Friday, December 25, 2009

Brace Yourself For a Hard Landing

Brace Yourself For a Hard Landing

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Ben Bernanke has been a bigger disaster than Hurricane Katrina. But the senate is about to re-up him for another four-year term. What are they thinking? Bernanke helped Greenspan inflate the biggest speculative bubble of all time, and still maintains that he never saw it growing. Right. How can retail housing leap from $12 trillion to $21 trillion in 7 years (1999 to 2006) without popping up on the Fed's radar? It's not possible. Bernanke is just fudging the facts to save his skin.

Bernanke was also staunch supporter of the low interest rate policy which led to the crash. Greenspan never believed that it was the Fed's job to deal with credit bubbles. "The free market is self-correcting", he thought. He was the nation's chief regulator, but he was opposed to the idea of government regulation. Go figure? Here' a quote from Greenspan in 2002:

“I do have an ideology. My judgment is that free, competitive markets are by far the unrivaled way to organize economies. We have tried regulation, none meaningfully worked.”

What rubbish. Listen to Greenspan try to dignify class warfare as a matter of principle.

Bernanke is no different than Greenspan; they're two peas in a pod. Everyone could see what the Fed-duo was up to from the get-go. They were working hand-in-hand with their crooked friends on Wall Street to milk the bubble for all it was worth before the whole thing blew sky-high. It was one ginormous skimming operation orchestrated by the Federal Reserve.

Now Bernanke is carrying on where his former boss left off, using all the tools at his disposal to offset the atrophy that's endemic to mature capitalist economies. "Stagnation", that the real enemy, which is why Bernanke supports this new galaxy of oddball debt-instruments and bizarre-sounding derivatives; because it creates a world where surplus capital can generate windfall profits despite chronic overcapacity. It's Financial Nirvana for the parasite class; the relentless transfer of wealth from workers to speculators via paper assets. Marx figured it out. And, now, so has Bernanke.

Bernanke is just following Greenspan's basic blueprint. It's nothing new. Unregulated derivatives trading is just one of the many scams he's thrown his weight behind. The list goes on and on; one swindle after another.

Just look what happened when Lehman Bros blew up. Just weeks earlier, Bernanke and Co. had worked out a deal with JP Morgan to buy Bear Stearns with the proviso that the government would guarantee $40 billion in Bear's toxic assets. Fair enough. The whole transaction went by without a hitch. Then Lehman starts teetering, and Bernanke and Treasury Secretary Henry Paulson decide to do a complete policy-flip and let Lehman default. Their reversal stunned the markets and triggered a frenzied run on the money markets that nearly collapsed the global financial system. Why?

It was because Bernanke knew that the big banks were buried under a mountain of bad assets and needed emergency help from Congress. The faux-Lehman crisis was cooked up to extort the $700 billion from taxpayers via the TARP fund. Bernanke and Paulson pulled off the biggest heist in history and there's never even been an investigation. It was blackmail, pure and simple.

Bernanke was in the wheelhouse when the subprime bubble blew and carved $13 trillion from aggregate household wealth. Consumers are now so deeply underwater that personal credit is shrinking for the first time in 50 years while unemployment is hovering at 10 percent. If Bernanke isn't responsible, than who is?

Take a look at Bernanke's so-called lending facilities. They are all designed with one object in mind, to support financial markets at the expense of workers. It's just more corporate welfare. The media praises the Troubled asset-backed security lending facility (TALF) as a way to restart the wholesale credit system (securitzation). But is it? Under the TALF, the government provides up to 92 percent of the funding for investors willing to buy assets backed by auto, credit card, or student loans. In other words, the Fed is putting the taxpayer on the hook for another trillion dollars (without congressional authorization or oversight) to produce more of the same high-risk junk which investors still refuse to purchase two years after the two Bear Stearns hedge funds defaulted in July 2007. Fortunately, the TALF turned out to be another Fed boondoggle that fizzled on the launchpad.

Bernanke's latest stealth-ripoff is called quantitative easing (QE) which is being touted as a way to increase consumer lending by building up banks reserves. In fact, it doesn't do that at all and Bernanke knows it. As an "expert" on the Great Depression, he knows that stuffing the banks with reserves was tried in the 1930s, but it accomplished nothing. Nor will it today. Here's how economist James Galbraith explains it:

"The New Deal rebuilt America physically, providing a foundation from which the mobilization of World War II could be launched. But it also saved the country politically and morally, providing jobs, hope, and confidence that in the end democracy was worth preserving....

“What did not recover, under Roosevelt, was the private banking system. Borrowing and lending—mortgages and home construction—contributed far less to the growth of output in the 1930s and ’40s than they had in the 1920s or would come to do after the war. If they had savings at all, people stayed in Treasuries, and despite huge deficits interest rates for federal debt remained near zero. The liquidity trap wasn’t overcome until the war ended..... the relaunching of private finance took twenty years, and the war besides.

“A brief reflection on this history and present circumstances drives a plain conclusion: the full restoration of private credit will take a long time. It will follow, not precede, the restoration of sound private household finances. There is no way the project of resurrecting the economy by stuffing the banks with cash will work. Effective policy can only work the other way around." ("No Return to Normal:Why the economic crisis, and its solution, are bigger than you think" James K. Galbraith, Washington Monthly)

And, there's more proof that Bernanke knows that quantitative easing is a hoax, too. Here's a quote from the late Paul Samuelson's magnum opus "Foundations of Economic Analysis":


"Today few economists regard Federal Reserve monetary policy as a panacea for controlling the business cycle. Purely monetary factors are considered to be as much symptoms as causes, albeit symptoms with aggravating effects that should not be completely neglected.

By increasing the volume of their government securities and loans and by lowering Member Bank legal reserve requirements, the Reserve Banks can encourage an increase in the supply of money and bank deposits. They can encourage but, without taking drastic action, they cannot compel. For in the middle of a deep depression just when we want Reserve policy to be most effective, the Member Banks are likely to be timid about buying new investments or making loans. If the Reserve authorities buy government bonds in the open market and thereby swell bank reserves, the banks will not put these funds to work but will simply hold reserves....

In terms of the quantity theory of money, we may say that the velocity of circulation of money does not remain constant. “You can lead a horse to water, but you can’t make him drink.” You can force money on the system in exchange for government bonds, its close money substitute; but you can’t make the money circulate against new goods and new jobs. You can get some interest rates down, but not all to the same degree. You can tempt businessmen with cheap rates of borrowing, but you can’t make them borrow and spend on new investment goods." (Paul Samuelson, "Foundations of Economic Analysis" Harvard University Press, 1947)

Bernanke was bread-and-buttered on Samuelson. He knows QE is a joke. He's just creating a diversion so he can shovel more money into insolvent banks, pump-up the stock markets, and recycle Treasurys. Otherwise why would Obama's Chief Economic Advisor, Lawrence Summers say this:

"In the current circumstances the case for fiscal stimulus... is stronger than ever before in my professional lifetime. Unemployment is almost certain to increase -- probably to the highest levels in a generation. Monetary policy has little scope to stimulate the economy given how low interest rates already are and the problems in the financial system. Global experience with economic downturns caused by financial distress suggests that while they are of uncertain depth, they are almost always of long duration." ("A Bailout Is Just a Start", Lawrence Summers, Washington Post)

QE is monetary policy writ large and--by Summers own admission--it won't work. It won't reduce unemployment or spark a credit expansion. That's why total consumer spending is falling, retail sales are flat, and wages are beginning to tank. Everywhere businesses are trimming hours and cutting salaries. Bernanke's $1 trillion in excess bank reserves has had no material effect on lending, credit expansion or jobs. It's been a dead loss. Here's Damian Paletta of the Wall Street Journal:

"U.S. lenders saw loans fall by the largest amount since the government began tracking such data, suggesting that nervousness among banks continues to hamper economic recovery.

Total loan balances fell by $210.4 billion, or 3%, in the third quarter, the biggest decline since data collection began in 1984, according to a report released Tuesday by the Federal Deposit Insurance Corp. The FDIC also said its fund to backstop deposits fell into negative territory for just the second time in its history, pushed down by a wave of bank failures.

The decline in total loans showed how banks remain reluctant to lend, despite the hundreds of billions of dollars the government has spent to prop up ailing banks and jump-start lending. The issue has taken on greater urgency with the U.S. unemployment rate hitting 10.2% in October, even as the economy appears to be stabilizing.

The total of commercial and industrial loans, a category that includes business loans, fell to $1.28 trillion at the end of September, from $1.36 trillion at the end of June. The outstanding total of construction loans, credit cards and mortgages also fell. ("Lending Declines as Bank Jitters Persist" Damian Paletta, Wall Street Journal)

Bernanke, Summers, Geithner and Obama have all misrepresented quantitative easing (QE) so they can improve the liquidity position of the banks without the public knowing what's going on. The fact is, the banks are not "capital constrained" by lack of reserves. Therefore, extra reserves won't lead to increased lending. Here is an excerpt from Billy Blog which clarifies how the banking system really works and how that relates to QE:

"Does quantitative easing work? The mainstream belief is that quantitative easing will stimulate the economy sufficiently to put a brake on the downward spiral of lost production and the increasing unemployment.

It is based on the erroneous belief that the banks need reserves before they can lend and that quantitative easing provides those reserves. That is a major misrepresentation of the way the banking system actually operates. But the mainstream position asserts (wrongly) that banks only lend if they have prior reserves. The illusion is that a bank is an institution that accepts deposits to build up reserves and then on-lends them at a margin to make money. The conceptualization suggests that if it doesn’t have adequate reserves then it cannot lend. So the presupposition is that by adding to bank reserves, quantitative easing will help lending.

But this is a completely incorrect depiction of how banks operate. Bank lending is not “reserve constrained”. Banks lend to any credit worthy customer they can find and then worry about their reserve positions afterwards. If they are short of reserves (their reserve accounts have to be in positive balance each day and in some countries central banks require certain ratios to be maintained) then they borrow from each other in the interbank market or, ultimately, they will borrow from the central bank through the so-called discount window. They are reluctant to use the latter facility because it carries a penalty (higher interest cost).

The point is that building bank reserves will not increase the bank’s capacity to lend. Loans create deposits which generate reserves." (Billy Blog, Bill Mitchell)


So, if bank lending is not constrained by lack of reserves, then what does QE actually do?

Not much, apparently. All quantitative easing does is exchange one type of financial asset (long-term bonds) with another (reserve balances). "The net financial assets in the private sector are in fact unchanged although the portfolio composition of those assets is altered (maturity substitution) which changes yields and returns." (Bill Mitchell)

The net result of Bernanke's meddling is just this: Quantitative easing and the lending facilities have kept the price of financial assets artificially high, which has minimized financial sector deleveraging. (Financial sector debt is currently $16.4 trillion, nearly the same as it was a year ago. $16.3 trillion) In contrast, households have lost $13 trillion which has thrust the middle class into a severe downturn. Bernanke's policies have made a bad situation even worse.

