Don’t forget Saturdays action alert to the Illinois Governor.
26 years behind bars for an innocent man is enough punishment.
The Financial Times Endorses Obama
By astral66 - April 21, 2008
The premier international financial daily newspaper, The Financial Times, has endorsed Barack Obama. Some excerpts: (link below)
"After Tuesday’s vote, the Democrats should move quickly to affirm Mr Obama’s nomination. That is not just because his lead in elected delegates is already unassailable and the contest should be brought to a swift conclusion. It is also because he is, in fact, the better candidate."
"Mr Obama has fought a brilliant campaign, out-organising his opponent, raising more money, and convincing undecided Democrats as well as the country at large that he was more likeable, more straightforward and more worthy of trust."
"On form, he is a spell-binding orator and holds arena-sized audiences in thrall. He is given to airy exhortations, it is true, but genuinely seeks consensus and has cross-party appeal.
Mrs Clinton’s campaign, in contrast, has been a shambles. She and her team expected to have it all sewn up long ago; they made no plans for a long struggle, ran short of money and had to reorganise on the run.
Her speaking style is pedestrian, when it is not actually grating. Those who dislike her tend to do so with a passion: her disapproval ratings started high and after months of campaigning are climbing still. It is a tribute to her tenacity and to the loyalty she commands in the party that her fate was not sealed weeks ago.
How much the way that a campaign is run tells you about a candidate’s fitness to be president is debatable – but it does tell you something, especially if the candidate with the misfiring strategy is running on a claim of management expertise."
Standing Room Only at Obama Town Hall in Erie, PA
By astral66 - April 18, 2008
Excerpts of blog
After his speech, Obama switched to the Q & A town hall meeting format. There were a lot of interesting questions, ranging from national intelligence issues, health care, jobs and the economy, veterans issues, and disability benefits. Obama fielded all of these extremely well. No one asked about any of the media generated controversies at all, people really wanted to focus on real issues that had a direct effect on their lives.
You could tell by Obama's statements and answers that he has done a lot of listening as he has travelled through Pennsylvania, and he cited specific examples of businesses closing, such as the Corning plant in State College that shut down and shipped it's equipment to China, or Steris in Erie, which recently shut down and shipped 350 jobs off to Mexico.
One man stood up and said, "We have lost a lot of jobs here in Erie, and it's quite all right with us if you tell people that we are bitter." That brought the whole crowd to their feet in applause once again, and Obama said, "That's the biggest response we've had all day!"
Eventually, Obama said it was time to wrap up the Q & A and took one more question. Things ended with a man who stood up with a cane when the microphone was brought to him. He started to say "I'm a disabled veteran and I served in ...," but the whole crowd stood up and applauded him so loudly that the rest of his sentence was drowned out by the noise. The applause went on for some time and then he waved for us to let him speak. It was a very poignant moment and you could see that he was very moved by the show of appreciation for his service, and had started to get choked up. At that point Obama went up to him and shook his hand, and the man said "I just want to thank you for running for President. Thank you."
THE MYTH OF 'AL QAEDA' NOW BEGINNING TO BE RECOGNISED BY THE MAINSTREAM MEDIA.
posted by Damian Lataan
Saturday, April 19, 2008
It’s interesting to note that, at long last, the mainstream media is hinting that the words ‘al Qaeda’ has simplistically become a metaphor for those that are fighting the US in Iraq and elsewhere and that ‘al Qaeda’ is not, as they have pushed for years, a specific organisation that is led and organised by the equally metaphoric and very dead ‘Osama bin Laden’.
Michael Cooper and Larry Rohter of ‘The New York Times’ today wrote: “As he campaigns with the weight of a deeply unpopular war on his shoulders, Senator John McCain of Arizona frequently uses the shorthand “Al Qaeda” to describe the enemy in Iraq in pressing to stay the course in the war there.” It’s a step in the right direction for the mainstream media to at last concede that ‘al Qaeda’ is indeed merely ‘shorthand’ for those that battle against US occupiers of various countries in the Middle East and Central Asia.
In much the same way as the Americans invoked the words ‘al Qaeda’ to denote those that raise their hands against them in defense of their lands, the Israelis today refer to all Palestinians that are fighting for their lands back as ‘terrorists’. The Israelis tried for a while to cast Palestinian fighters into the ‘al Qaeda’ mould but it was quickly revealed that those the Israelis ‘captured’ turned out to be Israeli intelligence patsies. They have occasionally tried it on since but haven’t of late been silly enough to actually insist that ‘al Qaeda’ is active with Palestinian fighters.
