Monday, August 17, 2009

Bank Failure Friday Costs FDIC Nearly $4 Billion

Bank Failure Friday Costs FDIC Nearly $4 Billion

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The Federal Deposit Insurance Corp. shuttered five banks on Friday, bringing the total number of failures for the year to 77. The agency’s insurance fund took a hit of nearly $4 billion. In March, the FDIC reported that its fund was at a 16-year low of $13 billion. New assessments on member institutions are expected to help replenish the fund, but the recent failures will likely intensify speculation that the FDIC might need a taxpayer bailout at some point.

Two of the five institutions—Colonial Bank [1] and Community Bank of Nevada [2]—accounted for the bulk of the losses. Both institutions have been zombies for months, kept alive by regulators as they scrambled to find the least costly way to put them down. Outside events and a sputtering economy appear to have finally forced the FDIC’s hand.

The FDIC estimates that the failure of Alabama-based Colonial will cost the fund $2.8 billion. Colonial’s deposits will be assumed by Branch Banking and Trust (BB&T) of Winston-Salem, N.C. BB&T purchased approximately $22 billion of Colonial Bank’s assets, instantly making it the ninth-biggest U.S. bank by assets, according to Bloomberg News [3]. Colonial had 346 branches spread out over Alabama, Florida, Georgia, Nevada and Texas. Today, these opened as branches of BB&T. The North Carolina bank has also agreed to share a small portion of the losses with the FDIC.

Colonial’s passing was truly a death foretold. It reported a $606 million second-quarter loss, its fifth straight quarterly deficit, according to Bloomberg. The bank tried to get money from the TARP but didn’t meet the requirements. A deal for private investors to put $300 million into the bank fell apart. Early this month, Colonial reported that it was the target of a criminal investigation by federal authorities over its mortgage lending activities. The Securities and Exchange Commission also issued subpoenas for documents relating to its accounting procedures. And, it was under a cease and desist enforcement order with its regulators to halt its “unsafe and unsound” banking practices. Then, on Thursday, Bank of America won a restraining order [4] against Colonial in an attempt to reclaim $1 billion it says it is owed.

The failure of Community Bank of Nevada is expected to cost the FDIC insurance fund $781.5 million. The bank has been in a free fall for at least a year. Its risky construction and development lending helped produce a $151.9 million loss last year. Non-performing assets, which include delinquent loans and repossessed real estate, made up 30 percent of total loans on June 30, reports the Las Vegas Review-Journal [5]. Despite assets of $1.5 billion, the bank had just $878,000 in reserves.

Try as it might, the FDIC could not find a buyer for this mess. It contacted 166 potential bidders to no avail, the FDIC told the Review-Journal. So instead, in a once-rare maneuver, the FDIC established a temporary bank—the Deposit Insurance National Bank of Las Vegas—to allow depositors time to open accounts at other insured institutions. This is the third time this year the FDIC has established a so-called “Bridge Bank [6],” because it couldn’t find buyers for a failed institution.

Community Bancorp, the Las Vegas-based holding company for the Nevada bank, also operated a similarly named bank in Arizona, which also failed. The Community Bank of Arizona [7] cost the FDIC deposit fund only an estimated $25.5 million. Its deposits were assumed by MidFirst Bank of Oklahoma City. MidFirst also scooped up another small community bank that failed yesterday, Union Bank [8] of Arizona, whose failure cost the FDIC an estimated $61 million.

The last to be mentioned but the first to fail on Friday was little Dwelling House Savings and Loan Association of Pittsburgh. The failure cost the FDIC a paltry $6.8 million. PNC Bank, also of Pittsburgh, got the deposits.

The collapse of Colonial and its $2.8 billion price tag for the FDIC is understandably dominating the headlines as it appears to be the third costliest bank failure for the FDIC since the economic crisis began.The Associated Press [9] provides some perspective:

The May closing of struggling Florida thrift BankUnited FSB is expected to cost the insurance fund $4.9 billion, the second-largest hit since the financial crisis began. The costliest was the July 2008 seizure of big California lender IndyMac Bank, on which the insurance fund is estimated to have lost $10.7 billion.

The largest U.S. bank failure ever also came last year: Seattle-based thrift Washington Mutual Inc. fell in September, with about $307 billion in assets. It was acquired by JPMorgan Chase & Co. for $1.9 billion in a deal brokered by the FDIC.

Stocks Drop Around World on Economy Concern

Stocks Slide on Economy Concern; Yen, Dollar, Treasuries Gain

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Stocks fell around the world, led by China, while the yen and dollar advanced and Treasuries rose as investors speculated that a rally in riskier assets has outpaced prospects for economic growth.

The MSCI World Index of 23 developed nations sank 2.6 percent at 1:15 p.m. in New York, the biggest retreat in eight weeks. The Standard & Poor’s 500 Index slid 2.2 percent after China’s Shanghai Composite Index slumped 5.8 percent, the most since November. The yen strengthened against all 16 of the most- traded currencies tracked by Bloomberg, while the dollar advanced against every one except the yen. The yield on the benchmark 10-year Treasury note dropped to its lowest level in almost a month. Copper and oil declined for a second day.

“The stock-market reaction overseas has woken people up to the fact that it’s not going to be a straight line up,” said Myles Zyblock, chief institutional strategist at RBC Capital Markets in Toronto. “People are starting to question the strength of the recovery.”

Equities tumbled after foreign direct investment in China fell, Yunnan Copper Industry Co. said there were “no clear signs” of a recovery and Japan’s economy grew less than economists estimated, reigniting concern that a five-month, 52 percent rally in the MSCI World was overdone. The tally of failed U.S. banks this year climbed to 77 last week, while the Reuters/University of Michigan index of consumer sentiment in America showed an unexpected decrease.

All 10 industry groups in the S&P 500 retreated today, except for health-care stocks, and 26 of 30 stocks in the Dow Jones Industrial Average declined, sending the measure down 168 points, or 1.8 percent, 9,153.4.

VIX Jumps

The benchmark index for U.S. stock options jumped the most since April on a closing basis. The VIX, as the Chicago Board Options Exchange Volatility Index is known, rose 13 percent to 27.36, the highest level in a month. The index, which measures the cost of using options to insure against declines in the S&P 500, is down from a record 80.86 in November yet above its 20 average over its 19-year history.

Alcoa Inc., Caterpillar Inc. and General Electric Co. lost more than 4.1 percent to lead the Dow lower. Lowe’s Cos. slid 9.3 percent, the biggest decline in the S&P 500, after the second-largest U.S. home-improvement retailer reported second- quarter profit that missed analysts’ estimates.

Raw-material producers fell the most in the S&P 500, collectively losing 3.4 percent as oil, copper and aluminum prices slumped. Freeport-McMoRan Copper & Gold Inc., the world’s largest publicly traded copper producer, sank 6.1 percent.

Treasuries Gain

Gains for Treasuries sent the yield on the benchmark 10- year note down 10 basis points to 3.47 percent. The cost of protecting corporate bonds from default rose, pushing contracts on the Markit CDX North America Investment-Grade Index, linked to 125 companies in the U.S. and Canada, up 4.5 basis points to a mid-price of 121.5 basis points, according to Phoenix Partners Group. That’s the highest since July 22, according to CMA DataVision.

Bond risk increased even as the Federal Reserve extended an emergency program aimed at stimulating credit markets, a move that may cushion the commercial real-estate industry from rising defaults and falling prices.

The Term Asset-Backed Securities Loan Facility, with a capacity of as much as $1 trillion, will expire June 30 for newly issued commercial mortgage-backed securities, instead of Dec. 31, the Fed and U.S. Treasury said today in a statement in Washington. For other asset-backed securities and CMBS sold before Jan. 1, the plan was extended three months to March 31.

European Stocks

The Dow Jones Stoxx 600 Index of European shares retreated 2 percent, the biggest drop since July 2. A 42 percent rebound since March 9 left the regional measure valued at 40.2 times the profits of its companies, near the most expensive since 2003, data compiled by Bloomberg show.

The world’s biggest pension funds have lost confidence in stocks as the best long-term investment, cutting holdings or leaving them unchanged during the steepest rally since the 1930s. Funds overseeing money for California teachers and public workers, Dutch government retirees and South Korean private- sector employees reduced their target weightings for equities this year, data compiled by Bloomberg show.

Japan’s Economy

The MSCI Asia Pacific Index lost 3.1 percent, the steepest decline since March. Japan’s gross domestic product expanded at an annual 3.7 percent pace in the three months ended June 30, missing the median estimate for a 3.9 percent increase in a Bloomberg News survey. Sony Corp., the maker of the PlayStation 3 game console, retreated 4.1 percent in Tokyo.

The recent rally in equities was spurred by growing speculation that the worst of the economic contraction is over.

Confidence in the world economy surged to a 22-month high in August on signs the first global recession since World War II is approaching an end, a Bloomberg survey of users on six continents showed last week. The U.S. unemployment rate dropped in July for the first time since April 2008, data from the Labor Department showed this month, while the German and French economies unexpectedly grew last quarter, government figures indicated last week.

The U.S. recession is “ending right now,” Abby Joseph Cohen, New York-based senior investment strategist at Goldman Sachs Group Inc., said in an interview today on Bloomberg Television and Radio. The Federal Reserve Bank of New York’s general economic index showed today that manufacturing in the New York region grew in August for the first time in more than a year. The Fed’s index was 12.08, topping the reading of 3 forecast by economists and up from minus-0.55 the prior month.

China Rout

Profit that missed analysts’ estimates at Ping An Insurance (Group) Co. helped send China’s Shanghai Composite Index down 5.8 percent, the steepest slump since Nov. 18.

Ping An, China’s second-biggest insurance company, fell 3.9 percent after first-half net income dropped 45 percent. Yunnan Copper sank 10 percent after posting a first-half loss.

The MSCI Emerging Markets Index declined 3.9 percent, the steepest drop since March. Russia’s ruble weakened 1.8 percent against the dollar and depreciated 0.9 percent against the euro.

