Russia's Pravda breaks the media silence and states the obvious

Al Qaeda does not exist and never has

The basic truth is that Al Qaeda does not exist and never has. Al Qaeda is a manufactured enemy who was created by the Bush Administration in order to have an excuse to wage a war for the control of the world’s oil resources.

Did an American even hear the words “Al Qaeda” before 9-11? Or were we told that its alleged leader Osama Bin Laden has family who themselves have personal business relationships with George W. Bush’s family and that both families had financially profited considerably from the “War on Terror”?

If “Al Qaeda” was such an organized group terrorists as we are being told then why weren’t we the people notified of this evil threat when the US Cole was bombed a few months before 9-11? “Al Qaeda” is nothing more than a broad euphemistic umbrella classification used to group any Middle Eastern fighter under the Sun as an enemy. The most diabolical aspect of this public relations stunt is that it enables the current Administration to label any group it feels necessary to attack to appear to be related to an unprovable organized enemy while at the same time actually increasing its approval ratings by exploiting the basic primal fears of the American public. Furthermore when one realizes the questionable motivations that this Administration has used previously to attack an enemy, as what is now surfacing about the Iraq War, one begins to get the strange feeling that this Orwellian double-speak is nothing more than a smoke and mirror illusion whose true intentions would of made Goebbels himself jealous.

Think about it: How could a bunch of technologically unadvanced group of people from third-world nations such as “Al Qaeda” ever have any real central organization structure? If they had any real organization they would have most certainly attacked us again after September eleventh. Where are all the terrorist cells in this country? Contrary to what has been implicitly presented in the media there HAS NEVER been a single domestic terror cell caught since Bush has been in office! The majority of suspects that have been arrested and detained in the immediate aftermath of 9-11 with the exception of a handful have not been charged with crimes in anyway associated with terrorism. All of their crimes are minor and for the most part are ! related to immigration violations of some sort. There is some ambiguity in all of this though because to this day the Ashcroft Justice Department has been less than forthcoming with the specifics of these arrests. Why would this be the case if the justifications for these arrests were really legitimate? We have been bombarded by the media with every indignity from the duck-tape chronicles to the crop dusting threat. You would think that with all this seeming sensitivity by our government about informing the general populace about possible terror threats, especially when some of their sources came from “unnamed and confidential secondary sources”, that the Ashcroft Justice Department would have gone out of it’s way to mention to the public any terrorist connections that the people detained after 9-11 had and would of sworn by it on a stack of Bibles.

To date the only really suspicious activity of people detained after 9-11 were a group of Israelis who were caught in Jersey City, New Jersey filming themselves in the foreground of the burning World Trade Center with “looks of jubilation on their faces”. It was later confirmed that two of the gentlemen detained had known Mossad ties. While they were detained it is of no matter now as they were subsequently released from jail a few! weeks later and were allowed to go back to Israel with no questions asked by the direct authorization of the Justice Department. I guess they were just dropping off a box of cigars to Governor McGreevy?

What is even more illuminating about all of this is that to this day nobody has taken responsibility for the attacks of 9-11, including “Al Qaeda”. The only thing to link these attacks to anyone is the video tape of Osama Bin Laden that was conveniently found in a cave in Afghanistan that had him talking about the physical structure of the World Trade Center and the plane strike. The audio quality of this tape is so poor that any objective Arab-speaking analyst who was asked to give their opinion was unable to do so! as they claimed that just about all the words on it were inaudible. I believe an objective investigation into this original tape’s authenticity could verify if this admission is in fact genuine and could shed some light on the truth of the existence of “Al Qaeda”. But even if this tape is genuine what would this really prove? As I have already mentioned it is common knowledge that Osama Bin Laden is connected to George W. Bush’s family by a minimum of two degrees of separation. So in the grand scheme of things what does this really matter? That the Cobra Commander said he did it?

In summary, “Al Qaeda” does not exist nor has it ever. If it really existed to anywhere near the extent that we have been told then there would have been an attack on our homeland. Of course this proof of a negative is used by the Administration to justify themselves to the American public that they are doing their jobs, but when one realizes that “Al Qaeda” is really nothing more than an artificially manufactured enemy then what job are they really doing other than capitalizing off of people’s fears? What other issue does the present Administration have to offer the average working-class citizen other than security? And if security is really only a Red Herring platform issue, then of what use are they to begin with? In addition, ! if there were any degree of truth in the strength of “Al Qaeda” or even of their very existence then there would have been a much larger resistance in Afghanistan and especially in Iraq. If an organization structure existed within “Al Qaeda” then you would have seen the Iraqi resistance be a much more conventional ! one. They would have had the communication capability and weapons arsenal to mount a more traditional counter-offensive against our troops and they would have been successful doing it because our force’s numbers are so minimal. This would have been a prime opportunity to defeat “the great satan” in front of the entire world. Their motivation to do so would have been so strong that in order for them to of not of done this one must make the quantum leap and conclude that “Al Qaeda” is much to do about nothing and always has been. The emperor is naked and running through the courtyard with a great big barrel of oil.

Original article posted here.

The fucking scam marches on . . .

Fed Defies Transparency Aim in Refusal to Disclose

By Mark Pittman, Bob Ivry and Alison Fitzgerald

Nov. 10 (Bloomberg) -- The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulsonsaid in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn't require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.

``The collateral is not being adequately disclosed, and that's a big problem,'' said Dan Fuss, vice chairman of Boston- based Loomis Sayles & Co., where he co-manages $17 billion in bonds. ``In a liquid market, this wouldn't matter, but we're not. The market is very nervous and very thin.''

Bloomberg News has requested details of the Fed lending under the U.S.Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure.

The Fed made the loans under terms of 11 programs, eight of them created in the past 15 months, in the midst of the biggest financial crisis since the Great Depression.

``It's your money; it's not the Fed's money,'' said billionaire Ted Forstmann, senior partner of Forstmann Little & Co. in New York. ``Of course there should be transparency.''

Treasury, Fed, Obama

Federal Reserve spokeswoman Michelle Smith declined to comment on the loans or the Bloomberg lawsuit. Treasury spokeswoman Michele Davisdidn't respond to a phone call and an e-mail seeking comment.

President-elect Barack Obama's economic adviser, Jason Furman, also didn't respond to an e-mail and a phone call seeking comment from Obama. In a Sept. 22 campaign speech, Obama promised to ``make our government open and transparent so that anyone can ensure that our business is the people's business.''

The Fed's lending is significant because the central bank has stepped into a rescue role that was also the purpose of the $700 billion Troubled Asset Relief Program, or TARP, bailout plan -- without safeguards put into the TARP legislation by Congress.

Total Fed lending topped $2 trillion for the first time last week and has risen by 140 percent, or $1.172 trillion, in the seven weeks since Fed governors relaxed the collateral standards on Sept. 14. The difference includes a $788 billion increase in loans to banks through the Fed and $474 billion in other lending, mostly through the central bank's purchase of Fannie Mae and Freddie Mac bonds.

Sept. 14 Decision

Before Sept. 14, the Fed accepted mostly top-rated government and asset-backed securities as collateral. After that date, the central bank widened standards to accept other kinds of securities, some with lower ratings. The Fed collects interest on all its loans.

The plan to purchase distressed securities through TARP called for buying at the ``lowest price that the secretary (of the Treasury) determines to be consistent with the purposes of this Act,'' according to the Emergency Economic Stabilization Act of 2008, the law that covers TARP.

The legislation didn't require any specific method for the purchases beyond saying mechanisms such as auctions or reverse auctions should be used ``when appropriate.'' In a reverse auction, bidders offer to sell securities at successively lower prices, helping to ensure that the Fed would pay less. The measure also included a five-member oversight board that includes Paulson and Bernanke.

At a Sept. 23 Senate Banking Committee hearing in Washington, Paulson called for transparency in the purchase of distressed assets under the TARP program.

