Wednesday, May 12, 2010

The Danger of Israel's Nuke Hypocrisy

The Danger of Israel's Nuke Hypocrisy

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This extraordinary double standard – demanding transparency from Iran, which doesn’t have the bomb and disavows wanting one, and protecting the secrets of Israel, which is believed to have one of the most sophisticated nuclear stockpiles on earth – has forced the Obama administration and many U.S. news organizations into logical and moral contortions.

The hypocrisy also is counterproductive, undermining whatever moral standing the United States might have in trying to strengthen safeguards that are considered important to prevent the nightmare scenario of some terrorist organization getting its hands on nuclear materials.

Despite those stakes, Israel’s Likud government and its neoconservative backers in the United States show no flexibility when it comes to acknowledging the existence of Israeli nukes or discussing the value of Israel accepting the nonproliferation standards that apply to other nations.

For his part, President Barack Obama has verbally stumbled through two questions when asked about his knowledge of Israel’s nuclear arsenal. In both cases, he clumsily maintained the practice of American presidents trying to keep Israel’s “secret,” a charade that dates back to Richard Nixon and has required the tacit collaboration of the mainstream U.S. news media.

Over the past four decades, Israel’s nuclear arsenal has been one of those inconvenient truths that everyone in power knows but agrees not to talk about. In that sense, it represents not only a glaring hypocrisy in the eyes of many around the world but also damages the U.S. democratic process by establishing a factual no-man’s-land where public debate fears to tread.

So, instead of news organizations like the New York Times demanding “all the news that fit to print,” you see a willful surrender of objectivity in favor of aligning with Israel’s desire for secrecy and double standards.

For instance, in a May 9 editorial, the Times demanded a toughening of the Nuclear Nonproliferation Treaty to punish countries that evade its prohibitions. The Times said this crackdown was a prerequisite for the United Nations punishing Iran with harsher sanctions.

“At a frightening time — when Iran and North Korea are defying the Security Council and pressing ahead with their nuclear programs, and terrorists are actively trying to buy or steal their own weapon — there has to be a law to make clear that proliferation will not be tolerated,” the Times said.
“The treaty is that law. But it is badly fraying.”

Double Standards

The Times said the nations of the world must come together and insist:

-- that “all treaty members accept tougher nuclear monitoring.”

--that penalties be imposed on “any state that violates its treaty commitments and then withdraws from the pact, as North Korea did.”

--that nuclear-fuel-producing nations, like the United States, guarantee supplies for other countries’ “peaceful energy programs.”

--that the United States and Russia make deep cuts in their own arsenals and “quickly draw other nuclear powers into arms reduction talks.”

--that “no more India-like exemptions from nuclear trade rules” be made “and that any state that tests a weapon would be denied nuclear trade.”

The Times noted that the special U.S. deal “to sell nuclear energy technology to India (which like Pakistan boycotted the nonproliferation treaty so it could develop weapons) enshrined unequal treatment.”

But the Times made no reference to the third rogue state that stayed out of the NPT so it could secretly develop nuclear weapons – Israel. The Times only made a backhand reference to that fact in a slap at Egypt for having the audacity to propose a nuclear-free zone in the Middle East.

“Egypt, which leads the Nonaligned Movement, is also playing games by pressing for a nuclear-weapons-free zone in the Middle East that seeks to force Israel to give up its nuclear arsenal. That is not going to happen any time soon.”

So, because Israel has no intention of relinquishing its nuclear weapons – or even acknowledging their existence – the Times suggested that another de facto special deal must be carved out.

But this “unequal treatment” favoring Israel not only gives it a pass on signing the NPT but comes with a special humiliation for senior U.S. officials, making them jump through hoops with verbal gymnastics to avoid even mentioning that Israel has nuclear weapons.

The Times concludes its editorial with a moral commandment that “all states need to ante up and reverse the treaty’s slide. The world’s security depends on it.”

All nations, it seems, but Israel.

Take Action! How We Can Save OUR Economy

Take Action! How We Can Save OUR Economy

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The next few weeks will culminate into a defining moment in American history and lay the course for our economic future. After two years of being asleep at the switch, Congress is finally stepping up and taking action on financial reform. The resulting bill will be a clear indication and definitive proof as to who is actually running our country. Will it reinforce the dominance of the Wall Street elite, or will it mark a rebirth of the rule of law and economic prosperity for millions of Americans who have seen their standard of living decline?

The early indications are ominous, two of the most crucial aspects of true reform have already been dealt a severe blow. The amendment to break up the “too big to fail” banks has been voted down, and the bill to audit the Federal Reserve has been gutted of important provisions.

We cannot just sit back and let politicians, who are overly influenced by campaign funding and lobbying activities on the part of the big banks who have plunged us into this crisis, decide our future without us. Our passive unwillingness to stand up for our own rights is part of the reason we are in this crisis to begin with. Right now is the most pivotal time for us to make our voice heard.

This bill is where we draw the line and STAND UP.

Enough is enough! It’s time for Americans to take OUR economy back from the big banks and financial interests that have looted it. It’s time to restructure, decentralize and democratize OUR economy.

Wall Street has pillaged our country. It has been bailed out and saved from their casino gambling, Ponzi schemes and allowed to continue their plunder. They are the concentrated power that history has warned us about.

Trillions of our taxpayer dollars have been handed over from the Treasury Department and Federal Reserve to the Wall Street elite, handed over to benefit the very people who caused the crisis. The truth about how many trillions of our tax dollars have been “transferred,” and who exactly they have been given to, has been kept secret in the un-audited Federal Reserve. It is time to audit the Fed and either dismantle it or remake it so it reflects the interests of the people, not the big banks who have hijacked our economy.

How much do they have to steal before Americans say, ‘No more! It is OUR money, it is OUR economy’? How many more honest, law abiding, hardworking Americans have to lose their homes, jobs and struggle just to acquire basic necessities and make ends meet before these greedy bankers are held accountable?

Before laying out our 12-step program to take our economy back, let’s take a brief look at some of the devastating results of Wall Street’s greed:

* Over 50 million US citizens are living in poverty;

* The US now has the HIGHEST poverty rate in the industrialized world;

* 50% of American children will need to use a food stamp during their childhood;

* 30 million Americans are in need of employment, with 20% of Americans either unemployed, underemployed or without hope of finding work;

* Foreclosure rates continue to break record after record. More than five million families have already lost their homes. A record 2.8 million properties were in foreclosure in 2009. The first three months of 2010 had the highest foreclosure rates ever, and 13-25 million foreclosures are predicted by 2014.

* In the past two years, Americans have lost $5 trillion from their pensions and savings. They have also lost $13 trillion in the value of their homes.

* Personal bankruptcies are rising. A record number of Americans filed for bankruptcy in March 2010. In fact, 6,900 Americans go bankrupt every day.

* Due to this economic crisis, American workers have bought more on credit cards than ever before. We now have over $850 billion in credit card debt, as banks charge usurious interest rates on this debt.

* The US now has the HIGHEST inequality of wealth in our nation’s history. The economic top 1% controls an all-time record 70% of all financial assets.

* The average CEO salary, including stock options and incentives, has skyrocketed and is now 500 times more than the average workers.

* While CEO salaries have been soaring and corporate profits are breaking all-time records, average worker pay is declining and incentives are being cut.

These are just some of the horrifying results of Wall Street’s rigging of the economy. The free-market is now a rigged-market ruled by corporate welfare and crony capitalists who are funneling wealth away from 99% of the American public and directly into their coffers on an unprecedented scale. Risk, losses and debts have been socialized, while profits have been privatized.

As a consequence of their continued looting, austerity measures are about to be implemented. In state after state across the country, and on a federal level, we are facing severe deficits. Mass school closings have already been scheduled for the end of this school year, as thousands of teachers have already been told that they will no longer have a job. Pension funds and medical programs are being slashed. Fire fighters, police and health care workers are being cut back . Six million Americans are on the verge of losing the unemployment benefits that they have been surviving off of and there are now a record six available workers for every one job opening. Unemployment insurance funds have already been depleted in 33 states, with more expected to go into the red within the next few months.

Draconian cuts in vital social programs and critical government functions are just beginning to be phased in, while our national wealth is still being transferred to the wealthiest. They are pulling out the social infrastructure from below us and are about to pile higher taxes on top of us.

While nearly 200 million, two out of three, Americans are struggling to make ends meet and currently living paycheck to paycheck, billionaires have increased their aggregate wealth by a stunning 50% during this economic crisis.

The Robber Barons of the Gilded Age have now been displaced as America’s greediest ruling class.

After trillions in bailouts – a cover for the greatest theft of wealth in history – we are seeing record-breaking profits and bonuses on Wall Street. We have the power to stop this looting, break up this concentrated power and take back the economy. We just have to stand up for ourselves – TOGETHER.

We can break the financial oppression, and here’s how we will do it.

The Mobilization for OUR Economy begins while the Obama Administration and Congress are debating reform of the financial industry. However, much more than what is being proposed is needed to give Americans control over their economic lives. To achieve these objectives, we are working to make the following common-sense reforms into reality:

#1) Break up the “Too Big To Fail” Banks. You can’t have free-market competition when a handful of big banks can rig the market and regulatory structure to benefit themselves at the expense of everyone else. We will continue to push for reforms put forth in the Kaufman-Brown SAFE Banking Act.

#2) Put in place a transparent open exchange for over-the-counter derivatives and ban High Frequency Trading (HFT). Investigate all prior HFT and frontrunning activities, including the sudden 1000 point stock market plunge on May 6th. Create a team of experts to analyze/restructure/dissolve existing derivative contracts to reduce risk. We support Senator Blanche Lincoln’s Wall Street Transparency and Accountability Act.

#3) Require stricter accounting standards so the real value and debt/liabilities of banks are understood. With this, a more responsible executive pay structure must be implemented. Investigate firms and hold them liable for accounting scams. Clawbacks must be implemented on bonuses and executive compensation that was based on false profits. Investigate the Federal Reserve’s role in covering up, aiding and abetting firms in accounting fraud.

#4) Rein in corporate power. Stop corporate welfare – no more bailouts! End
corporate personhood and reverse the Citizens United court decision by a constitutional amendment. We must also make sure that all taxpayer funds and loans handed out in the bailout are returned with an interest rate that reflects current profit margins that were created as a result of our tax money.

#5) Audit the Federal Reserve. There should be zero secrecy in this private banking corporation that prints U.S. dollars and extends zero interest loans to a select few. The Fed should either be dismantled or re-made to represent the interests of the American people, not the banks, and include elected positions on their Board of Governors.

#6) Tax trading of stocks, bonds, derivatives and options. A small micro-tax applied to large firms would slow high-risk speculation and provide significant revenue, allowing reduction of income taxes, withholding taxes and adequately fund government operations.

#7) Corresponding to our second objective, close the casino by reinstating both a modernized version of the Glass–Steagall Act, which separated commercial and investment banking, and a strict Net Capital rule that limits wild risk-taking and speculating.

#8) Shut the revolving door and put up a strict firewall between finance executives and government regulators and officials.

#9) End usurious credit card and pay day loans. Cap interest rates and get rid of hidden bank fees.

#10) Create an empowered and independent Consumer Protection Agency (CPA). Investigate predatory lending schemes, liar’s loans and put a moratorium on home foreclosures, as the first steps in what will be many investigations into abusive practices. Credit rating agencies should be regulated by the CPA and function independently of the firms producing the products being rated.

