Interview with Nahanni Rous producer of the documentary film Encounter Point http://www.encounterpoint.com
Added: March 29, 2007
Day: March 7, 2008
Gaza Under Siege by Ralph Nader
by Ralph Nader
Friday, March 7. 2008
The world’s largest prison—Gaza prison with 1.5 million inmates, many of them starving, sick and penniless—is receiving more sympathy and protest by Israeli citizens, of widely impressive backgrounds, than is reported in the U.S. press.
In contrast, the humanitarian crisis brought about by Israeli government blockades that prevent food, medicine, fuel and other necessities from coming into this tiny enclave through international relief organizations is received with predictable silence or callousness by members of Congress, including John McCain, Hillary Clinton and Barack Obama.
The contrast invites more public attention and discussion.
Israel has militarily occupied Gaza for forty years. It pulled out its colonials in 2005 but maintained an iron grip on the area—controlling all access, including its airspace and territorial waters. Its F-16s and helicopter gunships regularly shred more and more of the areas’ public works, its neighborhoods and inflict collective punishment on civilians in violation of Article 55 of the Fourth Geneva Convention.
As the International Red Cross declares, citing treaties establishing international humanitarian law, “Neither the civilian population as a whole nor individual civilians may be attacked.”
According to The Nation magazine, the great Israeli human rights organization B’Tselem, reports that the primitive rockets from Gaza, have taken thirteen Israeli lives in the past four years, while Israeli forces have killed more than 1000 Palestinians in the occupied territories in the past two years alone. Almost half of them were civilians, including some 200 children.
The Israeli government is barring most of the trucks from entering Gaza to feed the nearly one million Palestinians depending on international relief, from groups such as the United Nations Relief and Works Agency (UNRWA). The loss of life from crumbling health care facilities, disastrous electricity cutoffs, gross malnutrition and contaminated drinking water from broken public water systems does not get totaled. These are the children and their civilian adult relatives who expire in a silent violence of suffering that 98 percent of Congress avoids mentioning while extending billions of taxpayer dollars to Israel annually.
UNRWA says “we are seeing evidence of the stunting of children, their growth is slowing…” Cancer patients are deprived of their chemotherapy, kidney patients are cut off from dialysis treatments and premature babies cannot receive blood-clotting medications, reports Professor Saree Makdisi in the February 2, 2008 issue of The Nation.
The misery, mortality and morbidity worsens day by day. Here is how the commissioner-general of UNRWA sums it up—“Gaza is on the threshold of becoming the first territory to be intentionally reduced to a state of abject destitution, with the knowledge, acquiescence and-some would say-encouragement of the international community.”
Amidst the swirl of hard-liners on both sides and in both Democratic and Republican parties, consider the latest poll (February 27, 2008) of Israelis in the highly respected newspaper—Haaretz: “Sixty-four percent of Israelis say the government must hold direct talks with the Hamas government in Gaza toward a cease-fire and the release of captive soldier Gilad Shalit. Less that one-third (28 percent) still opposes such talks. An increasing number of public figures, including senior officers in the Israeli Defense Forces’ reserves have expressed similar positions on talks with Hamas.”
Hamas, which was created with the support of Israel and the U.S. government years ago to counter the Palestine Liberation Organization (PLO), has repeatedly offered cease-fire proposals.
The Israeli prime minister rejected them, notwithstanding “a growing number of politicians and security offices who are calling for Israel to accept a cease-fire,” according to Middle East specialist, professor Steve Niva.
There is a similar contrast between the hardline Bush regime, the comparably hardline Democrats in Congress, and a recent survey by the American Jewish Committee (itself often hawkish on Israeli actions toward the Palestinians) of American Jewry.
As reported by Eric Alterman in the January 7, 2008 issue of The Nation, “a majority of Jews in this country oppose virtually every aspect of the Bush Admistration/neocon agenda,” including his war in Iraq and his belligerence toward Iran.
By a 46-to-43 percent plurality American Jews continue to support the creation of a Palestinian state, notes Alterman. Other polls show even higher support, among Jews in America, for a two-state solution.
Then Alterman comes to his conclusion, writing: “These views, however, have been obscured in our political discourse by an unholy alliance between conservative-dominated professional Jewish organizations and neoconservative Jewish pundits, aided by pliant and frequently clueless mainstream media that empower these right-wingers to speak for a people [Jewish-Americans] with values diametrically opposed to theirs.”
Makes for a healthy, constructive political debate doesn’t it?
