Sunday, July 18, 2010

IMF tells Japan to raise consumption tax despite election defeat

IMF tells Japanese government to raise consumption tax despite election defeat

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The International Monetary Fund (IMF) this week told the Japanese government to push ahead with increasing the rate of the consumption tax, despite the ruling Democratic Party of Japan (DPJ) losing its majority in the upper house of the Diet in last Sunday’s elections.

The defeat for the DPJ government headed by new Prime Minister Naoto Kan was a direct result of mounting public opposition to his proposed doubling of the 5 percent tax, and other austerity measures, in order to avoid a Greece-style debt crisis.

Nevertheless, the IMF pushed for an even greater increase in the tax, to 15 percent, starting in 2011. It insisted that “early and credible” measures were essential to tackle the nation’s huge public debt, which is nearing 200 percent of gross domestic product, the world’s highest debt to GDP ratio.

Kan stated at a press conference on Monday that the tax rise was the main factor behind the electoral loss, saying he did not “sufficiently explain the matter beforehand”. However, he made it clear that the government would proceed, via a “more cautious and serious discussion of the matter”.

Finance Minister Yoshihiko Noda said on Tuesday that the sales tax hike was inevitable in order to slash debt, even though he respected the election verdict. He declared that the government would “start by calling for cooperation from other parties on drastic tax reform, including the consumption tax”.

Just a month after coming to office when former Prime Minister Yukio Hatoyama resigned in early June, the opinion poll approval ratings of Kan’s cabinet have declined from 60-70 percent to below 40 percent. As soon as he took office, Kan unveiled an austerity program, combined with a plan to cut the corporate tax cut from 40 percent to 25 percent.

Sunday’s election outcome is a sign that Japan’s parliamentary system is increasingly unable to mediate irreconcilable social tensions. While the government retains control of the lower house, it faces a gridlock in the upper house. In the election for half the upper house, the DPJ secured only 44 seats out of the 121 contested. Its coalition partner, the Peoples New Party (PNP), and DPJ-backed independents won no seats. The DPJ now holds only 106 seats in the 242-seat upper house, while the PNP has 4.

The main opposition Liberal Democratic Party (LDP), whose public support rating had been consistently below the DPJ, unexpectedly won 51 seats, due mainly to popular hostility to the government. A new free-market Your Party, formed by former LDP figures, won 10 seats. Two reformist parties—the Communist Party of Japan and the Social Democratic Party—lost ground, winning just 3 and 2 seats respectively.

The voting pattern reveals deep discontent with the entire political establishment. While the LDP won more seats than the DPJ, the outcome was not a revival of the LDP, which previously held power, almost uninterrupted, for five decades. For the 48 seats allocated in proportional representation nationally, the DPJ won 31.6 percent of votes, compared to just 24.1 percent for the LDP. Of the 73 seats allocated to 47 prefectures, the DPJ won more votes (22.8 million) than the LDP (19.5 million).

However, the DPJ lost severely in more sparsely populated regional prefectures, the LDP’s traditional base. Of the 29 single-seat prefectures that are generally regarded as rural, the LDP won 21. That was a drastic reversal from the 2007 upper house elections, when the DPJ and its allies took 23, and the LDP just 6. The swing indicated widespread disillusionment after the DPJ government planned to cut promised spending for economically depressed regional areas.

With the upper house able to block legislation, the parliament faces an impasse worse than in 2007, when the then LDP government lost its upper house majority. That debacle led to the resignation of Prime Minister Shinzo Abe, followed by a series of short and unstable governments that ultimately ended the LDP’s long rule last year. In 2007, the LDP, with its coalition partner the New Komito party, still controlled a two-thirds majority of the more powerful lower house, giving it the power to push through legislation by overriding the upper house. The current DPJ government, however, lacks a two-thirds majority.

It will be difficult for the DPJ to find a coalition partner to form a majority in the upper house. In May, the Social Democratic Party quit the government after Hatoyama reversed last year’s election promise to shut down the US Marine air base in Okinawa. Another major factor behind last Sunday’s defeat was Kan’s plan to retain Hatoyama’s base agreement with the US. The DPJ is so unpopular in Okinawa that the party did not run a candidate in that prefecture.

Japan’s parliamentary instability is rooted in the deepening tensions between the corporate elite and the working class, aggravated by the worst global economic crisis since the 1930s.

Last August, the DPJ led by Hatoyama came to power in the lower house elections under the slogan of “change” and with promises of increased public spending, including for childcare allowances and subsidies to farmers. That “historic victory” lasted barely nine months.

Hatoyama’s June 2 resignation was immediately related to his broken electoral promise to move the US base out of Okinawa. But it also followed a global shift inaugurated at the G20 finance ministers’ meeting—from the stimulus packages implemented during the 2008-09 financial crisis to austerity measures.

Hatoyama’s successor, Kan, immediately came up with the policy of doubling the consumption tax, in order to pay off the huge public debts resulting from stimulus packages during the economic stagnation in the 1990s and the current crisis. He warned parliament last month that, as in Greece and across Europe, “our finances could collapse if trust in national bonds is lost and growing national debt is left alone”.

The finance ministry estimates that Japan’s public debts will reach 862 trillion yen (US$9.72 trillion) by March 2011, or 181 percent of GDP. However, the IMF warned in May that the debt would reach 227 percent of GDP this year, far worse than Greece’s debt-to-GDP ratio of 130 percent.

This week, in a report issued after its annual consultation with the Japanese government, the IMF said reduction of Japan’s public debt “will require a large and protracted adjustment that will be made more credible by an early increase in the consumption tax.” It also spoke of the need for limits on spending, including “entitlement reforms”.

The international rating agencies are also exerting pressure on Tokyo. On Monday, Standard & Poor’s declared it may lower Japan’s sovereign rating if “a hung parliament” slows the government’s measures to improve its fiscal position. On Tuesday, Fitch Rating’s Japan sovereign analyst, Andrew Colquhoun, declared: “If we don’t see a credible plan come through by the end of this year, it will send a negative signal for its rating, adding pressure to credit rating.”

The Nikkei business daily reported on Wednesday that Kan’s government will cap annual government spending (excluding debt serving costs) at 71 trillion yen for the next three years. The Nikkei noted that the government would have to cut 10 percent from social services and local government funding, starting from the next fiscal year in April 2011. The only exception would be social security spending associated with retirees.

As in Greece and other European countries struggling with debt crises, cuts on this scale will deepen the gap between rich and poor, and provoke immense social and class conflict.

US stocks plunge on signs of renewed slump

US stocks plunge on signs of renewed slump

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US stocks plunged Friday after a spate of negative economic reports fueled fears of a sharp slowdown in economic growth. Stock prices were broadly lower in Asia and Europe, mainly in response to signs of renewed recession in the US, but American markets fell more dramatically.

The Dow Jones Industrial Average dropped 261 points (-2.5 percent), the Standard & Poor’s 500 index closed with a loss of 31.6 points (-2.9 percent), and the Nasdaq was down 70 points (-3.11 percent). The selloff brought to a crashing halt a weeklong rally that had driven the Dow well above the 10,000 mark.

Friday capped off a week of ominous economic data with a new consumer confidence report from the University of Michigan showing that its consumer sentiment index had fallen from 76 in June to 66.5 in July--the survey’s lowest level in eleven months.

This followed a downwardly revised forecast by the Federal Reserve for US economic growth this year combined with an upwardly revised forecast for unemployment, government reports showing a fall in retail sales in June and a rise in business inventories in May, other reports showing declines in factory output, and figures revealing a fall in wholesale prices for the third straight month.

Taken together, these indices point to a dramatic slowdown and the danger of a downward spiral into deflation, with even higher unemployment, a further rise in bankruptcies and a sharp contraction of credit markets.

The grim economic data comes in the midst of what is already a social catastrophe in the US. With nearly half of the 15 million people officially counted as unemployed without work for more than six months, the refusal of the Obama administration and the Democratic leadership in Congress to seriously press for an extension of federal unemployment benefits is depriving millions of any source of income. Some 2.5 million people have already been cut off of benefits since the federal program for extending compensation beyond 26 weeks expired on June 1, and the number will rise to 3 million by the end of this month.

One stark measure of the resulting social disaster is the report this week that the number of homes repossessed by banks through foreclosures hit a record high in the second quarter. US banks seized homes at a rate 38 percent higher than the same period a year earlier, for a record total of 250,000, according to the real estate consulting firm RealtyTrac.

Overall, the number of US properties subject to a foreclosure filing in the first six months of 2010 rose 8 percent from the same period in 2009. RealtyTrac said the figures indicate that banks are likely to repossess more than 1 million properties this year.

