Senator Mike Gravel spends 45 minutes discussing his campaign, on 88.9, KNPR.
Senator Gravel discusses his plan for Direct Democracy, the other candidates running for President, and the War in Iraq.
http://www.gravel2008.us
Day: September 22, 2007
Blackwater: Hired Guns, Above the Law by Jeremy Scahill (+ video)
by Jeremy Scahill
Global Research, September 22, 2007
The Nation – 2007-09-21
The Nation’s Jeremy Scahill describes the rise of Blackwater USA, the world’s most powerful mercenary army.
Roy Haber: Freedom Spread (the sketch) (video; comedy)
Roy Haber – Comedian/Actor/Cynical Bastard
Added: 9/21/2007
Runtime: 4:09
Declare This An Emergency (video; must-see)
Sept. 22, 2007
puppetgovcom
The Greatest Illusion ever.
So What Are You Going To Do About It?
Music by MUSE & Tchaikovsky
Network (MGM)
Battle at Kruger by Jason275
Infowars.com w/Alex JonesSee more videos at PUPPETGOV.com
Retitled: Continue reading
America in Crisis: The Liberal Challenge and the Prospects for Socialism, by Susan Rosenthal
by Susan Rosenthal
Dissident Voice
September 22, 2007
America is deeply divided. For one thing, most Americans want an end to the war against Iraq and some form of universal health care, while the ruling class is committed to the war and to sacrificing social services to pay for it.
Our Cowboy President is Afraid of Horses By Manila Ryce (video)
By Manila Ryce
The Largest Minority
Published Friday, September 21st, 2007, 5:12 pm
Our Cowboy President is Afraid of Horses
With his good ol’ folksy conversation style, manly swagger, adventures in brush-clearing, and tendency to use phrases like “smoke ‘em outta their holes,” you’d be forgiven if you thought our Texan president was a macho, gun toting cowboy. Unfortunately for Middle America, former Mexican President Vicente Fox says President Bush’s act is as fraudulent as Larry the Cable Guy’s. There’s some irony in the fact that a guy named Fox is exposing Bush for what he really is.
Mr. Fox derided Bush as a “windshield cowboy” and “the cockiest guy I have ever met in my life”. President Bush often shares tales with the media for his love of shooting doves and cutting brush on the Crawford, Texas ranch, which he purchased in 1999. The ranch is reported to have no horses and only five cattle.
Fox personally recalls a meeting in Mexico shortly after both men were elected when he offered Bush a ride on his palomino horse. Bush started “backing away” from the animal. “A horse lover can always tell when others don’t share our passion,” Fox said. While the revelation that George Bush is a phony might not be a revelation at all, this story does make the following video from several years ago even more hilarious. Enjoy.
Will Ferrell as Bush
December 23, 2005
From: meghans007
Democracy, not terror, is the engine of political Islam By William Dalrymple
Dandelion SaladBy William Dalrymple
ICH
09/21/07 “The Guardian“
Neocon policies designed to promote liberal opinion in the Middle East have in fact played into the hands of the religious parties
Six years after 9/11, throughout the Muslim world political Islam is on the march; the surprise is that its rise is happening democratically – not through the bomb, but the ballot box. Democracy is not the antidote to the Islamists the neocons once fondly believed it would be. Since the US invaded Afghanistan and Iraq, there has been a consistent response from voters wherever Muslims have had the right to vote. In Lebanon, Iran, Iraq, Palestine, Pakistan, Egypt, Turkey and Algeria they have voted en masse for religious parties in a way they have never done before. Where governments have been most closely linked to the US, political Islam’s rise has been most marked.
Much western journalism in the six years since 9/11 has concentrated on terrorist groups, jihadis and suicide bombers. But while the threat of violence remains very real, those commentators who have compared what they ignorantly call “Islamofascism” to the Nazis are guilty of hysteria: the differences in relative power and military capability are too great for the comparison to be valid, and the analogies that the neocons draw with the second world war are demonstrably false. As long as the west interferes in the Muslim world, bombs will go off; and as long as Britain lines up behind George Bush’s illegal wars, British innocents will die in jihadi atrocities. But that does not mean we are about to be invaded, nor is Europe about to be demographically swamped, as North American commentators such as Mark Steyn claim: Muslims will make up no more than 10% of the European population by 2020.
Yet in concentrating on the violent jihadi fringe, we may have missed the main story. For if the imminent Islamist takeover of western Europe is a myth, the same cannot be said for the Islamic world. Clumsy and brutal US policies in the Middle East have generated revolutionary changes, radicalising even the most moderate opinion, with the result that the status quo in place since the 1950s has been broken.
Egypt is typical: at the last election in 2005 members of the nominally banned Muslim Brotherhood, standing as independents, saw their representation rise from 17 seats to 88 in the 444-seat people’s assembly – a five-fold increase, despite reports of vote-rigging by President Mubarak’s ruling National Democratic Alliance. The Brothers, who have long abjured violence, are now the main opposition.
The figures in Pakistan are strikingly similar. Traditionally, the religious parties there have won only a fraction of the vote. That began to change after the US invasion of Afghanistan. In October 2002 a rightwing alliance of religious parties – the Muttahida Majlis Amal or MMA – won 11.6% of the vote, more than doubling its share, and sweeping the polls in the two provinces bordering Afghanistan – Baluchistan and the North West Frontier Province – where it formed ultra-conservative and pro-Islamist provincial governments. If the last election turned the MMA into a serious electoral force, there are now fears that it could yet be the principle beneficiary of the current standoff in Pakistan.