A Guide to 'NYT' Scoop on Pentagon's Media Propaganda
By Greg Mitchell
Published: April 20, 2008 12:45 PM ET
NEW YORK The front-page David Barstow epic in today's New York Times on how the Pentagon, starting in 2002, assembled a crew of retired military officers to disseminate propaganda via all-too-willing network and cable news outlets is drawing wide attention (see other story http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003791663 ). Barstow aptly refers to this as "a kind of media trojan horse."
The Confederate flag has no place in public today but to be displayed on the White House South lawn is darn right disrespectful.
Pope Benedict XVI waves to the crowd as President Bush applauds, Wednesday, April 16, 2008, during a South Lawn arrival ceremony at the White House in Washington.
(AP Photo/Ron Edmonds)
April 20th, 2008 2:50 pm
War-torn vets speak out
Haunted by their wartime experiences, some Iraq veterans are are protesting
By Claudia Feldman / Houston Chronicle
Hart Viges walks the streets of Austin in a tunic and carries a sign that reads, "Jesus Against War." It's one of many ways, he says, that he must atone for his actions as an American soldier in Iraq.
Army Sgt. Ronn Cantu says lingering memories of killing a civilian in Iraq led him to start a chapter of Iraq Veterans Against the War at his home — Fort Hood.
And in Houston, Chris Hauff, an Iraq War vet who returned from combat two years ago, wrestles with the feeling that his best friend died in a misguided war.
"The idea that American soldiers are there to spread democracy and liberate the people is all smoke and mirrors," Hauff says.
After five years and more than 4,000 American deaths, hundreds of anti-war Iraq veterans and even some active-duty soldiers are speaking out in protest. Though they make up a relatively small percentage of all the soldiers who have served, certainly they speak from experience. They've had their boots on the ground.
Nationally, more than 1,000 have joined Iraq Veterans Against the War, which is calling for an immediate troop pullout. At a recent IVAW conference in suburban Washington, D.C., 60 vets addressed about 400 peers. Collectively, they described American soldiers unraveling under pressure — devolving from fighting for freedom and defending innocents to saving their own lives, protecting their friends and getting revenge.
Viges, tall and reed-slim, spoke as if his entry to heaven were on the line.
"I joined the Army right after September 11th," he began. He ended with, "I don't know how many innocents I've helped kill. ...
"I have blood on my hands."
His story, common among the speakers, began with good intentions and patriotic zeal. Then he realized he couldn't tell friend from enemy, and as he dodged mortar fire and roadside bombs, he feared each new day was going to be his last.
In that atmosphere, Viges and other soldiers assigned to the 82nd Airborne Division aimed countless mortar rounds at the town of As Samawah, southeast of Baghdad. They were trying to root out insurgents, but to this day, Viges doesn't know whom or what they hit.
"This wasn't army to army," Viges said. "People live in towns."
The panelists' speeches were vetted ahead of time by two groups of veterans who scoured news accounts, researched documents, videos and photographs where available, and interviewed others who were present at the time.
The testimonials were sobering. They included heart-stopping details. But the vets kept talking. Clearly, it was information they felt compelled to share.
Jason Washburn's testimony is preserved on the Internet. A Marine veteran from Philadelphia, he explained how the rules of engagement kept changing until it seemed there were no rules at all.
"If the town or the city that we were approaching was a known threat, if the unit that went through the area before we did took a high number of casualties, we were allowed to shoot whatever we wanted.
"I remember one woman was walking by, and she was carrying a huge bag, and she looked like she was heading toward us. So we lit her up with the Mark 19, which is an automatic grenade launcher. And when the dust settled, we realized that the bag was only full of groceries. And, I mean, she had been trying to bring us food, and we blew her to pieces for it."
Jon Michael Turner, a Marine veteran from Vermont, described 3 a.m. house raids in which "problem" Iraqi men were subjected to his "choking hand."
It was tattooed in Arabic with an all-too-American epithet.
Turner recalled the first time he shot an Iraqi civilian. He offered no context or explanation except, "We were all congratulated after we had our first kills."
Turner also recalled the blind rage that led him and fellow Marines to start fights, spray bullets indiscriminately and fire on mosques. Eighteen men in his unit were killed by the enemy, he said. After that much bloodshed, the surviving soldiers were damaged mentally, if not physically.
"I just want to say that I'm sorry for the hate and destruction that I've inflicted on innocent people," said Turner, who began his speech by ripping off his service medals. "Until people hear about what is happening in this war, it will continue."