#11) Urgently hire 1,500+ white-collar crime investigators to enforce existing laws.

#12) Fire, investigate and prosecute government officials like Tim Geithner, Ben Bernanke, Larry Summers and John Dugan, and investigate Hank Paulson, Alan Greenspan and Robert Rubin, all of whom played a significant role in the financial collapse and the massive “transfer” of wealth to the finance industry. Also investigate and prosecute, under RICO statutes, top executives in financial firms who engaged in fraudulent activity. Appoint people like Elizabeth Warren, Simon Johnson, Joseph Stiglitz, William Black and Ron Paul to positions of authority over the economy.

These are our primary objectives and the necessary steps that must be taken to take OUR economy back. If the financial reform bill, that has been two years in the making, doesn’t live up to this 12-step program, we will know that our politicians have sold us short once again.

The Wall Street elite have controlled our political process for too long!

We must show them that we mean business this time, so STAND UP and fight for your future. Join us at sit-ins, protests and rallies across the United States. We can take back our country. We can regain control over our economic lives.

The time is now!





New York governor plans furloughs for 100,000 state workers

New York governor plans furloughs for 100,000 state workers

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On Monday, several thousand union members rallied outside of the State Capitol in Albany as well as at a number of other locations around the state of New York to protest Governor David Paterson’s plan to furlough 100,000 state workers one day a week until the new state budget is passed.

The government of the State of New York is suffering from near-total political paralysis. The state budget for the 2010-2011 fiscal year, due on first of April, is now more than a month late, and there are no discernable signs that this situation will change any time soon. This is not the first time that the state budget has been late, but the current economic crisis has led to a virtual halt in the budgetary process.

A substantial portion of state tax revenue in past decades has come from financial activity on Wall Street and the support it gave to the region’s economy. That revenue has diminished significantly since the onset of the financial crisis.

The recent rebound in profits and bonuses in the financial sector has had little effect on the larger economy. This has resulted in a precipitous decline in revenue for the state while the need for social services grows. The legislative and executive branches of government are haggling over how to apportion sufficient budget cuts to make up for a $9.2 billion deficit in the fiscal year that has already begun.

Since the governor first announced his proposed 2010-2011 state budget in January, the projected deficit has ballooned from $7.4 billion to a current estimate of more than $9 billion and is continuing to grow. In addition to a raft of proposed cuts in social, educational and medical services, Governor Paterson has demanded that a 4 percent pay increase for state workers included in the current contract with public employee unions be rescinded. The leaderships of the two main unions, the Civil Service Employees Union (CSEA) and the Public Employees Federation (PEF), have refused to reopen their contracts to permit this change. The governor, in turn, has unilaterally withheld the pay increase until the new state budget is enacted. The unions are suing him for breach of contract.

Over the last few months, Paterson has proposed a number of additional measures aimed at cutting labor costs by a total of $250 million, including a pay freeze on state employees and withholding a week’s pay until retirement. Union leaders have responded with proposed cost-saving measures of their own. Neither side has accepted the other’s proposals.

The governor has now taken unilateral action. “Because unions have not accepted any proposals to achieve necessary savings, I am left with no other choice but to move forward with this plan [the furloughs],” he said. “I do not take this action lightly, but it is necessary given the unions’ unwillingness to make any sacrifices, and I will do whatever is necessary to protect New York’s finances.”

Since the beginning of April, after the deadline for enacting the new budget, the state government has continued to function by the use of emergency appropriations bills on a week-to-week basis. It is projected that the state will run out of money entirely sometime in June. In an attempt to pressure both the legislature and the public employee unions, this past Thursday Governor Paterson announced that in next week’s bill, which must be approved by the legislature, he will include a provision to furlough approximately 100,000 state employees one day a week until a new budget is in place. This furlough would amount to a 20 percent pay cut for as long as it is in force and is projected to save the state $30 million a week. This is a permanent loss of pay. The legislature can only accept or reject, but not alter, the emergency appropriations bill.

The response by the CSEA and PEF to the prospect of furloughs has been to threaten protest marches and legal action. In its call for Monday’s rally against the proposed furloughs, the PEF stated, “We will rally, we will follow him [the governor] around the state, and we will sue him in court.” The basis for legal action will be that the governor is violating the existing union contracts. The CSEA appealed to good “business ethics” to counter the governor’s action. In a statement released on May 7, the union’s president, Danny Donohue, affirms that, “Any business person should understand that a contract is a contract and once you open one you can never again bargain in good faith.”

Leaders in the state legislature, including so-called friends of labor such as Assembly Speaker Democrat Sheldon Silver have said that they are powerless to stop the governor’s move because the state employees are under the jurisdiction of the executive branch, and furthermore, to vote down the emergency spending measure would cause an immediate shutdown of state government.

The union leaders are bowing to this argument. Gannett news service quotes Flo Tripi, Western Region president of the CSEA, as complaining, “Do we make noise in the legislature and say to the legislators ‘we don’t want you to vote for this bill because it has furloughs in it for our employees’ when in the same sense what that bill then does (by not being approved) is shut down Government in New York State? He’s [Paterson] got us in a box and we’re damned if we do and damned if we don’t.”

The emergency budget measure, including the furloughs, was passed by both houses of the legislature on Monday evening.

Some state legislators in New York have been reluctant to go against the public employee unions, whose leaderships have provided significant support in the past. The CSEA alone represents 250,000 members. However, the capitalist politicians, including the Democrats, are far more wary of doing anything contrary to the interests of the Wall Street financial elite. All sides have ruled out any proposals for significant tax increases on the wealthy.

A 20 percent cut in pay will not only have a substantial impact on state workers and their families, but will have a significant ripple effect on local communities. That is especially true in Albany, the state capital, and the surrounding region, where a large number of state employees are concentrated.

This latest attack, to be followed by more-severe measures when the new state budget is enacted, is part of a continuously deepening drive to make the working people pay for the state’s protracted fiscal crisis. According to the PEF, “The state workforce has been reduced by 4,500 positions since 2008 and 30,000 positions since 1990.” Last year, state employee unions agreed to the creation of a new, fifth tier in the pension system, with considerably reduced benefits for new hires, in return for a pledge from the governor of no layoffs for the rest of his term.

Despite such concessions, the bourgeois press and political commentators are mounting an ever more virulent campaign with the theme that state workers should be willing to make sacrifices and share the pain during a period of crisis.

Typical is a recent editorial in The Buffalo News that states: “New Yorkers by the millions have taken it on the chin—and in the wallet—during this steep downturn. They have given up raises, suffered layoffs, forfeited benefits and more in an effort to protect their jobs and even the health of their employers. Paterson and, we dare say, most New Yorkers don’t see why New York needs an exempted elite whose refusal to compromise threatens to make matters worse for the taxpayers who foot the bill.”

The reliance by the leaders of the CSEA, PEF, and other public worker unions on political lobbying and appeals to the sanctity of contracts will only serve to isolate public employees from the rest of the working class and allow such attacks to go unchallenged.

Lieutenant Governor Richard Ravitch was recently quoted in the New York Times as projecting a $15 billion deficit in next year’s state budget. He further stated that this recession was not like past cycles in which relatively quick economic recoveries provided the resources to compensate for short-term government deficits.

Ravitch has experience in such matters, having been a key figure in the “rescue” of New York City from near bankruptcy during the 1970s. Clearly, he is warning both capitalist politicians and union bureaucrats that there will be no return to business as usual. With the federal stimulus money largely gone and an adamant refusal to raise taxes on the wealthy, the attacks on public sector workers will only become deeper and more adamant.

Seattle police beating caught on tape

Seattle police beating caught on tape

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After being suppressed by the local media for several weeks, a video surfaced on May 7 showing Seattle police using racist language while beating an innocent man held on the ground.

The incident comes barely a year after a similarly brutal assault was caught on tape (See: Seattle, Wash.: Video captures attack on teenage girl at police station).

The video (, taken by a freelance cameraman, shows two suspects detained by Seattle police. One man is kicked and stepped on by officers while lying prone on the pavement. Detective Shandy Cobane from the city’s “Gang Unit” yells at the man, “I’m going to beat the f___ing Mexican piss out of you, homey.” He then proceeds to kick the man in the face. A female officer, since identified as Mary Woollum, steps on the back of the man’s knee with her full weight. Although bloodied and obviously dazed, no effort was made to provide him with medical help.

The man was later released without being booked or charged.

Yesterday, civil rights leaders speaking at a news conference in the city described the attack as a hate crime and demanded that the Federal Bureau of Investigation launch a full inquiry into the matter.

On April 17, Seattle police began an internal investigation into what happened but kept quiet about the incident, so as to keep it from becoming public. At least one major media outlet in the Seattle area, local Fox news affiliate KCPQ-TV, assisted in the cover-up.

Initially refusing to air the video, the television station subsequently fired the cameraman when it was released by another news station. In the aftermath of the video’s ultimate airing by ABC news affiliate KIRO 7, KCPQ-TV has been attempting to gain legal rights over the material, claiming the video belongs to them.

The cameraman, who insists that he was working off the clock when he shot the scene, publicly stated that he believes the FOX news affiliate refused to show the video in order to protect the police.

Neither of the two officers involved in the assault has been dismissed for their conduct. Cobane was reassigned to another division. It is unknown whether Woollum was similarly dealt with.

Seattle Police Chief John Diaz attempted to justify the officers’ actions in an interview with KIRO 7, insisting, “In the heat of the moment, people make mistakes…. I understand that.” He went on to claim that the city’s law enforcement agency has “a strong commitment [to] insuring that we hold all our officers accountable.”

The city’s Mayor Mike McGinn said he was “disappointed” with what happened. However, in reply to a question by KIRO 7 about whether he was bothered by the efforts of the Seattle Police to keep the incident out of the public eye, the mayor simply stated, “I have a very strong relationship with Chief Diaz.”

The use of this kind of violence against suspects is not an anomaly. Last March, revelations came to light that Sheriff’s Deputy Paul Schene savagely beat an unarmed teenager in custody in King County, the regional municipality that includes Seattle. Schene later claimed, in a legal proceeding that ended in mistrial, that he attacked the girl because he was afraid of her.

This latest incident of police brutality comes just weeks after the passage in Arizona of SB 1070, a law that legalizes the profiling and persecution of undocumented immigrants by the police. That legislation, variants of which are now being debated in state legislatures in other parts of the country, gives the police the right to stop people on the basis of the mere suspicion that they might be in the country illegally and arrest them if they are unable to produce, on the spot, the required documentation.

SB 1070 gives a green light to the targeting of Hispanics and all others deemed to be “foreign looking” by police officers. It fosters and legitimizes the sort of brutal racism expressed in this latest police assault in Seattle.

Federal officials block open hearings into West Virginia explosion

Federal officials block open hearings into West Virginia explosion

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On Monday, lawyers representing families of the coal miners killed in the April 5 blast at the Upper Big Branch Mine filed suit in a US District Court in Charleston, West Virginia, seeking to overturn the decision of the Obama administration to hold closed-door interviews of witnesses.

The decision by Joseph Main, head of the Mine Safety and Health Administration (MSHA), will mean family members of the 29 dead miners and their lawyers will be prevented from hearing testimony. They will also be barred from asking any questions or presenting additional testimony.

In taking secret testimony the Obama administration is continuing the practice of the Bush administration. This only underscores the fact that the official investigation will be another whitewash, which allows the coal operators to continue killing and maiming miners with impunity.

