Saturday, January 2, 2010

Nuclear Hero’s 'Crime' Was Making Us Safer

Nuclear Hero’s 'Crime' Was Making Us Safer

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Mordechai Vanunumy friend, my hero, my brotherhas again been arrested in Israel on "suspicion" of the "crime" of "meeting with foreigners." I myself have been complicit in this offense, traveling twice to Israel for the express purpose of meeting with him, openly, and expressing support for the actions for which he was imprisoned for over eighteen years. His offense has been to defy openly and repeatedly ,conditions put on his freedom of movement and associations and speech after he had served his full sentence, restrictions on his human rights which were a direct carry-over from the British Mandate, colonial regulations in clear violation of the Universal Declaration of Human Rights. Such restrictions have no place in a nation evincing respect for a rule of law and fundamental human rights. His arrest and confinement are outrages and should be ended immediately.

My perspective on Mordechai and his behavior was expressed as well as I could do it today in the following op-ed published in 2004 on the day of his release from prison. I can only say that I would be proud to be known as the American Vanunu: though my own possible sentence of 115 years for revealing state secrets was averted by disclosure of government misconduct against me which pales next to the Israeli misconduct in assaulting, drugging and kidnapping Vanunu in the process of bringing him to trial, let alone the eleven years of solitary confinement he was forced to endure.

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[Published 4/21/04 in the Los Angeles Times]

Mordechai Vanunu is the preeminent hero of the nuclear era. He consciously risked all he had in life to warn his own country and the world of the true extent of the nuclear danger facing us. And he paid the full price, a burden in many ways worse than death, for his heroic act — for doing exactly what he should have done and what others should be doing.

Vanunu's "crime" was committed in 1986, when he gave the London Sunday Times a series of photos he had taken within the Israeli nuclear weapons facility at Dimona, where he had worked as a technician.

For that act — revealing that his country's program and stockpile were much larger than the CIA or others had estimated — Vanunu was kidnapped from the Rome airport by agents of the Israeli Mossad and secretly transported back for a closed trial in which he was sentenced to 18 years in prison.

He spent the first 11 1/2 years in solitary confinement in a 6-by-9-foot cell, an unprecedented term of solitary under conditions that Amnesty International called "cruel, inhuman and degrading."

Now, after serving his full term, he is due to be released today. But his "unfreedom" is to be continued by restrictions on his movements and his contacts: He cannot leave Israel, he will be confined to a single town, he cannot communicate with foreigners face to face or by phone, fax or e-mail (purely punitive conditions because any classified information that he may have possessed is by now nearly two decades old).

The irony of all this is that no country in the world has a stronger stake than Israel in preventing nuclear proliferation, above all in the Middle East. Yet Israel's secret nuclear policies — to this day it does not acknowledge that it possesses such weapons — are shortsighted and self-destructive. They promote rather than block proliferation by encouraging the country's neighbors to develop their own, comparable weapons.

This will not change without public mobilization and democratic pressure, which in turn demand public awareness and discussion. It was precisely this that Vanunu sought to stimulate.

Not in Israel or in any other case — not that of the U.S., Russia, England, France, China, India or Pakistan — has the decision to become a nuclear weapons state ever been made democratically or even with the knowledge of the full Cabinet. It is likely that in an open discussion not one of these states could convince its own people or the rest of the world that it had a legitimate reason for possessing as many warheads as the several hundred that Israel allegedly has (far beyond any plausible requirement for deterrence).

More Vanunus are urgently needed. That is true not only in Israel but in every nuclear weapons state, declared and undeclared. Can anyone fail to recognize the value to world security of a heroic Pakistani, Indian, Iraqi, Iranian or North Korean Vanunu making comparable revelations?

And the world's need for such secret-telling is not limited to citizens of what nuclear weapons states presumptuously call rogue nations. Every nuclear weapons state has secret policies, aims, programs and plans that contradict its obligations under the Nuclear Nonproliferation Treaty and the 1995 Declaration of Principles agreed to at the NPT Renewal Conference. Every official with knowledge of these violations could and should consider doing what Vanunu did.

That is what I should have done in the early '60s based on what I knew about the secret nuclear planning and practices of the United States when I consulted at the Defense Department, on loan from the Rand Corp., on problems of nuclear command and control. I drafted the Secretary of Defense Guidance to the Joint Chiefs of Staff for the general nuclear war plans, and the extreme dangers of our practices and plan were apparent to me.

I now feel derelict for wrongfully keeping secret the documents in my safe revealing this catastrophically reckless posture. But I did not then have Vanunu's example to guide me.