Lt. Col. Mark Ballesteros, a spokesman for the Department of Defense, read from a one-paragraph response to the conference:
"(We) always regret the loss of any innocent life in Iraq or anywhere else. The U.S. military takes enormous precautions to prevent civilian deaths and injuries. By contrast the enemy in Iraq takes no such precautions and deliberately targets innocent civilians. When isolated allegations of misconduct have been reported, commanders have conducted comprehensive investigations to determine the facts and held individuals accountable when appropriate."
The vast majority of American soldiers, Ballesteros added, serve honorably in combat.
The veterans who came to Maryland last month called their conference Winter Soldier: Iraq and Afghanistan. It was a sequel to a tense 1971 gathering in a Howard Johnson motel in Detroit, where more than 100 Vietnam vets braved frigid winter conditions to speak out against their war.
(Organizers of the original chose the title Winter Soldier Investigation to evoke Thomas Paine, who wrote in 1776, "These are the times that try men's souls. The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country; but he that stands it now, deserves the love and thanks of man and woman.")
Navy Lt. John Kerry, the future U.S. senator and presidential candidate, attended that meeting and, a few months later, lambasted the war before the Senate Foreign Relations Committee.
Proud American soldiers were reduced to acts of senseless destruction, Kerry told the senators, "not isolated incidents but crimes ... ."
Many Americans — still recovering from the news of the My Lai massacre — believed Kerry. But lingering resentment from his testimony may have cost him the 2004 presidential election.
During his campaign against President Bush, Vietnam vets still furious with Kerry for somehow staining their service records and their honor struck back. They claimed he wasn't a war hero, that he hadn't earned his multiple medals, that in fact, he'd awarded his medals to himself.
The topic is still red-hot, even today. Pennsylvania veteran Bill Perry, who campaigned for Kerry and attended both Winter Soldier meetings, offered his perspective: "Kerry came from a well-educated, wealthy family, and he could have ducked the whole thing. I respect the person who served."
The comment was aimed at President Bush, who did not fight in Vietnam or any war.
The latest Winter Soldier event coincided with national polls showing two-thirds of Americans disagree with the handling of the war but consider the economy and their own financial logjams more pressing than combat halfway around the world.
Viges, the veteran of the 82nd Airborne, struggled to understand that disconnect.
One of his jobs in Iraq was to stand guard with a .50-caliber machine gun while his buddies searched houses supposedly inhabited by insurgents and enemy combatants. At the conference, searches of that kind were described vividly. Sometimes soldiers kicked in the front doors. Sometimes they upended refrigerators and ripped stoves out of walls. Sometimes they turned drawers upside down and broke furniture.
One day Viges was instructed to search a suspicious house, a hut, really, but he couldn't find pictures of Saddam Hussein, piles of money, AK-47s or roadside bombs.
"The only thing I found was a little .22 pistol," Viges said, " ... but we ended up taking the two young men, regardless."
An older woman, probably the mother of the young men, watched and wailed nearby.
"She was crying in my face, trying to kiss my feet," Viges said. "And, you know, I can't speak Arabic, but I can speak human. She was saying, 'Please, why are you taking my sons? They have done nothing wrong.' "
The testimonials went on for 3 1/2 days. They were interrupted once, when a middle-age man leaped from his seat and ran toward the stage.
"Liars! Liars!" he shouted. "Kerry lied while good men died, and you guys are betraying good men."
Others among the counter-protesters tried for a more even tone.
Chris Eaton, a former Houstonian now living in Dallas, spoke for them when he described himself as an average guy doing his best to support American troops.
"I'm not hateful," he said. "I'm not a warmonger."
He's married and the father of three. For his little girl's seventh birthday, he welded a butterfly made of old car parts, plate steel and rebar.
But Eaton didn't travel halfway across the country to talk about butterflies. He wanted to lend his voice to the counter-protesters. He wanted to remind the anti-war vets that they needed to tell the absolute and precise truth or risk demoralizing their brothers and sisters still fighting overseas.
Eaton also wanted to support his friend, retired Army Col. Harry Riley, who organized the counter-protest and the sponsoring group, Eagles Up.
Riley is a decorated Vietnam vet. He's got a calm, mellifluous voice — until he flashes back to 1971.
"No one stood up for me or millions of others smeared by Kerry," Riley said. "That first Winter Soldier meeting was total bunk, denigration and falsehood. We want to ensure this second one meets our criteria for accuracy."
It is true, Perry said, that a few of the testimonies from '71 contained significant errors and should have been omitted. That's unfortunate, he said, but hardly surprising given the impromptu nature of that meeting. The great majority of the vets, Perry said, spoke the truth.
Did not, said Riley, referring to a government investigation of the most serious charges made in Detroit. Not one of the soldiers' testimonies was substantiated.