This social tragedy is also an economic disaster, since it further weakens the housing market, driving down home prices even further and undercutting new construction. Reports released last week showed a sharp decline in home sales and home building. This week, the Mortgage Bankers Association reported that overall home loan applications decreased nearly 3 percent from a week earlier, even though mortgage rates are the lowest in decades.

In the face of this crisis, President Obama continues to stage public relations events where he touts the supposed success of his economic policies. On Thursday, he made an appearance at a new advanced battery plant in Holland, Michigan, which has been subsidized in part with federal stimulus funds. He once again made no mention of Congress’ failure to extend jobless benefits, and repeated his Herbert Hoover-like mantra that “we are headed in the right direction.”

Obama boasted that the new plant will eventually employ 300 workers. This, however, will barely make a dent in the jobs crisis in Holland and Michigan as a whole. The city and surrounding region have lost thousands of jobs over the past several years. Holland has an official unemployment rate of 11.8 percent.

The White House PR campaign in response to falling poll numbers and rising popular discontent is an example of pure cynicism. The administration and the Democratic Party leadership have decided, under pressure from the financial and corporate elite, to abandon the minimal stimulus policy they enacted in 2009. Instead, Obama has agreed to review government regulations and other policies opposed by big business as unduly restrictive, and move more quickly to cut the budget deficit by slashing social programs such as Medicare and Social Security.

High unemployment is to be maintained for years to come in order to bludgeon the working class into accepting a drastic decline in wages and living standards, along with intensified speedup. This is the key to Obama’s pledge to double US exports in five years.

The president spoke just two days after it was revealed that the Federal Reserve had cut its forecast for US economic growth this year from its previous estimate in April. The US central bank is now predicting growth this year from 3 percent to 3.5 percent, compared to its earlier forecast of 3.2 percent to 3.7 percent. It has also raised its projected jobless rate for the fourth quarter of 2010 to 9.2 percent to 9.5 percent from 9.1 percent to 9.5 percent.

These projections may prove to be unduly optimistic. Tom di Galoma, the US head of fixed-income trading for Guggenheim Partners, said Friday, “The Michigan [consumer sentiment] number this morning was horrendously bad. What is taking place is people are bracing for another economic dip. The numbers we are seeing this morning are actually quite recessionary.”

Paul Ashworth at Capital Economics said Thursday of the decline in US factory output, “[Yesterday’s] data releases suggest that the industrial recovery is rapidly losing momentum, making deflation an even bigger threat.”

The economists Nouriel Roubini and Ian Bremmer, writing in Tuesday’s Financial Times, presented the following prognosis: “In the US, 1.5 percent growth in the second half of this year and into 2011 will feel like a recession, given a probable further rise in unemployment, larger budget deficits, a further fall in home prices, larger losses by banks on mortgages and loans, and the risk that a protectionist surge will further damage relations with China.”

America: Hooked on War and Getting Poorer

America: Hooked on War and Getting Poorer

There's plenty of good money to be made /
Supplyin' the army with tools of the trade …
– Country Joe and the Fish

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I hallucinate easily, a hangover from time spent in an acid-rock commune in London in the fevered 60s. Most evenings when I switch on the television 6.30 news with its now cliched pictures of deep sea oil spurting from BP's pipe rupture, I see not bleeding sludge but human blood surging up into the Gulf of Mexico.

I've learned to trust my visions as metaphors for reality. The same news programmes, often as a dutiful throwaway item, will show a jerky fragment of Afghan combat accompanied by the usual pulse-pounding handheld shots of snipers amid roadside bomb explosions, preferably in fiery balls. My delusional mind converts this footage into a phantasmagoria where our M60 machine guns are shooting ammunition belts full of $1,000 bills.

Blood, oil, bullets … and cash.

Why is nobody talking about the Afghanistan adventure as a cause of our plunging recession? Or at least citing the 30-year-old endless war as a major contributory factor in wasting our money to "nation-build" in the Hindu Kush while our own country falls to pieces on food stamps, foreclosures and child poverty – one in five kids – that would put the world's poorest nations to shame?

Iraq was George Bush's war. But, as Republican party chairman Michael Steele correctly says, "Afghanistan is Obama's war of choice", and a losing proposition. Historically, Bush and Dick Cheney merely toyed with Afghanistan while visiting shock and awe on Iraq. But President Obama is really, really serious about it. He told us so on his campaign trail, but most of us refused to believe him. We told ourselves: oh, he's a closet pacifist, or he'll somehow find a way out of the impasse, thus sealing a devil's pact with our own consciences.

Obama's "way out" is to dig deeper in so that he'll be able to get out, it's said. Where have we heard that before? Exit strategy, my foot. Obama is a willing prisoner of his generals, the latest four-star foot-in-mouther being General George Casey, army chief of staff, who a few days ago confessed to CBS News that the US could face another "decade or so" of persistent conflict in Iraq and Afghanistan. (He then fudged it, but the cat was out of the bag.)

Our Afghanistan war, which began in 1980 under the Democrats (by weaponising Afghan resistance to the Soviets), and is now truly a bipartisan war, is as bankrupt as our economy. No connection? None that I can hear from Republicans or Democrats and the "liberal base". The war without purpose or common sense is simply a given, like the weather. Other than a few lonely members of Congress, like Florida's Alan Grayson (who introduced a bill titled "The War Is Making You Poor"), the antiwar Texas libertarian Ron Paul and Illinois's Tim Johnson, hardly anybody in public life dares to make a connection between teachers' pink slips, personal bankruptcies (6,000 a day now), our rotting infrastructure, lengthening queues at unemployment offices, child poverty … and the war.

You won't hear a peep from mainstream liberals such as Keith Olberman or Rachel Maddow. Nor, when Pentagon-funded war industry jobs are on the line, from any of the congressional liberals in my Southern California delegation such as Henry Waxman and Maxine Waters, who, after routine grumbling, just voted for yet another $30bn for the lost war that shores up our local weapons and aerospace industries.

Nobody knows whether, if the Iraq-Afghan wars came to a miraculous stop and we shipped the troops home tomorrow, leaving the homegrown Pashtun and Hazara factions to fight it out among themselves, the money would automatically return to our failing economy. But it's a question worth asking out loud. In 2008 Obama Democrats junked the war as an election issue in favour of the economy, and they won by avoiding as a political third rail any connection between the trillions spent fighting colonial wars in the Middle East and the billions we refuse to spend on our own people.

As a people we Americans are hooked on a permanent war economy that only here and there, in drips and drabs, creates immediate jobs while undermining any long-term possibility of recovery. The good news is that contracts for new unmanned Predator drone bases have been awarded to deprived areas of South Dakota, Wisconsin and Missouri, much to the local citizenry's joy. Some stimulus.

Genetically Modified Foods and Toxic Chemicals

Genetically Modified Foods And Toxic Chemicals

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Are finding their way to your food table thanks to the Government

Genetically Modified foods and toxic chemicals are finding their way into the food you eat and other products at an alarming rate. The United States Department of Agriculture (U.S.D.A.), the Environmental Protection Agency (E.P.A.), and the U.S. Department of Health & Human Services (U.S. D.H.H.S.), are allowing genetically modified food and other products to be approved without considering or even knowing their negative impacts on human health, pollinators, the very food chain that we depend upon, and other key agriculture and climate issues. [1]

One-hundred and sixty three regulatory agency reviews have been completed involving tomatoes, cotton, corn, canola, papaya, soybeans, potatoes, brassica napus, cantaloupe, flax, squash, beets, rice, radicchio, sugar beets, wheat, alfalfa, and other crops.[2] Most of these basic foods are used worldwide and in the United States. The impact of the approval and introduction of these agricultural products will have long-lasting effects. It will take years to determine their harm on human health and the environment. Once introduced cross-pollination will contaminate existing plants, flowers, and other crops, changing their makeup as well.

Thus, after the introduction of these altered plants into the environment, it will take years of study to determine their impact on human health, pollinators, and cross-pollination problems. And once introduced they cannot be removed from our environment. They will also increase our dependence on chemical fertilizers, herbicides, pesticides, and insecticides, increasing human consumptions of these toxics from our food sources. Our oceans, rivers, and streams will also be changed due to ever-increasing toxic fertilizer and chemical run-off into these water sources.

