A FINANCIAL MARKET CRASH IS A PROCESS, NOT AN EVENT
Saturday, 18 August 2007
Liquidity dries up, truth is revealed
By Eric Janszen
Reprinted from ITULIP.COM
Article contains headlines from 1929 as well as a video clip of this week's financial headlines. The similarities are striking.
A financial crash is not sudden, singular event. The way the Crash of 1929 is commonly misunderstood, the market crashed on Monday, October 31, 1929 and soup lines formed Tuesday.
A financial crash is a process lasting as long as a year, punctuated by a few notable grip-and-grin market events that make it into the history books. Underlying the process is the dissolution of a fallacious belief system that developed over a period of many years. Fallacies floated on an ocean of cheap credit. As the credit dries up, facts are revealed under the harsh light of reality.
Multiple fallacious beliefs now show under the light of evidence for all to see. The complicity of the ratings agencies in creating the housing bubble, while notable, is a minor revelation compared to the big three.
Financial Risk is Buried and Gone
False Belief: Risk spreading instruments disperse financial risk, creating greater financial market stability and resilience.
Fact: Underwriters, mostly investment banks, sold exotic credit derivatives and externalized the risk, dumping it mostly on foreign pension funds. Risk spreading instruments create Risk Pollution, causing financial risk to disappear from sight for a time, where it concentrates in the weakest parts of the financial system only to reappear later like PCBs at Love Canal. The subprime mortgage market is the beginning of the discovery of hundreds of Credit Love Canals. A multi-trillion dollar Risk Pollution Superfund will have to be developed, at taxpayer expense, to clean up over ten years of Risk Pollution.
The Housing Bubble Collapse is Benign
False Belief: The Housing Bubble Correction will not seriously damage the economy.
Fact: Every aspect of the economy on which rising home prices depended, from the market for mortgages to furniture to autos, is in decline. The collapse of the housing bubble will cause a recession in the U.S. by Q4 2007.
Deficits Don't Matter
False Belief: Deficits don't matter. An economy can be continuously stripped of its industrial capacity and its assets inflated and traded for profit continuously, and imports can be paid for with borrowed money forever.
Fact: No economy in history has ever survived long running large trade and fiscal deficits. The entire economy needs to be overhauled, from the tax system to the monetary system, to re-build capacity for capital formation, saving, and capital investment in productive industries. USA, Inc. needs to be restructured.
There is very little that the Fed can do to stop the dissolution of fallacies process now that it is underway. Rate cuts will further weaken dollar and create even higher inflation, which is one of the causes of the crash. The Fed will keep the discount window open to prevent cascading debt defaults and bank failures.
Here's how it went down last time. You will notice a few parallels.
1929 Headlines
Wave of Buying Sweeps Over Market as Stocks Swing Upward
Radio Flashes High; General Motors and Steels Soar
By Laurence Stern
The atmosphere of doubt and caution which Wall Street in recent weeks has come to regard almost as habitual on Thursdays was swept away yesterday in a rush of buying...
Perhaps the market's own strength weighed as heavily with speculative minds as the logic of the situation, since the tape is the one institution Wall Street does not argue with. At any rate, the market appeared entirely confident from the opening gong. It was a firm, almost buoyant, opening, many initial transactions involving large blocks at sizable price advances...
The advance was one of the most vigorous of the year, amounting to a net gain of 6.97 points in the Dow Jones "average" of thirty representative industrial issues...
- The World, March 15, 1929
_____
Stocks Soar As Bank Aid Ends Fear of Money Panic
By W. A. Lyon
The stock market strode out from under the shadow of a panic in call money that so lately threatened, revived in all its old strength yesterday. Assured that the New York banks were ready with their boundless resources to prevent a money crisis, the public and the professional trader set out to repair the damage done to prices on Monday and the major part of Tuesday.
Stocks in the aggregate, though bucking a 15 per cent rate for loans, enjoyed the greatest advance they have known in a single day in the last two years. Not even the surging bull markets of the memorable year 1928 saw such a day of heavy buying.
- New York Herald Tribune, March 28, 1929
_____
Banker Says Boom Will Run Into 1930
That at least a part of the great amount of money in the securities market may represent temporary employment of funds eventually finding their way into business uses, and that the prosperity of the present business cycle will probably not end in 1929, is the belief expressed by the J. Henry Schroder Banking Corporation in the quarterly review of the London house of Schroder.
- The World, March 30, 1929
_____
Public Liquidation Spurred by Bears, Hits Low Market Scare Orders From All Over Country Halt Ticker an Hour in Feverish Day
By Laurence Stern
With speculative nerves rubbed raw under the persistent hammering of bearish traders, a renewed wave of public liquidation swept over the stock market yesterday, depressing prices severely and hopelessly clogging the quotation ticker...
...To the majority of the market's followers, who now must be counted in millions, the most significant aspect of the decline is that it has carried the average level of the list to a lower point than was reached on Oct. 4 in the sharp break that climaxed a month of gradual recession.
This raises a pertinent question, whether the bull movement of the last five years has definitely given way to a liquidating market...
-The World, October 20, 1929
_____
Brokers Believe Worst Is Over and Recommend Buying of Real Bargains
Wall Street in looking over the wreckage of the week, has come generally to the opinion that high grade investment issues can be bought now, without fear of a drastic decline. There is some difference of opinion as to whether not the correction must go further, but everyone realizes that the worst is over, and that there are bargains for those who are willing to buy conservatively and live through the immediate irregularity.
-New York Herald Tribune, October 27, 1929
_____
Gigantic Bank Pool Pledged To Avert Disaster as Second Big Crash Stuns Wall Street
Largest Financial Powers in the City Meet After Day of Hysterical Liquidation Sinking Prices Below Thursday's
By Laurence Stern
After the stock market had come crashing down again in a veritable deluge of forced and hysterical liquidation, word sped through the financial district last evening that the largest banks in the city were prepared to exert their organized power this morning to prevent further disaster.
Arrangements described as "fully adequate" were completed at a conference at the offices of J. P. Morgan & Co. at Broad and Wall Streets...
Although no formal statement was issued, it was the consensus of those at the meeting that the worst of the liquidation is over and that a natural demand for investment stocks now available on the bargain counter should go far toward an immediate restoration of trading stability.
-The World, October 29, 1929
_____
Stocks Up in Strong Rally; Rockefellers Big Buyers; Exchanges Close 2-1/2 Days
By Ferdinand Lundberg
Revived by spontaneous investment buying and declarations of large extra cash dividends by leading companies, and free of the delirium that has recently gripped share owners, the stock market yesterday received a fresh start and scored a record comeback. Volume on the Stock Exchange totaled 10,727,320 shares, the third largest day on record.
The high spot of the day from a stock market viewpoint was the statement by John D. Rockefeller that there was no need to destroy values and that he and his son, John D. Rockefeller Jr., had been heavy buyers of stocks for investment in the last few days, and would continue to buy at present prices...
-- New York Herald Tribune, October 31, 1929
_____
Very Prosperous Year Is Forecast
Guenther Analyzes the Report of Mellon Covering 1929
That 1930 may be a very prosperous year, industrially and otherwise, without the peak conditions that made 1929 and exceptional year for business prosperity, is an observation made by Louis Guenther, publisher of the Financial World, in a statement based upon Secretary Mellon's fiscal report...
"To grow too fast is often unhealthy because of the suddenness with which a readjustment must be met. By far and large the country would be better off were further progress made along more normal lines...
Fortunately, we have returned to a more normal mind in appraising prospects. We are not looking for the Midas touch on everything to which we turn. That makes us more satisfied with normal incomes and normal profit returns."
-The World, December 15, 1929
Sunday, August 19, 2007
Monday, August 13, 2007
Mercenary Revolution
The Mercenary Revolution
By JEREMY SCAHILL
If you think the U.S. has only 160,000 troops in Iraq, think again.
With almost no congressional oversight and even less public awareness, the Bush administration has more than doubled the size of the U.S. occupation through the use of private war companies.
There are now almost 200,000 private "contractors" deployed in Iraq by Washington. This means that U.S. military forces in Iraq are now outsized by a coalition of billing corporations whose actions go largely unmonitored and whose crimes are virtually unpunished.
In essence, the Bush administration has created a shadow army that can be used to wage wars unpopular with the American public but extremely profitable for a few unaccountable private companies.
Since the launch of the "global war on terror," the administration has systematically funneled billions of dollars in public money to corporations like Blackwater USA , DynCorp, Triple Canopy, Erinys and ArmorGroup. They have in turn used their lucrative government pay-outs to build up the infrastructure and reach of private armies so powerful that they rival or outgun some nation's militaries.
"I think it's extraordinarily dangerous when a nation begins to outsource its monopoly on the use of force and the use of violence in support of its foreign policy or national security objectives," says veteran U.S. Diplomat Joe Wilson, who served as the last U.S. ambassador to Iraq before the 1991 Gulf War.
The billions of dollars being doled out to these companies, Wilson argues, "makes of them a very powerful interest group within the American body politic and an interest group that is in fact armed. And the question will arise at some time: to whom do they owe their loyalty?"
Precise data on the extent of U.S. spending on mercenary services is nearly impossible to
obtain - by both journalists and elected officials-but some in Congress estimate that up to 40 cents of every tax dollar spent on the war goes to corporate war contractors. At present, the United States spends about $2 billion a week on its Iraq operations.
While much has been made of the Bush administration's "failure" to build international consensus for the invasion of Iraq, perhaps that was never the intention. When U.S. tanks rolled into Iraq in March 2003, they brought with them the largest army of "private contractors" ever deployed in a war. The White House substituted international diplomacy with lucrative war contracts and a coalition of willing nations who provided token forces with a coalition of billing corporations that supplied the brigades of contractors.
'THERE'S NO DEMOCRATIC CONTROL'
During the 1991 Gulf War, the ratio of troops to private contractors was about 60 to 1. Today, it is the contractors who outnumber U.S. forces in Iraq. As of July 2007, there were more than 630 war contracting companies working in Iraq for the United States. Composed of some 180,000 individual personnel drawn from more than 100 countries, the army of contractors surpasses the official U.S. military presence of 160,000 troops.
In all, the United States may have as many as 400,000 personnel occupying Iraq, not including allied nations' militaries. The statistics on contractors do not account for all armed contractors. Last year, a U.S. government report estimated there were 48,000 people working for more than 170 private military companies in Iraq. "It masks the true level of American involvement," says Ambassador Wilson.
How much money is being spent just on mercenaries remains largely classified. Congressional sources estimate the United States has spent at least $6 billion in Iraq, while Britain has spent some $400 million. At the same time, companies chosen by the White House for rebuilding projects in Iraq have spent huge sums in reconstruction funds - possibly billions on more mercenaries to guard their personnel and projects.
The single largest U.S. contract for private security in Iraq was a $293 million payment to the British firm Aegis Defence Services, headed by retired British Lt. Col. Tim Spicer, who has been dogged by accusations that he is a mercenary because of his private involvement in African conflicts. The Texas-based DynCorp International has been another big winner, with more than $1 billion in contracts to provide personnel to train Iraqi police forces, while Blackwater USA has won $750 million in State Department contracts alone for "diplomatic security."
At present, an American or a British Special Forces veteran working for a private security company in Iraq can make $650 a day. At times the rate has reached $1,000 a day; the pay dwarfs many times over that of active duty troops operating in the war zone wearing a U.S. or U.K. flag on their shoulder instead of a corporate logo.
"We got [tens of thousands of] contractors over there, some of them making more than the Secretary of Defense," House Defense Appropriations Subcommittee Chairman John Murtha (D-Penn.) recently remarked. "How in the hell do you justify that?" In part, these contractors do mundane jobs that traditionally have been performed by soldiers. Some require no military training, but involve deadly occupations, such as driving trucks through insurgent-controlled territory.
Others are more innocuous, like cooking food or doing laundry on a base, but still court grave risk because of regular mortar and rocket attacks.
These services are provided through companies like KBR and Fluor and through their vast labyrinth of subcontractors. But many other private personnel are also engaged in armed combat and "security" operations. They interrogate prisoners, gather intelligence, operate rendition flights, protect senior occupation officials and, in at least one case, have commanded U.S. and international troops in battle.
In a revealing admission, Gen. David Petraeus, who is overseeing Bush's troop "surge," said earlier this year that he has, at times, been guarded in Iraq by "contract security." At least three U.S. commanding generals, not including Petraeus, are currently being guarded in Iraq by hired guns. "To have half of your army be contractors, I don't know that there's a precedent for that," says Rep. Dennis Kucinich (D-Ohio), a member of the House Oversight and Government Reform Committee, which has been investigating war contractors.
"Maybe the precedent was the British and the Hessians in the American Revolution. Maybe that's the last time and needless to say, they lost. But I'm thinking that there's no democratic control and there's no intention to have democratic control here."
The implications are devastating. Joseph Wilson says, "In the absence of international consensus, the current Bush administration relied on a coalition of what I call the co-opted, the corrupted and the coerced: those who benefited financially from their involvement, those who benefited politically from their involvement and those few who determined that their relationship with the United States was more important than their relationship with anybody else. And that's a real problem because there is no underlying international legitimacy that sustains us throughout this action that we've taken."
Moreover, this revolution means the United States no longer needs to rely on its own citizens to fight its wars, nor does it need to implement a draft, which would have made the Iraq war politically untenable.
'AN ARM OF THE BUSH ADMINISTRATION'
During his confirmation hearings in the Senate this past January, Petraeus praised the role of private forces, claiming they compensate for an overstretched military. Petraeus told the senators that combined with Bush's official troop surge, the "tens of thousands of contract security forces give me the reason to believe that we can accomplish the mission."
Taken together with Petraeus's recent assertion that the surge would run into mid-2009, this means a widening role for mercenaries and other private forces in Iraq is clearly on the table for the foreseeable future.
"The increasing use of contractors, private forces or as some would say 'mercenaries' makes wars easier to begin and to fight - it just takes money and not the citizenry," says Michael Ratner, president of the Center for Constitutional Rights, whose organization has sued private contractors for alleged human rights violations in Iraq.
"To the extent a population is called upon to go to war, there is resistance, a necessary resistance to prevent wars of self-aggrandizement, foolish wars and in the case of the United States, hegemonic imperialist wars. Private forces are almost a necessity for a United States bent on retaining its declining empire. Think about Rome and its increasing need for mercenaries."
Privatized forces are also politically expedient for many governments. Their casualties go uncounted, their actions largely unmonitored and their crimes unpunished. Indeed, four years into the occupation, there is no effective system of oversight or accountability governing contractors and their operations, nor is there any effective law - military or civilian being applied to their activities. They have not been subjected to military courts martial (despite a recent congressional attempt to place them under the Uniform Code of Military Justice), nor have they been prosecuted in U.S. civilian courts. And no matter what their acts in Iraq, they cannot be prosecuted in Iraqi courts because in 2004 the U.S. occupying authority granted them complete immunity.
"These private contractors are really an arm of the administration and its policies," argues Kucinich, who has called for a withdrawal of all U.S. contractors from Iraq. "They charge whatever they want with impunity. There's no accountability as to how many people they have, as to what their activities are."
That raises the crucial question: what exactly are they doing in Iraq in the name of the U.S. and U.K. governments? Rep. Jan Schakowsky (D-Ill.), a leading member of the House Select Committee on Intelligence, which is responsible for reviewing sensitive national security issues, explained the difficulty of monitoring private military companies on the U.S. payroll: "If I want to see a contract, I have to go up to a secret room and look at it, can't take any notes, can't take any notes out with me, you know - essentially, I don't have access to those contracts and even if I did, I couldn't tell anybody about it."