If Democrats and Republicans were serious about peace in the Middle East, they would showcase the broad joint Israeli and Palestinian peace movements. These efforts now include the over 500 courageous Israeli and Palestinian families who have lost a loved one to the conflict and who have joined forces to form the Parents Circle—Bereaved Families Forum.
Together, these families are expanding a non-violent initiative to push for a peaceful resolution to the conflict. Even though some of the families have visited the United States, their efforts are almost unknown even to U.S. observers of that area’s turmoil.
A new DVD documentary titled Encounter Point (see http://www.encounterpoint.com) recounts the activities and passion of these Palestinian and Israeli families steeped in the peace philosophies of Mahatma Gandhi and Nelson Mandela.
Do you think members of Congress will give them a public hearing? A meeting? It would be worth asking your members of Congress to do so.
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. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.
see
Encounter Point – The Documentary
Statement on Gaza Bill By Ron Paul
No Incentives for Israel to Find Peace By Liam Bailey
Gaza: A humanitarian implosion
Mosaic News: 3/6/08 – World News from the Middle East
Australia’s Hidden Empire by John Pilger
by John Pilger
Global Research, March 7, 2008
www.johnpilger.com
When the outside world thinks about Australia, it generally turns to venerable clichés of innocence – cricket, leaping marsupials, endless sunshine, no worries. Australian governments actively encourage this. Witness the recent “G’Day USA” campaign, in which Kylie Minogue and Nicole Kidman sought to persuade Americans that, unlike the empire’s problematic outposts, a gormless greeting awaited them Down Under. After all, George W Bush had ordained the previous Australian prime minister, John Howard, “sheriff of Asia”.
Colbert Report: AT&Treason (video)
Whistle-Blower: Feds Have a Backdoor Into Wireless Carrier — Congress Reacts
By Kevin Poulsen
Wired
March 06, 2008
A U.S. government office in Quantico, Virginia, has direct, high-speed access to a major wireless carrier’s systems, exposing customers’ voice calls, data packets and physical movements to uncontrolled surveillance, according to a computer security consultant who says he worked for the carrier in late 2003.
“What I thought was alarming is how this carrier ended up essentially allowing a third party outside their organization to have unfettered access to their environment,” Babak Pasdar, now CEO of New York-based Bat Blue told THREAT LEVEL. “I wanted to put some access controls around it; they vehemently denied it. And when I wanted to put some logging around it, they denied that.”
Pasdar won’t name the wireless carrier in question, but his claims are nearly identical to unsourced allegations made in a federal lawsuit filed in 2006 against four phone companies and the U.S. government for alleged privacy violations. That suit names Verizon Wireless as the culprit.
Pasdar has executed a seven-page affidavit for the nonprofit Government Accountability Project in Washington, which on Tuesday began circulating the document (.pdf), along with talking points (.doc), to congressional staffers hashing out a Republican proposal to grant retroactive legal immunity to phone companies who cooperated in the warrantless wiretapping of Americans.
h/t: ICH
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. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.
Statement on Gaza Bill By Ron Paul
By Ron Paul
March 5, 2008
Madam Speaker: I rise in opposition to H. Res. 951. As one who is consistently against war and violence, I obviously do not support the firing of rockets indiscriminately into civilian populations. I believe it is appalling that Palestinians are firing rockets that harm innocent Israelis, just as I believe it is appalling that Israel fires missiles into Palestinian areas where children and other non-combatants are killed and injured.
Unfortunately, legislation such as this is more likely to perpetuate violence in the Middle East than contribute to its abatement. It is our continued involvement and intervention – particularly when it appears to be one-sided – that reduces the incentive for opposing sides to reach a lasting peace agreement.
Additionally, this bill will continue the march toward war with Iran and Syria, as it contains provocative language targeting these countries. The legislation oversimplifies the Israel/Palestine conflict and the larger unrest in the Middle East by simply pointing the finger at Iran and Syria . This is another piece in a steady series of legislation passed in the House that intensifies enmity between the United States and Iran and Syria. My colleagues will recall that we saw a similar steady stream of provocative legislation against Iraq in the years before the US attack on that country.
I strongly believe that we must cease making proclamations involving conflicts that have nothing to do with the United States. We incur the wrath of those who feel slighted while doing very little to slow or stop the violence.
h/t: ICH
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. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.
see
No Incentives for Israel to Find Peace By Liam Bailey
Gaza: A humanitarian implosion
The Presidential Interview: Ecuador’s Correa by Greg Palast (video)
http://www.GregPalast.com
Greg Palast get’s the exclusive English interview with this controversial new Latin American president.
