Wednesday, October 14, 2009

Citigroup spins off subsidiary to pay trader $100 million

Citigroup spins off subsidiary to pay trader $100 million

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Citigroup announced Friday plans to sell its energy-trading subsidiary Phibro to Occidental Petroleum, the fourth largest US energy company, by the end of 2009. The $250 million sale appears largely designed to fulfill Citigroup’s obligation to pay one energy trader, Andrew Hall, a promised $100 million bonus.

Citi last year received $45 billion dollars in federal bailout money, which, unlike rivals Goldman Sachs and Morgan Stanley, it has not paid back. Citi’s bonus payments are thus subject to scrutiny by the federal government’s so-called pay czar, Kenneth R. Feinberg, who has power to approve the pay packages of top executives at firms receiving “exceptional” government assistance.

Last year, Citigroup paid Andrew Hall, the head of Phibro, $98.9 million, and was slated to pay him another $100 million this year. With the latest arrangement, Hall will still receive this bonus, but from Occidental, the firm’s new owner, and not Citigroup.

The deal came after “intensive” discussions between the Citigroup and Feinberg, who indicated that a decision by Citi to pay Hall his bonus would be unacceptable, according to sources quoted in the Wall Street Journal and New York Times. The Times indicated that Feinberg thought that the popular outrage sparked by such a payout would be more than White House wanted to deal with.

In response, Citigroup sold off Phibro, along with its obligations to pay Hall, at a bargain basement price. Hall’s pay package now falls outside limits of Feinberg’s oversight, giving the White House a cover to drop its complaints.

The Financial Times LEX column laughed off suggestions that the sale was motivated by anything other than Hall’s pay package. “Only someone just emerging from a lengthy coma” it wrote, “would have swallowed Citigroup’s explanation for the sale of its Phibro commodities unit as ‘consistent with Citi’s core strategy of a client-centered business model.’ Not unless that business model involves intentionally losing money.”

The column continued, “The sale was all about reconciling public anger with banker pay and an ironclad contract with head trader Andrew Hall for a $100m bonus. The sale price, said to be about Phibro’s net asset value of $250m, would have been a steal even at the height of the financial panic.”

Citigroup’s compensation practices in respect to Hall were dubious, to say the least. A source told the New York Times that 20 percent of Phibro’s profits were allocated to a fund controlled directly by Hall. Moreover, there were no set rules for compensation at Phibro, leaving it up to Hall’s discretion to dole out bonuses equivalent to the incomes of several thousand families.

Earlier this year, the federal government announced it would take a 36 percent equity stake in Citigroup by converting the $25 billion in loans that it had already made into stock. This was on top of another $20 billion that the government handed over to the company earlier last year.

After Citigroup received its $45 billion in aid from the federal government last year, it proceeded to lavish hundreds of millions of dollars on its employees. Over 738 employees got over $1 million in bonuses, while 143 each received between $4 million and $10 million, according to an investigation by the New York attorney general.

The purchase price of Hall’s company was set at $250 million, about 2.5 times Hall’s income last year. But even the huge bonus paid to this one trader is not extraordinary by Wall Street standards. Ray Irani, the CEO of the company buying Phibro, is estimated to be even wealthier than Hall. Irani received $49.9 million dollars last year, and has earned more than $884.8 million over the last 16 years, according to figures cited in the Wall Street Journal.

Andrew Hall is—in the most technical sense—a speculator, placing complicated bets on whether the prices of oil and natural gas will go up or down. He and his fellow traders analyze the movement of prices using computers, then place rapid bets whenever they detect any unusual patterns. What he does is of no use to anybody except wealthy investors—while contributing to the spikes in energy prices that drive millions around the world into destitution. For this he is paid fourteen thousand times the average person’s income.

In yet another example of the financial aristocracy gorging itself it was recently announced that Ken Lewis, the ousted CEO of Bank of America—which was given a $45 billion government bailout—is slated to receive a retirement package amounting to $68.8 million, including a $53.2 million pension fund. Lewis will also walk away with $81.8 million in stock and other compensation that he accumulated over his career, according to an analysis of corporate filings by an independent consulting firm.

Lewis, along with executives at the other big banks, shares much of the blame for speculative practices that produced the worst economic crisis since the 1930s.

According to the New York Times, “The government-appointed compensation czar, Kenneth R. Feinberg, does not have authority over any pay that was legally binding as of last February, so much of Mr. Lewis’s compensation package may go untouched.”

Workers expose GM payoff to Canadian auto union officials

Workers expose GM payoff to Canadian auto union officials

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Management at the General Motors transmission plant in Windsor, Ontario, have been forced to annul a secret memorandum of understanding with local officials of the Canadian Auto Workers union (CAW) after outraged workers launched a campaign to recall shop committee members who benefited from the sweetheart deal.

At issue was a local or “backyard” deal under which GM secretly increased the pay of five union officials who work as full-time CAW representatives at the transmission plant. This was done by transferring them into a premium skilled-trade job classification that had been rendered defunct as a result of the concessions the union granted GM in the 2008 “early” contract negotiations.

With the transmission plant scheduled for closure next June, the pay increase of $3.50 per hour was timed to boost the CAW officials’ pension entitlement by an extra $500 per month. In a leaflet clandestinely circulated to the transmission plant workers, the rank-and-file opponents of the sweetheart deal calculated that each of the five CAW officials stood to gain as much as $125,000 in additional wage and pension earnings if they survived until age 75.

Said recently retired Local 1973 member, Gene Locknick, a member of the group opposing the secret pay hike, “Because the plant’s shutting down next year, not only do they get an hourly pay increase that shows up on their cheque every week, this also affects the pension they’re going to get….They did it to top off their pensions.”

The secret-side deal to line the pockets of the Local 1973 bureaucrats was concluded earlier this year shortly after the CAW insisted that GM Canada workers twice reopen the collective agreement and accept massive concessions so as to clear the way for the taxpayer-funded bailout of GM by the Canadian and Ontario governments.

The new contract, rammed through by the CAW last spring, freezes autoworkers’ wages and cost-of-living allowances until 2012, gives back a week of holidays and a previously negotiated $1,700 annual bonus, increases health care and insurance premiums, and allows the company to increase the workload. Retirees have had their cost-of-living protection suspended and face increased co-pays for health and other benefits. Overall, the new agreement surrenders at least $19 per hour, per worker in labour cost—considerably more than did the 2008 sell-out contract, which provided GM with an additional $400 million in savings.

And while the CAW justified its support for these latest concessions by claiming that they were necessary to save jobs, GM is proceeding with the previously announced closure of the Windsor transmission plant and imposing further job cuts elsewhere. Of the 10,000 GM workers currently employed in Canada, only 7,000 will be left by 2010. Just four years ago, GM employed 20,000 workers.

News that local officials have been receiving topped up-pay since August threatened to stoke mounting rank-and-file opposition to the CAW, which has collaborated with management to impose speed-up and victimizations on the shop floor, and the wholesale destruction of living standards and communities.

Last month, 39 per cent of production workers at the joint GM-Suzuki CAMI plant in Ingersoll, Ontario, voted against a concessions agreement modelled on the recent deals at Chrysler and GM. In 2008, workers at Ford’s giant Oakville assembly plant rejected a tentative agreement by a 56 percent margin—the first time a local voted against a master contract negotiated with one of the Detroit Three automakers.

If GM reversed course late last week and cancelled the sweetheart deal with the Local 1973 leadership, it was because it was afraid that the rank-and-file opposition movement would disrupt the longstanding, and for GM highly profitable, collusion between the union apparatus and management.

With petitions being circulated inside the factory calling for the recall of the CAW officials, GM calculated its interests would best be served by moving quickly to defuse the brewing discontent. Thus GM Canada spokesman Stew Low announced last Thursday that the pay hike for the Local 1973 officials was being rescinded. He justified this about-face by claiming that the sweetheart deal had been the result of a “misunderstanding” as to “what is allowed” under the collective agreement.

In reality, the sweetheart deal at the GM transmission plant exemplifies the relationship that has developed between the CAW and the auto bosses.

While the CAW and the United Auto Workers, from which it separated in 1985, were built by workers in militant struggles, both have undergone a frightful degeneration and serve not as a means for workers to defend their interests but as auxiliaries of management in imposing concessions and job cuts and suppressing the class struggle.

This past year has witnessed an unprecedented assault on auto workers’ jobs, wages and working conditions. Yet never has there been any question of the CAW leading a struggle against the big business-government drive to make auto workers pay for the capitalist crisis. Rather CAW President Ken Lewenza repeatedly said that his bottom line was ensuring that the Detroit Three maintain their “Canadian advantage,” i.e., that their Canadian operations provide them with lower labour costs and greater profits than their US plants.

And while Lewenza treated US auto workers like the enemy, he lavished praise on Chrysler boss Tom Lasorda, saying that he was proud the son of a fellow union bureaucrat—former CAW Local 444 President Frank Lasorda—had risen to such a position.

Secret codicils and memoranda of understanding have, for many years, been part and parcel of the corporatist relations between the automakers and the CAW officialdom. In return for functioning as an industrial police force for management, CAW executives are rewarded with monetary inducements and other perks. Precisely because they would never be ratified by workers in an open vote, such agreements are not published as part of the more publicly available collective bargaining agreements.

Local 1973 President Bill Reeves admitted as much in statements made to the Windsor Star last week. “There are a lot of things that are done under memorandum of understanding,” he said. “General Motors is closing the plant, so if you’re going to get it, you might as well get it now, right?” Angered over the exposure of the payoff, he added, “It’s just for a small group, and people are making it a bigger issue than it really is.”

The dissident Local 1973 members were entirely justified in exposing and denouncing the sweetheart deal between the local CAW leadership and GM.

But what must be challenged and overturned is not just the payoff that some local union officials received for helping GM impose unprecedented concessions on the rank-and-file, but the anti-worker auto industry “bailout” as a whole and the associated job cuts, including the impending closure of the Windsor transmission plant.

To develop such a struggle, auto workers need to soberly examine the evolution of the CAW and UAW and repudiate their pro-capitalist and nationalist perspective. If these organizations have failed the working class and been transformed into adjuncts of management, it is because they uphold capitalism, and enforce the subordination of workers’ needs to the profits of big business, and have systematically divided Canadian and US workers, thereby enabling the automakers to pit workers against worker in a fratricidal struggle of jobs to the lowest bidder.

