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Energy Nominee Ernest Moniz Criticized for Backing Fracking and Nuclear Power; Ties to BP,...

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President Obama’s pick to become the nation’s next secretary of energy is drawing criticism for his deep ties to the fossil fuel, fracking and nuclear industries. MIT nuclear physicist Ernest Moniz has served on advisory boards for oil giant BP and General Electric, and was a trustee of the King Abdullah Petroleum Studies and Research Center, a Saudi Aramco-backed nonprofit organization. In 2011, Moniz was the chief author of an influential study for MIT on the future of natural gas. According to a new report by the Public Accountability Initiative, Moniz failed to disclose that he had taken a lucrative position at a pro-drilling firm called ICF International just days before a key natural gas "fracking" study was released. Reaction to his nomination has split the environmental community. Advocacy groups such as Public Citizen and Food & Water Watch are campaigning against Moniz’s nomination, but the Natural Resources Defense Council has praised his work on advancing clean energy based on efficiency and renewable power. We speak to Kevin Connor of the Public Accountability Initiative and ProPublica reporter Justin Elliott, who have both authored investigations into Moniz’s ties to industry.

TRANSCRIPT:

AMY GOODMAN: President Obama’s pick to become the nation’s next energy secretary is drawing criticism for his deep ties to the fossil fuel, fracking and nuclear industry. Obama nominated MIT Professor Ernest Moniz last month to replace outgoing Energy Secretary Steven Chu.

PRESIDENT BARACK OBAMA: I could not be more grateful to Steve for the incredible contribution that he’s made to this country. And now that he’s decided to leave Washington for sunny California, I’m proud to nominate another brilliant scientist to take his place, Mr. Ernie Moniz. So, there’s Ernie right there.

Now, the good news is that Ernie already knows his way around the Department of Energy. He is a physicist by training, but he also served as undersecretary of energy under President Clinton. Since then, he has directed MIT’s Energy Initiative, which brings together prominent thinkers and energy companies to develop the technologies that can lead us to more energy independence and also to new jobs. Most importantly, Ernie knows that we can produce more energy and grow our economy while still taking care of our air, our water and our climate.

AMY GOODMAN: The Senate Energy and Natural Resources Committee is scheduled to hold a hearing on Ernest Moniz’s nomination as energy secretary on April 9th. Reactions to his nomination has split the environmental community. Advocacy groups such as Public Citizen and Food & Water Watch are campaigning against his nomination, but the Natural Resources Defense Council has praised his work on advancing clean energy based on efficiency and renewable power.

Much of the criticism of Moniz centers on his extensive ties to industry. He has served on advisory boards for oil giant BP and General Electric and was a trustee of the King Abdullah Petroleum Studies and Research Center, a Saudi Aramco-backed nonprofit organization. In 2011, Moniz was the chief author of an influential study for MIT on the future of natural gas. According to a new report by the Public Accountability Initiative, Moniz failed to disclose that he had taken a lucrative position at a pro-drilling firm called ICF International just days before the study was released.

We’re joined now by two guests. In New York, Justin Elliott, a reporter at ProPublica, he recently wrote a piece called "Drilling Deeper: The Wealth of Business Connections for Obama’s Energy Pick." And in Los Angeles, we’re joined by Kevin Connor, director of the Public Accountability Initiative, a nonprofit watchdog group which recently published a report called "Industry Partner or Industry Puppet? How MIT’s Influential Study of Fracking Was Authored, Funded, and Released by Oil and Gas Industry Insiders." We invited MIT to join us on the show or send a comment to read on air, but we did not receive a response.

Kevin Connor, Justin Elliott, we welcome you to Democracy Now! Justin, let’s begin with you. Talk about Ernest Moniz’ record.

JUSTIN ELLIOTT: Right, well, I mean, and to some extent, this is kind of the classic revolving door situation. As President Obama mentioned when he nominated him to be energy secretary earlier this month, Moniz was an undersecretary in the department in President Clinton’s second term. After, he went back to MIT, but he also took a number of positions on boards of large energy companies or advisory councils, as you mentioned, that includes BP. It included a uranium enrichment company called USEC.

And I think there’s sort of two reasons why this is important. One is, some of these companies do business with the Energy Department and seek contracts and loan guarantees from the department. The other is, people in the environmental community think that this may inform how Ernest Moniz sets research priorities, so people are concerned that he’s—that he’s going to call for research on fossil fuels to the detriment of research on renewables, for example.

AMY GOODMAN: BP. Talk about his relationship with BP.

JUSTIN ELLIOTT: Well, there’s kind of two prongs on that front. One is, personally, Moniz did a six-year stint—paid, although BP won’t tell me how much—on BP’s science advisory council. It’s not really clear what he did. They don’t—BP doesn’t have to reveal much about it in their public SEC filings. At the same time, BP is one of the main funders of the MIT Energy Initiative. I think they have given—given or pledged a total of $50 million over the past few years. So he’s clearly—he’s clearly close to that company.

AMY GOODMAN: And how typical is this for a university professor?

JUSTIN ELLIOTT: Well, I think, in the science—in sciences and, in particular, in sort of the energy secretary, it’s increasingly—it’s increasingly common. I mean, Steven Chu, the outgoing energy secretary, who’s also an academic, actually also had close ties to BP. BP had given a bunch of money to Steven Chu’s lab at the University of California, Berkeley, and Chu picked a BP executive to be one of his undersecretaries. And Chu was later involved in the government’s response to the Gulf oil spill. So, I mean, I think this is—this is certainly common if you’re going to be picking an academic who’s involved in energy, and particularly fossil fuel research.

AMY GOODMAN: I wanted to turn to comments of the executive director the Natural Resources Defense Council, or NRDC. Earlier this month, Peter Lehner posted on the NRDC blog a "To-Do List for the New Energy Secretary." In it, he wrote, quote, "As a scientist, Moniz is obviously a firm believer in the power of clean energy technology. [MIT’s Energy Initiative] projects under his tenure included windows that generate electricity, batteries built by viruses, and a biofuel made from yeast. But he also believes that technology must be complemented by policy in order to effect real change. As he said at the Aspen Ideas Festival in 2006, in order to address global warming, we must 'have the will to take more than baby steps.'" NRDC is supporting Moniz’s nomination.

JUSTIN ELLIOTT: Right, Amy, and it’s completely true. Moniz has spoken in favor of renewable energy. I mean, I think the best way to sort of interpret his nomination is that he fits in with what Obama has called his "all-of-the-above" energy policy, which is to embrace things like fracking, continued use of oil, nuclear energy, but also develop wind and solar. And I think that that’s where Ernest Moniz is on energy policy.

AMY GOODMAN: Let’s turn to our guest in Los Angeles, Kevin Connor, and what you found in your report. Talk about the report that you did that looks at—well, the title of the report is "Industry Partner or Industry Puppet? How MIT’s Influential Study of Fracking Was Authored, Funded, and Released by Oil and Gas Industry Insiders."

KEVIN CONNOR: Sure. Moniz’s nomination prompted us at the Public Accountability Initiative to take a closer look at an influential study that MIT did on "The Future of Natural Gas," as it was called, in 2011. It was issued by the Energy Initiative, which Moniz was the director of. And it gave a very pro-gas—put a very pro-gas spin on fracking and shale gas extraction, said that natural gas was a bridge or will be a bridge to a low-carbon future, said that the environmental impacts related to fracking are challenging but manageable, and also endorsed natural gas exports, which is a very industry-friendly position to take.

It immediately, you know, prompted some criticism from people who pointed to the fact that the report was actually industry-funded, much like the initiative itself. But it was extremely influential. It was designed to influence policymakers. Moniz testified before Congress on the report. It had immediate impact, as well. And it came at a critical time for the industry, which was facing significant questions about the safety of fracking, the relative environmental impacts of fracking. And we took a closer look at the study and found that beyond just the industry funding of the study, there were significant conflicts of interest that went undisclosed in the report itself and in presentations of the report, and those involved Moniz and several other key authors of the study. So, as it turns out, it was not only just funded by industry, it was also authored by industry representatives.

AMY GOODMAN: Kevin Connor, I wanted to turn to a 2011 press conference at the MIT Energy Initiative, where Ernest Moniz introduced the study now under contention, "The Future of Natural Gas." In his opening remarks, Professor Moniz emphasized the report’s independent of its sponsors and advisers.

ERNEST MONIZ: I do want to emphasize a disclaimer, if you like, that while their advice was absolutely critical, they are not responsible for the recommendations and the findings. We have not asked for endorsement. We asked for their advice; we received it. But the results, then, are our responsibility.

AMY GOODMAN: Later in the presentation, co-chair Anthony Meggs introduces the MIT report’s findings, saying environmental impacts associated with fracking are, quote, "challenging but manageable." However, Meggs failed to disclose he had joined the gas company Talisman Energy prior to the release of the study.

ANTHONY MEGGS: ... messages are very simple. First of all, there’s a lot of gas in the world, at very modest cost. As you will see, gas is still, globally speaking, a very young industry with a bright future ahead of it. Secondly, and perhaps obviously at this stage, although not so obvious when we started three years ago, shale gas is transformative for the economy of the United States, North America, for the gas industry, in particular, and potentially on a global scale. Thirdly, the environmental impacts of shale development, widely discussed and hotly debated, are—and we use these words carefully—challenging but manageable.

AMY GOODMAN: Kevin Connor, your response?

KEVIN CONNOR: It’s absolutely outrageous for the Energy Initiative, for Moniz and MIT to pretend this is independent of industry, well, first of all, given the fact that the sponsors of the report are all, you know, industry organizations and companies like Chesapeake Energy. Moniz was attempting to say that it was somehow insulated from the influence of these gas companies, when in fact authors of the study, such as Moniz and Meggs, were—had industry positions at the time.

Meggs’s quote there is particularly insidious, the fact that he is saying that fracking is safe for the environment, when he had actually joined Talisman Energy, a gas company, one of the most active frackers in the Marcellus Shale, a month before the study was released. So he is speaking to a roomful of journalists there, presenting a report designed to influence policy, and not disclosing that he is on the industry payroll. That is perhaps the last person in that room who should be presenting that finding or having anything to do with authoring that kind of report. And yet MIT and Moniz thought it was appropriate to put that spokesperson forward. So, it just goes to the fact that MIT was really sort of presenting an industry brochure here with a lot of pro-gas, industry advocacy talking points, and not revealing that there were significant conflicts of interest here.

AMY GOODMAN: Justin Elliott, would you like to weigh in?

JUSTIN ELLIOTT: Yeah, I mean, one thing to note is, Ernest Moniz is getting a confirmation hearing next month, and as part of that, he has to release a personal financial disclosure, and also, at some point later, he’ll have to—an ethics agreement will become public. So we should actually learn more about his current and recent involvement in these companies and possibly also stock holdings and that sort of thing, so it should be interesting. I think this story isn’t over yet.

AMY GOODMAN: We’re going to break and come back to this discussion. Our guests are Justin Elliott—he’s a reporter with ProPublica—and Kevin Connor, who has put out a report on—from the Public Accountability Project called "Industry Partner or Industry Puppet? How MIT’s Influential Study of Fracking Was Authored, Funded, and Released by Oil and Gas Industry Insiders." This is Democracy Now! We’ll be back in a minute.

[break]

AMY GOODMAN: In October of 2009, Obama’s energy secretary nominee, Ernest Moniz, introduced Tony Hayward, CEO of BP, before he delivered a speech at the MIT Energy Initiative. This took place six months before the BP Deepwater Horizon spill in the Gulf of Mexico.

ERNEST MONIZ: Tony, I think it’s fair to say, without getting into great details, faced a significant number of challenges at that time of transition and is, these days, getting quite good press, I might say, in terms of having the company operating well, producing and maintaining, I think, its stance, taken quite early, in terms of recognizing the need and acting on the need to address climate risk mitigation, for example, with its diversified portfolio. We are very pleased to have BP here as a member of the Energy Initiative—in fact, the founding—founding member of the MIT Energy Initiative. And in fact, as President Hockfield said just a few minutes ago to Tony, that that confidence shown in where we were going here at MIT, in terms of our focus on energy and environment, was very, very important, and we really appreciate that early support and the continuing relationship. In fact, many of you may know that besides the Energy Initiative, BP has a major presence in terms of a Projects Academy and Operations Academy with the Sloan School of Engineering. And in fact, I just heard, again, in the discussion a few moments ago, that 300 of BP’s 500 senior executives have, one way or another, interacted with MIT, so it’s really quite a substantial relationship.

AMY GOODMAN: That’s energy secretary nominee Ernest Moniz speaking in October 2009, praising BP CEO Tony Hayward six months before the BP oil spill. Justin Elliott of ProPublica?

JUSTIN ELLIOTT: I mean, one of the things that surprised me, actually, as I was researching this story, is the extent to which the MIT Energy Initiative is working with industry. I mean, it’s well known that they and other energy research projects get industry funding. But if you look at their annual reports and even their website, they say, if you give us money as a company, we will help you achieve specific business goals. So, I mean, in a lot of the coverage of Moniz, he has been presented as an academic, which he is, but in some ways I think the traditional categories are sort of failing us—sort of academic versus business executive. I mean, this really is a part of—I mean, it’s not formally part of BP, but they’re working as essentially a subcontractor for BP. So I think that’s really—and again, I mean, President Obama specifically praised Ernest Moniz’s ties with business when he introduced him. So, I mean, it’s up for interpretation whether or not these ties are a good thing, but I think that’s really the proper way to see his background and who he is.

AMY GOODMAN: Kevin Connor, I wanted to ask you about the broader issue of what some call
"frackademia," gas-industry-funded academic research. In February of 2012, a year ago, University of Texas Professor Charles Groat published a study that suggested fracking did not lead to groundwater contamination. However, the study did not disclose Groat’s seat on the board of major Texas fracker Plains Exploration and Production Company, for which he was reportedly given $400,000 in 2011. That’s more than double his university salary. I want to go to a clip of Professor Groat explaining his study’s finding.

CHARLES GROAT: The immediate concern with shale gas development and hydraulic fracturing was that fracturing at several thousand feet below the surface would put chemicals into groundwater that people drank that would be very bad for your health, and so people were very much opposed to hydraulic fracturing from that point of view. So, an important part of our study was to determine whether or not there is any direct, verified evidence that hydraulic fracturing itself was producing contaminated waters that ended up in that process in groundwater. Our preliminary finding is we have found no demonstrated evidence that that—demonstration that that has happened.

AMY GOODMAN: Kevin Connor, your response?

KEVIN CONNOR: Well, as you noted, Groat, when he was saying this, had a serious stake in a gas company called PXP, $1.6 million stake, made several hundred thousand dollars a year, over $400,000 a year in 2011, and was going before the public and saying fracking is safe, without disclosing any of these related interests. I mean, there’s some question as to whether someone with that sort of stake in the industry should be working on this at all, but at the very least it should be disclosed to the public, to journalists.

And because Groat didn’t disclose it, it resulted in a lot of blowback in Texas. The journalists were very concerned that Groat had not highlighted this for them when the report was released, and it resulted in quite a bit of media coverage. The University of Texas ended up commissioning an external review of the study, which concluded that the study should actually be retracted and noted that Groat’s conflict of interest was quite serious and should have been disclosed. So, the sorts of transgressions that we see at MIT have actually resulted in real accountability at other universities. Groat actually retired as a result of this episode. And the director of the Energy Institute at Texas, which is sort of an analog to MIT’s Energy Initiative—the director actually resigned in the wake of this external review. So there have been real consequences. There has been real pushback against this trend at other universities. And there’s some question as to whether that will happen with MIT.

AMY GOODMAN: Well, going back to Moniz, because you’re talking about Groat here, not to be confused with the energy secretary nominee of President Obama, talk about what he makes at MIT, both as a university professor but also his outside funding.

KEVIN CONNOR: I’m actually not sure of his salary at MIT. I don’t believe it’s publicly disclosed there, though it will be released in his financial disclosures. But as a board member at ICF International, which is an oil and gas—well, it’s a consulting firm with a significant energy practice and significant oil and gas ties—he’s made over $300,000 in the past two years since joining the board. This is a position where he attends several meetings a year. It’s certainly not a full-time position, and yet he’s making over $150,000 a year in stock and cash compensation. So these are not insignificant financial ties he has.

AMY GOODMAN: And finally, Justin Elliott, Ernest Moniz is a nuclear physicist. Can you talk about the significance of that for energy policy, if he were to become the next energy secretary?

JUSTIN ELLIOTT: Sure. I mean, actually, the Department of Energy, the majority of its budget goes to maintaining the nation’s nuclear weapons stockpile, and also they’re in charge of cleanup of old nuclear waste. He’s been a strong and public supporter of nuclear power. And that’s actually the area where some of these business ties get into areas of potential conflicts. As I mentioned earlier, he was previously on an advisory council of a uranium enrichment company called USEC, one of the—one of the largest, and they’ve been seeking a $2 billion loan guarantee from the Energy Department to build a centrifuge plant in Ohio. That’s been on hold for a few years while they look into it further. So, it will be interesting to see whether Moniz has to recuse himself from that or whether it gets mentioned in any of the congressional hearings, but that’s certainly one of the big areas the Energy Department is active in.

AMY GOODMAN: Professor Moniz wrote in Foreign Affairs in 2011, "It would be a mistake, however, to let Fukushima cause governments to abandon nuclear power and its benefits." He wrote, "Electricity generation emits more carbon dioxide in the United States than does transportation or industry, and nuclear power is the largest source of carbon-free electricity in the country."

JUSTIN ELLIOTT: Right. And again, I mean, I think this is in keeping with President Obama’s, quote, "all-of-the-above," unquote, energy policy. I mean, this is—this is Obama nominating someone as energy secretary who is in keeping with the administration’s stated policy.

AMY GOODMAN: President Obama has long been pro-nuclear power—in fact, is the one who is restarting nuclear power plants after, what, some 40 years of the last one being built.

JUSTIN ELLIOTT: Right. And I think the only reason that effort has stalled is the price of natural gas, because of fracking, going down so low that nuclear power plants have become less economically feasible than they were five years ago.

AMY GOODMAN: Final comments, Kevin Connor, as you release your report, director of Public Accountability Initiative, the report that you did called "Industry Partner or Industry Puppet?" has MIT responded? And were you able to speak with Professor Moniz?

KEVIN CONNOR: I did call the Energy Initiative but was not able to speak with Dr. Moniz. And the Energy Initiative did actually respond, through a spokesperson, with a statement that didn’t really speak to questions I had raised about how the conflicts of interest surrounding the report were managed and disclosed. One critical conflict of interest I didn’t note earlier was that one of the study authors, John Deutch, was on the board of Cheniere Energy, a liquefied natural gas company, LNG export company. That wasn’t disclosed in the study. The study actually endorsed natural gas exports. He has a $1.6 million stake in that company. MIT Energy Initiative—

AMY GOODMAN: Central Intelligence Agency?

KEVIN CONNOR: —basically had no response, just said that the authors aren’t biased, which is hard to believe, given these connections.

AMY GOODMAN: Kevin, John Deutch, the former head of the Central Intelligence Agency?

KEVIN CONNOR: Exactly. Former director of the CIA was actually a study author here and is on the board of the only company in the U.S. to receive permits to export LNG from the lower 48 states. And again, this study endorsed LNG exports on fairly—a fairly thin basis of evidence and didn’t disclose this connection, which is really, again, quite outrageous.

AMY GOODMAN: Well, I want to leave it there; of course, we’ll continue to follow the nominee. The confirmation hearings will take place on April 9th. Justin Elliott, ProPublica reporter, and Kevin Connor, I want to thank you very much for being with us. Justin wrote "Drilling Deeper," looking at "The Wealth of Business Connections for Obama’s Energy Pick." And Kevin Connor wrote the study, "Industry Partner or Industry Puppet? How MIT’s Influential Study of Fracking Was Authored, Funded, and Released by Oil and Gas Industry Insiders." We will link to it at democracynow.org.

This is Democracy Now!, democracynow.org, The War and Peace Report. And when we come back, we’ll be joined by a well-known anchor here in New York, Cheryl Wills, who in this month of Women’s History Month—and we’ve just come out of African-American History Month—we’ll talk about what she found about her family. She wrote the book, Die Free: A Heroic Family Tale. Stay with us.

The Failure of Laissez Faire Capitalism and Economic Dissolution of the West

paulcroberts

Author’s  Note

I receive numerous questions from readers about our economic situation and the condition of civil liberty.

There is no way I can answer so many inquiries, and no need. I have written two books that provide the answers, and they are inexpensive. I have done my job. It is up to you to inform yourself. Kindle Reader software is available as a free online download that permits you to read ebooks in your own web browser.

My latest, The Failure Of Laissez Faire Capitalism And Economic Dissolution of the West , is available as an ebook in English as of March 2013 from Amazon.com and from Barnes&Noble.

My book is endorsed by Michael Hudson and Nomi Prims and has a 5 star rating from Amazon reviewers (as of March 23, 2013). Pam Martens’ review at Wall Street On Parade is available here

Libertarians who have not read the book have had an ideological knee-jerk reaction to the title. They demand to know how can I call the present system of crony capitalism laissez faire. I don’t. The current system of government supported crony capitalism is the end result of a 25-year process of deregulation.

Deregulation did not produce libertarian nirvana. It produced economic concentration and crony capitalism.

Amazon provides as a free read the introduction by Johannes Maruschzik to the German edition. Below is my Introduction to my book.

Paul Craig Roberts, March 27, 2012

Not only has your economy been stolen from you but also your civil liberties. My coauthor Lawrence Stratton and I provide the scary details of the entire story in The Tyranny of Good Intentions [5]. In the US law is no longer a shield of the people against arbitrary government. Instead, law has been transformed into a weapon in the hands of the government.

Josie Appleton documents that in England also law has been turned into a weapon against the people. http://www.spiked-online.com/site/printable/13420/ [6] Anglo-American law, the foundation of liberty and one of the greatest human achievements, lies in ruins.

Libertarians think that liberty is a natural right, and some Christians think that it is a God-given right. In fact, liberty is a human achievement, fought for by Englishmen over the centuries. In the late 17th century, the achievement of the Glorious Revolution was to hold the British government accountable to law. William Blackstone heralded the achievement in his famous Commentaries On The Laws Of England, a bestseller in pre-revolutionary America and the foundation of the US Constitution.

In the late 20th century and early 21st century, governments in the US and Great Britain chafed under the requirement that government, like the people, is ruled by law and took steps to free government from accountability to law.

Appleton says that the result is a “tectonic shift in the relationship between the state and the citizen.” Citizens of the US and UK are once again without the protection of law and subject to arbitrary arrests and indictments or to indefinite detention in the absence of indictments.

In the US, citizens can be detained indefinitely and even executed without due process of law. There is no basis in the US Constitution for these asserted powers. The unconstitutional powers exist only because Congress, the judiciary and the American people have accepted the lie that the loss of civil liberty is the price paid for protection against terrorists.

In a very short time the raw power of the state has been resurrected. Most Americans are oblivious to this outcome. As long as government is imprisoning and killing without trials demonized individuals whom Americans have been propagandized to fear, Americans approve. Americans do not understand that a point is reached when demonization becomes unnecessary and that precedents have been established that revoke the Bill of Rights.

If you are educated by these two books, you will be better able to understand what is happening and, thus, you will be in a better position to survive what is coming.

Introduction to The Failure of Laissez Faire Capitalism and Economic
Dissolution of the West: Towards a New Economics for a Full World

The collapse of the Soviet Union in 1991 and the rise of the high speed Internet have proved to be the economic and political undoing of the West. “The End Of History” caused socialist India and communist China to join the winning side and to open their economies and underutilized labor forces to Western capital and technology. Pushed by Wall Street and large retailers, such as Wal-Mart, American corporations began offshoring the production of goods and services for their domestic markets. Americans ceased to be employed in the manufacture of goods that they consume as corporate executives maximized shareholder earnings and their performance bonuses by substituting cheaper foreign labor for American labor. Many American professional occupations, such as software engineering and Information Technology, also declined as corporations moved this work abroad and brought in foreigners at lower renumeration for many of the jobs that remained domestically. Design and research jobs followed manufacturing abroad, and employment in middle class professional occupations ceased to grow. By taking the lead in offshoring production for domestic markets, US corporations force the same practice on Europe. The demise of First World employment and of Third World agricultural communities, which are supplanted by large scale monoculture, is known as Globalism.

For most Americans income has stagnated and declined for the past two decades. Much of what Americans lost in wages and salaries as their jobs were moved offshore came back to shareholders and executives in the form of capital gains and performance bonuses from the higher profits that flowed from lower foreign labor costs. The distribution of income worsened dramatically with the mega-rich capturing the gains, while the middle class ladders of upward mobility were dismantled. University graduates unable to find employment returned to live with their parents.

The absence of growth in real consumer incomes resulted in the Federal Reserve expanding credit in order to keep consumer demand growing. The growth of consumer debt was substituted for the missing growth in consumer income. The Federal Reserve’s policy of extremely low interest rates fueled a real estate boom. Housing prices rose dramatically, permitting homeowners to monetize the rising equity in their homes by refinancing their mortgages.

Consumers kept the economy alive by assuming larger mortgages and spending the equity in their homes and by accumulating large credit card balances. The explosion of debt was securitized, given fraudulent investment grade ratings, and sold to unsuspecting investors at home and abroad.

Financial deregulation, which began in the Clinton years and leaped forward in the George W. Bush regime, unleashed greed and debt leverage. Brooksley Born, head of the federal Commodity Futures Trading Commission, was prevented from regulating over-the-counter derivatives by the chairman of the Federal Reserve, the Secretary of the Treasury, and the chairman of the Securities and Exchange Commission. The financial stability of the world was sacrificed to the ideology of these three stooges that “markets are self-regulating.” Insurance companies sold credit default swaps against junk financial instruments without establishing reserves, and financial institutions leveraged every dollar of equity with $30 dollars of debt.

When the bubble burst, the former bankers running the US Treasury provided massive bailouts at taxpayer expense for the irresponsible gambles made by banks that they formerly headed. The Federal Reserve joined the rescue operation. An audit of the Federal Reserve released in July, 2011, revealed that the Federal Reserve had provided $16 trillion–a sum larger than US GDP or the US public debt–in secret loans to bail out American and foreign banks, while doing nothing to aid the millions of American families being foreclosed out of their homes. Political accountability disappeared as all public assistance was directed to the mega-rich, whose greed had produced the financial crisis.

The financial crisis and plight of the banksters took center stage and prevented recognition that the crisis sprang not only from the financial deregulation but also from the expansion of debt that was used to substitute for the lack of growth in consumer income. As more and more jobs were offshored, Americans were deprived of incomes from employment. To maintain their consumption, Americans went deeper into debt.

The fact that millions of jobs have been moved offshore is the reason why the most expansionary monetary and fiscal policies in US history have had no success in reducing the unemployment rate. In post-World War II 20th century recessions, laid-off workers were called back to work as expansionary monetary and fiscal policies stimulated consumer demand. However, 21st century unemployment is different. The jobs have been moved abroad and no longer exist. Therefore, workers cannot be called back to factories and to professional service jobs that have been moved abroad.

Economists have failed to recognize the threat that jobs offshoring poses to economies and to economic theory itself, because economists confuse offshoring with free trade, which they believe is mutually beneficial. I will show that offshoring is the antithesis of free trade and that the doctrine of free trade itself is found to be incorrect by the latest work in trade theory. Indeed, as we reach toward a new economics, cherished assumptions and comforting theoretical conclusions will be shown to be erroneous.

This book is organized into three sections. The first section explains successes and failures of economic theory and the erosion of the efficacy of economic policy by globalism. Globalism and financial concentration have destroyed the justifications of market capitalism. Corporations that have become “too big to fail” are sustained by public subsidies, thus destroying capitalism’s claim to be an efficient allocator of resources. Profits no longer are a measure of social welfare when they are obtained by creating unemployment and declining living standards in the home country.

The second section documents how jobs offshoring or globalism and financial deregulation wrecked the US economy, producing high rates of unemployment, poverty and a distribution of income and wealth extremely skewed toward a tiny minority at the top. These severe problems cannot be corrected within a system of globalism.

The third section addresses the European debt crisis and how it is being used both to subvert national sovereignty and to protect bankers from losses by imposing austerity and bailout costs on citizens of the member countries of the European Union.

I will suggest that it is in Germany’s interest to leave the EU, revive the mark, and enter into an economic partnership with Russia. German industry, technology, and economic and financial rectitude, combined with Russian energy and raw materials, would pull all of Eastern Europe into a new economic union, with each country retaining its own currency and budgetary and tax authority. This would break up NATO, which has become an instrument for world oppression and is forcing Europeans to assume burdens of the American Empire.

Sixty-seven years after the end of World War II, twenty-two years after the reunification of Germany, and twenty-one years after the collapse of the Soviet Union, Germany is still occupied by US troops. Do Europeans desire a future as puppet states of a collapsing empire, or do they desire a more promising future of their own?

Capitalism in Crisis: Richard Wolff Urges End to Austerity, New Jobs Program, Democratizing Work

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As Washington lawmakers pushes new austerity measures, economist Richard Wolff calls for a radical restructuring of the U.S. economic and financial systems. We talk about the $85 billion budget cuts as part of the sequester, banks too big to fail, Congress’ failure to learn the lessons of the 2008 economic collapse, and his new book, "Democracy at Work: A Cure for Capitalism." Wolff also gives Fox News host Bill O’Reilly a lesson in economics 101.

TRANSCRIPT:

AMY GOODMAN: "Anda," music by the pianist, arranger and composer Bebo Valdés. He died Friday at the age of 94. The son of a cigar factory worker and grandson of a slave, he studied classical music at the Conservatorio Municipal in Havana and became a favorite collaborator with the great Cuban singers of his era, including Beny Moré and Pío Leyva and Orlando Cascarita Guerra, along with Americans such as Woody Herman and Nat King Cole, was considered a giant during the golden age of Cuban music. This is Democracy Now!, democracynow.org, The War and Peace Report.

Our guest is Richard Wolff, a professor emeritus at the University of Massachusetts, Amherst, now at New School University, author of a number of books, including Democracy at Work: A Cure for Capitalism.

I want to talk about austerity here at home. This is House Speaker John Boehner speaking last month defending the $85 billion budget sequester cuts that took effect on March 1st.

HOUSE SPEAKER JOHN BOEHNER: The American people know, the president gets more money, they’re just going to spend it. And the fact is, is that he’s gotten his tax hikes. It’s time to focus on the real problem here in Washington, and that is spending.

AMY GOODMAN: House Speaker John Boehner. Professor Richard Wolff, your response? And also, that the Obama administration was warning catastrophe if sequestration took place. It took place.

RICHARD WOLFF: Well, it’s a stunning comment on our dysfunctional government built on top of a dysfunctional economy. Here we are in the middle of a crisis. We have millions of people without work, millions of people losing their homes, an economy that doesn’t work for the vast majority. The United States government is one of the major customers for goods and services in America. Sequestration is simply a cutback in government spending. It doesn’t take rocket science to understand that if the government, as the largest single buyer of goods and services, cuts back on the goods and services it buys, that means companies across America will sell less, and they’ll have less need of workers, and they will lay off workers. So, this is an act that worsens an unemployment that is already severe.

If you put that together with the tax increase on January 1st—and let me say a word about that. We heard a lot of public debate about taxing rich people, not taxing rich people, Republicans and Democrats, but the tax on the wealthy is small compared to the tax on the middle and lower incomes that went up on January 1st. When we raised the payroll tax here in America from 4.2 to 6.2 percent, we raised over $125 billion—huge amount of money, much more than was raised by taxing the rich—and we savaged the middle- and lower-income groups in America, those that in the presidential election both candidates had sworn to save and support. We attacked them, thereby limiting their capacity to buy goods and services because we taxed them more.

You put together the taxing of the middle and lower incomes with the cutbacks of government spending, and you’re going to do what every European country that has imposed austerity has already discovered: You’re making the problem worse. So with all the homilies that Mr. Boehner can put out there about how spending is a problem, this abstract idea doesn’t change the fact you’re making the economic conditions of the mass of people worse by these austerity steps, not better. And that ought to be put as the fire burning at the feet of politicians, so they stop talking these abstractions and deal with the reality of what they’re doing.

AMY GOODMAN: So what do you think needs to be done?

RICHARD WOLFF: A radical change in the policies. And I think it has to go far beyond simply reversing this austerity program, which, again, just for a word about history, back in the 1930s, the last time we had a breakdown of our capitalist system like this, we didn’t have austerity, we didn’t have cutbacks. We had the opposite. Roosevelt, in the middle of the '30s, created the Social Security system, went to everybody over 65 and said, "I'm going to give you a check for the rest of your life." He created the unemployment compensation system, giving all the unemployed for the first time checks every week for a year or two. And he created a public employment program and hired millions of workers. It’s the opposite of austerity. So any politician who says, "We must do this, because there’s no option," has forgotten even the American history of not that long ago.

So, the first thing I would do is go in that direction—not austerity, but its opposite. But I want to go further, because I think our problem is deeper. This crisis wasn’t supposed to happen. When it happened, it wasn’t supposed to last a long time. All of that has been proven false. The problems run deep. And I think what we have to do, and what that book tries to do, is to talk about reorganizing our economy so that for the first time we can say we’re not only going to get out of this crisis, we’re taking the kinds of steps that can prevent us from having them over and over again as our unstable business-cycle-ridden economy keeps imposing on us. So, for me, it’s the more profound change that we finally have to face, painful as it is. After 50 years of a country unwilling to face these questions, I think we need basic change. And that’s what I spend most of my time stressing.

AMY GOODMAN: Before we talk about the basic change, "democracy at work," as you put it—

RICHARD WOLFF: Right.

AMY GOODMAN: —what could Obama do without congressional support right now?

RICHARD WOLFF: Well, I think, in many ways, he could initiate a public employment program. I think it’s long overdue that he find all the ways available to him to say what Roosevelt said—and not that Roosevelt did everything correctly, and not that he’s a genius or any of that, but to take some lessons from those people in our country before who took steps that were successful.

AMY GOODMAN: I mean, Roosevelt didn’t plan on doing this when he first took office.

RICHARD WOLFF: Absolutely. He had pressure from below. The CIO, the biggest union-organizing drive in American history, never had anything that successful before.

AMY GOODMAN: As in AFL-CIO.

RICHARD WOLFF: That’s right. And with the socialist and communist parties, who were strong at that time, working with them, they organized millions of Americans into unions who had never joined a union before, and they pushed from below in a very powerful way. And they changed Mr. Roosevelt, showing that politicians, if subject to pressure from below, can change—same lesson that Cyprus has just taught us yet again. So, my response is: Learn from that. Roosevelt went on the radio to the American people and said, basically, "If the private sector either cannot or will not provide work for the millions of Americans that need and want to work, then it’s my job as president to do it." And he did it.

And I think Mr. Obama could and should overcome whatever has made him hesitate. We in this country not only don’t have a federal employment program, the Republicans and Democrats haven’t even put it on the floor to debate it as an important issue, even though it comes out of our own history. So I would say, put us—put our people to work. They want to work. The Federal Reserve says 20 percent of our tools, equipment, factory and office space is sitting idle, unused. So we have the people who want to work; we have the tools, equipment and raw materials for them to work with. And lord knows we need the wealth they could produce. Put them to work, and make it a national issue that that happen.

AMY GOODMAN: Where does the money come from?

RICHARD WOLFF: Well, Roosevelt went to the wealthy, and he went to the corporations, and he said to them, "You must give me the money to take care of the mass of people, because if you don’t, we’re going to have a catastrophe in this country. We’re going to have a social revolution." My argument is, let’s go back to the same tax rates that Roosevelt imposed, or at least in that neighborhood, which is much higher on wealthy people and much higher on corporations than we have today. That’s what he did. That’s how he funded it.

And in case our politicians are worried, let’s remind them: Mr. Roosevelt, who took those daring steps, was re-elected to be president four consecutive times, the most popular president in American history. It’s not a dead-end political decision. It’s the best decision a president could make to leave his legacy in history, that, we are told, our presidents care so much about.

AMY GOODMAN: We’re talking to Richard Wolff, author of Democracy at Work. Again, before we talk about "democracy at work," I wanted to go to a recent hearing in Washington. Executives with the banking giant JPMorgan Chase appeared before a Senate panel earlier this month to answer questions around so-called "London Whale trades" that cost the bank more than $6 billion and derailed financial markets worldwide. This is Arizona Republican Senator John McCain criticizing JPMorgan’s actions.

SEN. JOHN McCAIN: JPMorgan completely disregarded risk limits and stonewalled federal regulators. It is unsettling that a group of traders made reckless decisions with federally insured money and that all of this was done with the full awareness of top officials at JPMorgan. This bank appears to have entertained—indeed, embraced—the idea that it was, quote, "too big to fail."

AMY GOODMAN: Ashley Bacon, JPMorgan’s interim chief risk officer, testified at the same hearing.

ASHLEY BACON: I don’t think it is too big to fail. I think there’s further work that needs to be done to demonstrate and document that, and it’s in process. I’m not leading that process or deeply involved in it, but I think it is—it’s something that needs to be demonstrated to everybody’s satisfaction.

AMY GOODMAN: That was Ashley Bacon, JPMorgan’s interim chief risk officer. Can you explain what took place here and what is happening?

RICHARD WOLFF: Yes. On the question of "too big to fail," there really isn’t much to say. In 2008, our banks failed—all of them—the way the Cyprus banks failed and for very similar reasons. They took in a lot of depositors’ money, and they made risky bets they shouldn’t have made, and they failed, and so they didn’t have the money to honor their obligations, and they turned to the government for a bailout. And when the government hesitated, because it’s public money to bail out a privately failed bank, they were told, in another kind of blackmail, "We’re too big to fail. If you don’t bail us out, we will collapse and take the entire economy with us." And that was a persuasive argument. Particularly after they allowed Lehman Brothers to fail and that nearly did take the economy with it, that was a convincing argument.

You would have thought they had then learned the lesson about the problem of a too-big-to-fail financial institution. If you thought that, you would have been wrong, because the same banks that were too big to fail in 2008 are, all of them, bigger today. So we didn’t learn the lesson. We didn’t break up the banks. We didn’t limit, control their growth. They’re bigger now than they were then. And in a sense, maybe shame on them the first time, but having allowed this to happen, it’s shame on us.

Number two, we seem to need, as a nation, to believe that we have the power to control, limit or regulate, whether it’s the Glass-Steagall Act that came out of our disaster of the 1930s or the Dodd-Frank Act, which came out of the disaster that started in 2008. We seem to want to believe we can leave in place private banks, no matter how big they are, and hedge them about with regulations. The proof of the Whale trades in London, the proof of everything we know, is that these banks have the money, the staff, the resources to work their way around the regulations at least as fast as we impose them on them. That’s what these hearings fundamentally show. They can make trades that are too risky. They can lose wild amounts of money. They can turn to the government and demand to be helped and bailed out each time. And they get it. We are telling them, in a classic example, "Look, do whatever you want. You don’t have any risk of fundamental failure and punishment." Regulation doesn’t work, because we believe in place an entity, a large corporation, with the money and the incentives to get around it.

AMY GOODMAN: Interestingly, Jamie Dimon, the head of JPMorgan Chase, did not testify. He was brought before the Senate, what, about last June, where the senators were asking him for advice. And then, when you looked at the senators on the Senate committee and how much money JPMorgan Chase had given each of them, we’re talking about millions of dollars went to many of them.

RICHARD WOLFF: When I say that the big corporations, particularly the banks, have the resources and the incentives, I’m being polite. Yeah, part of the resources are going into literally making sure that the political regulator is a good friend and understands the complexities. In simple English, they are buying their way into the situation we watch, which is: "We will pretend to be regretful. You will pretend to be protecting the public. You will make regulations that we help you write so that we can get around them." It is something that ought not to be allowed to continue, because we’re living the economic crisis that comes from that way of doing business.

AMY GOODMAN: What lessons have been learned since 2008? And today, could the U.S. see the same situation as Cyprus?

RICHARD WOLFF: Absolutely. We have banks that are literally telling us, because we know from our controls that they are trying, even, to regenerate it. They’re trying to get people to borrow more money again. We’re not changing the wage structure of America, which means that Americans are required to go into debt to supplement their wages. You know, the irony is, we are trying, in the language of some of these folks, to kickstart our economy, to get it going again. But the problem is, our economy was a train heading into a stone wall in the first years of this century, and if we get our economy going again, without fundamental changes, what we’re doing is putting that same train back on the track heading towards the same wall. Cyprus shows us what’s happening.

But we don’t have to take just small countries. Take Great Britain, our classic ally. Their economy is now in the second or, in some people’s minds, the third recession within the crisis since 2007. They are following an austerity problem—process exactly like that supported by Mr. Boehner, and the economic downturn in Great Britain is catastrophic for that society. And so, we have this image of a future for us, if we don’t make fundamental change, but everyone wants to put it away and pretend that we can let it go by itself or a few regulations will solve the problem. They haven’t. They’re not doing it now elsewhere. That’s not a strategy we should pursue in this country, either.

AMY GOODMAN: When we come back, we’ll talk to Professor Richard Wolff about the alternatives, about, well, what he’s put forward, Democracy at Work: A Cure for Capitalism. This is Democracy Now! We’ll be back with Professor Wolff in a minute.

[break]

AMY GOODMAN: We continue with Richard Wolff, professor emeritus of economics at University of Massachusetts, Amherst, visiting professor at New School University here in New York, does a weekly program on WBAI in New York called Economic Update every Saturday at noon. His latest book is Democracy at Work: A Cure for Capitalism. So what exactly do you mean by this?

RICHARD WOLFF: What I mean is a change in the enterprises that produce the goods and services we all depend on and provide the jobs we all need and want. I think those have to be, in a fundamental way, democratized. So let me begin in that way.

We live in a country that says it goes to war around the world to bring democracy and that its central, most important political value is democracy. If you believe that—and I am a fervent supporter of democracy, and obviously you are—you’ve named your program that way—then we ought to have democracy in the place where we as adults spend most of our time. Five out of seven days we go to work. We walk into a place where we use our brains and our muscles eight or more hours, five out of seven days. If democracy is an important value, it ought to be right there, first and foremost. But we don’t. We basically have a situation where, for most of us, we go to work in a place where the decisions that are made are made by a tiny group of people. The major shareholders who own the block of shares in our system select a board of directors, 15 to 20 people, and they make the basic decisions: what to produce, how to produce it, where to produce it, and what to do with the profits. The rest of us must live with the results of that decision.

So if that tiny group of people make a decision to close the factory in Cincinnati or the office in Atlanta and move to Shanghai, the chips fall where they may. If they decide to use a toxic technology that’s not good for the air and water but is good for the profits, they do, we live with the results. And when they decide to take the profits of their business and to give enormous pay packages to a handful of top executives and big dividend payouts to their shareholders, which of course they do, since they’re in a position to do it, and the rest of us suddenly have to take out absurd debts to get our kids through college, then that’s the inequality of income and wealth that we have in America.

So, I look at this decision-making apparatus, I say, "Why are we surprised that they make the decisions the way we do—they do?" We all live with the results, and we have no say in how those decisions are made. It’s not democratic. That’s the first thing. But the second thing is, we’re now in five years of economic crisis that indicate that way of organizing the decisions doesn’t work for the mass of people. It works for them. The stock market’s back. The profits of big corporations are back—surprise, surprise—given who makes the decisions. But we are left.

And so, for me, the solution is, let’s face this. Let’s build an option, a real choice for Americans, between working in a non-democratic, top-down-organized capitalist enterprise or in what, for lack of a better term, we can call "cooperatives," workplaces that are organized democratically. I think we’ll have less inequality of income, we will have less pollution of our environment, and we’ll have less loss of jobs out of the country, if those decisions were made by the people, as they should have been from the beginning, who will not make the kinds of decisions that got us into the mess of economic crisis that we’re in now.

AMY GOODMAN: In June, you wrote a piece, Richard Wolff, in The Guardian called "Yes, There is an Alternative to Capitalism: Mondragon Shows the Way." Mondragon, Spain’s renowned co-op where all enterprise is owned and directed by co-op members. At the Green Party’s convention last year, the keynote speaker, Gar Alperovitz, said the Mondragon model is being replicated here in the United States. I want to just turn to a clip of what Gar Alperovitz said, the professor of political economy at the University of Maryland.

GAR ALPEROVITZ: So, in Ohio, the idea of worker ownership is a bigger idea. Lots of people understand it. And in Cleveland, building on the Mondragon model—some of you know about the Mondragon model—and other ideas, there are a series of worker-owned, integrated co-ops in Cleveland in a neighborhood where the average income is $18,000 per family. And they have got these co-ops, not just standing alone, but linked together with a nonprofit corporation and a revolving fund. The idea is to build the community and worker ownership, not just make a couple workers richer, to say the least, not rich, but to build a whole community, and to use the purchasing power of hospitals and universities—tax money in there—Medicare, Medicaid, education money, buy from these guys, and build the community. That model—and it’s the greenest for—one of the things is the greenest laundry in that part of the country, that uses about a third of the heat and about a third of the electricity and about a third of the water. They’re on track now to put in more solar capacity that exists—one of the other worker-owned companies—that exists in the entire state of Ohio. These are not little, dinky co-ops.

AMY GOODMAN: That was Gar Alperovitz talking about the Mondragon model here. And when we were in Spain, Democracy Now! went to Mondragon and interviewed one of the cooperative members, and we’ll link to that at democracynow.org [ Click here to watch the interview with Mikel Lezamiz, director of Cooperative Dissemination at the Mondragon Cooperative Corporation in Spain’s Basque Country. ] But, Richard Wolff, talk about that model and what’s happening here.