Perry noted that the investigation was conducted by Army personnel. In his opinion, the Army's investigation of itself was a joke.
With a wrench, Riley pushed the conversation back into the 21st century. If atrocities or war crimes are taking place in Iraq or Afghanistan, he said, service men and women are duty-bound to report them under oath and through official channels. Failure to do so, he added, means they are potential criminals themselves and subject to prosecution.
"Oh, great," retorted Hauff, the Houstonian. Soldiers aren't going to turn themselves in, and they're not going to report their peers or their superiors, either, he said.
"Nobody wants to be viewed as a snitch or a narc," Hauff said. And who, he asked, volunteers for a dock in pay or a loss of rank or a court-martial or worse?
"You're supposed to do what you're told in the military."
For vets who often feel isolated by their experiences and their memories, old war buddies are their best, most comfortable friends.
Viges greeted old friends joyously between sessions at the Winter Soldier conference. Many of them were vets from the Vietnam era.
"They are my fathers," he said.
After struggling with post-traumatic stress disorder, Viges said, he is somewhat better. He still jumps at the sound of fireworks, but he's stopped patrolling the perimeter of his house.
With shoulder-length, brown hair and a goatee, Viges looks very much like a model for velvet Jesus portraits. When he puts on his tunic and takes his anti-war campaign to the streets, he tells anyone who will listen, "Love thine enemy" and "Turn the other cheek."
A devout Christian, Viges finally left combat as a conscientious objector.
Cantu, the Fort Hood soldier, was one of several celebrity Texans at the conference. He says his pro-war sentiments changed 180 degrees the day he killed a civilian in Iraq. His convoy had been hit by an improvised explosive device, and he wanted revenge.
Next thing he knew, a car was coming toward them, and despite the warnings, it didn't stop.
Cantu opened fire. He didn't know until too late the car was filled with multiple members of an Iraqi family.
"I was literally on the verge of quitting (the military) right then and there," said Cantu, a third-generation military man.
Instead, he's spoken out against the war, through the protest chapter he founded and a 60 Minutes interview in 2007.
He occasionally comes to the attention of his superiors, too.
"All I've done is use my First Amendment rights," Cantu said. "I appreciate the Constitution. You can't really love it until you've actually been protected by it."
Cantu is scheduled to return to Iraq for his third tour of duty in early 2009.
"I've cheated death so many times," he said, suddenly somber. "I hope I can do it again."
Hauff, the Houston vet, didn't try to make it to Maryland. He had his hands full, with his job, his wife and his little girl. Besides, he didn't want to talk about the ugly side of war.
His best friend was on patrol, subbing for Hauff, when he was killed.
Hauff paused, keeping the many things he thought about that tragedy to himself. He had his emotions under control, he said, and he's moved on with his life.
His mother-in-law, sipping coffee and listening to him, cocked her head as if she didn't quite agree.
That year in Iraq changed him, Sherry Glover said. He doesn't like to be touched. He can be impatient with the people, even the child he loves the most. It's almost like he's barricaded himself inside an invisible fence that has a sign: "Keep out."
When Hauff finished talking, he frowned at his mother-in-law and walked away. They're sharing the same house, at least until Hauff and his family can afford to move.
Military families are paying for this war, Glover said darkly. She has a friend whose son tried to commit suicide between tours of duty. Army doctors gave him a bunch of prescriptions and deemed him ready to serve.
Glover couldn't go to the conference — she wanted to keep an eye on things at home — and made do by listening to the testimony on the local Pacifica radio station, KPFT-90.1 FM.
She and many other peace activists wondered why only a couple of outlets in the mainstream media covered the event.
The vets also wondered what all the other newspapers, magazines and TV stations were afraid of. The truth?
That's not it, said Larry Sabato, director of the University of Virginia's Center for Politics.
The gathering was tiny, Sabato said, in comparison to protests from the Vietnam era.
Also, activists on both sides of the war have moved the debate to the presidential campaign.
President Bush has been unequivocal in his support for the war, Sabato said, and those who share that commitment will vote Republican. Those who oppose the war will vote for the Democrat.
It's not that Americans don't have an opinion, he said. They're just waiting for Election Day.
Whoa real bugs used for spying, unreal!
Pentagon agency that created spy bugs declines to allow scientist to talk
Published: Monday April 21, 2008
Vice President Dick Cheney is so favored by the Defense Advanced Research Project Agency -- DARPA -- that they invited him to blow out the candles at their 50th anniversary bash.
