Thursday, August 12, 2010

U.S. Total Debt Now Stands at $200 Trillion!

U.S. Total Debt Now Stands at $200 Trillion!

Last month, the International Monetary Fund released its annual review of U.S. economic policy. Its summary contained these bland words about U.S. fiscal policy: “Directors welcomed the authorities’ commitment to fiscal stabilization, but noted that a larger than budgeted adjustment would be required to stabilize debt-to-GDP.”

But delve deeper, and you will find that the IMF has effectively pronounced the U.S. bankrupt. Section 6 of the July 2010 Selected Issues Paper says: “The U.S. fiscal gap associated with today’s federal fiscal policy is huge for plausible discount rates.” It adds that “closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP.”

It adds up to $200 Trillion in total debt and this spells a disaster scenario says Laurence Kotlikoff, an economics professor at Boston University. I recommend watching this special Bloomberg Video ...

Gulf Health Problems Blamed on Dispersed Oil

Gulf Health Problems Blamed on Dispersed Oil

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DAUPHIN ISLAND, Alabama - BP says it is no longer using toxic dispersants to break up the Gulf of Mexico oil spill. Gulf Coast residents claim otherwise, and say they have the sicknesses to prove it.

On Aug. 5, Donny Mastler, a commercial fisherman who also works on boats, was at the Dauphin Island Marina.

“I was with my friend Albert, and we were both slammed with exposure,” Mastler, told IPS, referring to toxic chemicals he inhaled that he believes are associated with BP’s Corexit dispersants. “We both saw the clumps of white bubbles on the surface that we know come from the dispersed oil.”

Both of their eyes were watering and their throats were burning, so Albert went to sit in his air-conditioned truck, while Mastler headed home.

“I started to vomit brown, and my pee was brown also,” Mastler said. “I kept that up all day. Then I had a night of sweating and non-stop diarrhea unlike anything I’ve ever experienced.”

BP has been using two oil dispersants, Corexit 9500 and Corexit 9527, both of which are banned in Britain. More than 1.9 million gallons of dispersant has been used to date on the Gulf of Mexico oil disaster.

Pathways of exposure are inhalation, ingestion, skin, and eye contact. Health impacts include headaches, nausea, vomiting, diarrhea, abdominal pains, dizziness, chest pains and tightness, irritation of eyes, nose, throat and lungs, difficulty breathing, respiratory system damage, skin irrigation and sensitisation, hypertension, central nervous system depression, neurotoxic effects, genetic damage and mutations, cardiac arrhythmia, and cardiovascular damage, among several others.

Not along ago, at the same marina, WKRG News 5 took a water sample to test for dispersants. The sample literally exploded when it was mixed with an organic solvent separating the oil from the water.

Bob Naman, the chemist who analysed the sample, told the station, “We think that it most likely happened due to the presence of either methanol or methane gas or the presence of the dispersant Corexit.”

As for Mastler’s physical reaction to his exposure, Hugh Kaufman, an EPA whistleblower and analyst, has reported this of the effects of the toxic dispersants:

“We have dolphins that are hemorrhaging. People who work near it are hemorrhaging internally. And that’s what dispersants are supposed to do…And, for example, in the Exxon Valdez case, people who worked with dispersants, most of them are dead now. The average death age is around 50. It’s very dangerous, and it’s an… economic protector of BP, not an environmental protector of the public.”

By early July, the Alabama Department of Public Health said that 56 people in Mobile and Baldwin Counties had sought treatment for what they believed were oil disaster-related illnesses.

Mastler had a previous exposure when he was working on a boat for a BP contractor and brought aboard an oil-covered absorbent pad he found in the water. That exposure, too, found Mastler with rashes on his arms, a soar throat, and nausea. He told IPS he knows many island residents who stay inside to avoid toxic fumes that blow in from the Gulf.

BP claims to have conducted air monitoring of oil-effected areas. A written statement by the company says, “The monitoring data shows that few people, if any, are exposed to levels of oil or dispersants that have even the potential to cause any significant adverse health effects.”

Many scientists and doctors disagree.

“The dispersants used in BP’s draconian experiment contain solvents such as petroleum distillates and 2-butoxyethanol,” Dr. Riki Ott, toxicologist and marine biologist, told IPS.

“Solvents dissolve oil, grease, and rubber. Spill responders have told me that the hard rubber impellors in their engines and the soft rubber bushings on their outboard motor pumps are falling apart and need frequent replacement…Divers have told me that they have had to replace the soft rubber o- rings on their gear after dives in the Gulf and that the oil-chemical stew eats its way into even the Hazmat dive suits,” Ott said.

“Given this evidence, it should be no surprise that solvents are also notoriously toxic to people, something the medical community has long known,” Dr. Ott added. “In ‘Generations at Risk’, medical doctor Ted Schettler and others warn that solvents can rapidly enter the human body: They evaporate in air and are easily inhaled, they penetrate skin easily, and they cross the placenta into fetuses. For example, 2- butoxyethanol is a human health hazard substance: It is a fetal toxin and it breaks down blood cells, causing blood and kidney disorders.”

Even the federal government has taken precautions for its employees. U.S. military officials decided to reroute training flights in the Gulf region in order to avoid oil and dispersant tainted-areas.

Public health agencies operating in the region have told their researchers who test the air quality to wear respirators when they are offshore, and in preparation for a long-term study of health effects from the BP disaster, the U.S. Labour Department has started gathering data from thousands of workers.

Meanwhile, physical evidence around the Gulf continues to mount daily. Ongoing reports of fish kills and wildlife deaths are a daily occurrence now.

On Aug. 5, in Port St. Joe, Florida, city officials closed a public boat ramp following an unexplained fish kill in St. Joseph’s Bay that caused hundreds of dead fish and crabs to wash ashore. Witnesses sighted a brown, sludgy material roughly six miles offshore.

“My voice is gone,” Mastler, speaking to IPS with a gravelly voice. “Another time I was at the marina and got exposed again, I could smell the oil. I’ve got a lot of burning in my mouth right now.”

On Aug. 8 he said that his urine was still “brown”, but said he was starting to feel “a little better”. Given that Mastler already had a chronic obstructive pulmonary disease, he believes he is “like the canary in the coal mine” with dispersant exposure.

Over the last six weeks, IPS has spoken with several people along the Gulf Coast who have complained of skin rashes, respiratory problems, nausea, headaches, burning eyes, and other problems they believe to be associated with BP’s toxic dispersants.

Mastler told IPS he chose not to work for BP because he never trusted them.

“That’s why I never went to BP, and I’m not going to, and I don’t appreciate the people they let die over this, and how they’re making us sick, and we’ve already had some deaths around this island,” he added, “They put untrained people out on the water, with faulty equipment, and with faulty respirators.”

On Wednesday, Mastler was still suffering.

“I’m still feeling terrible. I’m about to go to the doctor again right now. I might end up in the hospital. I’m short of breath, the diarrhea has been real bad, I still have discolouration in my urine, and the day before yesterday I was coughing up white foam with brown spots in it.”

Mastler plans to file a claim against BP for his medical expenses.

Paying Oil's True Cost

Paying Oil's True Cost

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I won’t claim it was the first time in all these months, just the first I noticed. On Monday, my hometown paper had no mention of the Gulf of Mexico, BP, or what we’ve come to call its disastrous “spill,” though that word hardly catches the dimensions of what happened. On Tuesday, the catastrophe that filled front pages and topped the TV news month after month returned to the paper as a reporter-less seven-paragraph piece, headlined “Relief Well Nears Point of Intercept,” and tucked away at the bottom of page 15 (with a credit line reading only, “by The New York Times”). This was, of course, just a week after, as the piece put it, “a 'static kill,' or 'top kill' cemented the runaway well.”

Runaway no more. Now, only the story is running away.