RICHARD WOLFF: Well, the model of Mondragon is so interesting, not only because it’s a real co-op, where the workers make the decisions—what to produce, how, where, what to do with the profits. And just to mention one of their achievements, they have a rule that the highest-paid worker cannot get more than a maximum of eight times the lowest. In our society, it’s typical in our large corporations that the CEO gets 300 to 400 times what the lowest worker. So, for those of us that are interested in a less unequal society than what we have here in America, the lesson is, if you cooperatize your enterprise, that’s a sure route to get there. And we haven’t found any other route that is just as effective.

So, the importance of Mondragon is, they start in the middle of the 1950s with a Catholic priest, Father Arizmendi—I always have to remember it—with six workers in the north of Spain, desperately trying to overcome the unemployment there. And here we are over a half a century later. Having to compete with countless capitalist enterprises, they won that competition. Trying to grow, they have a growth record that would be the envy of any capitalist corporation. They went from six workers in 1956 to 120,000 workers today in Spain.

AMY GOODMAN: And they are making?

RICHARD WOLFF: And they are making everything. They make dishwashers. They make clothes washers. They raise rabbits on farms. They do high-tech research, together with General Motors and Microsoft as some of their partners there. They do an immense array. They’re really a family of 200 to 300 co-ops that are united within the Mondragon cooperative corporation. So they’ve shown the ability to grow. They’ve shown the ability to adapt. They’ve shown their competitive power. They have—excuse me, they’ve shown all the different ways that a corporation can develop without a top-down hierarchical, undemocratic structure. So we don’t have to choose between effectiveness, growth, job, security, and a cooperative structure. The cooperative structure can be a way to get there.

Here in the United States, we have lots of such co-ops developing. There’s one even named after Father Arizmendi in California in the Bay Area. There are six Arizmendi bakeries and coffee shops that were set up on that model. They started with one; they’re now six. Hint: They’ve grown. And you can do this. And all over the United States, there are these efforts, often done by people who want a different kind of life. They want to be in charge of their own job. They want to have a sense of control and a sense that they’re not just a drone doing the work, but they’re part of the folks who design and direct. It brings out new capacities. It makes you more happier to go to work. It’s a more satisfying job life than you would otherwise have. So I think it recommends itself on all kinds of levels.

One other example, we can learn something from a country called Italy that we admire for its cuisine and its lovely countryside. They have a law there, passed in 1985, called the Marcora Law after the name of the legislator. Here’s what it does. It offers a choice to unemployed workers. You can take a dole every week, an unemployment check, the way we do in this country, or you have an option, an option B that we don’t have. If you get at least nine other workers to make the—unemployed workers, like yourself, to make the following choice, here’s what you can get. As a lump sum, you can get your entire unemployment program of two years of checks in your hands right at the beginning; you have to have nine other workers or more, and you have to use that money as the start-up capital for a cooperative enterprise. The idea of the Italian government was, if we give workers this to set up a job and an enterprise, they will be much more committed to it than they would if they didn’t have that role.

AMY GOODMAN: How do they know they’ll do it?

RICHARD WOLFF: They don’t. But they know those workers have an incentive, because if they don’t make that work, they can’t go back and collect unemployment. That’s what they got. The government doesn’t spend much more money than it would have anyway, but it creates jobs, and it creates workers committed, because it’s their enterprise, to make that work as their personal solution and as a way not only for them to survive, but for the whole of the Italian society for the first time to see what it’s like to have an enterprise where you run the affair.

You know, here in America, we want to believe in freedom of choice. Let’s give our people freedom of choice. They can have the choice to go work in a top-down, capitalist enterprise—what we’re used to—but if we develop the alternative, really a program of co-ops around the country, then American young people and older people could say, "What would it be like to work there? Let’s see what that’s like." And then we would have the choice we do not have in this country now.

AMY GOODMAN: Professor Wolff, before we end, I want to turn back to the crisis in Cyprus and relate it to what’s happening here. Bill O’Reilly of Fox News warned his audience last week that Cyprus and other European countries are facing economic hardships because they’re so-called "nanny states."

BILL O’REILLY: Greece, Italy, Spain, Portugal, Ireland, now Cyprus, all broke. And other European nations are close. Why? Because they’re nanny states, and there are not enough workers to support all the entitlements these progressive paradises are handing out.

AMY GOODMAN: That’s Bill O’Reilly of Fox News. Richard?

RICHARD WOLFF: You know, he gets away with saying things which no undergraduate in the United States with a responsible economic professor could ever get away with. If you want to refer to things as nanny states, then the place you go in Europe is not the southern tier—Portugal, Spain and Italy; the place you go are Germany and Scandinavia, because they provide more social services to their people than anybody else. And guess what: Not only are they not in trouble economically, they are the winners of the current situation. The unemployment rate in Germany is now below 5 percent. Ours is pushing between 7 and 8 percent. So, please, get your facts right, Mr. O’Reilly. The nanny state, you call it, the program of countries like Germany and Scandinavia, who tax their people heavily, by all means, but who provide them with social services that would be the envy of the United States—a national health program that takes care of you, whether you’re employed or not, and gives you proper healthcare. In France, for example, the law says when you go to work, you get five weeks’ paid vacation. That’s not an option; that’s the law. You get support when you’re a new parent for your child care and so forth. They provide services. And they are successful in Germany and Scandinavia, much more than we are in the United States and much more than those countries in the south.

So they’re not broken, the south, because they’re nanny states, since the nanny states, par excellence, are doing better than everyone. The actual truth of Mr. O’Reilly is the opposite of what he says. The more you do nanny state, the better off you are during a crisis and to minimize the cost of the crisis. That’s what the European economic situation actually teaches. He’s just making it up as he goes along to conform to an ideological position that is harder and harder for folks like him to sustain, so he has to reach further and further into fantasy.

AMY GOODMAN: In our last minute, other cures for capitalism, as you put it?

RICHARD WOLFF: Well, I think that there’s a set of fundamental reorganizations. When you have a private banking system in the United States, the way we did up until, say, the 1970s and '80s, you had it in a position relative to the economy that made a certain sense. But over the last 30 and 40 years, for a whole host of reasons, we have made debt a central part of the economy. Today it is not unusual for a person who goes into a grocery store to get a bottle of water to use a credit card, basically to make a loan in order to buy that bottle of water. Everything that consumers do is now mediated by debt. Everything corporations do, and as we look around the world, the governments are in debt. Debt is everywhere. It has become the water we swim in, the air we breathe. That puts the banks in an unbelievably powerful position, because they're the repository of the means to borrow. If we’re going to make an economy dependent on debt, we can’t leave the power to control that—

AMY GOODMAN: We have 10 seconds.

RICHARD WOLFF: —in the private hands of banks. Either we don’t become a debt-ridden country, or we make borrowing and lending a social program. We can’t allow private banking. It doesn’t work. It needs to be changed.

AMY GOODMAN: Richard Wolff, I want to thank you for being with us. If you’d like a copy of today’s show, you can go to our website at democracynow.org. Richard Wolff is professor emeritus at University of Massachusetts, teaches at New School University.

The Fire Last Time: Workplace Safety Still Ignored Across the Globe

Two years ago this week, the 100th anniversary of the tragic Triangle Shirtwaist fire, the issue of workplace safety got a lot of attention.  Two years later things haven’t changed much except now the dangers are world-wide.  Last September nearly 300 workers died when trapped behind locked doors in a Pakistani textile factory fire.  Last November, 120 people died and about 100 others were injured in a fire at an eight-story textile factory Bangladesh. And in the two years since America memorialized the Triangle Fire victims with conferences, speeches, and an HBO special – Republicans in Congress have made sure nothing has been done to improve the situation in the United States, such as expanding the budget for the Occupational Safety and Health Administration and giving OSHA stronger regulatory teeth.Relatives mourn the death of a garment worker after a fire swept through the Tazreen Fashion factory in Bangladesh's capital last year killing more than 100 people. (Photo: Andrew Biraj/REUTERS )

A century ago, on March 25, 1911, 146 garment workers, most of them Jewish and Italian immigrant girls in their teens and twenties, perished after a fire broke out at the Triangle Waist Company in New York City’s Greenwich Village. Even after the fire, the city’s businesses continued to insist they could regulate themselves, but the deaths clearly demonstrated that companies like Triangle, if left to their own devices, would not concern themselves with their workers’ safety. Despite this business opposition, the public’s response to the fire and to the 146 deaths led to landmark state regulations.

Businesses today, and their allies in Congress and the statehouses, are making the same arguments against government regulation that New York’s business leaders made a century ago. The current hue and cry about “burdensome government regulations” that stifle job growth shows that the lesson of the Triangle has been forgotten. Here, to refresh our fading memories, is what happened.

One hundred years ago, New York was a city of enormous wealth and wide disparities between rich and poor. New industries were booming—none more so than women’s and men’s clothing. The new age had created a demand for off-the-rack, mass-produced clothing that could be sold in department stores. The Triangle company made blouses, which were called shirtwaists.

Few of those who bought the new ready-to-wear clothing gave much thought to the people who made them. The blouses, skirts, and sweaters were sewn in miserable factories, often by girls as young as 15 who worked seven days a week, from 7 a.m. to 8 p.m. with a half-hour lunch break, and often longer during the busy season. They were paid about $6 per week, and were often required to use their own needles, thread, irons, and even sewing machines. The factories were overcrowded (they often occupied a room in a tenement apartment) and lacked ventilation. Many were poorly lit fire traps without sprinklers or fire escapes.

In November 1909, over 20,000 shirtwaist makers from more than 500 factories, led by the International Ladies Garment Workers Union (ILGWU), walked off their jobs. They demanded a 20 percent pay raise, a 52-hour workweek, and extra pay for overtime. They also called for adequate fire escapes and open doors from the factories to the street. Within 48 hours, more than 70 of the smaller factories agreed to the union’s demands, but many of the largest manufacturers refused to compromise. The New York City police soon began arresting strikers—labeling some of them “street walkers,” which was literally true, since they were carrying picket signs up and down the sidewalks. Judges fined them and sentenced some of the activists to labor camps.

But the strikers held out and by February 1910, most of the small and midsized factories, and some of the larger employers, had negotiated a settlement for higher pay and shorter hours. One of the companies that refused to settle was the Triangle Waist Company, one of New York’s largest garment makers.

That July, another group of garment workers—over 60,000 cloakmakers, mostly men this time—went on strike. As the tensions escalated, both union and business leaders invited prominent Boston attorney (and later Supreme Court Justice) Louis Brandeis to New York to help mediate the conflict. With Brandeis’s nudging, the two sides signed the “Protocol of Peace” agreement that set minimum industry standards on wages, hours, piece-rates, and workplace safety and health. But the Protocol’s weakness was that it was a voluntary agreement, not a government regulation, and not all manufacturers signed on. Once again, one of the holdouts was the Triangle Waist Company.

Owned by Isaac Harris and Max Blanck, who were known as the “the shirtwaist kings," Triangle was one of the most rabidly anti-union firms. On March 25, 1911, on a Saturday at 4:45 p.m., close to quitting time, a fire broke out on the eighth and ninth floors of its ten-story building. Factory foremen had locked the exit doors to keep out union organizers and to keep workers from taking breaks and stealing scraps of fabric. Other doors only opened inward and were blocked by the stampede of workers struggling to escape. The ladders of the city’s fire engines could not reach high enough to save the employees. As a result, workers burned or they jumped to their deaths. Experts later concluded that the fire was likely caused by a cigarette dropped on a pile of “cut aways” or scraps of cloth that had been accumulating for almost three months.

News of the fire spread quickly, catalyzing public opinion, and energizing a broad coalition of unlikely allies. It included immigrants, muckraking journalists, clergy, unionists, socialites, and socialists. Rose Schneiderman, an immigrant worker, socialist, and fiery union organizer, found common cause with Anne Morgan, the daughter of Wall Street chieftain J.P. Morgan. Frances Perkins, a former settlement house worker who was at the time a researcher and lobbyist for the Consumers League (and who later became Franklin Roosevelt’s trailblazing secretary of labor) joined hands with Rabbi Stephen S. Wise to demand reform.

On April 6, 30,000 New Yorkers marched—and hundreds of thousands more lined the march’s route—behind empty hearses to memorialize the fire’s victims. Numerous rallies, broadsides and editorials called for legislative action—ranging from fire safety codes to restrictions on child labor. In response to the outcry, New York Governor John Alden Dix created the Factory Investigating Commission, a pioneering body with broad subpoena powers and teams of investigators, led by two savvy Democratic politicians, state Assemblyman Al Smith and state Senator Robert F. Wagner.

Smith, Wagner, and the Commission members traveled up and down the state holding hearings and visiting factories. Over two years, the commissioners interviewed almost 500 witnesses and visited over 3,000 factories in 20 industries. They found buildings without fire escapes, bakeries in poorly ventilated cellars with rat droppings. Only 21 percent of the bakeries even had bathrooms, and most of them were unsanitary. Children—some as young as five years old—were toiling in dangerous canning factories. Women and girls were working 18-hour days.

After the fire, many city officials acknowledged there was a problem. Edward F. Croker, New York City’s retired fire chief, told the Commission that employers “pay absolutely no attention to the fire hazard or to the protection of the employees in these buildings. That is their last consideration.” His department had cited the Triangle building for lack of fire escapes just one week before the fire.

But the garment manufacturers, the Real Estate Board, and the bakery and cannery industry groups sought to stymie the Commission. The real-estate interests opposed city fire codes. After the Fire Department ordered warehouses to install sprinklers, the Protective League of Property Owners held a meeting to denounce the mandate, angrily charging the city with forcing owners to use “cumbersome and costly” equipment.

As representative of the Associated Industries of New York insisted that regulations would mean “the wiping out of industry in this state.” Mabel Clark, vice president of the W.N. Clark Company, a canning corporation, opposed any restrictions on child labor. “I have seen children working in factories, and I have seen them working at home, and they were perfectly happy,” she declared.

Terence McGuire, president of the Real Estate Board, summed up the business argument against regulation. “To my mind this is all wrong,” he declared. “The experience of the past proves conclusively that the best government is the least possible government.” The board warned that new laws would drive “manufacturers out of the City and State of New York.”

Smith, Wagner, and the political leaders of the time, fortified by a vibrant progressive movement, ignored these opponents of business regulation. In the first year, the Commission proposed and the legislature quickly passed a package of laws requiring mandatory fire drills, automatic sprinklers, and unlocked doors during work hours that were required to swing outward. They also created rules on the storage and disposal of flammable waste, and they banned smoking from the shop floor.

In the second year, the legislature passed additional reforms. They set the maximum numbers of workers per floor. They established codes requiring new buildings to include fireproof stairways and fire escapes. They required employers to provide clean drinking water, washrooms and toilets for their employees. They gave labor commission inspectors the power to shut down unsanitary tenement sweatshops. And they ruled that women could work no more than 54 hours a week and that children under 18 could not work in dangerous situations.

These pathbreaking state regulations, provoked by the Triangle fire, proved that government could play a powerful role in the lives of ordinary people. Other states followed suit, and ultimately President Franklin Roosevelt, prodded by Perkins, Wagner, and other veterans of New York’s progressive movement, introduced New Deal reforms ending child labor, establishing a federal minimum wage and a 40-hour week, and creating a National Labor Relations Board (NLRB) that would establish the right of workers to form a union that would bargain collectively with employers.

The Triangle company’s owners were indicted and went on trial for manslaughter, but they were found innocent when the judge told the jury that in order to return a guilty verdict, they had to find that the two defendants knew or should have known that the doors were locked. Harris and Blanck also continued to refuse to recognize the union. But the company never recovered from the fire and the controversy surrounding it, and in 1918, it closed its doors.

That didn’t happen to other city businesses. Contrary to the business leaders’ dire predictions, they did not suffer from the new regulations. The New York Times reported in July 1914, that, “[n]otwithstanding all the talk of a probable exodus of manufacturing interests, the commission has not found a single case of a manufacturer intending to leave the State because of the enforcement of the factory laws.” New York’s Seventh Avenue remained the headquarters of the nation’s garment industry for decades until production gradually moved south and overseas after World War II.

Ironically, 100 years after the Triangle fire, we still hear much of the same rhetoric whenever reformers seek to use government to businesses act more responsibly and protect consumers, workers, and the environment. For example, the disasters last year that killed 29 miners at Upper Big Branch and eleven oil rig workers in the Gulf could have been avoided had lawmakers resisted lobbying by mine owners and BP to weaken safety regulations.

Today, the leading foe of reform is the United States Chamber of Commerce, which is on a crusade against the Obama administration’s plans to set new rules on unsafe workplaces, industrial hazards and threats to public health. The Chamber labels every effort at reform a “job killer.” The Chamber’s most vocal proponent is Darrell Issa, the conservative California Republican who chairs the House Committee on Oversight and Government Reform. At the request of the Chamber and other industry lobbies, Issa recently launched a congressional assault on safeguards in workplaces and communities. 

In January, Issa sent letters to more than 170 companies and business lobby groups—including Duke Energy, FMC Corp., Toyota, Bayer, the American Petroleum Institute, the National Association of Manufacturers, the Association of American Railroads, the National Petrochemical & Refiners Association, and lobbies representing health care, banking, and telecommunication providers—asking them to identify "burdensome government regulations" that they want eliminated.

The business groups responded with a long wish list, including rules to control “combustible dust” that has resulted in explosions killing workers; rules to track musculoskelal disorders, such as tendonitis, carpal tunnel, or back injuries, that impact millions of workers at keyboards, in construction, or in meat processing; and rules to address workplace noise that leads to hearing loss. And Republicans listened. They are proposing to cut OSHA’s budget by 20 percent, which, coming on top of decades of cuts, would cripple an agency that has been effective at significantly reducing workplace injuries and deaths.

The Republican leadership is trying to drive home the message, in Speaker John Boehner’s words, that “excessive regulation costs jobs” and that the “path to prosperity” is by “getting government out of the way.” Americans of earlier generations—who enjoyed the benefits of the Progressive Era and the New Deal reforms, and the political clout of a vibrant labor movement—understood this was nonsense, but it seems like the lessons of the past have to be relearned again. That’s why it is important to recall the sordid circumstances in which 146 young women lost their lives at the Triangle Waist Company a century ago.

Peter Dreier

Peter Dreier is E.P. Clapp Distinguished Professor of Politics, and director of the Urban & Environmental Policy program, at Occidental College. His most recent book is The 100 Greatest Americans of the 20th Century: A Social Justice Hall of Fame (2012, Nation Books). Other books include: Place Matters: Metropolitics for the 21st Century and The Next Los Angeles: The Struggle for a Livable City. He writes regularly for the Los Angeles Times, The Nation, and American Prospect. 

Donald Cohen

Donald Cohen is currently the Director of the Cry Wolf Project and the Chair of In the Public Interest, a resource center on privatization and responsible contracting. A co-founder and former president of the Center on Policy Initiatives, a San Diego-based research, and policy center, Cohen has over 25 years of experience in campaigns and organizations dedicated to economic justice, healthcare reform, education reform, environmental protection, and international human rights.  He is also on the board of Green For All.

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Access to Health Care, Basic Necessities a Matter of Life or Debt

Examining the argument that “medical and other debt shouldn’t exist because debt is part of a rigged system of mafia capitalism that extracts wealth from people who are trying to meet their basic needs.”

This week the Strike Debt Rolling Jubilee, a project that arose from Occupy Wall Street, will announce its purchase of more than $1 million of medical debt as part of a weeklong national conversation about why people shouldn’t be put in debt meeting their basic needs.

Patient holding hands

(Image: Patient holding hands via Shutterstock)

The Rolling Jubilee raised funds to purchase bundles of debt for pennies on the dollar. Unlike the rapidly growing industry of collection agencies that purchase debt and then hound debtors until they repay, the Rolling Jubilee will erase their purchased debt, freeing debtors from their obligation. Rolling Jubilee members view debt as the intersection between Wall Street and people’s lives. They argue that medical and other debt shouldn’t exist because debt is part of a rigged system of mafia capitalism that extracts wealth from people who are trying to meet their basic needs.

We spoke with Thomas Gokey of Strike Debt and Dr. Steffie Woolhandler, co-founder of Physicians for a National Health Program and author of the leading studies on bankruptcy caused by medical debt, to learn more. We explored why medical debt exists in the United States, what its impacts are on health and what could be done to end medical debt completely. Woolhandler also described the impact of the 2006 Massachusetts’ health law, which was used as a blueprint for the national health law, on debt and health care costs. The solution, a national single-payer health system, described as “Expanded and Improved Medicare for All,” is already supported by the majority of Americans. Until this and other solutions to our crises are realized, Strike Debt provides a guide for organizing and resisting the culture of debt that binds us.

Living in the Land of Health Injustice

The US has used a market-based health system for so long that most people probably feel that it is normal, but in truth, the US health system is an aberration. Most industrialized nations have publicly-funded universal health care systems paid for through taxes that cover virtually 100 percent of necessary care. Their systems have been in existence for many decades, and while no system is perfect, other countries spend half what the United States  does per person on health care, cover everyone and have better health outcomes.

After World War II, the United States moved toward a system of health insurance primarily accessed through employment. Then, under President Reagan in the 1980s, there was an intentional effort to create investor-owned health-care services, turn health insurance into a profit-making sector and privatize the delivery of health care in for-profit hospitals. Creating a for-profit health care system is a thirty-year experiment with clear outcomes: uncontrolled costs, growing health disparities, falling life expectancy and other indicators of poor health status, including high numbers of preventable deaths. If such an experiment were to have been conducted by a research team, ethics would have demanded that the experiment be stopped a long time ago.

The basic flaws of the US system are obvious. When health insurance is tied to employment, the healthiest segment of the population (i.e. essentially those who are working) is covered. Those who cannot work, perhaps because of a serious accident or illness, lose their coverage or struggle to afford it on the individual market where the prices are higher and the coverage is skimpier. When the bottom line is profit, not health, health insurers compete to attract those who are healthy in the first place and then find ways to restrict and deny payment for care through provider networks, authorization processes and out-of-pocket costs.

Patients and providers spend so much time and energy trying to navigate the complicated health system in the United States that it is hard to see the forest for the trees. But each time that a patient delays or avoids necessary care, that a patient is asked what kind of insurance they have before they are asked what they need, or that a family has to choose between paying for treatment and paying for basics such as food and shelter, a health injustice has occurred. These scenarios do not happen in other wealthy nations.

In fact, medical debt and bankruptcy are uniquely American experiences among wealthy nations. Some enter into medical debt because they are uninsured and need medical services, but the majority of people who end up with medical bankruptcy have health insurance. Dr. Woolhandler and her colleagues interviewed over two thousand people in bankruptcy court. They found that more than 60 percent became bankrupt because of medical illness and medical bills, and nearly 80 percent had insurance when they first became ill. Despite being insured, the out-of-pocket costs for the premiums, copays, deductibles, co-insurance and uncovered services combined to create an unsustainable financial burden.

Woolhandler’s landmark bankruptcy study was based on data from 2007, before the financial crisis of 2008. At present, over one-third of working families have no savings, and nearly two-thirds do not have enough cash on hand to withstand a $1,000 emergency. When families are living paycheck to paycheck, one serious accident or illness is enough to push them over the edge.

In addition to the obvious risk of financial ruin, we asked Woolhandler about the impact of being uninsured or underinsured on health outcomes. The consequences are well-documented. People without insurance do not receive primary or preventive care, have worse outcomes when they do seek treatment and are more likely to die. The same goes for those who have skimpy health insurance. Copays and deductibles cause people to delay or avoid necessary care

ObamaCare Will Escalate Health Injustice

There is a lot of confusion about the Affordable Care Act (ACA). At its root the ACA was an insurance company takeover of health care in the United States which included lots of ways for health corporations to profit. There has been a marketing effort to sell people on the ACA by claiming more people will have health insurance, but what is not mentioned is that the type of insurance coverage people will have is going to be skimpier. While it is true that more people will have insurance, the ACA will still leave tens of millions without insurance when fully implemented, and there will be an increase in expensive under-insurance plans.

Prior to the passage of the Obama health reform, there were efforts by some state-level insurance regulators to require insurance companies to provide more extensive coverage by spending 80 to 85 percent of premiums on health services rather than on profit and administration. The Obama law stopped those efforts by putting in place a law for the first time which said that 60-40 plans are acceptable. In a 60-40 plan, the insurance company pays 60 percent of the covered costs, while the enrollee pays 40 percent plus the full amount of uncovered costs, those not included in their policies. Enrollee costs include premiums, deductibles, copays, co-insurance and other out-of-pocket expenses. It is these out-of-pocket costs that quickly lead to health-care debt and bankruptcy.

The ACA will push coverage in the direction of under-insurance in a number of ways. One is through taxing so-called “Cadillac Plans” which are merely insurance plans that provide the kind of coverage all Americans once viewed as standard – actual health insurance. Employers are planning to avoid the Cadillac tax by lowering benefits so that their plans do not meet the Cadillac Plan criteria. Employers are also planning to drop health benefits and pay a penalty instead, which saves money, or to drop health benefits and offer subsidies to employees to purchase health insurance on their own. Other employers are changing the status of their employees to be consultants or less than full time to avoid having to provide health benefits.

The ACA will result in more people purchasing inadequate insurance plans when the state insurance exchanges open later this year. There will be four tiers of coverage from 90-10 to 60-40 plans. Most people will be forced to choose the lower tiers because premiums will rise even higher when the requirement to offer policies to people with pre-existing conditions begins.

Those who qualify for subsidies by earning below 250 percent of the federal poverty level (the Federal Poverty Level income for a family of four is $23,550, the qualifying income, $58,875) will be allowed to purchase 70-30 plans only.

And the Obama administration narrowly interpreted the law so that qualification for subsidies based on the cost of premiums only applies to individual, not family, plans. This means that if the cost of an individual plan is less than 9.5 percent of a person’s income, even if that person actually needs a family plan which would cost more than 9.5 percent, they do not qualify for a subsidy to buy a family plan.

One way to know how the Obama law will fare is to look at the experience of the pilot project in Massachusetts. The 2006 Massachusetts health-care law cut the number of uninsured in half, which is similar to what the ACA is expected to accomplish. Those who are still without coverage are primarily the working poor. The health insurance exchange has not brought the cost of premiums down and is not used by the majority of the public. The exchange is mainly used by those who receive a subsidy from the government because subsidized plans must be purchased from the exchange. To pay for subsidies for insurance premiums, Massachusetts cut important safety net public health programs, especially programs like those for mental health services that are not covered by insurance. The cost of health care in Massachusetts, already the highest in the nation, continues to rise. And the cost of health care continues to be a barrier for people who need health services. Medical debt and bankruptcies continue at the same levels as before the law was passed.

Based on predictions by groups like the Congressional Budget Office and the experience in Massachusetts, we can predict the result of the ACA: continued lack of insurance for at least 30 million, more people in the costly individual insurance market, more people with under-insurance, continued increases in the cost of health care, continued financial barriers to necessary health care and continued high levels of medical debt and medical bankruptcy. In other words, health injustice will continue in the United States.

How to End Health Injustice

One of the first steps required for change is awareness of the problem. The Strike Debt Rolling Jubilee “Life or Debt” campaign will help some people directly, but it will do more to highlight the ongoing problems of medical debt and the debtor system. The Rolling Jubilee has joined with single-payer health care advocates for a week of national solidarity actions to educate about the single-payer solution and to shift the broader conversation to one that questions a system that profits from people’s attempts to meet their needs.

The dominant message in the United States is one that places the blame on individuals when they are unable to meet their basic needs for health care, housing, education and food. The individual is blamed for making a bad decision to borrow money or for not being able to put money aside in a savings account. This is meant to make people feel shame. It is a form of social control that disempowers people and silences them. But Strike Debt recognizes that 76 percent of Americans are in debt and asks, “How is it possible that three-quarters of us could all have just somehow failed to figure out how to properly manage our money, all at the same time?”

This is a fundamental question because real transformation becomes possible when people stop feeling isolated and ashamed and instead join together to tell their stories, to find connections between their stories and to question the root causes of their shared situation. For us, this was a key reason for the physical occupations in the fall of 2011. In the occupations, people met others who were struggling with the same problems of homelessness, unemployment and debt. The Strike Debt campaign says it well, “You are not a loan. You are not alone.” Working in solidarity is both empowering and powerful.

For too long in the United States, politicians and the corporate media have defined the narrative. We can use single payer as a prime example. A single-payer health-care system or “improved Medicare-for-All” would ensure access to health care from birth to death for everyone in the United States. This is eminently affordable, indeed the US already spends the most per person on health care in the world; we just get the least return for our spending. It is not a question of the cost; rather it is a question of the US political system being able to put in place real solutions despite the power of the insurance and for-profit health-care industries.

The arguments for single payer are widely supported and well-known. It is the only proven path to a national health system that will provide coverage to everyone in the United States, control costs and produce excellent health outcomes. There is a solid majority of the public, including a majority of health professionals, who supports a single-payer health system despite the intentional misinformation campaign that characterizes single payer as “socialism” and “rationing.” But single-payer supporters are disempowered by being told that they are asking for too much and that what they want is not politically feasible. They are urged to be pragmatic and to accept incremental solutions.

Tens of millions of dollars have been invested in front groups such as Health Care for America Now to channel popular energy away from single payer and into Wall Street solutions such as the ACA. And it has been very effective. During the health-reform process, the groups who supported health reform were effectively split. Single-payer supporters were divided into those who held firm for a single payer plan and those who supported what was called the public option. Single-payer supporters who held firm were chastised for not being pragmatic and supporting a public option, which was mislabeled as a step toward single payer even though the evidence showed that a public option was neither a practical step nor was it intended to be included in the health law.

As the health law neared the final steps in the process, and the provisions in the bill were increasingly unacceptable, two additional methods of social control were employed. One was straight up lying. Politicians and their front groups called the health law “universal, affordable and guaranteed,” when it was none of those. And the other was to tie the success of the law to the success of the Democratic Party and to frighten the public into believing that Republicans would be much worse. This line of thinking ignored the fact that the state model for the bill was passed under a Republican administration, Governor Romney, in Massachusetts, and that the blueprint for the bill was developed in the conservative Heritage Foundation.

There are important lessons to learn from the health-reform process. First, is that advocates must have a solid understanding of what constitutes a real solution so they are not led down a path toward a false solution. Second, is that advocates must work in solidarity for real solutions with confidence rather than accepting watered-down solutions. And third, is that advocates must not tether their work to the agenda of any political party but must be willing to hold whoever is in office accountable.

Commodifying Human Needs Violates Human Rights

The human rights framework is being used more and more as a way to understand problems and their solutions and to empower people to demand that basic needs are met. The concept of human rights runs counter to the incentive of the market, which is to make everything a commodity. When human needs are treated as commodities, those who control access to them have a captive population.

Like the company towns that arose during the Industrial Revolution, Wall Street controls the currency, the jobs, and goods and services, so that many people have nowhere to go. It is estimated by author John Curl that 92 percent of the working population in the US is trapped in indentured servitude, dependent on their job for their survival. As anthropologist David Graeber points out, the earliest wage contracts were slave rentals. Today, the reality for almost all Americans is living as indebted wage slaves.

One of the tools used by dictatorships to control their populations and prevent uprisings is to impose economic sanctions. Sanctions are easy to recognize when we look at other nations, but not so easy to see at home. The United States is the wealthiest nation in the world, and total wealth is growing. But this wealth, much of which is derived from the resources and labor of the population, is flowing to the top 1 percent or above, while the wealth of the bottom 99 percent is falling. There is enough wealth in the United States to provide free education and health care to all and to create a full employment program. The US could invest in a clean energy infrastructure and affordable housing. The failure to do so is equivalent to imposing sanctions on the majority of the people.

Although some do not know it yet, all people in the United States are united by their human rights to have basic needs met. Indeed, the United States has signed onto two international treaties that delineate these human rights. One is the Universal Declaration of Human Rights and the other is the International Covenant on Economic, Social, and Cultural Rights. These rights, including our right to health care, are being violated. It is up to the people to realize this and to join together in demanding that our rights be honored. Human rights are the glue that binds us to each other. Debt is the shackle that enslaves us to Wall Street.

Starting at the Roots

The commodification of health care is the root cause of medical debt and bankruptcy, but we see the same pattern when it comes to other essentials such as housing, education and more. The Strike Debt campaign on medical debt is part of a broader campaign against our debt-based economy. Debt has been part of human society for thousands of years and, as David Graeber notes, there are “potentially catastrophic social consequences of debt.” In order to avoid a debt crisis:

“It soon became traditional for each new ruler to wipe the slate clean, cancel all debts, and declare a general amnesty or ‘freedom’, so that all bonded labourers could return to their families. (It is significant here that the first word for ‘freedom’ known in any human language, the Sumerian amarga, literally means ‘return to mother’.) Biblical prophets instituted a similar custom, the Jubilee, whereby after seven years all debts were similarly cancelled. This is the direct ancestor of the New Testament notion of ‘redemption.’ ”

Strike Debt seeks to “build popular resistance to all forms of debt imposed on us by the banks. Debt keeps us isolated, ashamed and afraid. We are building a movement to challenge this system while creating alternatives and supporting each other. We want an economy where our debts are to our friends, families and communities – and not to the 1%.”

This type of thinking is fundamental to achieving a society based on equality, prosperity and human rights. A culture shift away from the dominant narrative of the marketplace to one of social solidarity is essential because a population that is empowered and works together is more difficult to oppress and control.

The Strike Debt campaign prepared a Debt Resisters Organizing Manual to provide people with tools to both resist debt and build the society we want to live in. The manual is an ongoing work that is available for free on the Strike Debt website. It explains debt and how it is created. It provides specific actions that people can take to decrease their individual debt. And it provides information so that communities can understand ways that debt controls their collective lives, for example when public debt is used to justify cuts to social services and basic public infrastructure.

Debt is a global problem. It is a tool that has been used for decades to advance a neoliberal agenda of privatization of goods and services. Secretary of State John Kerry’s first trip to Egypt was to push their new government to accept an International Monetary Fund (IMF) loan with the requirement that it end subsidies for fuel and food, among other structural adjustments. The United States, through the World Bank and IMF, routinely requires Structural Adjustment Programs as conditions of loans that demand decreased funding for public programs and increased foreign ownership of resources.

Indeed, rather than ending debt as wise rulers of the past have done, for the first time in the 5,000-year history of debt, Graeber writes, “we have begun to see the creation of the first effective planetary administrative system, operating through the IMF, World Bank, corporations and other financial institutions, largely in order to protect the interests of creditors.”

But more civil societies are taking a stand against debt that has been imposed upon them without their consent. In Spain, this is being done through the “No Pagamos” (We Won’t Pay) campaign. Likewise, it is happening in the UK and Greece. We have written previously about successes in Latin America such as Venezuela and Ecuador.

As neoliberal policies take root at home, more communities in the US are building Strike Debt chapters and fighting back. To find a chapter near you or to start one, visit Strike Debt. It is time for Americans to stand together, with the people of the world, and end the systemic problem of debt enslavement. For this, our solidarity is more important than ever.

You can listen to our interview with Thomas Gokey of Strike Debt and Dr. Steffie Woolhandler of PNHP.org on Medical Debt and Bankruptcy on Clearing the FOG.Margaret Flowers and Kevin Zeese

Kevin Zeese JD and Margaret Flowers MD co-host ClearingtheFOGRadio.org on We Act Radio 1480 AM Washington, DC and on Economic Democracy Media, co-direct It’s Our Economy and are organizers of the Occupation of Washington, DC. Their twitters are @KBZeese and @MFlowers8.

Could New York Be the Next Chicago?

Last September’s Chicago teachers strike, organized—and won—by an unapologetically democratic, community-centered union, gave hope to laborites across the country that there could be a functional American labor movement.

Now, a caucus of unionists seeks to remake New York’s United Federation of Teachers, the city’s local of the American Federation of Teachers, in the CTU’s mold. The Movement of Rank-and-File Educators (MORE) was founded last spring as an alliance of teacher caucuses and activist groups. The caucus stands unconditionally opposed to school closingsretributive punishment of students, and the “junk science” of evaluating teachers based on student tests. “Teachers need to play the role in laying a platform for parents and students,” says Marissa Torres, MORE’s candidate for assistant treasurer in next month’s elections. Torres calls for the UFT, like the Chicago Teachers Union, to foreground explicit anti-racism and collective struggle.

MORE’S sharpest point of departure from current leadership is over union governance. It demands elections for district representatives, which became appointed positions in 2003 under then-president Randi Weingarten (now the head of the AFT). As a caucus that counts parents among its members, it also advocates parent representation on the union’s executive board.

Unlike Chicago’s governing Caucus of Rank-and-File Educators (CORE), though, MORE faces safely ensconced union leadership. The Unity Caucus has been in power ever since the union’s founding in 1960. Former UFT member Lois Weiner argues in her recent book, The Future of Our Schools: Teachers Unions and Social Justice, that Unity’s unchecked reign has ossified the union. “The UFT has indeed been able to protect many of the vestiges of the old system by calling in its political chops,” she writes, but “has done so at the expense of alienating its natural allies, insulating the bureaucracy and allowing the union to all but disappear at the school.” At a February panel organized by MORE, Weiner cautioned caucus members not to focus only on capturing union leadership, but to reinvent the union through organizing, inside and out.

With union elections coming up and a fight with the city over teacher evaluation still raging, MORE has a host of opportunities to build support for its alternative model of teacher unionism.

Bloomberg-style elections

This spring’s UFT elections are unlikely to propel MORE into union leadership, but will serve as a test of its ground game. Elections are a time for “accountability, conversation, outreach, relationship building,” says Julie Cavanagh, MORE’s candidate for union president. Describing the union culture that MORE is trying to create, she says, “Spaces would exist for discourse, dialogue, and analysis. Questions could be asked and answered. A vision for the next three years would be presented and collectively discussed.”

To this end, MORE has used the elections as a launching pad for member-to-member outreach. Teachers have held countless regional forums and meet-ups to build a network of chapter leaders and members and organize at school sites. The caucus also maintains an active online presence and, like its counterparts in Chicago, hosts a reading group (covering Weiner’s book, among others). 

Although the UFT has a long history of dissident caucuses, none have been able to unseat Unity leadership—thanks in part to the union’s heavy incumbent bias. Of the 90 members on its executive board, only 23 are elected exclusively by teachers from particular strata—elementary, middle and high school. The rest of the board—19 “functionals” (non-teaching staff) and 48 at-large positions—are, like the 12-person leadership slate, voted on by workers and retirees alike. The retiree vote puts non-incumbents in a fix: Although challenger caucuses like MORE can access every teacher’s mailbox and buy a chapter leader list for mailings, they have no way of directly reaching out to retirees.

“Unity has been the only game in town,” says one retiree who taught high school social studies in Brooklyn for 24 years and agreed to speak on condition of anonymity. Though he expressed disappointment with union leadership over its handling of laid off teachers and its inability to roll back the mayor’s yearly tide of school closings—which included his own—he hasn’t heard from MORE and retains de facto Unity membership.

Compromise to the top?

Meanwhile, labor-management negotiations have become a theater of contention between MORE and Unity over how assertive—and how democratic—the union should be.

Last year, the Unity leadership decided to sign onto the city’s application for $40 million in federal Race to the Top funds, drawing criticism from MORE. Cavanagh slammed the leadership for accepting a greater role for standardized tests in teacher evaluations—a precondition for Race to the Top funding—in exchange for online learning grants with unproven benefits. “We should take a look at what we know works,” she said, “and not spend millions of dollars on experiments on other people’s children.”

New York City ultimately lost its Race to the Top bid for declining to provide requested information about its budget.

In response to MORE’s criticisms, Leo Casey, co-chair of the UFT’s evaluation negotiation committee, stressed the importance of finding common ground with the city. “The union’s position was that we needed to engage,” he said in an interview with Working In These Times, “and we needed to get the best possible evaluation system for our members that we could.”

Casey dismissed those opposed to the Unity leadership as “in the thrall of the apolitical romance of ‘revolutionary virtue’” and of the belief that “it is better to die gloriously on the field of battle protecting one’s virtue than to live to fight another day.” He accused dissidents of ignoring “the balance of power and of different forces” and using “rank-and-file empowerment and mobilization” as “the answer to every question.”

Who negotiates?

MORE’s emphasis on “empowerment and mobilization” has been evident in the union’s ongoing battle with the Bloomberg administration over a new evaluation system. Governor Andrew Cuomo demanded last spring that all districts negotiate new formulas for rating teachers by January 17, 2013, or risk hundreds of millions in sanctions. MORE maneuvered to involve rank-and-filers in the negotiations, gathering some 1,000 signatures on a petition calling for a member-wide referendum on all extra-contractual agreements. The UFT’s December 12 Delegate Assembly, however, dominated by the governing Unity Caucus, overwhelmingly voted down the proposal.

Negotiations between the union and the city on the new evaluation system fell through at the eleventh hour—which the union (and an unusually sympathetic New York Times) laid at the feet of the administration. While parent advocates won a legal battle to recoup the $250 million in punishment levied by the state, if no deal is reached by May 29, negotiations fall in the hands of a dubiously impartial arbitrator—state education commissioner John King.

The union leadership issued a statement expressing general approval of the arbitration process: “We’ve seen the kinds of plans the state has approved and we are comfortable with them because they are about helping teachers help kids.” MORE responds, “Any responsible union, led by people who care about the status of their members, would seek only a fair and independent arbitration process.”

As evidence of a current lack of democracy in negotiations, those clamoring for a new unionism cite emails such as one sent by a district representative to chapter leaders after a meeting in January. “It is not the place nor the time to get on a soapbox and speak about what you want to speak about,” the email reads. “We present the information, not to be filtered by you or to be changed in any way, it is to be presented to your members as you have heard it from me or any of the leadership in this union.”

The same day that email was sent, the union was criticized for being antidemocratic by a very different dissenter: Mayor Bloomberg. Responding to a union television ad blasting him for injecting dirty politics into evaluation negotiations, he compared it to the National Rifle Association, “another place where the membership, if you do the polling, doesn’t agree with the leadership.”

The union issued a stern rebuke—and the progressive media joined the uproar. But how the union can prevail in negotiations and defeat Bloomberg-allied forces in the long term is less obvious. Reacting to the Chicago teachers strike, UFT President Michael Mulgrew said, “The lesson for us here in New York is simple: Our ability to push back those so-called ‘reformers’ with their anti-teacher agenda depends in large measure on electing local and state representatives who understand and appreciate the importance of the work that we do every day in the classroom.”

The union is hopeful that Bloomberg’s successor, elected this year, will be more labor-friendly. By contrast, MORE’s approach is to take Bloomberg’s statement on the UFT’s member-leader rift and run with it—“occupying the union,” as Weiner’s book advocates, by elevating the voices of rank-and-filers and pushing for a CTU-style leadership that leverages these voices for political power.

UBS’ George Magnus Asks “Why Are The European Streets Relatively Quiet?”

The wave of social unrest that rumbled across Europe between 2008 and 2011 has become less intense. This has come as a cause for relief in financial markets, as it has helped to underpin the marginalization of ‘tail risk’ already addressed by the ECB and the Greek debt restructuring. And yet the latest crisis over the Cyprus bail-out/bail-in not only shoots an arrow into the heart of the principles of an acceptable banking union arrangement, if it could ever be agreed, but also signifies the deep malaise in the complex and fragile trust relationships between European citizens and their governments and institutions. Some people argue that protest, nationalist and separatist movements are just ‘noise’, that the business of ‘fixing Europe’ is proceeding regardless, and that citizens are resigned to the pain of keeping the Euro system together. UBS' George Magnus is not convinced, even if public anger is less acute now than in the past, it is far from dormant, and its expression is mostly unpredictable. So is the current lull in social unrest a signal that the social fabric of Europe is more robust than we thought, or (as we suggested 14 months ago) is the calm deceptive?

Social unrest is a systemic phenomenon, which, according to an OECD report, meets two principal criteria. It is highly uncertain, complex and ambiguous; and it is highly likely to generate ripple effects into other sectors of the economy and society, possibly leading to the toppling of governments, or even political systems. Although European social unrest since the crisis in Greece began has claimed a small number of fatalities and considerable damage to property, it has been notable more for the public expression of lack of trust in the institutions of government, including in Brussels. If a rising number of people give up on the willingness and ability of their institutions to address grievances, then the lull is most likely deceptive.

We have been here before. The economic and political context of the 1930s was, of course, different. Then there was much historical and unresolved geo-political baggage, and a rupture of the political centre as two radically different ideological veins erupted from the backlash against free trade and the gold standard. One championed radical social reform, the other what may be euphemistically called ‘nation-building’ 5 . And there was no EU. But the problem today, as then, is the same, namely the inadequacy of mainstream, political channels to address rising public concern about the loss of economic security, social stability and, yes, cultural identity6. How else to explain both the rise of Spain’s indignados, and other similar national protest movements in Europe, and the increase in nationalist, populist and separatist sentiment, and representation in national parliaments from Greece, France, and Spain to Finland and the Netherlands, and now Italy?

...

Still an austerity zone

Even though the financial crisis in Europe has faded, for the time being at least, the economic stress nurturing protest movements hasn’t. The best that can be said is that the incidence of austerity may not be as significant as it was in 2010-11

...

Backlash link to austerity

Let’s assume nothing changes, and that while European elites debate how – or if – they can build strong European banking, fiscal and economic institutions, with the required transfer mechanisms between creditors and debtors, the economic lot of European citizens, an unhappy one for five years now, shows no improvement. This seems a decent assumption.

...

The principal economic lesson is that an austerity regime with recurring reductions in public outlays won’t work a) when the private sector is trying to delever and shrink liabilities at the same time b) when it is a generic phenomenon and c) when its principal impact is to depress the level of money GDP and sustain the economy in a liquidity trap. But thanks to some interesting empirical work, another lesson concerns the corrosive and dangerous effects of large and sustained austerity in creating a social backlash that results in greater uncertainty, and therefore inertia, when it comes to corporate hiring and capital spending. As a result, output and public sector tax revenues suffer, reinforcing the negative dynamic between debt and the economy.