The USDA database, for the above 163 GE crops, lists the companies and universities involved in genetically modifying our crops to increase their profits and make us more dependent on their seeds, fertilizers, and chemicals.[3] The list of chemical companies, seed companies, and universities includes, but is not limited to: Monsanto, Dow AgroSciences LLC, DuPont, DNA Plant Technology Corporation, Ciba-Geigy Corporation, Mycogen, Calgene Inc., Agritope Inc., Pioneer Hi-Bred International Inc., Aventis CropScience, AgrEvo, Zeneca & Petoseed, BASF, Rhone Poulenc Inc., Northrup King, Syngenta Seeds, Inc., Asgrow, Dekalb Genetics Corporation, Novartis Seeds, Plant Genetic Systems, Bejo Zaden BV, Upjohn, Vector, Bayer CropScience, and various universities.

The listing of “Trait Categories” varies from “Herbicide Tolerances,” to “Altered Fatty Acids & Oils,” “Insect & Virus Resistance,” “Male Sterility,” and “Phytate Degradation” along with other trait modifications. One of the most interesting and widespread of all the categories is DELAYED FRUIT RIPENING in tomatoes and cantaloupes.

Tomatoes are used as fresh vegetables, in soups, stewed tomatoes, catsup, for seasoning, sauces and a wide variety of other food products. They have been under the genetically modified barrage for years in order to remake them for mechanical picking. The taste of these modified tomatoes have made them almost unfit for fresh use as they taste nothing like the delicious tomatoes of our past. Now, there is interest, by many companies, to delay the ripening process so they can be stored for longer and longer periods of time. When the genetically modified tomatoes, now found in many supermarkets ripen, they still don’t taste like their former counterparts…anyone can tell the difference by the harder feel, color, flavor, lack of moisture, and the tough or greasy skins. They don’t fully ripen for the most part and don’t have the taste and juice qualities for a great eating experience.

There are other issues which are rarely addressed when considering approval of this type of genetic engineering:

1. When you delay the ripening of tomatoes it lengthens the agriculture growing season for those crops to reach the green maturity to be picked. Thus, the tomatoes in question will take longer to grow in the fields making them unfit for timely agriculture production and the varying growing seasons, some very short, around the world and in the United States.

2. The fresh tomatoes grown by organic growers and by agriculture producers for the fresh markets could be impaired due to the length of the time needed during the growing season for ripening.

3. This genetic modification could cross-pollinate with other tomato crops causing mutations.

4. Genetic modification could harm pollinators thus reducing crop production of tomatoes.

5. There are other issues to be considered as these GE crops may need varying types of fertilizers and chemicals to produce growth thus increasing costs and other harm to the environment. These products could also harm pollinators and could have negative impacts on human and animal health.

The most important problem to be addressed is genetic food modification on our pollinators. Without the pollinators we won’t have enough food to eat and we will lose the wide variety of food, flowers, and other plants that not only sustain wildlife but ourselves in the long run. If we damage this abundance for any reason then we all suffer from lack of variety, type of foods, and the nutrition that goes with those foods.

In addition, Honey Bees and Pollinators are high on the list of concerns as they are declining each year in large numbers around the world. There is inadequate research being conducted into these losses. These studies are mostly dominated by groups and institutions dependent on chemical and seed company money or political influences. Many of the studies are paid for by the chemical companies themselves who have a vested interest in keeping their products on the market. Many universities that should be independent of corporate influences receive massive funding from some of these corporations forcing them not to release data that might go against the corporate interests or to do studies to prove that the chemicals or the genetically modified crops are safe.

Bayer CropScience, as just one example, has marketed a brand of chemicals call neonicotinoids that are harmful to honey bees and other pollinators according to the Bayer product labels.[4] The USDA and the EPA have refused to take these chemicals off the market. Some of these chemicals may cause CCD (Colony Collapse Disorder), in honey bees and other pollinators.[5] Many other countries are taking action and banning their use after honey bee declines.[6]

Bayer CropScience’s Movento ™ has the following statement on their product label:

“…ENVIRONMENTAL HAZARDS: This pesticide is toxic to aquatic invertebrates and oysters. Do not apply directly to water, to areas where surface water is present, or to intertidal areas below the mean high water mark…This product is potentially toxic to honey bee larvae through residues in pollen and nectar…Exposure of adult bees to direct treatment or residues on blooming crops can lead to effects on honey bee larvae...” [8] This warning on the Bayer label is not enough to cause the U.S. to ban usage of this chemical, thus there is no protection for our honey bees, aquatic life or human health from the USDA, EPA, and the DHHS.[7]

Many beekeepers are refusing to take their honey bees into areas where genetically modified crops or these toxic chemicals are being used due to sharp decline in bee colonies in areas where these chemicals are used. The threat to our health, future crop diversity, our pollinators, and lack of enough food to eat is being exacerbated by the inability of our government to protect us under their mandates. These mandates have been eroded by corporate power, lobbying, and unlimited sums of money spent to influence government policies to allow highly questionable products, toxic chemicals, and genetically modified foods to be introduced and used in the United States and around the world.

The USDA and the EPA aren’t protecting our pollinators by stopping any suspect genetic modifications or chemicals until the testing is thorough and complete. Chemicals known to cause harm to honey bees and pollinators are still on the market and used in agriculture fields, on pets, and in other areas like parks, golf courses, and for weed control.

It appears that the USDA, the EPA, and DHHS are in league with huge chemical companies and other groups to bring these genetically engineered crops to market without public consent and adequate long-term testing. And it appears that these corporations and some universities are in league to promote this type of world for us to live within without our consent. Chemical companies want a monopoly on worldwide crops and seeds and they want them engineered so that they won’t grow without their fertilizers and chemicals being used on them. All crops and seeds should not be patented or owned solely by chemical or seed companies.

The Obama administration’s approach to agriculture has been to allow government agencies to approve genetically modified crops continuing Bush administration policies. Chemical companies like CropLife America, Monsanto, Bayer CropScience, Dow Chemical, and others are having their GE crops approved in almost record breaking numbers. Early in 2010, President Obama, during a Congressional recess, appointed Islam Siddiqui, a former CropLife America VP and lobbyist, to be the Chief Agricultural Negotiator in the Office of the United States Trade Representative despite over 90,000 objections to his nomination. Instead of going through the Senate congressional process which may have stopped his confirmation, Obama capitulated to the pro-chemical agribusiness industry choice with this recess appointment.[12]

It is all driven by money…the public is the sacrificial lamb willing to allow chemical companies and other corporations to dictate what we eat and how safe it is for us and our children. We all have a choice to make…we can stop this process or we can allow these companies to dominate our food supplies, the very quality, quantity, and the types of food we eat.

For more information visit:

B- Rosalind Peterson's Archives


1- USDA, EPA, DHHS Home Page called: United States Regulatory Agencies Unified Biotechnology Website

2- USDA, EPA, DHHS Completed Agency Reviews of 163 Genetically Modified food and other crops: Website: Complete Listing & Current Status

3- USDA Completed Agency Reviews & List of Companies Getting Approval for their GE Crops.

4- Pesticide Blamed for Killing Honey Bees September 9, 2009

5- Behind Mass Die-Offs, Pesticides Lurk as Culprit January 7, 2010 Report

6- Pesticides: Germany Bans Chemicals Linked to Honeybee Devastation May 23, 2008 News

“…Germany has banned a family of pesticides that are blamed for the deaths of millions of honeybees. The German Federal Office of Consumer Protection and Food Safety (BVL) has suspended the registration for eight pesticide seed treatment products used in rapeseed oil and sweetcorn…Tests on dead bees showed that 99% of those examined had a build-up of clothianidin. The chemical, produced by Bayer CropScience, a subsidiary of the German chemical giant Bayer, is sold in Europe under the trade name Poncho. It was applied to the seeds of sweetcorn planted along the Rhine this spring. The seeds are treated in advance of being planted or are sprayed while in the field…Bayer's best selling pesticide, imidacloprid, sold under the name Gaucho in France, has been banned as a seed dressing for sunflowers in that country since 1999, after a third of French honeybees died following its widespread use. Five years later it was also banned as a sweetcorn treatment in France. A few months ago, the company's application for clothianidin was rejected by French authorities…Philipp Mimkes, spokesman for the German-based Coalition against Bayer Dangers, said: "We have been pointing out the risks of neonicotinoids for almost 10 years now. This proves without a doubt that the chemicals can come into contact with bees and kill them. These pesticides shouldn't be on the market…”

7- Bayer CropScience’s Movento™ has the following statement on their product label: “…ENVIRONMENTAL HAZARDS For Terrestrial Use: This pesticide is toxic to aquatic invertebrates and oysters. Do not apply directly to water, to areas where surface water is present, or to intertidal areas below the mean high water mark. This product may contaminate water through drift of spray in wind. Do not apply when weather conditions favor drift from treated areas. Drift and runoff from treated areas may be hazardous to aquatic organisms in neighboring areas. Do not contaminate water when disposing of equipment washwaters or rinsate. This chemical has properties and characteristics associated with chemicals detected in ground water. The use of this chemical in areas where soils are permeable, particularly where the water table is shallow, may result in ground-water contamination. This product is potentially toxic to honey bee larvae through residues in pollen and nectar…Exposure of adult bees to direct treatment or residues on blooming crops can lead to effects on honey bee larvae. See the "Directions for Use" section of this label for specific crop application instructions that minimize risk to honey bee larvae. OBSERVE THE FOLLOWING PRECAUTIONS WHEN SPRAYING IN THE VICINITY OF AQUATIC AREAS SUCH AS LAKES; RESERVOIRS; RIVERS; PERMANENT STREAMS; MARSHES OR NATURAL PONDS; ESTUARIES AND COMMERCIAL FISH FARM PONDS…”

8- The Agriculture Defense Coalition has compiled a large database on the subject of Genetically Modified Crops, Seeds, and Chemicals used in agriculture and other areas. We invite the public to view these documents and other records on the ADC website.

