Archive for the ‘deep politics’ Category

Capitalist Fools

December 25, 2008

titanic0
http://www.vanityfair.com/magazine/2009/01/stiglitz200901?printable=true&currentPage=all
by Joseph E. Stiglitz

Behind the debate over remaking U.S. financial policy will be a debate over who’s to blame. It’s crucial to get the history right, writes a Nobel-laureate economist, identifying five key mistakes—under Reagan, Clinton, and Bush II—and one national delusion.
by Joseph E. Stiglitz January 2009

Treasury Secretary Henry Paulson and former Federal Reserve Board chairman Alan Greenspan bookend two decades of economic missteps. Photo illustration by Darrow.

There will come a moment when the most urgent threats posed by the credit crisis have eased and the larger task before us will be to chart a direction for the economic steps ahead. This will be a dangerous moment. Behind the debates over future policy is a debate over history—a debate over the causes of our current situation. The battle for the past will determine the battle for the present. So it’s crucial to get the history straight.

What were the critical decisions that led to the crisis? Mistakes were made at every fork in the road—we had what engineers call a “system failure,” when not a single decision but a cascade of decisions produce a tragic result. Let’s look at five key moments.
No. 1: Firing the Chairman

In 1987 the Reagan administration decided to remove Paul Volcker as chairman of the Federal Reserve Board and appoint Alan Greenspan in his place. Volcker had done what central bankers are supposed to do. On his watch, inflation had been brought down from more than 11 percent to under 4 percent. In the world of central banking, that should have earned him a grade of A+++ and assured his re-appointment. But Volcker also understood that financial markets need to be regulated. Reagan wanted someone who did not believe any such thing, and he found him in a devotee of the objectivist philosopher and free-market zealot Ayn Rand.

Greenspan played a double role. The Fed controls the money spigot, and in the early years of this decade, he turned it on full force. But the Fed is also a regulator. If you appoint an anti-regulator as your enforcer, you know what kind of enforcement you’ll get. A flood of liquidity combined with the failed levees of regulation proved disastrous.

How did we land in a recession? Visit our archive, “Charting the Road to Ruin.” Illustration by Edward Sorel.

Greenspan presided over not one but two financial bubbles. After the high-tech bubble popped, in 2000–2001, he helped inflate the housing bubble. The first responsibility of a central bank should be to maintain the stability of the financial system. If banks lend on the basis of artificially high asset prices, the result can be a meltdown—as we are seeing now, and as Greenspan should have known. He had many of the tools he needed to cope with the situation. To deal with the high-tech bubble, he could have increased margin requirements (the amount of cash people need to put down to buy stock). To deflate the housing bubble, he could have curbed predatory lending to low-income households and prohibited other insidious practices (the no-documentation—or “liar”—loans, the interest-only loans, and so on). This would have gone a long way toward protecting us. If he didn’t have the tools, he could have gone to Congress and asked for them.

Of course, the current problems with our financial system are not solely the result of bad lending. The banks have made mega-bets with one another through complicated instruments such as derivatives, credit-default swaps, and so forth. With these, one party pays another if certain events happen—for instance, if Bear Stearns goes bankrupt, or if the dollar soars. These instruments were originally created to help manage risk—but they can also be used to gamble. Thus, if you felt confident that the dollar was going to fall, you could make a big bet accordingly, and if the dollar indeed fell, your profits would soar. The problem is that, with this complicated intertwining of bets of great magnitude, no one could be sure of the financial position of anyone else—or even of one’s own position. Not surprisingly, the credit markets froze.

Here too Greenspan played a role. When I was chairman of the Council of Economic Advisers, during the Clinton administration, I served on a committee of all the major federal financial regulators, a group that included Greenspan and Treasury Secretary Robert Rubin. Even then, it was clear that derivatives posed a danger. We didn’t put it as memorably as Warren Buffett—who saw derivatives as “financial weapons of mass destruction”—but we took his point. And yet, for all the risk, the deregulators in charge of the financial system—at the Fed, at the Securities and Exchange Commission, and elsewhere—decided to do nothing, worried that any action might interfere with “innovation” in the financial system. But innovation, like “change,” has no inherent value. It can be bad (the “liar” loans are a good example) as well as good.
No. 2: Tearing Down the Walls

The deregulation philosophy would pay unwelcome dividends for years to come. In November 1999, Congress repealed the Glass-Steagall Act—the culmination of a $300 million lobbying effort by the banking and financial-services industries, and spearheaded in Congress by Senator Phil Gramm. Glass-Steagall had long separated commercial banks (which lend money) and investment banks (which organize the sale of bonds and equities); it had been enacted in the aftermath of the Great Depression and was meant to curb the excesses of that era, including grave conflicts of interest. For instance, without separation, if a company whose shares had been issued by an investment bank, with its strong endorsement, got into trouble, wouldn’t its commercial arm, if it had one, feel pressure to lend it money, perhaps unwisely? An ensuing spiral of bad judgment is not hard to foresee. I had opposed repeal of Glass-Steagall. The proponents said, in effect, Trust us: we will create Chinese walls to make sure that the problems of the past do not recur. As an economist, I certainly possessed a healthy degree of trust, trust in the power of economic incentives to bend human behavior toward self-interest—toward short-term self-interest, at any rate, rather than Tocqueville’s “self interest rightly understood.”