TIGHTENING THE NOOSE

The Fed is engaged in various strategies to recapitalize the banking system. At the same time, Bernanke, Summers, Geithner, and Obama have stated repeatedly, that they're committed to slashing the long-term deficits. This means that they plan to reduce liquidity and push the economy back into recession so they can launch an attack on Medicaid, Medicare, and Social Security. Last Thursday, Bernanke announced that he will begin to tighten the noose as early as March 31 2010, when the Fed ends its $1.65 trillion purchases of agency debt, mortgage-backed securities, and US Treasurys. That's why stock market volatility has picked up since the Fed released its December 16 statement. Here's a clip:

"In light of ongoing improvements in the functioning of financial markets, the Committee and the Board of Governors anticipate that most of the Federal Reserve’s special liquidity facilities will expire on February 1, 2010,... These facilities include the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, and the Term Securities Lending Facility. The Federal Reserve will also be working with its central bank counterparties to close its temporary liquidity swap arrangements by February 1. The Federal Reserve expects that amounts provided under the Term Auction Facility will continue to be scaled back in early 2010. The anticipated expiration dates for the Term Asset-Backed Securities Loan Facility remain set at June 30, 2010, for loans backed by new-issue commercial mortgage-backed securities and March 31, 2010, for loans backed by all other types of collateral."

By April 1, 2010 the mortgage monetization program will be over; long-term interest rates will rise and housing prices will fall. When the Fed withdraws its support, liquidity will drain from the system, stocks will drop, and the economy will slide back into recession. Obama's second blast of fiscal stimulus--which is a mere $200 billion dollars---won't make a lick of difference.

The Obama administration and the Fed are on the same page. There will be no lifeline for the unemployed or the states. Those days are over. Now it's on to "starve the beast" and crush the middle class. Maestro Greenspan summed up the Fed's approach in a recent appearance on Meet the Press when he opined,

"I think the Fed has done an extraordinary job and it's done a huge amount (to bolster employment). There's just so much monetary policy and the central bank can do. And I think they've gone to their limits, at this particular stage."

World Has Betrayed Gaza Civilians: Rights Groups

World Has Betrayed Gaza Civilians: Rights Groups

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The world has "betrayed" civilians in the Gaza Strip by failing to end a blockade of the Hamas-run enclave, 16 rights groups, including Amnesty International and Oxfam, said Tuesday.

"The international community has betrayed the people of Gaza by failing to back their words with effective action to secure the ending of the Israeli blockade which is preventing reconstruction and recovery," said the report.

Israel and Egypt have allowed only vital humanitarian aid into the territory since the Islamist Hamas seized power there in June 2007.

"It is not only Israel that has failed the people of Gaza with a blockade that punishes everybody living there for the acts of a few," said Jeremy Hobbs, executive director of Oxfam International.

"World powers have also failed and even betrayed Gaza's ordinary citizens. They have wrung hands and issued statements, but have taken little meaningful action to attempt to change the damaging policy that prevents reconstruction."

The groups said that Israel had allowed only 41 truckloads of construction materials into Gaza since a devastating 22-day war launched by the Jewish state nearly a year ago ended with mutual ceasefires on January 18.

"Little of the extensive damage the offensive caused to homes, civilian infrastructure, public services, farms and businesses has been repaired" because of the shortages, the report said.

Some 1,400 Palestinians and 13 Israelis were killed during the war, which flattened portions of Gaza, an impoverished territory where the vast majority of the population relies on foreign aid.

Israel controls all but one of Gaza's border crossings, the Rafah terminal with Egypt, which Cairo rarely opens.

"Sick, traumatised and impoverished people are being collectively punished by a cruel, illegal policy imposed by the Israeli authorities," said Kate Allen, director of Amnesty International UK.

"Israel's responsibility to protect its citizens does not give it the right to punish every man, woman and child of Gaza," she added.

The groups also urged rival Palestinian factions to create a unified government capable of delivering aid, and said militant groups should refrain from rocket attacks from Gaza.

"Hamas and other Palestinian armed groups, too, must maintain their current de facto cessation of violence and permanently cease all indiscriminate firing of rockets into Israel," Hobbs wrote.

The report called on European foreign ministers to visit Gaza to see the damage for themselves and urged the EU to do all it can to lift the blockade.

Other groups signing the report include: Broederlijk Delen, CAFOD, CCFD Terre Solidaire, Christian Aid, Church of Sweden, Diakonia, Finn Church Aid, Medical Aid for Palestinians, medico international, medico international schweiz, Mercy Corps, MS ActionAid Denmark, Trocaire, and United Civilians for Peace.

Iran Sanctions Are a Precursor to War

Iran Sanctions Are a Precursor to War

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Last week the House overwhelmingly approved a measure to put a new round of sanctions on Iran. If this measure passes the Senate, the United States could no longer do business with anyone who sold refined petroleum products to Iran or helped them develop their ability to refine their own petroleum. The sad thing is that many of my colleagues voted for this measure because they felt it would deflect a military engagement with Iran. I would put the question to them, how would Congress react if another government threatened our critical trading partners in this way? Would we not view it as asking for war?

This policy is pure isolationism. It is designed to foment war by cutting off trade and diplomacy. Too many forget that the quagmire in Iraq began with an embargo. Sanctions are not diplomacy. They are a precursor to war and an embarrassment to a country that pays lip service to free trade. It is ironic that people who decry isolationism support actions like this.

If a foreign government attempted to isolate the US economically, cut off our supply of gasoline, or starve us to death, would it cause Americans to admire that foreign entity? Or would we instead unite under the flag for the survival of our country?

We would not tolerate foreign covert operations fomenting regime change in our government. Yet our CIA has been meddling in Iran for decades. Of course Iranians resent this. In fact, many in Iran still resent the CIA’s involvement in overthrowing their democratically elected leader in 1953. The answer is not to cut off gasoline to the Iranian people. The answer is to stay out of their affairs and trade with them honestly. If our operatives were no longer in Iran, they would no longer be available as scapegoats for the regime to, rightly or wrongly, blame for every bad thing that happens. As bad as other regimes may be, it is up to their own people to deal with them so they can achieve true self-determination. When foreigners instigate regime change, the new government they institute is always perceived as serving the interest of the overthrowing country, not the people. Thus we take the blame for bad governance twice. Instead we should stay out of their affairs altogether.

With the exception of the military industrial complex, we all want a more peaceful world. Many are hysterical about the imminent threat of a nuclear Iran. Here are the facts: Iran has never been found out of compliance with the nuclear non-proliferation treaty (NPT) they signed. However, being surrounded by nuclear powers one can understand why they might want to become nuclear capable if only to defend themselves and to be treated more respectfully. After all, we don’t sanction nuclear capable countries. We take diplomatic negotiations a lot more seriously, and we frequently send money to them instead. The non-nuclear countries are the ones we bomb. If Iran was attempting to violate the non-proliferation treaty, they could hardly be blamed, since US foreign policy gives them every incentive to do so.

The Dehumanization of the Enemy

Racism and War:
The Dehumanization of the Enemy:

Our real enemy is not the ones living in a distant land whose names or policies we don't understand; The real enemy is a system that wages war when it's profitable, the CEOs who lay us off our jobs when it's profitable, the Insurance Companies who deny us Health care when it's profitable, the Banks who take away our homes when it's profitable. Our enemies are not several hundred thousands away. They are right here in front of us - Mike Prysner

Racism and War: the Dehumanization of the Enemy:

Mike Prysner describes a mission he took part in which his unit forced Iraqis out of half a dozen homes, with no compensation, so the US military could use them. “One family in particular, a woman with two small girls, very elderly man, and two middle-aged men—we dragged them from their houses and threw them onto the street, and arrested the men because they refused to leave.” Since he left, he has been plagued by guilt “anytime I see a mother with her children, like the one who cried hysterically and screamed that we were worse than Saddam as we forced her from her home, …anytime I see a young girl like the one I grabbed by the arm and dragged into the street.” Prysner also describes the physical abuse of a wounded prisoner, with a sandbag over his head and his hands tied behind his back. “We were told we were fighting terrorists; the real terrorist was me, and the real terrorism is this occupation.” See http://snipurl.com/tt0ui

Americans Are Hell-Bent on Tyranny

Americans Are Hell-Bent on Tyranny

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Obama’s dwindling band of true believers has taken heart that their man has finally delivered on one of his many promises--the closing of the Guantanamo prison. But the prison is not being closed. It is being moved to Illinois, if the Republicans permit.

In truth, Obama has handed his supporters another defeat. Closing Guantanamo meant ceasing to hold people in violation of our legal principles of habeas corpus and due process and ceasing to torture them in violation of US and international laws.

All Obama would be doing would be moving 100 people, against whom the US government is unable to bring a case, from the prison in Guantanamo to a prison in Thomson, Illinois.

Are the residents of Thomson despondent that the US government has chosen their town as the site on which to continue its blatant violation of US legal principles? No, the residents are happy. It means jobs.

The hapless prisoners had a better chance of obtaining release from Guantanamo. Now the prisoners are up against two US senators, a US representative, a mayor, and a state governor who have a vested interest in the prisoners’ permanent detention in order to protect the new prison jobs in the hamlet devastated by unemployment.

Neither the public nor the media have ever shown any interest in how the detainees came to be incarcerated. Most of the detainees were unprotected people who were captured by Afghan war lords and sold to the Americans as “terrorists” in order to collect a proffered bounty. It was enough for the public and the media that the Defense Secretary at the time, Donald Rumsfeld, declared the Guantanamo detainees to be the “780 most dangerous people on earth.”

The vast majority have been released after years of abuse. The 100 who are slated to be removed to Illinois have apparently been so badly abused that the US government is afraid to release them because of the testimony the prisoners could give to human rights organizations and foreign media about their mistreatment.

Our British allies are showing more moral conscience than Americans are able to muster. Former PM Tony Blair, who provided cover for President Bush’s illegal invasion of Iraq, is being damned for his crimes by UK officialdom testifying before the Chilcot Inquiry.

The London Times on December 14 summed up the case against Blair in a headline: “Intoxicated by Power, Blair Tricked Us Into War.” Two days later the British First Post declared: “War Crime Case Against Tony Blair Now Rock-solid.” In an unguarded moment Blair let it slip that he favored a conspiracy for war regardless of the validity of the excuse [weapons of mass destruction] used to justify the invasion.

The movement to bring Blair to trial as a war criminal is gathering steam. Writing in the First Post Neil Clark reported: “There is widespread contempt for a man [Blair] who has made millions [his reward from the Bush regime] while Iraqis die in their hundreds of thousands due to the havoc unleashed by the illegal invasion, and who, with breathtaking arrogance, seems to regard himself as above the rules of international law.” Clark notes that the West’s practice of shipping Serbian and African leaders off to the War Crimes Tribunal, while exempting itself, is wearing thin.

In the US, of course, there is no such attempt to hold to account Bush, Cheney, Condi Rice, Rumsfeld, Wolfowitz, and the large number of war criminals that comprised the Bush Regime. Indeed, Obama, whom Republicans love to hate, has gone out of his way to protect the Bush cohort from being held accountable.