'A MARKETPLACE FOR WARFARE'
On the Internet, numerous videos have spread virally, showing what appear to be foreign mercenaries using Iraqis as target practice, much to the embarrassment of the firms involved. Despite these incidents and the tens of thousands of contractors passing through Iraq, only two individuals have been ever indicted for crimes there. One was charged with stabbing a fellow contractor, while the other pled guilty to possessing child-pornography images on his computer at Abu Ghraib prison.
Dozens of American soldiers have been court-martialed - 64 on murder-related charges alone - but not a single armed contractor has been prosecuted for a crime against an Iraqi. In some cases, where contractors were alleged to have been involved in crimes or deadly incidents, their companies whisked them out of Iraq to safety.
U.S. contractors in Iraq reportedly have their own motto: "What happens here today, stays here today." International diplomats say Iraq has demonstrated a new U.S. model for waging war; one which poses a creeping threat to global order.
"To outsource security-related, military related issues to non-government, non-military forces is a source of great concern and it caught many governments unprepared," says Hans von Sponeck, a 32-year veteran U.N. diplomat, who served as head of the U.N. Iraq mission before the U.S. invasion.
In Iraq, the United States has used its private sector allies to build up armies of mercenaries many lured from impoverished countries with the promise of greater salaries than their home militaries can pay. That the home governments of some of these private warriors are opposed to the war itself is of little consequence.
"Have gun, will fight for paycheck" has become a globalized law.
"The most worrying aspect is that these forces are outside parliamentary control. They come from all over and they are answerable to no one except a very narrow group of people and they come from countries whose governments may not even know in detail that they have actually been contracted as a private army into a war zone," says von Sponeck.
"If you have now a marketplace for warfare, it is a commercial issue rather than a political issue involving a debate in the countries.
You are also marginalizing governmental control over whether or not this should take place, should happen and, if so, in what size and shape. It's a very worrying new aspect of international relations. I think it becomes more and more uncontrollable by the countries of supply."
In Iraq, for example, hundreds of Chilean mercenaries have been deployed by U.S. companies like Blackwater and Triple Canopy, despite the fact that Chile, as a rotating member of the U.N. Security Council, opposed the invasion and continues to oppose the occupation of Iraq. Some of the Chileans are alleged to have been seasoned veterans of the Pinochet era.
"There is nothing new, of course, about the relationship between politics and the economy, but there is something deeply perverse about the privatization of the Iraq War and the utilization of mercenaries," says Chilean sociologist Tito Tricot, a former political prisoner who was tortured under Pinochet's regime.
"This externalization of services or outsourcing attempts to lower costs - third world mercenaries are paid less than their counterparts from the developed world - and maximize benefits. In other words, let others fight the war for the Americans. In either case, the Iraqi people do not matter at all."
NEW WORLD DISORDER
The Iraq war has ushered in a new system. Wealthy nations can recruit the world's poor, from countries that have no direct stake in the conflict, and use them as cannon fodder to conquer weaker nations. This allows the conquering power to hold down domestic casualties - the single-greatest impediment to waging wars like the one in Iraq. Indeed, in Iraq, more than 1,000 contractors working for the U.S. occupation have been killed with another 13,000 wounded. Most are not American citizens, and these numbers are not counted in the official death toll at a time when Americans are increasingly disturbed by casualties.
In Iraq, many companies are run by Americans or Britons and have well-trained forces drawn from elite military units for use in sensitive actions or operations. But down the ranks, these forces are filled by Iraqis and third-country nationals. Indeed, some 118,000 of the estimated 180,000 contractors are Iraqis, and many mercenaries are reportedly ill-paid, poorly equipped and barely trained Iraqi nationals.
The mercenary industry points to this as a positive: we are giving Iraqis jobs, albeit occupying their own country in the service of a private corporation hired by a hostile invading power.
Doug Brooks, the head of the Orwellian named mercenary trade group, the International Peace Operations Association, argued from early on in the occupation, "Museums do not need to be guarded by Abrams tanks when an Iraqi security guard working for a contractor can do the same job for less than one-fiftieth of what it costs to maintain an American soldier. Hiring local guards gives Iraqis a stake in a successful future for their country. They use their pay to support their families and stimulate the economy. Perhaps most significantly, every guard means one less potential guerrilla."
In many ways, it is the same corporate model of relying on cheap labor in destitute nations to staff their uber-profitable operations. The giant multinationals also argue they are helping the economy by hiring locals, even if it's at starvation wages.
"Donald Rumsfeld's masterstroke, and his most enduring legacy, was to bring the corporate branding revolution of the 1990s into the heart of the most powerful military in the world," says Naomi Klein, whose upcoming book, The Shock Doctrine: The Rise of Disaster Capitalism, explores these themes.
"We have now seen the emergence of the hollow army. Much as with so-called hollow corporations like Nike, billions are spent on military technology and design in rich countries while the manual labor and sweat work of invasion and occupation is increasingly outsourced to contractors who compete with each other to fill the work order for the lowest price. Just as this model breeds rampant abuse in the manufacturing sector - with the big-name brands always able to plead ignorance about the actions of their suppliers-so it does in the military, though with stakes that are immeasurably higher." In the case of Iraq, the U.S. and U.K. governments could give the public perception of a withdrawal of forces and just privatize the occupation. Indeed, shortly after former British Prime Minister Tony Blair announced that he wanted to withdraw 1,600 soldiers from Basra, reports emerged that the British government was considering sending in private security companies to "fill the gap left behind."
THE SPY WHO BILLED ME
While Iraq currently dominates the headlines, private war and intelligence companies are expanding their already sizable footprint. The U.S. government in particular is now in the midst of the most radical privatization agenda in its history. According to a recent report in Vanity Fair, the government pays contractors as much as the combined taxes paid by everyone in the United States with incomes under $100,000, meaning "more than 90 percent of all taxpayers might as well remit everything they owe directly to [contractors] rather than to the [government]."
Some of this outsourcing is happening in sensitive sectors, including the intelligence community. "This is the magnet now. Everything is being attracted to these private companies in terms of individuals and expertise and functions that were normally done by the intelligence community," says former CIA division chief and senior analyst Melvin Goodman. "My major concern is the lack of accountability, the lack of responsibility. The entire industry is essentially out of control. It's outrageous."
RJ Hillhouse, a blogger who investigates the clandestine world of private contractors and U.S. intelligence, recently obtained documents from the Office of the Directorate of National Intelligence (DNI) showing that Washington spends some $42 billion annually on private intelligence contractors, up from $17.54 billion in 2000. Currently that spending represents 70 percent of the U.S. intelligence budget going to private companies.
Perhaps it is no surprise then that the current head of the DNI is Mike McConnell, the former chair of the board of the Intelligence and National Security Alliance, the private intelligence industry's lobbying arm. Hillhouse also revealed that one of the most sensitive U.S. intelligence documents, the Presidential Daily Briefing, is prepared in part by private companies, despite having the official seal of the U.S. intelligence apparatus.
"Let's say a company is frustrated with a government that's hampering its business or business of one of its clients. Introducing and spinning intelligence on that government's suspected collaboration with terrorists would quickly get the White House's attention and could be used to shape national policy," Hillhouse argues.
MUTLINATIONAL MERCENARIES
Empowered by their new found prominence, mercenary forces are increasing their presence on other battlefields: in Latin America, DynCorp International is operating in Colombia, Bolivia and other countries under the guise of the "war on drugs" - U.S. defense contractors are receiving nearly half the $630 million in U.S. military aid for Colombia; in Africa, mercenaries are deploying in Somalia, Congo and Sudan and increasingly have their sights set on tapping into the hefty U.N. peacekeeping budget (this has been true since at least the early 1990s and probably much earlier). Heavily armed mercenaries were deployed to New Orleans in the aftermath of Hurricane Katrina, while proposals are being considered to privatize the U.S. border patrol.
Brooks, the private military industry lobbyist, says people should not become "overly obsessed with Iraq," saying his association's "member companies have more personnel working in U.N. and African Union peace operations than all but a handful of countries." Von Sponeck says he believes the use of such companies in warfare should be barred and has harsh words for the institution for which he spent his career working: "The United Nations, including the U.N. Secretary General, should react to this and instead of reacting, they are mute, they are silent."
This unprecedented funding of such enterprises, primarily by the U.S. and U.K. governments, means that powers once the exclusive realm of nations are now in the hands of private companies with loyalty only to profits, CEOs and, in the case of public companies, shareholders. And, of course, their client, whoever that may be. CIA-type services, special operations, covert actions and small-scale military and paramilitary forces are now on the world market in a way not seen in modern history. This could allow corporations or nations with cash to spend but no real military power to hire squadrons of heavily armed and well-trained commandos.
"It raises very important issues about state and about the very power of state. The one thing the people think of as being in the purview of the government - wholly run and owned by - is the use of military power," says Rep. Jan Schakowsky. "Suddenly you've got a for-profit corporation going around the world that is more powerful than states, can effect regime possibly where they may want to go, that seems to have all the support that it needs from this administration that is also pretty adventurous around the world and operating under the cover of darkness.
"It raises questions about democracies, about states, about who influences policy around the globe, about relationships among some countries. Maybe it's their goal to render state coalitions like NATO irrelevant in the future, that they'll be the ones and open to the highest bidder. Who really does determine war and peace around the world?"
Jeremy Scahill is author of The New York Times-bestseller "Blackwater: The Rise of the World's Most Powerful Mercenary Army.". He is a Puffin Foundation Writing Fellow at the Nation Institute. This article appears in the current issue of The Indypendent newspaper. He can be reached at jeremy(AT)democracynow.org
By JEREMY SCAHILL
If you think the U.S. has only 160,000 troops in Iraq, think again.
With almost no congressional oversight and even less public awareness, the Bush administration has more than doubled the size of the U.S. occupation through the use of private war companies.
There are now almost 200,000 private "contractors" deployed in Iraq by Washington. This means that U.S. military forces in Iraq are now outsized by a coalition of billing corporations whose actions go largely unmonitored and whose crimes are virtually unpunished.
In essence, the Bush administration has created a shadow army that can be used to wage wars unpopular with the American public but extremely profitable for a few unaccountable private companies.
Since the launch of the "global war on terror," the administration has systematically funneled billions of dollars in public money to corporations like Blackwater USA , DynCorp, Triple Canopy, Erinys and ArmorGroup. They have in turn used their lucrative government pay-outs to build up the infrastructure and reach of private armies so powerful that they rival or outgun some nation's militaries.
"I think it's extraordinarily dangerous when a nation begins to outsource its monopoly on the use of force and the use of violence in support of its foreign policy or national security objectives," says veteran U.S. Diplomat Joe Wilson, who served as the last U.S. ambassador to Iraq before the 1991 Gulf War.
The billions of dollars being doled out to these companies, Wilson argues, "makes of them a very powerful interest group within the American body politic and an interest group that is in fact armed. And the question will arise at some time: to whom do they owe their loyalty?"
Precise data on the extent of U.S. spending on mercenary services is nearly impossible to
obtain - by both journalists and elected officials-but some in Congress estimate that up to 40 cents of every tax dollar spent on the war goes to corporate war contractors. At present, the United States spends about $2 billion a week on its Iraq operations.
While much has been made of the Bush administration's "failure" to build international consensus for the invasion of Iraq, perhaps that was never the intention. When U.S. tanks rolled into Iraq in March 2003, they brought with them the largest army of "private contractors" ever deployed in a war. The White House substituted international diplomacy with lucrative war contracts and a coalition of willing nations who provided token forces with a coalition of billing corporations that supplied the brigades of contractors.
'THERE'S NO DEMOCRATIC CONTROL'
During the 1991 Gulf War, the ratio of troops to private contractors was about 60 to 1. Today, it is the contractors who outnumber U.S. forces in Iraq. As of July 2007, there were more than 630 war contracting companies working in Iraq for the United States. Composed of some 180,000 individual personnel drawn from more than 100 countries, the army of contractors surpasses the official U.S. military presence of 160,000 troops.
In all, the United States may have as many as 400,000 personnel occupying Iraq, not including allied nations' militaries. The statistics on contractors do not account for all armed contractors. Last year, a U.S. government report estimated there were 48,000 people working for more than 170 private military companies in Iraq. "It masks the true level of American involvement," says Ambassador Wilson.
How much money is being spent just on mercenaries remains largely classified. Congressional sources estimate the United States has spent at least $6 billion in Iraq, while Britain has spent some $400 million. At the same time, companies chosen by the White House for rebuilding projects in Iraq have spent huge sums in reconstruction funds - possibly billions on more mercenaries to guard their personnel and projects.
The single largest U.S. contract for private security in Iraq was a $293 million payment to the British firm Aegis Defence Services, headed by retired British Lt. Col. Tim Spicer, who has been dogged by accusations that he is a mercenary because of his private involvement in African conflicts. The Texas-based DynCorp International has been another big winner, with more than $1 billion in contracts to provide personnel to train Iraqi police forces, while Blackwater USA has won $750 million in State Department contracts alone for "diplomatic security."
At present, an American or a British Special Forces veteran working for a private security company in Iraq can make $650 a day. At times the rate has reached $1,000 a day; the pay dwarfs many times over that of active duty troops operating in the war zone wearing a U.S. or U.K. flag on their shoulder instead of a corporate logo.
"We got [tens of thousands of] contractors over there, some of them making more than the Secretary of Defense," House Defense Appropriations Subcommittee Chairman John Murtha (D-Penn.) recently remarked. "How in the hell do you justify that?" In part, these contractors do mundane jobs that traditionally have been performed by soldiers. Some require no military training, but involve deadly occupations, such as driving trucks through insurgent-controlled territory.
Others are more innocuous, like cooking food or doing laundry on a base, but still court grave risk because of regular mortar and rocket attacks.
These services are provided through companies like KBR and Fluor and through their vast labyrinth of subcontractors. But many other private personnel are also engaged in armed combat and "security" operations. They interrogate prisoners, gather intelligence, operate rendition flights, protect senior occupation officials and, in at least one case, have commanded U.S. and international troops in battle.
In a revealing admission, Gen. David Petraeus, who is overseeing Bush's troop "surge," said earlier this year that he has, at times, been guarded in Iraq by "contract security." At least three U.S. commanding generals, not including Petraeus, are currently being guarded in Iraq by hired guns. "To have half of your army be contractors, I don't know that there's a precedent for that," says Rep. Dennis Kucinich (D-Ohio), a member of the House Oversight and Government Reform Committee, which has been investigating war contractors.
"Maybe the precedent was the British and the Hessians in the American Revolution. Maybe that's the last time and needless to say, they lost. But I'm thinking that there's no democratic control and there's no intention to have democratic control here."
The implications are devastating. Joseph Wilson says, "In the absence of international consensus, the current Bush administration relied on a coalition of what I call the co-opted, the corrupted and the coerced: those who benefited financially from their involvement, those who benefited politically from their involvement and those few who determined that their relationship with the United States was more important than their relationship with anybody else. And that's a real problem because there is no underlying international legitimacy that sustains us throughout this action that we've taken."
Moreover, this revolution means the United States no longer needs to rely on its own citizens to fight its wars, nor does it need to implement a draft, which would have made the Iraq war politically untenable.
'AN ARM OF THE BUSH ADMINISTRATION'
During his confirmation hearings in the Senate this past January, Petraeus praised the role of private forces, claiming they compensate for an overstretched military. Petraeus told the senators that combined with Bush's official troop surge, the "tens of thousands of contract security forces give me the reason to believe that we can accomplish the mission."
Taken together with Petraeus's recent assertion that the surge would run into mid-2009, this means a widening role for mercenaries and other private forces in Iraq is clearly on the table for the foreseeable future.