The Bush administration proclaimed in 2004 that the promotion of democracy in the Middle East would be a major foreign policy theme in its second term. It has been widely perceived, not least in Washington, that this policy has failed. Yet in many ways US foreign policy has succeeded in turning Muslim opinion against the corrupt monarchies and decaying nationalist parties who have ruled the region for 50 years. The irony is that rather than turning to liberal secular parties, as the neocons assumed, Muslims have lined up behind parties most clearly seen to stand up against aggressive US intervention.
Religious parties, in other words, have come to power for reasons largely unconnected to religion. As clear and unambiguous opponents of US policy in the Middle East – in a way that, say, Musharraf, Mubarak and Mahmoud Abbas are not – religious parties have benefited from legitimate Muslim anger: anger at the thousands of lives lost in Afghanistan and Iraq; at the blind eye the US turns to Israel’s nuclear arsenal and colonisation of the West Bank; at the horrors of Abu Ghraib and the incarceration of thousands of Muslims without trial in the licensed network of torture centres that the US operates across the globe; and at the Islamophobic rhetoric that still flows from Bush and his circle in Washington.
Moreover, the religious parties tend to be seen by the poor, rightly or wrongly, as representing justice, integrity and equitable distribution of resources. Hence the strong showing, for example, of Hamas against the blatantly corrupt Fatah in the 2006 elections in Palestine. Equally, the dramatic rise of Hizbullah in Lebanon has not been because of a sudden fondness for sharia law, but because of the status of Hassan Nasrallah, Hizbullah’s leader, as the man who gave the Israelis a bloody nose, and who provides medical and social services for the people of South Lebanon, just as Hamas does in Gaza.
The usual US response has been to retreat from its push for democracy when the “wrong” parties win. This was the case not just with the electoral victory of Hamas, but also in Egypt: since the Brothers’ strong showing in the elections, the US has stopped pressing Mubarak to make democratic reforms, and many of the Brothers’ leading activists and business backers, as well as Mubarak’s opponent in the presidential election, are in prison, all without a word of censure from Washington.
Yet on a recent visit to Egypt I found everywhere a strong feeling that political Islam was there to stay, and that this was something everyone was going to have to learn to live with; the US response had become almost irrelevant. Even the Copts were making overtures to the Brothers. As Youssef Sidhom, who edits the leading Coptic newspaper, put it: “They are not going away. We need to enter into dialogue, to clarify their policies, and end mutual mistrust.”
The reality is that, like the Copts, we are going to have to find some modus vivendi with political Islam. Pretending that the Islamists do not exist, and that we will not talk to them, is no answer. Only by opening dialogue are we likely to find those with whom we can work, and to begin to repair the damage that self-defeating Anglo-American policies have done to the region, and to western influence there, since 9/11.
William Dalrymple is the author of The Last Mughal: The Fall of a Dynasty, Delhi 1857. – Please visit his website – www.williamdalrymple.com
FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. This material is distributed without profit.
Bruce Cockburn: Night Train (music video)
April 21, 2006
From: chauncygard Continue reading
Alive in Baghdad: Life as a Painter and Mother (video)
Sana’a is an artist and mother who lives in Amman Jordan after fleeing Baghdad’s violent streets. She talks about life in Baghdad & why she was forced to leave her country.
Make a donation to support our work at http://www.aliveinbaghdad.org/donate/
Racism and War by Ramzy Baroud
by Ramzy Baroud
Global Research, September 22, 2007
Racism is, among many things, convenient. It provides simplified, definite and ready-to-serve answers to complex and compounded questions. Racists, in turn, come from all walks of life; their motivation and the root causes behind their contemptible views of others may differ, but the outcome of these views is predictably the same – racial discrimination, social and political oppression, religious persecution and war.
The textual definition of racism pertains only to race, but in practice racism is a consequence of groupthink, whereby a group of people decides to designate itself as a collective and starts delineating its relationship with other collectives – or other people in general – with a sense of supremacy. When coupled with economic and/or political dominance, supremacy translates into various forms of subjugation and cruelty.
The adulation of the self/collective and the disparagement of the other is an ancient practice, as old as human civilisation itself. It is everlasting for the simple reason that it has always served as a political and economic tool and will likely remain effective so long as the quest for political and material power drives our behaviour.
It is also pertinent to stress that the need for this negative group designation is not always as straightforward as “black” and “white”. For example, less economically advantaged Eastern Europeans seeking (and competing for) employment in Western Europe find themselves lumped in the same group and subject to all sorts of classifications. Equally convenient has been the caricatured misrepresentation of “Arabs” by mainstream media, which serves to further specific political and economic interests.
Ironically, an extreme form of racism also exists in various Arab countries where foreign workers find themselves placed in a demeaning hierarchy based on country of origin. Western Europeans and Americans top the scale and are readily accommodated, while Southeast Asians are often at the bottom. A very qualified Indian engineer, for example, may find himself getting paid a lot less than a French one with relatively little experience.
In some countries, like South Africa, racism has wreaked havoc on society for generations. It manifests itself in the refusal of some people to identify with their original ancestral cultures because they fear that such affinity would negate the fact that they are “full” South African citizens – a right for which they fought a most arduous fight.