Turning a profit by preying on the poor

The American way of debt: Turning a profit by preying on the poor

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The increasingly desperate financial crisis facing large sections of the American working class has been writ large in statistics. In September, 15.1 million people were unemployed, with over 5.4 million out of work for six months or more. Counting discouraged and involuntary part-time workers, the unemployment figure in America is now 17 percent, while those still holding a job are down to an average of 33 hours a week, a record low.

Millions in the US are facing impossible levels of personal debt, rising credit card delinquencies, utility shutoffs, foreclosures and homelessness.

But a section of business has turned the growth of poverty into a gold mine. Standing behind the big banks are several layers of an increasingly complex and parasitic finance industry. In the middle of this food chain are the professional debt buyers and securitized investors. At the bottom are the collection agencies, the scavengers who relentlessly pursue individual workers.

Revolving household debt has soared since 2006. Once those falling behind the cost of living could no longer tap into home equity, they turned to credit cards, a much more expensive form of credit. Revolving debt is now estimated to be over $970 billion, with average credit card indebtedness per household now $10,678, up 30 percent from 2000, according to, a research firm.

US News and World Report puts average total household consumer debt at $22,231, not including other debt, such as student loans, which adds another $10,208, according to a May 2009 report. This debt load has provided fodder for the explosive growth of collection agencies.

Collection agency profits have grown between four and six times over the past several years, according to Securities and Exchange Commission (SEC) statistics. All indications are that tactics have become increasingly aggressive, and sometimes criminal.

One story behind these statistics was related last year on Credit and Collection World’s Web site. This industry source states, “Emilio Saladiages, 62, of Newark, New Jersey, asked to speak to a manager at Rent A Center about the incessant collection letters and calls he had been receiving regarding missed payments on furniture rentals.

“When no one would speak with him, he doused himself with lighter fluid and lit the fluid with a cigarette lighter, self-immolating in front of customers and employees of the store,” the Web site reported.

Credit and Collection World went on to state that Rent A Center, ubiquitous in poor neighborhoods, is notorious for its collection tactics. The state of California reached a $7.75 million settlement with the company for violations of the Fair Debt Collection Act.

While this is a particularly horrendous example, the size and scope as well as the brutality of the collection business has dramatically expanded. This business (known by the acronym ARM, for accounts receivable management) has grown nationally from 47,000 agencies to over 430,000 in the last 10 years, and is expected to swell an additional 23 percent by 2016. The Labor Department’s Bureau of Labor Statistics puts this industry’s growth rate at the number one position.

Much of this business borders on illegality, employing a policy of deliberate harassment and abuse. As an industry, it has long garnered the most business practice complaints by the Federal Trade Commission (FTC), but the past few years have seen violations skyrocket. “We’re sitting on the largest volume of complaints for any single industry—at more than 100,000 a year,” said Peggy Twohig, associate director of the financial practices division at the FTC.

There is a vast edifice of debt in place in American finance. Every form of debt is securitized, sliced and diced in the now-notorious manner of subprime mortgages. The banks have created these subsidiary industries and are dependent upon them. Not only have they have spun off securities in the accounts receivable industry we examine here, but they trade in virtually every kind of debt: motorcycle loans, recreational vehicle loans, franchise loans, boat loans, non-performing loans, equipment leases, home equity loans, trade receivables and student loans. These are all sources of speculative profit.

At bottom, all of this debt represents a claim on surplus value extracted from the labor of the working class. The working class must be made to pay—hence the abhorrent policies and tactics of the debt collection industry. These abuses are not excesses of a few cowboy entities, but reflect the parasitic character of capitalism and the specific requirements of the banking industry.

The ARM industry

What is this business and how did it develop? Of course, debt collection has a long and notorious history, judged by its “pound of flesh” literary association. A hundred years ago, the Chicago Tribune ran a headline that still sounds topical: “New Evidence of Extortion and Lawlessness by Many Collection Offices. Will Go to Grand Jury.”

But the ARM industry has evolved in recent years. Until the 1990s, credit card firms and other creditors rarely sold off unpaid debt. Instead, they hired third-party firms or lawyers to collect the bills, usually on a commission basis. This changed with the elephantine growth of credit card debt.

The first general-purpose credit card was issued in 1958 by the Bank of America. With it, the revolving credit line was born (as opposed to the installment payment plan). The credit card business was not immediately profitable, however, because of the restrictions imposed by states.

Enter the Supreme Court

State laws against usury prohibited banks from charging more than nominal interest until a 1978 Supreme Court ruling. The Marquette Bank opinion permitted national banks to extend interest rates on consumer loans from the state where credit decisions were made to apply to borrowers nationwide.

That decision allowed the banks issuing cards to circumvent state laws. All they needed was one state where rates were unregulated. In an arrangement to purportedly bring jobs to the state, South Dakota’s state government allowed Citibank to draft the necessary legislation and, with bipartisan support, the bill was introduced and passed into law in one day.

Usury law was eliminated in South Dakota and Citibank’s credit card division moved in. The previously unheard-of interest rate of 18 percent was established for all of Citibank’s customers, and the credit card industry as a whole entered a decade of enormous profits.

The percentage of US families using revolving consumer credit increased from 16 percent in 1977 to 37 percent in 1995, in tandem with the stagnation of wages and a dramatic rise of social inequality. Large swathes of American society attempted to offset the rising cost of living by borrowing.

In 1996, the Supreme Court made another decision that significantly increased profits for the credit card companies, allowing penalty fees, calculated at even higher rates, to be tacked on to consumers’ bills. Penalties would account for $18.1 billion in revenues in 2007. As inflation continued to mount and incomes to fall, the amount of credit card debt carried by Americans grew to $937 billion by 2008.

But it was not just the tremendous growth of credit card debt and usurious fees alone that created the debt-buying industry. It was the government’s bailout of the savings and loan industry in the early 1990s, under the elder George Bush, that created the impetus for the emergence of the industry.

Purchasing $125 billion in worthless S&L securities, the administration bailed out the wealthy speculators, then empowered the Resolution Trust Corporation, an agency of the Federal Deposit Insurance Corporation (FDIC), to sell large portfolios of the S&Ls’ delinquent credit card debt. These were purchased by new entities, which were to become the largest publicly traded ARM firms.

Securitization of credit card debt

In 1986, Bank One helped pioneer credit card securitization, packaging $50 million in debt and issuing securities linked to them. Because securitization pools the assets (the debt) and sells fractions of interests in the pool to investors, it reduces immediate risk to individual investors and promotes riskier lending models. Other banks followed, selling card-backed securities to hedge funds, pension funds and other investors. Outstanding card debt securitized by the major banks and credit card companies hit $400 billion in 2007.

As in the subprime mortgage industry, securitization was a financial boon to the banks at the direct expense of the working class. As securitization boomed in the 2000s, banks sent out card offers to households with incomes below $50,000, a relatively new market. USA Today reported on October 6 that this initiative, which peaked in 2001 at a record 2.1 billion offers, became a source of dramatically increased revenue.

According to a 2006 study cited by USA Today, those with incomes below $25,000 are twice as likely to pay interest rates of more than 20 percent than those earning $50,000, and five times more likely to pay such rates than those making over $100,000. Those who pay late or exceed their credit limit, even once, can be hit with rates up to 32 percent.

Securitization was a mechanism to drive up debt and dramatically increase profits, by collecting from the poorest layers.

The banks had to find a way to pressure workers into payment. In 1993, only $1.3 billion in debt was sold to third-party collectors, but this would skyrocket to $110 billion by 2005, with most of the debt from credit cards. The market capitalization of publicly traded ARM stocks more than tripled, from $878 million in January 2000 to $3.1 billion in May 2006.

Unlike mortgage debt, revolving debt did not result in losing one’s home. Aside from a punitive use of credit scoring and escalating fees, the banks had no direct way to pressure customers. After initial collection, the remaining debt would be “charged off” and sold. Collection hardball had to be outsourced.

Debt buyers typically pay between 3 percent and 16 percent of the face value of the debt, and then own the entire amount actually collected. Most debt sold is credit card debt, but this field has now expanded to telephone debt, water bills, car loans and the fastest growing field—medical debt. The big players buy million-dollar portfolios from banks, utility companies, auto financers, hospitals and municipalities.

Debt buyers

Most debt buyers will work an account for a set period, then resell the remaining uncollected assets to another debt buyer. The next buyer will similarly attempt the collection for a certain time frame, and then resell again. This cycle continues until the legal statute of limitations for collections is reached. (This varies by state from 2 to 10 years).

This aptly named “zombie debt” became an industry in itself during the 1990s, Forbes magazine explained in an October 2008 feature article. As credit card companies targeted those sections of the working class who couldn’t pay off their balances, a ballooning volume of debt was created. This debt was laundered among collection agencies for dwindling pennies on the dollar, depending on its age.

According a May, 2009, report in the Baltimore Sun, sums targeted for collection can often be based on entirely bogus debts. The newspaper described an identity theft victim who was contacted repeatedly by a series of debt collectors about a $5,045 bill that was not hers. Even after she sued and won a $40,000 settlement, the debt was sold again and she had to begin the battle anew.

As one of the industry’s leading debt-buyers, Unifund, put it, “[we] popularized the concept that long-delinquent distressed debt is regenerative.”

As household debt hit stratospheric levels, the US Congress made another major government policy decision at the behest of the credit card industry. In 2005, Congress revised the bankruptcy law, making it much harder for households to escape the grasp of bill collectors. The new law made most people ineligible for debt relief and instead forced them into 3-5 year repayment plans on auto, credit card, medical and other bills that previously were discharged in the bankruptcy process. Additionally, it drove up the cost of bankruptcy from $800 on average to between $1,400 and $2,400.

The mechanics of collection

The collection process itself is highly automated, utilizing, in the industry lingo, “appropriate diagnostics and analytics.” Forecasting models are used, scoring individuals based on zip codes, credit agency information and as much investigative fact-finding as possible.

Having been deemed a good mark, the individual is uploaded in the computer for predictive dialing. Literally billions of collection calls are made through computer-generated phone banks. At the collection agency level, each collector is auto-generated a series of non-stop calls based on when the computer predicts he or she has completed the last call.

If a debtor is not reached on the first attempt, the agency will begin the skip tracing process. One agency advertises its expertise as follows: “First thing we should do is ‘Categorize the Skip.’… An Intentional Skip [is not likely to leave] behind the typical ‘trails’ that skip tracers look for. Many Intentional Skips are aware of what is necessary, what they must do, to avoid being found…but usually are not willing to make an entire identity change and will frequently leave a trail that can be followed.