When I finally did have an example in front of me — that of young Americans who were choosing to go to prison rather than participate in what I too knew was a hopeless, immoral war — I was inspired in 1971 to turn over a top-secret history of presidential lies about the war in Vietnam to 19 newspapers. I regret only that I didn't do it earlier, before the bombs started falling.

Vanunu should long since have been released from solitary and from prison, not because he has "suffered enough" but because what he did was the correct and courageous thing to do in the face of the foreseeable efforts to silence and punish him.

The outrageous and illegal restrictions proposed to be inflicted on him when he finally steps out of prison after 18 years should be widely protested and rejected, not only because they violate his fundamental human rights but because the world needs to hear this man's voice.

The cult and culture of secrecy in every nuclear weapons state have endangered humanity and continues to threaten its survival. Vanunu's challenge to that wrongful and dangerous secrecy must be joined worldwide.

Mega Giant Corporations Are Very Bad for America

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The following is an excerpt from the first chapter of Cornered: The New Monopoly Capitalism and the Economics of Destruction, published by Wiley Press.

Even with a GPS and a good map, I have a hard time finding Diane Cochrane’s home, which is tucked in the crease of a hill a few miles east of Prescott, Arizona. The one-story green frame building sits at the bottom of a steep driveway that drops from a rocky road that cuts off a maze of streets that, as I drive along in my rented Pontiac, seem more like a mad Motocross track than the arteries of a neighborhood.

Yet it is easy to understand why Diane settled here with her husband after they fled the monotony of a Ford assembly line in Ohio. The landscape is a testament to the creativity of both humanity and God. Every one of the hundred or so houses in the community is unique. There are ramblers, chalets, A-frames, ranches, and log cabins. The terrain, meanwhile, seems to change in character almost inch by inch as the roadway drops and twists vertiginously into deep and scrubby ravines, only to crest a moment later to stunning views of a far shimmering horizon.

A few miles down Highway 69, the Wal-Mart Supercenter at the edge of Prescott is a different world. The parking lot alone is the grandest swath of flat space I’ve seen in the last hour of driving. Then there’s the store itself. To fit the big box into the undulating land, the builders had to cut deep into the side of a hill, carving away as much as six or seven stories worth of dirt and rock.

Once I am inside Wal-Mart’s door, it takes me nearly two minutes, striding swiftly, to walk from one end of the store to the other. Along the way I pass twenty-seven checkout lines and what seems like a whole town -- a savings bank, a McDonald’s, a portrait gallery -- tucked under this one roof. I almost wish I’d brought along some music to entertain myself, because there isn’t much new to look at on my stroll. Other than having a rack of cowboy hats, this Supercenter is filled with the exact same collection of products as every other Wal-Mart Supercenter in the United States, be it in Ohio, California, or Virginia. It also has the same empty feeling. When I arrive, it’s early evening and the parking lot is full. Yet the store seems almost vacant, and the few shoppers I do see wander listlessly and almost silently through the aisles.

Diane, who is sixty and has cut her gray hair short, wears a salmon-colored cotton shirt on this ninety-seven-degree April day. She tells me that until recently, she shopped in this Wal-Mart almost every day, often on her way home from her job managing a party store. She doesn’t anymore, though, and that’s not because filling a basket at the Supercenter can be more exhausting than a trip to the gym. Diane has tried to avoid all Wal-Marts everywhere ever since her two kittens, Bones and Moses, died of kidney failure on the same day in 2007. Diane believes that the food she purchased here -- Wal-Mart private label Special Kitty Gourmet Blend foil pouches filled with whitefish and tuna in sauce -- is what killed them.

My intent is not to blame any one person at Wal-Mart for the deaths of Diane’s kittens, nor to blame the rather abstract entity that is Wal-Mart taken as a whole. It is to reinforce the idea that monopoly exists just about everywhere in America today. It is also to add two new facts. First, today’s monopolies increasingly appear in the shape of giant trading firms like Wal-Mart, which are designed to govern entire production systems, even entire swaths, of our economy. Second, monopoly does not eliminate competition, nor does it automatically result in a rational and efficient governance of the production and service systems under its sway.

On the contrary, monopolization merely shifts competition from a horizontal plane to a vertical plane. That is, rather than having a winner-take-all battle among automobile makers or between Wal-Mart and Target, for example, we have competition between the monopoly and all the people under its power. In the case of Wal-Mart, this includes its workers and its suppliers as well as its customers. The real competition, in other words, is between the billionaires who make and wield monopolies like Wal-Mart and people like you, me, and Diane.