"The increasing use of contractors, private forces or as some would say 'mercenaries' makes wars easier to begin and to fight - it just takes money and not the citizenry," says Michael Ratner, president of the Center for Constitutional Rights, whose organization has sued private contractors for alleged human rights violations in Iraq.
"To the extent a population is called upon to go to war, there is resistance, a necessary resistance to prevent wars of self-aggrandizement, foolish wars and in the case of the United States, hegemonic imperialist wars. Private forces are almost a necessity for a United States bent on retaining its declining empire. Think about Rome and its increasing need for mercenaries."
Privatized forces are also politically expedient for many governments. Their casualties go uncounted, their actions largely unmonitored and their crimes unpunished. Indeed, four years into the occupation, there is no effective system of oversight or accountability governing contractors and their operations, nor is there any effective law - military or civilian being applied to their activities. They have not been subjected to military courts martial (despite a recent congressional attempt to place them under the Uniform Code of Military Justice), nor have they been prosecuted in U.S. civilian courts. And no matter what their acts in Iraq, they cannot be prosecuted in Iraqi courts because in 2004 the U.S. occupying authority granted them complete immunity.
"These private contractors are really an arm of the administration and its policies," argues Kucinich, who has called for a withdrawal of all U.S. contractors from Iraq. "They charge whatever they want with impunity. There's no accountability as to how many people they have, as to what their activities are."
That raises the crucial question: what exactly are they doing in Iraq in the name of the U.S. and U.K. governments? Rep. Jan Schakowsky (D-Ill.), a leading member of the House Select Committee on Intelligence, which is responsible for reviewing sensitive national security issues, explained the difficulty of monitoring private military companies on the U.S. payroll: "If I want to see a contract, I have to go up to a secret room and look at it, can't take any notes, can't take any notes out with me, you know - essentially, I don't have access to those contracts and even if I did, I couldn't tell anybody about it."
'A MARKETPLACE FOR WARFARE'
On the Internet, numerous videos have spread virally, showing what appear to be foreign mercenaries using Iraqis as target practice, much to the embarrassment of the firms involved. Despite these incidents and the tens of thousands of contractors passing through Iraq, only two individuals have been ever indicted for crimes there. One was charged with stabbing a fellow contractor, while the other pled guilty to possessing child-pornography images on his computer at Abu Ghraib prison.
Dozens of American soldiers have been court-martialed - 64 on murder-related charges alone - but not a single armed contractor has been prosecuted for a crime against an Iraqi. In some cases, where contractors were alleged to have been involved in crimes or deadly incidents, their companies whisked them out of Iraq to safety.
U.S. contractors in Iraq reportedly have their own motto: "What happens here today, stays here today." International diplomats say Iraq has demonstrated a new U.S. model for waging war; one which poses a creeping threat to global order.
"To outsource security-related, military related issues to non-government, non-military forces is a source of great concern and it caught many governments unprepared," says Hans von Sponeck, a 32-year veteran U.N. diplomat, who served as head of the U.N. Iraq mission before the U.S. invasion.
In Iraq, the United States has used its private sector allies to build up armies of mercenaries many lured from impoverished countries with the promise of greater salaries than their home militaries can pay. That the home governments of some of these private warriors are opposed to the war itself is of little consequence.
"Have gun, will fight for paycheck" has become a globalized law.
"The most worrying aspect is that these forces are outside parliamentary control. They come from all over and they are answerable to no one except a very narrow group of people and they come from countries whose governments may not even know in detail that they have actually been contracted as a private army into a war zone," says von Sponeck.
"If you have now a marketplace for warfare, it is a commercial issue rather than a political issue involving a debate in the countries.
You are also marginalizing governmental control over whether or not this should take place, should happen and, if so, in what size and shape. It's a very worrying new aspect of international relations. I think it becomes more and more uncontrollable by the countries of supply."
In Iraq, for example, hundreds of Chilean mercenaries have been deployed by U.S. companies like Blackwater and Triple Canopy, despite the fact that Chile, as a rotating member of the U.N. Security Council, opposed the invasion and continues to oppose the occupation of Iraq. Some of the Chileans are alleged to have been seasoned veterans of the Pinochet era.
"There is nothing new, of course, about the relationship between politics and the economy, but there is something deeply perverse about the privatization of the Iraq War and the utilization of mercenaries," says Chilean sociologist Tito Tricot, a former political prisoner who was tortured under Pinochet's regime.
"This externalization of services or outsourcing attempts to lower costs - third world mercenaries are paid less than their counterparts from the developed world - and maximize benefits. In other words, let others fight the war for the Americans. In either case, the Iraqi people do not matter at all."
NEW WORLD DISORDER
The Iraq war has ushered in a new system. Wealthy nations can recruit the world's poor, from countries that have no direct stake in the conflict, and use them as cannon fodder to conquer weaker nations. This allows the conquering power to hold down domestic casualties - the single-greatest impediment to waging wars like the one in Iraq. Indeed, in Iraq, more than 1,000 contractors working for the U.S. occupation have been killed with another 13,000 wounded. Most are not American citizens, and these numbers are not counted in the official death toll at a time when Americans are increasingly disturbed by casualties.
In Iraq, many companies are run by Americans or Britons and have well-trained forces drawn from elite military units for use in sensitive actions or operations. But down the ranks, these forces are filled by Iraqis and third-country nationals. Indeed, some 118,000 of the estimated 180,000 contractors are Iraqis, and many mercenaries are reportedly ill-paid, poorly equipped and barely trained Iraqi nationals.
The mercenary industry points to this as a positive: we are giving Iraqis jobs, albeit occupying their own country in the service of a private corporation hired by a hostile invading power.
Doug Brooks, the head of the Orwellian named mercenary trade group, the International Peace Operations Association, argued from early on in the occupation, "Museums do not need to be guarded by Abrams tanks when an Iraqi security guard working for a contractor can do the same job for less than one-fiftieth of what it costs to maintain an American soldier. Hiring local guards gives Iraqis a stake in a successful future for their country. They use their pay to support their families and stimulate the economy. Perhaps most significantly, every guard means one less potential guerrilla."
In many ways, it is the same corporate model of relying on cheap labor in destitute nations to staff their uber-profitable operations. The giant multinationals also argue they are helping the economy by hiring locals, even if it's at starvation wages.
"Donald Rumsfeld's masterstroke, and his most enduring legacy, was to bring the corporate branding revolution of the 1990s into the heart of the most powerful military in the world," says Naomi Klein, whose upcoming book, The Shock Doctrine: The Rise of Disaster Capitalism, explores these themes.
"We have now seen the emergence of the hollow army. Much as with so-called hollow corporations like Nike, billions are spent on military technology and design in rich countries while the manual labor and sweat work of invasion and occupation is increasingly outsourced to contractors who compete with each other to fill the work order for the lowest price. Just as this model breeds rampant abuse in the manufacturing sector - with the big-name brands always able to plead ignorance about the actions of their suppliers-so it does in the military, though with stakes that are immeasurably higher." In the case of Iraq, the U.S. and U.K. governments could give the public perception of a withdrawal of forces and just privatize the occupation. Indeed, shortly after former British Prime Minister Tony Blair announced that he wanted to withdraw 1,600 soldiers from Basra, reports emerged that the British government was considering sending in private security companies to "fill the gap left behind."
THE SPY WHO BILLED ME
While Iraq currently dominates the headlines, private war and intelligence companies are expanding their already sizable footprint. The U.S. government in particular is now in the midst of the most radical privatization agenda in its history. According to a recent report in Vanity Fair, the government pays contractors as much as the combined taxes paid by everyone in the United States with incomes under $100,000, meaning "more than 90 percent of all taxpayers might as well remit everything they owe directly to [contractors] rather than to the [government]."
Some of this outsourcing is happening in sensitive sectors, including the intelligence community. "This is the magnet now. Everything is being attracted to these private companies in terms of individuals and expertise and functions that were normally done by the intelligence community," says former CIA division chief and senior analyst Melvin Goodman. "My major concern is the lack of accountability, the lack of responsibility. The entire industry is essentially out of control. It's outrageous."
RJ Hillhouse, a blogger who investigates the clandestine world of private contractors and U.S. intelligence, recently obtained documents from the Office of the Directorate of National Intelligence (DNI) showing that Washington spends some $42 billion annually on private intelligence contractors, up from $17.54 billion in 2000. Currently that spending represents 70 percent of the U.S. intelligence budget going to private companies.
Perhaps it is no surprise then that the current head of the DNI is Mike McConnell, the former chair of the board of the Intelligence and National Security Alliance, the private intelligence industry's lobbying arm. Hillhouse also revealed that one of the most sensitive U.S. intelligence documents, the Presidential Daily Briefing, is prepared in part by private companies, despite having the official seal of the U.S. intelligence apparatus.
"Let's say a company is frustrated with a government that's hampering its business or business of one of its clients. Introducing and spinning intelligence on that government's suspected collaboration with terrorists would quickly get the White House's attention and could be used to shape national policy," Hillhouse argues.
MUTLINATIONAL MERCENARIES
Empowered by their new found prominence, mercenary forces are increasing their presence on other battlefields: in Latin America, DynCorp International is operating in Colombia, Bolivia and other countries under the guise of the "war on drugs" - U.S. defense contractors are receiving nearly half the $630 million in U.S. military aid for Colombia; in Africa, mercenaries are deploying in Somalia, Congo and Sudan and increasingly have their sights set on tapping into the hefty U.N. peacekeeping budget (this has been true since at least the early 1990s and probably much earlier). Heavily armed mercenaries were deployed to New Orleans in the aftermath of Hurricane Katrina, while proposals are being considered to privatize the U.S. border patrol.
Brooks, the private military industry lobbyist, says people should not become "overly obsessed with Iraq," saying his association's "member companies have more personnel working in U.N. and African Union peace operations than all but a handful of countries." Von Sponeck says he believes the use of such companies in warfare should be barred and has harsh words for the institution for which he spent his career working: "The United Nations, including the U.N. Secretary General, should react to this and instead of reacting, they are mute, they are silent."
This unprecedented funding of such enterprises, primarily by the U.S. and U.K. governments, means that powers once the exclusive realm of nations are now in the hands of private companies with loyalty only to profits, CEOs and, in the case of public companies, shareholders. And, of course, their client, whoever that may be. CIA-type services, special operations, covert actions and small-scale military and paramilitary forces are now on the world market in a way not seen in modern history. This could allow corporations or nations with cash to spend but no real military power to hire squadrons of heavily armed and well-trained commandos.
"It raises very important issues about state and about the very power of state. The one thing the people think of as being in the purview of the government - wholly run and owned by - is the use of military power," says Rep. Jan Schakowsky. "Suddenly you've got a for-profit corporation going around the world that is more powerful than states, can effect regime possibly where they may want to go, that seems to have all the support that it needs from this administration that is also pretty adventurous around the world and operating under the cover of darkness.
"It raises questions about democracies, about states, about who influences policy around the globe, about relationships among some countries. Maybe it's their goal to render state coalitions like NATO irrelevant in the future, that they'll be the ones and open to the highest bidder. Who really does determine war and peace around the world?"
Jeremy Scahill is author of The New York Times-bestseller "Blackwater: The Rise of the World's Most Powerful Mercenary Army.". He is a Puffin Foundation Writing Fellow at the Nation Institute. This article appears in the current issue of The Indypendent newspaper. He can be reached at jeremy(AT)democracynow.org
Thursday, August 09, 2007
Banking Against Disaster
A New New Deal
When the levees broke in New Orleans, I wrote about the desperate need for a New Deal for the 21st Century – one which would rebuild a crumbling infrastructure, help address glaring income inequality, and repair the damage done by a Bush administration fiercely hostile to the notion that government can serve the public good.
The collapse of the I-35W bridge in Minneapolis is yet another alarm, alerting us to our skewed priorities and need for a public investment agenda.
As The Nation argues in its forthcoming lead editorial, the neglect of our infrastructure is seen in collapsing bridges and exploding steam pipes, flooded subways, traffic-choked streets and clogged-up ports, electrical power brownouts, corroding drinking water systems, uneven broadband access, and an antiquated air traffic system.
The US Department of Transportation estimated that freight bottlenecks cost the economy $200 billion a year--nearly 1.6 percent of GDP. The Environmental Protection Agency estimated that it would cost $151 billion and $390 billion every year over the next 20 years to repair obsolete drinking water and wastewater systems, respectively -- systems that average 50 to 100 years of age. According to the Federal Highway Administration, $131.7 billion and $9.4 billion is needed every year over the next 20 years to repair deficient roads and bridges, respectively. Moreover, the American Society of Civil Engineers estimated that $1.6 trillion over the next five years would be required to alleviate problems with the nation's infrastructure. As John Nichols wrote, "That $1.6 trillion figure sounds like a lot of money, unless it is compared with the anticipated cost of $1 trillion or more for completing George Bush's mission in Iraq."
This is eminently doable, it's a question of political will.
Following the bridge collapse, Senators Christopher Dodd and Chuck Hagel introduced legislation to establish a National Infrastructure Bank that would enable the federal government to help finance infrastructure projects – partly through federal guarantees to state and local governments. Projects would include publicly-owned mass transit systems, roads, bridges, drinking water and wastewater systems, and housing properties. In the House, Congressmen Dennis Kucinich and Steven LaTourette introduced The Rebuilding America's Infrastructure Act which would create a low-cost federal financing mechanism to administer zero-interest loans to localities. States choose which projects to fund with the loans according to their specific needs.
The problem is that the Dodd bill, as well-intentioned as it is, would still invest only $60 billion a year – which pales in comparison to the scope of the problem. Similarly, Senator Bernie Sanders good bill to foster green collar jobs – which passed in the House too – also allots only $100 million. A much bolder undertaking is needed.
In a forthcoming paper for the New America Foundation economist (and sometime Nation contributor) James K. Galbraith writes, "Contrary to considerable myth, economic development in America has never been a purely private matter." Galbraith cites the Congress of 1862 and its authorization of land grant universities, homesteading, and the transcontinental railroads. And the New Deal which "laid down much of the public architectural legacy with which we live today."
Galbraith describes attempts in the 1980's to foster higher infrastructure investment on a systematic basis – such as Representatives Lee Hamilton and James Howard's effort to create a Federal Infrastructure Bank "which would have provided funds on a revolving basis to states and cities to support local and regional infrastructure." And late in the Clinton administration similar ideas were discussed "but of course died with the arrival of the Bush government."
In order to address the infrastructure needs – and the transition to a low-carbon emissions society that is required to meet the challenge of global warming – Galbraith calls for a Federal Infrastructure Bank to assist state and local governments with financial resources; and investments in universities and research centers to develop the needed specialists in urban design, environmental engineering, energy economics, transportation systems, carbon sequestration, the management of carbon trading markets and other fields. Galbraith estimates that a new large scale public investment initiative could be undertaken that amounts to new expenditures rising to two percent of GDP over a period of a few years – approximately 290 billion dollars per year in present dollars. (Roughly one-half of the current national security budget.)
In Hometown America, a report based on two years of research by a group of progressive thinkers, the authors write that "for the past 20 to 30 years, major parts of our economy and society have been short-changed – trillions of dollars of investment needed but not made in healthcare, education, energy independence, and a broad range of other essentials. We conclude that serious reforms are needed to make up for these shortfalls and to build a new generation of growth and middle class prosperity."