...

when expenditure cuts, specifically, rise to more than 2% of GDP, and particularly when they rise towards or over 5% of GDP, the number and the severity of incidents of unrest rise sharply.

...

Self-evidently, there have been heightened levels of social unrest and shocks to the political system in Greece, Spain, Portugal and Italy, but not in the UK or Ireland, or in the US, for that matter, though neither the US nor the UK, for example, have been immune to social unrest, sometimes requiring the force of the state to suppress it.12. But the main difference between many incidents of social unrest and the ones that damage the social fabric and the economic environment is the impact (sometimes more perceived than real, perhaps) of highly restrictive budgetary measures. Some governments may be better able to implement and absorb them, and sustain the trust or belief in citizens in perseverance. Mostly, this comes down to the robustness of local institutions, and the performance of leaders, as well as culture and history.

The most fundamental manifestation of this damage is, of course, unemployment. But this is only the most visible sign of the upheaval in Europe’s famed social model, and overlooks other important social and economic fault lines, including stagnant or declining real wages, rising income inequality, levels of youth unemployment of between 25% and 50%, and the rise in the numbers of long-term unemployed.

These phenomena didn’t begin with the financial and Euro crises, of course, but they have certainly been exacerbated by it and by the response of governments, and citizens are certainly making the connection, regardless.

So why are the streets relatively quiet?

The short answer is we don’t know. None of the reasons we can think of add up to much, but judge for yourself. It could have something to do with Europe’s rapid ageing demographic transition. The proportion of young adults, aged 15-24 has already been falling from peak levels seen in the mid 1980s, and is on track to decline further in the next 20 years. The proportion of 15-59 year olds, or what we might imagine as the part of the population most likely to express non-voting anger, is peaking now, but a significant decline is predicted. Perhaps the baby boomers have expended their protest energy!

Rapid growth in, and a rising proportion of, the numbers of young people, say aged 15-29, certainly feed the potential for social protest and upheaval. But they also need a catalyst, which could be the emergence of high inflation.

Empirically, there is an unequivocal association, but this is best applied, in contemporary times at least, to the experience of emerging and developing countries, for example, as in the Arab Spring. Although the European upheavals in the 1960s and 1970s were set against a backdrop of rising inflation, those in the 1930s and today are the product of depression and awkward questions of self-determination, not inflation.

Perhaps the relative calm in Europe has something to do with European family structures. The Bank Credit Analyst recently published a chart, emphasizing the role of the family as a shock absorber. The authors suggest that the countries with the highest youth unemployment rates are also those with the highest proportion of young adults living with their parents, who fulfill the role of effecting transfers and economic and social support.

We are not sure about this one either, although having an extended family structure on which to rely is clearly a mitigating factor against poverty and social exclusion. But the two variables may simply be spuriously correlated since both represent symptoms of a depressed economy. In any event, those countries with the highest youth unemployment and numbers living at home have already claimed the bragging rights for anti-austerity protest, while six of the other eight countries have been characterized by fallen or weakened governments, and the rise of nationalist and anti-immigrant political parties and policies.

A conclusion to this discussion is not possible.

In a benign outcome, the potential for social disorder will be defused by a new approach to economic burden-sharing, a re-sequencing of the pursuit of austerity and growth objectives, and steady progress towards the establishment of credible and trusted European banking, economic and political institutions, including financial transfer mechanisms. Motherhood, to be sure, and this has at least two vital caveats, namely the willingness of Germany and other northern European countries to accept significant sovereignty compromises, and the implications for the EU project, if this level of integration proves a bridge too far for UK voters in the promised 2017 referendum.

Social and political upheavals would doubtless haunt the worst-case outcome, where muddling through leads nevertheless to a fragmentation of the Eurozone, or, in extremis, a collapse, in spite of OMTs and the like. The possible consequences, including for the social fabric of Europe, have been well aired in the last couple of years.

The middle way, so to speak, is a muddling through that never scales the successful outcome hurdles, but carries on regardless. Political bonds, maybe fear, sustain the Euro system, but European leaders are unable to reach an agreed and acceptable framework for durable economic recovery and full integration. This outcome describes the status quo, and is the base case for most people. But it is also about stagnant, low growth, persistent high unemployment, retreating targets for debt sustainability, more bail-outs and bail-ins, latent financial instability, and likely sovereign default. The current Eurozone news could not be more apt, and doesn’t seem like the ideal scenario in which to expect European social unrest and political turbulence to fade away.

On the News With Thom Hartmann: Walmart Is Illegally Targeting Employees That Protested During...

In today's On the News segment: There is a new effort in Washington to loosen Wall Street regulations and water down the 2010 Dodd Frank Act is getting bipartisan support in Congress; Walmart is illegally targeting employees that took part in the Black Friday protests last year; Culinary workers in Las Vegas are standing up to Casino owners with acts of civil disobedience; and more.

Thom Hartmann here – on the news… 

You need to know this. Despite gridlock in Washington, a new effort to loosen Wall Street regulations and water down the 2010 Dodd Frank Act is getting bipartisan support in Congress.  Republican Representatives Patrick Henry and Scott Garrett are backing the measure, as is Democratic Rep. Gwen Moore.  Moore justified her support by saying the plan is only meant to relieve regulatory burdens on companies that do business with big banks.  Another democrat, Representative Jim Himes, even wants to roll-back Dodd Frank, and stick taxpayers with the bill, should the derivative market implode again.  But some Democrats still understand the dangers of banks-gone-wild, and are fighting for tougher regulations to protect us all.  Less than a week ago, Senator Carl Levin issued a scathing report on the devastation JP Morgan caused with risky multibillion-dollar derivative trades.  Levin said, “It is incredible that less than a week after new JPMorgan Whale hearings detailed how the bank's London office piled up risk, hid losses, and dodged regulatory oversight, that some House members are again supporting the weakening of derivative safegaurds.”  It's only been five years since the banksters crashed our economy by gambling with derivatives, and the modest legislation we've enacted is meant to prevent another economic meltdown.  Representative Alan Grayson, a leading voice for financial reform, criticized his colleagues for considering putting our nation at risk again. He said, “the road to hell is paved with these bills.”  We should be strengthening regulations on Wall Street, not giving banksters another free pass to gamble with our economic future.  Call Congress today and tell them they must stop the next derivatives debacle before it's too late. 

In screwed news... On Black Friday last year, Walmart employees made national headlines by staging a walkout to protest low-wages, unsafe working conditions, and anti-union management practices.  And now it appears the mega-retailer is illegally targeting employees that took part in the protest.  According to a new report by The Nation, The National Labor Relations Board has issued a complaint alleging that four companies, which are involved in staffing and managing Walmart's largest distribution center, have repeatedly threatened and punished warehouse workers for taking part in union activities.  The allegations include canceling employee breaks, increasing work hours, telling workers they are under surveillance, and even terminating six individuals for participating in pro-union activites.  As the NLRB was weakened by a recent Supreme Court ruling, that agency has been slow to process complaints and dole out punishments for Walmart's illegal practices. One employee told The Nation, “they're not terribly afraid to break labor law, because there's not really a penalty for doing so.”  Because Republicans continue to block agency nominations – effectively neutering the NLRB, Walmart workers shouldn't expect the agency to provide more help any time soon.  But employees have a legal right to demand higher wages and better working conditions, and they must not give up on this important fight.

In the best of the rest of the news... 

Culinary workers in Las Vegas are standing up to Casino owners with acts of civil disobedience.  Ninety-eight protestors were arrested yesterday for blocking traffic during a protest outside of the Cosmopolitan Hotel and Casino.  The workers have been in contract negotiations with casino management for about two years, demanding an agreement that outlines wages, benefits, and job security.  According to the Associated Press, the two-year-old casino is one of only a few in Las Vegas that is not unionized, despite the majority of workers saying they want representation. As protestors blocked the streets for about an hour, they chanted, “If we don't get no contract, you don't get no peace.”  Representatives of Deutsche Bank, that owns the casino, said they are stalling because they intend to sell the resort, and don't want to be burdened with a union contract. Any sale worth making, and any casino worth buying, can afford to pay it's workers a living wage.  Perhaps they should consider that it will be even more difficult to sell the casino if they can't get employees to work there.  Unions are under attack throughout our nation, and this is one more battle in the fight to preserve collective bargaining. We'll have to wait and see how this turns out. Stay tuned. 

In June of last year, Barclays Bank in the UK was fined 290 million Euros for it's role in the international Libor rate-rigging scandal.  So, it stands to reason that the bank executives don't deserve a reward for their actions... but yesterday, that's exactly what they got.  According to The Guardian, Barclays attempted to “bury” the news of bankster bonuses by announcing it the same day much of the city was distracted with news on a city budget.  But, reports of the 38.5 million euro payouts did not go unnoticed. The bank did not respond to claims it tried to bury the news of massive bonuses, but a person close to the company said the announcement date was selected back in December. John Hunter, of the UK Shareholder Association, said “society's first reaction is that bankers are a bunch of sleazeballs, and this makes them look even sleazier.”  It's bad enough that banksters are getting rewarded for lying and manipulating the financial markets, but it's even worse that they think no one will notice.  

And finally…  Talk about a return on investment. Reuters reports that an unnamed New York family bought a $3 dollar bowl at a yard sale, and they just sold the 1,000 year-old Chinese artifact at auction for $2.25 million dollars.  Apparently the family had the bowl displayed on a mantlepiece, and only learned of it's value after speaking with experts.  A Sotheby's representative said the piece is almost identical to one that's been featured in the British Museum for over 60 years.  So, next time you consider getting rid of a few things around the house, you may want to look a little more carefully at what you sell. One man's trash in another man's treasure.  And in this case, that treasure happened to be worth over $2 million dollars. 

And that’s the way it is today – Thursday, March 21, 2013. I’m Thom Hartmann – on the news. 

Norman Lamont: Cutting Spending Does Hit Growth

One of the chancellor's closest allies has said that George Osborne "should stick to the strategy" of deficit reduction, despite admitting that "no one can argue" austerity measures have had an "effect" on "meagre" economic growth in the UK. Reacting ...

Norman Lamont: Cutting Spending Does Hit Growth

One of the chancellor's closest allies has said that George Osborne "should stick to the strategy" of deficit reduction, despite admitting that austerity measures have had an "effect" on "meagre" economic growth in the UK. Reacting to Wednesday's Budg...

Britain’s growth halved, Osborne turns to Bank of England for help

By William Schomberg and David Milliken LONDON (Reuters) - Chancellor George Osborne turned to the Bank of England on Wednesday to do more to help spur the country's stagnant economy as he announced a halving of this year's growth forecast. In an annu...

Greece: The Crisis Behind the Crisis and the Challenges Facing the Left

Neoliberal policies created a disaster in the country now shredded by austerity measures. The Syriza party and the Greek left have much work ahead if they are to build a just and sustainable economic and social order.

When the global financial crisis of 2008 reached Europe's shores sometime in late 2009, the eurozone, with its faulty design and distinct neoliberal policymaking framework, experienced its first major crisis since the introduction of the euro as a single currency; the danger of an imminent collapse was suddenly all too real. From the beginning, there were warnings about the dire consequences of introducing a single currency into a region with sharp economic and cultural differences, but the European political elite turned a deaf ear on the skeptics.(1) European business interests were too big to be compromised over concerns about future financial busts or speculations about the risk of adopting a foreign currency without the backing of a federal treasury and a central bank acting as lender of last resort. Indeed, like the owner of the Titanic who told the captain to go full speed although several warnings had been received about icebergs ahead, European policymakers at the time could not resist the temptation to launch euro as a cash currency in spite of the fact that the Eurosystem was built on a weak institutional foundation. And they compounded the error by allowing highly problematic candidates to join the union, thereby violating the principles of optimal currency areas.(2)

Unfit to Join the Euro

The first crack in the EU wall occurred in Greece, the weakest link of the currency union. Economically, socially and culturally, Greece was ill prepared to join the euro when it did back in 2001, but the country managed nevertheless to do so mainly because of its legacy of contribution to the development of Western culture.(3) The nation's domestic political and economic elite were eager to join Euroland not just because of the perceived benefits, but also because they were very much in need of a psychological boost: if you are weak and marginal, and incapable of change and improvement, joining a group of strong and rich nations gives you the illusion that you are on a par with them.(4) Hence the hilarious statement of then Greek Finance Minister, Yannos Papantoniou, who described the joining of the euro as "'an historic day that would place Greece firmly at the heart of Europe,"' or the equally laughable statement of then prime minister Costas Simitis, who propounded that "we all know that our inclusion in EMU (European Monetary Union) ensures for us greater stability and opens up new horizons."

Apparently, both of these political midgets felt that what shapes a nation's economy is its currency, not its productive base, technological know-how, human skills, etcetera. Be that as it may, the euro produced, for the most part, a rocky ride for Greece (GDP increased, but both public and private debt levels reached new heights while competitiveness declined significantly) that ten years later crashed against the brick wall erected by international credit markets when they refused to extend further lending on account of the country's massive fiscal deficit and humongous public debt burden. And perhaps not without coincidence, both of the aforementioned euro cheerleaders ended up having reigned over the longest unbroken period of political corruption in the modern period of Greece, courtesy of neoliberal "socialist" governance.(5)

When the global financial crisis erupted, the Greek economy had already entered a downturn phase, with GDP expansion having slowed down in 2008. The industrial sector, in fact, had entered a phase of recession as far back as 2005. In 2008, the industrial production indicator had fallen by 4.2 percent and reached a 10 percent decline in 2009.(6) Yet, when the crisis initially reached Greece, everyone was in an apparent and inexplicable state of denial, including leading EU officials. Thus, in October 2008, Kostas Karamanlis, then Greece's prime minister and leader of the conservative New Democracy party, declared in a speech to his cadres that the Greek economy was largely "shielded" from the effects of the economic crisis thanks to the structural adjustments his government had initiated. And his main political opponent, PASOK leader George Papandreou and current prime minister, assured the citizenry that "there was plenty of money around" and that, if elected, his government would exhibit "'the political will"' to find money for the toiling population, just as it had been found for the bailouts of the banks. But the most problematic example of unwillingness on the part of leading public officials to recognize the trouble that lay ahead for Greece came from the EU chiefs themselves: thus, EU Commissioner Joaquín Almunia announced as late as February 2009 that "the Greek economy is in better condition compared with the average condition in the Eurozone, which is currently in recession."(7)

Why were the Greek and EU political elites unable and unwilling to face up to the gravity of the Greek situation before things got out of hand? This question remains vital as the Greek economic crisis is now turning into a humanitarian crisis and EU leaders continue to ignore the pressing reality of the situation, intent on pushing forward with the destructive policies of austerity and fiscal adjustment.

But Greece's sovereign debt crisis did not come out of the blue. It may have been precipitated by the financial global crisis of September-October 2008 (the deficit had climbed to 15.4 percent of GDP, although there are accusations made from a former employee of the Greek Statistical Authority, Zoe Georganta, a professor of economics at the University of Macedonia, that the official figures for the 2009 budget deficit had been inflated by the Papandreou government in 2010 in an apparent attempt to legitimize the harsh austerity measures that came along with the bailout plan orchestrated by the European Union and the International Monetary Fund (IMF); an inquiry is now underway by Greek prosecutors). But it had long been in the making. It was, in effect, a time bomb waiting to explode. The Greek economic model of growth was highly flawed: growth was not based on economic fundamentals; income tax rates were always very low, tax evasion massive, and Greek governments ran a continual deficit - building up an immense stock of national debt consistently well over 100 percent of GDP.

The Triple Nature of the Greek Crisis

Still, the Greek crisis must be seen as something much more than the simple outcome of corrupt government practices, although corruption, including tax evasion, is a major component of the economic ills facing the country today. It is the story of a kleptocratic state and a parasitic capitalist elite who got caught in the web of the eurozone's flawed design when the US financial crisis of 2007–2008 hit Europe's shores.(8) It is also the story of an economy that did not meet the prerequisites for entering an alleged optimum-currency area, nor did it make much attempt to fit in properly. But it is also the story of the general failure of the global neoliberal project, the financialization of the economy and free-market orthodoxy.(9) Indeed, how else could eurozone countries with such dissimilar economies - Greece, a statist and highly corrupt economy; Ireland, a poster-child for neoliberal capitalism; Spain, a faithful follower of EU dictates about deficits and debt - end up suffering the same fate?

The reason is rather simple: because they all orbited the same central entity, the black hole of European neoliberal capitalism. As such, political and ideological differences between social democratic and conservative political parties have long ago vanished. Thus, in Greece, Spain, Portugal and elsewhere, "'social democratic"' governments long ago discarded even the pretext of being agents of progressive reform.(10) Hence the ease with which such governments went along with the EU/IMF dictates in imposing unprecedented cuts and austerity measures that have drastically reduced the standard of living for the working people in their respective countries. In sum, the Greek crisis:

  • stands as a severe fiscal and public debt crisis (during the 1980s and 1990s, annual government expenditures exceeded revenue by an average of more than 8 percent of GDP, while the national debt exceeded 100 percent of GDP) stemming from the deep and long-term structural problems of the Greek economy and the deformities of the domestic political and cultural system
  • represents a European crisis due to the intricate trade and financial ties between Greece and the other eurozone member-states, and
  • reflects the deadly failure of the neoliberal project, which has become institutionalized throughout the EU's operational framework, all while the IMF remains the world's single most powerful enforcer of market fundamentalism. 

At the heart of the neoliberal vision is a societal and world order based on the prioritization of corporate power, "free" markets, and the abandonment of public services. The neoliberal claim is that economies would perform more effectively, producing greater wealth and economic prosperity for all, if markets were allowed to function without government intervention. This claim is predicated on the idea that "free" markets are inherently just and can create effective, low-cost ways to produce consumer goods and services. Subsequently, an interventionist or state-managed economy is wasteful and inefficient, choking off growth and expansion by constraining innovation and the entrepreneurial spirit.

This is the version of neoliberalism developed by Milton Friedman and the Chicago School and usually associated with the Pinochet regime in Chile, and, later, with the free-market policies of Margaret Thatcher and Ronald Reagan - an ideological revolution that was long in the making but that gained ascendancy over Keynesianism with the appearance of stagflation.(11) And it is by far the most dangerous ideology of our time (12), spreading havoc with its "economics of social disaster."(13)

In April 2010, with the bond vigilantes having woken up as a result of Dubai's debt crisis in late 2009, Greece was shut out of the international bond markets and - facing the prospect of a default - sought refuge under an EU/IMF financial rescue scheme. Months prior, the Papandreou government (14) had approached the IMF to extend its "'technical know-how and experience"' to the EU by administering a dose of shock therapy. Greece needed to be "rescued," and the Europeans needed not only the Fund's expertise but also to add an element of legitimacy to the austerity experiment that was about to be performed on a peripheral member-state. In this context, the invitation to the IMF to join in the operation on an ailing European patient served multiple purposes.

The neoliberal quacks were quick to rush to judgment about the roots of the Greek crisis - allegedly, a bloated public sector that wasted too many resources on lazy, unproductive citizens and hindered the potential of the private sector - and lost no time in recommending brutal austerity measures. What if the facts did not fit this narrative? Indeed, all the available data showed that the Greek public sector, while inefficient and corrupt, was actually smaller than the public sector of many other European nations; that Greeks worked on average more than most other Europeans; and that even Greek productivity in the years leading up to the crisis compared favorably with that of Germany.(15) And what if there were huge imbalances in the eurozone, with the core states running huge surpluses and the peripherals running huge deficits?(16) Greece was judged to be solely responsible for the sad state of its fiscal condition in the age of the euro and had to be punished, both as penance for its sins and as a warning to its southern cousins that the same fate awaited them if they didn't put their own fiscal houses in order.

It is this cynical, brutal perspective that led to Greece becoming an unwilling test subject for the EU's neoliberal vision and kept Germany's game going when things got rough in Euroland. Most of the German banks were overexposed to Greek debt and nearly insolvent. The May 2010 bailout of 110 billion euros (with a usurious interest rate of 5 percent) was orchestrated by the EU and the IMF - the twin monsters of neoliberal capitalism - in an apparent attempt to have Greece keep up with its debt payments to foreign banks: hence the rejection of even the slightest consideration of a debt restructuring, even though this would have been the quickest and safest way to allow Greece some breathing room. Helping its economy recover through the coordinated implementation of a large-scale development plan would also have been appropriate in a proper economic and monetary union. Indeed, such moves could have secured the confidence of international bond investors in the euro's sustainability and might even have prevented contagion in the rest of the periphery. They would certainly have prevented the spread of an otherwise avoidable contagion from the periphery to the center, which is clearly underway as of last year. But with the adoption of punishment as policy, contagion in the periphery became inevitable, and with the deficit economies in the periphery wrapped in an austerity straightjacket, the surplus economies of the center were bound to feel the effects of their insane and brutal policies. The economies of both Germany and France contracted in the last quarter of 2012. GDP in the eurozone as a whole fell by 0.5 percent last year, and, more significant, 2012 will go down in history as the first year since 1995 in which no quarter produced growth.(17)

The Catastrophic Effects of Austerity

Indeed, as a policy, the bailout scheme proved to be a dismal failure on every possible front, save for ensuring that debt payments kept flowing to foreign banks. The crude macro-stabilization program and the harsh austerity measures that accompanied the loan to Greece (amounting to 11 percent of the country's GDP) had the opposite of the intended effect on the markets and choked off all prospects of recovery for the Greek economy: demand plummeted due to the deadly combination of massive budget spending cuts, reductions in wages and pensions, and sharp tax increases, causing thousands of small businesses to go bankrupt and forcing several multinationals to move their production facilities to nearby Balkan countries, thereby producing explosive unemployment rates, sharply diminishing state revenues and substantially increasing the debt-to-GDP ratio.(18) The policy pursued by the EU/IMF duo is so fundamentally flawed that Keynes must be rolling over in his grave. Still, economic dogmas ought, apparently, to be respected, no matter what results they produce, so in the mind of the neoliberal zealots, they should be pursued to the bitter end. Thus, less than two years later, a second "bailout" of 130 billion euros was extended to beleaguered Greece, with terms and conditions for allegedly turning the economy around that are much harsher than the first "rescue" attempt. The "pay while you bleed" and "suffer for your sins" policy of the twin monsters should by now be clear to everyone.

In drafting the document for the so-called Second Economic Adjustment Program for Greece, the EU's neoliberal lackeys contended that "Greece made mixed progress towards the ambitious objectives of the first adjustment program."(19) On the positive side, it is noted, the general government deficit was reduced "from 15.75 percent of GDP in 2009 to 9.25 percent in 2011." On the negative side, the recession "was much deeper than previously projected" because, it is claimed, factors such as "social unrest" and "administrative incapacity" (including a lack of effectiveness in combating tax evasion) "hampered implementation." The antigrowth "fiscal and structural adjustment" program was perfectly designed and would have produced all the anticipated results if the government were better able to carry out the policies (perhaps it should have ordered the police and the army to arrest all public administrators and have them shot for disobeying the troika's commands), and if the citizenry did not on occasion make some fuss about the austerity program by staging demonstrations here and there, or by occupying the square outside the Greek parliament building. In essence, this is what the neoliberals' above comments are saying.

The feeble excuses of the EU bureaucrats for the fiscal consolidation program's causing a much sharper economic decline than "previously projected" fly in the face of the recent partial concessions made by the IMF: that the policies carried out in Greece ended up having much more adverse effects on the economy because the IMF miscalculated the impact of the fiscal multiplier. Indeed, the executive summary of the Second Economic Adjustment Program for Greece goes on to state unequivocally that, insofar as the prospects of the success of the second adjustment program are concerned, "the implementation risks ... remain very high" but the success of the program "depends chiefly on Greece."(20)

The neoliberal economics applied to Greece by Germany, the EU and the IMF did not simply cause a greater decline in Greek GDP than "originally projected" or make the debt grow substantially bigger in the course of the last two years (from 126.8 percent in 2010 to 180 percent in 2012). It also produced an economic and social catastrophe of proportions unparalleled in peacetime Europe. In May 2010, when the first bailout was approved and the austerity measures kicked into high gear, the unemployment rate in Greece stood at 12 percent. It has since climbed to 27 percent, and the youth unemployment rate has reached 62 percent. According to the Greek Statistical Authority, the actual number of unemployed reached 1.35 million in November 2012, with the number of employed standing at 3.642 million.(21)

Poverty is also spreading rapidly, affecting all groups in society, including children. In a recent report released by Eurostat, 31 percent of Greeks had a standard of living in 2011 that was close to the poverty line,(22) while the Labor Institute of the Greek General Confederation of Labor (INE-GSEE) states in its monthly publication Enimerosi that by the end of last year, 3.9 million people had fallen below the poverty line.(23) Income levels for workers have also taken a big hit over the last two to three years, and there is more wage suppression to come. According to research data released by the INE-GSEE, incomes dropped by 22.8 percent, or 19 billion euros, during 2010-2011, with a projected decline of 33 billion euros in available income in 2012.(24)

Perhaps most indicative of the catastrophic impact of the EU/IMF austerity measures imposed on Greece is that many schools throughout the country have gone on for a second year without heating oil (the nation was shocked recently by the death of two college students who died in their sleep due to inhalation of carbon monoxide from a makeshift stove as they could not afford heating oil, whose cost has gone through the roof because of the government's ingenious scheme to find extra revenues by raising the taxes on heating oil by 450 percent), the public health care system has collapsed to the point that even medication for cancer patients is not available, and suicides, for a nation that used to have the lowest recorded suicide rates in Europe, are taking place at a record pace.

The aim of the EU/IMF structural adjustment program with regard to the Greek labor market (employment and wages) is crystal clear: total liberalization, minimum wages comparable to those in Bulgaria and Romania (two relatively backward-looking Balkan nations, and with levels of corruption equal to those in Greece), and a potential ban on strikes. The first two elements of the subversive neoliberal labor market policy are well advanced, while the third one is in the works. Again, these measures have an official stamp of approval from the Greek government, including the current administration, a tripartite coalition consisting of the leader of the conservative party as prime minister and the leaders of the Socialist party and the Democratic Left as vice presidents. Moreover, as with every Greek administration since the outbreak of the crisis, the Ministry of Finance serves as a Trojan horse for inflicting the scorched-earth policy of the EU and IMF on Greece's economy and its people.

"The Left's Moment": Problems and Challenges

The scorched-earth policies pursued in Greece over the last three years by Germany and the twin monsters of neoliberalism, i.e., the EU and the IMF, have produced an economic and social catastrophe of unprecedented proportions for a nation in peacetime conditions. For the past three years, Greece has been a guinea pig for the policy prescriptions of a neoliberal EU under the command of Germany and its northern allies. A public debt crisis has been used as an opportunity to dismantle the social state, to sell off profitable public enterprises and state assets at bargain prices, to deprive labor of even its most basic rights after decades of hard-fought struggles against management, and to substantially reduce wages and pensions, creating a de facto banana republic - all with the support of a significant segment of the Greek industrial/financial class and with the assistance of the domestic political elite.

Greece is a nation experiencing a catastrophic crisis of immense proportions inside one of the world's richest regions, yet its government celebrates the fact that the deficit has been reduced as a result of the fiscal adjustment efforts (when virtually all other economic and social variables have gone from bad to worse every year) and expects the citizens to offer more "blood, tears, toil and sweat." At the same time, it is launching a brutal frontal attack on the left, using lies and propaganda and, increasingly, the iron fist of the state, as public opinion polls show consistently for the last few months that the conservative party of New Democracy (which is at the helm of the tripartite government currently ruling the nation) and Syriza, the Coalition of the Radical Left, are in a neck-and-neck race.

The political landscape of Greece has changed radically as a result of the economic crisis. First, the socialists, the true masters of calculated political and ideological duplicity, the real maestros of corruption in Greece, are all but finished as a political force. In the 2012 national elections, the Socialist Party received 12.3 percent of the popular vote, and the latest polls show that its popularity has dropped to about 7 percent. This is the price paid for surrendering Greece to the EU/IMF rescue mechanism in May 2010 and for collaborating since the 2012 elections with the conservatives in finalizing the conversion of Greece into a neoliberal zombie society.

Second, the conservatives, under the leadership of the current prime minister, Antonis Samaras, have shifted from being opponents of the memorandum of agreement with the EU and the IMF when they were the opposition to become its obsequious servants. Their credibility and base support has weakened considerably in the course of the last couple of years, but the conservative constituency in Greece feels trapped and has few options other than perhaps to throw its support behind Golden Dawn, the neo-Nazi party of Greece. To be sure, a good percentage of conservative voters have already done so: the neo-Nazis received 7 percent of the popular vote in the 2012 elections, and their numbers seem to be growing in spite of (in fact, maybe because of) being nothing more than preachers for hate and thugs who carry out organized attacks against immigrants throughout Greece. Ideologically, they embrace Hitler's National Socialism doctrine, strive for racial purity and openly envision the reestablishment of concentration camps for leftists and communists.

Greece's neo-Nazi political party represents a real threat to the social fabric of Greece; however, it remains to be seen how the appeal of the extreme right will be countered when society itself is facing a meltdown because of the harsh austerity measures and the traditional political establishment is morally bankrupt and has lost much of its legitimacy.(25)

The emergence of Syriza as the second-largest party (pulling 26.89 percent of the vote against 29.66 percent for the conservatives) represents the biggest change in the Greek political landscape. In many ways, this is indeed the "left's moment in Greece,"(26) but the reality of the support rate that the left enjoys is more complicated than what the numbers report. Most of its votes in the 2012 elections came from former Pasok voters. This is not to imply that Syriza may eventually rise to power on a protest vote, but it does mean that the left finds itself in the uncomfortable situation of having the backing of a huge percentage of "political orphans." Even more troubling is the fact that many former Socialist Party hacks look to relaunch their political careers by seeking to attach themselves to Syriza's political cause. These are, of course, political opportunists of the highest caliber, and Syriza must turn its back on them if it wishes to keep intact the left's overall mission, vision and core principles.

The general impression among analysts and an increasing number of average citizens is that Syriza is about to become a "new Pasok." This is not far from the truth, especially as some elements close to the leadership of the party appear to be willing to make whatever compromises may be necessary in order to have Syriza rise to power. The party also lacks a clear and coherent agenda for change, and its position on the current crisis has shifted remarkably in the course of the last several months from calling for the abolition of the EU/IMF fiscal adjustment program (but without having an overall strategy for managing the crisis, or even solid support at the grassroots level) to renegotiations of the agreement (when the "troika" - the European Commission, the IMF, and the European Central Bank, or ECB - supervising the fiscal consolidation effort has opposed outright any attempt aiming towards renegotiations of its terms of agreement for the bailout schemes). Conscious, perhaps, of the immaturity of Greek citizenry, but also reflecting its own political and ideological ambiguities, Syriza has also opted not to confront direct exit from the euro as a possible policy option, even though this may, in the final analysis, be the only effective strategy (but with a potentially huge short-term cost) for stopping the permanent decline of the nation's economy. Indeed, as things stand, the current eurozone is doomed to fail, and the peripheral nations will go on experiencing worsening economic and social conditions as the core remains adamantly opposed to any policy options that would mutualize the debt in the eurozone, provide relief for the beleaguered south, or end austerity.

To be sure, Syriza faces daunting challenges ahead, while finding the resolve to deal with them is undermined by the cacophony of views that prevail inside the party and by its lack of apparent influence among working-class organizations and trade unions. The extent to which the organization might be able to find qualified members among its ranks for the tormenting task of turning around a highly inefficient public administrative system and managing an economy which, by the end of the current year, will have seen its GDP shrink by an incredible 25 percent since the onset of the global financial crisis of 2008, is also highly debatable. For a party of the left, Syriza has also shown reluctance, or unwillingness, or inability to embark on an open discussion about the country's future political culture, having chosen, instead, to consume itself scoring political points over the way political corruption was sustained in the past by the conservative and socialist parties.

Yet, if there is anything that the economic crisis in Greece reveals, other than the fact that neoliberal policies wreak havoc on the standard of living and produce massive unemployment and widespread poverty, and that a way must be found to restart the engine of the economy and get the unemployed back to work, it is the need to come to terms with the norms and patterns of the nation's political culture, including revisiting questions of civic virtue, fairness and social provision, expectations and obligations, and articulating visions of a good and decent society.

Having said all that, Syriza remains in Greece today the only political force that can offer hope for the future, put an end to the ongoing catastrophe, and, under certain conditions, work its way toward the realization of a sustainable economic and social order based on those core principles that have long defined progressives worldwide: employment opportunities for all, decent wages, a vigorous and efficient welfare system, free health care services, free education, quality social services, a progressive tax system, democratic accountability, environmental protection, respect for the "other," democratic participation at the workplace, sound business practices, and incentives for new business undertakings.

In politics, there is a huge gap between theory and practice, so Syriza should be neither idealized nor undermined for what it is trying to do, which is to answer history's call and try to rescue the country that gave birth to democracy from becoming ultimately a wretched society and a failed state inside one of the world's richest regions.

C. J. Polychroniou is a policy fellow at the Levy Economics Institute of Bard College. Certain parts of the above article are included in a recent Policy Note (2013/1) published by the Levy Institute and titled "The Tragedy of Greece: A Case Against Neoliberal Economics, the Domestic Political Elite, and the EU/IMF Duo." The views expressed here do not necessarily represent those of the Institute's board nor its advisers.

Endnotes

1.
Some of the most dire warnings against the launching of the euro came from inside Germany itself. Wilhelm Hankel, Karl Albrecht Schachtschneider, Joachim Starbatty, and Wilhelm Nφlling were four renegade professors who opposed the euro from the start and tried to stop it with a legal challenge to Germany's highest court. Obviously, they lost the case. They tried again 12 years later against a German bailout of Greece. They lost again. Their basic claim all along has been was that the euro was an architectural flaw which would lead to the downfall of European economies. Moreover, and in sharp contrast to the original arguments in support of the creation of a single currency zone in Europe, the euro has led to greater economic and social inequality among the various national economies, has exacerbated the problem of unemployment in the peripheral economies, and has produced huge transfers from the periphery to the core.

2.
The original optimal currency area approach was laid out by Robert Mundell in his article "A Theory of Optimum Currency Areas," American Economic Review Vol. 51, No 4 (1961), pp. 657–665. See also R. I. McKinnon, "Optimum Currency Areas," American Economic Review Vol. 53, No. 4 (1963), pp. 717–725.

3.
Greece gained entry into the eurozone by fabricating - with significant help from Goldman Sachs - the true state of the country's fiscal condition. The EU political elite was clearly aware of Greece's actual fiscal condition, but opted to look the other way.

4.
This is the reason that, in spite of the irreparable damage that three years of catastrophic austerity measures - part of the bailout agreements orchestrated by the European Union (EU) and the International Monetary Fund (IMF) - have caused, both to the national interests and to Greece's social fabric, the discussion of exiting the euro remains a taboo virtually across the political spectrum.

5.
The conservative government of Kostas Karamanlis, which came to power in 2004 and governed until 2009, proved to be equally, if not even more, corrupt and immensely incompetent. In fact, from the 1980s onwards, the socialists and the conservatives had ruled the nation in a similar fashion, both of them using the state and its coffers as a means to enrich themselves and their parasitic capitalist partners and to cater to the needs and demands of their political clientele in order to maintain an army of faithful party voters, making it thus virtually impossible to tell which of the two political parties has caused greatest damage to the common good. Both have been implicated in various large-scale scandals that involved exploiting state resources in order to transfer wealth from the public to the private sector and to redistribute wealth from the bottom to the top. Both of them, as well as the private sector, squandered European Union structural funds with reckless abandon, in the process allowing the destruction of vital sectors of the economy to take place (e.g., agriculture). Insofar as the culture of corruption - which the elite saw fit to let spread throughout society, thus creating a system of "corrupt legality" - is concerned, foreign actors also had a major role in it. The German industrial giant Siemens was in the habit of handing out bribes to political figures in order to gain preferential treatment over business deals (i.e., gain state contracts). This was a global practice of Siemens', and it is estimated that the bribes to Greek officials in both main political parties may have been as much as 100 million euros over a ten-year period. Charges were filed in 2008 for money laundering and bribery, but a parliamentary investigative committee that had been formed to examine the Siemens scandal conveniently swept the case under the rug.

6.
Greek Statistical Authority (March 18, 2010). See www.statistics.gr.

7.
Cited on the web site of the Greek Embassy in Washington, DC. See http://www.greekembassy.org/embassy/Content/en/Article.aspx?office=3&folder=1013&article=24631

8.
See Dimitri B. Papadimitriou and L. Randall Wray, "Euroland's Original Sin," Policy Note 2012/8. Annandale-on-Hudson, N.Y.: Levy Economics Institute of Bard College (July 2012). Online: http://www.levyinstitute.org/publications/?docid=1559

9.
C. J. Polychroniou, "The Greek and the European Crisis in Context," New Politics Vol. 13, No. 4 (Winter 2012), pp. 49–56.

10.
See C. J. Polychroniou, "The Mediterranean Conundrum: Crisis in the European Periphery," Economic and Political Weekly, Vol. XLVII, No. 21 (May 26, 2012), pp. 35-41.

11.
A fine new source discussing the history and the policies of neoliberalism is that of Daniel Stedman Jones, Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics ( Princeton, N.J.: Princeton University Press, 2012).

12.
Among the many profound pieces by Henry A. Giroux on the ideology of neoliberalism, see in particular his latest one "The Politics of Disimagination and the Pathologies of Power," Truthout (February 27, 2013). Online: http://www.truth-out.org/news/item/14814-the-politics-of-disimagination-and-the-pathologies-of-power

13.
See C. J. Polychroniou, "Greece's Bailouts and the Economics of Social Disaster," Policy Note 2012/11. Annandale-on-Hudson, New York: The Levy Economics Institute of Bard College (September 2012). Online: http://www.levyinstitute.org/publications/?docid=1569

14.
George Papandreou, son of Andreas Papandreou, founder of the Panhellenic Socialist Movement (Pasok) and prime minister of Greece for almost ten years, after having won three national elections, became prime minister in October 2009. With no charisma whatsoever and lacking in intellectual prowess and administrative and leadership skills, his failure as a top political dog was all but ensured. He resigned in November 2011, after having ruled the most excruciatingly amateurish and agonizingly incompetent government in modern Greek history, but will always be remembered as the prime minister who "masterminded" the unconditional surrender of Greece to Germany and the IMF and imposed brutal austerity - the prime minister whose ultimate vision was "one working person per family." He is still the leader of The Socialist International, one of the most shameful contemporary political organizations, allegedly at the service of democratic socialism but whose members included, among other "devotees to the cause of socialism and democracy," Egypt's Hosni Mubarak and Tunisia's Zine al-Abidine Ben Ali; and, the irony of all ironies, he gets paid hefty fees to lecture for a few weeks at prestigious institutions like Harvard and Columbia, probably on how to ruin an economy and destroy a nation's sovereignty.

15.
See Dimitri B. Papadimitriou, Gennaro Zezza, and Vincent Duwicquet, "Current Prospects for the Greek Economy: Interim Report," Annandale-on-Hudson, New York: Levy Economics Institute of Bard College (October 2012). Online: http://www.levyinstitute.org/publications/?docid=1589

16.
See Jörg Bibow, "The Euro Debt Crisis and Germany's Euro Trilemma." Working Paper No. 721. Annandale-on-Hudson, New York: Levy Economics Institute of Bard College (May 2012). Online: http://www.levyinstitute.org/publications/?docid=1535

17.
Philip Blenkinsop and Annika Breidthardt, "Euro Zone Economy Falls Deeper than Expected into Recession," Reuters (February 14, 2013). Online: http://uk.reuters.com/article/2013/02/14/uk-europe-economy-idUKBRE91D0CS20130214

18.
C. J. Polychroniou, "Greece's Bailouts and the Economics of Social Disaster," Policy Note 2012/11. Annandale-on-Hudson, New York: The Levy Economics Institute of Bard College (September 2012). Online: http://www.levyinstitute.org/publications/?docid=1569

19.
European Commission, "European Economy: The Second Economic Adjustment Programme for Greece," Occasional Papers 94 (March 2012), p. 1.

20.
European Commission, "European Economy: The Second Economic Adjustment Programme for Greece," Occasional Papers 94 (March 2012), p. 4.

21.
Greek Statistical Authority, "Labour Force Survey: November 2012," Press Release (February 14, 2013).

22.
Cited in ekathimerini.com. "3.4 Million Greeks near Poverty Line in 2011, Eurostat Reports," (December 3, 2012). Online: http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_03/12/2012_472690.

23.
INE-GSEE (Labour Institute of the Greek General Confederation of Labour), Enimerosi, No. 200 (December 2012), p. 1.

24.
INE-GSEE (Labour Institute of the Greek General Confederation of Labour), The Greek Economy and Employment: Yearly Report (2012), p.21.

25.
Greece's two main political parties, the conservatives (New Democracy, or ND) and the socialists (Pasok), used to draw, until recently, over 75 percent of the combined vote. In the 2012 elections, both parties together managed to attract less than 35 percent of the popular vote - and if elections were held today, it is unlikely that they would get more than 28 percent of the combined vote.

26.
The phrase is borrowed from the title of an article by Costas Lapavitsas, which appeared in The Progressive, Vol. 76, Issue 7 (July 2012).

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The Long Hot Summer of 2013

I spent a couple of nights last week on the lookout for a cloud of rising smoke. From the chimney at the Vatican? No, thank you -- there were already thousands of journalists around the globe fixated on the ancient mystical wizardry in St. Peter's Square. I was a lot more concerned that black smoke was going to rise from the damp, raw streets of East Flatbush, in a corner of Brooklyn many blocks removed from the high-tech glitz of that borough's new Barclays Center. Night after night, hundreds of young people -- most from the neighborhood -- marched on their local police station house because they wanted answers to a simple question.

Why was a 16-year-old boy named Kimani Gray shot seven times by the New York cops -- three times in the back?

Of course, I had to follow the waves of Brooklyn protest -- which teetered for a time on the brink of a riot -- by way of Twitter, since the mainstream media gave very slight, and usually belated, coverage to the doings in East Flatbush. I guess issues of law and order, civil rights and civil unrest, and the right to assemble on a major street right here in the United States can't really compete with the nearly 2000-year-old rituals of wrinkled men with their bright robes and their white smoke.

Still, I couldn't help but think that -- stop me if you've heard this one before -- there's something happening here. Maybe it was because East Flatbush wasn't the only place in America where unusual things were taking place -- the scattered shrieks of regular people who've been pushed to the edge. As the protests in Brooklyn dragged on, I heard the annual budget speech from the mayor of Philadelphia drowned out and finally shut down by the voice of angry blue-collar municipal workers, frustrated that City Hall will no longer listen to them. Just a couple of weeks ago and about 10 blocks away, so many Philly teens, parents and teachers were so upset at the knee-jerk closing of 23 neighborhood public schools that they filled the expanse of Broad Street as they tried to flood the room where the vote was taking place.

There were 19 people arrested at the Philly school shutdown; about 45 arrested in various encounters and scuffles with the NYPD in Brooklyn. All of these events were treated by the media as a total out-of-left-field shock -- as if a spaceship had landed from Mars and deposited these mad-as-hell aliens on the hardscrabble streets of the inner city. And if you haven't been paying attention, you'd indeed think these scattered events had nothing to do with each other. But to the contrary, the same river of bruised blood runs through all of them -- people who are at long last tired of the drumbeat of disrespect.

grayriot.jpg

Yes, there's the daily harassment of stop-and-frisk, the yearly push for just one more wage cut or pension givebacks even as CEO pay -- and that of top governmental aides -- never seems to stop going up, or thebillionaire-funded death of the dream of educational opportunity for all. But the real reason we're at the snapping point is even more simple than that.

It keeps coming back to a famous quote that I saw pinging around the Internet a lot last week after it was repeated by the city councilman for East Flatbush, Jumanne Williams, at a hearing. It was uttered by Dr. Martin Luther King in a famous address known as "The Other America" speech. He delivered it a couple of times, including outside of Detroit just months after that city had erupted in flames. The civil rights leader re-affirmed his lifelong commitment to non-violent solutions, but he added this:

I think America must see that riots do not develop out of thin air. Certain conditions continue to exist in our society which must be condemned as vigorously as we condemn riots. But in the final analysis, a riot is the language of the unheard.

Dr. King was murdered exactly three weeks to the day later.

Flash forward 45 years later, and there are many conditions in American society that need to be condemned as vigorously as we condemn riots, arguably more than there were in Dr. King's time -- obscene income inequalitystagnant wages, record levels of long-term unemployment, a diminished watchdog media, failing urban schools, militarized police departments and civil rights abuses from rampant spying to a crackdown on public-serving whistleblowers to targeted assassinations.

It's reached the point where people are straining to be heard over the drone of our all-encompassingkleptocracy. It almost broke loose once, in 2011, with the realization that both political parties were selling out the middle-class in a phony debt crisis, and then the world was stunned by the out-of-nowhere Occupy movement -- thousands of unheard struggling to find their own language. That movement faltered for a variety of reasons, including the risen-again hope that democracy in 2012 could redress the people's grievances.

I think those hopes may have crossed a Rubicon, then crashed and burned for good earlier this month when the Dow Jones hit an all-time record, corporate profits swelled -- and not a dime of it trickled down to the American worker, who has watched nearly every dollar of income growth in recent years accumulate to the 1 Percent.

Into this tinderbox walked the 16-year-old Brooklyn kid named Kimani Gray. Those seven police gunshots later, his short life was over. The naysayers were quick to point to Kimani's flirtation with the gangs of East Flatbush and several arrests, and the allegation by police -- fiercely disputed by eyewitnesses -- that he had a gun and pointed it at the plainclothes officers, to dismiss both the value of his life and the cries of the protesters.  But the community deserves answers that it's not getting about what really happened 10 nights ago, as well as the dubious track record of the officers involved.