“If the person is an Intentional Skip, and they know how to hide, you just have to hope that person ‘slips up’ somewhere. It gets difficult if the person [is] aware of how to avoid paper trails, they do not stay in touch with old friends, family and relatives, they work under the table for cash only, they change their occupations frequently, they dropped all their old hobbies, they took on a new look, and they adopted new behavior patterns.”

The site goes on to elaborate the policy of searching every source of data: hunting and fishing license applications, divorce records, workmen’s compensation data, amateur radio records, etc. It gives a sense of the ruthlessness with which the unfortunate debtor is pursued.

For the younger generation, collection agencies are now creating Facebook accounts, a technique called “facebait.” Once they have been “friended,” the collectors identify themselves to all the debtor’s friends as a debt collector in an attempt to embarrass and harass the victim.

The fraud of debt settlement

Another relatively new player in the collection field is the “debt settlement” specialist. This scam is, if possible, even more parasitic and vicious. The service is widely sold to the most desperate individuals. Marketing themselves as customer advocates who will sympathetically assist the debtor and negotiate his liabilities down, these firms are profit-making entities that take charge of a family’s entire finances.

With “debt settlement,” the payments go to the settlement firm, not to the client’s debt—a point often not mentioned to clients. Usually there is an up-front premium.

Monthly payments are sent to the firm to be aggregated until a sufficient amount can be used to negotiate a payoff. Meanwhile, a worker’s credit score will continue to deteriorate. The firms count on the fact that most people drop out before the payoff. Even should he successfully complete the program, the individual is liable for taxes on the reduction! Victims of these schemes have few ways to retrieve their money.

In many states, once a creditor obtains a judgment, it can immediately restrain a bank account. As a result, workers are unable to pay rent, utilities or other expenses. Such policies are deliberately used to bully people into turning over large sums of money. A common complaint of consumers is that, having authorized a debt collector to make a single, specific withdrawal from their bank account, they find that all the funds are withdrawn or multiple withdrawals are made.

Accounts Receivable Management is an industry that was reinvented and became a major economic player as the American working class sank under a growing burden of debt in recent decades. It was established under the protection of the Supreme Court and shielded by links with government officials. Today, despite the systematic and well known nature of abuse, it remains well protected politically and highly profitable, poised to take full advantage of the growing misery of millions of Americans.

Case histories

The following reports and personal stories are gleaned from the legal record and ARM industry news reports. They paint a picture of the brutality with which the poorest sections of the population are being victimized. Not only are workers who are behind in their payments abused, harassed and fleeced, once they have fallen into substantial debt they are burdened with exorbitant fees and penalties that make it virtually impossible to get out of debt. The elderly, college students, the unemployed and even the dead are special targets.

* Last week, New York Attorney General Andrew Cuomo announced charges of grand larceny against 12 debt collectors in Buffalo. A chain of companies, owned by Tobias Boyland, had employees pose as police and threaten consumers with jail time unless they paid alleged debts on the spot.

Cuomo charged the companies with stealing “tens of thousands” of dollars by terrifying those unfortunate individuals who picked up the phone. Frightened at the prospect of arrest and humiliation, consumers authorized withdrawals from their checking accounts, wired money or sent money orders to the collection companies.

The Buffalo area, once a center of steel production that has been decimated by plant closures, has become a major debt collection center, with 120 firms employing more than 5,200 people.

* In September, Ohio Attorney General Richard Cordray described to the Akron Beacon Journal instances in which debt collectors called elderly people, “telling them they are worthless and they should get a job and that they have committed a crime and will be arrested.” He has filed a lawsuit against National Enterprise Systems, Inc., of Solon, Ohio, on their behalf.

* New York City Councilman Dan Garodnick said, “We’ve even heard of cases where debt collectors would threaten to have residents deported,” according to a report in the Village Voice from last March.

* Earlier this month, Internet payday lender Cash Today, Ltd, and its network of companies settled with the state of Nevada for $1 million in damages for unlawful debt collection. Consumers had been led to believe that a one-paycheck loan would cost between $35 and $80. However, if a payment was missed, the company would call them at home and at work, threatening them with arrest or imprisonment, cursing and informing co-workers, all violations of the Fair Debt Collection Law.

* The State of Maryland announced this week that it was issuing a cease-and-desist order against one of the largest debt buyers in the country, Encore Capital, and its subsidiaries. The company faces penalty and restitution demands of more than $40 million. Encore had made the news in March after awarding its top executives nearly $1 million in bonuses. The company had reported a 25 percent increase in earnings for 2008 by shifting to credit card debt.

* In August, California secured a judgment against CashCall, Inc., for infractions including: causing borrowers to incur bank fees by repeatedly presenting checks despite knowing that there were insufficient funds in the account; making excessive and verbally abusive telephone calls at all hours of the day and night; threatening law enforcement proceedings without any basis to do so; charging 139 percent annual interest on loans without disclosing it; improperly discussing private financial information with borrowers’ friends, colleagues and neighbors, etc.

* The Washington State attorney general’s office is suing Topco Financial Services for calling debtors names such as “loser,” “scum,” “blight on society,” “lowlife,” and “terrible parents,” and threatening to “bitch-slap” a debtor. When one debtor said she was undergoing tests for cancer, a Topco representative, according to the suit, replied, “Aren’t you dead yet? I’m going to collect the money from you dead or alive,” and, “Why don’t you just die from cancer because you are a low-life deadbeat?”

The abusive and illegal policies are not just limited to smaller “cowboy” firms. One target of an FTC investigation was Capital Acquisitions and Management Corp. (CAMCO), an industry leader with a $1.75 billion portfolio of consumer debt.

The FTC received over 2,000 formal complaints against the company. CAMCO harassed thousands of customers to pay old, unenforceable debts or even debts they didn’t owe. It sometimes tried to find people with the same name in the same geographic area and collect the debt from them.

Even if the consumer was not the actual debtor, CAMCO threatened jail, seizure of property or garnishment of wages, the FTC said. CAMCO collected millions every year “and perhaps as much as 80 percent of the money” came from consumers who never owed the original debt, the state government reported in its complaint. When it was closed down, CAMCO auctioned off its receivables to another debt buyer.

In March the New York Times reported, “Dead people are the newest frontier in debt collecting and one of the healthiest parts of the industry.” The newspaper explained that since probate records are public, they enable the eagled-eyed debt collector to file a claim. Firms such as DCM Services specialize in “emphatic active listening” when calling the bereaved regarding the deceased’s debt. Playing on the family member’s sense of morality, DCM will ask if anyone in the family is in a position to pay the debt, despite the fact that survivors generally have no legal obligation to do so.

Inside ARM, an industry Web site, gives additional details on a recent case, the basis of one of the largest collection awards documented. A California jury awarded Manuel and Luz Fausto $500,000 in damages over harassment by Credigy Services Corporation. The couple had opened a Wells Fargo credit card in 1992 and made regular payments on the card, but the balance kept increasing. They requested the account be frozen, but a local Wells Fargo branch declined their request.

The Faustos received help in paying the balance from a local business that promised to negotiate a discounted payoff. The couple then thought that two money orders, which they issued in the late 1990s, had paid off the entire debt.

But in 2006, Credigy contacted them demanding almost $17,000. A Brazilian affiliate of the collection agency made over 90 threatening calls and sent numerous letters to their home, even after a cease-and-desist notice was sent to the company. Only after Luz Fausto recorded the last phone call made by the collectors that threatened the Faustos’ livelihood, and the couple filed suit, did Credigy stop calling.

US Senate panel approves Obama-backed health care plan

US Senate panel approves Obama-backed health care plan

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The US Senate Finance Committee voted Tuesday to approve health care legislation that, if implemented, will slash health care benefits for millions of Americans. The Baucus plan, named for committee chairman Max Baucus, Democrat of Montana, passed in a 14-9 vote.

Republican Senator Olympia Snowe of Maine joined with all 13 Democratic committee members to support the bill, with the 9 remaining Republicans voting to oppose it.

President Obama praised the Finance Committee vote as a “critical milestone in our effort to reform our health care system.” The Baucus plan is the legislation largely favored by the administration.

The estimated cost of the measure is $829 billion over 10 years, but it is expected to reduce the deficit by $81 billion due mainly to cuts in government health care programs. The bill meets Obama’s criterion that any health plan must be “deficit neutral” and not add “one dime” to the federal budget deficit. This from an administration that has overseen the bailout of the banks—with no strings attached—at an potential liability of over $23 trillion.

The cost-cutting features of the Baucus plan were front and center Tuesday as the Finance Committee members made their positions known before the vote. Republicans and Democrats alike queried Douglas Elmendorf, director of the Congressional Budget Office, who was on hand to answer their questions about whether the plan would rein in spending.

Senator Snowe, who has been courted by the White House and finance committee Democrats to support the legislation and lend a show of bipartisanship to the proceedings, stated that there was no guarantee she would support its final form when reconciled with other versions of the legislation.

“My vote is for today. It doesn’t forecast what my vote will be tomorrow,” Snowe said, indicating that she would be wary of any unexpected costs introduced in a future Senate bill.

Senator Charles Grassley of Iowa, the ranking Republican on the committee, who voted with the balance of Republicans to oppose the plan, commented, “This bill is already moving on a slippery slope toward more government control of health care.”

In reality, Obama’s support for the Baucus plan demonstrates that his vision of restructuring health care has nothing in common with a government-run plan, or even a reform of the present system. Rather, the entire Congressional debate over health care has been dictated by the interests of the corporate and financial elite, including the giant health care insurers and pharmaceutical companies.

The result is legislation that will leave millions without health care coverage and slash billions from Medicare and other federal programs. Individuals and families will be mandated to buy insurance or face a penalty, while employers are under no obligation to provide coverage. The bill will also bring into force various mechanisms that will cut costs and ration care.

Of the five bills working their way through Congress, only the Baucus plan does not include a “public option” as part of its insurance “exchange” where coverage will be offered for sale. Instead, it calls for the expansion of so-called nonprofit health care cooperatives, which will provide little competition to private insurers.

In the other Congressional versions, the public option serves at best as a fig leaf of reform, and would exist as a dumping ground providing substandard care for those unable to purchase higher priced policies. In any event, Obama and various White House officials have repeatedly indicated that inclusion of a public option is not a requirement for the president’s signature on a final bill.