"This agency brought forth the Saturn 5 rocket, surveillance satellites, the Internet, stealth technology, guided munitions, unmanned aerial vehicles, night vision and the body armor that's in use today," Cheney claimed. "Thank heaven for DARPA."
The secretive Pentagon outfit, a research arm which develops new military technologies, refused to allow a scientist to be interviewed for an article Sunday about on a program that has received scant attention by the press: small insect cyborgs that may mark the next generation in military surveillance.
No, it's not April Fool's.
"No agency admits to having deployed insect-size spy drones," the Washington Post's Rick Weiss wrote last October. "But a number of U.S. government and private entities acknowledge they are trying. Some federally funded teams are even growing live insects with computer chips in them, with the goal of mounting spyware on their bodies and controlling their flight muscles remotely."
"The robobugs could follow suspects, guide missiles to targets or navigate the crannies of collapsed buildings to find survivors," he adds.
But in an article reported late Sunday by TIME's Mark Thompson, the agency has admitted creating insects with embedded computer chip systems.
"DARPA declined TIME's request to interview Dr. Lal about his program and the progress he is making in producing the bugs," Thompson wrote. "The agency added that there is no timetable for turning backyard pests into battlefield assets. But in a written statement, spokeswoman Jan Walker said that 'living, adult-stage insects have emerged with the embedded systems intact.'"
"Presumably," he mocks, "enemy arsenals will soon be well-stocked with Raid."
But he may be underplaying the case. The CIA developed simplistic "dragonfly" robots in the 1970s, Weiss notes, but scientists are skeptical that enhanced cyborg surveillance insects have been created.
So what's hot at DARPA right now? Bugs. The creepy, crawly flying kind. The Agency's Microsystems Technology Office is hard at work on HI-MEMS (Hybrid Insect Micro-Electro-Mechanical System), raising real insects filled with electronic circuitry, which could be guided using GPS technology to specific targets via electrical impulses sent to their muscles. These half-bug, half-chip creations - DARPA calls them "insect cyborgs" - would be ideal for surveillance missions, the agency says in a brief description on its website. Scientist Amit Lal and his team insert mechanical components into baby bugs during "the caterpillar and the pupae stages," which would then allow the adult bugs to be deployed to do the Pentagon's bidding. "The HI-MEMS program is aimed at developing tightly coupled machine-insect interfaces by placing micro-mechanical systems inside the insects during the early stages of metamorphosis," DARPA says. "Since a majority of the tissue development in insects occurs in the later stages of metamorphosis, the renewed tissue growth around the MEMS will tend to heal, and form a reliable and stable tissue-machine interface." Such bugs "could carry one or more sensors, such as a microphone or a gas sensor, to relay back information gathered from the target destination."
Wrote Weiss in October: "In one approach, researchers funded by the Defense Advanced Research Projects Agency are inserting computer chips into moth pupae -- the intermediate stage between a caterpillar and a flying adult -- and hatching them into healthy 'cyborg moths.'"
More images of the fitted insects are here.
Ann Coulter booksigning takes place... in a university bathroom?
Must see video, this is to funny to pass up.
BLOGGED BY Alan Breslauer ON 4/20/2008 11:15AM
VIDEO EXCLUSIVE: ABC News Democratic Debate Protest In Los Angeles Protesters Hand Out Flag Lapel Pins To ABC/Disney Employees Coverage You Won't See In The Mainstream Media.
This is a must read article!
Apr 22, 2008
CREDIT BUBBLE BULLETIN
Crisis intermission - now for stage two
Commentary and weekly watch by Doug Noland
Martin Feldstein, Harvard professor and former chairman of the US President's Council of Economic Advisors, wrote an op-ed piece in last Wednesday's Wall Street Journal - "Enough with Interest Rate Cuts" - worthy of comment.
"It's time for the Federal Reserve to stop reducing the federal funds rate, because the likely benefit is small compared to the potential damage. Lower interest rates could raise the already high prices of energy and food, which are already triggering riots in developing countries. In order to offset the inflationary impact of higher imported commodity prices, central banks in those countries may raise interest rates. Such contractionary policies
would reduce real incomes and exacerbate political instability.
"The impact of low interest rates on commodity-price inflation is different from the traditional inflationary effect of easy money. The usual concern is that lowering interest rates stimulates economic activity to a point at which labor and product markets cause wages and prices to rise. That is unlikely to happen in the US in the coming year. The general weakness of the economy will keep most wages and prices from rising more rapidly. But high unemployment and low capacity utilization would not prevent lower interest rates from driving up commodity prices.