Here in Great Moral America we only hold accountable celebrities and politicians for their sexual indiscretions. Tiger Woods is paying a bigger price for his girlfriends than Bush or Cheney will ever pay for the deaths and ruined lives of millions of people. The consulting company, Accenture Plc, which based its marketing program on Tiger Woods, has removed Woods from its Web site. Gillette announced that the company is dropping Woods from its print and broadcast ads. AT&T says it is re-evaluating the company’s relationship with Woods.

Apparently, Americans regard sexual infidelity as far more serious than invading countries on the basis of false charges and deception, invasions that have caused the deaths and displacement of millions of innocent people. Remember, the House impeached President Clinton not for his war crimes in Serbia, but for lying about his
affair with Monica Lewinsky.

Americans are more upset by Tiger Woods’ sexual affairs than they are by the Bush and Obama administrations’ destruction of US civil liberty. Americans don’t seem to mind that “their” government for the last 8 years has resorted to the detention practices of 1,000 years ago--simply grab a person and throw him into a dungeon forever without bringing charges and obtaining a conviction.

According to polls, Americans support torture, a violation of both US and international law, and Americans don’t mind that their government violates the Foreign Intelligence Surveillance Act and spies on them without obtaining warrants from a court. Apparently, the brave citizens of the “sole remaining superpower” are so afraid of terrorists that they are content to give up liberty for safety, an impossible feat.

With stunning insouciance, Americans have given up the rule of law that protected their liberty. The silence of law schools and bar associations indicates that the age of liberty has passed. In short, the American people support tyranny. And that’s where they are headed.

USA Spends Trillion Dollars to Make Terrorist War Last Forever

USA Spends Trillion Dollars to Make Terrorist War Last Forever

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The US has spent over one trillion dollars on the struggle against terrorism since the 9/11 terrorist attacks. Iraq has taken the lion’s share of the amount - $748 billion. The spending on anti-terrorist operations in Afghanistan is 2.5 times less.

The current US administration intends to assign $128.3 billion for “anti-terrorist activities” in the two countries with $65 billion of that – for Afghanistan. The increase in spending for this country is connected with a perspective to send 30,000 more servicemen to Afghanistan during the upcoming six months. Therefore, the United States will have to double its previous Afghan spending.

The Congress will have to approve the numbers in February. Many congressmen criticized Obama for such a decision and may not uphold the initiative.

The anti-terrorist spending does not include the costs on the wars in Iraq and Afghanistan. Numerous arms deals and the construction of military objects also require a lot of money. The list continues with bills for medical care of those injured in battles, government compensations to families and veterans, security measures to defend US embassies and other programs.

The training of Afghan security forces will cost $7.5 billion. A large amount, which has not been specified, will be spent on purchasing 1,400 armored vehicles. About $2 billion is to be spent on army intelligence to buy Predator and Reaper spy planes.

There is also an item of expense to encourage the Talibs who decide to lay down their arms.

Expert Sergey Golubev believes that the level of the terrorist threat in the world has grown because of the US-led anti-terrorist efforts.

“They spent a trillion dollars to add more fuel to the fire of the terrorist war. The Americans crushed Iraq and Afghanistan . There are too many people in these two countries who lost their homes, jobs and loved ones because of the USA, and those people are ready to do anything to harm the Americans. Washington will have to pay for this politics. As for the situation in other countries, one may say that there is no country in the world that can defend itself against terrorist attacks. Recent attacks in India’s Mumbai prove that,” the expert said.

Pavel Zolotarev, deputy director of the Institute for the USA and Canada believes that the spending of one trillion dollars was absolutely justifiable.

“There are problems in Afghanistan, of course, but the Americans have achieved the most important thing: there were no terrorist attacks conducted in the USA during the recent eight years. Unfortunately, the situation in Russia and many other countries is different, and we are not secured against terror attacks still,” the expert said.

US Senate bill advance sparks health care stock rally

US Senate bill advance sparks health care stock rally

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Health care company shares rose sharply this week, with the Senate health care bill poised for a final vote and passage Thursday morning. The stock market rally offered one more indication that the Obama-sponsored legislation—far from offering relief from health care hardships for ordinary Americans—will boost the giant insurers’ and pharmaceuticals’ profits, and that the industry and Wall Street are keenly aware of this fact.

The health care sector has conducted a concerted effort over the past year to ensure that the legislation is crafted in its interests, with spending by an estimated 3,300 lobbyists expected to top $1 billion for the past two years. (See “Health care profiteers: A billion-dollar industry”) The industry has been handsomely rewarded with a bill that will deliver millions of new cash-paying customers to private insurers, while placing virtually no limits on what the insurance companies can charge.

At the same time, any fears on the part of private insurers that the final Senate bill would contain a government-run “public option” were put to rest when Senator Joseph Lieberman, independent of Connecticut, threatened to withhold his critical vote if it were included; the measure was summarily dumped. Although the public option would have at best provided only a fig leaf of reform to an otherwise reactionary piece of legislation, the insurance industry was vehemently opposed to any measure representing even the hint of a threat to its profits.

Following the 60-40 vote early Monday morning to end debate on the bill—averting a Republican filibuster and clearing the way for its passage—a number of health care stocks saw considerable gains. That day the Standard and Poor’s Managed Health Care index rose 4.6 percent and the S&P Healthcare Index was up 1.4 percent, while the Morgan Stanley Healthcare Payors stock index rose 3.6 percent.

Oppenheimer Asset Management analyst Carl McDonald commented in a research note, “All in all, relative to the last version of health reform issued by the Senate, things have turned out pretty well for the health insurance industry.” He added, “In particular, all versions of a government-run health plan have largely been eliminated.”

Private insurer stocks seeing significant gains Monday were: Cigna Corp., 5.3 percent; Aetna Inc., 5.84 percent; Humana Inc., 3.79 percent; UnitedHealth Group Inc., 5 percent; and WellPoint Inc., 3.8 percent.

The pharmaceutical benefits sector also saw gains, with Medco Health Solutions Inc. shares rising Monday by 3.84 percent and Express Scripts going up 5.2 percent.

Shares of Allergan Inc., maker of Botox, rose by 1.7 percent Monday after a proposed 5 percent tax on the anti-wrinkle treatment was ditched in favor of a 10 percent tax on tanning salons.

Revisions to the Senate bill also delayed a nearly $20 billion tax on medical device manufacturers until 2011, reflected in stock gains in this sector: St. Jude Medical Inc. rose 1 percent, Stryker Corp. 0.6 percent and Zimmer Holdings Inc. 0.9 percent.

Hospital chains also saw gains, on expectations that provisions of the Senate legislation will reduce the number of uninsured patients seeking hospital care. Over the past week, Tenet Healthcare Corp. shares were up 8.4 percent; and Community Health Systems Inc. stock climbed 5.5 percent in value.

These companies will see an influx of new customers—estimated at some 30 million—resulting in increased profits. Sheryl R. Skolnick, managing director at Pali Capital, told the Wall Street Journal that any health care overhaul that increases the number of people with insurance “is good reform as long as it pays more than Medicare,” and that both the House and Senate bills would do this.

Monday’s boost for stock shares followed a general rise over the past two months, beginning around the time Connecticut’s Lieberman first signaled that he would filibuster with the Republicans if the Senate bill included a public option.

The Huffington Post reported the following sharp gains for major health insurance companies from October 27 through December 18:

• Coventry Health Care Inc., up 31.6 percent

• Cigna Corp., up 29.1 percent

• Aetna Inc., up 27.1 percent

• WellPoint Inc., up 26.6 percent

• UnitedHealth Group Inc., up 20.5 percent

• Humana Inc., up 13.6 percent

These figures show that investors are (correctly) interpreting the Senate health plan as a massive subsidy for private insurers. Oppenheimer strategist Brian Belski remarked, “It’s like a blanket has been lifted off this sector.” (By comparison, during this same period the Dow Jones Industrial Average was up 2.3 percent and the NASDAQ rose by only 1.4 percent.)

In anticipation of the Senate bill’s passage, Gregory Nersessian of Credit Suisse raised his price targets on seven insurers—Aetna, Cigna, Amerigroup Corp., Humana, Molina Healthcare Inc., UnitedHealth Group, and Wellcare Health Plans Inc.—a prediction of greater strength of stock performance.

Central to both the House and Senate versions of the health care legislation is the legal obligation of individuals and families to obtain insurance or pay a penalty, while, on the other hand, no restrictions are placed on what the insurance companies can charge for this coverage. Private insurers are expecting to haul in as much as $50 billion in new annual revenue, coming both from new paying customers and government subsidies.

To counteract measures in the Obama-sponsored legislation that prohibit insurers from denying coverage for people with pre-existing conditions, or from charging these customers higher premiums, the insurance companies will respond in a manner that protects every cent in their bottom line: by either raising premium prices for everyone or cutting benefits across the board.

Private insurers also fared well with a revision in the Senate bill on health insurance industry taxation. Under the original Senate bill the industry would have been taxed a fixed $6.7 billion a year. According to the revised proposal, health insurers would be taxed $2 billion in 2011, with increases over time rising to $10 billion in 2017.

US ground attacks reported in Pakistan

US ground attacks reported in Pakistan

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Amid a deepening political crisis in Pakistan and growing popular unrest over US missile strikes and mercenaries, it has been revealed that over the past five years US special operations troops have conducted a number of clandestine cross-border raids into the country’s tribal areas.

These raids involved “helicopter-borne elite soldiers stealing across the border at night, and were never declared to the Pakistani government,” according to a “former NATO officer” cited in an article published Monday by the British daily Guardian.

The only publicly acknowledged incursion by US forces took place on September 3, 2008, when US Navy Seals were flown by helicopter into a village in South Waziristan, where they raided three compounds and slaughtered some 20 people. While Washington claimed those killed were Al Qaeda fighters, the Pakistani government said that the victims were all villagers and included six women and two children.

The incident provoked widespread outrage in Pakistan, with the government denouncing the attack as a “grave provocation” and the country’s parliament demanding that the military use force to repel any further violations of the country’s sovereignty. Unnamed US officials told the media that the Pakistani regime had acquiesced to the raid, something Islamabad vehemently denied.

According to the Guardian account, however, the raid was the fourth such incursion to take place between 2003 and 2008. Two of the previous assaults had been similar assassination or “snatch and grab” missions against alleged Al Qaeda members, while a third was launched to recover a downed Predator drone, which the US military feared would fall into the hands of the Afghan resistance.

It was reported following the 2008 raid that President George W. Bush had issued a secret order allowing the US military to carry out cross-border attacks into Pakistan on the theory that the country, together with Afghanistan, were all part of the same theater in the “global war on terrorism.”

This policy has apparently been continued by President Barack Obama and is about to be intensified as part of the administration’s military escalation, which is sending at least 30,000 more troops into Afghanistan.

Since Obama took office, the CIA and US military have doubled the number of missile attacks from pilotless Predator drones, killing hundreds of Pakistani civilians. Now the US administration is demanding that the Pakistani government acquiesce in a further expansion of the drone campaign and that it undertake its own military offensive against Afghan resistance forces operating out of northwest Pakistan’s Federally Administered Tribal Areas, near the Afghanistan border.

