Archive for March, 2008

10 days That Changed Capitalism

March 30, 2008

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By Rob Johnson and Robert Borosage

http://www.ourfuture.org/blog-entry/10-days-changed-capitalism

The world has changed. The market fundamentalism that has dominated our economics over last three decades has been unmasked as a sham, deemed useless by the guardian of the integrity of finance itself, the Federal Reserve.

Without a vote of the Congress or a public debate, the Bush administration and the Federal Reserve have made government the guarantor of the shadow banking system – the unregulated, unhinged hedge funds and investment houses whose compulsive excesses now threaten the global economy. They say necessity is the mother of invention, but we seen only a part of the new machine, not surprisingly, the part that buttresses Wall Street. They have scrambled to put this together in an emergency, behind closed doors, without a hint of the necessary regulatory changes that must rationally accompany such guarantees. That is what the fight in the coming months will surely be about.

As the article below by David Wessel of the Wall Street Journal summarizes, the intervention puts at risk hundreds of billions of taxpayer dollars.

It also transforms the economic debate. It is inconceivable that taxpayers should be asked to bail out private buccaneer speculators without enforcing limits on their speculation – capital reserves, limits on what gambles they can take, oversight, transparency, new restrictions on their pay packages to remove the current multi-million dollar personal incentives to invent new Penza schemes and scams.

The shadow banking system now must be brought out of the shadows. After all we are constantly told that finance serves the economy, and the market system is the best means to solve our social goals. It feels very uncomfortable when our servant’s servant becomes our master’s master as Wall Street has been permitted to become in America in recent years by contribution- hungry elected officials.

As Barack Obama noted in his speech yesterday, the deregulation that fostered this folly was supported by both parties. It began under Jimmy Carter, accelerated under Ronald Reagan, went into hyper speed under Bill Clinton, and spiraled into catastrophe under George Bush. The freedom to gamble with other peoples’ money has been protected by lavish campaign contributions and powerful lobbies. These financial buccaneers have treated the laws and rules that govern our financial markets like just one more asset to be bought and sold. They have been unabashed in their arrogant abuse of power, rigging the rules and daring the world to stop them. A particularly audacious example occurred only last year when a concerted lobby campaign convinced the Democratic majority in the Senate to sustain the tax dodge that enables billionaire hedge fund operators to pay a lower tax rate than their secretaries.

This cannot continue. They ask to pocket their profits and have taxpayers protect them from their losses. That offends the principles of both democracy and the market. If they are too big to fail – if their failure will bring down the entire economy – then they are also too big to gamble on their own. They must be regulated – or perhaps nationalized, as the British have just done with one of their leading banks. After all they are asking to nationalize their losses. Why not some of their profits too?

This debate must be accessible to, and reflect the concerns of, citizens. It cannot be the exclusive province of so-called experts, Wall Street operators, economists and legislators. Too often, Wall Street manages to profit having the party and then make a bundle from the government in cleaning up the mess as they socialize the losses that they created.

It is important to understand how reckless Wall Street has been. They have not only victimized the American people through recession and bailouts. Their recklessness threatens to blow up their own cherished role as well. They have damaged the international reputation of the U.S. dollar, turning the world’s reserve currency into the equivalent of a junk bond. The excesses of their hubris-driven repackaging of assets has muddied the U.S. credit allocation process and accelerated the US decline as the financial center of world commerce. Their sacred cow of “free trade” is unlikely to withstand the pressure of a prolonged slump. Wall Street is compulsively consuming itself.

We are going to follow this debate closely at CAF. It will be a constant feature of this blog. We’ll call on the best progressive economists and analysts to break it down. We’ll collect the best documents so you can follow the debate. And we’ll be driving campaigns to make certain that the public doesn’t once more get stuck with the bill for the bankers’ party, with no assurances that the reckless structure of finance has been repaired.

David Wessel provides good summary of where we are below.


http://online.wsj.com/article/SB120657397294066915.htmlTen Days That Changed Capitalism
Officials Improvised
To Rescue Markets;
Will It Be Enough?
March 27, 2008; Page A1

David Wessel

The past 10 days will be remembered as the time the U.S. government discarded a half-century of rules to save American financial capitalism from collapse.

On the Richter scale of government activism, the government’s recent actions don’t (yet) register at FDR levels. They are shrouded in technicalities and buried in a pile of new acronyms.

But something big just happened. It happened without an explicit vote by Congress. And, though the Treasury hasn’t cut any checks for housing or Wall Street rescues, billions of dollars of taxpayer money were put at risk. A Republican administration, not eager to be viewed as the second coming of the Hoover administration, showed it no longer believes the market can sort out the mess.

“The Government of Last Resort is working with the Lender of Last Resort to shore up the housing and credit markets to avoid Great Depression II,” economist Ed Yardeni wrote to clients.

First, over St. Patrick’s Day weekend, the Fed (aka the Lender of Last Resort) and the Treasury forced the sale of Bear Stearns, the fifth-largest U.S. investment bank, to J.P. Morgan Chase at a price so low that a shareholder rebellion prompted J.P. Morgan to raise the price. To induce J.P. Morgan to do the deal, the Fed agreed to take losses or gains, if any, on up to $29 billion of securities in Bear Stearns’s portfolio. The outcome will influence the sum the Fed turns over to the Treasury, so this is taxpayer money; that’s why the Fed sought Treasury Secretary Henry Paulson’s OK.

Then the Fed lent directly to Wall Street securities firms for the first time. Until now, the Fed has lent directly only to Main Street banks, those that take deposits from ordinary folks. That’s because banks were viewed as playing a unique economic role and, supposedly, were more closely regulated than other types of lenders. In the first three days of this new era, securities firms borrowed an average of $31.3 billion a day from the Fed. That’s not small change, and it’s why Mr. Paulson, after the fact, is endorsing changes to give the Fed more access to these firms’ books.

Increased Leverage

In the days that followed, the Republican Treasury secretary leaned on two shareholder-owned, though government-chartered, companies — Fannie Mae and Freddie Mac — to raise capital that their boards didn’t want to raise. In exchange, their government regulator allowed them to increase their leverage so they can buy about $200 billion more in mortgage-backed securities.

So Fannie and Freddie will get bigger, a welcome development when mortgage markets are in trouble. Already, they have regained lost market share. They accounted for 76% of new mortgages in the fourth quarter of last year, up from 46% in the second quarter, Mr. Paulson said Wednesday. But everyone knows that if Fannie or Freddie stumble, taxpayers will get stuck with the tab.

And then, the federal regulator of the low-profile Federal Home Loan Banks, which are even less well capitalized than Fannie and Freddie, said they could buy twice as many Fannie and Freddie-blessed mortgage-backed securities as previously permitted — more than $100 billion worth.

Was this necessary? It’s messy, uncomfortable and undoubtedly flawed in many details. Like firefighters rushing to a five-alarm fire, policy makers are making mistakes that will be apparent only in retrospect.

Too Great to Ignore
But, regardless of how we got here, the clear and present danger that the virus in the housing, mortgage and credit markets is infecting the overall economy is too great to ignore. The Great Depression was worsened because the initial government reaction was wrong-headed. Federal Reserve Chairman Ben Bernanke spent an academic career learning how to avoid repeating those mistakes.

Is it working? It is helping. One key measure is the gap between interest rates on mortgages and safe Treasury securities. A wide gap means high mortgage rates, which hurt an already sickly housing market. A lot of recent activity, including Wednesday’s previously planned auction in which the Fed is trading Treasurys for mortgage-backed securities, is aimed at increasing demand for those securities to drive down mortgage rates.

The gap remains enormous by historical standards, but has narrowed. On March 6, according to FTN Financial, 30-year fixed-rate mortgages were trading at 2.92 percentage points above the relevant Treasury rates; Wednesday the gap was down to 2.22. Normal is about 1.5 percentage points. Money markets are still under stress, as banks and others hoard cash and super-safe short-term Treasurys.

Is it enough? Probably not. Although it’s hard to know, the downward tug on the overall economy from falling house prices persists. The next step, if one proves necessary, is almost sure to require the explicit use of taxpayer money.

Cushion the Blow

The case for doing more is twofold. One is to cushion the blow to families and communities, even if some are culpable. The other is to disrupt a dangerous downward spiral in which falling prices of houses and mortgage-backed securities lead lenders to pull back, hurting the economy and dragging asset prices down further, and so on.

In ordinary times, a capitalist economy lets prices — such as those of homes, mortgage-backed securities and stocks — fall to the point where the big-bucks crowd rushes in, hoping to make a killing. But if the big money remains on the sidelines, unpersuaded that a bottom is near, the wait for bargain hunters to take the plunge could be very long and very painful.
So the next step, no matter how it is dressed up, is likely to involve the government’s moving in ways that put a floor under prices, hoping that will limit the downside risks enough so more Americans are willing to buy homes and deeper-pocketed investors are willing, in effect, to lend them the money to do so.http://www.ourfuture.org/blog-entry/10-days-changed-capitalism

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The 9/11 Stand Down in 2 Minutes

March 29, 2008

from http://georgewashington.blogspot.com/

NORAD, responsible for intercepting errant aircraft over the U.S., has a standard operating procedure for scrambling planes for interception which takes less than 15 minutes
They did this successfully (on time) 129 times in 2000 and and 67 times between September 2000 and June 2001.

Yet, on September 11th, they failed to do their job 4 times in a single day:

You might think that the military couldn’t find the hijacked planes because the hijackers turned off the transponders. However, a former air traffic controller, who knows the flight corridor which the two planes which hit the Twin Towers flew “like the back of my hand” and who handled two actual hijackings says that planes can be tracked on radar even when their transponders are turned off (also, listen to this interview).

As a former senior air force colonel said:

If our government had merely [done] nothing, and I say that as an old interceptor pilot—I know the drill, I know what it takes, I know how long it takes, I know what the procedures are, I know what they were, and I know what they’ve changed them to—if our government had merely done nothing, and allowed normal procedures to happen on that morning of 9/11, the Twin Towers would still be standing and thousands of dead Americans would still be alive. [T]hat is treason!

Norad’s stand down on 9/11 was so blatant that Norad has been forced to give 3 entirely different versions of what happened that day, as each previous version has been exposed as false. When someone repeatedly changes his testimony after being caught in lies, how believable is he? The falsity of Norad’s explanations were so severe that even the 9/11 Commission considered recommending criminal charges for the making of false statements.