Last week, the government also announced -- and this was front-page news in the Times -- that 4.9 million runaway barrels of oil had poured into the Gulf since April, and that, according to a government report, all but 26% of it was now miraculously gone. The news in the headlines seemed rosy indeed. Almost a frog-turns-into-prince happy ending. Of course, given the strange, collusive relationship between the Obama administration and BP in the Gulf, including suppressing or discrediting scientific research on and media coverage of the spill, keeping key assessments of damage from the public, all sorts of lingering unanswered questions, and the low-ball figures both the administration and BP have repeatedly released since the Deepwater Horizon rig exploded, these should hardly be treated as gospel numbers. That they should not, however, was only a page 16 follow-up story in the Times; and for more startling figures -- that, for instance, closer to half of the spewed oil may remain in the Gulf -- you needed to look elsewhere.

Meanwhile, the government and BP were reportedly close to an agreement on a “clean up and compensation fund” that would, curiously enough, be pegged to that company’s oil revenues from the Gulf or, as the Wall Street Journal put it, “that would give both sides an incentive to continue production in the Gulf... [and] would represent a new level of interaction between BP and the federal government.” BP’s new chief operating officer Doug Suttles even briefly suggested that the company might return to the same reservoir of oil and take another shot at drilling there. But no matter, unless the capped well were to blow again, we’re obviously at one of those 24/7 to 0/7 moments that seem increasingly the essence of media coverage of any subject.

Not so fast, though. Mark Engler, TomDispatch regular and author of How to Rule the World: The Coming Battle Over the Global Economy, wants us to consider the real damage and real cost to our society from Big Oil’s predations. (By the way, the image accompanying Engler’s piece, “BP’s Black Gold,” comes from a series of collages on water issues by Phyllis Ewen, an artist whose work I particularly admire. Click on it to make it bigger. In addition, for a TomCast audio interview with Engler click here or, to download it to your iPod, here.) Tom

The Gulf at the Gas Station
Can We Calculate the True Cost of Our Dependence on Oil?

By Mark Engler

This might be an opportune time to make a disclosure: I am a BP shareholder. Admittedly, I’ve never attended the company’s annual meeting, and if I did, I would have very little weight to throw around.

I own two shares of BP stock. I received my stake in the company as a Christmas gift in 1989, when I was 14 years old. The previous June, I had taken a "summer enrichment" course in the Des Moines public schools, designed as an introduction to the world of business. The teacher gave each of us in the class a modest hypothetical budget to invest in the stock market.

Earnest young capitalists, we made our picks and then followed the quotes in the morning paper. I invested heavily in Amoco and finished the summer feeling that my portfolio had done quite well. As a result, my younger brother decided that I should receive a real piece of the enterprise that was once John D. Rockefeller's Standard Oil. He conspired with my mom to get me an Amoco share for the holidays.

I’ve watched the oil industry as an interested party ever since. In 1998, my Amoco stock split, turning my one share into two. Then, a few months later, the company was acquired by BP. This "oil mega-merger," as the BBC called it, gave me a stake in yet another energy titan. It also allowed the combined corporation to shed 6,000 jobs, prompting its new chief executive, Sir John Browne of BP, to confidently assure the press that "he hoped the merger will increase pre-tax profits of the two partners by 'at least' two billion dollars by the end of 2000."

The merger proved profitable indeed. Over time, the price of my stock nearly doubled. I received dividends every three months, usually of around 60 cents per share. And by the mid-2000s, BP was making some $20 billion per year in profits. The numbers looked good.

Of course, these are not the only numbers to consider. In fact, in the wake of BP's disaster in the Gulf of Mexico, they don’t seem like the right numbers at all. It’s time for a different accounting: What has that catastrophic spill cost our society? What price do we pay for our dependence on oil? How do we measure these things?

Costs of Business

When I first began receiving Amoco’s annual reports, they featured photos that celebrated robust industrial capabilities, like multicolored sunsets behind fields of horsehead oil pumps in Texas. These days, there's still some of that, but the reports tend to have more shots of solar panels, white windmills, and smiling school children (our future). Someone looking at the annual review the company sent me in 2001, for instance, might have been fooled by the photos of lush, palm-heavy landscapes in Indonesia, California, and Trinidad into thinking that it was a mailing from Conservation International.

Such changes in public relations were born of tragedy. Back in 1989, not three months before my summer business class, the Exxon Valdez collided with the Bligh reef in Alaska's Prince William Sound, breaching its hull. Even according to conservative estimates, it spilled more than 10 million gallons of oil and contaminated more than 1,200 miles of ecologically sensitive coastline. For years afterwards, we saw Exxon deal with the fallout of the catastrophe.

However many thousands of boats and booms the company deployed, it only managed to recover about 8% of the oil released. The rest evaporated, coated beaches, or sank to the bottom of the sea. The Exxon Valdez Oil Spill Trustee Council estimates that 250,000 seabirds, 2,800 sea otters, 300 harbor seals, 250 bald eagles, up to 22 killer whales, and billions of salmon and herring eggs were killed by the spill. Two decades later, some 16,000 gallons of leftover oil still poison wildlife in the Prince William Sound.

The cost to the planet was steep. The cost to Exxon could have been severe as well. While the company claims that it spent $2.1 billion on its clean-up efforts, it might have had to pay many times that in fines and lawsuit settlements. The government initially threatened $5 billion in criminal penalties, and in 1994 a federal jury ordered the company to pay $5.2 billion in punitive damages to Alaskans who had filed a class-action lawsuit. For a time, things at Exxon looked grim.

Although these were the worries of a rival corporation, Amoco investors did get a taste of what Exxon was experiencing. In 1990, after a dozen years of litigation, a federal judge in Chicago ordered my company to pay $132 million in damages to the French government and other parties. They had all been harmed 12 years earlier when the Amoco Cadiz ran aground off the coast of Brittany, releasing 68 million gallons of oil. At the time, it was the largest tanker spill ever. It killed millions of sea urchins and mollusks, thousands of tons of oysters, and almost 20,000 birds.

In terms of the overall business, however, the judgment was only a blip on Amoco's radar screen. In the end, Exxon never made any $10 billion payout for its disaster either. The first Bush administration allowed the company to plead guilty to a small number of charges and settled for penalties and fines of around $1 billion. The judge who ultimately approved the settlement had earlier worried that the amount was too low: "I'm afraid these fines send the wrong message," he said, "and suggest that spills are a cost of business that can be absorbed."

It was a prescient concern, especially given the resolution of the class-action suit. In that arena, Exxon's lawyers proved patient and skilled. They held up the case in court for years until, in 2008, nearly two decades after the spill, the Supreme Court ruled that damages paid by the company would be limited to an exceptionally absorbable $507.5 million.

Emerging Unscathed

In the months during which the well under BP's Deepwater Horizon freely spewed crude into the Gulf of Mexico, it released 4.9 million barrels of oil, or 205.8 million gallons, according to a government panel tasked with measuring the spill. Depending on what estimates you use for the earlier disaster, this amounts to roughly 20 times as much oil as the Exxon Valdez released. In negotiations with the Obama administration, BP agreed to put $20 billion into a fund for cleanup. It has also indicated that it will pay "all legitimate claims" related to the disaster.

Despite such vows, how much of the final cost BP will actually end up paying is unclear. Spill-related damages and lost economic activity could amount to tens of billions of dollars more than what BP is currently setting aside. An Oxford Economics study predicts that costs to the tourism industry alone could exceed $22 billion. Damage to the natural environment, much of it potentially unseen, is almost impossible to quantify.

In the case of the Valdez spill, according to the Associated Press, "the state priced each seagull at $167, eagles at $22,000, harbor seals at $700, and killer whales at $300,000." Such an effort could be replicated for the Gulf. Yet a price tag of $167 per seagull seems tragically inadequate as a means of accounting for a destroyed population of birds, and it doesn’t begin to account for species that may seem less significant to us, but could be crucial to the ecosystem.

Now-deposed BP executive Tony Hayward repeatedly vowed to Gulf residents that the company would "make this right." Likewise, in 1989, after the Valdez ran aground, Don Cornett, Exxon's top official in Alaska, told locals dependent on the ruined fishing industry, "We will do whatever it takes to keep you whole. We do business straight." Of course, that was before Exxon went on to pursue years of dogged litigation to limit its liability.