`We Need Transparency'

``We need oversight,'' Paulson told lawmakers. ``We need protection. We need transparency. I want it. We all want it.''

At a joint House-Senate hearing the next day, Bernanke also stressed the importance of openness in the program. ``Transparency is a big issue,'' he said.

The Fed lent cash and government bonds to banks, which gave the Fed collateral in the form of equities and debt, including subprime and structured securities such as collateralized debt obligations, according to the Fed Web site. The borrowers have included the now-bankrupt Lehman Brothers Holdings Inc., Citigroup Inc. and JPMorgan Chase & Co.

Banks oppose any release of information because it might signal weakness and spur short-selling or a run by depositors, said Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, a Washington trade group.

Frank Backs Fed

``You have to balance the need for transparency with protecting the public interest,'' Talbott said. ``Taxpayers have a right to know where their tax dollars are going, but one piece of information standing alone could undermine public confidence in the system.''

The nation's biggest banks, Citigroup, Bank of America Corp., JPMorgan Chase, Wells Fargo & Co., Goldman Sachs Group Inc. and Morgan Stanley, declined to comment on whether they have borrowed money from the Fed. They received $120 billion in capital from the TARP, which was signed into law Oct. 3.

In an interview Nov. 6, House Financial Services Committee ChairmanBarney Frank said the Fed's disclosure is sufficient and that the risk the central bank is taking on is appropriate in the current economic climate. Frank said he has discussed the program with Timothy F. Geithner, president and chief executive officer of the Federal Reserve Bank of New York and a possible candidate to succeed Paulson as Treasury secretary.

``I talk to Geithner and he was pretty sure that they're OK,'' said Frank, a Massachusetts Democrat. ``If the risk is that the Fed takes a little bit of a haircut, well that's regrettable.'' Such losses would be acceptable, he said, if the program helps revive the economy.

`Unclog the Market'

Frank said the Fed shouldn't reveal the assets it holds or how it values them because of ``delicacy with respect to pricing.'' He said such disclosure would ``give people clues to what your pricing is and what they might be able to sell us and what your estimates are.'' He wouldn't say why he thought that information would be problematic.

Revealing how the Fed values collateral could help thaw frozen credit markets, said Ron D'Vari, chief executive officer of NewOak Capital LLC in New York and the former head of structured finance at BlackRock Inc.

``I'd love to hear the methodology, how the Fed priced the assets,'' D'Vari said. ``That would unclog the market very quickly.''

TARP's $700 billion so far is being used to buy preferred shares in banks to shore up their capital. The program was originally intended to hold banks' troubled assets while markets were frozen.

AIG Lending

The Bloomberg lawsuit argues that the collateral lists ``are central to understanding and assessing the government's response to the most cataclysmic financial crisis in America since the Great Depression.''

The Fed has lent at least $81 billion to American International Group Inc., the world's largest insurer, so that it can pay obligations to banks. AIG today said it received an expanded government rescue package valued at more than $150 billion.

The central bank is also responsible for losses on a $26.8 billion portfolio guaranteed after Bear Stearns Cos. was bought by JPMorgan.

``As a taxpayer, it is absolutely important that we know how they're lending money and who they're lending it to,'' said Lucy Dalglish, executive director of the Arlington, Virginia- based Reporters Committee for Freedom of the Press.

Ratings Cuts

Ultimately, the Fed will have to remove some securities held as collateral from some programs because the central bank's rules call for instruments rated below investment grade to be taken back by the borrower and marked down in value. Losses on those assets could then be written off, partly through the capital recently injected into those banks by the Treasury.

Moody's Investors Service alone has cut its ratings on 926 mortgage-backed securities worth $42 billion to junk from investment grade since Sept. 14, making them ineligible for collateral on some Fed loans.

The Fed's collateral ``absolutely should be made public,'' said Mark Cuban, an activist investor, the owner of the Dallas Mavericks professional basketball team and the creator of the Web site BailoutSleuth.com, which focuses on the secrecy shrouding the Fed's moves.

The Bloomberg lawsuit is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan).

Original article posted here.

The Congressional Acquiesence of the Moron's Crimes Continues

Nearly a trillion dollars. No accountability.

Breaking Babylon

Wrecked Iraq


What was once the most advanced Middle Eastern society - economically, socially, and technologically - has become an economic basket case, rivaling the most desperate countries in the world

Michael Schwartz.


What the Good News from Iraq Really Means


As the Smoke Clears in Iraq: Even before the spectacular presidential election campaign became a national obsession, and the worst economic crisis since the Great Depression crowded out other news, coverage of the Iraq War had dwindled to next to nothing. National newspapers had long since discontinued their daily feasts of multiple — usually front page – reports on the country, replacing them with meager meals of mostly inside-the-fold summary stories. On broadcast and cable TV channels, where violence in Iraq had once been the nightly lead, whole news cycles went by without a mention of the war.

The tone of the coverage also changed. The powerful reports of desperate battles and miserable Iraqis disappeared. There are still occasional stories about high-profile bombings or military campaigns in obscure places, but the bulk of the news is about quiescence in old hot spots, political maneuvering by Iraqi factions, and the newly emerging routines of ordinary life.

A typical "return to normal life" piece appeared October 11th in the New York Times under the headline, "Schools Open, and the First Test is Iraqi Safety." Featured was a Baghdad schoolteacher welcoming her students by assuring them that "security has returned to Baghdad, city of peace."

Even as his report began, though, Times reporter Sam Dagher hedged the "return to normal" theme. Here was his first paragraph in full:

"On the first day of school, 10-year-old Basma Osama looked uneasy standing in formation under an already stifling morning sun. She and dozens of schoolmates listened to a teacher's pep talk — probably a necessary one, given the barren and garbage-strewn playground."

This glimpse of the degraded conditions at one Baghdad public school, amplified in the body of Dagher's article by other examples, is symptomatic of the larger reality in Iraq. In a sense, the (often exaggerated) decline in violence in that country has allowed foreign reporters to move around enough to report on the real conditions facing Iraqis, and so should have provided US readers with a far fuller picture of the devastation George Bush's war wrought.

In reality, though, since there are far fewer foreign reporters moving around a quieter Iraq, far less news is coming out of that wrecked land. The major newspapers and networks have drastically reduced their staffs there and — with a relative trickle of exceptions like Dagher's fine report — what's left is often little more than a collection of pronouncements from the US military, or Iraqi and American political leaders in Baghdad and Washington, framing the American public's image of the situation there.

In addition, the devastation that is now Iraq is not of a kind that can always be easily explained in a short report, nor for that matter is it any longer easily repaired. In many cities, an American reliance on artillery and air power during the worst days of fighting helped devastate the Iraqi infrastructure. Political and economic changes imposed by the American occupation did damage of another kind, often depriving Iraqis not just of their livelihoods but of the very tools they would now need to launch a major reconstruction effort in their own country.

As a consequence, what was once the most advanced Middle Eastern society — economically, socially, and technologically — has become an economic basket case, rivaling the most desperate countries in the world. Only the (as yet unfulfilled) promise of oil riches, which probably cannot be effectively accessed or used until US forces withdraw from the country, provides a glimmer of hope that Iraq will someday lift itself out of the abyss into which the US invasion pushed it.

Consider only a small sampling of the devastation.

The Economy: Fundamental to the American occupation was the desire to annihilate Saddam Hussein's Baathist state apparatus and the economic system it commanded. A key aspect of this was the closing down of the vast majority of state-owned economic enterprises (with the exception of those involved in oil extraction and electrical generation).

In all, 192 establishments, adding up to 35% of the Iraqi economy, were shuttered in the summer and fall of 2003. These included basic manufacturing processes like leather tanning and tractor assembly that supplied other sectors, transportation firms that dominated national commerce, and maintenance enterprises that housed virtually all the technicians and engineers qualified to service the electrical, water, oil, and other infrastructural systems in the country.