9- Honey Bee Section & Toxic Chemical Section.

10- Genetically Modified Crop Section Under Agriculture.

11- Weather Modification Section: Defeat U.S. Senate Bill S601 in 2010 – Protect Agriculture & Water Sources

12- Obama Appoints Pro-GMO+Chemical Siddiqui to Key Agriculture Post During Congressional Recess March 31, 2010 News

Ruling Allows CIA to Conceal Evidence of Its Own Illegal Conduct

Judge Rules CIA Can Suppress Information About Torture Tapes and Memos

How Financial Brokers Became Bookies: The Insidious Transformation of Markets Into Casinos

How Financial Brokers Became Bookies: The Insidious Transformation of Markets Into Casinos

"You all are the house, you're the bookie. [Your clients] are booking their bets with you. I don't know why we need to dress it up. It's a bet."
Senator Claire McCaskill, Senate Subcommittee on Investigations, investigating Goldman Sachs (Washington Post, April 27, 2010)

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Ever since December 2008, the Federal Reserve has held short-term interest rates near zero. This was not only to try to stimulate the housing and credit markets but also to allow the federal government to increase its debt levels without increasing the interest tab picked up by the taxpayers. The total public U.S. debt increased by nearly 50% from 2006 to the end of 2009 (from about $8.5 trillion to $12.3 trillion), but the interest bill on the debt actually dropped (from $406 billion to $383 billion), because of this reduction in interest rates.

One of the dire unintended consequences of that maneuver, however, was that municipal governments across the country have been saddled with very costly bad derivatives bets. They were persuaded by their Wall Street advisers to buy credit default swaps to protect their loans against interest rates shooting up. Instead, rates proceeded to drop through the floor, a wholly unforeseeable and unnatural market condition caused by rate manipulations by the Fed. Instead of the banks bearing the losses in return for premiums paid by municipal governments, the governments have had to pay massive sums to the banks – to the point of bankrupting at least one city (Montgomery, Alabama).

Another unintended consequence of the plunge in interest rates has been that “savers” have been forced to become “speculators” or gamblers. When interest rates on safe corporate bonds were around 8%, a couple could aim for saving half a million dollars in their working careers and count on reaping $40,000 yearly in investment income, a sum that, along with social security, could make for a comfortable retirement. But very low interest rates on bonds have forced these once-prudent savers into the riskier and less predictable stock market, and the collapse of the stock market has forced them into even more speculative ventures in the form of derivatives, a glorified form of gambling. Pension funds, which have binding pension contracts entered into when interest was at much higher levels, are so strapped for returns that they actually seek out the riskier investments, which have higher returns. That means they can and do regularly get fleeced when the risk occurs.

Derivatives are basically just bets. Like at a racetrack, you don’t need to own the thing you’re betting on in order to play. Derivative casinos have opened up on virtually anything that can go up or down or have a variable future outcome. You can bet on the price of tea in China, the success or failure of a movie, whether a country will default on its debt, or whether a particular piece of legislation will pass. The global market in derivative trades is now well over a quadrillion dollars – that’s a thousand trillion – and it is eating up resources that were at one time invested in productive enterprises. Why risk lending money to a corporation or buying its stock, when you can reap a better return betting on whether the stock will rise or fall?

The shift from investing to gambling means that not only are investors making very little of their money available to companies to produce goods and services, but the parties on one side of every speculative trade now have an interest in seeing the object of the bet fail, whether a company, a movie, a politician, or a country. Worse, high-speed program traders can actually manipulate the market so that the thing bet on is more likely to fail.

High frequency traders -- a field led by Goldman Sachs -- use computer algorithms to automatically bet huge sums of money on minor shifts in price. These bets send signals to the market which can themselves cause the price of assets to shoot up or tumble down. By placing high-volume trades, the largest speculative traders can thus intentionally “fix” prices in any direction they want.

“Prediction” Markets

Casinos for betting on what something will do in the future have been promoted as reliable “prediction” markets, and they can cover a broad range of issues. MIT’s Technology Review launched a futures market for technological innovations, in order to bet on upcoming developments. The NewsFutures and TradeSports Exchanges enable people to wager on matters such as whether Tiger Woods will take another lover, or whether Bin Laden will be found in Afghanistan.

A 2008 conference of sports leaders in Auckland, New Zealand, featured Mark Davies, head of a sport betting exchange called Betfair. Davies observed that these betting exchanges, while clearly gambling forums, are little different from the trading done by financial firms such as JPMorgan. He said:
“I used to trade bonds at JPMorgan, and I can tell you that what our customers do is exactly the same as what I used to do in my previous life, with the single exception that where I had to pore over balance sheets and income statements, they pore over form and team-sheets.”

The online news outlet Slate monitors various prediction markets to provide readers with up-to-date information on the potential outcomes of political races. Two of the markets covered are the Iowa Electronic Markets and Intrade. Slate claims that these political casinos are consistently better at forecasting winners than pre-election polls. Participants bet real money 24 hours a day on the outcomes of a range of issues, including political races. Newsfutures and Casualobserver are similar, smaller exchanges.

Besides shifting the emphasis to gambling (“Why Vote When You Can Bet?” says Slate’s “Guide to All Political Markets”), prediction markets can be manipulated so that they actually affect outcomes. This became evident, for example, in 2008, when the John McCain campaign used the InTrade market to shift perception of his chances of winning. A supporter was able to single-handedly manipulate the price of McCain’s contract, causing it to move up in the market and prompting some mainstream media to report it as evidence that McCain was gaining in popularity.

Betting on Terrorism

The destructive potential of betting on political outcomes became particularly apparent in a notorious prediction market sponsored by the Pentagon, called the “policy analysis market” (PAM) or “terror futures market.” PAM was an attempt to use the predictive power of markets to forecast political events tied to the Middle East, including terrorist attacks. Trading in American Airlines shares in the days before the September 11th attack on the World Trade Center was one of the bases of the Pentagon’s justification for the program. According to the New York Times, the PAM would have allowed trading of futures on political developments including terrorist attacks, coups d’√©tat, and assassinations.

The exchange was shut down a day after it launched, after commentators pointed out that the system made it ridiculously easy to make money with terror attacks.
At a July 28, 2003 press conference, Senators Byron L. Dorgan (D-ND) and Ron Wyden (D-OR) spoke out against the exchange. Wyden stated, “The idea of a federal betting parlor on atrocities and terrorism is ridiculous and it's grotesque,” while Dorgan called it “useless, offensive and unbelievably stupid”.
“This appears to encourage terrorists to participate, either to profit from their terrorist activities or to bet against them in order to mislead U.S. intelligence authorities,” they said in a letter to Admiral John Poindexter, the director of the Terrorism Information Awareness Office, which developed the idea. A week after the exchange closed, Poindexter offered his resignation.

Carbon Credit Trading

A massive new derivatives market that could be as destructive as the derivatives that contributed to the current economic meltdown is the trading platform called Carbon Credit Trading, which is on its way to dwarfing world oil trade. The program would allow trading not only in “carbon allowances” (permitting companies to emit greenhouse gases) and “carbon offsets” (allowing companies to emit beyond their allowance if they invest in emission-reducing projects elsewhere), but carbon derivatives -- such as futures contracts to deliver a certain number of allowances at an agreed price and time. Eoin O’Carroll cautioned in the Christian Science Monitor:

“Many critics are pointing out that this new market for carbon derivatives could, without effective oversight, usher in another Wall Street free-for-all just like the one that precipitated the implosion of the global economy. . . . Just as the inability of homeowners to make good on their subprime mortgages ended up pulling the rug out from under the credit market, carbon offsets that are based on shaky greenhouse-gas mitigation projects could cause the carbon market to tank, with implications for the broader economy.”