The yen advanced 1.8 percent against the Australian dollar as demand for higher-yielding currencies waned. The pound slid 1.3 percent against the U.S. dollar on growing evidence the U.K.’s sputtering economy is halting the currency’s biggest five-month rally in 24 years.

“The rally in risk assets has become overextended as it has run ahead of the improvement in fundamentals,” Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, wrote in an e-mailed report. “The dollar and yen have been boosted by a pickup in safe-haven demand.”

Commodities

Copper for delivery in December fell the most in eight weeks, losing 3.4 percent to $2.7545 a pound in New York. Aluminum, nickel and zinc also declined. Crude oil retreated 2.7 percent to $65.72 a barrel. Gold fell as much as 1.8 percent to $935.50 an ounce.

Today’s China-led tumble in stocks may provide buying opportunities that will send U.S. shares higher by the end of the day, according to Bespoke Investment Group LLC.

On days when Chinese stocks slid more than 3 percent and an exchange-traded fund that tracks the S&P 500 lost more than 1.5 percent at the open, the average open-to-close change in the ETF has been 2.1 percent with gains 67 percent of the time, according to Bespoke, which tracked the ETF since its inception in 1993.

“While things are going to look ugly at the open, traders have historically bought the morning dip more often than not,” Bespoke said in a note to clients.

Another major US bank collapses

Another major US bank collapses

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Alabama-based Colonial Bank collapsed Friday, bringing the total number of US bank failures so far this year to 77. With assets of $25 billion, Colonial is the sixth-biggest bank failure in American history, and the biggest since Washington Mutual’s banking operation was shut down by federal regulators and sold to JPMorgan Chase in September 2008.

Colonial’s collapse “signals an ominous phase in the nation’s banking crisis,” the Wall Street Journal commented. “Even as some large institutions show signs of stabilizing, a slew of regional lenders remain on the ropes. And regulators appear to be giving up hope that some of them can be saved.”

The demise of Colonial Bank appears to be another instance of reckless speculation combined with outright criminality. The institution had engaged in aggressive lending focused on the real estate market in Florida. The sub-prime mortgage collapse, which has especially affected Florida, led to Colonial registering unsustainable losses and write-downs. The bank lost more than $600 million in the last quarter, and by last month had $1 billion in “non-performing assets” out of total assets of $26 billion.

The bank had sought more than $500 million in bailout money from the Troubled Asset Relief Program (TARP), but this was made conditional on it raising an additional $300 million from private investors or other banks. Efforts to secure this money failed after a federal criminal investigation was launched into a proposed deal with Florida-based mortgage company Taylor, Bean & Whitaker. Agents with the FBI and Treasury Department raided Colonial’s offices earlier this month.

The Wall Street Journal reported on August 8: “The bank said the Justice Department is investigating its lending division that originates mortgages the bank doesn’t intend to keep, as well as related accounting irregularities over several years.”

In an earlier incident which highlighted the impunity with which the banks have been able to operate, Colonial changed regulators when questions were first raised about its finances. In 2008, the bank abandoned its charter with its primary regulator, the Office of the Comptroller of the Currency (OCC), and opted for Alabama state regulations after the OCC highlighted its exposure to Florida’s commercial real estate market.

The Federal Deposit Insurance Corp (FDIC) oversaw the fire-sale of Colonial to the North Carolina-based regional bank BB&T, now to become the eighth largest US bank measured by deposits. The transaction involved the now standard “no-loss” guarantee, with the FDIC agreeing to share losses with BB&T on $15 billion of Colonial’s assets. The bank collapse is expected to cost the FDIC about $2.8 billion, further depleting its deposit insurance fund, which last March was just $13 billion.

In addition to Colonial, four smaller banks collapsed last week—Community Bank of Nevada, Dwelling House, Union Bank, and Community Bank of Arizona—costing the FDIC another $875 million.

More institutions have already collapsed in 2009 than in any year since 1992. The failure rate is accelerating—of the 77 bank failures thus far this year, 32 have occurred in the last seven weeks alone. The Wall Street Journal noted Saturday that the banks now failing are in far worse shape than those which collapsed during the industry’s last crisis from 1989-1995, costing the FDIC substantially more.

The federal agency has listed 305 unidentified institutions as “problem banks.” A Bloomberg analysis published last Friday found that more than 150 publicly traded US lenders have “nonperforming loans” on their books equal to five percent or more of their holdings—a level which threatens banks’ entire equity. These institutions, which do not include the 19 largest banks regarded by Treasury as “too big to fail,” have combined deposits of $193 billion—“almost 15 times the size of the FDIC’s deposit insurance fund at the end of the first quarter.”

President Barack Obama’s administration has averted a full-scale collapse of the financial markets by placing trillions of dollars in public funds at the disposal of the banks—but none of the underlying problems have been addressed. Up to $2 trillion in bad debts and worthless securities (known as “toxic” or “troubled” assets) remain on the banks’ books.

The Congressional Oversight Panel, the body which reports to Congress on TARP’s progress, last week issued its monthly report for August. The report emphasized: “It would be foolish to think that the risk of troubled assets has been mitigated or that it does not remain the most serious risk to the American financial system.”

The report also noted that “it is likely that an overwhelming portion of the troubled assets from last October remain on the bank balance sheets today.” These assets are largely comprised of defaulted mortgages and the edifice of securities and other speculative mechanisms built upon the mortgage market.

The Congressional Oversight Panel warned: “If the economy worsens, especially if unemployment remains elevated or if the commercial real estate market collapses, then defaults will rise and the troubled assets will continue to deteriorate in value. Banks will incur further losses on their troubled assets.”

No one is yet aware of the true extent of the crisis. In an extraordinary admission, the Congressional Oversight Panel report stated: “It is impossible to resolve the argument about whether banks are or are not solvent because of the uncertain value of their loans.”

In other words, policy makers in the world’s leading capitalist economy are proceeding without even knowing whether the national banking system is solvent.

This ignorance is partly due to changes in accounting regulations enacted in April this year by the Financial Accounting Standards Board. Under the old guidelines, banks were required to maintain up-to-date market value reports of its asset holdings, but now banks can suspend this reporting principle if market prices for securities and other toxic assets are deemed to be based on a “distressed market,” or in cases where assets are not intended for immediate sale. In these instances, assets can be listed at their initial purchase price, concealing the true value.

The Congressional Oversight Panel explained: “Once a bank sells a legacy security or legacy loan, it must book the sale value, but if the bank holds the asset, it may continue to mark the asset at the higher value permitted by the new rule. Thus any sale at less than amortized cost value would forgo the benefit of being able to avoid distress pricing and force perhaps substantial write-downs... To the extent banks have not written down troubled assets, they are in effect continuing to invest in those assets by holding them for a future return ... postponing the day of reckoning if it turns out that, rather than appreciating, the assets depreciate.”

The banks’ estimate that their troubled assets will prove more valuable in the future is based on political rather than market calculations. The toxic assets relating to the sub-prime mortgage industry are effectively worthless and would never regain their former value in normal market conditions. Mortgage defaults have spread far beyond the sub-prime category and are continuing as the unemployment crisis worsens and as property prices continue to fall. The TARP report cited a Deutsche Bank estimate that by 2011, 48 percent of US homeowners will owe more than their house is worth.

In addition, the commercial real estate market may be set to crash, also bringing down commercial real estate securities. The Congressional Oversight Panel explained that this would create a new class of troubled assets, and place “more general renewed pressure on bank balance sheets that would again call into question the true value of residential mortgage loans.”

The banks are nevertheless holding onto their toxic assets in the expectation that the Obama administration will eventually intervene and use additional public funds to buy the worthless securities at prices equivalent to their listed value before the financial crisis. Alternatively, if direct government purchase proves unviable, the banks expect the government to provide additional no-loss guarantees and public subsidies to allow toxic assets to be sold at a profit to other private buyers.

In the meantime, the toxic assets provide the banks with a convenient pretext for maintaining restrictive lending practices which are badly affecting consumers and small businesses. The TARP fund was supposed to provide billions in public funds to make credit more accessible and less costly—but this was not made mandatory and the banks have simply used the money to shore up their bottom line, and, in many cases, continue to pay out exorbitant bonuses to the very executives responsible for creating the crisis in the first place.

The latest Congressional Oversight Panel TARP report emphasized that mid-sized banks, those with assets between $600 million and $100 billion, are at most risk of going under and may need additional public capital of up to $21 billion. The report included a series of recommendations to shore up these strata of the banking sector, including expanded modeling to test the longer-term security of their asset and capital holdings and greater disclosure regulations to force banks to reveal the toxic assets on their books. Neither the Treasury Department nor the Federal Reserve is inclined to enact these recommended measures.

The Obama administration has proven itself as a ruthless defender of the financial elite’s interests. Acting as the instrument of the major banks, it is using the accelerating rate of bank collapses to restructure the industry. Smaller and less competitive institutions are being deliberately purged, with federal regulators taking on their bad debts and handing over remaining assets and infrastructure to larger financial institutions. The result will be a further consolidation of the economic and social power of a small network of mega-banks.

Violence sweeps northwest Pakistan in wake of Mehsud assassination

Violence sweeps northwest Pakistan in wake of Mehsud assassination

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The civil war between the US-backed government of President Asif Ali Zardari and Islamist and tribal militants is escalating in the wake of the August 5 assassination of Pakistani Taliban leader Baitullah Mehsud by a US Predator drone in South Waziristan. The killing has been followed by a series of further Predator attacks, armed clashes, murders, bombings and rocket attacks across northwest Pakistan.

On Tuesday, three missiles fired by unmanned American drones slaughtered as many as 14 alleged militants in a village just seven kilometres from where Mehsud was killed. The US military has stepped up Predator flights over South Waziristan, calculating that the tribal and Taliban leadership will be holding meetings to determine who will replace Baitullah as the head of both the Mehsud tribe and the umbrella Islamist movement in the region, Tehrik-e-Taliban.