Faced with the growing anger and disgust of family members and other coal miners, the United Mine Workers, several local and national media organizations, and even Massey Energy—the owner of the Upper Big Branch mine—have called for public hearings. MSHA chief Joe Main was formerly the head of safety for the United Mine Workers union.

While MSHA has the power to subpoena witnesses for public hearings, it has only chosen to do so for two investigations throughout the history of the federal agency. Instead witnesses with testify on a voluntary basis and will not be under oath.

MSHA claims that the closed-door interviews are necessary to prevent witnesses from being intimidated by company officials. In practice, however, lawyers working for coal operators are routinely allowed to “represent” coal miners who come forward as witnesses. Any miner, foremen or other mine employee who refuses to do so faces possible victimization.

Massey Energy is notorious for operating its mines with disregard for the safety of its miners. Over the past 18 months, the UBB mine had more than 600 safety violations, including for ventilation plans, escape routes and coal dust control. Safety inspectors found that ventilation fans were at only half the level needed to prevent the buildup of explosive methane gas. At other times, airflow was directed to route polluted air onto the mine face instead of out of the pit.

Miners who worked for Massey have told reporters that the company did not allow miners to take the time to hang the curtains necessary to keep air flowing to newly mined sections and clean up coal dust. Massey often told miners to ignore gas sensors that detected high levels of methane, according to workers.

While the official cause of the blast has yet to be determined, miners and mine safety experts believe a methane explosion triggered a secondary coal dust explosion, resulting in massive blast. Seven of the 29 killed miners were riding out of the mine nearly 2 miles from the explosion.

In addition to concealing evidence of Massey’s criminal responsibility by keeping the interview process closed, the government is also covering its own role. MSHA is equally culpable for allowing Massey to continue operating the mine despite its record of safety violations and repeated signs of an impending disaster.

Despite Massey’s long record of violations, MSHA officials never sought to close the mine. Instead, MSHA officials issued pro forma citations knowing full well that Massey would appeal them. Dumped into a backlogged system a judge would not hear the case for several years, allowing the mine—which federal officials knew was a deathtrap—to continue to operate. MSHA investigators who would not play this game were quickly transferred to other areas.

MSHA never put the UBB mine on its “pattern of violation” list that would have given safety inspectors greater power to force the corrections of safety problems or shut the mine. The FBI has launched its own criminal probe into the explosion, looking into, among other things, whether MSHA officials took bribes from Massey.

US continues to detain, torture prisoners at secret Afghan base

US continues to detain, torture prisoners at secret Afghan base

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The International Committee of the Red Cross (ICRC) has confirmed to the British Broadcasting Corporation that the US military is operating a second “black jail” at its Bagram airbase near Kabul in Afghanistan, contrary to the Pentagon’s public denials.

The BBC’s Hilary Andersson writes that in response to a question about the existence of the secret facility, “The International Committee of the Red Cross (ICRC) said that since August 2009 US authorities have been notifying it of names of detained people in a separate structure at Bagram.” The Red Cross has not had access to these prisoners.

At that site, according to numerous former detainees, prisoners are abused, beaten, humiliated and subjected to sleep deprivation, sensory deprivation and other forms of torture.

The BBC reported on the second Bagram detention facility in April. At the time, Andersson cited the comments of nine witnesses, interviewed separately, who provided similar descriptions of conditions at the “secret jail.” The former detainees told of being beaten by American soldiers at the time of their arrests, being locked in tiny, windowless concrete cells, in which a light bulb was constantly illuminated, and being prevented from sleeping by various means.

When the BBC put the allegations to Pentagon officials in April, the latter denied any abuse and the existence of the secret site. Vice Admiral Robert Harward, in charge of the new Parwan detention facility, said, “I’ve never heard of it. This [Parwan] is the only detention facility in Afghanistan.” As the Red Cross statement makes clear, Harward was lying.

In response to a question from a reporter in January, Harward declared, “There are no black-jail secret prisons.… We do have field detention sites we do not disclose, but they’re held there for very short periods, and then they’re moved—if they’re determined to need additional internment, they’re moved to the detention facility at Parwan or released.” Again, Harward was lying through his teeth. He will not, of course, be called to account by anyone.

The New York Times and the Washington Post reported in November 2009 the allegations of numerous Afghan detainees, some of them teenagers, about a “black” site at Bagram. The Post’s article noted that the prisoners “appeared to have been in a facility run by U.S. Special Operations forces that is separate from the Bagram Theater Internment Facility, the main American-run prison, which holds about 700 detainees.”

The Times pointed out that when Barack Obama “signed an order to eliminate so-called black sites run by the Central Intelligence Agency in January [2009], it did not also close this jail, which is run by military Special Operations forces.”

Both the Post and the Times reported horrific allegations. One of the teenagers detained at Bagram, Rashid, a woodcutter from the Sabari district of Khost province, told the Post that “he lived in a small concrete cell that was slightly longer than the length of his body. Food was tossed in a plastic bag through a slot in the metal door. Both teenagers said that when they tried to sleep, on the floor, their captors shouted at them and hammered on their cells.

“When summoned for daily interrogations, Rashid said, he was made to wear a hood, handcuffs and ear coverings and was marched into the meeting room. He said he was punched by his interrogators while being prodded to admit ties to the Taliban; he denied such ties. During some sessions, he said, his interrogator forced him to look at pornographic movies and magazines while also showing him a photograph of his mother.

“‘I was just crying and crying. I was too young,’ Rashid said. ‘I didn't know what a prison looks like or what a prison is.’”

One of the detainees, a farmer named Hamidullah, told the Times, “The black jail was the most dangerous and fearful place. It is a place where everybody is afraid. In the black jail, they can do anything to detainees. They don’t let the ICRC officials or any other civilians see or communicate with the people they keep there.” None of the individuals interviewed were ever charged with a crime.

After the initial BBC report about the secret jail in April, an Amnesty International USA blog noted “the complete lack of interest that the US media has taken in the story…the silence has been deafening.” Now the confirmation by the Red Cross of the accuracy of that report, in the face of Pentagon stonewalling, has also elicited next to no interest.

Human rights activists now refer to Bagram as “Obama’s Guantánamo.”

The conditions at the officially acknowledged Parwan detention facility at Bagram, where 800 detainees are currently held, are savage enough. The BBC’s Andersson was allowed into the prison for an hour in April. This is what she described:

“In the new jail, prisoners were being moved around in wheelchairs with goggles and headphones on.

“The goggles were blacked out, and the purpose of the headphones was to block out all sound. Each prisoner was handcuffed and had their legs shackled.

“Prisoners are kept in 56 cells, which the prisoners refer to as ‘cages.’ The front of the cells are made of mesh, the ceiling is clear, and the other three walls are solid.

“Guards can see down into the cells [from] above.”

This is what US military spokesmen refer to as “humane” treatment. Col. John Garrity, a commander at Bagram, told the Washington Post in November, “I want to be clear that there is no harsh treatment at all.”

In June 2009 the BBC reported on allegations by 27 ex-inmates at Bagram, none of whom either was ever charged with any offense or put on trial: “Many allegations of ill-treatment appear repeatedly in the interviews: physical abuse, the use of stress positions, excessive heat or cold, unbearably loud noise, being forced to remove clothes in front of female soldiers.

“In four cases detainees were threatened with death at gunpoint.

“‘They did things that you would not do against animals let alone to humans,’ said one inmate known as Dr. Khandan.

“‘They poured cold water on you in winter and hot water in summer. They used dogs against us. They put a pistol or a gun to your head and threatened you with death,’ he said.

“‘They put some kind of medicine in the juice or water to make you sleepless and then they would interrogate you.’”

This kind of barbaric treatment is defined as torture and banned by various international laws and conventions.

The Obama administration, following in the footsteps of its predecessor, has intervened to prevent elemental legal rights being granted to Bagram detainees. In a case brought by the International Justice Network (IJN) on behalf of two Yemenis and one Tunisian citizen, who have been held incommunicado at Bagram for more than six years, the Obama Justice Department has argued that because Afghanistan is an active war zone the minimal rights available to Guantánamo detainees should be denied prisoners held in that country.

Using the same reactionary language as the Bush-Cheney-Rove cabal, lawyers for the Obama administration have insisted that granting detainees legal rights could harm the president’s “ability to succeed in armed conflict and to protect the United States’ forces” by limiting his powers to conduct military operations.

Tina Foster, executive director of the IJN, told the media last year that Bagram inmates exist “in a legal black-hole, without access to lawyers or courts.” She accused the new administration of “using the same arguments as the Bush White House.”

In an interview with Spiegel Online posted in September 2009, Foster noted, “Unfortunately, the US government did not change its position on Bagram when Obama took office. The government still claims that our clients are not entitled to any legal protections under US law. It maintains that even those individuals who they brought to Bagram from other countries, and have held without charge for more than six years, are still not entitled to speak with their attorney, and they are arguing now that they are not entitled to have their cases heard in US courts.”

The Spiegel interviewer asked, “But what then is the difference between the Bush and Obama administrations?”

“Foster: There is absolutely no difference between the Bush administration and the Obama administration’s position with respect to Bagram detainees’ rights. They have made much ado about nothing, in the hope that the courts and the public will not examine the issue more closely.”

US Senate begins oil spill cover-up

US Senate begins oil spill cover-up

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On Tuesday, the US senate began hearings into the Deepwater Horizon disaster, which took the lives of 11 workers in an April 20 explosion and has since poured millions of gallons of oil into the Gulf of Mexico, threatening the region with an environmental and economic catastrophe.

Appearing before the Energy and Natural Resources Committee in the morning and the Environmental and Public Health Committee in the afternoon were executives from the three corporations implicated in the disaster: Lamar McKay, president of the US operations of BP, which owned the oil and the drill site; Steven Newman, president of Transocean, the contractor that owned the rig and employed most of its workers; and Tim Probert, an executive with Halliburton, which contracted for the work of cementing the rig’s wellhead one mile beneath ocean’s surface.

The hearing resembled a falling out among thieves, with multi-millionaire executives—who, until April 20, had collaborated in thwarting basic safety and environmental considerations—each blaming the other for the explosion.

McKay of BP blamed Transocean. “Transocean owned the Deepwater Horizon drilling rig and its equipment, including the blowout preventer,” he said. “Transocean’s blowout preventer failed to operate.” Newman flatly denied that the blowout preventer was responsible for the disaster, shifting blame to BP, which he said controlled the operation, and Halliburton, which was responsible for the cementing around the well cap. “The one thing we know with certainty is that on the evening of April 20 there was a sudden, catastrophic failure of the cement, the casing, or both,” Newman said. Probert of Halliburton pushed back, indicating that BP and Transocean had moved forward operations before cementing was adequately set.

There was, in fact, some harmony between the accounts offered by the executives of Halliburton and Transocean, both of whom appeared to suggest that BP ordered the skipping of a usual step in offshore drilling—the placing of a cement plug inside the well to hold explosive gases in place. That this step was passed over was corroborated by two workers on the rig, who spoke to the Wall Street Journal on condition of anonymity. The workers also told the Journal that BP first cleared the decision with the US Department of the Interior’s Minerals Management Service (MMS). Both BP and the MMS refused comment to the Journal.