"Many factors have contributed to the recent rise in the prices of oil and food, especially the increased demand from China, India and other rapidly growing countries. Lower interest rates also add to the upward pressure on these commodity prices, by making it less costly for commodity investors and commodity speculators to hold larger inventories of oil and food grains. Lower interest rates induce investors to add commodities to their portfolios. When rates are low, portfolio investors will bid up the prices of oil and other commodities to levels at which the expected future returns are in line with the lower rates. An interest rate-induced rise in the price of oil also contributes indirectly to higher prices of food grains. It does so by making it profitable for farmers to devote more farm land to growing corn for ethanol."
While I concur with the basic premise of the article (stop the cuts!), the substance of Mr Feldstein's analysis leaves much to be desired. First of all, I find it strange than he would address the issues of overly accommodative Federal Reserve policy, commodity price risk, and inflationary pressures without so much as a cursory mention of our weak currency. The word "dollar" is nowhere to be found; not a mention of our current account deficits. The focus is only on interest rates, and such one-dimensional analysis just doesn't pass muster in our complex world.
Most people remain comfortably oblivious to today's inflation dynamics. Mr Feldstein mentions increased demand from China and India. He seems to imply, however, that portfolio buying (financed by low interest rates) by "commodity investors and speculators" is providing the major impetus to rising inflationary pressures generally. Perhaps price gains could have something to do with the US$2.5 trillion increase in global official reserve positions over the past two years (85% growth). I would also counter that destabilizing speculative activity is an inevitable consequence, rather than a cause, of an alarmingly inflationary global backdrop.
I'll remind readers that we live in a unique world of unregulated credit. Excess has evolved to the point of being endemic to an apparatus that operates without any mechanism for adjustment or self-correction. There is, of course, no gold reserve system to restrain domestic monetary expansions. Some years back, the dollar-based Bretton Woods global monetary regime lost its relevance. And, importantly, the market-based disciplining mechanism ("king dollar") that emerged at times to ruthlessly punish financial profligacy around the globe throughout the nineties has morphed into a dysfunctional dynamic that these days nurtures self-reinforcing excesses.
The "recycling" of our "bubble dollars" (in the process inflating local credit systems, asset markets, commodities and economies across the globe) directly back into our securities markets rests at the epicenter of global monetary dysfunction.
A historic inflation in dollar financial claims was the undoing of anything resembling a global monetary system, and now this anchorless "system" of wildcat finance is the bane of financial and economic stability. To be sure, massive and unrelenting US current account deficits and resulting dollar impairment have unleashed domestic credit systems around the globe to expand uncontrollably. Today, virtually any major credit system can and does inflate domestic credit to create the purchasing power to procure inflating global food, energy, and commodities prices.
The long-overdue US credit contraction and economic adjustment could change this dynamic. But for now there are reasons to expect this uninhibited global credit bubble to instead run to precarious extremes, and for resulting monetary disorder to become increasingly problematic. Destabilizing price movements and myriad inflationary effects are poised to worsen. The specter of yet another year of near $800 billion current account deficits coupled with huge speculative outflows of dollars is just too much for an acutely overheated and unstable global currency and economic system to cope with.
I hear pundits still referring to a "deflationary credit collapse". Well, the US credit system implosion was largely stopped in its tracks last month. The Fed bailed out Bear Stearns, opened wide the Fed discount window to Wall Street; and implemented unprecedented liquidity facilities for the benefit of the marketplace overall. Central banks around the globe executed unparalleled concerted market liquidity operations.
Here at home, the GSEs' regulator spoke publicly about Fannie and Freddie (mortgage agencies) having the capacity to add $200 billion of mortgages to their balances sheets, with the possibility of increasing their guarantee business as much as $2 trillion this year (certainly including "jumbo" mortgages, that is, larger than the present limits set by Fannie Mae and Freddie Mac). The Federal Home Loan Bank system was given the OK to continue aggressive liquidity injections and balloon its balance sheet in the process. And now (see "GSE Watch" below) we see that the Federal Housing Administration (with its new mandate and $729,550 loan limit) is likely to increase federal government mortgage insurance by as much as $200 billion this year, while Washington’s Ginnie Mae (Government National Mortgage Association) is in the midst of a securitization boom.
Together, the Fed and Washington have effectively nationalized a large portion of both mortgage and market liquidity risk. It is, as well, worth noting that JPMorgan Chase expanded assets by $80.7 billion during the first quarter (20.7% annualized) to $1.642 trillion, with six-month growth of $163.3 billion (22.1% annualized). Goldman Sachs expanded its balance sheets by $69.2 billion during Q1 (24.7% annualized) to $1.189 trillion, with half-year growth of $143.2 billion (27.4%). Even Wells Fargo grew assets at an almost 14% pace this past quarter. And we know that bank credit overall has expanded at a 12.6% rate over the past 38 weeks.