Robert Shapiro, former undersecretary of commerce in the Clinton administration and a cofounder of the U.S. Climate Task Force, warns, “We are on the verge of creating a new trillion-dollar market in financial assets that will be securitized, derivatized, and speculated by Wall Street like the mortgage-backed securities market.”

The proposed form of cap and trade has not yet been passed in the U.S., but a new market in which traders can speculate on the future of allowances and offsets has already been launched. The largest players in the carbon credit trading market include firms such as Morgan Stanley, Barclays Capital, Fortis, Deutsche Bank, Rabobank, BNP Paribas, Sumitomo, Kommunalkredit, Credit Suisse, Merrill Lynch and Cantor Fitzgerald. Last year, the financial services industry had 130 lobbyists working on climate issues, compared to almost none in 2003. The lobbyists represented companies such as Goldman Sachs and JPMorgan Chase.

Billionaire financier George Soros says cap-and-trade will be easy for speculators to rig. “The system can be gamed,” he said last July at a London School of Economics seminar. “That’s why financial types like me like it — because there are financial opportunities.”

Time to Board Up the Casinos and Rethink Our Social Safety Net?

At one time, gambling was called a sin and was illegal. Derivative trading was originally considered an illegal form of gambling. Perhaps it is time to reinstate the gambling laws, board up the derivatives casinos, and return the stock market to what it was designed to be: a means of funneling the capital of investors into productive businesses.

Short of banning derivatives altogether, the derivatives business could be slowed up considerably by imposing a Tobin tax, a small tax on every financial trade. “Financial products” are virtually the only products left on the planet that are not currently subject to a sales tax.

A larger issue is how to ensure adequate retirement income for the population without forcing people into gambling with their life savings to supplement their meager social security checks. It may be time to rethink not only our banking and financial structure but the entire social umbrella that our Founding Fathers called the Common Wealth.

Deficit hawks cry that we cannot afford more spending. But according to Richard Cook, who formerly served at the U.S. Treasury Department, the government could print and spend several trillion new dollars into the money supply without causing price inflation. Writing in Global Research in April 2007, he noted that the U.S. Gross Domestic Product in 2006 came to $12.98 trillion, while the total national income came to only $10.23 trillion; and at least 10 percent of that income was reinvested rather than spent on goods and services.

Total available purchasing power was thus only about $9.21 trillion, or $3.77 trillion less than the collective price of goods and services sold. Where did consumers get the extra $3.77 trillion? They had to borrow it, and they borrowed it from banks that created it with accounting entries on their books. If the government had replaced this bank-created money with debt-free government-created money, the total money supply would have remained unchanged. That means a whopping $3.77 trillion in new government-issued money could have been fed into the economy in 2006 without increasing the inflation rate.

In a 1924 book called Social Credit, C. H. Douglas suggested that government-issued money could be used to pay a guaranteed basic income for all. Richard Cook proposes a national dividend of $10,000 per adult and $5,000 per dependent child annually. In 2007, that would have worked out to about $2.6 trillion to provide a basic security blanket for everyone.

The Federal Reserve has funneled $4.6 trillion to Wall Street in bailout money, most of it generated via “quantitative easing” (in effect, printing money); yet hyperinflation has not resulted. To the contrary, what we have today is dangerous deflation. The M3 money supply shrank in the last year by 5.5 percent, and the rate at which it is shrinking is accelerating. The explanation for this anomaly is that the Fed’s $4.6 trillion added by quantitative easing fell far short of the estimated $10 trillion that disappeared from the money supply when the “shadow lenders” exited the market, after discovering that the “triple-A” mortgage-backed securities they had been purchasing from Wall Street were actually very risky investments.

Whether or not a national dividend is the best way to reflate the money supply, the important point here is that the government might be able to issue and spend several trillion dollars into the economy without creating hyperinflation. The money would merely make up for the shortfall between GDP and purchasing power, replacing the debt-money created as loans by private banks. As long as resources are sitting idle and people are unemployed -- and as long as the new money is used to put these resources together productively to create new goods and services -- price inflation will not result. Creating the national money supply is the sovereign right of governments, not of banks; and if the government wants to remain sovereign, it needs to exercise that right.

Researchers predict oil spill could reach Atlantic Ocean

Researchers predict oil spill could reach Atlantic Ocean

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Researchers with the University of Hawaii School of Ocean and Earth Science and Technology have released a new computer model which tracks the potential spread of oil from the Deepwater Horizon spill over a period of one year. The model predicts oil could make its way around the Florida peninsula and up the east coast of the United States by autumn, where currents will then pull it out into the Atlantic Ocean.

In a press release entitled “The long-term fate of the oil spill in the Atlantic,” researcher Fabian Schloesser explains the method behind the study. The model follows 8 million buoyant particles, representing the oil spill, released from the Deepwater Horizon site between April 20, when the blowout occurred, to September 17, 2010 in ocean flow data from simulations provided by the Ocean General Circulation Model for the Earth Simulator (OFES).

“The paths of the particles were calculated in 8 typical OFES years over 360 days from the beginning of the spill,” says Schloesser. “From these 8 typical years, 5 were selected to create an animation for which the calculated extent of the spill best matches current observational estimates.”

Researcher Axel Timmerman says of the projection, “After one year, about 20 percent of the particles initially released at the Deepwater Horizon location have been transported through the Straits of Florida and into the open Atlantic.” The coasts of North and South Carolina, Georgia and Florida could be affected by the spill by October of this year, according to the projection.

The computer model produced results similar to those reached in an earlier projection created by the National Center for Atmospheric Research in June. That study also predicted the spread of oil up the eastern coast of the US and into the Atlantic Ocean, but one month earlier than predicted by the University of Hawaii team. The NCAR projection stops at August 2010, while the latest study predicts the spread of oil through April 2011.

Timmerman says the projection shows the importance of collecting oil in the channel between Florida and the Grand Bahama Island before it can make its way to the Atlantic Ocean. He and his fellow researchers sent their findings to BP, but have yet to hear from the company after two weeks.

The computer model create by the University of Hawaii research team may be viewed on YouTube here.

Utah vigilante group releases undocumented immigrant hit list

Utah vigilante group releases undocumented immigrant hit list

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In an attempt to ignite a witch-hunt, an anonymous vigilante group in Utah has begun circulating a list among media outlets, law enforcement, state, and federal agencies containing the names of 1,300 alleged undocumented immigrants. Personal information such as birthdates, Social Security numbers, workplaces, addresses, phone numbers, names of children and due dates of pregnant women are included for many of the names on the list.

The group, calling themselves “Concerned Citizens of the United States,” originally sent the list to Immigration and Customs Enforcement (ICE) in April 2010, but they claim they “have not observed any action.” An enclosed letter, addressed to ICE and dated April 4, indicated that the anonymous group had used “legal Mexican nationals” to infiltrate the social networks of Hispanics in order to obtain the information included in the list.

An attached cover letter called for those on the list to be “deported immediately,” along with the message:

“To the elected officials, we would ask that you remember who you work for in this country—you work for America and for the citizens in the State of Utah. You DO NOT work for illegal immigrants who have come into our country illegally and now take advantage of our system. To the media—we would ask that you show the public the names and numbers and ask the question—how much are they costing the taxpayers to continue to support their existence in this country and in this state.”

Following the lead of reactionary politicians in Arizona and around the country, the group continues to propagate the lie that immigrants are responsible for the degradation of living standards of American workers.

Local Utah news radio outlet KSL contacted several of the people appearing on the list. One woman, who did not want to be identified, told KSL, “I have my papers! Why did they put me on that list? Now, it’s been 15 years since I got my residency.” The woman said she came to the United States in 1984, she has had a green card for more than a decade, and will become a citizen next month.

Another individual, who was named by KSL but will remain anonymous here, admitted that he in fact was undocumented, and had been brought to the United States at the age of 10 by his parents. The individual expressed fear that his family could be torn apart by deportations, and that although he has worked hard to learn English, graduate high school, and get a job, this may all be taken away from him.

The Associated Press spoke with Tony Yapias, former director of the Utah Office of Hispanic Affairs, who said that he has been contacted by many of the members of the Hispanic community in Utah, all scared for their safety and that of their families. “My phone has been ringing nonstop since this morning with people finding out they’re on the list,” he said. “They’re feeling terrorized. They’re very scared.”