Robert Bea, a University of California at Berkeley engineering professor, has gathered testimony from Deepwater Horizon survivors that indicates the rig was hit by major bursts of natural gas, promoting fears of an explosion just weeks before the April 20 blast, the New Orleans Times-Picayune reports. This raised concerns about whether mud at the well head should be replaced by much lighter seawater prior to installation of a concrete plug. The decision to proceed won out, according to information gathered by Bea.

Whatever the immediate cause of the disaster, the clear thrust of the hearings was to focus public outrage on a single, correctable “mistake,” such as a mechanical failure or regulatory oversight, in order to obscure the more fundamental reasons for the disaster: the decades-long gutting of regulation carried out by both Republicans and Democrats at the behest of the oil industry that made such a catastrophe all but inevitable.

A similar calculation lay behind Department of the Interior Secretary Ken Salazar’s Tuesday announcement that the MMS, which ostensibly regulates offshore oil drilling, will be split into two units—one that collects the estimated $13 billion in annual royalties from the nation’s extractive industries, and one that enforces safety and environmental regulations. Salazar’s claim that this would eliminate “conflicts of interest” in government regulation was nervy, to say the least, coming from a man with long-standing and intimate ties with oil and mining concerns, including BP.

Indeed, more farcical than the executives’ recriminations against each other was the spectacle of senators attempting to pose as tough critics of the oil industry. The US Senate, like the House of Representatives, the Department of the Interior, and the White House, is for all intents and purposes on the payroll of BP and the energy industry as a whole. Among the senators sitting on the two committees who have received tens of thousands in campaign cash from BP and the oil industry are Richard Shelby (Republican, Alabama), Mary Landrieu (Democrat, Louisiana), John McCain (Republican, Arizona) and Lisa Murkowski (Republican, Alaska).

One of the few truthful moments in the hearings came when an exasperated Murkowski told the executives, “I would suggest to all three of you that we are all in this together.” Murkowski and Landrieu also expressed concerns that the disaster could compromise offshore drilling.

None with even a passing familiarity of the workings of Washington or the Senate can have any doubt that Tuesday’s hearings were but the opening of a government whitewash. The ultimate aim is to shield the major industry players and the financial interests that stand behind them from any serious consequences.

The assemblage of the guilty parties inside the Senate chambers took place as ruptured pipes on the ocean floor continued to gush forth oil at a rate conservatively estimated at 220,000 gallons per day some 40 miles off Louisiana’s coast. The rate could be many times greater, but arriving at a more accurate estimate is impossible because BP has refused to release its underwater video footage for independent analysis.

BP, which is liable for cleanup costs, has all but admitted it has no idea of how to stop the leak. Its attempt last weekend to lower a four story box over the piping failed when ice crystals clogged a portal at the structure’s roof, a result that was widely anticipated. BP is now considering lowering a much smaller box in order to avoid icing. US Coast Guard and BP representatives have also floated the idea of a “junk shot,” firing golf balls, tire shreds, and other refuse at high pressure into the well.

The drilling of two relief wells continues, with the aim of disrupting the flow of oil from the current well. This option will take a minimum of 90 days, during which 18 million gallons more oil will pour out at the low-end estimate. Even this option provides no certainty. “The risks include unpredictable weather, since the wells will be operational at the start of hurricane season,” according to a report in the Christian Science Monitor. “The wells are also being drilled into the same mix of oil and gas that caused the original explosion, and operating two wells in the area creates the potential of igniting a second explosion that is more powerful.”

If the spill cannot be stopped—a distinct possibility—the ruptured well could release a large share of the deposit’s underground reserves into the Gulf of Mexico, which totals upwards of 100 million barrels of crude oil. And even if the spill is stopped at a lesser volume, with each day there is a growing probability that the oil will devastate the entire Gulf from Louisiana to Florida and possibly reach the Gulf Stream, impacting the Atlantic seaboard.

In the interim, the Environmental Protection Agency (EPA) has given BP clearance to resume pumping chemical dispersants into the oil column as it emerges from the broken piping. BP also continues to dump large quantities of dispersant onto the ocean’s surface. The environmental impact of such heavy use of dispersants is unknown, but a growing number of scientists and environmental groups are warning that the highly toxic substance could simply be transferring the brunt of the spill from the shore to marine ecosytems.

“The companies love the idea of using a chemical to spray on an oil slick to sink it,” Rick Steiner, a former professor of Marine Conservation at the University of Alaska, told the World Socialist Web Site. “It’s ‘out of sight out of mind’ as far as the public is concerned because TV cameras can’t see it. This is the big oil company playbook: public relations, litigation protection, and image.”

Oil has now washed ashore in three places: the Chandeleur Islands off Louisana’s coast, on the coast of a navigable channel from the Mississippi River known as the “South Pass,” and on Alabama’s Dauphin Island. Fishing has been blocked over a wide area, effectively imposing layoffs on thousands of fishermen, many of whom are self-employed and therefore not entitled to unemployment benefits. Sightings of birds covered in oil and dead sea turtles washed ashore have increased in recent days.

In his testimony, McKay boasted that BP would make available “grants of $25 million to Louisiana, Mississippi, Alabama, and Florida,” and that it has paid out approximately $3.5 million in damage claims to those affected by the spill. These figures, presented as an act of enormous magnanimity, are such a tiny share of BP’s revenues as to be almost inconsequential.

The company took home $93 million per day in profits—for a total of $6.1 billion—during the first quarter alone. The $3.5 million in damage claims paid out are significantly less than CEO Tony Hayward’s 2009 compensation, estimated at over $4,700,000 by Forbes.

US warns Pakistan of “severe consequences”

US warns Pakistan of “severe consequences”

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The Obama administration has seized on the failed car bombing in New York’s Times Square on May 1 to insist that the Pakistani military step up its war on Islamic militants and extend its operations into North Waziristan. The US demand is being backed by thinly disguised warnings of economic reprisals and military intervention.

US Secretary of State Hillary Clinton made an explicit public threat during a CBS interview last Sunday. After accusing some Pakistani officials of knowing the whereabouts of Osama bin Laden and Afghan Taliban leader Mullah Omar, she insisted on more Pakistani cooperation and warned: “We’ve made it very clear that if, heaven forbid, an attack like this that we can trace back to Pakistan were to have been successful, there would be very severe consequences.”

Speaking to ABC’s “This Week” on Sunday, Attorney General Eric Holder accused the Pakistani Taliban, known as Tehrik-e-Taliban, of being behind the Times Square incident. He claimed that the Taliban directed the suspected bomber, Faisal Shahzad, a naturalised American citizen of Pakistani descent. Under interrogation, Shahzad has allegedly admitted training in Taliban camps in North Waziristan, although the amateurish character of the bombing attempt indicates otherwise. A Tehrik-e-Taliban spokesman has denied any involvement.

Publicly, the Obama administration has been cautious, not wanting to further destabilise the already fragile Pakistani government. Under US pressure, the Pakistani military has already launched major offensives over the past year into the Swat Valley, Bajaur and South Waziristan, in which thousands of civilians were killed and hundreds of thousands driven from their homes. In the Federally Administered Tribal Areas (FATA) along the border with Afghanistan, US drone attacks have killed hundreds of civilians and reinforced anger toward what many Pakistanis regard as a US puppet government in Islamabad.

Behind closed doors, however, the “very severe consequences” have been spelled out in no uncertain terms. An article in the New York Times last Friday described “the new pressure from Washington” over the Times Square incident as “a sharp turnabout from the [previous] relatively polite encouragement”. “And it comes amid increasing debate within the administration about how to expand American military influence—and even a boots-on-the-ground presence—on Pakistani soil,” the article added.

The Times reported that the US commander in Afghanistan, General Stanley McChrystal, met with Pakistan’s military chief, General Ashfaq Parvez Kayani, on Friday to urge Pakistan to begin a military offensive into North Waziristan, which is part of the FATA territory. The Pakistani military has previously resisted such pressure, saying its forces were already overstretched. While McChrystal denied pressing Kayani, an American official explained to the Times that the Pakistani general was told: “We are saying you have got to go into North Waziristan.”

In an article on Sunday, the Washington Post described the debate in the Obama administration in similar terms, stating that some officials “see the Times Square incident as weighing in favor of a far more muscular and unilateral US policy. It would include a geographically expanded use of drone missile attacks in Pakistan and pressure for a stronger US military presence there.”

Such measures would be highly provocative and deeply destabilising. At least 36 US drone attacks have taken place inside Pakistan so far this year, including two in the past week inside North Waziristan. The figure compares to 53 for all of last year and 30 during the final year of the Bush administration. In the latest strike yesterday, 12 missiles were fired at an alleged training camp, killing at least 14 people. More than 900 people, mostly civilians, have died in US drone strikes.

What the Washington Post article suggests is that US drone attacks would take place deeper inside Pakistan and beyond the FATA border areas. American military officials have previously described areas of Baluchistan, including the city of Quetta, as hotbeds of “terrorist” activity. As for “a stronger US military presence,” the Pakistani military has previously opposed any increase in US “trainers” and “advisers,” as well as the direct intrusion of US troops from Afghanistan in “hot pursuit” of Islamist fighters. An attack by US special forces on a village in South Waziristan and the death of civilians in September 2008 provoked widespread opposition in Pakistan.

According to the Washington Post, those Obama officials that oppose a more aggressive military policy insist that the Pakistan government has no option but to do Washington’s bidding. “Pakistan’s economy is on the verge of collapse, with gross domestic product falling from more than 8 percent growth in 2005 to under 3 percent last year. More than $3.5 billion in US economic and military assistance is in the pipeline, and a nearly $8 billion International Monetary Fund agreement and a $3.5 billion World Bank financing package are pending.”

Whether directly through an increased US military presence or indirectly by compelling the Pakistani military to go on the offensive in North Waziristan and other areas, the Obama administration is drawing Pakistan into the broader American quagmire in the region. It is no accident that increased pressure on Islamabad comes as the US military is preparing to launch a major offensive to stamp its control over the southeastern Afghan city of Kandahar. The Times Square incident is simply a convenient pretext to demand parallel action on the Pakistani side of the border.

Under the banner of the “war on terrorism,” President Obama has escalated his so-called AfPak war, which, along with the occupation of Iraq, is aimed at securing American economic and strategic dominance in the key energy-rich regions of Central Asia and the Middle East. In pursuing these reckless and predatory wars over the past eight years, the US has steadily undermined the economic and political stability of Pakistan and encroached on its national sovereignty, and exacerbated wider regional tensions, particularly with India.

The disaster unfolding in Pakistan, along with Afghanistan and Iraq, must be opposed through the demand for the immediate, unconditional withdrawal of all US and foreign troops from all three countries.

A "Lost Decade" Ahead for Home Owners

A "Lost Decade" Ahead for Home Owners -- Just So Banks Won't Take a Bigger Hit on Their Garbage Mortgages

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In its effort to rescue the housing market, the Obama administration has created a Frankensystem which neither allows the market to clear nor solves the intractable social problems of lost equity and foreclosure. Obama needs to step-back and take a look at the mess he's made by following the advice of financial industry reps and bank lobbyists. Housing is in a shambles. The market is presently stitched together with buyer-assistance programs, loan modifications programs, new homebuyer subsidies, foreclosure abatement programs, principal reduction programs, historic low interest rates, "easy-term" financing, and government-backed loans. It's a veritable dog's breakfast of inducements, giveaways and bandaids all designed with one purpose in mind; to keep the banks from taking a bigger hit on their garbage mortgages. To get an idea of how desperate the situation really is; take a look at this eye-popping article in the Wall Street Journal:

"The U.S. government's massive share of the nation's mortgage market grew even larger during the first quarter. Government-related entities backed 96.5% of all home loans during the first quarter, up from 90% in 2009, according to Inside Mortgage Finance. The increase was driven by a jump in the share of loans backed by Fannie Mae and Freddie Mac, the government-owned housing-finance giants....