The report argues that the last great American middle class – created on rising wages, a strong industrial economy, and government programs that expanded public education, increased home ownership and eliminated poverty in old age – has eroded over the last three decades due to globalization, financial liberalization at the expense of middle class prosperity, an increased tax burden on the middle class, and military adventures abroad over public investments at home. The authors call for using "government much like an earlier generation did to create a high-wage and technologically advanced economy with a broad base of middle class jobs."
The report outlines "a new federal revenue sharing and regional decision-making process…."; a National Capital Budget and Development Bank "to finance and oversee the substantial resources that federal, state, and local governments will need to accomplish major reforms in healthcare, education, energy use, and other key areas"; and "reining in an over-reliance on military projection and strengthening economic and diplomatic engagement…."
Specifically, Hometown America calls for investment in the following areas: basic infrastructure – roads, bridges, levees, water systems, electrical grids; a new energy infrastructure for biofuels, hydrogen, solar, and other renewables; the build-out of America's broadband infrastructure; an expanded and advanced air and rail transportation system, including a new Skyways and Rail system to for the American heartland to complement the Interstate Highway system; a new system of federal research centers to push the frontiers of science of technology; and a network of public health clinics, new technology extension centers, and regional art and culture centers. And, as many have pointed out, "For national security, environmental, and economic reasons, the promotion of a renewable energy industry must be the first priority of any new public investment initiative." The Apollo Alliance has provided a blueprint to do just that – with $300 billion invested over the next 10 years, creating 3.3 million jobs, leading to economic growth, more tax revenues, and energy independence.
Citizens need to make it clear to the presidential candidates – and their representatives – that they seek a bold vision to renew our shredded social contract and rebuild our public infrastructure. Otherwise we can expect continued tragedies as we saw last week, and the same path of privilege for the few and treading water for the rest.
When the levees broke in New Orleans, I wrote about the desperate need for a New Deal for the 21st Century – one which would rebuild a crumbling infrastructure, help address glaring income inequality, and repair the damage done by a Bush administration fiercely hostile to the notion that government can serve the public good.
The collapse of the I-35W bridge in Minneapolis is yet another alarm, alerting us to our skewed priorities and need for a public investment agenda.
As The Nation argues in its forthcoming lead editorial, the neglect of our infrastructure is seen in collapsing bridges and exploding steam pipes, flooded subways, traffic-choked streets and clogged-up ports, electrical power brownouts, corroding drinking water systems, uneven broadband access, and an antiquated air traffic system.
The US Department of Transportation estimated that freight bottlenecks cost the economy $200 billion a year--nearly 1.6 percent of GDP. The Environmental Protection Agency estimated that it would cost $151 billion and $390 billion every year over the next 20 years to repair obsolete drinking water and wastewater systems, respectively -- systems that average 50 to 100 years of age. According to the Federal Highway Administration, $131.7 billion and $9.4 billion is needed every year over the next 20 years to repair deficient roads and bridges, respectively. Moreover, the American Society of Civil Engineers estimated that $1.6 trillion over the next five years would be required to alleviate problems with the nation's infrastructure. As John Nichols wrote, "That $1.6 trillion figure sounds like a lot of money, unless it is compared with the anticipated cost of $1 trillion or more for completing George Bush's mission in Iraq."
This is eminently doable, it's a question of political will.
Following the bridge collapse, Senators Christopher Dodd and Chuck Hagel introduced legislation to establish a National Infrastructure Bank that would enable the federal government to help finance infrastructure projects – partly through federal guarantees to state and local governments. Projects would include publicly-owned mass transit systems, roads, bridges, drinking water and wastewater systems, and housing properties. In the House, Congressmen Dennis Kucinich and Steven LaTourette introduced The Rebuilding America's Infrastructure Act which would create a low-cost federal financing mechanism to administer zero-interest loans to localities. States choose which projects to fund with the loans according to their specific needs.
The problem is that the Dodd bill, as well-intentioned as it is, would still invest only $60 billion a year – which pales in comparison to the scope of the problem. Similarly, Senator Bernie Sanders good bill to foster green collar jobs – which passed in the House too – also allots only $100 million. A much bolder undertaking is needed.
In a forthcoming paper for the New America Foundation economist (and sometime Nation contributor) James K. Galbraith writes, "Contrary to considerable myth, economic development in America has never been a purely private matter." Galbraith cites the Congress of 1862 and its authorization of land grant universities, homesteading, and the transcontinental railroads. And the New Deal which "laid down much of the public architectural legacy with which we live today."
Galbraith describes attempts in the 1980's to foster higher infrastructure investment on a systematic basis – such as Representatives Lee Hamilton and James Howard's effort to create a Federal Infrastructure Bank "which would have provided funds on a revolving basis to states and cities to support local and regional infrastructure." And late in the Clinton administration similar ideas were discussed "but of course died with the arrival of the Bush government."
In order to address the infrastructure needs – and the transition to a low-carbon emissions society that is required to meet the challenge of global warming – Galbraith calls for a Federal Infrastructure Bank to assist state and local governments with financial resources; and investments in universities and research centers to develop the needed specialists in urban design, environmental engineering, energy economics, transportation systems, carbon sequestration, the management of carbon trading markets and other fields. Galbraith estimates that a new large scale public investment initiative could be undertaken that amounts to new expenditures rising to two percent of GDP over a period of a few years – approximately 290 billion dollars per year in present dollars. (Roughly one-half of the current national security budget.)
In Hometown America, a report based on two years of research by a group of progressive thinkers, the authors write that "for the past 20 to 30 years, major parts of our economy and society have been short-changed – trillions of dollars of investment needed but not made in healthcare, education, energy independence, and a broad range of other essentials. We conclude that serious reforms are needed to make up for these shortfalls and to build a new generation of growth and middle class prosperity."
The report argues that the last great American middle class – created on rising wages, a strong industrial economy, and government programs that expanded public education, increased home ownership and eliminated poverty in old age – has eroded over the last three decades due to globalization, financial liberalization at the expense of middle class prosperity, an increased tax burden on the middle class, and military adventures abroad over public investments at home. The authors call for using "government much like an earlier generation did to create a high-wage and technologically advanced economy with a broad base of middle class jobs."
The report outlines "a new federal revenue sharing and regional decision-making process…."; a National Capital Budget and Development Bank "to finance and oversee the substantial resources that federal, state, and local governments will need to accomplish major reforms in healthcare, education, energy use, and other key areas"; and "reining in an over-reliance on military projection and strengthening economic and diplomatic engagement…."
Specifically, Hometown America calls for investment in the following areas: basic infrastructure – roads, bridges, levees, water systems, electrical grids; a new energy infrastructure for biofuels, hydrogen, solar, and other renewables; the build-out of America's broadband infrastructure; an expanded and advanced air and rail transportation system, including a new Skyways and Rail system to for the American heartland to complement the Interstate Highway system; a new system of federal research centers to push the frontiers of science of technology; and a network of public health clinics, new technology extension centers, and regional art and culture centers. And, as many have pointed out, "For national security, environmental, and economic reasons, the promotion of a renewable energy industry must be the first priority of any new public investment initiative." The Apollo Alliance has provided a blueprint to do just that – with $300 billion invested over the next 10 years, creating 3.3 million jobs, leading to economic growth, more tax revenues, and energy independence.
Citizens need to make it clear to the presidential candidates – and their representatives – that they seek a bold vision to renew our shredded social contract and rebuild our public infrastructure. Otherwise we can expect continued tragedies as we saw last week, and the same path of privilege for the few and treading water for the rest.
Sunday, August 05, 2007
Canadian Mercenaries Abroad
Just Because It’s Canadian, Does That Make It Good?
by Yves Engler / August 5th, 2007
A few weeks ago, four Montreal-based GardaWorld (“fifth largest integrated physical security and cash logistics firm worldwide” — according to the company website) employees were kidnapped while providing security for BearingPoint Consultants in Iraq. In a front page Ottawa Citizen article headlined, “How a nice Quebec firm found itself in a war zone”, the head of the company deflected criticism of its 5,000 private soldiers in the Middle East by claiming, “we’re perceived differently because we’re Canadian.”
Of course he didn’t mention if the Iraqi mothers whose children have been shot by mercenaries (unaccountable to any law) feel that way on discovering the bullets originate from a Canadian company.
The company’s eagerness to point out their heritage is a strategy that milks Canadians’ deep-seated perception of this country’s altruism. Numerous studies demonstrate that Canadians’ self-appraisal of their country’s foreign policy is the highest in the world.
But do the facts fit our self-image?
It is well known that Canada participated militarily in the Boer War, First World War, Second World War, Korean War, first Gulf War, bombing of Serbia and the war in Afghanistan. What is less well known is that Canada did so without facing a serious threat of invasion and that none of these wars were morally justifiable. (WWII may have been justifiable after the fact, but
Canadian motives for participating were not a high-minded struggle against anti-semitism or fascism. In a summer 1937 meeting with Hitler, Prime Minister McKenzie King lauded the Nazi’s support for the Fascists in Spain and during the war the Canadian government had a “none is too many” policy on immigration for fleeing European Jews.) Canada’s entry into the first three wars was more or less automatic because this country was part of the British Empire. We joined the last four conflicts because, quite frankly, Canada had become part of the U.S. Empire.
Many of us cite peacekeeping as a great Canadian endeavor. Canada and the Early Cold War, a book financed by the Department of Foreign Affairs, lays the myth of benevolent peacekeeping to rest. “The more extreme version of this myth, which makes Lester Pearson [the founder of peacekeeping] into Herbert Evatt raging against Great Power dominance and transforms Canada’s peacekeeping into neutralism or even pacifism, receives no support in the
DCER [documents on Canadian external relations].” Through peacekeeping, Canada was fighting the Western world’s Cold War “by other means.”
Aid is probably the most benevolent aspect of Canadian foreign policy. Yet, an important principle of Canadian aid is that where the US kills, Canada provides aid. Canadian aid expanded drastically in South Vietnam during the American War. More recently, the three major recipients of Canadian aid are Iraq, Afghanistan and Haiti. In Haiti, that aid was used to help overthrow
an elected government and then legitimate the brutal 26-month coup regime.
Geopolitics has always been the primary reason for disbursing Canadian aid. In the wake of the Chinese revolution, Canada began its first significant [non–European] allocation of foreign aid through the Colombo plan. The man in charge of Canada’s participation in the plan, Nik Cavell, explained the rationale behind the plan. Communism “has made a great inroad in Asia … and is busy day and night softening up, and preparing, other populations ready for the day when they too can be made satellites of an ever-growing world of terrible totalitarian slavery of the human mind and body.”
If some of India and Pakistan’s post-colonial population had not set their sights on a communist solution to their troubles –- with the possibility of Soviet or Chinese assistance — Canada probably would not have been willing to provide aid. The Colombo plan was then extended to Commonwealth Africa and the Caribbean amidst fears the British Empire’s old territories would fall under the influence of the communist bloc.
A 1969 background paper for the Canadian International Development Agency (CIDA) summarizes the rationale of Canadian aid. “To establish within recipient countries those political attitudes or commitments, military alliances or military bases that would assist Canada or Canada’s western allies to maintain a reasonably stable and secure international political
system. Through this objective, Canada’s aid programs would serve not only to help increase Canada’s influence within the developing world, but also within the western alliance.”
The second motivation driving Canadian aid is to advance capitalist interests. Initially all Canadian aid was tied, meaning that the money had to be spent on Canadian-produced goods or services. Even after four decades of criticism half of all Canadian aid is still tied. Additionally, many of the projects funded are chosen because they benefit Canadian corporate interests. A boon to Canadian-owned hotels and airlines, Canadian aid has been used to build airports throughout the Caribbean. And, by the late 1980s, aid became a way to coerce developing countries to adopt structural adjustment programs.
The third motivation behind Canadian aid is domestic: It aims to weaken the Quebec sovereignty movement and social movements generally across the country. In the late 1960s, Canada began to expand its aid to francophone nations as a way to placate Quebec nationalists. Prior to this, Canadian aid was focused on the recently decolonized former British colonies. The aid to the Francophonie was designed to convince Quebec nationalists that the Canadian government was sympathetic to francophone culture. Quebec’s large number of CIDA-funded international non-governmental organizations (and the jobs they provide, especially to young people) is a testament to the federal government’s policy of tying Quebecers to its overall aid objectives.
Of course, state funding for social/political organizations always has an element of co-optation. In the case of international assistance, the federal government would prefer activists join the Canadian University Services Overseas and go teach somewhere in Africa then organize to oppose the capitalist system at home. It’s a way of directing activists towards issues the government finds less politically sensitive as well as making them dependent on the federal government.
The other motivations behind Canadian aid are to feed the hungry, to build schools and other infrastructure, and to help people climb out of poverty. Unfortunately, these motivations are less acted upon than the ones cited above. That is because there are powerful actors in business and government who make sure their interests are satisfied before all others.
Unfortunately, most of us have, so far, paid more attention to the words than to the deeds of our governments and corporations. Only when the vast majority of Canadians pay attention to the reality of foreign affairs and demand altruistic aid, real international co-operation, benevolent peacekeeping instead of militarism, and the rule of law instead of an empire’s might, will these things happen.
Yves Engler is the author of two books: Canada in Haiti: Waging War on the Poor Majority (with Anthony Fenton) and Playing Left Wing: From Rink Rat to Student Radical. Read other articles by Yves.
by Yves Engler / August 5th, 2007
A few weeks ago, four Montreal-based GardaWorld (“fifth largest integrated physical security and cash logistics firm worldwide” — according to the company website) employees were kidnapped while providing security for BearingPoint Consultants in Iraq. In a front page Ottawa Citizen article headlined, “How a nice Quebec firm found itself in a war zone”, the head of the company deflected criticism of its 5,000 private soldiers in the Middle East by claiming, “we’re perceived differently because we’re Canadian.”
Of course he didn’t mention if the Iraqi mothers whose children have been shot by mercenaries (unaccountable to any law) feel that way on discovering the bullets originate from a Canadian company.
The company’s eagerness to point out their heritage is a strategy that milks Canadians’ deep-seated perception of this country’s altruism. Numerous studies demonstrate that Canadians’ self-appraisal of their country’s foreign policy is the highest in the world.
But do the facts fit our self-image?
It is well known that Canada participated militarily in the Boer War, First World War, Second World War, Korean War, first Gulf War, bombing of Serbia and the war in Afghanistan. What is less well known is that Canada did so without facing a serious threat of invasion and that none of these wars were morally justifiable. (WWII may have been justifiable after the fact, but
Canadian motives for participating were not a high-minded struggle against anti-semitism or fascism. In a summer 1937 meeting with Hitler, Prime Minister McKenzie King lauded the Nazi’s support for the Fascists in Spain and during the war the Canadian government had a “none is too many” policy on immigration for fleeing European Jews.) Canada’s entry into the first three wars was more or less automatic because this country was part of the British Empire. We joined the last four conflicts because, quite frankly, Canada had become part of the U.S. Empire.
Many of us cite peacekeeping as a great Canadian endeavor. Canada and the Early Cold War, a book financed by the Department of Foreign Affairs, lays the myth of benevolent peacekeeping to rest. “The more extreme version of this myth, which makes Lester Pearson [the founder of peacekeeping] into Herbert Evatt raging against Great Power dominance and transforms Canada’s peacekeeping into neutralism or even pacifism, receives no support in the
DCER [documents on Canadian external relations].” Through peacekeeping, Canada was fighting the Western world’s Cold War “by other means.”
Aid is probably the most benevolent aspect of Canadian foreign policy. Yet, an important principle of Canadian aid is that where the US kills, Canada provides aid. Canadian aid expanded drastically in South Vietnam during the American War. More recently, the three major recipients of Canadian aid are Iraq, Afghanistan and Haiti. In Haiti, that aid was used to help overthrow
an elected government and then legitimate the brutal 26-month coup regime.