The Mehsud and the Taliban are carrying out sweeping retaliation for the killing of their leader, targeting tribes that have collaborated with the Islamabad government against them.

On Wednesday, as many as 1,000 Mehsud tribal fighters launched an assault on the stronghold of one rival, Turkistan Bhittani, in the South Waziristan town of Jandola. Fighting raged for several hours, with the Taliban using rockets and mortars to level as many as 40 houses.

Pakistani Army helicopter gunships and ground artillery had to be called in to drive off the attackers. At least 70 members of Bhittani’s militia were killed and scores more were wounded. Taliban losses are unknown but are believed to have been substantial. The military claims at least 15 militants were killed when its artillery destroyed three vehicles attempting to leave the area.

Pakistani forces responded on Thursday with a major helicopter gunship attack on the alleged bases of Baitullah Mehsud’s cousin and possible successor, Hakimullah Mehsud, in the tribal agencies of Kurrum and Orakzai, to the north of South Waziristan. The government claimed that a number of houses were reduced to rubble and that at least 12 militants were killed.

The Taliban hit back throughout the day with targeted assassinations. In the tribal agency of Bajaur, two commanders of military-linked militias were seized by militants and executed. In Waziristan itself, a suicide-bomber riding an explosive-laden motorbike killed pro-government tribal leader Malik Khadeen and several of his lieutenants in Wana, the summer capital of the agency. Khadeen’s tribal militia, with military backing, has held Wana from the Taliban for the past several years,

The Pakistani establishment’s fear that Taliban revenge attacks can reach every corner of the country was palpably demonstrated yesterday, during the celebrations to commemorate the country’s establishment on August 14, 1947. Tens of thousands of troops and police were deployed throughout major cities such as Islamabad, Lahore, Karachi and Peshawar, manning road-blocks and pedestrian checkpoints and guarding government buildings and military installations. In many areas, Independence Day events were kept to a minimum.

While there were no incidents in most of the country, militants in northwest Pakistan launched a rocket barrage against a military base in Peshawar and attacked army bases in the tribal agencies of North Waziristan and Khyber. In the province of Balochistan, bombings rocked the capital Quetta and the towns of Hub and Mach, and electricity towers were destroyed in two other locations. It is unknown if the attacks were carried out by Taliban-linked militants or by ethnic Baloch separatists who have waged a decades-long insurgency against the Pakistani government.

The scale of the civil war and the hatred that has been generated against both the Islamabad government and the US have passed a threshold that makes any negotiated settlement to the violence unlikely.

Under pressure from Washington, particularly since the Obama administration took office, the Islamabad government has ordered the military to wage brutal offensives against the predominantly ethnic Pashtun population of the northwest. The objective is to eliminate the various Islamist and Pashtun tribal militias that oppose Pakistan’s close alliance with American imperialism and provide support to the anti-US insurgency being fought by the Taliban in the Pashtun-populated provinces of southern Afghanistan.

The result has been massive loss of life and displacement. During the April-May offensive in the Swat Valley and other Malakand districts of the North-West Frontier Province, the military forced over two million people from their homes in crushing an Islamist rebellion in the area led by cleric Maulana Fazlullah and his Tehreek-e-Nafaz-e-Shariat-e-Mohammadi (TSNM) movement.

The Pakistani Human Rights Commission, which just completed a fact-finding mission in Swat Valley, issued a condemnation of the operation this week, citing eye-witness accounts of extra-judicial killings and reprisals by the military. Several mass graves have allegedly been discovered. The area has been left devastated, with large numbers of houses damaged and infrastructure destroyed. Months after the offensive, over 1.2 million displaced persons are still unable to return.

As many as 500,000 people displaced last year by the military from the Bajaur and Mohmand tribal agencies are still living in squalid camps or with relatives elsewhere in Pakistan. Yesterday, the 2,300 families at one camp on the outskirts of Peshawar held a protest against the Independence Day celebrations, raising black flags instead of the Pakistani flag. Badsha Gul, a spokesman for the displaced, told the Pakistani News International they were protesting because “hundreds of our people were killed and our houses were destroyed while crops were damaged in the military operation”.

The Pakistani government is sending out strong signals that it intends to finally bow to Washington’s demands and order tens of thousands of troops to invade South Waziristan and mount a bloody confrontation with the Mehsud tribe and the Pakistani Taliban. The Obama administration, which has sent tens of thousands more troops to Afghanistan in a “surge” patterned after the similar Pentagon operation in Iraq, is anxious that Pakistani forces bear a large part of the burden of carrying the fight to the Taliban.

Owais Ahmed Ghani, the governor of the North-West Frontier Province, declared at an Independence Day event yesterday: “Areas beyond state control are being reduced. We have adopted a ‘hold-the-line’ policy and there will be no more retreating. There was talk that Peshawar could fall any day. Today, we have secured it. Similarly Malakand in the north is also under government control. The army is now moving to secure the south [Waziristan].”

The United Nations refugee agency has begun preparing camps for the tens of thousands of civilians who are expected to be driven from their homes, on top of over 45,000 who have already fled South Waziristan. UN spokesman Martin Mogwanja told a press conference on Wednesday: “The estimates that we have now and the working figure that we are using is that the number of displaced could rise somewhere between 90,000 and 150,000.”

The escalation of the violence can only have the most explosive political and social consequences. The majority of the Pakistani working class and rural poor do not support the reactionary aims of the Taliban and other Islamists. They are acutely conscious, however, that the Pakistan People’s Party-led coalition government is functioning as nothing more than a proxy for the Obama administration in its attempt to place Afghanistan and the Central Asian region under US imperialist domination. The only beneficiaries of the war are the country’s corrupt business, military and landed elite, who are benefiting from billions of dollars in US pay-outs each year, while the mass of the population endures worsening poverty.

A recent opinion poll, commissioned by Al Jazeerah, demonstrated the extent of the opposition—59 percent of the 2,600 respondents said the greatest threat to Pakistan was the United States and 67 percent stated they opposed the American air strikes taking place in the country’s northwest.

The editor-in-chief of the Pakistani Daily Mail, Makhdoom Babar, told Al Jazeerah: “This is a fact. The hatred of the US is growing very quickly because of these drone attacks. Maybe the intelligence agencies, the military channels, consider them productive, but for the general public it is controversial. The drone attacks are causing collateral damage.” Hundreds of civilians have been killed in the US strikes.

Despite the indiscriminate and terrorist nature of Taliban reprisals, which have also killed numerous innocent civilians, just 41 percent said they supported the government’s military operations against the Islamists. Barely 11 percent declared support for President Asif Ali Zardari’ policies, while 42 percent stated disapproval. When asked who should lead the country, only 9 percent named Zardari.

Zardari, the successor to the US-backed dictator General Pervez Musharraf, has not only increased Pakistan’s support for the US war in Afghanistan. His government has bowed to demands from the IMF for the elimination of energy subsidies, a stepped-up privatisation program and other anti-working class measures.

China-India border talks highlight rising tensions

China-India border talks highlight rising tensions

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The 13th round of border negotiations between China and India, held in New Delhi from August 7 to 8, became a focus of mounting tensions between the two regional rivals.

China sent its special representative State Councilor Dai Bingguo to meet with an Indian delegation led by National Security Adviser M. K. Narayanan. According to the Hindu newspaper, citing “informed sources”, the immediate aim of the talks was to agree on an outline for a final stage of negotiations, in which “both sides could get down to the actual nuts and bolts of the whole issue—negotiating the demarcation and delineation of the border”.

In other words, nothing concrete has even begun to be discussed since the talks were established in 2003. The only reported achievement of the latest round was an agreement to establish a hotline between the two prime ministers. India has only established such a hotline previously with Russia, so this is regarded as friendly gesture toward China.

China has shared a 4,000-kilometre-long “Line of Actual Control” with India since 1959, stretching from northwest Kashmir to Burma. In 1914, Britain drew the “McMahon Line” between India and Tibet, sowing the seeds of the future conflict between the two countries. China claims about 90,000 square kilometres in northeast India, mainly in the state of Arunachal Pradesh, which Beijing regards as “South Tibet”. India claims 43,180 square kilometres in China’s Aksai Chin region in eastern Kashmir.

Following conflicts over Tibet, the two countries fought a border war in 1962, in which the Indian forces were overrun. However, the Chinese army withdrew and unilaterally declared a ceasefire. The US had threatened to intervene to support India. With growing Sino-Soviet tensions, and Moscow refusing to back China against India, Beijing was in no position for a full-scale war with India.

Since the early 1990s, unresolved border disputes have once again become a potential flashpoint between the two aspiring powers. Although China is now India’s largest trade partner, tensions between the two further intensified with the global financial crisis. India banned imports of a series of Chinese goods.

In April, in an unprecedented move, Beijing attempted to block a $US2.9 billion Asian Development Bank (ADB) loan to India that included $US60 million for a flood control project in Arunachal Pradesh. India’s project rekindled a controversy that erupted in 2006, when the Chinese ambassador to India declared that the “whole state of Arunachal Pradesh is Chinese territory”.

India obtained the ADB funding in June, apparently with the support of the US and Japan, after a vote by the ADB broad. China strongly protested the ADB's approval.

Also in June, New Delhi announced the deployment of an additional 60,000 soldiers, along with tanks and two squadrons of advanced SU-30MKI strike aircraft, to the northeast state of Assam (near Arunachal Pradesh), bringing the total troop numbers in the area to 100,000.

In response, China’s official Global Times published an editorial on June 9 warning India “to consider whether or not it can afford the consequences of a potential confrontation with China”. The editorial reminded New Delhi that China had established close relations with Pakistan, Sri Lanka and Nepal and declared: “China won’t make any compromises in its border disputes with India.”

An unnamed Chinese official told the South China Morning Post on August 7 that India had intensified the border row with China by obtaining the ADB funding through the support of the US and Japan. “India has enough money to develop Arunachal Pradesh,” he declared. “But it wanted to test the Chinese. China opposed the loan application tooth and nail but India had its way. We lost face. And we don’t like losing face. We disgrace anyone who disgraces us.”