In addition, Dick Cheney monitored flight 77 for many miles as it approached the Pentagon — one of the most heavily-defended buildings in the world — and yet ordered that the airplane not be intercepted (confirmed here). Given that Cheney was in charge of all of the war games and coordinated the government’s “response” to the attacks on 9/11 — apparently including Norad (see this Department of State announcement, this CNN article, and this essay) — Cheney’s orders regarding flight 77 seem to be part and parcel of the Norad stand down.

above the Law ‘Denied in Full’: Federal Judges Grill CIA Lawyers on JFK Secrets

March 27, 2008

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Lawyers for the Central Intelligence Agency faced pointed questions in a federal court hearing Monday morning about the agency’s efforts to block disclosure of long-secret records about the assassination of President John F. Kennedy.

Three appellate judges probed for explanations of the agency’s rationale for withholding records concerning a deceased undercover CIA officer named George Joannides whose role in the events of 1963 remains unexplained.

For the past three and a half years, CIA has blocked the release of the Joannides files, denying my Freedom of Information Act (FOIA) request and spurning scholarly appeals for full disclosure. At stake is the viability of the 1992 JFK Assassination Records Act, which mandates the immediate review, and release of all government records related to Kennedy’s murder in Dallas on November 22, 1963. One of the strongest open government measures ever enacted, the future of the JFK Act is now in question as the CIA seeks judicial permission to defy its provisions.

The three-judge panel, chaired by Judge Karen Henderson, heard oral arguments in the federal courthouse here about whether the FOIA requires release of the records, most of which are more than 40 years old. These records were never shared with any JFK assassination investigation.

“Do you know where the records are located?” Henderson asked CIA lawyer John Truong in reference to a series of monthly reports that the Joannides was supposed to file in 1963. Truong said he did not know. Judge David Tatel questioned Truong’s contention that Joannides was not the subject of congressional investigation in the late 1970s. “Aren’t these key records?” asked Judge Judith Rogers.

Joannides served as the chief of psychological warfare operations in the Agency’s Miami station at the time of Kennedy’s assassination. Using the alias “Howard,” he was the case officer for a Cuban exile group whose members had repeated contact with accused assassin Lee Harvey Oswald in August 1963 — rendering any records of Joannides’ secret operations at that time potentially relevant to the JFK assassination story.

The JFK Records Act of 1992 was supposed to spur full disclosure on the much-debated subject. Approved unanimously by Congress and signed into law by President George H.W. Bush, the law sought to quell public doubt and confusion raised by Oliver Stone’s JFK.

“All Government records concerning the assassination of President John F. Kennedy should carry a presumption of immediate disclosure,” the Act declared, “and all records should be eventually disclosed to enable the public to become fully informed about the history surrounding the assassination.”

To insure compliance, Congress created an independent civilian review panel, the Assassination Records Review Board (ARRB) to determine what documents would be made public and to oversee the public release those records. The five-member board — not federal agencies — were given final say over what should be declassified. Between 1994 and 1998, the ARRB, chaired by federal judge John Tunheim, oversaw the release of four million pages of once-secret JFK records.

These new JFK files not only illuminate the events that led to the gunshots that took Kennedy’s life; they also provide an unprecedented glimpse of U.S. covert operations against Cuba, CIA propaganda and surveillance techniques, U.S. law enforcement action against organized crime figures, and efforts to assassinate Fidel Castro. The JFK Records Act, according to the watchdog group OMB Watch, “is the best example in existence of a successful targeted declassification effort.”

The CIA, however, now appears to be evading a signed memorandum of understanding that it gave to the ARRB about the release of JFK records. On September 30, 1998 the Agency committed itself to releasing any newly discovered JFK records under the criteria established by the board. Today the Agency is ignoring the ARRB criteria and blocking the disclosure of records that meet the legal definition of “assassination related” records.

The National Archives and Records Administration has responsibility for maintaining the JFK Records Collection but limited ability to compel the Agency to turn over sensitive documents. Even though the JFK Act states that all assassination records must be made public by 2017, a top CIA official noted in a court filing that the Agency has the right to keep as many as 1,100 still-secret JFK records out of public view beyond that date.

In my admittedly subjective view, the JFK Records Act is being slowly repealed by CIA fiat. In defiance of the law and common sense, the Agency continues to spend taxpayers’ money for the suppression of history around JFK’s assassination. In the post-9/11 era, you would think U.S. intelligence budget could be better spent.

The ARRB established George Joannides’ relevance to the JFK historical record in 1998 when it discovered and declassified five fitness reports from his personnel file. Those records revealed for the first time that Joannides had served as the chief of Psychological Warfare branch in the CIA’s Miami station in 1963. He arrived in Miami in 1962 under U.S. Army cover, according to recently declassified records.

At the time of Kennedy’s assassination his duties included handling the CIA’s contacts with a militant Cuban exile group called the Cuban Student Directorate, known by its Spanish acronym, DRE. In CIA cables, the group was known by the codename AMSPELL.

JFK scholars consider documents relating to the DRE to be relevant to the history of events in Dallas. A series of encounters between DRE members and Lee Harvey Oswald in August 1963 have long provoked investigative interest and debate.

Oswald approached the DRE’s delegation in New Orleans and offered to train guerrillas to fight the Castro government. He was rebuffed. When DRE members saw Oswald handing out pro-Castro leaflets a few days later an altercation ensued that ended with the arrest of all the participants. A week after that, the DRE’s spokesman in New Orleans debated the Cuba issue with Oswald on a radio program. After these encounters, the DRE issued a press release calling for a congressional investigation of the pro-Castro activities of the then-obscure Oswald.

The CIA was passing money to the DRE leaders at the time, according to an agency memo dated April 1963, found in the JFK Library in Boston. The document shows that the Agency gave the Miami-based group $250,000 a year — the equivalent of about $1.5 million annually in 2007 dollars.

The secret CIA files on Joannides may shed new light on what, if anything, Joannides and other CIA officers in anti-Castro operations knew about Oswald’s activities and contacts before Kennedy was killed.

In a July 2003 FOIA request, I asked for all records on Joannides’ contacts with and responsibilities for the DRE in 1962-64, as well as records on his stint as liaison to the congressional investigation in 1978. In the course of the lawsuit, the CIA admitted the existence of 33 still-secret documents in Joannides’ administrative file. The CIA refuses to release them in any form, claiming that the release of even a single word would harm national security or violate someone’s privacy. Those records have been “denied in full.”

The CIA denies any obligation to release JFK-related documents in the Joannides files. “The JFK Assassination Records Act has no applicability” to a FOIA request, according to a brief filed by the agency this summer.

The agency also asserts that its operational files are exempt from being searched under the terms of the 1984 CIA Information Act — even though the JFK Records Act supersedes that law and contains no exemption for the searching of operational files.

“The JFK statute is quite clear,” stated Anna Nelson, a former ARRB member and a professor at American University. “Every agency had to search every file system for records relating to the JFK assassination. Nothing in the statute excludes operational files. Furthermore, the board guidelines are clear that files like the Joannides file are a part of the assassination record. So the CIA is legally bound to search those files and to report on what they found, even if the documents aren’t released.”

In affidavits filed in support of the lawsuit, Nelson and John Tunheim, federal judge and former ARRB chair, called on the CIA to release the withheld documents. Former ARRB general counsel Jeremy Gunn stated that the Joannides’ material meets the ARRB’s definition of “assassination-related.”

Last year, federal judge Richard Leon upheld the CIA’s decision to withhold the records. In a September 2006 decision, Leon declared there was “not one scintilla of evidence” that the information in Joannides’ files is related to Kennedy’s assassination. Attorney Truong urged the appellate court to uphold Leon’s decision, saying the agency’s record search was “reasonable and responsive.”

In March 2007, twenty-two authors published an open letter in the New York Review of Books, calling on National Archivist Allen Weinstein to take possession of the Joannides files from the CIA, review them for genuinely sensitive and private information, and release them to the public. Echoing similar open letters in 2003 and 2005, the JFK writers declared that Joannides’ role in the assassination story required full disclosure of his files.

The signatories included novelists Norman Mailer and Don DeLillo, filmmaker Stone, anti-conspiratorial authors Vincent Bugliosi and Gerald Posner and pro-conspiracy journalists Anthony Summers and David Talbot — an unusual display of consensus in such a hotly contested subject.

In response, Weinstein said that the Archives staff has met with the CIA and discussed concerns related to the Joannides files that remain at the agency. “We expect to receive a response from the CIA in the near future,” he wrote in August. Two months later, the request is still pending. When it comes to obeying the law on JFK records, the CIA is still considering its options.

A decision in Morley v. CIA is expected before the end of the year.

Jefferson Morley| BIO | I’M A FAN OF THIS BLOGGER

http://www.huffingtonpost.com/jefferson-morley/denied-in-full-federal_b_69414.html

CIA role claim in Kennedy killing

March 27, 2008
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New video and photographic evidence that puts three senior CIA operatives at the scene of Robert Kennedy’s assassination has been brought to light.
The evidence was shown in a report by Shane O’Sullivan, broadcast on BBC Newsnight.

It reveals that the operatives and four unidentified associates were at the Ambassador Hotel, Los Angeles in the moments before and after the shooting on 5 June, 1968.

The CIA had no domestic jurisdiction and some of the officers were based in South-East Asia at the time, with no reason to be in Los Angeles.

‘Decoy’

Kennedy had just won the California Democratic primary on an anti-War ticket and was set to challenge Nixon for the White House when he was shot in a kitchen pantry.

 
THE CIA CONNECTION


A 24-year-old Palestinian, Sirhan Sirhan, was arrested as the lone assassin and notebooks at his house seemed to incriminate him. However, even under hypnosis, he has never been able to remember the shooting and defence psychiatrists concluded he was in a trance at the time.

Witnesses placed Sirhan’s gun several feet in front of Kennedy but the autopsy showed the fatal shot came from one inch behind.

Dr Herbert Spiegel, a world authority on hypnosis at Columbia University, believes Sirhan may have been hypnotically programmed to act as a decoy for the real assassin.

Evidence

The report is the result of a three-year investigation by filmmaker Shane O’Sullivan. He reveals new video and photographs showing three senior CIA operatives at the hotel.

  What were they doing there? It’s our obligation as friends of Bob Kennedy to investigate this
Paul Schrade
Three of these men have been positively identified as senior officers who worked together in 1963 at JMWAVE, the CIA’s Miami base for its Secret War on Castro. David Morales was Chief of Operations and once told friends:

“I was in Dallas when we got the son of a bitch and I was in Los Angeles when we got the little bastard.”

Gordon Campbell was Chief of Maritime Operations and George Joannides was Chief of Psychological Warfare Operations.