Once the public furor dies down, as already seems to be happening, BP will have financial incentive to do the same. Though the price of my stock took a hit, plummeting from around $60 per share in early April -- before anyone had heard of the Deepwater Horizon -- to a low of $27 per share in late June, it has already rallied to above $40 as of this writing. Some analysts are betting that BP, like Exxon, will contain the cost of its spill, and then continue about its business in much the same manner it did before. As analyst Antonia Juhasz argues with regard to the Valdez disaster, "Exxon emerged virtually unscathed from the incident and is, today, the most profitable corporation the world has ever known."

What We Do Not Pay at the Pump

Aspects of this situation are reminiscent of the aftermath of another recent “spill.” They recall the way in which bailout banks like Goldman Sachs and JPMorgan Chase relied on billions of dollars in public funding to stay afloat after causing a global economic near-collapse, then turned around the next year to report massive profits and once again award exorbitant bonuses to their well-heeled employees. In each case, there is something deeply unsatisfying about how the market handles the destructive behavior of powerful economic actors.

It is not a new idea to suggest that the true costs inherent in many economic pursuits have been unfairly socialized. Nor does this notion apply only in moments of crisis. Economists give the name "externalities" to costs associated with a business that are not reflected on the balance sheet of that enterprise or in the prices of its products, but rather are borne by society at large. For example, if a factory can dump its waste in a local river and is never fined, it has successfully externalized the cost of waste disposal, which the public pays for in the form of polluted water and its consequences.

Oil has many externalities, and the BP disaster has been only the most recent trigger -- "the reminder we didn't need," as Carter Dougherty at BNet put it -- for refreshed awareness that the gas we buy is far more expensive to our country than what any of us pay at the pump.

In August 1987, the New York Times published an editorial with the bold title, "The Real Cost of Gas: $5 a Gallon." Given that, at the time, you could commonly fill up for 99 cents per gallon, and that even the energy crises of the 1970s did not push gas prices above $1.50 per gallon, $5-a-gallon gas was pretty much unimaginable. Yet the Times editorial stated that, "in light of the administration's willingness to risk lives and dollars in the defense of oil from the Persian Gulf… the real cost of oil should include the cost of the military forces protecting supplies." It argued for an energy policy that accounted for Pentagon expenditures.

Two Gulf wars later, an array of reports from both liberal and conservative sources suggest that $5 per gallon is anything but an outlandish estimate for the true cost of gas. It could, in fact, be far too low.

Taking military spending into account would only be a start toward reckoning with what we really pay for oil. But since the military takes up a massive part of our national budget, it would be a good start.

Anita Dancs, an economist with the Center for Popular Economics, notes that "energy security, according to national security documents, is a vital national interest and has been incorporated into military objectives and strategies for more than half a century." After breaking down the overall military budget and evaluating specific missions, she concludes that "we will pay $90 billion this year to secure oil. If spending on the Iraq War is included, the total rises to $166 billion." That would already add 56 cents to every gallon of gas we buy.

The late Milton Copulos was a veteran of the Heritage Foundation, an advisor to both President Ronald Reagan’s White House and the CIA, as well as the head of the right-wing National Defense Council Foundation. He was particularly concerned with dependence on foreign oil, and he highlighted how oil imports were both an economic boon to unsavory governments abroad and a missed opportunity for domestic investment. In 2006, Copulos argued that, if you add to oil-related defense spending such factors as the economic impact of periodic oil supply disruptions and the opportunity costs of money spent on oil imports that might have been used elsewhere in the economy, the "hidden" costs of the U.S. dependence on petroleum would total up to $825 billion per year.

"To put the figure in further perspective," he wrote, "it is equivalent to adding $8.35 to the price of a gallon of gasoline refined from Persian Gulf oil." At today's rates, that would hike the price at the pump to approximately $11 per gallon, or more than $250 to fill the tank of a typical SUV.

Gushing Subsidies

Military spending is just one type of public subsidy that benefits the oil industry and keeps the price at gas stations artificially low. When I made my adolescent wager on Amoco, I was not aware that the company also profited from massive tax breaks and other non-military forms of support. Yet these go a long way toward making the enterprise a safe bet for investors. Copulos factored some of them into his $11 per gallon calculation; others would drive the price still higher.

In early July, The New York Times reported: "With federal officials now considering a new tax on petroleum production to pay for [the BP oil spill] cleanup, the industry is fighting the measure… But an examination of the American tax code indicates that oil production is among the most heavily subsidized businesses, with tax breaks available at virtually every stage of the exploration and extraction process." Senator Robert Menendez (D-NJ) added, “The flow of revenues to oil companies is like the gusher at the bottom of the Gulf of Mexico: heavy and constant. There is no reason for these corporations to shortchange the American taxpayer.”

The Times story notes that BP was, for instance, able to write off 70% of what it was paying in rent for the Deepwater Horizon rig that caught fire, "a deduction of more than $225,000 a day since the lease began." Amazingly, BP is also claiming a $9.9 billion tax credit for its response to its oil spill in the Gulf of Mexico.

Not only does our government allow energy companies to avoid taxes in myriad ways, the variety of public supports for the oil industry outside the tax code are almost too numerous to list. A 1995 report by the Union of Concerned Scientists mentioned several, including these: the government invests in substantial energy research that directly benefits the oil industry; it spends millions to maintain a Strategic Petroleum Reserve, designed to help stabilize the oil supply; and it maintains a massive highway system that facilitates gas-intensive auto travel, only part of which is paid for by taxes on motorists.

Then, of course, there is the environmental price we pay, most notably in the form of global warming. As Ezra Klein wrote recently in Newsweek, some experts argue that carbon emissions from cars could be offset at the cost of about 65 cents per gallon (money that would presumably be invested in activities like reforestation). Others believe the cost would be much steeper -- perhaps steep enough to turn oil industry profits into losses.

Andrew Simms of the British New Economics Foundation calculated that, if you were to combine BP's exploration, extraction, and production activities with those involved in the sale of its products, you would end up with 1,458 million tons of CO2-equivalent entering the atmosphere per year. Pricing the cost of carbon emissions at $35 per ton, he puts the bill for climate-change damages at $51 billion. Since BP reported a mere $19 billion in profits in 2006, the year Simms was reviewing, he argues that it would have been "$31 billion in the red," or effectively bankrupt, if it had to cover the climate-change bill.

There's more, too. Consider that car exhaust and oil industry pollution mean an increase in smog and asthma, burdening our health-care system. Then count in the damage caused by massive oil spills we seldom hear about in places like Nigeria, Ecuador, or China, as well as the economic cost of traffic congestion and excess auto accidents made possible by subsidized car travel (costs which the willfully contrarian Freakonomics blog contends may be even more expensive than global warming). The final tally is staggering. High-end estimates of the true costs of the gas we use come to over $15 per gallon. Taxpayers subsidize significant parts of this sum without even knowing it.

That Which Makes Life Worthwhile

To the extent that energy corporations are made to spend more to do business in the future -- forced, for example, to pay for mandatory safety measures, pricier insurance policies, or taxes from which they were previously exempt -- some of the costs of oil could be "internalized." If enough costs were accounted for, some companies, no longer confident that their efforts would be profitable, might begin to reconsider exploiting harder-to-extract reserves of fossil fuels. A recent article in the British Guardian offered this scenario: "If the billions of dollars of annual subsidies and the many tax breaks the industry gets were withdrawn, and the cost of protecting oil companies in developing countries were added, then most of the world's oil would almost certainly be left in the ground."

Unfortunately, this is surely an overstatement. If the exploits of oil companies were made more costly, these companies would simply raise their prices and pass along the costs to consumers. And we would pay them because we are unwilling to give up the speed and convenience of driving, or the luxury of airline travel. We would pay them because we are unwilling to reduce our consumption of foods shipped to our grocery stores from far away, or diminish our energy consumption in many other ways. We would pay them in order to maintain at least a facsimile of our previous lives.

Or would we?

While it is too much to say that "most of the world's oil" would be abandoned, some might be. In 2008, when gas prices soared above $4 per gallon, Americans did behave differently. As the New York Times reported, we drove 10 billion fewer miles per month than the year before; surprising numbers of SUV owners traded in their vehicles for smaller, more efficient cars; and daily oil consumption was lowered by 900,000 barrels. Investors began to reconsider how "realistic" the costs of developing alternative energies might be and to fund them more seriously. In other words, Americans responded to the market.