The most important consequence of the repeal of Glass-Steagall was indirect—it lay in the way repeal changed an entire culture. Commercial banks are not supposed to be high-risk ventures; they are supposed to manage other people’s money very conservatively. It is with this understanding that the government agrees to pick up the tab should they fail. Investment banks, on the other hand, have traditionally managed rich people’s money—people who can take bigger risks in order to get bigger returns. When repeal of Glass-Steagall brought investment and commercial banks together, the investment-bank culture came out on top. There was a demand for the kind of high returns that could be obtained only through high leverage and big risktaking.

There were other important steps down the deregulatory path. One was the decision in April 2004 by the Securities and Exchange Commission, at a meeting attended by virtually no one and largely overlooked at the time, to allow big investment banks to increase their debt-to-capital ratio (from 12:1 to 30:1, or higher) so that they could buy more mortgage-backed securities, inflating the housing bubble in the process. In agreeing to this measure, the S.E.C. argued for the virtues of self-regulation: the peculiar notion that banks can effectively police themselves. Self-regulation is preposterous, as even Alan Greenspan now concedes, and as a practical matter it can’t, in any case, identify systemic risks—the kinds of risks that arise when, for instance, the models used by each of the banks to manage their portfolios tell all the banks to sell some security all at once.

As we stripped back the old regulations, we did nothing to address the new challenges posed by 21st-century markets. The most important challenge was that posed by derivatives. In 1998 the head of the Commodity Futures Trading Commission, Brooksley Born, had called for such regulation—a concern that took on urgency after the Fed, in that same year, engineered the bailout of Long-Term Capital Management, a hedge fund whose trillion-dollar-plus failure threatened global financial markets. But Secretary of the Treasury Robert Rubin, his deputy, Larry Summers, and Greenspan were adamant—and successful—in their opposition. Nothing was done.
No. 3: Applying the Leeches

Then along came the Bush tax cuts, enacted first on June 7, 2001, with a follow-on installment two years later. The president and his advisers seemed to believe that tax cuts, especially for upper-income Americans and corporations, were a cure-all for any economic disease—the modern-day equivalent of leeches. The tax cuts played a pivotal role in shaping the background conditions of the current crisis. Because they did very little to stimulate the economy, real stimulation was left to the Fed, which took up the task with unprecedented low-interest rates and liquidity. The war in Iraq made matters worse, because it led to soaring oil prices. With America so dependent on oil imports, we had to spend several hundred billion more to purchase oil—money that otherwise would have been spent on American goods. Normally this would have led to an economic slowdown, as it had in the 1970s. But the Fed met the challenge in the most myopic way imaginable. The flood of liquidity made money readily available in mortgage markets, even to those who would normally not be able to borrow. And, yes, this succeeded in forestalling an economic downturn; America’s household saving rate plummeted to zero. But it should have been clear that we were living on borrowed money and borrowed time.

The cut in the tax rate on capital gains contributed to the crisis in another way. It was a decision that turned on values: those who speculated (read: gambled) and won were taxed more lightly than wage earners who simply worked hard. But more than that, the decision encouraged leveraging, because interest was tax-deductible. If, for instance, you borrowed a million to buy a home or took a $100,000 home-equity loan to buy stock, the interest would be fully deductible every year. Any capital gains you made were taxed lightly—and at some possibly remote day in the future. The Bush administration was providing an open invitation to excessive borrowing and lending—not that American consumers needed any more encouragement.
No. 4: Faking the Numbers

Meanwhile, on July 30, 2002, in the wake of a series of major scandals—notably the collapse of WorldCom and Enron—Congress passed the Sarbanes-Oxley Act. The scandals had involved every major American accounting firm, most of our banks, and some of our premier companies, and made it clear that we had serious problems with our accounting system. Accounting is a sleep-inducing topic for most people, but if you can’t have faith in a company’s numbers, then you can’t have faith in anything about a company at all. Unfortunately, in the negotiations over what became Sarbanes-Oxley a decision was made not to deal with what many, including the respected former head of the S.E.C. Arthur Levitt, believed to be a fundamental underlying problem: stock options. Stock options have been defended as providing healthy incentives toward good management, but in fact they are “incentive pay” in name only. If a company does well, the C.E.O. gets great rewards in the form of stock options; if a company does poorly, the compensation is almost as substantial but is bestowed in other ways. This is bad enough. But a collateral problem with stock options is that they provide incentives for bad accounting: top management has every incentive to provide distorted information in order to pump up share prices.

The incentive structure of the rating agencies also proved perverse. Agencies such as Moody’s and Standard & Poor’s are paid by the very people they are supposed to grade. As a result, they’ve had every reason to give companies high ratings, in a financial version of what college professors know as grade inflation. The rating agencies, like the investment banks that were paying them, believed in financial alchemy—that F-rated toxic mortgages could be converted into products that were safe enough to be held by commercial banks and pension funds. We had seen this same failure of the rating agencies during the East Asia crisis of the 1990s: high ratings facilitated a rush of money into the region, and then a sudden reversal in the ratings brought devastation. But the financial overseers paid no attention.
No. 5: Letting It Bleed

The final turning point came with the passage of a bailout package on October 3, 2008—that is, with the administration’s response to the crisis itself. We will be feeling the consequences for years to come. Both the administration and the Fed had long been driven by wishful thinking, hoping that the bad news was just a blip, and that a return to growth was just around the corner. As America’s banks faced collapse, the administration veered from one course of action to another. Some institutions (Bear Stearns, A.I.G., Fannie Mae, Freddie Mac) were bailed out. Lehman Brothers was not. Some shareholders got something back. Others did not.