In Malaysia, which exhibits considerable social harmony compared to some of it neighbours, racial classification is still very much real. Despite the government’s commendable efforts to accentuate the Malaysian national model while carefully underscoring Malay, Chinese or Indian sub-groupings, members of these groups are wary of their statistical representation in Malaysian society. Some react by stressing their number in comparison to the other groups, while others tirelessly underscore the types of discrimination they experience at the hands of the politically and economically advantaged.
While racism is universally recognised, few individuals would admit to their own prejudices and racist tendencies. Moreover, it would be self-deceiving to view racism as a purely Western phenomenon. While the Western model of racism, influenced by 18th century colonialism, is unique in many respects, group prejudices based on class, race and religion are shared almost equally between all nations.
The racism of those with political, military and economic power is often violent and detrimental, but it is important to remember that the underdog can be just as racist. An Arab reader from London sent me an e-mail demanding that I explain myself for collaborating on various projects with some well-known Jewish authors. “You are either naïve or you are selling out,” she wrote. It made no difference to her that these authors are anti-Zionist and have been, for many years, on the frontline of the struggle for Palestinian rights and justice. She simply couldn’t break away from a deeply ingrained racist belief that “Jews are not to be trusted.”
Of course, this is not an Arab, but a global predisposition; prolonged conflicts and wars tend to validate and inflate already existing prejudices. Although the Israeli educational system has produced generations of students saturated with grossly misleading images of Arabs and Palestinians, the relationship between Arabs and Jews hasn’t always been negative. For centuries, both groups lived in harmony; some of the best Arab poets of past times were Jews and some of the most luminous Jewish texts were written originally in Arabic. Unfortunately, conflict and war have a way of undermining such facts; racism in Israel is so intense now that few dare use the term “Arab Jew”.
Even when it doesn’t pertain to race, most people seem to slide easily into greater tribal memberships that divide the world into “us” and “them”, often using words of negation and often utilising religion. The “non” factor becomes very useful here: “non-Muslim”, “non-Jew”, “non-Christian”, and so on. Such negations are never well intended and always produce negative results. Less conspicuous terms such as “non-democratic” (a neo-colonial equivalent to “uncivilised”, perhaps?) could be similarly loaded and dangerous and are often used to promote and justify war.
It remains to be said that a true fight against racism and various other types of group prejudice requires first accepting personal responsibility in shaping one’s own society, and this includes the racism that exists within it. Martin Luther King Jr. refused “to accept the view that mankind is so tragically bound to the starless midnight of racism and war that the bright daybreak of peace and brotherhood can never become a reality”. We, too, must uncompromisingly reject such pessimism if we truly wish for peace, harmony and equality to replace war, social discord and injustice.
Ramzy Baroud is an author and a journalist. His latest volume, “The Second Palestinian Intifada: A Chronicle of a People’s Struggle” (Pluto Press, London) is available from Amazon and other book venues. He is the editor of PalestineChronicle.com and his articles are archived at ramzybaroud.net
Ramzy Baroud is a frequent contributor to Global Research. Global Research Articles by Ramzy Baroud
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Blackwater, Oil and the Colonial Enterprise By John Nichols
By John Nichols
ICH
09/21/07 “The Nation”
Blackwater USA’s mercenary mission in Iraq is very much in the news this week, and rightly so. The private military contractor’s war-for-profit program, which has been so brilliantly exposed by Jeremy Scahill, may finally get a measure of the official scrutiny it merits as the corporation scrambles to undo the revocation by the Iraqi government of its license to operate in that country. There will be official inquiries in Baghdad, and in Washington. The U.S. Congress might actually provide some of the oversight that is its responsibility. Perhaps, and this is a big “perhaps,” Blackwater’s “troops” could come home before the U.S. soldiers who have been forced to fight, and die, in defense of these international rent-a-cops.
But it is not the specific story of Blackwater that matters so much as the broader story of imperial excess that it illustrates.
If Blackwater, with an assist from the U.S. government, beats back the attempt by the Iraqis to regulate the firm’s activities — as now appears likely, considering Friday’s reports that the firm has resumed guarding U.S. State Department convoys in Baghdad — we will have all the confirmation that is needed of the great truth of the U.S. occupation of Iraq: This is a colonial endeavor no different than that of the British Empire against America’s founding generation revolted.
But even if Blackwater loses its fight to stay, even if the corporation is forced to shut down its multi-billion dollar, U.S. Treasury-funded operation in Iraq, the brief “accountability moment” may not be sufficient to open up the necessary debate about Iraq’s colonial status. The danger, for Iraq and the United States, that honest assessment of the crisis will lose out to face-saving gestures designed to foster the fantasy of Iraqi independence.
It is not enough that Blackwater is shamed and perhaps sanctioned. A Blackwater exit from Iraq will mean little if its mercenary contracts are merely taken over by one or more of the 140 other U.S.-sanctioned private security firms operating in that country — such as Vice President Dick Cheney’s Halliburton.
Whatever the precise play out of this Blackwater moment may be, the likelihood is that the colonial enterprise will continue. That’s because, in the absence of intense pressure from grassroots activists and the media, Congress is unlikely to go beyond a scratch at the surface of what is actually going on in Iraq.
The deeper discussion requires that a discussion about the substance that no less a figure than former Federal Reserve chairman Alan Greenspan describes as the reason for the invasion and occupation of this particular Middle Eastern land: oil.
The Rev. Martin Luther King Jr. aptly observed that “colonialism was made for domination and for exploitation,” and there is no substance that the Bush-Cheney administration is more interested in dominating and exploiting than oil.
