Even though Gloria claims that the constitutional change has nothing to do with extending her term, the opposition refuses to believe that. Gloria shows her tactical skill by attempting to bend the rules to her aims by having the two houses vote together on the changes since she has a large majority of support in the lower house. Although the Supreme Court will probably have to decided the constitutionality of this scheme it is packed with Arroyo appointments. However, even then the eminent judges sometimes decide enough is enough!
Gloria allies ready final push for Cha-cha
By Angie M. Rosales
12/01/2008
Running short of time, allies of President Arroyo in the House of Representatives are moving at double-time to push Charter change (Cha-cha) efforts with Sen. Aquilino Pimentel warning that Mrs. Arroyo’s allies would likely use numerical superiority to ram through efforts to amend the Constitution.
Insistence of Palace allies in Congress to have the two chambers vote jointly in effecting Cha-cha is obviously aimed at taking advantage of the apparent numerical superiority of lawmakers supporting the administration in the House of Representatives, effectively railroading the move to amend the 1987 Constitution, Pimentel, the Senate minority leader, said.
This will also enable President Arroyo to stay in power even beyond her mandate, he added.
A ranking Lakas CMD executive said Palace allies in the House of Representatives are running short of time in pushing Cha-cha with only barely six months for them to work on it since the law stipulates that efforts to change the Constitution cannot be undertaken one year before elections.
Ed Malay told a a forum held at Dapitan Manila yesterday that people will oppose any move to alter the present form of government.
“People right now would rather wait for 2010 to voice out their sentiments in what is happening now and GMA knows that very well after the debacle of team unity last senatorial election,” he said.
The insistence of administration congressmen for a joint voting is patently unconstitutional, against parliamentary tradition and simply illogical, Pimentel said even as he pointed out that the House has at present 229 congressmen compared to only 23 senators.
“If we vote jointly, we will always be overwhelmed and outnumbered by the House,” he said.
Pimentel said Mrs. Arroyo’s allies are pursuing this devious scheme on the presumption that when the issue of its constitutionality is raised before the Supreme Court, their position will be upheld by the tribunal.
However, he said he firmly believes that the Supreme Court, even if it is packed with Arroyo appointees, will resolve this issue according to the rule of law and the paramount public interest, and not to please the appointing authority.
The senator from Mindanao dared the proponents of the joint voting scheme to drop their proposal altogether to remove a major stumbling block that has set back the process for amending the Constitution.
The opposition lawmaker likewise warned saying that the trashing of the fourth impeachment case against Mrs. Arroyo is a portent of things to come if the administration lawmakers will insist on amending the Constitution through joint voting of the Senate and lower house.
House allies of Mrs. Arroyo, meanwhile, accused anti-charter change groups of exploiting the issue in a bid to derail legitimate attempts to amend the Constitution.
The administration lawmakers said that anti-charter change groups are suffering from paranoia.
“We are not going to extend the term of office of public officials, including the President,” says La Union Rep. Victor Ortega, chairman of the House Committee on Constitutional Amendments.
House Speaker Prospero Nograles, one of the proponents of charter change, reiterated that he himself is against the term extension and proposals to postpone the 2010 elections.
“We will not extend her (President Arroyo) term. Period,” Nograles said.
Taking the cudgels for Mrs. Arroyo, Palawan Rep. Antonio Alvarez, chairman of the House Committee on Trade and Industry, said that the president will step down as mandated by law.
“I am against term extension for the President simply because she is against it. The President has become a collateral damage of this Charter change enterprise,” Alvarez said.
“She has neither given any order, direct or indirect, verbal or written, nor dropped a hint or a text message that she wants to stay in Malacañang any minute longer than what’s allowed by law,” Alvarez said.
“What they did to the impeachment case by using their numerical superiority, they will also do on the proposed extension of terms,” Pimentel added.
The minority leader said the administration game plan was pried open when it was discovered that the House committee on constitutional amendments had started discussion on a resolution, authored by Batangas Rep. Hermilando Mandanas, to extend the term of all elective public officials from June 30, 2010 to June 30, 2011.
But the principal objective of the administration, according to Pimentel is to adopt a parliamentary system of government where the constitutional ban against the reelection of the incumbent president will be rendered inoperative. This will enable Mrs. Arroyo to run for Member of Parliament in Pampanga and subsequently for prime minister.
At the same time, Pimentel disagreed on the suggestion of former University of the Philippines and l97l Constitutional Convention secretary general Jose Abueva to hold a Constitutional Convention and the election of its delegates in May, 2010 meaning simultaneously with the scheduled national and local elections.
Pimentel argued that it would be much better to convert Congress into a Constituent Assembly than to call a Con-Con because it is a faster and an inexpensive process.
Moreover, he said it is inadvisable to hold the election of Con Con delegates and national and local government officials at the same time because the public discussion of constitutional issues and specific amendments is likely to be overshadowed by partisan political issues during the election campaign.
“With the many problems she is facing, she certainly doesn’t need this aggravation. Sadly, here is the case of a clueless dorm mother getting the blame for the actions of her boarders. What’s certain is 17 months from now, she’ll do a (outgoing-US President George) Bush, and that is to welcome to Malacanang her successor to kick off an orderly transition.”
Another lawmaker, Cavite Rep. Elpidio Barzaga, said anti-Chacha efforts prevent an “honest-to-goodness” revisiting of the 1987 Constitution, which contains some provisions that are either no longer useful or needs improvement, especially those involving economic policies that is included in the proposals of Nograles.
“Speaker Nograles’s proposal covers only the liberalization of the restrictive economic provisions in order to make the country competitive with other countries in attracting foreign investments, most especially if we consider the current global economic crisis. And therefore the argument that it is intended to extend the term of GMA is certainly and totally misplaced,” Barzaga said.
Nograles had earlier filed House Resolution 737 which calls on the House and Senate to convene into a Constituent Assembly (Con-Ass) to amend the 1987 Constitution. Specifically, the resolution aims to amend only Sections 2 and 3, Article 12 of the 1987 Constitution to allow 100-percent foreign ownership of lands.
Marikina Rep. Marcelino Teodoro described the efforts of anti-Chacha forces as “ill-motivated” and only promotes divisiveness in the country.
“The term extension issue of anti-Charter change groups are but ill-motivated. To think that way is only promoting divisiveness in our country. The Philippine Constitution is a 20-year old manifesto and the present global economic turmoil necessitates major amendments with the economic policies implemented in the country,” he said.
He added: “The conditions of 1987 is no longer our current situation, and the laws of the land must adapt to these conditions. Employment opportunities for Filipinos are no longer limited locally but in a global scale due to the technological advances through the years.”
Senator Loren Legarda also urged the administration and its Congress allies to drop the move for charter change and instead focus on strengthening the economy through a “fiscal stimulus package” in the face of the global financial crisis shaking up the world.
“Instead of throwing away hundreds of millions of pesos to efforts to amend the Constitution, which may only be futile because of rejection by the majority of the people, our government should devise a financial stimulus to boost agricultural productivity and help small businessmen to survive from the financial crisis,” Loren declared.
Loren said that the holding of a constituent assembly or convention and later of a nationwide plebiscite to ratify the amendments “would cost hundreds of millions of pesos which should be better directed to the strengthening of the national economy to prevent mass layoffs as well as the further spread of hunger among our people.”
She noted that 40 percent of Filipinos have experienced chronic hunger as found by a recent opinion survey.
“The work required to draft amendments to the Constitution will also divert Congress from enacting urgent and relevant laws to bolster the economy. It is untimely, considering the global financial crisis, the worst since the Great Depression, that will also set back our economy. Already we are facing a marked slowdown in our economic growth, resulting in the further spread of poverty and hunger,” Loren said.
The lady senator, who is the new chair of the Senate Committee on Agriculture, declared that the money that would be used to effect charter change should be allocated instead to farmers and small and medium enterprises to increase agricultural productivity and prevent the folding up of small businesses.
“At present there is a deep dissatisfaction among our farmers because they are not getting enough financial and infrastructure support from the government while much is expected of them to improve productivity. They also strongly resent and deplore the diversion of P780 milllion intended for farm aid to other uses in 2004, allegedly for the benefit of administration politicians in the 2004 elections as shown by the fertilizer scam,” Loren pointed out. “Small businessmen feel neglected because the promised government aid to them still has to be delivered.”
Loren said that the money allocated for charter change could provide a core for a “fiscal stimulus package” to jump-start the economy and prevent a recession that is being experienced by the United States, Japan and Europe.
“Already our export products, like electronics, are in difficult straits because of lower demand from the US and Japan, which are our biggest export destinations,” Loren asserted. “We can help our export industries to modernize so they can become more competitive.”
Gerry Baldo, Pat C. Santos
Sunday, November 30, 2008
No news out of Afghanistan, just propaganda.
This is from wiredispatch.
The US is more and more taking command in Afghanistan. They will have difficulty recruiting troops from other countries to help them. They may have to buy some troops from East Europe or elsewhere.
""Washington is already scheduled to send another 3,000 troops to arrive in the country in January and is now considering sending 20,000 more troops in the next 12 to 18 months, further tipping the numerical balance among ISAF forces.
"What we are seeing is a gradual increase of American influence in all areas of the war," the NATO official said. "Seeking to gain total control of the information flow from the campaign is just part of that." (Editing by John Chalmers) ""
At least now the news situation is transparent. There will be no news just propaganda to further the war effort. No doubt news will still filter through.
Press, "Psy Ops" to merge at NATO Afghan HQ-sources
Jon HemmingReuters North American News Service
Nov 29, 2008 01:56 EST
KABUL, Nov 29 (Reuters) - The U.S. general commanding NATO forces in Afghanistan has ordered a merger of the office that releases news with "Psy Ops", which deals with propaganda, a move that goes against the alliance's policy, three officials said.
The move has worried Washington's European NATO allies -- Germany has already threatened to pull out of media operations in Afghanistan -- and the officials said it could undermine the credibility of information released to the public.
Seven years into the war against the Taliban, insurgent influence is spreading closer to the capital and Afghans are becoming increasingly disenchanted at the presence of some 65,000 foreign troops and the government of President Hamid Karzai.
Taliban militants, through their website, telephone text messages and frequent calls to reporters, are also gaining ground in the information war, analysts say.
U.S. General David McKiernan, the commander of 50,000 troops from more than 40 nations in NATO's International Security Assistance Force (ISAF), ordered the combination of the Public Affairs Office (PAO), Information Operations and Psy Ops (Psychological Operations) from Dec. 1, said a NATO official with detailed knowledge of the move.
"This will totally undermine the credibility of the information released to the press and the public," said the official, who declined to be named.
ISAF spokesman Brigadier General Richard Blanchette said McKiernan had issued a staff order to implement a command restructure from Dec. 1 which was being reviewed by NATO headquarters in Brussels, but he declined to go into details of the reorganisation.
"This is very much an internal matter," he said. "This is up with higher headquarters right now and we're waiting to get the basic approval. Once we have the approval we will be going into implementation."
But another ISAF official confirmed that the amalgamation of public affairs with Information Operations and Psy Ops was part of the planned command restructure. This official, who also declined to be named, said the merger had caused considerable concern at higher levels within NATO which had challenged the order by the U.S. general.
"DECEPTION ACTIVITIES"
NATO policy recognises there is an inherent clash of interests between its public affairs offices, whose job it is to issue press releases and answer media questions, and that of Information Operations and Psy Ops.
Information Operations advises on information designed to affect the will of the enemy, while Psy Ops includes so-called "black operations", or outright deception.
While Public Affairs and Information Operations, PA and Info Ops in military jargon, "are separate, but related functions", according to the official NATO policy document on public affairs, "PA is not an Info Ops discipline".
The new combined ISAF department will come under the command of an American one-star general reporting directly to McKiernan, an arrangement that is also against NATO policy, the NATO official said.
"While coordination is essential, the lines of authority will remain separate, the PA reporting directly to the commander. This is to maintain credibility of PA and to avoid creating a media or public perception that PA activities are coordinated by, or are directed by, Info Ops," the NATO policy document says.
"PA will have no role in planning or executing Info Ops, Psy Ops, or deception activities," it states.
The United States has 35,000 of the 65,000 foreign troops in Afghanistan, operating both under ISAF and a separate U.S.-led coalition operation, but both come under McKiernan's command.
Washington is already scheduled to send another 3,000 troops to arrive in the country in January and is now considering sending 20,000 more troops in the next 12 to 18 months, further tipping the numerical balance among ISAF forces.
"What we are seeing is a gradual increase of American influence in all areas of the war," the NATO official said. "Seeking to gain total control of the information flow from the campaign is just part of that." (Editing by John Chalmers)
Source: Reuters North American News Service
The US is more and more taking command in Afghanistan. They will have difficulty recruiting troops from other countries to help them. They may have to buy some troops from East Europe or elsewhere.
""Washington is already scheduled to send another 3,000 troops to arrive in the country in January and is now considering sending 20,000 more troops in the next 12 to 18 months, further tipping the numerical balance among ISAF forces.
"What we are seeing is a gradual increase of American influence in all areas of the war," the NATO official said. "Seeking to gain total control of the information flow from the campaign is just part of that." (Editing by John Chalmers) ""
At least now the news situation is transparent. There will be no news just propaganda to further the war effort. No doubt news will still filter through.
Press, "Psy Ops" to merge at NATO Afghan HQ-sources
Jon HemmingReuters North American News Service
Nov 29, 2008 01:56 EST
KABUL, Nov 29 (Reuters) - The U.S. general commanding NATO forces in Afghanistan has ordered a merger of the office that releases news with "Psy Ops", which deals with propaganda, a move that goes against the alliance's policy, three officials said.
The move has worried Washington's European NATO allies -- Germany has already threatened to pull out of media operations in Afghanistan -- and the officials said it could undermine the credibility of information released to the public.
Seven years into the war against the Taliban, insurgent influence is spreading closer to the capital and Afghans are becoming increasingly disenchanted at the presence of some 65,000 foreign troops and the government of President Hamid Karzai.
Taliban militants, through their website, telephone text messages and frequent calls to reporters, are also gaining ground in the information war, analysts say.
U.S. General David McKiernan, the commander of 50,000 troops from more than 40 nations in NATO's International Security Assistance Force (ISAF), ordered the combination of the Public Affairs Office (PAO), Information Operations and Psy Ops (Psychological Operations) from Dec. 1, said a NATO official with detailed knowledge of the move.
"This will totally undermine the credibility of the information released to the press and the public," said the official, who declined to be named.
ISAF spokesman Brigadier General Richard Blanchette said McKiernan had issued a staff order to implement a command restructure from Dec. 1 which was being reviewed by NATO headquarters in Brussels, but he declined to go into details of the reorganisation.
"This is very much an internal matter," he said. "This is up with higher headquarters right now and we're waiting to get the basic approval. Once we have the approval we will be going into implementation."
But another ISAF official confirmed that the amalgamation of public affairs with Information Operations and Psy Ops was part of the planned command restructure. This official, who also declined to be named, said the merger had caused considerable concern at higher levels within NATO which had challenged the order by the U.S. general.
"DECEPTION ACTIVITIES"
NATO policy recognises there is an inherent clash of interests between its public affairs offices, whose job it is to issue press releases and answer media questions, and that of Information Operations and Psy Ops.
Information Operations advises on information designed to affect the will of the enemy, while Psy Ops includes so-called "black operations", or outright deception.
While Public Affairs and Information Operations, PA and Info Ops in military jargon, "are separate, but related functions", according to the official NATO policy document on public affairs, "PA is not an Info Ops discipline".
The new combined ISAF department will come under the command of an American one-star general reporting directly to McKiernan, an arrangement that is also against NATO policy, the NATO official said.
"While coordination is essential, the lines of authority will remain separate, the PA reporting directly to the commander. This is to maintain credibility of PA and to avoid creating a media or public perception that PA activities are coordinated by, or are directed by, Info Ops," the NATO policy document says.
"PA will have no role in planning or executing Info Ops, Psy Ops, or deception activities," it states.
The United States has 35,000 of the 65,000 foreign troops in Afghanistan, operating both under ISAF and a separate U.S.-led coalition operation, but both come under McKiernan's command.
Washington is already scheduled to send another 3,000 troops to arrive in the country in January and is now considering sending 20,000 more troops in the next 12 to 18 months, further tipping the numerical balance among ISAF forces.
"What we are seeing is a gradual increase of American influence in all areas of the war," the NATO official said. "Seeking to gain total control of the information flow from the campaign is just part of that." (Editing by John Chalmers)
Source: Reuters North American News Service
Saturday, November 29, 2008
Obama's one trick Wizards.
Failed financiers run the Obama transition team the article notes. Of course they have not failed, in that they are still in control. It is Obama who has failed to bring in change or anyone really outside the elite that caused the mess the US is in. Of course these people are smart enough to know that they must change their tune and there may even be some mildly progressive aspects to the stimulus but the same people are in control and they will do what is in their interests. There will be some collateral crumbs for the people.
Obama's one-trick wizards
By Spengler
One wants to ask the Wall Street wizards who comprise the talent pool for the incoming administration, "If you so smart, how come you ain't rich no more?" Manhattan's toniest private schools, harder to get into than Harvard, quietly are looking for full-tuition pupils now that the children of sacked Wall Street bankers are departing for public schools in cheaper suburbs. Harvard University president Drew Faust has warned of budget cuts to come due to "unprecedented losses" to its US$39 billion endowment. Shares of Citibank
, the current firm of Bill Clinton's treasury secretary Robert Rubin, last week traded at less than a tenth of their year-earlier market price and may require yet another federal bailout. [Citigroup will have more than $300 billion of troubled mortgages and other assets guaranteed by the US government under a federal plan to stabilize the lender after its stock fell 60% last week, Bloomberg reported today, November 24. Citigroup also will get a $20 billion cash infusion from the Treasury Department, adding to the $25 billion the bank received last month under the Troubled Asset Relief Program. In return for the cash and guarantees, the government will get $27 billion of preferred shares paying an 8% dividend.] Rubin, a transition advisor to president-elect Barack Obama, was mentor to Treasury secretary designate Timothy Geithner. Even Goldman Sachs, the thoroughbred trading machine that gave us Treasury Secretary Hank Paulson as well as Rubin, is trading at a fifth of its peak value. These facts came to mind while reading David Brooks' November 21 New York Times panegyric to Obama's prospective cabinet, which gushes, "Its members are twice as smart as the poor reporters who have to cover them, three times if you include the columnists." Brooks added, "... as much as I want to resent these overeducated Achievatrons ... I find myself tremendously impressed by the Obama transition." Has Brooks checked the markets? The cleverest people in the United States, the Ivy-pedigreed investment bankers, have fouled their own nests as well as their own net worth, and persuaded the taxpayers to bail them out. If these are the best and the brightest of 2008, America is in very deep trouble. The one-trick wizards of Wall Street had one idea, which was to ride the trend and pile on as much leverage as credulous investors and crony regulators would allow. It has gone pear-shaped, and those who didn't cash out early along with the cynics are poor. Fortunately for them, Obama will let them play with the budget of the US federal government for the next four years. Failed financiers run the Obama transition team. It used to be that the heads of great industrial companies got the top Cabinet posts. Now it is the one-trick wizards. After George W Bush fired former Treasury Secretary Paul O'Neill, who had run Alcoa, the last survivor of the species was Vice President Dick Cheney, the former CEO of Halliburton. Obama's bevy of talent comes from finance. American industrialists have become figures of ridicule, like the pathetic chief executive of General Motors, Rick Wagoner, begging for a government loan. Stocks rallied on November 22 on reports that Obama would give the Treasury post to Geithner, the New York Federal Reserve Bank president and the architect of the biggest bailout in history. He doubled the size of the Federal Reserve's balance sheet to more than $2 trillion, through the purchase of such risky assets as the commercial paper of near-bankrupt American auto companies. That is in addition to the Treasury's $700 billion bailout plan. Investors like the idea of trillion-dollar transfers from public funds to private companies. Former Treasury secretary Rubin "was an architect of the [Citibank's] strategy," the New York Times reported on November 23. "In 2005, as Citigroup began its effort to expand from within, Mr Rubin peppered his colleagues with questions as they formulated the plan. According to current and former colleagues, he believed that Citigroup was falling behind rivals like Morgan Stanley and Goldman, and he pushed to bulk up the bank's high-growth fixed-income trading, including the [structured credit] business. Former colleagues said Mr Rubin also encouraged [former Citibank CEO Charles] Prince to broaden the bank's appetite for risk, provided that it also upgraded oversight - though the Federal Reserve later would conclude that the bank's oversight remained inadequate." A case in point is the reported implosion of the Harvard and Yale endowments. For years, these giant funds were held up as proof that superior intelligence was the ticket to excess returns. During the 10 years through 2007, Harvard and Yale produced compound annual returns of 15% and 17.8% respectively, far better than the market, the average endowment or the average hedge funds - only to blow up in 2008 by frightful proportions not yet released. According to a recent study [1], the "super endowments" sailed past their peers by loading up real estate, commodities, and "private equity", precisely the sectors that underwent necrosis this year. Private equity is the subprime version of corporate finance, acquiring non-public companies with a minimum down payment and the maximum of debt. David Swenson, the legendary manager of the Yale Endowment, learned one trick: buy on dips in the equity market with all the borrowed money he could get. The alumni network on Wall Street made sure that the university endowments were first in line for the hottest deals. That worked until 2008. We do not know how far the private equity holdings of Harvard and Yale have fallen, but the traded equity price of the Blackstone Group, a leading private equity firm, is a fair gauge. It is down from its $35 initial offering last year to only $4.65 today, a drop of 87%. Commodities, meanwhile, have fallen by half. For a quarter of a century, the inbred products of the Ivy League puppy mills have known nothing but a rising trend in asset prices. About the origin of this trend, they were incurious. The Reagan administration had encountered a stock market in 1981 trading 50% below its the long-term trend. Reagan restored the equity market to trend by cutting taxes, suppressing inflation and easing some regulations. The private equity sharps were fleas traveling on Reagan's dog. They simply rode the trend with the maximum of leverage. Now that the stock market has collapsed, the private equity strategies cannot repay their debt, and their returns have evaporated. Note that equity investors spent a decade in the cold, from 1973 to 1983; it may be even worse this time. The maturities on debt issued to finance private equity deals will come due long before the recovery. Over the long term, we know that the average investment cannot grow faster than the economy, for investments ultimately are valued according to cash flows, and cash flows stem from economic growth. Real American gross domestic product grew by 2% a year on average between 1929 and 2007. Whence came the enormous returns to the Ivy League? Some of them surely came from betting on the right horses, but most came from privileged access to leverage. One recalls Ferdinand I of Austria (1793-1875), deposed for incompetence after the 1848 Revolution, who apocryphally shot an eagle, and said: "It's got to be an eagle, but it's only got one head!" Ferdinand thought the two-headed bird of his family crest was the norm, just as the pink-shirted, suspender-wearing Ivy Leaguers thought that two-digit returns were the norm for their investments. The same privileged access to leverage allowed the investment banks to produce return on equity in excess of 20% year in, year out, by selling structured products, as I explained in a recent essay (Lehman and the end of the era of leverage, Asia Times Online, September 16, 2008). For the 10 years through 2007, American homeowners joined the party, with returns in excess of 20% of their home equity (10% home price appreciation more than doubles with leverage). Investment banks were levered long the leverage, so to speak. The more leverage the world demanded, the more Wall Street could charge for ever-more-arcane methods of packaging leverage, and the higher the returns to leverage providers. That explains how a Washington political operative like Rahm Emanuel, now Obama's chief of staff, who studied ballet rather than balance sheets, could earn a reported $16.2 million in two-and-a-half years at Wasserstein Perella, the mergers and acquisitions boutique. At the height of the bubble, Bruce Wasserstein's firm sold out to Germany's Dresdner Bank for the fairy-tale sum of $1.6 billion. Even the crumbs from Wasserstein's loaf could make a Chicago politician rich. Without leverage, the clever folk around Barack Obama are fleas without a dog. None of them invented anything, introduced an important new product, opened a new market, or did anything that reached into the lives of ordinary people. They wore expensive cufflinks, read balance sheets, exercised regularly, sat on philanthropic boards, and assumed that their flea's ride on the Reagan dog would last forever. All they knew was leverage, and now that the world is de-levering, they are trying to put leverage back into the system. One almost can hear Mortimer Duke, Don Ameche's charcter in Trading Places, shouting, "Now, you listen to me! I want trading reopened right now. Get those brokers back in here! Turn those machines back on!" Of course, nothing excludes the possibility that Obama's team will come up with something constructive. But there is no reason to expect a drastic change from the crisis response of the same sort of people (starting with Treasury Secretary Paulson) in the Bush administration. They will bail out incompetent, failing firms and drop money from helicopters and call it a stimulus package. And it will turn out no better than it did for the humiliated Republicans.
Obama's one-trick wizards
By Spengler
One wants to ask the Wall Street wizards who comprise the talent pool for the incoming administration, "If you so smart, how come you ain't rich no more?" Manhattan's toniest private schools, harder to get into than Harvard, quietly are looking for full-tuition pupils now that the children of sacked Wall Street bankers are departing for public schools in cheaper suburbs. Harvard University president Drew Faust has warned of budget cuts to come due to "unprecedented losses" to its US$39 billion endowment. Shares of Citibank
, the current firm of Bill Clinton's treasury secretary Robert Rubin, last week traded at less than a tenth of their year-earlier market price and may require yet another federal bailout. [Citigroup will have more than $300 billion of troubled mortgages and other assets guaranteed by the US government under a federal plan to stabilize the lender after its stock fell 60% last week, Bloomberg reported today, November 24. Citigroup also will get a $20 billion cash infusion from the Treasury Department, adding to the $25 billion the bank received last month under the Troubled Asset Relief Program. In return for the cash and guarantees, the government will get $27 billion of preferred shares paying an 8% dividend.] Rubin, a transition advisor to president-elect Barack Obama, was mentor to Treasury secretary designate Timothy Geithner. Even Goldman Sachs, the thoroughbred trading machine that gave us Treasury Secretary Hank Paulson as well as Rubin, is trading at a fifth of its peak value. These facts came to mind while reading David Brooks' November 21 New York Times panegyric to Obama's prospective cabinet, which gushes, "Its members are twice as smart as the poor reporters who have to cover them, three times if you include the columnists." Brooks added, "... as much as I want to resent these overeducated Achievatrons ... I find myself tremendously impressed by the Obama transition." Has Brooks checked the markets? The cleverest people in the United States, the Ivy-pedigreed investment bankers, have fouled their own nests as well as their own net worth, and persuaded the taxpayers to bail them out. If these are the best and the brightest of 2008, America is in very deep trouble. The one-trick wizards of Wall Street had one idea, which was to ride the trend and pile on as much leverage as credulous investors and crony regulators would allow. It has gone pear-shaped, and those who didn't cash out early along with the cynics are poor. Fortunately for them, Obama will let them play with the budget of the US federal government for the next four years. Failed financiers run the Obama transition team. It used to be that the heads of great industrial companies got the top Cabinet posts. Now it is the one-trick wizards. After George W Bush fired former Treasury Secretary Paul O'Neill, who had run Alcoa, the last survivor of the species was Vice President Dick Cheney, the former CEO of Halliburton. Obama's bevy of talent comes from finance. American industrialists have become figures of ridicule, like the pathetic chief executive of General Motors, Rick Wagoner, begging for a government loan. Stocks rallied on November 22 on reports that Obama would give the Treasury post to Geithner, the New York Federal Reserve Bank president and the architect of the biggest bailout in history. He doubled the size of the Federal Reserve's balance sheet to more than $2 trillion, through the purchase of such risky assets as the commercial paper of near-bankrupt American auto companies. That is in addition to the Treasury's $700 billion bailout plan. Investors like the idea of trillion-dollar transfers from public funds to private companies. Former Treasury secretary Rubin "was an architect of the [Citibank's] strategy," the New York Times reported on November 23. "In 2005, as Citigroup began its effort to expand from within, Mr Rubin peppered his colleagues with questions as they formulated the plan. According to current and former colleagues, he believed that Citigroup was falling behind rivals like Morgan Stanley and Goldman, and he pushed to bulk up the bank's high-growth fixed-income trading, including the [structured credit] business. Former colleagues said Mr Rubin also encouraged [former Citibank CEO Charles] Prince to broaden the bank's appetite for risk, provided that it also upgraded oversight - though the Federal Reserve later would conclude that the bank's oversight remained inadequate." A case in point is the reported implosion of the Harvard and Yale endowments. For years, these giant funds were held up as proof that superior intelligence was the ticket to excess returns. During the 10 years through 2007, Harvard and Yale produced compound annual returns of 15% and 17.8% respectively, far better than the market, the average endowment or the average hedge funds - only to blow up in 2008 by frightful proportions not yet released. According to a recent study [1], the "super endowments" sailed past their peers by loading up real estate, commodities, and "private equity", precisely the sectors that underwent necrosis this year. Private equity is the subprime version of corporate finance, acquiring non-public companies with a minimum down payment and the maximum of debt. David Swenson, the legendary manager of the Yale Endowment, learned one trick: buy on dips in the equity market with all the borrowed money he could get. The alumni network on Wall Street made sure that the university endowments were first in line for the hottest deals. That worked until 2008. We do not know how far the private equity holdings of Harvard and Yale have fallen, but the traded equity price of the Blackstone Group, a leading private equity firm, is a fair gauge. It is down from its $35 initial offering last year to only $4.65 today, a drop of 87%. Commodities, meanwhile, have fallen by half. For a quarter of a century, the inbred products of the Ivy League puppy mills have known nothing but a rising trend in asset prices. About the origin of this trend, they were incurious. The Reagan administration had encountered a stock market in 1981 trading 50% below its the long-term trend. Reagan restored the equity market to trend by cutting taxes, suppressing inflation and easing some regulations. The private equity sharps were fleas traveling on Reagan's dog. They simply rode the trend with the maximum of leverage. Now that the stock market has collapsed, the private equity strategies cannot repay their debt, and their returns have evaporated. Note that equity investors spent a decade in the cold, from 1973 to 1983; it may be even worse this time. The maturities on debt issued to finance private equity deals will come due long before the recovery. Over the long term, we know that the average investment cannot grow faster than the economy, for investments ultimately are valued according to cash flows, and cash flows stem from economic growth. Real American gross domestic product grew by 2% a year on average between 1929 and 2007. Whence came the enormous returns to the Ivy League? Some of them surely came from betting on the right horses, but most came from privileged access to leverage. One recalls Ferdinand I of Austria (1793-1875), deposed for incompetence after the 1848 Revolution, who apocryphally shot an eagle, and said: "It's got to be an eagle, but it's only got one head!" Ferdinand thought the two-headed bird of his family crest was the norm, just as the pink-shirted, suspender-wearing Ivy Leaguers thought that two-digit returns were the norm for their investments. The same privileged access to leverage allowed the investment banks to produce return on equity in excess of 20% year in, year out, by selling structured products, as I explained in a recent essay (Lehman and the end of the era of leverage, Asia Times Online, September 16, 2008). For the 10 years through 2007, American homeowners joined the party, with returns in excess of 20% of their home equity (10% home price appreciation more than doubles with leverage). Investment banks were levered long the leverage, so to speak. The more leverage the world demanded, the more Wall Street could charge for ever-more-arcane methods of packaging leverage, and the higher the returns to leverage providers. That explains how a Washington political operative like Rahm Emanuel, now Obama's chief of staff, who studied ballet rather than balance sheets, could earn a reported $16.2 million in two-and-a-half years at Wasserstein Perella, the mergers and acquisitions boutique. At the height of the bubble, Bruce Wasserstein's firm sold out to Germany's Dresdner Bank for the fairy-tale sum of $1.6 billion. Even the crumbs from Wasserstein's loaf could make a Chicago politician rich. Without leverage, the clever folk around Barack Obama are fleas without a dog. None of them invented anything, introduced an important new product, opened a new market, or did anything that reached into the lives of ordinary people. They wore expensive cufflinks, read balance sheets, exercised regularly, sat on philanthropic boards, and assumed that their flea's ride on the Reagan dog would last forever. All they knew was leverage, and now that the world is de-levering, they are trying to put leverage back into the system. One almost can hear Mortimer Duke, Don Ameche's charcter in Trading Places, shouting, "Now, you listen to me! I want trading reopened right now. Get those brokers back in here! Turn those machines back on!" Of course, nothing excludes the possibility that Obama's team will come up with something constructive. But there is no reason to expect a drastic change from the crisis response of the same sort of people (starting with Treasury Secretary Paulson) in the Bush administration. They will bail out incompetent, failing firms and drop money from helicopters and call it a stimulus package. And it will turn out no better than it did for the humiliated Republicans.
Still opposition to SOFA agreement
This is from Juancole.
Even though there is still opposition to the SOFA there does not seem to be any increase in insurgency even the Sadr group. It remains to be seen how things will work out in practice. The Iraqi's still have little jurisdiction over troops or contractors when they commit crimes while on duty. I understood that the Iraqis did have the power to open mail but perhaps not.
Al-Hayat reports in Arabic that controversy continues to rage around the security pact, dividing communities against one another. The Association of Muslim Scholars condemned the Iraqi Islamic Party and other Sunni Arab parties for "selling Iraq" with their votes in its favor. Muqtada al-Sadr announced three days of mourning in protest against its enactment, but he did not order his supporters to engage in confrontation to overturn it, "in order to safeguard the unity of the country. One of the aides to Grand Ayatollah Ali Sistani called it a "diminution" of Iraq's sovereignty.Muqtada asked his followers to mourn formally in mosques for three days, and to hold wakes (for all the world as though someone had died in the family). Muqtada all by himself will leave behind enough material to keep symbolic anthropologists busy for centuries. He sent out a statement expressing his "condolences" to Iraqis at this calamity, an agreement of abasement and humiliation. Hundreds of Sadrists managed to demonstrate after Friday prayers, despite strict security, and to burn American flags.In Karbala, an aide to Sistani, Sheikh Ahmad al-Safi, said he had two concerns. First, would the Iraqi government actually exercise sovereignty to the degree stipulated in the agreement? And, second, he regretted the lack of any guarantee that Iraq would be removed from Chapter 7 of the UN Charter (and thus regain its independence from the UNSC). He pointed out that as long as US troops were on Iraqi soil, the government in Baghdad would not be truly sovereign, since it could not inspect the mail of American residents of Iraq, and US troops retained freedom of movement. Ayatollah Muhammad al-Ya`qubi expressed his "disappointment" that the pact was enacted. (He is the spiritual leader of the Islamic Virtue Party or Fadhila, which is strong in Basra).The Bush administration finally released the official English text on Friday. Some parliamentarians have expressed fears that it is not exactly the same as the Arabic text.
Even though there is still opposition to the SOFA there does not seem to be any increase in insurgency even the Sadr group. It remains to be seen how things will work out in practice. The Iraqi's still have little jurisdiction over troops or contractors when they commit crimes while on duty. I understood that the Iraqis did have the power to open mail but perhaps not.
Al-Hayat reports in Arabic that controversy continues to rage around the security pact, dividing communities against one another. The Association of Muslim Scholars condemned the Iraqi Islamic Party and other Sunni Arab parties for "selling Iraq" with their votes in its favor. Muqtada al-Sadr announced three days of mourning in protest against its enactment, but he did not order his supporters to engage in confrontation to overturn it, "in order to safeguard the unity of the country. One of the aides to Grand Ayatollah Ali Sistani called it a "diminution" of Iraq's sovereignty.Muqtada asked his followers to mourn formally in mosques for three days, and to hold wakes (for all the world as though someone had died in the family). Muqtada all by himself will leave behind enough material to keep symbolic anthropologists busy for centuries. He sent out a statement expressing his "condolences" to Iraqis at this calamity, an agreement of abasement and humiliation. Hundreds of Sadrists managed to demonstrate after Friday prayers, despite strict security, and to burn American flags.In Karbala, an aide to Sistani, Sheikh Ahmad al-Safi, said he had two concerns. First, would the Iraqi government actually exercise sovereignty to the degree stipulated in the agreement? And, second, he regretted the lack of any guarantee that Iraq would be removed from Chapter 7 of the UN Charter (and thus regain its independence from the UNSC). He pointed out that as long as US troops were on Iraqi soil, the government in Baghdad would not be truly sovereign, since it could not inspect the mail of American residents of Iraq, and US troops retained freedom of movement. Ayatollah Muhammad al-Ya`qubi expressed his "disappointment" that the pact was enacted. (He is the spiritual leader of the Islamic Virtue Party or Fadhila, which is strong in Basra).The Bush administration finally released the official English text on Friday. Some parliamentarians have expressed fears that it is not exactly the same as the Arabic text.
Philippines: Catholic bishops lead march calling on people to oust Arroyo.
This is from the Tribune (Manila)
The Pope's demand that clerics keep out of politics seems to have fallen on deaf ears in the Philippines. Many of the country's clerics take the view that they are responsible to their flock to see that they are treated better by the government and not just exploited. They fight for their interests to gain the respect of their charges.
Many clerics are particularly upset that Arroyo is trying to push through constitutional change to keep herself in power. Of course they are also upset by the pervasive corruption that they see within the Arroyo administration. Many clerics have been at the forefront of people power uprisings in the Philippines before.
It is doubtful that the clerics will actually be charged with sedition although calling for an uprising to remove Arroyo does seem a bit provocative! To charge the clerics with sedition would be likely to destabilise the situation even more and make them all heroes.
Bishops-led march on to oust Arroyo
By Riza Recio and Pat C. Santos
11/30/2008
Tagged as “pied pipers” by Malacañang, Catholic bishops who called for an uprising to remove President Arroyo from power said they are keen to continue their campaign, adding they will not be deterred by Justice Secretary Raul Gonzalez’s threat of sedition charges when they lead today a people’s protest in Caloocan City.
The mass action today, to be led by Novaliches Bishop Antonio Tobias, Caloocan Bishop Deogracias Iñiguez, the Kilusang Makabansang Ekonomiya (KME) and participated in by labor and cause-oriented groups, will primarily call for the public to block efforts of Mrs. Arroyo’s allies in the House of Representatives to amend the Constitution.
The revived Charter change (Cha-cha) attempt is being billed by the Palace and Mrs. Arroyo’s House allies as a measure to amend economic provisions in the Constitution but it is widely seen as an effort to further extend the term of Mrs. Arroyo which will end in 2010.
The bishops said they are unfazed by Gonzalez’s threats to file sedition charges against them.
Tobias and Iñiguez yesterday said they are open to “extra-legal” means to oust Mrs.Arroyo.
“We are already used to the threat of the old secretary of injustice. We will just wait what he will do,” said Tobias.
The 67-year-old bishop also warned Malacañang allies in Congress over their aggressiveness to push Charter Change, saying that it could fuel fury among the public.
In Thursday’s press conference, he said the moves for constitutional amendments despite the lack of public support just show the “real color of the administration.”
Invoking a Biblical passage that supposedly orders people “to fear and honor duly constituted authorities” Malacañang said the bishops are making “reckless and irresponsible” acts.
Deputy presidential spokesman Anthony Golez Jr. called Iñiguez and Tobias “pied pipers” for what he called as their acts on influencing the public to sympathize with them in searching for extra-legal means to oust Mrs. Arroyo.
Golez said the two bishops violated Biblical teachings in particular the Book of Romans Chapter 13 which supposedly told the faithful “to fear and honor the duly-constituted authority”.
“It is foremost that all bishops who are encouraging our people to resort to extra-constitutional means can be likened to the pied piper blowing their flute to innocent children and leading them to drown in the river” said Golez.
The Pied Piper is a mythical character who supposedly led hundreds of children to drown to retaliate against townsfolk who withheld payments for his previous service of ending a rat infestation.
Tobias said that the whole Catholic Church is heading for a consensus in calling for the ouster of Mrs. Arroyo.
“Masyado ng garapal kaya papunta na diyan. Papunta na diyan na magkakasama-sama kami (Their brazenness have become too much. We are all heading in one direction),” Tobias said.
Manila Archbishop Gaudencio Cardinal Rosales told an assembly at St. Paul’s College in Manila that “self-serving public servants exploit the ignorant poor.”
“The worst possible scenario is where people approach the poor not to help but to take advantage of them,” Rosales added.
There are more bishops now (who are joining the call for Mrs. Arroyo to step down). I’m very sure the initial five (who called for a new government) and the others like us are growing,” Tobias furthered.
Such was the case, he added, during the Martial Law years, when the religious leaders in the Philippines all expressed opposition to the continued stay of then-president Ferdinand Marcos.
Last month, Lagdameo along with Lingayen-Dagupan Archbishop Oscar Cruz, Masbate Bishop Joel Baylon, Balanga Bishop Socrates Villegas and Legazpi Bishop emeritus Jose Sorra, called on the public to start preparing for a new government to remove the present one that is riddled with massive corruption.
Some bishops, who are known to be friendly with Malacañang, however, tried to downplay the statement of the five bishops saying this does not represent the CBCP as a body.
Golez said the Palace had no plans on what measures to implement when the bishops lead today’s mass action.
It would depend on the action that the Department of Justice would be implementing related to this recent development, Golez said.
Gonzalez had said the DoJ would be monitoring any clear violation of the Revised Penal Code pertaining to rebellion and inciting to sedition of the rallyists.
Golez added with the country reeling from the current global crisis, the people would be unlikely to support any destabilization effort.
Malacañang, however, ordered police forces to exercise maximum tolerance on today’s mass actions.
In preparation for the mass protest, the Armed Forces of the Philippines and the National Capital Region Police Office will be on full alert tomorrow, according to the Palace.
AFP spokesperson Leopoldo Batawil said the armed forces has been coordinating with the AFP National Capital Region Command and the Region IV-A and Region III in order to ensure peace and order during today’s protest action.
The AFP has called on the protesters to stage rallies within the designated freedom parks and to ensure banning of bringing guns among rallyists.
The rallyists are also expected to protest the rushed junking of the impeachment case against Mrs. Arroyo, the fourth in so many years.
The impeachment bid was junked by the House committee on justice after two days of deliberations ruling that it was insufficient in substance. The impeachment case will be debated in the plenary tomorrow.
Gabriela Women’s Party Representative Liza Maza Saturday scored Justice Secretary Raul Gonzales for threatening two Catholic Bishops on “inciting to rebellion” cases for their critical stand against the Arroyo administration.
“It is so unbecoming of Gonzales to utter such statements. He should learn to respect the viewpoints of people who chose not to be gagged and fooled by the Arroyo administration,” said Maza.
“The Bishops’ call is valid and in no way impedes the constitutional right of anyone; rather it is a solid exercise of our basic right for expression and redress and to demand for accountability from our public officials, more so from the highest position in the country.”
“It appears that the allies of the Arroyo administration are guilty of hiding the truth, They might have killed the impeachment complaint but they will never succeed in thwarting our civil liberties,” she added.
The Gabriela solon further encouraged the people to be more vigilant against all the schemes of the Arroyo administration now that its “Charter Change express” had been exposed.
“It is high time for us Filipinos to unite against the evils in Malacañang. We can never allow the culture of greed, violence, and corruption to thrive further and consequently poison the minds of our children.” Charlie V. Manalo
The Pope's demand that clerics keep out of politics seems to have fallen on deaf ears in the Philippines. Many of the country's clerics take the view that they are responsible to their flock to see that they are treated better by the government and not just exploited. They fight for their interests to gain the respect of their charges.
Many clerics are particularly upset that Arroyo is trying to push through constitutional change to keep herself in power. Of course they are also upset by the pervasive corruption that they see within the Arroyo administration. Many clerics have been at the forefront of people power uprisings in the Philippines before.
It is doubtful that the clerics will actually be charged with sedition although calling for an uprising to remove Arroyo does seem a bit provocative! To charge the clerics with sedition would be likely to destabilise the situation even more and make them all heroes.
Bishops-led march on to oust Arroyo
By Riza Recio and Pat C. Santos
11/30/2008
Tagged as “pied pipers” by Malacañang, Catholic bishops who called for an uprising to remove President Arroyo from power said they are keen to continue their campaign, adding they will not be deterred by Justice Secretary Raul Gonzalez’s threat of sedition charges when they lead today a people’s protest in Caloocan City.
The mass action today, to be led by Novaliches Bishop Antonio Tobias, Caloocan Bishop Deogracias Iñiguez, the Kilusang Makabansang Ekonomiya (KME) and participated in by labor and cause-oriented groups, will primarily call for the public to block efforts of Mrs. Arroyo’s allies in the House of Representatives to amend the Constitution.
The revived Charter change (Cha-cha) attempt is being billed by the Palace and Mrs. Arroyo’s House allies as a measure to amend economic provisions in the Constitution but it is widely seen as an effort to further extend the term of Mrs. Arroyo which will end in 2010.
The bishops said they are unfazed by Gonzalez’s threats to file sedition charges against them.
Tobias and Iñiguez yesterday said they are open to “extra-legal” means to oust Mrs.Arroyo.
“We are already used to the threat of the old secretary of injustice. We will just wait what he will do,” said Tobias.
The 67-year-old bishop also warned Malacañang allies in Congress over their aggressiveness to push Charter Change, saying that it could fuel fury among the public.
In Thursday’s press conference, he said the moves for constitutional amendments despite the lack of public support just show the “real color of the administration.”
Invoking a Biblical passage that supposedly orders people “to fear and honor duly constituted authorities” Malacañang said the bishops are making “reckless and irresponsible” acts.
Deputy presidential spokesman Anthony Golez Jr. called Iñiguez and Tobias “pied pipers” for what he called as their acts on influencing the public to sympathize with them in searching for extra-legal means to oust Mrs. Arroyo.
Golez said the two bishops violated Biblical teachings in particular the Book of Romans Chapter 13 which supposedly told the faithful “to fear and honor the duly-constituted authority”.
“It is foremost that all bishops who are encouraging our people to resort to extra-constitutional means can be likened to the pied piper blowing their flute to innocent children and leading them to drown in the river” said Golez.
The Pied Piper is a mythical character who supposedly led hundreds of children to drown to retaliate against townsfolk who withheld payments for his previous service of ending a rat infestation.
Tobias said that the whole Catholic Church is heading for a consensus in calling for the ouster of Mrs. Arroyo.
“Masyado ng garapal kaya papunta na diyan. Papunta na diyan na magkakasama-sama kami (Their brazenness have become too much. We are all heading in one direction),” Tobias said.
Manila Archbishop Gaudencio Cardinal Rosales told an assembly at St. Paul’s College in Manila that “self-serving public servants exploit the ignorant poor.”
“The worst possible scenario is where people approach the poor not to help but to take advantage of them,” Rosales added.
There are more bishops now (who are joining the call for Mrs. Arroyo to step down). I’m very sure the initial five (who called for a new government) and the others like us are growing,” Tobias furthered.
Such was the case, he added, during the Martial Law years, when the religious leaders in the Philippines all expressed opposition to the continued stay of then-president Ferdinand Marcos.
Last month, Lagdameo along with Lingayen-Dagupan Archbishop Oscar Cruz, Masbate Bishop Joel Baylon, Balanga Bishop Socrates Villegas and Legazpi Bishop emeritus Jose Sorra, called on the public to start preparing for a new government to remove the present one that is riddled with massive corruption.
Some bishops, who are known to be friendly with Malacañang, however, tried to downplay the statement of the five bishops saying this does not represent the CBCP as a body.
Golez said the Palace had no plans on what measures to implement when the bishops lead today’s mass action.
It would depend on the action that the Department of Justice would be implementing related to this recent development, Golez said.
Gonzalez had said the DoJ would be monitoring any clear violation of the Revised Penal Code pertaining to rebellion and inciting to sedition of the rallyists.
Golez added with the country reeling from the current global crisis, the people would be unlikely to support any destabilization effort.
Malacañang, however, ordered police forces to exercise maximum tolerance on today’s mass actions.
In preparation for the mass protest, the Armed Forces of the Philippines and the National Capital Region Police Office will be on full alert tomorrow, according to the Palace.
AFP spokesperson Leopoldo Batawil said the armed forces has been coordinating with the AFP National Capital Region Command and the Region IV-A and Region III in order to ensure peace and order during today’s protest action.
The AFP has called on the protesters to stage rallies within the designated freedom parks and to ensure banning of bringing guns among rallyists.
The rallyists are also expected to protest the rushed junking of the impeachment case against Mrs. Arroyo, the fourth in so many years.
The impeachment bid was junked by the House committee on justice after two days of deliberations ruling that it was insufficient in substance. The impeachment case will be debated in the plenary tomorrow.
Gabriela Women’s Party Representative Liza Maza Saturday scored Justice Secretary Raul Gonzales for threatening two Catholic Bishops on “inciting to rebellion” cases for their critical stand against the Arroyo administration.
“It is so unbecoming of Gonzales to utter such statements. He should learn to respect the viewpoints of people who chose not to be gagged and fooled by the Arroyo administration,” said Maza.
“The Bishops’ call is valid and in no way impedes the constitutional right of anyone; rather it is a solid exercise of our basic right for expression and redress and to demand for accountability from our public officials, more so from the highest position in the country.”
“It appears that the allies of the Arroyo administration are guilty of hiding the truth, They might have killed the impeachment complaint but they will never succeed in thwarting our civil liberties,” she added.
The Gabriela solon further encouraged the people to be more vigilant against all the schemes of the Arroyo administration now that its “Charter Change express” had been exposed.
“It is high time for us Filipinos to unite against the evils in Malacañang. We can never allow the culture of greed, violence, and corruption to thrive further and consequently poison the minds of our children.” Charlie V. Manalo
Venezuela: After the regional elections
This is from links.org.
This is an analysis of the results from a socialist perspective. Those supporting Chavez are it would seem a motley crew. As this critique shows some of the losses of the Chavez group were due to the poor quality of the candidates. As in most movements that have an electoral aspect there is always the problem of mobilising the grass roots to create genuine social change rather than simply electing some champion of the people and then the people are left on the sidelines.
I gather that there is considerable corruption withing Venezuelan politics and that this is a problem within the Chavistas as well as the opposition groups.
Venezuela: After the regional elections, the workers propose a clean out and more revolution
Stalin Perez Borges
By Stalin Perez Borges, translated by Kiraz Janicke and Federico Fuentes for Links International Journal of Socialist Renewal
November 25, 2008 -- I want to give some preliminary and personal impressions, in the heat of the moment, where many comrades are very preoccupied by the significance of the [Chavista movement’s] loss of the Mayor of Greater Caracas and of some important or key governorships in the country.
It’s time to calm down and sit down together in order to evaluate in depth with the comrades. There are various points that we should analyse in order to draw conclusions that truly reflect reality. It is necessary to open a profound debate within the party [United Socialist Party of Venezuela – PSUV], to reflect and proceed with self-criticism, as President Chavez indicated on Sunday night.
First, I think it is necessary to stress the increase of votes for Chavismo across the entire country compared to last December 2 [the constitutional reform referendum]. At the same time the opposition has demonstrated once again that there is a ceiling of votes that it cannot overcome, even if abstention levels are much lower. Nevertheless, it managed to reach a level of support that allowed it to obtain political victories in important cities.
Second, I think it is necessary to stress that having gone into these elections divided in many states, as is the case of Carabobo, the candidates of Chavez carried out a very good election campaign although some of them did not win.
Third, I think that the warning that we gave from Marea Socialista [Socialist Tide] about some of the candidates, and above all the indication that they are leaders that express something that the revolutionary people profoundly reject, such as is the case of the endogenous right-wing, had a very important weight in fundamental districts such as the governorship of Miranda and others, for example Tachira. The action of previous governments is what explains the defeat in Greater Caracas. This is one of the most serious political problems that confronts the revolutionary process.
But there is a problem that is graver still. That is the dynamic within the PSUV itself. It is necessary to transform the party into a truly revolutionary party. We cannot continue with the method of an electoral machine where the base only participates in an irregular manner, in limited primaries, that in general are controlled by the power of the endogenous right-wing.
The party demonstrates that it could be a great party, but it is necessary to stimulate the participation of the workers, of the popular sectors that are the fundamental base of the revolution. And this stimulation should be political. The fact is the party has taken little account of its trade union movement. These electoral results, although they are positive, leave open the necessity of knowing that what is lacking is more democracy and more participation. The militants must feel it is their party, not the party of the leaders, otherwise it will run the risk of converting itself into just one more party, just like the other ones.
Nevertheless, it is not enough to simply announce that there should be self-criticism. The revolutionary people across the whole country must participate. We, on our part, believe that the moment has arrived to clean out the government and the party. A cleaning out and more revolution is what we need in order to ensure that working people govern in this revolution.
[Stalin Perez Borges is a national coordinator of the National Union of Workers (UNT), a militant of the PSUV and a national leader of Marea Socialista.]
This is an analysis of the results from a socialist perspective. Those supporting Chavez are it would seem a motley crew. As this critique shows some of the losses of the Chavez group were due to the poor quality of the candidates. As in most movements that have an electoral aspect there is always the problem of mobilising the grass roots to create genuine social change rather than simply electing some champion of the people and then the people are left on the sidelines.
I gather that there is considerable corruption withing Venezuelan politics and that this is a problem within the Chavistas as well as the opposition groups.
Venezuela: After the regional elections, the workers propose a clean out and more revolution
Stalin Perez Borges
By Stalin Perez Borges, translated by Kiraz Janicke and Federico Fuentes for Links International Journal of Socialist Renewal
November 25, 2008 -- I want to give some preliminary and personal impressions, in the heat of the moment, where many comrades are very preoccupied by the significance of the [Chavista movement’s] loss of the Mayor of Greater Caracas and of some important or key governorships in the country.
It’s time to calm down and sit down together in order to evaluate in depth with the comrades. There are various points that we should analyse in order to draw conclusions that truly reflect reality. It is necessary to open a profound debate within the party [United Socialist Party of Venezuela – PSUV], to reflect and proceed with self-criticism, as President Chavez indicated on Sunday night.
First, I think it is necessary to stress the increase of votes for Chavismo across the entire country compared to last December 2 [the constitutional reform referendum]. At the same time the opposition has demonstrated once again that there is a ceiling of votes that it cannot overcome, even if abstention levels are much lower. Nevertheless, it managed to reach a level of support that allowed it to obtain political victories in important cities.
Second, I think it is necessary to stress that having gone into these elections divided in many states, as is the case of Carabobo, the candidates of Chavez carried out a very good election campaign although some of them did not win.
Third, I think that the warning that we gave from Marea Socialista [Socialist Tide] about some of the candidates, and above all the indication that they are leaders that express something that the revolutionary people profoundly reject, such as is the case of the endogenous right-wing, had a very important weight in fundamental districts such as the governorship of Miranda and others, for example Tachira. The action of previous governments is what explains the defeat in Greater Caracas. This is one of the most serious political problems that confronts the revolutionary process.
But there is a problem that is graver still. That is the dynamic within the PSUV itself. It is necessary to transform the party into a truly revolutionary party. We cannot continue with the method of an electoral machine where the base only participates in an irregular manner, in limited primaries, that in general are controlled by the power of the endogenous right-wing.
The party demonstrates that it could be a great party, but it is necessary to stimulate the participation of the workers, of the popular sectors that are the fundamental base of the revolution. And this stimulation should be political. The fact is the party has taken little account of its trade union movement. These electoral results, although they are positive, leave open the necessity of knowing that what is lacking is more democracy and more participation. The militants must feel it is their party, not the party of the leaders, otherwise it will run the risk of converting itself into just one more party, just like the other ones.
Nevertheless, it is not enough to simply announce that there should be self-criticism. The revolutionary people across the whole country must participate. We, on our part, believe that the moment has arrived to clean out the government and the party. A cleaning out and more revolution is what we need in order to ensure that working people govern in this revolution.
[Stalin Perez Borges is a national coordinator of the National Union of Workers (UNT), a militant of the PSUV and a national leader of Marea Socialista.]
The Summers Conundrum
Read this and weep. In the US it seems centrist means a deregulation promoter, an arrogant sexist, a person who ravaged the Lithuanian economy often involving personal enrichment for his friends, a key employee of a hedge fund and of the World Bank, a person who worked in the Reagan administration and on and on. Anyone who was even remotely leftist would send this guy packing back to his corporate buddies.
The Summers Conundrum
By Mark Ames
November 10, 2008
. The conventional wisdom is that Summers is the "centrist" choice--Fareed Zakaria ("I think Summers is an extraordinarily brilliant guy") and David Gergen ("Larry Summers would be superb at this job"), two titans of centrism, both weighed in Sunday on the Stephanopoulos show in favor of Summers. And yet so far the debate over Summers has been largely confined to two outrageous moments in his career: his 1991 World Bank memo calling Africa "UNDER-polluted," and his more recent declarations, while serving as president of Harvard, about women's genetic inferiority in math and science. By themselves, these two incidents might be dismissed as merely provocative in a maverick-moron sort of way, as many of Summers' supporters argue; but in the context of Summers's track record, in which he oversaw the destruction of entire economies and covered up cronyism and corruption, his Africa memo and sexist declarations aren't exceptions but rather part of a disturbing pattern.
From the start, Summers has been on the wrong side of Obama's supporters. In 1982, while still a graduate student at Harvard, Summers was brought to Washington by his dissertation advisor Martin Feldstein, the supply-side economist, to serve on Ronald Reagan's Council of Economic Advisors. Those first years in the Reagan administration were crucial in the right-wing war against New Deal regulation of the banking system and financial markets--a war that Reagan's team won, and that we're all paying for today. Although Summers eventually identified himself with the Democratic Party--albeit the right wing of that party--nevertheless, as the New York Times's Peter T. Kilborn wrote in 1988:
He worked for 10 months as a top analyst in President Reagan's Council of Economic Advisers when his mentor, Martin S. Feldstein, was running it, and his colleagues don't recall him venting anti-Reagan heresies then....
"One of the ironies of this business is that Summers's economics are quite close to Feldstein's," said William A. Niskanen, who was a member of the Feldstein council.
It's ironic if you expected Summers to be a liberal Democrat--but par for the course in the context of Summers's real record. Some fifteen years after Summers's stint in the Reaganomics war room, he reappears as one of the key villains fighting to suppress the regulatory efforts of a top official, Brooksley Born, who was trying to call attention to the dangers of the unregulated derivatives, such as credit swap defaults, which today are considered the key to the current economic crisis.
But let's return to the Summers timeline. After his stint in the Reaganomics brain trust, he returned to Harvard to serve as one of the university's youngest professors. In 1988, he was Michael Dukakis's chief economic advisor, but when that campaign failed to bring Summers to power, he turned to America's great rival, the former Soviet Union, to try out his economic experiments. In 1990, Lithuania, a restive Soviet republic seeking independence, hired Summers to advise on that country's economic transformation. Poor Lithuania had no idea what it got itself into. This was Summers's first opportunity to tackle a country in economic crisis and put his wunderkind theories into practice. The results were literally suicidal: in 1990, when Summers first arrived, Lithuania's suicide rate was 26.1 per 100,000 and falling. Just five years after Summers got his hands on Lithuania's economy, life became so unbearable under the economic transition that the suicide rate nearly doubled to 45.6 per 100,000, worse than any other ex-Soviet republic in transition. In fact, it was the highest suicide rate in the world, suggesting something particularly harsh and brutal about the economic transition in that country as opposed to the others, where suffering and pain were common. Things got so bad that in 1992, after just two years of Summers-nomics, the traumatized Lithuanians voted the communist party back into power, the first East European nation to do so--even though just a year earlier Lithuanians actually died on the streets fighting communism.
Fresh off his success in Lithuania, Summers moved to the World Bank, where he was named the chief economist in 1991, the year he issued his famous let's-pollute-Africa memo. It was also the year that Summers, and his Harvard protégé Andrei Schleifer (who worked with Summers on the Lithuania economic transformation), began their catastrophic "rescue" of Russia's crisis-ridden economy. It's a complicated story involving corruption, cronyism and economic devastation. But by the end of the 1990s, Russia's GDP had collapsed by more than 60 percent, its population was suffering the worst death-to-birth ratio of any industrialized nation in the twentieth century, and the financial markets that Summers and Schleifer helped create had collapsed in what was then the world's biggest debt default ever. The result was the rise of Vladmir Putin and a national aversion to free markets and anything associated with Western liberalism.
But that's not all. Summers, through Schleifer, was also tainted with some of that country's corruption, which resulted in a US Justice Department lawsuit against Schleifer and others. While Schleifer was being paid by US taxpayers to advise the Russians on capital markets in the 1990s, his wife, Nancy Zimmerman, bought and traded Russian equities for a Boston hedge fund she ran--they even used Schleifer's US taxpayer-funded offices to run Zimmerman's Moscow-based hedge fund operations.
How close were Larry Summers and Andrei Schleifer? According to former Boston Globe economics correspondent David Warsh, Summers and Schleifer "were among each other's best friends," and Summers taught Schleifer "as an undergraduate, sent him on to MIT for his PhD, took him along on an advisory mission to Lithuania in 1990, and in 1991, shepherded his return to Harvard as full professor, where he was regarded, after Martin Feldstein and Summers, as the leader of the next generation."
In 2000, the Justice Department sought $102 million in damages from Schleifer, one of Schleifer's Harvard associates and Harvard University in a conflict-of-interest suit resulting from Schleifer's role as the lead US adviser to Russia's economic reforms--questioning the way Schleifer and his wife profited from his position. Schleifer's Harvard team in Moscow was funded by USAID in a no-bid contract, and supported by Summers as soon as he moved into the Treasury Department in 1993. So Schleifer benefited from his relationship with Summers twice: first, by getting a choice contract as the US government's man in Moscow in the 1990s when Summers was in power in the US government, one that benefited his wife's hedge fund (earlier this year, Portfolio suggested that the Schleifers' hedge funds made them billionaires ). Then after Schleifer returned to Harvard to face the lawsuit, Summers, now president of Harvard, presided over a controversial settlement that all but let his protégé off the hook. Thanks to pressure by Summers, Schleifer kept his chair at Harvard, where he continues to teach today.
Summers's other favorite man in Russia was Anatoly Chubais--who consistently ranks at the top of Russia's " most hated man" polls. Chubais was executor of the Russian government's privatization program, in which state companies worth tens of billions of dollars were handed over to insiders for a fraction of their worth in blatantly rigged auctions. Summers praised Chubais as a "demigod" and called Chubais and his free-market cohorts "the dream team." In September 1998, after Russia's capital markets collapsed, along with billions in US-taxpayer-backed loans, Chubais boasted to a Russian newspaper, "We swindled them." By "them," he meant the Western and American aid institutions that funded his reforms.
In light of all of the corruption, cronyism and devastation that have marked his career, Summers' statements about an under-polluted Africa or intellectually-inferior women no longer seem like provocative eccentricities but part and parcel of the Summers shtick. And now there's talk that President-elect Obama may hand the keys to national treasury to Summers--meaning that he'll be in charge of overseeing a trillion-dollar taxpayer bailout of the entire financial industry, a process already rife with conflicts of interest, cronyism and corruption--as detailed by Naomi Klein.
The bailout, as currently implemented, threatens to devastate America's economy much as Russia's and Lithuania's were devastated before. The idea that this is exactly the right time and place to put Larry Summers in charge of our economy's future is so frightening that it makes the Sarah Palin vice presidential choice seem almost quaint by comparison. Let's hope the rumors are wrong.
The Summers Conundrum
By Mark Ames
November 10, 2008
. The conventional wisdom is that Summers is the "centrist" choice--Fareed Zakaria ("I think Summers is an extraordinarily brilliant guy") and David Gergen ("Larry Summers would be superb at this job"), two titans of centrism, both weighed in Sunday on the Stephanopoulos show in favor of Summers. And yet so far the debate over Summers has been largely confined to two outrageous moments in his career: his 1991 World Bank memo calling Africa "UNDER-polluted," and his more recent declarations, while serving as president of Harvard, about women's genetic inferiority in math and science. By themselves, these two incidents might be dismissed as merely provocative in a maverick-moron sort of way, as many of Summers' supporters argue; but in the context of Summers's track record, in which he oversaw the destruction of entire economies and covered up cronyism and corruption, his Africa memo and sexist declarations aren't exceptions but rather part of a disturbing pattern.
From the start, Summers has been on the wrong side of Obama's supporters. In 1982, while still a graduate student at Harvard, Summers was brought to Washington by his dissertation advisor Martin Feldstein, the supply-side economist, to serve on Ronald Reagan's Council of Economic Advisors. Those first years in the Reagan administration were crucial in the right-wing war against New Deal regulation of the banking system and financial markets--a war that Reagan's team won, and that we're all paying for today. Although Summers eventually identified himself with the Democratic Party--albeit the right wing of that party--nevertheless, as the New York Times's Peter T. Kilborn wrote in 1988:
He worked for 10 months as a top analyst in President Reagan's Council of Economic Advisers when his mentor, Martin S. Feldstein, was running it, and his colleagues don't recall him venting anti-Reagan heresies then....
"One of the ironies of this business is that Summers's economics are quite close to Feldstein's," said William A. Niskanen, who was a member of the Feldstein council.
It's ironic if you expected Summers to be a liberal Democrat--but par for the course in the context of Summers's real record. Some fifteen years after Summers's stint in the Reaganomics war room, he reappears as one of the key villains fighting to suppress the regulatory efforts of a top official, Brooksley Born, who was trying to call attention to the dangers of the unregulated derivatives, such as credit swap defaults, which today are considered the key to the current economic crisis.