The original proposal by Treasury Secretary Henry Paulson, a three-page document that would have provided $700 billion for the secretary to spend at his sole discretion, without oversight or judicial review, was an act of extraordinary arrogance. He sold the program as necessary to restore confidence. But it didn’t address the underlying reasons for the loss of confidence. The banks had made too many bad loans. There were big holes in their balance sheets. No one knew what was truth and what was fiction. The bailout package was like a massive transfusion to a patient suffering from internal bleeding—and nothing was being done about the source of the problem, namely all those foreclosures. Valuable time was wasted as Paulson pushed his own plan, “cash for trash,” buying up the bad assets and putting the risk onto American taxpayers. When he finally abandoned it, providing banks with money they needed, he did it in a way that not only cheated America’s taxpayers but failed to ensure that the banks would use the money to re-start lending. He even allowed the banks to pour out money to their shareholders as taxpayers were pouring money into the banks.

The other problem not addressed involved the looming weaknesses in the economy. The economy had been sustained by excessive borrowing. That game was up. As consumption contracted, exports kept the economy going, but with the dollar strengthening and Europe and the rest of the world declining, it was hard to see how that could continue. Meanwhile, states faced massive drop-offs in revenues—they would have to cut back on expenditures. Without quick action by government, the economy faced a downturn. And even if banks had lent wisely—which they hadn’t—the downturn was sure to mean an increase in bad debts, further weakening the struggling financial sector.

The administration talked about confidence building, but what it delivered was actually a confidence trick. If the administration had really wanted to restore confidence in the financial system, it would have begun by addressing the underlying problems—the flawed incentive structures and the inadequate regulatory system.

Was there any single decision which, had it been reversed, would have changed the course of history? Every decision—including decisions not to do something, as many of our bad economic decisions have been—is a consequence of prior decisions, an interlinked web stretching from the distant past into the future. You’ll hear some on the right point to certain actions by the government itself—such as the Community Reinvestment Act, which requires banks to make mortgage money available in low-income neighborhoods. (Defaults on C.R.A. lending were actually much lower than on other lending.) There has been much finger-pointing at Fannie Mae and Freddie Mac, the two huge mortgage lenders, which were originally government-owned. But in fact they came late to the subprime game, and their problem was similar to that of the private sector: their C.E.O.’s had the same perverse incentive to indulge in gambling.

The truth is most of the individual mistakes boil down to just one: a belief that markets are self-adjusting and that the role of government should be minimal. Looking back at that belief during hearings this fall on Capitol Hill, Alan Greenspan said out loud, “I have found a flaw.” Congressman Henry Waxman pushed him, responding, “In other words, you found that your view of the world, your ideology, was not right; it was not working.” “Absolutely, precisely,” Greenspan said. The embrace by America—and much of the rest of the world—of this flawed economic philosophy made it inevitable that we would eventually arrive at the place we are today.

Joseph E. Stiglitz, a Nobel Prize–winning economist, is a professor at Columbia University.

Michael Parenti — Functions of Fascism (Real History)

December 2, 2008




Michael Parenti, Ph.D. in political science from Yale University
has taught at several universities, colleges, and other institutions.
He is the author of twenty books and many more articles.
His works have been translated into at least seventeen languages.

thanks for hanging in there for the last 8 years

November 8, 2008

stevens

Bush v Gore (2000) Dissenting Opinion On Stolen Election

“Time will one day heal the wound to that confidence that will be inflicted by today’s decision. One thing, however, is certain. Although we may never know with complete certainty the identity of the winner of this year’s Presidential election, the identity of the loser is perfectly clear. It is the Nation’s confidence in the judge as an impartial guardian of the rule of law.”

What happens to the Republican Party after the election?

November 2, 2008

What happens to the Republican Party after the election?

A vital opposition party being essential in a two-party system, the fate of the Republican Party will deserve almost as much attention as the activities of the newly dominant Democratic Party.

  1. Collapse of the Republican Party
  2. Defectors from the Party
  3. Door #1:  Purge the Party’s membership, keeping only the faithful
  4. Door #2:  reflection and rebuilding
  5. A historical note on the two Party system

1.  Collapse of the Republican Party

After a quarter-century in power, to varying degrees, the Republican Party not only faces defeat but disintegration, political and intellectual.  The Administrations of the two Bushes have ripped the Party from its modern foundation forged by Barry Goldwater and William Buckley in the 1960’s.  A massive tax increase and the Americans with Disabilities Act of 1990 under Bush Sr., the latter of the largest expansions of Federal power for decades — until Bush Jr.  Bush Jr’s contempt for civil liberties (other than gun control), massive spending and deficits (a Republican tradition since Reagan), massive expansion of government power, pro-open borders, and enthusiasm for foreign wars. 

McCain’s erratic political history — spun as being a “maverick” — gave few signs of change to this mess, other than his steadfast enthusiasm for foreign wars.

As a result the party has almost no doctrinal coherence — what does it stand for?  The only strong, consistent policy is opposition to abortion — a long-term aspect of its platform that has over decades has had little impact on public policy.  Probably because of the strong public consensus for a position between the extreme views held by the two major parties.

Politically the party has alienated many of its core constituencies.  McCain’s long-held contempt for the “religious right”.  Bush Jr’s and McCain’s strong support for open borders –opposing one of the most strongly held beliefs of the party core.  Most of all, Bush Jr’s disastrous management of the domestic economy and our foreign wars.

 

Note:  before commenting that we have won in Iraq, please explain what we have “won” — in terms of American national objectives.

2.  Defectors from the Party

A tangible indication of the Party’s internal weakness is the defection of so many conservatives from McCain-Palin ticket.  This has few parallels in American history.  Here is a partial list of well-known conseratives or Republicans (distinct but overlapping categories) who have expressed serious concerns about Gov Palin’s fitness as a potential President — some to the point of outright support for Obama.