Justified as the way to bring a modern free-enterprise system to backward Iraq, this draconian program was put in place by the President's proconsul in Baghdad, L. Paul Bremer III. The result? An immediate depression that only deepened in the years to follow.

One measure of this policy's impact can be found in the demise of the leather goods industry, a key pre-invasion sector of Iraq's non-petroleum economy. When a government-owned tanning operation, which all by itself employed 30,000 workers and supplied leather to an entire industry, was shuttered in late 2003, it deprived shoe-makers and other leather goods establishments of their key resource. Within a year, employment in the industry had dropped from 200,000 workers to a mere 20,000.

By the time Bremer left Iraq in the spring of 2004, the inhabitants of many cities faced 60% unemployment. Meanwhile, the country's agriculture, a key component of its economy, was also victimized by the dismantling of government establishments and services. The lush farming areas between the Tigris and Euphrates rivers suffered badly. The once-thriving date palm industry was a typical casualty. It suffered deadly infestations of pests when the occupation eliminated a government-run insecticide spraying program. Even oil refinery-based industrial towns like Baiji became cities of slums when plants devoted to non-petroleum activities were shuttered.

This economic devastation fueled the insurgency by generating desperation, anger, and willing recruits. The explosion of resistance, in turn, tended to obscure — at least for western news services — the desperate circumstances under which ordinary Iraqis labored.

As violence has subsided in Baghdad and elsewhere, demands for relief have come to the fore. These are not easily answered by a still largely non-functional central government in Baghdad whose administrative and economic apparatus was long ago dismantled, and many of whose key technical personnel had fled into exile. Meanwhile, in early 2006, the American occupation declared that further reconstruction work would be the responsibility of Iraqis. It is not clear into what channels the growing discontent over an economy that remains largely in the tank and a government that still cannot deliver ordinary services will flow.

Electricity: A critical factor in Iraq's collapse has been its decaying electrical grid. In areas where the insurgency raged, facilities involved in producing and transmitting electricity were targeted, both by the insurgents and US forces, each trying to deprive the other of needed resources. In addition, Bremer eliminated the government-owned maintenance and engineering enterprises that had been holding the electrical system together ever since the U.N. sanctions regime after the 1991 Gulf War deprived Iraq of material needed to repair and upgrade its facilities. Maintenance and replacement contracts were given instead to multinational companies with little knowledge of the existing system and — due to cost-plus contracting — every incentive to replace facilities with their own proprietary technology. In the meantime, many Iraqi technicians left the country.

The successor Iraqi governments, deprived of the capacity to manage the system's reconstruction, continued the US occupation policy of contracting with foreign companies. Even in areas of the country relatively unaffected by the fighting, those companies did the lucrative thing, replacing entire sections of the electric grid, often with inappropriate but exquisitely expensive equipment and technology.

A combination of factors — including pressure from the insurgency, the soaring costs of security, and an almost unparalleled record of endemic waste and corruption — led to costs well beyond those originally offered for the already overpriced projects. Many were then abandoned before completion as funding ran out. Completed projects were often shabbily done and just as often proved incompatible with existing facilities, introducing new inefficiencies.

In one altogether-too-typical case, Bechtel installed 26 natural gas turbines in areas where no natural gas was available. The turbines were then converted to oil, which reduced their capacity by 50% and led to a rapid sludge build-up in the equipment requiring expensive maintenance no Iraqi technicians had been trained to perform. In location after location, the turbines became inoperative.

Even before the invasion, the decrepit electrical system could not meet national demand. No province had uninterrupted service and certain areas had far less than 12 hours of service per day. The vast investments by the occupation and its successor regimes have increased electrical capacity since the invasion of 2003, but these gains have not come close to keeping up with skyrocketing demand created by the presence of hundreds of thousands of troops, private security personnel, and occupation officials, as well as by the introduction of all manner of electronic devices and products in the post-invasion period. Recent U.N. reports indicate that, in the last year, electrical capacity has slipped to less than half of demand. With priority going to military and government operations, many Baghdad neighborhoods experience less than two hours of publicly provided electricity a day, forcing citizens and business enterprises to utilize expensive and polluting gasoline generators.

In spring of this year, 81% of Iraqis reported that they had experienced inadequate electricity in the previous month. During the heat of summer and the cold of winter, these shortages create real health emergencies.

In 2004, the U.N. estimated that $20 billion in reconstruction funds would be needed for a fully operative electrical grid. The estimates now range from $40 billion to $80 billion.

Water: The Tigris and Euphrates rivers, which flow through the country from the northwest to the southeast, have since time immemorial irrigated the rich farming land that lay between them, nurtured the fish that are a staple of the Iraqi diet, and provided water for animal and human consumption. American-style warfare, with its reliance on tank, artillery, and air power, often resulted in the cratering of streets in upstream Sunni cities like Tal Afar, Falluja, and Samarra where the insurgency was strongest. One result was the wrecking of already weakened underground sewage systems. In the Sadr City section of Baghdad, for instance, where much fighting has taken place and American air power was called in regularly, there is now a lake of sewage clearly visible on satellite photographs.

The ultimate destination of significant parts of the filth from devastated sewage systems was the two rivers. Five years worth of such waste flowing through the streets and into those rivers has left them thoroughly contaminated. Their water can no longer be safely drunk by humans or animals, the remaining fish cannot be safely eaten, and the contaminated water reportedly withers the crops it irrigates.

Iraq's never-adequate water purification system has proven woefully insufficient to handle this massive flow of contamination, while inadequate electric supplies insure that the country's few functional purification plants are less than effective.

In many cities, the sewage system must be entirely reconstructed, but repairs cannot even begin without a viable electrical system, a reinvigorated engineering and construction sector, and a government capable of marshalling these resources. None of these prerequisites currently exist.

Schools: Education has been a victim of all the various pathologies current in Iraqi society. During the initial invasion, the US military often commandeered schools as forward bases, attracted by their well-defined perimeters, open spaces for vehicles, and many rooms for offices and barracks. Two incidents in which American gunfire from an occupied elementary school killed Iraqi civilians in the conservative Sunni city of Falluja may have been the literal sparks that started the insurgency. Many schools would subsequently be rendered uninhabitable by destructive battles fought in or near them.

Under the US occupation's de-Baathification policy, thousands of teachers who belonged to the Baath Party were fired, leaving hundreds of thousands of students teacherless. In addition, the shuttering of government enterprises deprived the schools of supplies — including books and teaching materials — as well as urgently needed maintenance.

The American solution, as with the electric grid, was to hire multinational firms to repair the schools and rehabilitate school systems. The result was an orgy of corruption accompanied by very little practical aid. Local school officials complained that facilities with no windows, heating, or toilet facilities were repainted and declared fit for use.

The dwindling central government presence made schools inviting arenas for sectarian conflict, with administrators, teachers, and especially college professors removed, kidnapped, or assassinated for ideological reasons. This, in turn, stimulated a mass exodus of teachers, intellectuals, and scientists from the country, removing precious human capital essential for future reconstruction.

Finally, in Baghdad, the US military began installing ten-foot tall cement walls around scores of communities and neighborhoods to wall off participants in the sectarian violence. As a result, schoolchildren were often separated from their schools, reducing attendance at the few intact facilities to those students who happened to live within the imprisoning walls.

This fall, as some of these walls were dismantled, residents discovered that many of the schools were virtually unusable. The Times's Dagher offered a vivid description, for instance, of a school in the Dolaie neighborhood which "is falling apart, and overwhelmed by the children of almost 4,000 Shiite refugee families who have settled in the Chukouk camp nearby. The roof is caving in, classroom floors and hallways are stripped bare, and in the playground a pile of burnt trash was smoldering."