A steady stream of top US officials, including CIA Director Leon Panetta and Joint Chiefs of Staff Chairman Admiral Mike Mullen, have flown to Islamabad to pressure the government of President Asif Ali Zardari and the Pakistani military to fall into line with the Obama administration’s military escalation.

US officials have demanded that the Pakistani military launch an attack against alleged sanctuaries of the so-called Haqqani network in North Waziristan. The group is led by Sirajuddin Haqqani and his father Jalaluddin. In the 1980s, the latter was one of the principal recipients of US arms and money during the CIA-backed war against the pro-Soviet regime in Kabul.

Washington is also pressing the Pakistani government to give it a green light for expanding the drone missile strikes from the tribal areas to Baluchistan, Pakistan’s largest province. Baluchistan borders Helmand province in Afghanistan, where much of the US and British counterinsurgency operation has been concentrated.

Press reports in both the US and Pakistan indicate that US officials have gone so far as to propose drone attacks on Quetta, a crowded city of nearly 600,000. The Pentagon and US intelligence agencies claim that Taliban leaders, including Mullah Omar, the founder of the movement, plan and direct military operations in Afghanistan from a safe haven in the city.

The Pakistani daily Dawn reported Wednesday that “Diplomatic sources say Pakistani leadership had been unequivocally cautioned by various official visitors from the US that if Pakistan failed to act, the Americans could take direct action, including expansion of drone strikes in Baluchistan.”

Tensions have mounted between Islamabad and Washington. While the Pakistani government and military have long done US imperialism’s bidding in the region, the war in neighboring Afghanistan and the US incursions into Pakistan are threatening to destabilize the entire country. Out of self-preservation, the Pakistani ruling elite appears to be balking at the latest US demands.

This was reflected in an appearance Tuesday by Foreign Minister Shah Mahmood Qureshi before the foreign affairs committee of Pakistan’s National Assembly, where he criticized the Obama administration’s escalation strategy.

According to a statement issued by the Foreign Ministry, he told legislators that the Zardari government would not allow either the entry of US and NATO troops into Pakistan in so-called “hot pursuit” or the expansion of the drone missile campaign.

“There are serious implications of the new US Afghanistan strategy for Pakistan,” Qureshi was quoted as saying in the ministry statement. “As a result of the military surge, there could be more violence in Afghanistan which could, in turn, result in further influx of militants and refugees from Afghanistan into Pakistan.”

The minister described the drone attacks as “counter-productive and unhelpful.” This formal position of the Pakistani government is belied by the fact that the CIA is launching these strikes from an airfield in Baluchistan, with the evident knowledge and consent of Islamabad.

The Associated Press, meanwhile, cited an unnamed “senior US diplomat” as stating that “more US action is expected against the Haqqani network,” and that it “would come with Pakistani support.”

Thus far, the Pakistani military has rejected US demands that it launch a new offensive in North Waziristan to go after Haqqani’s forces. It has maintained that its troops are already committed to an offensive in South Waziristan and that it cannot carry out the two campaigns simultaneously.

“We cannot fight on so many fronts,” a Pakistani security official told the Times of London.

This approach has angered Washington, which maintains that the Pakistani government is willing to use force against Pakistani Taliban militants carrying out attacks within its borders, but not against elements using Pakistan to launch attacks on US occupation forces in neighboring Afghanistan.

Underlying the Pakistani position, according to many analysts, are the longstanding ties between the Haqqanis and the Pakistan military intelligence agency, Inter-Services Intelligence, or ISI.

Pakistan’s influence over the Taliban and resistance elements allied with it is seen as a means of securing Pakistani interests in Afghanistan once the US is forced to withdraw from the country. Islamabad is particularly fearful of a growing Indian presence in Afghanistan.

“If America walks away, Pakistan is very worried that it will have India on its eastern border and India on its western border in Afghanistan,” Tariq Fatemi, a former Pakistani ambassador to the US, told the New York Times.

Contributing to the growing US-Pakistani tensions is the political crisis of the Pakistani regime, which has been shaken by a high court ruling striking down an amnesty brokered by the Bush administration with the country’s former military dictator, General Pervez Musharraf. The deal protected politicians of Zardari’s Pakistani People’s Party (PPP) from corruption charges.

Now, Defense Minister Ahmed Muktar and Interior Minister Rehman Malik, two of the key figures in coordinating military policy with Washington, are facing criminal indictments and have been barred from leaving the country. The opposition parties have demanded that the government resign.

The Obama administration’s special representative for Afghanistan and Pakistan, Richard Holbrooke, commented on what he called “the major political drama unfolding in Islamabad” in an appearance on the US Public Broadcasting System interview program hosted by Charlie Rose.

“How it’s going to come out remains to be seen,” said Holbrooke, adding, “It’s something that we are watching very carefully.”

In the same interview, Holbrooke described as a “dilemma” that “the leadership of both Al Qaeda and Taliban are in a neighboring country where our troops cannot fight.” He said that the US would “have to find other means” to deal with the issue. He defended the US drone missile attacks, described by human rights agencies as extra-judicial executions. “Some of the most dangerous people in the world…are not alive today,” because of the strikes, he said.

But the missile strikes, combined with the growing US presence in Pakistan, are provoking mounting popular opposition.

This has taken the form in recent weeks of demonstrations in several Pakistani cities against the reported presence in the country of US mercenaries from the infamous military contracting firm, Blackwater-Xe.

Thousands of people attended an anti-Blackwater rally Sunday in Rawalpindi, Pakistan’s fourth-largest city and the headquarters of its military. Called by Jamaat-e-Islami, Pakistan’s largest Islamist party, under the slogan “Go America, Go,” the rally’s speakers denounced Blackwater as “US terrorists” and charged that Washington was undermining Pakistan’s sovereignty and deliberately seeking to destabilize the country in order to seize control of its nuclear weapons.

Last weekend, hundreds of lawyers from the Islamabad Bar Association staged another anti-Blackwater rally outside the Police Training College in Sihala, demanding that the government expel foreign instructors, who, the demonstrators charged, were Blackwater operatives. The lawyers and others have also charged that the training operation is being used as a cover for US spying on Pakistan’s nearby Kahuta nuclear facility. Following the protest, the Pakistani government announced that it was moving the training college to a police headquarters in Islamabad.

Blackwater changed its name to Xe Services because of the company’s gruesome reputation following a 2007 massacre of 17 Iraqi civilians by its gunmen.

Both Washington and Blackwater executives deny that any of its personnel are deployed in Pakistan. Multiple press reports in both the US and Britain, however, have cited current and former US officials as saying that the mercenary outfit is indeed active in Pakistan.

Jeremy Scahill, author of the book Blackwater: the Rise of the World’s Most Powerful Mercenary Army, reported in the Nation magazine last month that Blackwater is playing a leading role in gathering intelligence for and executing the drone attacks, and that it is “at the center of a secret program in which they plan targeted assassinations of suspected Taliban and Al Qaeda operatives.”

The drone attacks, the cross-border raids by Special Operations troops and the use of American mercenaries, combined with the escalating pressure from Washington for an expansion of Pakistani military offensives in the Afghanistan border region, are all contributing to the political destabilization of this nuclear-armed country of 180 million people.

Carried out in secret and behind the backs of the American people, this crucial element of the Obama administration’s military escalation threatens to unleash a far wider war.

Happy Holidays From America's Banks

Happy Holidays From America's Banks

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Never mind Barack Obama's Audacity of Hope. It's the audacity of the banks that takes your breath away. Mean old Mr. Potter in It's a Wonderful Life seems like Father Christmas by comparison.

A recent report that Citigroup and Goldman Sachs may have received preferential treatment getting doses of the swine flu vaccine was enough to give Ebenezer Scrooge the yips. Then came news that in order for us to get back the taxpayer bailout money we loaned them, Citigroup is receiving billions of dollars in tax breaks from the IRS.

And there's a new study this week, "Rewarding Failure," from the public interest group Public Citizen, revealing that in the years leading up to the financial meltdown, the CEO's of the 10 Wall Street giants that either collapsed or got huge amounts of TARP money were paid an average of $28.9 million dollars a year.

In 2007, that amounted to 575 times the median income of an American family. Now, thanks in part to the banks' monumental malfeasance that led to our economic swan dive, food stamps are now being used to feed one in eight Americans, and a quarter of all the kids in this country. A new poll from The New York Times and CBS News reports that more than half of our unemployed have borrowed money from friends and relatives and have cut back on medical treatment. The Times wrote that, "Joblessness has wreaked financial and emotional havoc on the lives of many of those out of work... causing major life changes, mental health issues and trouble maintaining even basic necessities."

Yet according to the non-profit Americans for Financial Reform the reported $150 billion that Wall Street is paying itself in compensation and bonuses this year would be enough to solve the budget crisis of every one of the fifty states or create millions of jobs or prevent all foreclosures for four years.

All of this wretched excess is occurring as more and more people can't afford a roof over their heads. Foreclosures were up another five percent in the third quarter - 23 percent more than a year ago. Fewer Americans are willing to buy foreclosed properties, and the Obama administration's foreclosure prevention plan has been a bust so far - way too timid, critics say, and many of the banks won't play ball, refusing to negotiate in good faith with homeowners desperate to hold on.

We got a first hand look at the crisis this week, when thousands lined up at the Jacob Javits Convention Center just a few blocks from our Manhattan offices to attend a mortgage assistance event sponsored by the non-profit Neighborhood Assistance Corporation of America (NACA). So many showed up for this leg of the "Save the Dream Tour" that on many days, staff and volunteers stayed to help until one in the morning.

NACA has had success getting homeowners and banks together to work out a deal to prevent foreclosure. But the big banks' return to the government of the TARP bailout money with which we underwrote them over the last 14 months is a mixed blessing - great to have the cash returned so quickly, terrible because any leverage Washington held over the banks because of the loans virtually vanishes with the payback. They're back in the saddle and not inclined to be of much assistance helping anyone else out, especially those in mortgage trouble.

As Andrew Ross Sorkin of The New York Times wrote in the wake of President Obama's Monday meeting with Wall Street's top guns (three of whom failed to show up because of airport delays), "Executive compensation , leverage limits and lending standards were all issues that Washington said it planned to change - and when the taxpayers were the shareholders of these firms, it probably could have done so. But now the White House has been left in the position of extending invitations, rather than exercising its clout. And in the figurative and literal sense, it is getting stood up."

Afterwards, Obama said, "The problem is there's a big gap between what I'm hearing here in the White House and the activities of lobbyists on behalf of these institutions or associations of which they're a member up on Capitol Hill."

That's putting it mildly. This week, the American Bankers Association sent out an update and "call to action" memorandum crowing over its success watering down the bank reform bill that was approved by the House and urging its members to beat back similar legislation in the Senate. Self-righteously, it concludes, "As one of your New Year's resolutions, please vow to do everything in your power to show, and to have your colleagues in your bank show, your Senators the right path to true reform."

It helps when the right path is paved with silver and gold. As "Crossing Wall Street," a November report from the Center for Responsive Politics notes, "The finance, insurance and real estate sector has given $2.3 billion to candidates, leadership PACs and party committees since 1989, which eclipses every other sector...