But let's return to the Summers timeline. After his stint in the Reaganomics brain trust, he returned to Harvard to serve as one of the university's youngest professors. In 1988, he was Michael Dukakis's chief economic advisor, but when that campaign failed to bring Summers to power, he turned to America's great rival, the former Soviet Union, to try out his economic experiments. In 1990, Lithuania, a restive Soviet republic seeking independence, hired Summers to advise on that country's economic transformation. Poor Lithuania had no idea what it got itself into. This was Summers's first opportunity to tackle a country in economic crisis and put his wunderkind theories into practice. The results were literally suicidal: in 1990, when Summers first arrived, Lithuania's suicide rate was 26.1 per 100,000 and falling. Just five years after Summers got his hands on Lithuania's economy, life became so unbearable under the economic transition that the suicide rate nearly doubled to 45.6 per 100,000, worse than any other ex-Soviet republic in transition. In fact, it was the highest suicide rate in the world, suggesting something particularly harsh and brutal about the economic transition in that country as opposed to the others, where suffering and pain were common. Things got so bad that in 1992, after just two years of Summers-nomics, the traumatized Lithuanians voted the communist party back into power, the first East European nation to do so--even though just a year earlier Lithuanians actually died on the streets fighting communism.
Fresh off his success in Lithuania, Summers moved to the World Bank, where he was named the chief economist in 1991, the year he issued his famous let's-pollute-Africa memo. It was also the year that Summers, and his Harvard protégé Andrei Schleifer (who worked with Summers on the Lithuania economic transformation), began their catastrophic "rescue" of Russia's crisis-ridden economy. It's a complicated story involving corruption, cronyism and economic devastation. But by the end of the 1990s, Russia's GDP had collapsed by more than 60 percent, its population was suffering the worst death-to-birth ratio of any industrialized nation in the twentieth century, and the financial markets that Summers and Schleifer helped create had collapsed in what was then the world's biggest debt default ever. The result was the rise of Vladmir Putin and a national aversion to free markets and anything associated with Western liberalism.
But that's not all. Summers, through Schleifer, was also tainted with some of that country's corruption, which resulted in a US Justice Department lawsuit against Schleifer and others. While Schleifer was being paid by US taxpayers to advise the Russians on capital markets in the 1990s, his wife, Nancy Zimmerman, bought and traded Russian equities for a Boston hedge fund she ran--they even used Schleifer's US taxpayer-funded offices to run Zimmerman's Moscow-based hedge fund operations.
How close were Larry Summers and Andrei Schleifer? According to former Boston Globe economics correspondent David Warsh, Summers and Schleifer "were among each other's best friends," and Summers taught Schleifer "as an undergraduate, sent him on to MIT for his PhD, took him along on an advisory mission to Lithuania in 1990, and in 1991, shepherded his return to Harvard as full professor, where he was regarded, after Martin Feldstein and Summers, as the leader of the next generation."
In 2000, the Justice Department sought $102 million in damages from Schleifer, one of Schleifer's Harvard associates and Harvard University in a conflict-of-interest suit resulting from Schleifer's role as the lead US adviser to Russia's economic reforms--questioning the way Schleifer and his wife profited from his position. Schleifer's Harvard team in Moscow was funded by USAID in a no-bid contract, and supported by Summers as soon as he moved into the Treasury Department in 1993. So Schleifer benefited from his relationship with Summers twice: first, by getting a choice contract as the US government's man in Moscow in the 1990s when Summers was in power in the US government, one that benefited his wife's hedge fund (earlier this year, Portfolio suggested that the Schleifers' hedge funds made them billionaires ). Then after Schleifer returned to Harvard to face the lawsuit, Summers, now president of Harvard, presided over a controversial settlement that all but let his protégé off the hook. Thanks to pressure by Summers, Schleifer kept his chair at Harvard, where he continues to teach today.
Summers's other favorite man in Russia was Anatoly Chubais--who consistently ranks at the top of Russia's " most hated man" polls. Chubais was executor of the Russian government's privatization program, in which state companies worth tens of billions of dollars were handed over to insiders for a fraction of their worth in blatantly rigged auctions. Summers praised Chubais as a "demigod" and called Chubais and his free-market cohorts "the dream team." In September 1998, after Russia's capital markets collapsed, along with billions in US-taxpayer-backed loans, Chubais boasted to a Russian newspaper, "We swindled them." By "them," he meant the Western and American aid institutions that funded his reforms.
In light of all of the corruption, cronyism and devastation that have marked his career, Summers' statements about an under-polluted Africa or intellectually-inferior women no longer seem like provocative eccentricities but part and parcel of the Summers shtick. And now there's talk that President-elect Obama may hand the keys to national treasury to Summers--meaning that he'll be in charge of overseeing a trillion-dollar taxpayer bailout of the entire financial industry, a process already rife with conflicts of interest, cronyism and corruption--as detailed by Naomi Klein.
The bailout, as currently implemented, threatens to devastate America's economy much as Russia's and Lithuania's were devastated before. The idea that this is exactly the right time and place to put Larry Summers in charge of our economy's future is so frightening that it makes the Sarah Palin vice presidential choice seem almost quaint by comparison. Let's hope the rumors are wrong.
Summers and Hedge Funds
These two articles give some of the background of Summers insofar as he was associated with Hedge Funds. His work and pay are both secrets it seems. The Hedge Funds as a group were active in lobbying against their regulation and regulation of derivatives. The latter are often part of the toxic wastes floating about in the paper sewage generated by bright financial entrepreneurs as a source of profit.
Summers and Hedge Funds
By Ken Silverstein
After being named as Barack Obama’s top White House economics adviser, Lawrence Summers resigned from his post as a managing director of D.E. Shaw & Co, a leading hedge fund. “Neither the Obama transition team nor D.E. Shaw would say exactly what Summers had done in his two years of work for the $36 billion hedge fund, or how much he has been paid, Politico reports. A 2007 article in Institutional Investor’s Alpha says only that Summers was hired to work “with the senior management team to find new ways to generate profit and manage risk.”D.E. Shaw is a member of the Managed Funds Association, the leading lobbying organization for the hedge fund industry. The MFA was founded last year and since then has spent about $3.5 million lobbying the federal government, according to federal disclosure records. Its priorities include blocking regulation of hedge funds and financial instruments like derivatives. The MFA also opposes higher taxes on hedge funds and their managers. Incidentally, David E. Shaw, the founder of Summers’ recent employer, earned about $210 million last year.Top lobbyists at the MFA include former Louisiana Congressman Richard Baker, previously of the House Financial Services Committee, and Roger Hollingsworth, who was hired in August. Hollingsworth was hired from the Senate Banking Committee, where he served as deputy staff director and senior policy advisor to Committee Chairman Christopher J. Dodd,” says his bio. (Hollingsworth is a one-man revolving door. Before going to work for Dodd, he lobbied for the Securities Industry Association, and before that he worked for Democratic senators Jon Corzine and Charles Schumer.)The MFA spent a few million more on lobbyists from eight outside firms it retained. The roll call of former officials working for the association include, at one firm alone, Senator Don Nickles; Rachel Jones Hensler, tax policy director for the Budget Committee under Nickles; Hazen Marshall, staff director for the Senate Budget Committee; and Brian Wild, a former top aide to Vice President Dick Cheney. The list goes on and on.The MFA and people affiliated with it donate lavishly to politicians as well, overwhelmingly to Democrats. Trey Beck, the managing director of D.E. Shaw who helped hire Summers and who is also a board member of the MFA, gave more than $40,000 to the Democratic Senatorial Campaign Committee in recent years (not to mention $2,200 to Moveon.org in 2004).“As citizens, we’re delighted that President-elect Barack Obama has selected Larry Summers to head the National Economic Council,” D.E. Shaw said in a newly released statement.The MFA is surely delighted as well.<http://harpers.org/archive/2008/11/hbc-90003922>
And here is another post about Summers and Hedge Funds:
<http://www.politico.com/news/stories/1108/15995.html>Summers has ties to prominent hedge fund
By: Eamon JaversNovember 28, 2008 12:08 PM EST
On the same day Lawrence Summers was announced as President-elect Barack Obama’s top White House economics adviser, the veteran economist said he would resign as the part-time managing director of one of the nation’s largest and most successful hedge funds, D.E. Shaw & Co.But even as Summers takes the lead of economic policy thinking for the Obama White House, which has promised to be one of the most open and transparent in history, neither the Obama transition team nor D.E. Shaw would say exactly what Summers had done in his two years of work for the $36 billion hedge fund, or how much he has been paid.In a press release issued Monday, D.E. Shaw said only that Summers had been working on “various strategic initiatives, high-level research and advising the executive committee on the overall business.”Whatever he did for the hedge fund, Summers seems to have impressed his bosses.“As citizens, we’re delighted that President-elect Barack Obama has selected Larry Summers to head the National Economic Council," said D.E. Shaw managing director Max Stone in the statement. “Larry is an enormously gifted economist, and has already made major contributions to this country as a public servant, a researcher, and an academic leader.”As a treasury secretary under President Bill Clinton and a former president of Harvard University, Summers would have been enormously valuable for the hedge fund that prides itself on bringing together top talent from a wide range of backgrounds.D.E. Shaw was founded in 1988 by David E. Shaw, a former computer science professor at Columbia University, and is known as a major “quant” fund that specializes in using advanced mathematics and computer software to generate trading strategies.The aggressively nerdy firm brags that its 1,600 employees include the 2003 U.S. women's chess champion, a life master bridge player, a “Jeopardy” winner, as well as writers, athletes, musicians and former professors. One early employee was Jeff Bezos, who went on to greater renown as the founder of Amazon.com.In 2007, Shaw personally earned an estimated $210 million, reports Alpha magazine, and he spent a chunk of it on contributions to prominent Democratic politicians during the 2008 presidential cycle, including more than $3,000 to Barack Obama and $6,000 to Hillary Rodham Clinton, according to the Center for Responsive Politics.Overall, the hedge fund’s employees skew heavily Democratic, contributing more than $200,000 to political candidates in the 2008 campaign cycle, according to the center. Only $2,000 of that went to a Republican: Sen. Pat Roberts of Kansas.The hedge fund also has gotten much more involved in Washington policymaking in recent years, contributing to the Managed Funds Association, the trade group that has led the charge on resisting increased regulation and taxation of hedge funds in Washington.In 2007, the fund sold a 20 percent stake to Lehman Brothers, which filed for bankruptcy in September.One knowledgeable hedge-fund observer says Summers’ work at D.E. Shaw partly involved conducting research into emerging markets – those volatile but potentially lucrative stock exchanges in remote areas of the world.It’s not clear exactly what Summers would have been interested in. But a recent area of interest among hedge funds has been identifying ways the switch to electronic markets will create new liquidity on those exchanges, providing arbitrage opportunities for savvy American investors who can use the newly sped-up processes to take advantage of mismatches in prices.Summers, the observer said, provided valuable research to the firm. “This wasn’t a vanity job,” the observer said. “The Lawrence Summers connection makes sense – their approach is to get the best and brightest and figure out what to do with them.”The firm’s core specialty is in statistical arbitrage, which involves buying and selling huge numbers of stocks in very short amounts of time, ranging from mere seconds to several days. But how they make those decisions is very closely held information.“That’s where they get very secretive and squirrely and won’t tell you what they’re doing,” the observer said.A spokesperson for the Obama transition team declined to say what Summers had done for the hedge fund and how much he had been paid. But the Obama camp likely knows the answers, since the vetting questionnaire for applicants for administration posts requests tax returns and other detailed financial information, including the applicant’s net worth, real estate holdings, business partnerships, even gifts.Lightly regulated hedge funds are not required to file detailed information on their financial performance with the Securities and Exchange Commission. So, it’s difficult to estimate how well or poorly D.E. Shaw has weathered the global financial crisis in recent months.One person familiar with the industry says that investors generally believe that the firm has not had a disastrous year – which stands in stark contrast with many funds that have seen their value plummet. “Basically they are riding out the storm – so far,” the expert said.Executive compensation and lavish perks have become a hot-button issue in the midst of the economic calamity. In recent days, the insurance giant AIG announced that its CEO will accept only $1 in annual salary in the wake of that firm’s taxpayer bailout.And the Big Three automakers hinted that their CEOs won’t use their private jets next week to travel to Washington and plead for a government bailout, a symbolic response to criticism of their use of the jets to commute to the last round of congressional hearings.
Summers and Hedge Funds
By Ken Silverstein
After being named as Barack Obama’s top White House economics adviser, Lawrence Summers resigned from his post as a managing director of D.E. Shaw & Co, a leading hedge fund. “Neither the Obama transition team nor D.E. Shaw would say exactly what Summers had done in his two years of work for the $36 billion hedge fund, or how much he has been paid, Politico reports. A 2007 article in Institutional Investor’s Alpha says only that Summers was hired to work “with the senior management team to find new ways to generate profit and manage risk.”D.E. Shaw is a member of the Managed Funds Association, the leading lobbying organization for the hedge fund industry. The MFA was founded last year and since then has spent about $3.5 million lobbying the federal government, according to federal disclosure records. Its priorities include blocking regulation of hedge funds and financial instruments like derivatives. The MFA also opposes higher taxes on hedge funds and their managers. Incidentally, David E. Shaw, the founder of Summers’ recent employer, earned about $210 million last year.Top lobbyists at the MFA include former Louisiana Congressman Richard Baker, previously of the House Financial Services Committee, and Roger Hollingsworth, who was hired in August. Hollingsworth was hired from the Senate Banking Committee, where he served as deputy staff director and senior policy advisor to Committee Chairman Christopher J. Dodd,” says his bio. (Hollingsworth is a one-man revolving door. Before going to work for Dodd, he lobbied for the Securities Industry Association, and before that he worked for Democratic senators Jon Corzine and Charles Schumer.)The MFA spent a few million more on lobbyists from eight outside firms it retained. The roll call of former officials working for the association include, at one firm alone, Senator Don Nickles; Rachel Jones Hensler, tax policy director for the Budget Committee under Nickles; Hazen Marshall, staff director for the Senate Budget Committee; and Brian Wild, a former top aide to Vice President Dick Cheney. The list goes on and on.The MFA and people affiliated with it donate lavishly to politicians as well, overwhelmingly to Democrats. Trey Beck, the managing director of D.E. Shaw who helped hire Summers and who is also a board member of the MFA, gave more than $40,000 to the Democratic Senatorial Campaign Committee in recent years (not to mention $2,200 to Moveon.org in 2004).“As citizens, we’re delighted that President-elect Barack Obama has selected Larry Summers to head the National Economic Council,” D.E. Shaw said in a newly released statement.The MFA is surely delighted as well.<http://harpers.org/archive/2008/11/hbc-90003922>
And here is another post about Summers and Hedge Funds:
<http://www.politico.com/news/stories/1108/15995.html>Summers has ties to prominent hedge fund
By: Eamon JaversNovember 28, 2008 12:08 PM EST
On the same day Lawrence Summers was announced as President-elect Barack Obama’s top White House economics adviser, the veteran economist said he would resign as the part-time managing director of one of the nation’s largest and most successful hedge funds, D.E. Shaw & Co.But even as Summers takes the lead of economic policy thinking for the Obama White House, which has promised to be one of the most open and transparent in history, neither the Obama transition team nor D.E. Shaw would say exactly what Summers had done in his two years of work for the $36 billion hedge fund, or how much he has been paid.In a press release issued Monday, D.E. Shaw said only that Summers had been working on “various strategic initiatives, high-level research and advising the executive committee on the overall business.”Whatever he did for the hedge fund, Summers seems to have impressed his bosses.“As citizens, we’re delighted that President-elect Barack Obama has selected Larry Summers to head the National Economic Council," said D.E. Shaw managing director Max Stone in the statement. “Larry is an enormously gifted economist, and has already made major contributions to this country as a public servant, a researcher, and an academic leader.”As a treasury secretary under President Bill Clinton and a former president of Harvard University, Summers would have been enormously valuable for the hedge fund that prides itself on bringing together top talent from a wide range of backgrounds.D.E. Shaw was founded in 1988 by David E. Shaw, a former computer science professor at Columbia University, and is known as a major “quant” fund that specializes in using advanced mathematics and computer software to generate trading strategies.The aggressively nerdy firm brags that its 1,600 employees include the 2003 U.S. women's chess champion, a life master bridge player, a “Jeopardy” winner, as well as writers, athletes, musicians and former professors. One early employee was Jeff Bezos, who went on to greater renown as the founder of Amazon.com.In 2007, Shaw personally earned an estimated $210 million, reports Alpha magazine, and he spent a chunk of it on contributions to prominent Democratic politicians during the 2008 presidential cycle, including more than $3,000 to Barack Obama and $6,000 to Hillary Rodham Clinton, according to the Center for Responsive Politics.Overall, the hedge fund’s employees skew heavily Democratic, contributing more than $200,000 to political candidates in the 2008 campaign cycle, according to the center. Only $2,000 of that went to a Republican: Sen. Pat Roberts of Kansas.The hedge fund also has gotten much more involved in Washington policymaking in recent years, contributing to the Managed Funds Association, the trade group that has led the charge on resisting increased regulation and taxation of hedge funds in Washington.In 2007, the fund sold a 20 percent stake to Lehman Brothers, which filed for bankruptcy in September.One knowledgeable hedge-fund observer says Summers’ work at D.E. Shaw partly involved conducting research into emerging markets – those volatile but potentially lucrative stock exchanges in remote areas of the world.It’s not clear exactly what Summers would have been interested in. But a recent area of interest among hedge funds has been identifying ways the switch to electronic markets will create new liquidity on those exchanges, providing arbitrage opportunities for savvy American investors who can use the newly sped-up processes to take advantage of mismatches in prices.Summers, the observer said, provided valuable research to the firm. “This wasn’t a vanity job,” the observer said. “The Lawrence Summers connection makes sense – their approach is to get the best and brightest and figure out what to do with them.”The firm’s core specialty is in statistical arbitrage, which involves buying and selling huge numbers of stocks in very short amounts of time, ranging from mere seconds to several days. But how they make those decisions is very closely held information.“That’s where they get very secretive and squirrely and won’t tell you what they’re doing,” the observer said.A spokesperson for the Obama transition team declined to say what Summers had done for the hedge fund and how much he had been paid. But the Obama camp likely knows the answers, since the vetting questionnaire for applicants for administration posts requests tax returns and other detailed financial information, including the applicant’s net worth, real estate holdings, business partnerships, even gifts.Lightly regulated hedge funds are not required to file detailed information on their financial performance with the Securities and Exchange Commission. So, it’s difficult to estimate how well or poorly D.E. Shaw has weathered the global financial crisis in recent months.One person familiar with the industry says that investors generally believe that the firm has not had a disastrous year – which stands in stark contrast with many funds that have seen their value plummet. “Basically they are riding out the storm – so far,” the expert said.Executive compensation and lavish perks have become a hot-button issue in the midst of the economic calamity. In recent days, the insurance giant AIG announced that its CEO will accept only $1 in annual salary in the wake of that firm’s taxpayer bailout.And the Big Three automakers hinted that their CEOs won’t use their private jets next week to travel to Washington and plead for a government bailout, a symbolic response to criticism of their use of the jets to commute to the last round of congressional hearings.
Friday, November 28, 2008
Excerpts from the SOFA with Iraq
Some excerpts from a translation of the agreement at NYtimes. There are innocuous sounding packages that will actually give the US control over oil profits:
See my post and article at kenthink.
3. Consistent with a letter from the President of the United States to be sent to the Prime
Minister of Iraq, the United States remains committed to assist Iraq in connection with its
request that the UN Security Council extend the protections and other arrangements
established in Resolution 1483 (2003) and Resolution 1546 (2003) for petroleum,
petroleum products, and natural gas originating in Iraq, proceeds and obligations from
sale thereof, and the Development Fund for Iraq.
The sections on Iraq jurisdiction over criminal acts of troops and contractors is very limited:
The United States shall have the primary right to exercise jurisdiction over members of
the United States Forces and of the civilian component for matters arising inside agreed
facilities and areas; during duty status outside agreed facilities and areas; and in
circumstances not covered by paragraph 1.
Obviously even contractors are not subject to Iraq law when on duty!
The US is to do everything to ensure that Iraq does not meet its financial responsibilities incurred under Saddam. This will surely infuriate many especially Kuwait.
a. Support Iraq to obtain forgiveness of international debt resulting from the policies of
the former regime.
b. Support Iraq to achieve a comprehensive and final resolution of outstanding reparation
claims inherited from the previous regime, including compensation requirements imposed
by the UN Security Council on Iraq.
2. Recognizing and understanding Iraq’s concern with claims based on actions
perpetrated by the former regime, the President of the United States has exercised his
authority to protect from United States judicial process the Development Fund for Iraq
and certain other property in which Iraq has an interest. The United States shall remain
fully and actively engaged with the Government of Iraq with respect to continuation of
such protections and with respect to such claims.
See my post and article at kenthink.
3. Consistent with a letter from the President of the United States to be sent to the Prime
Minister of Iraq, the United States remains committed to assist Iraq in connection with its
request that the UN Security Council extend the protections and other arrangements
established in Resolution 1483 (2003) and Resolution 1546 (2003) for petroleum,
petroleum products, and natural gas originating in Iraq, proceeds and obligations from
sale thereof, and the Development Fund for Iraq.
The sections on Iraq jurisdiction over criminal acts of troops and contractors is very limited:
The United States shall have the primary right to exercise jurisdiction over members of
the United States Forces and of the civilian component for matters arising inside agreed
facilities and areas; during duty status outside agreed facilities and areas; and in
circumstances not covered by paragraph 1.
Obviously even contractors are not subject to Iraq law when on duty!
The US is to do everything to ensure that Iraq does not meet its financial responsibilities incurred under Saddam. This will surely infuriate many especially Kuwait.
a. Support Iraq to obtain forgiveness of international debt resulting from the policies of
the former regime.
b. Support Iraq to achieve a comprehensive and final resolution of outstanding reparation
claims inherited from the previous regime, including compensation requirements imposed
by the UN Security Council on Iraq.
2. Recognizing and understanding Iraq’s concern with claims based on actions
perpetrated by the former regime, the President of the United States has exercised his
authority to protect from United States judicial process the Development Fund for Iraq
and certain other property in which Iraq has an interest. The United States shall remain
fully and actively engaged with the Government of Iraq with respect to continuation of
such protections and with respect to such claims.
Michael Perelman: How to Create a Crisis
This is from Michael Perelman's blog a US economist. Unfortunately the paper often of little or no real value creates real debt via the government bailout that involves borrowing that the US citizen must eventually repay. In fact the taxpayer is paying to rescue the people who brought about the crisis in the first place. Many of those same people are in charge of this bailout.
Matter and Antimatter: How to Create a Crisis: A Thanksgiving Rant
Posted November 27, 2008Filed under: economics
Skilled physicists do not know how to take nothing and turn it into matter and antimatter, but finance behaves as if it had the capacity to do something similar. Imagine a simple market economy about to create a bubble. I want to tell the story of this bubble, only to put the current, crazy stimulus package into perspective.
Somebody says to me they have a piece of paper worth $1 million. I can buy for half the price. I borrow the money to cover most of the cost. People are willing to lend me the money confident in the belief that my paper will increase in value. Other people are engaging in the same transaction, spreading confidence that these papers are now increasing in value, say to $600,000.
The seller of the paper now has a half-million dollars, having given up nothing but blank piece of paper. I have a capital gain of hundred thousand dollars. My lenders have a credit with a half-million dollars. We are all better off, even though nothing has been produced.
Feeling secure in the increasing value of our paper, I along with the other “investors” now start consuming more, spreading prosperity for the economy. Virtually everybody is enjoying the benefit of the bubble. Within a short period of time, people throughout the economy making decisions based on the increasing appearance of health and the economy.
At some point, people realize that this paper is nothing more than a blank sheet of writing paper. The bubble may have stimulated some investment that is capable of producing real economic benefits, but mostly it has induced people to consume and commit themselves to pay back debts.
Remember, this prosperity was built out of nothing. In the end, matter and antimatter collided. The lenders have lost their money. The speculators and consumers are in debt. Most lack the wherewithal to repay their debts. But in the case of the current bubble, the economy does not have the productive capacity to put everything together. The loans came from abroad and so did many consumer goods.
At the same time, the government loans are ultimately dependent on another set of loans, also largely from abroad. How will these loans ever be repaid? Will new loans keep coming as the bubble engulfs the rest of the world?
Should the government come in and give me a half-million dollars so that I can repay my loan? Should I be rewarded for my stupidity and naïveté? Will that policy really make the economy healthy? Or will it policy just facilitate the creation of even greater bubbles?
Obviously, the most sensible decision would be to put the money into making a more healthy economy, one less susceptible to speculation — something impossible under capitalism, but that is another question. Eventually, somebody will have to pay the piper. The policy today seems to be an effort to shield the very people who created the crisis, placing the burden on the most innocent.
The graphic picture of the stimulus package that I posted yesterday suggests a government response just as foolish as the speculations that set off the bubble in the first place.
Happy Thanksgiving.
Matter and Antimatter: How to Create a Crisis: A Thanksgiving Rant
Posted November 27, 2008Filed under: economics
Skilled physicists do not know how to take nothing and turn it into matter and antimatter, but finance behaves as if it had the capacity to do something similar. Imagine a simple market economy about to create a bubble. I want to tell the story of this bubble, only to put the current, crazy stimulus package into perspective.
Somebody says to me they have a piece of paper worth $1 million. I can buy for half the price. I borrow the money to cover most of the cost. People are willing to lend me the money confident in the belief that my paper will increase in value. Other people are engaging in the same transaction, spreading confidence that these papers are now increasing in value, say to $600,000.
The seller of the paper now has a half-million dollars, having given up nothing but blank piece of paper. I have a capital gain of hundred thousand dollars. My lenders have a credit with a half-million dollars. We are all better off, even though nothing has been produced.
Feeling secure in the increasing value of our paper, I along with the other “investors” now start consuming more, spreading prosperity for the economy. Virtually everybody is enjoying the benefit of the bubble. Within a short period of time, people throughout the economy making decisions based on the increasing appearance of health and the economy.
At some point, people realize that this paper is nothing more than a blank sheet of writing paper. The bubble may have stimulated some investment that is capable of producing real economic benefits, but mostly it has induced people to consume and commit themselves to pay back debts.
Remember, this prosperity was built out of nothing. In the end, matter and antimatter collided. The lenders have lost their money. The speculators and consumers are in debt. Most lack the wherewithal to repay their debts. But in the case of the current bubble, the economy does not have the productive capacity to put everything together. The loans came from abroad and so did many consumer goods.
At the same time, the government loans are ultimately dependent on another set of loans, also largely from abroad. How will these loans ever be repaid? Will new loans keep coming as the bubble engulfs the rest of the world?
Should the government come in and give me a half-million dollars so that I can repay my loan? Should I be rewarded for my stupidity and naïveté? Will that policy really make the economy healthy? Or will it policy just facilitate the creation of even greater bubbles?
Obviously, the most sensible decision would be to put the money into making a more healthy economy, one less susceptible to speculation — something impossible under capitalism, but that is another question. Eventually, somebody will have to pay the piper. The policy today seems to be an effort to shield the very people who created the crisis, placing the burden on the most innocent.
The graphic picture of the stimulus package that I posted yesterday suggests a government response just as foolish as the speculations that set off the bubble in the first place.
Happy Thanksgiving.
Bernanke on Deflation causes and cure.
This is a six year old speech but quite relevant to what is happening in the present crisis. Many of the policies he recommended are now being implemented. It remains to be seen if they will work.
Remarks by Governor Ben S. BernankeBefore the National Economists Club, Washington, D.C.November 21, 2002
Deflation: Making Sure "It" Doesn't Happen Here
Since World War II, inflation--the apparently inexorable rise in the prices of goods and services--has been the bane of central bankers. Economists of various stripes have argued that inflation is the inevitable result of (pick your favorite) the abandonment of metallic monetary standards, a lack of fiscal discipline, shocks to the price of oil and other commodities, struggles over the distribution of income, excessive money creation, self-confirming inflation expectations, an "inflation bias" in the policies of central banks, and still others. Despite widespread "inflation pessimism," however, during the 1980s and 1990s most industrial-country central banks were able to cage, if not entirely tame, the inflation dragon. Although a number of factors converged to make this happy outcome possible, an essential element was the heightened understanding by central bankers and, equally as important, by political leaders and the public at large of the very high costs of allowing the economy to stray too far from price stability.
With inflation rates now quite low in the United States, however, some have expressed concern that we may soon face a new problem--the danger of deflation, or falling prices. That this concern is not purely hypothetical is brought home to us whenever we read newspaper reports about Japan, where what seems to be a relatively moderate deflation--a decline in consumer prices of about 1 percent per year--has been associated with years of painfully slow growth, rising joblessness, and apparently intractable financial problems in the banking and corporate sectors. While it is difficult to sort out cause from effect, the consensus view is that deflation has been an important negative factor in the Japanese slump.
So, is deflation a threat to the economic health of the United States? Not to leave you in suspense, I believe that the chance of significant deflation in the United States in the foreseeable future is extremely small, for two principal reasons. The first is the resilience and structural stability of the U.S. economy itself. Over the years, the U.S. economy has shown a remarkable ability to absorb shocks of all kinds, to recover, and to continue to grow. Flexible and efficient markets for labor and capital, an entrepreneurial tradition, and a general willingness to tolerate and even embrace technological and economic change all contribute to this resiliency. A particularly important protective factor in the current environment is the strength of our financial system: Despite the adverse shocks of the past year, our banking system remains healthy and well-regulated, and firm and household balance sheets are for the most part in good shape. Also helpful is that inflation has recently been not only low but quite stable, with one result being that inflation expectations seem well anchored. For example, according to the University of Michigan survey that underlies the index of consumer sentiment, the median expected rate of inflation during the next five to ten years among those interviewed was 2.9 percent in October 2002, as compared with 2.7 percent a year earlier and 3.0 percent two years earlier--a stable record indeed.
The second bulwark against deflation in the United States, and the one that will be the focus of my remarks today, is the Federal Reserve System itself. The Congress has given the Fed the responsibility of preserving price stability (among other objectives), which most definitely implies avoiding deflation as well as inflation. I am confident that the Fed would take whatever means necessary to prevent significant deflation in the United States and, moreover, that the U.S. central bank, in cooperation with other parts of the government as needed, has sufficient policy instruments to ensure that any deflation that might occur would be both mild and brief.
Of course, we must take care lest confidence become over-confidence. Deflationary episodes are rare, and generalization about them is difficult. Indeed, a recent Federal Reserve study of the Japanese experience concluded that the deflation there was almost entirely unexpected, by both foreign and Japanese observers alike (Ahearne et al., 2002). So, having said that deflation in the United States is highly unlikely, I would be imprudent to rule out the possibility altogether. Accordingly, I want to turn to a further exploration of the causes of deflation, its economic effects, and the policy instruments that can be deployed against it. Before going further I should say that my comments today reflect my own views only and are not necessarily those of my colleagues on the Board of Governors or the Federal Open Market Committee.
Deflation: Its Causes and Effects Deflation is defined as a general decline in prices, with emphasis on the word "general." At any given time, especially in a low-inflation economy like that of our recent experience, prices of some goods and services will be falling. Price declines in a specific sector may occur because productivity is rising and costs are falling more quickly in that sector than elsewhere or because the demand for the output of that sector is weak relative to the demand for other goods and services. Sector-specific price declines, uncomfortable as they may be for producers in that sector, are generally not a problem for the economy as a whole and do not constitute deflation. Deflation per se occurs only when price declines are so widespread that broad-based indexes of prices, such as the consumer price index, register ongoing declines.
The sources of deflation are not a mystery. Deflation is in almost all cases a side effect of a collapse of aggregate demand--a drop in spending so severe that producers must cut prices on an ongoing basis in order to find buyers.1 Likewise, the economic effects of a deflationary episode, for the most part, are similar to those of any other sharp decline in aggregate spending--namely, recession, rising unemployment, and financial stress.
However, a deflationary recession may differ in one respect from "normal" recessions in which the inflation rate is at least modestly positive: Deflation of sufficient magnitude may result in the nominal interest rate declining to zero or very close to zero.2 Once the nominal interest rate is at zero, no further downward adjustment in the rate can occur, since lenders generally will not accept a negative nominal interest rate when it is possible instead to hold cash. At this point, the nominal interest rate is said to have hit the "zero bound."
Deflation great enough to bring the nominal interest rate close to zero poses special problems for the economy and for policy. First, when the nominal interest rate has been reduced to zero, the real interest rate paid by borrowers equals the expected rate of deflation, however large that may be.3 To take what might seem like an extreme example (though in fact it occurred in the United States in the early 1930s), suppose that deflation is proceeding at a clip of 10 percent per year. Then someone who borrows for a year at a nominal interest rate of zero actually faces a 10 percent real cost of funds, as the loan must be repaid in dollars whose purchasing power is 10 percent greater than that of the dollars borrowed originally. In a period of sufficiently severe deflation, the real cost of borrowing becomes prohibitive. Capital investment, purchases of new homes, and other types of spending decline accordingly, worsening the economic downturn.
Although deflation and the zero bound on nominal interest rates create a significant problem for those seeking to borrow, they impose an even greater burden on households and firms that had accumulated substantial debt before the onset of the deflation. This burden arises because, even if debtors are able to refinance their existing obligations at low nominal interest rates, with prices falling they must still repay the principal in dollars of increasing (perhaps rapidly increasing) real value. When William Jennings Bryan made his famous "cross of gold" speech in his 1896 presidential campaign, he was speaking on behalf of heavily mortgaged farmers whose debt burdens were growing ever larger in real terms, the result of a sustained deflation that followed America's post-Civil-War return to the gold standard.4 The financial distress of debtors can, in turn, increase the fragility of the nation's financial system--for example, by leading to a rapid increase in the share of bank loans that are delinquent or in default. Japan in recent years has certainly faced the problem of "debt-deflation"--the deflation-induced, ever-increasing real value of debts. Closer to home, massive financial problems, including defaults, bankruptcies, and bank failures, were endemic in America's worst encounter with deflation, in the years 1930-33--a period in which (as I mentioned) the U.S. price level fell about 10 percent per year.
Beyond its adverse effects in financial markets and on borrowers, the zero bound on the nominal interest rate raises another concern--the limitation that it places on conventional monetary policy. Under normal conditions, the Fed and most other central banks implement policy by setting a target for a short-term interest rate--the overnight federal funds rate in the United States--and enforcing that target by buying and selling securities in open capital markets. When the short-term interest rate hits zero, the central bank can no longer ease policy by lowering its usual interest-rate target.5
Because central banks conventionally conduct monetary policy by manipulating the short-term nominal interest rate, some observers have concluded that when that key rate stands at or near zero, the central bank has "run out of ammunition"--that is, it no longer has the power to expand aggregate demand and hence economic activity. It is true that once the policy rate has been driven down to zero, a central bank can no longer use its traditional means of stimulating aggregate demand and thus will be operating in less familiar territory. The central bank's inability to use its traditional methods may complicate the policymaking process and introduce uncertainty in the size and timing of the economy's response to policy actions. Hence I agree that the situation is one to be avoided if possible.
However, a principal message of my talk today is that a central bank whose accustomed policy rate has been forced down to zero has most definitely not run out of ammunition. As I will discuss, a central bank, either alone or in cooperation with other parts of the government, retains considerable power to expand aggregate demand and economic activity even when its accustomed policy rate is at zero. In the remainder of my talk, I will first discuss measures for preventing deflation--the preferable option if feasible. I will then turn to policy measures that the Fed and other government authorities can take if prevention efforts fail and deflation appears to be gaining a foothold in the economy.
Preventing DeflationAs I have already emphasized, deflation is generally the result of low and falling aggregate demand. The basic prescription for preventing deflation is therefore straightforward, at least in principle: Use monetary and fiscal policy as needed to support aggregate spending, in a manner as nearly consistent as possible with full utilization of economic resources and low and stable inflation. In other words, the best way to get out of trouble is not to get into it in the first place. Beyond this commonsense injunction, however, there are several measures that the Fed (or any central bank) can take to reduce the risk of falling into deflation.
First, the Fed should try to preserve a buffer zone for the inflation rate, that is, during normal times it should not try to push inflation down all the way to zero.6 Most central banks seem to understand the need for a buffer zone. For example, central banks with explicit inflation targets almost invariably set their target for inflation above zero, generally between 1 and 3 percent per year. Maintaining an inflation buffer zone reduces the risk that a large, unanticipated drop in aggregate demand will drive the economy far enough into deflationary territory to lower the nominal interest rate to zero. Of course, this benefit of having a buffer zone for inflation must be weighed against the costs associated with allowing a higher inflation rate in normal times.
Second, the Fed should take most seriously--as of course it does--its responsibility to ensure financial stability in the economy. Irving Fisher (1933) was perhaps the first economist to emphasize the potential connections between violent financial crises, which lead to "fire sales" of assets and falling asset prices, with general declines in aggregate demand and the price level. A healthy, well capitalized banking system and smoothly functioning capital markets are an important line of defense against deflationary shocks. The Fed should and does use its regulatory and supervisory powers to ensure that the financial system will remain resilient if financial conditions change rapidly. And at times of extreme threat to financial stability, the Federal Reserve stands ready to use the discount window and other tools to protect the financial system, as it did during the 1987 stock market crash and the September 11, 2001, terrorist attacks.
Third, as suggested by a number of studies, when inflation is already low and the fundamentals of the economy suddenly deteriorate, the central bank should act more preemptively and more aggressively than usual in cutting rates (Orphanides and Wieland, 2000; Reifschneider and Williams, 2000; Ahearne et al., 2002). By moving decisively and early, the Fed may be able to prevent the economy from slipping into deflation, with the special problems that entails.
As I have indicated, I believe that the combination of strong economic fundamentals and policymakers that are attentive to downside as well as upside risks to inflation make significant deflation in the United States in the foreseeable future quite unlikely. But suppose that, despite all precautions, deflation were to take hold in the U.S. economy and, moreover, that the Fed's policy instrument--the federal funds rate--were to fall to zero. What then? In the remainder of my talk I will discuss some possible options for stopping a deflation once it has gotten under way. I should emphasize that my comments on this topic are necessarily speculative, as the modern Federal Reserve has never faced this situation nor has it pre-committed itself formally to any specific course of action should deflation arise. Furthermore, the specific responses the Fed would undertake would presumably depend on a number of factors, including its assessment of the whole range of risks to the economy and any complementary policies being undertaken by other parts of the U.S. government.7
Curing DeflationLet me start with some general observations about monetary policy at the zero bound, sweeping under the rug for the moment some technical and operational issues.
As I have mentioned, some observers have concluded that when the central bank's policy rate falls to zero--its practical minimum--monetary policy loses its ability to further stimulate aggregate demand and the economy. At a broad conceptual level, and in my view in practice as well, this conclusion is clearly mistaken. Indeed, under a fiat (that is, paper) money system, a government (in practice, the central bank in cooperation with other agencies) should always be able to generate increased nominal spending and inflation, even when the short-term nominal interest rate is at zero.
The conclusion that deflation is always reversible under a fiat money system follows from basic economic reasoning. A little parable may prove useful: Today an ounce of gold sells for $300, more or less. Now suppose that a modern alchemist solves his subject's oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days. What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.
What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
Of course, the U.S. government is not going to print money and distribute it willy-nilly (although as we will see later, there are practical policies that approximate this behavior).8 Normally, money is injected into the economy through asset purchases by the Federal Reserve. To stimulate aggregate spending when short-term interest rates have reached zero, the Fed must expand the scale of its asset purchases or, possibly, expand the menu of assets that it buys. Alternatively, the Fed could find other ways of injecting money into the system--for example, by making low-interest-rate loans to banks or cooperating with the fiscal authorities. Each method of adding money to the economy has advantages and drawbacks, both technical and economic. One important concern in practice is that calibrating the economic effects of nonstandard means of injecting money may be difficult, given our relative lack of experience with such policies. Thus, as I have stressed already, prevention of deflation remains preferable to having to cure it. If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation.
So what then might the Fed do if its target interest rate, the overnight federal funds rate, fell to zero? One relatively straightforward extension of current procedures would be to try to stimulate spending by lowering rates further out along the Treasury term structure--that is, rates on government bonds of longer maturities.9 There are at least two ways of bringing down longer-term rates, which are complementary and could be employed separately or in combination. One approach, similar to an action taken in the past couple of years by the Bank of Japan, would be for the Fed to commit to holding the overnight rate at zero for some specified period. Because long-term interest rates represent averages of current and expected future short-term rates, plus a term premium, a commitment to keep short-term rates at zero for some time--if it were credible--would induce a decline in longer-term rates. A more direct method, which I personally prefer, would be for the Fed to begin announcing explicit ceilings for yields on longer-maturity Treasury debt (say, bonds maturing within the next two years). The Fed could enforce these interest-rate ceilings by committing to make unlimited purchases of securities up to two years from maturity at prices consistent with the targeted yields. If this program were successful, not only would yields on medium-term Treasury securities fall, but (because of links operating through expectations of future interest rates) yields on longer-term public and private debt (such as mortgages) would likely fall as well.
Lower rates over the maturity spectrum of public and private securities should strengthen aggregate demand in the usual ways and thus help to end deflation. Of course, if operating in relatively short-dated Treasury debt proved insufficient, the Fed could also attempt to cap yields of Treasury securities at still longer maturities, say three to six years. Yet another option would be for the Fed to use its existing authority to operate in the markets for agency debt (for example, mortgage-backed securities issued by Ginnie Mae, the Government National Mortgage Association).
Historical experience tends to support the proposition that a sufficiently determined Fed can peg or cap Treasury bond prices and yields at other than the shortest maturities. The most striking episode of bond-price pegging occurred during the years before the Federal Reserve-Treasury Accord of 1951.10 Prior to that agreement, which freed the Fed from its responsibility to fix yields on government debt, the Fed maintained a ceiling of 2-1/2 percent on long-term Treasury bonds for nearly a decade. Moreover, it simultaneously established a ceiling on the twelve-month Treasury certificate of between 7/8 percent to 1-1/4 percent and, during the first half of that period, a rate of 3/8 percent on the 90-day Treasury bill. The Fed was able to achieve these low interest rates despite a level of outstanding government debt (relative to GDP) significantly greater than we have today, as well as inflation rates substantially more variable. At times, in order to enforce these low rates, the Fed had actually to purchase the bulk of outstanding 90-day bills. Interestingly, though, the Fed enforced the 2-1/2 percent ceiling on long-term bond yields for nearly a decade without ever holding a substantial share of long-maturity bonds outstanding.11 For example, the Fed held 7.0 percent of outstanding Treasury securities in 1945 and 9.2 percent in 1951 (the year of the Accord), almost entirely in the form of 90-day bills. For comparison, in 2001 the Fed held 9.7 percent of the stock of outstanding Treasury debt.
To repeat, I suspect that operating on rates on longer-term Treasuries would provide sufficient leverage for the Fed to achieve its goals in most plausible scenarios. If lowering yields on longer-dated Treasury securities proved insufficient to restart spending, however, the Fed might next consider attempting to influence directly the yields on privately issued securities. Unlike some central banks, and barring changes to current law, the Fed is relatively restricted in its ability to buy private securities directly.12 However, the Fed does have broad powers to lend to the private sector indirectly via banks, through the discount window.13 Therefore a second policy option, complementary to operating in the markets for Treasury and agency debt, would be for the Fed to offer fixed-term loans to banks at low or zero interest, with a wide range of private assets (including, among others, corporate bonds, commercial paper, bank loans, and mortgages) deemed eligible as collateral.14 For example, the Fed might make 90-day or 180-day zero-interest loans to banks, taking corporate commercial paper of the same maturity as collateral. Pursued aggressively, such a program could significantly reduce liquidity and term premiums on the assets used as collateral. Reductions in these premiums would lower the cost of capital both to banks and the nonbank private sector, over and above the beneficial effect already conferred by lower interest rates on government securities.15
The Fed can inject money into the economy in still other ways. For example, the Fed has the authority to buy foreign government debt, as well as domestic government debt. Potentially, this class of assets offers huge scope for Fed operations, as the quantity of foreign assets eligible for purchase by the Fed is several times the stock of U.S. government debt.16
I need to tread carefully here. Because the economy is a complex and interconnected system, Fed purchases of the liabilities of foreign governments have the potential to affect a number of financial markets, including the market for foreign exchange. In the United States, the Department of the Treasury, not the Federal Reserve, is the lead agency for making international economic policy, including policy toward the dollar; and the Secretary of the Treasury has expressed the view that the determination of the value of the U.S. dollar should be left to free market forces. Moreover, since the United States is a large, relatively closed economy, manipulating the exchange value of the dollar would not be a particularly desirable way to fight domestic deflation, particularly given the range of other options available. Thus, I want to be absolutely clear that I am today neither forecasting nor recommending any attempt by U.S. policymakers to target the international value of the dollar.
Although a policy of intervening to affect the exchange value of the dollar is nowhere on the horizon today, it's worth noting that there have been times when exchange rate policy has been an effective weapon against deflation. A striking example from U.S. history is Franklin Roosevelt's 40 percent devaluation of the dollar against gold in 1933-34, enforced by a program of gold purchases and domestic money creation. The devaluation and the rapid increase in money supply it permitted ended the U.S. deflation remarkably quickly. Indeed, consumer price inflation in the United States, year on year, went from -10.3 percent in 1932 to -5.1 percent in 1933 to 3.4 percent in 1934.17 The economy grew strongly, and by the way, 1934 was one of the best years of the century for the stock market. If nothing else, the episode illustrates that monetary actions can have powerful effects on the economy, even when the nominal interest rate is at or near zero, as was the case at the time of Roosevelt's devaluation.
Fiscal PolicyEach of the policy options I have discussed so far involves the Fed's acting on its own. In practice, the effectiveness of anti-deflation policy could be significantly enhanced by cooperation between the monetary and fiscal authorities. A broad-based tax cut, for example, accommodated by a program of open-market purchases to alleviate any tendency for interest rates to increase, would almost certainly be an effective stimulant to consumption and hence to prices. Even if households decided not to increase consumption but instead re-balanced their portfolios by using their extra cash to acquire real and financial assets, the resulting increase in asset values would lower the cost of capital and improve the balance sheet positions of potential borrowers. A money-financed tax cut is essentially equivalent to Milton Friedman's famous "helicopter drop" of money.18
Of course, in lieu of tax cuts or increases in transfers the government could increase spending on current goods and services or even acquire existing real or financial assets. If the Treasury issued debt to purchase private assets and the Fed then purchased an equal amount of Treasury debt with newly created money, the whole operation would be the economic equivalent of direct open-market operations in private assets.
JapanThe claim that deflation can be ended by sufficiently strong action has no doubt led you to wonder, if that is the case, why has Japan not ended its deflation? The Japanese situation is a complex one that I cannot fully discuss today. I will just make two brief, general points.
First, as you know, Japan's economy faces some significant barriers to growth besides deflation, including massive financial problems in the banking and corporate sectors and a large overhang of government debt. Plausibly, private-sector financial problems have muted the effects of the monetary policies that have been tried in Japan, even as the heavy overhang of government debt has made Japanese policymakers more reluctant to use aggressive fiscal policies (for evidence see, for example, Posen, 1998). Fortunately, the U.S. economy does not share these problems, at least not to anything like the same degree, suggesting that anti-deflationary monetary and fiscal policies would be more potent here than they have been in Japan.
Second, and more important, I believe that, when all is said and done, the failure to end deflation in Japan does not necessarily reflect any technical infeasibility of achieving that goal. Rather, it is a byproduct of a longstanding political debate about how best to address Japan's overall economic problems. As the Japanese certainly realize, both restoring banks and corporations to solvency and implementing significant structural change are necessary for Japan's long-run economic health. But in the short run, comprehensive economic reform will likely impose large costs on many, for example, in the form of unemployment or bankruptcy. As a natural result, politicians, economists, businesspeople, and the general public in Japan have sharply disagreed about competing proposals for reform. In the resulting political deadlock, strong policy actions are discouraged, and cooperation among policymakers is difficult to achieve.
In short, Japan's deflation problem is real and serious; but, in my view, political constraints, rather than a lack of policy instruments, explain why its deflation has persisted for as long as it has. Thus, I do not view the Japanese experience as evidence against the general conclusion that U.S. policymakers have the tools they need to prevent, and, if necessary, to cure a deflationary recession in the United States.
ConclusionSustained deflation can be highly destructive to a modern economy and should be strongly resisted. Fortunately, for the foreseeable future, the chances of a serious deflation in the United States appear remote indeed, in large part because of our economy's underlying strengths but also because of the determination of the Federal Reserve and other U.S. policymakers to act preemptively against deflationary pressures. Moreover, as I have discussed today, a variety of policy responses are available should deflation appear to be taking hold. Because some of these alternative policy tools are relatively less familiar, they may raise practical problems of implementation and of calibration of their likely economic effects. For this reason, as I have emphasized, prevention of deflation is preferable to cure. Nevertheless, I hope to have persuaded you that the Federal Reserve and other economic policymakers would be far from helpless in the face of deflation, even should the federal funds rate hit its zero bound.19
Remarks by Governor Ben S. BernankeBefore the National Economists Club, Washington, D.C.November 21, 2002
Deflation: Making Sure "It" Doesn't Happen Here
Since World War II, inflation--the apparently inexorable rise in the prices of goods and services--has been the bane of central bankers. Economists of various stripes have argued that inflation is the inevitable result of (pick your favorite) the abandonment of metallic monetary standards, a lack of fiscal discipline, shocks to the price of oil and other commodities, struggles over the distribution of income, excessive money creation, self-confirming inflation expectations, an "inflation bias" in the policies of central banks, and still others. Despite widespread "inflation pessimism," however, during the 1980s and 1990s most industrial-country central banks were able to cage, if not entirely tame, the inflation dragon. Although a number of factors converged to make this happy outcome possible, an essential element was the heightened understanding by central bankers and, equally as important, by political leaders and the public at large of the very high costs of allowing the economy to stray too far from price stability.
With inflation rates now quite low in the United States, however, some have expressed concern that we may soon face a new problem--the danger of deflation, or falling prices. That this concern is not purely hypothetical is brought home to us whenever we read newspaper reports about Japan, where what seems to be a relatively moderate deflation--a decline in consumer prices of about 1 percent per year--has been associated with years of painfully slow growth, rising joblessness, and apparently intractable financial problems in the banking and corporate sectors. While it is difficult to sort out cause from effect, the consensus view is that deflation has been an important negative factor in the Japanese slump.
So, is deflation a threat to the economic health of the United States? Not to leave you in suspense, I believe that the chance of significant deflation in the United States in the foreseeable future is extremely small, for two principal reasons. The first is the resilience and structural stability of the U.S. economy itself. Over the years, the U.S. economy has shown a remarkable ability to absorb shocks of all kinds, to recover, and to continue to grow. Flexible and efficient markets for labor and capital, an entrepreneurial tradition, and a general willingness to tolerate and even embrace technological and economic change all contribute to this resiliency. A particularly important protective factor in the current environment is the strength of our financial system: Despite the adverse shocks of the past year, our banking system remains healthy and well-regulated, and firm and household balance sheets are for the most part in good shape. Also helpful is that inflation has recently been not only low but quite stable, with one result being that inflation expectations seem well anchored. For example, according to the University of Michigan survey that underlies the index of consumer sentiment, the median expected rate of inflation during the next five to ten years among those interviewed was 2.9 percent in October 2002, as compared with 2.7 percent a year earlier and 3.0 percent two years earlier--a stable record indeed.
The second bulwark against deflation in the United States, and the one that will be the focus of my remarks today, is the Federal Reserve System itself. The Congress has given the Fed the responsibility of preserving price stability (among other objectives), which most definitely implies avoiding deflation as well as inflation. I am confident that the Fed would take whatever means necessary to prevent significant deflation in the United States and, moreover, that the U.S. central bank, in cooperation with other parts of the government as needed, has sufficient policy instruments to ensure that any deflation that might occur would be both mild and brief.
Of course, we must take care lest confidence become over-confidence. Deflationary episodes are rare, and generalization about them is difficult. Indeed, a recent Federal Reserve study of the Japanese experience concluded that the deflation there was almost entirely unexpected, by both foreign and Japanese observers alike (Ahearne et al., 2002). So, having said that deflation in the United States is highly unlikely, I would be imprudent to rule out the possibility altogether. Accordingly, I want to turn to a further exploration of the causes of deflation, its economic effects, and the policy instruments that can be deployed against it. Before going further I should say that my comments today reflect my own views only and are not necessarily those of my colleagues on the Board of Governors or the Federal Open Market Committee.
Deflation: Its Causes and Effects Deflation is defined as a general decline in prices, with emphasis on the word "general." At any given time, especially in a low-inflation economy like that of our recent experience, prices of some goods and services will be falling. Price declines in a specific sector may occur because productivity is rising and costs are falling more quickly in that sector than elsewhere or because the demand for the output of that sector is weak relative to the demand for other goods and services. Sector-specific price declines, uncomfortable as they may be for producers in that sector, are generally not a problem for the economy as a whole and do not constitute deflation. Deflation per se occurs only when price declines are so widespread that broad-based indexes of prices, such as the consumer price index, register ongoing declines.
The sources of deflation are not a mystery. Deflation is in almost all cases a side effect of a collapse of aggregate demand--a drop in spending so severe that producers must cut prices on an ongoing basis in order to find buyers.1 Likewise, the economic effects of a deflationary episode, for the most part, are similar to those of any other sharp decline in aggregate spending--namely, recession, rising unemployment, and financial stress.
However, a deflationary recession may differ in one respect from "normal" recessions in which the inflation rate is at least modestly positive: Deflation of sufficient magnitude may result in the nominal interest rate declining to zero or very close to zero.2 Once the nominal interest rate is at zero, no further downward adjustment in the rate can occur, since lenders generally will not accept a negative nominal interest rate when it is possible instead to hold cash. At this point, the nominal interest rate is said to have hit the "zero bound."
Deflation great enough to bring the nominal interest rate close to zero poses special problems for the economy and for policy. First, when the nominal interest rate has been reduced to zero, the real interest rate paid by borrowers equals the expected rate of deflation, however large that may be.3 To take what might seem like an extreme example (though in fact it occurred in the United States in the early 1930s), suppose that deflation is proceeding at a clip of 10 percent per year. Then someone who borrows for a year at a nominal interest rate of zero actually faces a 10 percent real cost of funds, as the loan must be repaid in dollars whose purchasing power is 10 percent greater than that of the dollars borrowed originally. In a period of sufficiently severe deflation, the real cost of borrowing becomes prohibitive. Capital investment, purchases of new homes, and other types of spending decline accordingly, worsening the economic downturn.
Although deflation and the zero bound on nominal interest rates create a significant problem for those seeking to borrow, they impose an even greater burden on households and firms that had accumulated substantial debt before the onset of the deflation. This burden arises because, even if debtors are able to refinance their existing obligations at low nominal interest rates, with prices falling they must still repay the principal in dollars of increasing (perhaps rapidly increasing) real value. When William Jennings Bryan made his famous "cross of gold" speech in his 1896 presidential campaign, he was speaking on behalf of heavily mortgaged farmers whose debt burdens were growing ever larger in real terms, the result of a sustained deflation that followed America's post-Civil-War return to the gold standard.4 The financial distress of debtors can, in turn, increase the fragility of the nation's financial system--for example, by leading to a rapid increase in the share of bank loans that are delinquent or in default. Japan in recent years has certainly faced the problem of "debt-deflation"--the deflation-induced, ever-increasing real value of debts. Closer to home, massive financial problems, including defaults, bankruptcies, and bank failures, were endemic in America's worst encounter with deflation, in the years 1930-33--a period in which (as I mentioned) the U.S. price level fell about 10 percent per year.
Beyond its adverse effects in financial markets and on borrowers, the zero bound on the nominal interest rate raises another concern--the limitation that it places on conventional monetary policy. Under normal conditions, the Fed and most other central banks implement policy by setting a target for a short-term interest rate--the overnight federal funds rate in the United States--and enforcing that target by buying and selling securities in open capital markets. When the short-term interest rate hits zero, the central bank can no longer ease policy by lowering its usual interest-rate target.5
Because central banks conventionally conduct monetary policy by manipulating the short-term nominal interest rate, some observers have concluded that when that key rate stands at or near zero, the central bank has "run out of ammunition"--that is, it no longer has the power to expand aggregate demand and hence economic activity. It is true that once the policy rate has been driven down to zero, a central bank can no longer use its traditional means of stimulating aggregate demand and thus will be operating in less familiar territory. The central bank's inability to use its traditional methods may complicate the policymaking process and introduce uncertainty in the size and timing of the economy's response to policy actions. Hence I agree that the situation is one to be avoided if possible.
However, a principal message of my talk today is that a central bank whose accustomed policy rate has been forced down to zero has most definitely not run out of ammunition. As I will discuss, a central bank, either alone or in cooperation with other parts of the government, retains considerable power to expand aggregate demand and economic activity even when its accustomed policy rate is at zero. In the remainder of my talk, I will first discuss measures for preventing deflation--the preferable option if feasible. I will then turn to policy measures that the Fed and other government authorities can take if prevention efforts fail and deflation appears to be gaining a foothold in the economy.
Preventing DeflationAs I have already emphasized, deflation is generally the result of low and falling aggregate demand. The basic prescription for preventing deflation is therefore straightforward, at least in principle: Use monetary and fiscal policy as needed to support aggregate spending, in a manner as nearly consistent as possible with full utilization of economic resources and low and stable inflation. In other words, the best way to get out of trouble is not to get into it in the first place. Beyond this commonsense injunction, however, there are several measures that the Fed (or any central bank) can take to reduce the risk of falling into deflation.
First, the Fed should try to preserve a buffer zone for the inflation rate, that is, during normal times it should not try to push inflation down all the way to zero.6 Most central banks seem to understand the need for a buffer zone. For example, central banks with explicit inflation targets almost invariably set their target for inflation above zero, generally between 1 and 3 percent per year. Maintaining an inflation buffer zone reduces the risk that a large, unanticipated drop in aggregate demand will drive the economy far enough into deflationary territory to lower the nominal interest rate to zero. Of course, this benefit of having a buffer zone for inflation must be weighed against the costs associated with allowing a higher inflation rate in normal times.
Second, the Fed should take most seriously--as of course it does--its responsibility to ensure financial stability in the economy. Irving Fisher (1933) was perhaps the first economist to emphasize the potential connections between violent financial crises, which lead to "fire sales" of assets and falling asset prices, with general declines in aggregate demand and the price level. A healthy, well capitalized banking system and smoothly functioning capital markets are an important line of defense against deflationary shocks. The Fed should and does use its regulatory and supervisory powers to ensure that the financial system will remain resilient if financial conditions change rapidly. And at times of extreme threat to financial stability, the Federal Reserve stands ready to use the discount window and other tools to protect the financial system, as it did during the 1987 stock market crash and the September 11, 2001, terrorist attacks.
Third, as suggested by a number of studies, when inflation is already low and the fundamentals of the economy suddenly deteriorate, the central bank should act more preemptively and more aggressively than usual in cutting rates (Orphanides and Wieland, 2000; Reifschneider and Williams, 2000; Ahearne et al., 2002). By moving decisively and early, the Fed may be able to prevent the economy from slipping into deflation, with the special problems that entails.
As I have indicated, I believe that the combination of strong economic fundamentals and policymakers that are attentive to downside as well as upside risks to inflation make significant deflation in the United States in the foreseeable future quite unlikely. But suppose that, despite all precautions, deflation were to take hold in the U.S. economy and, moreover, that the Fed's policy instrument--the federal funds rate--were to fall to zero. What then? In the remainder of my talk I will discuss some possible options for stopping a deflation once it has gotten under way. I should emphasize that my comments on this topic are necessarily speculative, as the modern Federal Reserve has never faced this situation nor has it pre-committed itself formally to any specific course of action should deflation arise. Furthermore, the specific responses the Fed would undertake would presumably depend on a number of factors, including its assessment of the whole range of risks to the economy and any complementary policies being undertaken by other parts of the U.S. government.7
Curing DeflationLet me start with some general observations about monetary policy at the zero bound, sweeping under the rug for the moment some technical and operational issues.
As I have mentioned, some observers have concluded that when the central bank's policy rate falls to zero--its practical minimum--monetary policy loses its ability to further stimulate aggregate demand and the economy. At a broad conceptual level, and in my view in practice as well, this conclusion is clearly mistaken. Indeed, under a fiat (that is, paper) money system, a government (in practice, the central bank in cooperation with other agencies) should always be able to generate increased nominal spending and inflation, even when the short-term nominal interest rate is at zero.
The conclusion that deflation is always reversible under a fiat money system follows from basic economic reasoning. A little parable may prove useful: Today an ounce of gold sells for $300, more or less. Now suppose that a modern alchemist solves his subject's oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days. What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.
What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
Of course, the U.S. government is not going to print money and distribute it willy-nilly (although as we will see later, there are practical policies that approximate this behavior).8 Normally, money is injected into the economy through asset purchases by the Federal Reserve. To stimulate aggregate spending when short-term interest rates have reached zero, the Fed must expand the scale of its asset purchases or, possibly, expand the menu of assets that it buys. Alternatively, the Fed could find other ways of injecting money into the system--for example, by making low-interest-rate loans to banks or cooperating with the fiscal authorities. Each method of adding money to the economy has advantages and drawbacks, both technical and economic. One important concern in practice is that calibrating the economic effects of nonstandard means of injecting money may be difficult, given our relative lack of experience with such policies. Thus, as I have stressed already, prevention of deflation remains preferable to having to cure it. If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation.
So what then might the Fed do if its target interest rate, the overnight federal funds rate, fell to zero? One relatively straightforward extension of current procedures would be to try to stimulate spending by lowering rates further out along the Treasury term structure--that is, rates on government bonds of longer maturities.9 There are at least two ways of bringing down longer-term rates, which are complementary and could be employed separately or in combination. One approach, similar to an action taken in the past couple of years by the Bank of Japan, would be for the Fed to commit to holding the overnight rate at zero for some specified period. Because long-term interest rates represent averages of current and expected future short-term rates, plus a term premium, a commitment to keep short-term rates at zero for some time--if it were credible--would induce a decline in longer-term rates. A more direct method, which I personally prefer, would be for the Fed to begin announcing explicit ceilings for yields on longer-maturity Treasury debt (say, bonds maturing within the next two years). The Fed could enforce these interest-rate ceilings by committing to make unlimited purchases of securities up to two years from maturity at prices consistent with the targeted yields. If this program were successful, not only would yields on medium-term Treasury securities fall, but (because of links operating through expectations of future interest rates) yields on longer-term public and private debt (such as mortgages) would likely fall as well.
Lower rates over the maturity spectrum of public and private securities should strengthen aggregate demand in the usual ways and thus help to end deflation. Of course, if operating in relatively short-dated Treasury debt proved insufficient, the Fed could also attempt to cap yields of Treasury securities at still longer maturities, say three to six years. Yet another option would be for the Fed to use its existing authority to operate in the markets for agency debt (for example, mortgage-backed securities issued by Ginnie Mae, the Government National Mortgage Association).
Historical experience tends to support the proposition that a sufficiently determined Fed can peg or cap Treasury bond prices and yields at other than the shortest maturities. The most striking episode of bond-price pegging occurred during the years before the Federal Reserve-Treasury Accord of 1951.10 Prior to that agreement, which freed the Fed from its responsibility to fix yields on government debt, the Fed maintained a ceiling of 2-1/2 percent on long-term Treasury bonds for nearly a decade. Moreover, it simultaneously established a ceiling on the twelve-month Treasury certificate of between 7/8 percent to 1-1/4 percent and, during the first half of that period, a rate of 3/8 percent on the 90-day Treasury bill. The Fed was able to achieve these low interest rates despite a level of outstanding government debt (relative to GDP) significantly greater than we have today, as well as inflation rates substantially more variable. At times, in order to enforce these low rates, the Fed had actually to purchase the bulk of outstanding 90-day bills. Interestingly, though, the Fed enforced the 2-1/2 percent ceiling on long-term bond yields for nearly a decade without ever holding a substantial share of long-maturity bonds outstanding.11 For example, the Fed held 7.0 percent of outstanding Treasury securities in 1945 and 9.2 percent in 1951 (the year of the Accord), almost entirely in the form of 90-day bills. For comparison, in 2001 the Fed held 9.7 percent of the stock of outstanding Treasury debt.
To repeat, I suspect that operating on rates on longer-term Treasuries would provide sufficient leverage for the Fed to achieve its goals in most plausible scenarios. If lowering yields on longer-dated Treasury securities proved insufficient to restart spending, however, the Fed might next consider attempting to influence directly the yields on privately issued securities. Unlike some central banks, and barring changes to current law, the Fed is relatively restricted in its ability to buy private securities directly.12 However, the Fed does have broad powers to lend to the private sector indirectly via banks, through the discount window.13 Therefore a second policy option, complementary to operating in the markets for Treasury and agency debt, would be for the Fed to offer fixed-term loans to banks at low or zero interest, with a wide range of private assets (including, among others, corporate bonds, commercial paper, bank loans, and mortgages) deemed eligible as collateral.14 For example, the Fed might make 90-day or 180-day zero-interest loans to banks, taking corporate commercial paper of the same maturity as collateral. Pursued aggressively, such a program could significantly reduce liquidity and term premiums on the assets used as collateral. Reductions in these premiums would lower the cost of capital both to banks and the nonbank private sector, over and above the beneficial effect already conferred by lower interest rates on government securities.15
The Fed can inject money into the economy in still other ways. For example, the Fed has the authority to buy foreign government debt, as well as domestic government debt. Potentially, this class of assets offers huge scope for Fed operations, as the quantity of foreign assets eligible for purchase by the Fed is several times the stock of U.S. government debt.16
I need to tread carefully here. Because the economy is a complex and interconnected system, Fed purchases of the liabilities of foreign governments have the potential to affect a number of financial markets, including the market for foreign exchange. In the United States, the Department of the Treasury, not the Federal Reserve, is the lead agency for making international economic policy, including policy toward the dollar; and the Secretary of the Treasury has expressed the view that the determination of the value of the U.S. dollar should be left to free market forces. Moreover, since the United States is a large, relatively closed economy, manipulating the exchange value of the dollar would not be a particularly desirable way to fight domestic deflation, particularly given the range of other options available. Thus, I want to be absolutely clear that I am today neither forecasting nor recommending any attempt by U.S. policymakers to target the international value of the dollar.