And New York City officials are doing everyone a huge disservice when they pretend that this is about one kid, and not the daily beatdown of disrespect from programs like stop-and-frisk, which has made it difficult for thousands of young, law-abiding blacks and Latinos to walk down a sidewalk without having to justify their very existence. Today, the courts in the nation's largest city are dealing with a massive class-action lawsuitover the alleged abuses of this policy.

The bottom line is, if it wasn't Kimani Gray, it would have been somebody else.

But no one ever sees it coming. That was the case in Philadelphia, suffering from years of benign and sometimes not-so-benign neglect of public schools and a multi-million-dollar push from the usual suspect of hedge funders, profit-seekers and  to boost charter schools and destroy public education as we know it. The co-conspirators tried (and largely succeeded) to rush through a large-scale scale shutdown of neighborhood schools, but the people formerly known as the unheard did raise of a hell of a ruckus. And they're probably just getting started.

These things don't happen in a vacuum. At the height of the schools crisis, someone emailed me a remarkable document that had been prepared by the Broad Foundation of billionaire Los Angeles "do-gooder" Eli Broad, who wages war on inner-city public education even as his foundation, not so ironically, has trained most of our top urban superintendents.(Now Broad wants to take over the L.A. Times, too -- God help us.) It's an 83-page guide "School Closure Guide" that was published in 2009 to guide presumably Broad-trained superintendents on a step by step method to implement mass closures of public schools in already distressed communities -- exactly what's happening now in Philadelphia, Chicago and elsewhere.

But Broad's minions must act quickly and smartly...before the voices of the unheard become too loud.

But here's the thing: Unheard voices are like water -- they are going to find the path of least resistance. Unless our leaders finally start listening, a trickle in Brooklyn, a leak in Philly, and suddenly there's a full-blown flood. (If you don't understand the oceanography, ask the folks down in New Orleans, another battered American community.)

When we look back on the long hot summer of 2013, and we will, I pray that we'll think of it as a few balmy days on a beach or in the mountains with family and friends after a season of coming together, of finally tackling our root problems from rising inequality to falling civil liberties.

But I worry terribly that it will be the other kind.

Will Bunch is a Pulitzer Prize winning reporter and senior political writer for the Philadelphia Daily News. He blogs at Attytood.com.

‘I Hate Going To Bed A Loyalist And Waking Up A Rebel’

Conservative MPs have expressed their frustration at David Cameron's decision to reach a compromise deal on the Leveson Report that Labour argues includes the statutory underpinning of press regulation - something the prime minister had previously ref...

What Is Modern Monetary Theory, or “MMT”?

Hundred dollar bill macro(Photo: Tetsumo)Modern Monetary Theory is a way of doing economics that incorporates a clear understanding of the way our present-day monetary system actually works – it emphasizes the frequently misunderstood dynamics of our so-called “fiat-money” economy. Most people are unnerved by the thought that money isn’t “backed” by anything anymore – backed by gold, for example. They’re afraid that this makes money a less reliable store of value. And, of course, it is perfectly true that a poorly managed monetary system, or one which is experiencing something like an oil-price shock, can also experience inflation. But people today simply don’t realize how much bigger a problem the opposite condition can be. Under the gold standard, and largely because of the gold standard, the capitalist world endured eight different deflationary slumps severe enough to be called “depressions.” Since the gold standard was abolished, there have been none – and, as we shall see, this is anything but coincidental.

The great virtue of modern, fiat money is that it can be managed flexibly enough to prevent *both* deflation and also any truly damaging level of inflation – that is, a situation where prices are rising faster than wages, or where both are rising so fast they distort a country’s internal or external markets. Without going into the details prematurely, there are technical reasons why a little bit of inflation is useful and normal. It discourages people from hoarding money and encourages healthy levels of consumption and investment. It promotes growth – provided that a country’s fiscal and monetary authorities manage it properly.

The trick is for the government to spend enough to ensure full employment, but not so much, or in such a way, as to cause shortages or bottlenecks in the real economy. These shortages and bottlenecks are the actual cause of most episodes of excessive inflation. If the mere existence of fiat monetary systems caused runaway inflation, the low, stable rates of consumer-price inflation we have seen over the past thirty-plus years would be pretty difficult to explain.

The essential insight of Modern Monetary Theory (or “MMT”) is that sovereign, currency-issuing countries are only constrained by real limits. They are not constrained, and cannot be constrained, by purely financial limits because, as issuers of their respective fiat-currencies, they can never “run out of money.” This doesn’t mean that governments can spend without limit, or overspend without causing inflation, or that government should spend any sum unwisely. What it emphatically does mean is that no such sovereign government can be forced to tolerate mass unemployment because of the state of its finances – no matter what that state happens to be.

Virtually all economic commentary and punditry today, whether in America, Europe or most other places, is based on ideas about the monetary system which are not merely confused – they are starkly and comprehensively counter-factual. This has led to a public discourse about things like budget deficits and Treasury debt which has become, without exaggeration, utterly detached from reality. Time and time again, these pundits declaim that hyperinflation is imminent, that interest rates are on the verge of an uncontrollable upward spike, and that the jig will be up for sure just as soon as the next T-bond auction fails. But even though, time after time, it is the pundits’ prognostications which fail, no one seems to take any notice. This must change. A reality-based economics is needed to make these things make sense again, and Modern Monetary Theory is here to put everyone on notice that a quite different jig is the one that’s really up.

The gold standard was finally and completely abolished over the course of a two-year period which started in 1971, when Richard Nixon ended the convertibility of the dollar for gold and devalued U.S. currency for the first time since the end of World War II. In 1973, the U.S. stopped trying to peg the dollar to any currency or commodity, instead allowing its value to be set on a freely-floating international currency market. The monetary system we inaugurated then is the one we still have now.

It is not the same as the one which has been adopted by most of Europe – and this very prominent source of confusion about the role of money in the world today will receive close scrutiny at the proper point. But first, we need to carefully unpack the implications of taking both gold and any sort of “peg” out of the monetary equation in the first place. In 1971, gold-linked money became fiat-money – not for the first time, of course, but for the first time in a long time. And it wasn’t just any currency. It was, by far, the world’s most important currency, economically. It was also the world’s reserve currency – the good-as-gold and backed-by-gold currency which the entire non-communist world used to settle transactions between various countries’ central banks. And yet, what everyone, and especially every American was told at the time was that it really wouldn’t make much difference. 

The political emphasis, at the time, was entirely on the importance of making sure that no one panicked. The officials of the Nixon administration acted like cops who had just roped off a fresh crime scene: “Just move right along, folks,” they kept intoning. “Nuthin’ to see here. Nuthin’, to see.” All of the experts and pundits said essentially the same thing – this was just a necessary technical adjustment that was only about complicated international banking rules. It wouldn’t affect domestic-economy transactions at all, or matter to anyone’s individual economic life. And so it didn’t – at least, not right away or in any way that got linked back to the event in later years. The world moved on, and Nixon’s action was mainly just remembered as a typical, high-handed Nixonian move – one which at least carried along with it the virtue of having pissed off Charles De Gaulle.

But what had really happened was epoch-making and paradigm-shattering. It was also, for the rest of the 1970s, polymorphously destabilizing. Because no one had a plan for, or knew, what all of this was going to mean for the reserve currency status of the U.S. dollar. Certainly not Richard Nixon, who was by then embroiled in the early stages of the Watergate scandal. But no one else was in charge of this either. In the moment, other countries and their central banks followed Washington’s line. They wanted to forestall any kind of panic too. But, inevitably, as the real consequences of the new monetary regime kicked in, and as unforeseen and unintended knock-on effects began to be felt, this changed.

The world had a choice to make after the closing of the gold window, but even though it was a very important choice, with very high-stakes outcomes attached to it, there was no international mechanism for making it – it just had to emerge from the chaos. Either the U.S. dollar was going to  continue to be the world’s reserve currency or it wasn’t. If it wasn’t, the related but separate question of what to use instead would come to the fore. But, as things unfolded, no other choice could be imposed on the only economic powerhouse-nation, so all the other little nations eventually just had to work out ways to adjust to the new status quo.

Even after Euro-dollar chaos, oil market chaos, inflationary chaos, a ferocious multi-national property crash and a severe, double-dip American recession, the dollar continued to be the reserve currency. And it still wasn’t going to be either backed by gold or exchangeable at any fixed rate for anything else. But while the implications of this were enormous, almost no one understood them at the time, or ever, subsequently, figured them out. For the 1970s was the period during which Keynesianism was decertified as the reigning economic philosophy of the capitalist world – replaced by something which, at least initially, purported to have internalized and improved upon it. This too was a choice that wasn’t so much made as stumbled into. The chaotic, crisis-wracked world we now live in is the one which subsequent versions of this then-new economic perspective have helped to create.

Conventional, so-called “neo-classical” economics pays little or no attention to monetary dynamics, treating money as just a “veil” over the activity of utility-maximizing individual “agents”. And, as hard as this is for non-economists to believe, the models which these ‘mainstream’ economists make do not even try to account for money, banking or debt. This is one big reason why virtually all members of the economics profession failed to see the housing bubble and were then blind-sided by both the 2008 financial collapse and the grinding, on-going Eurozone crisis which has followed in its wake. And the current group-think among ‘mainstream’ economists is yet another case where failure is no obstacle to continued funding – or continued failure. The absence of any sort of professional, intellectual or academic accountability will be a theme here.

The public policy reversal that began with Margaret Thatcher and Ronald Reagan promised that the deregulation of capitalism would lead to greater shared prosperity for everyone. Today, even though the falsehood of this claim is brutally obvious, the same economic nostrums and stupidities that were used to justify it in the first place continue to be trotted out and paid homage to by a class of financial-media personalities who equate making a lot of money with understanding money. It does not seem to occur to them that financial criminals and practitioners of bank-fraud can get rich through sociopathy alone.

What needs to be said is this: Keynesian economics worked before, and the improved version – now generally called “post-Keynesian” – will work again, to deliver what the market-fundamentalism of the past three decades has patently and persistently failed to deliver *anywhere in the world*. Namely – a prosperity which is shared by everyone. The principal purpose of Modern Monetary Theory is to explain, in detail, why this this worked in the past and how it can be made to work again.

Here’s how: start with a 100% payroll tax cut for both workers and employers – one that will only expire (if it does at all) when we have achieved full employment. This will not de-fund Social Security. And yes, we’ll come back to this point and cover it in great detail in due course. But first, stop and think back on the effect which federal revenue-sharing had on the economy in 2009 and 2010. If you’re thinking there were fewer teachers, nurses, policemen and fire-fighters getting laid off, you are correct. If you’re thinking that more roads, dams, bridges and sewer systems were getting repaired, you’re right again. But if you think that adding 800 million dollars to the deficit over two years is a guaranteed way to generate hyper-inflation, double-digit interest rates and bond-auction failures, leading ultimately to a frenzied worldwide rush to dump dollar-denominated financial assets, well, now would be a good time to ask yourself why you believe this.

One more point – one more plank in this three-point program to restore fiscal and monetary sanity: let’s give everyone who wants to work and is able to work some *work to do*. A currency-issuing government can purchase anything that is for sale in its own currency, including the labor of every last unemployed person who is still looking for a job. So, a key policy recommendation of Modern Monetary Theory is the idea of a “Job Guarantee”. The federal government should take the initiative and organize a transitional-job program for people who just can’t find work in the private sector – as it currently exists in real-world America today. Because the smug one-liner that starts and ends with: “Government can’t create jobs – only the private sector can create jobs!” is about the un-funniest joke on the planet right now.

The government creates millions of jobs already. Isn’t soldiering a job? Isn’t flying the President around in Air Force One a job? What about all the doctors and nurses down at the V.A. hospital, and the day-care workers on military bases? They certainly all appear to be employed. When you go into a convenience store to buy some – uh – local-and-organic Brussels sprouts, say, how closely does the clerk examine the bills and coins you tender? Did any clerk or cashier ever squint or turn your five-dollar bill sideways and back and ask, “Hmm.. are you sure this money came from work that was performed in the private sector?” No. They didn’t. Because the money governments pay to public employees is exactly the same money everyone else gets paid in.

A guaranteed transition-job would need to be different from the familiar examples cited above in certain ways. It would be important to make sure that such a program always hired “from the bottom”, not from the top. That’s an important way of making sure that such programs don’t create real-resource bottlenecks by competing with the private sector for highly skilled or specialized labor. Hence, a transition-program job would more closely resemble an entry-level job at a defense plant. Such a job only exists because of Pentagon orders for fighter planes or helmets or dog food for the K-9 units. There is no sort of ambiguity about where the stuff is going or how it is being paid for. And when the people who mow the lawn or sweep the parking lot get paid, they know, without having to think about it, that their wages will spend exactly the same way down at the grocery store as everyone else’s.

Defence spending is actually quite a good analog to the idea of a transitional-job program – one that would provide work to any and every person who wanted it. The only time the American economy ever achieved an extended, years-long period with zero unemployment, low, well-controlled inflation rates and with no significant financial aftershock at the end was the World War II era – broadly defined to include the Lend-Lease buildup of 1940 and 1941. This solution to the problem of mass unemployment worked in the 1940s and it would work today. In the 1940s, of course,the jobs were almost all war-related. But, economically, this makes no difference.

The connection between war and economic prosperity has been noticed before. It led some 19th Century thinkers (and also Jimmy Carter) to wonder whether there could be a “moral equivalent of war”. Well, there can be – by way of the Job Guarantee. The biggest pre-condition has been met, because one result of most wars has been that they forced the combatant countries off the gold standard. Now, all countries have left it. What matters next is whether there are enough real resources available to produce goods and services that are equal in value to the government’s job-guarantee spending. If these resources are available – if they are not already being used to produce something else – then the increased demand that results from the payment of job-guarantee wages will not be inflationary, regardless of what they go to produce.  

Money is 100% fungible.  Whether the job-guarantee program makes fighter planes or wind turbines makes no economic difference – the workers employed by it will spend their wages on the same things other workers buy. What matters, economically, is whether there are sufficient real resources and labor available to produce these goods and services in line with the increased demand for them. If there are, no additional government intervention is necessary in order to mobilize them. The same private-profit motivation which induces a company to produce one widget can be relied upon to induce the production of another one.

Most popular misconceptions about job-guarantee work as inefficient “make-work” ignore these private-sector dynamics. It is simply assumed that if the publicly-funded workers don’t personally contribute to making shoes or soap, their wages will result in “more money chasing the same goods” – and that this will automatically cause inflation. This is an obvious fallacy which has been empirically falsified many, many times, but most people continue to treat it as an article of economic faith. So, one of MMT’s most pressing tasks today is to make the case that we can, indeed, end mass unemployment without undermining price stability.

There are many other economic problems and challenges in the world today. Modern Monetary Theory is not a panacea for them. Even if its insights and policy recommendations become widely known, and even if they are someday fully implemented, societies will still face challenges such as inequality, regulatory capture and predatory financial behavior, including the kind of predatory mortgage lending that led to the worldwide crash in 2008. In order to understand these additional economic problems and dangers, we need to look at economics in a larger context, and correctly situate Modern Monetary Theory within this wider frame.

Modern Monetary Theory is based on earlier work which also focused on the relationship between the state and its money – ideas which come under the generic designation of “Chartalism”. MMT also remains firmly within the Keynesian tradition of macroeconomnic theorizing, and recognizes an extensive interconnectedness with other economists whose work is categorized as “post-Keynesian”. Some of MMT’s other notable academic progenitors include Hyman Minsky, Abba Lerner and, more recently, the English economist Wynne Godley, whose emphasis on achieving consistency in the analysis of economic stocks and flows presaged the emphasis which MMT-orbit economists put on it today.

The label “Modern Monetary Theory” is not particularly apt. It became attached to its advocates through the informal agency of Internet comment-threading, not because anyone considered it either very useful or very descriptive. In other words, it “just stuck”. In fact, the identity of the first person to use the “MMT” label is lost to online history. So, to be clear, MMT is only modern in the broad sense in which virtually everything that got started in the Western world in the 19th Century is called “modern”. It is not exclusively monetary either – it has quite a bit to say about fiscal policy as well. And it was not, initially, theoretical – it started as a body of quite empirical observations about the dynamics of the monetary system and the many ways they are being misunderstood these days. For MMT has a dual pedigree which is itself quite remarkable.

On the one hand, it represents the patient, decades-long academic work of a cadre of perhaps eight or ten working economists (originally there were three or four, plus their students). But MMT was independently co-discovered by a single person. A person who had no specific training or academic background in economics at all – the American businessman and auto-racing enthusiast Warren Mosler. How he came to initially suspect and, ultimately, clearly understand that the spending of sovereign governments had become operationally independent of their taxing and borrowing is recounted in his 2010 book, “The Seven Deadly Innocent Frauds of Economic Policy.”  The 1996 publication of an earlier book of his, “Soft-Currency Economics,” launched MMT as a social, intellectual and online movement. And while the academic side of MMT was completely unknown to him at first, it was not long before the two camps discovered each other, and this has led to a very extensive collaboration in the years since.

Today, MMT is being discovered by a rapidly-growing worldwide Internet audience. And the public’s growing interest in MMT is evident in other ways as well. One of the movement’s leading spokespersons, Dr. Stephanie Kelton of the University of Missouri at Kansas City, has been a repeat guest on an MSNBC weekend show. She, and other MMT economists, are frequent guests on a number of popular, mostly-progressive radio programs as well – both in the U.S. and in English-speaking countries around the world. And Warren Mosler’s seminal 2010 book was recently published in Italian.

(For obvious reasons, the stressed and austerity-damaged countries of the Eurozone’s southern tier are places where people are becoming more open to fresh economic ideas. At a 3-day conference in Rimini, Italy in 2012, a panel of four MMT/post-Keynesian speakers lectured to a crowd of over 2,000 people in a packed sports arena. Many in the audience crossed multiple international borders to attend.)

MMT has been mentioned, though not yet accurately described, in several of Paul Krugman’s columns for the New York Times. And certain aspects of it have been noticed even more widely in the media – for MMT is the theoretical basis of the “trillion-dollar coin” approach to fiscal cliffs. (The idea was first proposed and debated on Warren Mosler’s website.) In short, MMT is getting harder and harder to ignore. And since it really does have answers to some of the world’s most urgent and otherwise perplexing questions, it seems likely that MMT will soon become quite impossible to ignore. What follows is written to try to hasten that day.

This will be an intentionally simplified, non-technical exposition of the principal tenets of Modern Monetary Theory. The no-algebra version, in other words. It is intended as a guide for non-economists and other lay people who may have heard the phrase or seen a video clip about MMT and who wish to learn more. It is not a substitute for more complete and, necessarily, much more technical treatments that are available elsewhere, including the MMT Primer here at NEP.

Confining myself to examples and cases so widely known that no one will wonder where they came from accounts for the absence of footnotes in this. And since I make no claim to have learned knowledge of anything, I will just say, up front, that everything I know was thought of first by someone else. But rather than interrupt the narrative or complicate the process by trying to establish who said any particular thing first, I hope it is sufficient for me to just thank the MMT community at large for any material that I have borrowed or re-purposed along the way.

I also depart, here, from MMT’s mostly-neutral stance on contested political and ideological questions. For while MMT principles apply equally, irrespective of things like the size of government or the conceptions and misconceptions of people running governments, it has a policy bias no one can really miss.  I choose to emphasize rather than de-emphasize this bias – and I will sometimes even put it front-and-center. I hope no one will mistake this for any sort of rebuke toward those who choose not to do this. We have simply reached a point where practical applications need to be put on an equal footing with their theoretical underpinnings.

For somewhere – maybe somewhere in Italy – and on a day which may not be all that far off now, Modern Monetary Theory is going to start changing the world.

‘If you were a man, we’d kill you’: Captive journalist tells RT how she...

Published time: March 13, 2013 20:06

Anhar Kochneva. (Image from facebook.com)

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‘I couldn’t bear it any longer’, recalls Anhar Kochneva. The Ukrainian journalist who escaped Syrian rebels five months after she was kidnapped told RT about what she had to go through while in captivity and how she managed to run away.

Kochneva, a journalist and blogger who reported as a freelancer for Russian and Ukrainian news outlets, was captured at the beginning of October 2012 near the Syrian city of Homs.

The kidnappers - members of the Free Syrian Army – repeatedly threatened to kill her if the US $50 million ransom was not paid. The sum was later reduced to reportedly US$ 300,000. The rebels said they had planned to put Kochneva to death on December 16, but decided to "give her a second chance."

Several world powers – including Russia, the US and France - as well as international human right organizations, urged the Syrian opposition to release the woman. 

She escaped on Monday after spending more than 150 days in captivity, which damaged her health. The journalists walked for 15 kilometers in the mountainous area before she was lucky to meet people who helped her to get to the region controlled by the Syrian army.

Kocheva says it was only “thanks to God” that she is free again. In an interview with RT Arabic the journalist shared details of her escape.

RT: How did you manage to escape from captivity?  Who helped you do that?

Anhar Kochneva: No one, but Allah. Though, I know that many tried to help. The problem was that no one knew where I was – even the militants from the same group who were visiting that house did not know that I was kept there.

After I was kidnapped, my health seriously declined and there was a danger that I wouldn’t get cured and simply die. Or [the militants] would kill me, or the [Syrian] army would shoot me down accidentally when returning fire on the militants. It was really dangerous. I spent five months there.

RT: Could you tell in more detail about the escape? Was there security at the door?

AK: I only had to open the door and get outside. I started thinking about the best time to do that so that no one would see me because they could kill me. At night they would open fire every time they noticed any kind of movement and didn’t know what that was – a human or anything else. I had a million things to consider as it was a very dangerous action. If they had caught me, they would definitely beat me and toughen the conditions they kept me in. Angered, they could even kill me.

I opened the door which was locked from inside the house because the guards were there. I got to the street and went down the road. I kept walking and walking.

RT: So, the guards were sleeping at that time?

AK: Yes, yes. They were sleeping.

RT: They simply fell asleep and left the key in the door lock?

AK: Yes. They thought I wouldn’t do anything. Actually, there wasn’t even a key there – just a usual bolt.

So, they were sleeping and I walked out. I wanted to find someone on the road to tell them who I was and ask for help. Of course, there was a danger that they would give me away.

Thank God, I met people who helped me to get out of that district. I knew nothing about that area, I had no idea where were militants, where were [government troops], where were mines. I went across fields where mines could be.

RT: How were you captured? Did you recognize people who did that? How did they treat you all the time you were kept hostage?

AK: Sincerely, for first 50 days I had a very good opinion of them. And they didn’t think that I could go anywhere. For instance, a guy who kept watch over me used to support me most of the time. He would even give me his food and stay hungry himself.

But then they got tired of me staying there because they couldn’t leave and do something else. Sometimes they had to spend their own money on me as they were not given a budget to provide me with food, water or clothes. I was dressed in summer clothes, but when winter came I wanted warm clothes.

My presence there turned into burden for them and they felt angry with me, started abusing me, hitting without a reason and so on. They got harsher with me. They began to close the door. For instance, I needed to use the loo, but the door was closed and no one would open it for me. What did I have to do? I couldn’t bear that any longer.

To be honest, I know that they were saying “If you were a man, we would kill you.” And, naturally, they demanded a ransom for me. That’s why they treated me better than those who they simply wanted to slaughter.

PMQS: Miliband Mocks Cameron: ‘What Can He Organise In A Brewery?’

Ed Miliband unleashed his best ever gag at the start of prime minister's questions on Wednesday, mocking David Cameron for reports he has been forced to abandon his plans to introduce a minimum price for alcoholic drinks.

"In the light of his u-turn on alcohol pricing can the prime minister tell us if there is anything he could organise in a brewery?" the Labour leader said to roars of laughter from his MPs.

It has been reported that opposition to the policy from his cabinet, including from former health secretary Andrew Lansley, education secretary Michael Gove and home secretary Theresa May - who is said to be positioning herself to challenge for the Tory leadership - Cameron has had to drop the plan.

Miliband joked: "He obviously could not tell us about his policy on alcohol minimum unit pricing, I think the reality is he has just been overruled by the home secretary on this one."

The barb did not go down well with May, who, stood next to the Speaker's chair rather than sat on the government front bench, responded with her now trademark 'death stare'.

Generated image from gifs generated with the Imgflip Animated GIF Generator

Downing Street has refused to say whether plans for minimum pricing had been dropped, insisting the policy will be unveiled in "due course".

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The prime minister's official spokesperson said there was a "real problem with deep discounting and the impact of anti-social behaviour" that had to be tackled.

During PMQs Cameron was directly confronted in the Commons by Tory MP Sarah Wollaston - a former GP - who said abandoning minimum pricing would "critically undermine future efforts".

He told her: "There is a problem with deeply discounted alcohol in supermarkets and other stores and I am absolutely determined that we will deal with this.

"We published proposals, we are looking at the consultation and the results to those proposals, but be in no doubt, we've got to deal with the problem of having 20p or 25p cans of lager available in supermarkets. It's got to change."

A confident Miliband, who enjoyed one of his best PMQs performances to date, said reported cabinet splits showed the government was "falling apart".

"A week out from the Budget, they have got an economic policy that's failing, a prime minister that makes it up as he goes along and all the time, it's the country that is paying the price," he said.

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  • Theresa May

    Current position: Home Secretary Rides: "Beyond The Borders" Odds to win: 4/1 For: Politically, May is a shrewd and successful operator who has done a credible job as home secretary, a role that has tripped up many previous politicians. Against: A Tory minister recently described May as "100% charmless" and the only benefit that her appointment as leader would bring would be "net migration".

  • Boris Johnson

    Current position: Mayor of London Rides: "Bumbling Oratory" Odds to win: 5/1 For: Boris is rarer thing than a <a href="http://redirect.viglink.com?key=11fe087258b6fc0532a5ccfc924805c0&u=http%3A%2F%2Fwww.sugarbushdrafthorse.com%2Frevival.html">Sugarbush Draft Horse,</a> he's a "popular Tory". An <a href="http://redirect.viglink.com?key=11fe087258b6fc0532a5ccfc924805c0&u=http%3A%2F%2Fwww.huffingtonpost.co.uk%2F2012%2F10%2F07%2Fboris-johnson-preferred-to-david-cameron_n_1945895.html">opinion poll last October</a> outed him as the people's choice to replace Cameron. Unfortunately, it's not up to the people... Against: Johnson has all but ruled out taking over from Cameron before 2015, wary that undermining him could scupper any leadership hopes. Just like what happened to Lord Heseltine in the wake of Margaret Thatcher stepping down...

  • Michael Gove

    Current position: Secretary of State for Education Rides: "Baccalaureate Backtrack" Odds to win: 9/1 For: Gove is highly regarded within the Tory party as charming, polite and capable. Against: He has taken a bruising both from the public and other Tories for some of his proposals as Secretary of State for Education.

  • Philip Hammond

    Current position: Defence Secretary Rides: "Stripped Down Defender" Odds to win: 10/1 For: Erm... Against: Recently received a "slapping down" from Danny Alexander for publicly complaining about defence cuts. Also, he's possibly the most "beige" of all the prospective candidates.

  • Adam Afriyie

    Current position: MP for Windsor Rides: "Outside Upstart" Odds to win: 25/1 For: Afriyie is part of the new generation of Tories with fewer qualms about toppling their leader. One Tory minister said: "<a href="http://redirect.viglink.com?key=11fe087258b6fc0532a5ccfc924805c0&u=http%3A%2F%2Fwww.telegraph.co.uk%2Fnews%2Fpolitics%2F9916975%2FTories-too-afraid-of-fresh-chaos-for-leadership-coup.html">They don't have the same memory or experience to hold them back</a>. "And if they start to think they're going to lose their seats at the election, they could get a bit panicked." Against: Was widely ridiculed earlier this year when the relative unknown was tipped for a leadership challenge. Also, no-one seems to have told him about his own challenge until he read about it in the papers and "<a href="http://redirect.viglink.com?key=11fe087258b6fc0532a5ccfc924805c0&u=http%3A%2F%2Fwww.guardian.co.uk%2Fpolitics%2F2013%2Fjan%2F31%2Fadam-afriyie-pm-in-waiting">nearly choked on my Cornflakes</a>".

  • Liam Fox

    Current position: Rides: "Spend Wisely" Odds to win: 33/1 For: Dr Fox has become the unofficial spokesman for those Tories disaffected with the current leadership with a number of public statements criticising their direction on austerity. Against: Is it really a good move to appoint someone who was forced to resign from his job as defence minister for <a href="http://redirect.viglink.com?key=11fe087258b6fc0532a5ccfc924805c0&u=http%3A%2F%2Fwww.huffingtonpost.co.uk%2F2011%2F10%2F09%2Fliam-fox-resigns_n_1002156.html">allowing a close friend improper access to the highest level of government affairs?</a> Additionaly, <a href="http://redirect.viglink.com?key=11fe087258b6fc0532a5ccfc924805c0&u=http%3A%2F%2Fwww.huffingtonpost.co.uk%2F2013%2F03%2F11%2Fliam-fox-tory-leadership_n_2851902.html">Fox recently said</a>: "I think there is no chance of us having a leadership election in the Conservative Party before the election, I think that would be madness."

Earlier on HuffPost:

Frontrunning: March 12

  • Cardinals head to conclave to elect pope for troubled Church (Reuters)
  • Hyperinflation 'Unthinkable' Even With Bold Easing: Abe (Nikkei)
  • Ryan Plan Revives '12 Election Issues (WSJ)
  • Republicans to unveil $4.6tn of cuts (FT) - Obama set to dismiss Ryan plan to balance budget within decade
  • Italy 1-yr debt costs highest since Dec after downgrade (Reuters)
  • CIA Ramps Up Role in Iraq (WSJ)
  • Hollande Hostility Fuels Charm Offensive to Show He’s No Sarkozy (BBG)
  • SEC testing customized punishments (Reuters)
  • Judge Cans Soda Ban  (WSJ)
  • Hungary Lawmakers Rebuff EU, U.S. (WSJ)
  • Even Berlusconi Can’t Slow Bulls Boosting Euro View (BBG) - luckily the consensus is never wrong
  • Funding for Lending ‘put on steroids’ (FT)
  • Investigators Narrow Focus in Dreamliner Probe (WSJ)
  • With new group, Obama team seeks answer to Karl Rove (Reuters)
  • Boston Booms as Workers Say No to Suburbs (BBG)

Overnight Media Digest

WSJ

* Illinois settled Securities and Exchange Commission civil-fraud charges that the state misled municipal-bond investors by failing to adequately disclose the risks of its underfunded pension system.

* Lawmakers grilling Mary Jo White, President Barack Obama's nominee for chairman of the Securities and Exchange Commission, on Tuesday will have to weigh two seemingly contradictory versions of the attorney.

* U.S. aviation safety investigators examining Boeing Co's 787 Dreamliner increasingly are focusing on manufacturing or design problems with the batteries as possible causes of overheating rather than on other parts of the jet's electrical system, the head of the National Transportation Safety Board said on Monday.

* Starr International Co, run by the former chief executive of American International Group Inc, won the right to pursue as a class action its case against the U.S. government, alleging that elements of AIG's financial-crisis bailout package were unconstitutional.

* A crisis of confidence in the nuclear-power industry has trickled down to Namibia, where uranium accounts for 12 percent of exports. But uranium prices are down 70 percent over the past six years.

* General Motors Co is in the process of changing advertising agencies of its Cadillac brand. Advertising and marketing work to support Cadillac, valued at about $250 million, will be moved to longtime Michigan advertising agency Campbell Ewald, according to three people briefed on the matter.

* The monopoly powers of Mexico's telephone giant, América Móvil SAB de CV and leading broadcaster Grupo Televisa SAB, are coming under fire with a broad set of new laws that aim to open up the telecommunications and television businesses to competition.

* Many small U.S. banks are feeling a financial pinch from the government's efforts to punish executives and directors of banks that collapsed during the height of the financial crisis.

* KKR & Co LP is considering teaming with other private equity firms to pursue biotech firm Life Technologies Corp, according to people familiar with the matter, in the latest sign that buyout shops are still willing to form "clubs" if they covet a large target.

* VeriFone Systems Inc Chief Executive Douglas Bergeron is stepping down after a dozen years at the helm of the card-payment systems maker. The company said it will hire an executive-search firm to find a successor, with Chairman Richard McGinn serving as CEO on an interim basis.

FT

Dell Inc has agreed to give Carl Icahn a closer look at its books less than a week after the activist investor joined a growing chorus of opposition to founder Michael Dell's plan to take the world's No. 3 personal computer maker private.

Private equity firms are looking to buy the UK property business of Germany's second-biggest lender, Commerzbank AG, in a potential 5 billion pound ($7.45 billion) deal.

UK lender LLoyds Banking Group plans to sell 20 percent of its stake in wealth manager St James's Place

Alibaba Group has chosen Jonathan Lu, its Chief Data Officer who has more than a decade of experience in executive roles, to lead China's largest e-commerce company as it prepares to launch an initial public offering.

Italy's central bank has told some of the country's biggest banks to increase their bad loan provisions by an estimated 21 billion euros ($27.33 billion) amid deepening of a nearly two-year old recession.

Billionaire hedge fund manager John Paulson is exploring moving to Puerto Rico from New York to lower his tax bill.

Richard Joseph, a former futures trader, was convicted of six counts of insider trading, leaking information from the print room at JPMorgan Cazenove. Joseph placed spread bets with CMC Markets ahead of a series of deals in 2007 and 2008.

Mexico is looking to overhaul its telecom industry by introducing sweeping proposals that will increase competition and limit the control of telecoms tycoon Carlos Slim and broadcasting giant Televisa.

NYT

* For the second time in history, federal regulators have accused an American state of securities fraud, finding that Illinois misled investors about the condition of its public pension system from 2005 to 2009.

* A state court judge invalidated New York City's new restrictions on sweetened beverages on Monday, a day before they were set to take effect, saying the rules were "arbitrary and capricious."

* Britain, unlike other economic powers, is responding to the financial crisis by creating two new agencies, one to oversee institutions and another to watch for market abuses.

* In advance of a summit meeting of European Union leaders on Thursday in Brussels, the president of the European Commission, José Manuel Barroso, called on the bloc's 17 members to stay the course on austerity.

* Intrade, the online betting site, announced late on Sunday that it had halted trading and frozen customer accounts after the discovery of potential financial irregularities.

* Oppenheimer & Co will pay nearly $3 million to settle accusations by federal and state regulators that it misled investors about the performance of one of its private equity funds, in a case that signals stepped-up scrutiny of the buyout industry and how it values its holdings.

* Dell Inc has agreed to open its books to the activist investor Carl Icahn, signaling a possible truce on one front in the battle over the computer maker's proposed $24.4 billion buyout.

* In prepared testimony for her nomination hearing, Mary Jo White placed a premium on unearthing financial fraud, as she works to deflect concerns from lawmakers who question her ability to regulate banks she recently defended.

* British authorities have opened an investigation into Hewlett-Packard Co's claims that it was duped when it bought the business software maker Autonomy, according to regulatory documents filed on Monday.

Canada

THE GLOBE AND MAIL

* Ottawa and the Northwest Territories have reached a deal to hand the territory province-like power over its land, a move aimed at empowering local leaders to unlock more of their resource riches.

* Less than a third of the almost 300,000 members and supporters who signed up to choose the Liberal party's next leader have so far registered to vote, prompting front-runner Justin Trudeau's camp to complain about a host of technical glitches and request a one-week extension on registration.

* The federal government is facing questions over the legitimacy of its centerpiece for aboriginal education reform. Manitoba chiefs rejected the Harper government's vision for aboriginal education on Monday, claiming Ottawa is trying to "bypass" first nations chiefs and shirk its treaty responsibilities.

Reports in the business section:

* Chrysler Canada is jumping back into leasing for the first time since 2008, raising the competitive stakes another notch in an auto market already awash with financing and leasing incentives.

* AT&T Inc will begin selling BlackBerry's new BlackBerry Z10 smartphone next week, marking the smartphone's debut in a crucial U.S. market that has largely shunned the company's devices in recent years.

* Molson Coors Brewing Co's Canadian arm sold far less Miller Genuine Draft beer in the country over the past three years than the targets called for under its agreement with Miller Brewing Co. That under-performance - spelled out in court filings - is at the crux of a dispute that has erupted between the two companies, as Miller tries to cancel its Canadian licensing agreement with Molson.

NATIONAL POST

* The federal government, which has come under fire over tougher employment insurance (EI) rules, is sweetening benefits for parents. It says it will allow individuals receiving parental benefits through EI to qualify for sickness benefits as well, starting March 24.

* The latest annual report on federal ad spending shows Ottawa shelled out C$78.5 million ($76.5 million) in 2011-12 telling Canadians about everything from the switch to digital TV and the War of 1812, to elder abuse and anti-drug messaging. The Harper government spent C$21 million on major advertising campaigns under its Economic Action Plan brand.

* Despite activist claims that the city's homeless are dying due to a lack of shelter space, there is no shelter bed shortage in Toronto, according to an internal report prepared for city council.

FINANCIAL POST

* After years of growth, economists say the real estate boom is over and predict Canadian housing prices to flatline over the next decade. A TD Economics study, Long-Run Rate of Return for Canadian Home Prices, predicts a "string of lackluster performances" over the next few years.

* Alamos Gold Inc is going on the offensive in the takeover battle for Aurizon Mines Ltd, asking a securities regulator to reject both a break fee and poison pill that it believes are highly irregular.

* Travel tour operator Transat AT Inc said it has managed to wrest concessions from its flight attendants as the company continues its campaign to be more cost competitive. The bulk of the expected C$9 million in annual savings will come from Transat lowering the amount of flight attendants on its Airbus A330s to 10 from 11, and the move will also support a potential shift to a fleet of Boeing Co's 737s.

China

SECURITIES TIMES

-- Huatai Securities said on Tuesday its board of directors had sanctioned the issuance of no more than 10 billion yuan of corporate bonds on the Shanghai Stock Exchange to supplement operating funds.

-- The Shanghai securities regulator said five foreign banks, including Standard Chartered, have applied for licences to distribute mutual fund products in China.

CHINA SECURITIES JOURNAL

-- The Shanghai stock exchange is looking to invest more in regional stock exchanges to support smaller firms in China, its director general said on Monday.

CHINA DAILY

-- China's first special envoy for Asian affairs will have a focus on Myanmar, the Foreign Ministry said on Monday. There has been tension between China and its southern neighbour over conflict in Myanmar, close to the Chinese border.

-- Roughly one in ten of the 5,000 proposals submitted to China's top political advisory body since March 3 are related to environmental issues, said Lu Fuhe, a top national political advisor.

SHANGHAI DAILY

-- French firm Carrefour, the world's number two retailer, has implemented a system to allow shoppers to trace the origin of fruit and vegetables in their Chinese stores in Shanghai, a reflection of the recent pressure in China over food safety.

CHINA BUSINESS NEWS

-- The number of dead pigs found in the Huangpu River, one of Shanghai's key water sources, is now estimated to have increased to 2,800.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Axiall (AXLL) upgraded to Buy from Neutral at Citigroup
Dick's Sporting (DKS) upgraded to Outperform from Market Perform at BMO Capital
Dick's Sporting (DKS) upgraded to Conviction Buy from Buy at Goldman
Intercontinental Hotels (IHG) upgraded to Neutral from Sell at UBS
Mosaic (MOS) upgraded to Outperform from Market Perform at BMO Capital
Sherwin-Williams (SHW) upgraded to Neutral from Underperform at Credit Suisse
Vantiv (VNTV) upgraded to Outperform from Market Perform at Raymond James
Vitamin Shoppe (VSI) upgraded to Buy from Neutral at Goldman

Downgrades

CVS Caremark (CVS) downgraded to Neutral from Buy at Goldman
EverBank Financial (EVER) downgraded to Neutral from Buy at Sterne Agee
RadioShack (RSH) downgraded to Sell from Neutral at Goldman
Red Hat (RHT) downgraded to Neutral from Buy at Citigroup

Initiations

Fifth & Pacific (FNP) initiated with a Buy at Brean Capital
Rush Enterprises (RUSHA) initiated with a Market Perform at BMO Capital
TJX (TJX) initiated with an Overweight at Barclays
Wabash (WNC) initiated with an Outperform at BMO Capital
WABCO (WBC) initiated with an Outperform at BMO Capital
Xoom (XOOM) initiated with an Outperform at RW Baird
Xoom (XOOM) initiated with an Overweight at Barclays

HOT STOCKS

SEC charged Illinois for misleading pension disclosures
Treasury Department sold $489.9M of GM (GM) common stock in February
HP (HPQ) disclosed U.K Serious Fraud Office opened investigation related to Autonomy
KKR (KKR) has considered teaming to bid for Life Technologies (LIFE), and Thermo Fisher (TMO) and Danaher (DHR) also weigh bids for Life, valued at $12.5B with debt, DJ reports
Diamond Foods (DMND) sees second half sales down more than first half
Rio Tinto (RIO) slowed Guinea iron ore investment, to cut staff, Reuters reports
Said Guinea iron ore project not frozen, to work with government on funding, Bloomberg reports
Hill International (HIL) sees FY13 consulting fee revenue $500M-$520M
Cadence Design (CDNS) acquired Tensilica for $380M in cash
Pall Corp (PLL) signed 30 year agreement to supply Embraer (ERJ) with KC-390 manifolds
MRC Global (MRC), NAWAH entered into alliance to open distribution facility in Iraq
Lakeland Industries (LAKE) reported $11.5M goodwill impairment charge in Brazil

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Costco (COST), BioScrip (BIOS), Stewart Enterprises (STEI), XenoPort (XNPT), Heckmann (HEK)

Companies that missed consensus earnings expectations include:
Stage Stores (SSI), FuelCell (FCEL), Chiquita Brands (CQB), Hill International (HIL), Casey's General Stores (CASY), Urban Outfitters (URBN)

Companies that matched consensus earnings expectations include:
Douglas Dynamics (PLOW), Flow International (FLOW), Manitex (MNTX)

NEWSPAPERS/WEBSITES

  • Multinationals (GE, HPQ, CAT, HON) have been increasing their footprint in Asia for years as they have moved from selling into the region to also investing here. But the transformation is gaining critical mass as Western companies' market-share leads in Asia over cash-flush local competitors narrow, forcing Western firms to invest more, tailor their products and transfer top executives to Asia, the Wall Street Journal reports
  • Rising fuel prices have GM (GM) and Chrysler Group (FIATY) taking another look at selling smaller pickup trucks—vehicles that the Detroit Three automakers (F) abandoned in the U.S. amid weak demand. Both see the vehicles helping them to hit higher fuel-economy targets and to regain market share from Toyota (TM), the current top-selling small hauler., the Wall Street Journal reports
  • Two groups of AIG (AIG) shareholders won class-action status from a federal judge on in a $25B lawsuit by former CEO Maurice "Hank" Greenberg over alleged losses caused by the U.S. government's bailout of the insurer, Reuters reports
  • As the jobs market showing signs of healing, economists think they know what's next for monetary policy: the Fed will at some point reduce its monthly bond purchases, and soon after, end them altogether. But perhaps they shouldn't be so sure, Reuters reports
  • Shares of companies that own and operate their truck fleets (WERN, KNX, SWFT, HTLD) are outperforming those that act as brokers for trucking services, driven by stronger U.S. freight activity, Bloomberg reports
  • The Treasury Department, exiting its ownership stake in GM (GM), accelerated its sell- down of the automaker in February, saying it received $489.9M in proceeds from the sale of common shares, Bloomberg reports

SYNDICATE

Emeritus (ESC) announces 7.97M share secondary offering by holders
Government Properties (GOV) 9.95M share Spot Secondary priced at $25.20
HeartWare (HTWR) announces public offering of 1.5M shares of common stock
Lexington Realty (LXP) files to sell 15M shares of common stock
Salesforce.com (CRM) announces proposed $1B offering of convertible senior notes
Sapiens (SPNS) files to sell $40M of common stock, 6M shares for holders
Sun Communities (SUI) announces 4.5M share common stock offering
U.S. Silica (SLCA) announces 8.5M share secondary offering by stockholder
Yandex (YNDX) announces 24.25M Class A ordinary shares offering by holders

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Mehdi’s Morning Memo: Mansion Mischief

The ten thing you need to know on Tuesday 12 March 2013...

1) MANSION MISCHIEF

“Playing parliamentary silly buggers” is how one Lib Dem MP described the Labour motion on the mansion tax to us, as Nick Clegg and David Cameron agreed a government amendment that both coalition parties could sign up to. The deal, which makes it clear the Lib Dems support a new levy on homes over £2m while the Tories do not, saves the PM and DPM the awkwardness of a coalition split over the issue.

Labour had mischievously tabled today’s debate in an attempt to either divide the coalition, or force Lib Dem MPs to vote against their own policy. Both of which would be a good laugh for Ed Miliband and Ed Balls. Expect Opposition MPs to have a lot of fun at the Lib Dems expense during this afternoon’s Commons debate. Or rather, more so than usual.

Today's Memo is edited by Ned Simons as Mehdi Hasan is in Rome helping to choose the new Pope.

2) THE (OTHER SORT OF) BIG HOUSE

Chris Huhne meanwhile is swapping his mansion for the other sort of big house today, after being sentenced to eight months in jail. “Well, I certainly lied and lied again,” the former energy secretary told Channel 4 News. "I think my political career is very clearly over but I think that I have other things to offer, doing other things, and I will.”

It’s not all bad for Huhne, his former colleague on the Lib Dem benches, Lembit Opik, has offered to visit him in prison – perhaps seeking a captive audience for his stand-up routine. Surely Huhne has suffered enough?

3) WHO ARE THE 0.2%?