  1. Christopher Buckley (source)
  2. David Frum and Kathleen Parkerat National Review Online.
  3. Peggy Noonan (President Reagan’s speechwriter) at the Wall Street Journal.
  4. Colin Powell.
  5. Kenneth Adelman, long-time diplomat under several Republican administrations (source; bio).
  6. Former Treasury Secretary Paul O’Neill and former Securities and Exchange Commissioner William Donaldson (source).
  7. Douglas Kmiec, diplomat, long-time conservative (source; bio).
  8. Lawrence Eagleburger, Sec of State under Bush Sr. and whose endorsement is often cited by McCain, speaking on NPR (AP story, recording) (bio).  Later, his walkback (quote here; video here).
  9. Ken Duberstein, President Reagan’s Chief of Staff, on CNN (bio).

How will the Republican Party’s core react?

3.  Door #1:  Purge the Party’s membership, keeping only the faithful

Door #1 is to purge all but the faithful remnant.  Key Republicans are already digging holes for the stakes and gathering firewood.  Two examples follow.

Sarah Palin’s Future“, Fred Barnes (Executive Editor), Weekly Standard, 27 October 2008 — “Alaska’s most valuable resource.”  Excerpt:

Palin, by the way, is unsure about her ultimate role in national politics even if McCain wins, but it’s bound to be more complicated if he loses.

“I don’t know what kind of role the Republican party would want me to play,” she told me. “In the past, I have not been one to be considered for anything by the hierarchy of the party. Certainly not in my state. In some sense, I ran against my party.”

Palin remains skeptical of Republicans. “I would love to promote the party ideals if we’re going to live out the ideals and maybe allow other American voters to understand what the principles of the party are,” she says. “We’ve got to be assured we have enough people in the party who will live out those ideals and it’s not just rhetoric. Otherwise, I’d be wasting my time. There are a lot of things I would and should be doing.”

Rush Limbaugh spoke more explicitly during his 24 October show: ”Good Riddance, GOP Moderates.”  Excerpt:

This is Sarah Palin to Fred Barnes; and that, ladies and gentlemen, is why the rebuilding of the conservative movement — even if there is no direct leader in charge of making it happen, it will happen by default because it’s going to have to. Even if McCain wins, Colin Powell going to come running back? Is Bill Weld going to come running back? Hell, yes, they will! Hell, yes, they’ll come running back. They’ll do everything they can to stay in the circle of power. Of course they’ll come running back. All these people are out for self-interest. That’s what Sarah Palin is saying. She’s not in it for self-interest. The party had better be what the party is or I don’t have any future in it.

We’re going to rebuild it even if McCain wins. We’re going to have to. These people, these moderates who wanted the big tent, they have taken the party exactly where they said they wanted it to be — and when it got there, these little cowards jumped the ship! I have lost all respect for these people.

And, folks, when I said at the beginning of this that I wanted to turn around and pat myself on the back, it’s because I (and so many like me) knew this exact thing was going to happen and tried to warn people about it during the primaries and so forth. I am not happy it’s happened except for one reason. We flushed ‘em out. We found out they’re not really Republicans and they’re by no means conservatives, and now they’re gone. Now the trick is to keep ‘em out.

What might be the results of this course:

(1)  Becoming irrelevant extremists, like the Green and Socialist parties, as both membership and (equally or more important) funding dwindle. Few Americans, and even fewer in our ruling elites, have much interest in losers.  No matter how pure their ideology.

(2)  The center of gravity to America’s political ideological spectrum shifts left.  In most of America the primaries become the key contests in local, State, and national elections, are they are in so many areas today (due to both local political dominance plus gerrymandering).

4.  Door #2:  reflection and rebuilding

The second option would be far more difficult.  What did the Party do wrong?  How should its platform change to better express its beliefs for the 21st century?  How can it offer something to America that is more than a weak echo of the Democratic Party’s solutions, but not policies attractive only to a small extreme? 

5.  A historical note on the two Party system

For most of American history the two Party’s were divided by cross-cutting fractures, as a result of the Civil War making the South solidly Democratic terrain.  Many of the most conservative factions were in the Democratic Party.

After Johnson’s “New Society” much of the South changed affiliation, but this gave a racist tinge to the Republicans.  This weakened or even polluted the foundation laid by Goldwater and Buckley.

Now Obama gives new life to the Democratic Party, but also an opportunity for a fresh start to the Republican Party.  America needs a strong second party to provide not just alternative policies, but an alternative view of what America should be.  Are the Republicans up to this challenge?

Afterword

If you are new to this site, please glance at the archives below.  You may find answers to your questions in these.

Please share your comments by posting below.  Please make them brief (250 words max), civil, and relevant to this post.  Or email me at fabmaximus at hotmail dot com (note the spam-protected spelling).

For more information from the FM site

To read other articles about these things, see the FM reference page on the right side menu bar.  Of esp relevance to this topic:

Some solutions, ways to reform America:

  1. Diagnosing the Eagle, Chapter III – reclaiming the Constitution, 3 January 2008
  2. Obama might be the shaman that America needs, 17 July 2008
  3. Obama describes the first step to America’s renewal, 8 August 2008
  4. Let’s look at America in the mirror, the first step to reform, 14 August 2008  
  5. Fixing America: elections, revolt, or passivity?, 16 August 2008
  6. Fixing American: taking responsibility is the first step, 17 August 2008
  7. Fixing America: solutions — elections, revolt, passivity, 18 August 2008

Mutant Seeds for Mesopotamia

October 22, 2008

Mutant Seeds for Mesopotamia
by Andrew Bosworth, Ph.D.

www.uruknet.info/

October 15, 2008

One would think that Iraqi farmers, now prospering under “freedom” and “democracy,” would be able to plant the seeds of their choosing, but that choice, under little-known Order 81, would be illegal.