Price Gouging by Ralph Nader
by Ralph Nader
Nader for President 2008
March 6, 2008
The gouging price of oil – today reaching over $105 a barrel – is spiking gasoline and heating oil prices.
The price is being manipulated as a speculative commodity on the New York Mercantile Exchange.
A necessity for billions of people is now in the grip of speculators while producers and refiners are laughing all the way to the bank.
Where is our government?
It is doing nothing.
The oil-marinated Bush regime and the oil-saturated Congress are leaving Americans defenseless.
Four dollar a gallon oil is coming, analysts declare.
Millions of poor Americans are shivering without adequate home energy assistance funds.
While Exxon/Mobil makes over $1700 a second.
And the bosses make tens of thousands of dollars each per hour.
Despite appeals, the giant oil companies will not contribute to these energy assistance funds.
Over two years ago, they rebuffed Senator Charles Grassley’s request that they show some sympathy for the poor.
The major party candidates – McCain, Clinton and Obama – are not speaking out forcefully and demanding that the federal government investigate the causes of the skyrocketing price of oil.
They are not speaking out forcefully and demanding the Justice Department and Congressional committees use their subpoena powers to delve into the workings of the these mercantile exchanges, the timing and excessively long shutdowns of refineries for repair, and the resulting refinery shortages – which curtail supply and push prices upward.
Nor do they aggressively advocate for an excess profits tax on the oil industry – a tax which has been supported by American leaders ranging from former President Harry Truman to entrepreneur and CEO Jeno Paulucci.
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. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.
see
Gaza: A humanitarian implosion
Thursday March 6th, 2008
A report from eight UK human rights’ organizations says situation in Gaza worst since 1967
Intro:
A coalition of eight UK-based human rights organizations released a scathing report on conditions in the Gaza Strip on Thursday.DAVID MEPHAN, POLICY DIRECTOR, SAVE THE CHILDREN: The judgment of the various humanitarian, human rights, and development organizations like Save the Children that have been involved in putting this report together is that the humanitarian situation on the ground in Gaza today is the worst that it’s been for forty years.
Tensions Rise in Latin America Will Venezuela Attack?
By Liam Bailey
featured writer
Dandelion Salad
The Bailey Mail
March 7, 2008
2008-03-03 The war of words between the U.S. and Venezuela took a step closer to becoming a war of bullets over the past two days. The possibility comes from the fact that Venezuela’s President Hugo Chavez has threatened to declare war on Columbia if the Columbian army enters his country after anti-Columbian Guerrilla’s after Columbia chased the Rebels into Ecuador the day before. The raid was successful in killing one of the rebel group, Farc’s generals.Chavez called the general’s killing a “cowardly murder” and said any similar action into his territory would be seen as a “cause for war”. Along with Chavez’s words go ten tank battalions with air-support, which he swiftly sent to the border with Columbia, along with closing the Columbian embassy in Caracas.
The U.S. has recently been developing a good relationship with Columbia, and U.S. soldiers are in the country trying to assist them in dismantling some of the drug smuggling networks. Though the U.S. has specifically warned Columbia not to enter Venezuela, it is widely thought that if Venezuela does invade Columbia that the U.S. will be drawn into the conflict. On the other hand it is also widely thought that this is just more bum and bluster for a man known for flamboyant but largely empty threats.
One commenter on the Daily Mail online where I read the article believed the move was a deliberate attempt to create tension to push up oil prices, a motive he believes is shared by Iran’s Ahmadinejad. Another commenter wondered how the U.S. could even consider embroiling itself in another conflict when its military is already overstretched.
The overall feeling, including my own is that this is a storm in a teacup that will come to nothing. It is highly unlikely that Columbia will go against the U.S.’ word and enter Venezuela on the tail of rebels. An Argentinean commenter on the same thread warned that if it does come to something the consequences will be drastic for a region beginning to find its feet economically.