Thus, while it is right to pay close attention to the emerging discussion about Blackwater’s wicked work in Iraq, Americans would do well to pay an equal measure of attention to the still largely submerged discussion about an Iraqi oil deal that will pay huge benefits to the Hunt Oil Company, a Texas firm closely linked to the administration. How closely? When he was running Halliburton, Cheney invited Hunt Oil Company CEO Ray Hunt to serve on the firm’s board of directors. Hunt, a “Bush Pioneer” fund raiser during in 2000 who went on to serve as donated the tidy sum of $35 million to the Bush presidential library building fund.
The new “production sharing agreement” between Hunt Oil and the Kurdistan Regional Government puts one of the administration’s favorite firms in a position to reap immeasurable profits while undermining essential efforts to assure that Iraq’s oil revenues will be shared by all Iraqis. Hunt’s deal upsets hopes that Iraq’s mineral wealth might ultimately be a source of stability, replacing the promise of economic equity with the prospect of a black-gold rush that will only widen inequalities and heighten ethnic and regional resentments.
The Hunt deal is so sleazy — and so at odds with the stated goals of the Iraqi government and the U.S. regarding the sharing of oil revenues — that even Bush has acknowledged that U.S. embassy officials in Baghdad are deeply concerned about it. What Bush and Cheney have been slow to mention is the fact that Iraq’s oil minister, Hussain al-Shahristani, says the deal is illegal.
As with the Blackwater imbroglio, however, there is no assurance that the stance of the Iraqi government is definitional with regard to what happens in Iraq.
That is why it is disturbing that, for the most part, members of Congress — even members who say they do not want the United States to have a long-term presence in Iraq — have been slow to start talking about Hunt’s oil rigging.
One House member who has raised the alarm is Ohio Democrat Dennis Kucinich, who in his capacity as a key member of the House Committee on Oversight and Government Reform, has asked the committee’s chairman, California Democrat Henry Waxman, to launch an investigation into the Hunt Oil deal.
“As I have said for five years, this war is about oil,” Kucinich, who is mounting an anti-war bid for the Democratic presidential nomination, declared on the floor of the House this week. “The Bush Administration desires private control of Iraqi oil, but we have no right to force Iraq to give up control of their oil. We have no right to set preconditions to Iraq which lead Iraq to giving up control of their oil. The Constitution of Iraq designates that the oil of Iraq is the property for all Iraqi people.”
With that in mind, Kucinich explains, “I am calling for a Congressional investigation to determine the role the Administration may have played in the Hunt-Kurdistan deal, the effect the deal will have on the oil revenue sharing plan and the attempt by the Administration to privatize Iraqi oil.”
Waxman has been ahead of the curve on Blackwater, seeking testimony from the firm’s chairman at hearings scheduled for early October.
But Waxman needs to expand his focus, and the way to do that is by heeding Kucinich’s call for an investigation into the Hunt deal.
That inquiry should begin with two fundamental questions:
Who runs Iraq — the Iraqis or their colonial overlords in Washington?
And, if the claim is that the Iraqis are in charge, then why is Ray Hunt about to start steering revenues from that country’s immense oil wealth into the same Texas bank accounts that have so generously funded the campaigns of George Bush and Dick Cheney?
Copyright © 2007 The Nation
FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. This material is distributed without profit.
see:
Blackwater Accused Of Illegally Smuggling Weapons Into Iraq (video)
Blasphemy against the holy name of General Mary Petreus By Phil Rockstroh
By Phil Rockstroh
09/21/07 “ICH”
A Conservative’s Garden of False Narratives: Who are you calling a moonbat, anyway?
One would think that from the cries of (feigned) indignation and calls for repentance arising from conservatives regarding Move-On.org’s ad in the N.Y. Times that the liberal-leaning group had not simply questioned the insights and intentions of a public servant, promoting, in a public forum, the policy of an illegal and immoral occupation of a sovereign nation; rather, the folks of Move-On.org had committed blasphemy against the holy name of some revered saint — General Mary Petreus, Mother of God.
The Era of Global Financial Instability By Mike Whitney (rewrite)
By Mike Whitney
09/21/07 “ICH“
Correction and Rewrite: Information clearinghouse regular, Cruxpuppy, pointed out the glaring weaknesses in yesterday’s article. I thought this criticism was fair, well-argued, principled and accurate. He was right and I was wrong. I have rewritten the article which, I believe, shows how I really feel about the Federal Reserve. I agree, it must be abolished. Thanks for the criticism, cruxpuppy. I found it very constructive. Mike Whitney
“Give me control over a nation’s currency and I care not who makes its laws.” Baron M.A. Rothschild
Wall Street loves cheap money. That’s why traders were celebrating on Tuesday when Fed chief Ben Bernanke announced that he’d drop interest rates from 5.25% to 4.75%. The stock market immediately zoomed skyward adding 336 points before the bell rang. The next day the giddiness continued. By mid-morning the Dow was up another 110 points and headed for the stratosphere. Everyone on Wall Street loves Bernanke. He brings them candy and sweets and lets the American worker pay the bill.
So far, the scholarly-looking Bernanke has shown that he is no different than his predecessor Alan Greenspan. Facing his first crisis, the new Fed chief chose to reward his fat-cat friends at the hedge funds and investment banks by savaging the dollar. As soon as he announced his plan to cut the Fed funds rate by .50 basis points; gold soared to $736 per ounce, oil shot up to $82 per barrel, and the euro climbed to a new high of $1.40. These are all the predictable signs of inflation. Food and energy prices will surely follow. The bottom line is that the investor class has been bailed out at the expense of everyone else who trades in dollars.