Co-chair of the anti-immigrant Utah Minuteman Project, Eli Cawley, justified the list, telling KSL, “It’s probably against some privacy laws…but I think in the interest of preserving our civilization, preserving our society and protecting the people of the state of Utah, I think that’s a greater interest than protecting the privacy of some individuals.”

The Salt Lake City Weekly reported that the Utah Minuteman Project founder has denied responsibility for compiling and distributing the list, despite the fact the City Weekly reported in July 2009 that members had discussed a plan to recruit sympathetic company insiders to give them personal information about undocumented workers.

The appearance of the list in Utah has not come out of the blue. The Utah Minuteman Project has been very active in the recent past, inciting anti-immigrant sentiment in supporting anti-immigration legislation in 2008-2009.

Utah State politicians have also done their share to incite vigilante groups. State Representative Stephen Sandstrom, a Republican, has begun plans to introduce legislation similar to the SB 1070 immigration law passed in Arizona. After the US Justice Department announced its lawsuit against Arizona’s immigration law, Sandstrom indicated he would carry on with plans to introduce this legislation in Utah and announced that he would like to join other legislators in filing a brief supporting the legality of the Arizona law. Sandstrom has also appeared at rallies in Arizona in support of SB 1070.

US Senator Orrin Hatch, Republican of Utah, frequently parrots many of the myths being used to promote SB 1070, demonizing immigrants in the process. Hatch recently told KSL, “[In Arizona]…criminals are coming into the state…they’re bringing drugs right and left into the country, they’re trampling all over Arizona’s beautiful lands and wilderness areas. The state’s had enough of it.”

While the anonymous Utah vigilantes claim, “We are not violent nor do we support violence,” it is clear that the circulation of this list puts those included on it, as well as their families, in tremendous personal danger. Certain elements within vigilante organizations such as the Minute Men have been known to use violence against their targets. (See: “Anti-immigrant activist on trial for murder in Arizona”)

The vilification of immigrants by many in the Republican Party, in order to lay the blame for the current economic crisis at their feet, will ultimately lead to violent reactions from right-wing groups like that responsible for the distribution of this hit list in Utah.

The Democratic Party has no intention, nor desire, to mount a defense of immigrant workers. Calls by Obama and the Democrats for “immigration reform” amount to nothing more than reactionary policies aimed at attacking the democratic rights of all, and keeping immigrant workers segregated as a super-exploited section of the workforce.

Imprisoned for debt in America

Imprisoned for debt in America

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People are being thrown in jail for failing to pay debts in the United States, despite the fact that federal imprisonment for debt was abolished in 1933.

The Minneapolis Star-Tribune has documented such arrests, essentially for poverty, increasing throughout the United States. During the last four years, the use of arrest warrants against debtors in Minnesota has jumped by 60 percent, to 845 cases in 2009. The exposé showed that sometimes the unpaid bills were as low as $85.

The mechanism used to extract payment from the impoverished is the bench warrant. Workers are not actually incarcerated for debt, but for failing to respond to the legal system. However, the perpetrators of the court filings, the debt buyers and their legal representatives, are transparently using the system to intimidate, harass and frighten individuals into payments, sometimes for debts they do not even owe.

“In Illinois and southwest Indiana, some judges jail debtors for missing court-ordered debt payments. In extreme cases,” the Star-Tribune reports, “people stay in jail until they raise a minimum payment. In January, a judge sentenced a Kenney, Illinois, man to ‘indefinite incarceration’ until came up with $300 towards a lumber yard debt.” The self-employed roofer had broken his neck and back and filed for disability. After three hours in a holding cell, his wife got him released by borrowing $300 on a credit card.

Joy Uhlmeyer was stopped and arrested in her car on her way home from spending Easter with her elderly mother. After a costly divorce in 2006, she defaulted on a $6,200 Chase credit card. She was arrested and spent a freezing night in a holding cell. Then, handcuffed in a squad car, she was taken to downtown Minneapolis for booking. After 16 hours, she was fingerprinted and learned why she was being held. She had missed a court hearing scheduled by Resurgence Financial, a company she had never heard of.

She said, “The really maddening part of the whole experience was the complete lack of information. I kept thinking ‘If there was a warrant out for my arrest, then why in the world wasn’t I told about it?’” she recounted to the Star-Tribune.

Behind these and countless other cases across the country stand collections firms and debt-buyers. But behind these middlemen stand the major banks—Chase, Citigroup, etcetera—who profit most from the collection industry. Tens of thousands of suits are routinely filed in state courts by the large debt-buying companies. Once a judgment is issued, a court date is set. However, if for any reason a consumer fails to appear for a court date, a bench warrant can be issued for “default.”

In many cases, consumers are unaware of the case against them. The Legal Aid Society of New York’s study showed that the debt buyers often had not notified the purported debtor, and in many cases had no proof of claim. Their study found that debt buyers filed over 450,000 lawsuits in New York alone, winning default judgments against many workers. When these cases came to court only 1 percent of the debtors were represented by legal counsel.

The Star-Tribune points out that no national statistics are kept on arrested debtors in the US. “My suspicion is the debt collection industry does not want the world to know these arrests are happening, because the practice would be widely condemned,” said Robert Hobbs, deputy director of National Consumer Law Center in Boston.

“We have created a de facto debtors prison system in the United States that is largely unconstitutional,” said Judith Fox, a law professor at Notre Dame Law School. “In some parts of the country, people are so fearful of arrest they are scrambling to pay money they might not even owe,” she concluded.

Haekyung Nielsen, 27, of Bloomington, Minnesota, told the Star-Tribune that police arrived with a civil arrest at her home two weeks after giving birth through Caesarean section. A debt buyer had sent her court papers for an old credit card debt while she was in the hospital. “To send someone to arrest me two weeks after a massive surgery that takes most women eight weeks to recover from was just unbelievable,” she said.

The Minneapolis paper also noted the tendency for bail to be set at the judgment amount, the court-defined amount of debt. The Star-Tribune spoke to Judge Robert Blaeser, Hennepin County court civil division, who said that linking bail to debt streamlines the process. Creditors, in most cases credit card companies, are then able to petition the courts for the money.

They cite the case of Vee, a highway construction worker who was arrested one afternoon in February while driving his teenage daughter home from school. “As he was being cuffed, Vee said his daughter, who has severe asthma, started hyperventilating from the stress. ‘All I kept thinking about was whether she was all right, if she was using her inhaler,’ he said. From the jail, Vee made a collect call to his landlord who promised to make his bail. It was $1,875.06, the exact amount of a credit card debt.

The court system collected his debt on behalf of the credit card company, but Vee—like many others—continues to be traumatized by the experience. He still has unpaid medical and credit card bills and owes $40,000 on an old second mortgage. He told the Star-Tribune that the sight of a squad car in his rearview mirror fills him with anxiety, “Are the cops going to arrest me again...? So long as I’ve got unpaid bills, the threat is there,” he concluded.

The legal threat of a bench warrant against debtors is not new. What is new is the huge, highly capitalized and aggressive debt-buying and collection business. These middle men enable the credit card companies and the large banks that underwrite them to first “charge off” the debt, e.g., write it down as a business loss, then to sell the debt to the next tier of debt buyer.

According to the court data accessed by the Star-Tribune, three debt buyers—Unifund, CCR Partners Portfolio Recovery Associates and Debt Equities LLC—account for 15 percent of all debt-related arrest warrants issued in Minnesota since 2005.

The publicly-traded debt-buyers purchase old debt for pennies on the dollar (some of it past the statute of limitations) and then use teams of lawyers to collect the debt. In many cases the debt is impossible to verify. The National Consumer Law Center estimates that 1 in 10 debt-buyers’ lawsuits are based on inaccurate information.

The Star-Tribune reports that the top 10 debt-buyers in Minnesota obtained more than $223 million in court judgments from 2005 to 2009. This represents tens of thousands of individuals who are squeezed mercilessly for their last discretionary dollar. Jail is just the most extreme of the measures used to this end.

Meanwhile, debt-buyers are handsomely rewarded for their service to the financial industry, the large banks and the credit card companies. For debt-buyers profits have never been better. Portfolio Recovery Associates earned $44 million last year, an almost unheard-of 16 percent net profit margin.

In the first quarter of 2010 Portfolio’s profits skyrocketed even higher, with a net income increase of 47 percent. They are not alone. San Diego-based accounts receivable management company Encore Capital Group increased net income 21 percent or $.44 per share. These firms showed significant gains in all divisions—collection agency outsourcing, call centers, legal collections and bankruptcy servicing.