see
$300 Million From Chavez To FARC A Fake By Greg Palast
Latin American crisis triggered by an assassination “Made in the USA”
The Final Act of Abu Ghraib
By JoAnn Wypijewski
Mother Jones
March/April 2008 Issue
Exclusive: A front-row seat at the military scandal’s farcical last trial
…
This was the last court-martial that the Army would convene in the most notorious scandal of the Iraq War, the end of the road from Abu Ghraib that began in the spring of 2004 when photographs of naked, humiliated prisoners and smiling GIs first flashed around the world. Jordan had been the highest-ranking officer living at the prison when those photos were taken, and he was the only officer the Army chose to prosecute. Earlier that day he was acquitted of all charges connected with prisoner abuse, but he faced sentencing for disobeying a general order from a superior officer during the Abu Ghraib investigation. Of the charges he had confronted, this one carried the stiffest penalty—up to five years in prison, as opposed to one year for maltreatment of a fellow human. Like other character witnesses for Jordan, Colonel Norton had made a career depending on orders given and carried out: Special Forces, Vietnam, Haiti, General Dynamics. Like them, he was unfazed by Jordan’s offense. “He’s a man I’d go to war with, in a heartbeat,” Norton told the jurors, nine colonels and one brigadier general, on the panel. “He was a team player.” By then even the prosecutors seemed to agree. The government had begun its pursuit of Jordan more than three years earlier, at one point piling on charges that could have put him away for almost 48 years. Now its lawyers concluded, sighing, “What is a fair and just punishment?…A fine is certainly appropriate”—$7,373.10, one month’s pay—”a reprimand is certainly warranted.” A reprimand is all that Lt. Colonel Jordan got. It’s what he could have got without the expense of a trial and the jury’s affirmation that the authority invested in rank doesn’t carry much responsibility after all, that an officer might just be an empty suit.
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. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.
see
Abu Ghraib prison turned soldiers evil by design: researcher + Stanford Prison Experiment
Am I a Torturer? By Justine Sharrock
Extraordinary Rendition (video)
Tell Bush: Don’t Veto Torture Ban
Abu Omar: I Was Kidnapped by the CIA + The Torture Playlist
Mosaic News: 3/6/08 – World News from the Middle East
Warning
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This video may contain images depicting the reality and horror of war and should only be viewed by a mature audience.
For more: http://linktv.org/originalseries
“Hamas Claims Responsibility for Killing IDF Soldier,” IBA TV, Israel
“8 Killed In Jerusalem Seminary,” IBA TV, Israel
“Humanitarian Crisis in Gaza,” Al Jazeera English, Qatar
“20 Day Old Baby Killed in Gaza,” Syria TV, Syria
“Arab Ministers Come Out Empty Handed,” Dubai TV, UAE
“Iraqi Children Suffer,” Al-Aram TV, Iran
“Iran Parliament Elections Kick Off,” Al Jazeera TV. Qatar
“OPEC Will Not Increase Production,” Al Arabiya TV, UAE
Produced for Link TV by Jamal Dajani.
Vodpod videos no longer available. from www.youtube.com posted with vodpod
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No Incentives for Israel to Find Peace By Liam Bailey
By Liam Bailey
featured writer
Dandelion Salad
The Bailey Mail
March 7, 2008
The Arab League threatened Wednesday to withdraw their continued offer of normalized relations with Israel in return for the Jewish state’s withdrawal to the borders as they stood before the 1967 war. The Arab Peace Initiative was first made in 2002, when Israel swiftly rejected it, but seemed to consider it more deeply when it was reoffered last year, in an attempt by Israel to make some regional allies against Iran.
The threat from the Arab League is in response to what they call Israeli war crimes in Gaza and the other occupied territories, war crimes which it says are being recorded. I regret to say that it is unlikely the threat will make much of an impact on Israel’s behaviour. The truth is Israel doesn’t want peace because it comes at a far higher price for them than continuing the conflict:
They have the continued support of the international community as they starve the population of Gaza to death, and if that isn’t enough they can bomb the place up a bit for good measure, aided by the millions in military aid from the U.S. buying them the best weaponry, and they have hardly any civilian casualties. If Israel did find peace the military aid would stop and they would lose their precious East Jerusalem; there is no incentive for Israel to find peace and until that changes there will be no peace.
Meanwhile, Palestinian Authority President and supreme rule of the West Bank Mahmoud Abbas has been led by the nose by Condoleeza Rice. Abbas froze peace talks with Israel over the weekend to protest Israel’s deadly strikes on Gaza, and he had said earlier Wednesday that a ceasefire would be necessary to get him back to the table.
Rice however insisted the two were not linked: “I have talked with … president Abbas and obviously he wants calm … but this is not a condition for the resumption of the talks.” How can Rice decide what a precondition for talks is, Abbas set the precondition for god sake. Either way, Abbas did as he was told and will return to negotiations while bombs fall on Gaza. Israeli Prime Minister Olmert did say there would be no further attacks on Gaza if the rocket fire ceased.