Bernanke invoked the “Greenspan put”, which means that he used his power to protect his friends from the losses they should have incurred from their bad bets. Now, the big market players know that he can be counted on to bail them out whenever they make poor investment decisions. He’s also lived up to his nickname, “Helicopter Ben”; ready to deal with every new calamity by tossing trillions of freshly-minted US greenbacks into the jet-stream over the NYSE so elated traders can jack-up their PEs and fatten their bottom line . We think Bernanke should abandon the helicopter altogether and personally deliver pallet-loads of $100 bills to Wall Street’s doorstep, just like Bush does with contractors in Iraq. That way the fund managers can keep stoking the market with cheap cash without dawdling at the Fed’s Discount Window.
Despite the merriment on Wall Street, there is a downside to Bernanke’s actions. The Fed chief has shown foreign investors that he WILL NOT DEFEND THE DOLLAR. That is a powerful message to anyone who hopes to profit by investing in the US. It alerts them to the fact that the “strong dollar” policy is a fraud and that they’re better off getting out of US Treasuries and dollar-backed assets. Apparently, many have already gotten the message. Last month, foreign central banks and investors dumped $9.4 billion of US Treasuries and bonds compared to net purchases in June of $24.7 billion. That means that foreigners have stopped buying our debt which is currently $800 billion per year. That’s the last leg holding up the wobbly greenback. The dollar will undoubtedly fall precipitously.
So, why would Bernanke weaken the dollar even more by lowering rates 50 basis points?
Is he crazy or did he panic?
We don’t know, but we do know that this is the beginning of Capital flight—the sudden exodus of foreign investment from US debt and equities. Most likely, it will be accompanied by the hissssing sound of gas escaping from a punctured equity bubble followed quickly by a painful round of deflation, massive unemployment and the gnashing of teeth.
The size of the current account deficit, which peaked in 2005 at 6.8% of GDP, has dropped to 5.5% by the end of the second quarter of 2007. This is an indication that the maxed-out American consumer is running out of gas and that our foreign trading partners are slowing their intake of US dollars. Now comes the painful part. As the trade deficit shrinks, foreign investment will become scarcer and the dollar will tumble. That means interest rates will have to go up and American’s will face an agonizing economic downturn.
This is all part of the Federal Reserve’s master-plan for reorganizing the US economy and political system. Since Bush took office in 2000, the dollar has been deliberately weakened; losing more than 40% of its value when compared to the euro. (from $.85 per euro in 2000 to $1.40 per euro in 2007) It has fared even worse against gold. The Fed “rubber stamped” Bush’s $400 billion per year tax breaks for the wealthy and looked on approvingly while $4 trillion of national wealth was transferred to foreign investors and banks via the current account deficit (the result of currency deregulation) Also, we now know that Alan Greenspan supported the plan to invade Iraq. He even shamelessly admitted that the war was really about oil which suggests that he was attempting to preserve the dollar’s link to petroleum. That linkage is what maintains the dollar’s position as the world’s “reserve currency”. These things indicate that the Central Bank plays a vital role in the policy decisions which are reshaping American life. We assume that the Fed’s members are equally supportive of the repressive police-state measures which have been put in place in anticipation of problems that will undoubtedly arise from the economic meltdown they have painstakingly engineered.
The rate cuts tell us that the Fed is now planning to balance the current account deficit on the backs of the American middle class. Prices at the supermarket and gas pump will rise immediately; probably within the next few months if not weeks. It will be harder to get credit. Wages and living standards will decline. Stocks will fall. Consumer spending will shrivel.
Surprisingly, Bernanke’s rate cuts don’t even address the underlying problems they are supposed to cure. Millions of homeowners who took out subprime and Alt-a loans are headed for foreclosure. Only a small percentage of these will benefit from the rate cuts and avoid default because of lower “resets” on their loans. Most of them will not qualify for refinancing UNDER ANY TERMS because they don’t meet the new standards for securing a loan. Banks and mortgage companies have become much stricter in their lending practices.
The rate cuts don’t really help the banks or hedge funds either. Their stocks may lurch upward for a day or two, but that won’t last. Money is getting tighter and spending is down. It’s not a good time to be holding hundreds of billions in mortgage-backed liabilities (CDOs) which may have been levered many times their original-value. There’s no market for these CDOs. They’re turkeys. The debt will either have to be written off or the companies will be forced into bankruptcy.
Rate cuts won’t stem the tide of insolvencies or fix the deeply-ingrained problems in the financial markets. All they will do is forestall the impending recession by sustaining abnormal levels of liquidity. But as consumer spending contracts and unemployment continues to rise; the Fed’s “band-aid” approach to these systemic problems will prove to be ineffective. Bernanke is sacrificing the one thing he’ll need most in the bumpy months ahead; his credibility.
As economist and author Henry Liu says, “A market that catches on to the impotence of central-bank intervention can go into free fall.”
The most compelling argument for interest rate cuts was made by economist Martin Feldstein in a Wall Street Journal article “Liquidly Now”. Feldstein summarized the issue like this:
“Three separate but related forces are now threatening economic activity: a credit market crisis, a decline in house prices and home building, and a reduction in consumer spending. These developments compound the general weakening of the economy earlier in the year, marked by slowing employment growth and declining real spendable income.”