Joannides was called out of retirement in 1978 to act as the CIA liaison to the Congressional investigation into the JFK assassination. Now, we see him at the Ambassador Hotel the night a second Kennedy is assassinated.

Memory

Monday, 20 November would have been Bobby Kennedy’s 81st birthday. In Los Angeles, his son Max has just broken ground on a new high-school project in memory of his father on the old Ambassador Hotel site. Paul Schrade, a key figure behind the school project, was walking behind Robert Kennedy that night and was shot in the head. He believes this new evidence merits fresh investigation:

“It seems very strange to me that these guys would be at a Kennedy celebration. What were they doing there? And why were they there? It’s our obligation as friends of Bob Kennedy to investigate this.”

Ed Lopez, a former Congressional investigator who worked with Joannides in 1978, says:

“I think the key people at the CIA need to go back to anybody who might have been around back then, bring them in and interview them, and ask – is this Gordon Campbell? Is this George Joannides?”

This report was shown on Newsnight on Monday, 20 November, 2006.

Families Torn by Citizenship for Fallen

March 24, 2008

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A young, ambitious immigrant from Guatemala who dreamed of becoming an architect. A Nigerian medic. A soldier from China who boasted he would one day become an American general. An Indian native whose headstone displays the first Khanda, emblem of the Sikh faith, to appear in Arlington National Cemetery.

These were among more than 100 foreign-born members of the U.S. military who earned American citizenship by dying in Iraq.

Jose Gutierrez was one of the first to fall, killed by friendly fire in the dust of Umm Qasr in the opening hours of the invasion.

In death, the young Marine was showered with honors his family could only have dreamed of in life. His sister was flown in from Guatemala for his memorial service, where a Roman Catholic cardinal presided and top military officials saluted his flag-draped coffin.

And yet, his foster mother agonized as she accompanied his body back for burial in Guatemala City: Why did Jose have to die for America in order to truly belong?

Cardinal Roger Mahony of Los Angeles, who oversaw Gutierrez’s service, put it differently.

“There is something terribly wrong with our immigration policies if it takes death on the battlefield in order to earn citizenship,” Mahony wrote to President Bush in April 2003. He urged the president to grant immediate citizenship to all immigrants who sign up for military service in wartime.

“They should not have to wait until they are brought home in a casket,” Mahony said.

But as the war continues, more and more immigrants are becoming citizens in death — and more and more families are grappling with deeply conflicting feelings about exactly what the honor means.

Gutierrez’s citizenship certificate — dated to his death on March 21, 2003, — was presented during a memorial service in Lomita, Calif., to Nora Mosquera, who took in the orphaned teen after he had trekked through Central America, hopping freight trains through Mexico before illegally sneaking into the U.S.

“On the one hand I felt that citizenship was too late for him,” Mosquera said. “But I also felt grateful and very proud of him. I knew it would open doors for us as a family.”

“What use is a piece of paper?” cried Fredelinda Pena after another emotional naturalization ceremony, this one in New York City where her brother’s framed citizenship certificate was handed to his distraught mother. Next to her, the infant daughter he had never met dozed in his fiancee’s arms.

Cpl. Juan Alcantara, 22, a native of the Dominican Republic, was killed Aug. 6, 2007, by an explosive in Baqouba. He was buried by a cardinal and eulogized by a congressman but to his sister, those tributes seemed as hollow as citizenship.

“He can’t take the oath from a coffin,” she sobbed.

There are tens of thousands of foreign-born members in the U.S. armed forces. Many have been naturalized, but more than 20,000 are not U.S. citizens.

“Green card soldiers,” they are often called, and early in the war, Bush signed an executive order making them eligible to apply for citizenship as soon as they enlist. Previously, legal residents in the military had to wait three years.

Since Bush’s order, nearly 37,000 soldiers have been naturalized. And 109 who lost their lives have been granted posthumous citizenship.

They are buried with purple hearts and other decorations, and their names are engraved on tombstones in Arlington as well as in Mexico and India and Guatemala.

Among them:

_ Marine Cpl. Armando Ariel Gonzalez, 25, who fled Cuba on a raft with his father and brother in 1995 and dreamed of becoming an American firefighter. He was crushed by a refueling tank in southern Iraq on April 14, 2003.

_ Army Spc. Justin Onwordi, a 28-year-old Nigerian medic whose heart seemed as big as his smiling 6-foot-4 frame and who left behind a wife and baby boy. He died when his vehicle was blown up in Baghdad on Aug. 2, 2004.

_ Army Pfc. Ming Sun, 20, of China who loved the U.S. military so much he planned to make a career out of it, boasting that he would rise to the rank of general. He was killed in a firefight in Ramadi on Jan. 9, 2007.

_ Army Spc. Uday Singh, 21, of India, killed when his patrol was attacked in Habbaniyah on Dec. 1, 2003. Singh was the first Sikh to die in battle as a U.S. soldier, and it is his headstone at Arlington that displays the Khanda.

_ Marine Lance Cpl. Patrick O’Day from Scotland, buried in the California rain as bagpipes played and his 19-year-old pregnant wife told mourners how honored her 20-year-old husband had felt to fight for the country he loved.

“He left us in the most honorable way a man could,” Shauna O’Day said at the March 2003 Santa Rosa service. “I’m proud to say my husband is a Marine. I’m proud to say my husband fought for our country. I’m proud to say he is a hero, my hero.”

Not all surviving family members feel so sure. Some parents blame themselves for bringing their child to the U.S. in the first place. Others face confusion and resentment when they try to bury their child back home.

At Lance Cpl. Juan Lopez’s July 4, 2004, funeral in the central Mexican town of San Luis de la Paz, Mexican soldiers demanded that the U.S. Marine honor guard surrender their arms, even though the rifles were ceremonial. Earlier, the Mexican Defense Department had denied the Marines’ request to conduct the traditional 21-gun salute, saying foreign troops were not permitted to bear arms on Mexican soil.

And so mourners, many deeply opposed to the war, witnessed an extraordinary 45-minute standoff that disrupted the funeral even as Lopez’s weeping widow was handed his posthumous citizenship by a U.S. embassy official.

The same swirl of conflicting emotions and messages often overshadows the military funerals of posthumous citizens in the U.S.

Smuggled across the Mexican border in his mother’s arms when he was 2 months old, Jose Garibay was just 21 when he died in Nasiriyah. The Costa Mesa police department made him an honorary police officer, something he had hoped one day to become. America made him a citizen.

But his mother, Simona Garibay, couldn’t conceal her bewilderment and pain. It seemed, she said in interviews after the funeral, that more value was being placed on her son’s death than on his life.

Immigrant advocates have similar mixed feelings about military service. Non-citizens cannot become officers or serve in high-security jobs, they note, and yet the benefits of citizenship are regularly pitched by recruiters, and some recruitment programs specifically target colleges and high schools with predominantly Latino students.

“Immigrants are lured into service and then used as political pawns or cannon fodder,” said Dan Kesselbrenner, executive director of the National Immigration Project, a program of the National Lawyers Guild. “It is sad thing to see people so desperate to get status in this country that they are prepared to die for it.”

Others question whether non-citizens should even be permitted to serve. Mark Krikorian of the conservative Center for Immigration Studies, argues that defending America should be the job of Americans, not non-citizens whose loyalty might be suspect. In granting special benefits, including fast-track citizenship, Krikorian says, there is a danger that soldiering will eventually become yet another job that Americans won’t do.

And yet, immigrants have always fought — and died — in America’s wars.

During the Cvil War, the Union army recruited Irish and German immigrants off the boat. Alfred Rascon, an illegal immigrant from Mexico, received the Medal of Honor for acts of bravery during the Vietnam war. In the 1990s, Gen. John Shalikashvili, born in Poland after his family fled the occupied Republic of Georgia, became chairman of the Joint Chiefs of Staff.

After the Iraq invasion, the U.S. Embassy in Mexico fielded hundreds of requests from Mexicans offering to fight in exchange for citizenship. They mistakenly believed that Bush’s order also applied to nonresidents.

The right to become an American is not automatic for those who die in combat. Families must formally apply for citizenship within two years of the soldier’s death, and not all choose to do so.

“He’s Italian, better to leave it like that,” Saveria Romeo says of her 23-year-old son, Army Staff Sgt. Vincenzo Romeo, who was born in Calabria, died in Iraq and is buried in New Jersey. A miniature Italian flag marks his grave, next to an American one.

“What good would it do?” she says. “It won’t bring back my son.”

But it would allow her to apply for citizenship for herself, a benefit only recently offered to surviving parents and spouses. Until 2003 posthumous citizenship was granted only through an act of Congress and was purely symbolic. There were no benefits for next of kin.

Romeo says she has no desire to apply. She says she couldn’t bear to benefit in any way from her son’s death. And besides, she feels Italian, not American.

Fernando Suarez del Solar just feels angry — angry at what he considers the futility of a war that claimed his only son, angry at the military recruiters he says courted young Jesus relentlessly even when the family still lived in Tijuana.

His son was just 13, Suarez del Solar said, when he was first dazzled by Marine recruiters in a California mall. For the next two years Jesus begged the family to emigrate and eventually they did, settling in Escondido, Calif., where the teen signed up for the Marines before he left high school.

Lance Cpl. Jesus Suarez Del Solar was 20 when he was killed by a bomb in the first week of the war. He left behind a wife and baby and parents so bitter about his death that they eventually divorced.

Today, his 52-year-old father has become an outspoken peace activist who travels the country organizing anti-war marches, giving speeches and working with counter-recruitment groups to dissuade young Latinos from joining the U.S. military.

“There is nothing in my life now but saving these young people,” he says. “It is just something I feel have to do.”

But first he had to journey to Iraq. He had to see for himself the dusty stretch of wasteland where his son became an American. In tears, he planted a small wooden cross. And he prayed for his son — and for all the other immigrants who became citizens in death.

Spitzer Was Silenced

March 16, 2008

Elliot’s Mess And The $200 Million Bailout  

By Greg Palast
3-14-8
 
While New York Governor Eliot Spitzer was paying an ‘escort’ $4,300 in a hotel room in Washington, just down the road, George Bush’s new Federal Reserve Board Chairman, Ben Bernanke, was secretly handing over $200 billion in a tryst with mortgage bank industry speculators.
 
Both acts were wanton, wicked and lewd. But there’s a BIG difference. The Governor was using his own checkbook. Bush’s man Bernanke was using ours.
 