The International Herald Tribune ran a story on the Palestinian divisions caused by Hamas’ continued rocket fire. According to IHT Israeli officials have said the point of last weeks operation was to show Hamas the cost of continued rocket fire, and to create more popular dissatisfaction at Hamas rule. What better way to reduce support for Hamas than to kill dozens of innocent children and hundreds of Palestinians, what they call a method in the madness. The article only surveyed a handful of Palestinians, more of whom supported resistance than didn’t and the popular opinion even among Fatah supporters is that Israel’s disproportionate violence serves to increase support for Hamas, not weaken it.
The continued violence is also causing dissent among Israelis, especially as it comes again after the run up to last year’s Annapolis conference and the re-release of the Arab initiative along with Israel’s desire to form a regional alliance against Iran had many analysts, myself included hoping that peace maybe closer than ever before. Israeli newspaper Haaretz, last week ran a story on how a majority of Israeli citizens support talks with Hamas on resolving the conflict.
With Israel offering to stop attacking Gaza if the rocket fire stops, and Hamas offering a long ceasefire (hudna) in return for a complete halt to all Israeli operations in the West Bank and Gaza, the uninformed may wonder why the violence continues. I put it like this:
If Hamas stopped firing rockets, then Israel stopped attacking Gaza, before too long Israel would provoke Hamas by launching a police raid to arrest wanted militants, or an assassination and it would all start again. This has been the way it has gone time and time again, because like I say Israel has no incentive to find peace and many incentives to continue the conflict, until this conflict starts costing Israel there will be no peace.
see
Sorting Through The Rubble in Post-Bubble America By Mike Whitney
By Mike Whitney
07/03/08 “ICH“
“Market conditions are the worst anyone in this industry can ever remember. I don’t think anyone has a recollection of a total disappearance in liquidity… There are billion of dollars worth of assets out there for which there is just no market.”
— Alain Grisay, chief executive officer of London-based F&C Asset Management Plc; Bloomberg News
The hurricane that began with subprime mortgages, has swept through the credit markets wreaking havoc on municipal bonds, hedge funds, complex structured investments, and agency debt (Fannie Mae). Now the first gusts from the Force-5 gale are touching down in the real economy where the damage is expected to be widespread. The Labor Department reported on Friday that US employers cut 63,000 jobs in February, the biggest monthly decline in five years. The cut in payrolls added to the 22,000 jobs that were lost in January. 52,000 jobs were cut in manufacturing, while 331,000 have been lost in construction since September 2006.
The Labor Department also reported on Wednesday that worker productivity slowed significantly in the last quarter of 2007. When productivity is off; labor costs go up which adds to inflationary pressures. That makes it harder for the Fed to lower rates to stimulate the economy without inviting the dreaded “stagflation”—slow growth and rising prices.
The news on commercial construction is equally bleak. The Wall Street Journal reports:
“For the second month in a row, the Commerce Department reported a decline in spending on nonresidential construction — which includes everything from hospitals to office parks to shopping malls….Signs of trouble cropped up at the end of the year. As credit markets tightened, office space sold in the fourth quarter dropped 42% from a year earlier, and sales of large retail properties declined 31%, says Real Capital Analytics, a New York real-estate research group….If spending continues to slow, construction workers, who are reeling from the housing slowdown, face more layoffs.” (“Building Slowdown Goes Commercial”, Wall Street Journal)
Commercial real estate is the next shoe to drop. There’s a tremendous oversupply of retail space nationwide and the bloodletting has just begun. Builders have continued to put up shopping malls and office buildings even though residential real estate has gone off a cliff. Now the battered banks will have to repossess thousands of empty buildings in strip malls with no chance of leasing them out in the near future. It’s a disaster . From December 2007 to January 2008 spending on commercial construction took its steepest drop in 14 years. The sudden downturn is adding more and more people to the unemployment lines.
So, what does it all mean? Unemployment is up, productivity is down, inflation is increasing, the dollar is underwater, commercial real estate is in the tank and the country is sliding inexorably into recession.
THE DEEPEST AND MOST RAPID DOWNSWING SINCE THE GREAT DEPRESSION
As for the housing market:
“Housing is in its “deepest, most rapid downswing since the Great Depression,” the chief economist for the National Association of Home Builders said Tuesday, and the downward momentum on housing prices appears to be accelerating.