"The financial sector has also been a voracious lobbying force, spending an unprecedented $3.8 billion since 1998, while sending an army of lobbyists to Capitol Hill to make its case. That's more money than any other sector has spent on influence peddling. Not even the health care sector, which spun up a lobbying frenzy this year over health reform, has spent more."

The banks are making a list and checking it twice. And lest we forget, during his run for the White House, the finance sector filled Barack Obama's stocking with $39.5 million dollars worth of campaign contributions, more than any other presidential candidate.

God bless us, every one!

Compulsory Private Health Insurance: Just Another Bailout for the Financial Sector

Compulsory Private Health Insurance: Just Another Bailout for the Financial Sector?

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Dr. Benjamin Rush, a signer of the Declaration of Independence, is quoted as warning two centuries ago:

"Unless we put medical freedom into the Constitution, the time will come when medicine will organize into an underground dictatorship. . . . The Constitution of this republic should make special privilege for medical freedom as well as religious freedom."

That time seems to have come, but the dictatorship we are facing is not the sort that Dr. Rush was apparently envisioning. It is not a dictatorship by medical doctors, many of whom are as distressed by the proposed legislation as the squeezed middle class is. The new dictatorship is not by doctors but by Wall Street - the FIRE (finance, insurance and real estate) sector that now claims 40 percent of corporate profits.

Economist L. Randall Wray observes that ever since Congress threw out the Glass-Steagall Act separating commercial banking from investment banking, insurance and Wall Street finance have been "two peas in a pod." He writes:

"[T]here is a huge untapped market of some 50 million people who are not paying insurance premiums—and the number grows every year because employers drop coverage and people can't afford premiums. Solution? Health insurance 'reform' that requires everyone to turn over their pay to Wall Street. . . . This is just another bailout of the financial system, because the tens of trillions of dollars already committed are not nearly enough."

The health reform bills now coming through Congress are not focused on how to make health care cheaper or more effective, how to eliminate waste and fraud or how to cut out expensive middlemen. As originally envisioned, the public option would have pursued those goals. But the public option has been dropped from the Senate bill and radically watered down in the House bill. Rather than focusing on making health care affordable, the bills focus on how to force people either to buy health insurance if they don't have it, or to pay more for it if they do. If you don't have insurance and don't purchase it, you will be subject to a hefty fine. And if you do purchase it, premiums, co-pays, co-insurance payments and deductibles are liable to keep health care cripplingly expensive. Most of the people who don't have health care can't afford to pay the deductibles, so they will never use the plans they are forced to buy.

To subsidize those who can't pay, the Senate bill would make families earning two to four times the poverty level who don't have employer-sponsored insurance surrender 8 to 12 percent of their income to insurance payments, or pay a fine. In another effort to make insurance payments "affordable," the Senate bill calls for the lowest-cost plan to cover only 60 percent of health care costs. "In other words," wrote Dr. Andrew Coates in a November 23 article, "a guarantee of insurance industry dominance and the continued privatization of health care in every arena."

An excellent analysis was posted on December 22 by a national organization of 17,000 physicians called Physicians for a National Health Program. The authors observed:

"Some paint the Senate bill as a flawed first step to reform that will be improved over time, citing historical examples such as Social Security. But where Social Security established the nidus of a public institution that grew over time, the Senate bill proscribes any such new public institution. Instead, it channels vast new resources – including funds diverted from Medicare – into the very private insurers who caused today's health care crisis. Social Security's first step was not a mandate that payroll taxes which fund pensions be turned over to Goldman Sachs! . . .

"The bill would drain $43 billion from Medicare payments to safety-net hospitals, threatening the care of the 23 million who will remain uninsured even if the bill works as planned. . . . The bill would leave hundreds of millions of Americans with inadequate insurance – an 'actuarial value' as low as 60 percent of actual health costs. . . . The bill would inflate the already crushing burden of insurance-related paperwork that currently siphons $400 billion from care annually. . . . [T]he bill will cause U.S. health costs to increase even more rapidly than presently, and budget neutrality is to be achieved by draining funds from Medicare and an accounting trick – front-loading the new revenues while delaying most new coverage until 2014."

The Right to Sovereignty Over Our Own Bodies

Compulsory health insurance is like compulsory selective military service (the draft), except that all of our numbers have come up. The argument has been made that auto insurance is compulsory, so why not health insurance? But the obvious response is that you can choose to drive a car. The only way to escape the vehicle we call a body is to give up the ghost.

And that brings up another issue alluded to by Dr. Rush: the matter of freedom of choice in health care, which some people would equate with freedom of religion. Not everyone believes in modern medicine. If we the people have a right to choose what we believe about life after death, we should have the right to choose what we believe about life before death, by choosing how to maintain our own bodies.

The conventional treatment promoted by the medical/pharmaceutical complex is an aggressive approach that can wind up killing the patient as collateral damage in its war on the disease. Among other researchers questioning the wisdom of this approach is Gary Null, who reported the results of an exhaustive independent review by the Nutrition Institute of America in 2004. The reviewers concluded that the number-one killer is not heart disease or cancer, but conventional medicine itself. Conventional medicine was found to be responsible for an estimated 783,936 deaths annually, including 106,000 deaths from adverse drug reactions, 98,000 from medical errors and 88,000 from infection. And those figures were conservative, since no more than 20 percent of iatrogenic (doctor- or drug-caused) mishaps are ever reported.

There are more natural, less invasive alternatives, but most are not covered by insurance, and even such simple remedies as healthy organic food may be too expensive for people forced to use a major portion of their incomes for medical insurance.

A true public option of the Medicare-for-all variety could have solved the problem by keeping health care affordable. If other industrialized countries can find the money for a national health service, we could too. For a model, we could follow the lead of Canada, which originally obtained the funds for its national health service from its own publicly-owned central bank. But that will be the subject of another article. Stay tuned.

End Of The Year: U.S. Recruits Worldwide For Afghan War

End Of The Year: U.S. Recruits Worldwide For Afghan War

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The first of 33,000 more U.S. troops have arrived in Afghanistan for a Christmas surge and they will soon be joined by as many as 10,000 additional non-American troops serving under NATO in the International Security Assistance Force (ISAF). Washington will have over 100,000 uniformed personnel and tens of thousands of new military contractors in the South Asian war zone, and with more than 50,000 other NATO and NATO partner forces present total troop strength will exceed 150,000.

Except for a modest amount of troops assigned to the NATO Training Mission - Iraq in Baghdad, the U.S. with its 120,000 troops is now largely alone in that country. NATO, especially new NATO, member and candidate states were ordered to transfer their forces from Iraq to Afghanistan starting approximately a year ago and are now redeploying soldiers from missions in Kosovo, Lebanon and Chad to the same destination. The Afghan battlefront, then, currently has the largest amount of military forces stationed in any war zone in the world. [1]

Troops from NATO countries stationed in Bosnia, the Central African Republic, Chad, Lebanon and off the coast of Somalia are currently assigned to European Union missions (European warships also participate in NATO's Ocean Shield naval interdiction in Somali waters and the Gulf of Aden) and their transfer to the South Asian war front indicates the virtual interchangeability of armed units assigned to NATO and the European Union. [2]

Since the beginning of this year's escalation of the war in Afghanistan and into neighboring Pakistan, Western public figures and media have dwelt frequently and at length on the war being a - or the - test for the North Atlantic Treaty Organization, ostensibly the major watershed and crucible in its 60-year history.

When the bloc, the world's only military alliance, invoked its Article 5 mutual assistance clause in September of 2001 to support its leading member, the U.S., in its invasion and occupation of Afghanistan, the Alliance was fresh on the heels of its first-ever war: The 78-day bombing campaign against Yugoslavia in early 1999, the first all-out military assault targeting a European nation since Hitler's and Mussolini's attacks and invasions of 1939-1941.

By activating Article 5 - "The Parties agree that an armed attack against one or more of them in Europe or North America shall be considered an attack against them all [and] will assist the Party or Parties so attacked by taking forthwith" - NATO enlisted for its first land war and its first war in Asia.

It also exploited its effective war provision to launch Operation Active Endeavor in early October of 2001, a comprehensive, airtight naval surveillance and interdiction program throughout the entire Mediterranean Sea that monitors all activity in NATO's new mare nostrum (our sea) and dominates all access points into the world's most important sea: The Strait of Gibraltar, the Dardanelles Strait and the Suez Canal, connecting the Mediterranean with the Atlantic Ocean, the Black Sea, the Red Sea and thence to the Indian Ocean, respectively.

The U.S.-led military alliance gained control over that vast stretch of strategic waterways by adopting the American post-September 11, 2001 pretexts of combating terrorism and weapons of mass destruction. The first was the rationale for invading Afghanistan, the second for invading Iraq.

Three years after the inauguration of Active Endeavor, which continues with full force to this day, the NATO summit in Turkey developed the Istanbul Cooperation Initiative which upgraded military partnerships with the members of the bloc's Mediterranean Dialogue - Algeria, Egypt, Israel, Jordan, Mauritania, Morocco and Tunisia - and targeted the six members of the Gulf Cooperation Council - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates - for a similar relationship, one modeled on the Partnership for Peace program that prepared twelve Eastern European nations for accession to full NATO membership over the last decade. [3]

In ten years the military bloc has expanded from its Cold War confines, North America and Western and Southern Europe, into almost all of Eastern Europe including former Warsaw Pact states and Soviet and Yugoslav republics. The bipolar military division of Europe symbolized by the Berlin Wall [4] that ended twenty years ago has been replaced by a unilateral expansion of the world's sole military bloc toward Russia's western borders, from the Baltic to the Black to the Adriatic Seas. From there it has extended its reach through deployments and partnerships into the South Caucasus, Northeastern and Central Africa, and Central and South Asia.

If Afghanistan is a trial or the test of NATO in its sixtieth year, it is not so for the NATO of 1949 but of what leading Alliance officials and other proponents in recent years have referred to as 21st century NATO, expeditionary NATO, global NATO: The first attempt in history to forge an international military alliance. An international armed network with the world's self-proclaimed exclusive superpower and its nuclear arsenal as its foundation and at its core.

The "asymmetric" war in Afghanistan now in its ninth year is a seminal venture for NATO in several respects. In addition to it signifying the bloc's first ground war and its first colonial excursion outside the Euro-Atlantic world, the drawn-out and by all indications indefinite campaign in South Asia is laboratory and training camp, firing range and convergence point for the U.S.'s consolidation of a global military strike and occupation force first tested in Kosovo in 1999 with 50,000 troops under NATO command, then in Iraq after 2003 with tens of thousands of troops from NATO, new NATO and NATO candidate nations. [5]

Washington and Brussels have now dragooned armed contingents from fifty nations on five continents to serve under one commander, General Stanley McChrystal, head of all U.S. and NATO forces in Afghanistan. New contributing states include geographically remote and otherwise diverse countries that include Colombia, Bosnia, Georgia, Montenegro, Mongolia, Armenia and South Korea. All except Mongolia either are or have recently been the scenes of wars or at any moment may be. As numerous statements by political and military leaders of nations supplying troops to NATO for the Afghan war have established, that battleground is an ideal location and opportunity for gaining real-life combat experience for application at home. The bulk of countries in this category border Russia on the latter's northwestern and southwestern flanks. [6]

The defense minister of Austria, one of only a small number of European nations now yet a full NATO member, recently lamented that American officials were pressuring his country to provide more troops for deployment to Afghanistan, having to remind readers of one of his country's newspapers that his is still a sovereign state. As reported in Deutsche Welle, "Austria and the United States are quarreling over Austria's troop levels in Afghanistan. The Austrian government says it feels strong pressure from the US to send more of its troops to the NATO mission."