The Dysfunctional Society: Much has been made in the US presidential campaign of the $70 billion oil surplus the Iraqi government built up in these last years as oil prices soared. In actuality, most of it is currently being held in American financial institutions, with various American politicians threatening to confiscate it if it is not constructively spent. Yet even this bounty reflects the devastation of the war.

De-Baathification and subsequent chaos rendered the Iraqi government incapable of effectively administering projects that lay outside the fortified, American-controlled Green Zone in the heart of Baghdad. A vast flight of the educated class to Syria, Jordan, and other countries also deprived it of the managers and technicians needed to undertake serious reconstruction on a large scale.

As a consequence, less than 25% of the funds budgeted for facility construction and reconstruction last year were even spent. Some government ministries spent less than 1% of their allocations. In the meantime, the large oil surpluses have become magnets for massive governmental corruption, further infuriating frustrated citizens who, after five years, still often lack the most basic services. Transparency International's 2008 "corruption perceptions index" listed Iraq as tied for 178th place among the 180 countries evaluated.

The Iraq that has emerged from the American invasion and occupation is now a thoroughly wrecked land, housing a largely dysfunctional society. More than a million Iraqis may have died; millions have fled their homes; many millions of others have been scarred by war, insurgency and counterinsurgency operations, extreme sectarian violence, and soaring levels of common criminality. Education and medical systems have essentially collapsed and, even today, with every kind of violence in decline, Iraq remains one of the most dangerous societies on earth.

As its crisis deepened, the various areas of social and technical devastation became ever more entwined, reinforcing one another. The country's degraded sewage and water systems, for example, have spawned two consecutive years of widespread cholera. It seems likely that this year, the disease will only subside when the cold weather makes further contagion impossible, but this "solution" also guarantees its reoccurrence each year until water purification systems are rebuilt.

In the meantime, cholera victims cannot rely on Iraq's once vaunted medical system, since two-thirds of the country's doctors have fled, its hospitals are often in a state of advanced decay and disrepair, drugs remain scarce, and equipment, if available at all, is outdated. The rebuilding of the water and medical systems, however, cannot get fully underway unless the electrical system is restored to reasonable shape. Repair of the electrical grid awaits a reliable oil and gas pipeline system to provide fuel for generators, and this cannot be constructed without the expertise of technicians who have left the country, or newly trained specialists that the educational system is now incapable of producing. And so it goes.

On a daily basis, this cauldron of misery renews powerful feelings of discontent, which explains why American military leaders regularly insist that the country's current relative quiescence is, at best, "fragile." They believe only the most minimal reductions in US forces in Iraq (still hovering at close to 150,000 troops) are advisable.

Even if Washington prefers to ignore Iraqi realities, military officials working close to the ground know that the country's state of disrepair, and an inability to deal with it in any reasonably prompt way, leaves a population in steaming discontent. At any moment, this could explode in further sectarian violence or yet another violent effort to expel the US forces from the country.

Michael Schwartz's new book, War Without End: The Iraq Debacle in Context (Haymarket, 2008), has just been released. It explains just how the militarized geopolitics of oil led the US to dismantle the Iraqi state and economy while fueling sectarian civil war inside that country. A professor of sociology at Stony Brook State University, Schwartz has written extensively on popular protest and insurgency. His work on Iraq has appeared in numerous outlets, including TomDispatch, Asia Times, Mother Jones, and Contexts. A video of him discussing "wrecked Iraq" can be seen by clicking here. His email address is ms42@optonline.net.

Original article posted here.

Our genocide

The dying Rethugs

Goodbye, GOP The neocons killed the Republican Party. Will they stay for the funeral?

by Justin Raimondo

Barring a catastrophe – a terrorist attack on American soil, a calamitous gaffe, or the documented revelation that he really is a Muslim after all – it looks like Barack Obama is going to be the 44th president of these United States. Not only that, but I'd bet the farm we'll have a Democratic Congress, one with a working majority that relegates the Republicans to the role of back bench naysayers whose dissent barely registers. Last year, Paul Craig Roberts expressed the hopes of many American voters when he wrote: "If we are fortunate, Republicans will complete their self-destruction before they extinguish the Constitution and destroy America." It looks like he's going to get his wish. What killed the GOP was the war and its inevitable aftermath – the economic blowback that is even now whipping across the landscape and downing Wall Street's mightiest edifices. Not only that, but the general air of uncertainty and fear generated by the war and its economic and psychological ripple effects have created a crisis of confidence, one that threatens our well-being in an immediate way. Entrepreneurs don't like uncertainty, because business relations require regularity, or at least some degree of predictability. They also assume a degree of honesty, but truth has been in short supply lately, as the history of the Iraq war, from conception to inception, sadly demonstrates. After the American people found out they'd been deceived – that there were no "weapons of mass destruction," that we never had a chance of being greeted as "liberators," and that, far from paying for itself, as Paul Wolfowitz infamously averred, we'd be stuck with a $3 trillion bill – they cut the GOP loose and haven't yet looked back. This has always been the Republicans' war, no matter how enthusiastically most of the Democratic leadership initially supported it. The war we're supposedly "winning" has been the overarching theme of the McCain campaign, and he doesn't seem comfortable talking about anything else – unless it's why we must guarantee the borders of every obscure ex-Soviet "republic" for all time. The prime-time speakers at the Republican convention echoed the party line on the war, ad nauseam, and the entire event was one long paean to militarism and the glory of war. There were more uniforms in that convention hall than at the graduating ceremonies of West Point and Annapolis combined, and all the talk was of valor on the battlefield. Perhaps they should change their name to the Praetorian Party. They put all their eggs in one basket, and those eggs were hatched by the cowbirds of conservatism, the fabled neoconservatives. The history of this crew is too well-known to go into here in any detail: indeed, their narcissism has provided researchers with an overabundance of material that documents their hegira from far Left to far Right. Suffice to say that this vexatious faction entered the bloodstream of the conservative movement during the Cold War years, when pro-war (that's the Vietnam War) Democrats jumped ship and joined the GOP in protest over "McGovernism," i.e., a Democratic Party that rejected the politics of LBJ, Hubert Humphrey, and the neocons' favorite Democratic politician, Sen. Henry "Scoop" Jackson (D-Boeing). The sudden infusion of a bunch of highbrow leftist intellectuals into the conservative movement was welcomed by the organs of respectable conservative opinion, such as National Review. A few dissenters, such as Russell Kirk, Pat Buchanan, and the editors of Chronicles magazine, warned their fellows of trouble to come, but they were ignored. The neocons were bringing not only intellectual respectability and attention from liberal redoubts in the media and academia, but also hauling in plenty of dough. The big conservative foundations poured money into neocon projects and subsidized their up-and-coming intellectual dromedaries, driving out dissenters and imprinting the movement with their peculiar obsessions – first and foremost, an unmitigated militarism. Whatever else the neocons believed in – and this often seemed to change with the political seasons – the one constant was and is a firm belief in the efficacy of U.S. military intervention around the world. The leading neocon magazine, the Weekly Standard, once published a screed by Max Boot entitled "The Case for American Empire" – a title that seems curiously archaic today. However, back in the neocons' heyday, when the Iraq war was still a "cakewalk," the big disagreement among Those in the Know was whether America should formally acknowledge being an empire (Niall Ferguson) or not (Robert Kagan). This intra-neocon fight was just a strategic dispute: no one disputed the wisdom of global intervention. When Ron Paul warned his fellow Republicans that the empire is unsustainable, he was vilified by the neocons and the party establishment, derided as a kook, and practically drummed out of the party by the arbiters of political correctness, neocon style. They didn't even let him on the convention floor during McCain's coronation, and they refused to count his votes. Now that the disaster Paul predicted has befallen them, one can only stand and watch their spectacular implosion with the utmost satisfaction. What's particularly entertaining is the speed with which the neocons are now deserting the sinking ship of the GOP, like those small mammalian creatures they resemble in mien and spirit. Charles Krauthammer, David Brooks, David Frum – having destroyed the GOP and the conservative movement, they leave it a dried-up husk and move on to their next unwitting host. It's in somewhat dubious taste to say "I told you so," but that hasn't stopped me yet, so I'll say it again, as I did in February of last year: "We are in for some very dramatic times. With the leading figures in Congress and among the presidential candidates so far from the popular will on the major question of the day – the war – and with major economic problems on the horizon (if Alan Greenspan is right, Tuesday's huge drop in the stock market may be a hint of things to come), this country could be headed for some major turmoil. … "The consequences of our foreign policy do not just redound overseas: the political and cultural 'blowback' of the Iraq war, and whatever other wars come out of our initial intervention, is already straining the limits of our constitutional form of government, as well as putting tremendous economic pressure on a system that could break down at any moment. We have borrowed our children into penury, and now we're working on their children, who are going to inherit much less than we had to start with. "With all these rising crises looming, the American Empire promises to be the shortest-lived imperial expansion in world history. After a long and brilliant record as a successful ongoing project in limited government and representative democracy, will the American experiment end in a flashy display of military prowess punctuated by a noisy economic and political implosion?" The events of the past few weeks have definitively answered that question in the affirmative. I predict it won't be long before we're hearing the rhetoric of war employed by the re-designers of our economy: instead of a "war on terrorism," we'll soon be fighting a "war on recession" – and it will be considered close to treasonous if anyone so much as mentions the D-word in this regard. In any case, the new reality – or, rather, the newly realized reality – imposes radical restraints on us that rule out foreign wars of aggression, or "liberation," and require a concentration of our resources at home. Yet such a sudden change is going to take some getting used to by the lords of Washington, who are accustomed to thinking of the world as their playground. In the wake of such a sea-change, very often people go right on acting as if absolutely nothing had occurred, oblivious to the new reality until they run right into it, head first. That's what's happened, so far: the imperial pretensions of our presidential candidates, for example, show no signs of abating. They're still talking about bailing out the Georgian economy (the one in the Caucasus), when people right here in this country are being foreclosed out of their homes. They don't understand the full implications of what's happening to their beloved empire, but they will soon enough. The first politician to grasp the new reality, and successfully adapt to it, will go far. It's a pity that none of the current crop seem to get it. ~ Justin Raimondo Original article posted here.