“Housing is in a major contraction mode and will be another major, heavy weight on the economy in the first quarter,” said David Seiders, the NAHB’s chief economist.” (“Rapid Deterioration”, MarketWatch)
Home sales are down 65% from their peak in 2005. Inventory is stacked a mile-high. Vacant homes now number about 2 million; an increase of 800,000 since 2005. Demand is weak and prices are plummeting. It’s all bad. Meanwhile, the Federal Reserve and the Bush administration are scrambling to devise a plan that will keep homeowners from packing it in altogether and walking away from their mortgages. But what can they do? Will they really write-down the principle on the mortgages like Bernanke recommends and face years of litigation from bond holders who bought mortgage-backed securities under different terms? Or will they simply allow the market to clear and send 2 million homeowners into foreclosure in 2008 alone?
The deflating housing bubble is finally being felt in the broader economy. Home equity is vanishing which is putting downward pressure on consumer spending and shrinking GDP. Also, the dollar is at historic lows, and an intractable credit crunch has left the financial markets in disarray. Experts are now predicting that consumer spending won’t rebound until housing prices stop falling which could be late into 2009. When Japan experienced a similar credit/real estate meltdown; it took more than a decade to recover. There’s no reason to believe that the present crisis will unwind any faster.
On Friday, banking giant USB estimated that credit woes would end up costing financial institutions $600 billion, three times more than their original estimate of $200 billion. But USB’s forecast does not take into account the $6 trillion of lost home equity if housing prices fall 30% in the next two years. (which is very likely) Nor does it account for the potential losses in the structured finance market where $7.8 trillion of loans (which are presently in “pooled securities”) have gone into a deep-freeze. There’s no way of knowing how much capital will be drained from the system by the time all of this plays out, but if $7 trillion was lost in the dot.com bust, then it should greatly exceed that figure.
The housing bubble was entirely avoidable. It was the policies of the Federal Reserve which made it inevitable. By fixing interest rates below the rate of inflation for almost 3 years, Greenspan ignited speculation in housing and created a false perception of prosperity. In truth, it was nothing more than asset-inflation through the expansion of debt. The Fed’s actions were complimented by repeal of regulatory legislation which prevented the commercial banks from dabbling in securities trading. Once the laws were changed, the banks were free to peddle their mortgage-backed securities to investors around the world. (A-rated mortgage-backed bonds are currently fetching just 13% of their face value!) Now, those sketchy bonds are blowing up everywhere leaving large parts of the financial system dysfunctional.
As investors continue to run away from anything remotely connected to mortgages; the price of risk, as measured by the spread on corporate bonds, has skyrocketed. In fact, investors are even shunning overextended GSEs like Fannie Mae and Freddie Mac. As the number of foreclosures continues to soar, the aversion to risk will intensify triggering a savage unwinding of leveraged bets in the hedge funds as well as a wider paralysis in the financial markets.
There’s absolutely no doubt now that the storm that is currently ripping through the financials will soon bring Wall Street to its knees. It may be a good time to remember that on March 24, 2000, the NASDAQ peaked at 5048. On October 9, 2002 it bottomed-out at 1114; a loss of nearly 80%. Could it happen again?
You bet. Expect to see the Dow hugging 7,000 by year end.
The Wall Street Journal ran an article on Tuesday which outlined how the banks changed standards at the Basel meetings in Switzerland to give them greater autonomy in deciding issues that should have been governed by strict regulations:
“Some of the world’s top bankers spent nearly a decade designing new rules to help global financial institutions stay out of trouble…Their primary tenet: Banks should be given more freedom to decide for themselves how much risk they should take on, since they are in a better position than regulators to make that call.” (“Mortgage Fallout Exposes Holes in New Bank-risk Rules”, Wall Street Journal)
It is a classic case of the foxes deciding they should oversee the hen-house.
The Basel Committee on Banking Supervision is an industry-led group comprised of the central bank governors from the G-10 countries; Belgium, Canada, France, Italy, Japan, the Netherlands, Sweden, Switzerland, Britain and the US. Basel is supposed to establish the rules for maintaining sufficient capitalization for banks so that depositors are protected. But it’s a sham. It appears to be more focused on maintaining US and European dominance over the developing world and making sure the levers of financial power stay in the manicured paws of western banking mandarins.
Now that the financial system is in terminal distress; many people are questioning the wisdom of handing over so much power to organizations that don’t operate in the publics interest. Thomas Jefferson anticipated this scenario and issued a warning about the perils of abdicating sovereignty to unelected, profit-oriented bankers. He said:
“If the American people ever allow private banks to control the issue of our currency, first by inflation, then by deflation, the banks and the corporations that will grow up will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.”