I could have started this with dozens of stories about the deaths of dogs and cats just before and after the great pet food recall of 2007. I chose Diane’s story not because we have absolute proof that Wal-Mart cat food killed Bones and Moses -- the kittens were cremated days before the first recall was announced. Rather, it was because the circumstantial evidence is so strong. Bones and Moses were healthy kittens. There were two of them, and they died at the same time. During their whole lives Diane fed them only Special Kitty pouches. Diane’s veterinarian told Diane that the kittens’ blood-urea- nitrogen measurement was the highest she had ever seen. Diane also owned other animals at the time, including a seven-year-old cat named Little Bit and a seven-year-old collie named Sailor, both of whom ate food that was not included in the recall; both of them, she tells me, remain quite healthy.

I chose to focus on the pet food fiasco in general because it was one of those stories that comes along every so often that rips away the veil to reveal how the mechanisms of our economy really work. That’s what happened in March 2007, when an Ontario-based company named Menu Foods announced a recall of cans and pouches of wet pet food that had been packed at plants in Kansas and New Jersey. At first, the story seemed simple enough: another case in which poor food-handling techniques resulted in contamination that resulted in sickness and, in a few cases, death, just as we have seen in such other products as spinach and peanut butter.

That’s why the initial reports on the recall focused on empty store shelves and terrified pet owners. Within a week, however, the Menu Foods story began to morph into something entirely different: a horror tale about the dangers of food, drugs, toys, and tires made in China. The turning point came on March 23, when three things happened.

First, the Food and Drug Administration (FDA) announced that it suspected that some toxin had been mixed into the wheat gluten that was used to thicken the canned meats. Second, an independent lab reported that it had found rat poison in the recalled cans. Third, Menu Foods pointed a finger at a shipment of wheat gluten that had been purchased from a supplier in China. Although rat poison was later replaced as the main culprit by a chemical named melamine, the story line had now taken shape: cheap and adulterated Chinese products were poisoning Americans, their children, and their pets.

Throughout the coming months, journalists and officials would drag vast piles of horrifying facts into the light. Some Chinese toothpaste makers had used diethylene glycol, a component of brake fluid and antifreeze, as a sweetener. Some Chinese toy makers had coated their products with lead-based paints. Some Chinese farmers had fed unapproved drugs to catfish that were bound for U.S. dinner plates. Some Chinese slaughterhouses had mixed “oversulfated chondroitin sulfate” into the pig intestines that were used as the raw material for the blood thinner heparin.

The details were so nauseating and so terrifying that two of the most important revelations of the Menu Foods meltdown were all but lost. The first was that the corporations we rely on to stock our shelves with food had allowed the production of wheat gluten -- which is used to thicken wet foods, bind dry foods, and condition dough -- to be captured by a single foreign nation, China. Similarly, these corporations had allowed the production of numerous other vital inputs -- like most of the ingredients in our drugs -- to be captured by that one nation.

The second overlooked revelation was that almost the entire U.S. pet food industry had come to depend, to various degrees, on a single supplier of canned and pouched pet food. In this case, five of the top six independent brands -- including those marketed by Colgate-Palmolive, Mars, and Procter & Gamble -- had hired Menu Foods to stuff meat into at least some of the cans and pouches that as of early 2007 bore their labels. So had seventeen of the top twenty food retailers in the United States that sell “private label” wet pet foods under their store brands, including Safeway, Kroger’ s, and Wal- Mart. In total, the Menu Foods recall covered products that had been retailed under a phenomenal 150 different names.

Perhaps even more disturbing, especially for those pet owners who had been spending their dollars on a premium product, was that the recall revealed that high-end, expensive brands like Iams and Hill’s Pet Nutrition Science Diet rolled off the exact same Menu Foods packing lines as the cans that were wrapped in labels bearing such names as Supervalu and Price Chopper.

Without access to internal documents from all of these companies, it is almost impossible to know exactly what percentage of wet pet food in the United States came from Menu Foods factories in the months before the recall. The last thing an established brand wants to advertise is how much of its product it buys from outside suppliers. My own figures indicate that Menu Foods accounted for somewhat less than a quarter of the total pet food sold in the United States, by weight.

Even so, Menu Foods' octopuslike reach throughout the pet food industry resulted in disruptions that were far greater than would have been the case a decade earlier. Back then, the big pet food brands largely operated their own factories and packed their own cans, and they also actively managed their supply bases to avoid concentration. This means that they would have been able to isolate any supply problem far more swiftly and with far less disruption at the point of sale.

In 2007, the sheer number of brands affected by the Menu Foods recall meant that, as the Wall Street Journal noted, it was now much “harder for consumers to find a safe substitute.” 10 In some instances, confused store managers pulled all pet food off their store shelves. In other cases, confused consumers did not trust what was still for sale.