You've just been bought and sold: to a bank

Rescue for the Few, Debt Slavery for the Many

By MICHAEL HUDSON

We are now entering the financial End Time. Bailout “Plan A” (buy the junk mortgages) has failed, “Plan B” (buy ersatz stocks in the banks to recapitalize them without wiping out current mismanagers) is fizzling, and the debts still can’t be paid. That is the reality Wall Street avoids confronting. “First they ignore you, then they denounce you, and then they say that they knew what you were saying all the time,” said Gandhi. The same might be said of today’s overhang of debts in excess of the economy’s ability to pay. First the policy makers pretend that they can be paid, then they denounce the pessimists as spreading panic, and then they say that of course students have been taught for four thousand years now how the “magic of compound interest” keeps on doubling and redoubling debts faster than the economy can squeeze out an economic surplus to pay.

What has ended is the idea that “the magic of compound interest” can make economies rich without having to work and without industry. I hope we have seen the end of derivatives formulae seeking to make money by playing in a zero-sum game. A debt overhang always ends either in foreclosure of the debtor’s property, or in a debt annulment to preserve the economy’s overall freedom and equity.

This means that the postmodern economy as we know it must end – either in financial polarization and debt peonage to a new oligarchic elite, or in a debt cancellation, a Jubilee Year to rescue society. But when the government says that it is reviewing “all” the options, this reality is not one of them. Treasury Secretary Henry Paulson’s first option was to buy packages of junk mortgages (collateralized debt obligations, CDOs) to save the wealthiest institutional investors from having to take a loss on their bad bets. When this was not enough, he came up with “Plan B,” to give money to banks. But whereas Britain and European countries talked of nationalizing banks or at least taking a controlling interest, Mr. Paulson gave in to his Wall Street cronies and promised that the government’s stock purchases would not be real. There would be no dilution of existing shareholders, and the government’s investment would be non-voting. To cap the giveaway to his cronies, Mr. Paulson even agreed not to ask executives to give up their golden parachutes, exorbitant annual bonuses or salaries.

Plan A (the $700 billion to buy mortgage-backed junk that the private sector will not buy) failed partly because it let financial institutions avoid putting a fair value on the debt packages they were selling. Instead of telling the truth about their financial position by marking assets to market prices), they can “mark to model,” Enron-style. We have seen the result: A solid week of plunging stock market prices. The public media call this a panic, but there is nothing irrational about it. Who in their right mind would buy securities or buy into a bank without knowing what the securities were worth? Faith in junk mathematical models has ended.

So we still await a public response to the problem of how to write down debts. Whose economic interest will have to give: that of debtors, as increasingly has been the case over the past eight centuries; or that of creditors, which have fought back to create a neoliberal economy controlled by the FIRE sector?

It is not too late to decide which road to take, but Wall Street bankers and creditors have taken the lead in positioning themselves. Seeing which way the political winds were blowing, they moved to empty out the Treasury before the November 3 elections much like medieval citizens fleeing a horde of Mongolian raiders under Genghis Khan. “We’re moving. Clean out the cupboards,” much as Lehman Brothers emptied out their foreign bank accounts in Britain and elsewhere just before declaring bankruptcy, taking what they could and steering it to their best friends.

The pretense was that a bailout was needed to restore confidence. But the ensuing week showed that the claims were false. It didn’t turn the stock market around as promised. The Dow Jones Industrial Average fell 2,200 points from Wednesday, October 1 through the following Friday October 10 – eight straight trading days, not even pausing for the usual zigzags. Friday’s plunge was 100 points a minute for the first seven minutes – a 690 point drop to under 8000. Each 100 points was more than a 1 percent drop, which was reflected on the NASDAQ. Nothing could withstand the pressure of so many Americans cashing in their mutual funds overnight and so many foreigners in earlier time zones putting in sell-at-market orders.

Short sellers made one of the largest and quickest fortunes ever, and then covered their positions by buying back the stocks they had pre-sold. This pushed prices up even into positive territory just before 10:30 AM when George Bush began to speak. Half the financial stocks showed gains – a sign that the Plunge Protection Team had jumped in. But Mr. Bush said nothing helpful and stocks went back into freefall, ending down another 128 points despite the upcoming weekend G7 meeting. There was no talk at all of reducing debt levels – only of giving more money to banks, insurance companies and other money managers, as if “pushing on a string” somehow would lead them to lend yet more to an already debt-ridden economy.

If Congress really wanted to restore confidence, here’s what it might have done: First, mark to market, not to model. Investors no longer believe America’s Enron-style accounting, debt rating agencies or monoline risk insurers. They don’t trust U.S. banks to be honest about their financial positions. They worry about the fraud charges brought by attorneys general in eleven states against predatory lenders such as Countrywide and Wachovia that Citibank, JPMorgan Chase and Bank of America were so eager to buy.

So is it too late for Congress to change its mind and repeal the giveaway? If the $700 billion handout didn’t stabilize the unsalvageable for small investors, pension funds and even the financial sector itself, what did it do?

What the Fed has been doing while the media have not been looking?

Let’s put the giveaway in perspective. While Senators and Congressmen subject to voters’ choice were debating $700 billion for the major Wall Street contributors to both parties (admittedly only for starters, Mr. Paulson explained), the Federal Reserve already had given even more, without any public discussion and without the major media noticing. Since Bear Stearns failed in March, the Federal Reserve has used the small print of its charter to go outside its normal customers (which are supposed to be commercial banks), to give investment banks, brokerage houses and now large corporations almost indiscriminately some $875 billion in “cash for trash” swaps. (The statistics are released each week in the Fed’s H41 report.) Like Aladdin offering new lamps for old, the Fed has exchanged Treasury securities for junk mortgages and other securities that brokerage houses and investment banks did not have time to pawn off onto OPEC, Asian sovereign wealth funds or other investors.