Although a policy of intervening to affect the exchange value of the dollar is nowhere on the horizon today, it's worth noting that there have been times when exchange rate policy has been an effective weapon against deflation. A striking example from U.S. history is Franklin Roosevelt's 40 percent devaluation of the dollar against gold in 1933-34, enforced by a program of gold purchases and domestic money creation. The devaluation and the rapid increase in money supply it permitted ended the U.S. deflation remarkably quickly. Indeed, consumer price inflation in the United States, year on year, went from -10.3 percent in 1932 to -5.1 percent in 1933 to 3.4 percent in 1934.17 The economy grew strongly, and by the way, 1934 was one of the best years of the century for the stock market. If nothing else, the episode illustrates that monetary actions can have powerful effects on the economy, even when the nominal interest rate is at or near zero, as was the case at the time of Roosevelt's devaluation.
Fiscal PolicyEach of the policy options I have discussed so far involves the Fed's acting on its own. In practice, the effectiveness of anti-deflation policy could be significantly enhanced by cooperation between the monetary and fiscal authorities. A broad-based tax cut, for example, accommodated by a program of open-market purchases to alleviate any tendency for interest rates to increase, would almost certainly be an effective stimulant to consumption and hence to prices. Even if households decided not to increase consumption but instead re-balanced their portfolios by using their extra cash to acquire real and financial assets, the resulting increase in asset values would lower the cost of capital and improve the balance sheet positions of potential borrowers. A money-financed tax cut is essentially equivalent to Milton Friedman's famous "helicopter drop" of money.18
Of course, in lieu of tax cuts or increases in transfers the government could increase spending on current goods and services or even acquire existing real or financial assets. If the Treasury issued debt to purchase private assets and the Fed then purchased an equal amount of Treasury debt with newly created money, the whole operation would be the economic equivalent of direct open-market operations in private assets.
JapanThe claim that deflation can be ended by sufficiently strong action has no doubt led you to wonder, if that is the case, why has Japan not ended its deflation? The Japanese situation is a complex one that I cannot fully discuss today. I will just make two brief, general points.
First, as you know, Japan's economy faces some significant barriers to growth besides deflation, including massive financial problems in the banking and corporate sectors and a large overhang of government debt. Plausibly, private-sector financial problems have muted the effects of the monetary policies that have been tried in Japan, even as the heavy overhang of government debt has made Japanese policymakers more reluctant to use aggressive fiscal policies (for evidence see, for example, Posen, 1998). Fortunately, the U.S. economy does not share these problems, at least not to anything like the same degree, suggesting that anti-deflationary monetary and fiscal policies would be more potent here than they have been in Japan.
Second, and more important, I believe that, when all is said and done, the failure to end deflation in Japan does not necessarily reflect any technical infeasibility of achieving that goal. Rather, it is a byproduct of a longstanding political debate about how best to address Japan's overall economic problems. As the Japanese certainly realize, both restoring banks and corporations to solvency and implementing significant structural change are necessary for Japan's long-run economic health. But in the short run, comprehensive economic reform will likely impose large costs on many, for example, in the form of unemployment or bankruptcy. As a natural result, politicians, economists, businesspeople, and the general public in Japan have sharply disagreed about competing proposals for reform. In the resulting political deadlock, strong policy actions are discouraged, and cooperation among policymakers is difficult to achieve.
In short, Japan's deflation problem is real and serious; but, in my view, political constraints, rather than a lack of policy instruments, explain why its deflation has persisted for as long as it has. Thus, I do not view the Japanese experience as evidence against the general conclusion that U.S. policymakers have the tools they need to prevent, and, if necessary, to cure a deflationary recession in the United States.
ConclusionSustained deflation can be highly destructive to a modern economy and should be strongly resisted. Fortunately, for the foreseeable future, the chances of a serious deflation in the United States appear remote indeed, in large part because of our economy's underlying strengths but also because of the determination of the Federal Reserve and other U.S. policymakers to act preemptively against deflationary pressures. Moreover, as I have discussed today, a variety of policy responses are available should deflation appear to be taking hold. Because some of these alternative policy tools are relatively less familiar, they may raise practical problems of implementation and of calibration of their likely economic effects. For this reason, as I have emphasized, prevention of deflation is preferable to cure. Nevertheless, I hope to have persuaded you that the Federal Reserve and other economic policymakers would be far from helpless in the face of deflation, even should the federal funds rate hit its zero bound.19
Thursday, November 27, 2008
SOFA passes parliament in Iraq.
This is from raedinthemiddle.
Raed does not provide a translation of the text of SOFA but just of the motion passed. As can be seen there must be a referendum by July 30. Even if the SOFA is rejected it would be a year later in 2010 that the US would have to get out.
Thursday, November 27, 2008
iraqi parliament passes a conditional and temporary ratification
this is a rough translation of what the Iraqi parliament has passed today with a very slim majority (144 MPs instead of the constitutionally required two thirds majority 184 MPs). The good news is that this is not over yet. This will make the law valid for the next six months until the Iraqi people vote on it in a national referendum.Overall, and despite all the illegal and unconstitutional steps involved, I think it is great that we have a law the requires all US troops to withdraw from all Iraqi territories before the end of 2011. Let's wait and see what the majority of Iraqis will decide in the national referendum.Act Ratifying the agreement between Iraq and the United States on the withdrawal of U.S. troops from Iraq and organizing activities through its presence and the interim Thursday, November 27, 2008 The name of the people Council Chair based on what the council of representatives has passes and has been ratified by the council's Presidency, and based of the provisions of paragraph (first) of Article (61) and paragraph (third) of Article (73) of the Constitution: the following law has been passed: -- the law of Ratifying the agreement between Iraq and the United States on the withdrawal of U.S. troops from Iraq and organizing activities through its presence and the interim Article 1 - the Republic of Iraq ratified an agreement between Iraq and the United States on the withdrawal of U.S. troops from Iraq and organizing activities through its temporary presence. Article 2 - first - the (Convention on the withdrawal of U.S. troops from Iraq and organizing activities through its temporary presence) shall be submitted to the Iraqi people in a national referendum no later than on July 30, 2009. Second- the Independent Electoral Commission shall organize the referendum in accordance to the requirements of the Constitution and the law. Article 3 - the Iraqi government is committed to the outcome of the referendum . Article 4 - This Law shall be published in the Official Gazette and is effective as of 1/1/2009. Reasons For the purpose of scheduling the withdrawal of U.S. troops from Iraq and organizing activities through its presence in preparation for the temporary adoption of Iraq's armed forces to protect its security and defend its territory. for these purposes the law has been passed
Posted By Raed Jarrar at 12:31 PM
Raed does not provide a translation of the text of SOFA but just of the motion passed. As can be seen there must be a referendum by July 30. Even if the SOFA is rejected it would be a year later in 2010 that the US would have to get out.
Thursday, November 27, 2008
iraqi parliament passes a conditional and temporary ratification
this is a rough translation of what the Iraqi parliament has passed today with a very slim majority (144 MPs instead of the constitutionally required two thirds majority 184 MPs). The good news is that this is not over yet. This will make the law valid for the next six months until the Iraqi people vote on it in a national referendum.Overall, and despite all the illegal and unconstitutional steps involved, I think it is great that we have a law the requires all US troops to withdraw from all Iraqi territories before the end of 2011. Let's wait and see what the majority of Iraqis will decide in the national referendum.Act Ratifying the agreement between Iraq and the United States on the withdrawal of U.S. troops from Iraq and organizing activities through its presence and the interim Thursday, November 27, 2008 The name of the people Council Chair based on what the council of representatives has passes and has been ratified by the council's Presidency, and based of the provisions of paragraph (first) of Article (61) and paragraph (third) of Article (73) of the Constitution: the following law has been passed: -- the law of Ratifying the agreement between Iraq and the United States on the withdrawal of U.S. troops from Iraq and organizing activities through its presence and the interim Article 1 - the Republic of Iraq ratified an agreement between Iraq and the United States on the withdrawal of U.S. troops from Iraq and organizing activities through its temporary presence. Article 2 - first - the (Convention on the withdrawal of U.S. troops from Iraq and organizing activities through its temporary presence) shall be submitted to the Iraqi people in a national referendum no later than on July 30, 2009. Second- the Independent Electoral Commission shall organize the referendum in accordance to the requirements of the Constitution and the law. Article 3 - the Iraqi government is committed to the outcome of the referendum . Article 4 - This Law shall be published in the Official Gazette and is effective as of 1/1/2009. Reasons For the purpose of scheduling the withdrawal of U.S. troops from Iraq and organizing activities through its presence in preparation for the temporary adoption of Iraq's armed forces to protect its security and defend its territory. for these purposes the law has been passed
Posted By Raed Jarrar at 12:31 PM
Philippines: Fecal matter still hitting fan re fertilizer scam
This is from the Tribune (Manila). Arroyo and her deal making spouse are likely to wriggle free from all this as usual. The surprise witness may disappear or chicken out or whatever. Stay tuned for Fertilizer Scam Part 15 tomorrow or the next day with a cast of dozens including Joc-Joc, Arroyo, First Gentleman Mike etc.
A ‘surprise witness’ to pin Joc-joc on scam
By Angie M. Rosales
EXCLUSIVE
11/28/2008
It may be all over for former Agriculture Undersecretary Jocelyn “Joc-joc” Bolante when a “surprise witness” who reportedly has personal knowledge of the P728-million fertilizer fund scam finally surfaces before the Senate blue ribbon committee.
The surprise witness is to further pin down Bolante as being the architect in the alleged misuse, some four years ago, of the department’s fertilizer fund.
The witness, unimpeachable sources yesterday revealed, is likely to name names, including naming one of the alleged bagmen of First Gentleman Jose Miguel “Mike” Arroyo.
It has been talked about, for sometime, that the First Gentleman was allegedly heavily involved in the campaign and its “funding” for his wife’s 2004 presidential run.
But there is still no certainty that the unnamed witness, known to be knowledgeable on the purported modus operandi perpetrated by Bolante
in the disbursement of funds, will appear in today’s continuation of the inquiry as safety and well-being of the witness are still being arranged, along with the needed documents to back up the testimony, it was gathered.
The appearance of the unnamed witness is seen to trigger the surfacing of other supposed key players in the fund scam, substantiating allegations made in the previous Senate inquiry into the farm inputs and farm implements program during the 13th Congress, under the helm of Sen. Ramon Magsaysay Jr., sources added.
As this developed, majority of the blue ribbon committee members handling the inquiry favor the call to put in detention anew Bolante by the upper chamber.
Most likely, Bolante may find himself being held in custody by the Senate when proceedings resume today.
Committee chairman Sen. Richard Gordon yesterday said there are already 11 of his panel members who had signed, approving the motion made by opposition Sen. Panfilo Lacson to cite in contempt Bolante, as they have found him to be evasive in answering their queries during last Tuesday’s continuation of their probe.
“We have the votes. That’s why he should prepare himself very well, be frank and candid and not be evasive tomorrow. I mean, this is a big hint. We have 11 signatures already. There are 17 members and we only need nine (to constitute the majority),” the senator said during the weekly Kapihan sa Senado breakfast forum.
“Depending on the committee, I’m preparing the instances when Bolante had been caught lying or had been practically evasive…I already warned him,” Gordon said.
“I want to make it clear, Bolante is not under arrest, he’s not under house arrest, he’s in his house, he is escorted by the Senate principally because he has said that he fears for his life. He is under protective custody of the Senate. I am told by the (Senate) Sergeant-at-Arms that he is able to go wherever he wants. (But) we can detain him in any detention center that we see fit,” the senator said.
Expected to attend the hearing are former DA regional directors who were served the department at the time of the supposed perpetration of the fund scam.
“They are expected to shed more light especially to sustain what (DA Reg. 11) Dir. (Roger) Choi has stated (in the last proceedings) that directions were taken from Bolante and at the same time, to sustain the statement made by (DA Reg.7 Dir. Ricardo) Oblena of the fact that Bolante commanded to change the NGO (non-government organization) concerned,” the senator said.
Oblena, when cornered by Senate probers in the last hearing, confessed that he had received instructions through a phone call from Bolante, supposedly to change the name of the NGO-recipient of the funds for the submission of documents for liquidation, some two months after actual deliveries were made.
Earlier, Gordon ordered the National Bureau of Investigations (NBI) to locate the whereabouts of Maritess Aytona, Bolante’s alleged runner for some of the funds distributed in the Visayan region, after the Senate’s process servers failed to serve the invitation for her appear in today’s hearing as the Senate resumes its investigation on the fertilizer fund scam.
He added that they wanted to invite Aytona and compel her to appear in a face-off with Bolante.
“Right now, we have the lawyers saying that they are going to bring her here. We’re not quite sure whether that is going to happen. But tomorrow, we also expect more breakthroughs in the matter because of the fact that the AMLC (Anti-Money Laundering Council) will shed light on the deposits,” he said.
“We will get the AMLC to come down to make that report,” added Gordon.
Aytona was earlier identified as the individual who proposed a 30-30-40 sharing scheme for the P5-million fertilizer allocation-30 percent for the congressman, 30 percent for Bolante, and 40 percent for the purchase of liquid fertilizer.
Bolante has denied knowing her and Capiz Rep. Antonio del Rosario, who claimed that Aytona and her cohort, Jose Barredo, had offered him a cut of the P5-million fertilizer fund.
Aytona, in the submitted sworn affidavit of Barredo to the Magsaysay committee in October 2005, was identified as being connected with the supposed fertilizer supplier Feshan Philippines Inc.
The said company, according to Barredo is alleged to be “connected” with Bolante and was supposedly tapped to exclusively supply the liquid fertilizer of local government officials – congressmen and governors, sometime during the 2004 presidential elections.
Barredo attested before the Senate panel of having worked closely with Aytona in the “marketing” of liquid fertilizers to LGUs beginning January 2004.
Barredo identified several municipalities and congressional districts in Bulacan and legislative districts in Region 6 as his area of operation.
The blue ribbon chairman has also requested the Philippine Embassy in Singapore to secure immediately the deposition of Derek Glass, the Singaporean incorporator of Feshan.
Gordon issued the request to Ambassador Minda Cruz on Glass company’s participation in the fund scam in the hope of clarifying a statement purportedly attributed to Glass that the latter was not aware of the contract his company entered with the government.
He also wanted to verify reports that the liquid fertilizers delivered were allegedly of sub-standard quality.
Based on media reports, Glass earlier claimed the company and the Bio-Nature fertilizer brand might have been “used” unscrupulously by his local partners. He disavowed involvement in the scam and said he was surprised to be linked to it.
Glass also reportedly denied that Bio-Nature fertilizer, made by the Singapore-based Bio Nature Technology of which he is a major stockholder.
A ‘surprise witness’ to pin Joc-joc on scam
By Angie M. Rosales
EXCLUSIVE
11/28/2008
It may be all over for former Agriculture Undersecretary Jocelyn “Joc-joc” Bolante when a “surprise witness” who reportedly has personal knowledge of the P728-million fertilizer fund scam finally surfaces before the Senate blue ribbon committee.
The surprise witness is to further pin down Bolante as being the architect in the alleged misuse, some four years ago, of the department’s fertilizer fund.
The witness, unimpeachable sources yesterday revealed, is likely to name names, including naming one of the alleged bagmen of First Gentleman Jose Miguel “Mike” Arroyo.
It has been talked about, for sometime, that the First Gentleman was allegedly heavily involved in the campaign and its “funding” for his wife’s 2004 presidential run.
But there is still no certainty that the unnamed witness, known to be knowledgeable on the purported modus operandi perpetrated by Bolante
in the disbursement of funds, will appear in today’s continuation of the inquiry as safety and well-being of the witness are still being arranged, along with the needed documents to back up the testimony, it was gathered.
The appearance of the unnamed witness is seen to trigger the surfacing of other supposed key players in the fund scam, substantiating allegations made in the previous Senate inquiry into the farm inputs and farm implements program during the 13th Congress, under the helm of Sen. Ramon Magsaysay Jr., sources added.
As this developed, majority of the blue ribbon committee members handling the inquiry favor the call to put in detention anew Bolante by the upper chamber.
Most likely, Bolante may find himself being held in custody by the Senate when proceedings resume today.
Committee chairman Sen. Richard Gordon yesterday said there are already 11 of his panel members who had signed, approving the motion made by opposition Sen. Panfilo Lacson to cite in contempt Bolante, as they have found him to be evasive in answering their queries during last Tuesday’s continuation of their probe.
“We have the votes. That’s why he should prepare himself very well, be frank and candid and not be evasive tomorrow. I mean, this is a big hint. We have 11 signatures already. There are 17 members and we only need nine (to constitute the majority),” the senator said during the weekly Kapihan sa Senado breakfast forum.
“Depending on the committee, I’m preparing the instances when Bolante had been caught lying or had been practically evasive…I already warned him,” Gordon said.
“I want to make it clear, Bolante is not under arrest, he’s not under house arrest, he’s in his house, he is escorted by the Senate principally because he has said that he fears for his life. He is under protective custody of the Senate. I am told by the (Senate) Sergeant-at-Arms that he is able to go wherever he wants. (But) we can detain him in any detention center that we see fit,” the senator said.
Expected to attend the hearing are former DA regional directors who were served the department at the time of the supposed perpetration of the fund scam.
“They are expected to shed more light especially to sustain what (DA Reg. 11) Dir. (Roger) Choi has stated (in the last proceedings) that directions were taken from Bolante and at the same time, to sustain the statement made by (DA Reg.7 Dir. Ricardo) Oblena of the fact that Bolante commanded to change the NGO (non-government organization) concerned,” the senator said.
Oblena, when cornered by Senate probers in the last hearing, confessed that he had received instructions through a phone call from Bolante, supposedly to change the name of the NGO-recipient of the funds for the submission of documents for liquidation, some two months after actual deliveries were made.
Earlier, Gordon ordered the National Bureau of Investigations (NBI) to locate the whereabouts of Maritess Aytona, Bolante’s alleged runner for some of the funds distributed in the Visayan region, after the Senate’s process servers failed to serve the invitation for her appear in today’s hearing as the Senate resumes its investigation on the fertilizer fund scam.
He added that they wanted to invite Aytona and compel her to appear in a face-off with Bolante.
“Right now, we have the lawyers saying that they are going to bring her here. We’re not quite sure whether that is going to happen. But tomorrow, we also expect more breakthroughs in the matter because of the fact that the AMLC (Anti-Money Laundering Council) will shed light on the deposits,” he said.
“We will get the AMLC to come down to make that report,” added Gordon.
Aytona was earlier identified as the individual who proposed a 30-30-40 sharing scheme for the P5-million fertilizer allocation-30 percent for the congressman, 30 percent for Bolante, and 40 percent for the purchase of liquid fertilizer.
Bolante has denied knowing her and Capiz Rep. Antonio del Rosario, who claimed that Aytona and her cohort, Jose Barredo, had offered him a cut of the P5-million fertilizer fund.
Aytona, in the submitted sworn affidavit of Barredo to the Magsaysay committee in October 2005, was identified as being connected with the supposed fertilizer supplier Feshan Philippines Inc.
The said company, according to Barredo is alleged to be “connected” with Bolante and was supposedly tapped to exclusively supply the liquid fertilizer of local government officials – congressmen and governors, sometime during the 2004 presidential elections.
Barredo attested before the Senate panel of having worked closely with Aytona in the “marketing” of liquid fertilizers to LGUs beginning January 2004.
Barredo identified several municipalities and congressional districts in Bulacan and legislative districts in Region 6 as his area of operation.
The blue ribbon chairman has also requested the Philippine Embassy in Singapore to secure immediately the deposition of Derek Glass, the Singaporean incorporator of Feshan.
Gordon issued the request to Ambassador Minda Cruz on Glass company’s participation in the fund scam in the hope of clarifying a statement purportedly attributed to Glass that the latter was not aware of the contract his company entered with the government.
He also wanted to verify reports that the liquid fertilizers delivered were allegedly of sub-standard quality.
Based on media reports, Glass earlier claimed the company and the Bio-Nature fertilizer brand might have been “used” unscrupulously by his local partners. He disavowed involvement in the scam and said he was surprised to be linked to it.
Glass also reportedly denied that Bio-Nature fertilizer, made by the Singapore-based Bio Nature Technology of which he is a major stockholder.
Dreyfuss: Obama's Foreign Policy Team
This is from the Nation.
I have the same type of evaluation as Dreyfuss but no doubt Dreyfuss knows more about the players than I do so he can speak for himself. It should be pointed out though that Obama's own pronouncements are quite consistent with his choices. It was the Obama high of many on the left which obscured this reality that Obama himself made no attempt to hide. This article does not say much about Obama's courting of Israel as well.
_TheDreyfussReport_ATFboard_728x90");
Obama's Foreign Policy Team
posted by Robert Dreyfuss on 11/23/2008 @ 9:22pm
I hate to say I told you so, but here it goes.
In late September, in this column, I criticized Barack Obama for what I called a "pathetic" debate with John McCain, in which Obama got nearly everything about foreign policy wrong:
"He checked all the boxes. Barack ("Senator McCain is right") Obama couldn't find anything to disagree with the militarist Arizonan about. Support for NATO expansion? Check. Absurd anti-Russian diatribes? Check. Dramatic escalation of the war in Afghanistan? Check. I'm ready to attack Pakistan? Check. (Actually, on this one, McCain was the moderate!) Painful sanctions against Iran, backed up by the threat of force? Check. Blathering about the great threat from Al Qaeda? Check. It went on and on."
I pointed out that Obama went out of his way to say things like: "I believe the Republican Guard of Iran is a terrorist organization." And: "A resurgent and very aggressive Russia is a threat to the peace and stability of the region."
Last July, in a major feature piece for The Nation on Obama's foreign policy, I wrote:
"But in many respects, Obama seems likely to preside over a restoration of the bipartisan consensus that governed foreign policy during the cold war and the 1990s, updated for a post-9/11 world. ... Even as he pledges to end the war in Iraq, Obama promises to increase Pentagon spending, boost the size of the Army and Marines, bolster the Special Forces, expand intelligence agencies and maintain the hundreds of US military bases that dot the globe. He supports a muscular multilateralism that includes NATO expansion, and according to the Times of London, his advisers are pushing him to ask Defense Secretary Robert Gates to stay on in an Obama administration. Though he is against the idea of the United States imposing democracy abroad, Obama does propose a sweeping nation-building and democracy-promotion program, including strengthening the controversial National Endowment for Democracy and constructing a civil-military apparatus that would deploy to rescue and rebuild failed and failing states in Africa, Asia and the Middle East."
So are we surprised that now, as president-elect, Obama is selecting people whose views are coherent with Obama's frequently stated views? Are we surprised that the views of Obama's conservative and centrist advisers are, in fact, coherent with Obama's own? And are we surprised that his choices for his foreign policy and national security appointments are drawn exclusively from conservative, centrist, and pro-military circles without even a single -- yes, not one! -- chosen to represent the antiwar wing of the Democratic party? No, we are not.
What does it mean, then? Do we still believe that Obama was pretending to be conservative and cautious on foreign policy during the campaign, in order to get himself elected? Or is the truth, like Occam's razor, far simpler? Perhaps what Obama (and his advisers) said during the campaign reflects what they really believe.
We could all make lists of people that we might have chosen for secretary of state, defense, attorney general, homeland security, intelligence, and national security adviser. (True, not all of Obama's appointments are certain, yet, but the writing is on the wall.) It's now likely that not one of those posts will be filled with someone who either voted against the war in Iraq as a member of Congress or who, from outside Congress, vocally opposed the war. Not one.
What about Russ Feingold, Barbara Boxer, Chris Dodd, Sherrod Brown, and Jim Webb from the Senate? Where is John Kerry? What about Gary Hart and Al Gore? What about any one of a dozen or more prominent members of the antiwar and progressive caucuses in the House of Representatives, such as Lynn Woolsey, Jim McDermott, or Jim McGovern? What about the generals who, unlike General James E. Jones, didn't campaign with McCain and who spoke out against the war? What about the many prominent experts on disarmament and nonproliferation, like Lt. General Robert Gard, Gen. Joseph P. Hoar, and Peter Galbraith, all of whom serve on the board of directors of the Center for Arms Control? Or Joseph Cirincione of the Ploughshares Fund, a leading arms control expert? Well, you get the idea.
Here's the likely lineup so far: Secretary of State Hillary Clinton, Secretary of Defense Robert Gates, and National Security Adviser James E. Jones. For director of national intelligence, Dennis C. Blair, a retired admiral tangled up in the military-industrial complex? Key Obama advisers such as Richard Danzig, a former secretary of the Navy; Tony Lake, a former national security adviser; Susan Rice, an Africa specialist and former State Department official; and Mark Lippert, Obama's top Senate foreign policy aide are likely to get important deputy-level jobs, though Danzig -- who is on record supporting Gates for the job -- may yet get the top Pentagon post.
As I pointed out in my July piece for The Nation, Rice and Lake -- along with outside advisers Samantha Power and Sarah Sewell -- are on record supporting tough military action overseas in case of humanitarian crisis. Rice and Lake have said explicitly that they favor war against Sudan. Two years ago, they wrote in the Washington Post:
"The United States, preferably with NATO involvement and African political support, would strike Sudanese airfields, aircraft and other military assets. It could blockade Port Sudan, through which Sudan's oil exports flow. Then U.N. troops would deploy -- by force, if necessary, with U.S. and NATO backing.
"If the United States fails to gain U.N. support, we should act without it. Impossible? No."
Clinton, who now seems to be a lock for the State Department, would be likely to hire a passel of hardliners for her own aides, including people like Richard Holbrooke, Dennis Ross, and Leslie Gelb, all three of who serve on the advisory board of the ultra-hawkish group, United Against Nuclear Iran. She'd also draw on relatively conservative officials from the Center for a New American Security, the Brookings Institution, and other Washington thinktanks who are in tune with her own hawkish views on Israel, Iran, and projecting U.S. muscle abroad.
And then there is General Jones.
Out of the blue, in the third presidential debate, Obama cited Jones as someone he trusts on national security. He is an advocate for stepped-up defense spending. And, notes CNN, it's all one big, happy family:
"One person close to the transition noted Jones is a bipartisan figure who has warm relationships with both current Defense Secretary Robert Gates, who may stay on the job for at least a brief period, as well as Sen. Hillary Clinton, who is now on track to be nominated as Secretary of State after Thanksgiving."
Not once, but twice he was asked by Secretary of State Condoleezza Rice to be her deputy secretary of state. Adds the London Times, in an analytical story on Jones:
"Last year he conducted an investigation on behalf of Congress on the situation in Iraq and Afghanistan.
"'Make no mistake, Nato is not winning in Afghanistan,' he said. He also said that the war in Iraq had caused the US to 'take its eye off the ball' in Afghanistan, and gave warning that the consequences of failure there were just as serious as defeat in Iraq – views publicly expressed by Mr Obama.
"Before Mr Obama travelled to Afghanistan during the presidential campaign he was briefed by General Jones, who in 2007 was appointed by Dr Rice as a special envoy for Middle East Security."
National Review Online calls the idea of Jones at the NSC "a pretty good sign for hawks, a pretty bad sign for doves," which just about sums it up.
Share this article
I have the same type of evaluation as Dreyfuss but no doubt Dreyfuss knows more about the players than I do so he can speak for himself. It should be pointed out though that Obama's own pronouncements are quite consistent with his choices. It was the Obama high of many on the left which obscured this reality that Obama himself made no attempt to hide. This article does not say much about Obama's courting of Israel as well.
_TheDreyfussReport_ATFboard_728x90");
Obama's Foreign Policy Team
posted by Robert Dreyfuss on 11/23/2008 @ 9:22pm
I hate to say I told you so, but here it goes.
In late September, in this column, I criticized Barack Obama for what I called a "pathetic" debate with John McCain, in which Obama got nearly everything about foreign policy wrong:
"He checked all the boxes. Barack ("Senator McCain is right") Obama couldn't find anything to disagree with the militarist Arizonan about. Support for NATO expansion? Check. Absurd anti-Russian diatribes? Check. Dramatic escalation of the war in Afghanistan? Check. I'm ready to attack Pakistan? Check. (Actually, on this one, McCain was the moderate!) Painful sanctions against Iran, backed up by the threat of force? Check. Blathering about the great threat from Al Qaeda? Check. It went on and on."
I pointed out that Obama went out of his way to say things like: "I believe the Republican Guard of Iran is a terrorist organization." And: "A resurgent and very aggressive Russia is a threat to the peace and stability of the region."
Last July, in a major feature piece for The Nation on Obama's foreign policy, I wrote:
"But in many respects, Obama seems likely to preside over a restoration of the bipartisan consensus that governed foreign policy during the cold war and the 1990s, updated for a post-9/11 world. ... Even as he pledges to end the war in Iraq, Obama promises to increase Pentagon spending, boost the size of the Army and Marines, bolster the Special Forces, expand intelligence agencies and maintain the hundreds of US military bases that dot the globe. He supports a muscular multilateralism that includes NATO expansion, and according to the Times of London, his advisers are pushing him to ask Defense Secretary Robert Gates to stay on in an Obama administration. Though he is against the idea of the United States imposing democracy abroad, Obama does propose a sweeping nation-building and democracy-promotion program, including strengthening the controversial National Endowment for Democracy and constructing a civil-military apparatus that would deploy to rescue and rebuild failed and failing states in Africa, Asia and the Middle East."
So are we surprised that now, as president-elect, Obama is selecting people whose views are coherent with Obama's frequently stated views? Are we surprised that the views of Obama's conservative and centrist advisers are, in fact, coherent with Obama's own? And are we surprised that his choices for his foreign policy and national security appointments are drawn exclusively from conservative, centrist, and pro-military circles without even a single -- yes, not one! -- chosen to represent the antiwar wing of the Democratic party? No, we are not.
What does it mean, then? Do we still believe that Obama was pretending to be conservative and cautious on foreign policy during the campaign, in order to get himself elected? Or is the truth, like Occam's razor, far simpler? Perhaps what Obama (and his advisers) said during the campaign reflects what they really believe.
We could all make lists of people that we might have chosen for secretary of state, defense, attorney general, homeland security, intelligence, and national security adviser. (True, not all of Obama's appointments are certain, yet, but the writing is on the wall.) It's now likely that not one of those posts will be filled with someone who either voted against the war in Iraq as a member of Congress or who, from outside Congress, vocally opposed the war. Not one.
What about Russ Feingold, Barbara Boxer, Chris Dodd, Sherrod Brown, and Jim Webb from the Senate? Where is John Kerry? What about Gary Hart and Al Gore? What about any one of a dozen or more prominent members of the antiwar and progressive caucuses in the House of Representatives, such as Lynn Woolsey, Jim McDermott, or Jim McGovern? What about the generals who, unlike General James E. Jones, didn't campaign with McCain and who spoke out against the war? What about the many prominent experts on disarmament and nonproliferation, like Lt. General Robert Gard, Gen. Joseph P. Hoar, and Peter Galbraith, all of whom serve on the board of directors of the Center for Arms Control? Or Joseph Cirincione of the Ploughshares Fund, a leading arms control expert? Well, you get the idea.
Here's the likely lineup so far: Secretary of State Hillary Clinton, Secretary of Defense Robert Gates, and National Security Adviser James E. Jones. For director of national intelligence, Dennis C. Blair, a retired admiral tangled up in the military-industrial complex? Key Obama advisers such as Richard Danzig, a former secretary of the Navy; Tony Lake, a former national security adviser; Susan Rice, an Africa specialist and former State Department official; and Mark Lippert, Obama's top Senate foreign policy aide are likely to get important deputy-level jobs, though Danzig -- who is on record supporting Gates for the job -- may yet get the top Pentagon post.
As I pointed out in my July piece for The Nation, Rice and Lake -- along with outside advisers Samantha Power and Sarah Sewell -- are on record supporting tough military action overseas in case of humanitarian crisis. Rice and Lake have said explicitly that they favor war against Sudan. Two years ago, they wrote in the Washington Post:
"The United States, preferably with NATO involvement and African political support, would strike Sudanese airfields, aircraft and other military assets. It could blockade Port Sudan, through which Sudan's oil exports flow. Then U.N. troops would deploy -- by force, if necessary, with U.S. and NATO backing.
"If the United States fails to gain U.N. support, we should act without it. Impossible? No."
Clinton, who now seems to be a lock for the State Department, would be likely to hire a passel of hardliners for her own aides, including people like Richard Holbrooke, Dennis Ross, and Leslie Gelb, all three of who serve on the advisory board of the ultra-hawkish group, United Against Nuclear Iran. She'd also draw on relatively conservative officials from the Center for a New American Security, the Brookings Institution, and other Washington thinktanks who are in tune with her own hawkish views on Israel, Iran, and projecting U.S. muscle abroad.
And then there is General Jones.
Out of the blue, in the third presidential debate, Obama cited Jones as someone he trusts on national security. He is an advocate for stepped-up defense spending. And, notes CNN, it's all one big, happy family:
"One person close to the transition noted Jones is a bipartisan figure who has warm relationships with both current Defense Secretary Robert Gates, who may stay on the job for at least a brief period, as well as Sen. Hillary Clinton, who is now on track to be nominated as Secretary of State after Thanksgiving."
Not once, but twice he was asked by Secretary of State Condoleezza Rice to be her deputy secretary of state. Adds the London Times, in an analytical story on Jones:
"Last year he conducted an investigation on behalf of Congress on the situation in Iraq and Afghanistan.
"'Make no mistake, Nato is not winning in Afghanistan,' he said. He also said that the war in Iraq had caused the US to 'take its eye off the ball' in Afghanistan, and gave warning that the consequences of failure there were just as serious as defeat in Iraq – views publicly expressed by Mr Obama.
"Before Mr Obama travelled to Afghanistan during the presidential campaign he was briefed by General Jones, who in 2007 was appointed by Dr Rice as a special envoy for Middle East Security."
National Review Online calls the idea of Jones at the NSC "a pretty good sign for hawks, a pretty bad sign for doves," which just about sums it up.
Share this article
SOFA delay in Iraq
This is from antiwar.com
Even if there were a referendum it could take place at earliest next July and if it rejected the SOFA the US would still have a year to get out of Iraq! Nothing is mentioned here about the provisions re oil profits that give US control over those in effect. Anyway the whole agreement is so studded with minefields that it is not even translated into English for general consumption and the US is already noting loopholes: from Yahoonews.
But three officials in Washington said the administration of US President George W. Bush has withheld the official English translation of the agreement to suppress a public dispute with the Iraqis until after the parliamentary vote.
The officials, speaking on condition of anonymity, said the official English language text of the agreement was designated as "sensitive but unclassified."
"There are a number of areas in here where they have agreement on the same wording but different understandings about what the words mean," said one US official.
The White House National Security Council said it had held up the translation's release until the Iraqi parliament votes.......
In the event the SOFA is approved, the US could simply circumvent parts of the agreement, said officials.
For example, for the provision that bars the US from launching military operations into neighboring countries from Iraqi territory, the administration could cite another provision that allows parties to retain the right of self-defense -- such as pursuing groups that launch strikes on US targets from Syria or Iran.
The provision that appears to require the US to notify Iraqi officials in advance of any planned military operations and seek Iraqi approval for them could also be altered, said the officials.
Some US military figures find the provision especially troubling, although US Secretary of Defense Robert Gates, head of the US Central Command David Petraeus and the top US commander in Iraq Raymond Odierno have all endorsed it.
"Telling the Iraqis in advance would be an invitation to an ambush," said one US official.
The Iraqi government and security forces are "thoroughly penetrated by the insurgents, the Iranians, the Sadrists (followers of anti-American Shiite cleric Moqtada al Sadr) and ordinary folks who just sell scraps of intelligence," he added.
Delay May Lead to Iraq Referendum on US Troops
Posted November 26, 2008
The Iraqi government continues to scramble to get ready for tomorrow’s talks on the Status of Forces Agreement (SOFA) and tentatively the vote (though it has already been delayed twice this week). It is now being reported that the government has agreed on a demand by the a key Sunni bloc for a national referendum on the SOFA, to be held in July. They have reportedly rejected other demands for reforms however.
Assuming the referendum deal is sufficient to get the Sunni bloc’s support, the SOFA will likely pass easily over the remaining opposition. The United States does not appear to object to the referendum, but Secretary of State Condoleezza Rice insists that the SOFA will still go into effect on January 1 regardless of the pending referendum.
Under the terms of the SOFA, Iraq can cancel the deal at any time, but would be required to give the United States a year of advanced notice before doing so. Assuming the SOFA indeed goes into force before the referendum the July 30, 2009 vote would not have any effect on the deal until late 2010.
Related Stories
Even if there were a referendum it could take place at earliest next July and if it rejected the SOFA the US would still have a year to get out of Iraq! Nothing is mentioned here about the provisions re oil profits that give US control over those in effect. Anyway the whole agreement is so studded with minefields that it is not even translated into English for general consumption and the US is already noting loopholes: from Yahoonews.
But three officials in Washington said the administration of US President George W. Bush has withheld the official English translation of the agreement to suppress a public dispute with the Iraqis until after the parliamentary vote.
The officials, speaking on condition of anonymity, said the official English language text of the agreement was designated as "sensitive but unclassified."
"There are a number of areas in here where they have agreement on the same wording but different understandings about what the words mean," said one US official.
The White House National Security Council said it had held up the translation's release until the Iraqi parliament votes.......
In the event the SOFA is approved, the US could simply circumvent parts of the agreement, said officials.
For example, for the provision that bars the US from launching military operations into neighboring countries from Iraqi territory, the administration could cite another provision that allows parties to retain the right of self-defense -- such as pursuing groups that launch strikes on US targets from Syria or Iran.
The provision that appears to require the US to notify Iraqi officials in advance of any planned military operations and seek Iraqi approval for them could also be altered, said the officials.
Some US military figures find the provision especially troubling, although US Secretary of Defense Robert Gates, head of the US Central Command David Petraeus and the top US commander in Iraq Raymond Odierno have all endorsed it.
"Telling the Iraqis in advance would be an invitation to an ambush," said one US official.
The Iraqi government and security forces are "thoroughly penetrated by the insurgents, the Iranians, the Sadrists (followers of anti-American Shiite cleric Moqtada al Sadr) and ordinary folks who just sell scraps of intelligence," he added.
Delay May Lead to Iraq Referendum on US Troops
Posted November 26, 2008
The Iraqi government continues to scramble to get ready for tomorrow’s talks on the Status of Forces Agreement (SOFA) and tentatively the vote (though it has already been delayed twice this week). It is now being reported that the government has agreed on a demand by the a key Sunni bloc for a national referendum on the SOFA, to be held in July. They have reportedly rejected other demands for reforms however.
Assuming the referendum deal is sufficient to get the Sunni bloc’s support, the SOFA will likely pass easily over the remaining opposition. The United States does not appear to object to the referendum, but Secretary of State Condoleezza Rice insists that the SOFA will still go into effect on January 1 regardless of the pending referendum.
Under the terms of the SOFA, Iraq can cancel the deal at any time, but would be required to give the United States a year of advanced notice before doing so. Assuming the SOFA indeed goes into force before the referendum the July 30, 2009 vote would not have any effect on the deal until late 2010.
Related Stories
Wednesday, November 26, 2008
Obama gives foxes control of the chicken coop
This is from Truthdig.
Talk about getting the fox to guard the chicken coop. Obama has given the foxes control of the chicken coop. The great deregulators who helped get us into this mess and many of whom made millions along the way now are in charge of determining policy. Of course they change their tune but only because the old tune no longer sells. You need fear and a new tune. Buddy can you spare a hundred billion.
Obama Chooses Wall Street Over Main Street
http://www.truthdig.com/report/item/20081125_obama_chooses_wall_street_over_main_street/
Posted on Nov 25, 2008
By Robert Scheer
Maybe Ralph Nader was right in predicting that the same Wall Street hustlers would have a lock on our government no matter which major party won the election. I hate to admit it, since it wasn’t that long ago that I heatedly challenged Nader in a debate on this very point.
But how else is one to respond to Barack Obama’s picking the very folks who helped get us into this financial mess to now lead us out of it? Watching the president-elect’s Monday introduction of his economic team, my brother-in-law Pete said, “You can see the feathers coming out of their mouths” as the foxes were once again put in charge of the henhouse. He didn’t have time to expound on his point, having to get ready to go sort mail in his job at the post office, but he showed me a statement from Citigroup showing that the interest rate on Pete the Postal Worker’s credit card was 28.9 percent, an amount that all major religions would justly condemn as usurious.
Moments earlier, Obama had put his seal of approval on the Citigroup bailout, which his new economic team, led by protégés of Citigroup Executive Committee Chairman Robert Rubin, enthusiastically endorsed. A bailout that brings to $45 billion the taxpayer money thrown at Citigroup and the guarantee of $306 billion for the bank’s “toxic securities” that would have been illegal if not for changes in the law that Citigroup secured with the decisive help of Rubin and Lawrence Summers, the man who replaced him as Treasury secretary in the Clinton administration.
As Summers stayed on to ensure passage of deregulatory laws that enabled enormous banking greed, Rubin was rewarded with a $15 million-a-year executive position at Citigroup, a job that only got more lucrative as the bank went from one disaster, beginning with its involvement with Enron in which Rubin played an active role, to its huge role in the mortgage debacle. It is widely acknowledged that Citigroup fell victim to a merger mania, which Rubin and Summers made legal during their tenure at Treasury.
Yet despite that dismal record of dismantling sound regulation, Summers has been picked by Obama to be the top White House economic adviser and another Rubin disciple, Timothy Geithner, is the new Treasury secretary. Geithner, thanks in part to the strong recommendation of Rubin, had been appointed chairman of the New York Federal Reserve Bank after working for Rubin and Summers during the Clinton years. Once at the New York Fed, he was the main government official charged with regulating Citigroup, a task at which he obviously failed. Yet over the weekend, it was Geithner who hammered out the Citigroup bailout deal with Treasury Secretary Henry Paulson and a very actively involved Rubin.
As the Washington Post reported, Paulson had indicated last week that no further bailouts were planned before the new administration took office until “Rubin, an old colleague from Goldman Sachs, told Paulson in phone calls that the government had to act.” Rubin conceded in an interview with the Post that he had played a key role in the politics of the bailout.
This outrageous conflict of interest in which Rubin gets to exploit his ties to both the outgoing and incoming administrations was best described by Washington Post writer Steven Pearlstein: “The ultimate irony, of course, is that just as Rubin and Co. at Citi were being bailed out by the Bush Administration, President-elect Barack Obama was getting set to announce a new economic team drawn almost entirely from Rubin acolytes.”
As opposed to the far tougher deal negotiated on the bailout of AIG, the arrangement with Citigroup leaves the executives, including Rubin, who brought Citigroup to the brink of ruin, still in charge. Nor is there any guarantee of the value of the mortgage bundles that taxpayers will be guaranteeing. That is because, as candidate Obama clearly stated in his major economics address back in March, the deregulation pushed though during the Clinton years ended transparency in banking.
Why then has he appointed the very people responsible for this disaster to now make it all better? Why not ask him? Heck, yes, it is time for the many of us who responded to his e-mails during the campaign to now challenge our e-mail buddy as to why he suddenly acts as if the interests of Wall Street and Main Street are one and the same.
Robert Scheer is the author of a new book, “The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America.”
AP Photo/Charles Dharapak
They have his ear: Lawrence Summers, left, is just one veteran of Clinton-era deregulation who has found his way into Obama’s inner circles.
A Progressive Journal of News and Opinion. Editor, Robert Scheer. Publisher, Zuade Kaufman.Copyright © 2008 Truthdig, L.L.C. All rights reserved.
Citigroup gets U.S. rescues from losses, cash infusion
It seems that the US taxpayers are getting very little back for all their investments. The situation is looking more and more like a type of crony capitalism and a far cry from anything resembling free markets. Apparently creative destruction is no longer regarded as at all creative when it comes to Big Capital's favorite giant lemons being squished.
Of course it is true that when these giants fail it will cause big problems for Main Street as well. That seems all the more reason to get rid of the great lemons. The government could take them over for real instead of just getting preferred shares or giving them cash. If the government owned Citibank they could force the bank to loan instead of hoarding taxpayer dollars as most institutions are doing with the gobs of cash they have received. Even with all the cash infusion jobs are being lost. However, the big honcho who runs the whole mess remains at the helm. Of course all this is being done according to the government to protect the US tax payer. Of course Prince Alwaleed bin Talal will probably sleep better at night as well.
Citigroup Gets U.S. Rescue From Losses, Cash Infusion (Update3)
By Bradley Keoun
Nov. 24 (Bloomberg) -- Citigroup Inc. received a U.S. government rescue package that shields the bank from losses on toxic assets and injects $20 billion of capital, bolstering the stock after its 60 percent plunge last week.
The second-biggest U.S. bank by assets climbed 58 percent in New York trading after the Treasury, Federal Reserve and Federal Deposit Insurance Corp. announced the aid plan yesterday. In return for the cash and guarantees, the government gets $27 billion of preferred shares paying an 8 percent dividend and warrants equivalent to a 4.5 percent stake in the company.
The regulators stepped in to protect Citigroup from losses on $306 billion of troubled U.S. home loans, commercial mortgages, subprime bonds and low-grade corporate loans when the firm’s tumbling shares sparked concern that depositors might pull their money, destabilizing a company that operates in more than 100 countries. The $20 billion of new cash adds to a $25 billion infusion the bank, led by Chief Executive Officer Vikram Pandit, collected last month under a Congressional bailout program.
“It really was a must-do thing,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which manages about $85 billion. “If they’d let Citigroup go, that would’ve been disastrous.”
Citigroup’s stock dropped below $5 last week for the first time since 1994, vexing government officials who in the past three months have pumped $250 billion into U.S. banks, expanded the Fed’s last-resort lending programs by more than $1 trillion and bailed out insurer American International Group Inc. and mortgage finance companies Fannie Mae and Freddie Mac.
Dividend Cut
The shares, which closed last week at a 15-year-low of $3.77, today gained $2.18 to $5.95 as of 4 p.m. in New York Stock Exchange composite trading. The stock remains 89 percent off the record $55.70 reached in December 2006.
The cost of the new preferred shares will reduce earnings left over for common shareholders, Morgan Stanley analysts Betsy Graseck and Cheryl Pate wrote today in a report. Under the terms of the deal with the government, Citigroup also has to slash its quarterly shareholder dividend to 1 cent from 16 cents.
Over the longer term, Citigroup’s stock price will appreciate because of “the reduction in ‘tail risk,’” or the chance that losses might be become so heavy the bank can’t sustain them, they said.
“For the foreseeable future, Citi has oxygen,” Royal Bank of Scotland Group Plc analyst Tom Jenkins wrote today in a report.
Losing Streak
Pandit, who has been unable to snap a four-quarter streak of net losses totaling $20 billion since he took the lead at the company in December 2007, said the agreement addresses “market confidence and the recent decline in Citi’s stock.”
“What we really needed to do was completely put behind us the issue of whether Citi would be able to cover the losses that it has out of the capital base that it has,” Chief Financial Officer Gary Crittenden said in an interview. “Under virtually any circumstance that is reasonable, Citi has the ability now.”
The asset guarantees and capital infusion will boost Citigroup’s Tier 1 ratio -- a gauge of the bank’s ability to withstand loan losses -- to 14.8 percent, from 8.19 percent at the end of September. A bank needs a 6 percent Tier 1 ratio to meet the regulatory requirements for “well-capitalized” status, and Citigroup has at least $100 billion more capital than it needs to reach that threshold, Crittenden said.
Vanishing Value
“Today’s government actions seem to ensure its survival,” Sandler O’Neill & Partners LP analyst Jeff Harte wrote today in a report.
Former Chairman Sanford “Sandy” Weill, 75, built Citigroup through more than 100 acquisitions during his 17 years at the helm. The company pioneered the “financial supermarket” concept, offering services including branch banking, trading, investment-banking, credit cards, mortgage lending and transaction processing.
Citigroup’s market value, which at $274 billion at the end of 2006 was bigger than any of its U.S. rivals, has since slumped to $31 billion, ranking No. 6 behind JPMorgan Chase & Co., Wells Fargo & Co., Bank of America Corp., U.S. Bancorp and Bank of New York Mellon Corp.
Addressing employees last week, Pandit, 51, said he wanted to stick with the bank’s business strategy and avoid selling “core businesses” including the Smith Barney brokerage. Crittenden, 55, said in the interview that the stabilization deal with the government will allow investors to “look through to the earnings potential of the franchise.”
‘Stronger Hands’
Investors and Citigroup’s rivals may think differently.
“We should be thinking about breaking this company up and redistributing the assets into stronger hands,” Christopher Whalen of Institutional Risk Analytics, a Torrance, California- based research firm, said in a Bloomberg Radio interview.
Under the asset guarantees, Citigroup will cover the first $29 billion of pretax losses on the $306 billion asset pool, in addition to any reserves it already has set aside. After that, the government covers 90 percent of the losses, with Citigroup covering the rest. In addition to the mortgages, the guarantees cover U.S.-originated “structured investment vehicles,” which already this year have stuck the bank with $3.3 billion of writedowns.
The warrants accompanying the preferred shares give the government the right to buy 254 million Citigroup shares at $10.61 each, allowing taxpayers to profit if the stock rallies following the government’s investment. When combined with the warrants that came with last month’s injection under the Troubled Asset Relief Program, the Treasury would have an 8 percent stake in Citigroup.
Pandit’s Job
The deal is designed to “strengthen the financial system and protect U.S. taxpayers,” according to the statement from the three agencies.
In a departure from terms of the AIG, Fannie Mae and Freddie Mac bailouts, no management changes were required and Pandit gets to keep his job, government officials said. The government will have a say over executive compensation at Citigroup.
The bank still may end up “controlled by the government,” said Whalen, of Institutional Risk Analytics. In an interview with Bloomberg television, Crittenden said he was “quite confident that we will stay out of the government’s hand.”
Prince, Alwaleed
Pandit, a former Morgan Stanley banker, was picked to succeed Charles O. “Chuck” Prince five months after joining the bank as head of hedge-fund and private-equity investments. In May of this year, he announced a plan to rid the bank of more than $400 billion of its worst “legacy assets” -- many of them accumulated through an expansion in subprime mortgages and asset- backed lending during Prince’s four-year tenure.
As the stock tumbled last week, Pandit announced a plan to eliminate 52,000 jobs and cut costs by about $2 billion per quarter. He and three top deputies bought 1.3 million shares in a show of confidence, and Prince Alwaleed bin Talal, one of the bank’s biggest investors, said he would boost his stake to about 5 percent from 4 percent.
The stock kept plunging, and the bank’s board called an emergency meeting on Nov. 21 to discuss its options. The frenzied weekend of discussions with the Fed and Treasury were reminiscent of those that took place when Bear Stearns Cos. collapsed in March and Lehman Brothers Holdings Inc. descended into bankruptcy in September.
Loan Losses
“The lack of confidence in Citi’s stock price required the government to help stem the tide in order to avoid systemic risk over the weekend, which was not enough of a window for any serious bidders for a major takeover or segment sale,” CreditSights Inc. analyst David Hendler wrote today in a report. “These actions should settle market jitters surrounding the company for now.”
Alwaleed, in an interview today on CNBC, laid the blame for Citigroup’s troubles at the feet of Prince, and said he has “full confidence” in Pandit.
“You can never judge a CEO with this short tenure,” Alwaleed said. “Vikram should be given more time.”
Citigroup remains vulnerable to losses on loans and securities outside the U.S., said Peter Kovalski, a portfolio manager at Alpine Woods Capital Investors LLC in Purchase, New York, which oversees $8 billion and holds Citigroup shares. The bank also is keeping its credit-card and consumer-finance loans, where delinquencies also have surged.
The government plan “gives them a little bit of breathing room, but longer term, things may deteriorate and losses increase,” said Kovalski. “The Achilles heel with Citi is their exposure to emerging markets and what’s going to happen when emerging markets turn down, as they’re doing now.”
To contact the reporters on this story: Bradley Keoun in New York at bkeoun@bloomberg.net; Last Updated: November 24, 2008 16:14 EST
Of course it is true that when these giants fail it will cause big problems for Main Street as well. That seems all the more reason to get rid of the great lemons. The government could take them over for real instead of just getting preferred shares or giving them cash. If the government owned Citibank they could force the bank to loan instead of hoarding taxpayer dollars as most institutions are doing with the gobs of cash they have received. Even with all the cash infusion jobs are being lost. However, the big honcho who runs the whole mess remains at the helm. Of course all this is being done according to the government to protect the US tax payer. Of course Prince Alwaleed bin Talal will probably sleep better at night as well.
Citigroup Gets U.S. Rescue From Losses, Cash Infusion (Update3)
By Bradley Keoun
Nov. 24 (Bloomberg) -- Citigroup Inc. received a U.S. government rescue package that shields the bank from losses on toxic assets and injects $20 billion of capital, bolstering the stock after its 60 percent plunge last week.
The second-biggest U.S. bank by assets climbed 58 percent in New York trading after the Treasury, Federal Reserve and Federal Deposit Insurance Corp. announced the aid plan yesterday. In return for the cash and guarantees, the government gets $27 billion of preferred shares paying an 8 percent dividend and warrants equivalent to a 4.5 percent stake in the company.
The regulators stepped in to protect Citigroup from losses on $306 billion of troubled U.S. home loans, commercial mortgages, subprime bonds and low-grade corporate loans when the firm’s tumbling shares sparked concern that depositors might pull their money, destabilizing a company that operates in more than 100 countries. The $20 billion of new cash adds to a $25 billion infusion the bank, led by Chief Executive Officer Vikram Pandit, collected last month under a Congressional bailout program.
“It really was a must-do thing,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which manages about $85 billion. “If they’d let Citigroup go, that would’ve been disastrous.”
Citigroup’s stock dropped below $5 last week for the first time since 1994, vexing government officials who in the past three months have pumped $250 billion into U.S. banks, expanded the Fed’s last-resort lending programs by more than $1 trillion and bailed out insurer American International Group Inc. and mortgage finance companies Fannie Mae and Freddie Mac.
Dividend Cut
The shares, which closed last week at a 15-year-low of $3.77, today gained $2.18 to $5.95 as of 4 p.m. in New York Stock Exchange composite trading. The stock remains 89 percent off the record $55.70 reached in December 2006.
The cost of the new preferred shares will reduce earnings left over for common shareholders, Morgan Stanley analysts Betsy Graseck and Cheryl Pate wrote today in a report. Under the terms of the deal with the government, Citigroup also has to slash its quarterly shareholder dividend to 1 cent from 16 cents.
Over the longer term, Citigroup’s stock price will appreciate because of “the reduction in ‘tail risk,’” or the chance that losses might be become so heavy the bank can’t sustain them, they said.
“For the foreseeable future, Citi has oxygen,” Royal Bank of Scotland Group Plc analyst Tom Jenkins wrote today in a report.
Losing Streak
Pandit, who has been unable to snap a four-quarter streak of net losses totaling $20 billion since he took the lead at the company in December 2007, said the agreement addresses “market confidence and the recent decline in Citi’s stock.”
“What we really needed to do was completely put behind us the issue of whether Citi would be able to cover the losses that it has out of the capital base that it has,” Chief Financial Officer Gary Crittenden said in an interview. “Under virtually any circumstance that is reasonable, Citi has the ability now.”
The asset guarantees and capital infusion will boost Citigroup’s Tier 1 ratio -- a gauge of the bank’s ability to withstand loan losses -- to 14.8 percent, from 8.19 percent at the end of September. A bank needs a 6 percent Tier 1 ratio to meet the regulatory requirements for “well-capitalized” status, and Citigroup has at least $100 billion more capital than it needs to reach that threshold, Crittenden said.
Vanishing Value
“Today’s government actions seem to ensure its survival,” Sandler O’Neill & Partners LP analyst Jeff Harte wrote today in a report.
Former Chairman Sanford “Sandy” Weill, 75, built Citigroup through more than 100 acquisitions during his 17 years at the helm. The company pioneered the “financial supermarket” concept, offering services including branch banking, trading, investment-banking, credit cards, mortgage lending and transaction processing.
Citigroup’s market value, which at $274 billion at the end of 2006 was bigger than any of its U.S. rivals, has since slumped to $31 billion, ranking No. 6 behind JPMorgan Chase & Co., Wells Fargo & Co., Bank of America Corp., U.S. Bancorp and Bank of New York Mellon Corp.
Addressing employees last week, Pandit, 51, said he wanted to stick with the bank’s business strategy and avoid selling “core businesses” including the Smith Barney brokerage. Crittenden, 55, said in the interview that the stabilization deal with the government will allow investors to “look through to the earnings potential of the franchise.”
‘Stronger Hands’
Investors and Citigroup’s rivals may think differently.
“We should be thinking about breaking this company up and redistributing the assets into stronger hands,” Christopher Whalen of Institutional Risk Analytics, a Torrance, California- based research firm, said in a Bloomberg Radio interview.
Under the asset guarantees, Citigroup will cover the first $29 billion of pretax losses on the $306 billion asset pool, in addition to any reserves it already has set aside. After that, the government covers 90 percent of the losses, with Citigroup covering the rest. In addition to the mortgages, the guarantees cover U.S.-originated “structured investment vehicles,” which already this year have stuck the bank with $3.3 billion of writedowns.
The warrants accompanying the preferred shares give the government the right to buy 254 million Citigroup shares at $10.61 each, allowing taxpayers to profit if the stock rallies following the government’s investment. When combined with the warrants that came with last month’s injection under the Troubled Asset Relief Program, the Treasury would have an 8 percent stake in Citigroup.
Pandit’s Job
The deal is designed to “strengthen the financial system and protect U.S. taxpayers,” according to the statement from the three agencies.
In a departure from terms of the AIG, Fannie Mae and Freddie Mac bailouts, no management changes were required and Pandit gets to keep his job, government officials said. The government will have a say over executive compensation at Citigroup.
The bank still may end up “controlled by the government,” said Whalen, of Institutional Risk Analytics. In an interview with Bloomberg television, Crittenden said he was “quite confident that we will stay out of the government’s hand.”
Prince, Alwaleed
Pandit, a former Morgan Stanley banker, was picked to succeed Charles O. “Chuck” Prince five months after joining the bank as head of hedge-fund and private-equity investments. In May of this year, he announced a plan to rid the bank of more than $400 billion of its worst “legacy assets” -- many of them accumulated through an expansion in subprime mortgages and asset- backed lending during Prince’s four-year tenure.
As the stock tumbled last week, Pandit announced a plan to eliminate 52,000 jobs and cut costs by about $2 billion per quarter. He and three top deputies bought 1.3 million shares in a show of confidence, and Prince Alwaleed bin Talal, one of the bank’s biggest investors, said he would boost his stake to about 5 percent from 4 percent.
The stock kept plunging, and the bank’s board called an emergency meeting on Nov. 21 to discuss its options. The frenzied weekend of discussions with the Fed and Treasury were reminiscent of those that took place when Bear Stearns Cos. collapsed in March and Lehman Brothers Holdings Inc. descended into bankruptcy in September.
Loan Losses
“The lack of confidence in Citi’s stock price required the government to help stem the tide in order to avoid systemic risk over the weekend, which was not enough of a window for any serious bidders for a major takeover or segment sale,” CreditSights Inc. analyst David Hendler wrote today in a report. “These actions should settle market jitters surrounding the company for now.”
Alwaleed, in an interview today on CNBC, laid the blame for Citigroup’s troubles at the feet of Prince, and said he has “full confidence” in Pandit.
“You can never judge a CEO with this short tenure,” Alwaleed said. “Vikram should be given more time.”
Citigroup remains vulnerable to losses on loans and securities outside the U.S., said Peter Kovalski, a portfolio manager at Alpine Woods Capital Investors LLC in Purchase, New York, which oversees $8 billion and holds Citigroup shares. The bank also is keeping its credit-card and consumer-finance loans, where delinquencies also have surged.
The government plan “gives them a little bit of breathing room, but longer term, things may deteriorate and losses increase,” said Kovalski. “The Achilles heel with Citi is their exposure to emerging markets and what’s going to happen when emerging markets turn down, as they’re doing now.”
To contact the reporters on this story: Bradley Keoun in New York at bkeoun@bloomberg.net; Last Updated: November 24, 2008 16:14 EST
Russia to allow NATO to ship supplies across its Territory.
Note that it is two European countries Spain and Germany who are being given this permission not the U.S. The Khyber pass could easily be cut off and even now reaction to drone strikes is being met by more hijackings of vehicles and equipment at the pass.
Russia to Allow NATO to Ship Supplies Across its Territory
Posted November 20, 2008
Russian President Dmitry Medvedev signed an agreement today allowing Spain to use its territory to send supplies to Afghanistan for NATO’s military operation there. The Russian Foreign Ministry has also reported that it will allow Germany to use Russian railroads to ship supplies to troops.
The transfer of supplies overland across Europe and into Afghanistan is seen as increasingly important as its regular route through Pakistan’s Khyber Pass is seen to be at risk. Militants have hijacked a growing number of vehicles in recent days, and angered by US drone strikes the opposition political party Jamaat-e Islami has suggested it may ask people to prevent the use of the pass.
Ties between Russia and NATO have worsened in recent days, both over disputes about NATO’s expansion and NATO condemnation of Russia’s actions during a brief August war with prospective NATO member Georgia.
Russia to Allow NATO to Ship Supplies Across its Territory
Posted November 20, 2008
Russian President Dmitry Medvedev signed an agreement today allowing Spain to use its territory to send supplies to Afghanistan for NATO’s military operation there. The Russian Foreign Ministry has also reported that it will allow Germany to use Russian railroads to ship supplies to troops.
The transfer of supplies overland across Europe and into Afghanistan is seen as increasingly important as its regular route through Pakistan’s Khyber Pass is seen to be at risk. Militants have hijacked a growing number of vehicles in recent days, and angered by US drone strikes the opposition political party Jamaat-e Islami has suggested it may ask people to prevent the use of the pass.
Ties between Russia and NATO have worsened in recent days, both over disputes about NATO’s expansion and NATO condemnation of Russia’s actions during a brief August war with prospective NATO member Georgia.
Tuesday, November 25, 2008
US would control profits from some Iraqi oil exports under SOFA.
This is a rather lengthy anlaysis of the agreement. The oil aspect of the agreement has not been mentioned in any mainstream reports I have seen. While Iraq certainly won a lot of concessions from the original draft the agreement still does not give all that much jurisdiction over crimes committed by US forces as the article points out. There will be greater control over contractors but I am not even sure how much Iraqi jurisdiction will extend even there.
Special Reports
U.S. would control profits from Iraqi oil exports under agreement
By Jeremy R. HammondOnline Journal Contributing WriterNov 24, 2008, 00:24
There’s been no shortage of controversy surrounding what has been termed the Status of Forces Agreement (SOFA) between the governments of the United States and Iraq. After battling away for most of the year at what the terms of the agreement should be, the text was at last finalized this month.
The terms of the agreement effectively allow the U.S. to continue to control billions of dollars of proceeds from the sale of exported Iraqi oil held in the Federal Reserve Bank of New York. It also contains numerous loopholes that could allow the continuing long-term presence of U.S. military forces and would effectively maintain U.S. jurisdiction over crimes committed by American soldiers.
Iraq’s cabinet approved the agreement a week ago with 27 members voting in favor, out of 28 ministers who were present, with nine ministers absent. It is now being debated in the Parliament.
Abdul Qadir al-Obaidi, Iraq’s minister of defense, issued a dire warning that without the agreement and continued presence of U.S. forces, “then what happened in the Gulf of Aden will happen in the Arabian Gulf too. Pirates will start in these ports in a way you can’t even imagine.”
Governments often use fear tactics to push through controversial legislation. Before the U.S. invasion, members of the Congress were told that if they didn’t authorize the president to use military force against Iraq, Saddam Hussein might attack the east coast of the United States with biological weapons from unmanned aerial vehicles, for example. More recently, members of Congress were warned that if they did not pass the highly unpopular bill taking taxpayers’ dollars to bail out banking and investment corporations, there would be martial law in America.
While painting an imaginary threat to frighten the public into supporting the agreement, Obaidi criticized opponents as being conspiracy theorists. The New York Times reported Sunday that Obaidi “batted down conspiracy theories about the agreement,” theories fueled by “anti-American Shiite cleric Moktada al-Sadr” about “the existence of secret deals for a longer American presence.”
And yet Obaidi at the same time seemed to lend credence to the fears of opponents. As the Times noted, without comment on the contradiction, he “held open the possibility that some Americans might be needed after” the deadline of the withdrawal of U.S. troops by the end of 2011.
The agreement has been protested by large popular demonstrations in the streets of Baghdad. Thousands protested during a rally on Friday against the deal in Firdaus Square, where in 2003 U.S. soldiers toppled a statue of Saddam Hussein in a staged publicity event that has since been hailed by the mainstream media as “an iconic moment.”