A total of 1,513 votes were cast in the Falklands referendum, with 98.8% of the islanders declaring themselves in favour of remaining British. Just three votes, or 0.2% of the ballot, voted against. There will no doubt be a witch-hunt to find out who the hell those three people were.

William Hague welcomed the utterly unsurprising vote, saying: “We have always been clear that we believe in the rights of the Falklands people to determine their own futures and to decide on the path they wish to take. It is only right that, in the twenty-first century, these rights are respected.

“All countries should accept the results of this referendum and support the Falkland Islanders as they continue to develop their home and their economy. I wish them every success in doing so.”

This morning David Cameron said Argentina should "should take careful note of this result". No word on which way all the penguins voted.

4) THE RYAN PLAN

WASHINGTON - Under the splash headline ‘Austerity Now’ (that pun is so 2010 guys, we’ve used it at least five times, keep up) our American colleagues report that former Republican vice-presidential candidate and chairman of the House Budget Committee Chairman, Paul Ryan, said on Monday he can balance the US federal budget in 10 years without raising taxes any further by achieving $4.6 trillion in additional government spending cuts.

5) CAMERON ‘QUIZZED’

David Cameron will be at the liaison committee at 4pm this afternoon for 90 (it will seem longer) minutes. The format of the sessions, where the chairman of the different Commons select committees each get to question the prime minister means they are about as forensic as yesterday’s PM Direct event where Cameron had to resort to asking himself questions as none were forthcoming from the audience.

Pity the poor aides and journalists who get stuck in camera shot behind the prime minister and have to avoid nodding off live on Sky News (for as long as the broadcasters can bare to cover it that is).

6) POLL ‘BOOSTS’ TORY RIGHT

A Guardian/ICM poll has found that public “overwhelmingly believes a hard line on Europe, immigration and traditional families would make the party more appealing”.

According to the paper by a majority of 67%-25%, voters say, "the Conservatives would be more appealing if they took a tougher line with Europe". Some 75%-21% believe the same about the party taking a "a tougher line on immigration. And voters judge by 69%-24% that the Tories' appeal could be boosted by keeping "themselves on the side of traditional families" – in what will be read as a rejection of gay marriage.

The findings will be seized upon by Tory MPs who believe the key to electoral success in 2015 is to abandon Cameron’s modernising agenda and move to the right to take-on Ukip.

7) TAXI!

The Evening Standard reports that Lutfur Rahman, the mayor of Tower Hamlets in East London, has charged a series of mysteriously expensive taxi journeys to the public. One trip is said to have cost £71 despite the cab only travelling a distance of 400 metres. Another cost £121 when the same journey taken on the capital’s Docklands Light Railway would have cost just £2.10.

8) IRISH ASK UK TO STAY

Irish premier Enda Kenny has become the latest European leader to urge Britain to remain within the European Union. The Taoiseach, in London for a series of engagements including talks with Cameron, insisted Britain has much to gain from its membership.

"We see the British relationship with the EU as being a two-way relationship - Britain benefits from its membership of the EU, and the EU is better off with Britain as a leading member making a valued contribution," Kenny said.

9) NEW POPE TIME

From the BBC: "Cardinals gathered in Rome to elect a new pope will begin voting later on Tuesday, with no clear frontrunner in sight. The 115 cardinal-electors will attend a special Mass in the morning before processing into the Sistine Chapel to begin their deliberations in the afternoon. They will vote four times daily until two-thirds can agree on a candidate."

10) DRONE WARS

WASHINGTON - A new medal that would honor drone pilots and cyber warriors and outrank battlefield combat medals such as the Purple Heart and Bronze Star is facing backlash from veterans organizations and members of Congress, with a bipartisan group of 22 senators pressing the Pentagon to change the designation. As HuffPost reports, the backlash to the medal centers around the fact that it will take precedence over traditional several combat awards, which require that the recipient risk his or her life in order to receive them.

140 CHARACTERS OR LESS

@Queen_UK Queen of the Falklands. By popular consent. #YourQueenLovesYou #DontCryForOneArgentina

@Mike_Fabricant At the request of a Minister in charge of the legislation last night, I have changed my photo back to the pony.

900 WORDS OR MORE

Steve Richards in The Independent: "Labour and the Tories both think they'll lose 2015 and they can't both be right."

Benedict Brogan in the Daily Telegraph:"If Cameron wants his troops to rally, he must act like a general."

Mehdi Hasan in The Huffington Post UK: "Get Rid Of Dave? How Exactly Would That Help the Tories?"

Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

On the News With Thom Hartmann: 200,000 Taiwanese Publicly Protested Nuclear Power on Saturday,...

In today's On the News segment: Legislation that would penalize employers for lockouts in labor disputes introduced in Minnesota, and more.

Thom Hartmann here – on the news...

You need to know this. Republicans hate tax increases... unless they're part of Paul Ryan's budget plan. Six hundred billion dollars in new revenue, fought for by President Obama and opposed by Congressional Republicans, is just one of the many surprises in Paul Ryan's new GOP budget. According to Republican Representative Jason Chaffetz, new revenue generated from ending the Bush tax cuts for the very wealthy is included in the GOP plan because Republicans lost on the tax issue. Despite their doomsday predictions that Obama's tax plan would crush so-called job-creators and harm the economy, Republicans are now happy to make them part of the Paul Ryan budget. In prior years, when Democrats projected $600 billion in savings from decreased war spending, Paul Ryan dismissed the idea as "phantom savings" - yet now he has those very same projections as part of his own budget proposal. Despite incorporating multiple Obama policies in their budget, don't think Republicans are giving up on their austerity measures just yet. In typical GOP fashion, Ryan's budget calls for huge cuts to vital social service programs, like food stamps, job training, Medicare, and Medicaid. And just in case those cuts wouldn't be painful enough, Ryan's entire budget hinges on the repeal of Obamacare. Without defunding healthcare for millions of Americans, his numbers don't add up. Considering the fact that Obama has repeatedly said he would veto any attempt to repeal the Affordable Care Act, and Democrats in the Senate would block any such legislation, we can only conclude that Paul Ryan knows his budget is doomed to fail. It's clear that Republicans have no intention of working with the President to negotiate an honest, realistic budget plan. Ryan's budget is a farce, aimed at scoring political points with the tea party base, rather than helping the American people .

In screwed news... The U.S. Government has notified 60,000 border security workers that they will soon face furloughs because of Republican austerity measures. Customs and Border Protection must cut $754 million from it's budget by September 30th, meaning international travelers can expect longer lines at airports, huge delays at ports, and fewer border patrol officers at international checkpoints. The agency aims to reduce spending through furloughs, a hiring freeze, reductions in overtime hours, and reduced levels of training. Homeland Security Secretary Janet Napolitano expects customs wait times to increase by 150-200%, and she said, "I don't mean to scare, I mean to inform. If you're traveling, get to the airport earlier than you otherwise would. There's only so much we can do with personnel." Despite GOP claims that they favor strong boarder security, tax break security for millionaires and billionaires appears to mean even more to them. Republican obstinacy on the sequester is putting our national security in jeopardy, just to be sure their rich buddies never have to pay their fair share.

In the best of the rest of the news...

In Minnesota, employers may have to think twice about using worker lockouts during labor disputes. Lockouts have long been a common employer tactic in Minnesota, but state Representative Joe Atkins has introduced legislation to protect workers, and charge employers a penalty for keeping employees from their jobs. The Employer Lockout Accountability Act has bipartisan support in the Minnesota state legislature, and grew out of the American Crystal Sugar lockout, which has been ongoing since August of 2011. The Minnesota AFL-CIO has expressed support for the legislation, saying that the impact of lockouts stretches well beyond those who are kept from work. The AFL-CIO secretary-treasurer, Steve Hunter, said, "there's a community effect beyond just the workers themselves, and we thank that, by ensuring some economic security for those workers, we can help mitigate those community effects as well." With our right to organize being attacked in so many states throughout our nation, it's nice to see Rep. Atkins working to protect unionized workers in Minnesota.

On Saturday, 200,000 people took to the streets of Taiwan to protest nuclear power. Just two days before the two year anniversary of the meltdown of Japan's Fukushima nuclear power plant, protesters demanded their government stop allocating funding for a fourth nuclear power plant in New Taipei City. More than 6.5 million people live in close proximity to the plant, which is scheduled to be completed later this year – after 14 years of construction and about $10 billion of taxpayer money. One organizer in the protest said, "we have to take to the streets for the good of the next generation." After disasters like Chernobyl and Fukushima, it's easy to understand how dangerous nuclear energy is. Let's join with the 200,000 protesters in Taiwan, and take a stand for the good of the next generation of Americans too. No nukes!

Despite the flurry of people rushing out to buy assault weapons, and reports of empty shelves at gun stores, fewer Americans are purchasing guns. According to new data from the General Social Survey, people who already own guns are simply buying more. While 50% of households owned guns in the 1970's, only 34% reported guns in the home by 2012. Addressing the record sales levels at gun stores, Daniel Webster, the director of the Johns Hopkins Center for Gun Policy and Research, said, "I suspect the increase in gun sales has been limited mostly to current gun owners." If the NRA and it's fellow gun-nuts hadn't blocked commonsense regulations like a national gun registry, we could verify this data. Let's keep pushing Congress to enact some real gun reforms, before the gun-nuts have a chance to hoard any more fire power.

And finally... On Saturday, bikers in San Francisco bared it all for the environment. Protestors of all shapes and sizes came out in the buff to take part in the World Naked Bike Ride, which is an international demonstration against our dependence on fossil fuels. Riders were warned that a new law prohibited public nudity, but risked citations to bring attention to this important cause. Although this type of protest may not be for everyone, we applaud those brave enough to bare all for green energy. And we hope they remembered the sun block.

And that's the way it is today – Monday, March 11, 2013. I'm Thom Hartmann – on the news.

5 Ways Privatization Is Poisoning America

We all live better lives when the common good is not for sale.

March 10, 2013  |  

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It gets more maddening every day. Essential human needs are being packaged into products to be bought and sold. The right to food and water, education, health care, public spaces, and unrestricted speech shouldn't be based on who can pay the most, or on who can generate profits with the slickest marketing pitch.

The free-market capitalism that drives our economy is a doctrine of individuals pursuing profit. Nothing else matters. An executive for Roche, a healthcare company, said "We are not in the business to save lives, but to make money."

With privatization of the common good we risk losing both our heritage and our humanness.

1. The Taking of Public Land

Attempts to privatize federal land were made by the  Reagan administration in the 1980s and the Republican-controlled  Congress in the 1990s. In 2006, President Bush proposed  auctioning off 300,000 acres of national forest in 41 states.

The assault on our common areas continues with even greater ferocity today, as the euphemistic  Path to Prosperity has proposed to sell millions of acres of "unneeded federal land," and  libertarian groups like the  Cato Institute demand that our property be "allocated to the highest-value use." Mitt Romney admitted that he didn't know "what the purpose is" of public lands.

Examples of the takeaway are shocking.  Peabody Coal is strip-mining public lands in Wyoming and Montana and making a 10,000% profit on the meager amounts they pay for the privilege.  Sealaska is snatching up timberland in Alaska. The  Central Rockies Land Exchange would allow Bill Koch to pick up choice Colorado properties from the Bureau of Land Management, while neighboring Utah Governor Gary Herbert sees  land privatization as a way to reduce the deficit. Representative Cliff Stearns recommended that we  "sell off some of our national parks." One gold mining company even  invoked an 1872 law to grab mineral-rich Nevada land for which it stands to make a  million-percent profit.

The National Resources Defense Council just reported that oil and gas companies hold drilling and fracking rights on U.S. land equivalent to the size of California and Florida combined. Much of this land is "split estate," which means the company can drill under an American citizen's property without consent. Unrestrained by government regulations, TransCanada was able to use  eminent domain in Texas to lay its pipeline on private property and then have the owner arrested for trespassing on her own land, and  Chesapeake Energy Corporation overturned a 93-year-old law to frack a Texas residence without paying a penny to the homeowners. Most recently, the  oil frenzy in North Dakota has cheated Native Americans out of a billion dollars worth of revenue from drilling leases.

Away from the mountains and the plains, back in the cities of  Chicago and Indianapolis and L.A. and San Diego, our streets and parking spaces have been surrendered to corporations until the time of our great-grandchildren, with some of the  highest profit margins in the corporate world.

2. Water for Sale

The corporate invasion of the water market is well underway. In May 2000  Fortune Magazine called water "one of the world's great business opportunities..[It] promises to be to the 21st century what oil was to the 20th." Citigroup is on board, viewing water as a prime  investment, and perhaps the "single most important physical-commodity based asset class."

The vital human resource of water is being privatized and marketed  all over the country. In Pennsylvania and  California, the American Water Company took over towns and raised rates by 70% or more. In  Atlanta, United Water Services demanded more money from the city while prompting federal complaints about water quality. Shell owns  groundwater rights in Colorado, oil tycoon T. Boone Pickens is  buying up the water in drought-stricken Texas, and water in  Alaska is being pumped into tankers and sold in the Middle East.

A 2009 analysis of water and sewer utilities by Food and Water Watch  found that private companies charge up to 80 percent more for water and 100 percent more for sewer services. Various privatization abusesor failures occurred in California, Georgia, Illinois, Indiana, New Jersey, and Rhode Island.

Of course, water monopolization is a global concern, and a life-threatening issue in undeveloped countries, where  884 million people are without safe drinking water and more than 2.6 billion people lack the means for basic sanitation. Whether in the U.S. or in the world's poorest nation, the folly of privatizing water is made clear by the  profit-seeking motives of business:

(1) Water corporations are primarily accountable to their stockholders, not to the people they serve.
(2) They will avoid serving low-income communities where bill collection might be an issue.
(3) Because of the risk to profits, there is less incentive to maintain infrastructure.

3. Owning Human Life

Monsanto and their agro-chemical partners call themselves the "life industry."

In 1980 a General Electric geneticist  engineered an oil-eating bacterium, effective against oil spills, and in the first case of its kind the Supreme Court ruled that "a live, human-made micro-organism is patentable subject matter." Fifteen years later a  World Trade Organization decision allowed plants, genes, and microorganisms to be owned as  intellectual property.

The results, not surprisingly, have been disastrous. One-fifth of the  human genome is privately owned through patents. Strains of influenza and hepatitis have been  claimed by corporate and university labs, and because of this researchers can't use the patented life forms to perform cancer research. Thus the cost of life-preserving tests often depends on the whim (and the market analysis) of the organization claiming ownership of the biological entity.

The results have also been otherworldly. In 1996 the U.S. National Institutes of Health attempted to  patent the blood cells of the primitive Hagahai tribesman of New Guinea. U.S. companies AgriDyne and W.R. Grace tried to gain  ownership of the neem plant, used for centuries in India for the making of medicines and natural pesticides. Other examples of  'biopiracy': The University of Cincinnati holds a patent on Brazil's guarana seed; the University of Mississippi holds a patent on the Asian spice turmeric.

Most tragically, tens of thousands of  Indian farmers, charged for seeds that they used to develop on their own, and forced to repurchase them every year, have been driven to suicide after experiencing crop failures and ruinous debt.

Monsanto is at the forefront of GMO seeds and litigation against vulnerable farmers. To date the company has won over half of its  patent infringement lawsuits. The Supreme Court is currently weighing the arguments in  Bowman vs. Monsanto, which asks if a company can have a claim on a farmer whose crops were derived from a seed already paid for. More significantly, the question is whether a company can claim the rights to a form of life that has been nurtured by communities of farmers for centuries.

4. Owning the Air

In polluted Beijing, wealthy entrepreneur  Chen Guangbiao is selling "fresh air" in a soft drink can for about 80 cents.

While Americans are not yet dependent on (real or imagined) breathing supplements, we have relinquished public access to the air in another important way: the  1996 Telecommunications Act led the way to a giveaway of the transmission airwaves to the broadcast media. Through an effective lobbying campaign the communications industry gained all the benefits of a lucrative public space without even a licensing fee. Objected  former Senate Majority Leader Bob Dole, "The airwaves are a natural resource. They do not belong to the broadcasters, phone companies or any other industry. They belong to the American people."

Closely related is our right to freedom of expression on the Internet, which has been repeatedly threatened, despite the presence of existing copyright laws, by aggressive proposals like the  Stop Online Piracy Act (SOPA) and the Protect IP Act (PIPA). Privacy is at risk with the  Cyber Intelligence Sharing and Protection Act (CISPA), passed in the House despite objections by Ron Paul and others who recognize the "Big Brother" implications of government monitoring of Google and Facebook accounts. The  Foreign Intelligence Surveillance Act has facilitated the monitoring of foreign communications in the name of anti-terrorism.

A 2011  UNESCO report offered this worrisome insight: "..the control of information on the Internet and Web is certainly feasible, and technological advances do not therefore guarantee greater freedom of speech."

5. Children as Products

Leading capitalists like Bill Gates and Jeb Bush and Michael Bloomberg and Arne Duncan and Michelle Rhee, who together have a  few months teaching experience, have decided that the business model can pump out improved assembly line versions of our children.

Charter schools simply don't work as well as the profitseekers would have us believe. The recently updated  CREDO study at Stanford concluded again that "CMOs (Charter Management Organizations) on average are not dramatically better than non-CMO schools in terms of their contributions to student learning." Approximately the same percentages of charters and non-charters are showing improvement (or lack of improvement) in reading and math. In addition, poorly performing charters tend not to improve over time.

Nevertheless, charters remain appealing to poorly informed parents. The schools like to represent themselves as equal opportunity educational options, but the facts state the opposite, as many of them have  strict application standards that ensure access to the most qualified students. Funding for such schools drains money out of the public system.

Children are viewed as products in another way -- on the  school-to-prison pipeline. Many school districts employ "school resource officers" to patrol their hallways, and to ticket or arrest kids who disrupt the academic routine, no matter the age of the offender or the nature of the "offense":

-- A twelve-year-old was  arrested for wearing too much perfume.
-- A five-year-old was  handcuffed for committing "battery" on a police officer.
-- A six-year-old was called a  "terrorist threat" for talking about shooting bubbles at a classmate.

Along with these bizarre instances is the frightening precedent set by a private prison, Corrections Corporation of America, which despite having no law enforcement authority was allowed to  participate in a drug sweep at a high school in Arizona.

An Antidote?

A successful society doesn't derive from a few Ayn-Rand-type individuals. It's the other way around, as philosopher  John Dewey reasoned in the 1930s. It's easy to forget that our country's greatest success was due to a collaborative effort in the years during and after World War 2, when advances in manufacturing and technology made us the strongest economy the world had ever seen. It was a shared success. The common good was not for sale.

Cable Calls For Investment, Not Cuts, At Lib Dem Conference

Vince Cable renewed his call for billions of pounds more infrastructure investment funded by higher borrowing, saying the Government had to "really get moving", at the Lib Dem Party Conference in Brighton.

The Business Secretary admitted there were dangers in pushing up the Government's debt in an effort to kickstart the economy but he insisted the "balance of risks" seemed to be changing and ministers had to be "open minded".

He also warned that Liberal Democrats would block any effort to cut crucial spending in areas such as science and skills, and said Tory efforts to reduce immigration were harming the economy.

The intervention came at a fringe event at the party's spring conference in Brighton. Kicking off the gathering on Friday, Nick Clegg denied the Lib Dems were in crisis in the wake of sexual harassment allegations and the conviction of ex-Cabinet minister Chris Huhne.

However, the Deputy Prime Minster conceded the party had "let people down" and needed to take a "long, hard look in the mirror".

Both David Cameron and Clegg dismissed the prospect of increasing borrowing to fund more capital investment earlier this week after Cable floated the prospect in a pre-Budget essay in the New Statesman.

nick clegg

Nick Clegg at the Spring Conference in Brighton

However, Cable made light of the reaction last night, saying he noted the markets had not "collapsed" as a result.

"The point I was trying to make is that we need to be open minded and recognise that the balance of these risks may well be changing," he said.

Cable said the decision by the former Labour government to cut capital investment had been a major policy error.

He pointed out that a £15 billion increase in capital spending would restore it to peak levels - although he stressed the figure was "illustrative".

He added: "That's a useful figure, but I am not specifically recommending that."

Cable said he was on the "same page" as the Prime Minister, "but we have different emphasises and we use different language".

While Cameron used phrases like "trees don't produce money", he preferred to say there was "no such thing as a free lunch".

"There are risks in any policy option we care to take," he said.

"But nonetheless the conclusion I have drawn is that we have to look at how we can really get moving with investment in infrastructure and housing."

vince cable

Cable insisted increased capital spending would boost the economy

Cable has been listed with Tories Eric Pickles, Theresa May and Philip Hammond among ministers who are resisting further spending cuts but he insisted he did not "need lectures" about the importance of managing public finances.

But he criticised some on the Tory right for waging "jihad" on state spending and warned it would be "utterly counterproductive" to cut science and skills budgets any further. "Lib Dems in government will not allow that to happen," he added.

The Cabinet minister also attacked the Tory drive to reduce net annual immigration to tens of thousands, complaining that the Lib Dems were having to "live with" it.

"It is politically ineffective and it is causing a great deal of economic damage," he added, indicating that Mr Clegg would be making a speech on the issue.

Cable insisted more of the money needed to fill the deficit should be raised from taxes, rather than spending cuts.

He said the current ratio of spending cuts to tax rises was 80-20 or 85-15, and urged the introduction of measures such as the mansion tax, as well as a crackdown on long-term "non dom" residents.

"I think our view as a party must be that there has got to be a better balance between spending cuts and taxation," he said.

Party president Tim Farron will formally open the conference on Saturday morning, before a speech by former leader Lord Ashdown. Clegg is due to do a question and answer session with activists later.

READ MORE:

It’s A Trap! Labour Hope To Split Coalition With Mansion Tax Vote

The Labour Party has set a trap for the Lib Dems, they know it and may be willing to fall in.

Next week the House of Commons will vote on whether there should be a 'Mansion Tax' - a levy placed on homes worth over £2m designed to bring "fairness" to the tax system. It is a signature Lib Dem policy that the deputy prime minister has thus far been unable to convince George Osborne to include in his Budgets.

Always keen to cause mischief by exposing splits in the coalition, Ed Miliband and Ed Balls decided to borrow the policy and then use an Opposition Day debate in the Commons to put it to a, purely symbolic, vote on Tuesday. The scamps.

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Chris Leslie MP, Labour's shadow financial secretary to the Treasury, said the vote was "a chance for the Liberal Democrats to finally vote for something that was in their manifesto".

The full text of the motion is:

“That this House believes that a mansion tax on properties worth over £2million, to fund a tax cut for millions of people on middle and low incomes, should be part of a fair tax system and calls on the Government to bring forward proposals at the earliest opportunity”.

The vote is win-win for Labour. Should the Lib Dems decide to make a stand and support the motion, which after all was their policy in the first place, Miliband can claim to have split the coalition on a hugely symbolic issue.

But if the junior coalition partner decides to stick with the Tories and vote down the motion, it allows Labour to attack them for abandoning their principles.

It is not a problem lost on the Lib Dem leadership. Tim Farron, the party president, said in an interview with The House magazine on Thursday he had yet to make up his mind. "They’ve [Labour] been opportunistic, they’ve been mischievous. That doesn’t mean we shouldn’t consider it as an opportunity," he said.

Business secretary Vince Cable, who has vocally advocated for a Mansion Tax both inside cabinet and in public, has said he would not rule out voting with Labour.

And ahead of the Eastleigh by-election, Nick Clegg said David Cameron was "stuck in the past" in his opposition to a Mansion Tax.

In preparation for the Tuesday's Commons debate Balls will no doubt have a stack of Lib Dem quotes backing the tax piled high on his desk.

Of couse there is another problem for the Lib Dems. If they vote in favour of a symbolic motion calling for a Mansion Tax but fail to secure its actual introduction in the Budget - which Cameron has ruled out - Labour can easily ask what the point is of the Lib Dems being in government.

Also on HuffPost:

David Cameron Reprimanded For Making Misleading Economy Claim, Again

David Cameron has been rebuked for giving a misleading account of his government's economic record, after he claimed the Office for Budget Responsibility (OBR) has said austerity measures were not to blame for the lack of growth.

Yesterday the prime minister delivered a pre-Budget speech in which he insisted the government would not abandon its current economic plan. He lay the blame for the country's economic woes on global factors rather than the policies of the Treasury since 2010.

"As the independent Office for Budget Responsibility has made clear growth has been depressed by the financial crisis, the problems in the Eurozone and a 60 per cent rise in oil prices between August 2010 and April 2011," he said.

"They are absolutely clear that the deficit reduction plan is not responsible. In fact, quite the opposite."

However on Friday Robert Chote, the chairman of the OBR, has wrote to Cameron to complain this was misleading.

"For the avoidance of doubt, I think it is important to point out that every forecast published by the OBR since the June 2010 Budget has incorporated the widely held assumption that tax increases and spending cuts reduce economic growth in the short term, " he said.

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Chote said economic growth "has been much weaker since the end of 2010 than we and most other forecasters expected in June 2010" and that it was "clearly possible" that it was in part due to the government's austerity measures.

The OBR was set up by George Osborne in 2010 to provide independent economic growth forecasts to avoid the Treasury being accused of fixing the figures as had happened in the past.

It is not the first time the prime minister has been accused of making misleading claims about the government's economic record.

In January the UK Statistics Authority told him off for using a party political broadcast to claim that the government was "paying down Britain's debts" as the country's level of debt was actually rising.

A Downing Street spokesman said: "The OBR has today again highlighted external inflation shocks, the eurozone and financial sector difficulties as the reasons why their forecasts have come in lower than expected. That is precisely the point the prime minister was underlining."

Shadow chancellor Ed Balls said Cameron had "an obligation to be straight with people and not play fast and loose with the facts".

“This is another embarrassing rebuke for the Prime Minister, just 24 hours after his panicky and defensive speech on the economy. Deep spending cuts and tax rises have reduced economic growth, as the OBR says, and so it was deeply misleading for David Cameron to claim otherwise."

Related on HuffPost:

Mission Unaccomplished: Why the Invasion of Iraq Was the Single Worst Foreign Policy Decision...

I was there. And “there” was nowhere. And nowhere was the place to be if you wanted to see the signs of end times for the American Empire up close. It was the place to be if you wanted to see the madness -- and oh yes, it was madness -- not filtered through a complacent and sleepy media that made Washington’s war policy seem, if not sensible, at least sane and serious enough. I stood at Ground Zero of what was intended to be the new centerpiece for a Pax Americana in the Greater Middle East.

Not to put too fine a point on it, but the invasion of Iraq turned out to be a joke. Not for the Iraqis, of course, and not for American soldiers, and not the ha-ha sort of joke either. And here’s the saddest truth of all: on March 20th as we mark the 10th anniversary of the invasion from hell, we still don’t get it. In case you want to jump to the punch line, though, it’s this: by invading Iraq, the U.S. did more to destabilize the Middle East than we could possibly have imagined at the time. And we -- and so many others -- will pay the price for it for a long, long time.

The Madness of King George

It’s easy to forget just how normal the madness looked back then. By 2009, when I arrived in Iraq, we were already at the last-gasp moment when it came to salvaging something from what may yet be seen as the single worst foreign policy decision in American history. It was then that, as a State Department officer assigned to lead two provincial reconstruction teams in eastern Iraq, I first walked into the chicken processing plant in the middle of nowhere.

"By invading Iraq, the U.S. did more to destabilize the Middle East than we could possibly have imagined at the time. And we -- and so many others -- will pay the price for it for a long, long time."

By then, the U.S. “reconstruction” plan for that country was drowning in rivers of money foolishly spent. As the centerpiece for those American efforts -- at least after Plan A, that our invading troops would be greeted with flowers and sweets as liberators, crashed and burned -- we had managed to reconstruct nothing of significance. First conceived as a Marshall Plan for the New American Century, six long years later it had devolved into farce.

In my act of the play, the U.S. spent some $2.2 million dollars to build a huge facility in the boondocks. Ignoring the stark reality that Iraqis had raised and sold chickens locally for some 2,000 years, the U.S. decided to finance the construction of a central processing facility, have the Iraqis running the plant purchase local chickens, pluck them and slice them up with complex machinery brought in from Chicago, package the breasts and wings in plastic wrap, and then truck it all to local grocery stores. Perhaps it was the desert heat, but this made sense at the time, and the plan was supported by the Army, the State Department, and the White House.

Elegant in conception, at least to us, it failed to account for a few simple things, like a lack of regular electricity, or logistics systems to bring the chickens to and from the plant, or working capital, or... um... grocery stores. As a result, the gleaming $2.2 million plant processed no chickens. To use a few of the catchwords of that moment, it transformed nothing, empowered no one, stabilized and economically uplifted not a single Iraqi. It just sat there empty, dark, and unused in the middle of the desert. Like the chickens, we were plucked.

In keeping with the madness of the times, however, the simple fact that the plant failed to meet any of its real-world goals did not mean the project wasn't a success. In fact, the factory was a hit with the U.S. media. After all, for every propaganda-driven visit to the plant, my group stocked the place with hastily purchased chickens, geared up the machinery, and put on a dog-and-pony, er, chicken-and-rooster, show.

In the dark humor of that moment, we christened the place the Potemkin Chicken Factory. In between media and VIP visits, it sat in the dark, only to rise with the rooster’s cry each morning some camera crew came out for a visit. Our factory was thus considered a great success. Robert Ford, then at the Baghdad Embassy and now America's rugged shadow ambassador to Syria, said his visit was the best day out he enjoyed in Iraq. General Ray Odierno, then commanding all U.S. forces in Iraq, sent bloggers and camp followers to view the victory project. Some of the propaganda, which proclaimed that “teaching Iraqis methods to flourish on their own gives them the ability to provide their own stability without needing to rely on Americans,” is still online (including this charming image of American-Iraqi mentorship, a particular favorite of mine).

We weren’t stupid, mind you. In fact, we all felt smart and clever enough to learn to look the other way. The chicken plant was a funny story at first, a kind of insider’s joke you all think you know the punch line to. Hey, we wasted some money, but $2.2 million was a small amount in a war whose costs will someday be toted up in the trillions. Really, at the end of the day, what was the harm?

The harm was this: we wanted to leave Iraq (and Afghanistan) stable to advance American goals. We did so by spending our time and money on obviously pointless things, while most Iraqis lacked access to clean water, regular electricity, and medical or hospital care. Another State Department official in Iraq wrote in his weekly summary to me, “At our project ribbon-cuttings we are typically greeted now with a cursory ‘thank you,’ followed by a long list of crushing needs for essential services such as water and power.” How could we help stabilize Iraq when we acted like buffoons? As one Iraqi told me, “It is like I am standing naked in a room with a big hat on my head. Everyone comes in and helps put flowers and ribbons on my hat, but no one seems to notice that I am naked.”

By 2009, of course, it should all have been so obvious. We were no longer inside the neocon dream of unrivaled global superpowerdom, just mired in what happened to it. We were a chicken factory in the desert that no one wanted.

Time Travel to 2003

Anniversaries are times for reflection, in part because it’s often only with hindsight that we recognize the most significant moments in our lives. On the other hand, on anniversaries it’s often hard to remember what it was really like back when it all began. Amid the chaos of the Middle East today, it’s easy, for instance, to forget what things looked like as 2003 began. Afghanistan, it appeared, had been invaded and occupied quickly and cleanly, in a way the Soviets (the British, the ancient Greeks…) could never have dreamed of. Iran was frightened, seeing the mighty American military on its eastern border and soon to be on the western one as well, and was ready to deal. Syria was controlled by the stable thuggery of Bashar al-Assad and relations were so good that the U.S. was rendering terror suspects to his secret prisons for torture.

For decades to come, the U.S. will have a big enough military to ensure that our decline is slow, bloody, ugly, and reluctant, if inevitable. One day, however, even the drones will have to land.

Most of the rest of the Middle East was tucked in for a long sleep with dictators reliable enough to maintain stability. Libya was an exception, though predictions were that before too long Muammar Qaddafi would make some sort of deal. (He did.) All that was needed was a quick slash into Iraq to establish a permanent American military presence in the heart of Mesopotamia. Our future garrisons there could obviously oversee things, providing the necessary muscle to swat down any future destabilizing elements. It all made so much sense to the neocon visionaries of the early Bush years. The only thing that Washington couldn’t imagine was this: that the primary destabilizing element would be us.

Indeed, its mighty plan was disintegrating even as it was being dreamed up. In their lust for everything on no terms but their own, the Bush team missed a diplomatic opportunity with Iran that might have rendered today’s saber rattling unnecessary, even as Afghanistan fell apart and Iraq imploded. As part of the breakdown, desperate men, blindsided by history, turned up the volume on desperate measures: torture, secret gulags, rendition, drone killings, extra-constitutional actions at home. The sleaziest of deals were cut to try to salvage something, including ignoring the A.Q. Khan network of Pakistani nuclear proliferation in return for a cheesy Condi Rice-Qaddafi photo-op rapprochement in Libya.

Inside Iraq, the forces of Sunni-Shia sectarian conflict had been unleashed by the U.S. invasion. That, in turn, was creating the conditions for a proxy war between the U.S. and Iran, similar to the growing proxy war between Israel and Iran inside Lebanon (where another destabilizing event, the U.S.-sanctioned Israeli invasion of 2006, followed in hand). None of this has ever ended. Today, in fact, that proxy war has simply found a fresh host, Syria, with multiple powers using “humanitarian aid” to push and shove their Sunni and Shia avatars around.

Staggering neocon expectations, Iran emerged from the U.S. decade in Iraq economically more powerful, with sanctions-busting trade between the two neighbors now valued at some $5 billion a year and still growing. In that decade, the U.S. also managed to remove one of Iran’s strategic counterbalances, Saddam Hussein, replacing him with a government run by Nouri al-Malaki, who had once found asylum in Tehran.

Meanwhile, Turkey is now engaged in an open war with the Kurds of northern Iraq. Turkey is, of course, part of NATO, so imagine the U.S. government sitting by silently while Germany bombed Poland. To complete the circle, Iraq’s prime minister recently warned that a victory for Syria's rebels will spark sectarian wars in his own country and will create a new haven for al-Qaeda which would further destabilize the region.

Meanwhile, militarily burnt out, economically reeling from the wars in Iraq and Afghanistan, and lacking any moral standing in the Middle East post-Guantanamo and Abu Ghraib, the U.S. sat on its hands as the regional spark that came to be called the Arab Spring flickered out, to be replaced by yet more destabilization across the region. And even that hasn’t stopped Washington from pursuing the latest version of the (now-nameless) global war on terror into ever-newer regions in need of destabilization.

Having noted the ease with which a numbed American public patriotically looked the other way while our wars followed their particular paths to hell, our leaders no longer blink at the thought of sending American drones and special operations forces ever farther afield, most notably ever deeper into Africa, creating from the ashes of Iraq a frontier version of the state of perpetual war George Orwell once imagined for his dystopian novel 1984. And don’t doubt for a second that there is a direct path from the invasion of 2003 and that chicken plant to the dangerous and chaotic place that today passes for our American world.

Happy Anniversary

On this 10th anniversary of the Iraq War, Iraq itself remains, by any measure, a dangerous and unstable place. Even the usually sunny Department of State advises American travelers to Iraq that U.S. citizens “remain at risk for kidnapping... [as] numerous insurgent groups, including Al Qaida, remain active...” and notes that “State Department guidance to U.S. businesses in Iraq advises the use of Protective Security Details.”

In the bigger picture, the world is also a far more dangerous place than it was in 2003. Indeed, for the State Department, which sent me to Iraq to witness the follies of empire, the world has become ever more daunting. In 2003, at that infamous “mission accomplished” moment, only Afghanistan was on the list of overseas embassies that were considered “extreme danger posts.” Soon enough, however, Iraq and Pakistan were added. Today, Yemen and Libya, once boring but secure outposts for State’s officials, now fall into the same category.

Other places once considered safe for diplomats and their families such as Syria and Mali have been evacuated and have no American diplomatic presence at all. Even sleepy Tunisia, once calm enough that the State Department had its Arabic language school there, is now on reduced staff with no diplomatic family members resident. Egypt teeters.

The Iranian leadership watched carefully as the American imperial version of Iraq collapsed, concluded that Washington was a paper tiger, backed away from initial offers to talk over contested issues, and instead (at least for a while) doubled-down on achieving nuclear breakout capacity, aided by the past work of that same A.Q. Khan network. North Korea, another A.Q. Khan beneficiary, followed the same pivot ever farther from Washington, while it became a genuine nuclear power. Its neighbor China pursued its own path of economic dominance, while helping to “pay” for the Iraq War by becoming the number-one holder of U.S. debt among foreign governments. It now owns more than 21% of the U.S. debt held overseas.

And don’t put away the joke book just yet. Subbing as apologist-in-chief for an absent George W. Bush and the top officials of his administration on this 10th anniversary, former British Prime Minister Tony Blair recently reminded us that there is more on the horizon. Conceding that he had “long since given up trying to persuade people Iraq was the right decision,” Blair added that new crises are looming. “You’ve got one in Syria right now, you’ve got one in Iran to come,” he said. “We are in the middle of this struggle, it is going to take a generation, it is going to be very arduous and difficult. But I think we are making a mistake, a profound error, if we think we can stay out of that struggle.”

Think of his comment as a warning. Having somehow turned much of Islam into a foe, Washington has essentially assured itself of never-ending crises that it stands no chance whatsoever of winning. In this sense, Iraq was not an aberration, but the historic zenith and nadir for a way of thinking that is only now slowing waning. For decades to come, the U.S. will have a big enough military to ensure that our decline is slow, bloody, ugly, and reluctant, if inevitable. One day, however, even the drones will have to land.

And so, happy 10th anniversary, Iraq War! A decade after the invasion, a chaotic and unstable Middle East is the unfinished legacy of our invasion. I guess the joke is on us after all, though no one is laughing.

© 2013 Peter Van Buren

Peter Van Buren

Peter Van Buren spent a year in Iraq as a State Department Foreign Service Officer serving as Team Leader for two Provincial Reconstruction Teams (PRTs). Now in Washington, he writes about Iraq and the Middle East at his blog, We Meant Well. His new book is We Meant Well: How I Helped Lose the Battle for the Hearts and Minds of the Iraqi People (The American Empire Project, Metropolitan Books).

Quantitative Easing (QE) for the People: Comedian Grillo’s Populist Plan for Italy

Beppe-Grillo-e1361568756286

Default on the public debt, nationalization of the banks, and a citizen dividend could actually save the Italian economy.

Comedian Beppe Grillo was surprised himself when his Five Star Movement got 8.7 million votes in the Italian general election of February 24-25th.  His movement is now the biggest single party in the chamber of deputies, says The Guardian, which makes him “a kingmaker in a hung parliament.”

Grillo’s is the party of “no.” In a candidacy based on satire, he organized an annual “V‑Day Celebration,” the “V” standing for vaffanculo (“f—k off”).  He rejects the status quo—all the existing parties and their monopoly control of politics, jobs, and financing—and seeks a referendum on all international treaties, including NATO membership, free trade agreements and the Euro.

“If we get into parliament,” says Grillo, “we would bring the old system down, not because we would enjoy doing so but because the system is rotten.” Critics fear, and supporters hope, that if his party succeeds, it could break the Euro system.

But being against everything, says Mike Whitney in Counterpunch, is not a platform:

To govern, one needs ideas and a strategy for implementing those ideas. Grillo’s team has neither. They are defined more in terms of the things they are against than things they are for. It’s fine to want to “throw the bums out”, but that won’t put people back to work or boost growth or end the slump. Without a coherent plan to govern, M5S could end up in the political trash heap, along with their right-wing predecessors, the Tea Party.

Steve Colatrella, who lives in Italy and also has an article in Counterpunch on the Grillo phenomenon, has a different take on the surprise win. He says Grillo does have a platform of positive proposals. Besides rejecting all the existing parties and treaties, Grillo’s program includes the following:

  • unilateral default on the public debt;
  • nationalization of the banks; and
  • a guaranteed “citizenship” income of 1000 euros a month.

It is a platform that could actually work. Austerity has been tested for a decade in the Eurozone and has failed, while the proposals in Grillo’s plan have been tested in other countries and have succeeded.

Default: Lessons from Iceland and South America

Default on the public debt has been pulled off quite successfully in Iceland, Argentina, Ecuador, and Russia, among other countries.  Whitney cites a clip from Grillo’s blog suggesting that this is also the way out for Italy:

The public debt has not been growing in recent years because of too much expenditure . . . Between 1980 and 2011, spending was lower than the tax revenue by 484 billion (thus we have been really virtuous) but the interest payments (on the debt of 2,141 billion) that we had to pay in that period have made us poor. In the last 20 years, GDP has been growing slowly, while the debt has exploded.

. . . [S]peculators . . . are contributing to price falls so as to bring about higher interest rates. It’s the usurer’s technique. Thus the debt becomes an opportunity to maximize earnings in the market at the expense of the nation. . . . If financial powerbrokers use speculation to increase their earnings and force governments to pay the highest possible interest rates, the result is recession for the State that’s in debt as well as their loss of sovereignty.

. . . There are alternatives. These are being put into effect by some countries in South America and by Iceland. . . . The risk is that we are going to reach default in any case with the devaluation of the debt, and the Nation impoverished and on its knees. [Beppe Grillo blog]

Bank Nationalization:  China Shows What Can Be Done

Grillo’s second proposal, nationalizing the banks, has also been tested and proven elsewhere, most notably in China. In an April 2012 article in The American Conservative titled “China’s Rise, America’s Fall,” Ron Unz observes:

During the three decades to 2010, China achieved perhaps the most rapid sustained rate of economic development in the history of the human species, with its real economy growing almost 40-fold between 1978 and 2010.  In 1978, America’s economy was 15 times larger, but according to most international estimates, China is now set to surpass America’s total economic output within just another few years.

According to Eamonn Fingleton in In The Jaws of the Dragon (2009), the fountain that feeds this tide is a strong public banking sector:

Capitalism’s triumph in China has been proclaimed in countless books in recent years. . . .  But . . . the higher reaches of its economy remain comprehensively controlled in a way that is the antithesis of everything we associate with Western capitalism.  The key to this control is the Chinese banking system . . . [which is] not only state-owned but, as in other East Asian miracle economies, functions overtly as a major tool of the central government’s industrial policy.

Guaranteed Basic Income—Not Just Welfare

Grillo’s third proposal, a guaranteed basic income, is not just an off-the-wall, utopian idea either. A national dividend has been urged by the “Social Credit” school of monetary reform for nearly a century, and the U.S. Basic Income Guarantee Network has held a dozen annual conferences.  They feel that a guaranteed basic income is the key to keeping modern, highly productive economies humming.

In Europe, the proposal is being pursued not just by Grillo’s southern European party but by the sober Swiss of the north.  An initiative to establish a new federal law for an unconditional basic income was formally introduced in Switzerland in April 2012. The idea consists of giving to all citizens a monthly income that is neither means-tested nor work-related. Under the Swiss referendum system of direct democracy, if the initiative gathers more than 100,000 signatures before October 2013, the Federal Assembly is required to look into it.

Colatrella does not say where Grillo plans to get the money for Italy’s guaranteed basic income, but in Social Credit theory, it would simply be issued outright by the government; and Grillo, who has an accounting background, evidently agrees with that approach to funding.  He said in a presentation available on YouTube:

The Bank of Italy a private join-stock company, ownership comprises 10 insurance companies, 10 foundations, and 10 banks, that are all joint-stock companies . . .  They issue the money out of thin air and lend it to us.  It’s the State who is supposed to issue it.  We need money to work.  The State should say: “There’s scarcity of money?  I’ll issue some and put it into circulation.  Money is plentiful?  I’ll withdraw and burn some of it.” . . . Money is needed to keep prices stable and to let us work.

The Key to a Thriving Economy

Major C.H. Douglas, the thought leader of the Social Credit movement, argued that the economy routinely produces more goods and services than consumers have the money to purchase, because workers collectively do not get paid enough to cover the cost of the things they make.  This is true because of external costs such as interest paid to banks, and because some portion of the national income is stashed in savings accounts, investment accounts, and under mattresses rather than spent on the GDP.

To fill what Social Crediters call “the gap,” so that “demand” rises to meet “supply,” additional money needs to be gotten into the circulating money supply. Douglas recommended doing it with a national dividend for everyone, an entitlement by “grace” rather than “works,” something that was necessary just to raise purchasing power enough to cover the products on the market.

In the 1930s and 1940s, critics of Social Credit called it “funny money” and said it would merely inflate the money supply. The critics prevailed, and the Social Credit solution has not had much chance to be tested. But the possibilities were demonstrated in New Zealand during the Great Depression, when a state housing project was funded with credit issued by the Reserve Bank of New Zealand, the nationalized central bank. According to New Zealand commentator Kerry Bolton, this one measure was sufficient to resolve 75% of unemployment in the midst of the Great Depression.

Bolton notes that this was achieved without causing inflation.  When new money is used to create new goods and services, supply rises along with demand and prices remain stable; but the “demand” has to come first. No business owner will invest in more capacity or production without first seeing a demand. No demand, no new jobs and no economic expansion.

The Need to Restore Economic Sovereignty

The money for a guaranteed basic income could be created by a nationalized central bank in the same way that the Reserve Bank of New Zealand did it, and that central bank “quantitative easing” (QE) is created out of nothing on a computer screen today.  The problem with today’s QE is that it has not gotten money into the pockets of consumers. The money has gotten—and can get—no further than the reserve accounts of banks, as explained here and hereA dividend paid directly to consumers would be “quantitative easing” for the people.

A basic income guarantee paid for with central bank credit would not be “welfare” but would eliminate the need for welfare.  It would be social security for all, replacing social security payments, unemployment insurance, and welfare taxes.  It could also replace much of the consumer debt that is choking the private economy, growing exponentially at usurious compound interest rates.