Obama's toothless bank "reform" to become law

Obama’s toothless banking overhaul to become law

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The US Senate on Thursday passed the administration’s financial regulatory overhaul, paving the way for Obama to sign the measure into law next week. The House of Representatives had passed the bill on June 30.

The vote on the bill was 60 to 39, with Republicans Scott Brown (Massachusetts), Susan Collins (Maine) and Olympia Snowe (Maine) joining 57 Democrats in voting “yes.” Senator Russ Feingold of Wisconsin was the only Democrat to vote against the bill, on the grounds that it was insufficiently tough.

The final bill, the product of intensive lobbying by the banking industry, is even weaker than the version approved by a House-Senate conference committee on June 25. In order to obtain the three Republican votes necessary to block a Republican filibuster and bring the bill to the floor for a vote, the administration and the Democratic congressional leadership agreed to drop a $19 billion levy on big banks and hedge funds to pay for the implementation of the bill, and to further water down restrictions on the ability of commercial banks to invest in hedge funds and private equity funds.

The resulting bill, widely described in the media as the most sweeping financial reform since the 1930s, represents a full-scale capitulation to Wall Street. Nearly two years after the major banks and financial firms drove the financial system and the economy as a whole into the ground through their reckless profiteering and speculation, the so-called “reform” avoids any genuine reform of the financial system and places no serious restraints on the activities of the most powerful financial companies.

In important respects, it increases the power of the biggest banks and sets the stage for even more frenzied speculation and risk-taking. As a former US Treasury official told Newsweek magazine last month, “We’ve consolidated the position of the five banks that were most central to the crisis.”

Obama hailed the passage of the bill Thursday afternoon, declaring, “Because of this reform, the American people will never again be asked to foot the bill for Wall Street’s mistakes. There will be no more taxpayer-funded bailouts—period.”

He hastened to reassure Wall Street, saying, “The financial industry is central to our nation’s ability to grow, to prosper and to innovate.”

Virtually nobody on Wall Street and few in Washington believe that the bill’s patchwork of half-measures will prevent further taxpayer bailouts down the road. The most important innovation contained in the measure is the establishment of a so-called “resolution authority,” whereby the Treasury and the Federal Reserve will be able to seize and wind down any large financial company whose failure would threaten the stability of the financial system as a whole.

The bill authorizes the allocation of pubic funds to pay for the operation, without congressional approval, with the proviso that the major banks would subsequently be taxed to defer some of the cost.

This amounts to the institutionalization of financial rescue operations, instead of the ad hoc methods employed in the fall of 2008. The procedure is being put into place precisely because the regulatory overhaul fails to impose any real restrictions on the speculative activities of the banks.

In assessing the bill, it is useful to start with what it does not do. It does not break up the mega-banks that control an ever-greater share of deposits, assets and profits.

It does not restore the legal wall between commercial banking and investment banking, a central reform carried out during the Depression of the 1930s to prevent deposit-taking commercial banks from engaging in the high-risk speculation that is the bread and butter of investment banks and brokerages. The weakening and final removal of this wall in 1999 during the Clinton administration encouraged the wave of speculation and swindling that led to the collapse in September 2008.

It does not cap executive compensation.

It does not eliminate or seriously limit trading in derivatives, the complex and opaque financial instruments that played a central role in the collapse of American International Group (AIG) and threatened to topple the entire banking system.

Instead, the bill sets up what some have called a Potemkin village of regulatory structures with little real substance, which Wall Street banks will have little difficulty manipulating and gaming. For the most part, the details concerning how much capital banks must hold in reserve, what percentage of their capital they can invest in hedge funds, which types of derivatives will be forced onto clearinghouses and exchanges and which will continue to be traded in the “shadow banking system,” etc. will be determined by the various regulatory agencies.

The Wall Street Journal on Wednesday cited a law firm’s estimate that the new bill mandates at least 243 new federal rule-makings. The US Chamber of Commerce puts the number at 533.

In practice, this means that any provisions that threaten to hamper the profit-making activities of the banks can, and in all likelihood will be watered down to the point of irrelevance in the rule-making process. As the Journal pointed out, the massive lobbying carried out thus far by the banks will only grow more intense in the rule-making phase that follows formal enactment of the bill into law.

The process of drafting the bill has exemplified the corruption and bribery that pervade the US political system, and the domination of Congress, the White House and both political parties by the financial elite. The banks have spent hundreds of millions of dollars to lobby congressmen and senators, and spent millions more to bribe them in the form of campaign donations. Much of the 2,300-page bill was directly or indirectly dictated by Wall Street lawyers and lobbyists in closed-door meetings with Democratic officials.

The measure is being referred to as the Dodd-Frank bill, after its main congressional sponsors—Senate Banking Committee Chairman Christopher Dodd (Democrat from Connecticut) and House Financial Services Committee Chairman Barney Frank (Democrat from Massachusetts). These two long-time legislators are among the biggest beneficiaries of the largess of the financial industry.

Dodd’s single biggest campaign contributor has been Citigroup. The securities and investment industry has been his biggest source of funds, over $6 million during his Senate career.

Frank’s top contributor has been the American Bankers Association, followed by JPMorgan Chase.

The New York Times on Thursday published an article that provides a sense of how pervasive and shameless the process of bribery and vote selling has been. It reports that the Office of Congressional Ethics is investigating eight congressmen—five Republicans and three Democrats—who raised a combined $405,000 from the financial sector in the six weeks leading up to the December 11, 2009 vote in the House of Representatives on the House’s version of the bank regulation bill.

More than a third of this total ($140,000) was collected in the ten days before the vote. The article points out that the money was solicited by the lawmakers, who in some cases shifted their votes to accord with the desires of the banking lobby. Some congressmen went directly from debates in the House on the bill to fundraisers hosted by bank lobbyists.

The Times suggests that the eight congressmen being investigated were only the most flagrant in selling their votes for cash, and that such efforts were commonplace. The newspaper writes: “But the practice of soliciting donations in the midst of legislative debates remains common. In fact, dozens of members not included in the current ethics inquiry scheduled their own fund-raising events in the weeks before the House vote, many of them taking donations from financial services companies.”

US jobless benefit cutoff to hit three million

US jobless benefit cutoff to hit three million

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More than three million unemployed workers will have lost jobless benefits by the end of this month. Some 2.5 million have already been cut off since the federal program for extending unemployment compensation beyond 26 weeks expired June 1.

An analysis published Thursday in USA Today estimated the number of those to be cut off by the end of July at 3 million. A separate study by the National Employment Law Project put the figure at 3.2 million.

Even if the long-delayed legislation is finally taken up July 20, the new date announced Wednesday by Senate Majority Leader Harry Reid, it would only authorize an extension of jobless benefits through the month of November. Once the congressional election is safely past, there is little doubt that both Democrats and Republicans will agree to terminate the extended benefits program altogether.

The Obama administration is responding to this monumental social catastrophe with complete indifference. When extended benefits first expired in June, Obama devoted one Saturday radio/Internet speech to the topic. White House lobbying efforts for the past month have been focused on Senate passage of the financial reform bill, which does nothing to punish those responsible for the economic crisis or prevent another disaster in the future.

The sums involved in the banking bill dwarf the $34 billion cost of restoring extended jobless benefits. A single concession to Senator Scott Brown, a Massachusetts Republican who demanded that a new tax on hedge funds be dropped, was worth $19 billion.

The failure to extend jobless benefits in the midst of a deep recession is unprecedented since the program first assumed its modern form after World War II. In every recession since then, an extension of unemployment benefits has received bipartisan congressional approval as an emergency measure—i.e., without any offsetting budget cuts or tax increases to pay for it—whenever the unemployment rate was higher than 7.2 percent. The current US rate, which grossly underestimates the actual jobless toll, is 9.5 percent.

In the current slump, extensions of unemployment benefits were enacted in a similar fashion until the beginning of 2010, when first a handful, then nearly all Senate Republicans began demanding that the extended benefits should not add to the federal budget deficit. This was combined with the defection of key right-wing Democrats whose votes were needed from time to time to sustain a filibuster.

Neither Reid nor Obama put any special pressure on those senators, Republican and Democrat, whose opposition was responsible for cutting off millions of the most vulnerable in American society—long-term jobless workers.

This category has swelled until it embraces more than half the army of unemployed workers in America. The average duration of unemployment is now 35 weeks, compared to the 26-week basic benefit provided by the states. Federally funded extended benefits are required to bridge the gap.

According to the USA Today report, “Unemployment insurance has played a bigger role in this recession—the longest since the Great Depression—than in previous downturns… This extraordinary response has helped as many as 11 million people at one time—a record—while driving the program’s cost to an annual rate of $145 billion in the first quarter.”