Indian officials meanwhile complained that Beijing had rejected their proposal for India to retain Arunachal Pradesh in exchange for accepting China’s control over Aksai Chin. An Indian foreign ministry official told the South China Morning Post: “China has developed a big superiority complex. It thinks that any give-and-take vis-à-vis India will dent its self-projected image as the predominant power in Asia.”

China’s ambassador to India, Zhang Yan, urged both sides to resolve their disputes “with the utmost political wisdom”. Brahma Chellaney, a strategic analyst at the New Delhi-based Centre for Policy Research, told the Indian Express: “Mr. Zhang’s syrupy words are designed to salvage the [border] negotiations from the damage inflicted by vituperative attacks on India in China’s state-run media. China’s objective is to keep India engaged in endless and fruitless border talks so that Beijing, in the meantime, can change the Himalayan balance decisively in its favour through development of military power and infrastructure.”

In 2006, China built a major railway into the Tibetan plateau, a project widely regarded by Indian officials and defence analysts as designed for the rapid deployment of troops to attack India, if need be. China has also expanded its influence in a number of South Asian countries, including the construction of a “string of pearls” of ports and other facilities for deploying warships in the Indian Ocean. These developments have raised concerns in New Delhi about China’s intrusion into India’s “backyard”.

The bitter exchanges spilled into the open after the chauvinist China International Strategy Net web site urged the encouragement of communal divisions in India in order to break it up into 20-30 small states. “There cannot be two suns in the sky,” the web site declared, arguing that Asia could have only one dominant power. The Financial Times noted that the web site was run by Kang Lingyi, “who took part in hacking into the US government websites in 1999 following US bombing of the Chinese embassy in Belgrade. Sites such as his are part of the Communist Party’s strategy to allow nationalism to grow to strengthen its political legitimacy.”

An outcry in the Indian media forced the Indian foreign ministry to issue a statement on August 10. It stated that the article “appears to be an expression of individual opinion and does not accord with the officially stated position of China on India-China relations conveyed to us on several occasions,” such as the previous week’s border talks.

India is seeking to become a “world power” by aligning with the US, which is actively seeking to woo New Delhi through a series of nuclear, economic and military agreements. China attempted to block India’s access to the Nuclear Supplies Group after the former Bush administration pursued a civil nuclear deal with India in order to make it a strategic counterweight against Beijing. China has also assisted India’s rival Pakistan to build nuclear reactors and supplied it with arms.

The China-India rivalry has extended well into the Indian Ocean. In the name of fighting piracy, China recently sent warships to Somali waters to escort its merchant fleet, which is vital for the Chinese economy. The deployment is part of Beijing’s development of a blue-water navy. India is even more concerned by China’s growing influence in Sri Lanka. Beijing provided arms and diplomatic support to Colombo, helping its military crush the Liberation Tigers of Tamil Elam (LTTE) in May.

A week before the China-India talks, the Indian defence ministry’s naval planner, Alok Bhatnagar, announced that it would build 107 warships over the next decade, including aircraft carriers, destroyers, frigates and nuclear submarines, to rival China’s fleet. “China is developing its navy at a great rate. Its ambitions in the Indian Ocean are quite clear,” Bhatnagar declared.

At present, India is a lesser power than China. According to an article written by India’s former chief economic adviser, Shankar Acharya, and published in the Financial Times on July 29, China’s economy is three times the size of India’s, with per capita income 2.5 times that of India. China’s share of the world’s merchandise exports is almost nine times India’s. “Despite the rapid growth of India’s information technology-based service exports since 1995,” Acharya wrote, “in 2007, China’s total service exports exceed India’s by 40 percent”.

India’s chairman of the chiefs of staff, Admiral Sureesh Mehta, admitted on August 10 that India was no match for China militarily. “In military terms, both conventionally and unconventionally, we can neither have the capability nor the intention to match China force for force,” he said. Mehta said India’s annual defence budget of $US30 billion was much smaller than China’s $70 billion. He proposed avoiding conflict with China, “as it would be foolhardy to compare India and China as equals”.

However, the US is tipping the balance, seeking to woo India away from Russia and China. This is bound up with the Obama administration’s strategy to focus on the war in Afghanistan, Pakistan and surrounding Central Asian areas, aiming to control the energy-rich heartland of the Eurasian continent. During US Secretary of State Hillary Clinton’s trip to India in July, she signed a key defence pact, laying the basis to expand the already burgeoning US arms sales to India, including fighters and high-tech weapons.

The Wall Street Journal noted: “With their companies jockeying for market share abroad and their militaries modernising at home, China and India have been regarding each other less as friendly neighbours and more as future rivals.” The newspaper cited Brajesh Mishra, a former Indian national security adviser who headed the previous border talks with China. He urged India to deepen its ties with the US and other countries. “The Chinese must know that if they create something on the border, there would be an instant reaction far beyond what happened in 1962,” he said.

The US nuclear accord with India not only provides New Delhi with advanced nuclear technology but also effectively accepts India as a nuclear weapons power. In July, India unveiled its first nuclear-powered submarine armed with nuclear missiles, making it the sixth country in the world to acquire such weapons systems. This only underscores the dangers presented by the sharpening rivalry between the two regional powers that is being encouraged by Washington.

Economic nationalism on the rise in Europe

Economic nationalism on the rise in Europe

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The economic tensions between Europe and the US, and within Europe itself, are intensifying in the run-up to the G20 summit to be held next month in Pittsburgh, Pennsylvania. Major European countries are responding to the financial crisis with protectionist trade policies and appeals to national chauvinism.

Every international meeting of finance ministers and heads of state over the past two years has featured pledges from all participants to refrain from economic nationalist measures in defense of their respective industries and banks. The last G20 summit, held in London at the start of April, issued such a statement, declaring the nations’ determination to fight protectionism and develop new international regulations to oversee the financial markets.

What has taken place since the London summit, however, is a virtual free-for-all, in which individual nations—occasionally in a block with neighbours—have enacted nationalist measures aimed at securing the interests of their own domestic banks and business concerns.

The figures speak for themselves. According to the World Trade Organisation, the number of new investigations launched by national governments against dumping and other protectionist measures rose dramatically in both 2008 and the first half of 2009.

Trade conflicts between the US and leading European nations are heating up. At the start of this week, a German cabinet minister criticised a “buy American” provision adopted by the US Congress. “The big industrial nations should set a good example and refrain from erecting new barriers to trade,” said Karl-Theodor zu Guttenberg, the German economics minister, who speaks for Germany’s major banks and corporations.

Tensions are also growing over proposals to regulate the banks and finance houses. Since the start of the financial crisis, the German and French governments, in particular, have been waging a concerted campaign against Anglo-American domination of the world’s financial markets.

On Tuesday, the German vice chancellor and leader of the Social Democratic Party (SPD), Frank-Walter Steinmeier, warned the British government to take tougher action against the City of London and impose stricter regulations on City traders. Steinmeier made clear that the German government would prioritise the issue in Pittsburgh.

The French government has also intervened in the dispute. A few days before Steinmeier’s comments, French Finance Minister Christian Lagarde sought to deflect a scandal enveloping the French bank BNP Paribas—which plans to pay out more than a billion euros in bonuses to its leading employees—by blaming international banks.

Lagarde declared that BNP Paribas was forced to pay its executives exorbitant bonuses because of the lack of international controls. “What I find scandalous,” Lagarde told Le Monde, is that certain foreign banks are dispensing with the G20 principles and thus gaining a competitive advantage by, for example, offering guaranteed bonuses.” The “certain foreign banks” to which Lagarde was referring are first and foremost major US banks such as Goldman Sachs and JPMorgan Chase, which have awarded huge bonuses in recent weeks. Lagarde told Le Monde that she would raise the issue in Pittsburgh.

All of the criticism from France and Germany of the “excesses of the Anglo-Saxon model” is aimed at creating the conditions for Paris and Berlin to emerge as leading players in a revised global financial order. Already in June, French President Nicolas Sakozy said that the financial crisis had weakened the City of London and declared, “La Défense (the financial district in Paris) intends to take over.”

For his part, the Conservative Party mayor of London, Boris Johnson, made clear that he will resolutely defend Anglo-American financial interests—in particular, the hedge fund industry. Johnson told a business conference in London in July: “It’s utterly crazy that we should allow the EU (i.e., France and Germany) to launch an attack on the City’s alternative investment funds ... Hedge funds won’t go to Paris or Frankfurt, they’ll go to New York or Shanghai. What is good for London is good for the UK, and what is good for London is good for Europe.”

The most pernicious role in this outburst of protectionism and nationalism is being played by the Social Democratic and nominally Communist organisations in Europe, in alliance with the trade unions. These parties and unions, in turn, have the backing of a host of petty-bourgeois “left” organisations.

In the US, Democratic congressmen were amongst the loudest calling for a “Buy American” clause in the Obama administration’s economic stimulus package agreed earlier this year, and American auto and steel trade unions have been the most virulent advocates of new tariff measures to prevent Chinese products from entering the US market.

In Germany, the SPD, which is part of the grand coalition government, has just issued its own nationalist “Germany Plan” for the benefit of German corporations and banks. Seeking to outdo its conservative coalition partners in the run-up to national elections in September, the SPD election platform mentions the word “Germany” no less than 146 times.

As trade conflicts sharpen between the major powers, the European trade unions play a thoroughly treacherous role, siding with those sections of finance capital which offer the respective national labour bureaucracies the best chances of advancement. In the current conflict over the future of the GM-Opel auto company, for example, the German unions are backing the bidder who promises to cut the most jobs in European countries other than Germany.

For their part, the British unions are supporting a rival bid which would shed the most jobs in Germany. The British trade unions have the full backing of the Labour Party for their chauvinist campaign.

When building unions, carrying placards demanding “British jobs for British workers,” conducted chauvinist strikes earlier this year against the employment of Portuguese and Italian workers, British Prime Minister Gordon Brown defended his own advocacy of the same slogan two years earlier.