But first, it is important to set the context. Most people have never heard of the infamous “100 Orders,” but they help explain why the majority of Iraqis remain opposed to foreign occupation. The 100 Orders allow multinational corporations to basically privatize an entire nation, and this degree of foreign and private control has not been witnessed since the days of the British East India Company and its extraterritoriality treaties.

A few examples of the 100 Orders are illuminating:

* Order 39 allows for the tax-free remittance of all corporate profits.
*
Order 17 grants foreign contractors, including private security firms, immunity from Iraq’s laws.
*
Orders 57 and 77 ensure the implementation of the orders by placing U.S.-appointed auditors and inspector general in every government ministry, with five-year terms and with sweeping authority over contracts, programs, employees and regulations. (1)

Back to one of the most blatant orders of all: Order 81. Under this mandate, Iraq’s commercial farmers must now buy “registered seeds.” These are normally imported by Monsanto, Cargill and the World Wide Wheat Company. Unfortunately, these registered seeds are “terminator” seeds, meaning “sterile.” Imagine if all human men were infertile, and in order to reproduce women needed to buy sperm cells at a sperm bank. In agricultural terms, terminator seeds represent the same kind of sterility.

Terminator seeds have no agricultural value other than creating corporate monopolies. The Sierra Club, more of a mainstream “conservation” organization than a radical “environmentalist” one, makes the exact same case:

“This technology would protect the intellectual property interests of the seed company by making the seeds from a genetically engineered crop plant sterile, unable to germinate. Terminator would make it impossible for farmers to save seed from a crop for planting the next year, and would force them to buy seed from the supplier. In the third world, this inability to save seed could be a major, perhaps fatal, burden on poor farmers.” (2)

What makes this Order 81 even more outrageous is that Iraqi farmers have been saving wheat and barley seeds since at least 4000 BC, when irrigated agriculture first emerged, and probably even to about 8000 BC, when wheat was first domesticated. Mesopotamia’s farmers have now been trumped by white-smocked, corporate bio-engineers from Florida who strive to replace hundreds of natural varieties with a handful of genetically scrambled hybrids.

Where does such hubris come from? It comes from the entire mission surrounding the invasion of Iraq, which, upon closer inspection, had been planned years in advance by a faction of “neo-cons” who adopted Leon Trotsky’s glorification of the state, his theory “permanent revolution,” and his goal of exporting revolution worldwide. The neo-con revolution aims to alter the economic, political and cultural foundations of nations on the other side of the planet (rejecting old-fashioned notions of self-determination, popular sovereignty and even the nation-state system). This mission includes the transformation of agriculture and the establishment of “food control” over local populations.

Order 81 fits into this revolutionary program, and it is quite diabolical upon closer inspection. First, it forces Iraq’s commercial farmers to use registered terminator seeds (the “protected variety”). Then it defines natural seeds as illegal (the “infringing variety”), in a classic Orwellian turn of language.

This is so incredible that it must be re-stated: the exotic genetically scrambled seeds are the “protected variety” and the indigenous seeds are the “infringing variety.”

As Jeffrey Smith explains, author of Order 81: Re-Engineering Iraqi Agriculture:

“To qualify for PVP [Plant Variety Protection], seeds have to meet the following criteria: they must be ‘new, distinct, uniform and stable’… it is impossible for the seeds developed by the people of Iraq to meet these criteria. Their seeds are not ‘new’ as they are the product of millennia of development. Nor are they ‘distinct’. The free exchange of seeds practiced for centuries ensures that characteristics are spread and shared across local varieties. And they are the opposite of ‘uniform’ and ‘stable’ by the very nature of their biodiversity.” (3)

Order 81 comes with the Orwellian title of “Plant Variety Protection.” Any self-respecting scientist knows, however, that imposing biological standardization accomplishes the exact opposite: It reduces biodiversity and threatens species. So Order 81 comes with an Orwellian title and consists of Orwellian provisions.

Jeffrey Smith peels away the layers of mischief behind Order 81, finding it nonsensical that six varieties of wheat have been developed for Iraq:

“Three will be used for farmers to grow wheat that is made into pasta; three seed strains will be for ‘breadmaking.’

Pasta? According to the 2001 World Food Programme report on Iraq, ‘Dietary habits and preferences included consumption of large quantities and varieties of meat, as well as chicken, pulses, grains, vegetables, fruits and dairy products.’ No mention of lasagna. Likewise, a quick check of the Middle Eastern cookbook on my kitchen shelves, while not exclusively Iraqi, reveals a grand total of no pasta dishes listed within it.

There can be only two reasons why 50 per cent of the grains being developed are for pasta. One, the US intends to have so many American soldiers and businessmen in Iraq that it is orienting the country’s agriculture around feeding not ‘Starving Iraqis’ but ‘Overfed Americans’. Or, and more likely, because the food was never meant to be eaten inside Iraq at all…” (4)

Just in case Iraqi farmer can’t read, Order 81 enforces the new monopoly on seeds with the jackboot. Order 81 makes this clear in its own text, buried at the bottom of the document, as is most screw-you fine print:

“The court may order the confiscation of the infringing variety as well as the materials and tools substantially used in the infringement of the protected variety. The court may also decide to destroy the infringing variety as well as the materials and tools or to dispose of them in any noncommercial purpose.” (5)

Order 81 is about power and profit, but it disguises itself as humanitarian legislation.