This was a hopeful sign. At the same time, reacting to the market's cues will not be enough to sort out our relationship to oil and the oil business. We must also reckon with the market's limits. Appreciating the full magnitude of the Deepwater Horizon crisis requires us to recognize that the market is inherently unable to account for many of the things we hold most precious. Robert F. Kennedy pointed to this problem in one of his most powerful speeches, explaining that the gross national product measures everything “except that which makes life worthwhile."

Some things cannot be -- or should not be -- left to business spreadsheets. Calculating the cost of a destroyed ecosystem in the Gulf of Mexico or along the coast of Alaska means putting a price tag on things that are not meant to be priced. If you accept that a harbor seal's life is indeed worth $700, and a killer whale's $300,000, pretty soon you must accept that your own life has a price tag on it as well.

Yet taking the limits of economic calculus seriously has implications. It means that we cannot trust the market to solve its own problems -- to self-regulate and self-correct. It means that we need democratic action to place controls on corporate behavior. It means that some things must be considered not merely expensive but sacred, and defended against forces blind to their true value.

Those who believe that the price of my BP stock will recover in the next year might be wrong. Even if the stock bottoms out, however, that won’t restore a shattered Gulf, nor will it change a system that prizes easy consumption and deferred responsibility. We can only correct for the catastrophe oil has wrought by living according to a different measure.

USF says government tried to squelch their oil plume findings

USF says government tried to squelch their oil plume findings

The original reports by marine scientists on the extent of oil plumes met with resistance.

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A month after the Deepwater Horizon disaster began, scientists from the University of South Florida made a startling announcement. They had found signs that the oil spewing from the well had formed a 6-mile-wide plume snaking along in the deepest recesses of the gulf.

The reaction that USF announcement received from the Coast Guard and the National Oceanic and Atmospheric Administration, the federal agencies that sponsored their research:

Shut up.

"I got lambasted by the Coast Guard and NOAA when we said there was undersea oil," USF marine sciences dean William Hogarth said. Some officials even told him to retract USF's public announcement, he said, comparing it to being "beat up" by federal officials.

The USF scientists weren't alone. Vernon Asper, an oceanographer at the University of Southern Mississippi, was part of a similar effort that met with a similar reaction. "We expected that NOAA would be pleased because we found something very, very interesting," Asper said. "NOAA instead responded by trying to discredit us. It was just a shock to us."

NOAA Administrator Jane Lubchenco, in comments she made to reporters in May, expressed strong skepticism about the existence of undersea oil plumes - as did BP's then-CEO, Tony Hayward.

"She basically called us inept idiots," Asper said. "We took that very personally."

Lubchenco confirmed Monday that her agency told USF and other academic institutions involved in the study of undersea plumes that they should hold off talking so openly about it. "What we asked for, was for people to stop speculating before they had a chance to analyze what they were finding," Lubchenco said. "We think that's in everybody's interest. … We just wanted to try to make sure that we knew something before we speculated about it."

"We had solid evidence, rock solid," Asper said. "We weren't speculating." If he had to do it over again, he said, he'd do it all exactly the same way, despite Lubchenco's ire.

Coast Guard officials did not respond to a request for comment on Hogarth's accusation.

The discovery of multiple undersea plumes of oil droplets was eventually verified by one of NOAA's own research vessels. And last month USF scientists announced they at last could match the oil droplets in the undersea plumes to the millions of barrels of oil that gushed from the collapsed well until it was capped July 15.

"What we have learned completely changes the idea of what an oil spill is," USF scientist David Hollander said then. "It has gone from a two-dimensional disaster to a three-dimensional catastrophe."

Now Lubchenco is not only convinced the undersea plumes exist, but she is predicting that some of the spill's most significant impacts will be caused by their effect on juvenile sea creatures such as bluefin tuna. Lubchenco and her staff say they are now working smoothly with USF and other academic institutions in investigating the consequences of the largest marine oil spill in history.

However, Hogarth said, not all is hunky-dory.

USF's first NOAA-sponsored voyage to take samples after Deepwater Horizon, the one that turned up evidence of the undersea plumes, was designed to gather evidence for use in an eventual court case against BP and other oil companies involved in the disaster. At the end of the voyage, USF turned its samples over to NOAA, expecting to get either a shared analysis or the samples themselves back. So far, Hogarth said, they've received neither.

NOAA's top oil spill scientist, Steve Murawski, said Monday that he was "sure we will release the data" at some point. However, he said, because NOAA has collected so many samples over the past three months, when it comes to the samples from USF's trip in May, "I'm not sure where they are."

Lubchenco's agency came under fire last week for a new report that said "the vast majority" of the oil from Deepwater Horizon had been taken care of. Scientists who read the report closely said it actually said half the oil was still unaccounted for.

Lubchenco said anyone who read the report as saying the oil was gone read it wrong.

"Out of sight and diluted does not mean benign," she said.

Hidden Intelligence Operation Behind the Wikileaks Release of "Secret" Documents?

Hidden Intelligence Operation Behind the Wikileaks Release of "Secret" Documents?

The real story of Wikileaks has clearly not yet been told.

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Since the dramatic release of a US military film of a US airborne shooting of unarmed journalists in Iraq, Wiki-Leaks has gained global notoreity and credibility as a daring website that releases sensitive material to the public from whistleblowers within various governments. Their latest “coup” involved alleged leak of thousands of pages of supposedly sensitive documents regarding US informers within the Taliban in Afghanistan and their ties to senior people linked to Pakistan’s ISI military intelligence. The evidence suggests however that far from an honest leak, it is a calculated disinformation to the gain of the US and perhaps Israeli and Indian intelligence and a coverup of the US and Western role in drug trafficking out of Afghanistan.

Since the posting of the Afghan documents some days ago the Obama White House has given the leaks credibility by claiming further leaks pose a threat to US national security. Yet details of the papers reveals little that is sensitive. The one figure most prominently mentioned, General (Retired) Hamid Gul, former head of the Pakistani military intelligence agency, ISI, is the man who during the 1980’s coordinated the CIA-financed Mujahideen guerilla war in Afghanistan against the Soviet regime there. In the latest Wikileaks documents, Gul is accused of regularly meeting Al Qaeda and Taliban leading people and orchestrating suicide attacks on NATO forces in Afghanistan.

The leaked documents also claim that Osama bin Laden, who was reported dead three years ago by the late Pakistan candidate Benazir Bhutto on BBC, was still alive, conveniently keeping the myth alove for the Obama Administration War on Terror at a point when most Americans had forgotten the original reason the Bush Administration allegedly invaded Afghanistan to pursue the Saudi Bin Laden for the 9/11 attacks.

Demonizing Pakistan?

The naming of Gul today as a key liaison to the Afghan “Taliban” forms part of a larger pattern of US and British recent efforts to demonize the current Pakistan regime as a key part of the problems in Afghanistan. Such a demonization greatly boosts the position of recent US military ally, India. Furthermore, Pakistan is the only muslim country possessing atomic weapons. The Israeli Defense Forces and the Israeli Mossad intelligence agency reportedly would very much like to change that. A phoney campaign against the politically outspoken Gul via Wikileaks could be part of that geopolitical effort.

The London Financial Times says Gul’s name appears in about 10 of roughly 180 classified US files that allege Pakistan’s intelligence service supported Afghan militants fighting Nato forces. Gul told the newspaper the US has lost the war in Afghanistan, and that the leak of the documents would help the Obama administration deflect blame by suggesting that Pakistan was responsible. Gul told the paper, “I am a very favourite whipping boy of America. They can’t imagine the Afghans can win wars on their own. It would be an abiding shame that a 74-year-old general living a retired life manipulating the Mujahedeen in Afghanistan results in the defeat of America.”

Notable, in light of the latest Afghan Wikileaks documents, is the spotlight on the 74-year-old Gul. As I wrote in a previous piece, Warum Afghanistan? Teil VI:Washingtons Kriegsstrategie in Zentralasien, published this June on this website, Gul has been outspoken about the role of the US military in smuggling Afghan heroin out of the country via the top-security Manas Air Base in Kyrgyzstan.