The total annual cost of unemployment compensation is thus less than the amount squandered on the war in Afghanistan alone. It is one-quarter the size of the Pentagon budget, and less than 20 percent of the funds allocated by Congress for the bailout of Wall Street.

The amount paid out in benefits varies greatly from state to state, but it barely exceeds $300 a week even in traditionally higher-paying states like New York, Michigan and California. It is less than half that level in many states in the South and Mountain West.

Extended benefits beyond the basic 26 weeks were the product of a series of separate congressional actions, including 53 weeks of emergency benefits, 13 weeks of additional benefits in states with a jobless rate over 6.5 percent, and 20 additional weeks in states with a jobless rate over 8 percent.

The result is that the expiration of extended benefits affects workers differently from state to state.

But the impact is disastrous everywhere. According to a study by Harvard University economist Raj Chetty, the median net savings of a newly unemployed American worker is only $250. In other words, for the typical worker, loss of his or her job means instant and crushing economic want, if not an immediate plunge into poverty.

A report issued Thursday by the Economic Policy Institute points out that jobless benefits, both basic and extended, have been one of the principal supports for the US economy in the current slump. Spending of benefits by jobless workers is responsible for the creation of 1.15 million jobs since 2007, the EPI states.

The EPI study found that during 2008, the last year for which such figures are complete, 21.2 million American workers experienced unemployment at some point, while the average monthly figure was 8.9 million. If the same proportion holds in 2010, an average monthly jobless figure of 15 million will mean at least 35 million people out of work at some point during the year.

Despite the claims of the Democratic and Republican parties, the Obama administration and the corporate-controlled media that an economic “recovery” is underway, the Bureau of Labor Statistics report for May showed that the number of job openings was 3.2 million. With 15 million out of work, the ratio of unemployed workers to job openings was 4.7 to one. This is triple the ratio before the recession started in 2007, and nearly double the worst point of the last recession, when the ratio hit 2.8 unemployed per job opening.

Other economic figures dispel the claims of recovery: manufacturing was reported down in June in two key regions, New York and Philadelphia. Meanwhile, the number of foreclosures in the United States topped 520,000 in the first six months of 2010 and is projected to exceed one million for the year, for the first time in American history.

The “recovery” is only for Wall Street and corporate profits, which have risen steadily for the past year and now stand at 5.7 percent above the level of late 2007, the start of the slump. Total profits of all US corporations were $1.59 trillion in the first quarter of 2010, according to the Commerce Department. The $34 billion cost of extended unemployment benefits works out to two days’ profits for corporate America.

Another yardstick for measuring the acute socio-economic polarization in America is reported Thursday by the Washington Post. “Corporate America is hoarding a massive pile of cash,” the newspaper notes. “It just doesn’t want to spend it hiring anyone. Nonfinancial companies are sitting on $1.8 trillion in cash, roughly one-quarter more than at the beginning of the recession. And as several major firms report impressive earnings this week, the money continues to flow into firms’ coffers. Yet all the good news from big business hasn’t translated into much promise for jobless Americans, leading many to wonder: If corporations are sitting on so much money, why aren’t they hiring more workers?”

The newspaper—itself run by one of the largest media corporations—does not attempt a serious answer to this question. There is no doubt a deliberate calculation that high levels of unemployment are useful for bludgeoning the working class into accepting ever-lower levels of wages and benefits and ever worse forms of exploitation. Even more fundamental is the long-term crisis of profitability. American corporations increasingly look to speculation and other forms of financial parasitism, not production, as the more reliable source of profits.

The solution to the crisis of ever-growing joblessness and exploitation is clear: the resources of society, themselves the products of human labor, must be taken out of the hands of the capitalists and used for the benefit of the working people, beginning with an emergency program to provide every unemployed worker with a good-paying job.

The vast assets of the giant corporations and the super-rich must be placed at the disposal of society, and economic life reorganized to serve human needs, not private profit.

Israel Chokes Gaza Despite Announced Easing

Israel Chokes Gaza Despite Announced Easing

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Ramallah - Israel has received international praise for its decision to ease its crippling blockade on Gaza following the country's deadly assault on a humanitarian flotilla trying to bring desperately needed humanitarian aid to the coastal territory. But according to the UN and human rights organisations, the easing of the blockade is insufficient in meeting Gaza's needs.

"Even if the blockade is eased it remains illegal under international law as it is a collective form of punishment on a civilian population," Chris Gunness from the UN Relief and Works Agency (UNRWA) told IPS.

"Eighty percent of Gaza's population is aid-dependent. Allowing more aid in is perpetuating this dependency and not addressing the issue of self- sufficiency or the root causes of the crisis," added Gunness.

Israeli commandos shot dead nine activists aboard the Mavi Marmara, one of the flotilla boats, when they raided it in international waters at the end of May. The killings sparked international outrage but also drew global attention to the dire humanitarian situation in Gaza as a result of Israel's, and to a lesser degree Egypt's, hermetic sealing of the territory.

Following international pressure Israel decided to ease the closure. Towards the end of June the government of Israeli premier Benjamin Netanyahu issued a six-point plan to facilitate increased access for civilian goods entering Gaza and to expand economic activity, reports the Israeli human rights organisation Gisha.

The plan stated that all commercial products -- other than a list of banned dual-purpose goods -- would be permitted entry to the strip; 250 daily truckloads of goods would enter; the entrance of construction materials would be better facilitated; and the movement of humanitarian cases and international NGOs would be streamlined.

Gisha reports that there has been a moderate rise in the volume of trucks entering Gaza and an increase in imports of consumer goods, but that this volume still falls way below pre-embargo days, and isn't sufficient to meet the daily needs of Gaza's 1.5 million civilians.

During the week after Jun. 20, 695 trucks of goods entered Gaza. This compares with 2,400 per week prior to the closure, and meets only 30 percent of Palestinian needs. Over the past three years 2,328 trucks entered Gaza on a monthly basis compared with 10,400 trucks monthly prior to the blockade.

Additionally, items which could be used for industry and manufacturing and which present no security threat are still being restricted. There appears to be "no change in the policy of inflicting economic warfare or by preventing entry of goods necessary for production," says the Gisha report. "Textiles, industrial-sized buckets of margarine, glucose, packaging boxes and other raw materials are still banned.

"Permitting mayonnaise and potato chips into Gaza is really irrelevant in dealing with the underlying issues," says Maxwell Gaylard, UN Deputy Special and Humanitarian Coordinator for the Middle East.

"What we need to see is an improvement in Gaza's water, sanitation, power grid, educational and health sectors. Gaza's economy is shot to pieces and its infrastructure is extremely fragile," Gaylard told IPS.

"What have not been addressed by the easing of the closure are the issues of exports as well as the limited number of crossings open to facilitate the flow of goods," said Gunness.

A major step towards helping to rehabilitate Gaza's economy would be permitting exports on which Gaza's economy is heavily reliant. A 2005 Agreement on Movement and Access, signed by Israel and the Palestinian Authority (PA) in 2005, agreed to 400 daily truckloads of exports. In the last three years 295 export trucks have exited Gaza.

Gisha reports that "critical manufacturing sectors such as furniture, clothing and textile, and food production are dependent upon revenues acquired by selling their goods outside the strip."

The near collapse of these industries has been aggravated by restrictions on Gaza's banking ties with the outside world, making the legal transfer of money almost impossible.

These industries have been further decimated by the ban on the entrance of raw materials and spare parts.

"Operation Cast Lead destroyed at least 60,000 homes and structures which need to be urgently repaired and rebuilt. The easing of the blockade is not addressing this adequately," Gunness told IPS.

One of the biggest humanitarian issues remains the continued restrictions on movement, including Gazans trying to leave for medical treatment, to continue their studies, or to visit family in the West Bank.

In 2000, 26,000 Palestinian labourers travelled to Israel on a daily basis to earn a living and support large families. Revenue from Israel provided a major boost to Gaza's economy. In the last few weeks a daily average of 95 people have been permitted to pass through Gaza's Erez crossing into Israel. Students wishing to pursue their studies in the West Bank have been repeatedly turned back.

Twenty-nine-year-old Fatma Sharif, a lawyer with the Gaza human rights organisation Al-Mezan which is strongly critical of Hamas, had her application to enter the West Bank to study for her masters degree at Birzeit University near Ramallah turned down by Israel's High Court of Justice.

The decision of the judges was not based on Sharif being a security threat but rather that her application did not meet Israel's guidelines on travel restrictions imposed on Gaza's residents under the blockades.