The collapse of the mortgage market in 2007 steered more business to the Federal Housing Administration, which insures loans, and Fannie and Freddie, which were taken over by the government in 2008 as rising losses wiped out thin capital reserves. Congress also increased the limits on the size of loans that Fannie, Freddie and the FHA can guarantee, raising the ceiling to as high as $729,750 in high-cost housing markets such as New York and California. ("U.S. Role in Mortgage Market Grows Even Larger" Nick Timiraos, Wall Street Journal)

There is no housing market in the U.S. apart from the government. The Potemkin banking system is still on the rocks, so Fannie and Freddie have been forced to pick up the slack. But if the government is going to put up all the financing, then it should have a bigger say-so on the way things are run. The emphasis should be on helping people, not on more handouts for the banks.

The first order of business should be the launching of a National Bank that would help support the privately-owned banking system. This would ensure the availability of credit for prospective homeowners and small businesses without putting more pressure on Fannie and Freddie. The National Bank would operate as a public utility run by government employees. That would help to control salaries, eliminate the problem executive compensation and incentives, and reduce the incidents of fraud.

Naturally, the banks will oppose the move tooth and nail, so its up to Obama to guide the legislation through the congress. This is matter of national security. The banks now pose a threat to the materiel well-being of everyone in the country. They're a menace. While a National Bank won't undo the massive damage that's already been done; it will put the economy on the road to recovery by creating a reliable source of credit for any future expansion without inflating another humongous asset bubble.

As the WSJ's report reveals, the banks don't have the capital to function as banks. So, what good are they? They're merely wards of the state. Obama should bypass this sclerotic system of corruption-plagued institutions altogether and do what needs to be done while the economy is still weak. That way, the new National Bank will be up-and-running by the time economic activity begins to pick up again.

SHADOW INVENTORY; There's a 9-year backlog of distressed homes

Here's another stunner from the Wall Street Journal. The article is titled "Number of the Week: 103 Months to Clear Housing Inventory" by Mark Whitehouse. Here's an excerpt:

"How much should we worry about a new leg down in the housing market? If the number of foreclosed homes piling up at banks is any indication, there’s ample reason for concern. As of March, banks had an inventory of about 1.1 million foreclosed homes, up 20% from a year earlier....

Another 4.8 million mortgage holders were at least 60 days behind on their payments or in the foreclosure process, meaning their homes were well on their way to the inventory pile. That “shadow inventory” was up 30% from a year earlier. Based on the rate at which banks have been selling those foreclosed homes over the past few months, all that inventory, real and shadow, would take 103 months to unload. That’s nearly nine years. Of course, banks could pick up the pace of sales, but the added supply of distressed homes would weigh heavily on prices — and thus boost their losses." ("Number of the Week: 103 Months to Clear Housing Inventory" Mark Whitehouse, Wall Street Journal)

Got that? There's a 9-year backlog of distressed homes. The banks are deliberately fudging the numbers to hide how bad things really are. The number of homes in late-stage foreclosure is not 1.1 million, but nearly 6 million--- 5X more than the banks are admitting. Housing will be in the doldrums for a decade or more. It's shameful that people can't get basic information like this to help them make their investment decisions. The banks couldn't pull off this type of information warfare without the help of government officials pulling strings from inside. Bernanke and Geithner must be involved.

So, what's the objective?

The banks are trying to keep prices artificially high to avoid writing-down millions of mortgages that would force them into bankruptcy. It's called "extend and pretend" and its poisonous for the broader economy because it distorts prices and keeps a broken banking system in place that can't perform its social purpose.

WSJ housing editor James R. Hagerty verifies Whitehouse's claims and fills in some of the blanks. Here's a clip from his article:

"To get a sense of how many more households will lose their homes to foreclosures or related actions, Barclays tallies what it calls a shadow inventory, consisting of homeowners 90 days or more overdue on mortgage payments or already in the foreclosure process. At the end of February, 4.6 million households were in that category.

Barclays expects 1.6 million "distressed sales" of homes—mainly foreclosures or sales of homes for less than the mortgage balance due—both this year and in 2011, then a slight decline to 1.5 million in 2012. Last year, Barclays estimates, such sales totaled 1.5 million. About 30% of all home sales this year and next will be foreclosure-related, forecasts Robert Tayon, a mortgage analyst at Barclays, who says that would be only about 6% in a normal housing market." ("Foreclosure Estimate Falls", James R. Hagerty, Wall Street Journal)

Why would Barclays think that only 1.6 million "distressed" homes would be sold in 2010, when they openly admit that there's 4.6 million homes already in the foreclosure pipeline? What does Barclays know that the public is not supposed to know?

Clearly, the banks have worked out a deal with Geithner and Bernanke to sell distressed inventory in dribs and drabs rather than all at once. That keeps prices high and makes their losses more manageable. But isn't that collusion or, at the very least, price fixing? The government definitely HAS a role to play in helping people keep their homes or providing assistance when they lose them, but they have no right to scam the public by stealthily manipulating the market to save underwater financial institutions.

The problem is not housing. The problem is the banks. The banks do not have sufficient capital to fund the mortgage market, nor do they provide the bulk of the financing for auto loans, student loans, small business loans or credit card debt which is gathered into pools and chopped up into tranches for securities that are sold to investors. (Securitization generates wholesale funding for the credit markets) Not only are the banks unable to fulfill their primary social purpose--which is extending credit--they're also increasingly dependent on revenue from high-risk speculation. A recent article in the Financial Times exposed the fraud behind the 12-month surge in equities pointing out that retail investors have largely stayed on the sidelines. Here's an excerpt:

"...surveys show that the usual investors in major rallies – pension funds, hedge funds and retail investors – have not been net buyers of equities. And he says the most likely explanation for this anomaly in the biggest stock market rally since the 1930s is that major investment banks are the anxious buyers.

“Their buying would appear to be for one of two reasons. Firstly because they think the authorities will prevail in their (so far unsuccessful) efforts to inflate their way out of debt liquidation; or secondly because they are too big to fail and so can afford to take a huge gamble that enough buying will convince others to rush in and buy their inventory of risk assets at even higher prices." ("Equity Rally Not Driven by the Usual Investors", Financial Times)

Many people already suspected that the soaring stock market had more to do with "easy money" and bubblenomics, than they did with "green shoots". Still, the FT article does help to underline the fact that the bank's business model is broken and badly in need of repair. But, what is to be done? The banks already own just about everyone on Capital Hill, and their lobbyists are now writing large sections of the reform legislation. So how can they be stopped?

The root of the problem is political, and that's the best place to start. The banks' lethal grip on government has to be broken. The rest will be easy.

The U.S. Continues to Be a Terrorist State

Noam Chomsky: The U.S. Continues to Be a Terrorist State

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If Noam Chomsky’s critics have a common refrain, it is pointing to his habit of being far too hard on America’s motives and too easy on its opponents. The former, of course, is his métier. The latter criticism has limited (though a few important) instances. In fact, Chomsky’s central question is how do you punish the crook who owns the jailhouse, pays the police their salaries, and fails consistently to see his crimes as such? Or perhaps, how do you get a self-enamored hypocrite to reckon with his pathology? Certainly not by repeating the praise, or what Chomsky sometimes calls America’s “state religion” of self-worship. And despite this, in a very limited way, Chomsky does give credit where credit is due.

In his forthcoming book Hopes and Prospects, Chomsky admits that a black family in the White House is historic. But he credits not “America,” a “system of power” defined by “market interventions” in the economy that once tolerated, and even fought for, the right to own humans as slaves. Nor does he give much credit to “Brand Obama,” as he calls the phenomenon that elected our new president, insisting that the new president is “likely to ‘have more influence on boardrooms than any president since Ronald Reagan.’” In fact, Chomsky gives credit for the 2008 election, in a way, to himself and his ilk.

In an early manuscript of the book, Chomsky writes, “The two candidates in the Democratic primary were a woman and an African-American. That, too, was historic. It would have been unimaginable forty years ago. The fact that the country has become civilized enough to accept this outcome is a considerable tribute to the activism of the nineteen sixties and its aftermath, with lessons for the future.” As such, this small tome is Chomsky’s legacy book.

And high time. His landmark critique of B.F. Skinner that crippled behaviorism’s predominance in psychology and linguistics turns fifty this year. His first book on politics, American Power and the New Mandarins: Historical and Political Essays, turns forty. The Essential Chomsky, edited by Anthony Arnove, came out from the New Press last year, in time for Chomsky’s eightieth birthday. And Chomsky’s wife died of cancer last winter, which would make anyone take stock. Regularly voted into the “top public intellectual” polls various magazines frequently run, the linguist and foreign policy critic, said to be worth two million dollars, remains a polarizing figure.

What’s remarkable is how Chomsky’s criticism of the Vietnam war and America’s many interventions seem even more relevant today, prescient in their understanding of how American greed, dehumanization of others, cultural ignorance, and hypocrisy are rewritten as pragmatic, not moral, mistakes. In “The Remaking of History,” from Toward a New Cold War: Essays on the Current Crisis and How We Got There, he writes, “They may concede the stupidity of American policy, and even its savagery, but not the illegitimacy inherent in the entire enterprise.” He continues a page later, “One may criticize the intellectual failure of planners, their moral failures, and even the generalized and abstract ‘will to exercise domination’ to which they have regrettably but understandably succumbed. But the principle that the United States may exercise force to guarantee a certain global order that will be ‘open’ to transnational corporations—that is beyond the bounds of polite discourse.”

Yet Chomsky has been criticized for accuracy and balance, for the petty (citing statements made by an “embassy” rather than “ambassador”) and the heinous (apologist for Pol Pot; a distortion, he insists, of his views), but most commonly, it seems, for comparing U.S. behavior to Hitler’s. In Prospect Magazine, Oliver Kamm writes of Chomsky’s early political writings as going “beyond the standard left critique of U.S. imperialism to the belief that ‘what is needed [in the US] is a kind of denazification.’” “This diagnosis,” Kamm continues, “is central to Chomsky’s political output. While he does not depict the U.S. as an overtly repressive society—instead, it is a place where ‘money and power are able to filter out the news fit to print and marginalize dissent’—he does liken America’s conduct to that of Nazi Germany. In his newly published Imperial Ambitions, he maintains that ‘the pretenses for the invasion [of Iraq] are no more convincing than Hitler’s.’”

On balance, Chomsky is a vital, even indispensable voice in the American cultural debate, needed to remind us of the outrage we should feel as the modernization of American life brings us to accept as necessary and understandable the devastation of foreign countries with little actual public debate and no input from the citizens of those countries. How do our presidents’ “terrorist” campaigns (in Chomsky’s terms) become a normal functioning of the state? How does a country that so readily welcomes outsiders, or purports to, so easily bury them by “overthrowing governments around the world and installing malicious dictatorships, assassinating people” or write them off as collateral damage? Perhaps we should, or do, on some level, share his outrage. And yet his voice has been every bit as ruthless, and occasionally selective (like most good rhetoricians), as his opponents suggest. Does that run counter to, or complement, the voice and methodology of the systems of power he criticizes?