Over the weekend, the Baucus bill faced criticism from private insurers with the release of a report by America’s Health Insurance Plans (AHIP), an industry group, which engaged PricewaterhouseCoopers to analyze provisions of the plan. The report claims that under the legislation the cost of private health insurance would soar, increasing from 2009 to 2019 by 111 percent, compared to an increase of 79 percent during this period if no changes were enacted.

In particular, the AHIP report cited what they term “a weak coverage requirement” in the bill, which they say would result in healthy people choosing not to purchase insurance, causing insurers to hike premium costs for others. They also argue that cuts to Medicare would encourage health care providers to shift costs to the privately insured.

The report condemned a new tax on higher-priced “Cadillac” insurance plans, as well as prohibitions against insurers denying coverage for preexisting conditions. These costs, the study said, would also be shifted to the insured in the form of higher premiums.

The AHIP analysis determined that average annual costs for family coverage would rise to $25,900 by 2019 if the Baucus plan’s provisions were implemented, compared to $21,900 under current law.

While the Obama administration and Democrats on the Senate Finance Committee sought to dispute these figures, it should be noted that the Baucus bill contains no provisions to restrict what insurance companies can charge. The White House has worked closely throughout the Congressional discussion on health care to assure the insurance industry that any legislation that is drafted meets these conditions.

The frontal assault by the insurance industry on the eve of the Senate Finance Committee vote appeared to serve as a warning that the insurance industry will oppose any measures that might curb their freedom to reap profits. In the ensuing discussion in the Senate to reconcile the Baucus plan with the bill from the Senate health committee—and with final legislation from the House—they will resist the introduction of even a watered-down version of the public option, or any other measures they deem detrimental to their bottom line.

As it is presently constituted, however, the health care lobby should find little objectionable in the provisions of the Baucus plan. First of all, people will be mandated to purchase coverage from private insurers, or face penalties that will rise by 2017 to $750 for a family.

Obama opposed the “individual mandate” during his presidential campaign, arguing, “If we make it affordable, people will purchase it.” He now supports a mandate that will force individuals and families to buy what will inevitably be increasingly costly coverage, referring to it instead as “personal responsibility.”

Another Obama campaign promise has also been exposed as a sham—the fight for “universal health care.” One of the most damning features of the Baucus plan is that it would leave about 25 million people—or about 1 in every 12 US residents—with no health care coverage at all.

It is estimated that about a third of these uninsured—or more than 6 million people—would be undocumented immigrants and their children. In particularly cruel fashion, the Obama administration and Congressional Democrats have been at pains to insist that not a penny of federal money should go to insure these individuals.

The main federal spending in the plan is in the form of subsidies to low- and middle-income people to purchase private insurance, expected to amount to more than $460 billion over 10 years.

Medicaid, the health care program for the poor jointly funded by the federal government and the states, will also be expanded to cover an additional 14 million people at an estimated cost of $345 billion by raising the income threshold for eligibility. There are no provisions in the bill to pay for the estimated $33 billion in costs the states are expected to have to spend to cover costs for this expansion of benefits.

These outlays will in the main be financed by deep cuts to Medicare and other federal programs for the elderly, poor and disabled, which will be slashed by about $400 billion over the next decade.

Medicare payments to health care providers will be reduced by about $200 billion. An additional $113 billion will be axed from Medicare Advantage, the program by which more than 10 million seniors receive Medicare benefits through private health insurance plans.

The Baucus plan will also utilize “comparative effectiveness research” to implement further cuts to Medicare. An independent Medicare Commission, an unelected body appointed by the president, will have the power to reduce “excess cost growth,” with the goal of reducing spending by $22 billion over the next decade.

The Baucus plan would also establish an Innovation Center with the Centers for Medicare and Medicaid Services to test health care models, particularly aimed at moving primary care practices away from “fee-for-service”-based reimbursements. This center would seek to impose caps on health care costs by rationing care, thus denying payments for more expensive tests, procedures and drugs.

Over all, the Baucus plan would slash about 5 percent from the Medicare program over the next 10 years. These cuts will be translated into reductions in care for the elderly population, despite claims by White House officials that better care can be achieved by spending less.

The plan also seeks to raise more than $200 billion through taxes on so-called Cadillac plans. Such plans, defined as costing more than $8,000 annually for individuals or $21,000 for a family, would be taxed at a 40 percent rate for the coverage exceeding these cut-off levels. Obama opposed this measure during his presidential bid as an indirect tax on employee benefits, but now supports it.

Contrary to the “Cadillac” designation, the chief targets of this indirect tax would be comparatively higher paid workers—not the wealthy elite. Workers have gained these plans in bitter strikes and contract struggles, often sacrificing wage increases and other benefits to attain them. These plans generally have smaller co-pays and deductibles, as well as coverage for dental, optical and other vital health services.

While the taxes on these plans would be levied against the insurance companies, the costs would be passed on to the insured in the form of raised premiums and/or reductions in coverage. A preliminary estimate by the Congressional Joint Committee on Taxation has calculated that by 2019, 37 percent of family policies and 41 percent of individuals would fall into this category.

In other words, a plan that was touted as a means of extending coverage and making health care “more affordable” will leave 25 million US residents without coverage, and financially penalize a sizeable segment of the population with comparatively decent health coverage.

Despite these features of the Baucus plan, in his comments Tuesday Obama cynically claimed that the legislation “goes a long way towards offering security to those who have insurance and affordable options for those who don’t.”

There is no opposition from any section of the political establishment to the cost-cutting model exemplified by the Baucus plan, which has moved one step closer with Tuesday’s Finance Committee vote.

Deliberations in the Senate will now continue in closed-door discussions with Baucus and other senators, along with senior White House officials, including Budget Director Peter Orszag, Chief of Staff Rahm Emanuel and senior health adviser Nancy-Ann DeParle.

Whatever legislation ultimately emerges from these proceedings, and any reconciled bill between the House and Senate, the result will be a more openly and directly class-based health care system, in which the working class receives second-rate care, while the wealthy are ensured the best care that money can buy.

Attorney Reports Human Rights Abuses of GI Resisters

Attorney Reports Human Rights Abuses of GI Resisters

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Attorneys and veteran's groups are alarmed by recent reports that two US Army soldiers imprisoned at the Fort Lewis Regional Correctional Facility (RCF) have been subjected to human rights abuses and violations of their constitutional rights.

Travis Bishop, who has served a tour of duty in Iraq and is now recognized by Amnesty International as a "Prisoner of Conscience," resisted deployment to Afghanistan. The other soldier, Leo Church, recently went absent without leave (AWOL) from his unit in order to prevent his family from going homeless.

The civilian defense attorney for both soldiers, James M. Branum, told Truthout that both soldiers have been strip-searched while possibly being filmed. Bishop and Church have also been watched by female guards during strip-searches, while using the restroom as well as while in the showers. Both soldiers have been denied one in-person visit by their attorneys and all phone calls with their attorneys have been illegally monitored by guards.

Branum reported, "The Fort Lewis Brig is violating the constitutional rights of my clients, namely their protections under the Eighth Amendment (the prohibition on cruel and unusual punishment) and the Sixth Amendment (the right to counsel). This mistreatment must end."

Seth Manzel, a Fort Lewis Stryker Brigade veteran and executive director of the veteran support group G.I. Voice, said of the matter, "These techniques of sexual humiliation are far too similar to those practiced on foreign prisoners at Abu Ghraib in Iraq and Bagram in Afghanistan. Is the Army at Fort Lewis using enhanced interrogation techniques to break down American soldiers here at home?"

Manzel, speaking with Truthout via telephone, said his group wants people to know that these abuses are occurring against soldiers "who signed up to defend the country" and "the idea that we do this to our own soldiers demonstrates how amazingly barbaric this system is."

Other attorneys and military veteran bloggers have long commented on reports of human rights abuses in the RCF, including the use of female guards to sexually humiliate prisoners. The reports include the 2005 case of Michael Levitt, who plugged up his cell toilet in response to reported sexual humiliation by guards, and was then chained to a "stress-chair" (with metal frames, but no seat) for 109 hours. Other war resisters, such as Sgt. Kevin Benderman and Spc. Suzanne Swift have been held at the Fort Lewis RCF.

Manzel, who also helps run the GI resistance coffee house near Fort Lewis, Coffee Strong, added, "We're trying to raise awareness and give direct support to these two men. Ideally, we hope to pressure the leadership at Fort Lewis to respect their basic human rights, so that the leadership, courts, and other soldiers on base know that there is support out there for other soldiers who resist."

On September 28, Truthout reported that both soldiers had been held incommunicado, which violated their Sixth Amendment rights.

The Sixth Amendment is the part of the Bill of Rights that sets forth rights related to criminal prosecutions in federal courts, and reads, "In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district where in the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defense."

According to Branum, guards are monitoring his conversations with the soldiers, in addition to the fact that the room at Fort Lewis where they meet is not soundproof.

"The guards say we don't have the room set up yet, but the problem is they had the new brig as a grand opening in August," he explained. "But the attorney room is not set up. So they need to be transferred to another building where we can have private conversations."

"The last time I talked to Travis on the phone, he was telling me there was more issues of abuse, but he couldn't go into detail with me since our conversation was not private," Branum added.

Attorney LeGrande Jones, who practices in Olympia and was designated by Branum as the local counsel for Bishop, was also denied access to Bishop.

Branum said that the soldiers' Eighth Amendment rights had been violated as well.

"The Eighth Amendment prohibits cruel and unusual punishment," Branum explained to Truthout, "You can't use sexual humiliation as punishment. In the civilian world, it would not fly to have female guards watching over men using the shower. There's just no reason to use guards of a different gender to do this, particularly when the military is so male dominated. It's really weird that they are doing this at Fort Lewis."

Branum said that Leo Church had been strip-searched in a room while told that cameras were running.

Bishop is in the brig for having gone AWOL from Fort Hood, Texas, on the day of his deployment to Afghanistan to give himself "time to prepare for my application process." He was away from his unit for about a week, during which he drafted his CO application and sought legal advice. He returned voluntarily and on his return to the unit he submitted his application, but was court-martialed even as the Army was still reviewing it.