Geopolitics has always been the primary reason for disbursing Canadian aid. In the wake of the Chinese revolution, Canada began its first significant [non–European] allocation of foreign aid through the Colombo plan. The man in charge of Canada’s participation in the plan, Nik Cavell, explained the rationale behind the plan. Communism “has made a great inroad in Asia … and is busy day and night softening up, and preparing, other populations ready for the day when they too can be made satellites of an ever-growing world of terrible totalitarian slavery of the human mind and body.”
If some of India and Pakistan’s post-colonial population had not set their sights on a communist solution to their troubles –- with the possibility of Soviet or Chinese assistance — Canada probably would not have been willing to provide aid. The Colombo plan was then extended to Commonwealth Africa and the Caribbean amidst fears the British Empire’s old territories would fall under the influence of the communist bloc.
A 1969 background paper for the Canadian International Development Agency (CIDA) summarizes the rationale of Canadian aid. “To establish within recipient countries those political attitudes or commitments, military alliances or military bases that would assist Canada or Canada’s western allies to maintain a reasonably stable and secure international political
system. Through this objective, Canada’s aid programs would serve not only to help increase Canada’s influence within the developing world, but also within the western alliance.”
The second motivation driving Canadian aid is to advance capitalist interests. Initially all Canadian aid was tied, meaning that the money had to be spent on Canadian-produced goods or services. Even after four decades of criticism half of all Canadian aid is still tied. Additionally, many of the projects funded are chosen because they benefit Canadian corporate interests. A boon to Canadian-owned hotels and airlines, Canadian aid has been used to build airports throughout the Caribbean. And, by the late 1980s, aid became a way to coerce developing countries to adopt structural adjustment programs.
The third motivation behind Canadian aid is domestic: It aims to weaken the Quebec sovereignty movement and social movements generally across the country. In the late 1960s, Canada began to expand its aid to francophone nations as a way to placate Quebec nationalists. Prior to this, Canadian aid was focused on the recently decolonized former British colonies. The aid to the Francophonie was designed to convince Quebec nationalists that the Canadian government was sympathetic to francophone culture. Quebec’s large number of CIDA-funded international non-governmental organizations (and the jobs they provide, especially to young people) is a testament to the federal government’s policy of tying Quebecers to its overall aid objectives.
Of course, state funding for social/political organizations always has an element of co-optation. In the case of international assistance, the federal government would prefer activists join the Canadian University Services Overseas and go teach somewhere in Africa then organize to oppose the capitalist system at home. It’s a way of directing activists towards issues the government finds less politically sensitive as well as making them dependent on the federal government.
The other motivations behind Canadian aid are to feed the hungry, to build schools and other infrastructure, and to help people climb out of poverty. Unfortunately, these motivations are less acted upon than the ones cited above. That is because there are powerful actors in business and government who make sure their interests are satisfied before all others.
Unfortunately, most of us have, so far, paid more attention to the words than to the deeds of our governments and corporations. Only when the vast majority of Canadians pay attention to the reality of foreign affairs and demand altruistic aid, real international co-operation, benevolent peacekeeping instead of militarism, and the rule of law instead of an empire’s might, will these things happen.
Yves Engler is the author of two books: Canada in Haiti: Waging War on the Poor Majority (with Anthony Fenton) and Playing Left Wing: From Rink Rat to Student Radical. Read other articles by Yves.
Friday, July 20, 2007
D.C. Madam, DCphonelist
“Brandeis Boys” come to D.C. Madam’s rescue with website of phone listings
By The Hill.
As the phone records of the “D.C. Madam,” Deborah Jeane Palfrey, became public last week, curious Washingtonians started searching a mysterious database at dcphonelist.com that had organized mountains of her documents.
In their first on-the-record phone interview, the men behind the website spoke to the Hill about who they are, how they created the database and why they put it online.
Kevin, Igor and Yoni described their experiences in a conference call. The crew’s fourth member, Danny, was not present.
All asked that their last names not be printed.
Kevin said they were concerned for their respective employers.
“It also prevents people from calling us up and harassing us, or worse,” he said. “The irony is not entirely lost on us.”
The website’s registration remains private and its purveyors are shy with the press, e-mailing an Associated Press reporter for an article on Palfrey last week.
Many have plugged individuals’ phone numbers into the database in attempts to determine who utilized Palfrey’s services.
Some big fish have come under fire following their outing as possible clients, such as Sen. David Vitter (R-La.) and a former Bush administration official, Randall Tobias.
The proprietor of a Washington, D.C. escort service, Palfrey has been charged by federal authorities with running a prostitution ring. She has maintained her innocence and released her phone records to find witnesses for her potential trial.
All in their mid-20s, the “D.C. Phone Listers” — as they identified themselves in their first e-mail to The Hill — are computer programmers and IT specialists who live and work in the Boston area. All have informed their employers of their work for the website.
Fast friends since 2001, the Brandeis University alumni studied computer science, political science and philosophy and worked on the college newspaper.
The website’s e-mail address includes the name “Dembitz” — the middle name of former Supreme Court Justice Louis Brandeis — in a nod to the group’s alma mater, which was named for the judge.
The four aim to empower local reporters and citizen journalists, who may not have the resources of national media organizations, by posting the searchable database online.
“What this does is let someone in Kansas who has the right phone numbers search the data and see for himself,” Yoni said.
Feedback so far has been “all positive,” according to the group, with a few corrections made and several individuals saying their phone numbers were misdials.
Palfrey is a fan of the group’s work. “God bless them,” said Palfrey, who called the website’s founders “the Brandeis Boys” during an interview.
“I think what they are doing is a great, patriotic service to this country,” Palfrey said. “These fellows are democracy in action.”
Palfrey’s lawyer, Montgomery Blair Sibley, said that since Palfrey’s assets have been seized, she could not post a similar database.
“We got quotes from five or six people that said [it] would cost between $15,000 and $30,000 to do this very thing they have done now,” Sibley said. The attorney said the website has helped find about a dozen witnesses.
Not hired by Palfrey, the website team has had little contact with her or her attorney beyond a few e-mails and linking to one another’s websites. Kevin and others have asked Sibley to rescan some of the phone records so they can be used for the website.
The project’s only monetary expenditure so far was buying the domain for $10. The group said it has neither earned nor lost any money. “We joke about selling T-shirts,” Igor said.
“It would be throwing another layer of complication on it by putting ads up,” Kevin said, adding that that “might raise questions about our integrity.”
But the site has cost everyone involved plenty of time, about 100 man-hours between the four. On Monday, July 9, when Palfrey’s phone records were released, the group stayed up until 5 in the morning to complete the site.
After downloading the phone records, Igor used software to turn scanned images into text files, a process known as “optical character recognition,” or OCR. Kevin then took the lead on writing the computer program to parse the phone numbers from the data, while Danny designed the website.
So far, there have been more than 100,000 visits to the site and close to 50,000 searches, according to the team.
Yet the data is not perfect. OCR cannot catch everything, they said, and many of the scanned images could not be translated into useable text files. Plus, “even if the data is accurate, it is a list of numbers, not a list of clients,” Kevin said — hence a prominent disclaimer on the site.
More records are planned for release next week, according to Palfrey. Of the estimated 75,000 outgoing calls, no calls from 1997 have been made public.
“I understand there are more to come,” said Palfrey, talking about potentially other big names in her phone records. “I think the real meat is the lobbyists here because they’re all connected to a member of Congress.”
– By Kevin Bogardus
By The Hill.
As the phone records of the “D.C. Madam,” Deborah Jeane Palfrey, became public last week, curious Washingtonians started searching a mysterious database at dcphonelist.com that had organized mountains of her documents.
In their first on-the-record phone interview, the men behind the website spoke to the Hill about who they are, how they created the database and why they put it online.
Kevin, Igor and Yoni described their experiences in a conference call. The crew’s fourth member, Danny, was not present.
All asked that their last names not be printed.
Kevin said they were concerned for their respective employers.
“It also prevents people from calling us up and harassing us, or worse,” he said. “The irony is not entirely lost on us.”
The website’s registration remains private and its purveyors are shy with the press, e-mailing an Associated Press reporter for an article on Palfrey last week.
Many have plugged individuals’ phone numbers into the database in attempts to determine who utilized Palfrey’s services.
Some big fish have come under fire following their outing as possible clients, such as Sen. David Vitter (R-La.) and a former Bush administration official, Randall Tobias.
The proprietor of a Washington, D.C. escort service, Palfrey has been charged by federal authorities with running a prostitution ring. She has maintained her innocence and released her phone records to find witnesses for her potential trial.
All in their mid-20s, the “D.C. Phone Listers” — as they identified themselves in their first e-mail to The Hill — are computer programmers and IT specialists who live and work in the Boston area. All have informed their employers of their work for the website.
Fast friends since 2001, the Brandeis University alumni studied computer science, political science and philosophy and worked on the college newspaper.
The website’s e-mail address includes the name “Dembitz” — the middle name of former Supreme Court Justice Louis Brandeis — in a nod to the group’s alma mater, which was named for the judge.
The four aim to empower local reporters and citizen journalists, who may not have the resources of national media organizations, by posting the searchable database online.
“What this does is let someone in Kansas who has the right phone numbers search the data and see for himself,” Yoni said.
Feedback so far has been “all positive,” according to the group, with a few corrections made and several individuals saying their phone numbers were misdials.
Palfrey is a fan of the group’s work. “God bless them,” said Palfrey, who called the website’s founders “the Brandeis Boys” during an interview.
“I think what they are doing is a great, patriotic service to this country,” Palfrey said. “These fellows are democracy in action.”
Palfrey’s lawyer, Montgomery Blair Sibley, said that since Palfrey’s assets have been seized, she could not post a similar database.
“We got quotes from five or six people that said [it] would cost between $15,000 and $30,000 to do this very thing they have done now,” Sibley said. The attorney said the website has helped find about a dozen witnesses.
Not hired by Palfrey, the website team has had little contact with her or her attorney beyond a few e-mails and linking to one another’s websites. Kevin and others have asked Sibley to rescan some of the phone records so they can be used for the website.
The project’s only monetary expenditure so far was buying the domain for $10. The group said it has neither earned nor lost any money. “We joke about selling T-shirts,” Igor said.
“It would be throwing another layer of complication on it by putting ads up,” Kevin said, adding that that “might raise questions about our integrity.”
But the site has cost everyone involved plenty of time, about 100 man-hours between the four. On Monday, July 9, when Palfrey’s phone records were released, the group stayed up until 5 in the morning to complete the site.
After downloading the phone records, Igor used software to turn scanned images into text files, a process known as “optical character recognition,” or OCR. Kevin then took the lead on writing the computer program to parse the phone numbers from the data, while Danny designed the website.
So far, there have been more than 100,000 visits to the site and close to 50,000 searches, according to the team.
Yet the data is not perfect. OCR cannot catch everything, they said, and many of the scanned images could not be translated into useable text files. Plus, “even if the data is accurate, it is a list of numbers, not a list of clients,” Kevin said — hence a prominent disclaimer on the site.
More records are planned for release next week, according to Palfrey. Of the estimated 75,000 outgoing calls, no calls from 1997 have been made public.
“I understand there are more to come,” said Palfrey, talking about potentially other big names in her phone records. “I think the real meat is the lobbyists here because they’re all connected to a member of Congress.”
– By Kevin Bogardus
Thursday, July 19, 2007
Japan's Nuclear Earthquke
| |||||
Potentially Risky Trickle
Of Bad Nuclear News
July 19, 2007 7:05 a.m.
The Morning Brief, a look at the day's biggest news, is emailed to subscribers by 7 a.m. every business day. Sign up for the e-mail here.
For the fourth straight day, authorities revealed fresh news of a radioactive leak at a Japanese nuclear power plant following Monday's earthquake, potentially exacerbating a development that could set back a nascent revival of atomic-energy projects.
Inspectors from the Nuclear and Industrial Safety Agency found that radioactive iodine had leaked from an exhaust pipe at Tokyo Electric Power Co.'s Kashiwazaki-Kariwa plant in Japan's northwest, the Associated Press reports, citing the Kyodo news agency. This followed yesterday's revision of the number of upended barrels of radioactive waste to "several hundred" from the 100 reported earlier in the week -- including "a few dozen" with lids that opened -- and revised judgment about the 317 gallons of water that leaked into the Sea of Japan, which was 50% more radioactive than first announced, as the New York Times reports. The inspectors concluded the leak revealed today was too small to harm public health or the environment. But officials from another agency, the Nuclear Safety Commission, today slammed Tepco's response as they were touring the plant and especially the lack of equipment for dealing with a chemical fire that broke out. Yasuhisa Shiozaki, Japan's chief cabinet secretary, urged operators of the country's other 54 reactors to accelerate assessment of their facilities' earthquake resistance.
It was only this week that officials made public findings that show the Kashiwazaki-Kariwa plant could lie directly on top of the fault line responsible for Monday's 6.8-magnitude temblor, as The Wall Street Journal reports. That was a much stronger quake than the reactor was built to withstand, and nuclear experts elsewhere in the world are watching to see how it performed, the Journal adds. This daily release of bad news comes at a time when concerns about fossil fuels' contribution to global warming has diminished resistance to the construction of new atomic-power plants. But it doesn't bode well for a source of power that became frightful in the public imagination following a series of high-profile accidents in the late 1970s and early '80s, or in a country that suffered the only two atomic-weapon attacks in history.
Regardless of whether the radioactive leaks caused any damage, recurrent updates that paint a bleaker picture can undermine a company or government's credibility during a potential health crisis, as the Japanese learned in recent decades with Mad Cow disease, an outbreak of life-threatening milk contamination and even misreported safety violations at Tepco reactors.
* * *
Delphi Gets Cash Infusion
The troubled auto-parts giant Delphi seemed closer to emerging from bankruptcy protection after a group of hedge funds and other investors led by Appaloosa Management agreed to provide $2.55 billion in new funding. The latest plan, unlike a previous arrangement, won support from a committee of Delphi's current shareholders, the Financial Times reports. That plan had also been scrapped after Cerberus Capital Management pulled out of the Delphi investment following its successful bid for Chrysler Group, The Wall Street Journal adds. On another automotive front, Ford Motor today is expected to receive the initial bids from companies and private-equity firms interested in buying Jaguar and Land Rover, people familiar with the situation tell the New York Times. And Cerberus Capital Management is expected to be among them.
* * *
A Great Food-Brand Merger That Might Have Been
All talks on the matter are now over, but U.S. and European packaged-food-and-beverage giants PepsiCo and Nestle this spring were exploring a merger, people familiar with the matter tell The Wall Street Journal. Several issues disrupted negotiations on how to wed the $150 billion Nestle with the $108 billion maker of Doritos, Lipton Ice Tea and of course Pepsi, the Journal says. But one that stands out was Nestle's anxiety about how to integrate Pepsi's focus on snacking with the Crunch bar and Nesquik maker's growing emphasis on health-and-wellness products.
* * *
Also of Note…
BBC: A volcanic-like explosion created skyscraper-high mountains of steam and rained debris across Lexington Avenue near Grand Central Station, killing one person, injuring at least 20 and frightening the city at a time of heightened terrorism fears. Authorities blamed trouble at an 83-year-old underground pipe, ruling out terrorism but warning asbestos may have been released into the air as well.
Washington Post: Senate Democrats halted their quest to change President Bush's war strategy yesterday after Republicans blocked a proposal to begin withdrawing troops from Iraq. Rather than hold votes on several compromise measures aimed at forcing Mr. Bush to revisit his war plans, Democratic leaders are holding firm in their bid to persuade GOP critics of Bush's Iraq policy to embrace more aggressive measures to begin withdrawing troops.