“The subprime mortgage defaults have triggered a widespread flight from risky assets, with a substantial widening of all credit spreads, and a general freezing of credit markets. Official credit ratings came under suspicion. Investors and lenders became concerned that they did not know how to value complex risky assets.
In some recent weeks credit became unavailable. Loans to support private equity deals could not be syndicated, forcing the banks to hold those loans on their own books. Banks are also being forced to honor credit guarantees to previously off-balance-sheet conduits and other back-up credit lines, further reducing the banks’ capital available to support credit of all types.
The inability of credit markets to function properly will weaken the overall economy in the coming months. And even when the credit market crisis has passed, the wider credit spreads and increased risk aversion will be a damper on economic activity.
In addition to these general credit market problems, the decline of house prices and home building will be a growing drag on the economy….Falling house prices would not only cause further declines in home building but would also shrink household wealth and thus consumer spending.”
Feldstein has a good understanding of the problem, but backpedals on the rsolution. He says:
“Fed action to lower interest rates cannot solve the credit market problems, but it would help the economy: by stimulating the demand for housing, autos and other consumer durables; by encouraging a more competitive dollar to stimulate increased net exports; by raising share prices to increase both business investment and consumer spending; and by freeing up spendable cash for homeowners with adjustable-rate mortgages”.
Feldstein paradoxically wants rate cuts even though he admits that “lower interest rates cannot solve the credit market problems” but will just stimulate more wasteful “consumer spending”.
That’s not a cure. That’s just more Greenspan snake oil.
“Too much liquidity” is the problem not the solution. The reason the markets are so volatile and likely to implode at any minute is because every asset-class has been foolishly inflated by a monetary policy that followed Feldstein’s prescription. Now he wants to avoid the consequences of these misguided policies by reflating the bubble and destroying the dollar in the process. It’s a bad idea.
The Fed’s cuts coincide with the dismal earnings reports from Wall Street’s investment giants; Lehman Brothers, Morgan Stanley, Bear Stearns and Goldman Sachs. The four banks have taken a combined 22% haircut in the last quarter and are expected to sustain heavy losses from the billions of dollars of subprime CDOs they’ll have to either downgrade or write-off. So far, Bernanke’s rate cuts have diverted attention from the grim news and falling profits from America’s investment core.
The big financials aren’t the only one’s feeling the pinch from the housing meltdown either. There are many others including Bank of America that announced “unprecedented dislocations” in credit markets will have a “meaningful impact” on third-quarter results at its corporate investment bank. “Chief Financial Officer Joe Price told investors at a conference in San Francisco, ‘These are quite challenging financial times, and I cannot remember when credit markets in particular have been as volatile and unpredictable as they have been for the last few months.”’ (Bloomberg News)
Bernanke’s rate cuts are “thin gruel” for the banks bottom line, but they do offer a welcome distraction from the relentless drumbeat of bad economic news. The subprime sarcoma has spread to every part of the financial markets. It’s not just the steady up tick of foreclosures and mushrooming real estate inventory. The banks are also hoarding capital to cover their losses on unmarketable CDOs and leveraged buyouts (LBOs) which means that new mortgages will slow to a crawl even to credit-worthy applicants. An article in Bloomberg News gives us some idea of how quickly the market for housing-related bonds has deteriorated:
“Sales of US asset-backed securities, such as bonds that repackage subprime loans or credit card debts as well as collateralized debt obligations., FELL73% FROM A YEAR EARLIER to $30 billion last month, according to estimates from analysts at Deutsche Bank AG”. (Bloomberg News)
Bernanke is just prolonging the pain by not allowing the market to complete its cycle so that bad debts to be written off and industry can retool for the future. He’s buying time for his banker-friends, but doing considerable damage to the dollar in the process. Jim Rogers, the chairman of Beeland Interests Inc. summed up the rate cuts like this:
“Every time the Fed turns around to save its friends on Wall Street, it makes the situation worse. The dollar’s going to collapse, the bond market’s going to collapse. There’s going to be a lot of problems in the U.S.”
Rogers is not alone in his conclusions.
Even foreign leaders, like Venezuelan President Hugo Chavez, have commented recently on the worrisome state of US markets. Three days ago Chavez said on public television that we may be facing a “global financial earthquake” as the result of “irresponsible” US economic policies. Chavez quoted Nobel Laureate Joseph Stiglitz’s warning that we may be facing a major economic disaster which could lead to “widespread misery, hunger and severe unrest. And the United State is to blame.”
Chavez added that the Bush administration “has had to inject $300 US billion into the private banks this month to avoid a collapse of the dollar and the world economy ….The dollar is going down, they don’t see that it isn’t supported by reality” and because it is “because its fiscal deficit is the largest in history.”
Chavez’s predictions appear to be accurate as we can see that gold has suddenly skyrocketed while the dollar continues to fall.
The firestorm that began with the Fed’s low interest rates in 2002-2003 and evolved into the subprime-lending crisis of 2006-2007 is now threatening the stability of the entire financial system and the broader global economy. The reason for this is that mortgage debt is the foundation upon which all manner of bizarre-sounding debt-instruments are now resting. These debt-instruments (derivatives) greatly magnify the leverage on the underlying asset which is often is nothing more than a shaky subprime loan.