Church was imprisoned for having gone AWOL, which he did in order to prevent his wife and children from becoming homeless. He tried to get help from his unit, but was denied, and received eight months prison time. Church was eventually forced by this ordeal to give his newborn son up for adoption. According to Church, "With everything that was going on, from me leaving, even though it was to care for my family, because I could find no support from the Army, Amanda and I had to place our son, Austin in a loving home through adoption. We did not want him enduring the strife that we had endured and for him to end up being fatherless, because I would be living in prison."

Andrew VanDenBergh, a Marine veteran of the Iraq war and a G.I. Voice staff member, said of Leo Church in a press release, "He joined the Army, found out his family was homeless, wasn't allowed to keep his children from living on the streets, went to take care of his family, had to give a child up for adoption and is now locked in prison and being abused. Being abused for what? For taking care of his children?"

Fort Lewis continues to be a center of controversy with the recent revelation that a civilian security employee has been spying on groups opposing the shipment of Stryker combat vehicles through local ports.

White House defends inaction on jobs crisis as unemployment grows

White House defends inaction on jobs crisis as unemployment grows

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Brushing off criticism that the administration has done nothing to stem the loss of millions of jobs, President Obama’s leading economic advisor claimed Monday that the US was well on the way to recovery, while acknowledging that high levels of unemployment may become a permanent feature even after economic growth resumes.

Speaking at a convention of business economists in St. Louis, Lawrence Summers, the director of Obama’s National Economic Council, said the economy had made “substantial progress” over the last year, pointing in particular to the seven-month rise on the stock markets, where major indexes have risen 50 percent.

“We are no longer talking about panics and freefalls,” Summers declared, adding, “A year ago, the debate was whether the recession would turn into a depression—now it’s over the date when the recession ended.”

Summers said that the present situation was “an unsatisfactory state of affairs.” He referred to the official jobless rate of nearly 10 percent, not as a disaster for the tens of millions who are out of work, however, but primarily a problem for the government and corporations. Every additional percentage in unemployment, he said, “adds to the national debt, reduces capital stock and hurts human potential.”

Earlier in the day, the group which hosted Summers—the National Association for Business Economics—released a survey finding that 80 percent of economic forecasters believe the economy is growing again after four straight quarters of decline. While declaring the recession over, the respondents said the labor market was not expected to regain most of the jobs destroyed in the recession until 2012 or beyond.

Summers said the jobless rate was “higher than predicted” based on the historic patterns of output and employment levels. In fact, US employers, with the full backing of the administration, have used the persistent threat of job loss to squeeze ever-higher levels of productivity from workers, in addition to wage and benefit concessions. That was precisely what was done in the auto industry, with the forced bankruptcies and restructuring of GM and Chrysler.

Summers suggested that the experience of recent recessions and “recoveries” pointed to the probability that many of those currently out of work might never find employment again. The expansion of the 2000s, he said, produced only one-third as many jobs as the expansion in the 1990s. This, he said, was grounds to believe that high levels of unemployment were “structural,” i.e., permanent, rather than simply a function of the business cycle.

Like Obama, Summers speaks not for the interests of workers, but for Wall Street. As deputy treasury secretary and then treasury secretary under Bill Clinton, he and his predecessor at the Treasury Department, former Goldman Sachs executive Robert Rubin, championed financial deregulation, capital gains tax cuts and other free market policies that led to the speculative bubble that burst last year. In the aftermath of the meltdown, Summers worked with current Treasury Secretary Timothy Geithner to carry out the Wall Street bailout and has been a vocal opponent of any serious regulations, including checks on executive compensation.

In his comments to the business economists, Summers made clear that the administration was not contemplating any government public works program—the only measure that could immediately address the jobs crisis by hiring millions of the unemployed. “All of our policies to spur economic growth would go with the grain of the market,” not against it, he assured those present.

The only measure being contemplated by the White House is a further tax giveaway to big business. Obama is reportedly reviving a plan first proposed during the election campaign to give $3,000 tax credits to employers for each new worker they hire.

Over the last few days, Summers has been used as the White House’s point man to answer criticisms over its lack of response to the jobs crisis. The Republicans have pointed to the failure of the administration’s stimulus package in order to demand even greater tax breaks for big business and far more rapid destruction of social programs.

At the same time, some Democrats and liberal newspaper columnists, such as Bob Herbert of the New York Times, have expressed worry that the lack of response by the administration was generating widespread social anger, which could, sooner rather than later, be directed towards the government.

In a letter to Republican House Minority Leader John Boehner (Ohio), Summers lamely asserted that the Recovery Act stimulus package had “reduced the pace of job losses” since the recession began.

While welcoming collaboration with the Republicans to provide further tax cuts to businesses, Summers declared that “President Obama is returning our nation to fiscal responsibility,” and chastised the Republicans for driving up the deficit during Bush’s two terms.

While the White House found trillions to bail out Wall Street—because, Summers said, “the economic crisis required swift and aggressive action to avoid a depression”—Obama’s economic advisor made it clear there would be no “fiscally irresponsible” measures to provide emergency relief to the unemployed. On the contrary, he boasted the administration’s health care restructuring plan would slash tens of billions from the deficit—primarily through slashing Medicare and Medicaid.

Everything the administration has done since coming to office has been to secure the interests of the financial elite, which has used its public-funded bailout to consolidate its grip over the economy, resume its reckless speculation and reward itself with massive bonuses. Economists are now predicting a wave of new mergers and acquisitions of corporations, which will further enrich big investors, while leading to destruction of tens of thousands of more jobs.

But no relief has been forthcoming to the victims of the capitalist crisis.

The Wall Street Journal reported last week that private sector payrolls in the US are lower than they were at the end of 1999. Since the recession began, 7.2 million jobs have been lost—bringing the total number of workers officially unemployed to over 15 million.

The Journal noted, “Even if the job market were to return to the rapid pace of the 1990s—adding 2.15 million private-sector jobs a year, double the 2001-2007 pace—the US wouldn’t get back to a 5 percent unemployment rate until late 2017, Rutgers University economist Joseph Seneca estimated. And that assumes no recession between now and then.”

While the official unemployment rate is 9.8 percent, the US Labor Department’s broader measure, including those who have stopped looking for work and temporary employees who cannot find full-time work, has reached a record level of 17 percent.

The depth of the social crisis was put on display last week, when nearly 50,000 people lined up in downtown Detroit seeking assistance in paying their utility bills and preventing eviction or foreclosure from their homes. The paltry $15 million provided by the stimulus package will be able to serve no more than 3,400 households.

With 6.3 job searchers for every opening, it has become commonplace for thousands to apply every time an employer advertises for a few positions. Last week, 10,000 unemployed workers applied for 90 jobs over the course of three days at a Louisville, Kentucky, General Electric (GE) plant.

The crisis has had a particularly devastating effect on young, first-time job seekers. In a feature, entitled, “The Lost Generation,” the current edition of BusinessWeek notes, “While unemployment is ravaging just about every part of the global workforce, the most enduring harm is being done to young people who can’t grab onto the first rung of the career ladder.”

“In the U.S., the unemployment rate for 16- to 24-year-olds has climbed to more than 18%, from 13% a year ago…Only 46% of people aged 16-24 had jobs in September, the lowest since the government began counting in 1948,” BusinessWeek noted. Such is the “economic recovery.”

Dollar devaluation and the working class

Dollar devaluation and the working class

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There are growing signs of a major shift in world currency alignments. Since March, the US dollar has steadily declined, depreciating by 13.3 percent on a trade-weighted basis. Last week the decline accelerated, driving gold prices to record levels and prompting a number of Asian central banks to intervene on currency markets to slow the dollar’s fall.

Rather than warning of the implications of this erosion in the value of the world’s major trading and reserve currency, prominent financial publications and economic commentators are arguing that the trend should be welcomed and the long-term value of the dollar should be allowed to fall further.

On Saturday, the Financial Times of London published an editorial entitled “A Strong US Needs a Weakened Dollar.” The newspaper wrote that “this fall in value, while large, should neither be feared nor obstructed. … It would actually be rather helpful if the dollar were to weaken further… the effect of a cheaper dollar would be to help American exporters while making imports to the US dearer.

“This is what America—and the world—needs. In the medium term, as Mr. Summers [Obama’s top economic adviser Lawrence Summers] put it earlier this year, ‘the rebuilt American economy must be more export-oriented and less consumption-oriented.’ In short, the US must start living within its means, and the rest of the world must stop relying on its profligacy.”

Monday’s Financial Times carries a piece by economic columnist Wolfgang Münchau headlined “Making the Case for a Weaker Dollar.” He advocates a rebalancing of the world economy in which the massive US current account deficit would be sharply reduced, the Asian surplus would be pared down, and the 16-nation eurozone deficit would grow “somewhat larger.”

“In the long run,” he writes, “such a world would require significant reform of the international monetary system. In the short term, a fall in the dollar’s exchange rate would help get us there.”

He suggests that the “strong-dollar pledges” by US officials are disingenuous and the US is encouraging a further decline in the dollar as part of an export-led recovery strategy.

Münchau goes on to say that the necessary long-term reform of the international monetary system involves a permanently reduced global role for the dollar. He predicts that the world is moving toward a “dual system in which the dollar and the euro act as the world’s de facto reserve currencies.”

These and similar commentaries evade the immense risks that would inevitably accompany a permanent devaluation of the dollar and dilution of its reserve currency status. Such a project contains the seeds of a breakup of the world market. The assumption that this change could be carried out in an orderly manner, without sparking competitive devaluations by Europe and Asia, the formation of currency and trade blocs, the eruption of trade war and, ultimately, military conflict between the major powers, is highly dubious.

Among the most shallow commentaries in favor of a weaker dollar is that provided by US economist and New York Times columnist Paul Krugman. In an op-ed piece published Monday, he dismisses those who worry about the long-term implications of the decline of the dollar as little more than cranks.

Without considering the international implications of a continued fall in the dollar, or its consequences for social relations within the US, he says of the “current uproar” over the declining dollar: “The truth is that the falling dollar is good news.”

A lower dollar is “good for US exporters,” Krugman writes, “helping us make a transition away from huge trade deficits to a more sustainable international position.” He argues for leaving the benchmark interest rate, now effectively at zero, “on hold for the next two years or more.” He says nothing about the consequences of a depreciating dollar for the US currency’s status as the world reserve currency.

What is certain is that the loss of the dollar’s status as the unchallenged world reserve currency has devastating implications for the American working class.