As Grillo points out, it is not the cost of government but the cost of money itself that has bankrupted Italy. If the country wishes to free itself from the shackles of debt and restore the prosperity it once had, it will need to take back its monetary sovereignty and issue its own money, either directly or through its own nationalized central bank. If Grillo’s party comes to power and follows through with his platform, those shackles on the Italian economy might actually be released.

Ellen Brown is an attorney and the author of eleven books, including Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free. Her websites are webofdebt.com and ellenbrown.com. She is also chairman of the Public Banking Institute. Details of the June 2013 Public Banking Institute conference are here.

The Legacy of Hugo Chavez: The Revolution Within the Revolution Will Continue

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 The death of Hugo Chávez is a great loss to the people of Venezuela who have been lifted out of poverty and have created a deep participatory democracy. Chavez was a leader who, in unity with the people, was able to free Venezuela from the grips of US Empire, bring dignity to the poor and working class, and was central to a Latin American revolt against US domination.

Chávez grew up a campesino, a peasant, raised in poverty. His parents were teachers, his grandmother an Indian whom he credits with teaching him solidarity with the people. During his military service, he learned about Simon Bolivar, who freed Latin America from Spanish Empire.  This gradually led to the modern Bolivarian Revolution he led with the people. The Chávez transformation was built on many years of a mass political movement that continued after his election, indeed saved him when a 2002 coup briefly removed him from office. The reality is Venezuela’s 21st Century democracy is bigger than Chávez.  This will become more evident now that he is gone.

The Lies They Tell Us

If Americans knew the truth about the growth of real democracy in Venezuela and other Latin American countries, they would demand economic democracy and participatory government, which together would threaten the power of concentrated wealth. Real democracy creates a huge challenge to the oligarchs and their neoliberal agenda because it is driven by human needs, not corporate greed. That is why major media in the US, which are owned by six corporations, aggressively misinform the public about Chávez and the Bolivarian Revolution.

Mark Weisbrot of the Center for Economic and Policy Research writes:

The Western media reporting has been effective. It has convinced most people outside of Venezuela that the country is run by some kind of dictatorship that has ruined it.

In fact, just the opposite is true. Venezuela, since the election of Chávez, has become one of the most democratic nations on Earth. Its wealth is increasing and being widely shared. But Venezuela has been made so toxic that even the more liberal media outlets propagate distortions to avoid being criticized as too leftist.

We spoke with Mike Fox, who went to Venezuela in 2006 to see for himself what was happening. Fox spent years documenting the rise of participatory democracy in Venezuela and Brazil. He found a grassroots movement creating the economy and government they wanted, often pushing Chávez further than he wanted to go.

They call it the “revolution within the revolution.” Venezuelan democracy and economic transformation are bigger than Chávez. Chávez opened a door to achieve the people’s goals: literacy programs in the barrios, more people attending college, universal access to health care, as well as worker-owned businesses and community councils where people make decisions for themselves. Change came through decades of struggle leading to the election of Chávez in 1998, a new constitution and ongoing work to make that constitution a reality.

Challenging American Empire

The subject of Venezuela is taboo because it has been the most successful country to repel the neoliberal assault waged by the US on Latin America. This assault included Operation Condor, launched in 1976, in which the US provided resources and assistance to bring friendly dictators who supported neoliberal policies to power throughout Latin America. These policies involved privatizing national resources and selling them to foreign corporations, de-funding and privatizing public programs such as education and health care, deregulating and reducing trade barriers.

In addition to intense political repression under these dictators between the 1960s and 1980s, which resulted in imprisonment, murder and disappearances of tens of thousands throughout Latin America, neoliberal policies led to increased wealth inequality, greater hardship for the poor and working class, as well as a decline in economic growth.

Neoliberalism in Venezuela arrived through a different path, not through a dictator. Although most of its 20th century was spent under authoritarian rule, Venezuela has had a long history of pro-democracy activism. The last dictator, Marcos Jimenez Perez, was ousted from power in 1958. After that, Venezuelans gained the right to elect their government, but they existed in a state of pseudo-democracy, much like the US currently, in which the wealthy ruled through a managed democracy that ensured the wealthy benefited most from the economy.

As it did in other parts of the world, the US pushed its neoliberal agenda on Venezuela through the International Monetary Fund (IMF) and World Bank. These institutions required Structural Adjustment Programs (SAP) as terms for development loans. As John Perkins wrote in Confessions of an Economic Hit Man, great pressure was placed on governments to take out loans for development projects. The money was loaned by the US, but went directly to US corporations who were responsible for the projects, many of which failed, leaving nations in debt and not better off. Then the debt was used as leverage to control the government’s policies so they further favored US interests. Anun Shah explains the role of the IMF and World Bank in more detail in Structural Adjustment – a Major Cause of Poverty.

Neoliberalism Leads to the Rise of Chávez

A turning point in the Venezuelan struggle for real democracy occurred in 1989. President Carlos Andres Perez ran on a platform opposing neoliberalism and promised to reform the market during his second term. But following his re-election in 1988, he reversed himself and continued to implement the “Washington Consensus” of neoliberal policies – privatization and cuts to social services. The last straw came when he ended subsidies for oil. The price of gasoline doubled and public transportation prices rose steeply.

Protests erupted in the towns surrounding the capitol, Caracas, and quickly spread into the city itself. President Perez responded by revoking multiple constitutional rights to protest and sending in security forces who killed an estimated 3,000 people, most of them in the barrios. This became known as the “Caracazo” (“the Caracas smash”) and demonstrated that the president stood with the oligarchs, not with the people.

Under President Perez, conditions continued to deteriorate for all but the wealthy in Venezuela. So people organized in their communities and with Lieutenant Colonel Hugo Chávez attempted a civilian-led coup in 1992. Chávez was jailed, and so the people organized for his release. Perez was impeached for embezzlement of 250 million bolivars and the next president, Rafael Caldera, promised to release Chávez when he was elected. Chávez was freed in 1994. He then traveled throughout the country to meet with people in their communities and organizers turned their attention to building a political movement.

Chávez ran for president in 1998 on a platform that promised to hold a constituent assembly to rewrite the constitution saying:

I swear before my people that upon this moribund constitution I will drive forth the necessary democratic transformations so that the new republic will have a Magna Carta befitting these new times.

Against the odds, Chávez won the election and became president in 1999.

While his first term was cautious and center-left, including a visit by Chávez to the NY Stock Exchange to show support for capitalism and encourage foreign investment, he kept his promise. Many groups participated in the formation of the new constitution, which was gender-neutral and included new rights for women and for the indigenous, and created a government with five branches adding a people’s and electoral branches. The new constitution was voted into place by a 70 percent majority within the year. Chávez also began to increase funding for the poor and expanded and transformed education.

Since then, Chávez has been re-elected twice. He was removed from power briefly in 2002, jailed and replaced by Pedro Carmona, the head of what is equivalent to the Chamber of Commerce. Fox commented that the media was complicit in the coup by blacking it out and putting out false information. Carmona quickly moved to revoke the constitution and disband the legislature. When the people became aware of what was happening, they rapidly mobilized and surrounded the capitol in Caracas. Chávez was reinstated in less than 48 hours.

One reason the Chávez election is called a Bolivarian Revolution is because Simon Bolivar was a military political leader who freed much of Latin America from the Spanish Empire in the early 1800s. The election of Chávez, the new constitution and the people overcoming the coup set Venezuela on the path to free itself from the US empire. These changes emboldened the transformation to sovereignty, economic democracy and participatory government.

In fact, Venezuela paid its debts to the IMF in full five years ahead of schedule and in 2007 separated from the IMF and World Bank, thus severing the tethers of the Washington Consensus. Instead, Venezuela led the way to create the Bank of the South to provide funds for projects throughout Latin America and allow other countries to free themselves from the chains of the IMF and World Bank too.

The Rise of Real Democracy

The struggle for democracy brought an understanding by the people that change only comes if they create it. The pre- Chávez era is seen as a pseudo Democracy, managed for the benefit of the oligarchs. The people viewed Chávez as a door that was opened for them to create transformational change. He was able to pass laws that aided them in their work for real democracy and better conditions. And Chávez knew that if the people did not stand with him, the oligarchs could remove him from power as they did for two days in 2002.

With this new understanding and the constitution as a tool, Chávez and the people have continued to progress in the work to rebuild Venezuela based on participatory democracy and freedom from US interference. Chávez refers to the new system as “21st century socialism.” It is very much an incomplete work in progress, but already there is a measurable difference.

Mark Weisbrot of CEPR points out that real GDP per capita in Venezuela expanded by 24 percent since 2004. In the 20 years prior to Chávez, real GDP per person actually fell. Venezuela has low foreign public debt, about 28 percent of GDP, and the interest on it is only 2 percent of GDP. Weisbrot writes:

From 2004-2011, extreme poverty was reduced by about two-thirds. Poverty was reduced by about one-half, and this measures only cash income. It does not count the access to health care that millions now have, or the doubling of college enrollment – with free tuition for many. Access to public pensions tripled. Unemployment is half of what it was when Chávez took office.

Venezuela has reduced unemployment from 20 percent to 7 percent.

As George Galloway wrote upon Chávez’s death:

Under Chávez’ revolution the oil wealth was distributed in ever rising wages and above all in ambitious social engineering. He built the fifth largest student body in the world, creating scores of new universities. More than 90% of Venezuelans ate three meals a day for the first time in the country’s history. Quality social housing for the masses became the norm with the pledge that by the end of the presidential term, now cut short, all Venezuelans would live in a dignified house.

Venezuela is making rapid progress on other measures too. It has a high human development index and a low and shrinking index of inequality. Wealth inequality in Venezuela is half of what it is in the United States. It is rated “the fifth-happiest nation in the world” by Gallup. And Pepe Escobar writes that:

No less than 22 public universities were built in the past 10 years. The number of teachers went from 65,000 to 350,000. Illiteracy has been eradicated. There is an ongoing agrarian reform.

Venezuela has undertaken significant steps to build food security through land reform and government assistance. New homes are being built, health clinics are opening in under-served areas and cooperatives for agriculture and business are growing.

Venezuelans are very happy with their democracy. On average, they gave their own democracy a score of seven out of ten while the Latin American average was 5.8. Meanwhile, 57 percent of Venezuelans reported being happy with their democracy compared to an average for Latin American countries of 38 percent, according to a poll conducted by Latinobarometro. While 81 percent voted in the last Venezuelan election, only 57.5 percent voted in the recent US election.

Chávez won that election handily as he has all of the elections he has run in since 1999. As Galloway describes him, Chávez was “the most elected leader in the modern era.” He won his last election with 55 percent of the vote but was never inaugurated due to his illness.

Beyond Voting: The Deepening of Democracy in Venezuela

This is not to say that the process has been easy or smooth. The new constitution and laws passed by Chávez have provided tools, but the government and media still contain those who are allied with the oligarchy and who resist change. People have had to struggle to see that what is written on paper is made into a reality. For example, Venezuelans now have the right to reclaim urban land that is fallow and use it for food and living. Many attempts have been made to occupy unused land and some have been met by hostility from the community or actual repression from the police. In other cases, attempts to build new universities have been held back by the bureaucratic process.

It takes time to build a new democratic structure from the bottom up. And it takes time to transition from a capitalist culture to one based on solidarity and participation. In “Venezuela Speaks,” one activist, Iraida Morocoima, says “Capitalism left us with so many vices that I think our greatest struggle is against these bad habits that have oppressed us.” She goes on to describe a necessary culture shift as, “We must understand that we are equal, while at the same time we are different, but with the same rights.”

Chávez passed a law in 2006 that united various committees in poor barrios into community councils that qualify for state funds for local projects. In the city, community councils are composed of 200 to 400 families. The councils elect spokespeople and other positions such as executive, financial and “social control” committees. The council members vote on proposals in a general assembly and work with facilitators in the government to carry through on decisions. In this way, priorities are set by the community and funds go directly to those who can carry out the project such as building a road or school. There are currently more than 20,000 community councils in Venezuela creating a grassroots base for participatory government.

A long-term goal is to form regional councils from the community councils and ultimately create a national council. Some community councils already have joined as communes, a group of several councils, which then have the capacity for greater research and to receive greater funds for large projects.

The movement to place greater decision-making capacity and control of local funds in the hands of communities is happening throughout Latin America and the world. It is called participatory budgeting and it began in Porto Alegre, Brazil in 1989 and has grown so that as many as 50,000 people now participate each year to decide as much as 20 percent of the city budget. There are more than 1,500 participatory budgets around the world in Latin America, North America, Asia, Africa, and Europe. Fox produced a documentary, Beyond Elections: Redefining Democracy in the Americas, which explains participatory budgeting in greater detail.

The Unfinished Work of Hugo Chávez Continues

The movements that brought him to power and kept him in power have been strengthened by Hugo Chávez. Now the “revolution within the revolution” will be tested.  In 30 days there will be an election and former vice president, now interim president, Nicolas Maduro will likely challenge the conservative candidate Chávez defeated.

If the United States and the oligarchs think the death of Chávez means the end of the Bolivarian Revolution he led, they are in for a disappointment.  This revolution, which is not limited to Venezuela, is likely to show to itself and the world that it is deep and strong. The people-powered transformation with which Chávez was in solidarity will continue.

CIA and FBI Had Planned to Assassinate Hugo Chávez

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Article originally published by Global Research in 2005, which points to previous attempts to assassinate President Hugo Chavez

This empire, unlike any other in the history of the world, has been built primarily through economic manipulation.  “How do we know that the CIA was behind the coup that overthrew Hugo Chávez?” asked historian William Blum in 2002.

“Same way we know that the sun will rise tomorrow morning. That’s what it’s always done and there’s no reason to think that tomorrow morning will be any different.”

Now we have a bit more evidence the CIA and the FBI connived with reactionary elements to not only briefly overthrow Chávez, abolish the constitution and the National Assembly, but later assassinate the Venezuelan State Prosecutor, Danilo Anderson. He was killed by a car bomb in Caracas on November 18, 2004, while investigating those who were behind the coup. Giovani Jose Vasquez De Armas, a member of Colombia’s right wing paramilitary group called the United Self-Defense Forces of Colombia, claims he was in charge of logistics for the plot to kill Danilo Anderson. Vasquez De Armas told the Attorney General’s office that those planning the killing, “all discussed the plan with the help of the FBI and CIA.”

And the sun will rise tomorrow.

“According to the Attorney General, Vasquez De Armas said that during a meeting in Darien, Panama, on September 4 and 6, 2003, an FBI Officer called ‘Pesquera’ and a CIA agent called ‘Morrinson,’ attended a meeting along with two of the plot’s alleged organizers, Patricia Poleo and Salvador Romani, as well as two of those who actually did the killing, Rolando and Otoniel Guevera,” writes Alessandro Parma. “An official from the Attorney General’s office, speaking on behalf of Vasquez De Armas, said that in Panama the FBI and the plotting Venezuelans agreed, ‘to take out Chavez and the Government.’ He said, ‘the meeting’s final objective was to kill President Chavez and the Attorney General.’”

None of this is new or particularly revelatory.  Steve Kangas writes:

“CIA operations follow the same recurring script. First, American business interests abroad are threatened by a popular or democratically elected leader. The people support their leader because he intends to conduct land reform, strengthen unions, redistribute wealth, nationalize foreign-owned industry, and regulate business to protect workers, consumers and the environment. So, on behalf of American business, and often with their help, the CIA mobilizes the opposition. First it identifies right-wing groups within the country (usually the military), and offers them a deal: “We’ll put you in power if you maintain a favorable business climate for us.” The Agency then hires, trains and works with them to overthrow the existing government (usually a democracy). It uses every trick in the book: propaganda, stuffed ballot boxes, purchased elections, extortion, blackmail, sexual intrigue, false stories about opponents in the local media, infiltration and disruption of opposing political parties, kidnapping, beating, torture, intimidation, economic sabotage, death squads and even assassination. These efforts culminate in a military coup, which installs a right-wing dictator. The CIA trains the dictator’s security apparatus to crack down on the traditional enemies of big business, using interrogation, torture and murder. The victims are said to be “communists,” but almost always they are just peasants, liberals, moderates, labor union leaders, political opponents and advocates of free speech and democracy. Widespread human rights abuses follow.”

Examples include the coup to overthrow the democratically elected leader Mohammed Mossadegh in Iran, the ouster of democratically elected Jacob Arbenz in Guatemala, one coup per year (between 1957-1973) in Laos, the installation of the murderous “Papa Doc” Duvalier in Haiti, the assassination of Rafael Trujillo in the Dominican Republic, the overthrow of Jose Velasco in Ecuador, the assassination of the democratically elected Patrice Lumumba in the Congo (later Zaire), the overthrow of the democratically elected Juan Bosch in the Dominican Republic, the overthrow of the democratically elected government of Joao Goulart in Brazil, the overthrow of the democratically elected Sukarno government in Indonesia, a military coup in Greece designed to install the “reign of the colonels” (when the Greek ambassador complained about CIA plans for Cypress, Johnson told him: “F— your parliament and your constitution”), the overthrow of the popular Prince Sahounek in Cambodia, the overthrow of Juan Torres in Bolivia, the overthrow and assassination of Salvador Allende in Chile, the assassination of archbishop Oscar Romero in El Salvador, and dozens of other incidents rarely if ever taught in American school history lessons.

As John Perkins (author of Confessions of an Economic Hit Man), as a former respected member of the international banking community and National Security Agency economist, told Amy Goodman: “Basically what we were trained to do and what our job is to do is to build up the American empire. To bring—to create situations where as many resources as possible flow into this country, to our corporations, and our government…. This empire, unlike any other in the history of the world, has been built primarily through economic manipulation, through cheating, through fraud, through seducing people into our way of life, through the economic hit men.” Perkins’ job was “deal-making”:

It was giving loans to other countries, huge loans, much bigger than they could possibly repay. One of the conditions of the loan—let’s say a $1 billion to a country like Indonesia or Ecuador—and this country would then have to give ninety percent of that loan back to a U.S. company, or U.S. companies, to build the infrastructure—a Halliburton or a Bechtel. These were big ones. Those companies would then go in and build an electrical system or ports or highways, and these would basically serve just a few of the very wealthiest families in those countries. The poor people in those countries would be stuck ultimately with this amazing debt that they couldn’t possibly repay. A country today like Ecuador owes over fifty percent of its national budget just to pay down its debt. And it really can’t do it. So, we literally have them over a barrel. So, when we want more oil, we go to Ecuador and say, “Look, you’re not able to repay your debts, therefore give our oil companies your Amazon rain forest, which are filled with oil.” And today we’re going in and destroying Amazonian rain forests, forcing Ecuador to give them to us because they’ve accumulated all this debt. So we make this big loan, most of it comes back to the United States, the country is left with the debt plus lots of interest, and they basically become our servants, our slaves. It’s an empire. There’s no two ways about it. It’s a huge empire. It’s been extremely successful.

Most of the money for these loans, according to Perkins, is provided by the World Bank and the International Monetary Fund, the two premier neolib loan sharking operations (it is important to note that the Straussian neocon, Paul Wolfowitz, is now president of the World Bank, thus demonstrating how closely related the neocons and traditional neolibs are).

If the loan sharks are unable to steal natural resources (oil, minerals, rainforests, water) as a condition of repaying this immense debt, “the next step is what we call the jackals.”

Jackals are CIA-sanctioned people that come in and try to foment a coup or revolution. If that doesn’t work, they perform assassinations—or try to. In the case of Iraq, they weren’t able to get through to Saddam Hussein… His bodyguards were too good. He had doubles. They couldn’t get through to him. So the third line of defense, if the economic hit men and the jackals fail, the next line of defense is our young men and women, who are sent in to die and kill, which is what we’ve obviously done in Iraq.

Hugo Chávez is now between the assassination point of this neolib plan and invasion, when “our young men and women” will be “sent in to die and kill” Venezuelan peasants the same way they are now killing poor Iraqis. Of course, it remains to be seen if Bush can actually invade Venezuela—the neocon roster is teeming with targets, from Syria to Iran—and so we can expect the Bushcons and their jackals to continue efforts to assassinate Chávez, as Giovani Jose Vasquez De Armas reveals the CIA and the FBI are attempting to do, with little success. One notable failure by the jackals is Fidel Castro in Cuba, who experienced numerous assassination attempts and CIA counterinsurgency specialist Edward Lansdale’s Operation Mongoose (consisting of sabotage and political warfare), also known as the ‘’Cuba Project.’‘

As Blum notes, we know all of this is happening, same as we know the sun will come up tomorrow.

Kurt Nimmo is a photographer, multimedia artist and writer. You can visit his blog “Another Day in the Empire” at www.kurtnimmo.com/blog.

It’s Time to Tax Financial Transactions

On Friday at midnight, the sequester kicked in, triggering $85 billion in deep, dumb budget cuts that sent “nonessential personnel”— such as air traffic controllers — packing.

Not to worry, though: Wall Street’s day was pretty much like any other. Billions of dollars in profits were made off of trillions of dollars in financial transactions. And the vast majority of those transactions were conducted tax-free.

Moral of the story: What else is new?

Crash the economy? Free pass. Prevent planes from crashing? Pink slip.

We don’t need a team of policymakers to tell us this isn’t good policy, or that it needs changing. But on Thursday, we heard policymakers propose exactly that: a change.

Sens. Tom Harkin (D-Iowa) and Sheldon Whitehouse (D-R.I.), along with Rep. Pete DeFazio (D-Ore.), unveiled a bill that would place a light tax on all financial transactions — three pennies on every $100 traded.

The good news is that it’s a tax so small it could be mistaken for a rounding error. It’s so small, Wall Street could easily afford it and the average E-Trade investor would barely notice it. If this were a tax on coffee, it would cost you $1 for every 800 cups you bought at Starbucks.

But there’s even better news. This insignificant tax raises a significant amount of revenue — $352 billion over the next 10 years, or enough to refund about one-third of what the sequester will slash from the federal budget. It’s also enough to put many air traffic controllers back to work, Head Start teachers back in preschools, and crucial government programs back in business.

As the saying goes, “Nothing can resist an idea whose time has come.”

And after years of Wall Street excess, and at a moment when new revenues are badly needed, the time has surely come for a financial transaction tax .

Indeed, support for such a tax has never been stronger — or broader. Many on the progressive left have long favored it . Now, though, another group of bleeding-heart liberals, otherwise known as the American people, is on board. When it comes to cutting the deficit, 6 in 10 Americans prefer taxing the financial industry to cutting social spending.

But this idea doesn’t just have the masses on its side; it has the elites, and even some Republican elites. Once championed by the granddaddy of liberal economics, John Maynard Keynes, the banner of a financial transactions tax has been picked up by conservative economists including Sheila Bair, George W. Bush’s appointee to the Federal Deposit Insurance Corp.

After all, the tax isn’t just a good revenue raiser. It’s smart regulatory reform.

The high-frequency traders that now dominate our markets would be hardest-hit by the tax. A top economist recently concluded that their lightning speed, algorithm-driven trading drains profits from traditional investors. And analysts fear that such mass trading strategies could lead to disaster if markets behave unexpectedly.

The new tax would discourage these kinds of trades, which would be a good thing.

Europe, at least, seems to agree. Eleven nations, led by the conservative German government, are on track to start collecting the tax by January 2014. Expected revenues: $50 billion per year.

Of course, we’re talking about a tax on Wall Street.

It’s no wonder that, over the past few weeks, K Street appears to have upped the financial sector’s retainer. Their lobbying effort against the tax — here and in Europe — is in full swing.

Even the Obama administration has been convinced to come out against the tax in the United States. And they’re pressuring Europeans to water down their version by insulating American banks. What’s the logic driving this opposition?

Some have argued that, historically, these taxes have been ineffective because of widespread evasion. But they’re cherry-picking a few badly designed examples, such as Sweden’s lemon of a tax from nearly 30 years ago. This is like saying cars don’t work because you bought a Datsun in the ’70s.

Many countries have implemented such taxes effectively. The United Kingdom, for example, manages to raise more than $5 billion per year on a 0.5 percent tax on stock trades alone.

Another common argument is that the tax will be passed on to mom-and-pop investors. The just-introduced U.S. legislation addresses these concerns by providing tax credits for contributions to typical middle-class investment accounts, including 401(k)s. Investment funds would still be taxed on their trades, but this could encourage longer-term productive investment instead of the short-term speculation that adds little to no value to the real economy.

If the Obama administration is serious about fair taxation and a smart approach to the deficit, it should change its position. Rather than trying to derail Europe’s efforts, it should cooperate with Europe to ensure that the tax there is effectively enforced. And the administration should build support in Congress, including among Republicans.

Yes, we’ve all heard House Speaker John Boehner’s line that the debate over revenue raising is over. We also remember former President George H.W. Bush’s line, “Read my lips, no new taxes,” and how quickly his lips starting saying something else.

For tea partyers, wouldn’t a tax on Wall Street, the beneficiaries of the bailout they so reviled, be less objectionable than most other revenue options?

Sequestration is a septic wound, self-inflicted by lawmakers who can’t agree on anything. Here, at last, we have a smart idea with widespread support — Americans and Europeans, populists and economists, progressives and conservatives.

After Friday’s dumb budget cuts, a little smart policymaking would be nice for a change.

© 2013 The Washington Post

Katrina vanden Heuvel

Katrina vanden Heuvel is editor of The Nation.

The Privatization of War: Mercenaries, Private Military and Security Companies (PMSC)

The Privatization of War: Mercenaries, Private Military and Security Companies (PMSC)

Private military and security companies (PMSC) are the modern reincarnation of a long lineage of private providers of physical force: corsairs, privateers and mercenaries. Mercenaries, which had practically disappeared during the XIXth and XXth centuries, reappeared in the 1960’s during the decolonization period operating mainly in Africa and Asia. Under the United Nations a convention was adopted which outlaws and criminalizes their activities. Additional Protocol I of the Geneva Conventions also contains a definition of mercenary.

These non-state entities of the XXIst century operate in extremely blurred situations where the frontiers are difficult to separate. The new security industry of private companies moves large quantities of weapons and military equipment. It provides services for military operations recruiting former militaries as civilians to carry out passive or defensive security.

However, these individuals cannot be considered as civilians, given that they often carry and use weapons, interrogate prisoners, load bombs, drive military trucks and fulfill other essential military functions. Those who are armed can easily switch from a passive/defensive to an active/offensive role and can commit human rights violations and even destabilize governments. They cannot be considered soldiers or supporting militias under international humanitarian law either, since they are not part of the army or in the chain of command, and often belong to a large number of different nationalities.

PMSC personnel cannot usually be considered to be mercenaries for the definition of mercenaries as stipulated in the international conventions dealing with this issue does not generally apply to the personnel of PMSCs which are legally operating in foreign countries under contracts of legally registered companies.

Private military and security companies operate in a legal vacuum: they pose a threat to civilians and to international human rights law. The UN Human Rights Council has entrusted the UN Working Group on the use of mercenaries, principally, with the mandate: “To monitor and study the effects of the activities of private companies offering military assistance, consultancy and security services on the international market on the enjoyment of human Rights (…) and to prepare draft international basic principles that encourage respect for human rights on the part of those companies in their activities”.

During the past five years, the Working Group has been studying emerging issues, manifestations and trends regarding private military and security companies.  In our reports we have informed the Human Rights Council and the General Assembly about these issues. Of particular importance are the reports of the Working Group to the last session of the Human Rights Council, held in September 2010, on the Mission to the United States of America  (20 July to 3 August 2009), Document A/HRC/15/25/Add.3; on the Mission to Afghanistan (4-9 April 2009), Document A/HRC/15/25/Add.2, and the general report of the Working Group containing the Draft of a possible Convention on Private Military and Security Companies (PMSCs) for consideration and action by the Human Rights Council, Document A/HRC/15/25.

In the course of our research, since 2006, we have collected ample information which indicate the negative impact of the activities of “private contractors”, “private soldiers” or “guns for hire”, whatever denomination we may choose to name the individuals employed by private military and security companies as civilians but in general heavily armed. In the cluster of human rights violations allegedly perpetrated by employees of these companies, which the Working Group has examined one can find: summary executions, acts of torture, cases of arbitrary detention; of trafficking of persons; serious health damages caused by their activities; as well as attempts against the right of self-determination. It also appears that PMSCs, in their search for profit, neglect security and do not provide their employees with their basic rights, and often put their staff in situations of danger and vulnerability.

Summary executions

On 16 September 2007 in Baghdad, employees of the US-based firm Blackwater[1] were involved in a shooting incident in Nisoor Square in which 17 civilians were killed and more than 20 other persons were wounded including women and children. Local eyewitness accounts indicate the use of arms from vehicles and rocket fire from a helicopter belonging to this company.

There are also concerns over the activities and approach of PMSC personnel, their convoys of armored vehicles and their conduct in traffic, in particular their use of lethal force. This particular incident was not the first of its kind, neither the first involving Blackwater.

According to a congressional report on the behaviour of Xe/Blackwater in Iraq, Xe/Blackwater guards were found to have been involved in nearly 200 escalation-of-force incidents that involved the firing of shots since 2005. Despite the terms of the contracts which provided that the company could engage only in defensive use of force, the company reported that in over 80 per cent of the shooting incidents, its forces fired the first shots.

In Najaf in April 2004 and on several other occasions, employees of this company took part in direct hostilities, as well as in May 2007, where another incident involving the same company reportedly occurred involving guards belonging to the company and forces belonging to the Iraqi Ministry of the Interior allegedly exchanged gunfire in a sector of Baghdad.

Also in central Baghdad the shooting of employees of the PMSC, Unity Resources Group (URG)[2], protecting a convoy, left two Armenian women, Genevia Antranick and Mary Awanis dead on 9 October 2007 when their car came too close to a protected convoy. The family of Genevia Antranick was offered no compensation and has begun court proceedings against URG in the United States.

This company was also involved in the shooting of 72-year-old Australian Kays Juma. Professor Juma was shot in March 2006 as he approached an intersection being blockaded for a convoy URG was protecting. Professor Juma, a 25-year resident of Baghdad who drove through the city every day, allegedly sped up his vehicle as he approached the guards and did not heed warnings to stop, including hand signals, flares, warning shots into the body of his car and floodlights. The incident occurred at 10am[3].

Torture

Two United States-based corporations, CACI and L-3 Services (formerly Titan Corporation), were involved in the torture of Iraqi detainees at Abu Ghraib. CACI and L-3 Services, contracted by the Government of the United States, were responsible for interrogation and translation services, respectively, at Abu Ghraib prison and other facilities in Iraq.

Seventy two Iraqi citizens who were formerly detained at military prisons in Iraq, have sued L-3 Services, Inc. (“L-3”), a military private contractor which provided civilian translators for United States military forces in Iraq and Adel Nakhla, a former employee of L-3 who served as one of its translators there under the Alien Tort Statute. They allege having been tortured and physically and mentally abused during their detention and that they should be held liable in damages for their actions. The plaintiffs assert 20 causes of action, among which: torture; cruel, inhuman, or degrading treatment; assault and battery; intentional infliction of emotional distress[4].

Arbitrary detention 

A number of reports indicate that private security guards have played central roles in some of the most sensitive activities of the Central Intelligence Agency (CIA) such as the arbitrary detention and clandestine raids against alleged insurgents in Iraq and Afghanistan[5] and the involvement in CIA rendition flights[6] as well as joint covert operations[7]. Employees of PMSC would have been involved in the taking of detainees, from “pick up points” (such as Tuzla, Islamabad or Skopje) transporting them in rendition flights and delivering them to drop off points (such as Cairo, Rabat, Bucharest, Amman or Guantanamo) as well as in the construction, equipping and staffing of CIA’s “black sites”.

Within this context, the American Civil Liberties Union has filed a lawsuit in May 2007 against Jeppesen DataPlan Inc. (a subsidiary company of Boeing) on behalf of five persons who were kidnapped by the CIA disappearing in overseas prisons kept by USA secret services. Jeppesen would have participated in the rendition by providing flight planning and logistical support. The five persons were tortured during their arbitrary detention[8].

Health

The 2009 annual report of DynCorp International refers to four lawsuits concerning the spraying of narcotic plant crops along the Colombian border adjacent to Ecuador on behalf of 3 Ecuadorian Providences and 3266 plaintiffs[9].

From 1991, the United States Department of State contracted the private company DynCorp to supply services for this air-spraying program against narcotics in the Andean region. In accordance with the subscribed contract of 30 January 1998, DynCorp provides the essential logistics to the anti-drug Office of activities of Colombia, in conformity with three main objectives: eradication of cultivations of illicit drugs, training of the army and of personnel of the country, and dismantling of illicit drug laboratories and illicit drug-trafficking networks.

An NGO report indicated the consequences of the spraying carried out within the Plan Colombia had on persons living in the frontier region[10].  One third of the 47 women in the study exposed to the spraying showed cells with some genetic damage. The study established the relationship of the air fumigations of the Plan Colombia with damages in the genetic material. The study demonstrates that when the population is subjected to fumigations “the risk of cellular damage can increase and that, once permanent, the cases of cancerous mutations and important embryonic alterations are increased that prompt among other possibilities the rise in abortions in the area.

This example is particularly important given that Plan Colombia has served as the model for the arrangements that the United States would apply later to Iraq and Afghanistan. Plan Colombia provides immunity to the employees of the PMSC contracted (DynCorp) the same as Order 14 of the Coalition Provisional Authority did in Iraq.

Self-determination

The 2004 attempted coup d’état, which was perpetrated in Equatorial Guinea is a clear example of the link between the phenomenon of mercenaries and PMSCs as a means of violating the sovereignty of States. In this particular case, the mercenaries involved were mostly former directors and personnel of Executive Outcomes, a PMSC that had become famous for its operations in Angola and Sierra Leone. The team of mercenaries also included security guards who were still employed by PMSCs as was the case of two employees of the company Meteoric Tactical Systems providing security to diplomats of Western Embassies in Baghdad-among which to the Ambassador of Switzerland. It also included a security guard who had previously worked for the PMSC “Steele Foundation” and had given protection to President Aristide of Haiti and conducted him to the plane who took him to exile[11].

Trafficking in persons

In 2005, 105 Chileans were providing/or undergoing military training in the former army base of Lepaterique in Honduras. The instruction consisted in anti‐guerrilla tactics such as possible ambushes and deactivation of explosives and mortars how to avoid them. The Chileans had entered Honduras as tourists and were illegally in Honduras. They used high‐caliber weapons such as M‐16 rifles or light machine guns. They had been contracted by a subsidiary of Triple Canopy.

They were part of a group, which included also 189 Hondurans recruited and trained in Honduras. Triple Canopy had been awarded a contract by the United States Department of State. The strong contingent left the country by air from San Pedro Sula, Honduras, in several groups with a stopover in Iceland. Then reached the Middle East and were smuggled into Iraq[12].

The majority of the Chileans and Hondurans were engaged as security guards at fixed facilities in Iraq. They had been contracted by Your Solutions Honduras SRL, a local agent of Your Solutions Incorporated, registered in Illinois, United States of America, which in turn had been subcontracted by Triple Canopy, based in Chicago, United States of America. Some of the Chileans are presently working in Baghdad providing security to the Embassy of Australia under a contract by Unity Resources Group (URG).

Human rights violations committed by PMSC to their employees

PMSC often put the contracted private guards in situations of danger and vulnerability, such as the ‘private contractors’ of Blackwater, killed in Fallujah in 2004 allegedly due to the lack of the necessary safety means that Blackwater was supposed to provide in order to carry out the mission.

It should not be forgotten that this incident changed dramatically the course of the war and the occupation by the United States in Iraq. It may be considered as the turning point in the occupation of Iraq. This led to an abortive US operation to recapture control of the city and a successful recapture operation in the city in November 2004, called Operation Phantom Fury, which resulted in the death of over 1,350 insurgent fighters. Approximately 95 America troops were killed, and 560 wounded.

The U.S. military first denied that it has use white phosphorus as an anti-personnel weapon in Fallujah, but later retracted that denial, and admitted to using the incendiary in the city as an offensive weapon. Reports following the events of November 2004 have alleged war crimes, and a massacre by U.S. personnel, including indiscriminate violence against civilians and children.http://en.wikipedia.org/wiki/Fallujah – cite_note-17 This point of view is presented in the 2005 documentary film, “Fallujah, the Hidden Massacre”. In 2010, the International Journal of Environmental Research and Public Health, a leading medical journal, published a study, which shows that the rates of cancer, infant mortality and leukemia exceed those reported in Hiroshima and Nagasaki[13].

The over 300 000 classified military documents made public by Wikileaks show that the “Use of Contractors Added to War’s Chaos in Iraq”, as has been widely reported by the international media recently.

The United States has relied and continues to rely heavily on private military and security contractors in conducting its military operations. The United States used private security contractors to conduct narcotics intervention operations in Colombia in the 1990s and recently signed a supplemental agreement that authorizes it to deploy troops and contractors in seven Colombian military bases. During the conflict in the Balkans, the United States used a private security contractor to train Croat troops to conduct operations against Serbian troops. Nowadays, it is in the context of its operations in Iraq and Afghanistan in particular that the State is massively contracting out security functions to private firms.

In 2009, the Department of Defense employed 218,000 private contractors (all types) while there were 195,000 uniformed personnel. According to the figures, about 8 per cent of these contractors are armed security contractors, i.e. about 20,000 armed guards. If one includes other theatres of operations, the figure rises to 242,657, with 54,387 United States citizens, 94,260 third country nationals and 94,010 host-country nationals.

The State Department relies on about 2,000 private security contractors to provide United States personnel and facilities with personal protective and guard services in Afghanistan, Iraq, Israel and Pakistan, and aviation services in Iraq. The contracts for protective services were awarded in 2005 to three PMSCs, namely, Triple Canopy, DynCorp International and the U.S. Training Center, part of the Xe (then Blackwater) group of companies. These three companies still hold the State Department protective services contracts today.

Lack of transparency

The information accessible to the public on the scope and type of contracts between the Government of the United States and PMSCs is scarce and opaque. The lack of transparency is particularly significant when companies subcontract to others. Often, the contracts with PMSCs are not disclosed to the public despite extensive freedom of information rules in the United States, either because they contain confidential commercial information or on the argument that non-disclosure is in the interest of national defense or foreign policy. The situation is particularly opaque when United States intelligence agencies contract PMSCs.

Lack of accountability

Despite the fact of their involvement in grave human rights violations, not a single PMSC or employee of these companies has been sanctioned.

In the course of litigation, several recurring legal arguments have been used in the defense of PMSCs and their personnel, including the Government contractor defense, the political question doctrine and derivative immunity arguments. PMSCs are using the Government contractor defense to argue that they were operating under the exclusive control of the Government of the United States when the alleged acts were committed and therefore cannot be held liable for their actions.

It looks as if when the acts are committed by agents of the government they are considered human rights violations but when these same acts are perpetrated by PMSC it is “business as usual”.

The human rights violation perpetrated by private military and security companies are indications of the threat posed to the foundations of democracy itself by the privatization of inherently public functions such as the monopoly of the legitimate use of force. In this connection I cannot help but to refer to the final speech of President Eisenhower.

In 1961, President Eisenhower warned the American public opinion against the growing danger of a military industrial complex stating: “(…) we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defence with our peaceful methods and goals, so that security and liberty may prosper together”.

Fifty years later, on 8 September 2001, Donald Rumsfeld in his speech in the Department of Defence warned the militaries of the Pentagon against “an adversary that poses a threat, a serious threat, to the security of the United States of America (…) Let’s make no mistake: The modernization of the Department of Defense is (…) a matter of life and death, ultimately, every American’s. (…) The adversary. (…) It’s the Pentagon bureaucracy. (…)That’s why we’re here today challenging us all to wage an all-out campaign to shift Pentagon’s resources from bureaucracy to the battlefield, from tail to the tooth. We know the adversary. We know the threat. And with the same firmness of purpose that any effort against a determined adversary demands, we must get at it and stay at it. Some might ask, how in the world could the Secretary of Defense attack the Pentagon in front of its people? To them I reply, I have no desire to attack the Pentagon; I want to liberate it. We need to save it from itself.”

Rumsfeld should have said the shift from the Pentagon’s resources from bureaucracy to the private sector. Indeed, that shift had been accelerated by the Bush Administration: the number of persons employed by contract which had been outsourced (privatized) by the Pentagon was already four times more than at the Department of Defense.

It is not anymore a military industrial complex but as Noam Chomsky has indicated “it’s just the industrial system operating under one or another pretext”.

The articles of the Washington Post “Top Secret America: A hidden world, growing beyond control”, by Dana Priest and William M. Arkin (19 July 2010) show the extent that “The top-secret world the government created in response to the terrorist attacks of Sept. 11, 2001, has become so large, so unwieldy and so secretive that no one knows how much money it costs, how many people it employs, how many programs exist within it or exactly how many agencies do the same work”.

The investigation’s findings include that some 1,271 government organizations and 1,931 private companies work on programs related to counterterrorism, homeland security and intelligence in about 10,000 locations across the United States; and that an estimated 854,000 people, nearly 1.5 times as many people as live in Washington, D.C., hold top-secret security clearances. A number of private military and security companies are among the security and intelligence agencies mentioned in the report of the Washington Post.

The Working Group received information from several sources that up to 70 per cent of the budget of United States intelligence is spent on contractors. These contracts are classified and very little information is available to the public on the nature of the activities carried out by these contractors.

The privatization of war has created a structural dynamic, which responds to a commercial logic of the industry.

A short look at the careers of the current managers of BAE Systems, as well as on their address-books, confirms we are not any longer dealing with a normal corporation, but with a cartel uniting high tech weaponry (BAE Systems, United Defence Industries, Lockheed Martin), with speculative financiers (Lazard Frères, Goldman Sachs, Deutsche Bank), together with raw material cartels (British Petroleum, Shell Oil) with on the ground, private military and security companies[14].

The majority of the private military and security companies has been created or are managed by former militaries or ex-policemen for whom it is big business. Just to give an example MPRI (Military Professional Resources Incorporation) was created by four former generals of the United States Army when they were due for retirement[15]. The same is true for Blackwater and its affiliate companies or subsidiaries, which employ former directors of the C.I.A.[16]. Social Scientists refer to this phenomenon as the Rotating Door Syndrome.

The use of security contractors is expected to grow as American forces shrink. A July report by the Commission on Wartime Contracting, a panel established by Congress, estimated that the State Department alone would need more than double the number of contractors it had protecting the American Embassy and consulates in Iraq.

“Without contractors: (1) the military engagement would have had to be smaller–a strategically problematic alternative; (2) the United States would have had to deploy its finite number of active personnel for even longer tours of duty -a politically dicey and short-sighted option; (3) the United States would have had to consider a civilian draft or boost retention and recruitment by raising military pay significantly–two politically untenable options; or (4) the need for greater commitments from other nations would have arisen and with it, the United States would have had to make more concessions to build and sustain a truly multinational effort. Thus, the tangible differences in the type of war waged, the effect on military personnel, and the need for coalition partners are greatly magnified when the government has the option to supplement its troops with contractors”[17].

The military cannot do without them. There are more contractors over all than actual members of the military serving in the worsening war in Afghanistan.

CONCLUSIONS OF THE SENATE ARMED SERVICES COMMITTEE impact of Private Security Contracting on U.S. Goals in Afghanistan[18]

Conclusion I: The proliferation of private security personnel in Afghanistan is inconsistent with the counterinsurgency strategy. In May 2010 the U.S. Central Command’s Armed Contractor Oversight Directorate reported that there were more than 26,000 private security contractor personnel operating in Afghanistan. Many of those private security personnel are associated with armed groups that operate outside government control.

Conclusion 2: Afghan warlords and strongmen operating as force providers to private security contractors have acted against U.S. and Afghan government interests. Warlords and strongmen associated with U.S.-funded security contractors have been linked to anti Coalition activities, murder, bribery, and kidnapping. The Committee’s examination of the U.S. funded security contract with ArmorGroup at Shindand Airbase in Afghanistan revealed that ArmorGroup relied on a series of warlords to provide armed men to act as security, guards at the Airbase.

Open-ended intergovernmental working group established by the HR Council

Because of their impact in the enjoyment of human rights the Working Group on mercenaries in its 2010 reports to the UN Human Rights Council and General Assembly has recommended a legally binding instrument regulating and monitoring their activities at the national and international level.

The motion to create an open ended intergovernmental working group has been the object of lengthy negotiations, in the Human Rights Council, led by South Africa in order to accommodate the concerns of the Western Group, but primarily those of the United States and the United Kingdom and of a lot a pressure exerted in the capitals of African countries supporting the draft resolution. The text of the resolution was weakened in order to pass the resolution by consensus. But even so the position of the Western States has been a “fin de non recevoir”.

The resolution was adopted by a majority of 32 in favour, 12 against and 3 abstentions. Among the supporters of this initiative are four out of the five members of BRICS (Brazil, Russia, China and South Africa) in addition to the African Group, the Organization of the Islamic Conference and the Arab Group.

The adoption of this resolution opens an interesting process in the UN Human Rights Council where civil society can participate in the elaboration of an international framework on the regulation, monitoring and oversight of the activities of private military and security companies.  The new open ended intergovernmental working group will be the forum for all stakeholders to receive inputs, not only the draft text of a possible convention and the elements elaborated by the UN Working Group on mercenaries but also of other initiatives such as the proposal submitted to the Parliamentary Assembly of the Council of Europe, the Montreux Document and the international code of conduct being elaborated under the Swiss Initiative.

However, the negative vote of the delegations of the Western Group indicates that the interests of the new staggering security industry – its annual market revenue is estimated to be over USD one hundred billion – have been quite well defended as was the case in a number of other occasions. It also shows that Western governments will be absent from the start in a full in-depth discussion of the issues raised by the activities of PMSC.

We urge all States to support the process initiated by the Council by designating their representatives to the new open-ended intergovernmental working group, which will hold its first session in 2011, and to continue a process of discussions regarding a legally binding instrument.