The South Korean daily Dong-A Ilbo wrote on December 21 that "NATO has invited for the first time a Korean military delegation to a meeting next year of countries sending troops to Afghanistan.

"The dispatch of Korean troops scheduled for July will likely help expedite far-reaching military cooperation between Korea and NATO." The source added that with the advent of the new Lee Myung-bak government in Seoul "As Korea actively participates in international security cooperation, including its decision to send troops to Afghanistan and fully join the Proliferation Security Initiative, NATO's assessment of Korea is changing." The Proliferation Security Initiative (PSI) is a another mechanism, linked with the U.S. thousand-ship navy project as well as NATO's Operation Active Endeavor, to enmesh more and more nations around the world into an international military network run from Washington. [7]

South Korea is already what is identified by NATO as a Contact Country partner, the others being Japan, Australia and New Zealand, serving as the foundation stones for a rapidly emerging "Asian NATO" that includes Singapore and Mongolia - both of whom have or will have troops serving under NATO for the first time, in Afghanistan - as well as the Philippines, Thailand, Brunei and future prospects like India, Bangladesh and Cambodia and the five former Soviet republics in Central Asia as well as Afghanistan and Pakistan. [8]

While advancing eastward, the North Atlantic bloc has also moved south and has begun to formally penetrate Africa, with an air transport mission to the Darfur region of Sudan in 2005 and naval deployments off Somalia in the Horn of Africa beginning in 2007.

Washington's mainstay military ally in South and all of Latin America, Colombia, in addition to turning over seven military bases to the Pentagon in a move that could ignite a war with its neighbors Venezuela and Ecuador, is sending a company of battle-hardened U.S.-trained combat troops to Afghanistan for NATO's ISAF mission. They will bring their own wartime experience to bear in the South Asian nation and will return home, like their Georgian and South Korean military counterparts, also trained by the U.S., better prepared for armed conflict against neighboring states.

In addition to Britain, France and the Netherlands being obligated to lend their colonial possessions in Latin America and off its coasts to their U.S. NATO ally for use against Bolivarian Alliance for the Peoples of Our America (ALBA) members Bolivia, Cuba, Ecuador, Nicaragua and Venezuela (post-coup Honduras is withdrawing), steps have been taken over the past fifteen years to expand NATO ties with other Latin American nations as well as Colombia. [9]

In 1995 Chile and Argentina (under President Carlos Menem) sent troops to serve under NATO in Bosnia, the Alliance's first military deployment outside a member state's territory. This week Chile agreed to prolong the stationing of troops there - the mission since having been transferred from NATO to the European Union - with a government official stating, "We have been able to see Chile together with the North Atlantic Treaty organization in a European country, and the interaction of our armed forces with first-level armies of the world." [10]

The war and war zone trajectory for NATO candidates and partner states over the past fifteen years has been from Bosnia to Kosovo to Macedonia to Iraq and finally Afghanistan. Chilean armed forces, whoever wins next month's presidential run-off election, may eventually be sent to Afghanistan.

Solidifying ties with Chile, which is involved in the current multinational dispute over claims in the Antarctic, and with South Africa, where NATO warships and have docked and conducted naval exercises over the past two years, in addition to Australia which has the largest non-member troop contingent serving under NATO in Afghanistan, the Alliance is positioning itself for the scramble at the southern end of the planet [11] as it is for that at the top of the world. [12]

Two months before the dismantling of the Berlin Wall and the effective end of the Cold War, the triennial summit of the Non-Aligned Movement was held in Belgrade, Yugoslavia. Present were the representatives of 108 nations that defined themselves as militarily non-aligned.

Twenty years later, and with over twenty more countries in the world after the disintegration of the Soviet Union, Czechoslovakia and Yugoslavia itself and the independence of East Timor, the pressure to join in military agreements, partnerships, deployments, exercises and base hosting with the U.S. and NATO is more intense than during the Cold War.

The newly activated U.S. Africa Command alone targets 53 nations for individual and collective partnerships with the Pentagon. The war in Afghanistan is the broadest global touchstone to date in this militarization of the world. Washington is pressuring all and sundry to contribute with troops, logistics and funds and is employing the war to build up bilateral military ties and weapons and warfighting interoperability with nations throughout the world.

The first decade of the new millennium has been one of war, starting in earnest in Afghanistan, and the expansion of American bases and troops into Eastern Europe, the Middle East, Africa, South America, and Central and South Asia. Areas that until now had been spared the Pentagon's permanent presence.


Notes

1) U.S., NATO Poised For Most Massive War In Afghanistan’s History, Stop NATO, September 24, 2009
http://rickrozoff.wordpress.com/2009/09/24/u-s-nato-poised-for-most-massive-war-in-afghanistans-history
2) EU, NATO, US: 21st Century Alliance For Global Domination, Stop NATO, February 19, 2009
http://rickrozoff.wordpress.com/2009/08/26/eu-nato-us-21st-century-alliance-for-global-domination
3) NATO In Persian Gulf: From Third World War To Istanbu, Stop NATO, February 6, 2009
http://rickrozoff.wordpress.com/2009/08/26/nato-in-persian-gulf-from-third-world-war-to-istanbul
4) 1989-2009: Moving The Berlin Wall To Russia’s Borders, Stop NATO, November 7, 2009
http://rickrozoff.wordpress.com/2009/11/07/1989-2009-berlin-wall-moves-to-russian-border
5) Afghan War: NATO Builds History’s First Global Army, Stop NATO, August 9, 2009
http://rickrozoff.wordpress.com/2009/09/01/afghan-war-nato-builds-historys-first-global-army
6) Afghan War: NATO Trains Finland, Sweden For Conflict With Russia, Stop NATO, July 26, 2009
http://rickrozoff.wordpress.com/2009/09/01/afghan-war-nato-trains-finland-sweden-for-conflict-with-russia
7) Proliferation Security Initiative And U.S. 1,000-Ship Navy: Control Of World’s Oceans, Prelude To War, Stop NATO, January 29, 2009
http://rickrozoff.wordpress.com/2009/08/26/proliferation-security-initiative-and-us-1000-ship-navy-control-of-worlds-oceans-prelude-to-war
8) Global Military Bloc: NATO’s Drive Into Asia, Stop NATO, January 24, 2009
http://rickrozoff.wordpress.com/2009/08/26/global-military-bloc-natos-drive-into-asia
U.S. Expands Asian NATO Against China, Russia, Stop NATO, October 16, 2009
http://rickrozoff.wordpress.com/2009/10/16/u-s-expands-asian-nato-against-china-russia
9) Twenty Years After End Of The Cold War: Pentagon’s Buildup In Latin America, Stop NATO, November 4, 2009
http://rickrozoff.wordpress.com/2009/11/04/stop-nato
10) Xinhua News Agency, December 22, 2009
11) NATO Of The South: Chile, South Africa, Australia, Antarctica, Stop NATO, May 30, 2009
http://rickrozoff.wordpress.com/2009/08/31/nato-of-the-south-chile-south-africa-australia-antarctica
12) NATO’s, Pentagon’s New Strategic Battleground: The Arctic, Stop NATO, February 2, 2009
http://rickrozoff.wordpress.com/2009/08/26/natos-pentagons-new-strategic-battleground-the-arctic

Hordes of Angry Activists and a $27 Billion Court Case Is Making Oil Giant Chevron Pretty Nervous

Hordes of Angry Activists and a $27 Billion Court Case Is Making Oil Giant Chevron Pretty Nervous

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The oil industry is more powerful today than at any other time in history save the early 20th century. Thanks to last year's record run-up in oil prices, seven of the world's most valuable corporations are now oil companies. Yet just one of those companies has become the focus of intense consumer ire.

Perhaps the largest coordinated activist campaign in history is being launched against the San Ramon-based Chevron Corporation. Foregoing boycotts and other traditional market campaign techniques, non-governmental organizations are creatively communicating the business case for why Chevron should change its ways, focusing on mobilizing company shareholders and consumers to compel the company to come clean and pursue social and environmental leadership.

This unprecedented campaign to make Chevron the poster child of corporate irresponsibility has already persuaded pension funds in California, Maryland, New York, and Pennsylvania to consider selling a total of $12 billion in Chevron shares on the grounds that the firm is mismanaging its operations around the globe. The prime focus of this ongoing anti-Chevron effort has been the company's annual shareholder meetings, but protests at the Richmond refinery and a series of movie and PR stunts have been also been effective tactics.

The brains behind the campaign is a small firecracker of a woman, Antonia Juhasz, director of a special new Chevron program for Global Exchange, the San Francisco activist organization. Author of the book entitled The Tyranny of Oil, Juhasz brings to the campaign a depth of knowledge about the oil industry and a penchant for understanding how the media works. It was her idea, for example, to create an alternative shareholder report — The True Cost of Chevron — released in time for Chevron's annual shareholder meeting this past spring. The report, to which more than a dozen activist groups contributed, chronicles environmental and social issues confronting Chevron around the globe. Among other things, it pokes fun at Chevron's "Human Energy" PR campaign.

In its billboards and television ads, Chevron paints itself as part of the solution, and implies that the ingenuity of California and its citizens are already solving the challenges that climate change poses to society. One subtext of this advertising campaign is that global warming can be solved by everyday people. Indeed, the contented Americans depicted in the ads vow "I will use less energy," "I will leave the car at home more," and "I will finally get a programmable thermostat." The True Cost of Chevron campaign mocks this notion, by depicting put-upon villagers who stoically vow, "I will not breathe when outside," "I will give my baby contaminated water," and "I will ignore the toxic waste pits in my village."

"Chevron is emblematic of an industry that is out of control," Juhasz said. "They are not the worst oil company, but they hold themselves up to be a model corporate citizen, and they don't deserve it." Why then focus exclusively on Chevron? Focusing on one company makes the story more manageable, said Juhasz, exhibiting a clear understanding of modern campaigning techniques. And Chevron is everywhere, she noted, which allows activists to go to gas stations and distribute propaganda, or engage in publicity stunts that take advantage of the company's global profile.

"Our issues of peace, democracy, and environmental sustainability overlap with Chevron's actions around the globe," she said. "We want to take a closer look at the local impacts Chevron has globally in order to put pressure on them to be a better corporate citizen here, and everywhere else they operate. Our goal is to build a regional network not so much aimed at Chevron directly, but rather at policymakers who can adopt better regulations governing big oil."