This week, Bernanke’s Fed, for the first time in its history, loaned a selected coterie of banks one-fifth of a trillion dollars to guarantee these banks’ mortgage-backed junk bonds. The deluge of public loot was an eye-popping windfall to the very banking predators who have brought two million families to the brink of foreclosure.
 
Up until Wednesday, there was one single, lonely politician who stood in the way of this creepy little assignation at the bankers’ bordello: Eliot Spitzer.
 
Who are they kidding? Spitzer’s lynching and the bankers’ enriching are intimately tied.
 
HOW? FOLLOW THE MONEY.
 
The press has swallowed Wall Street’s line that millions of US families are about to lose their homes because they bought homes they couldn’t afford or took loans too big for their wallets. Ba-LON-ey. That’s blaming the victim.
 
Here’s what happened. Since the Bush regime came to power, a new species of loan became the norm, the ‘sub-prime’ mortgage and it’s variants including loans with teeny ‘introductory’ interest rates. From out of nowhere, a company called ‘Countrywide’ became America’s top mortgage lender, accounting for one in five home loans, a large chuck of these ‘sub-prime’s.
 
Here’s how it worked: The Grinning Family, with US average household income, gets a $200,000 mortgage at 4% for two years. Their $955 a month payment is 25% of their income. No problem. Their banker promises them a new mortgage, again at the cheap rate, in two years. But in two years, the promise ain’t worth a can of spam and the Grinnings are told to scram – because their house is now worth less than the mortgage. Now, the mortgage hits 9% or $1,609 plus fees to recover the ‘discount’ they had for two years. Suddenly, payments equal 42% to 50% of pre-tax income. Grinnings move into their Toyota.
 
Now, what kind of American is ‘sub-prime’. Guess. No peeking. Here’s a hint: 73% of HIGH INCOME Black and Hispanic borrowers were given sub-prime loans versus 17% of similar-income Whites. Dark-skinned borrowers aren’t ‘stupid’,  they had no choice. They were ‘steered’ as it’s called in the mortgage sharking business.
 
“Steering,” sub-prime loans with usurious kickers, fake inducements to over-borrow, called ‘fraudulent conveyance’ or ‘predatory lending’ under US law, were almost completely forbidden in the olden days (Clinton Administration and earlier) by federal regulators and state laws as nothing more than fancy loan-sharking.
 
But when the Bush regime took over, Countrywide and its banking brethren were told to party hardy “it was OK now to steer’m, fake’m, charge’m and take’m.”
 
BUT THERE WAS THIS ANNOYING PARTY-POOPER.
 
The Attorney General of New York, Eliot Spitzer, who sued these guys to a fare-thee-well. Or tried to.
 
Instead of regulating the banks that had run amok, Bush’s regulators went on the warpath against Spitzer and states attempting to stop predatory practices. Making an unprecedented use of the legal power of ‘federal pre-emption’, Bush-bots ordered the states to NOT enforce their consumer protection laws.
 
Indeed, the feds actually filed a lawsuit to block Spitzer’s investigation of ugly racial mortgage steering. Bush’s banking buddies were especially steamed that Spitzer hammered bank practices across the nation using New York State laws.
 
Spitzer not only took on Countrywide, he took on their predatory enablers in the investment banking community. Behind Countrywide was the Mother Shark, its funder and now owner, Bank of America. Others joined the sharkfest: Goldman Sachs, Merrill Lynch and Citigroup’s Citibank made mortgage usury their major profit centers. They did this through a bit of financial legerdemain called ‘securitization.’
 
What that means is that they took a bunch of junk mortgages, like the Grinnings, loans about to go down the toilet and re-packaged them into ‘tranches’ of bonds which were stamped ‘AAA’ – top grade – by bond rating agencies. These gold-painted turds were sold as sparkling safe investments to US school district pension funds and town governments in Finland (really).
 
When the housing bubble burst and the paint flaked off, investors were left with the poop and the bankers were left with bonuses. Countrywide’s top man, Angelo Mozilo, will ‘earn’ a $77 million buy-out bonus this year on top of the $656 million – over half a billion dollars he pulled in from 1998 through 2007.
 
BUT THERE WERE RUMBLINGS THAT THE PARTY WOULD SOON BE OVER.
 
Angry regulators, burned investors and the weight of millions of homes about to be boarded up were causing the sharks to sink. Countrywide’s stock was down 50%, and Citigroup was off 38%, not pleasing to the Gulf sheiks who now control its biggest share blocks.
 
Then, on Wednesday of this week, the unthinkable happened. Carlyle Capital went bankrupt. Who? That’s Carlyle as in Carlyle Group. James Baker, Senior Counsel. Notable partners, former and past: George Bush, the Bin Laden family and more dictators, potentates, pirates and presidents than you can count.
 
The Fed had to act. Bernanke opened the vault and dumped $200 billion on the poor little suffering bankers. They got the ‘public treasure’ and got to keep the Grinning’s house. There was no ‘quid’ of a foreclosure moratorium for the ‘pro quo’ of public bail-out. Not one family was ‘saved,’ but not one banker was left behind.
 
Every mortgage sharking operation shot up in value. Mozilo’s Countrywide stock rose 17% in one day. The Citi sheiks saw their company’s stock rise $10 billion in an afternoon.
 
And that very same day the bail-out was decided – what a coinkydink! – the man called “The Sheriff of Wall Street” was cuffed.
 
SPITZER WAS SILENCED.
 
Do I believe the banks called Justice and said “Take him down today!” Naw, that’s not how the system works. But the big players knew that unless Spitzer was taken out, he would create enough ruckus to spoil the party. Headlines in the financial press, one was ‘Wall Street Declares War on Spitzer’ – made clear to Bush’s enforcers at Justice who their number one target should be. And it wasn’t Bin Laden.
 
It was the night of February 13 when Spitzer made the bone-headed choice to order take-out in his Washington Hotel room. He had just finished signing these words for the Washington Post about predatory loans:
 
‘Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which he federal government was turning a blind eye.’
 
Bush, said Spitzer right in the headline:  ‘was the ‘Predator Lenders’ Partner in Crime.’ The President, said Spitzer, was a fugitive from justice. And Spitzer was in Washington to launch a campaign to take on the Bush regime and the biggest financial powers on the planet.
 
Spitzer wrote: When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners the Bush administration will not be judged favorably.”
 
FALLEN ON HIS OWN GUN
 
But now, the Administration can rest assured that this love story – of Bush and his bankers – will not be told by history at all ”now that the Sheriff of Wall Street has fallen on his own gun.”
 
A note on ‘Prosecutorial Indiscretion.’
 
Back in the day when I was an investigator of racketeers for government, the federal prosecutor I was assisting was deciding whether to launch a case based on his negotiations for airtime with 60 Minutes. I’m not allowed to tell you the prosecutor’s name, but I want to mention he was recently seen shouting: “Florida is Rudi country! Florida is Rudi country!”
 
Not all crimes lead to federal bust or even public exposure. It’s up to something called ‘prosecutorial discretion.’
 
Funny thing, this “discretion.” For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.
 
Naming and shaming and ruining Spitzer – rarely done in these cases – was made at the ‘discretion’ of Bush’s Justice Department.
 
Or maybe we should say, ‘indiscretion.’
 
************
 
 
http://www.GregPalast.com
Greg Palast, former investigator of financial fraud, is the author of the New York Times bestsellers Armed Madhouse and The Best Democracy Money Can Buy.

mission accomplished – Bush has undone a century of progress by the US’s environmental protection movement

March 16, 2008
bushcheer.jpg

By By Kaleem Omar

3/15/2008

President George W. Bush isn’t only hated by people in countries around the world opposed to the US’s invasion, occupation and destruction of Afghanistan and Iraq; he is also hated by many people in his own country opposed to his anti-environmental protection policies. Among other things, those policies have opened up millions of acres of America’s protected national wildlife refuges to oil and gas drilling operations by big US energy companies – putting the pristine wilderness at risk.A century ago, US President Teddy Roosevelt gave Americans the bountiful and enlightened National Wildlife Refuge System – the world’s first such system and one of America’s glories.There are national wildlife refuges in every American state, important centres for the preservation of a sense of wildness in each place. In addition, these refuges have served as models for states like New York, which have created their own supplemental patchwork of refuges large and small.

As much as anything, the refuge safety net has created a long-standing public policy for establishing wildlife sanctuaries, and the tacit understanding that without them, the wilderness is doomed.

As New York State’s Albany Times-Union newspaper noted, “For a century, a critical underpinning of America’s view of wilderness has been that we can’t live without it. It’s our heritage. National forests and parks have steadily grown in numbers and size, and public appreciation.”

Americans have consistently recognised that significant pieces of their natural environment need to be set aside. It hasn’t been a Republican agenda or a Democratic one; it’s been a remarkably bipartisan vision.

Democratic President Lyndon B. Johnson signed the far-reaching Wilderness Act forty-five years ago. Republican President Richard M. Nixon gave the country the Environmental Protection Agency and the Endangered Species Act; and Republican Ronald Reagan signed more wilderness protection legislation than any other president.

But what the Bush administration has been attempting seems to be nothing less than total reversal of a century of environmental flow in the United States. As the Albany Times-Union noted, “At every turn, the Bush administration is thumbing its nose at every president who’s gone before, back to Teddy Roosevelt.”

It is staggering how much environmental progress President George W. Bush is trying to undo. There is a cumulative sense over the last seven years of a level of greed and exploitation encouraged by the White House that at some points of America’s history would have been the stuff of impeachment.

Mining, lumbering, oil interests and developers in general have never had it so good on public lands, much of which were set aside explicitly or in the spirit of protecting the wilderness. “Sadly, public reaction has been surprisingly muted,” the Albany Times-Union noted.

One of the main reasons for this muted reaction, of course, has been the climate of fear created by the Bush administration as it has gone about pursuing its so-called “war against terrorism.” Dire warnings of imminent terrorist attacks continue to emanate from administration officials on an almost weekly basis. The result is a population so traumatised and apprehensive about what the future holds for them that environmental concerns have been pushed on to the backburner.

Known for its close links to US energy companies and other big business interest groups, the Bush administration seems more interested in giving its business cronies the opportunity to line their pockets by allowing them to exploit the natural resources of public lands and less interested in preserving the wilderness.

The administration has already allowed energy companies to drill for oil in some protected sections of the Alaska wilderness and plans are afoot to allow similar operations in other western states.

The topper has to be an attempt to export the Bush brand of exploitation abroad and turn on its head the Endangered Species Act.