The pattern is the same in one European country after another. In the wake of the financial crisis, national governments are rushing to implement protectionist policies at the behest of international banks and multinational companies that are based in their respective countries. The defence of the profits of the leading banks and corporations and the fortunes of the bankers and CEOs has become the single-minded goal of every government across the globe. Every aspect of domestic policy is subordinated to this aim.

The inevitable consequence of the nationalism of the labour and trade union bureaucracies is an intensified onslaught on the living standards of the working masses in every country. At the same time, the resurgence of protectionism inside Europe strengthens centrifugal forces that threaten to tear the continent apart.

White House Appears Ready to Drop "Public Option"

Former Gov. Dean calls public option indispensable

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Former Democratic Party Chairman Howard Dean, a leading figure in the liberal wing of his party, said Monday he doubts there can be meaningful health care reform without a direct government role.

Dean urged the Obama administration to stand by statements made early on in the debate in which it steadfastly insisted that such a public option was indispensable to genuine change, saying that Medicare and the Veterans Administration are "two very good programs that have been around for a long time."

Dean appeared on morning news shows Monday amid increasing indications the Obama White House is retreating from the public option in the face of vocal opposition from Republicans and some vocal participants at a town-hall-style meetings around the country.

The former Vermont governor was asked on NBC's "Today" show about President Barack Obama's statement over the weekend that the public option for insurance coverage was "just a sliver" of the overall proposal. Obama's health and human services secretary, Kathleen Sebelius, advanced that line, telling CNN Sunday that a direct government role in a system intended to provide virtually universal coverage was "not the essential element."

Dean, a physician, argued that a public option is fair and said there must be such a choice in any genuine shake up of the existing system.

"You can't really do health reform without it," he said. Dean maintained that the health insurance industry has "put enormous pressure on patients and doctors" in recent years.

He called a direct government role "the entirety of health care reform. It isn't the entirety of insurance reform ... We shouldn't spend $60 billion a year subsidizing the insurance industry."

Dean also said he doesn't foresee any Republican support for a public option. "I don't think the Republicans are interested and in order to have a bipartisan bill, you've got to have both sides interested," he said.

The shift in the administration's stance on a government-run insurance program leaves open a chance for compromise with Republicans that probably would enrage Obama's liberal supporters but could deliver a much-needed victory on a top domestic priority.

Rep. Anthony Weiner, D-N.Y., who is co-chairman of the Middle Class Caucus, said that "leaving private insurance companies the job of controlling the costs of health care is like making a pyromaniac the fire chief."

But Sen. Arlen Specter, D-Pa., told reporters in Philadelphia on Monday that the success of health care overhaul doesn't hinge on any one element and co-ops might provide the same results under a different name.

"I believe that the president has to make the evaluation as a matter of leadership as to what the administration wants to do. There is an alternative to the so-called public option by having co-ops. I think these matters are subject to exploration," Specter said.

Officials from both political parties are looking for concessions while Congress is on an August recess. Facing tough audiences, lawmakers and the White House are looking for a way to cover the nation's almost 50 million uninsured while maintaining political standing.

Sebelius said the White House would be open to co-ops instead of a public option — a sign that Democrats want a compromise so they can declare a victory.

Under a proposal by Sen. Kent Conrad, D-N.D., consumer-owned nonprofit cooperatives would sell insurance in competition with private industry, not unlike the way electric and agriculture co-ops operate, especially in rural states such as his own.

With $3 billion to $4 billion in initial support from the government, the co-ops would operate under a national structure with state affiliates, but independent of the government. They would be required to maintain the type of financial reserves that private companies are required to keep in case of unexpectedly high claims.

"I think there will be a competitor to private insurers," Sebelius said. "That's really the essential part, is you don't turn over the whole new marketplace to private insurance companies and trust them to do the right thing."

Obama's spokesman refused to say a public option was a make-or-break choice.

"What I am saying is the bottom line for this for the president is, what we have to have is choice and competition in the insurance market," White House press secretary Robert Gibbs said Sunday.

A day before, Obama appeared to hedge his bets.

"All I'm saying is, though, that the public option, whether we have it or we don't have it, is not the entirety of health care reform," Obama said at a town hall meeting in Grand Junction, Colo. "This is just one sliver of it, one aspect of it."

Lawmakers have discussed the co-op model for months, although the Democratic leadership and the White House have said they prefer a government-run option.

Conrad, chairman of the Senate Budget Committee, called the argument for a government-run public plan little more than a "wasted effort." He added there are enough votes in the Senate for a cooperative plan.

Who's Behind the Attacks on a Health Care Overhaul?

Who's behind the attacks on a health care overhaul?

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Much of the money and strategy behind the so-called grassroots groups organizing opposition to the Democrats' health care plans comes from conservative political consultants, professional organizers and millionaires, some of whom hold financial stakes in the outcome.

If President Barack Obama and Congress extend health insurance coverage to millions of uninsured Americans, raise taxes on the wealthy to pay for it, and limit insurers' discretion on who they cover and what they charge, that could pinch these opponents.

Most of them say they oppose big government in principle. Despite Obama's assurances to the contrary, many of them insist that the Democrats' legislation is but the first step toward creation of a single-payer system, where the federal government hires the doctors, approves treatments, sets the rules and imperils profit.

These opposition groups appear to have spent at least $10 million so far on ads attacking the Democrats' plans. Still, supporters of a health care overhaul have outspent opponents by more than 2-to-1 so far, according to Evan Tracey of the Campaign Media Analysis Group, which tracks ad spending. Supporters include drug makers angling for their own protections, unions, the American Medical Association and AARP, the seniors' lobby. Supporters announced this week that they intend to spend $150 million promoting an overhaul.

The opposition groups' names sound catchy and populist: Patients First. Patients United. Americans for Prosperity. Conservatives for Patients' Rights. FreedomWorks. 60 Plus. Club for Growth.

Here's who's behind them:

Conservatives for Patients' Rights is led by health care entrepreneur Rick Scott, the co-founder of Solantic urgent care walk-in centers, which he's spread across Florida and is looking to expand. While 80 percent of its patients have at least some insurance, Solantic also bills itself as an alternative to emergency-room care and a resource for patients with no insurance.

Scott left his job as CEO of the Columbia/HCA hospitals during a federal Medicare fraud probe in 1997 that led to a historic $1.7 billion settlement. He wasn't prosecuted and got a golden parachute.

Solantic's growth, Scott said in a telephone interview, is due in part to the trend in which "deductibles and co-payments are going up. As that happens, more people want us."

Scott said he wasn't concerned that the Democrats' proposed revisions would undercut his business: "It's irrelevant to us." Instead, he said he opposes the Democrats' plans because he doesn't believe that government involvement will contain health care costs. He sees it killing off the best private insurance plans and ultimately leading to a single-payer system, which he predicted would lead to waiting lists and denial of treatments.

Scott said he supports some government intervention — such as preventing insurers from dumping sick patients. Those who can't afford coverage on their own should get vouchers or tax credits, he said.

FreedomWorks, which has been advocating against the overhaul but has not launched TV ads, is chaired by Dick Armey, the former Republican majority leader of the House of Representatives from Texas.

But also noteworthy are the group's other backers and board members. They include billionaire flat-tax proponent and former GOP presidential candidate Steve Forbes; Richard J. Stephenson, who founded Cancer Treatment Centers of America, which offers alternative as well as standard therapies, sometimes not covered by insurance; and Frank M. Sands, Sr., chief executive officer of an investment management firm whose offerings include a Healthcare Leaders portfolio.

"They're on our board because they support lower taxes, less government and more freedom," said FreedomWorks spokesman Adam Brandon.

Matt Kibbe, the chief executive officer of FreedomWorks, said its members believe that "the government is already way too involved in the nation's health care system" and that government is to blame for health-cost inflation.

Kibbe acknowledged that private insurance is out of reach for many small businesses and individuals, but he contended that can be dealt with without creating a government-managed exchange. Like Scott, he expressed concern that more government interference would lead to a single-payer system, which would "inevitably" impose rationing of treatments to contain costs.

Patients First and Patients United are creations of a larger group called Americans for Prosperity. AFP's Web site describes a grassroots organization with more than 700,000 members that advocates "for public policies that champion the principles of entrepreneurship and fiscal and regulatory restraint."

It was started by billionaire David Koch, of the Koch Industries oil family, one of the country's top donors to conservative, free-market causes. The foundation's board includes Art Pope, a former North Carolina legislator also involved in conservative causes, whose family owns hundreds of discount stores.

Tim Phillips, AFP's president, is a former Republican congressional staffer who helped former Christian Coalition executive director Ralph Reed start up the consulting firm Century Strategies in the 1990s. Clients paid the firm to build Christian grassroots support for various business causes. That included work for since-convicted lobbyist Jack Abramoff.

The group, along with FreedomWorks, was involved in promoting the anti-tax "tea parties" earlier this year. AFP also is organizing a campaign "exposing the ballooning costs of global warming hysteria."

In an interview, AFP's Phillips said that he couldn't think of anyone on his board with a direct financial stake in the health care industry. "It's more freedom-based," he said. "They have a deep interest in protecting economic freedoms." He also said that no one in his organization believes that more government involvement in health care will lead to reduced costs for taxpayers.

By Labor Day, he said, his group will have organized 600 rallies on health care.

"Americans are looking at these rallies that are happening and the town-hall turnouts, and they say, 'No one group out of thin air could do that,'" Phillips said. "The American people can see through the attacks on the other side, where they try to vilify these groups as being corporate groups or front groups. They're believing it is in fact a broad groundswell.

"We're out here saying the truth, which is costs are going to go up and quality is going to go down. And what's the other side saying? 'Oh, these are front groups, these are all rich people.' The attack route's not going to work. It's not so far."

Two other grassroots groups have financed ads targeting peoples' fears that more government involvement would hurt seniors and hasten end-of-life decisions.