The participation of the UK and USA main exporters of these activities (it is estimated at 70% the industry of security in these two countries) as well as other Western countries where the new industry is expanding is of particular importance.

The Working Group also urges the United States Government to implement the recommendations we made, in particular, to:

support the Congress Stop Outsourcing Security (SOS) Act, which clearly defines the functions which are inherently governmental and that cannot be outsourced to the private sector;

rescind immunity to contractors carrying out activities in other countries under bilateral agreements;

carry out prompt and effective investigation of human rights violations committed by PMSCs and prosecute alleged perpetrators;

ensure that the oversight of private military and security contractors is not outsourced to PMSCs;
establish a specific system of federal licensing of PMSCs for their activities abroad;

set up a vetting procedure for awarding contracts to PMSCs;

ensure that United States criminal jurisdiction applies to private military and security companies contracted by the Government to carry out activities abroad; and

respond to pending communications from the Working Group.

The United Nations Human Rights Council, under the Universal Periodic Review, initiated a review in November 2010 in Geneva, focussing on the human rights record of the United States. The above article is an edited version of the presentation given by Jose L. Gomez del Prado in Geneva on 3 November 2010 at a parallel meeting at the UN Palais des Nations on that occasion.

Notes

[1] Blackwater Worldwide abandoned its tarnished brand name in order to shake its reputation battered by its criticized work in Iraq, renaming its family of two-dozen businesses under the name Xe’, see Mike Baker, ‘Blackwater dumps tarnished brand name’, AP News Break, 13 February 2009.

[2] URG, an Australian private military and security company, uses a number of ex military Chileans to provide security to the Australian Embassy in Baghdad. Recently one of those “private guards” shot himself, ABC News, reported by La Tercera, Chile, 16 September 2010.

[3]J.Mendes & S Mitchell, “Who is Unity Resources Group?”, ABC News Australia, 16 September 2010.

[4] Case 8:08-cv-01696-PJM, Document 103, Filed 07/29/10. Defendants have filed Motions to Dismiss on a number of grounds. They argue, among others, that the suit must be dismissed in its entirety because they are immune under the laws of war, because the suit raises non-justiciable political questions, and because they possess derivative sovereign immunity. They seek dismissal of the state law claims on the basis of government contractor immunity, premised on the notion that Plaintiffs cannot proceed on state law claims, which arise out of combatant activities of the military. The United States District Court for the district of Maryland Greenbelt Division has decided to proceed with the case against L-3 Services, Inc. It has not accepted the motions to dismiss allowing the case to go forward.

[5] Mission to the United States of America, Report of the Working Group on the use of mercenaries, United Nations document, A/HRC/15/25/Add.3, paragraphs 22.

[6] James Risen and Mark Mazzetti, “Blackwater guards tied to secret C.I.A. raids ”, New York Times, 10

December 2009.

[7] Adam Ciralsky, “Tycoon, contractor, soldier, spy”, Vanity Fair, January 2010. See also Claim No. HQ08X02800 in the High Court of Justice, Queen’s Bench Division, Binyam Mohamed v. Jeppesen UK Ltd, report of James Gavin Simpson, 26 May 2009.

[8]ACLU Press Release, UN Report Underscores Lack of Accountability and Oversight for Military and Security Contractors, New York, 14 September 2010.

[9] The reports also indicates that the Revenues of DynCorp for 2006 were of USD 1 966 993 and for 2009 USD 3 101 093

[10] Mission to Ecuador, Report of the Working Group on the use of mercenaries, United Nations document, A/HRC/4/42/Add.2

[11] A number of the persons involved in the attempted coup were arrested in Zimbabwe, other in Equatorial Guinea itself the place where the coup was intended to take place to overthrow the government and put another in its place in order to get the rich resources in oil. In 2004 and 2008 the trials took place in Equatorial Guinea of those arrested in connection with this coup attempt, including of the British citizen Simon Mann and the South African Nick du Toit. The President of Equatorial Guinea pardoned all foreigners linked to this coup attempt in November 2009 by. A number of reports indicated that trials failed to comply with international human rights standards and that some of the accused had been subjected to torture and ill-treatment. The government of Equatorial Guinea has three ongoing trials in the United Kingdom, Spain and Lebanon against the persons who were behind the attempted coup.
[12] Report of the Working Group on the use of mercenaries, Mission to Honduras, United Nations document A/HRC/4/42/Add.1.
[13] Wikipedia
[14] Mercenaries without borders by Karel Vereycken,  Friday Sep 21st, 2007
[15] Among which General Carl E. Vuono, Chief of the Army during the Gulf War and the invasion of Panama; General Crosbie E. Saint, former Commander in Chief of the  USA Army in Europe and General Ron Griffith. The President of MPRI is General Bantant J. Craddock.

[16] Such as Cofer Black, former Chief of the Counter Terrorism Center; Enrique Prado, former Chief of Operations and Rof Richter, second in command of the Clandestine Services of the Company
[17] Article published in the Spring 2010 issue of the University of Chicago Law Review, titled “Privatization’s Pretensions” by Jon D. Michaels, Acting Professor of Law at the UCLA School of Law
[18] INQUIRY INTO THE ROLE AND OVERSIGHT OF PRIVATE SECURITY CONTRACTORS IN AFGHANISTAN, R E P O R T TOGETHER WITH ADDITIONAL VIEWS OF THE COMMITTEE ON ARMED SERVICES UNITED STATES SENATE, 28 September 2010

‘War weary’ Taliban may form political party

Published time: March 04, 2013 20:52

Members of the Taliban (Reuters/Parwiz)

The Afghan Taliban are considering a political solution to the decade long conflict, a senior Taliban leader has said, amid speculation that the Taliban may be becoming war weary.

“We must launch a political movement to achieve the goals for which we have made so many sacrifices. The Taliban leaders whose names have been removed from the UN black list will play an important role in the political process,” Mullah Agha Jan Mutasim, a close confident of the militant groups elusive leader Mullah Omar and the former head of the Taliban Political Commission, told the Pakistani newspaper the Express Tribune. 

However, he added that the warring faction was a “vital part of the Taliban”.

The Taliban have said numerous times that they will not talk to the administration of Afghan president Hamid Karzai, who they’ve said was a US puppet. But political analysts believe that the Taliban are tired of waging war.

“The Taliban are tired of war and it will be a step in the right direction if they launch a political movement,” Rashid Waziri, an advisor at the Regional Studies Center of Afghanistan, told the Express Tribune on Sunday.

Pakistan, which has some influence over the Afghan Taliban, recently sent Maulana Rehman, an influential political-religious leader, to meet Taliban representatives in Qatar to help broker peace talks between the militants and the Karzai administration, although officially both sides denied the meeting.

Mullah Agha Jan Mutasim (AFP Photo / STR)

The unofficial talks in Doha, mark the latest efforts at a negotiated settlement with the Taliban.

As 2014 approaches – the date when most NATO troops will leave Afghanistan – the US is pushing for an Afghan led solution and for peace talks between the Afghan government and the insurgency. 

They also want to get Pakistan on board with any eventual settlement. Pakistan has long been a negative influence on the situation, enabling Taliban groups to operate from its territory while at the same time refusing to support negotiations.

Tony Gosling, an investigative journalist based in Bristol in the UK, believes the Taliban are serious about a political solution and that they have more influence in the country than the Karzai government.

“The Taliban have more influence than Karzai does. If elections in Afghanistan were free and fair, the Taliban might well do very well,” he told RT.

He also said that the west is trying to bring them into the political arena, as it now has little other option.

“We know that this has been going on behind the scenes since the beginning of the occupation. As the cost of the war gets higher and higher and cuts to the defense budget begin to bite, other options are being considered by the occupying powers,” said Gosling.

American military commanders concluded some time ago that the Afghan war could only end in a negotiated settlement with the Taliban and not an outright military victory. However talks between the Taliban and the US in 2012 ended in failure.

The talks stalled because the US administration could not complete a proposed prisoner swap for five Taliban members in Guantanamo to be exchanged for the one US soldier in captivity in Afghanistan, Sergeant Bowe Bergdhal.

The swap, which was scuppered by opposition from both parties in Congress, has made more serious talks difficult to envisage.

Reuters / Mohammad Shoib

The Taliban are also internally divided particularly between their political wing and their military commanders, who were critical of the existence of talks.

They are also unwilling to meet Washington’s demands to sever ties with Al Qaida, renounce violence and accept the commitments to political and human rights in Afghanistan’s Constitution.

But despite all these setbacks the Qataris remain willing to host the talks and one of the Taliban negotiators who is still in Doha has said that talks could restart as soon as the prisoner swap takes place and the insurgents are allowed to open an office in Doha.

If this happens “and practical steps are taken by the United States of America, talks will resume. There is no other obstruction,” Sohail Shaheen, a Taliban negotiator, told Japan’s NHK World TV last month.

Gosling believes that when NATO troops have gone and negotiations are underway between the Taliban and the Afghan government, there is a chance of peace in the country, although there may be problems in the short term.

“What’s happening in Pakistan and Iraq with frequent sectarian bombings, there is a likelihood of this happening in Afghanistan. But ultimately, if Afghanistan were left alone, it may turn into a more peaceful regime,” he said.

Greek Military Prepares for Mass Repression

GREECE

Former high-level Greek diplomat Leonidas Chrysanthopoulos told the UK’s New Statesman last week that discussions had taken place between senior Greek politicians and the armed forces on the military’s response to what Chrysanthopoulos described as an “explosion of social unrest” expected to occur “quite soon.”

Chrysanthopoulos said that in the coming months, “There will be further increases in armed actions. There will be bloody demonstrations.”

Without giving details, he said, “There are contacts by certain politicians with elements in the armed forces to guarantee that in the event of major social unrest, the army will not intervene.”

This last claim was likely made for public consumption. Even if such a request had been made, any assurances from the Greek military would be worthless given the recent history of the country, in which the “regime of the colonels” seized power in a military coup in 1967 that lasted until 1974. Since the onset of mass austerity in Greece in 2010 there have been constant rumours of coup discussions among high-ranking military personnel.

The most significant aspect of Chrysanthopoulos’ interview is the revelation of discussions between politicians and the military on how to respond to the threat of social revolution.

Greek ruling circles are working on the assumption that insurrectionary struggles are inevitable because of the intolerable level of suffering they have imposed on the working class. Within less than four years, the social position of the Greek working class has been reduced to levels not seen since the Nazi occupation during World War II.

Brutal poverty is a fact of life for millions. One major aspect of the assault on living conditions is the removal of public health provisions.

More than 50 pharmaceutical conglomerates have either halted or savagely cut supplies to Greece—citing concerns for their profits. The dangerous shortage of hundreds of basic medicines is resulting in chaotic scenes of patients rushing from one pharmacy to another in search of vital drugs, while public hospitals lack adequate supplies of drugs to dispense.

Such conduct is not confined to the big pharmaceutical companies. On Tuesday it emerged that the Swiss Red Cross, a non-profit relief agency, is set to slash the number of blood donor packets it supplies to Greece. It cited concerns that it has not received full payment for previous allocations and announced that beginning in 2015 the number of blood donor packets it sends to Greece will be halved from the current annual level of 28,000.

As a result of the austerity policies demanded by the “troika” (the International Monetary Fund, European Central Bank and European Union), a staggering 4.65 million people are now either unemployed or economically inactive. There are 450,000 households in which no one is employed. Of the 2.6 million people employed in the private sector in 2010, 900,000 have been laid off. Because the duration of benefits has been slashed, just 225,000 of the unemployed now receive unemployment pay.

In the private sector, just 600,000 workers (from a total 1.6 million) now work a regularly paid eight-hour day. Professor Savas Robolis of the University of Panteion in Athens recently said, “The remainder—a million workers—have had their hours cut or are getting paid late, four or five months late. They are in a state of desperation.”

This week’s annual report by the Bank of Greece found that 23 percent of the population lived below the poverty line in 2012, compared to 16 percent in 2011. Also noted was the exponential increase in child poverty, with the rate of families at risk reaching 31 percent in just one year (2010-2011). In the period 2010-2012, the average gross salary in the country was cut by 20.6 percent and labour costs for employers decreased by 18.5 percent.

Given the austerity measures already in place, there will be an overall reduction in labour costs in Greece for the period 2012-2014 of 17.6 percent. So savage are these measures that they are set to surpass the 15 percent reduction in overall costs demanded by the troika.

Presenting the report, the bank’s chairman, George Provopoulos, claimed that economic recovery would be achieved by means of austerity and demanded that even harsher measures be imposed. “Now that the finishing line is finally visible,” he said, “we ought to intensify efforts, to quicken our pace to cover the final stretch and ensure that citizens’ sacrifices have not been in vain…”

Speaking of the victims of these policies, he declared, “Extreme and unreasonable demands from social groups do not contribute towards this goal.”

The bank’s report was issued as representatives of the troika once again converged on Athens to monitor the implementation of the programme agreed with the New Democracy/PASOK/Democratic Left government.

Among the issues to be settled is how steeply this year’s pharmaceutical budget is to be slashed. As a result of previous troika demands, the budget was cut from €3.7 billion to €2.4 billion last year. Reports suggest it could be cut to €2 billion this year.

With pharmaceutical firms already withholding many drugs, this is a prescription for a health catastrophe and many needless deaths.

The troika is also set to demand a speedup in the layoff of 25,000 public sector workers this year (half by June) in order to meet the agreed 150,000 redundancies by 2015. If Athens were to fail to impose the cuts to the troika’s satisfaction, two tranches of loans for March and April totalling €8.8 billion would be withheld or much reduced. Failure to receive the finance would result in Greece defaulting on its entire debt.

By promising if elected to reverse the austerity programme, SYRIZA (Coalition of the Radical Left) won nearly 30 percent of the vote in last year’s election. It is put forward by a host of pseudo-left organizations as a progressive alternative to the pro-austerity governing parties and the means for countering the growth of the fascist Golden Dawn movement.

In reality, SYRIZA is no less a creature of the ruling elite than the right-wing New Democracy party, and is no less wedded to the austerity agenda. This week, SYRIZA press spokesman Panos Skourletis stated, “We do not have a magic wand that will improve and change the situation from one day to the next… We must realize that with every day this policy is applied, things grow worse. This devastation is incalculable and, therefore, restoration of the repercussions of this policy becomes even more difficult.”

The meaning of such comments—that it is impossible to reverse the austerity programme—is unmistakable. SYRIZA is readying its arguments and preparing for what it will be called on to carry out if it achieves its goal of entering a future anti-working class government.

Left To Die – The Government’s Policy On Homelessness

Over 50,000 people are homeless in the UK, and that number is increasing. There are approximately 710,000 empty homes in the UK – enough to house a million people.

A Failure Analysis of the US Economy

Introduction

As failure analysis engineers for companies, our job is to find the root cause of failure and recommend changes in design, process, tests, etc. to fix the problem. This type of analysis has become an important part of semiconductor mass production, which makes electronics cheaper and affordable for consumers. At the same time, mass production helps the manufacturer / producer of parts by increasing their profits.

“Workers should be able to work for fewer hours to achieve their production target. They could use their spare time to pursue higher education, leisure, hobbies, vocational training, etc.”

What we need to recognize is that both producers and consumers are vital for the semiconductor industry. Without a healthy demand for the latest electronic gadgets such as smartphones, tablet PCs, hybrid cars, etc. there would be no incentive for global semiconductor firms to keep investing in the research and development of new technologies that improve the quality of life. While we make a living through the failure analysis of modern-day electronics and keep our jobs, pay for mortgages, groceries, utilities, cars, etc., we also contribute to the demand for other goods by spending our wages. We are workers on one side and consumers on the other. Consumer spending helps create jobs for other services and 70% of the US economy depends on consumer spending [1]. It is the consumer’s purchasing capacity that is the best metric of economic performance.

Common Sense Macroeconomics

Producers and Consumers are like two wings of a bird. If either of the wings gets hurt, the bird will no longer be able to fly. If that bird is not nursed quickly and properly, it would be disabled and either die from hunger or fall prey to a predator. With the same analogy, both producers and consumers have to prosper for a robust economy.

Before we get into more details of macro-economics, let us see where the economic profession stands at this juncture. In a recent article in The New York Times, Professor Robert J. Shiller of Yale University and a best-selling author argues that even now we don’t understand what really causes a recession and layoffs [2]. But another best-selling economist, Professor Ravi Batra, seems to have solved the puzzle of recessions by offering a new theory of unemployment. His theory relies on common sense as he argues that recessions and depressions occur when worker productivity keeps rising faster than the economy’s average real wage. He demonstrates that this happened in the 1920s, which were followed by a depression. The same thing also occurred during the 2000s and the world has been in The Great Recession since 2007.

Batra argues that worker productivity is the main source of supply while wages are the main source of demand. If productivity rises faster than wages, then supply rises faster than demand. This results in overproduction and forces the manufacturer to fire workers. Producers are the suppliers of goods, and consumers generate the demand for these goods. Consumer demand, being dependent on wages, is sustainable only if the consumers as workers earn higher salaries. If the wages of consumers do not catch up with increased supply of goods, the supplier of goods is unable to sell all that he/she has manufactured.

Let us take an example of the semiconductor industry where the semiconductor wafer foundries manufacture tens of thousands of wafers per month. These facilities supply silicon for the semiconductor industry. For a wafer fabrication facility to be profitable, it has to be able to produce as many wafers as possible that meet the Statistical Process Control (SPC) stability metrics and customers’ quality requirements when it comes to DPPM (Defective Parts per Million). This ability to mass produce is measured by the productivity of the work force. A wafer foundry, like every other company, wants its employees to be highly productive to maintain a high supply of wafers for its customers. The wafer fab management pays incentives based on productivity.

Now, where does the need come for wafer fab to hire more workers? This occurs only if wafer fab customers demand more goods. Where does the customer demand come from? It comes from the wages of the people. When we have an economy where employed people have high wages or high purchasing capacity, they are able to generate a high demand for goods. Hence, the wages of the workers have to catch up with their productivity. If employees are very productive, that is they work hard and efficiently, they are able to increase the supply of goods into economy with their productivity. Now, what happens if the wages of the productive workers fail to catch up with their productivity? As a result of the growing gap between wages and productivity, eventually the purchasing capacity of the workers is not able to catch up with the amount of goods that are being manufactured by them. Hence this correlates to a gap between the supply of goods and the sustainable demand for them. In other words, the wage-productivity gap causes a supply-demand gap.

In my previous analogy, this hurts one of the two wings of a bird. In other words, the imbalance between oversupply of goods and weak demand for them leads to layoffs at the wafer fabrication facility. This is how an economy is so closely connected to maintaining a sustainable supply and demand of goods. Thus layoffs occur when people’s purchasing capacity falls short of the goods that workers produce due to their high productivity.

Consumer and National Debt

Some brilliant minds have devised a way to keep the wages of workers to remain the same or even fall, i.e. not letting wages catch up with their high productivity, but still maintain a high consumer demand. They do this by creating ‘consumer debt’. When a consumer is unable to buy much out of their real salary or wage, he/she can buy it using a credit card or by going into debt with a loan from financial institutions. While relatively stable consumer debt is good for the economy as long as the borrower is able to repay his/her debt within the allotted time frame with interest, what can consumers do when they lose their jobs in a recession, and are not able to find other employment soon? If the consumer is not able to repay his/her debt in time, the increase in interest on the credit card loan wipes out his/her savings, thereby resulting in bankruptcy.

It should be clear that when wages trail productivity, the overall economy suffers because of the reduced purchasing capacity of unemployed workers. If you follow this logic, then it is evident that consumer’s purchasing capacity is critical for sustainable demand. Hence, I consider a strong consumer purchasing capacity to be the chief source of high consumer demand, which acts as an engine for economic growth. Thus, the real job creators in a free market economy are not only the producers of goods but also the consumers of goods. Every company estimates its consumer base prior to manufacturing in order to avoid the over-production of goods. Hence, if consumer demand keeps on weakening, then the economy goes into a recession. In that case to avoid a depression, the government has to step in and increase its own spending that makes up for the loss in demand due to lost wages of the laid off workers. The government may also cut tax rates to boost consumer demand. In either case, the budget deficit rises, and may rise very sharply if the wage-productivity gap and hence the supply-demand gap are very high. This is the main reason why the budget deficit rocketed after 2007, so much so that it almost tripled from about $500 billion in 2007 to $1.3 trillion in 2011.

Now, if government spending creates jobs, then these workers can jump start the engine of economic growth by paying off their debts and boosting consumer demand through their real wages. The higher the wages of these workers, the higher will be their purchasing capacity and the higher the consumer demand. This would act as an incentive to the producers/manufacturers to make further investments.

However, if increased government spending does not boost consumer demand and instead goes into the pockets of manufacturers, the manufacturing sector may hire a few more workers because of the extra money it receives from the government stimulus, but that growth will not be sustainable. In fact, a case can be made that the high budget deficit of recent years has mainly helped the manufacturer. For instance, in 2011 the economy generated 1 million new jobs with the help of a budget deficit of $1.3 trillion. If you divide 1.3 trillion with 1 million, you get 1.3 million. In other words, the government spent an extra $1.3 million to create one job in the economy. Is this not absurd, given the fact that the average wage is only $50,000 per year? Thus, the government deficit is now mainly helping the manufacturers, who must be getting the difference between $1.3 million and $50,000 for each person they hire.

As Batra shows, this is what the continued rise in the wage-productivity gap does to an economy. Just 15 years ago, in 1999, we had a budget surplus along with an unemployment rate of less than 5 percent. Today, we have a trillion dollar deficit along with an unemployment rate close to 8 percent.

Free Trade vs Fair Trade

An economy is sustainable when it is able to balance its trade and budget. If any country has a trade deficit (where imports are larger than exports), it leads to a fall in the country’s FOREX (FOREign eXchange) reserves (which eventually depreciates its currency). The value of a country’s currency is a deciding factor in the standard of living. Hence, a country cannot run year-over-year trade deficits if it wishes to maintain the standard of living of its citizens. Also, high trade deficits result in loss of FOREX reserves, which are important as they determine the buying power of the country’s currency.

Let us take an example of a country ‘A’ where its population has sufficient purchasing power and can buy everything produced in the nation. But there are some products that are not produced at home and have to be imported from another country ‘B’. Hence country ‘A’ has to pay money [its currency] to buy country B’s goods. Either country ‘A’ has to balance its trade by getting country ‘B’ currency from a third country ‘C’, or go on printing its own currency. But there is a limit that country ‘B’ will accept country ‘A”s money. After that country ‘A’ will have to produce the items within the country, causing huge inflation due to depreciated value of its currency resulting from excess money printing. It is possible to avoid trade deficits through balanced trade policies. Fair trade is more important than Free trade. Free trade implies no import duties imposed by a country on its imported goods. While Free trade works great when trading with countries having nearly similar value of their monetary currencies, it results in high trade deficits when multinational corporations (MNCs) from a rich country make goods for cheap in another country with a significantly lower value of its currency. The MNCs in the United States prefer to manufacture things in low wage countries with cheap currencies, as it is highly profitable. However, in addition to increasing trade deficits, this practice also leads to massive job losses in the home country, especially when jobs are also outsourced.

As a result of this free trade policy, the U.S. economy has been running over half a trillion dollar trade deficit for the past four years [3].While such a deficit results in higher corporate profits for MNCs in the United States, it results in depreciating FOREX reserves. This threatens the economic independence of the U.S. as a country.

Figure 1 below shows the FOREX reserves of BRIC (Brazil, Russia, India and China) in USD over ten years. According to Dr. Richard Haas, Chairman of the Council of Foreign Relations, China’s ownership of trillions in FOREX is a great threat to the United States, as China, with vast FOREX reserves, is in a position to influence US foreign policies through its control over the value of US currency [4].This is similar to the way the United States was able to dominate the foreign policies of Britain and France after World War II and forced their troop withdrawal during the Suez crisis purely because of its ownership of British and French debt [5].

030213-6aFigure 1: World Forex reserves in billions of USD as per International Monetary Fund (IMF), April 2009 [6]

During the Reagan years, the trade deficit started to increase at a rate not seen in the last 60-70 years [7]. The Reagan administration then had to pressure Japan to sign the 1985 Plaza Accord to devalue the U.S. dollar at the expense of the Japanese yen in order to increase U.S. exports [8]. As a result of yen’s appreciation, Japan experienced an economic crash and lost a decade of growth. The Nikkei average went up to about 39,000 in December 1989, but after the crash it hovered around 15,000 during the lost decade of the 1990s. In the last several years it has dropped even more, hovering around 10,000 [9].

Looking at the fate of what happened to Japan as a result of the yen appreciation; China has refused to appreciate its currency significantly in spite of the pressure by the Obama administration, which hopes to boost U.S. exports to China [10]. This should be a great concern for the United States because it would not be able to export significant amount of goods to China to balance its trade.

Counterfeit Electronics as a Threat to US National Security

In addition to nearly 600 billion dollars in trade deficit due to free trade policies, the counterfeit electronics from China entering into the U.S. supply chain have become a national security threat [11]. Initially, the United States manufactured all defense-related products at home. However, consumer electronics were being built in China due to its low cost of labor. As technology progressed to advanced transistor technology, it required a large investment from defense contractors, who work for profit, to manufacture semiconductor wafers in the United States. Hence, several defense contractors started to use Chinese built ICs for military weapons like missiles and machine guns. Along with the state-of-the-art infrastructure, the technical know-how to make advanced technology products has also been transferred to China.

So now China is flooding the U.S. defense supply chain with counterfeit ICs [12]. It has become very costly to prevent this, which is also eating away profits of U.S. defense contractors. The free trade policies of the United States are creating a perfect storm for its semiconductor industry. According to Professor Ravi Batra, “Free trade has done to the United States what Hitler and Imperial Japan could not do during the war.” He characterizes free trade as the ‘Agrification syndrome’ by which Americans continue to lose manufacturing jobs, and continue to work harder at the jobs they do have, but suffer declining wages, despite increases to their productivity [13].

If the United States had adopted fair trade instead of free trade, it would have imposed tariffs on the cheap goods that are dumped in this country by China. As people prefer to get the best value for their money, U.S. consumers would have preferred to buy U.S. made goods as tariffs would make them competitive with Chinese goods. This way manufacturing jobs would have been preserved. Simple math shows that by just eliminating the 600 billion dollar annual trade deficit would create 6 million jobs paying a $100,000 salary every year. This is a simple job creation strategy, as the country faces the highest unemployment rate since the Great Depression.

030213-6bFigure 2: BLS, BEA Census- Productivity and real income index from 1964-2008 relative to 1970 (Source: David Ruccio: Graph of the week: USA productivity and real hourly wages 1964-2008 [14])

Economic Reforms

If you observe Fig. 2 above, real wages have failed to keep up with productivity since the 1970s. The productivity of American workers has been consistently increasing. However, the average household median income has not increased at the rate at which productivity has increased. The real hourly wages have remained fairly constant. The United States needs to reform its current economic model so that wages keep track with the productivity of workers [15]. Professor Batra argues that this can happen only in a free market system, where companies are small and unable to control prices. In such a system, there would be no need for the government budget deficit, and it would raise the living standard for every individual in society.

Under this system, the majority of shares of corporations would be owned by its employees rather than by a few investors on Wall Street. When workers become majority shareholders, they know that they are part owners of the company and will be fairly rewarded for hard work. By being highly productive, these workers would receive a fair share of corporate profits.

The system would still preserve the incentive for growth because hard work would bring higher incomes. At the same time, it would avoid severe recessions and depressions caused by poor consumer demand (due to a huge gap between wages and productivity resulting in poor purchasing capacity of the majority of consumers). Also, in economic downturns, it will be possible to cut back the working hours of the workers and reduce their wages across the board rather than lay off some workers. This would minimize, if not eliminate, the problem of high unemployment [16].

Modern economic thinkers blame automation as a major cause of job losses. Technology could be productively utilized in such a way that the manufacturing sector could cut back on work hours while paying workers a high wage due to their high productivity. This is because automation enables a worker to be very productive through use of machines to manufacture products. High worker productivity significantly increases the supply of goods in an economy. As a result workers would be able to work for fewer hours to achieve their production target. They could use their spare time to pursue higher education, leisure, hobbies, vocational training, etc. This way it is also possible to minimize, if not eliminate, the problem of high unemployment resulting from automation while still keeping the supply of goods proportionate to consumer demand.

Employee guided firms will also be able provide health insurance and pension benefits to workers and the government would not need to spend money for this purpose. This way the budget deficit would fall to zero and the national debt could be retired over time.
Additionally, it would also avoid undue pressure from Wall Street to ship jobs overseas under pressure of delivering maximum profits to Wall Street investors. This would minimize speculation, malpractices and economic bubbles through economic self-regulation with minimal government interference.

References:

1. http://en.wikipedia.org/wiki/Consumer_spending

2. Robert J. Shiller: “The Mystery of Economic Recessions”, New York Times, 4 February 2001. p. 17 http://cowles.econ.yale.edu/news/shiller/rjs_01-02-01_nyt_mystery.htm

3. Martin Crutsinger: “US deficit tops $1 trillion for fourth year,” Associated Press, 12 October 2012. http://finance.yahoo.com/news/us-deficit-tops-1-trillion-fourth-011445884–finance.html

4. Justin Webb, “Don’t be distracted by Greece : Americans must also face financial facts, ” Telegraph (UK), 25 June 2011. http://www.telegraph.co.uk/news/worldnews/us-politics/8598451/Dont-be-distracted-by-Greece-Americans-must-also-face-financial-facts.html

5. Laurie Milner, The Suez Crisis, 03 March 2011. http://www.bbc.co.uk/history/british/modern/suez_01.shtml

6. http://en.wikipedia.org/wiki/Foreign-exchange_reserves

7. Alex Seitz-Wald: 10 Things Conservatives Don’t Want You To Know About Ronald Reagan, 5 February 2011. http://thinkprogress.org/politics/2011/02/05/142288/reagan-centennial/?mobile=nc

8. http://en.wikipedia.org/wiki/Plaza_Accord

9. http://en.wikipedia.org/wiki/Lost_Decade_(Japan)

10. China seeks to learn from mistakes of 1985 Plaza Accord, The Japan Times, 9 September 2006. http://www.japantimes.co.jp/text/nb20060909a3.html

11. Richard Dudley: Counterfeit Electronics in DoD are Widespread and Threaten National Security, 3 June 2012. http://defense-update.com/20120603_counterfeit-electronics-in-dod-are-widespread-and-threaten-national-security.html

12. Joseph Farah: Fake Chinese electronics threaten U.S. Defense. 29 May 2012. http://www.wnd.com/2012/05/fake-electronics-feared-undermining-u-s-defense/

13. Sean Fenley: Barack Obama, What’s Wrong with Protectionism?, 21 September 2008. http://www.opednews.com/articles/Barack-Obama-What-s-Wrong-by-Sean-Fenley-080918-200.html

14. David Ruccio: Graph of the week: USA productivity and real hourly wages 1964-2008. http://rwer.wordpress.com/2010/11/20/graph-of-the-week-usa-productivity-and-real-hourly-wages-1964-2008/

15. Ravi Batra: The New Golden Age : The Coming Revolution against Political Corruption and Economic Chaos, New York, Palgrave Macmillan, 2007. Also see ravibatra.com for Batra’s other writings.

16. P.R.Sarkar : PROUT in a Nutshell, AMPS.

Cut Benefits, Not The Military

The Defence Secretary has told George Osborne the military cannot cope with any more cuts - so the welfare budget should be slashed instead. Philip Hammond has warned he will resist further cuts to his department in the next spending review. In an int...

‘I’m Not A Dictator, I Can’t Block The Door, I Can’t Use Jedi Mind...

The frustration at his administration's failure to agree a deal on radical spending cuts, due to go into force at midnight on Friday, has finally got to Barack Obama, with the President telling a White House press conference that he is "not a dictator...

‘Medical stocks are down by 90 percent’: Greece accuses pharma giants of slashing imports

Published time: February 28, 2013 01:36

AFP Photo / Louisa Gouliamaki

The Greek government has reportedly accused 50 leading pharmaceutical companies of cutting off supplies of key medications to the country, sparking a run on pharmacies. Drug companies say the cheap medicines they supply merely get re-exported at a profit.

Pfizer, Roche, GSK and AstraZeneca are among the producers the government says have either stopped providing certain medicines to the debt-stricken country, or plan to do so, according to the UK’s Guardian newspaper. Pfizer and Roche admit that they have done so, but GSK and AstraZeneca deny that they have reduced supplies so far.

"It's a disgrace. The government is panic-stricken and the multinationals only think about themselves,” said Dimitris Karageorgiou, secretary of the Panhellenic Pharmaceutical Association.

As the news has spread, patients with prescriptions for antibiotics, statins and other medicines totalling over 200 brand names, began queuing outside pharmacies.

“I would say supplies are down by 90%,” said Karageorgiou.

“The companies are ensuring that they come in dribs and drabs to avoid prosecution. Everyone is really frightened. Customers tell me they are afraid of losing access to medication altogether.”

But the multinationals say the government’s own lack of regulation has created this crisis, which has been more than two years in the making.

Under the current system, individuals in Greece buy medicines from pharmacies, and are later reimbursed by the state, with the state setting the prices the drug stores can charge. In the wake of the country’s financial crisis, the government ordered its pharmacies to sell drugs at much lower prices, to cut down its own budget expenditure.

But as Greek prices are now 20 percent below the next-cheapest country in Europe, this has created an incentive for pharmacists to simply re-sell drugs to other countries in the EU, creating a “parallel trade”. The health ministry estimates that over 25 percent of all drugs entering Greece are then re-exported.

Pharmaceutical companies have already lowered their prices for the Greek market, but are now saying that the re-export is starting to eat into their profits in other European countries.

They also point out that as well as paying less, Greek insurance funds and hospitals owe €1.9 billion to drug manufacturers.

"We are insisting that the public hospitals fulfil their contracts and this is something we do in any country … We are withholding medicines until they meet their obligations," said Daniel Grotsky, a Roche spokesman.

The Swiss company is owed €200 million. Grotsky said Roche is still supplying individual pharmacies, and only drugs where alternatives are available have been held back.

Frouzis Konstantinos, of Novartis, another drug giant, says the government needs to pay up its existing debt, and stop squeezing the profit margins of pharmacies.

"The government needs to correct these wrong prices to avoid a surge of exportation,” he told the Guardian.

But this is unlikely.

Under the austerity budget the state’s allocation for medicines has fallen from €3.7 billion in 2011 to €2.44 last year, and the number for 2013 is likely to be even lower.

Instead, the government has banned exports of more than 60 drugs altogether, and says it will levy fines of between €2,000 and €20,000 on those pharmacies that re-export illegally. 


Mehdi’s Morning Memo: ‘Shall We Leave It At That?’

The ten things you need to know on Wednesday 27 February 2013...

1) 'SHALL WE LEAVE IT AT THAT?'

The Rennard affair rumbles on - with more and more seemingly contradictory statements being issued by the various Lib Dem players. Consider this story on the front of the Telegraph:

"Nick Clegg was personally warned by one of his MPs that a senior figure in the Liberal Democrats might be sexually molesting female members of staff, The Daily Telegraph can disclose.

"Sandra Gidley, a former MP and party spokesman, said she told Mr Clegg about the allegations surrounding Lord Rennard, the party's former chief executive, after he was elected as Lib Dem leader in 2007.

"... Asked by The Daily Telegraph whether she told Mr Clegg 'face–to–face' about the allegations concerning Lord Rennard, she said: 'Yes, that is true but at this point I don't want to go any further. I am hoping his memory might be jogged. Shall we leave it at that?'"

Well, um, er, no. Especially since Clegg and Danny Alexander have both claimed that the latter once confronted Rennard over those 'general' allegations while Rennard himself issued a statement yesterday, via a spokesperson, saying "in 27 years of working for the Liberal Democrats he received no complaint or allegation about his behaviour".

As my colleague Ned Simons notes, they can't both be right, can they?

(On a side note, Ned also tried tracking down the seven female Lib Dem MPs to ask them why they've been so conspicuously silent on the Rennard allegations... check out what he discovered here.)

2) GOING NEGATIVE

Who says policy-makers are running out of ideas to prompt a much-needed economic recovery? From the Express:

"Interest rates could be slashed to below zero to kick–start Britain's economy, the Bank of England's Deputy Governor has suggested.

"Paul Tucker admitted his idea was 'extraordinary' but said radical steps were needed to encourage banks to lend more.

"If rates went below zero, in effect becoming negative, the main financial institutions would have to pay the Bank of England a fee for holding their money.

"It is thought this would force banks to lend more cash to small businesses, a move which many believe holds the key to getting the economy moving again."

3) WINDFALL TAX?

Given the size of the budget deficit, and the shortfall in tax revenues, how about a 1997-style windfall tax on the utilities?

This morning, the BBC reports:

"British Gas has said its profits have risen because a colder 2012 meant people used more gas.

"It reported profits from residential energy supply of £606m for 2012, up 11% from the previous year.

"... Centrica, which owns British Gas, reported an adjusted operating profit of £2.7bn for 2012, up 14% from 2011."

4) WE'RE ALL IN THIS TOGETHER, PART 99

"Barclays to reveal that it employs more than 600 millionaires," says the headline in the Independent.

Bonus tax, anyone? The paper reports:

"Next week, the bank will - for the first time - put an exact figure on the number of staff who enjoy seven-figure salaries made up of basic pay, an annual bonus and shares issued through long-term incentive plans. It is understood that this number will be "around" 600 with most of them believed to work for Barclays Investment Bank, which is currently run by the flamboyant racehorse owner Rich Ricci, who will be among their number."

If I was a banker, I wouldn't want to be named Rich Ricci...

5) EYE ON EASTLEIGH

The Eastleigh by-election campaign enters its final day (woo-hoo!), with all four parties in the race making one last, concerted push for votes.

But the Guardian's John Harris, reporting from Eastleigh, concludes:

"For everybody's sake, it is perhaps time that all this was over. Back in the town centre, I seek peace and quiet in the obligatory branch of Costa Coffee. One of the baristas has spent the last three weeks serving endless politicians, aides and activists. 'Hundreds of them,' she says. 'And I'm sick of it.' Like other locals, she mentions cold calls, piles of leaflets and in-person visits. 'I don't bother answering the door any more,' she says, as another canvassing team trudges in for coffee. 'I can't be arsed.'"

Meanwhile, his Guardian colleague Steve Morris reports that, during a walkabout in Eastleigh yesterday, former Lib Dem leader Paddy Ashdown "was heckled by one former Lib Dem voter, library worker Jayne Perkins, who shouted at the Lib Dem entourage: 'Thank you so much for lying to the people of Eastleigh.'"

BECAUSE YOU'VE READ THIS FAR...

Watch this mash-up video - 'Argo' meets 'Home Alone'. Hilarious...

6) 'ILL INFORMED'

From the BBC:

"Ofsted's chief inspector says he wants some school governors in England to be paid and to provide more professional leadership.

"Sir Michael Wilshaw is to launch an online at-a-glance report card for each school, which he wants governors to use to hold head teachers to account.

"He is also set to attack governors who are 'ill-informed' and 'not able to make good decisions'."

7) HELP! THE ROMANIANS ARE COMING!!

Anti-immigration campaigners will be delighted by this report in the Telegraph:

"Up to one in three Romanian migrants has been arrested, according to figures which show the country is ranked second for foreigners held over serious offences.

"Some 27,725 Romanians were arrested for offences in London in five years, Scotland Yard said, including 10 for murder and more than 140 for rape. The figures, published under the Freedom of Information Act, will add to fears of a crime wave when restrictions on workers from Romania and Bulgaria are lifted next January.

"Romanians were second only to Poles, who accounted for 34,905 arrests."

8) RESIGN!

From the Telegraph:

"Several Cabinet ministers privately believe that Sir David Nicholson should stand aside as the head of the NHS because of the Mid Staffordshire scandal, The Daily Telegraph can disclose.

"One Cabinet minister said Sir David’s position was 'completely unacceptable' and symbolised how the Civil Service did not penalise failure.

"Several ministers are understood to have raised 'very serious concerns' about Sir David but the Prime Minister has been advised by the head of the Civil Service that the NHS would be destabilised by his removal."

9) HE'S GAY. OH WAIT. HE ISN'T.

From the Daily Mail:

"John Bercow was left squirming with embarrassment after mistakenly describing former England rugby star Ben Cohen as 'openly gay'.

"The Commons Speaker made the slip-up as he introduced Cohen to a room full of guests at ParliOut, Parliament's gay staff network.

"Cohen, 34, is happily married to Abigail and they have five-year-old twin daughters."

10) TWO POPES?

The Vatican seems to be taking a leaf out of the US political playbook - in the United States, former presidents, governors and senators get to keep their titles for life (hence 'Mr President' in reference to Bill Clinton and George W Bush, even now...).

And now, as the Telegraph reports:

"Pope Benedict XVI will continue to wear a white cassock and will be known as 'Pope Emeritus', adding further confusion to his status after he steps down tomorrow. The 85–year–old German Pontiff will continue to be addressed as 'His Holiness' after he goes into retirement within the Vatican, the same honorific the new pope will enjoy."

PUBLIC OPINION WATCH

From the Sun/YouGov poll:

Labour 42
Conservatives 32
Lib Dems 12
Ukip 9

That would give Labour a majority of 112.

140 CHARACTERS OR LESS

@BBCJLandale Tory MP to me: "Only the Liberals could have a sex scandal that doesn't involve sex and turn it into a leadership crisis."

@simonblackwell If Nick Clegg's not careful he might begin to be seen as in some way untrustworthy.

@ChrisBryantMP Argo is great despite the lie about British refusal to accept six US diplomats.

900 WORDS OR MORE

Danny Finkelstein, writing in the Times, says: "The Lib Dems are not a serious national party."

Mary Riddell, writing in the Telegraph, says: "If Nick Clegg’s story won’t stand up, the Lord Rennard scandal could finish him."

Seumas Milne, writing in the Guardian, says: "George Osborne hasn't just failed – this is an economic disaster."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

US Sponsored Coup d’Etat: The Destabilization of Haiti

aristide

Author’s Note

This article was written nine years ago, in the last days of February 2004 in response to the barrage of disinformation in the mainstream media. It was completed on February 29th, the day of President Jean Bertrand Aristide’s kidnapping and deportation by US Forces.

The armed insurrection which contributed to unseating President Aristide on February 29th 2004 was the result of a carefully staged military-intelligence operation, involving the US, France and Canada. The 2004 coup had set the stage for the installation of US puppet government in Port au Prince, which takes orders directly from Washington.

Michel Chossudovsky, Global Research, February 26, 2013


(Minor editorial corrections were made to the original draft since its publication on February 29th 2004, the title of article predates the actual Coup D’Etat which was in the making at the time of writing)

original article published at http://globalresearch.ca/articles/CHO402D.html

by Michel Chossudovsky

The Rebel paramilitary army crossed the border from the Dominican Republic in early February. It constitutes a well armed, trained and equipped paramilitary unit integrated by former members of Le Front pour l’avancement et le progrès d’Haiti (FRAPH), the  “plain clothes” death squadrons, involved in mass killings of civilians and political assassinations during the CIA sponsored 1991 military coup, which led to the overthrow of the democratically elected government of President Jean Bertrand Aristide

The self-proclaimed Front pour la Libération et la reconstruction nationale (FLRN) (National Liberation and Reconstruction Front) is led by Guy Philippe, a former member of the Haitian Armed Forces and Police Chief. Philippe had been trained during the 1991 coup years by US Special Forces in Ecuador, together with a dozen other Haitian Army officers. (See Juan Gonzalez, New York Daily News, 24 February 2004).

The two other rebel commanders and associates of Guy Philippe, who led the attacks on Gonaives and Cap Haitien are Emmanuel Constant, nicknamed “Toto” and Jodel Chamblain, both of whom are former Tonton Macoute and leaders of FRAPH.

In 1994, Emmanuel Constant led the FRAPH assassination squadron into the village of Raboteau, in what was later identified as “The Raboteau massacre”:

“One of the last of the infamous massacres happened in April 1994 in Raboteau, a seaside slum about 100 miles north of the capital. Raboteau has about 6,000 residents, most fishermen and salt rakers, but it has a reputation as an opposition stronghold where political dissidents often went to hide… On April 18 [1994], 100 soldiers and about 30 paramilitaries arrived in Raboteau for what investigators would later call a “dress rehearsal.” They rousted people from their homes, demanding to know where Amiot “Cubain” Metayer, a well-known Aristide supporter, was hiding. They beat people, inducing a pregnant woman to miscarry, and forced others to drink from open sewers. Soldiers tortured a 65-year-old blind man until he vomited blood. He died the next day.

The soldiers returned before dawn on April 22. They ransacked homes and shot people in the streets, and when the residents fled for the water, other soldiers fired at them from boats they had commandeered. Bodies washed ashore for days; some were never found. The number of victims ranges from two dozen to 30. Hundreds more fled the town, fearing further reprisals.” (St Petersburg Times, Florida, 1 September 2002)

During the military government (1991-1994), FRAPH was (unofficially) under the jurisdiction of the Armed Forces, taking orders from Commander in Chief General Raoul Cedras. According to a 1996 UN Human Rights Commission report, FRAPH had been supported by the CIA.

Under the military dictatorship, the narcotics trade, was protected by the military Junta, which in turn was supported by the CIA. The 1991 coup leaders including the FRAPH paramilitary commanders were on the CIA payroll. (See Paul DeRienzo,   http://globalresearch.ca/articles/RIE402A.html , See also see Jim Lobe, IPS, 11 Oct 1996). Emmanuel Constant alias “Toto” confirmed, in this regard, in a CBS “60 Minutes” in 1995, that the CIA paid him about $700 a month and that he created FRAPH, while on the CIA payroll. (See Miami Herald, 1 August 2001). According to Constant, the FRAPH had been formed “with encouragement and financial backing from the U.S. Defense Intelligence Agency and the CIA.” (Miami New Times, 26 February 2004)

The Civilian “Opposition” 

The so-called “Democratic Convergence” (DC) is a group of some 200 political organizations, led by former Port-au-Prince mayor Evans Paul.  The “Democratic Convergence” (DC) together with “The Group of 184 Civil Society Organizations” (G-184) has formed a so-called “Democratic Platform of Civil Society Organizations and Opposition Political Parties”.