As the Albany Times-Union noted, “Under a proposal being floated by the administration, trophy hunters, circuses and the pet industry would be permitted to kill, capture or legally import certain desired species, many of which are at the door of extinction.”

The sick premise being used by the Bush administration to justify the move is that poor countries can use the money raised by selling some of their endangered wildlife to support badly needed conservation efforts for the others.

The most reprehensible part of this plan is that only foreign endangered species would be involved: trophy hunting for rare beasts, exporting Asian elephants for US circuses and zoos, resuming a partial African ivory trade (internationally banned since the early 1980s), and encouraging shadowy collectors to retrieve rare birds from the Amazon rain forest.

American endangered species are not part of the proposal, probably because the hue and cry that would result nationally would deafen a few ears in Washington.

Worldwide, and especially in poorer countries, the black market trade in endangered species is a huge problem, tying up all kinds of international policing resources. But at least at present there’s something of a cap on the illegal activity.

With the Bush proposal, however, we may as well put up billboards telling poachers they now have a place in line behind lumbering, mining and oil. And please, after you’ve shot the last elephant, turn out the lights.

American national parks are not merely places of spectacular scenic features and curiosities. This sounds like a strange statement in the face of the advertised lure of wonders like the geysers of Yellowstone, the incredible blue of Oregon’s Crater Lake (which I had the good fortune to see in the summer of 1989), the unrivalled picture of the Grand Canyon, and the waterfalls of the Yosemite with their legends of Yosemite Sam and his “hoard of King Solomon’s gold,” of all things.

But nearly all the national parks, and many of the wilderness areas, would justify their existence even if they did not possess so great a scenic merit. The scenery is inspiring, unforgettable; but the meaning goes deeper.

When the Yellowstone National Park was established through an Act of Congress in 1872, it was as “a public park or pleasuring-ground for the benefit and enjoyment of the people.” Whatever Congress meant by those words, it occurred naturally to the early exploration parties that the wonders of the region were no ordinary creation of nature – that the volcanic phenomena especially were of world significance; and that consequently any private interests that could gain ownership would reap large profits.

In the act of Congress that set up the National Park Service, some forty-five years afterward, the field of purpose was much widened. The words of the act should be well remembered, for the National Park System operates today under that organic law, which orders the conservation of “the scenery and the natural and historic objects and the wild life” in the national parks, and the provision “for the enjoyment of the same in such a manner and by such means as will leave them unimpaired for the enjoyment of future generations.”

This is what the national parks are for – not a part, but the whole of the stated purpose. This, with the implication of policies and methods to achieve the stated ends, is the full meaning of the national parks. It is no longer “conservation.” It is preservation. Or it may be called conservation in another and newer sense: the conserving of resources that are not to be expressed in terms of money, but embrace the moral, spiritual, and educational welfare of the people and add to the joy of their living.

Included in the National Park System are twenty-eight areas designated as national parks, and eighty-six areas called national monuments. In addition, there are about sixty preserved places, mostly of small extent, which fall into various categories, according to the historical reasons for which they were set aside. Finally, there are three national parkways and the integrated group known as the National Capital Parks.

In 1898, the great American naturalist John Muir wrote: “Thousands of nerve-shaken, over-civilised people are beginning to find out that going to the mountains is going home; that wildness is a necessity; and that mountain parks and reservations are useful not only as fountains of timber and irrigating rivers, but as fountains of life.”

With every passing year, the truth of that statement in emphasised. But it is that very vision of Muir and Teddy Roosevelt that the Bush administration is seeking to undo. To Bush and his business cronies, the wilderness is not a necessity, not a fountain of life; it is a resource to be exploited for money.

 

Bush’s King Midas in reverse – everthing he touches turns to shit

March 16, 2008

 bushbust.jpg

by Ed Naha | March 15, 2008 -dit_title=Mission accomplished: FUBAR 'R' us digg_skin=’compact’; 

Which one of these headlines scares you the most? “Recession fears rise on more job cuts.” “Fed takes new steps to boost cash for banks.” “World markets slide as US economy groans.” “Housing market spirals, no end in sight.” “Consumer confidence at lowest since 2002.” “Studies: Iraq costs US $12B per month.” “Gas prices rise to new national record.” “Consumers increased their borrowing by $6.9 billion in January.” “Bush says no recession in sight.”

Yeah, I know. It’s not even close. Once again, our President emerges victorious.

Over the years, Bush has acquired many critics. Some think him as being arrogant, stubborn, ill informed, short-sighted, paranoid, clueless and out of touch. Others consider him an ideologue, an overgrown frat boy with a warped sense of entitlement, a dry drunk, a sociopath, a fascist, a belligerent blow-hard, a monarch wannabe with the inherent intelligence of a kadota fig and a total failure. To be fair to Bush, he is all that and more – an unprecedented Black Hole in the history of American governance.

Our president, who believes in the piss on ’em, I mean, er, trickle down theory of economics and who has made a practice out of robbing the poor to give to the rich, is now faced with his latest monstrous creation: an American economy that has gone bust. The only reason there aren’t Hoovervilles popping up around the country is that nobody can afford the cardboard.

The sheer madness of King George has been highlighted in the past week by dire financial headline after headline and Bush’s reaction, or lack of it, to the consequences of his “let them eat caca” economic policies.

Last week, the Labor Department announced that 63,000 non-farm jobs were lost in February, following January’s 22,000 goners. February’s figures were the worst in five years. In addition, 450,000 folks bade adios to the labor force. They just stopped looking for jobs that weren’t there. (As a result, our unemployment rate eased to 4.8% from 4.9%, a fact Bush actually bragged about.)

The real job loss for February is a tad higher than the official number. Construction lost 39,000 posts. Manufacturing took a 52,000 hit. Retailers cut 34,100 jobs. Financial companies slashed 12,000 positions. Even temp agencies reported 27,600 jobs cut. The total job loss number was offset by the creation of new jobs in such sectors as government, service, prostitution and television punditry. (Okay, I made some of that last stuff up.)

Consumer confidence sank to a new low of 33.1%.

“We’ve gotten to a point where there’s very little for the consumer to cheer about. Everywhere you look – homes, grocery stores, gasoline stations – there are things that are all weighing on consumer attitudes,” said Richard Yamarone, economist at Argus Research. “You have soaring energy and food prices, rising home foreclosures and uncertainties about the jobs climate. When you mix it altogether it is a recipe for miserable consumer sentiment.”

D’ya think?

Adding to the hilarity, the dollar slid to record international lows this past week. It’s right down there with colored beads, trinkets and beaver pelts.

Oil soared to a new high, just about $110 a barrel. Gas prices hit an all-time record, with regular unleaded going for $3.2272 a gallon, a figure that doesn’t accurately reflect what’s happening at the pump. In California, for instance, a gallon of unleaded averages $3.50, with one station in the northern part of the state pumping it up to $5.19! In other words, gas is now almost as costly as a D.C. hooker.

The amount of consumer credit owed to banks and credit cards rose to $6.9 billion this year because people are now using their credit cards to survive.

Probably not coincidentally, a survey measuring an individual’s outlook about their personal financial standing as well as that of the country’s came up with a resounding NEGATIVE 41.6%

Think of this way: all those folks who wanted to have a beer with Bush can no longer afford the beer. (Nor can they afford his policies.)

Bush’s King Midas in reverse financial touch is spreading across the land. Retail sales in January fell at the fastest pace in the last five years.

Retailers including AnnTaylor Stores Corp., Talbots Inc. and Pacific Sunwear of California Inc. have closed hundreds of stores so far this year. Gadget seller Sharper Image filed for bankruptcy protection last month and plans to shutter nearly half of its 184 stores.

That, along with the Chapter 11 bankruptcy of catalog retailer Lillian Vernon Corp., could mark the beginning of a wave of retail bankruptcies that’s expected to go well beyond the home furnishings stores hurt by the housing disaster.

Unless the economy dramatically improves, retail bankruptcies this year could reach the highest level since the 1991 recession. More closings could leave gaping holes in the nation’s retail centers, which have already seen average vacancy rates creep up to between 7 percent and 8 percent from 5 percent over the last six months.

David Solomon, president and CEO of ReStore, NAI Global’s retail division, expects the vacancy rate could hit 10 percent by the end of the year. Suzanne Mulvee, senior economist at Property & Portfolio Research, figures that vacancies could rise as high as 12.5 percent this year. Her figure includes retail spaces where tenants have defaulted on their rents.

Part of the problem, according to Mulvee, is that more retail space is coming to the market just as consumer demand is falling. Another 130 million square feet of retail space will become available this year, she predicts, on top of last year’s 143 million.

Another reason malls are being hit hard is that, despite dwindling business, landlords are raising rents, driving a lot of small stores out. Clearly, landlords subscribe to Bush’s sunny economic views. Either that or Helen Keller’s.

U.S. home foreclosure filings jumped 60 percent and bank seizures more than doubled in February as rates on adjustable mortgages rose and property owners were unable to sell or refinance amid falling prices.

More than 223,000 properties were in some stage of default, or 1 in every 557 U.S. households.

About $460 billion of adjustable-rate mortgages are scheduled to reset this year and another $420 billion will rise in 2011, according to New York-based analysts at Citigroup Inc. Homeowners faced higher payments as fourth-quarter home prices fell 8.9 percent, the biggest drop in 20 years as measured by the S&P/Case- Shiller home price index.

Foreclosure filings are likely to be “explosive” in May and June as more payments jump Rick Sharga, executive vice president of RealtyTrac, said in an interview. There may be between 750,000 and 1 million bank repossessions in 2008. Bank seizures rose 110 percent in February from a year ago, he said.

Even interest rates on 30-year fixed-rate mortgage are rising. Why? The mortgage market is short by roughly $1 trillion in capital.

Despite BushCo.’s efforts to make it nearly impossible for regular folks to declare bankruptcy, an average of 4,000 bankruptcy filings were made PER DAY in February.

Meanwhile, hidden bank fees are on the rise, with consumers paying over $36 billion in 2006, the last year on record.

Americans are getting slapped around worse than Curly of The Three Stooges. The official government response? “I’m not saying there’s a recession,” insists Edward Lazear, chairman of the White House Council of Economic Advisers. (Bush has Council of Economic Advisers??? One that even has a president??? Who knew?) Ever the realist, Lazear stated: “We have definitely downgraded our forecast for this quarter.”

That sort of thinking is akin to the National Weather Service forecasting “drizzle” before Katrina hit New Orleans.

The Ponzi Schemes run by unregulated lenders while Bush was asleep at the wheel has resulted in a housing credit mess that is almost unparalleled in American history.