As well, in a UPI interview on September 26, 2001, two weeks after the 9-11 attacks, Gul stated, in reply to the question who did Black Sept. 11?, “Mossad and its accomplices. The US spends $40 billion a year on its 11 intelligence agencies. That’s $400 billion in 10 years. Yet the Bush Administration says it was taken by surprise. I don’t believe it. Within 10 minutes of the second twin tower being hit in the World Trade Center CNN said Osama bin Laden had done it. That was a planned piece of disinformation by the real perpetrators…” [1] Gul is clearly not well liked in Washington. He claims his request for travel visas to the UK and to the USA have repeatedly been denied. Making Gul into the arch enemy would suit some in Washington nicely.

Who is Julian Assange?

Wikileaks founder and “Editor-in-chief”, Julian Assange, is a mysterious 29-year-old Australian about whom little is known. He has suddenly become a prominent public figure offering to mediate with the White House over the leaks. Following the latest leaks, Assange told Der Spiegel, one of three outlets with which he shared material from the most recent leak, that the documents he had unearthed would “change our perspective on not only the war in Afghanistan, but on all modern wars.” He stated in the same interview that ‘”I enjoy crushing bastards.” Wikileaks, founded in 2006 by Assange, has no fixed home and Assange claims he “lives in airports these days.”

Yet a closer examination of the public position of Assange on one of the most controversial issues of recent decades, the forces behind the September 11, 2001 attacks on the Pentagon and World Trade Center shows him to be curiously establishment. When the Belfast Telegraph interviewed him on July 19, he stated,

"Any time people with power plan in secret, they are conducting a conspiracy. So there are conspiracies everywhere. There are also crazed conspiracy theories. It's important not to confuse these two...." What about 9/11?: "I'm constantly annoyed that people are distracted by false conspiracies such as 9/11, when all around we provide evidence of real conspiracies, for war or mass financial fraud." What about the Bilderberg Conference?: "That is vaguely conspiratorial, in a networking sense. We have published their meeting notes." [2]

That statement from a person who has built a reputation of being anti-establishment is more than notable. First, as thousands of physicists, engineers, military professionals and airline pilots have testified, the idea that 19 barely-trained Arabs armed with box-cutters could divert four US commercial jets and execute the near-impossible strikes on the Twin Towers and Pentagon over a time period of 93 minutes with not one Air Force NORAD military interception, is beyond belief. Precisely who executed the professional attack is a matter for genuine unbiased international inquiry.

Notable for Mr Assange’s blunt denial of any sinister 9/11 conspiracy is the statement in a BBC interview by former US Senator, Bob Graham, who chaired the United States Senate Select Committee on Intelligence when it performed its Joint Inquiry into 9/11. Graham told BBC, "I can just state that within 9/11 there are too many secrets, that is information that has not been made available to the public for which there are specific tangible credible answers and that that withholding of those secrets has eroded public confidence in their government as it relates to their own security." BBC narrator: "Senator Graham found that the cover-up led to the heart of the administration." Bob Graham: "I called the White House and talked with Ms. Rice and said, ‘Look, we've been told we're gonna get cooperation in this inquiry, and she said she'd look into it, and nothing happened.’”

Of course, the Bush Administration was able to use the 9/11 attacks to launch its War on Terrorism in Afghanistan and then Iraq, a point Assange conveniently omits.

For his part, General Gul claims that US intelligence orchestrated the Wikileaks on Afghanistan to find a scapegoat, Gul, to blame. Conveniently, as if on cue, British Conservative Prime Minister David Cameron, on a state visit to India, lashed out at the alleged role of Pakistan in supporting Taliban in Afghanistan, conveniently lending further credibility to the Wikileaks story. The real story of Wikileaks has clearly not yet been told.



Notes

[1] General Hamid Gul, Arnaud de Borchgrave 2001 Interview with Hamid Gul, Former ISI Chief, UPI, reprinted July 2010 on http://www.veteranstoday.com/2010/07/28/arnaud-de-borchgrave-2001-interview-with-hamid-gul-former-isi-chief/

[2] Julian Assange, Interview in Belfast Telegraph, July 19, 2010.

Google-Verizon Pact May Herald End of Equal-Access Internet as FCC Stalls

Google-Verizon Pact May Herald End of Equal-Access Internet as FCC Stalls

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Imagine an Internet where consumers paid a low price for basic service and more for add-ons such as 3-D video.

Or imagine if Comcast Corp., now seeking approval to acquire General Electric Co.’s NBC Universal, let its customers download Universal movies at superfast speeds, while relegating the latest Harry Potter film from rival Time Warner Inc. to the slow lane.

Open-Internet advocates say such cable television-like tiered services and virtual toll booths would violate “net neutrality,” the concept that all information coursing across the Web is equal, Bloomberg Businessweek reports in its Aug. 16 edition.

Like it or not, net neutrality may soon be ending. No one senses this more acutely than Julius Genachowski. Since a federal court ruling in April gutted his power to regulate Internet service providers, the Federal Communications Commission chairman has struggled to regain authority over carriers such as AT&T Inc., Verizon Communications Inc., and Comcast by proposing new rules and holding closed-door talks with industry players.

His predicament deepened on Aug. 9 when the chief executive officers of Google Inc. and Verizon, Eric Schmidt and Ivan G. Seidenberg, suggested that the industry embrace net neutrality -- up to a point. They would exempt from open-access rules wireless networks and any “managed services” delivered over wires, such as health-care monitoring, special entertainment events, and gambling.

Opera in 3-D

The CEOs offered as an example an opera performance streamed in 3-D over the Web. Verizon would be paid a premium to send the program to opera buffs more quickly and at higher quality.

Now, with Congress unable to agree on whether to stop companies from carving up the Internet, Genachowski is left with few choices. He wants to uphold President Barack Obama’s campaign pledge to protect the open Web, even as the industry gets set to impose restrictions.

The Google-Verizon plan hit like “a tidal wave” because Google had been “a very strong supporter of net neutrality,” Darrell West, vice-president of governance studies at the Brookings Institution in Washington, told Bloomberg Television.

Google seems to be laying the groundwork for tiered pricing, and “the Internet is going to become more like other parts of the economy,” West said.

The proposal is in keeping with Google’s longtime advocacy of an open Internet, Schmidt said in an interview.

Showing Leadership

“We’re trying to show some leadership,” he said. “I have no objection to other people trying to show some leadership, too, but something’s got to happen.”

Verizon’s willingness to agree to clear net-neutrality rules for its wired business was “pleasantly surprising,” Schmidt said. “They’re serious.”

The exemption for managed services merely recognizes what Verizon already offers through its paid FiOS broadband service providing TV, phone and Internet.

Public-interest organizations rejected the deal. Joel Kelsey, political adviser for Washington-based consumer advocacy group Free Press, said the pact “would give companies like Verizon, Comcast, and AT&T the right to decide which content will move fast and which should be slowed down.”

Others criticized Google for what they called its abandonment of the open Web. “Google has taken a big step back in people’s eyes,” said Craig Moffett, an analyst with New York- based Sanford C. Bernstein & Co. “The company that’s supposed to not be evil is suddenly being characterized by the net- neutrality crowd as the arch-villain.”

FCC Ends Talks

The FCC had tried to strike its own accord in talks with the industry that began in June. Unable to reach a consensus, Genachowski ended the discussions last week. “Any deal that doesn’t preserve the freedom and openness of the Internet for consumers and entrepreneurs will be unacceptable,” he said. He declined to comment on the Google-Verizon deal, spokeswoman Jen Howard said in an e-mail.

The chairman, an Obama appointee who leads a 3-2 Democratic majority, could argue that rules written for telephone service provide the authority he needs to require that Internet providers treat traffic equally. If he tries to apply the phone rules to broadband, carriers and congressional Republicans would protest. Cable and phone companies say phone-style rules could lead to rate regulation, and they say that prospect would delay investments to upgrade the Internet.

‘Going to Be Sued’

If Genachowski goes that route, “he’s going to be sued,” said Representative Cliff Stearns of Florida, the top Republican on the House subcommittee on communications, technology, and the Internet. “We’re not going to get innovation if the government steps in.”