The press lauds Mr. Bernanke as “a student of the Great Depression.” If he were, he should know that what led to the 1929 collapse were harsh U.S. Government creditor policies toward its World War I Allied governments. This created a situation where the Federal Reserve had to provide easy credit to hold interest rates artificially low so as to encourage U.S. investors to lend to Britain and Germany, which would use these dollar inflows to pay their Inter-Ally arms and reparations debts. Mr. Bernanke’s predecessor, Alan Greenspan, promoted easy credit simply for ideological reasons, to enrich Wall Street by enabling it to sell more debt.

A student of the Great Depression would understand the conflicts of interest between retail commercial banking and wholesale investment banking and money management that led Congress to pass the Glass-Steagall Act in 1933 – conflicts unleashed once again when Pres. Clinton backed then-Fed Chairman Alan Greenspan and Republican leader (and McCain hero) Senator Phil Gramm in leading the repeal of this act, opening up the floodgates to today’s financial double-dealing that has cost the American economy so much.

If Mr. Bernanke does know this history, his behavior is simply that of an opportunistic student of the art of political self-advancement, toadying to Wall Street in campaigning for one last great rip-off before the Bush Administration goes out of business. The Fed has given Wall Street newly minted Treasury bonds, added to the national debt out of thin air. It has done this without feeling any need to rationalize it by drawing absurd public-relations pictures about how the government may “make a profit for taxpayers.”

The Fed Chairman is not elected democratically. He traditionally is designated by the Wall Street financial sector that the Fed is supposed to regulate, acting as its lobbyist for creditor interests – the top 10 percent of the population – against that of the indebted “bottom 90 percent.” This “independence of the central bank” is trumpeted as a hallmark of democracy. But it is undemocratic, precisely by being isolated from public control.
The Age of Oligarchy

Treasury Secretary Paulson has no such luxury. The Treasury is supposed to represent the national interest, not that of bankers – even though its head these days is drawn from Wall Street and acts as its lobbyist. Mr. Paulson presented his almost totalitarian giveaway gruffly to Congress on a take-it-or-leave it basis, announcing that if Congress did not save Wall Street from taking losses on its mountain of bad loans, the banks were willing to crash the economy out of spite. “Please don’t make us wreck the economy,” he said in effect. As Margaret Thatcher used to say while selling off the British government’s crown jewels in the 1980s, TINA: There is no alternative.

In making this bold threat Mr. Paulson behaved as arrogantly as Lehman’s CEO Richard Fuld did when he tried to bluff Korea and other prospective investors into paying the full, fictitiously high book value for his company. (His bluff failed and Lehman went bankrupt, wiping out its shareholders, including the employees and managers who held 30 percent of its stock.) There turned out to be an alternative after all. Responding to the loudest public condemnation in memory, Congress called Mr. Paulson’s bluff.

What made his $700 billion Troubled Asset Relief Program (TARP) so much more visible to the media than the Fed’s actions is that Congress is involved, and this is an election year. The level of deception and false argument is therefore enormous – along with a few tradeoffs and tax cuts to distract attention. Erstwhile Republican opponent Sen. Jeff Sessions of Alabama came right out and said that “This bill has been packaged with a lot of very popular things to give it even more momentum,” so that (as The New York Times explained), “instead of siding with a $700 billion bailout, lawmakers could now say they voted for increased protection for deposits at the neighborhood bank, income tax relief for middle-class taxpayers and aid for schools in rural areas where the federal government owns much of the land.”

Left behind while Wall Street’s believers in the rapture of free markets were swept up to heaven by “socialism for the rich” have been mortgage debtors, student-loan debtors, the Pension Benefit Guarantee Corporation (PBGC, some $25 billion short), the Federal Deposit Insurance Corporation (FDIC, about $40 billion short), as well as Social Security which, we are warned, may run up a trillion dollar deficit thirty or forty years down the line. Only the wealthiest have been beneficiaries, not voters, homeowners and other debtors.

Still, Congress was panicked into acting on Friday, October 3, because a week earlier, September 26, stocks fell 777 points after Congressmen responded to an unprecedented volume of voter protest against the bailout. “This sucker could go down,” Pres. Bush warned as Wall Street’s lobbyists blamed the market downturn to the failure of Congress to preserve the “monetary system,” and specifically the banks and insurance companies that already had lost their net worth and were plunging deeper into Negative Equity territory. Democratic leaders Barney Frank and House Speaker Nancy Pelosi said, in effect, “Look what you’ve done! You irresponsible politicians are grandstanding on principle, and wiping out peoples’ stock market savings and threatening their pension funds. If you don’t give Wall Street firms enough money to cover their losses so that everyone wins, they’ll kill the economy until they get their way.” Well, they didn’t quite say this, but that was basically their message. It certainly was Wall Street’s message: “Wall Street to Economy: Your money or your life.”

So Congress gave in. Democrats ran like lemmings to “save the economy.” Yet the stock market fell a few hundred points, and kept on plunging all week long, much worse and much faster than had occurred right after Congress had initially defeated the bill.

The “Reality Problem”

What did the “free market” theory underlying the giveaway leave out of account? For starters, “the monetary system” turns out to be a euphemism for the fortunes of financial gamblers using junk mathematics (the Merton-Scholes derivatives formula) based on junk economics (blessed with Nobel Prizes) to buy, speculate and even to insure junk mortgages, junk bonds and junk commercial paper and derivatives based on their relative prices. So what is left out first of all was full knowledge of the value of what is being bought and sold. Mark-to-market models leave the price up to the investment bankers. If trust existed and there really was honor among these thieves, a government bailout would not be necessary, because “the market” could clear.

“Free market” ideology assumes that each party will act in his or her self-interest. If this is so, why should foreign governments accumulate more dollar claims on the U.S. Treasury, which already owes their central banks $4 trillion? When there hardly were enough Treasury securities to go around even as the United States ran unprecedented federal budget deficits, U.S. officials urged these banks and sovereign wealth funds to buy packaged mortgages yielding a higher rate of return. And at least by buying these bonds, foreign governments would not be accused of funding America’s war in Iraq that most of their voters opposed. But investors made a fatal mistake in believing U.S. representations of the value of their junk-mortgage packages. This trust has now been lost, all the more so since the bailout’s permission to keep on “marking to market.”

Congress thought that its $700 billion would distract attention at least until the November 4 election. But to no avail. Markets fell 157 points on Giveaway Friday, and kept on going down another 800 points on Monday, October 6 (to about 9500) before bouncing 500 points off the floor, only to fall even more through Friday. So the giveaway failed in its stated purpose to rescue stock market investors (“peoples’ capitalism”) or their pension funds. But that was not its real purpose. The time simply had come to clear out and take whatever one could.

Making banks and insurers in the zero-sum derivative game whole, so that winners can collect their bets while losers can sell their bad investments to the Treasury, is supposed to re-inflate the credit pyramid. The idea is to solve the debt problem with yet more debt to prop up housing prices once again to unaffordable levels! This is not a long-term solution, but it would give insiders enough time to arrange a do-over and get out of the game more quickly, to sell out their junk mortgages and junk bonds to the proverbial “greater fool” – in this case, the “greater fool of last resort,” the U.S. Treasury, as long as it can be run by Mr. Paulson or, under Mr. Obama, perhaps the former Goldman-Sachs official Robert Rubin.

The banks are to “earn” their way out of their negative equity position by selling more of their product – credit – to increase the economy’s debt levels and hence receive more interest payments. The problem is that most families are already “loaned up.” They have no more discretionary income to pledge to carry more debt. Without writing down their debts, there will be no fresh lending, and hence no source of credit and purchasing power for new autos, appliances, goods and services in general. Debt deflation is being imposed on the “real” economy. Creditors and speculators alone are to be made whole.