For the first time since the Federal Reserve started tracking the data in 1945, the amount of debt tied up in American homes now exceeds the equity homeowners have built.

The Fed reported last week that homeowner equity actually slipped below 50 percent in the second quarter of last year, and fell to just below 48 percent in the fourth quarter.

Economy.com estimates 8.8 million homeowners, or about 10 percent of homes, will have zero or negative equity by the end of this month. Even more disturbing, about 13.8 million households will be “upside down” if prices fall 20 percent from their peak. Again, U.S. home prices plunged 8.9 percent in the final quarter of 2007, so that 20 percent figure isn’t all that far-fetched.

So far, the government has stepped in with a number of half-assed measures to contain the housing fallout. Last month, Congress passed a $168 billion economic stimulus package with provisions aimed at helping homeowners refinance into more affordable loans. The Federal Reserve has also slashed interest rates in hopes of spurring growth.

Fed Chairman Ben Bernanke suggested lenders reduce loan amounts to provide relief to beleaguered homeowners. (The lenders are sure to cave. That “pretty please with sugar on top” negotiating style has worked so well nationally during the last seven years.) Most economists believe that it’s all too little too late.

Peter Morici of the University of Maryland School of Business stated, on CNN: “This is a wholesale meltdown… Across the board the economy is shrinking. Over 600,000 Americans left the labor force. The labor department reports that unemployment is falling. That is simply because so many people have quit the labor market. They only count those that are looking for a job, not all those that are discouraged and decided to stay at home.

“We need 115,000 jobs (created a month) to break even. We lost over 100,000 jobs (in February). So, by all rights, the unemployment rate should have gone up to over 5 percent. The labor department only computes it on the basis of people that are actually participating, those that are employed and those that are looking. Those that quit looking don’t count in their mind. If we counted all the people that have quit, if we adjusted it for the labor force participation rate we had seven or eight years ago, the unemployment rate would be near 7 percent.”

As for Treasury Secretary Henry Paulson and Fed chief Ben Bernanke insisting that the sun will come out tomorrow, betcha bottom dollar that tomorrow, there’ll be sun, Morici was less than impressed.

“If you look at the (Congressional) testimony last week, Ben Bernanke’s testimony and Paulson’s speech in Chicago, according to Paulson, our manufacturing sector is just plain healthy, and there is nothing to worry about, even though it lost 50,000 jobs last month and over 3.5 million jobs during the course of the Bush administration. As for Bernanke, he keeps cutting interest rates thinking that is going to push the economy forward. But as he cuts interests rates credit card terms are becoming more difficult. Housing loans have all but dried up. The reason is that we have a wholesale breakdown in the credit markets.

“Normally, banks loan money to homeowners and they turn around and turn them into bonds and sell them to insurance companies. Because of the sub prime meltdown and all of the bad bonds they wrote, all of the bogus securities that are melting away in value, the fixed income buyers, the insurance companies, large private buyers, foreign governments and investors are no longer willing to accept paper that Citibank and the other large banks create. Bernanke has showed no recognition of this problem. He is not addressing it, instead he tells the banks to mark down the debt a bit. The credit markets are not functioning. Cutting the Fed rates will not help.”

But surely, our fearless leader has planned for such an economic emergency! Surely, he can face down a recession. Uh, not really. In fact, he doesn’t even think we’re in a recession. We’re experiencing a “slowdown.” And, once again, he’s on the case. (Uh-oh.) He’s administered, what he calls, “a booster shot.”

Bush addressed the economy in-between FISA snit-fits and anti-Cuba rants. “Losing a job is painful,” he imagined, “and I know Americans are concerned about our economy. So am I. It’s clear our economy has slowed, but the good news is, we anticipated this and took decisive action to bolster the economy, by passing a growth package that will put money into the hands of American workers and businesses.”

Unfortunately, Bush was not done in his speechifying: “I signed this growth package into law just three weeks ago, and its provisions are just starting to kick in. First, a growth package includes incentives for businesses to make investments in new equipment this year. These incentives are now in place, and they are starting to have an impact. My advisors tell me that investment in new equipment remains solid thus far in the first quarter.”

So, lets review. Businesses are going belly up. What’s the first thing on their minds? “Hey, we’re going under! Let’s expand and upgrade.” Note to whoever is advising Bush. Hide the bong when Cheney shows up.

Bush summed up his sunny views with a succinct: “So my message to the American people is this: I know this is a difficult time for our economy, but we recognized the problem early (Note: what tipped you off? The quiche lines in Kennebunkport?), and provided the economy with a booster shot. We will begin to see the impact over the coming months. And in the long run, we can have confidence that so long as we pursue pro-growth, low-tax policies that put faith in the American people, our economy will prosper.”

In other words, we’re fucked until a new president takes over.

The checks that Bush is sending out to some Americans are in the $600 to $1200 range. (“Look, ma! Now we kin buy ourselves that terlet paper we’ve been a’ hankerin’ for.”) Bush sincerely believes that these checks will perk up the economy. Why? Because, with all that dough burning a hole in their pockets, Americans will spend like drunken sailors.

Theorized Bush: “The purpose is to encourage our consumers. The purpose is to give them money — their own to begin with, by the way — but give them money to help deal with the adverse effects of the decline in housing value. Consumerism is a significant part of our GDP growth, and we want to sustain the American consumer, encourage the American consumer and, at the same time, we want to encourage investment. So we’ll see how the plan works.”

In other words: lost your home, your job, and your health insurance? Buy shit! You know like you did after 9/11! Buy lotsa shit! “When the money reaches the American people, we expect they will use it to boost consumer spending,” Bush fantasized.

Clearly Bush has his pulse on the upraised finger of the nation.

Why else would he be moved towards such profundities as: “I’m concerned about the economy because I’m concerned about working Americans, concerned about people who want to put money on the table and save for their kids’ education.”

If you’re like me, you put that money right next to the mashed potatoes on your table. Yum. Pass the unpaid mortgage, please. I’m saving bankruptcy for dessert!

One day after “The Wall Street Journal” ran the results of a survey wherein 71% of economists polled thought we were in a recession now, Bush gave a speech devoted to our current crises. “I’m coming to you as an optimistic fellow,” he golly-geed. “I’ve seen what happens when America deals with difficulty. I believe that we’re a resilient economy, and I believe that the ingenuity and resolve of the American people is what helps us deal with these issues.”

If you’re religious by nature, that nails it. All gods have officially abandoned us.

Probably the most telling reflection of America’s current Bizarro state of affairs can be found in the story headlined: “Dr. Death to run for US Congress.”

It seems that assisted-suicide advocate Jack (“Dr. Death”) Kevorkian has decided to throw his cowl into the ring and run as an independent in Oakland, California’s 9th Congressional district. Kevorkian spent more than eight years in jail for the murder of a man whose videotaped assisted suicide was aired on national television. He claims to have helped 130 folks kick the bucket.

In a sense, Bush has fashioned a political career doing what Kevorkian does but on a much larger scale. Unlike Bush, Kevorkian was always upfront with his patients as he ended their suffering.

With Bush, all you get is: don’t worry, be happy.

And don’t worry about that dirty needle.

It’s good for you.

The Hole In The Whole

March 9, 2008
1929crash.jpgWritten by Realist http://pessimistplace.blugginout.com/
Published March 07, 2008Do attempt to convince me that the economy is not now in recession. Please. I want to have something to laugh about when you brag about all those bargains you picked up on the way down. Will they be worth anything a year from now?

I’ve been through many recessions in my time, and over the years, I have discovered one sure-fire sign that the economy is in recession: employers carp about having to pay their workers more than they “deserve”. “Expensive” labor causes employers to take out their poor management on their employees’ incomes, including reducing their hours of work (if workers aren’t terminated completely) even though productivity improved. As Nigel Gault, chief U.S. economist at research firm Global Insight, insists, “As long wages stay under control, inflation is not going to be able to get out of control like it did in the 1970s”.

No matter how the captains of industry and commerce attempt to spin the facts, workers know that they are being made the fall guys. Those who have jobs are doing all that they can to keep them, and those who were thinking of changing jobs are delaying taking action. There is a significant correlation between workers’ impressions of the condition of the job market and the onset of recessions. As people lose jobs and seek work, their neighbors are approached to aid in the search for replacement income, being asked if their own employers are hiring. That condition is more likely to be seen as an accurate assessment of the state of the economy no matter what so-called experts like Ben Bernanke and Henry Paulson say. These jobless facts don’t lie.

The search for new employment isn’t being helped by the record oil prices. Local LA television news is reporting, as of this writing, gas prices as high as $3.80 a gallon, and the effects of the record wholesale oil prices aren’t going to hit the pumps for several weeks yet. Few of those interviewed by the local reporters doubt that $4 gas is on the way.

Without that job, even those with good credit aren’t going to be able to continue to pay the mortgage. Those not yet caught up in the record numbers of foreclosures are instead walking away from their homes before they are foreclosed.

Just to show that the trickle-down theory can work only if one inverts the scale — as homeowners lose their homes, the investors who originally funded the mortgages are increasingly in borrowing trouble themselves. This will only lead to more investors distancing themselves from the mortgage market, making home loans as rare as a truthful statement from the Bush administration.

Mortgage investors and homeowners in distress are being joined by local governments, who are losing funding for their bonds as the costs of borrowing to float these notes exceeds the value of the notes’ collateral. Foreign investors are now seeking more profitable opportunities until the US economy stabilizes.

It doesn’t get any better soon. The Federal Reserve’s “Beige Book” report noted that the U.S. economy nearly ground to a halt in the fourth quarter of 2007 and that all of its districts reported decelerating economic growth in early 2008 as prices increased almost everywhere in the United States.

Throwing the effort to contain inflation overboard, the Fed has now clearly shifted its meager efforts to keeping the economic furnace of the ship of state stoked. Large banks are reporting tens of billion in losses, and expect more losses to emerge soon. The Fed is easing interest rates for large bank borrowing among themselves to deal with their short-term cash flow difficulties. This move does not change conditions for anyone else.

One move that will change conditions for the rest of us is the order from on high to increase the money supply by $100 billion in March. Allegedly, this is a move that will increase employment, but I expect to hear soon that the dollar is rapidly inflating and causing exchange rate slippage. Two dollar euros, anyone?

But even with all of these openly discussed difficulties, some CEOs still think they can party like there is no tomorrow. Countrywide Financial Corp. CEO Angelo Mozilo told a U.S. House panel that credit tightening has “gone too far”, but he’s only thinking of the poor homeowner who “can’t take advantage of lower home prices”.