Bloomberg: China's economy grew at the fastest pace in 12 years in the second quarter and inflation there surged, prompting speculation the government will allow quicker currency appreciation and raise interest rates. Growth was powered by investment in factories and real estate, funded by record exports, that the government has been unable to cool with two rate increases this year and restrictions on bank lending.
Telegraph: U.S. supermarket retailer Wal-Mart is examining a deal to invest in Beijing Hualian, a hypermarket operator with scores of stores in the capital and other cities across China, in a move that would boost its presence in the world's most populous country.
International Herald Tribune: The European Central Bank flatly rejected as "unacceptable" new French attempts to secure greater political influence over monetary policy, but France didn't give ground and suggested that other countries suffering from the strong euro would come around to its view.
Financial Times: German Chancellor Angela Merkel said Europe should adopt a common approach for vetting corporate acquisitions by foreign state-controlled investors, adding that she favored a U.S. model for joint European action.
Times of London: The murder of a second Russian dissident on British soil was averted last month when police and intelligence agencies intercepted a suspected killer in London. In a move likely to damage already strained relations between Britain and Russia, Scotland Yard said that officers last month arrested a man on suspicion of conspiracy to murder billionaire Russian exile Boris Berezovsky and held him for two days before deporting the man back to Russia.
Associated Press: President Bush reiterated his threat to veto Senate legislation that would substantially increase funds for children's health insurance by levying a 61-cent-a-pack increase in the federal excise tax on cigarettes. Renewal of the State Children's Health Insurance Program has been considered by many to be the most important health legislation that Congress is taking up this year.
Reuters: IBM, the world's largest technology-services company, posted a 12% jump in second-quarter profit and raised its 2007 earnings forecast as revenue surged on software company acquisitions.
Wall Street Journal: The Securities and Exchange Commission intends to file civil charges against a Dow Jones board member -- David Li, chairman and chief executive of Bank of East Asia -- in connection with an unfolding insider-trading case, according to people familiar with the matter.
Nature: The island that is now England, Scotland and Wales was severed from continental Europe by a cataclysmic flood during the last ice age, according to new research on the Dover Strait from a group based in Britain.
* * *
Quote of the Day
"With the level of resource utilization relatively high and with a sustained moderation in inflation pressures yet to be convincingly demonstrated, the FOMC has consistently stated that upside risks to inflation are its predominant policy concern," Federal Reserve Chairman Ben Bernanke told Congress yesterday, suggesting Fed policy makers' concern about prices makes any imminent cut in interest rates extremely unlikely. Despite an ailing housing market's consequences for the economy, the Fed is worried that a tight labor market might boost inflation, because persistent demand for new workers could mean U.S. productivity is slowing, Mr. Bernanke said.
Write to Joseph Schuman at joseph.schuman@wsj.com
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Saturday, July 14, 2007
TILMA Blues: Dissecting Canada for Easy Digestion
B.C. Premier shines spotlight on free trade
Progress has been 'slow' on efforts to remove inter-provincial barriers, he says
KATHERINE HARDING
July 7, 2007
IQALUIT -- It wasn't even on the agenda, but the seemingly dry subject of provincial free trade stole some of the spotlight at a meeting between western premiers yesterday.
"When are we going to decide we are a country? When are we going to decide that the free movement of goods and people and services is something that is part of what a national identity should be?" British Columbia Premier Gordon Campbell told reporters after the annual conference wrapped up in Iqaluit.
He was flanked by the other three western premiers and three territorial leaders also in attendance. All wore seal-skin vests given to them by the Nunavut government, which hosted the event.
Mr. Campbell said Canada's premiers identified interprovincial trade as a key economic issue a decade ago, but have only made "slow progress on it" since.
B.C. and Alberta signed a first-of-its-kind interprovincial trade agreement that began coming into effect this spring. The deal, which is opposed by unions in both provinces, aims to slash trade barriers and red tape and increase labour mobility in a bid to create the country's second-largest economic trade zone, behind Ontario.
Both governments were confident that the Trade, Investment and Labour Mobility Agreement would become an example for the rest of the country. However, no other provinces have acted on it or joined it.
Both Manitoba Premier Gary Doer and Saskatchewan Premier Lorne Calvert have serious reservations about signing an agreement such as TILMA.
However, Mr. Doer said issues such as increasing labour mobility between provinces is critical, and he expects major progress will be made at a meeting between the premiers next month in Moncton.
While the western premiers couldn't agree on everything, they said they made progress on long-standing issues such as native relations and northern devolution. The politicians have jointly asked the federal government to start up devolution negotiations as early as this fall.
A devolution agreement with Ottawa would put the Northwest Territories and Nunavut on a more equal footing with the provinces. Those territorial governments would finally be able to manage public lands and natural resources. They would also be entitled to resource-revenue sharing with the federal government.
Yukon already has a devolution deal with Ottawa that took effect in 2003.
Nunavut Premier Paul Okalik said the politicians also made strides on climate change. He said they discussed alternative energy sources and sharing research about the consequences of climate change.
"We can't stop what's happening now, so we have to reform our ways and prepare ourselves better," he said.
Next year's western premiers conference will be held in Saskatoon, and Mr. Calvert said Prime Minister Stephen Harper was welcome to attend.
Relations between Mr. Calvert's government and Ottawa have been strained recently over the issue of resource revenue. Mr. Harper even travelled to Saskatchewan this week - while Mr. Calvert was in Iqaluit - and told reporters the provincial government was "ungrateful."
Mr. Calvert said yesterday the Prime Minister was simply trying to divert attention from breaking a promise about reforms to the federal government's equalization program.
Provinces sluggish on free-trade agreement: B.C., Alta.
Last Updated: Friday, July 6, 2007 | 4:52 PM CT
The premiers of Alberta and British Columbia say they're frustrated with delays in getting other premiers to sign on to an interprovincial trade agreement.
Ed Stelmach and Gordon Campbell, both speaking Friday at the end of the western premiers' conference in Iqaluit, said they want the other provinces to agree to the Trade, Investment and Labour Mobility Agreement (TILMA), which both provinces signed last year. It came into effect April 1.
"We have to deal with issues that are trade barriers within the country of Canada," Stelmach said. "They're significant, they're impeding trade, they're increasing costs. And we want to take this agreement further and we've had, of course, interest paid by other premiers."
TILMA allows businesses, tradespeople and professionals to work and move back and forth across provincial borders with less red tape.
Under the agreement, businesses in the two provinces don't face duplicate registration requirements, and occupational standards for professionals like engineers and teachers are harmonized. As well, government procurement is more open to suppliers in both provinces.
But some provinces, like Saskatchewan, have expressed concern that by signing on to TILMA, they may lose control over what happens within their boundaries.
Saskatchewan's New Democrat government is concerned the province's Crown corporations could be hurt by the deal, as it would give all companies equal status in applying for government contracts. And just last week, the Opposition Saskatchewan Party announced it would not sign onto TILMA if elected, saying the deal may take away too much power from the provincial government.
Other jurisdictions are concerned that businesses registered in one province may have to be recognized in another.
But Campbell said all provinces identified the free movement of goods, labour and services as an issue more than a decade ago, so he doesn't understand why there's been so little movement in making TILMA a countrywide agreement.
"I'm proud of the fact that we've got TILMA signed between Alberta and British Columbia, and I think it's time for us to decide whether we're a country or not," Campbell said.
"I think it's ridiculous that someone can be trained as a teacher in Manitoba and isn't able to teach in British Columbia."
All of Canada's premiers will discuss the standardized accreditation and mobility of labour at the Council of the Federation meeting next month in Moncton, N.B. At the meeting of the council, which brings together premiers and territorial leaders to deal with "collaborative intergovernmental relations," Campbell and Stelmach said they'll try to convince everybody to consider signing on to the agreement.
All the western and northern premiers ended the Iqaluit meeting Friday with promises to work together on issues such as climate change, education and infrastructure.
TILMA opposition encouraged
Northern Sentinel
By Tom Fletcher
Jul 08 2007
Opposition critics are urging municipalities to keep the pressure on the B.C. government over its new trade deal with Alberta.
NDP municipal affairs critic Charlie Wyse and economic development critic Jenny Kwan have sent a letter to local councils across the province, the latest step in a campaign against the Trade, Investment and Labour Mobility Agreement (TILMA), which went into effect in April. The letter accuses the B.C. Liberal government of giving contradictory answers on the key question of whether municipalities will be open to bylaw challenges or financial penalties from Alberta businesses demanding equal treatment.
Economic Development Minister Colin Hansen has rejected suggestions that TILMA could affect local bylaws governing things like building heights, billboard sizes, noise levels or pesticide use if local rules were stricter than those in Alberta.
The NDP's letter notes that while a B.C. government backgrounder states "municipalities are not required to defend their own measures or pay monetary awards," it gave a different answer in response to a legal opinion obtained by the Union of B.C. Municipalities (UBCM). There it said: "The course of action that the Province would take in any dispute proceeding involving municipalities would depend on the particular circumstances of the dispute."
Hansen has also promised that the Union of B.C. Municipalities will be represented in discussions to clarify grey areas during a transition period that ends in April of 2009. And it appears that significant grey areas remain.
"The agreement is vague and there are no precedents, so one of the issues for councils and boards is the uncertainty that surrounds TILMA," lawyer Donald Lidstone wrote in his analysis for the UBCM.
Lidstone said the key issues relate to tendering for municipal work, whether business regulations will be harmonized, municipal assistance to local business, and "the remote possibility that a regulatory (including land use) bylaw might have the effect of restricting or impairing an investment in British Columbia by an Alberta investor."
Wyse said in an interview the transition period means municipalities have time before they must open up bidding for major goods, services and construction contracts, but bylaws they pass now will soon fall under TILMA rules.
The NDP letter says TILMA is the latest in a series of moves by the B.C. Liberal government to restrict local government control. Others include:
• the 2003 Significant Projects Streamlining Act, allowing the government to overrule local authorities on projects deemed "provincially significant."
• the 2006 legislation taking independent power projects out of the hands of local authorities. Energy Minister Richard Neufeld defended the move, saying projects such as wind and small hydroelectric power are a key part of B.C.'s energy plan and should be handled provincially, like mines and power dams.
• Bill 11, passed this spring, "allows the provincial cabinet to bypass regional districts and create 'instant' municipalities in rural areas to promote resort development," the NDP letter says.
• Bill 36, yet to be passed by the legislature, restructures the Lower Mainland transportation authority, removing day-to-day control from a board made up of municipal politicians.
--
Caelie Frampton
TILMA Campaign Coordinator
604.688.8846
Want to learn more about TILMA and how we can join together and stop this new trade agreement?
Visit: http://groups.google.com/group/stoptilma .
Sunday, July 08, 2007
Bush Flirting with Nuclear Armageddon
Putin ‘Narrowly’ Averts US Nuclear Armageddon
By: Sorcha Faal, and as reported to her Western Subscribers
[for complete article links, please see original here.]
Russian Military Analysts are reporting today that this past weeks ‘Sudden-Summit’ between Presidents Putin and Bush in the United States has ‘narrowly averted an American nuclear Armageddon’ in which the Americans were planning a massive atomic strike upon Iran.
Putin was advised immediately prior to the ‘Sudden-Summit’ by Russian Military Commanders that the United States had issued the orders for a nuclear strike on Iran, and which has been further confirmed by the Washington Times News Service, and as we can read:
"International radio operators picked up large numbers of coded Air Force communications being sent around the world on June 26 that indicated some type of military activity was about to take place.
A U.S. military official said the radio traffic was monitored from the Air Force Global High Frequency System (GHFS) that some observers regarded as "extraordinary" because of the unprecedented length of messages. They were sent to Air Force commanders at Andrews Air Force Base; Wideawake Airfield on Ascension Island; Elmendorf Air Force Base, Alaska; Andersen Air Force Base, Guam; Hickam Air Force Base, Hawaii; Lajes Field in the Azores; Offutt Air Force Base, Nebraska; Salinas Air Base, Puerto Rico; Thule Air Base, Greenland; and Yokota Air Base, Japan. All are sites of GHFS ground stations.
The messages appeared to be emergency action messages, coded communications sent by the Joint Chiefs of Staff to U.S. Air Force strategic nuclear forces.
The messages sent June 26 included 174 characters, much longer than normal 30-character messages, and amateur radio monitors say they have not seen the size of this message since the 1991 Persian Gulf War."
Upon his learning of the Americans planned nuclear attack on Iran, Putin ordered an ‘immediate’ flight change to the United States while he was in route to Guatemala for the 2014 Olympic Games announcement, of which Russia was announced the winner.
These reports state that Putin was ‘blunt’ with the American War Leader Bush in stating that any nuclear attack upon Iran’s nuclear facilities, being built by Russian nuclear engineers and technicians, would be viewed by Russia as attack upon Russia itself.
These reports further state that the planned American nuclear strike upon Iran was to coincide with Israel’s long-planned invasion of Syria, and which their military forces are currently massed in what is described as the largest ‘war games’ on the Golan Heights since Israel’s capturing of this Syrian territory during the 1967 Six Day War.
Russian political analysts state the War Leaders of the United States are ‘frantic’ to engage the entire Middle East in Total War as the support for their present wars has eroded their standing among their citizens with over half of the American people are now calling for the impeachment of both President Bush and his Vice President Cheney.
Of great concern to the American War Leaders, also, is the impending invasion of Iraq by fellow NATO Member Turkey, and as we can read as reported by the International Herald Tribune:
"Turkey's government and military have agreed on detailed plans for a cross-border operation against Kurdish rebels based in northern Iraq, the foreign minister said Friday.
Foreign Minister Abdullah Gul urged the United States and Iraq, which oppose a Turkish military move into Iraq, to crack down on rebels of the Kurdistan Workers' Party, or PKK. But he said Turkey was ready to stage an offensive if necessary.
"We have decided how to act, everything is clear," Gul told private NTV television. "We know what to do and when to do it," he said without providing details."
To the greatest concern, however, facing the American War Leaders is the fast coming implosion of their economy due to the massive strain of their war budget, and which is now approaching $1.4 trillion, and which has destabilized the World’s banking system leading many experts to believe the American banking system will be the ‘first to go’ and could likely lead to a Global Depression.
Sadly though, it is acknowledged in these reports that Putin’s ‘warnings’ to Bush this past week resulted in a delay only of the Americans planned attacks against Iran, and which the American War Leader ‘strongly suggested’ that if Putin was concerned about Russian casualties in Iran perhaps they shouldn’t be their in the first place.
As the World continues its mad plunge towards the nuclear abyss, one can only wonder what could possibly stop this insanity from happening.
© July 7, 2007 EU and US all rights reserved.
[Ed. Note: The United States government actively seeks to find, and silence, any and all opinions about the United States except those coming from authorized government and/or affiliated sources, of which we are not one. No interviews are granted and very little personal information is given about our contributors, or their sources, to protect their safety.]
By: Sorcha Faal, and as reported to her Western Subscribers
[for complete article links, please see original here.]
Russian Military Analysts are reporting today that this past weeks ‘Sudden-Summit’ between Presidents Putin and Bush in the United States has ‘narrowly averted an American nuclear Armageddon’ in which the Americans were planning a massive atomic strike upon Iran.
Putin was advised immediately prior to the ‘Sudden-Summit’ by Russian Military Commanders that the United States had issued the orders for a nuclear strike on Iran, and which has been further confirmed by the Washington Times News Service, and as we can read:
"International radio operators picked up large numbers of coded Air Force communications being sent around the world on June 26 that indicated some type of military activity was about to take place.