—Joel Whitney for Guernica

Guernica: You’ve been savaging U.S. foreign policy for a long time. What’s new in Hopes and Prospects? Or would you say that you’re reworking a single thesis with new examples?

Noam Chomsky: There are new things that are happening. But I don’t think the basic principles of international affairs or social organization or aspirations for the future change very much. In fact, they haven’t for a long time.

Guernica: Does that imply that your approach as a critic isn’t effective?

Noam Chomsky: On the contrary, it has been quite effective in ways I have discussed repeatedly and at length, even though it hasn’t reached as far as changing fundamental principles and their institutional basis.

Guernica: One thing that never changes in your work is the meditation on the devastating effects of U.S. foreign policy. Here in the U.S., we endlessly tell ourselves, and our leaders especially do this, that “we’re good.” No matter the results, our intentions are good.

Noam Chomsky: Systems of power don’t have good intentions. You’ll occasionally in history find a benevolent dictator or a king who has the interests of the people at heart. But fundamentally, structures of power are not moral agents. We don’t look for good intentions. Of course, they all profess good intentions. But of course that’s also true of Hitler.

Guernica: Are “structures of power” amoral or immoral?

Noam Chomsky: Structures of power are amoral. The CEO, say, of the American Petroleum Institute may care a lot about whether his grandchildren will have a decent world to live in. But as CEO of the American Petroleum Institute, he’s going to try to make that impossible by doing what they’re doing right now, in fact. Working out ways to try to duplicate the success of the insurance industry in undermining any kind of health reform. They’ve already announced, “We’re gonna try to learn from [the health insurance industry’s] tactics and block any kind of energy or environmental bill.” Now he knows (he’s not an idiot) that could lead to a serious catastrophe which could undermine the prospects for the life of his grandchildren whom he cares a lot about. But as the director of a petroleum institute, he can’t consider that. If he did, he’d no longer have that position.

Guernica: You write about how corporations have these super-human rights and that investors and by-laws force them to take every advantage to maximize profits. But what you just said about structures of power being amoral, it seems to me that your work is actually asking them to be moral, no?

Noam Chomsky: I’m not addressing CEOs of corporations or President Obama or anything like that. I’m addressing people, saying, “Look, you’ve got a lot of opportunities. You can effect changes, which will change the actions of structures of power, which will in fact dissolve the structures of power.”

Guernica: What are those changes you mention above that can dissolve the structures of power?

Noam Chomsky: Consider the systematic dismantling of industrial capacity, say GM plants, destroying the workforce and communities, while Obama’s transportation secretary is abroad seeking to use federal stimulus money to contract with Spanish firms to provide high-speed transport—which could be produced by converting the plants that are being dismantled, by the skilled workforce being abandoned. It might require takeover of the facilities by “stakeholders”—workforce and community. There’s no economic principle that bars that, and it could happen with sufficient consciousness and popular support.

Guernica: One group you seem to expect a little more out of, by way of intermediaries between us people and the “power structures,” seems to be intellectuals. In the “Responsibility of—”

Noam Chomsky: The people we call intellectuals aren’t necessarily smarter or more knowledgeable than anyone else. But they happen to have a lot of privilege, and privilege confers responsibility. And so they oughta do things. I don’t expect them to.

Guernica: You’ve called “the inability of educated classes to perceive what they are doing” an “historical universal.”

Noam Chomsky: Close to it.

Guernica: And you cite a story in the New York Times where “the reviewer,” you write, “constitutional lawyer Noah Feldman, described Osama [bin Laden]’s descent to greater and greater evil over the years, finally reaching the absolute lower depths, when ‘he put forth the perverse claim that since the United States is a democracy, all citizens bear responsibility for its government’s actions, and civilians are therefore fair targets.’” What’s significant about this?

Noam Chomsky: What’s significant is what directly follows it. There had been an election in Palestine, actually the first really free election in the Arab world, and two days after Noah Feldman’s article appeared, Steven Erlanger on the front page of the New York Times reported blandly that the U.S. government has just undertaken to punish the people of Palestine for voting the wrong way in a free election. Well, that makes Osama bin Laden look pretty tame. And these things appear right next to each other, and no one notices it.

Guernica: Am I right to believe that you essentially make no distinction between U.S. “terrorism,” i.e. interventions, and, say, al Qaeda’s terrorism?

Noam Chomsky: Yeah, U.S. terrorism is often far worse because it’s a powerful state. Take 9/11. That was a serious terrorist act. In Latin America, they often call it “the second 9/11” because there was another one, namely September 11, 1973.

Guernica: In Chile.

Noam Chomsky: Suppose that al Qaeda had not just blown up the World Trade Center, but suppose that they’d bombed the White House, killed the president, established a military dictatorship, killed maybe fifty to a hundred thousand people, maybe tortured seven hundred thousand, instituted a major international terrorist center in Washington, which was overthrowing governments around the world and installing malicious dictatorships, assassinating people, [and] brought in a bunch of economists who drove the economy into its worst disaster maybe in history. Well, that would be worse than what we call 9/11. And it did happen, namely on 9/11/1973. All that I’ve changed is per capita equivalence in numbers, a standard way to measure. Well, okay, that’s one we were responsible for. So yeah, it’s much worse.

Guernica: Some critics of U.S. foreign policy have been arguing for a universally accepted definition of terrorism to standardize in media, governments, etc.

Noam Chomsky: I agree. Reagan declared a war on terror in 1981—he said that’d be the core of our foreign policy. And since then, I’ve been writing about terrorism using the official definition in the U.S. code, and in Army manuals, and, in fact, in British law. It’s a pretty good definition. Now that’s considered outrageous. And the reason is when you use the official definition, it follows pretty quickly that the United States is a leading terrorist state. Now that’s the “wrong” conclusion, so therefore we can’t use that definition. There are academic conferences and sober volumes on terrorism trying to find some appropriate definition, and the “appropriate” definition has a very definite condition to meet. It has to include the terror that they carry out against us but exclude the terror that we carry out against them.

Guernica: True or false: no one did more to oppose the tyrannical communism of the Soviets?

Noam Chomsky: I don’t know what you mean by “tyrannical communism of the Soviets.” That was one particular form of tyranny, one that was out of U.S. control, and perceived as offering a model for others, so naturally the U.S. generally opposed it—though not when it was bearing the brunt of the war against the Nazis. The U.S. has also opposed democracies and repeatedly overthrew them and established tyrannies. And it supported, and still supports, brutal tyrannies. The question is misformulated and can’t be answered.

Guernica: Soviet communism—you don’t know what that is?

Noam Chomsky: I know what I think it is, and has been since 1918: the most severe attack on socialism/communism apart from fascism. What I don’t know is what you think it is.

Guernica: Your definition sounds fine. Utne characterized your work as having “an unflagging sense of outrage.” I’m wondering, when you diligently dissect exactly what your country has done in places like Chile, Vietnam, Iraq, and elsewhere, when you log numbers of innocent civilians killed, and carefully present these outrageous quotes from members of government or heads of corporations, what you’re feeling. I believe the anger comes through. What else is going on? Shame? Guilt?

Noam Chomsky: All of them. Shame and guilt, of course, because there’s much that we can do about it, that I haven’t done. And outrage because, yes, it’s outrageous. And disgust at the hypocrisy in which it’s veiled. But there’s no point in revealing those emotions. You know, maybe I can talk about them with my wife or something. But what’s the point of going public with them? Doesn’t do any good.

Guernica: Yet those emotions come through in your work as a subtext.

Noam Chomsky: Maybe. And it very much angers supporters of state violence; in fact, they’re infuriated by it, when it comes out.

Guernica: What do you mean?

Noam Chomsky: When it comes out, they are sometimes infuriated by it. I happened to be in England a couple of days ago [for] an interview at BBC. One of the things the interviewer brought up is a statement of mine showing how incomparably awful I am. The statement is “One has to ask whether what the United States needs is dissent or denazification.” And that’s so utterly outrageous; it shows I’m kind of a maniac from outer space. So I asked him what I always do when somebody brings it up. I said, “Did you read the context?” And of course he hadn’t. So I said, “Okay, here’s the context.” During the Vietnam War, the Chicago Museum of Science set up a diorama of a Vietnamese village in which children could be on the outside with guns and shoot into the village and try to kill people. And there was a protest by a group of mothers, a quiet protest, protesting this thing. There was an article in the New York Times condemning—not the exhibit, but the mothers—because they were trying to take away fun from the kiddies. And in that context I said, “Sometimes you have to wonder whether what’s needed is dissent or denazification.” I think it’s just the right thing to say.

Guernica: You’ve written how utterly Iraqis are excluded from the decisions made about their country...

Noam Chomsky: Or Vietnamese or Central Americans, or a long list of others. In fact, we don’t even care about them. If you listen to National Public Radio and happened to have it on last night (or maybe it was PBS), they were discussing the debates about what to do in Afghanistan. One of their correspondents was asked to comment on the costs of the war. She went through the costs of the war, so many hundreds of billions, and then the most severe cost—you know, a thousand American soldiers killed—and then the discussion ended. Now, is that the only cost? There’s no cost to Afghans?

Guernica: One of the ironic “hopes” in your book is the term “hope” as used by what you call “Brand Obama.” Brand Obama seemed to buttress Americans’ assumptions that because we elected a part-black president, we must be over our racism and this is more evidence that we have a noble purpose and a basic goodness. But you point to other countries, India, Bolivia—and where else?—where an outsider was elected.

Noam Chomsky: It’s happening in many parts of Latin America. Bolivia is particularly dramatic. But it’s also true in Brazil. Lula, the president of Brazil; he’s a peasant, steel worker, union organizer, didn’t have much higher education. What put him into power are these vast popular movements. They don’t go along with his policies altogether; by any means, they’re pretty critical of them. But part of the electoral base, like the Landless Workers’ Movement may be the most important mass popular movement in the world. The same is happening elsewhere. Comparing that with our system should lead us to a deal of introspection about just who and what we are.

Guernica: Are you and Hugo Chavez friends?

Noam Chomsky: We’ve met on a friendly basis, but I think you might ask yourself why you are asking this question, and not asking, for example, whether Lula, Correa, and others are friends (for the record, they are, to the same extent). I think we know the answers, but they might be useful for you to think about the matter more carefully.

Guernica: I am unaware of either of those others holding up one of your books and giving your sales a renewed jolt.

Noam Chomsky: It doesn’t answer my question. The fact that he held up my books says nothing about whether we are friends. We’ve never met. I’ve praised work of Hume’s, but it doesn’t mean he was my friend. The question arises about Chavez, not Lula (who I know a lot better) or Correa (who I just spent a few hours with) or many others who are at the heart of the “pink tide” because Chavez is demonized by state/media propaganda. I don’t accept that. Nor, I think, should you.

Guernica: You just said you have met him. Now you haven’t? Your reflexive antagonism aside, I’m happy to give you a moment to explain why we shouldn’t accept state/media propaganda against Chavez.

Noam Chomsky: I hadn’t met him when he held my book up at the UN. Since then, I did spend a few hours with him, like Correa, nothing like Lula, who I spent several days with and got to know pretty well. Sorry if it sounds like reflexive antagonism. It’s rather that I think we should be asking ourselves why the reflexive question is about Chavez—not Lula, or Correa, or for that matter Morales, who I haven’t met but have written about far more than Chavez.