For those Americans who believe in what we were taught in civics class and Econ 101, the most disturbing revelation was not even the fragility of our food systems, but that some of our most cherished beliefs about how the U.S. economy works appear no longer to be true. We are told that companies are engaged in a mad scramble to discover exactly what we the U.S. consumers want and to devise perfectly tailored systems to supply those want as efficiently as possible. We are told that our economy is characterized by constantly chaotic yet always constructive competition and that any American with a better product and bit of gumption can bring that product to market and beat the big guys.

Yet the reality, as Menu Foods now taught us, could not be more different -- at least not in the pet food aisle in Wal-Mart or Kroger’s. Instead of having infinite choice, as we thought, we are really presented with a wall of standard-issue cans and pouches that are distinguished only by the words and colors on their labels. The secret ingredient of U.S. capitalism, at least in this corner of the industrial kitchen, could have been cooked up in the Soviet Union.

More disturbing yet is that such concentration is not the exception in the United States but increasingly the rule. A quick tour of almost any grocery store reveals degrees of concentration that make Menu Foods look like a novice. Let’s take a quick walk around the average U.S. grocery or big-box store.

Over in the health-care aisle we find that Colgate-Palmolive and Procter & Gamble split more than 80 percent of the U.S. market for toothpaste, including such seemingly independent brands as Tom’s of Maine.

In the cold case we find that almost every beer is manufactured or distributed by either Anheuser-Busch InBev or MillerCoors, including imports like Corona, Beck’s, and Tsingtao; regional beers like Rolling Rock; once independent microbrews like Redhook and Old Dominion; and even “organic” beers like Stone Mill Pale Ale.

Perhaps Americans are comfortable with the fact that Campbell’s controls more than 70 percent of the shelf space devoted to canned soups. After all, the firm grew to prominence after its launch in 1869, thanks to its pioneering successes in integrating advanced chemistry, mass manufacturing, and modern advertising.

But what are we to make of the modern snack aisle, where Frito-Lay in recent years has captured half the business of selling salty corn chips and potato chips?

And what about the business of selling tap water in plastic bottles? Here, if anywhere, is an activity that any enterprising young American should be able to master. All you would seem to need to enter the local market for water is a spigot, some bottles, and a cool label. Yet nine of the top ten brands of bottled tap water in the United States are sold by PepsiCo (Aquafina), Coca-Cola (Dasani and Evian), or Nestlé (Poland Spring, Arrowhead, Deer Park, Ozarka, Zephyrhills, and Ice Mountain).

Furthermore, what can we learn from the size of the corporation in whose store we now stand? Until we elected Ronald Reagan president, both Democrats and Republicans made sure that no chain store ever came to dominate more than a small fraction of sales in the United States as a whole, or even in any one region of the country. Between 1917 and 1979, for instance, administrations from both parties repeatedly charged the Great Atlantic and Pacific Tea Company, the chain store behemoth of the mid-twentieth century that is better known as A & P, with violations of antitrust law, even threatening to break the firm into pieces.

Then in 1981 we stopped enforcing that law. Thus, today Wal-Mart is at least five times bigger, relative to the overall size of the U.S. economy, than A & P was at the very height of its power. 13 Indeed, Wal- Mart exercises a de facto complete monopoly in many smaller cities, and it sells as much as half of all the groceries in many big metropolitan markets. Wal-Mart delivers at least 30 percent and sometimes more than 50 percent of the entire U.S. consumption of products ranging from soaps and detergents to compact discs and pet food.

For that matter, what can we learn about our twenty-first- century consumer arcadia by looking at how the Supercenter in which we shop was constructed? The price of the steel in the frame reflects the nearly complete roll-up of the world’s main sources of iron ore by three firms (two of which recently tried to merge). The price of the store shelves reflects the nearly complete roll-up by these same three firms of the capacity to process bauxite into aluminum. The price of the concrete in the foundation reflects the recent roll-up of the world cement industry by a few immense firms like Mexico’s Cemex. The price of the crushed rock in the parking lot reflects the roll-up of control by a few corporations over many of the biggest quarries in the United States.

Big corporations have played a big role in this country for a long time. Companies of men began to build big interstate railroads even before the Civil War, and they began to assemble giant industrial combines soon after. Big companies began to centralize control over the butchery of cattle and hogs, the milling of grains, and the canning of fruit and vegetables and soups in the late nineteenth century.

By the early twentieth century, men had enclosed in the walls of a few corporations the capacity to make automobiles, chemicals, and farm machinery. For much of the last century, however, the American people took steps to disrupt the efforts to completely dominate these businesses, and, as we saw with A & P, we took special pains to restrict the reach of pure trading companies.