A strong and stable dollar was the bedrock of the international capitalist monetary system that was established at the Bretton Woods conference at end of World War II. The dollar has served for nearly seven decades as the world’s supreme trading and reserve currency. The unique and privileged position of the dollar—which brought with it immense advantages for US capital—was based on the unchallenged economic supremacy of the US at the end of the war. That, in turn, was founded on the global dominance of American industry.

The long-term decline of American capitalism, reflected most importantly in the decay of its industrial base, resulted in the massive global imbalances between debtor nations—first and foremost, the US—and creditor nations, such as China, Japan and Germany, which led to the implosion of the world economy a year ago. It is the transformation of the US from the industrial powerhouse of the world to the center of global financial speculation and parasitism that, in the final analysis, underlies the erosion in the international position of the dollar.

To allow the dollar to continue to fall is to acknowledge the reality of America’s decline and the necessity for world capitalism to find a new basis for growth. At the heart of such a global economic “rebalancing” is a fundamental restructuring of class relations within the United States.

The Bretton Woods framework gave the American bourgeoisie a huge advantage in managing social relations within the US. The US ruling class could utilize deficit spending and inflationary policies to make concessions to the demands of the working class because the world accepted the dollar regardless. Without that advantage, the US must adhere to onerous fiscal and monetary restraints, the burden of which is to be placed on the working class.

This process is already well underway. In the name of global economic rebalancing and reform at home, the Obama administration is seeking to cut the consumption of the working class, slash production costs and drive up US exports.

This amounts to subjecting American workers to the type of economic “shock therapy” that the US-dominated International Monetary Fund has prescribed for a host of indebted Third World countries over the past quarter century. Currency devaluation, accompanied by cuts in state expenditure for social services and the use of mass unemployment to drive down wages and increase exploitation—these are the methods that are now being employed against the American working class.

The process by which the US closed down its manufacturing facilities and farmed out production to cheap labor havens around the world—which produced the unsustainable reliance of the US on infusions of credit from surplus nations such as China and Japan—is to be reversed. Industry in the US is to be revived, but on the basis of the destruction of the wages, working conditions and living standards of the working class.

The US is to become a low-cost producer of goods for the world market. The American working class is to experience levels of exploitation which it hasn’t faced in a century. Its wages and living standards are to be brought more closely in line with those faced by the super-exploited workers of Asia.

This policy of class war underlies Obama’s assault on the jobs and wages of auto workers, his refusal to provide aid to bankrupt states and localities, and his drive to gut health care benefits for workers and attack entitlement programs, beginning with Medicare.

America will once again set an example for world capitalism—by serving as the model for similar attacks on the workers of every country.

The working class of the United States, however, has no intention of submitting to its own impoverishment. The stage is being set for a revival of the class struggle in the US and internationally on a colossal scale.

Mass. House approves bill allowing quarantines

Mass. House approves bill allowing quarantines

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Public health officials would have the power to isolate individuals and order quarantines to contain the outbreak of serious contagious diseases under a bill approved by the Massachusetts House on Thursday.

Supporters say that while the bill has been in the works for years, the emergence of swine flu shows the importance of having laws on the books to deal with public health crises. Critics say the bill gives the government too much power.

The bill, approved by a 113-36 vote, is designed to clarify the authority of government and the rights of citizens in the case of a public health crisis. Backers say under existing law there are few checks on the power of government once the governor declares a health emergency.

"The bill strikes that balance between protecting the community in the case of an emergency but also protecting the civil liberties of individuals," said Rep. Jeffrey Sanchez, D-Boston, House chairman of the Committee on Public Health.

Sanchez said the House version of the bill eliminates some of the more contentious parts approved in April by the Senate including sections placing restrictions on the right to public assembly and allowing the arrest of individuals without warrant.

The Senate bill would also allow the government to mandate vaccinations or place into isolation anyone who refused to be vaccinated -- a provision that was eliminated from the House version.

"This bill does not change the law to force people to be vaccinated," Sanchez said.

The bill spells out the authority of the public health commissioner once an emergency is declared -- including the power to force the evacuation of public buildings and order health care facilities to provide services to those sickened.

The bill would also let the commissioner limit public access to contaminated areas, adopt measures to safely dispose of infection waste, and store and distribute antitoxins, serums, vaccines and antibiotics.

One of the most contentious parts of the bill would give public health officials the authority to force individuals or groups into isolation or quarantine when there is "reasonable cause to believe that a disease or condition dangerous to the public health exists or may exist or that there is an immediate risk of an outbreak."

The isolation or quarantine order can be made orally as long as it is followed by a written order. The bill allows those in quarantine to appeal to a Superior Court judge. It also bars employers from firing workers because of a quarantine order.

Rep. Todd Smola, R-Palmer, said he heard from dozens of constituents worried about the Senate version of the bill.

He said there wasn't enough time to study the changes in the House version, which he said still gives too much power to the commissioner of public health.

"People have enough concerns right now relative to government control invading in their personal space and in their personal lives," he said.

Other parts of the bill are designed to send up early warning signs of a potential outbreak, including requiring pharmacists to report increased prescription rates or unusual types of prescriptions.

Public health officials would also be allowed to obtain medical records to try to investigate or monitor an outbreak, provided that the medical records remain confidential.

The public health emergency would end whenever the governor says it is over or 90 days after it was first declared, whichever comes first.

The compromise version of both bills must now be worked out.

US Supreme Court term begins with more threats to democratic rights

US Supreme Court term begins with more threats to democratic rights

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With the traditional opening of the new term on the first Monday of October, the United States Supreme Court, now firmly under the control of right-wing Chief Justice John G. Roberts, Jr., is poised to overrule decades of established precedent. The court appears ready to dismantle many of the remaining protections for democratic rights established during the middle of the twentieth century, one of the few periods when the high court did not function openly as an instrument of political and social reaction.

Ignoring tradition, on September 9 the court heard re-arguments in Citizens United v. Federal Election Commission, a case remaining from last term. As noted by the World Socialist Web Site and other publications, several justices seem ready to declare unconstitutional any attempt by Congress to limit political contributions by corporations, although such laws have been upheld since they were first enacted in 1947. (See: “US Supreme Court set to ease rules on corporate campaign cash”.)

With newly confirmed Associate Justice Sonia Sotomayor holding the seat vacated by David Souter, the Supreme Court began with oral arguments on October 5 in Maryland v. Shatzer, yet another vehicle for the high court to cut back on the landmark Miranda v. Arizona ruling of 1966 by allowing police to return and question criminal suspects who previously invoked their constitutional right to remain silent. The case follows on last term’s Montejo v. Louisiana, which overruled precedent that prohibited police investigators from interviewing a criminal suspect who already had legal representation.

The conventional wisdom is that Sotomayor will not affect the court’s ideological balance because, like Souter, she is considered a judicial “moderate” by contemporary standards. There is some reason to believe, however, based on her background as a prosecutor and her decisions when a judge on the federal Court of Appeals, that she will vote more favorably than Souter for police powers and against the rights of those accused of crimes.

The most significant case for democratic rights argued last week is Salazar v. Buono. The plaintiff sued for the removal of an eight-foot-high cross erected years ago as a memorial to US war dead on a remote desert outcropping in the massive Mojave National Preserve—federal land located in Southern California. A United States district judge issued an injunction to remove the cross. To avoid the ruling, in 2004 Congress passed a law conveying the land directly under the cross to the Veterans of Foreign Wars (VFW), with a provision that the land will revert to the United States if no longer maintained as a war memorial.

Elena Kagan, the Obama administration’s new solicitor general, argued in favor of maintaining the blatantly sectarian religious symbol on what remains, effectively, federal land. The purpose of the 2004 enactment is obviously to skirt the First Amendment, which opens the US Constitution’s Bill of Rights with the statement, “Congress shall make no law respecting an establishment of religion.”

Salazar is the first “Establishment Clause” dispute to be heard by the Roberts court. Joined by the other George W. Bush appointee confirmed by the Democratic-controlled Senate, Associate Justice Samuel Alito, as well as Associate Justices Antonin Scalia, Clarence Thomas and Anthony Kennedy, Roberts seems to have a clear five-vote majority in favor of scuttling decades of precedent enforcing the “wall of separation between church and state,” as Thomas Jefferson described the Establishment Clause in a famous 1802 letter.

While most of the justices at the October 7 oral argument seemed to be groping for a narrow, technical ground on which to base a decision, Scalia bullied his way forward in the typical result-oriented, intellectually dishonest and highly offensive manner one expects from this so-called intellectual leader of the Supreme Court’s right-wing bloc. This included the following remarkable exchange with the plaintiff’s lawyer, Peter Eliasberg, of the Southern California American Civil Liberties Union (ACLU).

Eliasberg: I think it would be very odd indeed for the VFW to feel that it was free to take down the cross and put up, for example, a statue of a soldier which would honor all of the people who fought for America in World War I, not just Christians, and say: “Well, we were free to do that because even though there’s the sign that says this cross is designated to honor all the—”

Scalia: The cross doesn’t honor non‑Christians who fought in the war? Is that—is that—

Eliasberg: I believe that’s actually correct.

Scalia: Where does it say that?

Eliasberg: It doesn’t say that, but a cross is the predominant symbol of Christianity and it signifies that Jesus is the son of God and died to redeem mankind for our sins, and I believe that’s why the Jewish war veterans—

Scalia: It’s erected as a war memorial. I assume it is erected in honor of all of the war dead. It’s the—the cross is the—is the most common symbol of the resting place of the dead, and it doesn’t seem to me—what would you have them erect? A cross—some conglomerate of a cross, a Star of David, and, you know, a Moslem half moon and star?

Eliasberg: Well, Justice Scalia, if I may go to your first point. The cross is the most common symbol of the resting place of Christians. I have been in Jewish cemeteries. There is never a cross on a tombstone of a Jew. (Laughter.) So it is the most common symbol to honor Christians.

Scalia: I don’t think you can leap from that to the conclusion that the only war dead that that cross honors are the Christian war dead. I think that’s an outrageous conclusion.

Eliasberg: Well, my—the point of my—point here is to say that there is a reason the Jewish war veterans came in and said we don’t feel honored by this cross. This cross can’t honor us because it is a religious symbol of another religion.

Scalia, who claims to be guided exclusively by the original intent of the framers and a “strict construction” of the Constitution, has no problem with congressional approval of a Christian symbol on federal land.