Meanwhile, mortgage-backed securities (MBS) issuance by government-sponsored enterprises (such as Fannie Mae and Freddie Mac) issuance has been ramped up to a record pace. And let’s not forget the credit intermediation function now being carried out by the money fund complex, with assets having increased an unprecedented $371 billion year to date (41.3% annualized) and $900 billion over the past 38 weeks (47.7% annualized). It is also worth noting the $184 billion y-t-d increase (29% annualized) in foreign "custody" holdings held at the Fed.
Sure, the credit system remains under significant stress, with additional mortgage and corporate credit deterioration in the offing. But, at least for now, policymakers have successfully stemmed systemic deleveraging. The credit system is simply not in deflationary collapse mode.
I could not be more pessimistic with regard to our economy's prognosis. And certainly much more severe credit problems lay ahead. I could argue further that recent credit system developments are indeed consistent with the unfolding "worst-case scenario". Yet I tend right now to see benefits from analyzing the current backdrop in terms of the conclusion of the first stage of the crisis.
The key aspect of this first stage was a breakdown in Wall Street's highly leveraged risk intermediation and securities speculation markets. The speed and force of the unwind was extraordinary and in notable contrast to traditional banking crises that track real economy developments. "Resolution" came only through the Federal Reserve and federal government assuming unprecedented risk, and at a cost of a policymaking mix of interest-rate cuts, marketplace interventions and government guarantees. It is worth pondering some of the near-term ramifications.
First of all, and as the market recognized this past week, yields have been driven to excessively low levels. Fed funds are today ridiculously priced in comparison both with the inflationary backdrop and with global rates. Mr Feldstein is calling for a halt to rate cuts when it would be more appropriate for the Fed to move immediately to return rates to a more reasonable level. They, of course, would not contemplate as much.
So I will presume that today's non-imploding credit system, replete with government-backed mortgage securitizations, government-guaranteed bank credit, presumed government-backstopped money funds and a recovering debt issuance apparatus, will suffice in the near-term in generating credit sufficient to perpetuate our enormous current account deficits. This is no minor point.
I have in past Bulletins made the case that US credit and economic bubbles had become untenable; the scope of credit and risk intermediation necessary to support the maladjusted economy had become too large. Extraordinary measures to effectively nationalize mortgage and market liquidity risk change somewhat the direction of the analysis. I would today argue that the risk of a precipitous economic downturn has been reduced in the near-term. As a consequence, US credit growth could
Continue to page 2 http://www.atimes.com/atimes/Global_Economy/JD22Dj02.html
Bush and Lee talk T-bones and bombs
It was all smiles after two days of talks between US President George W Bush and South Korea's Lee Myung-bak, and if secret deals are being hammered out between US and North Korean nuclear envoys, mum's the word. For public consumption, the leaders tackled issues ranging from an impending free-trade agreement to the US troop presence in South Korea - and beef. - Donald Kirk (Apr 21, '08)
I missed this one that came out on Saturday.
Petraeus hid Maliki's resistance to US troops
By Gareth Porter
WASHINGTON - General David Petraeus, in testimony before US congressional committees last week, portrayed Iraqi Prime Minister Nuri al-Maliki's late March offensive in Basra as a poorly planned effort that departed from what US officials had expected.
What Petraeus, the US commander in Iraq, did not reveal is that Maliki was deliberately upsetting a Petraeus plan to put US and British forces into Basra for a months-long operation to eliminate the Mahdi Army from the city.
Petraeus referred to a plan for an operation to be carried out in Basra that he and his staff had developed with the head of the Basra Operational Command, General Mohan al-Furayji. But
Petraeus carefully dodged a question from Senator Hillary Clinton about what resources he was planning to deploy to Basra and over what length of time.
Clinton evidently suspected that the plan envisioned the deployment of US troops on a large scale in the Shi'ite south, despite the fact that the Iraqi government is supposed to be responsible for security there. Petraeus responded vaguely that it was "a phased plan over the course of a number of months during which different actions were going to be pursued".
Reports in the British press indicated, however, that the campaign plan was based on the assumption that British and US troops would play the central role in an effort to roll up the Mahdi Army in Basra. The Independent reported March 21 that Furayji had publicly declared there would be a "final battle" in Basra, probably during the summer, and that Britain had already promised to provide military forces for the campaign. It quoted "senior government sources" as saying that Prime Minister Gordon Brown's earlier pledge to cut the number of British troops in the south from 4,100 to 2,500 would "almost certainly be postponed until at least the end of the year".