If no revenue was available for future Social Security, public health care and repair the nation’s depleted infrastructure before this giveaway, think of how bare the cupboard must be now that the government has run up the recent trillions of dollars in new debt rather than writing off a penny of the bad mortgage debts being blamed for causing the debacle.

We can see where this is leading. The wealthiest 1 percent of the population will come into possession of even more returns to wealth than the 57 percent that they are now taking. In contrast to the Statue of Liberty’s inscription “give me your poor … yearning to breathe free,” the Fed – and now the Treasury, with Congressional blessing – is taking from the public purse and giving to America’s wealthiest investors and insiders. This “Robin Hood in Reverse” program is being done without strings, without asking banks to stop paying dividends, exorbitant executive salaries and golden parachutes, and without taking over banks with negative net worth of the kind that many homeowners are experiencing.

Nobody is talking about a debt write-down or moratorium. The subprime mortgage problem could have been solved by writing down just $1 or $2 trillion of the face value and interest rates of predatory loans. Instead, the $10+ trillion in financial-sector damage in recent weeks reflects Wall Street’s fraudulent packaging and sale of junk mortgages at unrealistically high prices, using junk mathematics to calculate junk derivatives and sell them to gullible investors who believe that the pretenses these mathematics, credit ratings and projected income have a basis in reality.

The amazing feature of today’s crash is how many Wall Street firms actually believed that the game of musical financial chairs could go on before they had to stop dancing and indeed, escape from the room. I remember one day back in the 1970s when I warned Frank Zarb of Lazard Freres about the likelihood of Third World debt defaults, and suggested that the firm should do an ability-to-pay analysis. “We don’t have to do any such thing,” he replied. “We have the schedule of what they owe right here in this IMF report.” It was a thick printout of the scheduled debt service for an African country that soon became insolvent. But Wall Street’s mentalité was that of Herbert Hoover on the eve of the Great Depression: A debt is a debt, and that is that. The response is to blame the victim, as if the irresponsibility lies with debtors rather than creditors.

No reversal of the Bush tax cuts is offered to re-inflate the economy, no move toward more progressive taxation of Wall Street speculators who pay only a 15 percent “capital gains” tax rate instead of the much higher income-tax and FICA withholding rates that wage-earners pay. (Wall Street has its own golden parachute program, so why should it pay for Social Security for the rest of society?) There is to be no reduction in the special tax benefits for real estate, whose tax favoritism led to the crisis by “freeing” more income from the tax collector to be pledged to mortgage bankers as interest. The Bubble Economy is to be re-inflated by Fannie Mae, Freddie Mac and the FHA lending to help buyers bid up housing and commercial office prices once again to a rate that promises to impose debt peonage on homeowners.

The budget deficit will soar, without any prosecution of tax evasion scams by UBS or KPMG. Instead of a fiscal or regulatory comet driving these dinosaurs to extinction, the climate has turned more conducive to their proliferation. Our Age of Deception is to be locked in even more tightly. The Congressional bailout’s suspension of mark-to-market rules to rely on Wall Street’s “self-regulation” should win a prize for Oxymoron of 2008 as investors have no clue as to what financial assets are worth. No wonder lending has dried up, especially to banks themselves.

Just as financial victims fail to vote and support their self-interest, predators also turn out to pursue self-defeating “free market” strategies. The financial sector’s short-termism is the greatest enemy to its survival. It has translated its wealth into a fatal political control of its legal climate, blocking [with the explicit support of Barack Obama, Editors] Congressional efforts to rewrite the oppressive bankruptcy laws that credit-card banks lobbied so hard to pass, [with vital help from Joe Biden, the senior senator from credit card company HQ, the state of Delaware, Editors] crucial. These hard bankruptcy terms prevent the courts from renegotiating homeowner debts to keep property occupied, accelerating the real estate price collapse. The result is today’s negative equity, posing the question of just who is to bear the cost of bring debts back in line with the economy’s ability to pay. Will it be the financial institutions that sponsored asset-price inflation and lobbied for deregulation of lenders? Or, will it be the debtors who thought they were riding the wave to get an inflationary free lunch?

Instead of requiring creditors to absorb losses on the excess of debts over what can be paid, the debts are being kept in place, not scaled back to what the economy can pay. The government is to make creditors and computerized derivatives speculators whole – and will act as collecting agent for the overhead of bad debts the economy has run up.

Today we can see the debt-fueled bubble of asset-price inflation that Alan Greenspan trumpeted as real wealth creation for what it really is – credit creation to bid up real estate, stock market and packaged-debt prices. Tangible capital formation has been left out of account, as if postindustrial economies no longer need it.

Will voters see the asymmetry in Congress’s failure to offer debt relief for homeowners as real estate prices plunge below the mortgages that are owed? Will its members be blamed for not rewriting the nation’s bankruptcy laws to free families from debt peonage – and free housing markets from the price declines that result from today’s proliferation of foreclosure sales? For that matter, will there be no relief for corporations having to cut back investment in order to service their junk bonds and other debts with which Wall Street’s corporate raiders and “shareholder activists” have loaded then down?

Evidently not.

Michael Hudson is a former Wall Street economist specializing in the balance of payments and real estate at the Chase Manhattan Bank (now JPMorgan Chase & Co.), Arthur Anderson, and later at the Hudson Institute (no relation). In 1990 he helped established the world’s first sovereign debt fund for Scudder Stevens & Clark. Dr. Hudson was Dennis Kucinich’s Chief Economic Advisor in the recent Democratic primary presidential campaign, and has advised the U.S., Canadian, Mexican and Latvian governments, as well as the United Nations Institute for Training and Research (UNITAR). A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) He can be reached via his website, mh@michael-hudson.com

Original article posted here.

More on the class war of the "bailout" scam

Wall Street: A new Iraq War

By Pepe Escobar

WASHINGTON - As the US electoral college stands today, Barack Obama would win this presidential election, even according to the Macchiavelli from Texas himself, Karl Rove, Obama would win even across the Potomac, in northern Virginia, once a Republican stronghold, now "communist country", according to John McCain's brother Joe.

Red or blue, voters continued to flock to the Obama camp immediately after this Tuesday's second presidential debate - a total cool, calm and collected Obama wipeout, with McCain relegated to the role of a bewildered reptile, at times neurotic, sycophantic, dismissively all-knowing or just plain mean (like referring to Obama as "that one").

Voters also continue to flock to the Obama camp amidst the biggest state intervention in United States history. Biggest if we



don't count another monster state intervention - the soon-to-become trillionaire war in Iraq.

The Wall Street US$810 billion - and counting - bailout is being interpreted by millions of angry Americans as no less than a class struggle weapon of mass destruction. It may cost US taxpayers over $2 trillion after real interest payments are added. Yes, this bailout is a second Iraq war.

Even the initial Bush/Paulson numbers - everyone remembers those $700 billion - came out of nowhere. As a US Treasury spokesman told Forbes magazine, "It's not based on any particular data point ... We just wanted to choose a really large number."

So Americans will soon be listening to the sound, not of music, but of over a trillion dollars of their future taxpayer earnings being sucked-up by Goldman Sachs, Citibank, Bank of America and JP Morgan Chase. The Bank of China will also collect. There's absolutely no guarantee any of these banks will put the money back into productive US investments.

The US Treasury - that is, Treasury Secretary and former Goldman Sachs CEO Hank Paulson - will print money like crazy, just like during the Latin American crisis of the 1980s. And who is the Treasury hiring to decide which banks and which debts to buy up? Wall Street experts.

So this is a new Iraq war in more ways than one. In Iraq, Washington subcontracted the war to private military outfits, like Blackwater. Now it's time for Wall Street to pull its own Blackwater.