At the rally, demonstrators burned an effigy of President George W. Bush. A man who helped erect the effigy was quoted by the London Times as saying, “Just like Saddam’s statue was brought down, Mr Bush has fallen as well.”
The demonstrations were reportedly organized by Moktada al-Sadr, a highly influential figure whose father was murdered in 1999, most likely by the regime of Saddam Hussein. Following the U.S. invasion of Iraq, he organized a resistance to the occupation consisting of both political and military elements. He commands the al-Mahdi Army, which has threatened to resume armed resistance if the agreement is passed by the Iraqi government.
While the government of Prime Minister Nuri al-Maliki initially claimed it could make an agreement unilaterally with the Bush administration, it has since conceded that the measure must obtain Parliamentary approval.
Under the U.S. Constitution, the agreement would also need to be agreed to by the Senate to have the force of law, but the Bush administration has claimed that no Senate approval is necessary, essentially declaring its intention to violate Article II, Section 2 of the Constitution. This is not the first time the executive branch under Bush has declared for itself the power to govern by fiat, and it is likely to continue to be met with little resistance by the complacent U.S. Congress.
The SOFA agreement, which now has the official lengthy title of “Agreement Between the United States of America and the Republic of Iraq On the Withdrawal of United States Forces from Iraq and the Organization of Their Activities during Their Temporary Presence in Iraq,” while addressing a number of the Iraqi concerns, contains a number of loopholes that would allow, among other things, a U.S. military presence in Iraq beyond the given deadline for withdrawal.
It states in the preamble that both parties recognize the importance of “contributing to world peace and stability, combating terrorism in Iraq,” and “thereby deterring aggression and threats against the sovereignty, security, and territorial integrity of Iraq.” The agreement affirms that cooperation between the two countries “is based on full respect for the sovereignty of each of them in accordance with the purpose and principles of the United Nations Charter.”
This must be considered rather Orwellian language, given the fact that the invasion of Iraq was an act of aggression, defined at Nuremberg as “the supreme international crime, differing only from other war crimes in that it contains within itself the accumulated evil of the whole”; and that the invasion was itself a breach of the peace in violation of the U.N. Charter and other applicable international treaties comprising the body of international law, resulting in instability and bringing terrorism to Iraq. It’s also quite meaningless language given some of the actual contents of the agreement itself.
Article 3 of the agreement contains a clause apparently intended to prevent the U.S. from including Iraqis in its extraordinary renditions programs by barring the U.S. from transferring any non-U.S. persons into or out of the country “unless in accordance with applicable Iraqi laws and regulations, including implementing arrangements as may be agreed to by the Government of Iraq.”
There is thus a loophole that might allow the U.S. to do precisely that, and any such “arrangements” could be interpreted, if the record of the Bush administration is any gauge, to mean approval from the Iraqi president without advice or consent of the Parliament. The U.S. could also, of course, simply violate the agreement and spirit disappeared persons out of the country as it has under the CIA renditions program.
Article 4 states that the U.S. military presence is requested “for the purposes of supporting Iraq in its efforts to maintain security and stability in Iraq,” which is belied by the fact that most Iraqis want the American troop presence to end and consider the continuing occupation to be the most significant causal factor of the violence that, while having ebbed over the past two years, continues to plague the country.
A survey taken last year for the U.S. military, for example, revealed that “Iraqis of all sectarian and ethnic groups believe that the U.S. military invasion is the primary root of the violent differences among them, and see the departure of ‘occupying forces’ as the key to national reconciliation,” as reported by the the Washington Post.
The agreement states that any such operations “shall be fully coordinated with Iraqi authorities” and “overseen by a Joint Military Operations Coordination Committee (JMOCC),” and that it is “the duty of the United States Forces to respect the laws, customs, and traditions of Iraq and applicable international law.” It then adds that both nations “retain the right to legitimate self-defense within Iraq, as defined in applicable international law.”
This itself represents a major loophole because, of course, the right to “self-defense” under international law is very broadly interpreted by the U.S. For example, the invasion of Iraq itself was painted by the Bush administration as an act of self-defense against a perceived threat and thus, according to the administration, legitimate. As another example, the U.S. continues to bomb Pakistan despite growing protests from both the public and the government. In one incident that is particularly revealing as to the U.S. interpretation of “self-defense” under international law, a U.S. airstrike in June targeted and killed 11 members of the Pakistani Frontier Corps within Pakistan. Despite having killed allied forces within their own borders, the Pentagon described the attack as a “legitimate” act of self-defense.
The agreement sets the date of June 30, 2009, as the deadline for “the withdrawal of combat forces from the cities, villages, and localities.” U.S. forces would then be located on bases within Iraq and would ostensibly only be able to leave those bases on combat operations executed with the full cooperation of the Iraqi government. Use of such bases would be granted to the U.S. for the purpose of the ongoing foreign military presence within Iraq.
The agreement states that its implementation must be “consistent with protecting the natural environment and human health and safety” and that “Each Party shall provide the other with maps and other available information on the location of mine fields and other obstacles that can hamper or jeopardize movement within the territory and waters of Iraq.”
But it’s highly unlikely that the U.S. will engage in efforts to clean up areas contaminated with depleted uranium (DU), a still radioactive and chemically toxic isotope that is leftover from the process of enriching uranium. The dense metal is used as a weapons’ hardener for penetrating armor by the U.S. military, but aerosolizes upon impact, and thus presents the risk that DU particles could be spread by the wind or contaminate drinking water. While the Pentagon has denied publicly that DU poses a health risk, it has privately acknowledged in internal documents and studies that inhalation of DU represents a serious health risk and may lead to cancer.
The Pentagon acknowledged after the Gulf War that at least 320 tons of DU remained on the ground from that conflict. Cancer rates in southern Iraq rose significantly after that war, with many Iraqi doctors attributing the increase to DU, claims that have been dismissed by the Pentagon as “propaganda.” Dr. Doug Rokke, a former US army colonel sent to the Gulf by the Army as a health physicist in 1991 to advise on cleanup procedures involving depleted uranium, has said that 30 members -- nearly a third of his entire team -- are now seriously ill, himself included, and that several have since died from cancer.
One estimate puts the amount of DU used in the first couple months of the Iraq war following the March 19, 2003 invasion at 1,100 to 2,200 tons.
It’s equally unlikely that the U.S. will make any effort to clean up “dud” cluster munitions that still litter Iraq from both wars. Estimates from the Gulf War put the number of unexploded submunitions, which effectively become landmines, at more than one million. These weapons continued to kill a decade after the war. According to a Human Rights Watch estimate, in 2001, cluster submunitions caused an average of 30 casualties per month. In its World Report 2004, the group reported that the U.S. and U.K. “dropped nearly 13,000 cluster munitions, containing an estimated 1.8 to 2 million submunitions” in just the first three weeks of combat. Even assuming only a conservative 5 percent “dud” rate for the weapons (many of which were not bombs but ground-launched munitions with a dud rate of up to 16 percent), that would translate into 100,000 unexploded munitions.
Another controversial aspect of the SOFA agreement has been the question of jurisdiction for crimes committed by U.S. forces in Iraq. While the U.S. has backed down from its insistence that private Pentagon contractors, such as mercenaries from the infamous Blackwater group, be under U.S. jurisdiction, the final agreement still maintains that U.S. soldiers themselves will primarily be.
The agreement states that “Iraq shall have the primary right to exercise jurisdiction over members of the United States Forces and of the civilian component,” but only for “premeditated felonies” and only “when such crimes are committed outside agreed facilities and areas and outside duty status.” Thus, for Iraq to have jurisdiction, any crimes committed by American soldiers would have to be shown to be “premeditated” and committed while off duty.
Were a soldier to kill an Iraqi civilian, for example, while not on duty, it would have to be shown that he had contemplated the killing in advance and acted with intent to kill. If the soldier therefore claimed that he had been threatened by other Iraqis and discharged his weapon only to deter an assault, and that any collateral damage that resulted was accidental, then the case would fall not under Iraqi, but U.S. jurisdiction.
Moreover, the pact adds that any member of the U.S. armed forces who is found to have committed a premeditated crime while off duty would “be entitled to due process standards and protections consistent with those available under United States and Iraqi law.” Any such incident would thus still fall under U.S. legal jurisdiction, with only what might perhaps be described as special consideration for Iraqi law -- but not full Iraqi legal jurisdiction, as has been misreported by some of the mainstream media.
On top of that, the text adds that “United States Forces authorities shall certify whether an alleged offense arose during duty status,” which essentially gives the U.S. the power to define any service member’s “duty status” at the time of any given incident -- yet another loophole that might prevent Iraq from having jurisdiction over crimes committed against its own people by foreign occupying military forces.
The agreement also stipulates that “each Party shall waive the right to claim compensation against the other Party for any damage, loss, or destruction of property, or compensation for injuries or deaths that could happen to members of the force or civilian component of either Party arising out of the performance of their official duties in Iraq.”
In other words, if the U.S. destroys Iraqi property or injures or kills Iraqis, the Iraqi government may not seek any compensation or reparations. Of course, this clause is mostly one-sided since there is no risk of Iraqis destroying the homes of U.S. citizens. Iraq isn’t bombing U.S. cities, towns, and villages, and Iraqis aren’t killing U.S. civilians within their own borders. So this clause may in effect be read as an Iraqi waiver of any right of the government to seek reparations from the U.S. for damages, injuries, or deaths resulting from the continuing foreign military occupation.
There is a recourse for “third party claims” -- meaning from Iraqi citizens as opposed to the government -- under which the U.S. would “pay just and reasonable compensation” for “meritorious” claims. But the U.S. apparently gets to decide what claims are “meritorious” or not, and all such claims “shall be settled expeditiously in accordance with the laws and regulations of the United States.” In other words, claims of damages, injuries or deaths from Iraqi citizens seeking compensation for actions of the U.S. military would not fall under Iraqi jurisdiction.
The SOFA agreement stipulates that detentions must be carried out only with Iraqi cooperation and that detained individuals must be turned over to Iraqi authorities within 24 hours of their arrest, which represents a shift from the U.S.’s earlier position that it be able to detain Iraqi citizens when and however it chooses.
The most commonly reported statement in the agreement, reflected in many headlines, is that which reads, “All the United States Forces shall withdraw from all Iraqi territory no later than December 31, 2011.”
In addition, “All United States combat forces shall withdraw from Iraqi cities, villages, and localities no later than the time at which Iraqi Security Forces assume full responsibility for security in an Iraqi province, provided that such withdrawal is completed no later than June 30, 2009.”
The agreement also states, “The United States recognizes the sovereign right of the Government of Iraq to request the departure of the United States Forces from Iraq at any time.” (Notice it doesn’t recognize the sovereign right of the People of Iraq, who overwhelmingly want the U.S. forces gone and whose government is seen by many as a puppet regime for colluding with the U.S. in arranging for its occupying forces to remain. Of course, Iraqis who recognize this have fallen prey to “conspiracy theories” -- at least according to Iraq’s minister of defense.)
In return, the U.S. does offer a few incentives for the Iraqi government. It pledges, for example, to “Support Iraq to obtain forgiveness of international debt resulting from the policies of the former regime,” which the U.S. supported throughout the 1980s.
The agreement also states, “Recognizing and understanding Iraq’s concern with claims based on actions perpetrated by the former regime, the President of the United States has exercised his authority to protect from United States judicial process the Development Fund for Iraq and certain other property in which Iraq has an interest. The United States shall remain fully and actively engaged with the Government of Iraq with respect to continuation of such protections and with respect to such claims.
“Consistent with a letter from the President of the United States to be sent to the Prime Minister of Iraq, the United States remains committed to assist Iraq in connection with its request that the UN Security Council extend the protections and other arrangements established in Resolution 1483 (2003) and Resolution 1546 (2003) [sic] for petroleum, petroleum products, and natural gas originating in Iraq, proceeds and obligations from sale thereof, and the Development Fund for Iraq.”
Resolution 1483 noted “the establishment of the Development Fund for Iraq to be held by the Central Bank of Iraq” and that funds “shall be disbursed at the direction of the [Coalition Provisional] Authority.”
The Coalition Provisional Authority (CPA), then headed up by L. Paul Bremer, proceeded to establish the Development Fund for Iraq (DFI) in an account at the Federal Reserve Bank of New York. To get around the terms of 1483, the DFI was held on the books of the Central Bank of Iraq and a portion of the fund located in Baghdad. But the U.S. nevertheless remained in control of the money and held most of it in New York.
The fund consists of assets seized from Iraq under the regime of Saddam Hussein as well as proceeds from the export of Iraqi oil.
While 1483 stipulates that these funds should be used “to assist the people of Iraq in the reconstruction and development of their economy and to facilitate assistance by the broader donor community,” the system has been plagued with charges of corruption and lack of accountability, with billions of dollars reportedly unaccounted for. Billions more have been paid out to corporations contracted by the Pentagon for ostensible reconstruction. One such corporation has been Halliburton. Vice President Dick Cheney was CEO of Halliburton from 1995 until 2000.
A further resolution on June 8, 2004, Resolution 1446, stated that “upon dissolution of the Coalition Provisional Authority, the funds in the Development Fund for Iraq shall be disbursed solely at the direction of the Government of Iraq,” but that proceeds from export sales of oil and natural gas would continue to be deposited in the fund.
As a January 2004 report from the Federal Reserve Bank of New York noted, in March 2003, “President Bush issued an executive order directing the transfer of funds controlled by the Iraqi government and its financial and oil institutions to the U.S. Treasury.” The Federal Reserve Bank then created a “Special Purpose Account” for the funds on behalf of the Treasury.
According to a Congressional Research Service report from October, about $10 billion is currently still being held in the Federal Reserve Bank of New York, accounting for a third of Iraq’s total reserves of foreign currency and gold.
If the agreement is approved by the Iraqi Parliament, it will thus effectively acquiesce to continued control over these proceeds from the export of Iraqi oil by the U.S., with merely a recognition of Iraqi “concern” over this money and a veil of Iraqi control over only the disbursement of the money for reconstruction and development. This aspect of the proposed pact has received little -- if any -- attention in U.S. mainstream media reports that have focused instead on the date set for withdrawal.Jeremy R. Hammond is the editor of Foreign Policy Journal, a website dedicated to providing news, critical analysis, and opinion commentary on U.S. foreign policy from outside of the standard framework offered by government officials and the mainstream corporate media, particularly with regard to the “war on terrorism” and events in the Middle East. He has also written for numerous other online publications. You can contact him at jeremy@foreignpolicyjournal.com. Copyright © 1998-2007 Online JournalEmail Online Journal Editor
Special Reports
U.S. would control profits from Iraqi oil exports under agreement
By Jeremy R. HammondOnline Journal Contributing WriterNov 24, 2008, 00:24
There’s been no shortage of controversy surrounding what has been termed the Status of Forces Agreement (SOFA) between the governments of the United States and Iraq. After battling away for most of the year at what the terms of the agreement should be, the text was at last finalized this month.
The terms of the agreement effectively allow the U.S. to continue to control billions of dollars of proceeds from the sale of exported Iraqi oil held in the Federal Reserve Bank of New York. It also contains numerous loopholes that could allow the continuing long-term presence of U.S. military forces and would effectively maintain U.S. jurisdiction over crimes committed by American soldiers.
Iraq’s cabinet approved the agreement a week ago with 27 members voting in favor, out of 28 ministers who were present, with nine ministers absent. It is now being debated in the Parliament.
Abdul Qadir al-Obaidi, Iraq’s minister of defense, issued a dire warning that without the agreement and continued presence of U.S. forces, “then what happened in the Gulf of Aden will happen in the Arabian Gulf too. Pirates will start in these ports in a way you can’t even imagine.”
Governments often use fear tactics to push through controversial legislation. Before the U.S. invasion, members of the Congress were told that if they didn’t authorize the president to use military force against Iraq, Saddam Hussein might attack the east coast of the United States with biological weapons from unmanned aerial vehicles, for example. More recently, members of Congress were warned that if they did not pass the highly unpopular bill taking taxpayers’ dollars to bail out banking and investment corporations, there would be martial law in America.
While painting an imaginary threat to frighten the public into supporting the agreement, Obaidi criticized opponents as being conspiracy theorists. The New York Times reported Sunday that Obaidi “batted down conspiracy theories about the agreement,” theories fueled by “anti-American Shiite cleric Moktada al-Sadr” about “the existence of secret deals for a longer American presence.”
And yet Obaidi at the same time seemed to lend credence to the fears of opponents. As the Times noted, without comment on the contradiction, he “held open the possibility that some Americans might be needed after” the deadline of the withdrawal of U.S. troops by the end of 2011.
The agreement has been protested by large popular demonstrations in the streets of Baghdad. Thousands protested during a rally on Friday against the deal in Firdaus Square, where in 2003 U.S. soldiers toppled a statue of Saddam Hussein in a staged publicity event that has since been hailed by the mainstream media as “an iconic moment.”
At the rally, demonstrators burned an effigy of President George W. Bush. A man who helped erect the effigy was quoted by the London Times as saying, “Just like Saddam’s statue was brought down, Mr Bush has fallen as well.”
The demonstrations were reportedly organized by Moktada al-Sadr, a highly influential figure whose father was murdered in 1999, most likely by the regime of Saddam Hussein. Following the U.S. invasion of Iraq, he organized a resistance to the occupation consisting of both political and military elements. He commands the al-Mahdi Army, which has threatened to resume armed resistance if the agreement is passed by the Iraqi government.
While the government of Prime Minister Nuri al-Maliki initially claimed it could make an agreement unilaterally with the Bush administration, it has since conceded that the measure must obtain Parliamentary approval.
Under the U.S. Constitution, the agreement would also need to be agreed to by the Senate to have the force of law, but the Bush administration has claimed that no Senate approval is necessary, essentially declaring its intention to violate Article II, Section 2 of the Constitution. This is not the first time the executive branch under Bush has declared for itself the power to govern by fiat, and it is likely to continue to be met with little resistance by the complacent U.S. Congress.
The SOFA agreement, which now has the official lengthy title of “Agreement Between the United States of America and the Republic of Iraq On the Withdrawal of United States Forces from Iraq and the Organization of Their Activities during Their Temporary Presence in Iraq,” while addressing a number of the Iraqi concerns, contains a number of loopholes that would allow, among other things, a U.S. military presence in Iraq beyond the given deadline for withdrawal.
It states in the preamble that both parties recognize the importance of “contributing to world peace and stability, combating terrorism in Iraq,” and “thereby deterring aggression and threats against the sovereignty, security, and territorial integrity of Iraq.” The agreement affirms that cooperation between the two countries “is based on full respect for the sovereignty of each of them in accordance with the purpose and principles of the United Nations Charter.”
This must be considered rather Orwellian language, given the fact that the invasion of Iraq was an act of aggression, defined at Nuremberg as “the supreme international crime, differing only from other war crimes in that it contains within itself the accumulated evil of the whole”; and that the invasion was itself a breach of the peace in violation of the U.N. Charter and other applicable international treaties comprising the body of international law, resulting in instability and bringing terrorism to Iraq. It’s also quite meaningless language given some of the actual contents of the agreement itself.
Article 3 of the agreement contains a clause apparently intended to prevent the U.S. from including Iraqis in its extraordinary renditions programs by barring the U.S. from transferring any non-U.S. persons into or out of the country “unless in accordance with applicable Iraqi laws and regulations, including implementing arrangements as may be agreed to by the Government of Iraq.”
There is thus a loophole that might allow the U.S. to do precisely that, and any such “arrangements” could be interpreted, if the record of the Bush administration is any gauge, to mean approval from the Iraqi president without advice or consent of the Parliament. The U.S. could also, of course, simply violate the agreement and spirit disappeared persons out of the country as it has under the CIA renditions program.
Article 4 states that the U.S. military presence is requested “for the purposes of supporting Iraq in its efforts to maintain security and stability in Iraq,” which is belied by the fact that most Iraqis want the American troop presence to end and consider the continuing occupation to be the most significant causal factor of the violence that, while having ebbed over the past two years, continues to plague the country.
A survey taken last year for the U.S. military, for example, revealed that “Iraqis of all sectarian and ethnic groups believe that the U.S. military invasion is the primary root of the violent differences among them, and see the departure of ‘occupying forces’ as the key to national reconciliation,” as reported by the the Washington Post.
The agreement states that any such operations “shall be fully coordinated with Iraqi authorities” and “overseen by a Joint Military Operations Coordination Committee (JMOCC),” and that it is “the duty of the United States Forces to respect the laws, customs, and traditions of Iraq and applicable international law.” It then adds that both nations “retain the right to legitimate self-defense within Iraq, as defined in applicable international law.”
This itself represents a major loophole because, of course, the right to “self-defense” under international law is very broadly interpreted by the U.S. For example, the invasion of Iraq itself was painted by the Bush administration as an act of self-defense against a perceived threat and thus, according to the administration, legitimate. As another example, the U.S. continues to bomb Pakistan despite growing protests from both the public and the government. In one incident that is particularly revealing as to the U.S. interpretation of “self-defense” under international law, a U.S. airstrike in June targeted and killed 11 members of the Pakistani Frontier Corps within Pakistan. Despite having killed allied forces within their own borders, the Pentagon described the attack as a “legitimate” act of self-defense.
The agreement sets the date of June 30, 2009, as the deadline for “the withdrawal of combat forces from the cities, villages, and localities.” U.S. forces would then be located on bases within Iraq and would ostensibly only be able to leave those bases on combat operations executed with the full cooperation of the Iraqi government. Use of such bases would be granted to the U.S. for the purpose of the ongoing foreign military presence within Iraq.
The agreement states that its implementation must be “consistent with protecting the natural environment and human health and safety” and that “Each Party shall provide the other with maps and other available information on the location of mine fields and other obstacles that can hamper or jeopardize movement within the territory and waters of Iraq.”
But it’s highly unlikely that the U.S. will engage in efforts to clean up areas contaminated with depleted uranium (DU), a still radioactive and chemically toxic isotope that is leftover from the process of enriching uranium. The dense metal is used as a weapons’ hardener for penetrating armor by the U.S. military, but aerosolizes upon impact, and thus presents the risk that DU particles could be spread by the wind or contaminate drinking water. While the Pentagon has denied publicly that DU poses a health risk, it has privately acknowledged in internal documents and studies that inhalation of DU represents a serious health risk and may lead to cancer.
The Pentagon acknowledged after the Gulf War that at least 320 tons of DU remained on the ground from that conflict. Cancer rates in southern Iraq rose significantly after that war, with many Iraqi doctors attributing the increase to DU, claims that have been dismissed by the Pentagon as “propaganda.” Dr. Doug Rokke, a former US army colonel sent to the Gulf by the Army as a health physicist in 1991 to advise on cleanup procedures involving depleted uranium, has said that 30 members -- nearly a third of his entire team -- are now seriously ill, himself included, and that several have since died from cancer.
One estimate puts the amount of DU used in the first couple months of the Iraq war following the March 19, 2003 invasion at 1,100 to 2,200 tons.
It’s equally unlikely that the U.S. will make any effort to clean up “dud” cluster munitions that still litter Iraq from both wars. Estimates from the Gulf War put the number of unexploded submunitions, which effectively become landmines, at more than one million. These weapons continued to kill a decade after the war. According to a Human Rights Watch estimate, in 2001, cluster submunitions caused an average of 30 casualties per month. In its World Report 2004, the group reported that the U.S. and U.K. “dropped nearly 13,000 cluster munitions, containing an estimated 1.8 to 2 million submunitions” in just the first three weeks of combat. Even assuming only a conservative 5 percent “dud” rate for the weapons (many of which were not bombs but ground-launched munitions with a dud rate of up to 16 percent), that would translate into 100,000 unexploded munitions.
Another controversial aspect of the SOFA agreement has been the question of jurisdiction for crimes committed by U.S. forces in Iraq. While the U.S. has backed down from its insistence that private Pentagon contractors, such as mercenaries from the infamous Blackwater group, be under U.S. jurisdiction, the final agreement still maintains that U.S. soldiers themselves will primarily be.
The agreement states that “Iraq shall have the primary right to exercise jurisdiction over members of the United States Forces and of the civilian component,” but only for “premeditated felonies” and only “when such crimes are committed outside agreed facilities and areas and outside duty status.” Thus, for Iraq to have jurisdiction, any crimes committed by American soldiers would have to be shown to be “premeditated” and committed while off duty.
Were a soldier to kill an Iraqi civilian, for example, while not on duty, it would have to be shown that he had contemplated the killing in advance and acted with intent to kill. If the soldier therefore claimed that he had been threatened by other Iraqis and discharged his weapon only to deter an assault, and that any collateral damage that resulted was accidental, then the case would fall not under Iraqi, but U.S. jurisdiction.
Moreover, the pact adds that any member of the U.S. armed forces who is found to have committed a premeditated crime while off duty would “be entitled to due process standards and protections consistent with those available under United States and Iraqi law.” Any such incident would thus still fall under U.S. legal jurisdiction, with only what might perhaps be described as special consideration for Iraqi law -- but not full Iraqi legal jurisdiction, as has been misreported by some of the mainstream media.
On top of that, the text adds that “United States Forces authorities shall certify whether an alleged offense arose during duty status,” which essentially gives the U.S. the power to define any service member’s “duty status” at the time of any given incident -- yet another loophole that might prevent Iraq from having jurisdiction over crimes committed against its own people by foreign occupying military forces.
The agreement also stipulates that “each Party shall waive the right to claim compensation against the other Party for any damage, loss, or destruction of property, or compensation for injuries or deaths that could happen to members of the force or civilian component of either Party arising out of the performance of their official duties in Iraq.”
In other words, if the U.S. destroys Iraqi property or injures or kills Iraqis, the Iraqi government may not seek any compensation or reparations. Of course, this clause is mostly one-sided since there is no risk of Iraqis destroying the homes of U.S. citizens. Iraq isn’t bombing U.S. cities, towns, and villages, and Iraqis aren’t killing U.S. civilians within their own borders. So this clause may in effect be read as an Iraqi waiver of any right of the government to seek reparations from the U.S. for damages, injuries, or deaths resulting from the continuing foreign military occupation.
There is a recourse for “third party claims” -- meaning from Iraqi citizens as opposed to the government -- under which the U.S. would “pay just and reasonable compensation” for “meritorious” claims. But the U.S. apparently gets to decide what claims are “meritorious” or not, and all such claims “shall be settled expeditiously in accordance with the laws and regulations of the United States.” In other words, claims of damages, injuries or deaths from Iraqi citizens seeking compensation for actions of the U.S. military would not fall under Iraqi jurisdiction.
The SOFA agreement stipulates that detentions must be carried out only with Iraqi cooperation and that detained individuals must be turned over to Iraqi authorities within 24 hours of their arrest, which represents a shift from the U.S.’s earlier position that it be able to detain Iraqi citizens when and however it chooses.
The most commonly reported statement in the agreement, reflected in many headlines, is that which reads, “All the United States Forces shall withdraw from all Iraqi territory no later than December 31, 2011.”
In addition, “All United States combat forces shall withdraw from Iraqi cities, villages, and localities no later than the time at which Iraqi Security Forces assume full responsibility for security in an Iraqi province, provided that such withdrawal is completed no later than June 30, 2009.”
The agreement also states, “The United States recognizes the sovereign right of the Government of Iraq to request the departure of the United States Forces from Iraq at any time.” (Notice it doesn’t recognize the sovereign right of the People of Iraq, who overwhelmingly want the U.S. forces gone and whose government is seen by many as a puppet regime for colluding with the U.S. in arranging for its occupying forces to remain. Of course, Iraqis who recognize this have fallen prey to “conspiracy theories” -- at least according to Iraq’s minister of defense.)
In return, the U.S. does offer a few incentives for the Iraqi government. It pledges, for example, to “Support Iraq to obtain forgiveness of international debt resulting from the policies of the former regime,” which the U.S. supported throughout the 1980s.
The agreement also states, “Recognizing and understanding Iraq’s concern with claims based on actions perpetrated by the former regime, the President of the United States has exercised his authority to protect from United States judicial process the Development Fund for Iraq and certain other property in which Iraq has an interest. The United States shall remain fully and actively engaged with the Government of Iraq with respect to continuation of such protections and with respect to such claims.
“Consistent with a letter from the President of the United States to be sent to the Prime Minister of Iraq, the United States remains committed to assist Iraq in connection with its request that the UN Security Council extend the protections and other arrangements established in Resolution 1483 (2003) and Resolution 1546 (2003) [sic] for petroleum, petroleum products, and natural gas originating in Iraq, proceeds and obligations from sale thereof, and the Development Fund for Iraq.”
Resolution 1483 noted “the establishment of the Development Fund for Iraq to be held by the Central Bank of Iraq” and that funds “shall be disbursed at the direction of the [Coalition Provisional] Authority.”
The Coalition Provisional Authority (CPA), then headed up by L. Paul Bremer, proceeded to establish the Development Fund for Iraq (DFI) in an account at the Federal Reserve Bank of New York. To get around the terms of 1483, the DFI was held on the books of the Central Bank of Iraq and a portion of the fund located in Baghdad. But the U.S. nevertheless remained in control of the money and held most of it in New York.
The fund consists of assets seized from Iraq under the regime of Saddam Hussein as well as proceeds from the export of Iraqi oil.
While 1483 stipulates that these funds should be used “to assist the people of Iraq in the reconstruction and development of their economy and to facilitate assistance by the broader donor community,” the system has been plagued with charges of corruption and lack of accountability, with billions of dollars reportedly unaccounted for. Billions more have been paid out to corporations contracted by the Pentagon for ostensible reconstruction. One such corporation has been Halliburton. Vice President Dick Cheney was CEO of Halliburton from 1995 until 2000.
A further resolution on June 8, 2004, Resolution 1446, stated that “upon dissolution of the Coalition Provisional Authority, the funds in the Development Fund for Iraq shall be disbursed solely at the direction of the Government of Iraq,” but that proceeds from export sales of oil and natural gas would continue to be deposited in the fund.
As a January 2004 report from the Federal Reserve Bank of New York noted, in March 2003, “President Bush issued an executive order directing the transfer of funds controlled by the Iraqi government and its financial and oil institutions to the U.S. Treasury.” The Federal Reserve Bank then created a “Special Purpose Account” for the funds on behalf of the Treasury.
According to a Congressional Research Service report from October, about $10 billion is currently still being held in the Federal Reserve Bank of New York, accounting for a third of Iraq’s total reserves of foreign currency and gold.
If the agreement is approved by the Iraqi Parliament, it will thus effectively acquiesce to continued control over these proceeds from the export of Iraqi oil by the U.S., with merely a recognition of Iraqi “concern” over this money and a veil of Iraqi control over only the disbursement of the money for reconstruction and development. This aspect of the proposed pact has received little -- if any -- attention in U.S. mainstream media reports that have focused instead on the date set for withdrawal.Jeremy R. Hammond is the editor of Foreign Policy Journal, a website dedicated to providing news, critical analysis, and opinion commentary on U.S. foreign policy from outside of the standard framework offered by government officials and the mainstream corporate media, particularly with regard to the “war on terrorism” and events in the Middle East. He has also written for numerous other online publications. You can contact him at jeremy@foreignpolicyjournal.com. Copyright © 1998-2007 Online JournalEmail Online Journal Editor
The New Welfare State: A Conservative View.
This is from a conservative US commentator in the Nationalinterest.
Although I come from a diametrically opposite political pole much of what Bandow says seems to show a great deal of common sense and immunity from the imperialistic virus that infects most US discourse on both the left and right.
The New Welfare State
by
Doug Bandow11.24.2008
The Republican Party is a wreck. The election was not quite as catastrophic as predicted—though if the Democrats take the two GOP Senate seats still at risk, things couldn’t have turned out much worse. Continuing on its present course obviously is no option.
Most of the arguments on the Right so far have been between social and economic conservatives, but the Republican Party also needs to reconsider its foreign policy stance. Neoconservatives had their opportunity and their policies were found wanting. With President Barack Obama and likely Secretary of State Hillary Clinton almost certain to follow the usual liberal interventionist course, the GOP should respond with a policy of strategic independence rather than even more promiscuous global meddling. In short, conservatives should insist on a “defense” policy that actually promotes America’s defense instead of promoting social engineering in other nations.
There’s much loose talk among conservatives about the need to increase military spending to maintain a strong defense. Even Barack Obama campaigned to expand the military’s size. But the image of the United States as a beleaguered innocent under siege by enemies around the world is embarrassing nonsense. America is the globe’s dominant military player, with most of its “defense” spending having nothing to do with defending the United States.
In 2009, Washington will spend roughly $700 billion on the military. Adjusted for inflation, even the $515 billion for normal (non-Afghan/Iraq) operations is more than America spent annually during the cold war, Korean War, or Vietnam War. Yet then the United States faced the Soviet Union and, in the latter two cases, was fighting a very hot war. Today America faces no threats of comparable magnitude.
Indeed, the United States bestrides the globe as a colossus. It accounts for roughly half of the world’s military spending. Washington is allied with every major industrialized state except China and Russia. As Colin Powell noted in 1991, after the Soviet Union’s collapse: “I’m running out of demons. I’m running out of enemies. I’m down to Castro and Kim Il Sung.” Nasty characters they were, but replacements for the “evil empire” they were not.
A revived Russia is dangerous only to its immediate neighbors. Its nuclear arsenal gives Moscow the power to deter Washington from attacking, but no more. Beijing spends more on its military—estimates of China’s annual outlays top out at $100 billion or so—but not enough to catch up or surpass America’s military capabilities. For instance, the United States has twelve aircraft carriers while China has none. And Asia is filled with countries with an interest in constraining Beijing: Russia, India, Japan and the ASEAN states.
Terrorism remains the most serious threat facing America, but it is not one amenable to solution via carrier groups, air wings and armored divisions. Indeed, using heavy conventional forces in an attempt to eliminate terrorism typically makes the problem worse—invading countries and killing civilians creates more grievances and more enemies. Better to target terrorist sponsors, use special forces in cooperation with indigenous allies, share intelligence among friendly states, dry up funding and break local organizations, and favor limited retaliation over nation-building where states have aided terrorists.
Not only is Washington spending too much money on the military, but the United States is deploying too many of its forces to defend other nations. For instance, troops in South Korea do nothing for American security. The Republic of Korea (ROK) has twice the population and around forty times the GDP of the North. For the ROK to ask for American military aid is a bit like Washington begging for defense alms from Europe to deter a Mexican attack.
Japan enjoys the world’s second-ranking economy and is fully capable of creating a world-class deterrent to any outside attack. Grant that some of its neighbors remain nervous about a more powerful Japan. That’s still no argument for stationing a Marine expeditionary force in Okinawa. The United States should not babysit countries unwilling to work through antagonisms rooted in a conflict that ended more than six decades ago. Many nations want American protection. But so what? That doesn’t mean Washington should waste money and risk lives to maintain a gaggle of international welfare queens.
U.S. forces in Europe, whether located in Britain, Germany, the Balkans or Donald Rumsfeld’s famous “new Europe” to the east, have equally little to do with American security. After all, the European Union collectively has a larger GDP and population than the United States. Why should American taxpayers subsidize the continent’s defense so Europeans can fund lavish welfare states? If the Europeans don’t believe they face a threat serious enough to warrant creating and maintaining modern and professional military forces, that’s their privilege. America shouldn’t bail them out by taking over their defense.
In any case, a Russian attack on the core Western European states for whose defense Washington created NATO is about as likely as an invasion from Mars. The former members of the Soviet Union and Warsaw Pact along Russia’s border understandably feel more vulnerable, but Moscow is acting more like a traditional great power interested in border security than an ideologically expansionist power planning a war of conquest. That means it desires influence rather than control.
The former still isn’t a pleasant prospect for newly independent states stuck in a bad geopolitical neighborhood, but easing their discomfort is no reason for America to risk war with nuclear-armed Russia. For instance, Americans have humanitarian reasons to sympathize with the Georgian people, not geopolitical reasons to defend the state of Georgia. The major powers in Europe have a much greater interest in backing up their central and eastern neighbors.
Indeed, NATO has become a defense black hole for the United States. By continually expanding the alliance, Washington has been adding small client states with nonexistent military capabilities but multiple political liabilities, ranging from social instability to ethnic discord to border conflict. For example, what conceivable benefit does America gain from bringing Albania or Croatia into NATO? Countries like Estonia proudly send a few dozen personnel to Iraq while expecting the United States to defend them from Russia in return. The alliance has become a form of international welfare, with Washington promiscuously distributing security guarantees hither and yon.
Even less relevant to American security are the potpourri of nation-building and humanitarian interventions Washington has busied itself in the post-cold war years. There’s Haiti (twice!), Somalia, Bosnia and Kosovo, none of which had the slightest relevance to even the barest security interest. Whatever the justification for invading Iraq, sticking around as occupier to sort out conflicts amongst the Kurds, Shia and Sunni was never worth the cost. Intervening in Darfur or any number of other geopolitical horror shows creates many risks while straining a military whose principal duty should remain protecting America: its people, territory, and constitutional system and liberties.
If the United States was only concerned about its own defense, its military requirements would be modest. No country has the capability to assault American territory with ground forces. No potential adversary possesses an air force or navy which can match, let alone overcome, comparable American forces. The greatest military threat still comes from Moscow’s strategic nuclear forces, but Washington possesses by far the globe’s most sophisticated and deadly arsenal. All that is lacking is an effective missile defense, which justifies continued work in this area.
But the same tyranny of distance works against U.S. intervention overseas, making it so expensive. China is the latest conservative defense bugaboo. But Beijing has no practical capacity to attack America. To launch an attack on U.S. territory with something other than missiles would require a massive army, naval and air build-up. It would not be enough for the People’s Republic of China (PRC) to match America; Beijing would have to assemble forces capable of overwhelming U.S. defenders. To do that would require massive expenditures and years of effort. Some day China’s moment might come, but not in the foreseeable future, especially at a time when the PRC remains notably poorer than America. Even when the Chinese economy overtakes that of the United States at some point in the coming years, China’s per capita GDP will remain well below that of America. Talk of a renewed “yellow peril” in the East is nonsense.
What Beijing’s increasing military outlays do is threaten Washington’s ability to intervene against the PRC. China is updating its strategic nuclear forces, expanding its blue water naval capabilities, modernizing its antiquated conventional forces and developing asymmetric war capacities, such as the ability to destroy U.S. satellites. None of these steps will enable it to attack America. All of them will make it more costly for Washington to attempt to coerce Beijing, particularly in the event of hostilities in the Taiwan Strait. That is, China is creating an effective deterrent force, capable of sinking U.S. carriers, blinding U.S. intelligence and forestalling U.S. nuclear threats. For Washington to construct a military capable of overwhelming China’s growing forces would force it to devote ever more resources to “defense.”
Washington has two basic choices. The first is to attempt to remain the dominant military power in every region on earth, capable of waging war against any adversary or likely hostile coalition on its own territory or in its own region. For instance, assume that the U.S. government wants to undertake three tasks in addition to protecting America: defend Georgia from Russia; shield Taiwan from the PRC; and fix failed states in Africa and the Middle East.
None of these objectives has much of anything to do with preserving American independence, liberties and prosperity. But pursuing these goals would cost as much if not more than defending the United States: maintaining strategic nuclear and conventional forces capable of defeating (not just deterring) a rebounding great power and an incipient great power, as well as large enough ground forces to garrison failed states (not just U.S. territories) for years. Every increase in Chinese and Russian military spending would require a much larger U.S. increase. Every additional failed state would force another expansion of American ground forces.
The cost would not just be financial. If pursuit of these objectives went awry—especially if deterrence against China or Russia failed—the consequence could be a devastated homeland as well as wasted money. Neither China nor Russia is the equivalent of Serbia or Iraq. War with the first two would be very different than war with the latter two.
The second choice is to put defense back into defense policy. The United States should maintain a military sufficient to deter or defeat attack on America by any enemy or likely coalition of enemies. Washington should possess the air and naval capacity necessary to keep hostile forces away from the American homeland. And the United States should have the ability to, if necessary, join with allied states to prevent an antagonistic hegemonic power from dominating Eurasia. In short, Washington should aim to keep America as the world’s strongest power, the first among equals, but not the arrogant unipower, determined to meddle in everyone else’s affairs and fight everyone else’s wars.
“War is the health of the state” Randolph Bourne famously declared. He was right. War is the ultimate big government program—a direct attack on individual liberty, fiscal responsibility, moral values and family stability. It always should be a last rather than first resort, never a matter of “choice” by ivory-tower warriors bent on remaking the world at everyone else’s expense.
The conservative movement isn’t dead, but its wounds are serious. To revive, the Right needs to offer a genuine alternative to the traditional liberalism likely to dominate policy in the Obama administration. No where is that more necessary than in foreign affairs. Let President Barack Obama propose sacrificing American lives and money to reform the world. Let conservatives insist that Washington defend America rather than populous and prosperous allies and favor the protection of American liberties over the dream of global social engineering. That is a political battle the Right would win.
Doug Bandow is the Robert A. Taft Fellow at the American Conservative Defense Alliance. A former special assistant to President Ronald Reagan, he is the author of Foreign Follies: America’s New Global Empire (Xulon).
Copyright © 2006 The National Interest All rights reserved. Legal TermsP: (800) 893-8944, Outside the U.S.: (914) 962-6297 backissues@nationalinterest.orgP.O. Box 2671, Danbury, CT 06813-2671The National Interest is published by The Nixon CenterThe Nixon Center 1615 L Street, Suite 1250 Washington, DC 20036www.nixoncenter.org
Although I come from a diametrically opposite political pole much of what Bandow says seems to show a great deal of common sense and immunity from the imperialistic virus that infects most US discourse on both the left and right.
The New Welfare State
by
Doug Bandow11.24.2008
The Republican Party is a wreck. The election was not quite as catastrophic as predicted—though if the Democrats take the two GOP Senate seats still at risk, things couldn’t have turned out much worse. Continuing on its present course obviously is no option.
Most of the arguments on the Right so far have been between social and economic conservatives, but the Republican Party also needs to reconsider its foreign policy stance. Neoconservatives had their opportunity and their policies were found wanting. With President Barack Obama and likely Secretary of State Hillary Clinton almost certain to follow the usual liberal interventionist course, the GOP should respond with a policy of strategic independence rather than even more promiscuous global meddling. In short, conservatives should insist on a “defense” policy that actually promotes America’s defense instead of promoting social engineering in other nations.
There’s much loose talk among conservatives about the need to increase military spending to maintain a strong defense. Even Barack Obama campaigned to expand the military’s size. But the image of the United States as a beleaguered innocent under siege by enemies around the world is embarrassing nonsense. America is the globe’s dominant military player, with most of its “defense” spending having nothing to do with defending the United States.
In 2009, Washington will spend roughly $700 billion on the military. Adjusted for inflation, even the $515 billion for normal (non-Afghan/Iraq) operations is more than America spent annually during the cold war, Korean War, or Vietnam War. Yet then the United States faced the Soviet Union and, in the latter two cases, was fighting a very hot war. Today America faces no threats of comparable magnitude.
Indeed, the United States bestrides the globe as a colossus. It accounts for roughly half of the world’s military spending. Washington is allied with every major industrialized state except China and Russia. As Colin Powell noted in 1991, after the Soviet Union’s collapse: “I’m running out of demons. I’m running out of enemies. I’m down to Castro and Kim Il Sung.” Nasty characters they were, but replacements for the “evil empire” they were not.
A revived Russia is dangerous only to its immediate neighbors. Its nuclear arsenal gives Moscow the power to deter Washington from attacking, but no more. Beijing spends more on its military—estimates of China’s annual outlays top out at $100 billion or so—but not enough to catch up or surpass America’s military capabilities. For instance, the United States has twelve aircraft carriers while China has none. And Asia is filled with countries with an interest in constraining Beijing: Russia, India, Japan and the ASEAN states.
Terrorism remains the most serious threat facing America, but it is not one amenable to solution via carrier groups, air wings and armored divisions. Indeed, using heavy conventional forces in an attempt to eliminate terrorism typically makes the problem worse—invading countries and killing civilians creates more grievances and more enemies. Better to target terrorist sponsors, use special forces in cooperation with indigenous allies, share intelligence among friendly states, dry up funding and break local organizations, and favor limited retaliation over nation-building where states have aided terrorists.
Not only is Washington spending too much money on the military, but the United States is deploying too many of its forces to defend other nations. For instance, troops in South Korea do nothing for American security. The Republic of Korea (ROK) has twice the population and around forty times the GDP of the North. For the ROK to ask for American military aid is a bit like Washington begging for defense alms from Europe to deter a Mexican attack.
Japan enjoys the world’s second-ranking economy and is fully capable of creating a world-class deterrent to any outside attack. Grant that some of its neighbors remain nervous about a more powerful Japan. That’s still no argument for stationing a Marine expeditionary force in Okinawa. The United States should not babysit countries unwilling to work through antagonisms rooted in a conflict that ended more than six decades ago. Many nations want American protection. But so what? That doesn’t mean Washington should waste money and risk lives to maintain a gaggle of international welfare queens.
U.S. forces in Europe, whether located in Britain, Germany, the Balkans or Donald Rumsfeld’s famous “new Europe” to the east, have equally little to do with American security. After all, the European Union collectively has a larger GDP and population than the United States. Why should American taxpayers subsidize the continent’s defense so Europeans can fund lavish welfare states? If the Europeans don’t believe they face a threat serious enough to warrant creating and maintaining modern and professional military forces, that’s their privilege. America shouldn’t bail them out by taking over their defense.
In any case, a Russian attack on the core Western European states for whose defense Washington created NATO is about as likely as an invasion from Mars. The former members of the Soviet Union and Warsaw Pact along Russia’s border understandably feel more vulnerable, but Moscow is acting more like a traditional great power interested in border security than an ideologically expansionist power planning a war of conquest. That means it desires influence rather than control.
The former still isn’t a pleasant prospect for newly independent states stuck in a bad geopolitical neighborhood, but easing their discomfort is no reason for America to risk war with nuclear-armed Russia. For instance, Americans have humanitarian reasons to sympathize with the Georgian people, not geopolitical reasons to defend the state of Georgia. The major powers in Europe have a much greater interest in backing up their central and eastern neighbors.
Indeed, NATO has become a defense black hole for the United States. By continually expanding the alliance, Washington has been adding small client states with nonexistent military capabilities but multiple political liabilities, ranging from social instability to ethnic discord to border conflict. For example, what conceivable benefit does America gain from bringing Albania or Croatia into NATO? Countries like Estonia proudly send a few dozen personnel to Iraq while expecting the United States to defend them from Russia in return. The alliance has become a form of international welfare, with Washington promiscuously distributing security guarantees hither and yon.
Even less relevant to American security are the potpourri of nation-building and humanitarian interventions Washington has busied itself in the post-cold war years. There’s Haiti (twice!), Somalia, Bosnia and Kosovo, none of which had the slightest relevance to even the barest security interest. Whatever the justification for invading Iraq, sticking around as occupier to sort out conflicts amongst the Kurds, Shia and Sunni was never worth the cost. Intervening in Darfur or any number of other geopolitical horror shows creates many risks while straining a military whose principal duty should remain protecting America: its people, territory, and constitutional system and liberties.
If the United States was only concerned about its own defense, its military requirements would be modest. No country has the capability to assault American territory with ground forces. No potential adversary possesses an air force or navy which can match, let alone overcome, comparable American forces. The greatest military threat still comes from Moscow’s strategic nuclear forces, but Washington possesses by far the globe’s most sophisticated and deadly arsenal. All that is lacking is an effective missile defense, which justifies continued work in this area.
But the same tyranny of distance works against U.S. intervention overseas, making it so expensive. China is the latest conservative defense bugaboo. But Beijing has no practical capacity to attack America. To launch an attack on U.S. territory with something other than missiles would require a massive army, naval and air build-up. It would not be enough for the People’s Republic of China (PRC) to match America; Beijing would have to assemble forces capable of overwhelming U.S. defenders. To do that would require massive expenditures and years of effort. Some day China’s moment might come, but not in the foreseeable future, especially at a time when the PRC remains notably poorer than America. Even when the Chinese economy overtakes that of the United States at some point in the coming years, China’s per capita GDP will remain well below that of America. Talk of a renewed “yellow peril” in the East is nonsense.
What Beijing’s increasing military outlays do is threaten Washington’s ability to intervene against the PRC. China is updating its strategic nuclear forces, expanding its blue water naval capabilities, modernizing its antiquated conventional forces and developing asymmetric war capacities, such as the ability to destroy U.S. satellites. None of these steps will enable it to attack America. All of them will make it more costly for Washington to attempt to coerce Beijing, particularly in the event of hostilities in the Taiwan Strait. That is, China is creating an effective deterrent force, capable of sinking U.S. carriers, blinding U.S. intelligence and forestalling U.S. nuclear threats. For Washington to construct a military capable of overwhelming China’s growing forces would force it to devote ever more resources to “defense.”
Washington has two basic choices. The first is to attempt to remain the dominant military power in every region on earth, capable of waging war against any adversary or likely hostile coalition on its own territory or in its own region. For instance, assume that the U.S. government wants to undertake three tasks in addition to protecting America: defend Georgia from Russia; shield Taiwan from the PRC; and fix failed states in Africa and the Middle East.
None of these objectives has much of anything to do with preserving American independence, liberties and prosperity. But pursuing these goals would cost as much if not more than defending the United States: maintaining strategic nuclear and conventional forces capable of defeating (not just deterring) a rebounding great power and an incipient great power, as well as large enough ground forces to garrison failed states (not just U.S. territories) for years. Every increase in Chinese and Russian military spending would require a much larger U.S. increase. Every additional failed state would force another expansion of American ground forces.
The cost would not just be financial. If pursuit of these objectives went awry—especially if deterrence against China or Russia failed—the consequence could be a devastated homeland as well as wasted money. Neither China nor Russia is the equivalent of Serbia or Iraq. War with the first two would be very different than war with the latter two.
The second choice is to put defense back into defense policy. The United States should maintain a military sufficient to deter or defeat attack on America by any enemy or likely coalition of enemies. Washington should possess the air and naval capacity necessary to keep hostile forces away from the American homeland. And the United States should have the ability to, if necessary, join with allied states to prevent an antagonistic hegemonic power from dominating Eurasia. In short, Washington should aim to keep America as the world’s strongest power, the first among equals, but not the arrogant unipower, determined to meddle in everyone else’s affairs and fight everyone else’s wars.
“War is the health of the state” Randolph Bourne famously declared. He was right. War is the ultimate big government program—a direct attack on individual liberty, fiscal responsibility, moral values and family stability. It always should be a last rather than first resort, never a matter of “choice” by ivory-tower warriors bent on remaking the world at everyone else’s expense.
The conservative movement isn’t dead, but its wounds are serious. To revive, the Right needs to offer a genuine alternative to the traditional liberalism likely to dominate policy in the Obama administration. No where is that more necessary than in foreign affairs. Let President Barack Obama propose sacrificing American lives and money to reform the world. Let conservatives insist that Washington defend America rather than populous and prosperous allies and favor the protection of American liberties over the dream of global social engineering. That is a political battle the Right would win.
Doug Bandow is the Robert A. Taft Fellow at the American Conservative Defense Alliance. A former special assistant to President Ronald Reagan, he is the author of Foreign Follies: America’s New Global Empire (Xulon).
Copyright © 2006 The National Interest All rights reserved. Legal TermsP: (800) 893-8944, Outside the U.S.: (914) 962-6297 backissues@nationalinterest.orgP.O. Box 2671, Danbury, CT 06813-2671The National Interest is published by The Nixon CenterThe Nixon Center 1615 L Street, Suite 1250 Washington, DC 20036www.nixoncenter.org
Former speaker attests to Arroyo Bribes: Philippines
This is from the Inquirer.
De Venecia was a former speaker of the house and an Arroyo ally. No doubt these accusations will probably not result in any action against Arroyo. Arroyo already has the house well under her control. The accusations are symptomatic of the extent of corruption within the Arroyo administration. Arroyo is also trying to push through constitutional change so that she can remain in power longer.
De Venecia: ‘Arroyo bribes total P100M'
Money was to protect her from impeachmentBy Leila Salaverria, Gil C. Cabacungan Jr.Philippine Daily InquirerFirst Posted 01:19:00 11/25/2
MANILA, Philippines—Pangasinan Rep. Jose de Venecia Jr. Monday accused President Gloria Macapagal-Arroyo of spending as much as P100 million in bribes in October 2007 to buy herself “legal protection” from moves to impeach her for at least a year.
Nine months after he was booted out as Speaker of the House of Representatives, De Venecia finally delivered on his promise to expose irregularities in the Arroyo administration, testifying at the start of discussions on the substance of the fourth impeachment complaint against her in three years.
He told the House committee on justice that Ms Arroyo had a hand in the bribery-tainted $329 million National Broadband Network (NBN) deal with China’s ZTE Corp., in unexplained delays in the NorthRail project and in the giving of cash gifts in connection with last year’s impeachment case against her.
De Venecia’s testimony marked the first time that the charges against the President have been elaborated on in Congress. Ms Arroyo’s dominant allies killed the previous ouster moves in the House even before details could be discussed.
De Venecia told his peers that the impeachment complaint filed by his son Joey was an opportunity to use their consciences and cleanse the image of congressmen as “commodities for sale.”
“Everybody is for sale in this country, even when we go to our districts, many of the citizenry are for sale. Their votes are for sale. Where will the country go? Now is the time to start cleansing ourselves and our nation,” he said in his 40-minute testimony.
He spoke of an invitation made by the President to him and other congressmen and local government officials to a breakfast meeting in Malacañang where the cash gifts were handed out on Oct. 11, 2007.
“In that meeting, many were given P500,000 in bags of cash. I am not saying all of the congressmen. Many of the congressmen are not guilty. But many received P500,000 bags from President Arroyo and I was not there because I knew what was going to happen,” De Venecia said.
“President Arroyo paid, spent hundreds, maybe a hundred million pesos, including gifts to governors which were admitted by (Bulacan) Gov. JonJon Mendoza and (Pampanga) Gov. Ed Panlilio ... (Manila) Congressman Beny Abante and Cebu Rep. Tony Cuenco and (Deputy Speaker) Amelita Villarosa.”
Large-scale bribery
“My God! The President is spending a fortune just to buy legal protection for one year. This bribe money to congressmen and local government officials was her way of purchasing legal protection for one year because of the Supreme Court decision that an impeachment case can be only filed for one year,” De Venecia said.
He said he met the President on that day at 11 a.m. in the Malacañang music room where he was asked to transmit what he described as a “bogus and sham” three-page impeachment complaint by lawyer Roel Pulido that preempted the “more serious complaint” by San Juan Rep. Ronaldo Zamora and Iloilo Vice Gov. Rolex Suplico.
De Venecia’s bag of P500,000 cash, which was delivered to his office that same day, would be forwarded to the committee as exhibit A.
“This is large-scale bribery and corruption, as if we members of the House are commodities for sale. Please use our conscience if we want to cleanse this country, this government and this Congress,” he said.
Not a single rail track laid
De Venecia was a former speaker of the house and an Arroyo ally. No doubt these accusations will probably not result in any action against Arroyo. Arroyo already has the house well under her control. The accusations are symptomatic of the extent of corruption within the Arroyo administration. Arroyo is also trying to push through constitutional change so that she can remain in power longer.
De Venecia: ‘Arroyo bribes total P100M'
Money was to protect her from impeachmentBy Leila Salaverria, Gil C. Cabacungan Jr.Philippine Daily InquirerFirst Posted 01:19:00 11/25/2
MANILA, Philippines—Pangasinan Rep. Jose de Venecia Jr. Monday accused President Gloria Macapagal-Arroyo of spending as much as P100 million in bribes in October 2007 to buy herself “legal protection” from moves to impeach her for at least a year.
Nine months after he was booted out as Speaker of the House of Representatives, De Venecia finally delivered on his promise to expose irregularities in the Arroyo administration, testifying at the start of discussions on the substance of the fourth impeachment complaint against her in three years.
He told the House committee on justice that Ms Arroyo had a hand in the bribery-tainted $329 million National Broadband Network (NBN) deal with China’s ZTE Corp., in unexplained delays in the NorthRail project and in the giving of cash gifts in connection with last year’s impeachment case against her.
De Venecia’s testimony marked the first time that the charges against the President have been elaborated on in Congress. Ms Arroyo’s dominant allies killed the previous ouster moves in the House even before details could be discussed.
De Venecia told his peers that the impeachment complaint filed by his son Joey was an opportunity to use their consciences and cleanse the image of congressmen as “commodities for sale.”
“Everybody is for sale in this country, even when we go to our districts, many of the citizenry are for sale. Their votes are for sale. Where will the country go? Now is the time to start cleansing ourselves and our nation,” he said in his 40-minute testimony.
He spoke of an invitation made by the President to him and other congressmen and local government officials to a breakfast meeting in Malacañang where the cash gifts were handed out on Oct. 11, 2007.
“In that meeting, many were given P500,000 in bags of cash. I am not saying all of the congressmen. Many of the congressmen are not guilty. But many received P500,000 bags from President Arroyo and I was not there because I knew what was going to happen,” De Venecia said.
“President Arroyo paid, spent hundreds, maybe a hundred million pesos, including gifts to governors which were admitted by (Bulacan) Gov. JonJon Mendoza and (Pampanga) Gov. Ed Panlilio ... (Manila) Congressman Beny Abante and Cebu Rep. Tony Cuenco and (Deputy Speaker) Amelita Villarosa.”
Large-scale bribery
“My God! The President is spending a fortune just to buy legal protection for one year. This bribe money to congressmen and local government officials was her way of purchasing legal protection for one year because of the Supreme Court decision that an impeachment case can be only filed for one year,” De Venecia said.
He said he met the President on that day at 11 a.m. in the Malacañang music room where he was asked to transmit what he described as a “bogus and sham” three-page impeachment complaint by lawyer Roel Pulido that preempted the “more serious complaint” by San Juan Rep. Ronaldo Zamora and Iloilo Vice Gov. Rolex Suplico.
De Venecia’s bag of P500,000 cash, which was delivered to his office that same day, would be forwarded to the committee as exhibit A.
“This is large-scale bribery and corruption, as if we members of the House are commodities for sale. Please use our conscience if we want to cleanse this country, this government and this Congress,” he said.
Not a single rail track laid
U.S. Pledges Top 7.7 Trillion to Ease Frozen Credit
This is from Bloomberg.
With any welfare program the government would demand a cost-benefit analysis to show that the expenditures had a net benefit but these bailouts are non-transparent and engineered by experts who themselves were often involved in financial institutions that caused the crisis in the first place. Eventually there may be so much outrage that the process will grind to a halt even though so far fear mongering--not that there is nothing to fear--has worked wonders. The necessity for haste does not mean it is necessary to let the public purse be opened to the very miscreants who caused the crisis in the first place with no strings attached.
U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit (Update2)
By Mark Pittman and Bob Ivry
Nov. 24 (Bloomberg) -- The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year, are intended to rescue the financial system after the credit markets seized up 15 months ago.
The unprecedented pledge of funds includes $3.18 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.
When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in.
“Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about,” said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. “The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones.”
Too Big to Fail
Bloomberg News tabulated data from the Fed, Treasury and Federal Deposit Insurance Corp. and interviewed regulatory officials, economists and academic researchers to gauge the full extent of the government’s rescue effort.
The bailout includes a Fed program to buy as much as $2.4 trillion in short-term notes, called commercial paper, that companies use to pay bills, begun Oct. 27, and $1.4 trillion from the FDIC to guarantee bank-to-bank loans, started Oct. 14.
William Poole, former president of the Federal Reserve Bank of St. Louis, said the two programs are unlikely to lose money. The bigger risk comes from rescuing companies perceived as “too big to fail,” he said.
‘Credit Risk’
The government committed $29 billion to help engineer the takeover in March of Bear Stearns Cos. by New York-based JPMorgan Chase & Co. and $122.8 billion in addition to TARP allocations to bail out New York-based American International Group Inc., once the world’s largest insurer.
Citigroup received $306 billion of government guarantees for troubled mortgages and toxic assets. The Treasury Department also will inject $20 billion into the bank after its stock fell 60 percent last week.
“No question there is some credit risk there,” Poole said.
Congressman Darrell Issa, a California Republican on the Oversight and Government Reform Committee, said risk is lurking in the programs that Poole thinks are safe.
“The thing that people don’t understand is it’s not how likely that the exposure becomes a reality, but what if it does?” Issa said. “There’s no transparency to it so who’s to say they’re right?”
The worst financial crisis in two generations has erased $23 trillion, or 38 percent, of the value of the world’s companies and brought down three of the biggest Wall Street firms.
Markets Down
The Dow Jones Industrial Average through Friday is down 38 percent since the beginning of the year and 43 percent from its peak on Oct. 9, 2007. The S&P 500 fell 45 percent from the beginning of the year through Friday and 49 percent from its peak on Oct. 9, 2007. The Nikkei 225 Index has fallen 46 percent from the beginning of the year through Friday and 57 percent from its most recent peak of 18,261.98 on July 9, 2007. Goldman Sachs Group Inc. is down 78 percent, to $53.31, on Friday from its peak of $247.92 on Oct. 31, 2007, and 75 percent this year.
Regulators hope the rescue will contain the damage and keep banks providing the credit that is the lifeblood of the U.S. economy.
Most of the spending programs are run out of the New York Fed, whose president, Timothy Geithner, is said to be President- elect Barack Obama’s choice to be Treasury Secretary.
‘They Got Snookered’
The money that’s been pledged is equivalent to $24,000 for every man, woman and child in the country. It’s nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country’s mortgages.
“It’s unprecedented,” said Bob Eisenbeis, chief monetary economist at Vineland, New Jersey-based Cumberland Advisors Inc. and an economist for the Atlanta Fed for 10 years until January. “The backlash has begun already. Congress is taking a lot of hits from their constituents because they got snookered on the TARP big time. There’s a lot of supposedly smart people who look to be totally incompetent and it’s all going to fall on the taxpayer.”
President Franklin D. Roosevelt’s New Deal of the 1930s, when almost 10,000 banks failed and there was no mechanism to bolster them with cash, is the only rival to the government’s current response. The savings and loan bailout of the 1990s cost $209.5 billion in inflation-adjusted numbers, of which $173 billion came from taxpayers, according to a July 1996 report by the U.S. General Accounting Office, now called the Government Accountability Office.
‘Worst Crisis’
With any welfare program the government would demand a cost-benefit analysis to show that the expenditures had a net benefit but these bailouts are non-transparent and engineered by experts who themselves were often involved in financial institutions that caused the crisis in the first place. Eventually there may be so much outrage that the process will grind to a halt even though so far fear mongering--not that there is nothing to fear--has worked wonders. The necessity for haste does not mean it is necessary to let the public purse be opened to the very miscreants who caused the crisis in the first place with no strings attached.
U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit (Update2)
By Mark Pittman and Bob Ivry
Nov. 24 (Bloomberg) -- The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year, are intended to rescue the financial system after the credit markets seized up 15 months ago.
The unprecedented pledge of funds includes $3.18 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.
When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in.
“Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about,” said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. “The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones.”
Too Big to Fail
Bloomberg News tabulated data from the Fed, Treasury and Federal Deposit Insurance Corp. and interviewed regulatory officials, economists and academic researchers to gauge the full extent of the government’s rescue effort.
The bailout includes a Fed program to buy as much as $2.4 trillion in short-term notes, called commercial paper, that companies use to pay bills, begun Oct. 27, and $1.4 trillion from the FDIC to guarantee bank-to-bank loans, started Oct. 14.
William Poole, former president of the Federal Reserve Bank of St. Louis, said the two programs are unlikely to lose money. The bigger risk comes from rescuing companies perceived as “too big to fail,” he said.
‘Credit Risk’
The government committed $29 billion to help engineer the takeover in March of Bear Stearns Cos. by New York-based JPMorgan Chase & Co. and $122.8 billion in addition to TARP allocations to bail out New York-based American International Group Inc., once the world’s largest insurer.
Citigroup received $306 billion of government guarantees for troubled mortgages and toxic assets. The Treasury Department also will inject $20 billion into the bank after its stock fell 60 percent last week.
“No question there is some credit risk there,” Poole said.
Congressman Darrell Issa, a California Republican on the Oversight and Government Reform Committee, said risk is lurking in the programs that Poole thinks are safe.
“The thing that people don’t understand is it’s not how likely that the exposure becomes a reality, but what if it does?” Issa said. “There’s no transparency to it so who’s to say they’re right?”
The worst financial crisis in two generations has erased $23 trillion, or 38 percent, of the value of the world’s companies and brought down three of the biggest Wall Street firms.
Markets Down
The Dow Jones Industrial Average through Friday is down 38 percent since the beginning of the year and 43 percent from its peak on Oct. 9, 2007. The S&P 500 fell 45 percent from the beginning of the year through Friday and 49 percent from its peak on Oct. 9, 2007. The Nikkei 225 Index has fallen 46 percent from the beginning of the year through Friday and 57 percent from its most recent peak of 18,261.98 on July 9, 2007. Goldman Sachs Group Inc. is down 78 percent, to $53.31, on Friday from its peak of $247.92 on Oct. 31, 2007, and 75 percent this year.
Regulators hope the rescue will contain the damage and keep banks providing the credit that is the lifeblood of the U.S. economy.
Most of the spending programs are run out of the New York Fed, whose president, Timothy Geithner, is said to be President- elect Barack Obama’s choice to be Treasury Secretary.
‘They Got Snookered’
The money that’s been pledged is equivalent to $24,000 for every man, woman and child in the country. It’s nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country’s mortgages.