Topping it all off, the entire document puts on rather magisterial airs. It was signed by L. Paul Bremer himself, with his own hand, and presumably with his own pen:

“Pursuant to my authority as Administrator of the Coalition Provisional Authority…”

Like the Roman Proconsuls, Paul Bremer also spent a year in the provinces, governing the so-called barbarians…

-The above is an excerpt from Andrew Bosworth’s new book: Biotech Empire: The Untold Future of Food, Pills, and Sex, available at Amazon.

-Andrew Bosworth, Ph.D. is an assistant professor of Government at the University of Texas at Brownsville.

Notes

1. Uruknet Report, “Have You Ever Heard of Bremer’s 100 Orders?” 11 April 2008.

2. Institutional Report, Genetic Engineering at a Historic Crossroads,” The Sierra Club Genetic Engineering Committee Report, March 2001.

3. Jeffrey Smith. “ORDER 81: Re-Engineering Iraqi Agriculture – The Ultimate War Crime: Breaking the Agricultural Cycle.” Global Research and The Ecologist, 27 August 2005, Vol 35, No. 1.

4. Jeffrey Smith. “ORDER 81: Re-Engineering Iraqi Agriculture – The Ultimate War Crime: Breaking the Agricultural Cycle.” Global Research and The Ecologist, 27 August 2005, Vol 35, No. 1.

5 CPA/ORD/26 April 2004/81, p. 27.

US oil firms seek drilling access, but exports soar

July 15, 2008

ANALYSIS-US oil firms seek drilling access, but exports soar
07.03.08, 2:40 PM ET

United States – By Tom DoggettWASHINGTON3 (Reuters) – While the U.S. oil industry want access to more federal lands to help reduce reliance on foreign suppliers, American-based companies are shipping record amounts of gasoline and diesel fuel to other countries.

A record 1.6 million barrels a day in U.S. refined petroleum products were exported during the first four months of this year, up 33 percent from 1.2 million barrels a day over the same period in 2007. Shipments this February topped 1.8 million barrels a day for the first time during any month, according to final numbers from the Energy Department.

The surge in exports appears to contradict the pleas from the U.S. oil industry and the Bush administration for Congress to open more offshore waters and Alaska’s Arctic National Wildlife Refuge to drilling.

“We can help alleviate shortages by drilling for oil and gas in our own country,” President Bush told reporters this week. “We have got the opportunity to find more crude oil here at home.”

“As a nation, we can have more control over our energy destiny by supplying more of the oil and natural gas we’ll be consuming from resources here at home,” Red Cavaney, president of the American Petroleum (otcbb: AMPE.OB news people ) Institute, said in a letter last week to U.S. lawmakers.

But environmentalists and other opponents to expanding drilling areas could seize on the record exports to argue Congress should not open more acres if U.S. refineries are churning crude oil into petroleum products that are sent out of the American market.

“It doesn’t look good to say: ‘We need more oil.’ But then export the refined products that you’re getting. It doesn’t seem to be consistent,” said Jim Presswood, energy lobbyist for the Natural Resources Defense Council.

But many energy experts say oil and petroleum products are traded globally, and it may make economic sense to export gasoline refined along the U.S. Gulf Coast to Latin America and import European-refined gasoline to U.S. East Coast markets.

“The fact is that the (United States) participates in global markets for both crude and refined products, and there are any number of variables that impact supply and prices in those markets,” said Bill Holbrook, spokesman for the National Petrochemicals and Refiners Association.

The 1.6 million barrels a day in record petroleum exports represented 9 percent of total U.S. refining capacity of 17.6 million barrels a day.

However, with refiners operating at 85 percent of capacity during the January-April period, the shipments represented a much a larger share of total U.S. oil products produced.

The exports were also equal to half the 3.2 million barrels of gasoline, diesel fuel and other petroleum products the United States imported each day over the 4-month period.

The biggest share of U.S. oil products exported went to Mexico, Canada, Chile, Singapore and Brazil.

U.S. consumers are paying record prices for gasoline and diesel fuel, which the Bush administration blames in part on tight supplies.

While the administration argues that more supplies would help to bring down prices, U.S exports of diesel fuel in April averaged 387,000 barrels per day, up almost seven-fold from 59,000 barrels a day in the same month a year earlier.

U.S. gasoline shipments in April averaged 202,000 barrels a day, the most for the month since 1945, when America was sending fuel overseas to ease supply shortages in other countries during World War II. Gasoline exports in April 2007 were almost half at 116,000 barrels per day.

Residual fuel exports in April were 377,000 barrels per day, the fourth highest level for any month, and up 10 percent from 344,000 barrels per day a year earlier.

John Felmy, the chief economist at the American Petroleum Institute, said a portion of the oil products exported, especially diesel, was fuel that did not meet U.S. clean air requirements and therefore could not be sold in America. “You may have some that you’re not able to use,” he said.

Also, while U.S. gasoline demand is down due to high prices and a weak American economy, there is “strong economic growth outside the United States” where fuel is often subsidized and demand is high, said John Cook, director of EIA’s Petroleum Division.

However, both the EIA and API admitted they did not know why daily U.S. gasoline exports to Canada skyrocketed to 41,000 barrels in January-April this year from 9,000 barrels in 2007.