That’s why we have never before seen such power to govern our industries concentrated in so few hands. That’s why we have never before seen such physical concentration of production -- be it of vitamin C, wheat gluten, heparin, or aspirin in China, of semiconductors in Taiwan, or of package- sorting capacity in Memphis. That’s why we have never before seen such a lack of compartmentalization of our systems and therefore such a socialization of the risk in these systems. That’s why we have never before seen such top-down competition and thus the destruction of so many of the real assets, skills, and products enclosed within the fences of these corporations. That’s why we have never before faced such a lack of real options.

I know that this last point -- that the U.S. consumer faces fewer and fewer options -- is, on the face of it, hard to believe. The world we shop in every day appears to be full of choices. Yet in real life, our political economy is filled with hidden monopolies almost everywhere, and these monopolies increasingly control, restrict, and determine what we buy, with little or no regard for any real market forces.

Just ask Diane Cochrane. As much as she wanted to cut Wal-Mart out of her life, she quickly found that she could not. Although Diane was eventually able to find a new -- much more expensive -- source of pet food for her surviving cat and dog, there are certain items she just can’t find in Prescott outside Wal-Mart, which now runs two Supercenters in this community of forty-one thousand people.

“It’s getting to where for a lot of things you have to go to Wal-Mart,” Diane says. This is true even when she knows that the quality is bad. There is, she tells me, “no other choice.”

Bankers Get $4 Trillion Gift From Barney Frank

Bankers Get $4 Trillion Gift From Barney Frank: David Reilly

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To close out 2009, I decided to do something I bet no member of Congress has done -- actually read from cover to cover one of the pieces of sweeping legislation bouncing around Capitol Hill.

Hunkering down by the fire, I snuggled up with H.R. 4173, the financial-reform legislation passed earlier this month by the House of Representatives. The Senate has yet to pass its own reform plan. The baby of Financial Services Committee Chairman Barney Frank, the House bill is meant to address everything from too-big-to-fail banks to asleep-at-the-switch credit-ratings companies to the protection of consumers from greedy lenders.

I quickly discovered why members of Congress rarely read legislation like this. At 1,279 pages, the “Wall Street Reform and Consumer Protection Act” is a real slog. And yes, I plowed through all those pages. (Memo to Chairman Frank: “ystem” at line 14, page 258 is missing the first “s”.)

The reading was especially painful since this reform sausage is stuffed with more gristle than meat. At least, that is, if you are a taxpayer hoping the bailout train is coming to a halt.

If you’re a banker, the bill is tastier. While banks opposed the legislation, they should cheer for its passage by the full Congress in the New Year: There are huge giveaways insuring the government will again rescue banks and Wall Street if the need arises.

Nuggets Gleaned

Here are some of the nuggets I gleaned from days spent reading Frank’s handiwork:

-- For all its heft, the bill doesn’t once mention the words “too-big-to-fail,” the main issue confronting the financial system. Admitting you have a problem, as any 12- stepper knows, is the crucial first step toward recovery.

-- Instead, it supports the biggest banks. It authorizes Federal Reserve banks to provide as much as $4 trillion in emergency funding the next time Wall Street crashes. So much for “no-more-bailouts” talk. That is more than twice what the Fed pumped into markets this time around. The size of the fund makes the bribes in the Senate’s health-care bill look minuscule.

-- Oh, hold on, the Federal Reserve and Treasury Secretary can’t authorize these funds unless “there is at least a 99 percent likelihood that all funds and interest will be paid back.” Too bad the same models used to foresee the housing meltdown probably will be used to predict this likelihood as well.

More Bailouts

-- The bill also allows the government, in a crisis, to back financial firms’ debts. Bondholders can sleep easy -- there are more bailouts to come.

-- The legislation does create a council of regulators to spot risks to the financial system and big financial firms. Unfortunately this group is made up of folks who missed the problems that led to the current crisis.

-- Don’t worry, this time regulators will have better tools. Six months after being created, the council will report to Congress on “whether setting up an electronic database” would be a help. Maybe they’ll even get to use that Internet thingy.

-- This group, among its many powers, can restrict the ability of a financial firm to trade for its own account. Perhaps this section should be entitled, “Yes, Goldman Sachs Group Inc., we’re looking at you.”

Managing Bonuses

-- The bill also allows regulators to “prohibit any incentive-based payment arrangement.” In other words, banker bonuses are still in play. Maybe Bank of America Corp. and Citigroup Inc. shouldn’t have rushed to pay back Troubled Asset Relief Program funds.

-- The bill kills the Office of Thrift Supervision, a toothless watchdog. Well, kill may be too strong a word. That agency and its employees will be folded into the Office of the Comptroller of the Currency. Further proof that government never really disappears.