One of them, Club for Growth, which advocates lower taxes, is led by president Chris Chocola, a former Republican congressman from Indiana who lost his re-election bid in 2006. Club for Growth this week announced a $1.2 million ad campaign against a health care overhaul, to run in North Dakota, Colorado, Arkansas and Nevada.

The other, 60 Plus Association, is a conservative senior advocacy group that wants to abolish the estate tax. Singer Pat Boone is the group's national spokesman. Chairman Jim Martin started the group in 1992 with fund-raising help from conservative direct mail guru Richard Viguerie. It spent $1.5 million on TV ads opposing a healthcare overhaul in the last week.

Martin declined to identify his major donors. In 2006, he acknowledged that his group was getting funding from the pharmaceutical industry. But this year, pharmaceutical companies lead the spending spree on behalf of a health care overhaul.

"The shoe's on the other foot," Martin said. "They've gotten in bed with the White House."

Statement by Sergeant Travis Bishop

Statement by Sergeant Travis Bishop

by: Sergeant Travis Bishop

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Ladies and Gentlemen of the Panel,

The prosecution raised the point that 'ignorance of the law is no excuse for the crime.' And here is proof of that. Case presented, verdict rendered, Sgt. Bishop is guilty. I have been convicted of the crimes that I committed, and I cannot argue that.

All I can say is this: If I had a Soldier that acted on impulse and did something illegal that I, his Sergeant, could have trained him on, there is no doubt in my mind that I would be in the First Sergeant's office the next morning explaining how I 'failed' the Soldier, leaving this Soldier untrained and, ultimately, unprepared.

Since the day I was promoted to this rank that is now in jeopardy, the idea of the Sergeant being responsible for even the individual actions of the Soldier has been drilled into me; especially on the issue of training your Soldier. My rank would be in jeopardy if my Soldier was doing things that I could have, according to my superiors, prevented, as long as I had taken an interest in my Soldier's life, and trained my Soldier as best as I possibly could.

But today, I stand alone. My actions and decisions, based on a seemingly unapproachable command structure, and a lack of training of my rights as a Soldier, remain defended by myself only. I have defense counsel, but the 'buck' stops with me and me alone, and I don't believe that this would be true in any other situation in the Army.

So why is that? Why is there such a stigma around the words? Conscientious Objection. To me, for the longest time, it was only an archaic term from somewhere back in the Vietnam Era; not something that applied to me, the modern Soldier. COs were the butt ends of jokes; they were punch lines. But why?

Maybe it's because since day one of anyone's career in the military, fierceness and bravado are pounded into every potential Soldier, and fear and doubt are viewed as weaknesses. This leaves Soldiers that feel as I feel in quite a predicament.

Does a Soldier who feels as I feel tell someone in their Command? Or a peer? And risk persecution and ridicule? I have never heard the word 'coward' used more than when I say the words conscientious objector around a group of Soldiers.

But what most Soldiers don't realize is that CO is not only a regulation, it's a right. To file for conscientious objector status is an individual right of every Soldier in the Army. This right ensures that Soldiers with the beliefs that I share have the opportunity to request to be discharged due to said beliefs. But, unlike other regulations in the military, this one remains unpublicized.

Ladies and gentlemen of the panel, there are many regulations that offer Soldiers individual rights that without these regulations, they might not ultimately have, even though the average Soldier has no idea these regulations and rights exist. And yet, regardless of knowledge of these regulations, they still fall under these rights given to them by the military.

My key point is this: AR 195-6 covers Army polygraph procedures. If a Soldier doesn't know their rights covered and protected under this regulation, does this give persons giving the polygraph test free reign to ask whatever they want? Just because they don't know the regulation?

If a Soldier doesn't know that, under AR 600-8-22, they are entitled to receive a Good Conduct Medal after 3 years of outstanding service, does that mean that it is ok to not award this Soldier?

If a Soldier doesn't have a clear understanding of AR 600-8-3, Unit Postal Operations, does that mean that the Soldier isn't entitled to receive mail in theaters of combat?

It is my firm belief that the Conscientious Objector regulation is not a regulation only, but an individual right of every Soldier, and that the responsibility to teach this regulation falls on Unit Command Teams. There are plenty of regulations that we do teach Units about, sometimes quarterly even. Why not this one?

In closing, I am not trying to say that I did not commit these crimes. The point I'm trying to convey is that, had I known that the process for applying to be a CO was still alive and well in the Army, I would have applied to be discharged as such a long time ago.

The truth is, as soon as I discovered that the process existed, I acted upon it. I left because I did not feel that I would have a sympathetic, understanding command structure to fully take my problems to, and also to give myself time to prepare for my CO application process, and the legal battle I'm currently fighting.

These are not excuses. These are explanations. My hope is that you truly treat them as such during your sentencing deliberations. Godspeed.

Afghanistan War Resister Sentenced

Afghanistan War Resister Sentenced

Sergeant Travis Bishop.
Sergeant Travis Bishop being led away after his courtmartial manages to flash a peace sign to onlookers. (Photo: Eric Thompson)

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Sergeant Travis Bishop, with the US Army's 57th Expeditionary Signal Battalion, pled not guilty at a special court martial on Thursday to two counts of missing movement, disobeying a lawful order and going absent without leave (AWOL). Friday, in a trial full of theatrics from the jury, prosecution witnesses and the prosecution, he was found guilty on all counts.

Sgt. Bishop is the second soldier from Fort Hood in as many weeks to be tried by the military for his stand against an occupation he believes is "illegal." He insists that it would be unethical for him to deploy to support an occupation he opposes on both moral and legal grounds, and has filed for conscientious objector (CO) status. A CO is someone who refuses to participate in combat based on religious or ethical grounds, and can be given an honorable discharge by the military.

Last week, Specialist Victor Agosto was sentenced to 30 days in a county jail for his refusal to deploy to Afghanistan. Agosto, like Bishop, feels the war is illegal, something that James Branum, the civilian lawyer for both soldiers, agrees with.

"The war in Afghanistan does not meet the criteria for lawful war under the UN Charter, which says that member nations who joined the UN, as did the US, should give up war forever, aside from two exceptions: that the war is in self defense, and that the use of force was authorized by the UN Security Council," Branum told Truthout in an earlier interview, "The nation of Afghanistan did not attack the United States. The Taliban may have, but the nation and people of Afghanistan did not. And under US law, the Supremacy Clause of the US Constitution, any treaty enacted by the US is now the 'supreme law of the land.' So when the United States signed the UN Charter, we made that our law as well."

Bishop, unlike Agosto, applied for CO status due to his religious and moral convictions. Bishop told Truthout he was "opposed to all war," based on his religious beliefs, that "as a real Christian, I must be opposed to all violence, no matter what, because that is what Jesus taught."

After receiving his orders to deploy to Afghanistan, Bishop needed time to prepare his application for CO status, so he went AWOL for a week "because I didn't have time to prepare to file for CO status. So, while AWOL, I prepared a statement and filled out my application for CO [status]. Then I went back [to Fort Hood] with Branum and turned myself in. I never planned on staying AWOL. They gave me a barracks room and assigned me to a platoon and told me to show up to work the next day. That was it. They started the CO process, but they also started the Uniform Code of Military Justice process, and that's where it gets shifty."

Bishop told Truthout that he had serious doubts about his views on war for a long time, but was unaware of his right to file for CO status until just before he was scheduled to deploy.

One of the main points Branum made in defense of Bishop was that Bishop had never been given proper training that would have informed him of the CO option.

"Travis was never told about his option of conscientious objector status," Branum explained to Truthout. "If an enlisted soldier isn't informed that he has a right, then he effectively does not have that right. Just one to two days before he was set to deploy, in the midst of moral questions, he heard about CO status."

On Thursday, Bishop's defense called two witnesses to the stand, Pfc. Anthony Sadoski and Specialist Michael Kern, both of whom are active duty soldiers at Fort Hood who said that they, too, had never been informed that filing for CO status was an option.

Captain Matt Kuskie, the prosecuting attorney, argued, "Ignorance of the law is no excuse." The judge, Major Matthew McDonald, said that whether Bishop was notified or not about his right to file for CO status was not relevant to the case.

"If every soldier in the Army who disobeyed an order could claim it was because they weren't notified of conscientious objector status, we probably wouldn't have a military any more," he added.

Branum told Truthout he is attempting to establish a precedent with the trial, regardless of the outcome. "We want to change the law, and I would argue that when soldiers are informed of their deployment, which is generally two to six months in advance, they should be giving training about CO status. I will argue that if you don't do the training, you can't deploy."

Despite Sgt. Bishop's commander, Captain Christopher Hall's admission to the court that he had never provided CO training to Bishop's unit, the jury, who were all officers of much higher ranks (six to seven ranks higher) than Bishop, therefore, not necessarily a jury of his peers, appeared hostile to Bishop's plight.

For example, one of the jurors had to be woken up during the trial. Another, a Lt. Col. Atkins, rolled his eyes and shook his head throughout most of the defense's time of making their case.

The prosecution argued that Bishop's searching of his conscience that led to his decision to apply for CO status was "a misguided intellectual journey."

During mitigation of Sgt. Bishops sentence, Lt. Col. Ron Leininger, a chaplain at Fort Hood who recommended that Bishop be denied his CO status, was called as a witness in an unexpected move by the prosecution, in order to counter several witnesses by the defense who each testified to Bishop's character and sincerity in his pursuit of CO status.

Leininger stated that he did not feel Bishop had a deep enough or sincerely held religious belief to establish grounds for recommending him CO status. Leininger's written report of his interview with Bishop had several mistakes, including having called Sgt. Bishop "Sgt. Bush" in one section.

Leininger claimed that his interview with Bishop lasted 45 minutes, and that he did not receive phone calls while it was occurring. Sgt. Bishop appeared shocked by this, and later, when Truthout asked him about his reaction he said, "The Chaplain only spoke with me for 20 minutes, took two calls on his cell phone, and was texting the whole time."