While each of the activist organizations involved in this campaign has a different regional focus, they regularly hold conference calls and coordinate strategy to maximize impact. Their common theme is that the issues haunting Chevron in Richmond, Ecuador, Burma, Kazakhstan, and Nigeria are all really the same, and stem from a corporate culture that is out of sync with the values of the Bay Area.

Chevron repeatedly declined to comment on the charges leveled against it by activists. This should come as no surprise since outgoing CEO David O'Reilly suggested at the company's last shareholder meeting that the report pulled together by Global Exchange and various other groups should be thrown in the trash.

The company known as Chevron was once part of Standard Oil, which was started by the infamous Rockefeller family, and broken up under the Sherman Antitrust Act. Successor companies of Standard Oil — which once controlled 88 percent of US oil flows — comprised what were known as the "Seven Sisters" and included Exxon, Mobil, BP, Shell, Gulf, Mobil, and Standard Oil of California, which ultimately became Chevron. The sequential subsuming of Gulf (1985), Texaco (2001), and then Unocal (2005) allowed Chevron to become the world's second-largest oil company. Just 36 countries have a larger gross domestic product than Chevron. Based on annual revenues, it is California's largest and the world's fifth-largest corporation, with operations in 122 countries. Chevron was the second-most-profitable US corporation last year, edging out General Electric.

The campaign against the oil company can be seen within the context of a larger global examination of what Karin Lissakers, director of the Revenue Watch Institute, calls the "paradox of plenty." Lissakers and others describe this paradox as the persistent inability of resource-rich countries to transform their wealth in oil and other extractive industries into economic development that benefits their citizens.

The Revenue Watch Institute is hardly a left-leaning organization. Its prime constituency is the financial community, and it is one of many groups behind the so-called "publish what you pay" movement, which calls for greater transparency in where revenues from natural resources go when transferred from private to public hands. "We focus on the money flows, the revenue streams, and the distribution of those revenues in resource-rich countries," said Lissakers, whose institute is not directly involved in the anti-Chevron campaign. "What we campaign for are international good practices in all extractive industries. We should not have different standards for different countries."

Lissakers used Uganda to illustrate her point. Possible oil revenue in that central African nation represents $50 billion in total potential value, a large percentage of which could, if managed properly, provide immense economic opportunity in that impoverished country. "We want to make sure the state captures a significant part of that value. Our ultimate goal is to have access to country-by-country reporting in order to figure total revenues, value of products, and the percentage of this wealth flowing to governments."

In Lissakers' view, interestingly enough, mining companies are "way ahead of the curve" when it comes to such corporate social responsibility issues, while the oil sector — the most profitable of all natural resource businesses — is a clear and persistent laggard. But she believes big oil is going through an evolution in its thinking. "BP and Shell were instrumental in getting the transparency examination off the ground, but the response from US oil companies has been unenthusiastic from the very beginning," she said. And among US oil companies, Chevron's attitude makes it unique, critics say.

"When there is a problem, they send a lawyer instead of engineers," said Juhasz of Global Exchange. "They are dog-headed and would rather litigate than fix the problem."

This penchant for litigation is evident from the depths of the Amazonian jungle to Chevron's own backyard in nearby Richmond. Indeed, of the five refineries operating in the Bay Area, Chevron's Richmond facility is the worst polluter, according to the Bay Area Air Quality Management District. The company has yet to bring its vintage refinery, surrounded by immigrant residential communities, up to snuff on modern pollution controls and practices. Apparently, it would rather fight in court.

Yet the unprecedented coordination between its critics is a big test for both Chevron and the groups. If Chevron prevails, it may conclude that it can continue to conduct business as usual. But if the activists prevail, the entire industry might have to clean up its act — becoming part of the solution to not only climate change but the persistent poverty and human rights woes that plague much of the oil-producing world.


Across the globe, many of the very same issues that haunt Chevron in its global operations are everpresent at its century-old Richmond refinery.

In Richmond, the oil company's chief critic has long been Communities for a Better Environment, a grassroots group focused on industrial pollution issues impacting low-income communities of color. The group's key objective these days is to stop Chevron from processing dirtier crude such as Alberta tar sands at the Richmond refinery. Tar sands are one of the dirtiest forms of crude oil. Development contributes to clear-cutting of the Boreal Forest in Canada — the largest terrestrial carbon sink in the world — and emits three to five times as many greenhouse gas emissions as other more traditional forms of crude oil.

The company recently suffered a loss when the Contra Costa Superior Court ruled that Chevron's environmental impact report assessing proposed changes at the refinery was inadequate. At the moment, it is unclear how the company will respond. The ruling has halted construction activity necessary to process tar sands, stranding 1,100 union workers, pitting their jobs against the activists and local citizens worried about public health.

Another key environmental issue at Richmond is the burning of waste gases. While some refineries recycle these waste gases — reducing such flaring by 80 percent — Chevron has historically maintained that such practices were "not economically feasible" at the Richmond site. But Communities for a Better Environment has estimated that revenue generated by just seventeen minutes of Richmond refinery operations could fund the $100 million upgrades necessary to make the facility state-of-the-art when it comes to these gases.

Jessica Tovar, a local organizer for Communities for a Better Environment, pointed out that residents of Richmond's nearby Iron Triangle neighborhood suffer from asthma, cancer and other acute symptoms on a daily basis. "Chevron is not the only polluter, but their refinery is the largest [pollution source]," Tovar said, "and is one of the largest contributors to global warming in the San Francisco Bay Area." She noted that Chevron itself has described the boilers at the Richmond facility as "vintage," and Tovar added that the thirty- to fifty-year-old pipes are "more likely to create explosions than new ones." Since its environmental impact report was rejected, Chevron has "postponed indefinitely" all promised upgrades to the Richmond refinery complex. "The most important upgrades from a public safety perspective are now not going forward," she said.

Referring to the $100 million upgrade needed to halt the flaring of waste gases, Torm Nompraseurt, a senior organizer for Asian Pacific Environmental Network, said, "This system would serve the community for a long, long time. Our response to Chevron is that our lives are not that cheap — even if we are poor."

For Nompraseurt, the prime issue in Richmond is that Chevron is not following the law when it comes to disclosing its true plans through the environmental impact report process. "Chevron told its shareholders one thing, and they told the local community something else," he said. "For me, it is really about the principle that all projects need to go through the [environmental impact report] process, whether one is Chevron or a homeowner making a change to their own house. Under the California Environmental Quality Act, one has to disclose what the applicant is proposing to do. That's just the law."

While activists appear to be gaining ground in Richmond, immense challenges remain. The Asian Pacific Environmental Network, in particular, faces some unique organizing obstacles due to cultural factors. "Many Laotians do not believe that they can tell the government what to do," Nompraseurt added. "In fact, the majority of the 10,000 Laotians who reside in Richmond also have a fear of corporations. They think money and power equals corruption. They sense Chevron has had so much influence on the Richmond City Council, they don't think they can change anything."


While Richmond is a prime focus of Bay Area activists, controversies involving Chevron span the globe, from Angola, Chad, and Iraq to the Philippines. Ecuador is the hottest spot. There, Amazon Watch, a San Francisco-based organization dedicated to protecting the health and human rights of indigenous peoples in the Amazon River basin, has been embroiled with Chevron in a dispute over the oil company's liability for past operations that have had devastating consequences for indigenous peoples.

Chevron appears on the verge of being handed a judgment in Ecuador next year that could total as much as $27 billion. The ruling is a response to practices of its Texaco operations dating back to 1984, which Chevron assumed liability for during the 2001 merger.

Amazon Watch filed a lawsuit against operations then owned by Texaco in Ecuador in 1993, and first raised the issue of Chevron's potential liabilities in Ecuador when Chevron subsequently purchased the assets of Texaco. Amazon Watch maintains that pollution from oil operations in Ecuador "is one the largest environmental and social disasters on the planet," claiming that 18 billion gallons of toxic wastes have been dumped in an area the size of Rhode Island, threatening the livelihood of 30,000 indigenous peoples belonging to five different tribes. Critics claim Texaco employed primitive exploration and production practices in order to save $3.50 per barrel of oil sold to global markets. As a result, untreated wastes flowed directly into local waterways. Waste pits were simply covered over with soil, locations then re-inhabited by villagers.

Chevron points to its $40 million investment in cleanups in Ecuador as a good faith effort, but in reality, the potential for massive pollution problems in the future still exists. And while a deal with PetroEcuador, the nationalized oil company, allegedly left Chevron "off the hook" for future liability, this agreement did not, in the view of Amazon Watch lawyers, apply to the individuals still harmed by pollution.

Perhaps the biggest irony of Chevron's woes in Ecuador is that Chevron fought to move the trial from the United States to this South American country, where it has historically had a cozy relationship with the government. However, when left-leaning Rafael Correa Delgado was elected the new president of Ecuador in 2007, this strategy backfired. Chevron claims it will take this case about legacy issues it inherited from Texaco to some sort of unspecified international tribunal, but lawyers working on behalf of Amazon Watch say no such venue exists.

"It would have been a lot cheaper to settle back in 2001, when we were only asking for $1 billion to $3 billion," said Amazon Watch Executive Director Atossa Soltani. "They've lost face and an opportunity. They now look like they are out of step with today's values."

Indeed, the core message of the Amazon Watch campaign is that the handling of Ecuador represents a crisis in management. "What they did in Ecuador is indicative of deeply rooted symptoms of a company whose values are out of sync, especially here in the San Francisco Bay Area." She ridiculed the fact that Chevron points to its $40 million invested in cleanups in Ecuador as a sign of goodwill, when CEO David O'Reilly received a $50 million bonus in 2008 after the company boasted record profits of approximately $24 billion.

Juan Carlos Quiroz, a policy analyst and Ecuador specialist for the Revenue Watch Institute, expressed some sympathy for Chevron. "Chevron does make some valid points," Quiroz said, highlighting the difficulties foreign companies face when governments change hands rapidly and cultural factors beyond their control impact their image. Is it really Chevron's fault that large portions of the revenue it creates for host governments may be mismanaged, asked Quiroz.

"You have to understand that the government of Ecuador has been very unstable," he said. "The country has had ten presidents in twelve years." Consequently, Ecuador has lacked a coordinated plan for distributing revenues from oil operations. Regions that are the poorest are getting less revenue than regions that are better off, according to the Revenue Watch Institute's analysis.


Burma, also known as Myanmar, may be Chevron's biggest black eye. Here, the issue is not so much environmental impacts, but rather the ruthless killing and looting of nearby villages by armed forces funded by Chevron. The brutal military junta ruling the country is also siphoning off revenues from oil operations and, according to Earth Rights International, stashing it in banks in Singapore.

Earth Rights International, a small nonprofit organization that started up in 1994 focused on human rights abuses in Burma, is the prime mover behind the anti-Chevron work. Despite proposed legislation in Congress that would require Chevron to pull out of Burma, that is not the group's top priority. Rather, it argues that any new projects going forward in Burma should not rely upon the military as a police force. Such battalions are used to patrol pipeline regions, fostering a variety of human rights abuses, including forced labor, land grabs, and murder. Along with contributing to The True Cost of Chevron report, Earth Rights International has released a series of reports about how revenues from oil operations there are not trickling down to provide economic benefits to local citizens.