A U.S. military official said the radio traffic was monitored from the Air Force Global High Frequency System (GHFS) that some observers regarded as "extraordinary" because of the unprecedented length of messages. They were sent to Air Force commanders at Andrews Air Force Base; Wideawake Airfield on Ascension Island; Elmendorf Air Force Base, Alaska; Andersen Air Force Base, Guam; Hickam Air Force Base, Hawaii; Lajes Field in the Azores; Offutt Air Force Base, Nebraska; Salinas Air Base, Puerto Rico; Thule Air Base, Greenland; and Yokota Air Base, Japan. All are sites of GHFS ground stations.
The messages appeared to be emergency action messages, coded communications sent by the Joint Chiefs of Staff to U.S. Air Force strategic nuclear forces.
The messages sent June 26 included 174 characters, much longer than normal 30-character messages, and amateur radio monitors say they have not seen the size of this message since the 1991 Persian Gulf War."
Upon his learning of the Americans planned nuclear attack on Iran, Putin ordered an ‘immediate’ flight change to the United States while he was in route to Guatemala for the 2014 Olympic Games announcement, of which Russia was announced the winner.
These reports state that Putin was ‘blunt’ with the American War Leader Bush in stating that any nuclear attack upon Iran’s nuclear facilities, being built by Russian nuclear engineers and technicians, would be viewed by Russia as attack upon Russia itself.
These reports further state that the planned American nuclear strike upon Iran was to coincide with Israel’s long-planned invasion of Syria, and which their military forces are currently massed in what is described as the largest ‘war games’ on the Golan Heights since Israel’s capturing of this Syrian territory during the 1967 Six Day War.
Russian political analysts state the War Leaders of the United States are ‘frantic’ to engage the entire Middle East in Total War as the support for their present wars has eroded their standing among their citizens with over half of the American people are now calling for the impeachment of both President Bush and his Vice President Cheney.
Of great concern to the American War Leaders, also, is the impending invasion of Iraq by fellow NATO Member Turkey, and as we can read as reported by the International Herald Tribune:
"Turkey's government and military have agreed on detailed plans for a cross-border operation against Kurdish rebels based in northern Iraq, the foreign minister said Friday.
Foreign Minister Abdullah Gul urged the United States and Iraq, which oppose a Turkish military move into Iraq, to crack down on rebels of the Kurdistan Workers' Party, or PKK. But he said Turkey was ready to stage an offensive if necessary.
"We have decided how to act, everything is clear," Gul told private NTV television. "We know what to do and when to do it," he said without providing details."
To the greatest concern, however, facing the American War Leaders is the fast coming implosion of their economy due to the massive strain of their war budget, and which is now approaching $1.4 trillion, and which has destabilized the World’s banking system leading many experts to believe the American banking system will be the ‘first to go’ and could likely lead to a Global Depression.
Sadly though, it is acknowledged in these reports that Putin’s ‘warnings’ to Bush this past week resulted in a delay only of the Americans planned attacks against Iran, and which the American War Leader ‘strongly suggested’ that if Putin was concerned about Russian casualties in Iran perhaps they shouldn’t be their in the first place.
As the World continues its mad plunge towards the nuclear abyss, one can only wonder what could possibly stop this insanity from happening.
© July 7, 2007 EU and US all rights reserved.
[Ed. Note: The United States government actively seeks to find, and silence, any and all opinions about the United States except those coming from authorized government and/or affiliated sources, of which we are not one. No interviews are granted and very little personal information is given about our contributors, or their sources, to protect their safety.]
Keeping Smaller Smaller
Record Group Lets Small Webcasters Pay Lower Rates
By Reuters.
LOS ANGELES - A group backed by the record industry that collects Internet music royalties said on Tuesday it would defer new copyright-payment rates for small Webcasters who claim the new payments would bankrupt them.
SoundExchange, which collects and distributes royalties from Webcasters and satellite radio, said the offer was for Webcasters with revenues of $1.25 million or less.
SoundExchange’s latest efforts follows mounting pressure and activity in Congress, where legislators have introduced bills to annul the pending royalty rate increase, which they say threatens the fledgling industry.
Saying it was seeking to address “alleged weaknesses in the small Webcasters’ businesses,” SoundExchange will defer new sharply higher royalty rates for these companies set by the U.S. Copyright Royalty Board (CRB) on May 1, 2007, that would be retroactive to January 1, 2006, and effective through 2010.
“Although the rates revised by the CRB are fair and based on the value of music in the marketplace, there’s a sense in the music community and in Congress that small Webcasters need more time to develop their businesses,” said John Simson, executive director of SoundExchange, which collects royalties on behalf of artists and big music companies like Warner Music Group Corp. and Vivendi’s Universal Music.
But an advocate for Internet radio operators on Tuesday criticized the offer by SoundExchange. “A proposal like this would doom small Webcasters and kill large Webcasters,” said Jake Ward, of the SaveNetRadio Coalition.
Ward said by deeming a Webcaster large and subject to the higher rates, due to its popularity, ignores the fact that many of these larger sites are still small, struggling companies.
“It would also force small companies to stay small,” he said, noting that certain companies might seek to stay below the higher rate levels. “There’s no question that Webcasters with government-set revenue caps would invest less, innovate less and promote less.”
By Reuters.
LOS ANGELES - A group backed by the record industry that collects Internet music royalties said on Tuesday it would defer new copyright-payment rates for small Webcasters who claim the new payments would bankrupt them.
SoundExchange, which collects and distributes royalties from Webcasters and satellite radio, said the offer was for Webcasters with revenues of $1.25 million or less.
SoundExchange’s latest efforts follows mounting pressure and activity in Congress, where legislators have introduced bills to annul the pending royalty rate increase, which they say threatens the fledgling industry.
Saying it was seeking to address “alleged weaknesses in the small Webcasters’ businesses,” SoundExchange will defer new sharply higher royalty rates for these companies set by the U.S. Copyright Royalty Board (CRB) on May 1, 2007, that would be retroactive to January 1, 2006, and effective through 2010.
“Although the rates revised by the CRB are fair and based on the value of music in the marketplace, there’s a sense in the music community and in Congress that small Webcasters need more time to develop their businesses,” said John Simson, executive director of SoundExchange, which collects royalties on behalf of artists and big music companies like Warner Music Group Corp. and Vivendi’s Universal Music.
But an advocate for Internet radio operators on Tuesday criticized the offer by SoundExchange. “A proposal like this would doom small Webcasters and kill large Webcasters,” said Jake Ward, of the SaveNetRadio Coalition.
Ward said by deeming a Webcaster large and subject to the higher rates, due to its popularity, ignores the fact that many of these larger sites are still small, struggling companies.
“It would also force small companies to stay small,” he said, noting that certain companies might seek to stay below the higher rate levels. “There’s no question that Webcasters with government-set revenue caps would invest less, innovate less and promote less.”
Saturday, July 07, 2007
Justice Dropping Warrantless Eavesdropping Warrant
Yesterday's ruling on NSA warrantless eavesdropping
The Sixth Circuit Court of Appeals yesterday, by a 2-1 decision, vacated last August's Order from District Court Judge Anna Diggs Taylor which enjoined the Bush administration from eavesdropping without warrants. Judge Taylor had found that the President's NSA warrantless eavesdropping program violates both the Constitution as well as federal law (FISA).
Yesterday's ruling (.pdf) had absolutely nothing to do with the merits of the case -- i.e., whether the NSA program is illegal or not -- but instead rested only on the narrow, technical (though important) issue of whether the particular plaintiffs in this case are entitled to sue over the warrantless eavesdropping program (two of the three judges concluded that they are not).
While the two judges in the majority did not rule on the legality of the program, the third judge -- Judge Gilman -- agreed with Judge Taylor's finding that the President's program violated FISA. He thus wrote that he "would affirm its judgment," and he rejected the administration's standard two defenses for that behavior (i.e., (1) that AUMF implicitly authorized FISA violations and (2) the President has "inherent authority" under Article II to eavesdrop with no warrants). In fact, just as was true for Judge Taylor, Judge Gilman found that while the "standing" issue was a close one, the actual merits -- i.e., whether the President broke the law -- was not close:
The closest question in this case, in my opinion, is whether the plaintiffs have the standing to sue. Once past that hurdle, however, the rest gets progressively easier . . . . [The administration's] AUMF and inherent-authority arguments are weak in light of existing precedent and statutory construction.
The two judges in the majority did not dispute any of this. Instead, they ruled, roughly speaking, that because the program was conducted in secret, the plaintiffs cannot prove that they were subjected to warrantless eavesdropping and thus lack "standing" to contest the legality of the NSA program.
Several observations about the decision:
(1) Any journalist or Bush follower claiming that this decision constitutes vindication for warrantless eavesdropping -- or that it constitutes a repudiation of Judge Taylor's finding that the President broke the law and violated the Constitution -- is deeply confused and/or engaged in a campaign of deceit. Even worse than that, anyone celebrating this result is essentially celebrating a situation where our government leaders are able to act in secret -- even when the law makes it illegal to do so -- and as a result of this secrecy, block courts from ruling on whether they broke the law.
Why would anyone -- including those who think the NSA program is legal -- want to empower our government officials to act free of judicial review of whether they acted illegally? If those who claim to believe that the President acted legally are telling the truth, wouldn't they desire a judicial ruling on these questions?
As noted, the majority opinion here did not make a single comment suggesting they believe Judge Taylor's ruling on the merits was wrong, nor did they suggest that warrantless eavesdropping is legal. To the extent they commented on those issues at all, the majority opinion observed that the appeal "presents a number of serious issues," while the other Judge in the majority (Gibbons) described in the first paragraph of her concurring opinion the "complexity" of the "merits issues." Not a word in either of those two opinions constitutes a repudiation of the finding by Judge Taylor that the President broke the law and violated the Constitution.
(2) Unlike the two judges in the majority, the dissenting judge (Gilman) did issue findings regarding the illegality of the NSA program once he found that the plaintiffs had standing to sue. And he decided conclusively that the NSA program violates FISA and that the administration's two legal excuses are invalid. That means that the only two federal judges ever to rule on the legality of the NSA warrantless eavesdropping program -- Judge Taylor and now Judge Gilman -- have both decisively concluded that the President's warrantless eavesdropping is illegal.
Moreover, the rejection by both Judge Taylor and Judge Gilman of the administration's Article II and AUMF "defenses" are completely consistent with the rejection of those same defenses by the Supreme Court in its Hamdan ruling last June, when the Court found illegal the President's Guantanamo military commissions. The two prongs of the Cheney/Addington/Yoo Vision of Presidential Omnipotence used to justify a whole array of presidential lawbreaking -- Article II "inherent authority" and AUMF's "implicit" authorization -- have suffered one legal defeat after the next. If anything, yesterday's decision bolsters that trend, not undermines it.
(3) This is one of those types of legal outcomes which -- understandably so -- can drive laypersons, along with conscientious lawyers, crazy. The result, on its face, is grotesquely unfair, outrageously so.
After all, the whole point of FISA is to make it illegal for the government to spy on us in secret. And yet spying on us in secret is exactly what the Bush administration did; that is the crux of the lawbreaking here. But precisely because it spied on Americans in secret rather than with judicial oversight, nobody knows whose conversations they surveilled and we cannot find out.
It is because of this illegal behavior that the plaintiffs are unable to show that they were subjected to this surveillance. To dismiss the case on the ground that the plaintiffs are unable to make this showing, then, is to reward the Bush administration with the ultimate prize (immunity from judicial review) for having broken the law.
Worse still, it means that if the Government breaks the law in secret, it can be immune from being held accountable in a court because no one individual can ever prove that they were directly and uniquely harmed by the illegal conduct, and thus would lack standing to sue. That result is as destructive as it is Kafka-esque, and it is what happened yesterday.
But the fact that the decision's result is so unfair does not mean, unfortunately, that it was wrongly decided. The role of the judge is to apply the law as it exists, and a judge is not free -- nor should we want them to be free -- to disregard binding legal doctrine whenever the judge decides that doing so is necessary to avoid unfair results. In a society that exists under the rule of law, the solution to bad laws and bad legal doctrines is to change those laws democratically, not to empower judges unilaterally to disregard the law in order to produce (what the individual judge perceives to be) better results.
As technical-seeming as it is, "standing" is a critically important constitutional limitation on the power of the judiciary. Independently, whether one believes in the merits of this doctrine or not, it is a requirement that must be fulfilled before the Constitution permits a court to rule on any matter. And there is good reason for that.
Courts are not omnipotent, free-floating bodies that exist in order to resolve all disputes. If courts had the power to resolve every abstract political and legal dispute, courts themselves would be omnipotent, or at least supreme. The Constitution thus limits the power of courts by narrowing the circumstances in which courts are empowered to act ("The judicial Power shall extend to all Cases . . . [and] to Controversies to which the United States shall be a Party"). Rightly or wrongly, the Supreme Court over the years has interpreted that provision to require (roughly speaking) direct and unique injury by the party who is suing, and the Sixth Circuit judges were required to apply that doctrine.
The role of a federal court is thus confined to resolving actual, specific disputes between specific parties where, in essence, one party has harmed the other. If such an injury is lacking, it means that the plaintiffs in a case are basically asking the court to simply issue abstract rulings -- i.e., "is the Government's warrantless eavesdropping program legal"? -- rather than resolving an actual, specific dispute ("I was harmed by the defendant and am entitled to be compensated or otherwise have that wrongful conduct remedied").
Independent of the question of whether the standing issue was correctly resolved here -- and all of the judges appeared to believe that it was a close and difficult question -- the standing doctrine is an important limitation on the power of courts. And that is true even when it produces atrocious outcomes (such as yesterday's finding that our Government can break the law in how its spies on us but remain immune from judicial review as long as it keeps its lawbreaking a secret).
(4) The most important point here is, as usual, the one most overlooked by journalists and Bush followers alike. From the beginning of the NSA scandal, Bush followers have proudly boasted about how confident they were that their warrantless eavesdropping behavior was legal. And yet, the only thing they have done is desperately block one attempt after the next to obtain a legal ruling on whether they broke the law.
There have been countless proposals and other means available to have a court rule on whether the government broke the law and violated the Constitution by spying without warrants, and the administration has resisted every such effort. Yesterday's ruling was but the latest of the obstruction efforts.
Indeed, as Judge Gilman noted -- and as so-called "legal experts" commenting on this case have completely failed to understand -- the Bush administration in this case refused to defend its conduct on the merits. The only argument they made before Judge Taylor was that she had no right to rule on these matters, and they therefore, in effect, conceded the substantive claims that they broke the law. As Judge Gilman wrote:
This is an amazingly simple point that law professors and others who strutted around criticizing Judge Taylor's opinion -- including Orin Kerr and Ann Althouse in her tour de force of ignorance in a New York Times Op-Ed -- have failed to digest.
Judge Taylor did not "fail to address" arguments made by the Bush administration regarding the legality of their behavior because they did not make any such arguments. They refused to do so, because -- as always -- their only objective is to block judicial rulings on the legality of their behavior, not to defend what they have done.
But once myths like this take hold, especially when they are spouted by so-called "experts," they are impossible to eradicate, and hence, we find this on the front page of The New York Times today in an article by Adam Liptak:
Judge Taylor's ruling, which was stayed during the appeal, had attracted criticism from across the political spectrum. Legal experts said it overlooked important precedents, failed to engage some of the government's arguments and relied on novel constitutional arguments where more straightforward ones were available.