The EIA said more U.S. diesel is going to Latin American to fuel power plants because of a shortage of natural gas in the region, and China has switched to diesel from coal to run some of its generating facilities in order to reduce smog ahead of the summer Olympics next month in Beijing. (Editing by Christian Wiessner)

Copyright 2008 Reuters, Click for Restriction

Are you a republican or a democrat

June 4, 2008

Tile :Violent Femmes – I’m Nothing
This is lyrics from http://www.lyrics007.com
I-M-N-O-T-H-I-N
I-M-N-O-T-H-I-N
I’m nothing’
I’m nothin’
Are you a republican or a democrat
A liberal fascist full of crap
I’m nothin’
I’m nothin’
Somebody somewhere might be something
But everybody everywhere
Knows that I’m nothin
Politics and dirty tricks
I got no time for stones and sticks
Politics and dirty tricks
I got no time I’m chasing chicks
I’m nothin’
I’m nothin’
Somebody somewhere might be something
But everybody everywhere
Knows that I’m nothing
I’m nothing but I’m not proud
‘Cause being nothing it’s not allowed
Are you a gay or are you straight
Do you believe in love
Or do you believe in hate
I’m nothin’
I’m nothin’
Somebody somewhere said he was something
But to everybody everywhere
I’m saying I’m nothing
I’m nothing. I’m like a cloud
I’m free to be alone in a crowd
What’s your reality. It’s not real to me
What’s your anomaly. It is my destiny
I-M-N-O-T-H-I-N
I-M-N-O-T-H-I-N
I’m nothin’
Nothin’
Nothin’
I’m nothing now and I’ll be nothing when
This nothing world has it’s nothing end

McCain Defends ‘Enron Loophole’ keepen us safe from gays and terrorist.

May 30, 2008

By Jason Leopold

Sen. John McCain says he opposes the $307 billion farm bill because it would dole out wasteful subsidies, but his chief economic adviser Phil Gramm also wants to stop its proposed regulation of energy futures trading, a market that was famously abused when Enron Corp. manipulated California’s electricity prices in 2001.

Clearing the way for that California price gouging, Gramm, as a powerful Texas senator in 2000, slipped an Enron-backed provision into the Commodities Futures Modernization Act that exempted from regulation energy trading on electronic platforms.

Then, over the next year, Enron – with Gramm’s wife Wendy serving on its board of directors – worked to create false electricity shortages in California, bilking consumers out of an estimated $40 billion.

Gramm left the Senate in 2002 but now has emerged as what Fortune magazine calls “McCain’s econ brain,” not only filling the Arizona senator’s acknowledged void on economic expertise (“I don’t know as much about the economy as I should”) but recognized as one of McCain’s closest friends in politics. The two men talk daily.

A McCain aide told me that the Arizona senator opposes the farm bill because it “rewards lobbyists” by granting rich farmers lucrative subsidies, although he would support “a reasonable level of assistance and risk management to farmers when they need America’s help.”

But the aide, who spoke on condition of anonymity, acknowledged that the presumptive Republican presidential nominee also opposes the farm bill because Gramm advised McCain that he should resist its regulatory language on the energy futures market.

Democrats have dubbed that gap in energy futures regulation the “Enron loophole,” but it played a part, too, in the more recent attempt by the Amaranth Advisers hedge fund to corner the national gas market by shifting trades to the unregulated “dark markets” of the Intercontinental Exchange.

The “Enron loophole” also has become part of the debate over the soaring price of oil. Last week, a study sponsored by Sen. Carl Levin, D-Michigan, concluded that speculative futures markets were partly to blame for the surge in oil prices that have pushed gas at the pump toward $4 a gallon.

At a May 15 news conference, Levin said the skyrocketing price of oil is “not the result of supply and demand. Speculators have taken over most of the futures market.”

However, the 673-page farm bill, containing the regulatory provisions on electronic energy trading, still faces obstacles amid overall concerns about the bill’s largesse to farmers at a time of rising food prices.

President George W. Bush has vowed to veto the bill, although it cleared the House and Senate by margins wide enough for an override, assuming Republicans don’t rally behind Bush and McCain, their current and future standard bearers.

Gramm and Enron

The battle over the “Enron loophole” also could draw attention to McCain’s dependence on Gramm as his chief economic adviser and Gramm’s key role in passing legislation that let Enron trade commodities on electronic platforms without federal oversight.

In 2000, with the Republicans in charge of Congress and Gramm chairing the Senate Banking Committee, the exemption on electronic trading was approved without a Senate hearing.

Internal Enron documents, which were released in 2002, revealed that the Houston-based company helped write the legislation, which was signed into law by President Bill Clinton in December 2000.

Freed from regulatory interference, Enron then used manipulative trading practices to game the California electricity market and drive up electricity prices across the state.

While California consumers were getting fleeced, the new Bush administration shielded Enron from early accusations of market manipulation. President Bush personally joined the fight against imposing caps on the soaring price of electricity, buying additional time for Enron although the company’s house of cards collapsed anyway in fall 2001. [For details, see Consortiumnews.com’s “Bush’s Enron Lies.”]

In 2006, the “Enron loophole” allowed Amaranth Advisers hedge fund to shift its trades from the regulated New York Mercantile Exchange (NYMEX) to the unregulated Intercontinental Exchange (ICE) in Atlanta.

That let Amaranth corner the natural gas market, betting that futures prices would rise. The hedge fund lost about $6 billion and imploded as natural gas prices fell to a two-year low in September 2006.

Last July, the Federal Energy Regulatory Commission and the Commodity Futures Trading Commission charged that Amaranth manipulated prices paid in the physical natural gas markets. FERC has proposed $291 million in penalties and the forfeiture of “unjust profits.”