One of Leininger's critiques of Bishop was that he was not a member of a local church, despite the fact that for a soldier to apply for CO status, they do not have to be affiliated with a local church. Atheists, for example, can apply for CO status and be granted the status, if they can prove deeply held moral convictions that oppose violence.

When asked by the defense what he thought of religions or causes like the civil rights movement that required people to follow their conscience - even if it meant they would have to break the law - Chaplain Leininger said, "perhaps, but that it would be sad for them to do so. Jesus Christ, the founder of Christianity, was executed for breaking Roman law in order to follow his conscience."

The jury had already found Sgt. Bishop guilty of all charges, and sentenced him to one year in prison, a rank reduction to Private, forfeiture of two-thirds of his pay for one year and a bad conduct discharge.

A disappointed Branum told Truthout that he plans to take the result of the trial to the Military Court, the US Army Court of Criminal Appeals, the US Military Court of Criminal Appeals and "then Habeus Review and take it to a civilian court, then, if necessary, the Supreme Court."

Branum added, "If Travis goes to jail, he wants it to be for something. He wants it to count." The attorney said he will continue to demand the Army provide CO training, "and my hope is that when troops are going to be deployed, they'll be read their Bishop rights."

After receiving his sentence, Sgt. Bishop met with a group of friends and supporters outside the courtroom and said, "It means a lot to me you are here in my support. This is not the end, by any means. This is the beginning. When I get out, I'm going to be louder, more active, and pissed off."

Shortly thereafter, he was shackled and escorted out of the building. While walking to a van to take him to prison he flashed a peace sign, while several soldiers, one of them active duty and most of them combat veterans, stood at attention and saluted him for his actions.

Lou Dobbs Tours Single-Payer Systems Abroad and Realizes They're Good

Lou Dobbs Tours Single-Payer Systems Abroad and Realizes, Holy Crap They're Good

By Leslie Savan

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Lou Dobbs is a strange man. One day he's railing against "Obamacare," stoking the birther and deather paranoia that an illegitimate president's health care plan will mandate euthanasia. Next day he's practically singing the praises of single-payer healthcare systems 'round the world.

It's kind of French of him, but last week, CNN's government-out-of-my-face bloviator began a monthlong, nation-a-night series to "learn from other countries' health care plans." He's already toured the single-payer systems of Denmark, Canada, and England, and the heavily regulated, public/private plans of Germany, France, Holland, and Switzerland. And, as if he were channeling Michael Moore or something, he's been rattling off stats showing that most of these universally covered foreigners are spending less on healthcare but living longer than we do.

Oh, sure, he'll occasionally exaggerate any weakness he can find--Lou's particularly eager to tsk-tsk over England's long lines. But overall, the series (reported mostly by CNN's Kitty Pilgrim), has been straightforward, like this look at Denmark, which could almost inspire a townhall mob to chant "Mandate, baby, mandate!"

And tonight it's off to Japan!

But, really, what gives, Mr. Independent? Have you gone soft on softcore socialism? Do you realize that you're actually making the "government takeover of healthcare" look pretty darn good? Or is this some kind of forced penance for spraying CNN with birther spittle, causing the network a "publicity nightmare," and, worse, sinking your own ratings?

On his Wednesday radio show, Dobbs as much as announced that CNN president Jon Klein (who's been publicly defending Dobbs against calls for his firing) made him do it: "We're pushing opinion aside. We're focusing on a nonpartisan objective reality that it is our job to cover," Dobbs declared, admitting, "I resisted this idea initially."

But as Lou has proved again and again, he can't help but resist. On radio the very next day, he slammed Obama for compiling "an enemies' list" (not true), and harrumphed mightily: "I'm moving from being an independent, sir, to being absolutely opposed to your, any policy you could conceive of!" As if he hadn't moved into outright opposition long ago.

So, as soon as Lou had completed all that extra homework--writing 100 times on the blackboard, "I will push opinion aside. I will push opinion aside"--he finally gets to bust out and mix it up with his guests. Only then do the familiar snide comments, appalled facial expressions, and twisted facts spill into a headlong attack on each and every aspect of Obama's healthcare plan--even the aspects resembling those he had just more or less commended in Europe.

That is, Dobbs can read all sorts of fair and balanced words from a script, but he is willfully deaf to their meaning. Anything that doesn't fit his worldview, he doesn't hear, it doesn't compute, and he goes blank.

As he did last week when he interviewed Obama's former doctor, David Scheiner. The fact that Scheiner had criticized the president's healthcare plan was enough to land him on Lou Dobbs Tonight; but the fact that Scheiner had criticized Obama from the left for ignoring single-payer plans simply couldn't find an empty berth to tie up to in Dobbs's brain. Dr. Scheiner passionately, and at length, explains to Dobbs that it is private insurance companies that are standing between doctors and their patients, not the goverment. "The government never gets in the way," Scheiner says. "In Medicare, 40 years of Medicare, they've never interfered with me giving care."

"Medicare is--I'm sorry, which is interfering?" replies a suddenly glowering Dobbs, who apparently wasn't listening at all. Yet even after Scheiner carefully explains yet again, Dobbs kept on: "But the argument is, as you know, Doctor, that with government-run healthcare that there would be great intrusion by the government..."

Now that's what I call dobbering! More willful than mere doddering, Lou's habit of hearing only what he wants to hear, while clinging to factoids that have been proven wrong and getting offended when others question these falsehoods, deserves an eponymous word all its own.

Take Lou's famous Imaginary Alien Leprosy Epidemic from 2005: He insisted that 7,000 cases of leprosy had suddenly appeared in the U.S. over the previous three years, mostly, he implied, from "illegal aliens." There were indeed 7,000 cases, "but that's over the last 30 years, not the last three," David Leonhardt wrote in The New York Times, and there was no link to immigrants. Leonhardt added that Dobbs "never acknowledged on the air that his program presented false information twice. Instead, he lambasted [guests] for saying he had." (For a recent, ridiculous health care lambasting, see this.)

People who've worked with Lou at CNN frequently try to explain his self-contradictions--the free-market capitalist who rails against corporations outsourcing American jobs, for example, or the anti-immigrant scourge who's married to a Mexican-American, or the avuncular anchor who says the only way to stop "leftist bloodsucker" Howard Dean is to "put a stake through his heart"--with a Theory of Two Lous. Lloyd Grove quoted an email from former CNN CEO Tom Johnson last week in The Daily Beast that explicitly postulated a nice, warm, sensitive Lou who wants all his colleagues to love him and simultaneously a mean, self-centered Lou who "can intimidate the hell out of" his people. You flips your coin and takes your luck.

In fact, Dobbs's fluctuating nature may simply be an expression of his total embodiment of CNN. No other cable anchor is as identified with his network as Dobbs is with his--none have been at the helm for as long, or have as intimate a relationship with the corporate side as Dobbs does (he and Ted Turner are old, close friends). Over that tenure Dobbs has gone from being the enterprising pioneer pushing a 24/7 news cycle to, with the rise of FOX and MSNBC, the closest thing we have to a cable establishmentarian. FOX is red, MSNBC is blue, and CNN is not purple but beige on beige--like Dobbs sees himself. At times he seems to fade into the silvery ether of his network's logo, leaving nothing but his perfect pearly whites behind, clacking away.

Dobbs has all the seamless, slick authority of a local TV anchor circa 1979--it's not for nothing that he's often compared to Ted Baxter, the hamster-brained blowhard on the Mary Tyler Moore Show. He was chosen to give heft and an air of reliability to CNN--the same reason the network got James Earl Jones to intone "This is CNN" for its bumpers--when it was little more than a local Atlanta start-up, fighting for acceptance from major corporate advertisers. As it has succeeded, so Dobbs has morphed into a kind of Mr. Drysdale, the stuffy banker from The Beverly Hillbillies, projecting a pompous dignity while secretly, just below the surface, bubbling with insecurities.

And like Mr. Drysdale, Dobbs sees himself as helping good, decent folks fit into a modern world that has too little respect for and absolutely no understanding of their traditional values. He has become a tribune of the "center" in American politics, and the center to Dobbs looks an awful lot like his glory days in the 1980s and early '90s, when CNN bestrode the cable world like a colossus and conservatism had not lost two foreign wars and destroyed the national economy. That these things have happened is almost beyond the ken of any political talk star created by Ronald Reagan's repeal of the old Fairness Doctrine rules, Dobbs included. They, quite naturally, just want all the changes to stop, right now.

So he looks into the camera with beetled brow, tries to make sense of these terrible truths, and asks, as he did last week about health care reform, "Is doing nothing better than doing something?"

Swine flu link to killer nerve disease

Swine flu jab link to killer nerve disease: Leaked letter reveals concern of neurologists over 25 deaths in America

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Prevention: Is the swine flu jab safe?

A warning that the new swine flu jab is linked to a deadly nerve disease has been sent by the Government to senior neurologists in a confidential letter.

The letter from the Health Protection Agency, the official body that oversees public health, has been leaked to The Mail on Sunday, leading to demands to know why the information has not been given to the public before the vaccination of millions of people, including children, begins.

It tells the neurologists that they must be alert for an increase in a brain disorder called Guillain-Barre Syndrome (GBS), which could be triggered by the vaccine.

GBS attacks the lining of the nerves, causing paralysis and inability to breathe, and can be fatal.

The letter, sent to about 600 neurologists on July 29, is the first sign that there is concern at the highest levels that the vaccine itself could cause serious complications.

It refers to the use of a similar swine flu vaccine in the United States in 1976 when:

  • More people died from the vaccination than from swine flu.
  • 500 cases of GBS were detected.
  • The vaccine may have increased the risk of contracting GBS by eight times.
  • The vaccine was withdrawn after just ten weeks when the link with GBS became clear.
  • The US Government was forced to pay out millions of dollars to those affected.

Concerns have already been raised that the new vaccine has not been sufficiently tested and that the effects, especially on children, are unknown.

It is being developed by pharmaceutical companies and will be given to about 13million people during the first wave of immunisation, expected to start in October.

Top priority will be given to everyone aged six months to 65 with an underlying health problem, pregnant women and health professionals.