According to Satyajit Das, a respected authority on derivatives trading, “A single dollar of “real” capital supports $20 to $30 of loans. This spiral of borrowing on an increasingly thin base of real assets, writ large and in nearly infinite variety, ultimately created a world in which derivatives outstanding earlier this year stood at $485 trillion — or eight times total global gross domestic product of $60 trillion.” (Are We Headed for an Epic Bear Market” Jon Markman)
We are now seeing the first signs that this enormous debt-bubble is beginning to unwind. There’s very little the Fed can do to affect the inevitable crash that (we believe) they engineered. As defaults in housing continue to rise; the swaps and derivatives in the secondary market will implode. Trillions in market capitalization will vanish in a flash.
US GDP for the last 6 years has largely depended on transactions involving the exchange of massively over-levered assets. Production in the real economy has remained flat. The investment banks are at the epicenter of this controversial new system called “structured finance”. We continue to believe that the banks that depended on mortgage-backed securities (MBSs) and collateralized debt obligations (CDOs) (as well as asset-backed commercial paper) for the bulk of their income; are in deep trouble. Robert E. Lucas alluded to potential bank-woes in an article in the Wall Street Journal, “Mortgages and Monetary Policy”:
“There is an immediate risk of a payments crisis, a modern analogue to an old-fashioned bank run. Many institutions — not just banks – HAVE PAYMENT OBLIGATIONS THAT ARE FAR IN EXCESS OF THE RESERVES TO WHICH THEY HAVE IMMEDIATE ACCESS. Against these obligations they hold short-term securities that they believed could be liquidated on short notice at little cost. If some of these securities turn out not to be liquid in this sense (and especially if no one is sure who holds them) then everyone wants to get into Treasury bonds.”
It‘s rare when we are in agreement with the far-right viewpoints of the WSJ’s Editorial page, but in this case, Lucas nailed it. The banks have “obligations that are far in excess of the reserves to which they have immediate access.” This is a direct result of the new market architecture of “structured finance” which stacks debt on debt until the whole system is pushed to the breaking point.
Low interest rates can’t fix this “systemic” problem. Only fiscal policy can soften the blow of a deflating credit bubble. Economist Henry Liu offers this constructive “New Deal-type” proposal which is a sensible (and ethical) way to address the prospect of growing unemployment and increasing economic hardship for the middle and lower classes:
“A case can be made that what is needed under current conditions is not more cheap money from the Fed, but full employment with rising wages by government fiscal stimulants to boost consumer demand. The US government should make use of the money that the banks cannot find worthy borrowers to lend to, with money-cautious investors seeking to lend to the government, creating jobs for infrastructure rehabilitation and upgrading education to get the economy moving again off the destructive track of privatized systemic financial manipulation.” (“Either Way, It could be an Unkind Cut” Henry C K Liu, Asia Times)
Liu is right. We should be enacting the policies which reflect our values on social justice and the equitable distribution of wealth. Instead, the system is being manipulated by an oligarchy of racketeers who have savaged the currency, drained our treasury, and paved the way for a painful cycle of deflation. The US consumer is now being blamed for the massive current account deficit; as if shopping at Walmart for the lowest prices was a crime. But the Fed is the real culprit. They have been opposed to protective tariffs or currency regulation from the very beginning. No country in the history of the world has ever allowed its industrial base to be so ruthlessly decimated (offshoring, outsourcing, factory closures) just to feed the insatiable avarice of its criminal elites.
The current account deficit is the logical upshot of “free trade”. And, free trade is the Orwellian moniker used to describe the millions of decent paying jobs which are sacrificed on the altar of globalization. The workers had no part in creating this destructive self-aggrandizing system.
Nor did they have any say-so in the design of the modern market, which is often referred to as “structured finance”. Structured finance has been promoted as a way of using capital more efficiency by distributing risk more evenly throughout the system. In fact, it has turned out to be a colossal swindle which is now threatening to break the banks and bring the stock market crashing down. It is essentially mortgage-laundering scheme concocted by the investment banks; winked-at by the so-called regulators, facilitated by the ratings agencies, and exploited by the hedge funds. The victims of this scam are the insurance companies, foreign investors, pension funds and over-leveraged homeowners. Their losses are liable to soar into the trillions of dollars.
Fed chief Alan Greenspan enthusiastically endorsed every dodgy “structured finance” idea; including subprime lending, ARMs, Mortgage-backed securities, currency deregulation, credit expansion and structural changes to the financial services industry. These are the pavers on the road to perdition carefully put in place by the Federal Reserve.
Author Gabriel Kolko summed up “structured finance” in a recent article “The Predicted Financial Storm Has Arrived”:
“We are at an end of an era…Now begins global financial instability. It is impossible to speculate how long today’s turmoil will last-but there now exists an uncertainty and lack of confidence that has been unparalleled since the 1930s-and this ignorance and fear is itself a crucial factor. The moment of reckoning for bankers and bosses has arrived. What is very clear is that losses are massive and the entire developed world is now experiencing the worst economic crisis since 1945, one in which troubles in one nation compound those in others.
Internationalization of finance has meant less regulation than ever, and regulation was scarcely very effective even at the national level….. Greed’s only bounds are what makes money. Existing international institutions-of which the IMF is the most important–or well-intentioned advice will not change this reality.”
The people must take over control of their own currency again. The Federal Reserve must be abolished.
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Of Magritte Country and Simmering Frogs by Glitzqueen (aka The Other Katherine Harris)
glitzqueen
Featured writer
Dandelion Salad
Glitzqueen’s blog post
Sept. 21, 2007
(T)his is Magritte country, the country of surrealism. Anything can happen.