-- Since Congress isn’t cutting jobs, why not add a few more. The bill calls for more than a dozen agencies to create a position called “Director of Minority and Women Inclusion.” People in these new posts will be presidential appointees. I thought too-big-to-fail banks were the pressing issue. Turns out it’s diversity, and patronage.

-- Not that the House is entirely sure of what the issues are, at least judging by the two dozen or so studies the bill authorizes. About a quarter of them relate to credit-rating companies, an area in which the legislation falls short of meaningful change. Sadly, these studies don’t tackle tough questions like whether we should just do away with ratings altogether. Here’s a tip: Do the studies, then write the legislation.

Consumer Protection

-- The bill isn’t all bad, though. It creates a new Consumer Financial Protection Agency, the brainchild of Elizabeth Warren, currently head of a panel overseeing TARP. And the first director gets the cool job of designing a seal for the new agency. My suggestion: Warren riding a fiery chariot while hurling lightning bolts at Federal Reserve Chairman Ben Bernanke.

-- Best of all, the bill contains a provision that, in the event of another government request for emergency aid to prop up the financial system, debate in Congress be limited to just 10 hours. Anything that can get Congress to shut up can’t be all bad.

Even better would be if legislators actually tackle the real issues stemming from the financial crisis, end bailouts and, for the sake of my eyes, write far, far shorter bills.

Billions more for bailout of US mortgage giants

Billions more for bailout of US mortgage giants

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The US Treasury announced Thursday that it will remove a cap on federal support to mortgage giants Fannie Mae and Freddie Mac, extending to the largely government-owned firms an unlimited amount of funds for three years. The news came only a few hours after the two companies announced that they would hand out $6 million pay packages to each of their chief executives.

Fannie and Freddie have been taking losses as foreclosures have reached record levels. The percentage of prime-rate mortgages in foreclosure has doubled over the past year, according to a study released earlier this month by federal regulators. Fannie and Freddie own or guarantee the majority of home mortgages made in the US.

Prior to Thursday’s announcement, the companies each had a limit of $200 billion on federal financial aid, of which Fannie had used $60 billion and Freddie $51 billion. The two firms are chartered by the government but held by private shareholders. Last year’s intervention by the government, however, left it as the largest shareholder in both companies.

Investors responded to the decision by buying up shares of both companies on Monday, the first day of trading following the new policy announcement. They fell on Tuesday, however, in part due to fears that any government aid would come at the expense of existing shareholders.

Fannie and Freddie were created by the government in 1938 (Fannie) and 1970 (Freddie) in order to provide credit to mortgage originators and take mortgages off the books of local lenders. The companies repackaged and resold a large share of these mortgage obligations.

In recent months, the Federal Reserve has become the largest buyer of these securities, of which it now holds over $1 trillion worth, in order to steady the price of mortgage-backed securities.

But the Fed is preparing to wind down this program within months and the elimination of the cap on federal aid to Fannie and Freddie is being made to cover expected losses. The rationale is that, given an unlimited guarantee of funding for Fannie and Freddie, investors will continue to finance them even as foreclosures soar.

Reuters pointed out that the rationale for the unlimited guarantee of funds to Fannie and Freddie was similar to a point made by former Treasury Secretary Henry Paulson in July 2008, when he said, “If you have a bazooka in your pocket and people know it, you probably won’t have to use it.” Less than two months later, the government took over the companies.

Under the terms of the 2008 takeover by the US government, the Treasury had until the start of 2010 to increase the firms’ funding limits without congressional approval.

Had the White House waited to make the announcement after the new year, it would likely have faced opposition on the part of Republicans.

Only hours before the Treasury announced the new policy, Fannie and Freddie reported that the Treasury and Federal Housing Finance Agency had approved $6 million pay packages for each of the companies’ chief executives. Michael Williams and Charles Haldeman Jr. will take their compensation entirely in cash and deferred salary, since the two companies’ stock is likely to fall further in the future.

Other executives will also make off handsomely. David M. Johnson, Fannie Mae’s chief financial officer stands to earn $3.6 million, and a number of other executives will make over $2 million. Bruce Witherell, Freddie Mac’s chief operating officer, will receive $4.5 million, and its chief operating officer will receive $3.5 million.

Thirty years since the Soviet invasion of Afghanistan

Thirty years since the Soviet invasion of Afghanistan

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In the press coverage of President Barack Obama’s recent decision to deploy more US troops to Afghanistan, a historical milestone has gone curiously unmentioned—the 30th anniversary of the USSR’s invasion of Afghanistan, which began on December 27, 1979.

An examination of the circumstances of this event undermines Obama’s claims that American policy in Afghanistan is motivated by a “war on terror,” revealing instead the imperialist aims behind US policy.