The British Neurological Surveillance Unit (BNSU), part of the British Association of Neurologists, has been asked to monitor closely any cases of GBS as the vaccine is rolled out.

One senior neurologist said last night: ‘I would not have the swine
flu jab because of the GBS risk.’

There are concerns that there could be a repeat of what became known as the ‘1976 debacle’ in the US, where a swine flu vaccine killed 25 people – more than the virus itself.

A mass vaccination was given the go-ahead by President Gerald Ford because scientists believed that the swine flu strain was similar to the one responsible for the 1918-19 pandemic, which killed half a million Americans and 20million people worldwide.

Swine flu vaccines being prepared

The swine flu vaccine being offered to children has not been tested on infants

Within days, symptoms of GBS were reported among those who had been immunised and 25 people died from respiratory failure after severe paralysis. One in 80,000 people came down with the condition. In contrast, just one person died of swine flu.

More than 40million Americans had received the vaccine by the time the programme was stopped after ten weeks. The US Government paid out millions of dollars in compensation to those affected.

The swine flu virus in the new vaccine is a slightly different strain from the 1976 virus, but the possibility of an increased incidence of GBS remains a concern.

Shadow health spokesman Mike Penning said last night: ‘The last thing we want is secret letters handed around experts within the NHS. We need a vaccine but we also need to know about potential risks.

‘Our job is to make sure that the public knows what’s going on. Why
is the Government not being open about this? It’s also very worrying if GPs, who will be administering the vaccine, aren’t being warned.’

Two letters were posted together to neurologists advising them of the concerns. The first, dated July 29, was written by Professor Elizabeth Miller, head of the HPA’s Immunisation Department.

It says: ‘The vaccines used to combat an expected swine influenza pandemic in 1976 were shown to be associated with GBS and were withdrawn from use.

‘GBS has been identified as a condition needing enhanced surveillance when the swine flu vaccines are rolled out.

‘Reporting every case of GBS irrespective of vaccination or disease history is essential for conducting robust epidemiological analyses capable of identifying whether there is an increased risk of GBS in defined time periods after vaccination, or after influenza itself, compared with the background risk.’

The second letter, dated July 27, is from the Association of British Neurologists and is written by Dr Rustam Al-Shahi Salman, chair of its surveillance unit, and Professor Patrick Chinnery, chair of its clinical research committee.

America swine flu 1976

Halted: The 1976 US swine flu campaign

It says: ‘Traditionally, the BNSU has monitored rare diseases for long periods of time. However, the swine influenza (H1N1) pandemic has overtaken us and we need every member’s involvement with a new BNSU survey of Guillain-Barre Syndrome that will start on August 1 and run for approximately nine months.

‘Following the 1976 programme of vaccination against swine influenza in the US, a retrospective study found a possible eight-fold increase in the incidence of GBS.

‘Active prospective ascertainment of every case of GBS in the UK is required. Please tell BNSU about every case.

‘You will have seen Press coverage describing the Government’s concern about releasing a vaccine of unknown safety.’

If there are signs of a rise in GBS after the vaccination programme begins, the Government could decide to halt it.

GBS attacks the lining of the nerves, leaving them unable to transmit signals to muscles effectively.

It can cause partial paralysis and mostly affects the hands and feet. In serious cases, patients need to be kept on a ventilator, but it can be fatal.

Death is caused by paralysis of the respiratory system, causing the victim to suffocate.
It is not known exactly what causes GBS and research on the subject has been inconclusive.

However, it is thought that one in a million people who have a seasonal flu vaccination could be at risk and it has also been linked to people recovering from a bout of flu of any sort.

The HPA said it was part of the Government’s pandemic plan to monitor GBS cases in the event of a mass vaccination campaign, regardless of the strain of flu involved.
But vaccine experts warned that the letters proved the programme was a ‘guinea-pig trial’.

Dr Tom Jefferson, co-ordinator of the vaccines section of the influential Cochrane Collaboration, an independent group that reviews research, said: ‘New vaccines never behave in the way you expect them to. It may be that there is a link to GBS, which is certainly not something I would wish on anybody.

‘But it could end up being anything because one of the additives in one of the vaccines is a substance called squalene, and none of the studies we’ve extracted have any research on it at all.’

He said squalene, a naturally occurring enzyme, could potentially cause so-far-undiscovered side effects.

Jackie Fletcher, founder of vaccine support group Jabs, said: ‘The Government would not be anticipating this if they didn’t think there was a connection. What we’ve got is a massive guinea-pig trial.’

Professor Chinnery said: ‘During the last swine flu pandemic, it was observed that there was an increased frequency of cases of GBS. No one knows whether it was the virus or the vaccine that caused this.

‘The purpose of the survey is for us to assess rapidly whether there is an increase in the frequency of GBS when the vaccine is released in the UK. It also increases consultants’ awareness of the condition.

Panic over? The number of swine flu cases has fallen sharply in the past week

Panic over? The number of swine flu cases has fallen sharply in the past few weeks

‘This is a belt-and-braces approach to safety and is not something people should be substantially worried about as it’s a rare condition.’

If neurologists do identify a case of GBS, it will be logged on a central database.

Details about patients, including blood samples, will be collected and monitored by the HPA.

It is hoped this will help scientists establish why some people develop the condition and whether it is directly related to the vaccine.

But some question why there needs to be a vaccine, given the risks. Dr Richard Halvorsen, author of The Truth About Vaccines, said: ‘For people with serious underlying health problems, the risk of dying from swine flu is probably greater than the risk of side effects from the vaccine.

‘But it would be tragic if we repeated the US example and ended up with more casualties from the jabs.

‘I applaud the Government for recognising the risk but in most cases this is a mild virus which needs a few days in bed. I’d question why we need a vaccine at all.’

Professor Miller at the HPA said: ‘This monitoring system activates pandemic plans that have been in place for a number of years. We’ll be able to get information on whether a patient has had a prior influenza illness and will look at whether influenza itself is linked to GBS.

‘We are not expecting a link to the vaccine but a link to disease, which would make having the vaccine even more important.’

The UK’s medicines watchdog, the Medicines and Healthcare Products Regulatory Agency, is already monitoring reported side effects from Tamiflu and Relenza and it is set to extend that surveillance to the vaccine.

A Department of Health spokesperson said: ‘The European Medicines Agency has strict processes in place for licensing pandemic vaccines.

‘In preparing for a pandemic, appropriate trials to assess safety and the immune responses have been carried out on vaccines very similar to the swine flu vaccine. The vaccines have been shown to have a good safety profile.

‘It is extremely irresponsible to suggest that the UK would use a vaccine without careful consideration of safety issues. The UK has one of the most successful immunisation programmes in the world.’

I COULDN''T EAT OR SPEAK... IT WAS HORRENDOUS

Hilary Wilkinson

Victim: Hilary Wilkinson spent three months in hospital after she was diagnosed with Guillain-Barre Syndrome
When Hilary Wilkinson woke up with muscle weakness in her left arm and difficulty breathing, doctors initially put it down to a stroke.

But within hours, she was on a ventilator in intensive care after being diagnosed with Guillain-Barre Syndrome.

She spent three months in hospital and had to learn how to talk and walk again. But at times, when she was being fed through a drip and needed a tracheotomy just to breathe, she doubted whether she would survive.

The mother of two, 57, from Maryport, Cumbria, had been in good health until she developed a chest infection in March 2006. She gradually became so weak she could not walk downstairs.

Doctors did not diagnose Guillain-Barre until her condition worsened in hospital and tests showed her reflexes slowing down. It is impossible for doctors to know how she contracted the disorder, although it is thought to be linked to some infections.

Mrs Wilkinson said: ‘It was very scary. I couldn’t eat and I couldn’t speak. My arms and feet had no strength and breathing was hard.

I was treated with immunoglobulin, which are proteins found in blood, to stop damage to my nerves. After ten days, I still couldn’t speak and had to mime to nurses or my family.

‘It was absolutely horrendous and I had no idea whether I would get through it. You reach very dark moments at such times and wonder how long it can last.

But I’m a very determined person and I had lots of support.’

After three weeks, she was transferred to a neurological ward, where she had an MRI scan and nerve tests to assess the extent of the damage.

Still unable to speak and in a wheelchair, Mrs Wilkinson eventually began gruelling physiotherapy to improve her muscle strength and movement but it was exhausting and painful.

Three years later, she is almost fully recovered. She can now walk for several miles at a time, has been abroad and carries out voluntary work for a GBS Support Group helpline.

She said: ‘It makes me feel wary that the Government is rolling out this vaccine without any clear idea of the GBS risk, if any. I wouldn’t wish it on anyone and it certainly changed my life.

‘I’m frightened to have the swine flu vaccine if this might happen again – it’s a frightening illness and I think more research needs to be done on the effect of the vaccine.’

Hotline staff given access to confidential records

Confidential NHS staff records and disciplinary complaints could be accessed by hundreds of workers manning the Government’s special swine flu hotline.

They were able to browse through a database of emails containing doctors’ and nurses’ National Insurance numbers, home addresses, dates of birth, mobile phone numbers and scanned passport pages – all details that could be used fraudulently.

And private and confidential complaints sent by hospitals about temporary medical staff – some of whom were named – were also made available to the call-centre workers, who were given a special password to log in to an internal NHS website.

It could be a breach of the Data Protection Act.

The hotline staff work for NHS Professionals, which was set up using taxpayers’ money to employ temporary medical and administrative staff for the health service.

The not-for-profit company runs two of the Government’s swine flu call centres – with 300 staff in Farnborough, Hampshire, and 900 in Watford, Hertfordshire.

Shadow Health Secretary Andrew Lansley described the revelations as ‘disturbing’.

Anne Mitchell, a spokeswoman for Unison, said: ‘There’s no excuse for such a fundamental breach of personal security. Action needs to be taken as soon as possible to make sure this does not happen again.’

A spokeswoman for NHS Professionals would not confirm whether access to the confidential files had been granted.