Genachowski declines to say when he might put phone-style rules to a vote by the FCC. “He needs to act swiftly,” said Gigi Sohn, president of Public Knowledge, a Washington-based group that favors net neutrality. “The more he delays, the more he gives the opposition time.”

Foreclosure Crisis Spreads Across U.S. as Idaho Defaults Mount

Foreclosure Crisis Spreads Across U.S.; Idaho Defaults Mount

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Nan Holmes, a senior escrow officer at a title insurer, says her insider’s view of the local market gave her the confidence three years ago to pay $370,000 for a new home in Boise, Idaho. She got a price she liked from the builder and 100 percent bank financing.

That was before the bottom fell out of the housing market in California, Nevada and Florida as borrowers with bad credit began defaulting in record numbers, setting off a recession. Holmes, who had earned $150,000 a year when real estate was booming, saw her compensation shrink by half when business cooled, forcing her to dip into savings and sell jewelry. She stopped paying the mortgage in April and has put the house on the market for $145,000 less than she owes the bank.

“How long will it take for the market to turn so I can just break even?” Holmes, 55, said as she sat in her house in Boise’s tree-lined Collister neighborhood, four miles (6.4 kilometers) from the state capitol.

Home foreclosures are climbing in the Northwest and Midwest, areas that had earlier dodged the worst of the mortgage crisis, according to real estate data firm RealtyTrac Inc. With 14.6 million Americans out of work and consumer spending declining, further weakness in housing could push the economy back into recession, former Federal Reserve Chairman Alan Greenspan said Aug. 1.

Foreclosure rates in Utah, Idaho, Illinois and Colorado rose in the second quarter compared with a year earlier, and rank among the 10 highest in the country. The number of homes seized by lenders at least doubled in 19 states and more than tripled in seven of them, according to Irvine, California-based RealtyTrac.

Later in Cycle

“The housing downturn started late in the Northwest and now it’s ending late,” said Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pennsylvania. Idaho, Oregon and Washington lagged behind the national cycle and will suffer declines after other areas stabilize, he said.

New defaults are declining and appear to have bottomed in states where the crisis began, falling 43 percent in California, 37 percent in Florida and 27 percent in Nevada in the second quarter from a year earlier, RealtyTrac’s data show.

“The worst is over, but it’s going to be a long road ahead,” said economist Steven Frable at IHS Global Insight Inc. in Lexington, Massachusetts.

July Data

Last month, 325,229 U.S. properties got a notice of default, auction or bank repossession, RealtyTrac said today in a report. While that’s an increase of 4 percent from June, the number was down almost 10 percent from a year earlier. One in 397 households received a filing. Lenders seized 92,858 properties in July, the second-highest monthly tally since RealtyTrac began records in January 2005.

“The numbers are exploding due to unemployment and economic displacement,” said Rick Sharga, senior vice president of marketing at RealtyTrac. “We will see them get a lot worse unless we see some job creation.”

Initial jobless claims rose last week by 2,000 to 484,000, the highest in six months, Labor Department figures showed today. Unemployment is near a 27-year high at 9.5 percent. More than 4.4 million people are collecting unemployment benefits and almost 5.3 million are getting emergency and extended payments. Fed Chairman Ben S. Bernanke told Congress on July 21 the outlook is “unusually uncertain.”

Chicago Jobs Disappear

Chicago lost 76,000 jobs in the year through June, the most in any metropolitan area tracked by the U.S. Bureau of Labor Statistics. Denver lost 18,900, Detroit 18,700. Employment dropped 4.1 percent in Grand Junction, Colorado, and 2.7 percent in Bend, Oregon, the data show.

Home seizures soared 822 percent in Idaho in the second quarter, and the state had the seventh-highest foreclosure rate, according to RealtyTrac. Boise’s median house price was $140,100 in the quarter, down 34 percent from the peak $212,800 in 2007, the National Association of Realtors said yesterday.

The metropolitan area, home to a third of Idaho’s 1.54 million residents, has been pummeled by housing-related construction and retail job losses, as well as layoffs at chipmaker Micron Technology Inc. and grocer Albertsons, said Michael Ferguson, the state’s chief economist.

Idaho’s jobless rate was 8.8 percent in July, up from 8.2 percent a year earlier and 2.9 percent in July 2007.

“This is an off-the-chart, extreme financial event,” Ferguson said. “I wasn’t around for the Depression, but in the last half century there has been nothing like this.”

Cows and Corn

In Charter Pointe, a development built on corn fields 11 miles from downtown, more than half of the homes listed for sale are bank-owned or “underwater,” meaning the property is worth less than the mortgage. Dairy cows wander in a nearby pen, and baling machines grind into the night.

“The neighbors aren’t used to living next to farming operations with manure and flies,” said Richard Murgoitio, who sold 70 acres to Hubble Homes Inc. in 2001 and would like to sell his remaining land to builders. “We’re hoping they take us all out, if the economy ever turns around.”

Micron, founded in Boise in 1978 with early investors including the late potato mogul J.R. Simplot, cut local production and 1,500 jobs last year as chip prices fell. The company has more than 5,000 full-time workers in the area, said Daniel Francisco, a Micron spokesman. It employed twice that number as recently as 2001, Ferguson said.

Budget Cuts

Albertsons cut its local payroll following a 2006 buyout by companies including Eden Prairie, Minnesota-based Supervalu Inc. and private-equity firm Cerberus Capital Management LP of New York. The acquisition ended seven decades of Boise ownership for the grocery chain and its plans for as many as 1,000 new hires, the state economist said.

Idaho lost 6.9 percent of its jobs from 2008 through 2009, compared with the 4.9 percent U.S. average, and its timber industry payrolls fell 38 percent, according to IHS Global.

Government workers and services haven’t been spared. The state budget, which peaked at $3 billion in 2008, dropped by a fifth to $2.38 billion in the fiscal 2011 year that began July 1. More than 200 positions were cut and furloughs imposed in agencies including health and welfare, tax collection and the attorney general’s office, Ferguson said.

The value of residential transactions in Ada County, which includes Boise, declined 62 percent in June from the peak four years earlier, multiple listings data show. Boise had the highest metro foreclosure rate outside California, Florida, Nevada or Arizona in the first six months of the year, RealtyTrac said.

Short Sale Sought

Holmes said her company, TitleOne Corp., is down to 80 employees from a high of 175 in 2007. Her lender, Bank of America Corp. of Charlotte, North Carolina, took the first step toward foreclosure in July.

Holmes, a divorced mother of two, put her house on the market in June and has applied for a federal program that offers incentives to loan servicers, investors and homeowners to complete short sales, in which the bank accepts less than what it is owed on the mortgage.

She’s asking $225,000 and hasn’t had an offer. A third of real estate listings in her area are distressed properties, with seven months of inventory on the market in Boise at her price.

“I was never raised to be in this position,” Holmes said, showing pictures of her 6-year-old granddaughter, as well as the oversize tub in her master bathroom. “I’ve tried everything I can think of.”

U.S. Jobless Claims Unexpectedly Climb to Five-Month High

More Americans Than Forecast File Claims for Jobless Benefits

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More Americans than forecast filed applications for unemployment benefits last week, signaling firings stepped up as the economy slowed.

Initial jobless claims rose by 2,000 to 484,000 in the week ended Aug. 7, the highest level since mid February, Labor Department figures showed today in Washington. The number of people receiving unemployment benefits dropped, while those getting supplemental benefits surged by 1.34 million reflecting the government’s extension of eligibility.

Companies may be losing confidence in the recovery and are hesitant to hire, raising the risk of further erosion in consumer spending, the biggest part of the economy. Federal Reserve policy makers this week said growth “is likely to be more modest” than they previously projected, prompting central bankers to take additional steps to spur a rebound.

“There’s still considerable uncertainty about the economic outlook,” said David Resler, chief economist at Nomura Securities International Inc. in New York. “Businesses are simply reluctant to put people on payrolls and are more willing to let them go. This week’s increase was more disappointing than what we’ve seen in recent weeks.”