At the time, President Jimmy Carter seized on the Soviet intervention—which aimed to suppress mujahadeen rebels fighting the Soviet-backed regime of the People’s Democratic Party of Afghanistan (PDPA)—to undo a decade of dĂ©tente and escalate tensions with the USSR. This critical decision unleashed a conflict that would ultimately devastate Afghan society.

It emerged only years later that the Soviet invasion was itself a response to a deliberate US attempt to set up a new military front against the USSR in Afghanistan. Even before the Soviet invasion, Washington was secretly assisting the mujahadeen, with the aim of provoking a Soviet intervention and trapping the USSR in a bloody quagmire. The US foreign policy establishment’s ultimate goal in pursuing this policy was to destroy the USSR and promote an expansion of US power in strategically located, oil-rich Central Asia.

In his 1996 memoir From the Shadows, Robert Gates, the current US secretary of defense, recalls US deliberations in the winter and spring of 1979. He describes a March 30, 1979 meeting: “Under Secretary of State for Political Affairs David Newsom stated that it was US policy to [demonstrate] to the Pakistanis, Saudis and others our resolve to stop the extension of Soviet influence in the Third World… Walt Slocombe, representing Defense, asked if there was value in keeping the Afghan insurgency going, ‘sucking the Soviets into a Vietnamese quagmire?’”

On July 3, 1979, President Carter authorized the CIA to fund and carry out propaganda for the Afghan rebels. The CIA reportedly sent its first shipments to the mujahadeen that summer.

The Kremlin Stalinists, guided by purely military and nationalist calculations, fell squarely into the trap set by Washington. The Soviet leadership thought that Afghan President Hafizullah Amin, from the PDPA’s Khalq faction, was negotiating a separate deal with Washington to halt US aid to the mujahadeen. Moscow feared that a pro-US regime in Kabul might let the US deploy Pershing missiles to Afghanistan, where they would be aimed at the USSR.

It also feared that the US would use Afghan Uzbeks and Tajiks for national-separatist propaganda aimed at Soviet Central Asia. Carter administration National Security Advisor Zbigniew Brzezinski (now one of the main mentors of Barack Obama) publicly advocated an ethnic carve-up of the USSR.

As Soviet forces invaded, KGB commandos assassinated Amin. In his place, Moscow installed Babrak Karmal, leader of the conservative Parcham wing of the PDPA, as president. This was a signal to the ruling classes that the PDPA would abandon its partial land redistribution and other reform measures. The Kremlin’s strategy was to arrange a deal with Afghanistan’s tribal elites, while crushing resistance to the PDPA regime with mass bombing raids.

Washington’s policy towards the Soviet-Afghan war was marked by unsurpassed cynicism. It unleashed a barrage of sanctimonious protests against an invasion it had helped promote, including organizing a boycott of the 1980 Moscow Olympics. As it sent billions of dollars in weaponry to the mujahadeen, it publicly denied that it was giving the rebels any assistance.

Though Washington proclaimed that its Afghan proxies were “freedom fighters,” the mujahadeen and their international backers were social reactionaries. With the assistance of right-wing Muslim regimes such as Saudi Arabia and Pakistan, the US promoted Islamic fundamentalist warlords within the resistance. Washington turned a blind eye as they exterminated competing mujahadeen factions and funded themselves through large-scale opium sales.

When the mujahadeen proved incapable of organizing attacks on Kabul and strategic roadways, the CIA armed and trained international Muslim recruits to launch terrorist attacks and suicide bombings. The young Saudi billionaire Osama bin Laden oversaw these global recruitment networks, which later formed the core of Al Qaeda.

These networks gathered together recruits from the Muslim Brotherhood, those influenced by extremist Saudi Islam, and all the forces in the Muslim world that had historically been mobilized against the powerful socialist traditions of the Middle Eastern workers and intellectuals, including in Afghanistan.

Rising losses and popular discontent in the USSR prompted Moscow to withdraw its forces in 1989. This was followed by the Soviet collapse in 1991 and the 1992 collapse of the PDPA regime, as leading PDPA officials passed into the service of competing mujahadeen warlords. Afghanistan descended into civil war.

The architects of US policy in Afghanistan have recorded their callous indifference to the consequences of their policies. Asked in 1998 if he felt remorse about the Afghan tragedy, Brzezinski replied bluntly: “What’s more important to the history of the world? The Taliban or the collapse of the Soviet empire? Some stirred-up Moslems or the liberation of Central Europe and the end of the cold war?”