“Unregulated markets are known as ‘dark markets’ because there is very little oversight of the trades,” said Rep. Bart Stupak, D-Michigan, chairman of the subcommittee on Oversight and Investigations, during a hearing on energy speculation last December.

By trading on the “dark” ICE market, traders can avoid the Commodity Futures Trading Commission’s rules which are in place to prevent price distortions or supply squeezes.

Stupak said trading volumes on ICE “have skyrocketed in the past three years and are now as large or even larger in some months, than the volumes traded on the regulated futures market.”

The lack of oversight “makes it difficult for regulators to detect excessively large positions which could lead to price manipulation,” Stupak said.

Advising McCain

Gramm, who is now a vice chairman of financial services company UBS, began advising McCain in 2005 when the Arizona senator indicated he planned to run for President.

Since then, McCain has adopted much of Gramm’s anti-tax, anti-regulatory agenda. Most strikingly, McCain shifted to support Bush’s tax cuts, which McCain had voted against in 2001 and 2003. He now vows that, if elected President, he would make them permanent.

Yet Gramm’s influence over McCain’s economic agenda – and the checkered political-business history of Gramm and his wife Wendy – have largely escaped media scrutiny.

Gramm received more than $34,000 in campaign contributions from Enron and served as one of the company’s key legislative allies in Washington, including his help in 2000 removing federal oversight from energy trades on electronic platforms.

At the height of the Enron scandal in January 2002, Gramm’s press secretary Larry Neal told The New York Times that Gramm did not “recall a conversation” he apparently had with Enron’s chairman Ken Lay in 2000 to discuss that Enron legislative priority.

An internal Enron e-mail dated Aug. 10, 2000, under the subject “CFTC Reauthorization” – sent by Enron’s top lobbyist Richard Shapiro to Steve Kean, Enron’s executive vice president – said the company needed to get Lay on the phone with Gramm so the bill could be passed.

“The bill is not moving quickly in the Senate due to Senator Phil Gramm’s desire to see significant changes made to the legislation (not directly related to our energy language),” Shapiro said.

“Last week at the [2000] Republican Convention, I asked the Senator about the bill and he said they were working on it, but much needs to be changed for his support. More telling perhaps, were Wendy Gramm’s comments that she would rather the current bill die if a better bill can be passed next year.

“What this means is that we must, at the least, remove Senator Gramm’s opposition to the bill to move the process and more importantly seek to gain his support of the legislation.”

Shapiro added: “However, with less than 20 or so legislative days left, we need Senator Gramm to engage.

“A call from Ken Lay in the next two weeks to Senator Gramm could be an impetus for Gramm to move his staff to resolve the differences. Gramm needs to fully understand how helpful the bill is to Enron.

“Let me know your thoughts on this approach. I am prepared to assist in coordinating the call and drafting the talking points for a Ken Lay/Sen. Gramm call.”

Several other internal Enron e-mails briefed company staffers on the status of Gramm’s position and Enron’s lobbying of the senator. Gramm finally removed a “hold” on the bill in December 2000, reintroduced the bill under a different number, and forced a vote on it without floor debate.

It was then attached to an appropriations bill that was signed by President Clinton on Dec. 21, 2000.

California Crisis

Less than a month later, California began to experience rolling blackouts due to artificial electricity shortages which, according to documents later released by federal energy regulators, were the result of manipulative trading practices employed by Enron.

The California crisis centered on Enron’s energy trades through a new platform called EnronOnline, which had been freed from regulatory oversight by the legislation pushed by Gramm.

In April 2002, Gramm blocked an amendment by Sen. Dianne Feinstein, D-California, that would have closed the loophole that Gramm had helped open.

Gramm’s wife, Wendy, also had played a role in the anti-regulatory policies that contributed to the Enron scandal.

On Jan. 14, 1993, in the final days of the first Bush administration, Wendy Gramm – as chairwoman of the Commodity Futures Trading Commission – pushed through a key regulatory exemption removing energy derivatives contracts and interest-rate swaps from federal oversight.

That was a major financial boon to Enron, where Wendy Gramm landed five weeks later as a member of the board of directors. She also became a member of the audit committee that signed off on another one of Enron’s fraudulent schemes, partnerships that hid the company’s growing debt.

Even after Enron had collapsed in fall 2001, Sen. Gramm continued to resist congressional efforts at tightening up the rules.

In 2002, despite the accounting scandals at Enron, WorldCom and other major companies, Sen. Gramm objected to the Sarbanes-Oxley corporate reform bill designed to hold executives accountable for inaccuracies in financial reports.

Now, the Gramm family’s anti-regulatory agenda is returning via McCain’s presidential campaign.

As Fortune’s editor-at-large Shawn Tully wrote, “economic conservatives should take heart. McCain’s chief economic adviser – and perhaps his closest political friend – is the ultimate pure play in free market faith, former Texas Sen. Phil Gramm. … Most of [McCain’s] current positions are vintage Gramm indeed.” [Fortune, Feb. 19. 2008]

The first test of McCain’s commitment to Gramm’s anti-regulatory purity may come in the looming battle over the “Enron loophole” that the farm bill seeks to close.

Jason Leopold has launched a new Web site, The Public Record, at http://www.pubrecord.org

To comment at Consortiumblog, click here. (To make a blog comment about this or other stories, you can use your normal e-mail address and password. Ignore the prompt for a Google account.) To comment to us by e-mail, click here. To donate so we can continue reporting and publishing stories like the one you just read, click here.

10 days That Changed Capitalism

March 30, 2008

071008_r16665_p233.jpg

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

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.