“It’s unprecedented,” said Bob Eisenbeis, chief monetary economist at Vineland, New Jersey-based Cumberland Advisors Inc. and an economist for the Atlanta Fed for 10 years until January. “The backlash has begun already. Congress is taking a lot of hits from their constituents because they got snookered on the TARP big time. There’s a lot of supposedly smart people who look to be totally incompetent and it’s all going to fall on the taxpayer.”
President Franklin D. Roosevelt’s New Deal of the 1930s, when almost 10,000 banks failed and there was no mechanism to bolster them with cash, is the only rival to the government’s current response. The savings and loan bailout of the 1990s cost $209.5 billion in inflation-adjusted numbers, of which $173 billion came from taxpayers, according to a July 1996 report by the U.S. General Accounting Office, now called the Government Accountability Office.
‘Worst Crisis’
Monday, November 24, 2008
Karzai: Obama vows to fight terror in "region"
This is from antiwar.com.
Obama has phone Karzai when he has not yet phoned other leaders such as poor Gloria Arroyo in the Philippines. As the article notes this is hardly a surprise given that during the campaign he made Afghanistan a priority and also spoke of strikes into Pakistan. Why antiwar groups are excited about Obama is beyond comprehension. His policy is Bush and perhaps then some. Obama will withdraw from Iraq only to put troops elsewhere. He may have some problems with the new SOFA agreement since that agreement may not allow for a residual force such as Obama probably desires to stay in Iraq.
Karzai: Obama Vows to Fight Terror in ‘Region’.A Saturday phone call between President-elect Barack Obama and Afghan President Hamid Karzai has yielded, according to President Karzai, a firm commitment to make Afghanistan and the “region” a top priority in the incoming Obama Administration. The “region” appears to be a reference to Pakistan.
The move hardly comes as a surprise, with Obama having made an Afghanistan-centric foreign policy among the cornerstones of his foreign policy during the campaign, and called for strikes in Pakistan from the beginning of primary season.
President Karzai has also been a long-time advocate of strikes into Pakistan, threatening at one point this summer to send his own under-equipped military into the Pakistani tribal regions to fight the militants. President Bush sought to “calm” the tensions that threat caused, but not long after the US embarked on its own policy of unilateral strikes into Pakistani territory.
Pakistani Prime Minister Yousef Raza Gilani has expressed optimism that the Obama Administration would be open to ending the drone strikes, seriously unpopular among the Pakistani population. It seems however that Obama’s conversation with Karzai indicates that his position on strikes into Pakistan has not changed, leaving Pakistan with no obvious alternative but to revert to its reported strategy of publicly complaining about the drone strikes but ultimately doing nothing about it.
Related Stories
Obama has phone Karzai when he has not yet phoned other leaders such as poor Gloria Arroyo in the Philippines. As the article notes this is hardly a surprise given that during the campaign he made Afghanistan a priority and also spoke of strikes into Pakistan. Why antiwar groups are excited about Obama is beyond comprehension. His policy is Bush and perhaps then some. Obama will withdraw from Iraq only to put troops elsewhere. He may have some problems with the new SOFA agreement since that agreement may not allow for a residual force such as Obama probably desires to stay in Iraq.
Karzai: Obama Vows to Fight Terror in ‘Region’.A Saturday phone call between President-elect Barack Obama and Afghan President Hamid Karzai has yielded, according to President Karzai, a firm commitment to make Afghanistan and the “region” a top priority in the incoming Obama Administration. The “region” appears to be a reference to Pakistan.
The move hardly comes as a surprise, with Obama having made an Afghanistan-centric foreign policy among the cornerstones of his foreign policy during the campaign, and called for strikes in Pakistan from the beginning of primary season.
President Karzai has also been a long-time advocate of strikes into Pakistan, threatening at one point this summer to send his own under-equipped military into the Pakistani tribal regions to fight the militants. President Bush sought to “calm” the tensions that threat caused, but not long after the US embarked on its own policy of unilateral strikes into Pakistani territory.
Pakistani Prime Minister Yousef Raza Gilani has expressed optimism that the Obama Administration would be open to ending the drone strikes, seriously unpopular among the Pakistani population. It seems however that Obama’s conversation with Karzai indicates that his position on strikes into Pakistan has not changed, leaving Pakistan with no obvious alternative but to revert to its reported strategy of publicly complaining about the drone strikes but ultimately doing nothing about it.
Related Stories
16 arrested for distributing cleric's leaflet in Iraq
This is from aswataliraq.
Not only is it illegal apparently to ask Obama to end the occupation but also to ask for the text of the SOFA agreement so that the public would know what it contained. Great democratic leap forward!
16 arrested in Kut for distributing cleric’s leaflet
November 23, 2008 - 06:23:38
WASSIT / Aswat al-Iraq: An Iraqi force arrested 16 persons in central Kut city while they were handing out a release issued by Shiite cleric Sayyid Mahmoud al-Hassani al-Sarkhi, a security source from Wassit province said on Sunday.
“The release, which was about the Iraqi-U.S. security pact, contained a demand to the U.S. president-elect to end the occupation in Iraq,” the source told Aswat al-Iraq.
“It also demands Iraqi officials to release the pact to the public to enable them to learn about its details,” he added.
Kut, the capital city of Wassit province, lies 180 km southeast of Baghdad.
Not only is it illegal apparently to ask Obama to end the occupation but also to ask for the text of the SOFA agreement so that the public would know what it contained. Great democratic leap forward!
16 arrested in Kut for distributing cleric’s leaflet
November 23, 2008 - 06:23:38
WASSIT / Aswat al-Iraq: An Iraqi force arrested 16 persons in central Kut city while they were handing out a release issued by Shiite cleric Sayyid Mahmoud al-Hassani al-Sarkhi, a security source from Wassit province said on Sunday.
“The release, which was about the Iraqi-U.S. security pact, contained a demand to the U.S. president-elect to end the occupation in Iraq,” the source told Aswat al-Iraq.
“It also demands Iraqi officials to release the pact to the public to enable them to learn about its details,” he added.
Kut, the capital city of Wassit province, lies 180 km southeast of Baghdad.
Sunday, November 23, 2008
Making the World's Poor Pay
This article is interesting in that it shows some of the effects of the global crisis on less developed countries. I found the severe restraints that the IMF continues to place on countries who borrow from it particularly interesting. I imagine Iceland's interest rate is so high that most investors will shy away from any borrowing and the economy will go into a tailspin. Hungary has been forced to cut social spending including welfare payments as a condition for receiving loans.
Making the World's Poor Pay:The Economic Crisis and the Global South
Adam Hanieh
The current global economic crisis has all the earmarks of an epoch-defining event. Mainstream economists – not usually known for their exaggerated language – now openly employ phrases like 'systemic meltdown' and 'peering into the abyss.' On October 29, for example, Martin Wolf, one of the top financial commentators of the Financial Times, warned that the crisis portends "mass bankruptcy," "soaring unemployment" and a "catastrophe" that threatens "the legitimacy of the open market economy itself... the danger remains huge and time is short."
There is little doubt that this crisis is already having a devastating impact on heavily-indebted American households. But one of the striking characteristics of analysis to date – by both the left and the mainstream media – is the almost exclusive focus on the wealthy countries of North America, Europe and East Asia. From foreclosures in California to the bankruptcy of Iceland, the impact of financial collapse is rarely examined beyond the advanced capitalist core.
The pattern of capitalist crisis over the last fifty years should alert us to the dangers of this approach. Throughout its history, capitalism has functioned through geographical displacement of crisis – attempting to offload the worst impacts onto those outside the core. This article presents a short survey of what this crisis might mean for the Global South.
World trade drops
This crisis hits a world economy that – for the first time in history – is truly global. Of course exports and the control of raw materials have always been important to capitalism. But up until the 1970s most capitalist production was organized nationally. Throughout the 1980s and 1990s both production and consumption began to be organized at the international scale. Today, all markets are dominated by a handful of large companies operating internationally through interconnected chains of production, sub-contracting and marketing. Almost every product we consume has involved the labour of thousands of people scattered across the globe – from the production of raw material inputs, research and development (R&D), assembly, transport, marketing, and financing. At one level this interconnectedness of production expresses the fact that human beings have become one social organism. At the same time, it continually runs up against a system organized for the pursuit of individual, private profit.
This interconnectedness has taken a very particular form over the last couple of decades. The world market has been structured around the consumption of the American (and, to a lesser extent, European) consumer. Goods produced in low-wage production zones such as China and India – using raw materials mostly sourced from other countries in the South – are exported to the U.S. where they ended up in the ever expanding homes of an overly-indebted consumer. Control of this global chain of production and consumption rests in the hands of large U.S., European and Japanese conglomerates.
This structure helped to fracture and roll-back national development projects across the globe. Coupled with the debt crisis of the 1980s, export-oriented models of development were imposed by the International Monetary Fund and other financial institutions on most countries in the South. Many of the elites of these countries bought into this development model as they gained ownership stakes in newly privatized companies and access to markets in the North.
The ever-expanding consumption of the U.S. market was predicated on a massive rise in indebtedness. U.S. consumers were encouraged to take on vast levels of debt (through credit cards, mortgages, 'zero-down' financing, etc) in order to maintain the consumption levels that underpinned global demand. The dollars that enabled this growth in debt came from financial instruments that were purchased by Asian central banks and others around the world. These institutions lent dollars back to the U.S. where they were channeled to consumers through banks and other mechanisms.
The U.S. real estate market was just one of the financial bubbles that permitted this treadmill of increasing indebtedness to continue. People could continually refinance their mortgages as real estate prices went up. But with the collapse of this bubble global world demand is suddenly drying up. Because of the interconnectedness of world trade, this will have a very severe impact on every country across the globe, particularly in the South.
One measure of this is shown by a relatively obscure economic indicator, the Baltic Dry Index (BDI). The BDI measures the cost of long-distance shipping for commodities such as coal, iron ore and steel. From June – November 2008, the BDI fell by 92%, with rental rates for large cargo ships dropping from $234,000 a day to $7,340. This massive drop reflects two factors: the reduction in world demand for raw materials and other commodities, and the inability of shippers to have their payments guaranteed by banks because of the credit crisis.
Falling commodity prices also demonstrate this drop-off in world trade. Copper prices, for example, have fallen 23 per cent in the past two months. Chinese consumption of the metal, critical to much industrial production, has fallen by more than half this year. ArcelorMittal, the world's largest steelmaker, stated on November 5 that its global output would decline by more than 30 percent. The World Bank (which has consistently underestimated the severity of the current downturn) is now predicting global trade volumes to shrink for the first time since 1982.
Social dislocation
This drop in world trade will have a particularly devastating impact on those countries that have adopted 'export-oriented' models of development. This model was heavily promoted by the World Bank, the International Monetary Fund (IMF) and most economists over the last couple of decades. As global demand shrinks, countries reliant on exports will be faced with collapse of their core industries and potential mass unemployment. This will place further pressure on wages as new labour reserves augment already large levels of unemployment.
Standard and Chartered estimate, for example, that Chinese exports could tumble to "zero or even negative growth" in 2009. JP Morgan Chase is predicting that Chinese exports will fall 5.7 percent for every one percent drop in global economic growth. This is not just a matter of getting by on smaller levels of still positive growth. China needs to create 17 million jobs a year in order to deal with the large numbers of farmers moving from the countryside to urban areas. This means that the country must maintain high rates of growth. Even if growth drops from 11-12% annually to 8% the country faces potentially huge social dislocation. Already, workers in China are protesting in the millions as their factories close and owners abscond with unpaid wages.
A collapse in world trade is not the only potentially devastating threat this crisis presents to the global periphery. Like the 1997 Asian Crisis, the rapid withdrawal of foreign funds from stock markets and other investments in the South could cause the meltdown of currencies and the collapse of industries already reeling from slowdowns in trade. A quick survey of a few countries demonstrates the deadly mix of capital outflows, high inflation and drops in export earnings:
In Pakistan, foreign-currency reserves have dropped more than 74 percent in the past year to about $4.3-billion (U.S.). The country is teetering on the edge of total collapse and urgently requires $6-billion in order to pay for imports and service its existing debt. The dire situation of foreign outflows led the German foreign minister to state on 28 October that the "world has just six days to save Pakistan" (at the time of writing it looks like Pakistan will get this money in the form of loans from the IMF and/or countries of the Gulf Cooperation Council).
Sri Lanka has lost nearly 25% of its foreign reserves since the beginning of August as foreign investors repatriate their dollar holdings from the country. Nearly 50 percent of Sri Lanka's textile and garments exports (accounting for some 43 percent of total foreign exchange earnings) went to the U.S. in 2007, while another 45 percent went to the EU. These exports will likely be decimated by a generalized collapse in demand. The weakening of the Sri Lankan rupee over the last few years has contributed to a 20% increase in inflation, with high food prices hitting the poorest most heavily.
India has seen its foreign exchange reserves drop by 17% since March 2008. Over $51-billion (U.S.) left India during the third week of October, the largest fall in eight years. The Indian textile industry, which makes up the second largest component of the country's labour force after agriculture, exports 70% of its product to U.S. and European markets. It is expected that textile and garment orders will decline by at least 25% over winter and mass lay-offs have already begun. On October 29, the Association of Chambers of Commerce and Industries predicted that companies in seven key industries (steel, cement, finance, construction, real estate, aviation, and information technology) would need to cut 25% of their workforce. This at a time when the country struggles with an immense gap between rich and poor. The wealth of the richest 53 people in India is equivalent to 31 percent of the country's GDP, yet according to the World Bank 42 percent of the population lives below the official poverty line of $1.25 a day.
These patterns are repeated across the globe. Countries including Mexico, Turkey, Indonesia, Brazil, Argentina, South Korea as well as the poorer countries of Eastern and Southern Europe are faced with collapsing growth rates, capital flight, and declines in the value of their currency. In many cases, these problems have been exacerbated due to a proliferation of low-interest loans taken by individuals and companies that were denominated in foreign currency (such as Swiss Francs, Euros, and Dollars). These loans initially offered a better rate of interest than the domestic currency, but, as local currencies have dropped in value, the amount of money required to be repaid has increased dramatically. Business Week estimates that borrowers in so-called 'emerging markets' owe some $4.7-trillion (U.S.) in foreign-denominated debt, up 38% over the past two years. This is the reassertion of a debt crisis from the 1980s that never really went away, but only partially subsided.
The IMF returns
This unfolding social crisis has returned the IMF to center stage. Typically, the IMF lends to those countries facing potential collapse and, in return, demands the fulfillment of stringent economic conditions. The scale of borrowing is already immense: Iceland ($2.4-billion), Ukraine ($16.5-billion), and Hungary ($15.7-billion) have been extended loans with Pakistan, Serbia, Belarus, and Turkey likely candidates in the near future.
The conditions that come with this latest round of IMF lending have been particularly opaque. The policies that Ukraine is expected to pass, for example, are not yet known despite the fact the country has essentially agreed to take a $16.5-billion loan from the IMF. Hungary has agreed to cuts in welfare spending, a freeze in salaries and canceling bonuses for public sector workers yet the final details have not been made public. Iceland was required to raise interest rates to 18% with the economy predicted to contract by 10% and inflation reaching 20%.
We can certainly expect that the conditions attached to loans in the poorer countries in the Global South will be much more stringent than those imposed on these European countries. There is little doubt that these countries will face massive job losses, intense pressure to privatize public resources, and slashing of state spending on welfare, education and health in the name of 'balanced budgets.' Whether these attacks on the social fabric are successful, however, will ultimately depend on the level of resistance they face.
Authoritarian state
On 11 October, a meeting of progressive economists in Caracas, Venezuela, issued a statement warning that the dynamic of this crisis "encourages new rounds of capital concentration and, if the people do not firmly oppose this, it is becoming perilously likely that restructuring will occur simply to save privileged sectors." This is an important point to understand. Capitalist crisis doesn't automatically lead to the end of capitalism. Without effective resistance and struggle, the crisis will eventually be resolved at the expense of working people – particularly those in the South.
This could be one of the most serious crises that capitalism has faced in living memory. But we should not be fooled into thinking that the system will somehow be reformed or its contradictions solved through peaceful and orderly means. The most likely immediate outcome is a hardened, more authoritarian state that seeks to restore profitability through ratcheting up repression and forcing people to accept the loss of jobs, housing and any kind of social support. In the South, this will inevitably mean more war and military repression.
If this is not prevented then the system will utilize this crisis to restructure and continue business as usual. This is why resistance – both at home and abroad – will be the single most important determinant to how this eventually plays out. In Latin America, for example, attempts to restrict capital flight, place key economic sectors under popular control, and establish alternative currency and trade arrangements are important initiatives that point to the necessity of solutions beyond capitalism. In the Middle East, popular resistance to the political and economic control of the region has undoubtedly checked the extension of U.S. power.
Any displacement of crisis onto the South means playing different groups of people against one another. For this reason, the ideological corollary of war and military repression abroad is likely an increasingly virulent racism in the North – directed at immigrants, people of color and indigenous populations. This means that for activists in North America the question of global solidarity and resistance to racism must be placed as a central priority of any effective fightback. Any attempt to turn inwards, or dismiss international solidarity as less important in this phase will be disastrous for all working people – across the globe. •
Adam Hanieh can be contacted at hanieh08@gmail.com
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Making the World's Poor Pay:The Economic Crisis and the Global South
Adam Hanieh
The current global economic crisis has all the earmarks of an epoch-defining event. Mainstream economists – not usually known for their exaggerated language – now openly employ phrases like 'systemic meltdown' and 'peering into the abyss.' On October 29, for example, Martin Wolf, one of the top financial commentators of the Financial Times, warned that the crisis portends "mass bankruptcy," "soaring unemployment" and a "catastrophe" that threatens "the legitimacy of the open market economy itself... the danger remains huge and time is short."
There is little doubt that this crisis is already having a devastating impact on heavily-indebted American households. But one of the striking characteristics of analysis to date – by both the left and the mainstream media – is the almost exclusive focus on the wealthy countries of North America, Europe and East Asia. From foreclosures in California to the bankruptcy of Iceland, the impact of financial collapse is rarely examined beyond the advanced capitalist core.
The pattern of capitalist crisis over the last fifty years should alert us to the dangers of this approach. Throughout its history, capitalism has functioned through geographical displacement of crisis – attempting to offload the worst impacts onto those outside the core. This article presents a short survey of what this crisis might mean for the Global South.
World trade drops
This crisis hits a world economy that – for the first time in history – is truly global. Of course exports and the control of raw materials have always been important to capitalism. But up until the 1970s most capitalist production was organized nationally. Throughout the 1980s and 1990s both production and consumption began to be organized at the international scale. Today, all markets are dominated by a handful of large companies operating internationally through interconnected chains of production, sub-contracting and marketing. Almost every product we consume has involved the labour of thousands of people scattered across the globe – from the production of raw material inputs, research and development (R&D), assembly, transport, marketing, and financing. At one level this interconnectedness of production expresses the fact that human beings have become one social organism. At the same time, it continually runs up against a system organized for the pursuit of individual, private profit.
This interconnectedness has taken a very particular form over the last couple of decades. The world market has been structured around the consumption of the American (and, to a lesser extent, European) consumer. Goods produced in low-wage production zones such as China and India – using raw materials mostly sourced from other countries in the South – are exported to the U.S. where they ended up in the ever expanding homes of an overly-indebted consumer. Control of this global chain of production and consumption rests in the hands of large U.S., European and Japanese conglomerates.
This structure helped to fracture and roll-back national development projects across the globe. Coupled with the debt crisis of the 1980s, export-oriented models of development were imposed by the International Monetary Fund and other financial institutions on most countries in the South. Many of the elites of these countries bought into this development model as they gained ownership stakes in newly privatized companies and access to markets in the North.
The ever-expanding consumption of the U.S. market was predicated on a massive rise in indebtedness. U.S. consumers were encouraged to take on vast levels of debt (through credit cards, mortgages, 'zero-down' financing, etc) in order to maintain the consumption levels that underpinned global demand. The dollars that enabled this growth in debt came from financial instruments that were purchased by Asian central banks and others around the world. These institutions lent dollars back to the U.S. where they were channeled to consumers through banks and other mechanisms.
The U.S. real estate market was just one of the financial bubbles that permitted this treadmill of increasing indebtedness to continue. People could continually refinance their mortgages as real estate prices went up. But with the collapse of this bubble global world demand is suddenly drying up. Because of the interconnectedness of world trade, this will have a very severe impact on every country across the globe, particularly in the South.
One measure of this is shown by a relatively obscure economic indicator, the Baltic Dry Index (BDI). The BDI measures the cost of long-distance shipping for commodities such as coal, iron ore and steel. From June – November 2008, the BDI fell by 92%, with rental rates for large cargo ships dropping from $234,000 a day to $7,340. This massive drop reflects two factors: the reduction in world demand for raw materials and other commodities, and the inability of shippers to have their payments guaranteed by banks because of the credit crisis.
Falling commodity prices also demonstrate this drop-off in world trade. Copper prices, for example, have fallen 23 per cent in the past two months. Chinese consumption of the metal, critical to much industrial production, has fallen by more than half this year. ArcelorMittal, the world's largest steelmaker, stated on November 5 that its global output would decline by more than 30 percent. The World Bank (which has consistently underestimated the severity of the current downturn) is now predicting global trade volumes to shrink for the first time since 1982.
Social dislocation
This drop in world trade will have a particularly devastating impact on those countries that have adopted 'export-oriented' models of development. This model was heavily promoted by the World Bank, the International Monetary Fund (IMF) and most economists over the last couple of decades. As global demand shrinks, countries reliant on exports will be faced with collapse of their core industries and potential mass unemployment. This will place further pressure on wages as new labour reserves augment already large levels of unemployment.
Standard and Chartered estimate, for example, that Chinese exports could tumble to "zero or even negative growth" in 2009. JP Morgan Chase is predicting that Chinese exports will fall 5.7 percent for every one percent drop in global economic growth. This is not just a matter of getting by on smaller levels of still positive growth. China needs to create 17 million jobs a year in order to deal with the large numbers of farmers moving from the countryside to urban areas. This means that the country must maintain high rates of growth. Even if growth drops from 11-12% annually to 8% the country faces potentially huge social dislocation. Already, workers in China are protesting in the millions as their factories close and owners abscond with unpaid wages.
A collapse in world trade is not the only potentially devastating threat this crisis presents to the global periphery. Like the 1997 Asian Crisis, the rapid withdrawal of foreign funds from stock markets and other investments in the South could cause the meltdown of currencies and the collapse of industries already reeling from slowdowns in trade. A quick survey of a few countries demonstrates the deadly mix of capital outflows, high inflation and drops in export earnings:
In Pakistan, foreign-currency reserves have dropped more than 74 percent in the past year to about $4.3-billion (U.S.). The country is teetering on the edge of total collapse and urgently requires $6-billion in order to pay for imports and service its existing debt. The dire situation of foreign outflows led the German foreign minister to state on 28 October that the "world has just six days to save Pakistan" (at the time of writing it looks like Pakistan will get this money in the form of loans from the IMF and/or countries of the Gulf Cooperation Council).
Sri Lanka has lost nearly 25% of its foreign reserves since the beginning of August as foreign investors repatriate their dollar holdings from the country. Nearly 50 percent of Sri Lanka's textile and garments exports (accounting for some 43 percent of total foreign exchange earnings) went to the U.S. in 2007, while another 45 percent went to the EU. These exports will likely be decimated by a generalized collapse in demand. The weakening of the Sri Lankan rupee over the last few years has contributed to a 20% increase in inflation, with high food prices hitting the poorest most heavily.
India has seen its foreign exchange reserves drop by 17% since March 2008. Over $51-billion (U.S.) left India during the third week of October, the largest fall in eight years. The Indian textile industry, which makes up the second largest component of the country's labour force after agriculture, exports 70% of its product to U.S. and European markets. It is expected that textile and garment orders will decline by at least 25% over winter and mass lay-offs have already begun. On October 29, the Association of Chambers of Commerce and Industries predicted that companies in seven key industries (steel, cement, finance, construction, real estate, aviation, and information technology) would need to cut 25% of their workforce. This at a time when the country struggles with an immense gap between rich and poor. The wealth of the richest 53 people in India is equivalent to 31 percent of the country's GDP, yet according to the World Bank 42 percent of the population lives below the official poverty line of $1.25 a day.
These patterns are repeated across the globe. Countries including Mexico, Turkey, Indonesia, Brazil, Argentina, South Korea as well as the poorer countries of Eastern and Southern Europe are faced with collapsing growth rates, capital flight, and declines in the value of their currency. In many cases, these problems have been exacerbated due to a proliferation of low-interest loans taken by individuals and companies that were denominated in foreign currency (such as Swiss Francs, Euros, and Dollars). These loans initially offered a better rate of interest than the domestic currency, but, as local currencies have dropped in value, the amount of money required to be repaid has increased dramatically. Business Week estimates that borrowers in so-called 'emerging markets' owe some $4.7-trillion (U.S.) in foreign-denominated debt, up 38% over the past two years. This is the reassertion of a debt crisis from the 1980s that never really went away, but only partially subsided.
The IMF returns
This unfolding social crisis has returned the IMF to center stage. Typically, the IMF lends to those countries facing potential collapse and, in return, demands the fulfillment of stringent economic conditions. The scale of borrowing is already immense: Iceland ($2.4-billion), Ukraine ($16.5-billion), and Hungary ($15.7-billion) have been extended loans with Pakistan, Serbia, Belarus, and Turkey likely candidates in the near future.
The conditions that come with this latest round of IMF lending have been particularly opaque. The policies that Ukraine is expected to pass, for example, are not yet known despite the fact the country has essentially agreed to take a $16.5-billion loan from the IMF. Hungary has agreed to cuts in welfare spending, a freeze in salaries and canceling bonuses for public sector workers yet the final details have not been made public. Iceland was required to raise interest rates to 18% with the economy predicted to contract by 10% and inflation reaching 20%.
We can certainly expect that the conditions attached to loans in the poorer countries in the Global South will be much more stringent than those imposed on these European countries. There is little doubt that these countries will face massive job losses, intense pressure to privatize public resources, and slashing of state spending on welfare, education and health in the name of 'balanced budgets.' Whether these attacks on the social fabric are successful, however, will ultimately depend on the level of resistance they face.
Authoritarian state
On 11 October, a meeting of progressive economists in Caracas, Venezuela, issued a statement warning that the dynamic of this crisis "encourages new rounds of capital concentration and, if the people do not firmly oppose this, it is becoming perilously likely that restructuring will occur simply to save privileged sectors." This is an important point to understand. Capitalist crisis doesn't automatically lead to the end of capitalism. Without effective resistance and struggle, the crisis will eventually be resolved at the expense of working people – particularly those in the South.
This could be one of the most serious crises that capitalism has faced in living memory. But we should not be fooled into thinking that the system will somehow be reformed or its contradictions solved through peaceful and orderly means. The most likely immediate outcome is a hardened, more authoritarian state that seeks to restore profitability through ratcheting up repression and forcing people to accept the loss of jobs, housing and any kind of social support. In the South, this will inevitably mean more war and military repression.
If this is not prevented then the system will utilize this crisis to restructure and continue business as usual. This is why resistance – both at home and abroad – will be the single most important determinant to how this eventually plays out. In Latin America, for example, attempts to restrict capital flight, place key economic sectors under popular control, and establish alternative currency and trade arrangements are important initiatives that point to the necessity of solutions beyond capitalism. In the Middle East, popular resistance to the political and economic control of the region has undoubtedly checked the extension of U.S. power.
Any displacement of crisis onto the South means playing different groups of people against one another. For this reason, the ideological corollary of war and military repression abroad is likely an increasingly virulent racism in the North – directed at immigrants, people of color and indigenous populations. This means that for activists in North America the question of global solidarity and resistance to racism must be placed as a central priority of any effective fightback. Any attempt to turn inwards, or dismiss international solidarity as less important in this phase will be disastrous for all working people – across the globe. •
Adam Hanieh can be contacted at hanieh08@gmail.com
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Ben Stein: What if a Slowdown is a never-ending story
This is a bit surprising article by a commentator who is usually more right wing than this! Stein is recommending a very large stimulus package. This is quite likely what Obama will bring. It remains to be seen how well it will work.
NY Times Business Section, November 23, 2008Everybody's BusinessWhat if a Slowdown Is a Never-Ending Story?By BEN STEIN
I AM endlessly charmed by chatter about when this slowdown/recession will end. Will it be late 2009? Maybe early 2010? Just a few days ago, a man stopped me at a party and asked: "Are we in the fifth inning? The fourth inning?"I am charmed by these comments and questions because they assume a fact not in evidence: that the slowdown/correction/recession will end within a short time — or even within a measurable time.But this does not look like a typical recession. A typical recession is brought on by Federal Reserve tightening in the face of excessive demand and rising prices. The economy still functions normally, but purposeful credit tightening slows activity. When the Fed loosens up and money starts flowing, demand increases and growth returns. This, at least, is the pattern of the large recessions we have had since the Great Depression, which was a special case, as we shall see.Smaller recessions have been brought on simply by the inventory-business cycle, but they, too, were amenable to Fed stimulus.That was because normal credit mechanisms were working.This time it's different. Or, because that is a dangerous phrase, let me say that maybe this time it's different.The problem now, as in 1929 to 1940, is that the economy is not functioning normally. It is shot through and through with fear, even terror. Worse yet, and unlike the situation in the Depression, government miscues have been only a part of the problem. This fear is so pervasive that it has brought the credit sector to a virtual shutdown, even to borrowers with good credit. At this point, the lending sector is so panicked —largely from the government's inconsistent behavior and failure to rescue Lehman Brothers — that it is frozen. Not totally, but way too much for ease of lending and maybe even for the survival of a robust economy. And if a colossal worldwide deleveraging spreads to Treasury debt owned by foreigners, the situation will be deadly serious.The unemployment rate is rising. Housing is in collapse. Manufacturing is weak. The unionized auto sector is dying before our eyes. Commodities are falling hard and fast.In this situation, the nation faces a real peril: we could reach a state of long-term equilibrium — as economists say — well below full employment. This condition had been thought by classical economists to be impossible to reach. But the Depression taught us that if there is enough fear in the economy, lenders will not lend and economic activity will continue indefinitely at a level consistent with serious recession or even depression.This was John Maynard Keynes's great contribution to economic understanding, and it's a big one. Of course, it is contested, as all macroeconomics is, and it may not be the full explanation, but we know from observation that an industrial economy can run well below capacity for a long time.We should be terrified by this prospect. It would mean real suffering for tens of millions of people in America — maybe billions worldwide.In this situation, where fear rules, we must turn to the federal government for relief. The private sector is the patient, not the doctor. Solvency guarantees for banks that lend are a must. No more Lehmans can be allowed to happen. A truly serious stimulus package is very much in order. It has to be big enough and last long enough that Americans do not just sock it away under the mattress. We cannot nickel-and-dime our way out of this. The inflation threat is small in an economy in full credit-collapse mode. There is virtually no dose of stimulus that is too much in an economy as shellshocked as today's.Closely related is the question of the Big Three automakers. To let them fail or go through bankruptcy would be a mistake horrifyingly similar to allowing Lehman to fail, and in some ways worse. It would kick the economy to the curb, increase the dose of fear running through the nation's bloodstream, frighten consumers from buying, choke lending, and tend to keep the economy from returning to full employment.I understand well the arguments against rescuing Detroit, as I have often said. But I also understand that if you have a wayward child who's hit by a falling tree, you don't stop to lecture her about her wayward ways. You get her to the hospital right away.Once we have a Treasury secretary who gets this, once we enact a stimulus package that is big enough and long-lasting enough to do the job, perhaps with Treasury rebates for buying cars, trucks, refrigerators and toasters, we can be strict with Detroit. But to add hundreds of thousands of workers from the auto sector to the jobless ranks would be suicidal during these times.We must remember that economies don't always revive automatically. And the credit crisis, the deleveraging crisis and the Treasury gaffes are more than enough to keep the economy weak. To add to the patient's woes by allowing a vital organ to fail — in this case, the auto industry — is just plain foolish.This whole thing is not guaranteed to end in smiles. But we can stop pretending that it will get better no matter what mistakes we make in policy. Saving the automakers is a step out of the darkness. Or, I might say, allowing them to die is a step toward a terrifying dusk._______________________________________________
NY Times Business Section, November 23, 2008Everybody's BusinessWhat if a Slowdown Is a Never-Ending Story?By BEN STEIN
I AM endlessly charmed by chatter about when this slowdown/recession will end. Will it be late 2009? Maybe early 2010? Just a few days ago, a man stopped me at a party and asked: "Are we in the fifth inning? The fourth inning?"I am charmed by these comments and questions because they assume a fact not in evidence: that the slowdown/correction/recession will end within a short time — or even within a measurable time.But this does not look like a typical recession. A typical recession is brought on by Federal Reserve tightening in the face of excessive demand and rising prices. The economy still functions normally, but purposeful credit tightening slows activity. When the Fed loosens up and money starts flowing, demand increases and growth returns. This, at least, is the pattern of the large recessions we have had since the Great Depression, which was a special case, as we shall see.Smaller recessions have been brought on simply by the inventory-business cycle, but they, too, were amenable to Fed stimulus.That was because normal credit mechanisms were working.This time it's different. Or, because that is a dangerous phrase, let me say that maybe this time it's different.The problem now, as in 1929 to 1940, is that the economy is not functioning normally. It is shot through and through with fear, even terror. Worse yet, and unlike the situation in the Depression, government miscues have been only a part of the problem. This fear is so pervasive that it has brought the credit sector to a virtual shutdown, even to borrowers with good credit. At this point, the lending sector is so panicked —largely from the government's inconsistent behavior and failure to rescue Lehman Brothers — that it is frozen. Not totally, but way too much for ease of lending and maybe even for the survival of a robust economy. And if a colossal worldwide deleveraging spreads to Treasury debt owned by foreigners, the situation will be deadly serious.The unemployment rate is rising. Housing is in collapse. Manufacturing is weak. The unionized auto sector is dying before our eyes. Commodities are falling hard and fast.In this situation, the nation faces a real peril: we could reach a state of long-term equilibrium — as economists say — well below full employment. This condition had been thought by classical economists to be impossible to reach. But the Depression taught us that if there is enough fear in the economy, lenders will not lend and economic activity will continue indefinitely at a level consistent with serious recession or even depression.This was John Maynard Keynes's great contribution to economic understanding, and it's a big one. Of course, it is contested, as all macroeconomics is, and it may not be the full explanation, but we know from observation that an industrial economy can run well below capacity for a long time.We should be terrified by this prospect. It would mean real suffering for tens of millions of people in America — maybe billions worldwide.In this situation, where fear rules, we must turn to the federal government for relief. The private sector is the patient, not the doctor. Solvency guarantees for banks that lend are a must. No more Lehmans can be allowed to happen. A truly serious stimulus package is very much in order. It has to be big enough and last long enough that Americans do not just sock it away under the mattress. We cannot nickel-and-dime our way out of this. The inflation threat is small in an economy in full credit-collapse mode. There is virtually no dose of stimulus that is too much in an economy as shellshocked as today's.Closely related is the question of the Big Three automakers. To let them fail or go through bankruptcy would be a mistake horrifyingly similar to allowing Lehman to fail, and in some ways worse. It would kick the economy to the curb, increase the dose of fear running through the nation's bloodstream, frighten consumers from buying, choke lending, and tend to keep the economy from returning to full employment.I understand well the arguments against rescuing Detroit, as I have often said. But I also understand that if you have a wayward child who's hit by a falling tree, you don't stop to lecture her about her wayward ways. You get her to the hospital right away.Once we have a Treasury secretary who gets this, once we enact a stimulus package that is big enough and long-lasting enough to do the job, perhaps with Treasury rebates for buying cars, trucks, refrigerators and toasters, we can be strict with Detroit. But to add hundreds of thousands of workers from the auto sector to the jobless ranks would be suicidal during these times.We must remember that economies don't always revive automatically. And the credit crisis, the deleveraging crisis and the Treasury gaffes are more than enough to keep the economy weak. To add to the patient's woes by allowing a vital organ to fail — in this case, the auto industry — is just plain foolish.This whole thing is not guaranteed to end in smiles. But we can stop pretending that it will get better no matter what mistakes we make in policy. Saving the automakers is a step out of the darkness. Or, I might say, allowing them to die is a step toward a terrifying dusk._______________________________________________
Vietnam: Cluster bombs a threat for 440 years
Of course the US does not support a ban on the weapons--neither do Russia nor China nor Israel. Countries that use them should be held responsible for clearing them later but of course this does not happen although as this article mentions there is an American Vets organisation that does help with funding.
Cluster bombs a threat for 440 years22/11/2008 -- 10:13 PMHCM City (VNA) – An estimated 98 percent of victims of cluster munitions worldwide are civilians, with children accounting for one third of that number, according to Nguyen Thi Kim Hoa of the Landmine Survivors Network Vietnam . “An unspecified large amount of unexploded cluster munitions remain in the ground from the war,” said Hoa while opening a seminar on Nov. 21 on international cooperation on clearing cluster munitions and assisting Vietnamese victims. Cluster munitions are large-sized weapons dropped from the air or shot from the ground that produce hundreds of smaller-bombs when they reach their target. Statistics show 20.2 percent or 6.6 million ha of land are affected by unexploded ordnance in Vietnam . About 104,000 people have been injured or killed this way since 1975. Nearly 97 million tonnes of bombs, of which 296,000 are cluster munitions, were carpeted across Vietnam between 1965 and 1975. Every geographic area in Vietnam, both rural and urban, has been contaminated with 16 different types of cluster bombs and ammunition. Most of it was found at depths of 30 to 70cm, said Nguyen Trong Canh, director of the Vietnam Bombs and Mines Clearance Action Centre. He said it would take at least 440 years and 10 billion USD to clear this left over ammunition across the nation, adding that it would have an enormous impact on human life, socio-economic development and the environment. Canh said unexploded munitions would discourage people from cultivating their land, reducing farm productivity and hampering socio-economic development. Each year the Vietnamese Government spends hundreds of millions of dollars on clearance and other mine action activities. Funding comes from several non-governmental organisations and foreign donors. But Chuck Searcy from the Vietnam Veterans of America Foundation said foreign donations had fallen recently, which might force Vietnam to deal with generations of victims itself. A total of 107 countries, including Vietnam , ratified the Convention on Cluster Munitions in Dublin last May in an effort to strictly ban the use, production, transport and storage of cluster munitions globally.-Enditem
Cluster bombs a threat for 440 years22/11/2008 -- 10:13 PMHCM City (VNA) – An estimated 98 percent of victims of cluster munitions worldwide are civilians, with children accounting for one third of that number, according to Nguyen Thi Kim Hoa of the Landmine Survivors Network Vietnam . “An unspecified large amount of unexploded cluster munitions remain in the ground from the war,” said Hoa while opening a seminar on Nov. 21 on international cooperation on clearing cluster munitions and assisting Vietnamese victims. Cluster munitions are large-sized weapons dropped from the air or shot from the ground that produce hundreds of smaller-bombs when they reach their target. Statistics show 20.2 percent or 6.6 million ha of land are affected by unexploded ordnance in Vietnam . About 104,000 people have been injured or killed this way since 1975. Nearly 97 million tonnes of bombs, of which 296,000 are cluster munitions, were carpeted across Vietnam between 1965 and 1975. Every geographic area in Vietnam, both rural and urban, has been contaminated with 16 different types of cluster bombs and ammunition. Most of it was found at depths of 30 to 70cm, said Nguyen Trong Canh, director of the Vietnam Bombs and Mines Clearance Action Centre. He said it would take at least 440 years and 10 billion USD to clear this left over ammunition across the nation, adding that it would have an enormous impact on human life, socio-economic development and the environment. Canh said unexploded munitions would discourage people from cultivating their land, reducing farm productivity and hampering socio-economic development. Each year the Vietnamese Government spends hundreds of millions of dollars on clearance and other mine action activities. Funding comes from several non-governmental organisations and foreign donors. But Chuck Searcy from the Vietnam Veterans of America Foundation said foreign donations had fallen recently, which might force Vietnam to deal with generations of victims itself. A total of 107 countries, including Vietnam , ratified the Convention on Cluster Munitions in Dublin last May in an effort to strictly ban the use, production, transport and storage of cluster munitions globally.-Enditem
5 dead, thousands evacuated in Philippine floods
This is from ABC. (Philippines)
This is bad news coming on top of a poor economic situation. The crop damage will leave people destitute.
5 dead, thousands evacuated in Philippines floods
Posted 5 hours 52 minutes ago
Five people have drowned and thousands of people have been evacuated after heavy flooding in the northern Philippines.
Thousands of villagers fled their homes when rivers overflowed and flooded many parts of northern Cagayan and Isabela provinces.
At least 8,000 people have been evacuated as relief operations operations continue.
A state of calamity has been declared by local officials in Isabela province to allow immediate access to calamity funds.
Farm crops worth at least $US700,000 have been destroyed.
A cold front and an intertropical convergence zone have brought non-stop rains in the northern and southern Philippines.
This is bad news coming on top of a poor economic situation. The crop damage will leave people destitute.
5 dead, thousands evacuated in Philippines floods
Posted 5 hours 52 minutes ago
Five people have drowned and thousands of people have been evacuated after heavy flooding in the northern Philippines.
Thousands of villagers fled their homes when rivers overflowed and flooded many parts of northern Cagayan and Isabela provinces.
At least 8,000 people have been evacuated as relief operations operations continue.
A state of calamity has been declared by local officials in Isabela province to allow immediate access to calamity funds.
Farm crops worth at least $US700,000 have been destroyed.
A cold front and an intertropical convergence zone have brought non-stop rains in the northern and southern Philippines.
Doomed from the start: Kagarlitsky on Financial Reform
This is from the Moscow Times.
The aim of reforms is to restore profitability to the system so of course unless there were a revolution that overturned the capitalism system no reform is going to change that aim. Kargarlitsky claims that radical social and economic reforms are needed before any financial reforms will work. He does not say precisely what these are but perhaps he envisions some new basic agreement between capital and labor such as he claims existed at the time of the Bretton Woods agreement. However at present labor seems weak especially the labor movement in advanced capitalist states. Kargarlitsky does not seem to give any detailed reasons why reforms must fail except that it will not be accompanied by more basic reforms. Maybe Kargarlitsky is advocating revolution but can't say that because Putin and the secret police are listening!
Doomed From the Start
20 November 2008
By Boris Kagarlitsky
We can say three things with certainty regarding reforms to international financial structures: They are necessary, inevitable and doomed to fail.The Group of 20 summit held in Washington was destined to fail from the start because the participants held such widely divergent interpretations of the problem. It was also doomed because nobody had a solution plan that was clear or concrete enough. The only thing that the G20 members could agree upon is the date of their next summit. Ideally, the participants would have become acquainted with each other's positions as a first step toward unified action. But even that would not have been enough because even if the participants had agreed on all of the issues and even if a coordinated solution had been developed, nothing useful would have come of it. The old financial system is falling apart before our eyes, and it is impossible to build a new one its place. But no matter how hard the politicians and experts might try, a new and effective international financial model can be built only after the world's most developed countries institute radical social and economic reforms. That new system would institutionalize on a global level the new principles guiding the lives of its member states. But none of today's world leaders is proposing any fundamental changes to their societies. What's more, politicians never address such questions at summits and conferences.
At the end of World War II, the Bretton Woods agreement reflected the economic conditions in Europe and the United States at the time. The unbridled free market economy was subjected to new government regulation, and the domination of the bourgeoisie was replaced by a historical compromise between labor and capital. It was no coincidence that the chief architect of the Bretton Woods agreement was the eminent British economist John Maynard Keynes, whose name is connected with the era of mixed economy and the welfare state.By the end of the 1980s, however, neoliberalism had replaced Keynesianism as the dominant economic model in Western countries. This paradigm was also adopted at leading international institutions, such as the International Monetary Fund and the World Bank, whose origins date back to the Bretton Woods era. If their initial task had been to regulate markets, stop reckless financial speculation and promote socially responsible government policies, by the end of the 20th century the IMF and the World Bank had largely become libertarian tools for deregulation and privatization. At the same time, these institutions underwent a radical and seemingly irreversible transformation. Although in a formal sense, they remain a part of the public sector and exist on funds from their founding member states, in reality they are becoming instruments of the global financial oligarchy. Most central banks have become independent of their respective governments, and they have shown more loyalty to the directors of private banks. Therefore, until each country reforms its own central bank, it will be pointless to even discuss the emergence of a new international financial architecture. Over the past 20 years, the public sector has been destroyed and privatized. If that situation does not undergo radical changes, trying to reform the global financial system is a useless endeavor.It is not the world's financial structures that needs to be reformed but society. If this were to ever happen, however, it would remove the need of having most of today's international institutions. In addition, the leaders who gather at the G20 and other global summits would become irrelevant as well.Boris Kagarlitsky is the director of the Institute of Globalization Studies.
The aim of reforms is to restore profitability to the system so of course unless there were a revolution that overturned the capitalism system no reform is going to change that aim. Kargarlitsky claims that radical social and economic reforms are needed before any financial reforms will work. He does not say precisely what these are but perhaps he envisions some new basic agreement between capital and labor such as he claims existed at the time of the Bretton Woods agreement. However at present labor seems weak especially the labor movement in advanced capitalist states. Kargarlitsky does not seem to give any detailed reasons why reforms must fail except that it will not be accompanied by more basic reforms. Maybe Kargarlitsky is advocating revolution but can't say that because Putin and the secret police are listening!
Doomed From the Start
20 November 2008
By Boris Kagarlitsky
We can say three things with certainty regarding reforms to international financial structures: They are necessary, inevitable and doomed to fail.The Group of 20 summit held in Washington was destined to fail from the start because the participants held such widely divergent interpretations of the problem. It was also doomed because nobody had a solution plan that was clear or concrete enough. The only thing that the G20 members could agree upon is the date of their next summit. Ideally, the participants would have become acquainted with each other's positions as a first step toward unified action. But even that would not have been enough because even if the participants had agreed on all of the issues and even if a coordinated solution had been developed, nothing useful would have come of it. The old financial system is falling apart before our eyes, and it is impossible to build a new one its place. But no matter how hard the politicians and experts might try, a new and effective international financial model can be built only after the world's most developed countries institute radical social and economic reforms. That new system would institutionalize on a global level the new principles guiding the lives of its member states. But none of today's world leaders is proposing any fundamental changes to their societies. What's more, politicians never address such questions at summits and conferences.
At the end of World War II, the Bretton Woods agreement reflected the economic conditions in Europe and the United States at the time. The unbridled free market economy was subjected to new government regulation, and the domination of the bourgeoisie was replaced by a historical compromise between labor and capital. It was no coincidence that the chief architect of the Bretton Woods agreement was the eminent British economist John Maynard Keynes, whose name is connected with the era of mixed economy and the welfare state.By the end of the 1980s, however, neoliberalism had replaced Keynesianism as the dominant economic model in Western countries. This paradigm was also adopted at leading international institutions, such as the International Monetary Fund and the World Bank, whose origins date back to the Bretton Woods era. If their initial task had been to regulate markets, stop reckless financial speculation and promote socially responsible government policies, by the end of the 20th century the IMF and the World Bank had largely become libertarian tools for deregulation and privatization. At the same time, these institutions underwent a radical and seemingly irreversible transformation. Although in a formal sense, they remain a part of the public sector and exist on funds from their founding member states, in reality they are becoming instruments of the global financial oligarchy. Most central banks have become independent of their respective governments, and they have shown more loyalty to the directors of private banks. Therefore, until each country reforms its own central bank, it will be pointless to even discuss the emergence of a new international financial architecture. Over the past 20 years, the public sector has been destroyed and privatized. If that situation does not undergo radical changes, trying to reform the global financial system is a useless endeavor.It is not the world's financial structures that needs to be reformed but society. If this were to ever happen, however, it would remove the need of having most of today's international institutions. In addition, the leaders who gather at the G20 and other global summits would become irrelevant as well.Boris Kagarlitsky is the director of the Institute of Globalization Studies.
U.S. to move five new brigades to Afghanistan.
This is from the Irish Times. No doubt Gates has a bright future under Obama. Obama will probably keep him on as his defence secretary according to news reports.
Gates fits in perfectly with Obama's bellicose plans for Afghanistan. Why leftists ever supported Obama is beyond me. The two main US parties are mainly fronts for the ruling class. To support one of their leaders is to simply surrender to them without even a fight. Boring from within I guess it is supposed to be! The Obama plan is public works at home and creative destruction for the military-industrial complex abroad. Obama may have trouble recruiting any allied forces for further service in Afghanistan. Only in the US is the Afghan war popular. In fact I am not sure how popular it is even there.
US to move five new brigades to Afghanistan
US Defense Secretary Robert Gates said today he expected to move five combat brigades into Afghanistan next year and wanted at least some of them in place before the country's election next autumn, stressing this was a top priority.
Washington had initially said it would send one brigade in January and three later in the year.
Violence in Afghanistan has surged to levels not seen since the 2001 US-led invasion toppled the country's former Taliban rulers, prompting commanders to call for more troops.
"We will deploy an additional brigade combat team in January," Mr Gates said after a meeting of defense ministers from eight countries that have forces in southern Afghanistan, a Taliban stronghold.
"Beyond that we've had some very preliminary discussions. We don't have a timetable at this point for the additional four brigade combat teams that (top NATO commander) Gen. (David) McKiernan has asked for," he told a news conference in the eastern Canadian town of Cornwallis.
Each brigade has about 3,500 soldiers.
Mr Gates said the meeting had discussed trying to put as many troops as possible into the country before the presidential election.
"All of us agree that one of our most important and maybe the most important objective for us in 2009 in Afghanistan is a successful election," he said, calling on Afghan authorities to play their part too.
"We all recognize the need for the Afghan government - with our help - to demonstrate some progress over the course of 2009," he said.
US president-elect Barack Obama says he wants to focus more on the Afghan war and plans to persuade other nations to send more soldiers.
But Canadian defence minister Peter MacKay said Mr Obama should look to other Nato members first, rather than turning to the other seven nations that took part in the Cornwallis meeting: Canada, Denmark, Britain, the Netherlands, Australia, Estonia and Romania.
"The reality is there are other Nato doors that president-elect Obama should be knocking on first," he told the news conference. Canada has long complained that the nations with troops in southern Afghanistan are bearing a disproportionate share of the military burden.
"There is an enormous amount of goodwill that has been engendered by President-elect Obama that he might be willing to spend for a cause that he clearly believes in," said MacKay.
Many Nato nations insist on stationing their troops in other quieter parts of Afghanistan and strictly limit what kind of combat activities they can carry out.
Reuters
© 2008 irishtimes.com
Gates fits in perfectly with Obama's bellicose plans for Afghanistan. Why leftists ever supported Obama is beyond me. The two main US parties are mainly fronts for the ruling class. To support one of their leaders is to simply surrender to them without even a fight. Boring from within I guess it is supposed to be! The Obama plan is public works at home and creative destruction for the military-industrial complex abroad. Obama may have trouble recruiting any allied forces for further service in Afghanistan. Only in the US is the Afghan war popular. In fact I am not sure how popular it is even there.
US to move five new brigades to Afghanistan
US Defense Secretary Robert Gates said today he expected to move five combat brigades into Afghanistan next year and wanted at least some of them in place before the country's election next autumn, stressing this was a top priority.
Washington had initially said it would send one brigade in January and three later in the year.
Violence in Afghanistan has surged to levels not seen since the 2001 US-led invasion toppled the country's former Taliban rulers, prompting commanders to call for more troops.
"We will deploy an additional brigade combat team in January," Mr Gates said after a meeting of defense ministers from eight countries that have forces in southern Afghanistan, a Taliban stronghold.
"Beyond that we've had some very preliminary discussions. We don't have a timetable at this point for the additional four brigade combat teams that (top NATO commander) Gen. (David) McKiernan has asked for," he told a news conference in the eastern Canadian town of Cornwallis.
Each brigade has about 3,500 soldiers.
Mr Gates said the meeting had discussed trying to put as many troops as possible into the country before the presidential election.
"All of us agree that one of our most important and maybe the most important objective for us in 2009 in Afghanistan is a successful election," he said, calling on Afghan authorities to play their part too.
"We all recognize the need for the Afghan government - with our help - to demonstrate some progress over the course of 2009," he said.
US president-elect Barack Obama says he wants to focus more on the Afghan war and plans to persuade other nations to send more soldiers.
But Canadian defence minister Peter MacKay said Mr Obama should look to other Nato members first, rather than turning to the other seven nations that took part in the Cornwallis meeting: Canada, Denmark, Britain, the Netherlands, Australia, Estonia and Romania.
"The reality is there are other Nato doors that president-elect Obama should be knocking on first," he told the news conference. Canada has long complained that the nations with troops in southern Afghanistan are bearing a disproportionate share of the military burden.
"There is an enormous amount of goodwill that has been engendered by President-elect Obama that he might be willing to spend for a cause that he clearly believes in," said MacKay.
Many Nato nations insist on stationing their troops in other quieter parts of Afghanistan and strictly limit what kind of combat activities they can carry out.
Reuters
© 2008 irishtimes.com
Saturday, November 22, 2008
Nader: Changing with Retreads: The Third Clinton Administration
This is from informationclearinghouse.
It seems that the US will have the same old people. The best that can be hoped for is that there will be some progressive programs more or less forced upon these same old folks by the economic crisis. But even good old George is playing Santa Claus and extending unemployment payments through the Xmas seasons.
Foreign policy and intelligence look to be areas in which it will be not a Third Clinton Administration but Bush reincarnated.
Changing With Retreads
The Third Clinton Administration
By RALPH NADER
November 21, 2008 "Counterpunch" -- While the liberal intelligentsia was swooning over Barack Obama during his presidential campaign, I counseled “prepare to be disappointed.” His record as a Illinois state and U.S. Senator, together with the many progressive and long overdue courses of action he opposed during his campaign, rendered such a prediction unfortunate but obvious.
Now this same intelligentsia is beginning to howl over Obama’s transition team and early choices to run his Administration. Having defeated Senator Hillary Clinton in the Democratic Primaries, he now is busily installing Bill Clinton’s old guard. Thirty one out of forty seven people that he has named so far for transition or appointments have ties to the Clinton Administration, according to Politico. One Clintonite is quoted in the Washington Post as saying – “This isn’t lightly flavored with Clintons. This is all Clintons, all the time.”
Obama’s “foreign policy team is now dominated by the Hawkish, old-guard Democrats of the 1990,” writes Jeremy Scahill. Obama’s transition team reviewing intelligence agencies and recommending appointments is headed by John Brennan and Jami Miscik, who worked under George Tenet when the CIA was involved in politicizing intelligence for, among other officials, Secretary of State Colin Powell’s erroneous address before the United Nations calling for war against Iraq.
Mr. Brennan, as a government official, supported warrantless wiretapping and extraordinary rendition to torturing countries. National Public Radio reported that Obama’s reversal when he voted for the revised FISA this year relied on John Brennan’s advise.
For more detail on these two advisers and others recruited by Obama from the dark old days, see Democracy Now, November 17, 2008 and Jeremy Scahill, AlterNet, Nov. 20, 2008 “This is Change? 20 Hawks, Clintonites and Neocons to Watch for in Obama’s White House.”
The top choice as White House chief of staff is Rahm Emanuel—the ultimate hard-nosed corporate Democrat, military-foreign policy hawk and Clinton White House promoter of corporate globalization, as in NAFTA and the World Trade Organization.
Now, recall Obama’s words during the bucolic “hope and change” campaign months: “The American people…understand the real gamble is having the same old folks doing things over and over and over again and somehow expecting a different result.” Thunderous applause followed these remarks.
“This is more ‘Groundhog Day’ then a fresh start,” asserted Peter Wehner, a former Bush adviser who is now at the Ethics and Public Policy Center.
The signs are amassing that Barack Obama put a political con job over on the American people. He is now daily buying into the entrenched military-industrial complex that President Eisenhower warned Americans about in his farewell address.
With Robert Rubin on his side during his first photo opportunity after the election, he signaled to Wall Street that his vote for the $750 billion bailout of those speculators and crooks was no fluke (Rubin was Clinton’s financial deregulation architect in 1999 as Secretary of the Treasury before he became one of the hugely paid co-directors tanking Citigroup.)
Obama’s apologists say that his picks show he wants to get things done, so he wants people who know their way around Washington. Moreover, they say, the change comes only from the president who sets the priorities and the courses of action, not from his subordinates. This explanation assumes that a president’s appointments are not mirror images of the boss’s expected directions but only functionaries to carry out the Obama changes.
If you are inclined to believe this improbable scenario, perhaps you may wish to review Obama’s record compiled by Matt Gonzalez at Counterpunch.
Ralph Nader is the author of The Seventeen Traditions.
It seems that the US will have the same old people. The best that can be hoped for is that there will be some progressive programs more or less forced upon these same old folks by the economic crisis. But even good old George is playing Santa Claus and extending unemployment payments through the Xmas seasons.
Foreign policy and intelligence look to be areas in which it will be not a Third Clinton Administration but Bush reincarnated.
Changing With Retreads
The Third Clinton Administration
By RALPH NADER
November 21, 2008 "Counterpunch" -- While the liberal intelligentsia was swooning over Barack Obama during his presidential campaign, I counseled “prepare to be disappointed.” His record as a Illinois state and U.S. Senator, together with the many progressive and long overdue courses of action he opposed during his campaign, rendered such a prediction unfortunate but obvious.
Now this same intelligentsia is beginning to howl over Obama’s transition team and early choices to run his Administration. Having defeated Senator Hillary Clinton in the Democratic Primaries, he now is busily installing Bill Clinton’s old guard. Thirty one out of forty seven people that he has named so far for transition or appointments have ties to the Clinton Administration, according to Politico. One Clintonite is quoted in the Washington Post as saying – “This isn’t lightly flavored with Clintons. This is all Clintons, all the time.”
Obama’s “foreign policy team is now dominated by the Hawkish, old-guard Democrats of the 1990,” writes Jeremy Scahill. Obama’s transition team reviewing intelligence agencies and recommending appointments is headed by John Brennan and Jami Miscik, who worked under George Tenet when the CIA was involved in politicizing intelligence for, among other officials, Secretary of State Colin Powell’s erroneous address before the United Nations calling for war against Iraq.
Mr. Brennan, as a government official, supported warrantless wiretapping and extraordinary rendition to torturing countries. National Public Radio reported that Obama’s reversal when he voted for the revised FISA this year relied on John Brennan’s advise.
For more detail on these two advisers and others recruited by Obama from the dark old days, see Democracy Now, November 17, 2008 and Jeremy Scahill, AlterNet, Nov. 20, 2008 “This is Change? 20 Hawks, Clintonites and Neocons to Watch for in Obama’s White House.”
The top choice as White House chief of staff is Rahm Emanuel—the ultimate hard-nosed corporate Democrat, military-foreign policy hawk and Clinton White House promoter of corporate globalization, as in NAFTA and the World Trade Organization.
Now, recall Obama’s words during the bucolic “hope and change” campaign months: “The American people…understand the real gamble is having the same old folks doing things over and over and over again and somehow expecting a different result.” Thunderous applause followed these remarks.
“This is more ‘Groundhog Day’ then a fresh start,” asserted Peter Wehner, a former Bush adviser who is now at the Ethics and Public Policy Center.
The signs are amassing that Barack Obama put a political con job over on the American people. He is now daily buying into the entrenched military-industrial complex that President Eisenhower warned Americans about in his farewell address.
With Robert Rubin on his side during his first photo opportunity after the election, he signaled to Wall Street that his vote for the $750 billion bailout of those speculators and crooks was no fluke (Rubin was Clinton’s financial deregulation architect in 1999 as Secretary of the Treasury before he became one of the hugely paid co-directors tanking Citigroup.)
Obama’s apologists say that his picks show he wants to get things done, so he wants people who know their way around Washington. Moreover, they say, the change comes only from the president who sets the priorities and the courses of action, not from his subordinates. This explanation assumes that a president’s appointments are not mirror images of the boss’s expected directions but only functionaries to carry out the Obama changes.
If you are inclined to believe this improbable scenario, perhaps you may wish to review Obama’s record compiled by Matt Gonzalez at Counterpunch.
Ralph Nader is the author of The Seventeen Traditions.
Friday, November 21, 2008
Philippine stocks decline.
As with other stock markets there has been a decline recently in Philippine stocks although the North American exchanges had a rally late Friday. The week overall has still been negative and with no auto bailout it remains to be seen what will happen on Monday.
Foreign sell-offs hammer share prices
BY ALBERT CASTRO
SHARE prices plummeted by 4.1 percent yesterday, the second straight loss of such magnitude in as many days, following a drop in Wall Street of over 400 points.
The market lost 10 percent of its value for the whole week, mainly on account of sell-offs by foreigners who were shipping out funds to safer havens.
Foreign funds sold P1.05 billion worth of stocks during the week.
On Friday, the Philippine Stock Exchange index (PSEi) closed the week at 1,765.90, a 76.43 points drop from Thursday’s closing.
Losers edged gainers 79 to 11. Turnover reached 820.15 million shares worth P1.17 billion.
The market has lost a total of P3.78 trillion worth of value since the start of the year because of continued selling.
"Risk aversions continue to hit the market. The past two days saw the US market declining by nearly 900 points, which led foreign funds to liquidate," said Emmanuel Soller, Equitiworld Securities trader.
"Foreign selling continues to pull local stocks. The selling outweighs the relatively good performance of local companies as reported in their latest filings," he added.
Soller said investors were continuing to look for indication that the US crisis would soon be solved and were awaiting the assumption into office by US president-elect Barrack Obama and his plans to address the crisis.
Most actively traded Philippine Long Distance Telephone Co. was down P120 to P2,060. Ayala Corp. was down P7 to P174. Energy Development Corp. was down P0.16 to P2.30. Ayala Land was down P0.30 to P5.50. SM Prime Holdings was down P0.50 to P5.80.
Bank of the Philippine Island was steady at P37.
Foreign sell-offs hammer share prices
BY ALBERT CASTRO
SHARE prices plummeted by 4.1 percent yesterday, the second straight loss of such magnitude in as many days, following a drop in Wall Street of over 400 points.
The market lost 10 percent of its value for the whole week, mainly on account of sell-offs by foreigners who were shipping out funds to safer havens.
Foreign funds sold P1.05 billion worth of stocks during the week.
On Friday, the Philippine Stock Exchange index (PSEi) closed the week at 1,765.90, a 76.43 points drop from Thursday’s closing.
Losers edged gainers 79 to 11. Turnover reached 820.15 million shares worth P1.17 billion.
The market has lost a total of P3.78 trillion worth of value since the start of the year because of continued selling.
"Risk aversions continue to hit the market. The past two days saw the US market declining by nearly 900 points, which led foreign funds to liquidate," said Emmanuel Soller, Equitiworld Securities trader.
"Foreign selling continues to pull local stocks. The selling outweighs the relatively good performance of local companies as reported in their latest filings," he added.
Soller said investors were continuing to look for indication that the US crisis would soon be solved and were awaiting the assumption into office by US president-elect Barrack Obama and his plans to address the crisis.
Most actively traded Philippine Long Distance Telephone Co. was down P120 to P2,060. Ayala Corp. was down P7 to P174. Energy Development Corp. was down P0.16 to P2.30. Ayala Land was down P0.30 to P5.50. SM Prime Holdings was down P0.50 to P5.80.
Bank of the Philippine Island was steady at P37.
Iraq pact may violate constitutions, scholars warn.
This is from antiwar.com.
It is rather ironic that the semi-puppet government of Iraq is being more democratic with respect to SOFA than the US administration. Maliki still seems to be having trouble with the deal but at least he submitted it to the Iraqi parliament! I do not recall Obama having said anything about this matter but perhaps I missed it.
Iraq Pact May Violate Constitution, Scholars Warn
Posted November 20, 2008
Constitutional law scholars yesterday warned a congressional subcommittee that the Status of Forces Agreement (SOFA) between the United States and Iraq potentially runs afoul of the constitutions of both nations, and has urged the Bush Administration to rather seek an extension of the UN Mandate to authorize the troops to remain in Iraq beyond the end of the year.
From the Iraqi perspective, there continues to be dispute over how many votes are required to pass the 275-member parliament. The Maliki government has maintained that it needs only a simple majority, but opponents insist that security pacts require a two-thirds majority.
Of course that concern pales in comparison to the American side, where the administration has long asserted that no congressional approval will be sought. Though the president has the authority to pass executive agreements without Congress, scholars warn that the SOFA is far more comprehensive than previous ones, and would seem to require congressional approval.
Congressman William Delahunt has publicly condemned the Bush Administration over the deal, complaining that the they “kept the American people totally in the dark” and have refused to even provide the Congress with a copy of the deal.
It is rather ironic that the semi-puppet government of Iraq is being more democratic with respect to SOFA than the US administration. Maliki still seems to be having trouble with the deal but at least he submitted it to the Iraqi parliament! I do not recall Obama having said anything about this matter but perhaps I missed it.
Iraq Pact May Violate Constitution, Scholars Warn
Posted November 20, 2008
Constitutional law scholars yesterday warned a congressional subcommittee that the Status of Forces Agreement (SOFA) between the United States and Iraq potentially runs afoul of the constitutions of both nations, and has urged the Bush Administration to rather seek an extension of the UN Mandate to authorize the troops to remain in Iraq beyond the end of the year.
From the Iraqi perspective, there continues to be dispute over how many votes are required to pass the 275-member parliament. The Maliki government has maintained that it needs only a simple majority, but opponents insist that security pacts require a two-thirds majority.