Rulings in Salazar and the other cases argued so far are expected early next year.

There are about 50 more pending matters on the Supreme Court docket, which is less than usual at the outset of a term. The number of high court cases has been declining for years.

Attracting the most media interest so far is McDonald v. City of Chicago, in which the Supreme Court will decide whether its recent decision that the Second Amendment “right to bear arms” prohibits the District of Columbia from banning handgun ownership applies to state and local governments as well. (See “The reactionary politics of the Supreme Court’s ‘gun rights’ decision”.) It seems unlikely that the Supreme Court majority will pass up this new opportunity to give a political boost to the reactionaries who comprise the Republican Party “base.”

There is only one national security case thus far, Holder v. Humanitarian Law Project, which turns on the constitutionality of laws criminalizing “material support” to foreign groups labeled terrorist organizations by the US government. Such statutes have been used repeatedly in political prosecutions over the last decade, particularly to victimize Muslim charities, which provide relief to Palestinians and others oppressed by imperialism and Zionism.

Migliaccio v. Castaneda is a particularly horrific case. A man detained on immigration charges died due to the deliberate failure of federal prison authorities to treat a cancerous lesion on his penis for eleven months. The Obama administration is arguing that the responsible federal officials cannot be sued individually even if the denial of medical care violated the Constitution.

There are two cases, Graham v. Florida and Sullivan v. Florida, in which juveniles were sentenced to life in prison without possibility of parole, one for a crime committed at 16 and the other at age 13. Neither offense was murder. The punishment is being challenged as violating the “cruel and unusual” provision of the Eighth Amendment.

That such a question can even be debated among high court judges demonstrates the erosion of democratic rights in the US. The outcome is unclear. Four years ago the Supreme Court held by a narrow 5-4 vote that the death penalty cannot be applied to juvenile offenders.

One notable feature of this term’s docket is the high number of cases—almost half—involving seemingly esoteric business issues, such as whether hedge fund strategies can be patented and whether court rulings denying corporate claims of attorney-client privilege are immediately appealable. Many of these cases are of immense importance to corporate interests, which see in the new court an opportunity to further weaken legal restraints on their profit-making activities.

Obama continues assault on democratic rights

Obama continues assault on democratic rights

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Actions taken by President Barack Obama over the past month have confirmed that he is every bit as committed as his predecessor, George W. Bush, to the expansion of the police powers of the state.

Last week, Obama moved to significantly weaken a “media shield” bill advancing through Congress that would give new protection to government whistle-blowers and journalists in cases involving sources who speak with reporters on condition of anonymity. It marked yet another volte-face for Obama, who as a senator championed a similar measure.

Congressional and media allies were taken by surprise. The two leading establishment newspapers, the New York Times and the Washington Post, published editorials criticizing Obama’s position. “The administration’s opposition to the core of this bill came as a complete surprise and doesn’t show much concern for compromise,” said New York Democratic Senator Charles Schumer. “This turns the bill’s near-certain passage into an uphill fight.”

A version of the shield law that has been passed by the House of Representatives allows judges to weigh the public’s right to know against considerations of “national security” in instances where the government takes reporters to court to force them to reveal their sources. In opposition to this bill, Obama offered his own version, which would force reporters to reveal their sources whenever the White House claims national security to be at stake.

Obama’s transparent aim is to intimidate the press and prevent members of the intelligence and defense apparatus from revealing government secrets and crimes. Purported threats to national security “was the constant cry from the Bush administration as the public learned—through the unauthorized disclosure of confidential information—of prisoner abuse, secret CIA prisons for terrorist suspects and warrantless wiretapping,” the New York Times noted.

In another effort by the Obama administration to suppress information relating to abuses by the CIA, a federal judge ruled September 30 in favor of the administration’s bid to suppress hundreds of documents relating to the intelligence agency’s destruction of 92 video tapes of detainees undergoing torture.

The American Civil Liberties Union had sued under the Freedom of Information Act for the release of the documents, which also describe interrogation methods used at the CIA’s “black sites.” Current CIA Director Leon Panetta had argued in court papers that revealing any documentation of agency interrogation methods would threaten national security.

Last month, the Obama administration announced that it would seek to extend three provisions of the USA Patriot Act set to expire by year’s end. The provisions allow the government to operate roving wire taps, search any individual’s business, personal, and even library records upon presentation of a national security letter, and spy on so-called “lone wolf” suspects, i.e., foreign nationals who have no known links to groups designated as terrorist.

It now appears that Congress will extend the provisions.

The latest moves follow a well-established pattern. Since his inauguration, the candidate of “change” has consistently upheld the anti-democratic policies of the Bush administration:

• The administration announced its intention to continue the practice of rendition, whereby alleged terror suspects are seized and spirited off to third-party countries that practice torture.

• While announcing his intention to shut down the prison camp at Guantánamo Bay, Obama has opposed the habeas corpus lawsuits of prisoners there and rejected habeas corpus rights for prisoners at the infamous US military prison at Bagram in Afghanistan. The administration has also indicated its intention to carry on the practice of indefinite detention without trial.

• Obama has opposed any investigation of high-ranking Bush administration and CIA officials who ordered and oversaw the torture and killing of detainees. In response to the court-ordered release of a CIA inspector general’s report that revealed instances of murder, Obama’s attorney general, Eric Holder, announced a token investigation of a few “rogue agents” who overstepped Bush administration torture guidelines.

• Obama has suppressed the publication of photos depicting the torture, murder, and rape of prisoners, as well as other evidence of Bush administration criminality.

• The White House has invoked the state secrets privilege in an attempt to quash lawsuits by victims of torture and rendition, as well as those filed in opposition to warrentless wire-tapping of US residents.

When Obama ran for the presidency, he promised a new era of government openness and said he would curb or reverse the Bush administration’s most egregious abuses of democratic rights. He won the election in part because of public opposition to the Bush administration’s authorization of police-state methods.

However—as with foreign policy, which has seen the continuation of the Iraq war and expansion of war and military intervention in Afghanistan and Pakistan, and economic policy, which has continued and expanded the government bailout of Wall Street and attacks on the jobs, wages and benefits of workers—Obama has continued his predecessor’s assault on democratic rights.

In the space of 10 months in office, the Democratic administration has confirmed that there remains no serious constituency for the defense of democratic rights in either party or any section of the American political establishment.

The continuity between the right-wing policies of the Republican Bush and Democratic Obama administrations demonstrates that militarism and social reaction are not fundamentally a question of the individual traits of presidents, but rather are rooted in the class structure and historical crisis of American capitalism.

Obama, no less than Bush, represents the interests of the American financial aristocracy. Internationally, it increasingly employs military aggression in pursuit of its global economic and strategic aims in an attempt to offset the decline in its world economic position. At home, it turns to anti-democratic methods to defend an economic system that promotes staggering levels of inequality and growing social misery for broad masses of working people.

The ever more pronounced concentration of wealth at the very top of society and heightening of class tensions are ultimately incompatible with democratic procedures and methods of rule. The trampling of the Bill of Rights and habeas corpus is bound up with an awareness in ruling circles that their policies must give rise to social opposition. The police-state framework built up under Bush and Obama is a response by the ruling elite to a threat not from foreign terrorists, but from its main enemy—the American working class.

Anthem sued over denial of transplant

Anthem sued over denial of transplant

California man, given OK by insurer there, says it wouldn't cover liver surgery in Indiana

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Ephram Nehme was gravely ill when Anthem Blue Cross of California agreed to pay for a liver transplant his physician said he needed to survive. Then, his condition went downhill fast.

Nehme's doctor told him he could die waiting for an organ in California and urged him to go to Indiana, where the waiting list was shorter. But Anthem Blue Cross, an affiliate of Indianapolis-based WellPoint, said no. It would not pay for a transplant in Indiana.

Nehme, a Lebanese immigrant with a rags-to-riches story, could afford to buy himself a new lease on life and did -- going to Indiana and paying $205,000 for a liver transplant there.

But he remains angry with Anthem and sued the company, accusing it of putting its bottom line ahead of his medical needs.

"I hope I can change it for other people," said Nehme, 61, who runs produce markets in Southern California's San Fernando and Simi valleys. "If somebody doesn't have a nickel in his pocket, what happens? He's dead."

"This is a tremendously important issue because most people aren't savvy enough about how to work this system, and it is totally stacked against them," said Bryan Liang, director of the Institute of Health Law Studies at California Western Law School in San Diego. "The insurers make sure they get the results they want. They hold all the cards."

Insurers say their pre-authorization reviews of big-ticket procedures, such as transplants, perform important services: ensuring patients get the care they need, when they need it, and keeping a lid on costs.

In Nehme's case, Anthem contends his policy made it clear that transplants were covered only at certain contracted hospitals, and that he was not sick enough to qualify for an exception.

Nehme begs to differ. When he needed a liver, the median wait time at the University of California-Los Angeles was more than two years. At the Clarian Transplant Center in Indianapolis, where he had his operation, it was about six weeks. Waiting for a liver at UCLA, Nehme believes, would have been a virtual death sentence.

"I shook my head and said I better do what I have to do now, and I'll fight (the insurance company) later," he recalled.

In the 1970s, Nehme contracted hepatitis from a blood transfusion. He managed the condition for years with medications. But by the fall of 2006, Nehme had run out of options. His longtime physician told him it was time for a transplant.

Joseph Tector, an Indiana University surgeon and medical director of the Clarian center in Indianapolis, testified that Nehme "was extremely unlikely to receive a liver transplant in sufficient time back in California at UCLA."

Nehme contends Anthem weighed none of this in denying the request.

Anthem physician-employees involved acknowledged in depositions they neither physically examined Nehme nor discussed his condition with his treating physicians at UCLA or Indiana University.

"They never saw me, and they are making a decision over the phone that it's not necessary for me to have the surgery," Nehme said.

Anthem defended its process, saying in a statement that its policy is to review all transplant requests "on a case by case basis by a medical expert"

Anthem declined to discuss Nehme's accusations. The case is set for trial this month in Los Angeles.

When War becomes Peace, When the Lie becomes the Truth

When War becomes Peace, When the Lie becomes the Truth

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When war becomes peace,

When concepts and realities are turned upside down,

When fiction becomes truth and truth becomes fiction.

When a global military agenda is heralded as a humanitarian endeavor,

When the killing of civilians is upheld as "collateral damage",

When those who resist the US-NATO led invasion of their homeland are categorized as "insurgents" or "terrorists".