Guernica: In the new book, you hit Obama pretty hard over his cabinet and the Wall Street types in his administration. You also basically allege that neoliberalism and the free market policies that we recommend to others—not only do we not follow them, but they don’t work, in terms of standard of living, wages, etc. You actually say protectionism does work and point to some interesting examples. Ronald Reagan. South Korea.

Noam Chomsky: Adam Smith had advice for the American colonies in the seventeen seventies. He advised the colonies to follow classical economic principles—they’re not very different from neoliberalism. In fact, it’s pretty much what economists today recommend to the third world. He said, Keep to your comparative advantages—the term “comparative advantage” hadn’t been invented yet—produce what you’re good at, which is catching fish, hunting fur, and growing food, and export it to us in England. And import superior British manufactures. But the U.S. gained its independence, so it didn’t have to follow that advice, and didn’t. It immediately set up under Alexander Hamilton high protective barriers to try to bar superior British textiles, in later years British steel. And it built up its own manufacturing base under protective barriers and by an enormous amount of state intervention. Take, say, cotton, the fuel of American industrialization. Well, how did America produce cotton? First of all, by exterminating the indigenous population. Secondly, by slavery. Those are pretty severe market interventions. Yeah, they worked.

Guernica: So your greater point is...

Noam Chomsky: I’m not recommending protectionism. I’m just saying, let’s be honest. Before we preach to others, let’s find out the truth about what we ourselves do. So take Ronald Reagan whom you mentioned. He’s considered the high priest of free markets. In fact, he was by far the most protectionist president in post-war U.S. history.

Guernica: So what are you recommending?

Noam Chomsky: I think decisions should be made in an entirely different manner for entirely different ends. Should producing more goods and consuming more goods be the highest value in life? That’s not obvious, by any means.

Guernica: And what would be?

Noam Chomsky: Living decent lives, in an environment that provides for people’s essential needs, offers them opportunities to become creative, active, to work together in solidarity, [and lead] more happy, creative lives. That’s a more important goal, I think.

Guernica: Here’s one critic of your work, Nick Cohen in the Observer: “The lesson of 11 September is that no constraints of morality or conscience would stop al-Qaeda exploding a nuclear weapon. If however, it is all our fault, as Chomsky says, perhaps we can avert catastrophe by being nicer and better people. Perhaps we can, but Chomsky is as reluctant to admit that al Qaeda is an autonomous movement as he is to admit the existence of the democratic and socialist opposition to Saddam Hussein.”

Noam Chomsky: They’re mentioning somebody with my name. But it doesn’t relate at all to anything I’ve ever said or believe. Who did you say you’re quoting?

Guernica: Nick Cohen in the Observer.

Noam Chomsky: Oh, Nick Cohen’s a maniac. If you’ll notice, he never cites anything. Does he cite anything? That already gives you the answer. Go back and check. He doesn’t cite anything. These are just diatribes, tantrums. I’m not interested in them.

Guernica: The greater point is that there are maniacs who have sought from their clerics and received permission to use nuclear weapons on civilians.

Noam Chomsky: Yes, there are. And we should try to prevent it. And there are ways to prevent it, and I discuss them, but they’re not his ways. His ways are just bomb everybody in sight. Well, I think that’s the way to increase terror. In fact, it has increased terror.

Guernica: It’s increased terror sevenfold, you write (citing analysts on the Iraq war).

Noam Chomsky: But he doesn’t like what I say, so he’ll scream and shout and slander. Why pay attention to him? Do you read Stalinist party acts?

Guernica: I don’t.

Noam Chomsky: Okay.

How the Federal Reserve Makes Money Out of Thin Air

Exposing the Secrets of the Temple: How the Federal Reserve Makes Money Out of Thin Air

Go To Original

For some, the Federal Reserve is the right place to house any new regulatory powers contained in financial reform legislation. For others, the Fed is at the center of all that ails us. In fact, over 95,000 have signed a petition at

"In a major victory for transparency at the Federal Reserve, the Senate passed on Tuesday an amendment by Sen. Bernie Sanders that directs the Government Accountability Office to conduct a top-to-bottom audit of all emergency actions by the Fed since the start of the financial crisis in 2007. In addition to the audit, the Fed for the first time would have to reveal by Dec.1, 2010, the identities of banks and other financial institutions that took more than $2 trillion in nearly zero-interest loans." -- from the office of Sen. Sanders, 05/11/10

William Greider, author of Secrets of the Temple, perhaps the finest book on the Federal Reserve, termed the Sanders-Paul audit bill the "first breach in the wall," adding, "it promises to keep alive popular demands for more fundamental reforms." Greider challenged Greenspan and Paulson long before it was fashionable, and has written lately about restructuring the Fed. Now national affairs correspondent for the Nation, Greider was for 17 years the national affairs editor at Rolling Stone, and spent 15 years at the Washington Post. His latest book is Come Home, America: The Rise and Fall (and Redeeming Promise) of Our Country, and he wrote the introduction to Meltdown: How Greed and Corruption Shattered Our Financial System and How We Can Recover, by the editors of the Nation.

Terrence McNally: Your latest book, Come Home, America, is a bit of a departure for you, isn't it?

William Greider: I hope It's a gentle and helpful description for people of how deep a hole we are in, and that the country that emerges from this ditch -- I'm talking more broadly than the financial crisis -- is going to be different from the country we knew for so many years. That passage is going to be painful, but I stick to my optimism and insist that we can be a better country on the other side of the ditch

I wrote it just as the financial crisis was blossoming (if you can use that word) and I think I was a little premature in how quickly the public at large, never mind the governing types, could grasp the reality of what was happening to us.

The book is now out in paperback, but I almost wish it were published for the first time right now or even next year, because this is a really hard blow Americans have taken. I think many people are still in denial, which I understand.

McNally: I assume the book says things you've stored up for years, but America wasn't ready yet to recognize the depth of our problems and thus the possibility of change. What do you make of that?

Greider: I've always tried to take a longer frame historical view of things, which gives me sympathy for people trying to cope with what's new. In the book I suggest that this country is at the end of a long and mostly glorious run that started with victory in World War II. There were some very dark passages as well, we know, but American prosperity became not just fabulous, but also widely shared.

McNally: That was the great era of the American middle class.

Greider: And my message is that the good times that we knew are not coming back. This is not just about when do we get out of the grand recession or start creating jobs again and so forth. It's deeper than that. The business model for American prosperity that more or less worked for most of the last 50 years is gone.

I urge you to test this. Talk to young people, 18 to 30. Ask them what their reality is. I guarantee they will bring you up to date, because that prosperity model has been busted for them for years. California is experiencing a lot of the symptoms now. As the bubble of prosperity shrinks, they're piling more of the costs on young people.

McNally: And since California had a bigger share of the bubble....

Greider: Let's be fair, California also did more for young people in its good years than almost anybody else. It built a fabulous education system, but that's coming down now. For some years, even generous California has pushed costs off on young people. Not just at UC Berkeley, but at all the state schools, the community colleges and down the line.

Young people might not have read my books, but they know their own reality. They will tell you in fairly blunt terms that what they're told by their elders -- people like you and me -- is bunk, and it has been bunk for years.

The standard -- and California again is the model -- is go to school, get more education, get a good job, and if you do all the right things, in a few years you'll have a family and you'll own your own home, etc.

And what happens to people who do? No piece of that turns out to be true anymore. I'm not stating anything that hasn't been reported before, but I don't think those of us who are a little bit older have quite absorbed the profound difference that has emerged. The financial crisis makes it worse, because the country has lost trillions of dollars in wealth.

McNally: What brought you to write about the Fed at a point when -- aside from those folks who have always opposed it -- the Fed was hardly on people's radar? You wrote Secrets of the Temple in 1987. What sparked your interest?

Greider: I was the assistant managing editor at the Washington Post running the national coverage in 1981, the dawn of the Reagan era. I had an arrangement with budget director David Stockman, where we met privately every other week or so, and talked about the advance of the Reagan agenda. That turned into a piece I wrote for Atlantic magazine called "The Education of David Stockman," in which he basically revealed that he had lost faith in Reaganomics.

But it dawned on me after a few months that Reagan wasn't actually the most important story. The really fundamental story happening to the American economy involved Paul Volcker at the Federal Reserve. As soon as he was appointed by Jimmy Carter in late '79, he took interest rates way up and induced a long and deep recession. And I said to myself, "I've been in Washington for 20 years, I know a lot about the federal government but, beyond the usual cliches, I don't know anything about the Fed."

I'd had a glimpse of how powerful it is, and yet it's excluded from political discourse. Except for a few crackpots, nobody can talk about it. What's this about? I emphasize my innocence because the deeper I got into it, the more I realized that I wasn't just looking at a political institution, I was looking at the bloody core of American capitalism.

McNally: When did the Federal Reserve come into existence? What was the argument for it at the time? And what was it charged to do once it was brought into existence?

Greider: The events of the financial crisis tore away the mask, destroying the mystique of intimidating, superior expertise that protected the Central Bank from real scrutiny and political discussion. People in the governing elites would blame that on a lazy public that doesn't pay attention, but the truth is that general ignorance was in the design when Congress approved the creation of a central bank in 1913.

They wanted to do that because at the time the country was in very serious political conflict surrounding issues of money, the currency, the banks, the power of the banking system, who had access to credit, and who was denied access.

When the banking system, led by JP Morgan and other famous players, decided that for their own sake they had to create a central bank Washington had to help. It was too big for even JP Morgan. So they design this beast, patterned after the Bank of England, as a semi-secret institution that can decide these large questions in privacy. They were quite deliberately cutting out the public. And it worked. The "money question" gradually disappeared from American politics.

So 60 years later, even though I'm intensely interested in government, I don't know much of anything about this institution. And I wasn't alone, was I? When the Fed started bailing out big banks in such a miserable way, pumping out trillions of dollars, average Americans finally said, "What's that? Why was I not told about this?" And to me, that was quite exciting; exhilarating even.

McNally: Where did that money come from? Who's in charge here?

Greider: I would say the Fed created it, that's what central banks do. What do I mean, "created it"? They type keyboard numbers, the money comes into existence, and ends up at a bank.

I literally think this is the watershed where Ben Bernanke reminds me of the Wizard of Oz, when little Toto pulls back the curtain, and you see Frank Morgan in the control booth frantically turning dials and pulling levers. His voice comes ringing out from the screen, "Silence, the great Oz has spoken," and Dorothy says, "Nonsense, you're only a man pretending to be a wizard." That's what happened at the Fed. To my delight, it offers a moment where we have a chance -- only a chance -- to reopen the question of democracy.

I know quite a lot about the Federal Reserve, I've followed it over 30 years, and I make this provocative argument: democracy could have saved us from this collapse -- which naturally all so-called responsible people deny.

I'm convinced if the Federal Reserve was subjected to the normal give-and-take of politics, with people taking different positions and arguing over the Fed's policy-making -- we wouldn't have had this Wall Street catastrophe. The Fed -- instead of being worshiped -- would have been embattled, and a normal kind of politics would flow from that.

McNally: But more "democratic" or more "transparent" institutions such as Congress haven't done such a good job themselves. Why do you say that the shift from complete mystery to debate and conversation might have saved us?

Greider: I wrote 20 years ago in Secrets of the Temple and I'm writing again now, that the effect of introducing the Central Bank in the terms that our country chose, not only reduced average citizens to ignorant children, but also reduced members of Congress to a similar role -- cranky, powerless children. The Federal Reserve was the father figure, wise, remote and stern. It would make decisions behind closed doors, and wouldn't bother to explain them to the public, because it knew the public wouldn't understand them.