Stocks dropped as the report added to evidence the world’s largest economy was slowing. The Standard & Poor’s 500 Index fell 0.8 percent to 1,080.5 at 10:28 a.m. in New York. Treasury securities were little changed after erasing earlier losses.

Increase Unexpected

Economists forecast claims would fall to 465,000, according to the median of 42 projections in a Bloomberg News survey. Estimates ranged from 450,000 to 480,000. The government revised the prior week’s claims figure up to 482,000 from a previously reported 479,000.

Prices of goods imported into the U.S. rose in July for the first time in three months, led by higher fuel costs, another Labor Department report showed today. The 0.2 percent increase in the import-price index was smaller than projected and followed a 1.3 percent June drop. Prices excluding energy fell 0.3 percent.

There were no special factors influencing last week’s data, a Labor Department spokesman told reporters as the figures were being released.

The four-week moving average of claims climbed to 473,500 from 459,250, today’s report showed.

The number of people continuing to collect unemployment benefits fell by 118,000 to 4.45 million in the week ended July 31, from 4.57 million the prior week.

Extended Benefits

The continuing claims figure does not include those receiving extended benefits under federal programs. The number of Americans who’ve used up traditional benefits and are now collecting emergency and extended payments soared by 1.34 million to 5.28 million in the week ended July 24. That was the week legislation resuming eligibility went into effect.

While companies have added workers to their payrolls seven straight months, firings have remained elevated as the economic recovery shows signs of slowing. Private firms added 71,000 jobs in July, fewer than economists had forecast, according to government figures released Aug. 6.

CareFusion Corp., the maker of products to reduce hospital infections and monitor medical safety, said Aug. 10 it will cut about 700 jobs as part of a restructuring designed to eliminate layers of management and lower costs. The San Diego-based company employs more than 15,000 people, it said this week, and was spun off last year from Cardinal Health Inc.

Help for States

Congress this week passed legislation providing $26 billion in aid to state governments that is designed to prevent thousands of layoffs of teachers and other public service employees.

Weaker sales and declining income tax revenue have left states with budget gaps totaling $84 billion, according to the National Conference of State Legislatures. Every state except Vermont is required to balance its budget, forcing spending cuts, tax increases or both -- actions Fed Chairman Ben S. Bernanke said last week are contributing to the nation’s sluggish recovery.

The Fed on Aug. 10 held its benchmark interest rate at a record low and announced it will reinvest principal payments on mortgage holdings into long-term Treasury securities, an effort to bolster economic growth.

“The pace of economic recovery is likely to be more modest in the near term than had been anticipated,” the Federal Open Market Committee said in a statement in Washington. “To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at their current level.”

Who really controls Africa’s ‘blood-diamond’ trade?

Who really controls Africa’s ‘blood-diamond’ trade?

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Corporate media coverage in early August of British model Naomi Campbell’s testimony at the Special War Crimes Court on Sierra Leone doesn’t provide a clue to the background of this trial against former Liberian President Charles Taylor.

The ongoing tribunal, which is taking place in The Hague, Netherlands, charges Taylor with utilizing diamonds to fund the Revolutionary United Front, a rebel group in Sierra Leone. Campbell’s testimony centered around whether or not she had received diamonds from Taylor during a 1997 visit to the Republic of South Africa to support the Nelson Mandela Children’s Fund.

Yet the questions asked of Campbell, who was forced into testifying, and the content of her testimony revealed nothing about the origins of the political crises in Liberia and Sierra Leone — or of the historic role of the United States, Britain and other imperialist states that have used their influence to control the marketing and distribution of African diamonds.

This sensational angle in Taylor’s trial also conceals what was really at stake during the Liberian civil war. During the late 1990s South African President Nelson Mandela helped negotiate a settlement to the Liberian conflict resulting in internationally supervised elections.

In the aftermath of a tumultuous civil war which lasted for seven years, Taylor overwhelmingly won the 1997 elections, gaining recognition by both the United Nations and the Organization of African Unity (later the African Union). He survived another seven years amid attempts by armed opposition groups to topple his regime.

In 2003 after the intervention of U.S. troops in Liberia, Taylor was convinced to go into exile in Nigeria. He was later handed over to the International Criminal Court in the Netherlands for prosecution, where he has remained for the last six years.

Neither Taylor nor Campbell has ever had any influence in the international diamond trade. Liberia is a major producer of diamonds, but the mining and marketing of these gems are not controlled by the government or anyone else on the African continent. This lack of control of the national economies of both Sierra Leone and Liberia can be traced back to the late 18th and early 19th centuries when Britain and the United States established these areas as colonial outposts under the guise of providing a homeland for former enslaved Africans from the British and U.S.-controlled territories in the Western hemisphere.

British, U.S. domination over Sierra Leone, Liberia

When Lord Mansfield held that a slave owner could not remove Africans from England by force in 1772, opponents of the Atlantic slave trade interpreted the ruling as an act of emancipation for those held captive in Britain.

Later, during the U.S. revolutionary war, British colonialists promised Africans who sided with them against the soon-to-be U.S. ruling class that they would be liberated from slavery when the war ended. Many of the formerly enslaved Africans emigrated to England and Nova Scotia, Canada.

London grew into a center for African groups during the 1780s, some of whom had arrived from the Americas following the U.S. revolutionary war. Many British organizations, including religious groups, felt that the solution to the emergence of an unassimilated race in Britain was to establish a “Christian-oriented” settlement in West Africa that would fall under the direct control of British finance capital and influential churches.

In 1787 approximately 400 Africans departed from England to establish a new society built on land ostensibly purchased from an African monarch in the region now known as Sierra Leone. During its early years the country was ruled by the British-owned Sierra Leone Company.

Soon after 1787 many Africans who had settled in Nova Scotia and had failed to obtain the land promised by the British, decided to repatriate to Sierra Leone.

Thomas Peters, who had formerly been enslaved in the United States, led 1,200 free Africans from Nova Scotia, Canada. These repatriots played an instrumental role in the founding of Freetown. Eight years later, hundreds of Africans from Jamaica who had rebelled against British slavery, commonly referred to as “Maroons,” joined the resettled Africans residing in Freetown.

After the British abolished slavery in 1807, the population of repatriates grew to more than 70,000 in Sierra Leone. Several years later the experiment in resettlement began in neighboring Liberia.

Like Sierra Leone, Liberia grew out of the willingness of some enslaved Africans to return to the land of their ancestors, as well as the desire of the European settlers in the U.S. to rid the country of free Africans and establish an outpost for trade in West Africa. The settlements began in 1821 through the American Colonization Society.

In 1847 Liberia was recognized by the United States as an independent republic. Nonetheless, the country has remained under U.S. influence from its founding to the present.

Despite the development of trade in palm oil, sugar, coffee and molasses, the European colonial powers who controlled the neighboring territories blocked any commerce between Liberia and the bordering nations. Faced with an economic blockade by colonial powers, the Liberian government was forced to accept a 100,000 pound sterling loan from the British at a very unfavorable rate in 1871.

By the early 20th century, Liberia had received less than one-third of the loan and was so far in debt that it sought to arrange a bailout. In 1912 a loan of $1.7 million was granted by a consortium headed by J.P. Morgan, the National City Bank, First National Bank of New York and Kuhn Loeb & Co. Liberia’s financial operations were, for all practical purposes, taken over by the United States in conjunction with its consortium partners Britain, France and Germany.

After World War I began, the U.S. government appointed a receiver-general who assumed total control of Liberia’s national treasury. The most significant extension of credit to Liberia took place in 1926 when Firestone Rubber Corporation of America granted $5 million that was used to pay off the remaining loans to the other financial institutions.

In more recent times, imperialist influence has continued over the Liberian economy through control of the iron ore and diamond industries. During the 1960s iron ore deposits were estimated at 1 billion tons. The exploitation of these resources was carried out by a consortium dominated by firms from Germany, France, Italy and Belgium, with a substantial portion of the output going to the then-powerful Bethlehem Steel Corporation based in the United States.

Whose ‘blood diamonds’?

Several major diamond-producing firms operate inside Liberia. The largest trader is Hatton Diamonds, which is part of the DeBeers Central Selling Organization. This firm has controlled the diamond market in Liberia for many decades and has run the government’s industry office.