Of course that concern pales in comparison to the American side, where the administration has long asserted that no congressional approval will be sought. Though the president has the authority to pass executive agreements without Congress, scholars warn that the SOFA is far more comprehensive than previous ones, and would seem to require congressional approval.
Congressman William Delahunt has publicly condemned the Bush Administration over the deal, complaining that the they “kept the American people totally in the dark” and have refused to even provide the Congress with a copy of the deal.
Chinese Automakers may buy GM and Chrysler
Perhaps the US taxpayers could swallow their pride and let the Chinese buy the giant auto lemons. The Chinese would not dare ask for a bailout either later on surely! If the sale saved US jobs it would probably be welcome. No doubt the US government would or should put conditions on the sale so that plants are not simply closed and moved offshore. This sale would give the Chinese an opportunity to do something useful with all those billions of US dollars they are holding. This is from agoracosmopolitan. MG Rover is already owned by the Chinese!
Chinese Automakers may buy GM and Chrysler
by Bertel Schmitt
Chinese carmakers SAIC and Dongfeng have plans to acquire GM and Chrysler, China’s 21st Century Business Herald reports. LINK A National Enquirer the paper is not. It is one of China's leading business newspapers, with a daily readership over three million]. This newspaper cites a senior official of China’s Ministry of Industry and Information Technology– the state regulator of China’s auto industry– who dropped the hint that “the auto manufacturing giants in China, such as Shanghai Automotive Industry Corporation (SAIC) and Dongfeng Motor Corporation, have the capability and intention to buy some assets of the two crisis-plagued American automakers.” These hints are very often followed with quick action in the Middle Kingdom. The hints were dropped just a few days after the same Chinese government gave its auto makers the go-ahead to invest abroad. And why would they do that?
A take-over of a large overseas auto maker would fit perfectly into China’s plans. As reported before, China has realized that its export chances are slim without unfettered access to foreign technology. The brand cachet of Chinese cars abroad is, shall we say, challenged. The Chinese could easily export Made-in-China VWs, Toyotas, Buicks. If their joint venture partner would let them. The solution: Buy the joint venture partner. Especially, when he’s in deep trouble.
At current market valuations (GM is worth less than Mattel) the Chinese government can afford to buy GM with petty cash. Even a hundred billion $ would barely dent China’s more than $2t in currency reserves. For nobody in the world would buying GM and (while they are at it) Chrysler make more sense than for the Chinese. Overlap? What overlap? They would gain instant access to the world’s markets with accepted brands, and proven technology.
The editors of 21st Century Business Herald, obviously with input from higher-up, writes that Chinese industry must change and upgrade. China wants their factories to change from low-value-added manufacturing to technically innovative and financially-sound high-value-add industries. Says the paper: “It would be much easier now for strong Chinese automakers to go global by acquiring some assets of their U.S. counterparts in times of crisis.”
Deloitte & Touche sees a trend: “Chinese automakers can start with buying out the OEM projects and Chinese ventures of some global carmakers such as GM and Chrysler.”
The Chinese appear to have bigger plans than an accounting firm can imagine. 21st Century Business Herald acts and writes as if its already a done deal, and the beginning of more to come. “In the coming two years China is likely to see a few of its large Chinese automakers and other manufacturing enterprises set a precedent for achieving globalization by acquiring global companies, just like SAIC or Dongfeng’s possible acquisition of troubled GM or Chrysler.”
Just in case you missed it, the Shanghai Automotive Industry Corporation (SAIC) is China’s largest auto manufacturer. In 1984, the company entered a joint venture with Volkswagen. A decade later, SAIC entered a joint venture with General Motors. In 2007, SAIC bought the Nanjing Automobile Corporation, which had acquired British MG Rover in 2005.
Dongfeng Motor Corporation is a public company, although 70 percent of their shares are reported to be in government hands. They also are one of China’s Big Three. The company has numerous joint venture partners, such as Nissan, Peugeot-Citroen, Honda, and Kia. Dongfeng (which means “East Wind”) was founded at the behest of Mao Zedong himself in 1968.
Chinese Automakers may buy GM and Chrysler
by Bertel Schmitt
Chinese carmakers SAIC and Dongfeng have plans to acquire GM and Chrysler, China’s 21st Century Business Herald reports. LINK A National Enquirer the paper is not. It is one of China's leading business newspapers, with a daily readership over three million]. This newspaper cites a senior official of China’s Ministry of Industry and Information Technology– the state regulator of China’s auto industry– who dropped the hint that “the auto manufacturing giants in China, such as Shanghai Automotive Industry Corporation (SAIC) and Dongfeng Motor Corporation, have the capability and intention to buy some assets of the two crisis-plagued American automakers.” These hints are very often followed with quick action in the Middle Kingdom. The hints were dropped just a few days after the same Chinese government gave its auto makers the go-ahead to invest abroad. And why would they do that?
A take-over of a large overseas auto maker would fit perfectly into China’s plans. As reported before, China has realized that its export chances are slim without unfettered access to foreign technology. The brand cachet of Chinese cars abroad is, shall we say, challenged. The Chinese could easily export Made-in-China VWs, Toyotas, Buicks. If their joint venture partner would let them. The solution: Buy the joint venture partner. Especially, when he’s in deep trouble.
At current market valuations (GM is worth less than Mattel) the Chinese government can afford to buy GM with petty cash. Even a hundred billion $ would barely dent China’s more than $2t in currency reserves. For nobody in the world would buying GM and (while they are at it) Chrysler make more sense than for the Chinese. Overlap? What overlap? They would gain instant access to the world’s markets with accepted brands, and proven technology.
The editors of 21st Century Business Herald, obviously with input from higher-up, writes that Chinese industry must change and upgrade. China wants their factories to change from low-value-added manufacturing to technically innovative and financially-sound high-value-add industries. Says the paper: “It would be much easier now for strong Chinese automakers to go global by acquiring some assets of their U.S. counterparts in times of crisis.”
Deloitte & Touche sees a trend: “Chinese automakers can start with buying out the OEM projects and Chinese ventures of some global carmakers such as GM and Chrysler.”
The Chinese appear to have bigger plans than an accounting firm can imagine. 21st Century Business Herald acts and writes as if its already a done deal, and the beginning of more to come. “In the coming two years China is likely to see a few of its large Chinese automakers and other manufacturing enterprises set a precedent for achieving globalization by acquiring global companies, just like SAIC or Dongfeng’s possible acquisition of troubled GM or Chrysler.”
Just in case you missed it, the Shanghai Automotive Industry Corporation (SAIC) is China’s largest auto manufacturer. In 1984, the company entered a joint venture with Volkswagen. A decade later, SAIC entered a joint venture with General Motors. In 2007, SAIC bought the Nanjing Automobile Corporation, which had acquired British MG Rover in 2005.
Dongfeng Motor Corporation is a public company, although 70 percent of their shares are reported to be in government hands. They also are one of China’s Big Three. The company has numerous joint venture partners, such as Nissan, Peugeot-Citroen, Honda, and Kia. Dongfeng (which means “East Wind”) was founded at the behest of Mao Zedong himself in 1968.
Thursday, November 20, 2008
Gulf States to bailout US?
So now not just the big US corporations but the country itself needs a bailout! The article does not say whether the funds would be loans or not. Aid sounds as if it were just a gift. I don't think that the Gulf States would see much sense in such charitable giving. This is from AFP via Yahoo.
US seeks 300 billion dlrs from Gulf states: report
Thu Nov 20, 2:29 am ET
KUWAIT CITY (AFP) – The United States has asked four oil-rich Gulf states for close to 300 billion dollars to help it curb the global financial meltdown, Kuwait's daily Al-Seyassah reported Thursday.
Quoting "highly informed" sources, the daily said Washington has asked Saudi Arabia for 120 billion dollars, the United Arab Emirates for 70 billion dollars, Qatar for 60 billion dollars and was seeking 40 billion dollars from Kuwait.
Al-Seyassah said Washington sought the amount as "financial aid" to face the fallout of the financial crisis and help prevent its economy from sliding into a painful recession.
The daily said the United States plans to use the funds to help the ailing automobile industry , banks and other companies suffering from the global financial turmoil.
The four nations, all members of OPEC, produce together 14 million barrels of oil per day, around half of the cartel's production and about 17 percent of world supplies.
The four states are estimated to have amassed close to 1.5 trillion dollars in surplus in the past six years due to high oil prices that rocketed above 147 dollars in July before sliding to just above 50 dollars.
The daily also said that the United States has asked Kuwait to forgive its Iraqi debt estimated at around 16 billion dollars.
Copyright © 2008 Agence France Presse. All rights reserved. The information contained in the AFP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of Agence France Presse.
Copyright © 2008 Yahoo! Inc. All rights reserved.
US seeks 300 billion dlrs from Gulf states: report
Thu Nov 20, 2:29 am ET
KUWAIT CITY (AFP) – The United States has asked four oil-rich Gulf states for close to 300 billion dollars to help it curb the global financial meltdown, Kuwait's daily Al-Seyassah reported Thursday.
Quoting "highly informed" sources, the daily said Washington has asked Saudi Arabia for 120 billion dollars, the United Arab Emirates for 70 billion dollars, Qatar for 60 billion dollars and was seeking 40 billion dollars from Kuwait.
Al-Seyassah said Washington sought the amount as "financial aid" to face the fallout of the financial crisis and help prevent its economy from sliding into a painful recession.
The daily said the United States plans to use the funds to help the ailing automobile industry , banks and other companies suffering from the global financial turmoil.
The four nations, all members of OPEC, produce together 14 million barrels of oil per day, around half of the cartel's production and about 17 percent of world supplies.
The four states are estimated to have amassed close to 1.5 trillion dollars in surplus in the past six years due to high oil prices that rocketed above 147 dollars in July before sliding to just above 50 dollars.
The daily also said that the United States has asked Kuwait to forgive its Iraqi debt estimated at around 16 billion dollars.
Copyright © 2008 Agence France Presse. All rights reserved. The information contained in the AFP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of Agence France Presse.
Copyright © 2008 Yahoo! Inc. All rights reserved.
Philippine pessimism to linger until Q 1 2009--poll
This just shows how the recession is global. The Philippines exports quite a bit especially to the US. With US demand slowing this will effect exports. Interesting that areas outside of the Manila capital area are less pessimistic about prospects. This is from the Daily Tribune.
Pessimism to linger until Q1 ’09 — poll
By Ruben Hortelano
11/21/2008
Business sentiment remained dim until the next quarter with the overall confidence index at negative 6.8 percent in the last quarter of the year and at negative .5 percent in the first quarter of next year, the latest business confidence survey of the Bangko Sentral ng Pilipinas (BSP) showed.
The BSP, nevertheless, said the confidence index for the last quarter was 6.1 percentage points higher from the previous quarter with the moderate improvement being attributed to the recent easing of world oil prices and expectations of a seasonal pick-up in demand and higher remittances from Filipinos working overseas during the Holiday season.
“The bearish outlook on the macroeconomy mirrored the weak global sentiment due to the global economic slowdown and the financial turmoil,” according to BSP.
BSP Gov. Amando Tetangco Jr. said survey respondents attributed their negative sentiment largely to expectations of an economic slowdown and lower exports, especially to the US, the country’s major export destination.
Respondents also cited the decline in consumer demand for certain commodities, particularly milk and other milk-based products due to the melamine scare, the peso depreciation and political noise for their bearish mood.
BSP director for economic statistics Lou Sicat said most respondents, however, remain confident of higher sales in the domestic market during the long Christmas holidays when Filipinos tend to splurge.
Businesses, however, expect to spend only for the purchase of more capital equipment and not for the hiring of new employees.
Sicat said the most pessimistic of the business sectors was the trade sector, while the most optimistic were in the construction sector.
Sicat said the decline in business sentiment was evident across all sectors as pessimists outnumber optimists except in the construction sector.
The construction sector posted a positive index of 6.6 percent but the services sector showed an index of negative 6.3 percent.
The industry as well as the wholesale and retail sectors similarly posted negative indices of negative 5.8 percent and negative 9.8 percent, respectively.
Perceptions as to the availability of credit worsened to negative 7.4 percent in the fourth quarter from negative 1.6 percent in the survey three months earlier.
Banks were seen to tighten their already tight credit standards further, making credit less readily available.
The employment index, which stood at 8.3 percent in the third-quarter survey, slid to a negative 1.4 percent.
Sicat said the survey was conducted from Oct. 1 to Nov. 5 this year on 1,242 firms listed by the Securities and Exchange Commission.
The response rate was 75.4 percent, higher than previous quarter response rate of 74.3 percent.
Respondents from the areas outside the National Capital Region were less pessimistic than their counterparts from the NCR. By contrast, NCR respondents were pessimistic about general economic conditions in both the current quarter and the next.
The average capacity utilization of the industry sector in the last quarter of 74.8 percent was lower by 2.8 percentage points from its level in the previous quarter, and by more than 1 percentage point relative to its level a year ago.
Competition, weak demand leading to low sales volume, and high interest rates were cited by respondents as the major risks to their business prospects in the last quarter.
Pessimism to linger until Q1 ’09 — poll
By Ruben Hortelano
11/21/2008
Business sentiment remained dim until the next quarter with the overall confidence index at negative 6.8 percent in the last quarter of the year and at negative .5 percent in the first quarter of next year, the latest business confidence survey of the Bangko Sentral ng Pilipinas (BSP) showed.
The BSP, nevertheless, said the confidence index for the last quarter was 6.1 percentage points higher from the previous quarter with the moderate improvement being attributed to the recent easing of world oil prices and expectations of a seasonal pick-up in demand and higher remittances from Filipinos working overseas during the Holiday season.
“The bearish outlook on the macroeconomy mirrored the weak global sentiment due to the global economic slowdown and the financial turmoil,” according to BSP.
BSP Gov. Amando Tetangco Jr. said survey respondents attributed their negative sentiment largely to expectations of an economic slowdown and lower exports, especially to the US, the country’s major export destination.
Respondents also cited the decline in consumer demand for certain commodities, particularly milk and other milk-based products due to the melamine scare, the peso depreciation and political noise for their bearish mood.
BSP director for economic statistics Lou Sicat said most respondents, however, remain confident of higher sales in the domestic market during the long Christmas holidays when Filipinos tend to splurge.
Businesses, however, expect to spend only for the purchase of more capital equipment and not for the hiring of new employees.
Sicat said the most pessimistic of the business sectors was the trade sector, while the most optimistic were in the construction sector.
Sicat said the decline in business sentiment was evident across all sectors as pessimists outnumber optimists except in the construction sector.
The construction sector posted a positive index of 6.6 percent but the services sector showed an index of negative 6.3 percent.
The industry as well as the wholesale and retail sectors similarly posted negative indices of negative 5.8 percent and negative 9.8 percent, respectively.
Perceptions as to the availability of credit worsened to negative 7.4 percent in the fourth quarter from negative 1.6 percent in the survey three months earlier.
Banks were seen to tighten their already tight credit standards further, making credit less readily available.
The employment index, which stood at 8.3 percent in the third-quarter survey, slid to a negative 1.4 percent.
Sicat said the survey was conducted from Oct. 1 to Nov. 5 this year on 1,242 firms listed by the Securities and Exchange Commission.
The response rate was 75.4 percent, higher than previous quarter response rate of 74.3 percent.
Respondents from the areas outside the National Capital Region were less pessimistic than their counterparts from the NCR. By contrast, NCR respondents were pessimistic about general economic conditions in both the current quarter and the next.
The average capacity utilization of the industry sector in the last quarter of 74.8 percent was lower by 2.8 percentage points from its level in the previous quarter, and by more than 1 percentage point relative to its level a year ago.
Competition, weak demand leading to low sales volume, and high interest rates were cited by respondents as the major risks to their business prospects in the last quarter.
Antiwar groups fear Obama hawkish cabinet.
Material from LAtimes.
This is hardly surprising. There is a bipartisan consensus on an aggressive imperialist foreign policy. While Obama wants to withdraw troops from Iraq, he wants to enlarge the armed forces and increase the number of troops in Afghanistan. He probably will even be more active in Pakistan as well. With the exception of Iraq Obama is very much a hawk. It remains to be seen whether things will cool down with Russia. Obama does seem a bit sceptical of the missile defence system in East Europe but he supports Georgia and the Ukraine joining NATO.
Antiwar groups fear Barack Obama may create hawkish Cabinet
Activists note that most of the candidates for top security posts voted for the 2002 resolution authorizing President Bush to invade Iraq or otherwise supported launching the war.By Paul Richter
November 20, 2008
Reporting from Washington — Antiwar groups and other liberal activists are increasingly concerned at signs that Barack Obama's national security team will be dominated by appointees who favored the Iraq invasion and hold hawkish views on other important foreign policy issues.
The activists are uneasy not only about signs that both Sen. Hillary Rodham Clinton (D-N.Y.) and Defense Secretary Robert M. Gates could be in the Obama Cabinet, but at reports suggesting that several other short-list candidates for top security posts backed the decision to go to war.
"Obama ran his campaign around the idea the war was not legitimate, but it sends a very different message when you bring in people who supported the war from the beginning," said Kelly Dougherty, executive director of the 54-chapter Iraq Veterans Against the War.
The activists -- key members of the coalition that propelled Obama to the White House -- fear he is drifting from the antiwar moorings of his once-longshot presidential candidacy. Obama has eased the rigid timetable he had set for withdrawing troops from Iraq, and he appears to be leaning toward the center in his candidates to fill key national security posts.
The president-elect has told some Democrats that he expects to take heat from parts of his political base but will not be deterred by it.
Aside from Clinton and Gates, the roster of possible Cabinet secretaries has included Sens. John F. Kerry (D-Mass.) and Richard G. Lugar (R-Ind.), who both voted in 2002 for the resolution authorizing President Bush to invade Iraq, though Lugar has since said he regretted it.
"It's astonishing that not one of the 23 senators or 133 House members who voted against the war is in the mix," said Sam Husseini of the liberal group Institute for Public Accuracy.
Clinton, who was Obama's chief opponent during the Democratic presidential primaries, appears to be the top candidate for secretary of State in his administration. Speculation about Clinton has dismayed some liberal activists but has cheered some conservatives such as former Secretary of State Henry Kissinger and editor William Kristol of the Weekly Standard.
Clinton voted in favor of the Iraq war resolution, and despite pressure, she never said during the primary campaign that she regretted that vote. She also favored legislation last year to support the designation of Iran's Revolutionary Guard Corps as a terrorist organization, another decision that pleased conservatives.
In a move to advance her candidacy, Clinton's husband, former President Clinton, has agreed to take steps to avoid conflicts of interest posed by his far-flung financial dealings, Democrats close to the discussions said Wednesday.
Bill Clinton has agreed to check with the Obama administration before giving a paid speech. He also has agreed to disclose the sources of new contributions to his charitable enterprise, the William J. Clinton Foundation, those close to the matter said on condition of anonymity.
He also is trying to devise a way to share the identity of past donors, a touchy matter because some contributors do not want their identities divulged, said one Democrat.
Knowledgeable Democrats say that Gates is under consideration to remain in his post for at least several months even though he frequently has said he wants to return to private life when the Bush administration leaves office.
Activists note that Vice President-elect Joe Biden, also expected to be a leading voice in the new administration's foreign policy, voted for the 2002 war resolution.
Another possible contender for the diplomatic post, former U.S. diplomat Richard C. Holbrooke, also backed the Iraq invasion.
Kevin Martin, executive director of the group Peace Action, said that although Obama had campaigned as an agent of change, the president-elect is "a fairly centrist guy" who appears to be choosing from the Democratic foreign policy establishment -- "and nobody from outside it."
"So, in the short term, we're going to be disappointed," he said. "They may turn out to be all pro-war, or at least people who were pro-war in the beginning."
Martin said that his group was concerned about Gates and Clinton as well as Rahm Emanuel, Obama's choice for White House chief of staff. He also said his group was trying to mobilize its grass-roots supporters with e-mail alerts, but recognized that it must approach the subject delicately because of public euphoria over Obama's historic victory.
"There's so much Obama hero worship, we're having to walk this line where we can't directly criticize him," he said. "But we are expressing concern."
Peace Action urged in a letter for its members to speak up because "we can be sure that the Obama team is under pressure to dial back plans to withdraw from Iraq."
Despite concerns, some groups are trying to remain conciliatory.
Tom Andrews, national director of Win Without War, said that although he finds Sen. Clinton's views "very troubling," Obama should be given the benefit of the doubt.
"I take him at his word that he is committed to ending the occupation of Iraq in 16 months and that he's going to assemble a team that's committed to that goal," Andrews said.
Obama campaigned on a promise to remove all combat troops from Iraq in 16 months, or roughly one brigade a month.
Since winning the White House, Obama has affirmed his pledge to remove the troops but has left himself some flexibility on the withdrawal timetable.
In an appearance on CBS' "60 Minutes" on Sunday, Obama promised a troop pullback but described it in broad terms.
"I've said during the campaign, and I've stuck to this commitment, that as soon as I take office, I will call in the Joint Chiefs of Staff, my national security apparatus, and we will start executing a plan that draws down our troops," the president-elect said.
Richter is a writer in our Washington bureau.
paul.richter@latimes.com
Times staff writer Peter Nicholas in Washington contributed to this article.
This is hardly surprising. There is a bipartisan consensus on an aggressive imperialist foreign policy. While Obama wants to withdraw troops from Iraq, he wants to enlarge the armed forces and increase the number of troops in Afghanistan. He probably will even be more active in Pakistan as well. With the exception of Iraq Obama is very much a hawk. It remains to be seen whether things will cool down with Russia. Obama does seem a bit sceptical of the missile defence system in East Europe but he supports Georgia and the Ukraine joining NATO.
Antiwar groups fear Barack Obama may create hawkish Cabinet
Activists note that most of the candidates for top security posts voted for the 2002 resolution authorizing President Bush to invade Iraq or otherwise supported launching the war.By Paul Richter
November 20, 2008
Reporting from Washington — Antiwar groups and other liberal activists are increasingly concerned at signs that Barack Obama's national security team will be dominated by appointees who favored the Iraq invasion and hold hawkish views on other important foreign policy issues.
The activists are uneasy not only about signs that both Sen. Hillary Rodham Clinton (D-N.Y.) and Defense Secretary Robert M. Gates could be in the Obama Cabinet, but at reports suggesting that several other short-list candidates for top security posts backed the decision to go to war.
"Obama ran his campaign around the idea the war was not legitimate, but it sends a very different message when you bring in people who supported the war from the beginning," said Kelly Dougherty, executive director of the 54-chapter Iraq Veterans Against the War.
The activists -- key members of the coalition that propelled Obama to the White House -- fear he is drifting from the antiwar moorings of his once-longshot presidential candidacy. Obama has eased the rigid timetable he had set for withdrawing troops from Iraq, and he appears to be leaning toward the center in his candidates to fill key national security posts.
The president-elect has told some Democrats that he expects to take heat from parts of his political base but will not be deterred by it.
Aside from Clinton and Gates, the roster of possible Cabinet secretaries has included Sens. John F. Kerry (D-Mass.) and Richard G. Lugar (R-Ind.), who both voted in 2002 for the resolution authorizing President Bush to invade Iraq, though Lugar has since said he regretted it.
"It's astonishing that not one of the 23 senators or 133 House members who voted against the war is in the mix," said Sam Husseini of the liberal group Institute for Public Accuracy.
Clinton, who was Obama's chief opponent during the Democratic presidential primaries, appears to be the top candidate for secretary of State in his administration. Speculation about Clinton has dismayed some liberal activists but has cheered some conservatives such as former Secretary of State Henry Kissinger and editor William Kristol of the Weekly Standard.
Clinton voted in favor of the Iraq war resolution, and despite pressure, she never said during the primary campaign that she regretted that vote. She also favored legislation last year to support the designation of Iran's Revolutionary Guard Corps as a terrorist organization, another decision that pleased conservatives.
In a move to advance her candidacy, Clinton's husband, former President Clinton, has agreed to take steps to avoid conflicts of interest posed by his far-flung financial dealings, Democrats close to the discussions said Wednesday.
Bill Clinton has agreed to check with the Obama administration before giving a paid speech. He also has agreed to disclose the sources of new contributions to his charitable enterprise, the William J. Clinton Foundation, those close to the matter said on condition of anonymity.
He also is trying to devise a way to share the identity of past donors, a touchy matter because some contributors do not want their identities divulged, said one Democrat.
Knowledgeable Democrats say that Gates is under consideration to remain in his post for at least several months even though he frequently has said he wants to return to private life when the Bush administration leaves office.
Activists note that Vice President-elect Joe Biden, also expected to be a leading voice in the new administration's foreign policy, voted for the 2002 war resolution.
Another possible contender for the diplomatic post, former U.S. diplomat Richard C. Holbrooke, also backed the Iraq invasion.
Kevin Martin, executive director of the group Peace Action, said that although Obama had campaigned as an agent of change, the president-elect is "a fairly centrist guy" who appears to be choosing from the Democratic foreign policy establishment -- "and nobody from outside it."
"So, in the short term, we're going to be disappointed," he said. "They may turn out to be all pro-war, or at least people who were pro-war in the beginning."
Martin said that his group was concerned about Gates and Clinton as well as Rahm Emanuel, Obama's choice for White House chief of staff. He also said his group was trying to mobilize its grass-roots supporters with e-mail alerts, but recognized that it must approach the subject delicately because of public euphoria over Obama's historic victory.
"There's so much Obama hero worship, we're having to walk this line where we can't directly criticize him," he said. "But we are expressing concern."
Peace Action urged in a letter for its members to speak up because "we can be sure that the Obama team is under pressure to dial back plans to withdraw from Iraq."
Despite concerns, some groups are trying to remain conciliatory.
Tom Andrews, national director of Win Without War, said that although he finds Sen. Clinton's views "very troubling," Obama should be given the benefit of the doubt.
"I take him at his word that he is committed to ending the occupation of Iraq in 16 months and that he's going to assemble a team that's committed to that goal," Andrews said.
Obama campaigned on a promise to remove all combat troops from Iraq in 16 months, or roughly one brigade a month.
Since winning the White House, Obama has affirmed his pledge to remove the troops but has left himself some flexibility on the withdrawal timetable.
In an appearance on CBS' "60 Minutes" on Sunday, Obama promised a troop pullback but described it in broad terms.
"I've said during the campaign, and I've stuck to this commitment, that as soon as I take office, I will call in the Joint Chiefs of Staff, my national security apparatus, and we will start executing a plan that draws down our troops," the president-elect said.
Richter is a writer in our Washington bureau.
paul.richter@latimes.com
Times staff writer Peter Nicholas in Washington contributed to this article.
Pfaff: Bracing for a major disappointment
Perhaps there will be some disappointment although many leftists did not expect all that much change. Given the strong support from Wall Street and the many establishment type figures supporting the campaign any radical change was unlikely. The choices Obama is making for his transition team support this view and as the article points out many are recycled Clinton officials. Blacks and many liberals are probably just happy enough that a black was able to get elected for president even though he does not really represent much in the way of change. It remains to be seen how progressive Obama is in tackling the economic crisis. On foreign policy there has always been bipartisan consensus to support US imperialism so at most one can expect a bit less mad dog reckless imperialism but I would not count even on that as Obama's position so far on Afghanistan is quite hopeless almost Bush on steroids.
Bracing for a Major Disappointmenthttp://www.truthdig.com/report/item/20081118_bracing_for_a_major_disappointment/Posted on Nov 18, 2008By William PfaffBRUSSELS—The Americans who voted for Barack Obama as president were promised change they could count on, but it rather looks as if they may actually be asked to make do with a mildly refurbished Clinton administration, with many of the same officials and nearly all of the same policies. The policies are drawn from the same centrist Democratic Party sources as those of Bill Clinton, and Obama’s admirers might even find themselves with Hillary Rodham Clinton as secretary of state—which makes no sense whatsoever.Are there no significant differences of view on war and peace between the two of them? Why did the American (and international) public have to endure a year and a half of Democratic Party primaries in addition to the national election contest if the Democratic race could have been settled by the flip of a coin between people who believed in the same policies and thought the same thoughts?Where is the sweeping change Barack Obama was promising the electorate? Looking back, he was rarely specific about the changes he intended to make. He constantly invoked the principle of change, without going much into the messy details, for which—admittedly—he was criticized at the time.Many who voted for him, as did this writer, relied upon his evident qualities, in comparison with his predecessor and most of his competitors, which were that he clearly was very intelligent, as well as balanced and mature: He was an adult, who spoke to his audiences as fellow adults. This was his great difference from Hillary Clinton. Personally very intelligent, she has spent too long in the shady political precincts of ambition and calculation. She could never have made the speech Obama made on race. (Possibly he will never again be able to make such a speech. He has himself said that we must settle down now to being disappointed by Obama.)The disappointment problem is international. Because of the enormous expectations Obama’s election has aroused abroad, above all among America’s European allies, any Obama-Clinton restoration of Clintonism would be met with incomprehension and disappointment. This is not because the Clinton administration was so awful, but because it was so confused in perception and lacking in foreign policy direction that it was easy for George W. Bush to merge it into the Great War on Terror. He had simply to add fear, security hysteria, lies about mass destruction weapons, and torture.Europeans had never thought of Americans as torturers. When it turned out that the sponsors and defenders of torture occupied the highest offices of government in the United States, with the chief legal enablers of torture in the White House counsel’s office itself, and heading no less than the Department of Justice, a chill passed through the Western alliance. It was noted that the chosen euphemism for torture by the president, lawyers and the CIA was “enhanced measures,” a direct translation of the term employed by the Gestapo.I was just in Brussels to speak to the European Ideas Network, sponsored by the Christian Democratic-Center Right-Conservative group, the largest in the European Parliament. The audience seemed taken aback when I answered their question about what will change in European-American relations under Barack Obama by replying, “Probably not much.”The president-elect has said he will stop torture and extra-legal imprisonment, but on fundamental matters of transatlantic relations, he clearly has indicated that he wants an alliance in which the Europeans contribute more. (This will undoubtedly be a welcome change from the Bush effort to split the European Union by encouraging hostility toward the West Europeans by the pro-American former Warsaw Pact governments.)The U.S. contribution to the Georgia fiasco has undermined its reputation among the East Europeans. In the future, there probably will be more American consultation and good will in transatlantic relations, and perhaps even in dealing with Russia (there certainly is nothing to gain from hostility). However, Barack Obama himself said in his Berlin speech that he expects the Europeans to contribute a lot more to “winning” the war in Afghanistan.This is not a popular idea; the European governments have been encouraging regional diplomatic solutions for Afghanistan, Iraq and Iran. Most Americans may be surprised to know that there is West European concern (as French Foreign Minister Bernard Kouchner told a Brookings audience in Washington last week) that the new American administration might try to take all this over for itself, and thereby wreck the progress already made. After all, it was Barack Obama who said that he would himself talk to the Iranians.Visit William Pfaff’s Web site at www.williampfaff.com.© 2008 Tribune Media Services Inc.
Bracing for a Major Disappointmenthttp://www.truthdig.com/report/item/20081118_bracing_for_a_major_disappointment/Posted on Nov 18, 2008By William PfaffBRUSSELS—The Americans who voted for Barack Obama as president were promised change they could count on, but it rather looks as if they may actually be asked to make do with a mildly refurbished Clinton administration, with many of the same officials and nearly all of the same policies. The policies are drawn from the same centrist Democratic Party sources as those of Bill Clinton, and Obama’s admirers might even find themselves with Hillary Rodham Clinton as secretary of state—which makes no sense whatsoever.Are there no significant differences of view on war and peace between the two of them? Why did the American (and international) public have to endure a year and a half of Democratic Party primaries in addition to the national election contest if the Democratic race could have been settled by the flip of a coin between people who believed in the same policies and thought the same thoughts?Where is the sweeping change Barack Obama was promising the electorate? Looking back, he was rarely specific about the changes he intended to make. He constantly invoked the principle of change, without going much into the messy details, for which—admittedly—he was criticized at the time.Many who voted for him, as did this writer, relied upon his evident qualities, in comparison with his predecessor and most of his competitors, which were that he clearly was very intelligent, as well as balanced and mature: He was an adult, who spoke to his audiences as fellow adults. This was his great difference from Hillary Clinton. Personally very intelligent, she has spent too long in the shady political precincts of ambition and calculation. She could never have made the speech Obama made on race. (Possibly he will never again be able to make such a speech. He has himself said that we must settle down now to being disappointed by Obama.)The disappointment problem is international. Because of the enormous expectations Obama’s election has aroused abroad, above all among America’s European allies, any Obama-Clinton restoration of Clintonism would be met with incomprehension and disappointment. This is not because the Clinton administration was so awful, but because it was so confused in perception and lacking in foreign policy direction that it was easy for George W. Bush to merge it into the Great War on Terror. He had simply to add fear, security hysteria, lies about mass destruction weapons, and torture.Europeans had never thought of Americans as torturers. When it turned out that the sponsors and defenders of torture occupied the highest offices of government in the United States, with the chief legal enablers of torture in the White House counsel’s office itself, and heading no less than the Department of Justice, a chill passed through the Western alliance. It was noted that the chosen euphemism for torture by the president, lawyers and the CIA was “enhanced measures,” a direct translation of the term employed by the Gestapo.I was just in Brussels to speak to the European Ideas Network, sponsored by the Christian Democratic-Center Right-Conservative group, the largest in the European Parliament. The audience seemed taken aback when I answered their question about what will change in European-American relations under Barack Obama by replying, “Probably not much.”The president-elect has said he will stop torture and extra-legal imprisonment, but on fundamental matters of transatlantic relations, he clearly has indicated that he wants an alliance in which the Europeans contribute more. (This will undoubtedly be a welcome change from the Bush effort to split the European Union by encouraging hostility toward the West Europeans by the pro-American former Warsaw Pact governments.)The U.S. contribution to the Georgia fiasco has undermined its reputation among the East Europeans. In the future, there probably will be more American consultation and good will in transatlantic relations, and perhaps even in dealing with Russia (there certainly is nothing to gain from hostility). However, Barack Obama himself said in his Berlin speech that he expects the Europeans to contribute a lot more to “winning” the war in Afghanistan.This is not a popular idea; the European governments have been encouraging regional diplomatic solutions for Afghanistan, Iraq and Iran. Most Americans may be surprised to know that there is West European concern (as French Foreign Minister Bernard Kouchner told a Brookings audience in Washington last week) that the new American administration might try to take all this over for itself, and thereby wreck the progress already made. After all, it was Barack Obama who said that he would himself talk to the Iranians.Visit William Pfaff’s Web site at www.williampfaff.com.© 2008 Tribune Media Services Inc.
Iraqi lawmakers brawl over Security Pact
This is from the NYTimes.
I am a bit surprised at this. Sadr actually is often opportunistic and in this situation I thought he might go along with the pact. However, the revisions do little to extend Iraqi control over the US armed forces or contractors when "on mission" although it seems that even this limited sovereignty does not sit well with Americans. However US legislators apparently will have no say on the matter! Rather interesting that what is to a considerable extent a puppet government actually has more direct say than US legislators!
It would seem that there are enough powerful blocs behind the SOFA to have it pass unless the parliament cannot restore order!
November 20, 2008
Iraqi Lawmakers Brawl Over Security Pact
By CAMPBELL ROBERTSON and SUADAD AL-SALHY
BAGHDAD — A session of Iraq’s Parliament collapsed in chaos on Wednesday, as a discussion among lawmakers about a three-year security agreement with the Americans boiled over into shouting and physical confrontation.
The session was dedicated to a second public reading of the agreement, which governs the presence of American troops in Iraq through 2011 and which the Parliament is scheduled to vote on Monday. Even before the session began, legislators were apprehensive.
“There is much tension inside the Parliament,” said Iman al-Asadi, a Shiite lawmaker, shortly before the session was scheduled to start. “We worry that they will fight each other inside the room.”
Lawmakers who support the pact said they were worried in particular about the followers of the anti-American Shiite cleric Moktada al-Sadr, who make up a bloc of 32 legislators in the 275-member Parliament. While there are those in Parliament, like many Sunnis, who have objections to elements of the pact, the Sadrists reject any agreement with the Americans in principle.
In a departure from protocol, security guards were present in the room, both because of the tension and because several Iraqi government officials were in attendance to answer questions about the agreement. Hoshyar Zebari, the foreign affairs minister, said the guards were unarmed.
As soon as the session began, politicians in opposition to the pact stood up in the hall and volubly argued that the ratification process was unconstitutional, because a law governing the passage of international agreements has not been approved. Supporters say such a law is unnecessary, because Parliament had already ratified numerous agreements without one.
For the next two hours, the Parliament speaker, Mahmoud Mashhadani, lashed out at the objecters and refused their demands to change the Parliament agenda. He then invited Hassan al-Sneid, a Shiite lawmaker, to begin the second public reading of the agreement, a matter of parliamentary procedure.
As Mr. Sneid began reading, witnesses said, Sadrists and other opponents of the agreement continued to trade shouts with lawmakers who supported it. Then, Ahmed Masu’udi, a Sadrist lawmaker, approached the dais. Mr. Masu’udi said later in an interview that he was simply trying to reach Mr. Mashhadani to persuade him to stop the reading; several other witnesses said Mr. Masu’udi tried to attack Mr. Sneid. The security guards rushed toward Mr. Masu’udi, who said that they grabbed him and struggled to push him away. At that point, witnesses said, the hall was filled with shouting, lawmakers rushed toward the front and the session ended in chaos.
Legislators poured out of the hall and into the cafeteria. There, shouting and accusations continued among the lawmakers, quickly attracting a company of security guards, who surrounded the cafeteria and tried to keep away the journalists and other onlookers who had gathered.
The shouting ended shortly after when many of the legislators involved marched off to their offices. In the aftermath, members of Parliament, many visibly irritated, cast blame: on the Sadrists for causing the commotion, on the dominant Shiite parties for what they see as an attempt to jam the passage through too quickly, and on the Americans and the Iraqi government for what even some supporters of the pact consider an inappropriately secretive negotiating process.
There was uncertainty as to what would happen Thursday, when Parliament tries again for the second reading. Several blocs threatened to boycott Parliament until an investigation took place, while other lawmakers vowed that anyone who tried to disrupt the session would be forcibly removed. There was also uncertainty as to whether the agreement could be voted on before the middle of next week, when many legislators may go on a pilgrimage.
While the confrontation in Parliament was unfolding, demonstrations in favor of the pact were taking place around the country.
But the optimism among Shiite lawmakers earlier in the week had considerably dampened.
In Washington, the Bush administration sent Secretary of State Condoleezza Rice and Secretary of Defense Robert M. Gates to Capitol Hill to brief lawmakers on the agreement. They did so behind closed doors, and the administration has not released a copy of the agreement, which has been published in Iraqi newspapers. Officials have repeatedly declined to discuss its terms in detail.
The administration argues that the agreement with Iraq does not require Congressional approval, but prominent lawmakers have raised objections, particularly about the provisions giving the Iraqis legal jurisdiction over crimes by American soldiers in some circumstances and about Iraq’s demands to authorize military operations.
It was not clear that Congress was in a position to force any changes. The Pentagon’s spokesman, Geoff Morrell, said that American commanders were satisfied with the conditions set in the agreement, including deadlines for withdrawal and constraints on operations.
“I’m not going to get into this — the specifics of this — other than to say that how this agreement is implemented will be worked out between our commanders on the ground and the Iraqi leadership,” he said. “And both seem to be very confident that it provides the framework for them to continue to do all that still needs to be done.”
Atheer Kakan and Mohammed Hussein contributed reporting from Baghdad, and Steven Lee Myers from Washington.
I am a bit surprised at this. Sadr actually is often opportunistic and in this situation I thought he might go along with the pact. However, the revisions do little to extend Iraqi control over the US armed forces or contractors when "on mission" although it seems that even this limited sovereignty does not sit well with Americans. However US legislators apparently will have no say on the matter! Rather interesting that what is to a considerable extent a puppet government actually has more direct say than US legislators!
It would seem that there are enough powerful blocs behind the SOFA to have it pass unless the parliament cannot restore order!
November 20, 2008
Iraqi Lawmakers Brawl Over Security Pact
By CAMPBELL ROBERTSON and SUADAD AL-SALHY
BAGHDAD — A session of Iraq’s Parliament collapsed in chaos on Wednesday, as a discussion among lawmakers about a three-year security agreement with the Americans boiled over into shouting and physical confrontation.
The session was dedicated to a second public reading of the agreement, which governs the presence of American troops in Iraq through 2011 and which the Parliament is scheduled to vote on Monday. Even before the session began, legislators were apprehensive.
“There is much tension inside the Parliament,” said Iman al-Asadi, a Shiite lawmaker, shortly before the session was scheduled to start. “We worry that they will fight each other inside the room.”
Lawmakers who support the pact said they were worried in particular about the followers of the anti-American Shiite cleric Moktada al-Sadr, who make up a bloc of 32 legislators in the 275-member Parliament. While there are those in Parliament, like many Sunnis, who have objections to elements of the pact, the Sadrists reject any agreement with the Americans in principle.
In a departure from protocol, security guards were present in the room, both because of the tension and because several Iraqi government officials were in attendance to answer questions about the agreement. Hoshyar Zebari, the foreign affairs minister, said the guards were unarmed.
As soon as the session began, politicians in opposition to the pact stood up in the hall and volubly argued that the ratification process was unconstitutional, because a law governing the passage of international agreements has not been approved. Supporters say such a law is unnecessary, because Parliament had already ratified numerous agreements without one.
For the next two hours, the Parliament speaker, Mahmoud Mashhadani, lashed out at the objecters and refused their demands to change the Parliament agenda. He then invited Hassan al-Sneid, a Shiite lawmaker, to begin the second public reading of the agreement, a matter of parliamentary procedure.
As Mr. Sneid began reading, witnesses said, Sadrists and other opponents of the agreement continued to trade shouts with lawmakers who supported it. Then, Ahmed Masu’udi, a Sadrist lawmaker, approached the dais. Mr. Masu’udi said later in an interview that he was simply trying to reach Mr. Mashhadani to persuade him to stop the reading; several other witnesses said Mr. Masu’udi tried to attack Mr. Sneid. The security guards rushed toward Mr. Masu’udi, who said that they grabbed him and struggled to push him away. At that point, witnesses said, the hall was filled with shouting, lawmakers rushed toward the front and the session ended in chaos.
Legislators poured out of the hall and into the cafeteria. There, shouting and accusations continued among the lawmakers, quickly attracting a company of security guards, who surrounded the cafeteria and tried to keep away the journalists and other onlookers who had gathered.
The shouting ended shortly after when many of the legislators involved marched off to their offices. In the aftermath, members of Parliament, many visibly irritated, cast blame: on the Sadrists for causing the commotion, on the dominant Shiite parties for what they see as an attempt to jam the passage through too quickly, and on the Americans and the Iraqi government for what even some supporters of the pact consider an inappropriately secretive negotiating process.
There was uncertainty as to what would happen Thursday, when Parliament tries again for the second reading. Several blocs threatened to boycott Parliament until an investigation took place, while other lawmakers vowed that anyone who tried to disrupt the session would be forcibly removed. There was also uncertainty as to whether the agreement could be voted on before the middle of next week, when many legislators may go on a pilgrimage.
While the confrontation in Parliament was unfolding, demonstrations in favor of the pact were taking place around the country.
But the optimism among Shiite lawmakers earlier in the week had considerably dampened.
In Washington, the Bush administration sent Secretary of State Condoleezza Rice and Secretary of Defense Robert M. Gates to Capitol Hill to brief lawmakers on the agreement. They did so behind closed doors, and the administration has not released a copy of the agreement, which has been published in Iraqi newspapers. Officials have repeatedly declined to discuss its terms in detail.
The administration argues that the agreement with Iraq does not require Congressional approval, but prominent lawmakers have raised objections, particularly about the provisions giving the Iraqis legal jurisdiction over crimes by American soldiers in some circumstances and about Iraq’s demands to authorize military operations.
It was not clear that Congress was in a position to force any changes. The Pentagon’s spokesman, Geoff Morrell, said that American commanders were satisfied with the conditions set in the agreement, including deadlines for withdrawal and constraints on operations.
“I’m not going to get into this — the specifics of this — other than to say that how this agreement is implemented will be worked out between our commanders on the ground and the Iraqi leadership,” he said. “And both seem to be very confident that it provides the framework for them to continue to do all that still needs to be done.”
Atheer Kakan and Mohammed Hussein contributed reporting from Baghdad, and Steven Lee Myers from Washington.
Wednesday, November 19, 2008
Hazardous path out of crisis...Joergen Moeller.
This is from atimes.
This is an interesting article that both traces the origin of the global financial crisis and suggests steps towards getting out of it. If Moeller is correct a reduction in the standard of living in the US is a collateral consequence of policies that will solve the crisis. It is doubtful that Americans will be willing to put up with such policies which also result in lower GDP in the US compared with some other countries.
Moeller's suggestion that the dollar will depreciate shows no sign of happening. For the present the dollar is still a refuge in the storm and yields on Treasury Bills are high and are sought as a safe haven with little risk.
Moeller also is an avid free trader. Many countries may not prosper in a free trading system and in tough economic times protectionism is likely to be more attractive to many. There are signs of this even in the Obama rhetoric. Also, although Moeller rightly sees the growth of mergers in these crisis times, it is not clear that this is at all progressive. As he points out the new behemoths may not be competitive and will have enough political and economic clout to be able to act irresponsibly and effect government policies negatively.
Hazardous path out of crisis
By Joergen Oerstroem Moeller
The global financial crisis lands an acute challenge on the table for policymakers in Asia, as it is the only place in the world having room to maneuver for active economic policies and is in possession of the world's savings. For some time, the question was open as to whether deregulation and privatization - the policies of president Ronald Reagan and prime minister Margaret Thatcher - were permanently shifting the paradigm of the global economy, or were just another cyclical wave of political preferences. Now we know. It was a cycle. For the past 30 years the world has lived under the spell that the market gets its right. This was the basis for economic and financial policies first in the US, then Europe and after that most
other countries. Bastion after bastion of well-established and renowned enterprises, many of them public utilities, were transferred from public ownership (service to the population) to private ownership (where the priority is profit). The philosophy was that profit would ensure efficiency and that would guarantee the high-quality service the public looked for. The global financial crisis demonstrates that if left alone, the market tends to get it wrong - not right. When the assumption has been proved wrong, the policies cannot and will not be kept in place unchanged. More international regulation and control will certainly be included on government agendas. That does not necessarily mean that deregulation and privatization will be rolled back completely, but it does mean that more deregulation and privatization is unlikely to take place and that some of the privatized enterprises probably will be brought back under public ownership. It is noteworthy that US mortgage guarantors Fannie Mae and Freddy Mac have been nationalized - deprivatized, so to speak - and insurance giant AIG is in reality undergoing a similar process. Forced by circumstances, a US administration judged to be the least likely to nationalize and deprivatize has ordered two of the most spectacular and far-reaching nationalizations of financial institutions the world has seen. This lesson will not easily be forgotten. Second, a new wave of concentration of financial institutions is under way. The Bank of America
has bought Merrill Lynch and there will be other mergers and acquisitions. The days where genuine competition ruled between the mayor financial institutions are gone and will not come back. The world will be left with a few mastodons so powerful and in possession of enormous financial might that they soon will throw their weight around with regard to economics and politics. We witness the gradual phasing out of specialized financial institutions, crowded out by the mega institutions without healthy competition and where wrong decisions may cause havoc because of their size. Until recently we could hope that if a financial institution got it wrong, the other ones might have got it right - not so anymore. Out of this may not come a more robust system, but a more fragile one. Third, deregulation and privatization gave birth to investment funds. Many having enjoyed themselves during a spending spree buying public utilities one after another, they now may face a rough time. Many operated on the assumption that the valuation of the assets (bridges, toll roads, airports and so forth) would continue to rise, allowing them to expand by increasing borrowing using new loans to repay former loans. Now these assets are starting to fall in value, with the inevitable consequence that it won't be long before we read about such investment funds in difficulties. They excelled in complicated and opaque financial operations selling and buying among each other, sometimes between different subsidiaries inside the same mother company, and often publishing obscure annual reports. Their owners were sometimes pension funds, which did not want to undertake such risks under their own name. Fourth, it has so far primarily been the American and British financial systems that have been in the firing line, with some Japanese banks also exposed. We cannot be sure that the rest of Asia and the eurozone continue to be relatively unharmed. It seems, however, a reasonable fair assumption that, if they are drawn in, the repercussions will be smaller than for the US and the UK. One wonders what the consequence of that will be for the future global financial system. It is difficult to see the US regain its former position after having demonstrated such incompetence. For years, observers have amused themselves by pointing out that the eurozone was no match for London as a financial center. Perhaps perceptions will change. Perhaps investors will start to feel more at ease investing via more cautious, more conservative, and less sophisticated but also less risky financial institutions in the eurozone, and perhaps financial centers in Asia will start to emerge for real. Fifth, the world needs a financial system ready to take calculated risks; otherwise many investments will not be undertaken. The virtue of a good financial system is that it knows how to weigh pros and cons and gets it right most of the time. For the next years, the global financial system will tend to be cautious and the risk for the global economy is that it may be too cautious, always thinking of 2008 and fearing to repeat mistakes. Human nature indicates and history shows this kind of behavior. After a period of assuming unsustainable risks the world may move into a period with a financial system that is too risk-aversive. Many developing countries and newly industrialized countries will feel the pinch, and this may lead to lower global growth. The global authorities face a challenge to tell the financial system that even if it is understandable in view of the 2008 crisis that they prefer to avoid risks, continued global growth requires some risks and accordingly it should not be too cautious. The balance must be found. The world may end up with a financial system being extremely solid because it does not dare to lend, which is why it is there. A strange outcome to a crisis started by reckless lending. The present crisis is due to one single factor and nothing else: high and persistent imbalances in the US building up over decades and culminating in explosive growth of these during the past eight years. The US government's liabilities and long-term commitment stands at almost US$50 trillion - four times total annual production. The total federal debt is more than $10 trillion. Next year, the budget deficit will probably surpass $500 billion. The balance of payments has been in deficit for years. Total demand can surpass production for some years - as it has - but not indefinitely. The longer it lasts, the more painful the alignment will be. It has become a global crisis because the US was and still is the largest and most powerful economy, with one-quarter of global production. Consequently, a solution must be a global one defining the burden-sharing between the US and the rest of the world. Restoring balance for the US economy requires lower demand or increased production and/or a combination of both. Demand can be reined in by restrictive economic policies, but that will deepen the recession. Stimulating policies can be applied to combat recession through an upswing, but will aggravate the imbalances. The policy implication is that US fiscal and monetary policies cannot be applied effectively. Years of irresponsible policies have removed any room of maneuver. It is good to hear plans of expansionary economic policies, but where does the money come from? More borrowing, and if so from whom? Private households already dissaving, a business sector facing alarming falls in profit, a maimed financial sector? The rest of the world is already up to the hilt with Treasury bonds, it definitely does not want to accumulate more of these. That leaves us with two not very attractive policies: depreciation of the US dollar and/or protectionism. They can do at least some of the job by reducing real incomes, thus cutting total demand and enhancing competitiveness and thus stimulating production through exports. It looks fine, but it isn't. What the US gains the rest of the world loses. These policies redress US imbalances by shifting them to other countries. Only if other countries are willing to accept this will such policies work. And they can only be expected to do so if the US is ready to enter into some kind of arrangement ensuring that their burden is accompanied by a comparable effort by the US. Irrespective of which policies are set in motion, the result is a transfer of purchasing power from America to other countries and a lower real income for the US - a lower share of global gross domestic product (GDP). The US can scream or squirm or whatever it likes, this is going to happen. Here follows a sketch about how to manage adjustment and minimize the negative repercussions: First, the US undertakes to reduce oil consumption, in particular in the transport sector. For an incoming administration, the opportunity arises to introduce a new energy policy. The political question is whether the American people, having resisted such measures for years, are now finally ready. Second, a commitment by everybody to refrain from protectionist steps, thus guaranteeing continued free trade and international investment banning any attempts to solve one's own problems by shifting them to other countries. There is talk about relaunching the Doha-round, and that would be wonderful, but let us have both feet on the ground and not jump for the moon however desirable it looks. Third, policymakers announce guidelines for a US dollar depreciation, signaling that a falling US dollar is the preferred option and thus removing the risk that such a policy triggers speculation. Major economic powers must align domestic monetary policies in particular interest rate changes so as not to open windows for speculators to exploit any differences. Fourth, measures to stimulate domestic demand in countries having room to maneuver to do to uphold global demand. The recently announced Chinese stimulus package amounting to $586 billion and composed of three elements - loose monetary policy, tax reductions and investments - is a step in the right direction. Fifth, a US commitment to follow economic policies in conformity with guidelines normally laid down by the International Monetary Fund (IMF) for countries needing assistance to sort out economic imbalances. The interpretation is limits for deficits on the public budget and the balance of payments. Sixth, the top 10 or 20 global economic powers (not G-10, but the 10 countries with the largest share of global GDP) agree to coordinate economic policies to better synchronize the global business cycle. Seventh, a keen awareness of the risk to the global economy of countries that may not be able to weather the crisis sliding into political anarchy and economic chaos, thus joining the list of failed states. This is where the world really needs preemptive and preventive policies. The normal blueprint imposing restrictive economic policies will not do in these circumstances; something more imaginative is needed to keep the economy going. The IMF should step in, but the IMF does not possess money itself. It borrows from member countries to lend to other member countries. Only if creditors find it attractive or necessary will they place the necessary funds at the disposal of the IMF, and global leaders must create an atmosphere in which they are ready to do so. These seven steps look like a tall order, and other methods to rebalance the US economy without too much harm for the rest of the world may be available - but they are not easy to spot. Joergen Oerstroem Moeller is Visiting Senior Research Fellow, Institute of Southeast Asian Studies, Singapore and Adjunct Professor Singapore Management University & Copenhagen Business School. (Copyright 2008 Asia Times Online (Holdings) Ltd. All rights reserved.
This is an interesting article that both traces the origin of the global financial crisis and suggests steps towards getting out of it. If Moeller is correct a reduction in the standard of living in the US is a collateral consequence of policies that will solve the crisis. It is doubtful that Americans will be willing to put up with such policies which also result in lower GDP in the US compared with some other countries.
Moeller's suggestion that the dollar will depreciate shows no sign of happening. For the present the dollar is still a refuge in the storm and yields on Treasury Bills are high and are sought as a safe haven with little risk.
Moeller also is an avid free trader. Many countries may not prosper in a free trading system and in tough economic times protectionism is likely to be more attractive to many. There are signs of this even in the Obama rhetoric. Also, although Moeller rightly sees the growth of mergers in these crisis times, it is not clear that this is at all progressive. As he points out the new behemoths may not be competitive and will have enough political and economic clout to be able to act irresponsibly and effect government policies negatively.
Hazardous path out of crisis
By Joergen Oerstroem Moeller
The global financial crisis lands an acute challenge on the table for policymakers in Asia, as it is the only place in the world having room to maneuver for active economic policies and is in possession of the world's savings. For some time, the question was open as to whether deregulation and privatization - the policies of president Ronald Reagan and prime minister Margaret Thatcher - were permanently shifting the paradigm of the global economy, or were just another cyclical wave of political preferences. Now we know. It was a cycle. For the past 30 years the world has lived under the spell that the market gets its right. This was the basis for economic and financial policies first in the US, then Europe and after that most
other countries. Bastion after bastion of well-established and renowned enterprises, many of them public utilities, were transferred from public ownership (service to the population) to private ownership (where the priority is profit). The philosophy was that profit would ensure efficiency and that would guarantee the high-quality service the public looked for. The global financial crisis demonstrates that if left alone, the market tends to get it wrong - not right. When the assumption has been proved wrong, the policies cannot and will not be kept in place unchanged. More international regulation and control will certainly be included on government agendas. That does not necessarily mean that deregulation and privatization will be rolled back completely, but it does mean that more deregulation and privatization is unlikely to take place and that some of the privatized enterprises probably will be brought back under public ownership. It is noteworthy that US mortgage guarantors Fannie Mae and Freddy Mac have been nationalized - deprivatized, so to speak - and insurance giant AIG is in reality undergoing a similar process. Forced by circumstances, a US administration judged to be the least likely to nationalize and deprivatize has ordered two of the most spectacular and far-reaching nationalizations of financial institutions the world has seen. This lesson will not easily be forgotten. Second, a new wave of concentration of financial institutions is under way. The Bank of America
has bought Merrill Lynch and there will be other mergers and acquisitions. The days where genuine competition ruled between the mayor financial institutions are gone and will not come back. The world will be left with a few mastodons so powerful and in possession of enormous financial might that they soon will throw their weight around with regard to economics and politics. We witness the gradual phasing out of specialized financial institutions, crowded out by the mega institutions without healthy competition and where wrong decisions may cause havoc because of their size. Until recently we could hope that if a financial institution got it wrong, the other ones might have got it right - not so anymore. Out of this may not come a more robust system, but a more fragile one. Third, deregulation and privatization gave birth to investment funds. Many having enjoyed themselves during a spending spree buying public utilities one after another, they now may face a rough time. Many operated on the assumption that the valuation of the assets (bridges, toll roads, airports and so forth) would continue to rise, allowing them to expand by increasing borrowing using new loans to repay former loans. Now these assets are starting to fall in value, with the inevitable consequence that it won't be long before we read about such investment funds in difficulties. They excelled in complicated and opaque financial operations selling and buying among each other, sometimes between different subsidiaries inside the same mother company, and often publishing obscure annual reports. Their owners were sometimes pension funds, which did not want to undertake such risks under their own name. Fourth, it has so far primarily been the American and British financial systems that have been in the firing line, with some Japanese banks also exposed. We cannot be sure that the rest of Asia and the eurozone continue to be relatively unharmed. It seems, however, a reasonable fair assumption that, if they are drawn in, the repercussions will be smaller than for the US and the UK. One wonders what the consequence of that will be for the future global financial system. It is difficult to see the US regain its former position after having demonstrated such incompetence. For years, observers have amused themselves by pointing out that the eurozone was no match for London as a financial center. Perhaps perceptions will change. Perhaps investors will start to feel more at ease investing via more cautious, more conservative, and less sophisticated but also less risky financial institutions in the eurozone, and perhaps financial centers in Asia will start to emerge for real. Fifth, the world needs a financial system ready to take calculated risks; otherwise many investments will not be undertaken. The virtue of a good financial system is that it knows how to weigh pros and cons and gets it right most of the time. For the next years, the global financial system will tend to be cautious and the risk for the global economy is that it may be too cautious, always thinking of 2008 and fearing to repeat mistakes. Human nature indicates and history shows this kind of behavior. After a period of assuming unsustainable risks the world may move into a period with a financial system that is too risk-aversive. Many developing countries and newly industrialized countries will feel the pinch, and this may lead to lower global growth. The global authorities face a challenge to tell the financial system that even if it is understandable in view of the 2008 crisis that they prefer to avoid risks, continued global growth requires some risks and accordingly it should not be too cautious. The balance must be found. The world may end up with a financial system being extremely solid because it does not dare to lend, which is why it is there. A strange outcome to a crisis started by reckless lending. The present crisis is due to one single factor and nothing else: high and persistent imbalances in the US building up over decades and culminating in explosive growth of these during the past eight years. The US government's liabilities and long-term commitment stands at almost US$50 trillion - four times total annual production. The total federal debt is more than $10 trillion. Next year, the budget deficit will probably surpass $500 billion. The balance of payments has been in deficit for years. Total demand can surpass production for some years - as it has - but not indefinitely. The longer it lasts, the more painful the alignment will be. It has become a global crisis because the US was and still is the largest and most powerful economy, with one-quarter of global production. Consequently, a solution must be a global one defining the burden-sharing between the US and the rest of the world. Restoring balance for the US economy requires lower demand or increased production and/or a combination of both. Demand can be reined in by restrictive economic policies, but that will deepen the recession. Stimulating policies can be applied to combat recession through an upswing, but will aggravate the imbalances. The policy implication is that US fiscal and monetary policies cannot be applied effectively. Years of irresponsible policies have removed any room of maneuver. It is good to hear plans of expansionary economic policies, but where does the money come from? More borrowing, and if so from whom? Private households already dissaving, a business sector facing alarming falls in profit, a maimed financial sector? The rest of the world is already up to the hilt with Treasury bonds, it definitely does not want to accumulate more of these. That leaves us with two not very attractive policies: depreciation of the US dollar and/or protectionism. They can do at least some of the job by reducing real incomes, thus cutting total demand and enhancing competitiveness and thus stimulating production through exports. It looks fine, but it isn't. What the US gains the rest of the world loses. These policies redress US imbalances by shifting them to other countries. Only if other countries are willing to accept this will such policies work. And they can only be expected to do so if the US is ready to enter into some kind of arrangement ensuring that their burden is accompanied by a comparable effort by the US. Irrespective of which policies are set in motion, the result is a transfer of purchasing power from America to other countries and a lower real income for the US - a lower share of global gross domestic product (GDP). The US can scream or squirm or whatever it likes, this is going to happen. Here follows a sketch about how to manage adjustment and minimize the negative repercussions: First, the US undertakes to reduce oil consumption, in particular in the transport sector. For an incoming administration, the opportunity arises to introduce a new energy policy. The political question is whether the American people, having resisted such measures for years, are now finally ready. Second, a commitment by everybody to refrain from protectionist steps, thus guaranteeing continued free trade and international investment banning any attempts to solve one's own problems by shifting them to other countries. There is talk about relaunching the Doha-round, and that would be wonderful, but let us have both feet on the ground and not jump for the moon however desirable it looks. Third, policymakers announce guidelines for a US dollar depreciation, signaling that a falling US dollar is the preferred option and thus removing the risk that such a policy triggers speculation. Major economic powers must align domestic monetary policies in particular interest rate changes so as not to open windows for speculators to exploit any differences. Fourth, measures to stimulate domestic demand in countries having room to maneuver to do to uphold global demand. The recently announced Chinese stimulus package amounting to $586 billion and composed of three elements - loose monetary policy, tax reductions and investments - is a step in the right direction. Fifth, a US commitment to follow economic policies in conformity with guidelines normally laid down by the International Monetary Fund (IMF) for countries needing assistance to sort out economic imbalances. The interpretation is limits for deficits on the public budget and the balance of payments. Sixth, the top 10 or 20 global economic powers (not G-10, but the 10 countries with the largest share of global GDP) agree to coordinate economic policies to better synchronize the global business cycle. Seventh, a keen awareness of the risk to the global economy of countries that may not be able to weather the crisis sliding into political anarchy and economic chaos, thus joining the list of failed states. This is where the world really needs preemptive and preventive policies. The normal blueprint imposing restrictive economic policies will not do in these circumstances; something more imaginative is needed to keep the economy going. The IMF should step in, but the IMF does not possess money itself. It borrows from member countries to lend to other member countries. Only if creditors find it attractive or necessary will they place the necessary funds at the disposal of the IMF, and global leaders must create an atmosphere in which they are ready to do so. These seven steps look like a tall order, and other methods to rebalance the US economy without too much harm for the rest of the world may be available - but they are not easy to spot. Joergen Oerstroem Moeller is Visiting Senior Research Fellow, Institute of Southeast Asian Studies, Singapore and Adjunct Professor Singapore Management University & Copenhagen Business School. (Copyright 2008 Asia Times Online (Holdings) Ltd. All rights reserved.
Iraqi cleric repeats concerns on US-Iraq pact.
If Sistani were not such a holy man we would classify him as a waffling politician! It seems likely given that Iran seems to be giving at least tacit support to the agreement that it will pass through parliament. There will not be much time for discussion if the vote if to be on Nov. 24 , less than a week.
Iraqi cleric repeats concerns on US-Iraq pact
Top Iraqi cleric says US-Iraq security pact must win support of main political groups
HAMZA HENDAWIAP News
Nov 18, 2008 07:54 EST
Iraq's top Shiite cleric said Tuesday that the U.S.-Iraqi security pact would only be viable if the country's main political groups backed it and it restored the country's full sovereignty.
The comment by Grand Ayatollah Ali al-Sistani came as the 275-seat parliament prepared for a Nov. 24 vote on the pact, which would allow U.S. troops to stay in Iraq for three more years. If passed by the legislature, it would then require ratification by the president and his two deputies.
Al-Sistani has not publicly taken a clear position on the pact, but he has indicated that it could only work if it is passed by a comfortable majority in parliament.
His latest comments came in a statement issued by his office in the holy city of Najaf, south of Baghdad. It said they were made in response to a question by a follower on what it termed "claims in the media" that the cleric supported the pact. Al-Sistani does not speak to journalists or give media interviews, communicating his views through edicts or in answers to questions sent to him by followers.
The Iraqi Cabinet has overwhelmingly approved the pact, meaning prospects of it passing in parliament are good since Prime Minister Nouri al-Maliki's coalition partners dominate the legislature.
A senior official close to al-Sistani has said that the cleric, who can bury the agreement if he publicly speaks against it, told two al-Maliki emissaries Saturday that while not ideal, the document seemed to be the best possible option.
The official, who spoke on condition of anonymity because he was not authorized to publicize what took place in the meeting, said al-Sistani made clear to the two that it would be "unbecoming" for him to speak publicly in favor of the agreement because of his religious status.
Al-Sistani wields enormous influence among Iraq's majority Shiites and his nod to the agreement removed a potential hurdle in the way of the pact, which provides for the withdrawal of U.S. troops from Iraqi cities by June 30, 2009 and the entire country by Jan. 1, 2012.
The statement said al-Sistani wanted the agreement to secure the "restoration of full sovereignty and the realization of Iraq's stability and security." It also quoted him as saying that he wanted it to "win the support of all Iraqis and their main political groups."