This is more than psychology; this is a power relationship built into our society. And it means that the governing elites with technocratic expertise and the powerful interests have a kind of top-tier democracy where they debate among themselves. Some of it's public, a lot of it happens at nice dinners, but the rest of us are down below and we are quite purposely kept in the dark.

McNally: The argument is repeated over and over again: it would imperil our economy if people knew which banks are talking to the Fed about infusions, etc. They still hold to the notion that we will all be better off if the mysterious wizards take care of us while we mind our own business.

Greider: That conceit goes much more broadly than the Federal Reserve. It is built into what I call technocratic governance present in a lot of levels of government, not just Washington.

I offer the gleaming or most tarnished example, which is Central Intelligence. It's very similar, isn't it? They know things we don't, and we have to trust their judgment because they can't make this information available to us, it's classified, you wouldn't want to share it with the enemy. The CIA literally has the ability to stampede this nation into war. And it's done so, hasn't it, in recent memory?

McNally: How is the U.S. system similar or different from other central banks?

Greider: It's similar to the central banks in other leading countries. The functioning reality of the European Union or the European monetary system isn't all that different from the U.S., but it's a very different history. They have a very hard conservative view of currency values and how they must be maintained. That grows out of a lot of bloody history -- most dramatically Germany's devastating inflation after they lost World War I, which essentially led to the collapse of civil government and the rise of Hitler. Those societies have a very different understanding of social equity than we do, and spend public capital on a lot of enterprises which this country does not yet accept as necessary. So I think it's an unfair comparison to say they're not that different; they're profoundly different.

McNally: What is the role of our 12 regional privately owned federal reserve banks?

Greider: The Fed was set up in an era before telephones were trans-Atlantic or trans-continental. They had the telegraph, but gold moved by ship and train. As the country expanded, reserves of banks were mal-distributed across the country, and they believed the banks would fail because you couldn't get the reserves there fast enough. So they set up 12 regional banks holding reserves all over the geographic country. That is utterly irrelevant today.

Nevertheless, these institutions have some prestige and, above all, they are part of the Fed's political base. You put the movers and shakers on the local board, you put the leading bankers on the local boards, and all of them become a claque of the Federal Reserve and its privileges. Leave the politics aside, I think it was a dubious hybrid at the beginning, but now it is an absolutely corrupt hybrid. The regional banks are not as powerful as many presume. Thanks to New Deal reforms, decision-making is now centralized in Washington. Basically the chairman and the seven-member board of governors control policy.

McNally: Let me read from your article in August 2009: "Bankers are the shareholders who ostensibly own the 12 regional Federal Reserve banks; bankers sit on the boards of directors proposing interest rate changes for Fed governors; and bankers also have a special advisory council that meets privately with governors to critique monetary policy and the management of the economy, so the bankers have all this power."

Greider: Let me take a step further. This is an accusation I laid out in broad form in the book 20 years ago, but the subsequent 20 years have really confirmed my judgment. For the last 30 years, starting in 1980, the Federal Reserve chose sides. It chose sides in ways that benefited capital and punished labor, that favored stock market and financial investments over wage earners and industry.

The Federal Reserve underwent an unusually harsh ideological shift trying to tamp out inflation but then went on to favor deregulation of banks and very stern control of the real economy which would keep wages from rising.

McNally: During the period when Alan Greenspan was being venerated as the maestro, you were writing articles explaining that he was was taking sides. Can you describe a specific example of the way the Fed handled interest rates that favored finance and hurt working people?

Greider: I used a phrase which was a bit of a caricature, nevertheless I would argue it's accurate. I called Greenspan the one-eyed chairman. "One-eyed" because he saw price inflation in the real economy and the so-called danger of rising wages -- even when they didn't exist. So he would tap on the brake of higher interest rates and slow down the U.S. economy. Growing faster would lead to full employment, which is the right condition for generating rising wages. With full employment, workers have better bargaining power whether they're in unions or not.

Meanwhile, he was blind to the really ferocious inflation of prices in financial assets. The stock market, housing, bonds, and so other many things we've now gotten educated about, went through the roof. This didn't just start in the last few years, as the story's being told now. It really started back in the '80s, and, when Greenspan was in charge in the '90s, he made it far worse. These were his ideological convictions, but they did enormous damage to the U.S. economy and to people all over.

Here's the nut of my complaint: if this is a self-governing democracy, the American people are entitled to know these things. That doesn't mean they'll always understand them correctly or that they will even care or pay attention. But I believe it's a right of being an American, to be able to hear the contesting views and the political consequences for ourselves.

McNally: And the economic consequences.

Greider: When a government agency does this to people, it at least ought to tell the people what it's doing, but the Fed is exempt from that. The Fed isn't alone. A lot of other agencies of government get to keep secrets too. If you hear a little outrage in my voice, it's because I have considerable confidence that if Americans at large get a general picture of what government is doing, they can fight it out from there. They'll make some wrong choices, but on the whole that's better than leaving it to secret experts.

McNally: Let me read a couple of quotes from a site that calls for abolishing the Federal Reserve. There is a minority movement in this country that is more outraged than you are, and feels not merely that it should be transparent, but that it should be eliminated. I want to get your take on whether what they're saying is accurate:

"Who owns the Fed? The Rothschilds of London and Berlin, the Lazard brothers of Paris, Israel Moses of Italy, Cue and Loeb and Warburg of Germany and the Lehman Brothers, Goldman Sachs and the Rockefeller families of New York. Did you know that the Fed is the only for-profit corporation in America that is exempt from both federal and state taxes? The Fed takes in about one trillion dollars per year tax-free, the banking families listed above get all that money. Almost everybody thinks that the money they pay in taxes goes to the US treasury to pay for the expenses of the government. Do you want to know where your tax dollars really go? If you look at the back of any check made payable to the IRS, you will see that it is endorsed as pay any FRB branch or general depository for credit US treasury, this is in payment of US obligation. Yes, that's right. Every dime you pay in income tax is given to those private banking families commonly known as the Fed tax-free."

What's true and what's not true in that?

Greider: It would take me an hour and a half to sort through the juxtapositions and leaps of conspiratorial faith that you've just read. I will make it crude and simple: Basically that is a fantasy of people who have genuine fears about the power of the central bank. Some of what they are citing goes back centuries, and has some figure of anti-Semitism floating over it. I will say this issue has been litigated. The Federal Reserve system -- notwithstanding all that you've read about who owns the 12 regional banks -- is a part of the federal government.

People of good intentions don't want to believe that, partly because they can't believe that their elected government did this to them. I cut to the chase and say get over it. The Federal Reserve system was created by an act of Congress, and it chartered private organizations. Because the bankers wanted it that way, the 12 banks are chartered as stock-holding companies. Its life and death depends upon the Congress.

If people want this cleared up, go to the Constitution. Article One is about the Congress, and Section Eight gives the power to create money and regulate its value to the Congress -- not to the White House or the Treasury. It doesn't even mention a central bank.

I want to return to first principles and say, the Congress needs to reclaim its authority in the Constitution to supervise the creation and regulation of money. Now it could delegate that of course -- members of congress are not going to count the actual bills on the floor of the House. But that would necessarily restore democratic principles to the central bank function.

My point is, every advanced industrial nation that has a currency -- and most do -- will have a central bank. So I'm not against having a functioning central bank; what I'm against is setting it outside our democratic accountability and the usual principles of whom government must answer to. It's supposed to answer to the people.

McNally: In your article, "How the Fed Prints Money Out of Thin Air," you make a point that Congress is talking about giving the Fed more power, for instance, if they lodge the new regulatory agency within the Fed.

You said: "I ran into a retired Fed official. I said to him, we think this would be a good time to dismantle the temple. I playfully told my old friend, democratize the Fed or tear it down, create something new in its place that's accountable to the public. He did not react well to my teasing, he got a stricken look."

You then state several reasons why granting the Fed even more power is a really bad idea. How do you think it should be restructured?

Greider: People know the Fed screwed up regulating the banks by letting the big boys go crazy, but I think they do not fully appreciate that their monetary policy was also skewed drastically in one direction, to the great detriment of most of us and to the country as a whole. Why would we trust them with even more supervisory power?

The Fed is in a profound conflict of interest as to what its role is. Is it supposed to defend the public interest against the bankers? Or is it supposed to help the bankers be profitable and therefore stable?

McNally: You say that the Fed serves two masters and is kind of schizophrenic. But would it be safe to say that, when push comes to shove, stability for the banks and for finance and for Wall Street seems to always win?

Greider: Absolutely. Barack Obama basically said, "We can't fix all of the parts that are broken in the financial system, so let's turn it over to the Federal Reserve and let them clean up the mess." That's literally what the president proposed. Congress is ambivalent about that because a lot of senators and representatives are pretty pissed at the moment about the Fed and its secrecy and all the rest.

With some sympathy to the Fed governors: I say that's a dangerous idea. You're asking them to take on this powerful client, and do things that the Congress and the president don't have the nerve to do, which is change the financial system.

McNally: So you've got folks like the president and the Congress who are funded by financiers and bankers through campaign donations and lobbying, and the Fed actually includes the bankers as one of its powerful pieces. If one has trouble because of their conflict of interest, the other's conflict seems even larger.

If Congress chooses to assert its constitutional duty as you recommend, what might the restructuring of the Fed look like?

Greider: Well, it could take many different forms. I'm not wed to the exact details, but I think you could even keep the name Federal Reserve if that gives people confidence in the dollar or whatever. But basically you would re-create an accountable agency of government, and cut away all the insider banker stuff and cut away all of the secrecy rules.

It's perfectly okay for an agency of government not to reveal commercial secrets for instance, but at some point they've got to reveal the process of their decision-making, and you can do that in a pretty timely way. That would be the first rule.

Then you have to also do some serious reforms in Congress itself, so that they begin to have a genuine regulatory oversight function that actually keeps track of the Fed -- not in rhetorical propaganda terms, but the way any Fed watcher in the marketplace would look at the institution.

Reporters could do approximately the same thing I did, which is, first of all, to carefully track what these people say and do, and then go out into the financial world -- bankers, business people, investor firms, bond houses -- and talk to the participants there. They won't tell you dark secrets, but they will tell you what they see happening. Then write about it in order to demystify the institution.

And report not just once or twice a year, but regularly, "The Fed is pushing policy this way, and people say it will have the following consequences for ordinary mortals." Why should the government's actions be secret? The media would do that with other subjects, why not with monetary policy?

McNally: Do you envision the Federal Reserve as a public bank that might put public funds to better use, for investments in infrastructure, for example? And might there also be public banks in states and municipalities?

Greider: Bernanke's been widely praised for actually doing this for the last two years. He printed money in high volume, not to keep the economy going, but to save the financial system. Lincoln did something very similar to fight the Civil War -- called the Greenback currency. Orthodox monetarists always denounce the Greenbacks, people at large, however, understood that it kept the economy booming through the Civil War. It was shut down afterward to the ruination of American farmers.

If you could get responsible stewardship in Congress, you could move to something similar in the modern era. Instead of simply creating money and turning it over to the banking system, in toto, you would very publicly devote a portion of new money created to specific projects that the government builds for the broad general interest. High speed rail, for example, is something people can understand. You can harness the money power to broad public use.