Chevron has purported to document the benefits of programs financed by oil companies in 25 Burmese villages since 2002. These reports claim that disease rates are down, while literacy rates are up. Abuses in villages located directly in pipeline corridors have also gone down, but these reports do not acknowledge that abuses in nearby villages have gone up, the organization claims. "Chevron and its partners need to acknowledge a corporate responsibility beyond the 25 villages that exist in pipeline corridors," said Paul Donowitz, Earth Rights International's point person for its Chevron campaign. Because Burma does not pay its military and soldiers are now banned from looting and raiding villagers residing in these pipeline corridors, Donowitz claims they are just expanding their search for food and other supplies in nearby areas.

In essence, Chevron argues that if it leaves Burma, Chinese oil companies will move in to fill the void, and then local villages will be worse off than they are now, which is quite possibly true. The oil business can be dirty indeed.

Beyond the torture and mayhem, the other atrocity in Burma is that the "paradox of plenty" is in full display. Earth Rights International claims it has evidence from confidential sources that $4.8 billion has been diverted from the country's national budget from the Yadana natural gas pipeline to the military regime and is sitting in two banks in Singapore, depriving local communities of virtually any economic benefits from oil operations while enduring violent acts of social injustice.


Kazakhstan is the largest private oil development area in the former Soviet Union. Chevron was the first private oil company to drill here in 1993 and is Kazakhstan's largest private producer. The company owns a 20 percent stake in the Karachaganack Field.

More than six years ago, the village of Berezovka, comprised of just 1,300 people and located within five kilometers of these expanding oil drilling operations, was promised to be moved to a "village of the 21st century." National and international laws require the relocation of any village that close to such oil exploration facilities.

The consortium of oil companies and government is rumored to be close to relocating Berezovka, according to Michelle Kinman with Crude Accountability, a Washington, DC-based nonprofit organization that is focused on environmental-justice issues near the Caspian Sea. "We are cautiously optimistic, since this action is predicated on national laws," Kinman said. In her view, the companies involved with consortium, including Chevron, do not want to set a precedent that raises expectations on future relocations too high.

Unfortunately, previous relocations have not been done well. The residents of one rural village, Tengiz, were all moved into a single urban high-rise building. Disputes over compensation of roughly $1,500 per household involved methods of counting what was and wasn't a "household." Crude Accountability claims that few of these villagers were given any training about how to live and work in an urban setting. The organization is working toward making the relocation of Berezovka a successful one, while simultaneously convincing the World Bank and other financial institutions to not fund oil and natural gas development that fosters pollution or human rights abuses throughout the Caspian Sea.


What happens in Nigeria could have major impacts on future operations in a continent destined to become the top oil producer for the U.S. in the coming decades. In fact, Africa already supplies the U.S. with more oil than the Middle East. But Nigeria is a quagmire that may represent Chevron's toughest challenge yet.

Nigeria's population of 150 million people makes it the most populous country in Africa. (The entire continent has a population of 900 million.) Nigeria is torn by cultural and religious strife that makes everything more complicated. For example, the north is predominately Muslim and has traditionally dominated governing structures. The south is comprised primarily of poor Christian populations living near the oil reserves in the Niger Delta, a former fishing community. These southerners have traditionally have not had much voice in governmental affairs.

Today, oil operations have decimated fish populations, interrupting their traditional way of life in the Niger Delta. Many villagers write long detailed letters to Chevron about the impacts oil operations have on their lives - but they never get a response. Chevron employees live in barricades so they have no interaction with local population. As of late, villagers have become armed and steal oil - locals call it "bunkering" -- and Chevron has begun to bribe armed rebels to allow oil to get to market, further entrenching a culture of corruption in Nigeria.

"Oil is so lucrative, that a web of mysterious relationships between oil companies, the government, militants and communities has evolved," said Laura Livoti, founder of Justice in Nigeria and a long-time activist and radio reporter. Earlier this year, for example, 20,000 villagers were displaced during a government-backed crackdown funded by Chevron. "No humanitarian aid was allowed, no journalists, no human rights observers. Armed political militants blew up facilities, which shut down the oil industry. Things got so bad, Chevron pulled out all non-essential employees," she said.

It was this development that prompted the government to offer an amnesty program for militants this past May. While many balked, a large number have come forward to accept amnesty, except the militants most committed to political ideals as well as genuine solutions to local poverty.

The militants and ongoing corruption in Nigeria complicates things. "When the Nigerians were peaceful protestors, it was a lot easier to gain sympathy," acknowledged Livoti. "Now that an armed resistance as risen up in Nigeria, attracting sympathy -- and financial support - is much more difficult," she said.


Despite the litany of woes facing Chevron around the world on the environmental and social fronts, even some renewable energy advocates come to its defense.

"Chevron is in the business of producing crude oil, which is what makes today's world economy run," said Al Rettenmaier, CEO of Integrated Energy Solutions, LLC, an Overland Park, Kansas-based firm committed to tapping the renewable energy potential of algae as well as other clean energy options. "It is a tough, competitive business and we are fortunate to have American oil companies as the leaders in this huge energy industry. We all want a different model, but the reality for today is that the world runs on oil. My personal experience with Chevron is that they are a forward-thinking, progressive American oil company. There is a great deal of concern in their company for the environment and safety. They are a company I would trust to do the right thing anywhere they operate in the world."

Chevron has turned its Chevron Energy Solutions into a $400 million-plus business developing solar photovoltaic and energy-efficiency projects, including a solar system for the Richmond Civic Center. But this level of funding is chump change compared with its total top and bottom-line numbers. The firm also failed to hire locally in Richmond when installing that system, despite the existence of the city's Solar Richmond program, which hires and trains local youth to create the green jobs President Obama has been touting as the answer to today's struggling economy.

Still, the firm is not without its green-tech supporters. "I have spent a considerable amount of time with the company and feel that while they are working in an inherently dirty business, and have a legacy of dubious environmental attention, they are committed to being an energy company well into the future," said Ian Thomson, a prime mover behind CleanTechies.com, a web site that focuses on green jobs in the Bay Area.

"The company is full of extremely bright people," Thomson added. "They know that 'cap and trade' and carbon regulations and other constraints will make alternatives increasingly competitive with their core business. But they know oil. Chevron feels they can compete with the other big oil companies by doing that what they've always been doing."

Although Chevron officials were not willing to discuss the company's checkered international record, Chevron's recently retired chief technology officer, Don Paul, was made available to discuss new energy technologies in an interview at Chevron's San Ramon headquarters, where security was as tight as at a military facility.

"Just when the world thinks it is running out of something, science and technology make something else work," Paul said, summing up the perspective of many oil industry veterans about the likely solution to the problems posed by climate change. From Paul's perspective, bio-fuels are a big part of our energy future as well as being a line of business not too dissimilar from oil and natural gas. "Crude oil is biomass that was processed through geologic time spanning million of years," he said. "With bio-fuels, we are just short-circuiting geologic time. In essence, what we are looking to do in bio-fuels is cut out that middle step."

Responding to criticisms about relying upon former food crops such as corn to serve as the prime feedstock for bio-fuels, Chevron has partnered with Weyerhaeuser to explore developing bio-fuels from timber and wood waste. "Our focus is how to develop the next generation of bio-fuel technologies and go after a large part of our current waste stream as sources for these cleaner fuels," Paul said. Noting that corn prices have risen due to the ethanol production boom in the Midwest, he expressed concern about trading off food for fuel. "Much of our corn has traditionally been given away as humanitarian contributions to poor developing nations. What happens to that program when corn is diverted to fuel?"

Given the size of its operations, he said Chevron takes a twenty-year view on emerging energy technologies. The firm has created partnerships with key agricultural schools at UC Davis, Texas A&M, and Georgia Tech. "Ultimately, we hope to tap true wastes such as sewage, trash, and waste grease to create bio-fuels," he said.

While Chevron is the largest producer of geothermal energy in the world, it does not see geothermal as a major energy source in California. Instead, Paul was much more bullish on solar energy. But instead of the solar photovoltaic arrays that have become so popular with residents and businesses alike, Chevron is instead exploring solar thermal technologies that concentrate solar energy to create steam. "We think it makes more sense to heat water with the sun to create steam instead of converting sunlight to electricity, where you lose two-thirds of the available energy in the conversion to electricity," he said. Chevron hopes to launch a large-scale, solar-thermal-concentrated power initiative in the near future, he promised.


What if oil companies changed their ways and Chevron owned up to its responsibilities and began to devote larger and larger sums to renewable alternatives to oil and natural gas? Can these corporations be part of the solution or will they always be part of the problem?

The announcement that Chevron will soon have a new CEO, John Watson, is a sign, perhaps, that the company is seeking a new direction. "It's possible that this provides an opening for Chevron to do the right thing in the spirit of moving ahead and getting rid of old baggage," observed Becky Tarbotton, program director for the Rainforest Action Network, yet another non-governmental organization ganging up on the oil company. But Tarbotton isn't getting her hopes up. "From what we can tell, Watson isn't exactly a paragon of progressiveness," she said. "In fact, he was the architect of the merger between Texaco and Chevron. But you never know."

The involvement of the Rainforest Action Network, a pioneer in both boycotts and stakeholder engagement, signals that the anti-Chevron campaign is about to hit a new, even more intense phase. "This will be an on-line, off-line campaign of a scale and scope never seen before," Tarbotton promised. "We're bringing some firepower to the campaign in a full-scale attack on the Chevron brand. Our primary objective is to hold Chevron accountable in Ecuador. Our second goal is to get Chevron to establish a global environmental and human rights policy. We're not asking for the sky. We just want Chevron to do the basic things so they are no longer criminals."

Antonia Juhasz, the mastermind of the anti-Chevron campaign, sums up the core message of this unprecedented assault on a single oil company this way. "Chevron is one of the wealthiest corporations in the world," she said. "It should therefore be the cleanest, safest and most equitable company there is and should be deploying the safest technology. If you have to collaborate with some of the most brutal political regimes in the world to safeguard operations, you should probably not be doing business there. They should be limiting production to the least environmentally damaging methods and regions. Oil is an inherently destructive industry, but Chevron is clearly not a model of how to do it right."

Juhasz claims that every California citizen is now impacted by the political power of Chevron. "Chevron calls the shots for the business community at the state capitol in Sacramento, and it led the fight to kill a proposal to enact a severance oil tax — which most other states have — that would add $1 billion annually to state government's coffers," she said. "We don't have the funds to address health care, cleanups on our highways, and create new jobs because Chevron and its allies also fought efforts to close loopholes on corporate taxation at the federal level, too."

But for all its involvement at the state and local level, the future of Chevron's reputation may well be decided in a court in South America. The looming judgment in Ecuador will signal whether the power of the purse can prevail in today's jittery financial climate. A $27 billion hit to Chevron would certainly send a message to shareholders, as well as the rest of the oil industry. Whatever the outcome in Ecuador, the power of the people is being tested in novel ways, and the eventual outcome of the anti-Chevron campaign will likely have repercussions for years to come.