Two days later, the Sunday Mirror quoted a "senior US military source" as saying that the "coalition" would turn its attention to Basra once the "huge operation" in Mosul against al Qaeda and nationalist Sunni insurgents was completed, and that the US was prepared to redeploy "thousands" of US Marines to Basra, if necessary.
This plan for a major foreign troop deployment to the south for the first time since the US battles against the Mahdi Army in April 2004 did not sit well with Maliki. In 2006 and 2007, he had repeatedly blocked US proposals that US and Iraqi forces target Muqtada al-Sadr's Mahdi Army in Baghdad as well as in the south.
When Vice President Dick Cheney, who had previously played the "bad cop" in the George W Bush administration's relations with Maliki, visited Baghdad in mid-March, one of his objectives was to get Maliki to go along with the Petraeus plan to eliminate the commanding position of Muqtada's forces in Basra. Maliki has told Iraqi officials that Cheney put pressure on him to go along with the Basra operation, according one Iraqi source.
After Cheney met briefly with Maliki on March 17, he discussed the "security situation" with Muqtada's Shi'ite rival, Abdul-Aziz al-Hakim, head of the Supreme Islamic Iraqi Council, which has been pushing for the destruction of the Mahdi Army. Cheney lavished praise on Hakim, whom he ostentatiously called "my friend", for "working so hard with the United States and with Iraq's other leaders to advance the cause of Iraq's freedom and democracy". The signal of the Bush administration's intentions toward Muqtada could hardly have been clearer.
The Cheney visit apparently mobilized Maliki, but not in the way Cheney had intended.
Four days later, when Petraeus met with Maliki's national security adviser Mowaffak al-Rubaie to talk about the US campaign plan for Basra, Rubaie warned Petraeus that Maliki had a different plan. Petraeus was apparently told that the operation would last from a week to 10 days - not the several months envisioned in the Petraeus plan.
The main point of Maliki's operation, however, was that it would exclude US troops. As Maliki explained in an interview with CNN correspondent Nic Robertson on April 7, he had demanded that US and British troops stay out of Basra, "because that would give an excuse to some militant groups to say that this is a foreign force attacking us".
Maliki thus feared that a confrontation between thousands of US and British troops and the Mahdi Army would further inflame the feelings of Shi'ites in the south about the occupation, with which his own regime has been so tightly linked.
The Shi'ite south has become the most anti-occupation region in the country. The British polling firm ORB, which has been doing opinion surveys in Iraq since 2005, found in March that 69% of respondents in the south believed security would improve if foreign troops were withdrawn, and only 10% believed it would get worse.
When Maliki met with Petraeus the following morning, according to Petraeus' spokesman, Petraeus warned against sending "a couple of brigades" into the city, suggesting that he did not consider the scale of the operation to be large enough. Nevertheless, when Maliki told him the decision to launch an operation in Basra had already been made and that it would begin in three days, Petraeus agreed to support it.
When the Basra operation became an obvious disaster, however, Washington officials began to question Maliki's motives. On the third day of the operation, as Bush administration officials were reassessing what they described as "a rapidly deteriorating situation in southern Iraq", one official told the Washington Post's Peter Baker they were comparing conspiracy theories about why Maliki had acted so precipitously.
Although that comment was not explained, it clearly implied that Maliki was deliberately undermining the US objective of eliminating the Mahdi Army by using US and British troops.
Bush administration suspicions of Maliki's intentions could not have been eased by the fact that a delegation of pro-government parties traveled to Iran to ask the commander of the Iranian Revolutionary Guards Corps to negotiate a ceasefire with the Mahdi Army. That ploy, which did result in a tenuous ceasefire, raised the possibility that Maliki intended from the beginning that the outcome of the Basra operation would be a new agreement that would prevent the deployment of US and British troops to fight the Mahdi Army during the summer.
Bush administration officials have been asserting that the most important thing about the Basra operation is that Maliki is now convinced that Iran is really an enemy rather than a friend. But Maliki's April 7 interview with CNN's Robertson made it clear that he has not budged from his position that his government's interests lie in an accord between Iran and the United States - not in taking sides against Iran.
"We will always reject the idea of any side using Iraq as a launching pad for its attack on others," said Maliki. "We reject Iran using Iraq to attack the US, and at the same time we reject the idea of the US using Iraq to attack Iran ..."
Gareth Porter is an historian and national security policy analyst. The paperback edition of his latest book, Perils of Dominance: Imbalance of Power and the Road to War in Vietnam, was published in 2006.
(Inter Press Service)
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