Even though the nation is stumbling towards an economic hard-landing; the banks are still only interested in finding a way to save themselves. Last week, the New York Times revealed a “confidential proposal” from Bank of America to members of Congress asking the US government to guarantee $739 billion in mortgages that are at “moderate to high risk” of defaulting to save the banks from potential losses. Yesterday, Rep. Barney Frank–operating in the interests of his banking constituents–made an appeal in the House of Representatives on this very issue, saying that congress should consider buying up some of these sinking mortgages to help struggling homeowners. But why should the taxpayer pay for the mistakes of privately-owned banks; especially when those banks have been bilking the public out of billions of dollars through the sale of worthless subprime securities?
The Fed has already lowered the Fed Funds rate by 2.25 basis points to 3% (more than a full-point below the current rate of inflation) to help the banks recoup some of their losses from their bad bets. Bernanke has also opened a Temporary Auction Facility (TAF), which allows the banks to use mortgage-backed securities (MBS) and other structured investments as collateral at 85% their face-value.(even though the bonds are only worth pennies on the dollar on the open market) So far, the TAF has secretly loaned out $75 billion to capital-depleted banks, which Bernanke thinks is a positive development. By why is the Fed chief encouraged by the fact that the country’s largest investment banks need to borrow billions of dollars at bargain rates just to stay solvent? The truth is that many of the banks are just padding their flagging balance sheets so they can scour the planet looking for investors to buy parts of their franchises.
On Tuesday, Bernanke addressed the Independent Community of Bankers of America exhorting them to take whatever steps are required to keep homeowners with negative equity from walking away from their mortgages. Along with the proposed “rate freeze” on adjustable rate mortgages (ARMs); the Fed chief also suggested that the lenders lower the principle on the mortgages to entice homeowners to keep making nominal payments on their loans. But, clearly, foreclosure is the wisest choice for many homeowners who may otherwise be chained to an asset of steadily declining value for the rest of their lives. Homeowners should base their decisions on what is in their best long-term financial interests, just as the bankers would do. If that means walking-away, then that is what they should do. The homeowner is in no way responsible for the problems deriving from the subprime/securitization scam. That was entirely the work of the bankers.
The FDIC has begun to increase staff at many of its regional offices to deal with the anticipated rash of bank failures in states hardest hit by the housing bust. California, Florida and parts of the southwest will definitely need the most attention. These states are undergoing a housing depression and many of the smaller banks which issued the mortgages and commercial real estate loans are bound to get hammered. They simply do not have the capital cushion to withstand the tsunami of defaults and foreclosures that are coming. Depositors should make sure that all their savings are covered under FDIC rules; no more than $100,000 per account. Money markets are not insured.
Also, the G-7 nations announced last week that if “irrational” price movements persist, they would “collectively take suitable measures to calm the financial markets”. The group added that they would conduct their activities secretively for maximum effect. Consider how desperate the situation must really be for G-7 finance ministers to issue a public warning that they are planning to intervene in the market to prevent a calamity. This is stunning. The group did not specify whether they were talking about propping up the stumbling greenback or buying up futures in the equities markets like a global Plunge Protection Team. Nevertheless, their comments add to the growing perception that things are out of control and deteriorating quickly.
INFLATION vs. DEFLATION
With oil, gold and food prices soaring, the Fed has been roundly criticized for cutting rates and risking further erosion to the value of the dollar. (This morning the dollar fell to $1.53 on the euro!) But Bernanke is right; the real danger is deflation. We are at the beginning of a consumer-led recession; characterized by weakening demand, lack of personal savings, declining asset-values (particularly homes) and over-indebtedness. The Fed’s increases to the money supply via low interest rates will not effect the dramatic economic slowdown that will be evident within the year. Trillions of dollars of derivatives, over-leveraged subprime assets and otherwise bad bets are all unwinding at the same time draining an ocean of virtual capital from the economy. If credit keeps getting destroyed at the present pace, the country will be in the grips of a depression-like slump by 2009. The Wall Street Journal’s Greg Ip puts it like this in his article “For the Fed, a Recession—Not Inflation—Poses Greater Threat”:
“So why is the Fed more worried about growth than inflation? First, it thinks run-ups in commodity prices explain the increases, not only in overall inflation but also in core inflation: higher energy costs have “passed through” to other goods and services. Core inflation rose and fell with energy inflation between early 2006 and mid-2007, and the Fed thinks the same thing is probably happening now. If energy and food prices stop rising — they don’t have to actually fall — both overall and core inflation should recede.
Ip continues: “Fed officials don’t think the latest jump (in food and energy) can be justified by fundamental supply and demand….A more likely explanation, investors perhaps alarmed by the Fed’s dovish stance, are pouring money into commodity funds and foreign currencies as a hedge against inflation. …But speculative price gains can’t be sustained if the fundamentals don’t support them. If the Fed and the futures markets are right, prices will be lower, not higher, a year from now.”