Male. Bovine. Excrement.

After far too long, the Congress is beginning to look into the exorbitant remuneration executives receive even though their companies have gone in the tank. Angelo Mozilo is himself just one of the persons of interest to the House Committee on Oversight and Government Reform chaired by Rep. Henry Waxman.

Things should get even more interesting now that the Bush Family’s Carlyle Group subsidiary Carlyle Capital Corp. couldn’t meet several of the margin calls placed by investors concerned with saving at least a portion of their investment from that political slush fund. This indicates a loss of investor confidence in the Bush style of business management, but is not the only clue. For example, one of the largest corporate sector beneficiaries of Bush economic policy and tax cutting is now backing Democratic presidential candidates more than they are Lame John McCain.

I’m sure that this support is intended to act as a rear-guard defense as these same companies leave the United States – and the high-wage jobs they offer American citizens – in search of more profitable venues elsewhere in the world. Care for some lead in your Lipitor? You’ll be getting it soon enough!

Having destroyed our national regulatory capability, the mad scramble is now on in the corporatist sector of our society to retain as much of the wealth they acquired, whether by fair means or foul, and move it offshore. This alone is a sign that the party is over, and the piper is coming up the walk to demand payment. Those who have the assets, such as Pfizer, will relocate out of the United States before the offal obstructs the aerodynamic obdurator. Others, like General Electric’s GE Money, already have, removing itself – and all of its top executives – to London.

That way, these companies won’t have to settle accounts for their share of the mess.

We, the People of the United States, have this penalty coming. We believed Ronald Reagan’s Morning in America lies despite much evidence to the contrary, not to mention PATCO. We accepted George HW Bush’s excuses for suppressing investigation of the economic and international treasons committed under his watch as both VP and president. We failed to recognize that Bill Clinton was selling us out with NAFTA and GATT, and we didn’t life a finger to limit the predations allowed under George W. Bush. We aren’t going to escape the consequences of our 30-year inaction, for the sheriff is coming to reclaim the homestead we can no longer afford.

He has no choice — he doesn’t want to lose his.

They knew, but did nothing

March 8, 2008
bushcheneybevisbutthead1.jpg

In this exclusive extract from his new book, Philip Shenon uncovers how the White House tried to hide the truth of its ineptitude leading up to the September 11 terrorist attacks. .

In the American summer of 2001, the nation’s news organisations, especially the television networks, were riveted by the story of one man. It wasn’t George Bush. And it certainly wasn’t Osama bin Laden.

It was the sordid tale of an otherwise obscure Democratic congressman from California, Gary Condit, who was implicated – falsely, it later appeared – in the disappearance of a 24-year-old government intern later found murdered. That summer, the names of the blow-dried congressman and the doe-eyed intern, Chandra Levy, were much better known to the American public than bin Laden’s.

Even reporters in Washington who covered intelligence issues acknowledged they were largely ignorant that summer that the CIA and other parts of the Government were warning of an almost certain terrorist attack. Probably, but not necessarily, overseas.

The warnings were going straight to President Bush each morning in his briefings by the CIA director, George Tenet, and in the presidential daily briefings. It would later be revealed by the 9/11 commission into the September 11 attacks that more than 40 presidential briefings presented to Bush from January 2001 through to September 10, 2001, included references to bin Laden.

And nearly identical intelligence landed each morning on the desks of about 300 other senior national security officials and members of Congress in the form of the senior executive intelligence brief, a newsletter on intelligence issues also prepared by the CIA.

The senior executive briefings contained much of the same information that was in the presidential briefings but were edited to remove material considered too sensitive for all but the President and his top aides to see. Often the differences between the two documents were minor, with only a sentence or two changed between them. Apart from the commission’s chief director, Philip Zelikow, the commission’s staff was never granted access to Bush’s briefings, except for the notorious August 2001 briefing that warned of the possibility of domestic al-Qaeda strikes involving hijackings. But they could read through the next best thing: the senior executive briefings.

During his 2003 investigations it was startling to Mike Hurley, the commission member in charge of investigating intelligence, and the other investigators on his team, just what had gone on in the spring and summer of 2001 – just how often and how aggressively the White House had been warned that something terrible was about to happen. Since nobody outside the Oval Office could know exactly what Tenet had told Bush during his morning intelligence briefings, the presidential and senior briefings were Tenet’s best defence to any claim that the CIA had not kept Bush and the rest of the Government well-informed about the threats. They offered a strong defence.

The team’s investigators began to match up the information in the senior briefings and they pulled together a timeline of the headlines just from the senior briefings in the northern spring and summer:

“Bin Ladin Planning Multiple Operations” (April 20)and “Bin Ladin Threats Are Real” (June 30)It was especially troubling for Hurley’s team to realise how many of the warnings were directed to the desk of one person: Condoleezza Rice, the National Security Adviser. Emails from the National Security Council’s counter-terrorism director, Richard Clarke, showed that he had bombarded Rice with messages about terrorist threats. He was trying to get her to focus on the intelligence she should have been reading each morning in the presidential and senior briefings

“Bin Ladin Public Profile May Presage Attack” (May 3)

“Terrorist Groups Said Co-operating on US Hostage Plot” (May 23)

“Bin Ladin’s Networks’ Plans Advancing” (May 26)

“Bin Ladin Attacks May Be Imminent”

(June 23)

“Bin Ladin and Associates Making Near-Term Threats” (June 25)

“Bin Ladin Planning High-Profile

Attacks” (June 30),

“Planning for Bin Ladin Attacks Continues, Despite Delays” (July 2)

Other parts of the Government did respond aggressively and appropriately to the threats, including the Pentagon and the State Department. On June 21, the US Central Command, which controls American military forces in the Persian Gulf, went to “delta” alert – its highest level – for American troops in six countries in the region. The American embassy in Yemen was closed for part of the summer; other embassies in the Middle East closed for shorter periods.

But what had Rice done at the NSC? If the NSC files were complete, the commission’s historian Warren Bass and the others could see, she had asked Clarke to conduct inter- agency meetings at the White House with domestic agencies, including the Federal Aviation Administration and the FBI, to keep them alert to the possibility of a domestic terrorist strike.

She had not attended the meetings herself. She had asked that the then attorney-general, John Ashcroft, receive a special briefing at the Justice Department about al-Qaeda threats. But she did not talk with Ashcroft herself in any sort of detail about the intelligence. Nor did she have any conversations of significance on the issue with the FBI director, Louis Freeh, nor with his temporary successor that summer, the acting director Tom Pickard.

There is no record to show that Rice made any special effort to discuss terrorist threats with Bush. The record suggested, instead, that it was not a matter of special interest to either of them that summer.

Bush seemed to acknowledge as much in an interview with Bob Woodward of The Washington Post that Bush almost certainly regretted later. In the interview in December 2001, only three months after the attacks, Bush said that “there was a significant difference in my attitude after September 11” about al-Qaeda and the threat it posed to the United States.

Before the attacks, he said: “I was not on point, but I knew he was a menace, and I knew he was a problem. I knew he was responsible, or we felt he was responsible, for the previous bombings that killed Americans. I was prepared to look at a plan that would be a thoughtful plan that would bring him to justice, and would have given the order to do that. I have no hesitancy about going after him. But I didn’t feel that sense of urgency, and my blood was not nearly as boiling.”

If anyone on the White House staff had responsibility for making Bush’s blood “boil” that summer about Osama bin Laden, it was Rice.

The members of Mike Hurley’s team were also alarmed by the revelations, week by week, month by month, of how close the commission’s chief director, Philip Zelikow, was to Rice and others at the White House. They learned early on about Zelikow’s work on the Bush transition team in 2000 and early 2001 and about how much antipathy there was between him and Richard Clarke. They They heard the stories about Zelikow’s role in developing the “pre-emptive war” strategy at the White House in 2002.

Zelikow’s friendships with Rice and others were a particular problem for Warren Bass, since Rice and Clarke were at the heart of his part of the investigation. It was clear to some members of team that they could not have an open discussion in front of Zelikow about Rice and her performance as National Security Adviser. They could not say openly, certainly not to Zelikow’s face, what many on the staff came to believe: that Rice’s performance in the spring and summer of 2001 amounted to incompetence, or something not far from it.

David Kay, the veteran American weapons inspector sent to Iraq by the Bush Administration in 2003 to search for weapons of mass destruction, passed word to the commission that he believed Rice was the “worst national security adviser” in the history of the job.

For Hurley’s team, there was a reverse problem with Clarke. It was easy to talk about Clarke in Zelikow’s presence, as long as the conversation centred on Clarke’s failings at the NSC and his purported dishonesty.

Long before Bass had seen Clarke’s files, Zelikow made it clear to the team’s investigators that Clarke should not be believed, that his testimony would be suspect.

He argued that Clarke was a braggart who would try to rewrite history to justify his errors and slander his enemies, Rice in particular. The commission had decided that in its private interviews with current and former government officials, witnesses would be placed under oath when there was a substantial reason to doubt their truthfulness. Zelikow argued that Clarke easily fell into that category; Clarke, he decreed, would need to be sworn in.

When he finally got his security clearance and was allowed into the reading room, Bass discovered he could make quick work of Rice’s emails and internal memos on the al-Qaeda threat in the spring and summer of 2001. That was because there was almost nothing to read, at least nothing that Rice had written herself.

Either she committed nothing to paper or email on the subject, which was possible since so much of her work was conducted face-to-face with Bush, or terrorist threats were simply not an issue that had interested her before September 11. Her speeches and public appearances in the months before the attacks suggested the latter.

Tipped off by an article in The Washington Post, the commission discovered the text of a speech that she had been scheduled to make on September 11, 2001 – the speech was canceled in the chaos following the attacks – in which Rice planned to address “the threats of today and the day after, not the world of yesterday”. The speech, which was intended to outline her broad vision on national security and to promote the Bush Administration’s plans for a missile defence system, included only a passing reference to terrorism and the threat of radical Islam. On the day that Osama bin Laden launched the most devastating attack on the United States since Pearl Harbour, bin Laden’s terrorist network was seen by Rice as only a secondary threat, barely worth mentioning.

But if Rice had left almost no paper trail on terrorism in 2001, Clarke’s files were everything that Bass could have hoped for. Clarke wrote down much of what he saw and heard at the White House, almost to the point of obsession when it came to al-Qaeda. Bass and his colleagues could see that Clarke had left a rich narrative of what had gone so wrong at the NSC in the months before September 11, albeit filtered through the writings of the very opinionated Clarke.