The world still faces the consequences of this eruption of US imperialist influence into Central Asia. Great power competition—unleashed by the Afghan civil war—for dominant influence over Afghanistan, strategically located at the center of the Eurasian land mass, initially saw an attempt by the US, Pakistan and Saudi Arabia to unify Afghanistan under the fundamentalist Taliban militia in the mid-1990s. It culminated in 2001 in the US invasion and occupation of Afghanistan—carried out under the fraudulent banner of a “war on terror”—against the same forces Washington had supported in the 1980s and 1990s.

As it seeks to use its position in Afghanistan to enforce its hegemony over an unstable Asian continent, Washington faces the toxic political results of its policy in 1979: Afghan narco-warlords, international terrorist networks, ex-Soviet republics socially devastated by the collapse of the USSR, and the general poverty of the region.

The catastrophes of the present emerge from crimes committed in the past. The history of US imperialism’s first major push into Central Asia must be understood in order to assess the consequences the current US escalation will have for the region and the world.

Middle-Class Tax Time Bomb In The Health Care Bill

A Less Than Honest Policy

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There is a middle-class tax time bomb ticking in the Senate’s version of President Obama’s effort to reform health care.

The bill that passed the Senate with such fanfare on Christmas Eve would impose a confiscatory 40 percent excise tax on so-called Cadillac health plans, which are popularly viewed as over-the-top plans held only by the very wealthy. In fact, it’s a tax that in a few years will hammer millions of middle-class policyholders, forcing them to scale back their access to medical care.

Which is exactly what the tax is designed to do.

The tax would kick in on plans exceeding $23,000 annually for family coverage and $8,500 for individuals, starting in 2013. In the first year it would affect relatively few people in the middle class. But because of the steadily rising costs of health care in the U.S., more and more plans would reach the taxation threshold each year.

Within three years of its implementation, according to the Congressional Budget Office, the tax would apply to nearly 20 percent of all workers with employer-provided health coverage in the country, affecting some 31 million people. Within six years, according to Congress’s Joint Committee on Taxation, the tax would reach a fifth of all households earning between $50,000 and $75,000 annually. Those families can hardly be considered very wealthy.

Proponents say the tax will raise nearly $150 billion over 10 years, but there’s a catch. It’s not expected to raise this money directly. The dirty little secret behind this onerous tax is that no one expects very many people to pay it. The idea is that rather than fork over 40 percent in taxes on the amount by which policies exceed the threshold, employers (and individuals who purchase health insurance on their own) will have little choice but to ratchet down the quality of their health plans.

These lower-value plans would have higher out-of-pocket costs, thus increasing the very things that are so maddening to so many policyholders right now: higher and higher co-payments, soaring deductibles and so forth. Some of the benefits of higher-end policies can be expected in many cases to go by the boards: dental and vision care, for example, and expensive mental health coverage.

Proponents say this is a terrific way to hold down health care costs. If policyholders have to pay more out of their own pockets, they will be more careful — that is to say, more reluctant — to access health services. On the other hand, people with very serious illnesses will be saddled with much higher out-of-pocket costs. And a reluctance to seek treatment for something that might seem relatively minor at first could well have terrible (and terribly expensive) consequences in the long run.

If even the plan’s proponents do not expect policyholders to pay the tax, how will it raise $150 billion in a decade? Great question.

We all remember learning in school about the suspension of disbelief. This part of the Senate’s health benefits taxation scheme requires a monumental suspension of disbelief. According to the Joint Committee on Taxation, less than 18 percent of the revenue will come from the tax itself. The rest of the $150 billion, more than 82 percent of it, will come from the income taxes paid by workers who have been given pay raises by employers who will have voluntarily handed over the money they saved by offering their employees less valuable health insurance plans.

Can you believe it?

I asked Richard Trumka, president of the A.F.L.-C.I.O., about this. (Labor unions are outraged at the very thought of a health benefits tax.) I had to wait for him to stop laughing to get his answer. “If you believe that,” he said, “I have some oceanfront property in southwestern Pennsylvania that I will sell you at a great price.”

A survey of business executives by Mercer, a human resources consulting firm, found that only 16 percent of respondents said they would convert the savings from a reduction in health benefits into higher wages for employees. Yet proponents of the tax are holding steadfast to the belief that nearly all would do so.

“In the real world, companies cut costs and they pocket the money,” said Larry Cohen, president of the Communications Workers of America and a leader of the opposition to the tax. “Executives tell the shareholders: ‘Hey, higher profits without any revenue growth. Great!’ ”

The tax on health benefits is being sold to the public dishonestly as something that will affect only the rich, and it makes a mockery of President Obama’s repeated pledge that if you like the health coverage you have now, you can keep it.

Those who believe this is a good idea should at least have the courage to be straight about it with the American people.