Did the US Congress make at least an effort to appoint a group of independent experts to analyze the whole mess? No, it didn't. The bailout ballet was staged to perfection. Representative Marcy Kaptur, Democrat from Ohio, was one of the few to denounce the intimidation tactics and the fearmongering atmosphere on the House floor. Representative Brad Sherman, Democrat from California, warned that martial law would be imposed in the US if the bailout did not pass.

Let's assume, for the sake of argument, Americans would want to vote out all the politicians who supported the bailout. They simply can't. Because there are not enough third-party candidates - or progressives - to replace them; this is the realm of money politics, and they simply cannot compete with the Democratic or Republican machines. Not to mention that two-thirds of the Senate - which also approved the bailout - are not up for re-election.

The economists' man
The Economist magazine - the voice of the City of London - says that economists are mostly Barack Obama cheerleaders. But what was Obama doing before the bailout was approved? Both Obama - and McCain - were frantically calling House representatives to change their "no" vote into a "yes".

Were there other options apart from the biggest redistribution of wealth - this one towards the top, not the bottom - since the 1917 October Revolution in Russia? Of course there were. One of them was offered on the pages of the Washington Post by two respected Yale economists. [1] Essentially, it says "pay off all the delinquent mortgages".

John McCain, in a desperate Hail Mary pass trying to stop the bleeding in his campaign, came up with more or less the same proposal ("It's my idea, not Senator Obama's") at the presidential debate - stunning all the punditocracy.

But he didn't know how to sell it. He didn't explain where the funds - expected to be upwards of $300 billion - would come from, he didn't say that the bailed-out banks under Bush/Paulson could in fact buy up mortgages, and on top of it, he incurred the ire of large sections of his already irate "base".

The Obama campaign, caught off guard, responded the next day via Obama economic adviser Jason Furman: "The biggest beneficiaries of this plan will be the same financial institutions that got us into this mess, some of whom even committed fraud."

Obama, for his part, bought the bailout hook, line and sinker - and has been busy trying to justify it on the campaign trail. He may be leading the polls - even before the debate - but this has more to do, according to the Washington Post, with "negativity about the country's financial prospects" than an Obama plan B to deal with the financial crisis. Obama was never pro-active - he was reactive to the Bush/Paulson plan, which then became the Bush/Paulson/Pelosi/McCain/Obama bailout plan.

Obama could have called dozens of economists to educate him about the financial crises in Mexico in 1997, Brazil in 1999 and Argentina in 2001. He could have learned how Sweden dealt with its own crisis in 1989 - yes, they pay high taxes but have one of the highest standards of living in the world.

All this when Paulson - Mr Goldman Sachs himself - revealed that the first bad debts would be bought up only after the November 4 elections. So American voters won't even evaluate if the bailout worked (the markets, for their part, have already said "no") before they elect Obama or McCain and their new House representatives.

So there was no US national debate. Could it be because, according to the nonpartisan Center for Responsive Politics, those who voted "yes" had received 41% more money from the financial sector over their congressional careers than those who voted "no"? As the Center points out, "election after election, the finance, insurance and real estate sector has been the top campaign contributor in federal politics, giving more than $2 billion to federal candidates and political parties since 1989."

Whoever is elected, Obama or McCain, will inherit this supreme Bush administration-made toxic mess - which includes the biggest fiscal and foreign deficits in US history, a fiscal debt currently at 70% but bound to explode to about 90% of US GDP, and no control of monetary policy.

Both Obama and McCain, during the debate, have adamantly refused to admit that the US economy will get much worse before it gets better. McCain has already admitted, on the record, that he knows virtually nothing about the economy - his top economic adviser was uber-deregulator Phil Gramm, the eminence grise who said America is a "nation of whiners".

As for Obama, these are some of the questions he is not answering at the moment:
How deep will the recession be?
Will the US invent another bubble to try to dribble the recession?
And, if that is the case, will that be an military-industrial complex bubble? Or a disaster-capitalism bubble?

'A new world is coming into being'
The McCain campaign strategy in the face of all this is simple: more sleaze, in the form of a barrage of unsubstantiated attacks on Obama on the campaign trail (he's a dangerous black man, maybe a Muslim, and maybe a terrorist) by the lipstick pitbull from Alaska, mooseburger-eating creationist hockey mom Sarah Palin, who seems to have better things to do than reading the Constitution, or picking up a dictionary, or stop winking, or ending her habit of misquoting people. In the words of a McCain strategist, "If we keep talking about the economic crisis, we're going to lose."

And why don't they want to keep talking about the economy? Refer, for instance, to the new Obama campaign strategy - a 13-minute documentary posted on the net about the late 1980s Keating Five savings and loan scandal, a deregulation fiasco in which McCain had a starring role.

Both campaigns are not even trying to really debate the pitfalls and the seriousness of it all. Remember that low-level functionary who came up with that sub-Hegelian concept of the "end of history" after the fall of the Soviet Union - one Francis Fukuyama? Even he is alarmed.

Once again, it's up to those pesky Europeans to tell it like it is. Jean-Claude Milner, former president of the International College of Philosophy, puts it in stark terms. The European bourgeoisie worries about savings security. The American bourgeoisie worries about credit security. In Western Europe, credit is a means to acquire assets. In America, it's the opposite: an asset is a means to obtain credit. The whole thing works, as long as there's no depression.

Then there are the enormous Pentagon budgets. They aren't solely dedicated to facilitate "preemptive wars"; they are above all a means of permanent support to the economy. So, American capitalism is in fact state capitalism - where the state is not an entrepreneur, or an owner, but a larger-than-life client. Therefore, this client must intervene in times of crisis. In Milner's lovely formulation, the US state is "the invisible hand behind the visible credit".

Milner goes beyond the military-industrial complex. He identifies a "military-financial complex". That's how the snake bites its own tail: "Wall Street relies on credit. Credit relies on the absence of depression. The military budget makes a depression impossible." It's this idea of capitalism, based on credit and disconnected from natural resources, that is today on fire. And not only because of the subprime crisis. Miller stresses how the US Army is above all an economic tool, and much less a traditional army (which the neo-cons, drunk with power, imbued with the mission of bringing democracy to the Middle East).

The other key factor is that owners of natural resources don't accept this financial capitalism disconnect anymore. The best example is Russia. That's also where al-Qaeda's logic fits in. Al-Qaeda reasoned that what causes the disconnect is financial capital. The symbol of financial capital is the Twin Towers. So the towers must be destroyed. Whether al-Qaeda is, or is not, a US-controlled cipher is beside the point; the fact is bin Laden and al-Zawahiri, in their writings, have always stressed their strategy of bleeding the empire through its overextended Achilles heel.

Milner is somewhat apocalyptic. For him, if American financial capitalism collapsed, it would drag most developed and emerging markets. The other main protagonist left on stage would be Russian capitalism - which follows a completely different logic: excess of natural resources, and state control over how they reach the market.

Another pesky European, John Gray, professor of European Thought at the London School of Economics, author of crucial books like Straw Dogs and Black Mass, and one of Europe's most brilliant intellectuals - of course, Bush, McCain, neo-cons, they all hate intellectuals - says the financial crisis is the American equivalent to the fall of the Soviet Union. As he wrote on the London Observer,
Having created the conditions that produced history's biggest bubble, America's political leaders appear unable to grasp the magnitude of the dangers the country now faces. Mired in their rancorous culture wars and squabbling among themselves, they seem oblivious to the fact that American global leadership is fast ebbing away. A new world is coming into being almost unnoticed, where America is only one of several great powers, facing an uncertain future it can no longer shape.
A new world, coming into being almost unnoticed. You betcha.

1. The Trickle-Up Bailout, by By Jonathan G S Koppell and William N Goetzmann, Wednesday, October 1, 2008, Washington Post

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2008). He may be reached at pepeasia@yahoo.com.

Original article posted here.