Bernanke is right on this point. Temporary price increases are not the result of shortages, increased production costs, or fundamentals, but speculation. In fact, demand for petroleum products has been down by 3.4% over the last four weeks compared to the same time last year, which means that prices will probably drop steeply once the commodities frenzy runs out of steam. Investors are simply looking for somewhere to put their money rather than in shaky corporate bonds or overpriced equities. Commodities are the logical alternative. But as soon as consumer spending stalls; all asset-classes will fall accordingly, including gold and oil. (And, yes, the dollar should recover some lost-ground, however temporary.)
Many analysts believe oil’s rally will be short-lived. Falling demand for overall petroleum products, which was down 3.4 percent over the last four weeks compared to the same time last year, suggest prices could drop steeply once the dollar-driven oil investment frenzy runs out of steam, analysts said.
THE RECESSION AHEAD: Cyclical downturn or post-bubble recession?
An article in the New York Times by Morgan Stanley’s Asia chairman, Stephen Roach, states that the country is not in a cyclical downturn, but post-bubble recession. There is a big difference. The Fed’s interest rate cuts and Bush’s “Stimulus Plan” are unlikely to stop housing prices from continuing to fall nor will they miraculously fix the problems in the credit markets. The massive expansion of credit in the last 6 years has created a $45 trillion derivatives balloon that could implode or just partially unwind. No one really knows. And no one really knows how much damage it will cause to the global financial system. Stay tuned.
Roach notes that the recession of 2000 to 2001 was a collapse of business spending which only represented a 13% of GDP. Compare that to the current recession which “has been set off by the simultaneous bursting of property and credit bubbles…. Those two economic sectors collectively peaked at 78 percent of gross domestic product, or fully six times the share of the sector that pushed the country into recession seven years ago.”
Not only will the impending recession be six times more severe; it will also be the death-knell for America’s consumer-based society. Attitudes towards spending have already changed dramatically since prices on food and fuel have increased. That trend will only grow as hard times set in.
Roach adds: “For asset-dependent, bubble-prone economies, a cyclical recovery — even when assisted by aggressive monetary and fiscal accommodation — isn’t a given….Washington policymakers may not be able to arrest this post-bubble downturn. Interest rate cuts are unlikely to halt the decline in nationwide home prices…Aggressive interest rate cuts have not done much to contain the lethal contagion spreading in credit and capital markets.
A more effective strategy would be to try to tilt the economy away from consumption and toward exports and long-needed investments in infrastructure…Fiscal initiatives should be directed at laying the groundwork for future growth, especially by upgrading the nation’s antiquated highways, bridges and ports.” (“Double, Bubble Trouble” Stephen Roach, New York Times)
The Federal Reserve and Washington policymakers are still stuck in the past trying to revive consumer spending by creating another equity bubble with low interest rates and their $600 per person “stimulus” giveaways. This is the wrong approach and its bound to fail. The Greenspan era is over. Let’s put it to rest once and for all. No more bubbles. No more phony debt-generated prosperity. No more over-leveraged, complex Ponzi-scams that end in tragedy. Roach points the way forward; invest in infrastructure and environmentally-friendly technologies, rebuild the economy from the ground up, reestablish fiscal sanity and minimize deficit spending, put America back to work making things that people use and that improve society, and (as Roach says) “help the innocent victims of the bubble’s aftermath — especially lower- and middle-income families”. And, most importantly, abolish the Federal Reserve and give the control of our money back to our elected representatives in Congress. That is the only way to put America’s economic future back in the hands of the people.
That’s a plan we can all get behind. It’s time to split the new wood and start fresh.
Bravo, Stephen
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Heathrow airport first to fingerprint
By David Millward and Gordon Rayner
telegraph.co.uk
9:03pm GMT 07/03/2008
Millions of British airline passengers face mandatory fingerprinting before being allowed to board flights when Heathrow’s Terminal 5 opens later this month.
For the first time at any airport, the biometric checks will apply to all domestic passengers leaving the terminal, which will handle all British Airways flights to and from Heathrow.
The controversial security measure is also set to be introduced at Gatwick, Manchester and Heathrow’s Terminal 1, and many airline industry insiders believe fingerprinting could become universal at all UK airports within a few years.
All four million domestic passengers who will pass through Terminal 5 annually after it opens on March 27 will have four fingerprints taken, as well as being photographed, when they check in.
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. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.
Dandelion Salad 