Except on the standing issue, yesterday's ruling did not repudiate any of Judge Taylor's findings. The one judge who ruled on them at all said he would have affirmed them, and on the issue of the program's legality, ruled as she did. Moreover, the claim that she "failed to engage some of the government's arguments" is based on the complete falsehood that the government advanced arguments to defend its behavior. It did not. It expressly refused to do so. And that is the key point here, and has been from the beginning.
Since the NSA scandal emerged, there has never been a remotely meritorious -- or even non-frivolous -- defense to the President's lawbreaking. And the administration knows that, which is why they have desperately sought to block judicial review of their behavior and have refused to defend their behavior in court. Rather than simplistically focus on the binary win/loss analysis in discussing this outcome, perhaps journalists could highlight the real scandal here -- having been caught red-handed violating the law in eavesdropping on our conversations, the Bush administration has done everything possible to prevent a judicial ruling on the legality and constitutionality of its actions.
(5) The plaintiffs here will, of course, appeal, though they have no automatic right to have their appeal heard. Either the full Sixth Circuit panel or the Supreme Court must agree to hear their appeal if there is to be a further decision in this case. There are court cases (against AT&T and other telecommunication companies) challenging the legality of the NSA program pending in the Ninth Circuit, where the District Judge has refused to dismiss those lawsuits based on the "state secrets" doctrine and an appellate ruling on that question is expected soon.
There are ways for Congress to act here in order to enable or even compel a court to rule on the legality of the NSA warrantless eavesdropping program. Regardless of one's views on the legality of this program, obtaining a judicial ruling is urgently necessary. It should require little mental energy to contemplate the dangers of allowing our government leaders to spy on us (or take other actions against us) in secret and then simultaneously block any and all processes to determine whether they have broken the law.
-- Glenn Greenwald
source
The Sixth Circuit Court of Appeals yesterday, by a 2-1 decision, vacated last August's Order from District Court Judge Anna Diggs Taylor which enjoined the Bush administration from eavesdropping without warrants. Judge Taylor had found that the President's NSA warrantless eavesdropping program violates both the Constitution as well as federal law (FISA).
Yesterday's ruling (.pdf) had absolutely nothing to do with the merits of the case -- i.e., whether the NSA program is illegal or not -- but instead rested only on the narrow, technical (though important) issue of whether the particular plaintiffs in this case are entitled to sue over the warrantless eavesdropping program (two of the three judges concluded that they are not).
While the two judges in the majority did not rule on the legality of the program, the third judge -- Judge Gilman -- agreed with Judge Taylor's finding that the President's program violated FISA. He thus wrote that he "would affirm its judgment," and he rejected the administration's standard two defenses for that behavior (i.e., (1) that AUMF implicitly authorized FISA violations and (2) the President has "inherent authority" under Article II to eavesdrop with no warrants). In fact, just as was true for Judge Taylor, Judge Gilman found that while the "standing" issue was a close one, the actual merits -- i.e., whether the President broke the law -- was not close:
The closest question in this case, in my opinion, is whether the plaintiffs have the standing to sue. Once past that hurdle, however, the rest gets progressively easier . . . . [The administration's] AUMF and inherent-authority arguments are weak in light of existing precedent and statutory construction.
The two judges in the majority did not dispute any of this. Instead, they ruled, roughly speaking, that because the program was conducted in secret, the plaintiffs cannot prove that they were subjected to warrantless eavesdropping and thus lack "standing" to contest the legality of the NSA program.
Several observations about the decision:
(1) Any journalist or Bush follower claiming that this decision constitutes vindication for warrantless eavesdropping -- or that it constitutes a repudiation of Judge Taylor's finding that the President broke the law and violated the Constitution -- is deeply confused and/or engaged in a campaign of deceit. Even worse than that, anyone celebrating this result is essentially celebrating a situation where our government leaders are able to act in secret -- even when the law makes it illegal to do so -- and as a result of this secrecy, block courts from ruling on whether they broke the law.
Why would anyone -- including those who think the NSA program is legal -- want to empower our government officials to act free of judicial review of whether they acted illegally? If those who claim to believe that the President acted legally are telling the truth, wouldn't they desire a judicial ruling on these questions?
As noted, the majority opinion here did not make a single comment suggesting they believe Judge Taylor's ruling on the merits was wrong, nor did they suggest that warrantless eavesdropping is legal. To the extent they commented on those issues at all, the majority opinion observed that the appeal "presents a number of serious issues," while the other Judge in the majority (Gibbons) described in the first paragraph of her concurring opinion the "complexity" of the "merits issues." Not a word in either of those two opinions constitutes a repudiation of the finding by Judge Taylor that the President broke the law and violated the Constitution.
(2) Unlike the two judges in the majority, the dissenting judge (Gilman) did issue findings regarding the illegality of the NSA program once he found that the plaintiffs had standing to sue. And he decided conclusively that the NSA program violates FISA and that the administration's two legal excuses are invalid. That means that the only two federal judges ever to rule on the legality of the NSA warrantless eavesdropping program -- Judge Taylor and now Judge Gilman -- have both decisively concluded that the President's warrantless eavesdropping is illegal.
Moreover, the rejection by both Judge Taylor and Judge Gilman of the administration's Article II and AUMF "defenses" are completely consistent with the rejection of those same defenses by the Supreme Court in its Hamdan ruling last June, when the Court found illegal the President's Guantanamo military commissions. The two prongs of the Cheney/Addington/Yoo Vision of Presidential Omnipotence used to justify a whole array of presidential lawbreaking -- Article II "inherent authority" and AUMF's "implicit" authorization -- have suffered one legal defeat after the next. If anything, yesterday's decision bolsters that trend, not undermines it.
(3) This is one of those types of legal outcomes which -- understandably so -- can drive laypersons, along with conscientious lawyers, crazy. The result, on its face, is grotesquely unfair, outrageously so.
After all, the whole point of FISA is to make it illegal for the government to spy on us in secret. And yet spying on us in secret is exactly what the Bush administration did; that is the crux of the lawbreaking here. But precisely because it spied on Americans in secret rather than with judicial oversight, nobody knows whose conversations they surveilled and we cannot find out.
It is because of this illegal behavior that the plaintiffs are unable to show that they were subjected to this surveillance. To dismiss the case on the ground that the plaintiffs are unable to make this showing, then, is to reward the Bush administration with the ultimate prize (immunity from judicial review) for having broken the law.
Worse still, it means that if the Government breaks the law in secret, it can be immune from being held accountable in a court because no one individual can ever prove that they were directly and uniquely harmed by the illegal conduct, and thus would lack standing to sue. That result is as destructive as it is Kafka-esque, and it is what happened yesterday.
But the fact that the decision's result is so unfair does not mean, unfortunately, that it was wrongly decided. The role of the judge is to apply the law as it exists, and a judge is not free -- nor should we want them to be free -- to disregard binding legal doctrine whenever the judge decides that doing so is necessary to avoid unfair results. In a society that exists under the rule of law, the solution to bad laws and bad legal doctrines is to change those laws democratically, not to empower judges unilaterally to disregard the law in order to produce (what the individual judge perceives to be) better results.
As technical-seeming as it is, "standing" is a critically important constitutional limitation on the power of the judiciary. Independently, whether one believes in the merits of this doctrine or not, it is a requirement that must be fulfilled before the Constitution permits a court to rule on any matter. And there is good reason for that.
Courts are not omnipotent, free-floating bodies that exist in order to resolve all disputes. If courts had the power to resolve every abstract political and legal dispute, courts themselves would be omnipotent, or at least supreme. The Constitution thus limits the power of courts by narrowing the circumstances in which courts are empowered to act ("The judicial Power shall extend to all Cases . . . [and] to Controversies to which the United States shall be a Party"). Rightly or wrongly, the Supreme Court over the years has interpreted that provision to require (roughly speaking) direct and unique injury by the party who is suing, and the Sixth Circuit judges were required to apply that doctrine.
The role of a federal court is thus confined to resolving actual, specific disputes between specific parties where, in essence, one party has harmed the other. If such an injury is lacking, it means that the plaintiffs in a case are basically asking the court to simply issue abstract rulings -- i.e., "is the Government's warrantless eavesdropping program legal"? -- rather than resolving an actual, specific dispute ("I was harmed by the defendant and am entitled to be compensated or otherwise have that wrongful conduct remedied").
Independent of the question of whether the standing issue was correctly resolved here -- and all of the judges appeared to believe that it was a close and difficult question -- the standing doctrine is an important limitation on the power of courts. And that is true even when it produces atrocious outcomes (such as yesterday's finding that our Government can break the law in how its spies on us but remain immune from judicial review as long as it keeps its lawbreaking a secret).
(4) The most important point here is, as usual, the one most overlooked by journalists and Bush followers alike. From the beginning of the NSA scandal, Bush followers have proudly boasted about how confident they were that their warrantless eavesdropping behavior was legal. And yet, the only thing they have done is desperately block one attempt after the next to obtain a legal ruling on whether they broke the law.
There have been countless proposals and other means available to have a court rule on whether the government broke the law and violated the Constitution by spying without warrants, and the administration has resisted every such effort. Yesterday's ruling was but the latest of the obstruction efforts.
Indeed, as Judge Gilman noted -- and as so-called "legal experts" commenting on this case have completely failed to understand -- the Bush administration in this case refused to defend its conduct on the merits. The only argument they made before Judge Taylor was that she had no right to rule on these matters, and they therefore, in effect, conceded the substantive claims that they broke the law. As Judge Gilman wrote:
This is an amazingly simple point that law professors and others who strutted around criticizing Judge Taylor's opinion -- including Orin Kerr and Ann Althouse in her tour de force of ignorance in a New York Times Op-Ed -- have failed to digest.
Judge Taylor did not "fail to address" arguments made by the Bush administration regarding the legality of their behavior because they did not make any such arguments. They refused to do so, because -- as always -- their only objective is to block judicial rulings on the legality of their behavior, not to defend what they have done.
But once myths like this take hold, especially when they are spouted by so-called "experts," they are impossible to eradicate, and hence, we find this on the front page of The New York Times today in an article by Adam Liptak:
Judge Taylor's ruling, which was stayed during the appeal, had attracted criticism from across the political spectrum. Legal experts said it overlooked important precedents, failed to engage some of the government's arguments and relied on novel constitutional arguments where more straightforward ones were available.
Except on the standing issue, yesterday's ruling did not repudiate any of Judge Taylor's findings. The one judge who ruled on them at all said he would have affirmed them, and on the issue of the program's legality, ruled as she did. Moreover, the claim that she "failed to engage some of the government's arguments" is based on the complete falsehood that the government advanced arguments to defend its behavior. It did not. It expressly refused to do so. And that is the key point here, and has been from the beginning.
Since the NSA scandal emerged, there has never been a remotely meritorious -- or even non-frivolous -- defense to the President's lawbreaking. And the administration knows that, which is why they have desperately sought to block judicial review of their behavior and have refused to defend their behavior in court. Rather than simplistically focus on the binary win/loss analysis in discussing this outcome, perhaps journalists could highlight the real scandal here -- having been caught red-handed violating the law in eavesdropping on our conversations, the Bush administration has done everything possible to prevent a judicial ruling on the legality and constitutionality of its actions.
(5) The plaintiffs here will, of course, appeal, though they have no automatic right to have their appeal heard. Either the full Sixth Circuit panel or the Supreme Court must agree to hear their appeal if there is to be a further decision in this case. There are court cases (against AT&T and other telecommunication companies) challenging the legality of the NSA program pending in the Ninth Circuit, where the District Judge has refused to dismiss those lawsuits based on the "state secrets" doctrine and an appellate ruling on that question is expected soon.
There are ways for Congress to act here in order to enable or even compel a court to rule on the legality of the NSA warrantless eavesdropping program. Regardless of one's views on the legality of this program, obtaining a judicial ruling is urgently necessary. It should require little mental energy to contemplate the dangers of allowing our government leaders to spy on us (or take other actions against us) in secret and then simultaneously block any and all processes to determine whether they have broken the law.
-- Glenn Greenwald
source
Monday, July 02, 2007
Impunity: Bush Commutes Scooter
Bush Commutes Libby's Jail Sentenceby David Corn
It is appropriate.
The president who led the nation into a disastrous war in Iraq by peddling false statements and misrepresentations has come to the rescue of a White House aide convicted of lying by commuting his sentence. Before the ink was dry on today's court order denying Scooter Libby's latest appeal -- a motion to allow him to stay out of jail while he was challenging his conviction -- George W. Bush commuted Libby's sentence. Libby will no longer have to serve the 30-month prison sentence ordered by federal district court Judge Reggie Walton. He will, though, have to pay the $250,000 fine that was part of the sentence.
The commutation -- which is not a pardon and does not erase Libby's conviction -- is a reminder that Bush and his crew do not believe in accountability. Bush has been rather stingy in the use of his pardon power. And regulations issued by his Justice Department note that recipients of pardons should serve their sentences and demonstrate contrition before obtaining presidential absolution. (Libby had expressed no remorse and was not scheduled to report to jail for several weeks.) Yet with this commutation, Bush ducked those requirements, and he is allowing Vice President Dick Cheney's former chief of staff, who was found guilty of lying to federal investigators in the CIA leak case, to go unpunished. The fine will be no problem for Libby. His neoconservative friends and admirers will kick in to cover that tab. (Perhaps even Cheney will send a check.)
Libby had become a symbol of the Bush White House's problem with the truth. After all, his lies had been designed to block FBI agents and federal prosecutors from learning the full truth of a White House effort to discredit a critic who had accused the Bush administration of twisting the prewar intelligence. And now the final act in the long-running CIA leak scandal -- Bush's commutation -- stands as another symbol of this grand theme: Lying doesn't really bother this crowd. In the 2000 presidential campaign, Bush claimed he would bring responsibility to the White House and, as a PR stunt, he dubbed his campaign jet Accountability One. Yet with this commutation, he takes the position that in his administration an aide who purposefully misleads government officials investigating a possible national security crime need not be held fully accountable.
This is no shocker. Early on in the CIA leak affair, the White House announced that anyone involved in the 2003 leak that disclosed the CIA employment of Valerie Wilson, an undercover Agency officer, would be booted out of the administration. But Karl Rove, who had disclosed classified information about Valerie Wilson to two reporters and who apparently lied about his actions to White House press secretary Scott McClellan, was not pink-slipped. Bush has never acknowledged this broken promise. (Libby left the White House only after he was indicted in the fall of 2005.)
Bush shielded Rove, and now -- better late than never -- he's doing the same for Libby. Ever since Libby's conviction in March, neoconservative and conservative Libby partisans have been urging -- or demanding -- that Bush pardon Libby. They have cried that his indictment, his conviction, and his sentence were travesties of justice. They blasted Bush for declining to intervene in the proceedings, branding the president (their pal!) a coward. They acted as if Bush's refusal to pardon Libby was a personal betrayal of each and every one of them. They showed more concern for Libby than any of the civilians who have perished in Iraq in the years since they, Libby. and their allies engineered the invasion of Iraq. Libby was their cause; he was one of them.
Once again, Bush, being nudged by the neocons, has sent a clear message: Telling the truth doesn't matter. Bush has refused to acknowledge that he, Cheney, and other administration officials -- to be polite about it -- stretched the truth about Iraq and the threat it posed before the war. Today, he says that if you lie to protect the White House (especially the vice president), you can escape retribution. But if Bush, Cheney and the others could get away with big untruths about war, why shouldn't Libby get away with small lies about a cover-up? Fair's fair, right?
The foundation of a democratic judicial system is that the sentence fits the crime. In this instance, the commutation fits the administration.
David Corn is the Washington editor for The Nation magazine.
Copyright © 2007 The Nation
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