He did not suggest that he wanted it passed unanimously, instead using the Arabic word for "accord," or support by a large and representative number of lawmakers.
"Any agreement that does not meet those two demands ... cannot be accepted," said al-Sistani, who called on lawmakers to "rise to their historic responsibility before God and the people."
The agreement places U.S. military operations and movement under stringent Iraqi control. It also gives the Iraqis limited judicial powers over American soldiers and defense contractors in the case of serious crimes committed off-base and off-duty. It prohibits the U.S. military from using Iraqi territory to launch attacks against Iraq's neighbors, including longtime American adversaries Iran and Syria.
Al-Sistani's comments did not constitute a change in the cleric's position on the agreement, but the timing and the tone of the statement suggested that he may have lingering concerns.
Parliament can only reject or pass the agreement, since the document was officially signed by the two nations and cannot be changed unless negotiations reopen, which is highly unlikely with less than six weeks left before the expiration of the U.N. mandate.
The main blocs in parliament — the Shiites, the Kurds and most of the Sunni Arabs — support the agreement and can easily muster a comfortable majority in the Nov. 24 vote, but any one of the three members of the presidential council led by President Jalal Talabani can veto it.
Source: AP News
Iraqi cleric repeats concerns on US-Iraq pact
Top Iraqi cleric says US-Iraq security pact must win support of main political groups
HAMZA HENDAWIAP News
Nov 18, 2008 07:54 EST
Iraq's top Shiite cleric said Tuesday that the U.S.-Iraqi security pact would only be viable if the country's main political groups backed it and it restored the country's full sovereignty.
The comment by Grand Ayatollah Ali al-Sistani came as the 275-seat parliament prepared for a Nov. 24 vote on the pact, which would allow U.S. troops to stay in Iraq for three more years. If passed by the legislature, it would then require ratification by the president and his two deputies.
Al-Sistani has not publicly taken a clear position on the pact, but he has indicated that it could only work if it is passed by a comfortable majority in parliament.
His latest comments came in a statement issued by his office in the holy city of Najaf, south of Baghdad. It said they were made in response to a question by a follower on what it termed "claims in the media" that the cleric supported the pact. Al-Sistani does not speak to journalists or give media interviews, communicating his views through edicts or in answers to questions sent to him by followers.
The Iraqi Cabinet has overwhelmingly approved the pact, meaning prospects of it passing in parliament are good since Prime Minister Nouri al-Maliki's coalition partners dominate the legislature.
A senior official close to al-Sistani has said that the cleric, who can bury the agreement if he publicly speaks against it, told two al-Maliki emissaries Saturday that while not ideal, the document seemed to be the best possible option.
The official, who spoke on condition of anonymity because he was not authorized to publicize what took place in the meeting, said al-Sistani made clear to the two that it would be "unbecoming" for him to speak publicly in favor of the agreement because of his religious status.
Al-Sistani wields enormous influence among Iraq's majority Shiites and his nod to the agreement removed a potential hurdle in the way of the pact, which provides for the withdrawal of U.S. troops from Iraqi cities by June 30, 2009 and the entire country by Jan. 1, 2012.
The statement said al-Sistani wanted the agreement to secure the "restoration of full sovereignty and the realization of Iraq's stability and security." It also quoted him as saying that he wanted it to "win the support of all Iraqis and their main political groups."
He did not suggest that he wanted it passed unanimously, instead using the Arabic word for "accord," or support by a large and representative number of lawmakers.
"Any agreement that does not meet those two demands ... cannot be accepted," said al-Sistani, who called on lawmakers to "rise to their historic responsibility before God and the people."
The agreement places U.S. military operations and movement under stringent Iraqi control. It also gives the Iraqis limited judicial powers over American soldiers and defense contractors in the case of serious crimes committed off-base and off-duty. It prohibits the U.S. military from using Iraqi territory to launch attacks against Iraq's neighbors, including longtime American adversaries Iran and Syria.
Al-Sistani's comments did not constitute a change in the cleric's position on the agreement, but the timing and the tone of the statement suggested that he may have lingering concerns.
Parliament can only reject or pass the agreement, since the document was officially signed by the two nations and cannot be changed unless negotiations reopen, which is highly unlikely with less than six weeks left before the expiration of the U.N. mandate.
The main blocs in parliament — the Shiites, the Kurds and most of the Sunni Arabs — support the agreement and can easily muster a comfortable majority in the Nov. 24 vote, but any one of the three members of the presidential council led by President Jalal Talabani can veto it.
Source: AP News
Tuesday, November 18, 2008
US road to recovery runs through Beijing..
This is a weird but interesting article. I am not sure that the US would be happy to sell off Citibank to China! But who knows! Maybe it would be a good way to get rid of what looks to be another lemon.
The authors seem to think that the economy can't be saved by stimulating demand in the US but it is not clear what the result of capital outlows to China would mean for US homeowners who are losing their homes or how that would produce an upswing in jobs in the US. If the present US bailout program will fail to boost the US economy it is not clear at all outflows of capital to China would help. It might help US investors however. Maybe that is the point.
This is from atimes.
US's road to recovery runs through Beijing
By Francesco Sisci and David P Goldman
English author G K Chesterton rhymed about "the night we went to Bannockburn by way of Brighton Pier", and it may seem no less whimsical to argue that the United States' road to recovery, as well as Barack Obama's path to presidential greatness, run through China. In the rush to prop up America's financial institutions, foreign economic policy seems remote from Washington's agenda. America wants to revive the mortgage market and consumer spending. The effort is doomed to failure. For a quarter of a century the American consumer has been the locomotive of the world economy, and now the locomotive has derailed and taken
the rest of the world economy with it. Recovery requires a great change in direction of capital flows. For the past decade, poor people in the developing world have financed the consumption of rich people in America. America has borrowed nearly $1 trillion a year, mostly from the developing world, and used these funds to import consumer goods and buy homes at low interest rates. The result is a solvency crisis of the American household, which shows up as a solvency crisis for financial institutions. If we reckon the retirement needs of households as a liability, the household sector is as good as bankrupt. No recovery is possible unless American households can save, and they cannot save in an economic contraction when incomes spiral downwards. To save, Americans must sell goods and services to someone else, and a glance at the globe makes clear who that must be: nearly half the world's population, and most of the world's capacity for economic growth, is concentrated in China and the Pacific Littoral. China's economic problem is the inverse of America's: China has achieved fast rates of growth at the expense of huge disparities between the prosperous coast and the backward interior, as well as excessive dependence on foreign markets. China's policy response to the economic crisis is far more radical than Washington's. Rather than attempting to patch up the situation and restore the status quo ante, China plans to spend nearly a fifth of its gross domestic product on an internal stimulus focused on infrastructure in its interior. Severe execution risk attends the Chinese proposal, and markets remain to be convinced. China can reduce the execution risk of its great economic shift towards home consumption, and America can solve its savings problem, through a grand partnership. This partnership need not be exclusive to America and China, but it must be founded on America and China, two of the world's largest economies. India and the other Asian economies should be encouraged to join this partnership. A great deal has been written about prospective conflict between China and the United States, but very little explanation is offered as to what issues might arise between China and the United States. China and America have far more to gain from cooperation than from conflict. America's objection to Chinese foreign policy center on China's pursuit of commercial interest with countries (Iran, Sudan) whose behavior America considers unacceptable. America stands to gain an ally in questions of rogue-state behavior, terrorism, nuclear proliferation and other matters of national interest, in return for helping China achieve its legitimate goals. The goals of the partnership should be to:
Support China's internal development by re-orienting export flows towards China and other emerging economies from the United States and other industrial countries.
Transfer technologies and other expertise to the emerging economies.
Make the emerging economies partners in the recovery of American asset prices. Fear and risk-aversion rather than trust and optimism conditioned the two-way capital flow between emerging markets and the United States during the past 10 years. After the 1997 Asia financial crisis, and the 1998 Russian bankruptcy
, investors in emerging markets lent their savings to the American government or its quasi-governmental agencies to diversify their portfolios into safe assets, while Westerners invested in local emerging market currencies for higher returns. As one of the authors reported recently at this site (See Who will finance America’s deficit? David P Goldman, Asia Times Online, November 13, 2008), global financing of the US government deficit drew on leverage in emerging markets. De-leveraging of the world financial system sharply curtails the availability of overseas financing for the Treasury deficit. America's economy model is broken. The tape cannot be run in reverse: America can't rescue an economy based on rising consumer debt and zero savings. America must become a technology exporter. Throwing more money into consumer stimulus, bailouts for the automobile sector, and so forth will fail miserably. America should recognize that the deformation of its economy is the inverse of the deformation of the Chinese economy (as well as other emerging economies), and that their common problem has a common cure. The trouble in the world economy has been that a rich Chinese won't lend money to a poor Chinese, unless the poor Chinese first moves to America. China bought American mortgages, including poor-quality assets dressed up as high-quality assets, because China does not have the financial, legal and administrative capacity as well as the trust to write sufficient mortgage business at home. China's efforts to spend a fifth of its GDP on infrastructure face enormous problems of governance. In the United States, voters most approve most public spending at the local level, and the federal system provides checks and balances against abuse of public funds. Emerging economies must rely on the probity of a small number of officials with enormous power, a far less effective check against corruption. China can use America's help in shifting its economy towards the internal market. Ironically, American officials have been trying to persuade China to import the American financial model for years, and the collapse of the American model has made the prospect less attractive. But it is a very good moment for China to bring in American banks, and start up a consumer lending market. The failures of the American consumer market do not wipe out a century of banking experience in evaluating and securitizing consumer loans. To help import the American model, China should be given the opportunity to purchase major American institutions in return. Citicorp, for example, could be bought today for about $50 billion or Capital One for $13 billion. America remains the most technologically advanced economy in the world. China needs American high technology. In many instances, America restricts the sale of technology to China due to security concerns. The United States should offer China a general reduction in restrictions on imports of American technology and acquisition of American companies, in return for a treaty linking Chinese and American security interests. The treaty would include:
A system of royalties for technology transfers and guarantees against pirating.
Freedom for Chinese companies to acquire American companies, including financial institutions.
Agreement on a common stance towards rogue states, nuclear arms proliferation, terrorism and other issues of mutual concern, covering such issues as Pakistan, Sudan, Iran and other areas of past diplomatic conflict.
An agreement on strategic arms deployment in Asia.
A roadmap for China's democratization.
Environmental and energy-efficiency goals.
Stabilization of China’s yuan against the dollar to support free capital flows between the US and China. There are close to 2 billion people in China and the countries in its immediate periphery, and a further 1.1 billion people in India. Half the world's population lives in emerging Asia, and its productivity could triple in a generation. Out of the present crisis, the world might enjoy one of the longest and fastest economic booms in history - or it might remain in an economic mire for a decade. The incoming American administration might be remembered as one of the worst, or one of the best, in American history. David P Goldman was global head of fixed-income research for Banc of America Securities and global head of credit strategy at Credit Suisse.
The authors seem to think that the economy can't be saved by stimulating demand in the US but it is not clear what the result of capital outlows to China would mean for US homeowners who are losing their homes or how that would produce an upswing in jobs in the US. If the present US bailout program will fail to boost the US economy it is not clear at all outflows of capital to China would help. It might help US investors however. Maybe that is the point.
This is from atimes.
US's road to recovery runs through Beijing
By Francesco Sisci and David P Goldman
English author G K Chesterton rhymed about "the night we went to Bannockburn by way of Brighton Pier", and it may seem no less whimsical to argue that the United States' road to recovery, as well as Barack Obama's path to presidential greatness, run through China. In the rush to prop up America's financial institutions, foreign economic policy seems remote from Washington's agenda. America wants to revive the mortgage market and consumer spending. The effort is doomed to failure. For a quarter of a century the American consumer has been the locomotive of the world economy, and now the locomotive has derailed and taken
the rest of the world economy with it. Recovery requires a great change in direction of capital flows. For the past decade, poor people in the developing world have financed the consumption of rich people in America. America has borrowed nearly $1 trillion a year, mostly from the developing world, and used these funds to import consumer goods and buy homes at low interest rates. The result is a solvency crisis of the American household, which shows up as a solvency crisis for financial institutions. If we reckon the retirement needs of households as a liability, the household sector is as good as bankrupt. No recovery is possible unless American households can save, and they cannot save in an economic contraction when incomes spiral downwards. To save, Americans must sell goods and services to someone else, and a glance at the globe makes clear who that must be: nearly half the world's population, and most of the world's capacity for economic growth, is concentrated in China and the Pacific Littoral. China's economic problem is the inverse of America's: China has achieved fast rates of growth at the expense of huge disparities between the prosperous coast and the backward interior, as well as excessive dependence on foreign markets. China's policy response to the economic crisis is far more radical than Washington's. Rather than attempting to patch up the situation and restore the status quo ante, China plans to spend nearly a fifth of its gross domestic product on an internal stimulus focused on infrastructure in its interior. Severe execution risk attends the Chinese proposal, and markets remain to be convinced. China can reduce the execution risk of its great economic shift towards home consumption, and America can solve its savings problem, through a grand partnership. This partnership need not be exclusive to America and China, but it must be founded on America and China, two of the world's largest economies. India and the other Asian economies should be encouraged to join this partnership. A great deal has been written about prospective conflict between China and the United States, but very little explanation is offered as to what issues might arise between China and the United States. China and America have far more to gain from cooperation than from conflict. America's objection to Chinese foreign policy center on China's pursuit of commercial interest with countries (Iran, Sudan) whose behavior America considers unacceptable. America stands to gain an ally in questions of rogue-state behavior, terrorism, nuclear proliferation and other matters of national interest, in return for helping China achieve its legitimate goals. The goals of the partnership should be to:
Support China's internal development by re-orienting export flows towards China and other emerging economies from the United States and other industrial countries.
Transfer technologies and other expertise to the emerging economies.
Make the emerging economies partners in the recovery of American asset prices. Fear and risk-aversion rather than trust and optimism conditioned the two-way capital flow between emerging markets and the United States during the past 10 years. After the 1997 Asia financial crisis, and the 1998 Russian bankruptcy
, investors in emerging markets lent their savings to the American government or its quasi-governmental agencies to diversify their portfolios into safe assets, while Westerners invested in local emerging market currencies for higher returns. As one of the authors reported recently at this site (See Who will finance America’s deficit? David P Goldman, Asia Times Online, November 13, 2008), global financing of the US government deficit drew on leverage in emerging markets. De-leveraging of the world financial system sharply curtails the availability of overseas financing for the Treasury deficit. America's economy model is broken. The tape cannot be run in reverse: America can't rescue an economy based on rising consumer debt and zero savings. America must become a technology exporter. Throwing more money into consumer stimulus, bailouts for the automobile sector, and so forth will fail miserably. America should recognize that the deformation of its economy is the inverse of the deformation of the Chinese economy (as well as other emerging economies), and that their common problem has a common cure. The trouble in the world economy has been that a rich Chinese won't lend money to a poor Chinese, unless the poor Chinese first moves to America. China bought American mortgages, including poor-quality assets dressed up as high-quality assets, because China does not have the financial, legal and administrative capacity as well as the trust to write sufficient mortgage business at home. China's efforts to spend a fifth of its GDP on infrastructure face enormous problems of governance. In the United States, voters most approve most public spending at the local level, and the federal system provides checks and balances against abuse of public funds. Emerging economies must rely on the probity of a small number of officials with enormous power, a far less effective check against corruption. China can use America's help in shifting its economy towards the internal market. Ironically, American officials have been trying to persuade China to import the American financial model for years, and the collapse of the American model has made the prospect less attractive. But it is a very good moment for China to bring in American banks, and start up a consumer lending market. The failures of the American consumer market do not wipe out a century of banking experience in evaluating and securitizing consumer loans. To help import the American model, China should be given the opportunity to purchase major American institutions in return. Citicorp, for example, could be bought today for about $50 billion or Capital One for $13 billion. America remains the most technologically advanced economy in the world. China needs American high technology. In many instances, America restricts the sale of technology to China due to security concerns. The United States should offer China a general reduction in restrictions on imports of American technology and acquisition of American companies, in return for a treaty linking Chinese and American security interests. The treaty would include:
A system of royalties for technology transfers and guarantees against pirating.
Freedom for Chinese companies to acquire American companies, including financial institutions.
Agreement on a common stance towards rogue states, nuclear arms proliferation, terrorism and other issues of mutual concern, covering such issues as Pakistan, Sudan, Iran and other areas of past diplomatic conflict.
An agreement on strategic arms deployment in Asia.
A roadmap for China's democratization.
Environmental and energy-efficiency goals.
Stabilization of China’s yuan against the dollar to support free capital flows between the US and China. There are close to 2 billion people in China and the countries in its immediate periphery, and a further 1.1 billion people in India. Half the world's population lives in emerging Asia, and its productivity could triple in a generation. Out of the present crisis, the world might enjoy one of the longest and fastest economic booms in history - or it might remain in an economic mire for a decade. The incoming American administration might be remembered as one of the worst, or one of the best, in American history. David P Goldman was global head of fixed-income research for Banc of America Securities and global head of credit strategy at Credit Suisse.
Afghan article says US bin Ladin hunt phoney.
This is from Juan Cole's blog. Personally I think that bin Ladin probably died years ago. He had serious health problems that included the need for regular dialysis. It is not clear how he would get that while on the run and in remote areas.
Afghan article says US Bin-Ladin hunt phoney
The USG Open Source Center translates an article from the Persian Afghan press alleging that French troops were at one point close to capturing Usamah Bin Ladin in Afghanistan, but that American forces stopped them from doing so. It says that a forthcoming French documentary containing interviews with the French soldiers provides proof for the allegation. The argument is that the Bush administration needed Bin Ladin to be at large in order to justify its military expansionism.Afghan article says US Bin-Ladin hunt phoneyHasht-e-SobhFriday, October 3, 2008 Document Type: OSC Translated TextAfghan article says US Bin-Ladin hunt phoneyText of article, "Bin-Ladin on the run? The rumour which was fact", by Afghan independent secular daily newspaper Hasht-e Sobh on 29 SeptemberSo, the rumour was right: French soldiers trapped Usamah Bin-Ladin, but were not allowed by the Americans to arrest the apparent fugitive leader of Al-Qa`idah. A Bin-Ladin documentary just released by French documentary cinema examines this issue, an issue which has led to heated debate in the French media.This French documentary shows how the Americans are interested in continuing the game, a bloody and expensive game whose victims are only the unprotected and local people of our dry and dusty country. It was last year that rumours spread about this report in Kabul, but it has not been taken seriously by the media. But watching this revealing French documentary changes the rumours into disturbing facts. "Bin Laden, the failings of a manhunt", produced by Emmanuel Razavi and Eric de Lavarene, two French filmmakers and reporters, assesses and confirms the claims of French soldiers that they could have killed Usamah within two operations, but the American forces prevented them. This film has not been broadcast publicly yet and is to be broadcast by Planet, a French network.Even though French soldiers have insisted on this in the battlefield many times, the Elysees Palace in Paris and the White House in America have rejected this, and the Afghan leadership does not have any information about it yet!The main question that arises is the extent to which the "Bin Laden on the run" project is a problem for America and Afghanistan. Seven years of suicide bombing and explosions, blood and violence, unmanned fighter planes, and old vehicles full of explosives, all to catch a long-bearded Arab whom America apparently hates? And an Arab who worked for the CIA in the name of Allah, and who now, also in the name of that same Allah, has conducted a jihad against that same CIA?Facing the facts in this Usamah film is a bitter and disturbing experience and will make you nervous and wish that what it is that you are watching is just a baseless rumour, or a figment of Hollywood's imagination. But it is not. The pictures are real and you are facing a debate in documentary form. The only justification for the bloody presence of America in Afghanistan is the ambiguous existence of Usamah Bin-Ladin and the Al-Qa'idah terrorist network.George Bush, with his "war on terror" project, has transformed the middle east and Afghanistan into an inflamed bomb ready to explode, but has not found out anything about his beloved lost Usamah Bin-Ladin so far.What is seen, and the film also emphases this, is that all these slogans, this fighting and killing are a game, a painful and prolonged game whose end even the players do not know and which is running out of control. Apparently, it is a game of cat and mouse, just like "Tom and Jerry", the famous cartoon. But it is a reality that the stubborn one from Texas does not want to catch the mouse - unlike credulous Tom - and that the long-bearded Wahhabi Arab does not want to hide - unlike the intelligent and roaming Jerry. Their prolonged game has made not only the audiences tired but has also transformed the playground into a big pool of blood.There have always been questions that neither the politicians have been willing to answer, nor the independent western media to raise. If Usamah is not the lost one of the Americans, then who is? What are the Americans searching for in Afghanistan and who are they looking for? The main media in the West remained silent before the report of the Usamah Bin-Ladin arrest by French soldiers. And, through a news boycott, they reduced a certain fact to a rumour.Certainly, they will do the same before this film, too. But instead they will try to complicate the scenario. More painful than anything else is the political fair in Kabul, a poor fair where everyone offers his despicable commodity - a combination of generous western customers and thankful sellers of the country. Everyone knows the fact, like "an obvious secret", but no one wants to irritate the delicate minds of their nervous guests, guests who will be staying at home until the new year.Politicians try to forget such news in Kabul, and this is the advice they give to the people. Forgetting and ignoring such facts is possible, but how can we forget and ignore the bombs exploding next to our houses every day?Bombs which sometimes rise from the ground and sometimes descend from the air.(Description of Source: Kabul Hasht-e-Sobh in Dari Kabul Hasht-e Sobh in Dari - Eight-page secular daily launched in May 2007; editor-in-chief, Qasim Akhgar, is a political analyst and Head of the Association for the Freedom of Speech. )
posted by Juan Cole @
Afghan article says US Bin-Ladin hunt phoney
The USG Open Source Center translates an article from the Persian Afghan press alleging that French troops were at one point close to capturing Usamah Bin Ladin in Afghanistan, but that American forces stopped them from doing so. It says that a forthcoming French documentary containing interviews with the French soldiers provides proof for the allegation. The argument is that the Bush administration needed Bin Ladin to be at large in order to justify its military expansionism.Afghan article says US Bin-Ladin hunt phoneyHasht-e-SobhFriday, October 3, 2008 Document Type: OSC Translated TextAfghan article says US Bin-Ladin hunt phoneyText of article, "Bin-Ladin on the run? The rumour which was fact", by Afghan independent secular daily newspaper Hasht-e Sobh on 29 SeptemberSo, the rumour was right: French soldiers trapped Usamah Bin-Ladin, but were not allowed by the Americans to arrest the apparent fugitive leader of Al-Qa`idah. A Bin-Ladin documentary just released by French documentary cinema examines this issue, an issue which has led to heated debate in the French media.This French documentary shows how the Americans are interested in continuing the game, a bloody and expensive game whose victims are only the unprotected and local people of our dry and dusty country. It was last year that rumours spread about this report in Kabul, but it has not been taken seriously by the media. But watching this revealing French documentary changes the rumours into disturbing facts. "Bin Laden, the failings of a manhunt", produced by Emmanuel Razavi and Eric de Lavarene, two French filmmakers and reporters, assesses and confirms the claims of French soldiers that they could have killed Usamah within two operations, but the American forces prevented them. This film has not been broadcast publicly yet and is to be broadcast by Planet, a French network.Even though French soldiers have insisted on this in the battlefield many times, the Elysees Palace in Paris and the White House in America have rejected this, and the Afghan leadership does not have any information about it yet!The main question that arises is the extent to which the "Bin Laden on the run" project is a problem for America and Afghanistan. Seven years of suicide bombing and explosions, blood and violence, unmanned fighter planes, and old vehicles full of explosives, all to catch a long-bearded Arab whom America apparently hates? And an Arab who worked for the CIA in the name of Allah, and who now, also in the name of that same Allah, has conducted a jihad against that same CIA?Facing the facts in this Usamah film is a bitter and disturbing experience and will make you nervous and wish that what it is that you are watching is just a baseless rumour, or a figment of Hollywood's imagination. But it is not. The pictures are real and you are facing a debate in documentary form. The only justification for the bloody presence of America in Afghanistan is the ambiguous existence of Usamah Bin-Ladin and the Al-Qa'idah terrorist network.George Bush, with his "war on terror" project, has transformed the middle east and Afghanistan into an inflamed bomb ready to explode, but has not found out anything about his beloved lost Usamah Bin-Ladin so far.What is seen, and the film also emphases this, is that all these slogans, this fighting and killing are a game, a painful and prolonged game whose end even the players do not know and which is running out of control. Apparently, it is a game of cat and mouse, just like "Tom and Jerry", the famous cartoon. But it is a reality that the stubborn one from Texas does not want to catch the mouse - unlike credulous Tom - and that the long-bearded Wahhabi Arab does not want to hide - unlike the intelligent and roaming Jerry. Their prolonged game has made not only the audiences tired but has also transformed the playground into a big pool of blood.There have always been questions that neither the politicians have been willing to answer, nor the independent western media to raise. If Usamah is not the lost one of the Americans, then who is? What are the Americans searching for in Afghanistan and who are they looking for? The main media in the West remained silent before the report of the Usamah Bin-Ladin arrest by French soldiers. And, through a news boycott, they reduced a certain fact to a rumour.Certainly, they will do the same before this film, too. But instead they will try to complicate the scenario. More painful than anything else is the political fair in Kabul, a poor fair where everyone offers his despicable commodity - a combination of generous western customers and thankful sellers of the country. Everyone knows the fact, like "an obvious secret", but no one wants to irritate the delicate minds of their nervous guests, guests who will be staying at home until the new year.Politicians try to forget such news in Kabul, and this is the advice they give to the people. Forgetting and ignoring such facts is possible, but how can we forget and ignore the bombs exploding next to our houses every day?Bombs which sometimes rise from the ground and sometimes descend from the air.(Description of Source: Kabul Hasht-e-Sobh in Dari Kabul Hasht-e Sobh in Dari - Eight-page secular daily launched in May 2007; editor-in-chief, Qasim Akhgar, is a political analyst and Head of the Association for the Freedom of Speech. )
posted by Juan Cole @
Iran supports US SOFA agreement.
This turn around will probably ensure that the SOFA will pass the Iraqi parliament although it certainly does not guarantee it. It seems that Iran is optimistic that they can have a positive dialogue with Obama. However, given the Iranian and US positions on Iranian nuclear development this may be a temporary thaw.
Tuesday, November 18, 2008
Iran's Sudden Support for Iraq-US Security Pact
Omid Memarian explains Iran's turnaround on the Iraqi-US security agreement, which it was rejecting only last month:
'Obama's victory disarms leaders such as Ahmadinejad, who for decades have used inefficient American foreign policies as excuses to justify their own failures, mismanagement and corruption. Earlier this year, Ahmadinejad said that the "U.S. (political) establishment will not let Obama win the presidential election." This was believed because in none of the Muslim countries, including Iran, does a man of a minority ethnicity like Obama have even a slim chance of getting a position in a high office. But American democracy allow this.' McClatchy has more: "Reports from Iran's state news agency called an Iraqi Cabinet vote that advanced the security compact a "victory for the ruling party and its Kurdish partners," referring to the Shiite lawmakers who supported the agreement." Me, I agree with Memarian that the turning point was the election Obama. The Iranians would never have trusted McCain enough to hope for any good outcome from a security pact. But I think they are convinced that Obama really does want US troops out of Iraq, and that he wants to talk to Iran.The Iranians haven't changed their minds about the goal,of getting US troops out of Iraq,but they can now afford to be a little patient.
posted by Juan Cole @
Tuesday, November 18, 2008
Iran's Sudden Support for Iraq-US Security Pact
Omid Memarian explains Iran's turnaround on the Iraqi-US security agreement, which it was rejecting only last month:
'Obama's victory disarms leaders such as Ahmadinejad, who for decades have used inefficient American foreign policies as excuses to justify their own failures, mismanagement and corruption. Earlier this year, Ahmadinejad said that the "U.S. (political) establishment will not let Obama win the presidential election." This was believed because in none of the Muslim countries, including Iran, does a man of a minority ethnicity like Obama have even a slim chance of getting a position in a high office. But American democracy allow this.' McClatchy has more: "Reports from Iran's state news agency called an Iraqi Cabinet vote that advanced the security compact a "victory for the ruling party and its Kurdish partners," referring to the Shiite lawmakers who supported the agreement." Me, I agree with Memarian that the turning point was the election Obama. The Iranians would never have trusted McCain enough to hope for any good outcome from a security pact. But I think they are convinced that Obama really does want US troops out of Iraq, and that he wants to talk to Iran.The Iranians haven't changed their minds about the goal,of getting US troops out of Iraq,but they can now afford to be a little patient.
posted by Juan Cole @
Maoist rebels ask Philippines to stop offensive.
This is from Reuters.
As long as the NPA and Communist Party of the Philippines remains on terror lists it may be difficult for negotiations to take place. They have been stalled for years. There seems no sign that the rebels are being stamped out. If the economy in the countryside deteriorates further they stand to gain even more territory and influence. They are in effect a parallel govt. and justice system in many areas and have influence over a much wider area.
There are legal front organisations as well that have members in the government. My wife owns property in an NPA influenced area. It does not improve property values!!
Maoist rebels ask Philippines to stop offensive
Mon Nov 17, 2008 2:03pm IST
MANILA (Reuters) - Communist guerrillas in the Philippines demanded on Monday that the military halts an offensive in a mining area in the south in exchange for talks on freeing a captured lieutenant, but the army rejected the call.
"The safe and orderly release of Lieutenant Vicente Camayo can only be achieved through negotiations and on condition that the military operations in the area are stopped," the Communist Party of the Philippines (CPP) said in a statement.
Camayo, commander of a special forces company, was captured after communist New People's Army (NPA) guerrillas attacked an army base near Monkayo, a mining town on the southern island of Mindanao on Nov. 7.
The rebels said the army should "cease military operations in Monkayo" because it would endanger the lieutenant's life and deter negotiations for his possible release. They also assured his family that the soldier was getting humane treatment.
"We will never negotiate with terrorists," Lieutenant-Colonel Ernesto Torres, an army spokesman, told reporters, adding troops in the area were ordered to continue efforts to free the captive army officer.
Torres said the rebels were using the captive officer as a propaganda tool as well as a bargaining chip to force Manila to resume peace talks with the communist National Democratic Front in Norway. Talks have been stalled since August 2005.
The rebels refused to return to peace negotiations unless the Philippines helped remove the communist movement and its leader, Jose Maria Sison, from terrorist blacklists in the United States, several Western European states and Australia.
The communist conflict, which started in the late 1960s, has killed more than 40,000 people and scared off investors from the resource-rich Philippines.
The 5,000-member NPA targets mines, plantations, timber, construction and telephone companies to raise funds and disrupt the economy.
Over the last nine months, fighting between the government and the NPA rebels has been escalating in the Compostela Valley, a mining province on Mindanao, where Monkayo is located.
The area has become a centre of communist rebel activities due to the huge amount of money generated from extortion, said Torres, adding violence has been on the rise in the area where mainly small miners operate.
© Thomson Reuters 2008. All rights reserved. Users may download and print extracts of content from this website for their own personal and non-commercial use only. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world.
As long as the NPA and Communist Party of the Philippines remains on terror lists it may be difficult for negotiations to take place. They have been stalled for years. There seems no sign that the rebels are being stamped out. If the economy in the countryside deteriorates further they stand to gain even more territory and influence. They are in effect a parallel govt. and justice system in many areas and have influence over a much wider area.
There are legal front organisations as well that have members in the government. My wife owns property in an NPA influenced area. It does not improve property values!!
Maoist rebels ask Philippines to stop offensive
Mon Nov 17, 2008 2:03pm IST
MANILA (Reuters) - Communist guerrillas in the Philippines demanded on Monday that the military halts an offensive in a mining area in the south in exchange for talks on freeing a captured lieutenant, but the army rejected the call.
"The safe and orderly release of Lieutenant Vicente Camayo can only be achieved through negotiations and on condition that the military operations in the area are stopped," the Communist Party of the Philippines (CPP) said in a statement.
Camayo, commander of a special forces company, was captured after communist New People's Army (NPA) guerrillas attacked an army base near Monkayo, a mining town on the southern island of Mindanao on Nov. 7.
The rebels said the army should "cease military operations in Monkayo" because it would endanger the lieutenant's life and deter negotiations for his possible release. They also assured his family that the soldier was getting humane treatment.
"We will never negotiate with terrorists," Lieutenant-Colonel Ernesto Torres, an army spokesman, told reporters, adding troops in the area were ordered to continue efforts to free the captive army officer.
Torres said the rebels were using the captive officer as a propaganda tool as well as a bargaining chip to force Manila to resume peace talks with the communist National Democratic Front in Norway. Talks have been stalled since August 2005.
The rebels refused to return to peace negotiations unless the Philippines helped remove the communist movement and its leader, Jose Maria Sison, from terrorist blacklists in the United States, several Western European states and Australia.
The communist conflict, which started in the late 1960s, has killed more than 40,000 people and scared off investors from the resource-rich Philippines.
The 5,000-member NPA targets mines, plantations, timber, construction and telephone companies to raise funds and disrupt the economy.
Over the last nine months, fighting between the government and the NPA rebels has been escalating in the Compostela Valley, a mining province on Mindanao, where Monkayo is located.
The area has become a centre of communist rebel activities due to the huge amount of money generated from extortion, said Torres, adding violence has been on the rise in the area where mainly small miners operate.
© Thomson Reuters 2008. All rights reserved. Users may download and print extracts of content from this website for their own personal and non-commercial use only. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world.
Obama calls Georgian Leader Saakashvili
This is from Reuters.
Eat your heart out Arroyo (Philippines) . Obama did not bother to call Medvedev, instead Medvedev called him. This may or may not be a bad sign as far as relations with Russia are concerned. It seems that some European countries are not too eager for Georgia to join NATO. Perhaps Obama might take a little less hostile stance to Russia but we will see. Obama has doubts about the missile defence system as well it seems. )Obama has not bothered to call India either.
Obama calls Georgian leader Saakashvili
Tue Nov 18, 2008 3:49pm IST
TBILISI (Reuters) - U.S. President-elect Barack Obama has called Georgian President Mikheil Saakashvili to assure Moscow's outspoken foe of Washington's continued support, the Georgian leader's press service said on Tuesday.
Russia's chilly ties with the West cooled further after its war with Georgia in August, when Russian troops launched a massive counter-attack in support of rebels following Tbilisi's attempt to retake one of its breakaway regions by force.
The United States has led harsh Western criticism over Russia's speedy recognition of Georgia's breakaway regions of South Ossetia and Abkhazia and what it sees as Moscow's disproportionate use of force during the five-day war.
Democrat Obama, who defeated Republican presidential hopeful John McCain in a Nov. 4 election, called the Georgian leader on Monday, a spokesman for Saakashvili said.
"The conversation was friendly and touched upon future relations between Georgia and the U.S.," Saakashvili's press service said in a statement posted on the presidential Web site www.president.gov.ge.
"Obama underlined that he supports Georgia's territorial integrity and paid attention to the importance of continuing reforms in Georgia," it said. "Obama expressed the hope that the two leaders would meet in the near future."
Tbilisi's U.N. envoy said on Monday he expected Obama as a new U.S. leader would maintain strong U.S. support for Georgia's NATO ambitions.
Outgoing President George W. Bush had pushed for swift acceptance of Georgia and Ukraine into NATO, a position that failed to win unanimous support among European NATO members and strained ties with Russia long before its war with Georgia.
With the Bush administration's influence wavering, U.S. and European officials have said Washington is now studying whether NATO could give Georgia something short of a formal path to membership to satisfy European opposition to offering Tbilisi a so-called Membership Action Plan.
© Thomson Reuters 2008 All rights reserved
Eat your heart out Arroyo (Philippines) . Obama did not bother to call Medvedev, instead Medvedev called him. This may or may not be a bad sign as far as relations with Russia are concerned. It seems that some European countries are not too eager for Georgia to join NATO. Perhaps Obama might take a little less hostile stance to Russia but we will see. Obama has doubts about the missile defence system as well it seems. )Obama has not bothered to call India either.
Obama calls Georgian leader Saakashvili
Tue Nov 18, 2008 3:49pm IST
TBILISI (Reuters) - U.S. President-elect Barack Obama has called Georgian President Mikheil Saakashvili to assure Moscow's outspoken foe of Washington's continued support, the Georgian leader's press service said on Tuesday.
Russia's chilly ties with the West cooled further after its war with Georgia in August, when Russian troops launched a massive counter-attack in support of rebels following Tbilisi's attempt to retake one of its breakaway regions by force.
The United States has led harsh Western criticism over Russia's speedy recognition of Georgia's breakaway regions of South Ossetia and Abkhazia and what it sees as Moscow's disproportionate use of force during the five-day war.
Democrat Obama, who defeated Republican presidential hopeful John McCain in a Nov. 4 election, called the Georgian leader on Monday, a spokesman for Saakashvili said.
"The conversation was friendly and touched upon future relations between Georgia and the U.S.," Saakashvili's press service said in a statement posted on the presidential Web site www.president.gov.ge.
"Obama underlined that he supports Georgia's territorial integrity and paid attention to the importance of continuing reforms in Georgia," it said. "Obama expressed the hope that the two leaders would meet in the near future."
Tbilisi's U.N. envoy said on Monday he expected Obama as a new U.S. leader would maintain strong U.S. support for Georgia's NATO ambitions.
Outgoing President George W. Bush had pushed for swift acceptance of Georgia and Ukraine into NATO, a position that failed to win unanimous support among European NATO members and strained ties with Russia long before its war with Georgia.
With the Bush administration's influence wavering, U.S. and European officials have said Washington is now studying whether NATO could give Georgia something short of a formal path to membership to satisfy European opposition to offering Tbilisi a so-called Membership Action Plan.
© Thomson Reuters 2008 All rights reserved
Monday, November 17, 2008
Islamists regain control over much of Somalia
This is from Reuters via wiredispatch.
It will be interesting to see if Obama renews US intervention in Somalia. Perhaps he will be too busy intervening in the US economy to worry much about Somalia! It looks as if they same type of groups that the Ethiopians had attacked and driven south are now back with a vengeance. The US supported the Ethiopian invasion and even mounted some air attacks on rebels.
FACTBOX-Islamists regain control over much of Somalia
REUTERSReuters North American News Service
Nov 16, 2008 06:35 EST
Nov 16 (Reuters) - Somali President Abdullahi Yusuf has admitted Islamist insurgents now control most of the country and raised the prospect his government could completely collapse.
The Horn of Africa country has had no effective government since warlords overthrew dictator Mohamed Siad Barre in 1991 and then turned on each other. Here are some details on aspects of the conflict.
* INSURGENTS RETURN:
-- Al Shabaab fighters, who are on Washington's list of foreign terrorist groups, moved into Elasha town overnight, 2 km (1 mile) from Sinkadheer, where Ethiopian troops are based. Sinkadheer is 15 km (9 miles) southwest of Mogadishu.
-- Last week Islamist rebels captured the port of Merka. Given its proximity to Mogadishu, Merka was a significant territorial gain by the insurgents. They already captured the larger Kismayu port, which lies further south, in August. Different Islamist groups now control most of south Somalia.
* ISLAMIST RULE IN 2006:
-- In June 2006, Islamist militia called the Somalia Islamic Courts Council seized Mogadishu after defeating U.S.-backed warlords. Washington accused the Islamists of al Qaeda links.
-- With tacit U.S. approval, Somalia's neighbour Ethiopia sent troops to defend the government against an Islamist attack on Baidoa in December 2006. The force advanced rapidly, taking Mogadishu and driving the Islamists to Somalia's southern tip.
* INTERIM GOVERNMENT:
-- Lawmakers had elected warlord Abdullahi Yusuf president and Ali Mohamed Gedi prime minister to run the 14th attempt at government since the fall of Barre. They entered the capital after the fall of the Islamists.
-- Gedi resigned in October 2007 and was succeeded by Nur Hassan Hussein as prime minister, but a rift also opened between Yusuf and Hussein.
* PEACE EFFORTS:
-- The government signed a peace deal with some opposition figures in August 2008. The deal, initialled in June, called for the rapid deployment of U.N. peacekeepers.
-- But the agreement was rejected by Islamist Sheikh Hassan Dahir Aweys, who now says he represents the opposition Alliance for the Re-Liberation of Somalia. The deal was also rejected by the rebels and other opposition hardliners.
-- Somalia's government signed a ceasefire agreement with some opposition figures on Oct. 26, meeting an opposition demand by giving a date for the withdrawal of Ethiopian forces backing the interim administration. But the deal was again rejected by hardliners, who said it would have no effect on the ground.
* BLOODSHED AND HUNGER:
-- Violence in Somalia has killed over 10,000 people since the beginning of 2007 and uprooted 1 million. The U.N. says 3.2 million people may need food aid later this year but donors have only funded about a third of a $637 million aid appeal.
-- The African Union has said it is incapable of stabilising Somalia through its African Union Mission in Somalia (AMISOM) and urged the United Nations to take over the force. The AU had wanted an 8,000 strong force, but only has 3,000 from Uganda and Burundi.
Source: Reuters North American News Service
It will be interesting to see if Obama renews US intervention in Somalia. Perhaps he will be too busy intervening in the US economy to worry much about Somalia! It looks as if they same type of groups that the Ethiopians had attacked and driven south are now back with a vengeance. The US supported the Ethiopian invasion and even mounted some air attacks on rebels.
FACTBOX-Islamists regain control over much of Somalia
REUTERSReuters North American News Service
Nov 16, 2008 06:35 EST
Nov 16 (Reuters) - Somali President Abdullahi Yusuf has admitted Islamist insurgents now control most of the country and raised the prospect his government could completely collapse.
The Horn of Africa country has had no effective government since warlords overthrew dictator Mohamed Siad Barre in 1991 and then turned on each other. Here are some details on aspects of the conflict.
* INSURGENTS RETURN:
-- Al Shabaab fighters, who are on Washington's list of foreign terrorist groups, moved into Elasha town overnight, 2 km (1 mile) from Sinkadheer, where Ethiopian troops are based. Sinkadheer is 15 km (9 miles) southwest of Mogadishu.
-- Last week Islamist rebels captured the port of Merka. Given its proximity to Mogadishu, Merka was a significant territorial gain by the insurgents. They already captured the larger Kismayu port, which lies further south, in August. Different Islamist groups now control most of south Somalia.
* ISLAMIST RULE IN 2006:
-- In June 2006, Islamist militia called the Somalia Islamic Courts Council seized Mogadishu after defeating U.S.-backed warlords. Washington accused the Islamists of al Qaeda links.
-- With tacit U.S. approval, Somalia's neighbour Ethiopia sent troops to defend the government against an Islamist attack on Baidoa in December 2006. The force advanced rapidly, taking Mogadishu and driving the Islamists to Somalia's southern tip.
* INTERIM GOVERNMENT:
-- Lawmakers had elected warlord Abdullahi Yusuf president and Ali Mohamed Gedi prime minister to run the 14th attempt at government since the fall of Barre. They entered the capital after the fall of the Islamists.
-- Gedi resigned in October 2007 and was succeeded by Nur Hassan Hussein as prime minister, but a rift also opened between Yusuf and Hussein.
* PEACE EFFORTS:
-- The government signed a peace deal with some opposition figures in August 2008. The deal, initialled in June, called for the rapid deployment of U.N. peacekeepers.
-- But the agreement was rejected by Islamist Sheikh Hassan Dahir Aweys, who now says he represents the opposition Alliance for the Re-Liberation of Somalia. The deal was also rejected by the rebels and other opposition hardliners.
-- Somalia's government signed a ceasefire agreement with some opposition figures on Oct. 26, meeting an opposition demand by giving a date for the withdrawal of Ethiopian forces backing the interim administration. But the deal was again rejected by hardliners, who said it would have no effect on the ground.
* BLOODSHED AND HUNGER:
-- Violence in Somalia has killed over 10,000 people since the beginning of 2007 and uprooted 1 million. The U.N. says 3.2 million people may need food aid later this year but donors have only funded about a third of a $637 million aid appeal.
-- The African Union has said it is incapable of stabilising Somalia through its African Union Mission in Somalia (AMISOM) and urged the United Nations to take over the force. The AU had wanted an 8,000 strong force, but only has 3,000 from Uganda and Burundi.
Source: Reuters North American News Service
Operation Enduring Disaster: Tariq Ali
This is from antiwar.com.
Ali is no doubt right that what is needed is the co-operation of Afghanistan's neighbours to create a situation where rebuilding Afghanistan is possible. No doubt negotiations to end the hot war are necessary as well because as long as there is no security there can be little rebuilding. In effect if reconstructions efforts are not supported by insurgents they will be sabotaged as being a foreign imposition and a threat to the insurgents.
As Ali notes there does not seem to be any great anti-war sentiment in the US with respect to Afghanistan. However with the deteriorating economic situation, the cost in money and lives, this could change. But the present course of Petraeus and Obama are just a continuation of the Bush policies.
Operation Enduring Disaster
Breaking with Afghan policyby Tariq Ali
Afghanistan has been almost continuously at war for 30 years, longer than both World Wars and the American war in Vietnam combined. Each occupation of the country has mimicked its predecessor. A tiny interval between wars saw the imposition of a malignant social order, the Taliban, with the help of the Pakistani military and the late Benazir Bhutto, the prime minister who approved the Taliban takeover in Kabul.
Over the last two years, the U.S./NATO occupation of that country has run into serious military problems. Given a severe global economic crisis and the election of a new American president – a man separated in style, intellect, and temperament from his predecessor – the possibility of a serious discussion about an exit strategy from the Afghan disaster hovers on the horizon. The predicament the U.S. and its allies find themselves in is not an inescapable one, but a change in policy, if it is to matter, cannot be of the cosmetic variety.
Washington's hawks will argue that, while bad, the military situation is, in fact, still salvageable. This may be technically accurate, but it would require the carpet-bombing of southern Afghanistan and parts of Pakistan, the destruction of scores of villages and small towns, the killing of untold numbers of Pashtuns and the dispatch to the region of at least 200,000 more troops with all their attendant equipment, air, and logistical support. The political consequences of such a course are so dire that even Dick Cheney, the closest thing to Dr. Strangelove that Washington has yet produced, has been uncharacteristically cautious when it comes to suggesting a military solution to the conflict.
It has, by now, become obvious to the Pentagon that Afghan President Hamid Karzai and his family cannot deliver what is required, yet it is probably far too late to replace him with UN Ambassador Zalmay Khalilzad. On his part, fighting for his political (and probably physical) existence, Karzai continues to protect his brother Ahmad Wali Karzai, accused of being involved in the country's staggering drug trade, but has belatedly sacked Hamidullah Qadri, his transport minister, for corruption.
Qadri was taking massive kickbacks from a company flying pilgrims to Mecca. Is nothing sacred?
A Deteriorating Situation
Of course, axing one minister is like whistling in the wind, given the levels of corruption reported in Karzai's government, which, in any case, controls little of the country. The Afghan president parries Washington's thrusts by blaming the U.S. military for killing too many civilians from the air. The bombing of the village of Azizabad in Herat province last August, which led to 91 civilian deaths (of which 60 were children), was only the most extreme of such recent acts. Karzai's men, hurriedly dispatched to distribute sweets and supplies to the survivors, were stoned by angry villagers.
Given the thousands of Afghans killed in recent years, small wonder that support for the neo-Taliban is increasing, even in non-Pashtun areas of the country. Many Afghans hostile to the old Taliban still support the resistance simply to make it clear that they are against the helicopters and missile-armed unmanned aerial drones that destroy homes, and to "Big Daddy" who wipes out villages, and to the flames that devour children.
Last February, Director of National Intelligence Michael McConnell presented a bleak survey of the situation on the ground to the House Permanent Select Committee on Intelligence:
"Afghan leaders must deal with the endemic corruption and pervasive poppy cultivation and drug trafficking. Ultimately, defeating the insurgency will depend heavily on the government's ability to improve security, deliver services, and expand development for economic opportunity.
"Although the international forces and the Afghan National Army continue to score tactical victories over the Taliban, the security situation has deteriorated in some areas in the south and Taliban forces have expanded their operations into previously peaceful areas of the west and around Kabul. The Taliban insurgency has expanded in scope despite operational disruption caused by the ISAF [NATO forces] and Operation Enduring Freedom operations. The death or capture of three top Taliban leaders last year – their first high level losses – does not yet appear to have significantly disrupted insurgent operations."
Since then the situation has only deteriorated further, leading to calls for sending in yet more American and NATO troops – and creating ever deeper divisions inside NATO itself. In recent months, Sir Sherard Cowper-Coles, the British ambassador to Kabul, wrote a French colleague (in a leaked memo) that the war was lost and more troops were not a solution, a view reiterated recently by Air Marshal Sir Jock Stirrup, the British defense chief, who came out in public against a one-for-one transfer of troops withdrawn from Iraq to Kabul. He put it this way:
"I think we would all take some persuading that there would have to be a much larger British contingent there. … So we also have to get ourselves back into balance; it's crucial that we reduce the operational tempo for our armed forces, so it cannot be, even if the situation demanded it, just a one for one transfer from Iraq to Afghanistan, we have to reduce that tempo."
The Spanish government is considering an Afghan withdrawal and there is serious dissent within the German and Norwegian foreign policy elites. The Canadian foreign minister has already announced that his country will not extend its Afghan commitment beyond 2011. And even if the debates in the Pentagon have not been aired in public, it's becoming obvious that, in Washington, too, some see the war as unwinnable.
Enter former Iraq commander Gen. David Petraeus, center stage as the new Centcom commander. Ever since the "success" of "the surge" he oversaw in Iraq (a process designed to create temporary stability in that ravaged land by buying off the opposition and, among other things, the selective use of death squads), Petraeus sounds, and behaves, more and more like Lazarus on returning from the dead – and before his body could be closely inspected.
The situation in Iraq was so dire that even a modest reduction in casualties was seen as a massive leap forward. With increasing outbreaks of violence in Baghdad and elsewhere in Iraq, however, the talk of success sounds ever hollower. To launch a new "surge" in Afghanistan now by sending more troops there will simply not work, not even as a public relations triumph. Perhaps some of the 100 advisers that Gen. Petraeus has just appointed will point this out to him in forceful terms.
Flight Path to Disaster
Obama would be foolish to imagine that Petraeus can work a miracle cure in Afghanistan. The cancer has spread too far and is affecting U.S. troops as well. If the American media chose to interview active-duty soldiers in Afghanistan (on promise of anonymity), they might get a more accurate picture of what is happening inside the U.S. Army there.
I learned a great deal from Jules, a 20-year-old American soldier I met recently in Canada. He became so disenchanted with the war that he decided to go AWOL, proving – at least to himself – that the Afghan situation was not an inescapable predicament. Many of his fellow soldiers, he claims, felt similarly, hating a war that dehumanized both them and the Afghans. "We just couldn't bring ourselves to accept that bombing Afghans was no different from bombing the landscape" was the way he summed up the situation.
Morale inside the Army there is low, he told me. The aggression unleashed against Afghan civilian often hides a deep depression. He does not, however, encourage others to follow in his footsteps. As he sees it, each soldier must make that choice for himself, accepting with it the responsibility that going AWOL permanently entails. Jules was convinced, however, that the war could not be won, and he did not want to see any more of his friends die. That's why he was wearing an "Obama out of Afghanistan" T-shirt.
Before he revealed his identity, I mistook this young soldier – a Filipino-American born in southern California – for an Afghan. His features reminded me of the Hazara tribesmen he must have encountered in Kabul. Trained as a mortar gunner and paratrooper from Fort Benning, Georgia, he was later assigned to the 82nd Airborne at Fort Bragg. Here is part of the account he offered me:
"I deployed to southeastern Afghanistan in January 2007. We controlled everything from Jalalabad down to the northernmost areas of Kandahar province in Regional Command East. My unit had the job of pacifying the insurgency in Paktika, Paktia, and Khost provinces – areas that had received no aid, but had been devastated during the initial invasion. Operation Anaconda [in 2002] was supposed to have wiped out the Taliban. That was the boast of the military leaders, but ridiculed by everyone else with a brain."
He spoke also of how impossible he found it to treat the Afghans as subhumans:
"I swear I could not for a second view these people as anything but human. The best way to fashion a young, hard DICK like myself – DICK being an acronym for 'dedicated infantry combat killer' – is simple and the effect of racist indoctrination. Take an empty shell off the streets of L.A. or Brooklyn, or maybe from some podunk town in Tennessee… and these days America isn't in short supply… I was one of those no-child-left behind products…
"Anyway, you take this empty vessel and you scare the living sh*t out of him, break him down to nothing, cultivate a brotherhood and camaraderie with those he suffers with, and fill his head with racist nonsense like all Arabs, Iraqis, Afghans are Hajj. Hajj hates you. Hajj wants to hurt your family. Hajj children are the worst because they beg all the time. Just some of the most hurtful and ridiculous propaganda, but you'd be amazed at how effective it's been in fostering my generation of soldiers."
As this young man spoke to me, I felt he should be testifying before the Senate Foreign Relations Committee. The effect of the war on those carrying out the orders is leaving scars just as deep as the imprints of previous imperial wars. Change we can believe in must include the end of this, which means, among other things, a withdrawal from Afghanistan.
In my latest book, The Duel: Pakistan on the Flight Path of American Power, I have written of the necessity of involving Afghanistan's neighbors in a political solution that ends the war, preserves the peace, and reconstructs the country. Iran, Russia, India, and China, as well as Pakistan, need to be engaged in the search for a political solution that would sustain a genuine national government for a decade after the withdrawal of the Americans, NATO, and their quisling regime. However, such a solution is not possible within the context of the plans proposed by both present Secretary of Defense Robert Gates and President-elect Barack Obama, which focus on a new surge of American troops in Afghanistan.
The main task at hand should be to create a social infrastructure and thus preserve the peace, something that the West and its horde of attendant non-governmental organizations have failed to do. School buildings constructed, often for outrageous sums, by foreign companies that lack furniture, teachers, and kids are part of the surreal presence of the West, which cannot last.
Whether you are a policymaker in the next administration or an AWOL veteran of the Afghan War in Canada, Operation Enduring Freedom of 2001 has visibly become Operation Enduring Disaster. Less clear is whether an Obama administration can truly break from past policy or will just create a military-plus add-on to it. Only a total break from the catastrophe that George W. Bush, Dick Cheney, and Donald Rumsfeld created in Afghanistan will offer pathways to a viable future.
For this to happen, both external and domestic pressures will probably be needed. China is known to be completely opposed to a NATO presence on, or near, its borders, but while Beijing has proved willing to exert economic pressure to force policy changes in Washington – as it did when the Bank of China "cut its exposure to agency debt last summer," leaving U.S. Treasury Secretary Paulson with little option but to functionally nationalize the mortgage giants – it has yet to use its diplomatic muscle in the region.
But don't think that will last forever. Why wait until then? Another external pressure will certainly prove to be the already evident destabilizing effects of the Afghan war on neighboring Pakistan, a country in a precarious economic state, with a military facing growing internal tensions.
Domestic pressure in the U.S. to pull out of Afghanistan remains weak, but it could grow rapidly as the extent of the debacle becomes clearer and NATO allies refuse to supply the shock-troops for the future surge.
In the meantime, they're predicting a famine in Afghanistan this winter.
Tariq Ali, writer, journalist, filmmaker, contributes regularly to a range of publications including the Guardian, the Nation, and the London Review of Books. His most recent book, just published, is The Duel: Pakistan on the Flight Path of American Power (Scribner, 2008). In a two-part video released by TomDispatch.com, he offers critical commentary on Barack Obama's plans for Afghanistan and Pakistan, as well as on the tangled U.S.-Pakistani relationship.
Copyright 2008 Tariq Ali
Ali is no doubt right that what is needed is the co-operation of Afghanistan's neighbours to create a situation where rebuilding Afghanistan is possible. No doubt negotiations to end the hot war are necessary as well because as long as there is no security there can be little rebuilding. In effect if reconstructions efforts are not supported by insurgents they will be sabotaged as being a foreign imposition and a threat to the insurgents.
As Ali notes there does not seem to be any great anti-war sentiment in the US with respect to Afghanistan. However with the deteriorating economic situation, the cost in money and lives, this could change. But the present course of Petraeus and Obama are just a continuation of the Bush policies.
Operation Enduring Disaster
Breaking with Afghan policyby Tariq Ali
Afghanistan has been almost continuously at war for 30 years, longer than both World Wars and the American war in Vietnam combined. Each occupation of the country has mimicked its predecessor. A tiny interval between wars saw the imposition of a malignant social order, the Taliban, with the help of the Pakistani military and the late Benazir Bhutto, the prime minister who approved the Taliban takeover in Kabul.
Over the last two years, the U.S./NATO occupation of that country has run into serious military problems. Given a severe global economic crisis and the election of a new American president – a man separated in style, intellect, and temperament from his predecessor – the possibility of a serious discussion about an exit strategy from the Afghan disaster hovers on the horizon. The predicament the U.S. and its allies find themselves in is not an inescapable one, but a change in policy, if it is to matter, cannot be of the cosmetic variety.
Washington's hawks will argue that, while bad, the military situation is, in fact, still salvageable. This may be technically accurate, but it would require the carpet-bombing of southern Afghanistan and parts of Pakistan, the destruction of scores of villages and small towns, the killing of untold numbers of Pashtuns and the dispatch to the region of at least 200,000 more troops with all their attendant equipment, air, and logistical support. The political consequences of such a course are so dire that even Dick Cheney, the closest thing to Dr. Strangelove that Washington has yet produced, has been uncharacteristically cautious when it comes to suggesting a military solution to the conflict.
It has, by now, become obvious to the Pentagon that Afghan President Hamid Karzai and his family cannot deliver what is required, yet it is probably far too late to replace him with UN Ambassador Zalmay Khalilzad. On his part, fighting for his political (and probably physical) existence, Karzai continues to protect his brother Ahmad Wali Karzai, accused of being involved in the country's staggering drug trade, but has belatedly sacked Hamidullah Qadri, his transport minister, for corruption.
Qadri was taking massive kickbacks from a company flying pilgrims to Mecca. Is nothing sacred?
A Deteriorating Situation
Of course, axing one minister is like whistling in the wind, given the levels of corruption reported in Karzai's government, which, in any case, controls little of the country. The Afghan president parries Washington's thrusts by blaming the U.S. military for killing too many civilians from the air. The bombing of the village of Azizabad in Herat province last August, which led to 91 civilian deaths (of which 60 were children), was only the most extreme of such recent acts. Karzai's men, hurriedly dispatched to distribute sweets and supplies to the survivors, were stoned by angry villagers.
Given the thousands of Afghans killed in recent years, small wonder that support for the neo-Taliban is increasing, even in non-Pashtun areas of the country. Many Afghans hostile to the old Taliban still support the resistance simply to make it clear that they are against the helicopters and missile-armed unmanned aerial drones that destroy homes, and to "Big Daddy" who wipes out villages, and to the flames that devour children.
Last February, Director of National Intelligence Michael McConnell presented a bleak survey of the situation on the ground to the House Permanent Select Committee on Intelligence:
"Afghan leaders must deal with the endemic corruption and pervasive poppy cultivation and drug trafficking. Ultimately, defeating the insurgency will depend heavily on the government's ability to improve security, deliver services, and expand development for economic opportunity.
"Although the international forces and the Afghan National Army continue to score tactical victories over the Taliban, the security situation has deteriorated in some areas in the south and Taliban forces have expanded their operations into previously peaceful areas of the west and around Kabul. The Taliban insurgency has expanded in scope despite operational disruption caused by the ISAF [NATO forces] and Operation Enduring Freedom operations. The death or capture of three top Taliban leaders last year – their first high level losses – does not yet appear to have significantly disrupted insurgent operations."
Since then the situation has only deteriorated further, leading to calls for sending in yet more American and NATO troops – and creating ever deeper divisions inside NATO itself. In recent months, Sir Sherard Cowper-Coles, the British ambassador to Kabul, wrote a French colleague (in a leaked memo) that the war was lost and more troops were not a solution, a view reiterated recently by Air Marshal Sir Jock Stirrup, the British defense chief, who came out in public against a one-for-one transfer of troops withdrawn from Iraq to Kabul. He put it this way:
"I think we would all take some persuading that there would have to be a much larger British contingent there. … So we also have to get ourselves back into balance; it's crucial that we reduce the operational tempo for our armed forces, so it cannot be, even if the situation demanded it, just a one for one transfer from Iraq to Afghanistan, we have to reduce that tempo."
The Spanish government is considering an Afghan withdrawal and there is serious dissent within the German and Norwegian foreign policy elites. The Canadian foreign minister has already announced that his country will not extend its Afghan commitment beyond 2011. And even if the debates in the Pentagon have not been aired in public, it's becoming obvious that, in Washington, too, some see the war as unwinnable.
Enter former Iraq commander Gen. David Petraeus, center stage as the new Centcom commander. Ever since the "success" of "the surge" he oversaw in Iraq (a process designed to create temporary stability in that ravaged land by buying off the opposition and, among other things, the selective use of death squads), Petraeus sounds, and behaves, more and more like Lazarus on returning from the dead – and before his body could be closely inspected.
The situation in Iraq was so dire that even a modest reduction in casualties was seen as a massive leap forward. With increasing outbreaks of violence in Baghdad and elsewhere in Iraq, however, the talk of success sounds ever hollower. To launch a new "surge" in Afghanistan now by sending more troops there will simply not work, not even as a public relations triumph. Perhaps some of the 100 advisers that Gen. Petraeus has just appointed will point this out to him in forceful terms.
Flight Path to Disaster
Obama would be foolish to imagine that Petraeus can work a miracle cure in Afghanistan. The cancer has spread too far and is affecting U.S. troops as well. If the American media chose to interview active-duty soldiers in Afghanistan (on promise of anonymity), they might get a more accurate picture of what is happening inside the U.S. Army there.
I learned a great deal from Jules, a 20-year-old American soldier I met recently in Canada. He became so disenchanted with the war that he decided to go AWOL, proving – at least to himself – that the Afghan situation was not an inescapable predicament. Many of his fellow soldiers, he claims, felt similarly, hating a war that dehumanized both them and the Afghans. "We just couldn't bring ourselves to accept that bombing Afghans was no different from bombing the landscape" was the way he summed up the situation.
Morale inside the Army there is low, he told me. The aggression unleashed against Afghan civilian often hides a deep depression. He does not, however, encourage others to follow in his footsteps. As he sees it, each soldier must make that choice for himself, accepting with it the responsibility that going AWOL permanently entails. Jules was convinced, however, that the war could not be won, and he did not want to see any more of his friends die. That's why he was wearing an "Obama out of Afghanistan" T-shirt.
Before he revealed his identity, I mistook this young soldier – a Filipino-American born in southern California – for an Afghan. His features reminded me of the Hazara tribesmen he must have encountered in Kabul. Trained as a mortar gunner and paratrooper from Fort Benning, Georgia, he was later assigned to the 82nd Airborne at Fort Bragg. Here is part of the account he offered me:
"I deployed to southeastern Afghanistan in January 2007. We controlled everything from Jalalabad down to the northernmost areas of Kandahar province in Regional Command East. My unit had the job of pacifying the insurgency in Paktika, Paktia, and Khost provinces – areas that had received no aid, but had been devastated during the initial invasion. Operation Anaconda [in 2002] was supposed to have wiped out the Taliban. That was the boast of the military leaders, but ridiculed by everyone else with a brain."
He spoke also of how impossible he found it to treat the Afghans as subhumans:
"I swear I could not for a second view these people as anything but human. The best way to fashion a young, hard DICK like myself – DICK being an acronym for 'dedicated infantry combat killer' – is simple and the effect of racist indoctrination. Take an empty shell off the streets of L.A. or Brooklyn, or maybe from some podunk town in Tennessee… and these days America isn't in short supply… I was one of those no-child-left behind products…
"Anyway, you take this empty vessel and you scare the living sh*t out of him, break him down to nothing, cultivate a brotherhood and camaraderie with those he suffers with, and fill his head with racist nonsense like all Arabs, Iraqis, Afghans are Hajj. Hajj hates you. Hajj wants to hurt your family. Hajj children are the worst because they beg all the time. Just some of the most hurtful and ridiculous propaganda, but you'd be amazed at how effective it's been in fostering my generation of soldiers."
As this young man spoke to me, I felt he should be testifying before the Senate Foreign Relations Committee. The effect of the war on those carrying out the orders is leaving scars just as deep as the imprints of previous imperial wars. Change we can believe in must include the end of this, which means, among other things, a withdrawal from Afghanistan.
In my latest book, The Duel: Pakistan on the Flight Path of American Power, I have written of the necessity of involving Afghanistan's neighbors in a political solution that ends the war, preserves the peace, and reconstructs the country. Iran, Russia, India, and China, as well as Pakistan, need to be engaged in the search for a political solution that would sustain a genuine national government for a decade after the withdrawal of the Americans, NATO, and their quisling regime. However, such a solution is not possible within the context of the plans proposed by both present Secretary of Defense Robert Gates and President-elect Barack Obama, which focus on a new surge of American troops in Afghanistan.
The main task at hand should be to create a social infrastructure and thus preserve the peace, something that the West and its horde of attendant non-governmental organizations have failed to do. School buildings constructed, often for outrageous sums, by foreign companies that lack furniture, teachers, and kids are part of the surreal presence of the West, which cannot last.
Whether you are a policymaker in the next administration or an AWOL veteran of the Afghan War in Canada, Operation Enduring Freedom of 2001 has visibly become Operation Enduring Disaster. Less clear is whether an Obama administration can truly break from past policy or will just create a military-plus add-on to it. Only a total break from the catastrophe that George W. Bush, Dick Cheney, and Donald Rumsfeld created in Afghanistan will offer pathways to a viable future.