Repeatedly in 2001, Clarke had gone to Rice and others in the White House and pressed them to move, urgently, to respond to a flood of warnings about an upcoming and catastrophic terrorist attack by Osama bin Laden. The threat, Clarke was arguing, was as dire as anything that he or the CIA had ever seen.

He pushed for an early meeting in 2001 with Bush to brief him about bin Laden’s network and the “nearly existential” threat it represented to the United States. But Rice rebuffed Clarke. She allowed him to give a briefing to Bush on the issue of cyber terrorism, but not on bin Laden; she told Clarke the al-Qaeda briefing could wait until after the White House had put the finishing touches that summer on a broader campaign against bin Laden. She moved Clarke and his issues off centre stage – in part at the urging of Zelikow and the transition team.

Bass told colleagues that he gasped when he found a memo written by Clarke to Rice on September 4, 2001, exactly a week before the attacks, in which Clarke seemed to predict what was just about to happen. It was a memo that seemed to spill out all of Clarke’s frustration about how slowly the Bush White House had responded to the cascade of terrorist threats that summer. The note was terrifying in its prescience.

“Are we serious about dealing with the al-Qaeda threat?” he asked Rice. “Decision makers should imagine themselves on a future day when the CSG [Counterterrorism Security Group] has not succeeded in stopping al-Qaeda attacks and hundreds of Americans lay dead in several countries, including the US.

Bass’s colleagues said he knew instantly that the September 4 email was so sensitive – and potentially damaging, especially to Rice – that the White House would never voluntarily release a copy to the commission or allow him to take notes from the room if they came close to reproducing its language. Under a written agreement between the commission and the White House, notes could not “significantly reproduce” the wording of a classified document.

Bass decided he would have to try to memorise it in pieces, several sentences at a time, and then rush back to the commission to bat them out on a computer keyboard.

The day he discovered the document, Bass all but burst into the commission’s offices and rushed over to Hurley.

“Holy shit, chief,” Bass said excitedly. “You won’t believe what I found.”

He told Hurley that Clarke’s September 4 memo was a “document that grabs you by the throat, a document that you write when you’re at the end of your tether – or well past it”, as Clarke clearly was in the weeks before September 11. Hurley instantly understood the significance of what he was being told by Bass. The question for both men was whether Zelikow would allow them to share any of it with the public.

Months later, Bass could not take it any longer. He was going to quit, or least threaten to quit, and he was going to make it clear that Zelikow’s attempts at interference – his efforts to defend Rice and demean Clarke – were part of the reason why. He marched into the office of Dan Marcus, the general counsel, to announce his threat to leave the investigation.

“I cannot do this,” he declared to Marcus, who was already well aware of Bass’s unhappiness. “Zelikow is making me crazy.”

He was outraged by Zelikow and the White House; Bass felt the White House was trying to sabotage his work by its efforts to limit his ability to see certain documents from the NSC files and take useful notes from them. Marcus urged him to calm down: “Let’s talk this through.” But Bass made it clear to colleagues that he believed Zelikow was interfering in his work for reasons that were overtly political – intended to shield the White House, and Rice in particular, from the commission’s criticism. For every bit of evidence gathered by Bass and Hurley’s team to bolster Clarke’s allegation that the White House had ignored terrorist threats in 2001, Zelikow would find some reason to disparage it.

Marcus and Hurley managed to talk Bass out of resigning, although the threat lingered until the final weeks of the investigation.

On May 15, 2002, CBS network reported that a daily briefing presented to Bush a few weeks before the September 11 attacks warned him specifically about the threats of a domestic hijacking by al-Qaeda.

Instead of releasing the briefing or at least offering a detailed explanation of what was in the document, the White House chose to have Rice hold a news conference at the White House in which she raised as many questions about the briefing as she answered.

It would later become clear to many of the commission’s members and its staff that she had tried to mislead the White House press corps about the contents of the briefing.

She acknowledged that Bush had received a briefing about possible al-Qaeda hijackings, but she claimed that the brief offered “historical information” and “was not a warning – there was no specific time, place, or method”.

She failed to mention, as would later be clear, that the briefing focused entirely on the possibility that al-Qaeda intended to strike within the United States; it cited relatively recent FBI reports of possible terrorist surveillance of government buildings in New York.

Tom Kean, the commission’s chairman, could not deny the thrill of this. A former governor of New Jersey who had left politics to become president of Drew University in his home state, Kean took a seat in the reading room in the New Executive Office building where the commission was reviewing the White House’s most secret files.

Kean was handed a sheaf of presidential briefings from the Clinton and Bush administrations. Here in his hands were the documents that the White House had been so determined for so long to keep from him. Lee Hamilton liked to refer to the briefings as the “holy of holies” – the ultimate secret documents in the government – and Kean assumed that must be the case.

“I thought this would be the definitive secrets about al-Qaeda, about terrorist networks and all the other things that the President should act on,” he said. “I was going to find out the most important things that a president had learned.” He assumed they would contain “incredibly secretive, precise, and accurate information about anything under the sun.”

Each brief was only several pages long, so Kean could read through months of them in a stretch of a few hours.

And he found himself terrified by what he was reading, really terrified. Here were the digests of the most important secrets that were gathered by the CIA and the nation’s other spy agencies at a cost of tens of billions of dollars a year.

And there was almost nothing in them.

“They were garbage,” Kean said. “There really was nothing there – nothing, nothing.”

If students back at Drew turned in term papers this badly researched, “I would have given them an F,” he said.

Kean pointed that out to one of his White House minders who accompanied him to the reading room. “I’ve read all this,” he told the minder in astonishment. A lot of the information in the briefings and other supposedly top secret intelligence reports had already been revealed by the nation’s big news organisations. “I already knew this.”

“Oh, but you’re missing the point,” the minder replied. “Now you know it’s true.” It occurred to Kean that this might be the commission’s most frightening discovery of all: The emperors of espionage had no clothes. Perhaps the reason the White House had fought so hard to block the commission’s access to the briefings was that they revealed how ignorant the Government was of the threats it faced before September 11. Kean could understand their fear. Imagine the consequences if al-Qaeda and its terrorist allies knew how little the US really knew about them.

Commission member Jamie Gorelick, who, along with Zelikow, was given access to the larger universe of briefings, was more impressed by the documents than Kean had been. Or at least she was less unimpressed. She knew the Bush Administration was right to complain that much of the intelligence in the briefs in the months before September 11 was maddeningly non-specific about a possible date or place of an attack. Some of the intelligence in the briefs was “paltry”; sometimes the information contradicted itself from one day to the next, Gorelick said.

But she was astonished by the sheer volume of the warnings. Flood, cascade, tsunami, take your pick of metaphors. She could see that in the spring and summer of 2001, there was a consistent drum beat of warnings, day after day, that al-Qaeda was about to attack the United States or its allies. It was clear to Gorelick that the CIA had gone to Bush virtually every morning for months in 2001 to give him the message that the United States needed to be ready for a catastrophic terrorist strike, and from what she was reading, no one ruled out the possibility of a domestic attack.

“Something is being planned, something spectacular,” she said, summarising what the President had been told by George Tenet and what Bush should have read in the briefings. “We don’t know what it is, we don’t know where it is, but something is happening.”

She said CIA analysts were trying to tell Bush, as bluntly as they could, that the threat in those months was “the worst thing they’ve ever seen – an unprecedented threat,” worse than the threats before the millennium.

It seemed to Gorelick that Rice had “assumed away the hardest part of her job” as national security adviser – gathering the best intelligence available to the White House and helping the President decide how to respond to it. Whatever her job title, Rice seemed uninterested in actually advising him. Instead, she wanted to be his closest confidant – specifically on foreign policy – and to simply translate his words into action. Rice had wanted to be “the consigliere to the President”, Gorelick thought.

Domestic issues seemed to bore her. Her deputy, Stephen Hadley, had told the commission something remarkable in his private interview the month before: He and Rice had not seen themselves as responsible for co-ordinating the FBI and other domestic agencies about terrorism. But if they weren’t responsible, who was? There was no separate domestic security adviser in the White House. They had just demoted Clarke.

At the time of her May 2002 news conference, no reporter had a copy of the presidential briefing. CBS had broken the story of its existence but had few details of what was actually in the document. So the White House press corps would have to trust Rice’s description of what was in it.

She described it as a “warning briefing but an analytic report” about al-Qaeda threats and said that it contained “the most generalised kind of information – there was no time, there was no place, there was no method of attack” mentioned apart from a “very vague” concern about hijacking. “I want to reiterate,” she said. “It was not a warning.”

Asked if September 11 didn’t represent an intelligence failure by the Administration, she replied almost testily: “I don’t think anybody could have predicted that these people would take an airplane and slam it into the World Trade Centre, take another one and slam it into the Pentagon – that they would try to use an airplane as a missile.”

Rice’s news conference came eight months after the attacks. Yet she was suggesting that in all that time, no one had bothered to tell her that there were indeed several reports prepared within the CIA, the aviation administration, and elsewhere in the Government about the threat of planes as missiles.

Had no one told her in all those months that the Department of Defence had conducted drills for the possibility of a plane-as-missile attack on the Pentagon? Had she forgotten that when she and Bush attended the G8 summit in Italy in July 2001, the airspace was closed because of the threat of an aerial suicide attack by al-Qaeda?

Commission member Tim Roemer made it his goal to get the August 6 briefing made public and to prove once and for all that Rice and her White House colleagues had a concept of the truth about September 11 that was, at best, “flexible”. To Roemer, Rice had long ago passed the “threshold” between spin and dishonesty.

“She’d lost credibility with me,” he said. The question among the Democratic commissioners was whether anybody would be brave enough to go public to question Rice’s competence and her honesty.

Much as the staff felt beaten down by Zelikow, so did the other Democratic commissioners. By the end, they had given up the fight to document the more serious failures of Bush, Rice, and others in the Administration in the months before September. Zelikow would never have permitted it. Nor, they realised, would Kean and Hamilton. The Democrats hoped the public would read through the report and understand that September 11 did not have to happen – that if the Bush Administration had been more aggressive in dealing with the threats flooding into the White House from January 2001 through to September 10, 2001, the plot could have been foiled. The Clinton administration could not duck blame for having failed to stop bin Laden before 2001.

But what had happened in the White House in the first eight months of George Bush’s presidency had all but guaranteed that 19 young Arab men with little more than pocket knives, a few cans of mace, and a misunderstanding of the tenets of Islam could bring the US to its knees.

The Commission – The Uncensored History Of The 9/11 Investigation by Philip Shenon (Little, Brown, $35) is published on Monday.