DeBeers was formed by British settler-colonialist Cecil Rhodes in 1870 and taken over in 1926 by white South African mine owner Ernest Oppenheimer, who migrated from Germany.

One other major player in the Liberian diamond industry is the Antwerp Company, based in Belgium. The role of Belgium as a diamond-marketing base can be traced back to the 16th century when Antwerp was a center for the emerging mercantile and capitalist classes.

Liberia’s diamond industry has never been under the control of its people. Of course, this fact of history will not be brought into the current trial of Charles Taylor.

Neither will the fact that the U.S. administration under George W. Bush played an instrumental role in overthrowing Taylor through the Guinea-based Liberians United for Reconciliation and Development rebel group, which received arms and training from Washington.

One major criticism of the Taylor trial and other efforts to bring African leaders before the International Criminal Court — such as Sudanese President Omar Hassan al-Bashir — is that the court has focused exclusively on leaders from the continent and has ignored the most devastating war crimes committed by the U.S. ruling class and other Western imperialist states.

The occupations of Iraq, Afghanistan and Pakistan, the ongoing U.S. support for the state of Israel and its occupation over the Palestinians, as well as the imperialist role in the deaths of 4 million to 6 million people in the Democratic Republic of Congo, have not been addressed by the ICC or the U.N. Special Courts, such as the one prosecuting Taylor. It is these crimes — committed by Western imperialist states — that are being covered up in the Taylor trial.

Anti-imperialist forces in the U.S. must recognize that the ICC is not concerned with ending war crimes. Despite the role of Charles Taylor, the Revolutionary United Front in Sierra Leone and other puppet dictators in Africa, the underlying forces that drove their actions can be traced backed to the continued desire on the part of imperialism to dominate the resources and labor of the African continent.


Speculators feast on Russian disaster

Speculators feast on Russian disaster

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The race is already on in commodities markets worldwide to wring new fortunes out of the climate catastrophe now raging in Russia. It’s a chilling example of how capitalism works in a time of crisis.

Russia is in the middle of the worst heat wave ever recorded in that vast country, most of which lies far to the north and historically has experienced relatively cool summers and frigid winters.

Over the 130 years that records have been kept, Moscow had a pleasant average of 75 degrees Fahrenheit in the summer months. This July and early August the thermometer spiked at 100 degrees — and is staying there. Hundreds of wildfires are raging in the parched forests, causing deadly smog throughout the area. The death rate in Moscow has doubled to 700 a day, which health officials blame on the smog.

Further south, in the breadbasket steppes of Russia that have made it the world’s third-largest exporter of wheat, temperatures have been even hotter and crops are failing. Cattle and poultry are dying from the heat, the drought and lack of fodder. Some automakers temporarily halted production because of the extreme heat in southern Russia. (Bloomberg BusinessWeek, Aug. 5)

The Russian government announced in early August that, due to this crisis, it would not be exporting any more wheat this year.

Capitalist vultures feast

Immediately, the speculators went to work.

In the Chicago Mercantile Exchange and other markets around the world where betting goes on over the future of crops, huge sums began changing hands as capitalists gamble over how high the price of wheat will go if the devastating heat wave and drought do not end in time to rescue most of this year’s harvest.

Relief does not appear to be in sight. The state weather service predicted that temperatures in most parts of central Russia would run about 14 degrees above average through Aug. 12, rising to as high as 108 degrees Fahrenheit in some areas. And only the privileged have air conditioning in most of Russia.

The weather service also reported that rainfall in July in central Russia and along the Volga River, the areas hardest hit by fires, ranged from 10 percent to 30 percent of the long-term average.

“Futures prices [of U.S. wheat] fell sharply in the financial crisis, from nearly $13 a bushel in early 2008 to around $4.50 a bushel less than 10 months later. In early June, they were trading around $4.28 due to an apparent glut,” reported the Wall Street Journal on Aug. 9, which hastened to add that, with the Russian disaster, “Prices surged above $7 last week.”

Speculators who are betting that wheat prices will go even higher hope there will be no rain.

But others are betting that the rains will come, the Russian crop will be saved, and there will consequently be a glut on the market next year, causing prices to fall.

Farmers in grain-exporting countries all over the world, especially the U.S., Canada and Australia, are trying to figure out whether wheat will be making money next year or prices will continue to be low. If the latter, they are likely to plant corn instead of wheat, figuring they can sell it to the energy market for ethanol.

The irony is that world grain stocks are now at the third-highest level on record and prices have been dropping, even though in the U.S. farmers have pulled back from wheat in favor of corn. The size of the wheat crop shrank 11 percent in the past two years, to 2.2 billion bushels, according to the U.S. Department of Agriculture. Whatever happens over the next year, the world will not run out of wheat, but poorer countries and people may not be able to afford it.

The speculators and exploiters of human labor don’t look at the problem from the point of view of hunger and suffering. They’re concerned only about profits. “A titanic 2011 U.S. acreage battle is brewing,” said Rich Feltes, senior vice president for research at MF Global, a commodities brokerage firm. (Wall Street Journal, Aug. 9)

This means that it will be the speculators, not the farmers, who in the end determine which crops are grown — and it will be based on how much profit they think can be made. They are also already speculating in the currencies of the countries involved, anticipating that inflation will depreciate the money.

Capitalism and climate change

It is the drive for profits that has pushed capitalist expansion in both industry and agriculture in the modern age. This drive for profits is not only behind the speculation that is driving up wheat prices — it is also behind the climate change that is so cruelly buffeting Russia this summer.

The National Oceanic and Atmospheric Administration, a U.S. governmental body, released a report on July 28 that confirmed the planet is heating up rapidly. The report got scant attention in the corporate media, even though it summarized the findings of more than 300 climate scientists in 48 countries who measured 10 separate planetwide features, including air and sea temperatures, humidity, Arctic sea ice, glaciers, and spring snow cover in the Northern hemisphere.

The impact of continuing change, it says, will be extreme heat waves, heavy downpours in some areas and drought in others, rising ocean temperatures and acidification, insect infestations and wildfires, and sea level increases of more than three feet in some areas. (noaanews.noaa.gov) It all adds up to widespread disasters unless governments rein in greenhouse gas emissions — which appears remote, as that would threaten the interests of the ruling classes that dictate the economic policies of the capitalist countries and have blocked any meaningful international treaties on climate change.

Do today’s leaders in Russia acknowledge this problem?

After all, Russia used to be part of the Soviet Union, which developed its industry according to a plan, not according to the whims of the capitalist markets. That economic plan was of course damaged by the vicious struggle of the capitalist world against socialism — both the invasion by Hitler Germany in 1939 that cost the USSR 20 million lives and much of its industry in World War II, and then the U.S.-led Cold War. This unrelenting military offensive forced the Soviet leaders to prioritize defense when the people needed relief from extreme wartime scarcity.

The Soviet Union, despite many gains for the masses made possible by the workers’ revolution of 1917, did not survive. Russia today is a capitalist country where “entrepreneurs” look to profit out of any disasters. This bourgeois view of “development” has been expressed by its political leaders, who have looked for business opportunities in the thawing of the permafrost and in the melting of sea ice north of Siberia that now blocks potential navigation channels between Europe and Asia. But the current crisis has forced a change.

President Dmitri Medvedev, who until now has been one of those leaders ambivalent about global warming, said recently: “Our country has not experienced such a heat wave in the last 50 or even 100 years. We need to learn our lessons from what has happened, and from the unprecedented heat wave that we have faced this summer.

“Everyone is talking about climate change now,” he continued. “Unfortunately, what is happening now in our central regions is evidence of this global climate change, because we have never in our history faced such weather conditions in the past. This means that we need to change the way we work, change the methods that we used in the past.” (“Russian fires prompt Kremlin to abruptly embrace climate change,” Christian Science Monitor, Aug. 9)

It is not likely that politicians who have embraced capitalism will learn the real lessons of the growing disasters now plaguing the world. The future lies instead with anti-capitalist forces that are growing, especially in the oppressed countries, and that say, along with Bolivian President Evo Morales, “Save the world — from capitalism.”