For this to happen, both external and domestic pressures will probably be needed. China is known to be completely opposed to a NATO presence on, or near, its borders, but while Beijing has proved willing to exert economic pressure to force policy changes in Washington – as it did when the Bank of China "cut its exposure to agency debt last summer," leaving U.S. Treasury Secretary Paulson with little option but to functionally nationalize the mortgage giants – it has yet to use its diplomatic muscle in the region.
But don't think that will last forever. Why wait until then? Another external pressure will certainly prove to be the already evident destabilizing effects of the Afghan war on neighboring Pakistan, a country in a precarious economic state, with a military facing growing internal tensions.
Domestic pressure in the U.S. to pull out of Afghanistan remains weak, but it could grow rapidly as the extent of the debacle becomes clearer and NATO allies refuse to supply the shock-troops for the future surge.
In the meantime, they're predicting a famine in Afghanistan this winter.
Tariq Ali, writer, journalist, filmmaker, contributes regularly to a range of publications including the Guardian, the Nation, and the London Review of Books. His most recent book, just published, is The Duel: Pakistan on the Flight Path of American Power (Scribner, 2008). In a two-part video released by TomDispatch.com, he offers critical commentary on Barack Obama's plans for Afghanistan and Pakistan, as well as on the tangled U.S.-Pakistani relationship.
Copyright 2008 Tariq Ali
Sunday, November 16, 2008
Why cynics are wrong...Zizek
This is from inthesetimes.
Why Cynics Are Wrong
The sublime shock of Obama’s victory
By Slavoj Zizek
Obama's victory is a sign in which the long past of slavery and the struggle for its abolition reverberates.
Days before the election, Noam Chomsky told progressives that they should vote for Obama, but without illusions. I fully share Chomsky’s doubts about the real consequences of Obama’s victory: From a pragmatic-realistic perspective, it is quite possible that Obama will just do some minor face-lifting improvements, turning out to be “Bush with a human face.” He will pursue the same basic politics in a more attractive mode and thus effectively even strengthen U.S. hegemony, which has been severely damaged by the catastrophe of the Bush years.
There is nonetheless something deeply wrong with this reaction — a key dimension is missing in it. It is because of this dimension that Obama’s victory is not just another shift in the eternal parliamentary struggles for majority with all their pragmatic calculations and manipulations. It is a sign of something more. This is why a good, American friend of mine, a hardened Leftist with no illusions, cried for hours when the news came of Obama’s victory. Whatever our doubts, fears and compromises, in that moment of enthusiasm, each of us was free and participating in the universal freedom of humanity.
What kind of sign am I talking about? In his last published book The Contest of Faculties (1798), the great German Idealist philosopher Immanuel Kant addressed a simple but difficult question: Is there true progress in history? (He meant ethical progress in freedom, not just material development.) He conceded that actual history is confused and allows for no clear proof: Think how the 20th century brought unprecedented democracy and welfare, but also the Holocaust and gulag.
Nonetheless, Kant concluded that, although progress cannot be proven, we can discern signs that indicate progress is possible. Kant interpreted the French Revolution as a sign that pointed toward the possibility of freedom: The hitherto unthinkable happened, a whole people fearlessly asserted their freedom and equality. For Kant, even more important than the — often bloody — reality of what went on in the streets of Paris was the enthusiasm that those events engendered in sympathetic observers all around Europe:
The recent Revolution of a people which is rich in spirit, may well either fail or succeed, accumulate misery and atrocity, it nevertheless arouses in the heart of all spectators (who are not themselves caught up in it) a taking of sides according to desires which borders on enthusiasm and which, since its very expression was not without danger, can only have been caused by a moral disposition within the human race.
One should note here that the French Revolution generated enthusiasm not only in Europe, but also in faraway places like Haiti, where it triggered another world-historical event: The first revolt of Black slaves, who fought for full participation in the emancipatory project of the French Revolution. Arguably the most sublime moment of the French Revolution occurred when the delegation from Haiti, led by Toussaint l’Ouverture, visited Paris and was enthusiastically received at the Popular Assembly as equals among equals.
Obama’s victory belongs to this line; it is a sign of history in the triple Kantian sense of signum rememorativum, demonstrativum, prognosticum. That is, it is a sign in which the memory of the long past of slavery and the struggle for its abolition reverberates; an event which now demonstrates a change; a hope for future achievements. No wonder that Hegel, the last great German Idealist, shared Kant’s enthusiasm in his description of the impact of the French Revolution:
This was accordingly a glorious mental dawn. All thinking beings shared in the jubilation of this epoch. Emotions of a lofty character stirred men’s minds at that time; a spiritual enthusiasm thrilled through the world, as if the reconciliation between the divine and the secular was now first accomplished.
Did Obama’s victory not give birth to the same universal enthusiasm all around the world, with people dancing on the streets from Chicago to Berlin to Rio de Janeiro? All the skepticism displayed behind closed doors even by many worried progressives (what if, in the privacy of the voting booth, publicly disavowed racism reemerges?) was proven wrong.
There is one thing about Henry Kissinger, the ultimate cynical Realpolitiker, that strikes the eye of all observers: How utterly wrong most of his predictions were. To take only one example, when news reached the West about the 1991 anti-Gorbachev military coup, he immediately accepted the new regime (which ignominiously collapsed three days later) as a fact. In short, when socialist regimes were already a living dead, Kissinger was counting on a long-term pact with them.
The position of the cynic is that he alone holds some piece of terrible, unvarnished wisdom. The paradigmatic cynic tells you privately, in a confidential low-key voice: “But don’t you get it that it is all really about (money/power/sex), that all high principles and values are just empty phrases which count for nothing?” What the cynics don’t see is their own naivety, the naivety of their cynical wisdom that ignores the power of illusions.
The reason Obama’s victory generated such enthusiasm is not only the fact that, against all odds, it really happened, but that the possibility of such a thing to happen was demonstrated. The same goes for all great historical ruptures. Recall the fall of the Berlin Wall: Although we all knew about the rotten inefficiency of the Communist regimes, we somehow did not “really believe” that they will disintegrate. Like Kissinger, we were all too much victims of cynical pragmatism.
This attitude is best encapsulated by the French expression “je sais bien, mais quand meme” (I know very well that it can happen, but nonetheless… I cannot really accept that it can happen). This is why, although Obama’s victory was clearly predictable at least for the last two weeks before the election, his actual victory was still experienced as a shock. In some sense, the unthinkable did happen, something that we really didn’t believe could happen. (Note that there is also a tragic version of the unthinkable really taking place: holocaust, gulag… how can one really accept that something like that could happen?)
The true battle begins now, after the victory: The battle for what this victory will effectively mean, especially within the context of two other much more ominous signs of history: 9/11 and the financial meltdown. Nothing was decided by Obama’s victory, but his victory widens our freedom and thereby the scope of our decisions. But regardless of whether we succeed or fail, Obama’s victory will remain a sign of hope in our otherwise dark times, a sign that the last word does not belong to “realist” cynics, be they from the Left or the Right.
Slavoj Žižek, a philosopher and psychoanalyst, is a senior researcher at the Institute for Advanced Study in the Humanities, in Essen, Germany. He is the author of, among many other books, The Fragile Absolute and Did Somebody Say Totalitarianism?
But this is exactly what the leadership of Obama, the place where the money has gone, is meant to provide: the illusion of freedom rather than the reality. Zizek mistakes the reality of a feeling with the reality of the material conditions. The reality of the material conditions is that people are becoming less free than ever and are going to be required to make greater sacrifices to save the system while chief executives of failing corporations play golf or go hunting in Great Britain. The bailout to save main street and Wall street along with the coming depression is going to make everyday life for many much worse and more of a struggle to make ends meet. That is the possibility of freedom that this great new dawn some leftists are cheering brings. It is a breakthrough for a black to be elected president of the US but it is a breakthrough that rather than threatening the ruling class helps to expand its validity in the eyes of minorities.
Why Cynics Are Wrong
The sublime shock of Obama’s victory
By Slavoj Zizek
Obama's victory is a sign in which the long past of slavery and the struggle for its abolition reverberates.
Days before the election, Noam Chomsky told progressives that they should vote for Obama, but without illusions. I fully share Chomsky’s doubts about the real consequences of Obama’s victory: From a pragmatic-realistic perspective, it is quite possible that Obama will just do some minor face-lifting improvements, turning out to be “Bush with a human face.” He will pursue the same basic politics in a more attractive mode and thus effectively even strengthen U.S. hegemony, which has been severely damaged by the catastrophe of the Bush years.
There is nonetheless something deeply wrong with this reaction — a key dimension is missing in it. It is because of this dimension that Obama’s victory is not just another shift in the eternal parliamentary struggles for majority with all their pragmatic calculations and manipulations. It is a sign of something more. This is why a good, American friend of mine, a hardened Leftist with no illusions, cried for hours when the news came of Obama’s victory. Whatever our doubts, fears and compromises, in that moment of enthusiasm, each of us was free and participating in the universal freedom of humanity.
What kind of sign am I talking about? In his last published book The Contest of Faculties (1798), the great German Idealist philosopher Immanuel Kant addressed a simple but difficult question: Is there true progress in history? (He meant ethical progress in freedom, not just material development.) He conceded that actual history is confused and allows for no clear proof: Think how the 20th century brought unprecedented democracy and welfare, but also the Holocaust and gulag.
Nonetheless, Kant concluded that, although progress cannot be proven, we can discern signs that indicate progress is possible. Kant interpreted the French Revolution as a sign that pointed toward the possibility of freedom: The hitherto unthinkable happened, a whole people fearlessly asserted their freedom and equality. For Kant, even more important than the — often bloody — reality of what went on in the streets of Paris was the enthusiasm that those events engendered in sympathetic observers all around Europe:
The recent Revolution of a people which is rich in spirit, may well either fail or succeed, accumulate misery and atrocity, it nevertheless arouses in the heart of all spectators (who are not themselves caught up in it) a taking of sides according to desires which borders on enthusiasm and which, since its very expression was not without danger, can only have been caused by a moral disposition within the human race.
One should note here that the French Revolution generated enthusiasm not only in Europe, but also in faraway places like Haiti, where it triggered another world-historical event: The first revolt of Black slaves, who fought for full participation in the emancipatory project of the French Revolution. Arguably the most sublime moment of the French Revolution occurred when the delegation from Haiti, led by Toussaint l’Ouverture, visited Paris and was enthusiastically received at the Popular Assembly as equals among equals.
Obama’s victory belongs to this line; it is a sign of history in the triple Kantian sense of signum rememorativum, demonstrativum, prognosticum. That is, it is a sign in which the memory of the long past of slavery and the struggle for its abolition reverberates; an event which now demonstrates a change; a hope for future achievements. No wonder that Hegel, the last great German Idealist, shared Kant’s enthusiasm in his description of the impact of the French Revolution:
This was accordingly a glorious mental dawn. All thinking beings shared in the jubilation of this epoch. Emotions of a lofty character stirred men’s minds at that time; a spiritual enthusiasm thrilled through the world, as if the reconciliation between the divine and the secular was now first accomplished.
Did Obama’s victory not give birth to the same universal enthusiasm all around the world, with people dancing on the streets from Chicago to Berlin to Rio de Janeiro? All the skepticism displayed behind closed doors even by many worried progressives (what if, in the privacy of the voting booth, publicly disavowed racism reemerges?) was proven wrong.
There is one thing about Henry Kissinger, the ultimate cynical Realpolitiker, that strikes the eye of all observers: How utterly wrong most of his predictions were. To take only one example, when news reached the West about the 1991 anti-Gorbachev military coup, he immediately accepted the new regime (which ignominiously collapsed three days later) as a fact. In short, when socialist regimes were already a living dead, Kissinger was counting on a long-term pact with them.
The position of the cynic is that he alone holds some piece of terrible, unvarnished wisdom. The paradigmatic cynic tells you privately, in a confidential low-key voice: “But don’t you get it that it is all really about (money/power/sex), that all high principles and values are just empty phrases which count for nothing?” What the cynics don’t see is their own naivety, the naivety of their cynical wisdom that ignores the power of illusions.
The reason Obama’s victory generated such enthusiasm is not only the fact that, against all odds, it really happened, but that the possibility of such a thing to happen was demonstrated. The same goes for all great historical ruptures. Recall the fall of the Berlin Wall: Although we all knew about the rotten inefficiency of the Communist regimes, we somehow did not “really believe” that they will disintegrate. Like Kissinger, we were all too much victims of cynical pragmatism.
This attitude is best encapsulated by the French expression “je sais bien, mais quand meme” (I know very well that it can happen, but nonetheless… I cannot really accept that it can happen). This is why, although Obama’s victory was clearly predictable at least for the last two weeks before the election, his actual victory was still experienced as a shock. In some sense, the unthinkable did happen, something that we really didn’t believe could happen. (Note that there is also a tragic version of the unthinkable really taking place: holocaust, gulag… how can one really accept that something like that could happen?)
The true battle begins now, after the victory: The battle for what this victory will effectively mean, especially within the context of two other much more ominous signs of history: 9/11 and the financial meltdown. Nothing was decided by Obama’s victory, but his victory widens our freedom and thereby the scope of our decisions. But regardless of whether we succeed or fail, Obama’s victory will remain a sign of hope in our otherwise dark times, a sign that the last word does not belong to “realist” cynics, be they from the Left or the Right.
Slavoj Žižek, a philosopher and psychoanalyst, is a senior researcher at the Institute for Advanced Study in the Humanities, in Essen, Germany. He is the author of, among many other books, The Fragile Absolute and Did Somebody Say Totalitarianism?
Pakistan and U.S. have tacit Deal on Airstrikes.
Note that there is no official confirmation of anything just anonymous officials. However, that there is a tacit deal would explain why the U.S. pays no attention to Pakistani demands that the raids stop. It could be though that articles such as this are meant to justify the US raids as well. Whatever is the case the raids fan anti-Americanism and are probably counterproductive. They could very well result in even more problems for the Pakistan government already beset by severe economic difficulties. This is from the Washington Post.
Pakistan and U.S. Have Tacit Deal On Airstrikes
By Karen DeYoung and Joby WarrickWashington Post Staff WritersSunday, November 16, 2008; A01
The United States and Pakistan reached tacit agreement in September on a don't-ask-don't-tell policy that allows unmanned Predator aircraft to attack suspected terrorist targets in rugged western Pakistan, according to senior officials in both countries. In recent months, the U.S. drones have fired missiles at Pakistani soil at an average rate of once every four or five days.
The officials described the deal as one in which the U.S. government refuses to publicly acknowledge the attacks while Pakistan's government continues to complain noisily about the politically sensitive strikes.
The arrangement coincided with a suspension of ground assaults into Pakistan by helicopter-borne U.S. commandos. Pakistani President Asif Ali Zardari said in an interview last week that he was aware of no ground attacks since one on Sept. 3 that his government vigorously protested.
Officials described the attacks, using new technology and improved intelligence, as a significant improvement in the fight against Pakistan-based al-Qaeda and Taliban forces. Officials confirmed the deaths of at least three senior al-Qaeda figures in strikes last month.
Zardari said that he receives "no prior notice" of the airstrikes and that he disapproves of them. But he said he gives the Americans "the benefit of the doubt" that their intention is to target the Afghan side of the ill-defined, mountainous border of Pakistan's Federally Administered Tribal Areas (FATA), even if that is not where the missiles land.
Civilian deaths remain a problem, Zardari said. "If the damage is women and children, then the sensitivity of its effect increases," he said. The U.S. "point of view," he said, is that the attacks are "good for everybody. Our point of view is that it is not good for our position of winning the hearts and minds of people."
A senior Pakistani official said that although the attacks contribute to widespread public anger in Pakistan, anti-Americanism there is closely associated with President Bush. Citing a potentially more favorable popular view of President-elect Barack Obama, he said that "maybe with a new administration, public opinion will be more pro-American and we can start acknowledging" more cooperation.
The official, one of several who discussed the sensitive military and intelligence relationship only on the condition of anonymity, said the U.S-Pakistani understanding over the airstrikes is "the smart middle way for the moment." Contrasting Zardari with his predecessor, retired Gen. Pervez Musharraf, the official said Musharraf "gave lip service but not effective support" to the Americans. "This government is delivering but not taking the credit."
From December to August, when Musharraf stepped down, there were six U.S. Predator attacks in Pakistan. Since then, there have been at least 19. The most recent occurred early Friday, when local officials and witnesses said at least 11 people, including six foreign fighters, were killed. The attack, in North Waziristan, one of the seven FATA regions, demolished a compound owned by Amir Gul, a Taliban commander said to have ties to al-Qaeda.
Pakistan's self-praise is not entirely echoed by U.S. officials, who remain suspicious of ties between Pakistan's intelligence service and FATA-based extremists. But the Bush administration has muted its criticism of Pakistan. In a speech to the Atlantic Council last week, CIA Director Michael V. Hayden effusively praised Pakistan's recent military operations, including "tough fighting against hardened militants" in the northern FATA region of Bajaur.
"Throughout the FATA," Hayden said, "al-Qaeda and its allies are feeling less secure today than they did two, three or six months ago. It has become difficult for them to ignore significant losses in their ranks." Hayden acknowledged, however, that al-Qaeda remains a "determined, adaptive enemy," operating from a "safe haven" in the tribal areas.
Along with the stepped-up Predator attacks, Bush administration strategy includes showering Pakistan's new leaders with close, personal attention. Zardari met with Bush during the U.N. General Assembly in September, and senior military and intelligence officials have exchanged near-constant visits over the past few months.
Pakistan's new intelligence chief, Lt. Gen. Ahmed Shuja Pasha, traveled to Washington in late October, and Gen. David H. Petraeus, installed on Oct. 31 as head of the U.S. Central Command, visited Islamabad on his third day in office. On Wednesday, Hayden flew to New York for a secret visit with Zardari, who was attending a U.N. conference.
Zardari spoke over the telephone with Sen. John F. Kerry (D-Mass.), a conversation Pakistani officials said they considered an initial contact with the incoming Obama administration. Although Kerry has been mentioned as a possible secretary of state, the officials said he indicated that he expects to continue in the Senate, where he is in line to take over Vice President-elect Joseph R. Biden Jr.'s position as chairman of the Foreign Relations Committee.
Despite improved relations with the Bush administration, Zardari said, "we think we need a new dialogue, and we're hoping that the new government will . . . understand that Pakistan has done more than they recognize" and is a victim of the same insurgency the United States is fighting. Pakistan hopes that a $7.6 billion loan from the International Monetary Fund, announced yesterday, will spark new international investment and aid.
Pakistan, whose military has received more than $10 billion in direct U.S. payments since 2001, also wants the United States to provide sophisticated weapons to its armed forces, Zardari said. Rather than using U.S. Predator-fired missiles against Pakistani territory, he asked, why not give Pakistan its own Predators? "Give them to us. . . . we are your allies," he said.
Last month, officials confirmed, Predator strikes in the FATA killed Khalid Habib, described as al-Qaeda's No. 4 official, and senior operatives Abu Jihad al-Masri and Abu Hassan al-Rimi. Three other senior al-Qaeda figures -- explosives expert Abu Khabab al-Masri, Abu Sulayman al-Jazairi and senior commander Abu Laith al-Libi --were killed during the first nine months of the year.
Current and former U.S. counterterrorism officials said improved intelligence has been an important factor in the increased tempo and precision of the Predator strikes. Over the past year, they said, the United States has been able to improve its network of informants in the border region while also fielding new hardware that allows close tracking of the movements of suspected militants.
The missiles are fired from unmanned aircraft by the CIA. But the drones are only part of a diverse network of machines and software used by the agency to spot terrorism suspects and follow their movements, the officials said. The equipment, much of which remains highly classified, includes an array of powerful sensors mounted on satellites, airplanes, blimps and drones of every size and shape.
Before 2002, the CIA had no experience in using the Predator as a weapon. But in recent years -- and especially in the past 12 months -- spy agencies have honed their skills at tracking and killing single individuals using aerial vehicles operated by technicians hundreds or thousands of miles away. James R. Clapper Jr., the Pentagon's chief intelligence officer, said the new brand of warfare has "gotten very laserlike and very precise."
"It's having the ability, once you know who you're after, to study and watch very steadily and consistently -- persistently," Clapper told a recent gathering of intelligence professionals and contractors in Nashville. "And then, at the appropriate juncture, with due regard for reducing collateral casualties or damage, going after that individual."
Two former senior intelligence officials familiar with the use of the Predator in Pakistan said the rift between Islamabad and Washington over the unilateral attacks was always less than it seemed.
"By killing al-Qaeda, you're helping Pakistan's military and you're disrupting attacks that could be carried out in Karachi and elsewhere," said one official, speaking on the condition of anonymity. Pakistan's new acquiescence coincided with the new government there and a sharp increase in domestic terrorist attacks, including the September bombing of the Marriott hotel in Islamabad.
"The attacks inside Pakistan have changed minds," the official said. "These guys are worried, as they should be."
Staff writer Colum Lynch at the United Nations contributed to this report.
Pakistan and U.S. Have Tacit Deal On Airstrikes
By Karen DeYoung and Joby WarrickWashington Post Staff WritersSunday, November 16, 2008; A01
The United States and Pakistan reached tacit agreement in September on a don't-ask-don't-tell policy that allows unmanned Predator aircraft to attack suspected terrorist targets in rugged western Pakistan, according to senior officials in both countries. In recent months, the U.S. drones have fired missiles at Pakistani soil at an average rate of once every four or five days.
The officials described the deal as one in which the U.S. government refuses to publicly acknowledge the attacks while Pakistan's government continues to complain noisily about the politically sensitive strikes.
The arrangement coincided with a suspension of ground assaults into Pakistan by helicopter-borne U.S. commandos. Pakistani President Asif Ali Zardari said in an interview last week that he was aware of no ground attacks since one on Sept. 3 that his government vigorously protested.
Officials described the attacks, using new technology and improved intelligence, as a significant improvement in the fight against Pakistan-based al-Qaeda and Taliban forces. Officials confirmed the deaths of at least three senior al-Qaeda figures in strikes last month.
Zardari said that he receives "no prior notice" of the airstrikes and that he disapproves of them. But he said he gives the Americans "the benefit of the doubt" that their intention is to target the Afghan side of the ill-defined, mountainous border of Pakistan's Federally Administered Tribal Areas (FATA), even if that is not where the missiles land.
Civilian deaths remain a problem, Zardari said. "If the damage is women and children, then the sensitivity of its effect increases," he said. The U.S. "point of view," he said, is that the attacks are "good for everybody. Our point of view is that it is not good for our position of winning the hearts and minds of people."
A senior Pakistani official said that although the attacks contribute to widespread public anger in Pakistan, anti-Americanism there is closely associated with President Bush. Citing a potentially more favorable popular view of President-elect Barack Obama, he said that "maybe with a new administration, public opinion will be more pro-American and we can start acknowledging" more cooperation.
The official, one of several who discussed the sensitive military and intelligence relationship only on the condition of anonymity, said the U.S-Pakistani understanding over the airstrikes is "the smart middle way for the moment." Contrasting Zardari with his predecessor, retired Gen. Pervez Musharraf, the official said Musharraf "gave lip service but not effective support" to the Americans. "This government is delivering but not taking the credit."
From December to August, when Musharraf stepped down, there were six U.S. Predator attacks in Pakistan. Since then, there have been at least 19. The most recent occurred early Friday, when local officials and witnesses said at least 11 people, including six foreign fighters, were killed. The attack, in North Waziristan, one of the seven FATA regions, demolished a compound owned by Amir Gul, a Taliban commander said to have ties to al-Qaeda.
Pakistan's self-praise is not entirely echoed by U.S. officials, who remain suspicious of ties between Pakistan's intelligence service and FATA-based extremists. But the Bush administration has muted its criticism of Pakistan. In a speech to the Atlantic Council last week, CIA Director Michael V. Hayden effusively praised Pakistan's recent military operations, including "tough fighting against hardened militants" in the northern FATA region of Bajaur.
"Throughout the FATA," Hayden said, "al-Qaeda and its allies are feeling less secure today than they did two, three or six months ago. It has become difficult for them to ignore significant losses in their ranks." Hayden acknowledged, however, that al-Qaeda remains a "determined, adaptive enemy," operating from a "safe haven" in the tribal areas.
Along with the stepped-up Predator attacks, Bush administration strategy includes showering Pakistan's new leaders with close, personal attention. Zardari met with Bush during the U.N. General Assembly in September, and senior military and intelligence officials have exchanged near-constant visits over the past few months.
Pakistan's new intelligence chief, Lt. Gen. Ahmed Shuja Pasha, traveled to Washington in late October, and Gen. David H. Petraeus, installed on Oct. 31 as head of the U.S. Central Command, visited Islamabad on his third day in office. On Wednesday, Hayden flew to New York for a secret visit with Zardari, who was attending a U.N. conference.
Zardari spoke over the telephone with Sen. John F. Kerry (D-Mass.), a conversation Pakistani officials said they considered an initial contact with the incoming Obama administration. Although Kerry has been mentioned as a possible secretary of state, the officials said he indicated that he expects to continue in the Senate, where he is in line to take over Vice President-elect Joseph R. Biden Jr.'s position as chairman of the Foreign Relations Committee.
Despite improved relations with the Bush administration, Zardari said, "we think we need a new dialogue, and we're hoping that the new government will . . . understand that Pakistan has done more than they recognize" and is a victim of the same insurgency the United States is fighting. Pakistan hopes that a $7.6 billion loan from the International Monetary Fund, announced yesterday, will spark new international investment and aid.
Pakistan, whose military has received more than $10 billion in direct U.S. payments since 2001, also wants the United States to provide sophisticated weapons to its armed forces, Zardari said. Rather than using U.S. Predator-fired missiles against Pakistani territory, he asked, why not give Pakistan its own Predators? "Give them to us. . . . we are your allies," he said.
Last month, officials confirmed, Predator strikes in the FATA killed Khalid Habib, described as al-Qaeda's No. 4 official, and senior operatives Abu Jihad al-Masri and Abu Hassan al-Rimi. Three other senior al-Qaeda figures -- explosives expert Abu Khabab al-Masri, Abu Sulayman al-Jazairi and senior commander Abu Laith al-Libi --were killed during the first nine months of the year.
Current and former U.S. counterterrorism officials said improved intelligence has been an important factor in the increased tempo and precision of the Predator strikes. Over the past year, they said, the United States has been able to improve its network of informants in the border region while also fielding new hardware that allows close tracking of the movements of suspected militants.
The missiles are fired from unmanned aircraft by the CIA. But the drones are only part of a diverse network of machines and software used by the agency to spot terrorism suspects and follow their movements, the officials said. The equipment, much of which remains highly classified, includes an array of powerful sensors mounted on satellites, airplanes, blimps and drones of every size and shape.
Before 2002, the CIA had no experience in using the Predator as a weapon. But in recent years -- and especially in the past 12 months -- spy agencies have honed their skills at tracking and killing single individuals using aerial vehicles operated by technicians hundreds or thousands of miles away. James R. Clapper Jr., the Pentagon's chief intelligence officer, said the new brand of warfare has "gotten very laserlike and very precise."
"It's having the ability, once you know who you're after, to study and watch very steadily and consistently -- persistently," Clapper told a recent gathering of intelligence professionals and contractors in Nashville. "And then, at the appropriate juncture, with due regard for reducing collateral casualties or damage, going after that individual."
Two former senior intelligence officials familiar with the use of the Predator in Pakistan said the rift between Islamabad and Washington over the unilateral attacks was always less than it seemed.
"By killing al-Qaeda, you're helping Pakistan's military and you're disrupting attacks that could be carried out in Karachi and elsewhere," said one official, speaking on the condition of anonymity. Pakistan's new acquiescence coincided with the new government there and a sharp increase in domestic terrorist attacks, including the September bombing of the Marriott hotel in Islamabad.
"The attacks inside Pakistan have changed minds," the official said. "These guys are worried, as they should be."
Staff writer Colum Lynch at the United Nations contributed to this report.
Maliki, Sistani support SOFA...
This is from the Washington Post.
I am a bit surprised that Sistani has supported SOFA since there are still limitations upon Iraq sovereignty particularly re US troops and contractors as far as I understand it. The agreement must still pass parliament but it now seems as if it might very well pass but we will see. Once details of the plan are released assuming they are then there could be considerable resistance but even Al Sadr may have decided to support the agreement. On the other hand the parliament is so lethargic that it may just go on holiday!
Iraq Head, Top Cleric Back 2011 Exit by U.S.Agreement Gives Pact Better Odds of Passing
By Mary Beth Sheridan
Washington Post Staff WriterSunday, November 16, 2008; A01
BAGHDAD, Nov. 15 -- Iraq's prime minister and its most influential Shiite cleric have decided to support a security agreement that would allow U.S. troops to remain in the country until the end of 2011, sharply increasing its chances of passage in the Iraqi parliament, officials said Saturday.
Approval of the so-called status of forces agreement would be a cause for relief among Bush administration officials, who have grown increasingly concerned that U.S. forces would begin the new year with no legal basis to remain in Iraq. A U.N. mandate authorizing their presence is set to expire Dec. 31.
A delegation of Shiite lawmakers and government officials met Saturday with Grand Ayatollah Ali Sistani to review the latest changes to the agreement, and the cleric "gave the Iraqi side the green light to sign it," according to an official in Sistani's office who spoke on the condition of anonymity. Sistani's views carry great weight among members of the Shiite parties that dominate Iraq's government.
Meanwhile, Prime Minister Nouri al-Maliki has made clear his own support for the agreement and has received assurances from nearly all the parties in the cabinet that they would back it, said an adviser, Sami al-Askari.
A senior U.S. official in Baghdad, also speaking on the condition of anonymity, called Maliki's decision "an important and positive step."
Many Iraqi politicians have withheld public endorsement of the accord because of wariness about appearing too pro-American in the run-up to provincial elections expected in late January. In addition, Iran has been pressuring legislators to end the U.S. presence, according to American and Iraqi officials.
But the Iraqi government also managed to wrest some face-saving changes in the document in last-minute wrangling. The current draft sets a fixed, end-of-2011 deadline for the departure of U.S. forces, unlike earlier versions that said the U.S. military presence could be extended if Iraq requested it.
An aide to President-elect Barack Obama said Saturday that Obama supports the principle underlying the agreement but had not yet seen the specifics of the text. The aide recalled that, during the campaign, Obama said its completion before the end of the year was "critical . . . so that our troops have the protection they need."
The agreement would not affect Obama's pledge to withdraw most U.S. combat forces within 16 months of his inauguration. The document says nothing about when a drawdown would begin, the rate of departure or accomplishing it earlier than 2011.
The cabinet is expected to sign off on the bilateral accord Sunday or Monday, said Askari, a lawmaker who belongs to Maliki's Dawa party. Askari said the only holdout in the cabinet is the Iraqi Islamic Party, a Sunni group led by Vice President Tariq al-Hashimi. His spokesman could not be reached for comment.
Askari said "the difficult part will be the parliament," which must also approve the agreement. But most of the parties represented in the cabinet are expected to urge their lawmakers to fall in line. Maliki's support for the accord was first reported by McClatchy Newspapers and the Los Angeles Times.
The agreement would transform the U.S. military role here, giving the Iraqi armed forces and court system a much greater say in security operations. U.S. officials have lobbied hard for the accord, saying that without some legal umbrella, the 150,000 U.S. troops in Iraq would have to start withdrawing at the end of this year.
Negotiators had finished a draft agreement last month. But Maliki, whose party has only 15 seats in the 275-seat parliament, thought he could not get it through the legislature, according to aides and politicians who have discussed the matter with him.
Iraq then asked for several changes. When the U.S. government agreed to some, Maliki decided to support the accord, Askari said.
"He knows many other parties have to be persuaded to accept it. He wanted some time and the support of the U.S.," Askari said. "So now he is feeling in a good position, he can go forward."
Maliki is expected to address the nation early in the week about the agreement, Askari said.
Iraq's foreign minister, Hoshyar Zebari, said in an interview that "it looks like the atmosphere is much better" for approving the accord. But he warned that Iraq's notoriously lethargic parliament must move quickly, before it takes its scheduled break at month's end for the period of the Muslim pilgrimage to Mecca, Saudi Arabia.
"From now until the end of November is very critical," he said.
Opposition to the agreement in parliament is expected to come from the party of anti-American cleric Moqtada al-Sadr, which controls 30 of the 275 seats and has held frequent demonstrations against the pact.
In addition, parliament Speaker Mahmoud al-Mashhadani, a member of a small Sunni party, "is not full-hearted behind the agreement," Askari said. However, a source in Mashhadani's office said Saturday that the speaker had decided to back the accord. He spoke on the condition of anonymity.
The last-minute concessions made by U.S. authorities appear to be mainly symbolic, according to officials from both sides. U.S. officials did not give in on the Iraqis' main demand, which was that Iraq be given greater jurisdiction over American troops who commit major crimes while off duty.
Still, Iraqi politicians got enough minor changes to claim victory on an agreement that the country's defense and interior ministers have called vital to maintaining stability.
For example, the U.S. side agreed to scrap the language that would have allowed the American troops to stay beyond 2011 if Iraq requested, according to one official close to the negotiations, who spoke on the condition of anonymity because of their sensitivity.
But nothing prevents the Iraqis from seeking such an extension, according to congressional staffers briefed by U.S. officials last week in Washington.
The deputy parliament speaker, Khalid al-Attiya, said after leading a delegation to the city of Najaf to visit Sistani that "the Americans have responded positively on two important amendments. The first one is the Americans should withdraw from cities and suburbs on June 30, 2009, and the second one is that Americans should leave Iraq in 2011."
The Bush administration has always envisioned the accord as an executive agreement, which does not require congressional approval. Bush has consistently told Congress that the status of forces accord and an accompanying strategic framework agreement are "nonbinding" and would not tie the hands of a new president. But experts said its terms are enforceable under international law.
Obama has said that Congress should have a chance to review the document before it is signed by Bush, although he has stopped short of demands by some lawmakers that they should be given the same veto power accorded the Iraqi parliament.
The president-elect's policy calls for a "residual force" of an unspecified number of U.S. troops to remain in Iraq to fight al-Qaeda and protect U.S. diplomats and civilians. He has also conditioned ongoing U.S. training for the Iraqi security forces on progress toward political reconciliation in Iraq.
The U.S. military reported Saturday that two soldiers and a Marine had been killed. A statement said the two soldiers died in a noncombat-related helicopter accident in the northern city of Mosul. The Marine died of injuries from an improvised explosive device in the western province of Anbar.
Three car bombs exploded in Baghdad and northern Iraq on Saturday, killing at least 12 people and injuring dozens, authorities said.
Staff writer Karen DeYoung in Washington and special correspondents Qais Mizher and Zaid Sabah in Baghdad, Dlovan Brwari in Mosul and Saad Sarhan in Najaf contributed to this report.
I am a bit surprised that Sistani has supported SOFA since there are still limitations upon Iraq sovereignty particularly re US troops and contractors as far as I understand it. The agreement must still pass parliament but it now seems as if it might very well pass but we will see. Once details of the plan are released assuming they are then there could be considerable resistance but even Al Sadr may have decided to support the agreement. On the other hand the parliament is so lethargic that it may just go on holiday!
Iraq Head, Top Cleric Back 2011 Exit by U.S.Agreement Gives Pact Better Odds of Passing
By Mary Beth Sheridan
Washington Post Staff WriterSunday, November 16, 2008; A01
BAGHDAD, Nov. 15 -- Iraq's prime minister and its most influential Shiite cleric have decided to support a security agreement that would allow U.S. troops to remain in the country until the end of 2011, sharply increasing its chances of passage in the Iraqi parliament, officials said Saturday.
Approval of the so-called status of forces agreement would be a cause for relief among Bush administration officials, who have grown increasingly concerned that U.S. forces would begin the new year with no legal basis to remain in Iraq. A U.N. mandate authorizing their presence is set to expire Dec. 31.
A delegation of Shiite lawmakers and government officials met Saturday with Grand Ayatollah Ali Sistani to review the latest changes to the agreement, and the cleric "gave the Iraqi side the green light to sign it," according to an official in Sistani's office who spoke on the condition of anonymity. Sistani's views carry great weight among members of the Shiite parties that dominate Iraq's government.
Meanwhile, Prime Minister Nouri al-Maliki has made clear his own support for the agreement and has received assurances from nearly all the parties in the cabinet that they would back it, said an adviser, Sami al-Askari.
A senior U.S. official in Baghdad, also speaking on the condition of anonymity, called Maliki's decision "an important and positive step."
Many Iraqi politicians have withheld public endorsement of the accord because of wariness about appearing too pro-American in the run-up to provincial elections expected in late January. In addition, Iran has been pressuring legislators to end the U.S. presence, according to American and Iraqi officials.
But the Iraqi government also managed to wrest some face-saving changes in the document in last-minute wrangling. The current draft sets a fixed, end-of-2011 deadline for the departure of U.S. forces, unlike earlier versions that said the U.S. military presence could be extended if Iraq requested it.
An aide to President-elect Barack Obama said Saturday that Obama supports the principle underlying the agreement but had not yet seen the specifics of the text. The aide recalled that, during the campaign, Obama said its completion before the end of the year was "critical . . . so that our troops have the protection they need."
The agreement would not affect Obama's pledge to withdraw most U.S. combat forces within 16 months of his inauguration. The document says nothing about when a drawdown would begin, the rate of departure or accomplishing it earlier than 2011.
The cabinet is expected to sign off on the bilateral accord Sunday or Monday, said Askari, a lawmaker who belongs to Maliki's Dawa party. Askari said the only holdout in the cabinet is the Iraqi Islamic Party, a Sunni group led by Vice President Tariq al-Hashimi. His spokesman could not be reached for comment.
Askari said "the difficult part will be the parliament," which must also approve the agreement. But most of the parties represented in the cabinet are expected to urge their lawmakers to fall in line. Maliki's support for the accord was first reported by McClatchy Newspapers and the Los Angeles Times.
The agreement would transform the U.S. military role here, giving the Iraqi armed forces and court system a much greater say in security operations. U.S. officials have lobbied hard for the accord, saying that without some legal umbrella, the 150,000 U.S. troops in Iraq would have to start withdrawing at the end of this year.
Negotiators had finished a draft agreement last month. But Maliki, whose party has only 15 seats in the 275-seat parliament, thought he could not get it through the legislature, according to aides and politicians who have discussed the matter with him.
Iraq then asked for several changes. When the U.S. government agreed to some, Maliki decided to support the accord, Askari said.
"He knows many other parties have to be persuaded to accept it. He wanted some time and the support of the U.S.," Askari said. "So now he is feeling in a good position, he can go forward."
Maliki is expected to address the nation early in the week about the agreement, Askari said.
Iraq's foreign minister, Hoshyar Zebari, said in an interview that "it looks like the atmosphere is much better" for approving the accord. But he warned that Iraq's notoriously lethargic parliament must move quickly, before it takes its scheduled break at month's end for the period of the Muslim pilgrimage to Mecca, Saudi Arabia.
"From now until the end of November is very critical," he said.
Opposition to the agreement in parliament is expected to come from the party of anti-American cleric Moqtada al-Sadr, which controls 30 of the 275 seats and has held frequent demonstrations against the pact.
In addition, parliament Speaker Mahmoud al-Mashhadani, a member of a small Sunni party, "is not full-hearted behind the agreement," Askari said. However, a source in Mashhadani's office said Saturday that the speaker had decided to back the accord. He spoke on the condition of anonymity.
The last-minute concessions made by U.S. authorities appear to be mainly symbolic, according to officials from both sides. U.S. officials did not give in on the Iraqis' main demand, which was that Iraq be given greater jurisdiction over American troops who commit major crimes while off duty.
Still, Iraqi politicians got enough minor changes to claim victory on an agreement that the country's defense and interior ministers have called vital to maintaining stability.
For example, the U.S. side agreed to scrap the language that would have allowed the American troops to stay beyond 2011 if Iraq requested, according to one official close to the negotiations, who spoke on the condition of anonymity because of their sensitivity.
But nothing prevents the Iraqis from seeking such an extension, according to congressional staffers briefed by U.S. officials last week in Washington.
The deputy parliament speaker, Khalid al-Attiya, said after leading a delegation to the city of Najaf to visit Sistani that "the Americans have responded positively on two important amendments. The first one is the Americans should withdraw from cities and suburbs on June 30, 2009, and the second one is that Americans should leave Iraq in 2011."
The Bush administration has always envisioned the accord as an executive agreement, which does not require congressional approval. Bush has consistently told Congress that the status of forces accord and an accompanying strategic framework agreement are "nonbinding" and would not tie the hands of a new president. But experts said its terms are enforceable under international law.
Obama has said that Congress should have a chance to review the document before it is signed by Bush, although he has stopped short of demands by some lawmakers that they should be given the same veto power accorded the Iraqi parliament.
The president-elect's policy calls for a "residual force" of an unspecified number of U.S. troops to remain in Iraq to fight al-Qaeda and protect U.S. diplomats and civilians. He has also conditioned ongoing U.S. training for the Iraqi security forces on progress toward political reconciliation in Iraq.
The U.S. military reported Saturday that two soldiers and a Marine had been killed. A statement said the two soldiers died in a noncombat-related helicopter accident in the northern city of Mosul. The Marine died of injuries from an improvised explosive device in the western province of Anbar.
Three car bombs exploded in Baghdad and northern Iraq on Saturday, killing at least 12 people and injuring dozens, authorities said.
Staff writer Karen DeYoung in Washington and special correspondents Qais Mizher and Zaid Sabah in Baghdad, Dlovan Brwari in Mosul and Saad Sarhan in Najaf contributed to this report.
Russia reaches out to Obama
This is from aljazeera.
It remains to be seen whether anything will come of this. Obama quite rightly is rather doubtful about whether the missile defence system will even work. I am not sure he is that worried about Russian reaction. However, at least there is a certain window of opportunity for a less combative policy on the issue. It seems to me that Russia had already offered the joint defence program to Bush and it was rejected. It will be interesting to see if Obama is any more positive.
Russia reaches out to Obama
Moscow hopes the Obama administration will be less enthusiastic about the US missile defence shield [EPA]
The election of Barack Obama as US president could see Russia and the US reach a deal on Washington's controversial plan to deploy a missile defence system in eastern Europe, the Russian president has said.
Speaking in Washington on Saturday, Dmitry Medvedev said he hoped Obama would seek to repair relations between the two countries that have become seriously strained over the system and the war in Georgia.
"US-Russian relations lack the needed mutual trust. We pin such hopes on the arrival of the new US administration," Medvedev said during his visit for the G20 economic summit.
Diplomatic relations between the two countries plunged to a post-Cold War low after Russia took military action in August to crush neighbouring Georgia's attempt to regain contol over South Ossetia.The region - which broke away from Tbilisi's control in the 1990s - has been recognised as an independent state by Moscow, but much of the West has criticised Russia for its support of the separatists.
'Gesture of goodwill'
In what has been interpreted as a gesture of goodwill, Medvedev signalled his country would be willing to compromise over American plans to deploy a radar system in the Czech Republic and an anti-missile barrage in Poland.
Medvedev also indicated Russia would hold off on a possible military response to the US project. He said Moscow would not be the first to escalate the situation.
"We will not do anything until America takes the first step," he said.
Russia views the project as a threat to its own security.
"It's better to have a global missile defence rather than kind of fractured national elements"
Dmitry Medvedev, Russian presidentJust one day after Obama's election victory, Medvedev announced plans to deploy missiles in Kaliningrad, a Russian enclave which borders Nato military alliance members Poland and Lithuania.
However, the Kremlin hopes the Obama administration will not pursue the missile defence shield project with the same vigour as George Bush, the outgoing US president.
"[The] first signal we received shows that our partners think about this programme rather than plan to simply rubber-stamp it," Medvedev said.
Joint defence plan?
For the first time, Moscow signalled it might accept something less than a total rejection of the missile defence system project by the US. The Russian president suggested it might be possible to agree a joint anti-missile system.
"It's better to have a global missile defence rather than kind of fractured national elements," Medvedev said.
"We have a chance to solve the problem through either agreeing on a global system or, as a minimum, to find a solution on the exisiting programmes which would suit the Russian Federation."
In a marked shift in rhetoric, Medvedev insisted there was "no anti-Americanism in Russia". Instead, there were "problems which have been piling up and chances to solve them".
The Russian president also dismissed suggestions that he made anti-US comments on the day after Obama's election win in a bid to put pressure on the president-elect.
"You think it was blackmail,"he said. "With all respect to the USA, I did not even think then what day it was."
Medvedev said he would meet Obama soon after he takes office in January.
It remains to be seen whether anything will come of this. Obama quite rightly is rather doubtful about whether the missile defence system will even work. I am not sure he is that worried about Russian reaction. However, at least there is a certain window of opportunity for a less combative policy on the issue. It seems to me that Russia had already offered the joint defence program to Bush and it was rejected. It will be interesting to see if Obama is any more positive.
Russia reaches out to Obama
Moscow hopes the Obama administration will be less enthusiastic about the US missile defence shield [EPA]
The election of Barack Obama as US president could see Russia and the US reach a deal on Washington's controversial plan to deploy a missile defence system in eastern Europe, the Russian president has said.
Speaking in Washington on Saturday, Dmitry Medvedev said he hoped Obama would seek to repair relations between the two countries that have become seriously strained over the system and the war in Georgia.
"US-Russian relations lack the needed mutual trust. We pin such hopes on the arrival of the new US administration," Medvedev said during his visit for the G20 economic summit.
Diplomatic relations between the two countries plunged to a post-Cold War low after Russia took military action in August to crush neighbouring Georgia's attempt to regain contol over South Ossetia.The region - which broke away from Tbilisi's control in the 1990s - has been recognised as an independent state by Moscow, but much of the West has criticised Russia for its support of the separatists.
'Gesture of goodwill'
In what has been interpreted as a gesture of goodwill, Medvedev signalled his country would be willing to compromise over American plans to deploy a radar system in the Czech Republic and an anti-missile barrage in Poland.
Medvedev also indicated Russia would hold off on a possible military response to the US project. He said Moscow would not be the first to escalate the situation.
"We will not do anything until America takes the first step," he said.
Russia views the project as a threat to its own security.
"It's better to have a global missile defence rather than kind of fractured national elements"
Dmitry Medvedev, Russian presidentJust one day after Obama's election victory, Medvedev announced plans to deploy missiles in Kaliningrad, a Russian enclave which borders Nato military alliance members Poland and Lithuania.
However, the Kremlin hopes the Obama administration will not pursue the missile defence shield project with the same vigour as George Bush, the outgoing US president.
"[The] first signal we received shows that our partners think about this programme rather than plan to simply rubber-stamp it," Medvedev said.
Joint defence plan?
For the first time, Moscow signalled it might accept something less than a total rejection of the missile defence system project by the US. The Russian president suggested it might be possible to agree a joint anti-missile system.
"It's better to have a global missile defence rather than kind of fractured national elements," Medvedev said.
"We have a chance to solve the problem through either agreeing on a global system or, as a minimum, to find a solution on the exisiting programmes which would suit the Russian Federation."
In a marked shift in rhetoric, Medvedev insisted there was "no anti-Americanism in Russia". Instead, there were "problems which have been piling up and chances to solve them".
The Russian president also dismissed suggestions that he made anti-US comments on the day after Obama's election win in a bid to put pressure on the president-elect.
"You think it was blackmail,"he said. "With all respect to the USA, I did not even think then what day it was."
Medvedev said he would meet Obama soon after he takes office in January.
Saturday, November 15, 2008
Philippines: Fertilizer fund scandal still hits fan!
This is a case of pass the buck down instead of up as it should go!
Ping: Summon DA’s Yap‘We will prove Joc Joc is a liar’
BY DENNIS GADIL
SEN. Panfilo Lacson yesterday asked the Blue Ribbon committee to summon Agriculture Secretary Arthur Yap over claims by former agriculture undersecretary for finance Jocelyn "Joc Joc" Bolante that Yap could be responsible for the P728-million fertilizer fund scam.
But Blue Ribbon chair Alan Peter Cayetano and Sen. Mar Roxas said Bolante is not yet off the hook. They said they are awaiting documents and further testimonies.
Lacson said Yap must answer queries on why he failed to monitor and prevent the fertilizer project from turning into a fund scam as DA undersecretary for operations.
Bolante on Thursday told senators he was not aware that there was an anomaly in the implementation of the fertilizer program but said Yap, then undersecretary for operations, should have known about it.
Yap held that post February 2004 to August 2004 when fertilizer funds intended for purchase of farm implements for farmers supposedly found their way to congressmen and local executive officials loyal to President Arroyo.
Bolante told the Senate panel that after approving the list of recipients and the release of funds, it was the task of the DA undersecretary of operations or the DA regional director to monitor the implementation.
"Sa mga susunod na hearing... ihaharap na namin sa kanya (Bolante) ang mga dokumento, mga opisyal mula sa Department of Agriculture... We’ll have three or more hearings at least na kaharap niya mga tao, kaharap nya mga dokumento. Tingnan natin kung makukumbinsi niya ang publiko," Cayetano said.
Roxas said the next Senate hearing on the fertilizer fund probe will serve to unmask the claims of Bolante that no higher authority was behind the controversial scam.
Bolante on Thursday cleared President Arroyo, saying the implementation of the P728-million farm input-farm implement program was implemented without her approval.
"This shows that the thief is related to the liar. In the next Senate hearings, where we will call DA employees, we will find out who really is lying and who stole from the people," said Roxas.
Roxas stressed the need to put on record Bolante’s testimony, but said the truthfulness of his claims can be seen in the documents gathered by the Senate and by the testimony of other people from the DA.
"The evidence is there in the 2006 Senate committee report. Yesterday, we gave Joc Joc the chance to air his side. In the next hearing, we will see the inconsistencies in Joc Joc’s testimony. We will find out who is lying, because one couldn’t say that ‘it’s black’ and the other ‘it’s white.’ There is only one right answer," he said.
Caloocan Bishop Deogracias Iñiguez, head of the CBCP Public Affairs Committee, said the statement of Bolante clearing President Arroyo of any knowledge in the fund scandal is "simply unbelievable."
"Everything that happens in government, especially with that kind of amount, emanates from her (Arroyo) so it is impossible for her not to know anything about this," he said. – With Gerard Naval
Ping: Summon DA’s Yap‘We will prove Joc Joc is a liar’
BY DENNIS GADIL
SEN. Panfilo Lacson yesterday asked the Blue Ribbon committee to summon Agriculture Secretary Arthur Yap over claims by former agriculture undersecretary for finance Jocelyn "Joc Joc" Bolante that Yap could be responsible for the P728-million fertilizer fund scam.
But Blue Ribbon chair Alan Peter Cayetano and Sen. Mar Roxas said Bolante is not yet off the hook. They said they are awaiting documents and further testimonies.
Lacson said Yap must answer queries on why he failed to monitor and prevent the fertilizer project from turning into a fund scam as DA undersecretary for operations.
Bolante on Thursday told senators he was not aware that there was an anomaly in the implementation of the fertilizer program but said Yap, then undersecretary for operations, should have known about it.
Yap held that post February 2004 to August 2004 when fertilizer funds intended for purchase of farm implements for farmers supposedly found their way to congressmen and local executive officials loyal to President Arroyo.
Bolante told the Senate panel that after approving the list of recipients and the release of funds, it was the task of the DA undersecretary of operations or the DA regional director to monitor the implementation.
"Sa mga susunod na hearing... ihaharap na namin sa kanya (Bolante) ang mga dokumento, mga opisyal mula sa Department of Agriculture... We’ll have three or more hearings at least na kaharap niya mga tao, kaharap nya mga dokumento. Tingnan natin kung makukumbinsi niya ang publiko," Cayetano said.
Roxas said the next Senate hearing on the fertilizer fund probe will serve to unmask the claims of Bolante that no higher authority was behind the controversial scam.
Bolante on Thursday cleared President Arroyo, saying the implementation of the P728-million farm input-farm implement program was implemented without her approval.
"This shows that the thief is related to the liar. In the next Senate hearings, where we will call DA employees, we will find out who really is lying and who stole from the people," said Roxas.
Roxas stressed the need to put on record Bolante’s testimony, but said the truthfulness of his claims can be seen in the documents gathered by the Senate and by the testimony of other people from the DA.
"The evidence is there in the 2006 Senate committee report. Yesterday, we gave Joc Joc the chance to air his side. In the next hearing, we will see the inconsistencies in Joc Joc’s testimony. We will find out who is lying, because one couldn’t say that ‘it’s black’ and the other ‘it’s white.’ There is only one right answer," he said.
Caloocan Bishop Deogracias Iñiguez, head of the CBCP Public Affairs Committee, said the statement of Bolante clearing President Arroyo of any knowledge in the fund scandal is "simply unbelievable."
"Everything that happens in government, especially with that kind of amount, emanates from her (Arroyo) so it is impossible for her not to know anything about this," he said. – With Gerard Naval
Report: Maliki will endorse US security pact.
The pact will still need to go through the Iraqi parliament in which there may still be quite a bit of opposition. Shiite leaders such as Sistani and Al Sadr still do not support the draft apparently. See this report.
Report: Maliki Will Endorse US Security Pact
Posted November 14, 2008
With Iraq’s cabinet preparing to discuss the Status of Forces Agreement (SOFA) with the United States, and a vote expected sometime this weekend, the latest and seemingly final draft of the controversial deal is expected to receive a shot in the arm in the form of an endorsement by Iraqi Prime Minister Nouri al-Maliki.
The Los Angeles Times cites one of Maliki’s “trusted confidants” who says the prime minister will press his cabinet to approve the deal and give an address endorsing the deal ahead of a vote in parliament. Maliki’s support for the SOFA will likely be of enormous help in getting the deal through the cabinet, but there is no guarantee it will sway parliament to support the measure over popular objection.
Iraq requested over 100 amendments to the previous “final” draft of the SOFA, which also seemed to have the support of the prime minister before popular sentiment turned securely against it. The United States accepted some of the amendments, but rejected others, most particularly a change regarding immunity for US troops who commit crimes in Iraq.The White House has also endorsed the current draft, with spokesman Gordon Johndroe calling it a “good agreement.” This is hardly surprising, of course, in that they were the ones who submitted the draft in the first place. State Department deputy spokesman Robert Wood indicated that the US was unwilling to entertain further negotiations, but they seemed quite resistant to the current round until Prime Minister Maliki announced he would not be submitting the draft to parliament without amendments.
Report: Maliki Will Endorse US Security Pact
Posted November 14, 2008
With Iraq’s cabinet preparing to discuss the Status of Forces Agreement (SOFA) with the United States, and a vote expected sometime this weekend, the latest and seemingly final draft of the controversial deal is expected to receive a shot in the arm in the form of an endorsement by Iraqi Prime Minister Nouri al-Maliki.
The Los Angeles Times cites one of Maliki’s “trusted confidants” who says the prime minister will press his cabinet to approve the deal and give an address endorsing the deal ahead of a vote in parliament. Maliki’s support for the SOFA will likely be of enormous help in getting the deal through the cabinet, but there is no guarantee it will sway parliament to support the measure over popular objection.
Iraq requested over 100 amendments to the previous “final” draft of the SOFA, which also seemed to have the support of the prime minister before popular sentiment turned securely against it. The United States accepted some of the amendments, but rejected others, most particularly a change regarding immunity for US troops who commit crimes in Iraq.The White House has also endorsed the current draft, with spokesman Gordon Johndroe calling it a “good agreement.” This is hardly surprising, of course, in that they were the ones who submitted the draft in the first place. State Department deputy spokesman Robert Wood indicated that the US was unwilling to entertain further negotiations, but they seemed quite resistant to the current round until Prime Minister Maliki announced he would not be submitting the draft to parliament without amendments.
Morici: Paulson adds to AIG folly
Any idea of moral hazard is out the window. While workers regularly lose their jobs at companies apparently not worth saving the bigwigs at the bailed out AIG cavort on the links at taxpayer expense.
The executives at AIG certainly have not behaved well since the first bailout. They have enjoyed lavish golf retreats in California and luxurious hunting trips in Britain.
Of course Paulson himself was an employee of one of these too big to fail firms. This is a case of the fox guarding the hen house.
Paulson adds to AIG folly
By Peter Morici
US Treasury Secretary Henry Paulson's decision to inject another US$27 billion into failed insurer AIG and raise the taxpayers' investment to $150 billion suggests he is more intent on helping his pals on Wall Street than protecting taxpayer interests. AIG has solid businesses in industrial, commercial and life insurance, but like a lot of financial firms was attracted to easy profits writing credit default swaps on mortgage-backed bonds - so called collateralized debt obligations (CDOs). AIG received fees to guarantee repayment of those mortgages, or the funds obtained through foreclosures when homeowners defaulted. Like most on Wall Street, AIG executives believed
home prices would rise faster than household incomes forever, so these CDOs really bore little risk. This credit default swap business was outside AIG's highly regulated, solid insurance businesses but was backed by the value of those businesses. Essentially, if the CDOs fell too much in value, AIG pledged the value of those businesses. If an abnormal number of the mortgages failed, the held-to-maturity value of the CDOs would fall and obligations would trigger for AIG to post collateral. When that happened in 2007, AIG deposited cash or other liquid assets with the investors holding the CDOs. With the housing market so depressed by the summer of 2007, AIG could not raise enough cash to meet all its obligations. On September 16, the Federal Reserve provided $85 billion in loans to AIG in exchange for warrants - the right to buy common stock - equal to 79.9% of the company. AIG was to pay 8.5% above the benchmark London Interbank Offered Rate (Libor) for the first $85 billion. The insurer was to use the loans to honor obligations to holders of the credit default swaps, and AIG was to sell parts of its insurance businesses to repay the loans to the Federal Reserve. That loan proved inadequate, and the Fed advanced another $38 billion on October 9. The $123 billion was not enough to finance AIG's short-term credit default swap obligations, and it cannot sell enough pieces of its good insurance businesses to pay back the Federal Reserve in the current environment. Now, the Federal Reserve and Treasury are agreeing to restructure $60 billion of the original loan, lowering the interest rate to 3% above Libor and invest about another $27 billion in AIG. The interest rates on the loans were lowered, in part, because large shareholders complained about heavy-handed government action. The monies will be used to set up two special funds. The first will seek to buy up some of the CDOs that have declined in value to about 50 cents on the dollar, permitting AIG to recoup its collateral paid in cash. This fund will not buy up the most troubled CDOs, whose values are even lower than 50 cents on the dollar. The second fund will be used to solve liquidity problems at AIG's securities lending business. It rents securities to short sellers in the stock markets. This is all folly. The government assumes greater risks without getting benefits for the taxpayer. Many firms that purchased the original credit default swaps from AIG have used the collateral posted by AIG on the less risky CDOs for other purposes and may not want to sell AIG their CDOs. Also, many of the swaps have been resold to firms that don't hold the CDOs, as part of complex derivatives transactions. The short-selling business is a whole new headache, and it should make taxpayers ask what else is lying around at AIG. If the deal works out, AIG executives get to keep their jobs; but if the plan fails, the US government may get stuck holding the bag on billions of dollars of false promises to pay from AIG. Its warrants may prove not worth very much as AIG's obligations overwhelm the value of its businesses. If AIG can't make it on the money the taxpayers have already apparently squandered, then the Treasury should simply exercise its warrants, take control of AIG, and sell off AIG's solid insurance businesses for what they are worth. The Treasury can buy back the CDOs for common shares in the company and reorganize the new AIG with more responsible management. The executives at AIG certainly have not behaved well since the first bailout. They have enjoyed lavish golf retreats in California and luxurious hunting trips in Britain. While the American taxpayer makes monthly tax payments to Washington, AIG executives bang away at birds on the English countryside. Peter Morici is a professor at the University of Maryland School of Business and former chief economist at the US International Trade Commission. (Copyright 2008 Peter Morici.)
The executives at AIG certainly have not behaved well since the first bailout. They have enjoyed lavish golf retreats in California and luxurious hunting trips in Britain.
Of course Paulson himself was an employee of one of these too big to fail firms. This is a case of the fox guarding the hen house.
Paulson adds to AIG folly
By Peter Morici
US Treasury Secretary Henry Paulson's decision to inject another US$27 billion into failed insurer AIG and raise the taxpayers' investment to $150 billion suggests he is more intent on helping his pals on Wall Street than protecting taxpayer interests. AIG has solid businesses in industrial, commercial and life insurance, but like a lot of financial firms was attracted to easy profits writing credit default swaps on mortgage-backed bonds - so called collateralized debt obligations (CDOs). AIG received fees to guarantee repayment of those mortgages, or the funds obtained through foreclosures when homeowners defaulted. Like most on Wall Street, AIG executives believed
home prices would rise faster than household incomes forever, so these CDOs really bore little risk. This credit default swap business was outside AIG's highly regulated, solid insurance businesses but was backed by the value of those businesses. Essentially, if the CDOs fell too much in value, AIG pledged the value of those businesses. If an abnormal number of the mortgages failed, the held-to-maturity value of the CDOs would fall and obligations would trigger for AIG to post collateral. When that happened in 2007, AIG deposited cash or other liquid assets with the investors holding the CDOs. With the housing market so depressed by the summer of 2007, AIG could not raise enough cash to meet all its obligations. On September 16, the Federal Reserve provided $85 billion in loans to AIG in exchange for warrants - the right to buy common stock - equal to 79.9% of the company. AIG was to pay 8.5% above the benchmark London Interbank Offered Rate (Libor) for the first $85 billion. The insurer was to use the loans to honor obligations to holders of the credit default swaps, and AIG was to sell parts of its insurance businesses to repay the loans to the Federal Reserve. That loan proved inadequate, and the Fed advanced another $38 billion on October 9. The $123 billion was not enough to finance AIG's short-term credit default swap obligations, and it cannot sell enough pieces of its good insurance businesses to pay back the Federal Reserve in the current environment. Now, the Federal Reserve and Treasury are agreeing to restructure $60 billion of the original loan, lowering the interest rate to 3% above Libor and invest about another $27 billion in AIG. The interest rates on the loans were lowered, in part, because large shareholders complained about heavy-handed government action. The monies will be used to set up two special funds. The first will seek to buy up some of the CDOs that have declined in value to about 50 cents on the dollar, permitting AIG to recoup its collateral paid in cash. This fund will not buy up the most troubled CDOs, whose values are even lower than 50 cents on the dollar. The second fund will be used to solve liquidity problems at AIG's securities lending business. It rents securities to short sellers in the stock markets. This is all folly. The government assumes greater risks without getting benefits for the taxpayer. Many firms that purchased the original credit default swaps from AIG have used the collateral posted by AIG on the less risky CDOs for other purposes and may not want to sell AIG their CDOs. Also, many of the swaps have been resold to firms that don't hold the CDOs, as part of complex derivatives transactions. The short-selling business is a whole new headache, and it should make taxpayers ask what else is lying around at AIG. If the deal works out, AIG executives get to keep their jobs; but if the plan fails, the US government may get stuck holding the bag on billions of dollars of false promises to pay from AIG. Its warrants may prove not worth very much as AIG's obligations overwhelm the value of its businesses. If AIG can't make it on the money the taxpayers have already apparently squandered, then the Treasury should simply exercise its warrants, take control of AIG, and sell off AIG's solid insurance businesses for what they are worth. The Treasury can buy back the CDOs for common shares in the company and reorganize the new AIG with more responsible management. The executives at AIG certainly have not behaved well since the first bailout. They have enjoyed lavish golf retreats in California and luxurious hunting trips in Britain. While the American taxpayer makes monthly tax payments to Washington, AIG executives bang away at birds on the English countryside. Peter Morici is a professor at the University of Maryland School of Business and former chief economist at the US International Trade Commission. (Copyright 2008 Peter Morici.)
Obama doesn't phone India or the Philippines
This is from the asiatimes.
They should be happy that they have not received calls. Obama may want help with more troops for Afghanistan or perhaps funding to help the US bailout. If they are really Obama fans they could always phone as Medvedev did. Of course no one might answer.
India reels over Obama's silence
By M K Bhadrakumar
Diplomatic predicaments can at times be almost laughable. Indian officials were scurrying around like headless chickens because 120 anxious hours had passed and United States president-elect Barack Obama had not yet put a phone call through to Prime Minister Manmohan Singh - as he has done to at least nine other heads of state. The Indians could learn a thing or two from the Kremlin. Russian President Dmitry Medvedev found himself exactly in Manmohan's predicament when by November 8 his Kremlin telephone still had not rung. But 43-year-old Medvedev did a smart thing. He put a call through to Chicago
to the 47-year old president-elect. The Kremlin thereupon went ahead and publicized the
call.
They should be happy that they have not received calls. Obama may want help with more troops for Afghanistan or perhaps funding to help the US bailout. If they are really Obama fans they could always phone as Medvedev did. Of course no one might answer.
India reels over Obama's silence
By M K Bhadrakumar
Diplomatic predicaments can at times be almost laughable. Indian officials were scurrying around like headless chickens because 120 anxious hours had passed and United States president-elect Barack Obama had not yet put a phone call through to Prime Minister Manmohan Singh - as he has done to at least nine other heads of state. The Indians could learn a thing or two from the Kremlin. Russian President Dmitry Medvedev found himself exactly in Manmohan's predicament when by November 8 his Kremlin telephone still had not rung. But 43-year-old Medvedev did a smart thing. He put a call through to Chicago
to the 47-year old president-elect. The Kremlin thereupon went ahead and publicized the
call.