~ Baudouin Bruggeman
Bruggeman, a Belgian schoolmaster, made this remark with reference to the parliamentary crisis that may soon divide his nation. While sipping champagne at a recent festival in Namur, he also said, “We must not worry too much.”
In response, I submit that we’re all in Magritte country now. And we should be worried as hell.
Reminding me of frogs wasn’t the rift between French- and Flemish-speakers in Belgium, but a comment on Huffington Post to Hale Stewart’s blog, Why the Fed’s Rate Cut Was a Mistake. A member called usna73 opined:
(T)hey are hoping that … average citizens will act like a “boiled frog” as their standard of living steadily declines. All the while they will lie about the inflation statistics …
If the frog analogy is new to you, they cook peacefully over increasing heat, in water that feels at first like a warm bath and slowly builds to a boil. With reference to our decline in living standards, another Huffpost member (olephart) wrote very colorfully later:
In all the hoopla over the rate cut did anyone notice the reported wholesale and consumer price reports? Both were reported to have fallen! These numbers apparently issued in part to give cover to the Fed in its rate cut decision … Have any talking heads raised an eyebrow over these numbers? Is anyone else slightly incredulous? … The list of items I’ve seen going up is virtually everything I purchase. I know they use substitution to hide inflation but they must be down to tallying … costs of aardvark droppings and garbage at the port of New York. Commodity prices and gold are skyrocketing, oil has jumped 20% higher than post-Katrina prices, the dollar is tanking and they say that prices are falling? …
Too true, usna and olephart. And yet they’re peering at a teensy part of the picture: say, one bowler hat in a Magritte skyful. Even if we take in the whole “Golconde” of interchangeable bowler-topped burghers in suspension — and aptly liken it to a middle class held in stasis, without footing, poised to tumble or blow away through no motive force of its own — we’re leaving out a lot.
The larger canvas looks more like Goya’s “Disasters of War” and still spookier Black Paintings, depicting the evils he witnessed in wartime and and his vision of the dark spirits behind them. “Saturn Devouring One of His Children” just about nails the latter.
It’s a difficult image for most of us to view, but old Saturn isn’t short of worshippers. If you retain any doubt, brace yourself and read Stephen Lendman’s in-depth review of “The Shock Doctrine” by Naomi Klein, which appeared at Dandelion Salad yesterday. Even though many of the facts were familiar to me, Klein has brought them together in a uniquely forceful way. Certainly I intend to read the book, but the review seems an extraordinarily throrough account of its contents.
When I wrote “brace yourself” before reading this material, I meant it earnestly. There’s a grain of truth in conservative claims that we progressives are “soft”, which derives from the happy fact that we’re decent people. Few of us have ever done anything terrible and the wrongs that we do commit pain us. Unlike our foes, we were born and/or bred with empathy; thus, it’s hard for us to accept that some people — typically those in charge — are Just Plain Wicked. That’s why they get away with their conspiracies, laughing us off as fools when we spot them conspiring, wave our arms and blow whistles.
Naomi Klein is no fool and years of research went into the volume Lendman reviewed. It shows in certain terms that war and other catastrophes, man-made or opportunistically seized upon, are as meat and drink to those ruling most of the world now. Moving from one plundered country to the next, she demonstrates that the welfare of nations and people means nothing to these modern-day Saturns of global finance and commerce or to their locally purchased enablers.
To them, each territory is just a pot in which some of us swim with the illusion of freedom — until the rulers of the universe get a bit hungry or the heat chances to rise on its own. Katrina and the tsunami were gifts; they didn’t have to foment conflicts, engineer coups or maim societies with debt, as they do in order to feed on most populations. Following the first pulse of fire, wherever it comes from, they apply others — usually moving the dial gingerly to keep the froggies stupefied or even keen for more warmth, but they aren’t a bit averse to slamming the lid on hard and jolting the heat to max, when they’re in a rush for dinner.
We’re among the many being cooked now, of course — besides all the crises we’re already stewing in, we can feel the temperature rising — and I’m willing to bet the radical right-wing Flemings of northern Belgium are in league with them to boil the south. The country has a vast national debt, which they’d be thrilled to see settled disproportionately on the poorer Walloons, thus making them ripe for World Bank/IMF exploitation.
Yeah, it all sounds surreal. But now the whole world is Magritte country.
09.20.07 Uncensored News Reports From Across The Middle East (video; over 18 only)
Warning
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This video contains images depicting the reality and horror of war and should only be viewed by a mature audience.
Selected Episode
Sept. 20, 2007
For more episodes and other Link TV programs:
http://www.linktv.org/originalseries
“Netanyahu Spills the Beans,” IBA TV, Israel
“Rice in Jerusalem, Israel Attacks Gaza,” Dubai TV, UAE
“Wedding at the Border,” Syria TV, Syria
“Syrian Opposition Meets in Germany,” Al-Iraqiya TV, Iraq
March 14 Bloc Threatened in Parliament,” Al Jazeera English, Qatar
Assassinated MP Feared for His Life,” Future TV, Lebanon
Al Zawahiri Calls Musharraf an American Puppet,” Al Jazeera TV, Qatar
“Britain May Establish First Interfaith School,” Al Arabiya TV, UAE
“Soup for Everyone,” Dubai TV, UAE
Produced for Link TV by Jamal Dajani
Dandelion Salad 