When preemptive nuclear war is upheld as self defense.

When advanced torture and "interrogation" techniques are routinely used to "protect peacekeeping operations",

When tactical nuclear weapons are heralded by the Pentagon as "harmless to the surrounding civilian population"

When three quarters of US personal federal income tax revenues are allocated to financing what is euphemistically referred to as "national defense"

When the Commander in Chief of the largest military force on planet earth is presented as a global peace-maker,

When the Lie becomes the Truth.

Obama's "War Without Borders"

We are the crossroads of the most serious crisis in modern history. The US in partnership with NATO and Israel has launched a global military adventure which, in a very real sense, threatens the future of humanity.

At this critical juncture in our history, the Norwegian Nobel Committee's decision to award the Nobel Peace Prize to President and Commander in Chief Barack Obama constitutes an unmitigated tool of propaganda and distortion, which unreservedly supports the Pentagon's "Long War": "A War without Borders" in the true sense of the word, characterised by the Worlwide deployment of US military might.

Apart from the diplomatic rhetoric, there has been no meaningful reversal of US foreign policy in relation to the George W. Bush presidency, which might have remotely justified the granting of the Nobel Prize to Obama. In fact quite the opposite. The Obama military agenda has sought to extend the war into new frontiers. With a new team of military and foreign policy advisers, the Obama war agenda has been far more effective in fostering military escalation than that formulated by the NeoCons.

Since the very outset of the Obama presidency, this global military project has become increasingly pervasive, with the reinforcement of US military presence in all major regions of the World and the development of new advanced weapons systems on an unprecdented scale.

Granting the Nobel Peace Prize to Barack Obama provides legitimacy to the illegal practices of war, to the military occupation of foreign lands, to the relentless killings of civilians in the name of "democracy".

Both the Obama administration and NATO are directly threatening Russia, China and Iran. The US under Obama is developing "a First Strike Global Missile Shield System":

"Along with space-based weapons, the Airborne Laser is the next defense frontier. ... Never has Ronald Reagan's dream of layered missile defenses - Star Wars, for short - been as....close, at least technologically, to becoming realized."

Reacting to this consolidation, streamlining and upgrading of American global nuclear strike potential, on August 11 the Commander-in-Chief of the Russian Air Force, the same Alexander Zelin cited earlier on the threat of U.S. strikes from space on all of his nation, said that the "Russian Air Force is preparing to meet the threats resulting from the creation of the Global Strike Command in the U.S. Air Force" and that Russia is developing "appropriate systems to meet the threats that may arise." (Rick Rozoff, Showdown with Russia and China: U.S. Advances First Strike Global Missile Shield System, Global Research, August 19, 2009)

At no time since the Cuban missile crisis has the World been closer to the unthinkable: a World War III scenario, a global military conflict involving the use of nuclear weapons.

1. The so-called missile defense shield or Star Wars initiative involving the first strike use of nuclear weapons is now to be developed globally in different regions of the World. The missile shield is largely directed against Russia, China, Iran and North Korea.

2. New US military bases have been set up with a view to establishing US spheres of influence in every region of the World as well as surrounding and confronting Russia and China.

3. There has been an escalation in the Central Asian Middle East war. The "defense budget" under Obama has spiraled with increased allocations to both Afghanistan and Iraq.

4. Under orders of president Obama, acting as Commander in Chief, Pakistan is now the object of routine US aerial bombardments in violation of its territorial sovereignty, using the "Global War on Terrorism" as a justification.

5. The construction of new military bases is envisaged in Latin America including Colombia on the immediate border of Venezuela.

6. Military aid to Israel has increased. The Obama presidency has expressed its unbending support for Israel and the Israeli military. Obama has remained mum on the atrocities committed by Israel in Gaza. There has not even been a semblance of renewed Israeli-Palestinian negotiations.

7. There has been a reinforcement of the new regional commands including AFRICOM and SOUTHCOM

8. A new round of threats has been directed against Iran.

9. The US is intent upon fostering further divisions between Pakistan and India, which could lead to a regional war, as well as using India's nuclear arsenal as an indirect means to threaten China.

The diabolical nature of this military project was outlined in the 2000 Project for a New American Century (PNAC). The PNAC's declared objectives are:

defend the American homeland;

fight and decisively win multiple, simultaneous major theater wars;

perform the "constabulary" duties associated with shaping the security environment in critical regions;

transform U.S. forces to exploit the "revolution in military affairs;" (Project for a New American Century, Rebuilding Americas Defenses.pdf, September 2000)

The "Revolution in Military Affairs" refers to the development of new advanced weapons systems. The militarization of space, new advanced chemical and biological weapons, sophisticated laser guided missiles, bunker buster bombs, not to mention the US Air Force's climatic warfare program (HAARP) based in Gokona, Alaska, are part of Obama's "humanitarian arsenal".

War against the Truth

This is a war against the truth. When war becomes peace, the world is turned upside down. Conceptualization is no longer possible. An inquisitorial social system emerges.

An understanding of fundamental social and political events is replaced by a World of sheer fantasy, where "evil folks" are lurking. The objective of the "Global War on Terrorism" which has been fully endorsed by Obama administration has been to galvanize public support for a Worldwide campaign against heresy.

In the eyes of public opinion, possessing a "just cause" for waging war is central. A war is said to be Just if it is waged on moral, religious or ethical grounds. The consensus is to wage war. People can longer think for themselves. They accept the authority and wisdom of the established social order.

The Nobel Committee says that President Obama has given the world "hope for a better future." The prize is awarded for Obama's

"extraordinary efforts to strengthen international diplomacy and cooperation between peoples. The Committee has attached special importance to Obama's vision of and work for a world without nuclear weapons."

...His diplomacy is founded in the concept that those who are to lead the world must do so on the basis of values and attitudes that are shared by the majority of the world's population. (Nobel Press Release, October 9, 2009)

The granting of the Nobel "peace prize" to president Barack Obama has become an integral part of the Pentagon's propaganda machine. It provides a human face to the invaders, it upholds the demonization of those who oppose US military intervention.

The decision to grant Obama the Nobel Peace Prize was no doubt carefully negotiated with the Norwegian Committee at the highest levels of the US government. It has far reaching implications.

It unequivocally upholds the US led war as a "Just Cause". It erases the war crimes committed both by the Bush and Obama administrations.

War Propaganda: Jus ad Bellum

The "Just war" theory serves to camouflage the nature of US foreign policy, while providing a human face to the invaders.

In both its classical and contemporary versions, the Just war theory upholds war as a "humanitarian operation". It calls for military intervention on ethical and moral grounds against "insurgents", "terrorists", "failed" or "rogue states".

The Just War has been heralded by the Nobel Committee as an instrument of Peace. Obama personifies the "Just War".

Taught in US military academies, a modern-day version of the "Just War" theory has been embodied into US military doctrine. The "war on terrorism" and the notion of "preemption" are predicated on the right to "self defense." They define "when it is permissible to wage war": jus ad bellum.

Jus ad bellum has served to build a consensus within the Armed Forces command structures. It has also served to convince the troops that they are fighting for a "just cause". More generally, the Just War theory in its modern day version is an integral part of war propaganda and media disinformation, applied to gain public support for a war agenda. Under Obama as Nobel Peace Laureate, the Just War becomes universally accepted, upheld by the so-called international community.

The ultimate objective is to subdue the citizens, totally depoliticize social life in America, prevent people from thinking and conceptualizing, from analyzing facts and challenging the legitimacy of the US NATO led war.

War becomes peace, a worthwhile "humanitarian undertaking", Peaceful dissent becomes heresy.

Military Escalation with a Human Face. Nobel Committee grants the "Green Light"

More significantly, the Nobel peace prize grants legitimacy to an unprecedented "escalation" of US-NATO led military operations under the banner of peacemaking.

It contributes to falsifying the nature of the US-NATO military agenda.

Between 40,000 to 60,000 more US and allied troops are to be sent to Afghanistan under a peacemaking banner. On the 8th of october, a day prior to the Nobel Committee's decision, the US congress granted Obama a 680-billion-dollar defense authorization bill, which is slated to finance the process of military escalation:

"Washington and its NATO allies are planning an unprecedented increase of troops for the war in Afghanistan, even in addition to the 17,000 new American and several thousand NATO forces that have been committed to the war so far this year".

The number, based on as yet unsubstantiated reports of what U.S. and NATO commander Stanley McChrystal and the chairman of the Joint Chiefs of Staff Michael Mullen have demanded of the White House, range from 10,000 to 45,000.

Fox News has cited figures as high as 45,000 more American soldiers and ABC News as many as 40,000. On September 15 the Christian Science Monitor wrote of "perhaps as many as 45,000."

The similarity of the estimates indicate that a number has been agreed upon and America's obedient media is preparing domestic audiences for the possibility of the largest escalation of foreign armed forces in Afghanistan's history. Only seven years ago the United States had 5,000 troops in the country, but was scheduled to have 68,000 by December even before the reports of new deployments surfaced. (Rick Rozoff, U.S., NATO Poised For Most Massive War In Afghanistan's History, Global Research, September 24, 2009)

Within hours of the decision of the Norwegian Nobel committee, Obama met with the War Council, or should we call it the "Peace Council". This meeting had been carefully scheduled to coincide with that of the Norwegian Nobel committee.

This key meeting behind closed doors in the Situation Room of the White House included Vice President Joe Biden, Secretary of State Hillary Clinton, Secretary of Defense Robert Gates, and key political and military advisers. General Stanley McChrystal participated in the meeting via video link from Kabul.

General Stanley McChrystal ias said to have offered the Commander in Chief "several alternative options" "including a maximum injection of 60,000 extra troops". The 60,000 figure was quoted following a leak of the Wall Street Journal (AFP: After Nobel nod, Obama convenes Afghan war council, October 9, 2009)

"The president had a robust conversation about the security and political challenges in Afghanistan and the options for building a strategic approach going forward," according to an administration official (quoted in AFP: After Nobel nod, Obama convenes Afghan war council October 9, 2009)

The Nobel committee had in a sense given Obama a green light. The October 9 meeting in the Situation Room was to set the groundwork for a further escalation of the conflict under the banner of counterinsurgency and democracy building.

Meanwhile, in the course of the last few months, US forces have stepped up their aerial bombardments of village communities in the northern tribal areas of Pakistan, under the banner of combating Al Qaeda.