The Group of 184 (G-184), is headed by Andre (Andy) Apaid, a US citizen of Haitian parents, born in the US. (Haiti Progres, http://www.haiti-progres.com/eng11-12.html ) Andy Apaid owns Alpha Industries, one of Haiti’s largest cheap labor export assembly lines established during the Duvalier era. His sweatshop factories produce textile products and assemble electronic products for a number of US firms including Sperry/Unisys, IBM, Remington and Honeywell. Apaid is the largest industrial employer in Haiti with a workforce of some 4000 workers. Wages paid in Andy Apaid’s factories are as low as 68 cents a day. (Miami Times, 26 Feb 2004). The current minimum wage is of the order of $1.50 a day:

“The U.S.-based National Labor Committee, which first revealed the Kathie Lee Gifford sweat shop scandal, reported several years ago that Apaid’s factories in Haiti’s free trade zone often pay below the minimum wage and that his employees are forced to work 78-hour weeks.” (Daily News, New York, 24 Feb 2004)

Apaid was a firm supporter of the 1991 military coup. Both the Convergence démocratique and the G-184 have links to the FLRN (former  FRAPH death squadrons) headed by Guy Philippe. The FLRN is also known to receive funding from the Haitian business community.

In other words, there is no watertight division between the civilian opposition, which claims to be non-violent and the FLRN paramilitary. The FLRN is collaborating with the so-called “Democratic Platform.”

The Role of the National Endowment for Democracy (NED)

In Haiti, this “civil society opposition” is bankrolled by the National Endowment for Democracy which works hand in glove with the CIA. The Democratic Platform is supported by the International Republican Institute (IRI) , which is an arm of the National Endowment for Democracy (NED). Senator John McCain is Chairman of IRI’s Board of Directors. (See Laura Flynn, Pierre Labossière and Robert Roth, Hidden from the Headlines: The U.S. War Against Haiti, California-based Haiti Action Committee (HAC), http://www.haitiprogres.com/eng11-12.html ).

G-184 leader Andy Apaid was in liaison with Secretary of State Colin Powell in the days prior to the kidnapping and deportation of President Aristide by US forces on February 29. His umbrella organization of elite business organizations and religious NGOs, which is also supported by the International Republican Institute (IRI), receives sizeable amounts of money from the European Union.(http://haitisupport.gn.apc.org/184%20EC.htm ).

It is worth recalling that the NED, (which overseas the IRI) although not formally part of the CIA, performs an important intelligence function within the arena of civilian political parties and NGOs. It was created in 1983, when the CIA was being accused of covertly bribing politicians and setting up phony civil society front organizations. According to Allen Weinstein, who was responsible for setting up the NED during the Reagan Administration: “A lot of what we do today was done covertly 25 years ago by the CIA.” (‘Washington Post’, Sept. 21, 1991). 

The NED channels congressional funds to the four institutes: The International Republican Institute (IRI), the National Democratic Institute for International Affairs (NDI), the Center for International Private Enterprise (CIPE), and the American Center for International Labor Solidarity (ACILS). These organizations are said to be “uniquely qualified to provide technical assistance to aspiring democrats worldwide.” See IRI, http://www.iri.org/history.asp )

In other words, there is a division of tasks between the CIA and the NED. While the CIA provides covert support to armed paramilitary rebel groups and death squadrons, the NED and its four constituent organizations finance “civilian”  political parties and non governmental organizations with a view to instating American “democracy” around the World.

The NED constitutes, so to speak, the CIA’s “civilian arm”. CIA-NED interventions in different part of the World are characterized by a consistent pattern, which is applied in numerous countries.

The NED provided funds to  the “civil society” organizations in Venezuela, which initiated an attempted coup against President Hugo Chavez. In Venezuela it was the “Democratic Coordination”, which was the recipient of NED support; in Haiti it is the “Democratic Convergence” and G-184.

Similarly, in former Yugoslavia, the CIA channeled support to the Kosovo Liberation Army (KLA) (since 1995), a paramilitary group involved in terrorist attacks on the Yugoslav police and military. Meanwhile, the NED through the  “Center for International Private Enterprise” (CIPE) was backing the DOS opposition coalition in Serbia and Montenegro. More specifically, NED was financing the G-17, an opposition group of  economists responsible for formulating (in liaison with the IMF) the DOS coalition’s  “free market” reform platform in the 2000 presidential election, which led to the downfall of Slobodan Milosevic.  

The IMF’s Bitter “Economic Medicine”

The IMF and the World Bank are key players in the process of economic and political destabilization. While carried out under the auspices of an intergovernmental body, the IMF reforms tend to support US strategic and foreign policy objectives.

Based on the so-called “Washington consensus”, IMF austerity and restructuring measures through their devastating impacts, often contribute to triggering social and ethnic strife. IMF reforms have often precipitated the downfall of elected governments. In extreme cases of economic and social dislocation, the IMF’s bitter economic medicine has contributed to the destabilization of entire countries, as occurred in Somalia, Rwanda and Yugoslavia. (See Michel Chossudovsky, The globalization of Poverty and the New World Order, Second Edition, 2003, http://globalresearch.ca/globaloutlook/GofP.html )

The IMF program is a consistent instrument of economic dislocation. The IMF’s reforms contribute to reshaping and downsizing State institutions through drastic austerity measures. The latter are implemented alongside other forms of intervention and political interference, including CIA covert activities in support of rebel paramilitary groups and opposition political parties.

Moreover, so-called “Emergency Recovery” and “Post-conflict” reforms are often introduced under IMF guidance, in the wake of a civil war, a regime change or “a national emergency”.

In Haiti, the IMF sponsored  “free market” reforms have been carried out consistently since the Duvalier era. They have been applied in several stages since the first election of president Aristide in 1990. 

The 1991 military coup, which took place 8 months following Jean Bertrand Aristide’s accession to the presidency, was in part intended to reverse the Aristide government’s progressive reforms and reinstate the neoliberal policy agenda of the Duvalier era.

A former World Bank official Mr. Marc Bazin was appointed Prime minister by the Military Junta in June 1992. In fact, it was the US State Department which sought his appointment.

Bazin had a track record of working for the “Washington consensus.”  In 1983, he had been appointed Finance Minister under the Duvalier regime, In fact he had been recommended to the Finance portfolio by the IMF: “President-for-Life Jean-Claude Duvalier had agreed to the appointment of an IMF nominee, former World Bank official Marc Bazin, as Minister of Finance”. (Mining Annual Review, June, 1983). Bazin, who was considered Washington’s “favorite”, later ran against Aristide in the 1990 presidential elections.

Bazin, was called in by the Military Junta in 1992 to form a so-called  “consensus government”. It is worth noting that it was precisely during Bazin’s term in office as Prime Minister that the political massacres and extra judicial killings by the CIA supported FRAPH death squadrons were unleashed, leading to the killing of more than 4000 civilians. Some 300,000 people became internal refugees,  “thousands more fled across the border to the Dominican Republic, and more than 60,000 took to the high seas” (Statement of Dina Paul Parks, Executive Director, National Coalition for Haitian Rights, Committee on Senate Judiciary, US Senate, Washington DC, 1 October 2002). Meanwhile, the CIA had launched a smear campaign representing Aristide as “mentally unstable” (Boston Globe, 21 Sept 1994).

The 1994 US Military Intervention

Following three years of military rule, the US intervened in 1994, sending in 20,000 occupation troops and “peace-keepers” to Haiti. The US military intervention was not intended to restore democracy. Quite the contrary: it was carried out to prevent a popular insurrection against the military Junta and its neoliberal cohorts.

In other words, the US military occupation was implemented to ensure political continuity.

While the members of the military Junta were sent into exile, the return to constitutional government required compliance to IMF diktats, thereby foreclosing the possibility of a progressive “alternative” to the neoliberal agenda. Moreover, US troops remained in the country until 1999. The Haitian armed forces were disbanded and the US State Department hired a mercenary company DynCorp to provide “technical advice” in restructuring the Haitian National Police (HNP).

“DynCorp has always functioned as a cut-out for Pentagon and CIA covert operations.” (See Jeffrey St. Clair and Alexander Cockburn,  Counterpunch, February 27, 2002, http://www.corpwatch.org/issues/PID.jsp?articleid=1988 ) Under DynCorp advice in Haiti, former Tonton Macoute and Haitian military officers involved in the 1991 Coup d’Etat were brought into the HNP. (See Ken Silverstein, Privatizing War, The Nation, July 28, 1997, http://www.mtholyoke.edu/acad/intrel/silver.htm )

In October 1994, Aristide returned from exile and reintegrated the presidency until the end of his mandate in 1996. “Free market” reformers  were brought into his Cabinet. A new wave of deadly macro-economic policies was adopted under a so-called Emergency Economic Recovery Plan (EERP) “that sought to achieve rapid macroeconomic stabilization, restore public administration, and attend to the most pressing needs.” (See IMF Approves Three-Year ESAF Loan for Haiti, Washington, 1996, http://www.imf.org/external/np/sec/pr/1996/pr9653.htm ).

The restoration of Constitutional government had been negotiated behind closed doors with Haiti’s external creditors. Prior to Aristide’s reinstatement as the country’s president, the new government was obliged to clear the country’s debt arrears with its external creditors. In fact the new loans provided by the  World Bank, the  Inter-American Development Bank (IDB), and the IMF were used to meet Haiti’s obligations with international creditors. Fresh money was used to pay back old debt leading to a spiraling external debt.

Broadly coinciding with the military government, Gross Domestic Product (GDP) declined by 30 percent (1992-1994). With a per capita income of $250 per annum, Haiti is the poorest country in the Western hemisphere and among the poorest in the world. (see World Bank, Haiti: The Challenges of Poverty Reduction, Washington, August 1998, http://lnweb18.worldbank.org/External/lac/lac.nsf/0/8479e9126e3537f0852567ea000fa239/$FILE/Haiti1.doc ).

The World Bank estimates unemployment to be of the order of 60 percent. (A 2000 US Congressional Report estimates it to be as high as 80 percent. See US House of Representatives, Criminal Justice, Drug Policy and Human Resources Subcommittee, FDHC Transcripts, 12 April 2000).

In the wake of three years of military rule and economic decline, there was no “Economic Emergency Recovery” as envisaged under the IMF loan agreement. In fact quite the opposite: The IMF imposed  “stabilization” under the “Recovery” program required further budget cuts in  almost non-existent social sector programs.  A civil service reform program was launched, which consisted in reducing the size of the civil service and the firing of “surplus” State employees. The IMF-World Bank package was in part instrumental in the paralysis of public services, leading to the eventual demise of the entire State system. In a country where health and educational services were virtually nonexistent, the IMF had demanded the lay off of “surplus” teachers and health workers with a view to meeting its target for the budget deficit.   

Washington’s foreign policy initiatives were coordinated with the application of the IMF’s deadly economic medicine. The country had been literally pushed to the brink of economic and social disaster.

The Fate of Haitian Agriculture

More than 75 percent of the Haitian population is engaged in agriculture, producing both food crops for the domestic market as well a number of cash crops for export. Already during the Duvalier era, the peasant economy had been undermined. With the adoption of the IMF-World Bank sponsored trade reforms, the agricultural system, which previously produced food for the local market, had been destabilized. With the lifting of trade barriers, the local market was opened up to the dumping of US agricultural surpluses including rice, sugar and corn, leading to the destruction of the entire peasant economy. Gonaives, which used to be Haiti’s rice basket region, with extensive paddy fields had been precipitated into bankruptcy:

. “By the end of the 1990s Haiti’s local rice production had been reduced by half and rice imports from the US accounted for over half of local rice sales. The local farming population was devastated, and the price of rice rose drastically “ ( See Rob Lyon, Haiti-There is no solution under Capitalism! Socialist Appeal, 24 Feb. 2004, http://cleveland.indymedia.org/news/2004/02/9095.php ).

In matter of a few years, Haiti, a small impoverished country in the Caribbean, had become the World’s fourth largest importer of American rice after Japan, Mexico and Canada.

The Second Wave of IMF Reforms

The presidential elections were scheduled for November 23, 2000. The Clinton Administration had put an embargo on development aid to Haiti in 2000. Barely two weeks prior to the elections, the outgoing administration signed a Letter of Intent with the IMF. Perfect timing: the agreement with the IMF virtually foreclosed from the outset any departure from the neoliberal agenda.

The Minister of Finance had sent the amended budget to the Parliament on December 14th. Donor support was conditional upon its rubber stamp approval by the Legislature. While Aristide had promised to increase the minimum wage, embark on school construction and  literacy programs, the hands of the new government were tied. All major decisions regarding the State budget, the management of the public sector, public investment, privatization, trade and monetary policy had already been taken. They were part of the agreement reached with the IMF on November 6, 2000.

In 2003, the IMF imposed the application of a so-called “flexible price system in fuel”, which immediately triggered an inflationary spiral. The currency was devalued. Petroleum prices increased by about 130 percent in January-February 2003, which served to increase popular resentment against the Aristide government, which had supported the implementation of the IMF economic reforms.

The hike in fuel prices contributed to a 40 percent increase in consumer prices (CPI) in 2002-2003 (See Haiti—Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding, Port-au-Prince, Haiti June 10, 2003, http://www.imf.org/external/np/loi/2003/hti/01/index.htm ). In turn, the IMF had demanded, despite the dramatic increase in the cost of living, a freeze on wages as a means to “controlling inflationary pressures.” The IMF had in fact pressured the government to lower public sector salaries (including those paid to teachers and health workers).  The IMF had also demanded the phasing out of the statutory minimum wage of approximately 25 cents an hour. “Labour market flexibility”, meaning wages paid below the statutory minimum wage would, according to the IMF, contribute to attracting foreign investors. The daily minimum wage was $3.00 in 1994, declining to about $1.50- 1.75 (depending on the gourde-dollar exchange rate) in 2004. 

In an utterly twisted logic, Haiti’s abysmally low wages, which have been part of the IMF-World Bank “cheap labor” policy framework since the 1980s, are viewed as a means to improving the standard of living. In other words, sweatshop conditions in the assembly industries (in a totally unregulated labor market) and forced labor conditions in Haiti’s agricultural plantations are considered by the IMF as a key to achieving economic prosperity, because they “attract foreign investment.” 

The country was in the straightjacket of a spiraling external debt. In a bitter irony, the IMF-World Bank sponsored austerity measures in the social sectors were imposed in a country which has 1,2 medical doctors for 10,000 inhabitants and where the large majority of the population is illiterate. State social services, which were virtually nonexistent during the Duvalier period, have collapsed.

The result of IMF ministrations was a further collapse in purchasing power, which had also affected middle income groups. Meanwhile, interest rates had skyrocketed. In the Northern and Eastern parts of the country, the hikes in fuel prices had led to a virtual paralysis of transportation and public services including water and electricity.

While a humanitarian catastrophe is looming, the collapse of the economy spearheaded by the IMF, had served to boost the popularity of the Democratic Platform, which had accused  Aristide of “economic mismanagement.” Needless to say, the leaders of the Democratic Platform including Andy Apaid –who actually owns the sweatshops– are the main protagonists of the low wage economy.

Applying the Kosovo Model

In February 2003, Washington announced the appointment of James Foley as Ambassador to Haiti . Foley had been a State Department spokesman under the Clinton administration during the war on Kosovo. He previously held a position at NATO headquarters in Brussels. Foley had been sent to Port au Prince in advance of the CIA sponsored operation. He was transferred to Port au Prince in September 2003, from a prestige diplomatic position in Geneva, where he was Deputy Head of Mission to the UN European office.

It is worth recalling Ambassador Foley’s involvement in support of the Kosovo Liberation Army (KLA) in 1999.

Amply documented, the Kosovo Liberation Army (KLA) was financed by drug money and supported by the CIA. ( See Michel Chossudovsky, Kosovo Freedom Fighters Financed by Organized Crime, Covert Action Quarterly, 1999, http://www.heise.de/tp/english/inhalt/co/2743/1.html )  

The KLA had been involved in similar targeted political assassinations and killings of civilians, in the months leading up to the 1999 NATO invasion as well as in its aftermath.  Following the NATO led invasion and occupation of Kosovo, the KLA was transformed into the Kosovo Protection Force (KPF) under UN auspices. Rather than being disarmed to prevent the massacres of civilians, a terrorist organization with links to organized crime and the Balkans drug trade, was granted a legitimate political status.

At the time of the Kosovo war, the current ambassador to Haiti James Foley was in charge of State Department briefings, working closely with his NATO counterpart in Brussels, Jamie Shea. Barely two months before the onslaught of the NATO led war on 24 March 1999, James Foley had called for the “transformation” of the KLA into a respectable political organization:

We want to develop a good relationship with them [the KLA] as they transform themselves into a politically-oriented organization,’ ..`[W]e believe that we have a lot of advice and a lot of help that we can provide to them if they become precisely the kind of political actor we would like to see them become… “If we can help them and they want us to help them in that effort of transformation, I think it’s nothing that anybody can argue with..’ (quoted in the New York Times, 2 February 1999)

In the wake of the invasion “a self-proclaimed Kosovar administration was set up composed of the KLA and the Democratic Union Movement (LBD), a coalition of five opposition parties opposed to Rugova’s Democratic League (LDK). In addition to the position of prime minister, the KLA controlled the ministries of finance, public order and defense.” (Michel Chossudovsky, NATO’s War of Aggression against Yugoslavia, 1999, http://www.globalresearch.ca/articles/CHO309C.html )

The US State Department’s position as conveyed in Foley’s statement was that the KLA would “not be allowed to continue as a military force but would have the chance to move forward in their quest for self government under a ‘different context’” meaning the inauguration of a de facto “narco-democracy” under NATO protection. (Ibid).

With regard to the drug trade, Kosovo and Albania occupy a similar position to that of Haiti: they constitute “a hub” in the transit (transshipment) of narcotics from the Golden Crescent, through Iran and Turkey into Western Europe. While supported by the CIA, Germany’s Bundes Nachrichten Dienst (BND) and NATO, the KLA has links to the Albanian Mafia and criminal syndicates involved in the narcotics trade.( See Michel Chossudovsky, Kosovo Freedom Fighters Financed by Organized Crime, Covert Action Quarterly, 1999, http://www.heise.de/tp/english/inhalt/co/2743/1.html )  

Is this the model for Haiti, as formulated in 1999 by the current US Ambassador to Haiti James Foley?

For the CIA and the State Department the FLRN and Guy Philippe are to Haiti what the KLA and Hashim Thaci are to Kosovo.

In other words, Washington’s design is “regime change”: topple the Lavalas administration and install a compliant US puppet regime, integrated by the Democratic Platform and the self-proclaimed Front pour la libération et la reconstruction nationale (FLRN), whose leaders are former FRAPH and Tonton Macoute terrorists. The latter are slated to integrate a “national unity government” alongside the leaders of the Democratic Convergence and The Group of 184 Civil Society Organizations led by Andy Apaid. More specifically, the FLRN led by Guy Philippe is slated to rebuild the Haitian Armed forces, which were disbanded in 1995.

What is at stake is an eventual power sharing arrangement between the various Opposition groups and the CIA supported Rebels, which have links to the cocaine transit trade from Colombia via Haiti to Florida. The protection of this trade has a bearing on the formation of a new “narco-government”, which will serve US interests.

A bogus (symbolic) disarmament of the Rebels may be contemplated under international supervision, as occurred with the KLA in Kosovo in 2000. The “former terrorists” could then be integrated into the civilian police as well as into the task of “rebuilding” the Haitian Armed forces under US supervision.

What this scenario suggests, is that the Duvalier-era terrorist structures have been restored. A program of civilian killings and political assassinations directed against Lavalas supporter is in fact already underway.

In other words, if Washington were really motivated by humanitarian considerations, why then is it supporting and financing the FRAPH death squadrons? Its objective is not to prevent the massacre of civilians. Modeled on previous CIA led operations (e.g. Guatemala, Indonesia, El Salvador), the FLRN death squadrons have been set loose and are involved in targeted political assassinations of Aristide supporters.

The Narcotics Transshipment Trade

While the real economy had been driven into bankruptcy under the brunt of the IMF reforms, the narcotics transshipment trade continues to flourish.  According to the US Drug Enforcement Administration (DEA), Haiti remains “the major drug trans-shipment country for the entire Caribbean region, funneling huge shipments of cocaine from Colombia to the United States.” (See US House of Representatives, Criminal Justice, Drug Policy and Human Resources Subcommittee, FDHC Transcripts, 12 April 2000). 

It is estimated that  Haiti is now responsible for 14 percent of all the cocaine entering the United States, representing billions of dollars of revenue for organized crime and US financial institutions, which launder vast amounts of dirty money. The global trade in narcotics is estimated to be of the order of 500 billion dollars.

Much of this transshipment trade goes directly to Miami, which also constitutes a haven for the recycling of dirty money into bona fide investments, e.g. in real estate and other related activities.

The evidence confirms that the CIA was protecting this trade during the Duvalier era as well as during the military dictatorship (1991-1994). In 1987, Senator John Kerry as Chairman of the Subcommittee on Narcotics, Terrorism and International Operations of the Senate Foreign Affairs Committee was entrusted with a major investigation, which  focused  on the links between the CIA and the drug trade, including the laundering of drug money to finance armed insurgencies. “The  Kerry Report” published in 1989, while centering its attention on the financing of the Nicaraguan Contra, also included a section on Haiti: 

“Kerry had developed detailed information on drug trafficking by Haiti’s military rulers that led to the indictment in Miami in 1988, of Lt. Col. Jean Paul. The indictment was a major embarrassment to the Haitian military, especially since Paul defiantly refused to surrender to U.S. authorities.. In November 1989, Col. Paul was found dead after he consumed a traditional Haitian good will gift—a bowel of pumpkin soup…

The U.S. senate also heard testimony in 1988 that then interior minister, Gen. Williams Regala, and his DEA liaison officer, protected and supervised cocaine shipments. The testimony also charged the then Haitian military commander Gen. Henry Namphy with accepting bribes from Colombian traffickers in return for landing rights in the mid 1980’s.

It was in 1989 that yet another military coup brought Lt. Gen. Prosper Avril to power… According to a witness before Senator John Kerry’s subcommittee, Avril is in fact a major player in Haiti’s role as a transit point in the cocaine trade.” ( Paul DeRienzo, Haiti’s Nightmare: The Cocaine Coup & The CIA Connection, Spring 1994, http://globalresearch.ca/articles/RIE402A.html )

Jack Blum, who was Kerry’s Special Counsel, points to the complicity of US officials in a 1996 statement to the US Senate Select Committee on Intelligence on Drug Trafficking and the Contra War:

“...In Haiti …  intelligence “sources” of ours in the Haitian military had turned their facilities over to the drug cartels. Instead of putting pressure on the rotten leadership of the military, we defended them. We held our noses and looked the other way as they and their criminal friends in the United States distributed cocaine in Miami, Philadelphia and New, York. (http://www.totse.com/en/politics/central_intelligence_agency/ciacont2.html )

Haiti not only remains at the hub of the transshipment cocaine trade, the latter has grown markedly since the 1980s. The current crisis bears a relationship to Haiti’s role in the drug trade. Washington wants a compliant Haitian government which will protect the drug transshipment routes, out of Colombia through Haiti and into Florida.

The inflow of narco-dollars –which remains the major source of the country’s foreign exchange earnings– are used to service Haiti’s spiraling external debt, thereby also serving the interests of the external creditors.

In this regard, the liberalization of the foreign-exchange market imposed by the IMF has provided (despite the authorities pro forma commitment to combating the drug trade) a convenient avenue for the laundering of narco-dollars in the domestic banking system. The inflow of narco-dollars alongside bona fide “remittances” from Haitians living abroad, are deposited in the commercial banking system and exchanged into local currency. The foreign exchange proceeds of these inflows can then be recycled towards the Treasury where they are used to meet debt servicing obligations.

Haiti, however, reaps a very small percentage of the total foreign exchange proceeds of this lucrative contraband. Most of the revenue resulting from the cocaine transshipment trade accrues to criminal intermediaries in the wholesale and retail narcotics trade, to the intelligence agencies which protect the drug trade as well as to the financial and banking institutions where the proceeds of this criminal activity are laundered. 

The narco-dollars are also channeled into “private banking” accounts in numerous offshore banking havens. (These havens are controlled by the large Western banks and financial institutions). Drug money is also invested in a number of financial instruments including hedge funds and stock market transactions. The major Wall Street and European banks and stock brokerage firms launder billions of dollars resulting from the trade in narcotics.

Moreover, the expansion of the dollar denominated money supply by the Federal Reserve System , including the printing of billions of dollars of US dollar notes for the purposes of narco-transactions constitutes profit for the Federal Reserve and its constituent private banking institutions of which the most important is the New York Federal Reserve Bank. See (Jeffrey Steinberg, Dope, Inc. Is $600 Billion and Growing, Executive Intelligence Review, 14 Dec 2001, http://www.larouchepub.com/other/2001/2848dope_money.html

In other words, the Wall Street financial establishment, which plays a behind the scenes role in the formulation of US foreign policy, has a vested interest in retaining the Haiti transshipment trade, while installing a reliable “narco-democracy” in Port-au-Prince, which will effectively protect the transshipment routes.

It should be noted that since the advent of the Euro as a global currency, a significant share of the narcotics trade is now conducted in Euro rather than US dollars. In other words, the Euro and the dollar are competing narco-currencies.

The Latin American cocaine trade –including the transshipment trade through Haiti– is largely conducted in US dollars.  This shift out of dollar denominated narco-transactions, which undermines the hegemony of the US dollar as a global currency, largely pertains to the Middle East, Central Asian and the Southern European drug routes.

Media Manipulation

In the weeks leading up to the Coup d’Etat, the media has largely focused its attention on the pro-Aristide “armed gangs” and “thugs”,  without providing an understanding of the role of the FLRN Rebels.

Deafening silence: not a word was mentioned in official statements and UN resolutions regarding the nature of the FLRN.  This should come as no surprise: the US Ambassador to the UN  (the man who sits on the UN Security Council) John Negroponte.  played a key role in the CIA supported Honduran death squadrons in the 1980s when he was US ambassador to Honduras. (See San Francisco Examiner, 20 Oct 2001  http://www.flora.org/mai/forum/31397 )

The FLRN rebels are extremely well equipped and trained forces. The Haitian people know who they are. They are Tonton Macoute of the Duvalier era and former FRAPH assassins.

The Western media is mute on the issue, blaming the violence on President Aristide. When it acknowledges that the Liberation Army is composed of death squadrons, it fails to examine the broader implications of its statements and that these death squadrons are a creation of the CIA and the Defense Intelligence Agency.

The New York Times has acknowledged that the “non violent” civil society opposition is in fact collaborating with the death squadrons, “accused of killing thousands”, but all this is described as “accidental”. No historical understanding is provided. Who are these death squadron leaders?  All we are told is that they have established an “alliance” with the “non-violent” good guys who belong to the “political opposition”. And it is all for a good and worthy cause, which is to remove the elected president and “restore democracy”: 

“As Haiti’s crisis lurches toward civil war, a tangled web of alliances, some of them accidental, has emerged. It has linked the interests of a political opposition movement that has embraced nonviolence to a group of insurgents that includes a former leader of death squads accused of killing thousands, a former police chief accused of plotting a coup and a ruthless gang once aligned with Mr. Aristide that has now turned against him. Given their varied origins, those arrayed against Mr. Aristide are hardly unified, though they all share an ardent wish to see him removed from power.” (New York Times,  26 Feb 2004)

There is nothing spontaneous or “accidental” in the rebel attacks or in the “alliance” between the leader of the death squadrons Guy Philippe and Andy Apaid, owner of the largest industrial sweatshop in Haiti and leader of the G-184. 

The armed rebellion was part of a carefully planned military-intelligence operation. The Armed Forces of the Dominican Republic had detected guerilla training camps inside the Dominican Republic on the Northeast Haitian-Dominican border. ( El ejército dominicano informó a Aristide sobre los entrenamientos rebeldes en la frontera, El Caribe, 27 Feb. 2004, http://www.elcaribe.com.do/articulo_multimedios.aspx?id=2645&guid=AB38144D39B24C6FBA4213AC40DD3A01&Seccion=64 )

Both the armed rebels and their civilian “non-violent” counterparts were involved in the plot to unseat the president. G-184 leader Andre Apaid was in touch with Colin Powell in the weeks leading up to the overthrow of Aristide;  Guy Philippe and “Toto” Emmanuel Constant have links to the CIA; there are indications that Rebel Commander Guy Philippe and the political leader of the Revolutionary Artibonite Resistance Front Winter Etienne were in liaison with US officials. (See BBC, 27 Feb 2004, http://news.bbc.co.uk/2/hi/americas/3496690.stm ).

While the US had repeatedly stated that it will uphold Constitutional government, the replacement of Aristide by a more compliant individual had always been part of the Bush Administration’s agenda.

On Feb 20, US Ambassador James Foley called in a team of four military experts from the U.S. Southern Command, based in Miami. Officially their mandate was “to assess threats to the embassy and its personnel.” (Seattle Times, 20 Feb 2004). US Special Forces are already in the country. Washington had announced that three US naval vessels “have been put on standby to go to Haiti as a precautionary measure”. The Saipan is equipped with Vertical takeoff Harrier fighters and attack helicopters. The other two vessels are the Oak Hill and Trenton.  Some 2,200 U.S. Marines from the 24th Marine Expeditionary Unit, at Camp Lejeune, N.C. could be deployed to Haiti at short notice, according to Washington.

With the departure of President Aristide, Washington, however, has no intention of disarming its proxy rebel paramilitary army, which is now slated to play a role in the “transition”. In other words, the Bush administration will not act to prevent the occurrence of killings and political assassinations of Lavalas and Aristide supporters in the wake of the president’s kidnapping and deportation.

Needless to say, the Western media has not in the least analyzed the historical background of the Haitian crisis. The role played by the CIA has not been mentioned. The so-called “international community”, which claims to be committed to governance and democracy, has turned a blind eye to the killings of civilians by a US sponsored paramilitary army. The “rebel leaders”, who were commanders in the FRAPH death squadrons in the 1990s, are now being upheld by the US media as bona fide opposition spokesmen. Meanwhile, the legitimacy of the former elected president is questioned because he is said to be responsible for “a worsening economic and social situation.” 

The worsening economic and social situation is largely attributable to the devastating economic reforms imposed by the IMF since the  1980s. The restoration of Constitutional government in 1994 was conditional upon the acceptance of the IMF’s deadly economic therapy, which in turn foreclosed the possibility of a meaningful democracy. High ranking government officials respectively within the Andre Preval and Jean Bertrand Aristide governments were indeed compliant with IMF diktats. Despite this compliance, Aristide had been “blacklisted” and demonized by Washington.  

The Militarization of the Caribbean Basin

Washington seeks to reinstate Haiti as a full-fledged US colony, with all the appearances of a functioning democracy. The objective is to impose a puppet regime in Port-au-Prince and establish a permanent US military presence in Haiti. 

The US Administration ultimately seeks to militarize the Caribbean basin.

The island of Hispaniola is a gateway to the Caribbean basin, strategically located between Cuba to the North West and Venezuela to the South.  The militarization of the island, with the establishment of US military bases, is not only intended to put political pressure on Cuba and Venezuela, it is also geared towards the protection of the multibillion dollar narcotics transshipment trade through Haiti, from production sites in Colombia, Peru and Bolivia.

The militarisation of the Caribbean basin is, in some regards, similar to that imposed by Washington on the Andean Region of South America under “Plan Colombia’, renamed “The Andean Initiative”. The latter constitutes the basis for the militarisation of oil and gas wells, as well as pipeline routes and transportation corridors. It also protects the narcotics trade.

Mehdi’s Morning Memo: The Return Of ‘Calamity Clegg’?

The ten things you need to know on Monday 25 February 2013...

1) THE RETURN OF 'CALAMITY CLEGG'?

Oh dear. So there we were, minding our own business on a Sunday evening, when out comes the deputy prime minister with a pretty startling admission - "indirect and non-specific concerns about Chris Rennard’s conduct reached my office in 2008" - that seem to contradict his earlier denials of having had any knowledge of claims of sexual misconduct against the senior Lib Dem peer. Clegg flew back to the UK from a half-term holiday in Spain with his family to proclaim that he would "not stand by and allow my party to be subject to a show trial of innuendo, half-truths and slurs".

But the Lib Dem leader has turned a controversy over sexual harassment into, basically, a Lib Dem leadership crisis - perhaps the worst of his political career. Speaking on Radio Solent this morning, Clegg said he "feels for" the women who have come forward but said "until last week... no very specific allegations were put to me...now that those general concerns have evolved into specific concerns we can act and we will".

This morning's front pages have gone for Clegg's jugular:

"Revealed: The Damning New Claim Against Nick Clegg" (Telegraph)

"Clegg Says He Knew Of Sex Claims About Peer" (Times)

"Clegg: I Did Know About Sex Claims" (Independent)

"Clegg Admits He Knew About Sex Claims" (Guardian)

"Clegg: I Did Know About Lord Grope" (Daily Mirror)

As is so often the case when it comes to the Lib Dems, the most damning splash is on the front of the Daily Mail:

"Weasel words: Clegg insisted he didn't know about sex allegations against peer. Now he admits he ordered probe FIVE YEARS ago into 'non specific' claims of assaults Now Lib Dems face a police probe."

The paper notes how the Lib Dem leader dumped the current chief secretary to the Treasury right in it: "In a stunning about-face, Mr Clegg said he asked his chief of staff, Danny Alexander, to probe ‘concerns about Chris Rennard’s conduct’ in 2008."

The Telegraph reports:

"Mr Clegg’s predecessors as party leader, Charles Kennedy and Sir Menzies Campbell, could also be asked whether any concerns about Lord Rennard had been raised with them.

"... However party insiders have told The Telegraph that 'at least a dozen women' could have been the subject of the peer's attention."

It ain't looking good for the coalition's junior partner - and this story is going to run and run. "The Lib Dems' attempt last week to insulate Clegg and set up an internal inquiry smacked of a bid to sweep the controversy back under a carpet," writes Kevin Maguire in today's Mirror. "It's been blindingly obvious since the US Watergate scandal that any hint of a cover-up can be more dangerous than the original crime."

Meanwhile, senior Lib Dems are queueing up to plead ignorance. "I knew of no reports that suggested Chris Rennard resigned for anything other than health reasons," the party's deputy leader Simon Hughes said on BBC Breakfast this morning. Pressed on whether he was aware of complaints against Rennard, Vince Cable told the Marr programme yesterday: "Absolutely not."

And it has to be pointed out, of course, that Lord Rennard has strenuously denied all of the allegations made against him.

2) LET'S TRY AGAIN

If you think the Rennard affair is the only scandal harming the Lib Dems right now, think again.

From the Telegraph:

"The retrial begins today of Vicky Pryce, 60, after the jury was discharged for failing to reach a verdict in her trial for perverting the course of justice by taking speeding points for ex–husband Chris Huhne."

3) EYE ON EASTLEIGH

Meanwhile, the Lib Dems remain bullish about their prospects for victory in Eastleigh - the Times quotes a senior pary figure, speaking off the record:

“'If Chris Huhne lying isn’t going to derail us then a peer that very few people have heard of is not going to harm us,' he said.

"Although Mike Thornton, the Lib Dem candidate, remains the favourite to win the election, bookmakers have cut the odds of victory for the Conservatives after a new poll. The poll, conducted by Survation and published yesterday, showed the Tories with a four-point lead. Ladbrokes has slashed the odds of Maria Hutchings, the Conservative candidate, winning the seat from 5-1 to 5-2."

As the Independent's lead editorial notes, "It is difficult to overstate the significance of Thursday's by-election. The contest is still a hard-fought scrap between the Coalition partners with far-reaching implications for Britain's political landscape, up to the 2015 election and beyond." The Sun's Trevor Kavanagh agrees: "Thursday’s battle will seal the fate of either David Cameron or Nick Clegg and even perhaps the Coalition they lead. It could even hasten the General Election, officially fixed for May 2015, with devastating consequences for the Conservatives."

4) 'A DOWNGRADED CHANCELLOR'

The Rennard affair couldn't have come along at a better time for George Osborne. All eyes are on the Lib Dems, rather than the hapless chancellor of the exchequer who lost our economy's triple-A credit rating on Friday night.

Well, not all eyes. The FT splashes on "Osborne feels the heat over rating blow", noting how:

"George Osborne is under pressure from both sides of the coalition to change the government's economic plan after the UK's loss of its triple A credit rating prompted colleagues of the chancellor to question his economic credibility.

"... Tory MPs are becoming increasingly dissatisfied with the chancellor's performance, with the 100-strong "No Turning Back" group of Thatcherite backbenchers spearheading a push for greater austerity to fund tax cuts.

"David Ruffley, a leading member of the group, said: 'Some of us would like him to cut public spending even more in order to fund tax cuts to inject a fiscal stimulus into the UK economy at the budget.'"

Cut spending even more? Really? Insanity, as Einstein is said to have once remarked, is doing the same thing twice and expecting different results.

"George Osborne is a bankrupt Chancellor of the Exchequer," says an irate editorial in the Mirror. "His failure to adopt a Plan B to make the economy grow is the political equivalent of banging his head against a brick wall... As it stands, he is a downgraded Chancellor."

In its lead editorial, however, the Times - home to key Osborne ally, Danny Finkelstein - says "the problem is not that the strategy laid out by the coalition in 2010 was wrong. It is that the Government has failed to implement that strategy with sufficient vigour and political courage".

If. You. Say. So.

5) GAY MARRIAGE REVOLT, PART 68

First we discovered that Dave was having difficulties persuading his mother to back his same-sex marriage bill; now we learn that he's lost the support of the chair of his own local party association. From the Telegraph:

"The chairman of David Cameron’s local Conservative association has resigned in protest at his support for gay marriage.

"Cicely Maunder, 64, has abandoned her party membership and a number of the executive committee in Chipping Norton are said to have joined her.

"The decision by Mrs Maunder will be embarrassing for the Prime Minister who has a home in his Witney Constituency not far from the town in Oxfordshire."

BECAUSE YOU'VE READ THIS FAR...

Watch this video of a kitten inside a... glass. Yes, a glass.

6) 'LISTENING TRIP'

Welcome to Britain, John! From the Times:

"John Kerry, the new US Secretary of State, is expected to focus on the Middle East on his inaugural world tour, which kicked off in London last night.

"Syria will be on the menu at a breakfast meeting with David Cameron this morning, but talks with the Prime Minister and later with William Hague, the Foreign Secretary, are also expected to touch on the Falklands.

Mr Kerry's ten-day tour is billed as a "listening trip" but already it is becoming clear that the new Secretary of State will run up against problems: the reluctance of the Syrian opposition to trust a White House that has vetoed arms deliveries, the limits of diplomacy in persuading Iran to drop its pursuit of a nuclear bomb, and European reluctance to spend more on defence. It will also take up the British call for faster progress on reaching a Middle East peace settlement, with an eye to President Obama's trip to Israel in March.

The paper notes that "Mr Kerry has an edge over his European counterparts because, unlike many of them, he has met President Assad on several occasions".

7) THE LOST WAR

More good news from the 'good war' in Afghanistan - via tonight's BBC Panorama:

"Shocking revelations of murder, sexual abuse of young boys, unarmed civilians being shot at, police officers high on drugs, and routine kidnaps and extortion are exposing the true state of Afghanistan's security forces in Helmand province.

"An investigation has revealed how Afghan forces running bases that British soldiers fought to secure are barely able to function – let alone pose a challenge to the Taliban."

Meanwhile, the Times reports:

"President Karzai yesterday ordered all US Special Forces out of a province bordering Kabul amid allegations that Afghans working with them are involved in murder and torture."

"In a test of his power over the Nato-led mission, the President issued his directive after several months of complaints about US-sponsored militias roaming unchecked in Wardak. They are alleged to have cut a student’s throat and made nine people disappear."

Are you 'listening', Mr Kerry?

8) 'HOW NOT TO RUN AN ELECTION'

That's the title of a new and damning study from the Electoral Reform Society on last November's police and crime commissioner elections - described as a multimillionpound "debacle"

The Guardian reports:

"Nearly 90% of voters in England and Wales have no idea who their police and crime commissioner is despite November's first direct elections, which cost £75m. A study by the Electoral Reform Society (ERS) shows the elections, which recorded the lowest turnout in peacetime history, were poorly delivered and had failed candidates and voters. Voters were left in the dark about who they could vote for, while candidates were kept away by huge deposits, unclear eligibility rules, vast electoral districts and high campaign costs."

9) MOVE TO WALES, SAVE MONEY

Desperate times call for desperate measures. From the Independent's front page:

"Taxpayers could be given a discount for living and working in Wales, as part of attempts to boost the country's underdeveloped economy.

"The British Government spends £18bn more on Wales every year than it gets back in tax - or £6,008 per head of the Welsh population. At present just one in 16 people earn more than £34,000 - the rate at which the higher 40 per cent tax band kicks in.

"Now, The Independent understands, the Treasury is proposing to allow the Welsh Assembly taxation powers that would allow it to vary the rates of tax that apply to people who live and work in Wales."

10) AN OSCAR FOR LINCOLN

Woo-hoo! Daniel Day-Lewis's superb portrayal of President Abraham Lincoln, in the Steven Spielberg biopic of the same name, ensured the British-born star become the first person to win the best actor Oscar for the third time at last night's Academy Awards ceremony in Los Angeles.

The HuffPost UK's full report on last night's Oscars, and full list of winners and runners-up, is here.

My recent New Statesman column on what Obama can learn from Lincoln is here.

PUBLIC OPINION WATCH

From yesterday's Sunday Times/YouGov poll:

Labour 43
Conservatives 32
Lib Dems 11
Ukip 9

That would give Labour a majority of 114.

140 CHARACTERS OR LESS

@iainmartin1 Chris Huhne down and out, Nick Clegg auditioning for part of Richard Nixon. Vince Cable... pondering...

@toryjim So Nick Clegg might have known something but didn't know what that something that he might have known but didn't know was.

@davidschneider Keen to get to truth of Rennard affair, Clegg launches full inquiry supervised by the Vatican.

900 WORDS OR MORE

Gaby Hinsliff, writing in the Guardian, says: "The Lib Dems' handling of harassment claims has so far been shameful. Their inquiries had best follow their brief – and dig."

Stephen Glover, writing in the Daily Mail, says: "Pity the voters who trusted the REAL 'nasty party'".

Romanian prime minister Victor Ponta, writing in the Times, says: "Our people have an improving economy at home. They don’t need to come to Britain."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

Osborne Facing Calls For Spending Cuts After Credit Downgrading

George Osborne was facing renewed demands from the Tory rank-and-file for tax and spending cuts tonight after Britain was stripped of its prized AAA credit rating. Ministers and senior party figures rallied round the chancellor in the wake of the deci...

Osborne To Continue With Austerity Programme Despite Credit Rate

George Osborne insisted Britain would not "run away" from its problems and vowed to continue with his tough austerity programme after Moody's downgraded the country's AAA credit rating. In a major blow to George Osborne's economic strategy, the agency...

Bad News For Osborne As Britain Loses Its AAA Rating

Britain has had its cherished credit status downgraded by US agency Moody's. In a major blow to George Osborne's economic strategy, the agency reduced Britain's debt rating from AAA to AA1, forecasting "sluggish" growth over the next few years. Moody'...

Horsemeat Scandal Goes Global As World’s Largest Food Maker Pulls Tainted Pasta From Spain...

First it was Ireland, then the entire UK, then Germany, and gradually it spread to all of Europe (except for France of course, where it was always a delicacy). But it was only once its finally crossed the Alps and made its way to the Swiss factories of Nestle, the world's largest food maker, did the horsemeat scandal truly go global. The FT reports that "the escalating horsemeat scandal has ensnared two of the biggest names in the food industry, Nestlé, the world’s number-one food maker, and JBS, the largest beef producer by sales. Switzerland-based Nestlé on Monday removed pasta meals from shelves in Italy and Spain and suspended deliveries of all processed products containing meat from German supplier, H.J. Schypke, after tests revealed traces of horse DNA above 1 per cent. Nestlé said it had informed the authorities....Nestlé withdrew two chilled pasta products, Buitoni Beef Ravioli and Beef Tortellini from sale in Italy and Spain. Lasagnes à la Bolognaise Gourmandes, a frozen meat product for catering businesses produced in France, will also be withdrawn."

And now we wait as the panic spreads across the Atlantic to the US, where every food purist, who until recently stuffed themselves full of pink slime and still eats bucketfulls of the mysterious "meat" known as KFC, will accuse their retailer of horseplay, and demand that every burger be triple tested at massive bottom line losses to already profit-strapped food producers everywhere (but will certainly help Madison Avenue as horse ads become the latest advertising meme).

From the FT:

“We are also enhancing our existing comprehensive quality assurance programme by adding new tests on beef for horse DNA prior to production in Europe,” said Nestlé, which just last week said products under its labels were not affected.

The European food industry has already been crippled as the horsemeat scandal unfolds:

Nielsen, the consumer research group, said sales of frozen burgers in the week to February 2 fell 40 per cent, and more than two-thirds of British adults said they would be less likely to buy frozen meat products in the future.

Two people who attended the meeting described it as “constructive”. However, the minister was challenged by several people on how quickly the Food Standards Agency and the Department of Environment acted on intelligence it had received on the food supply chain. One retailer also said an attack by David Cameron on the supermarkets on Friday “had not necessarily been helpful”.

The testing, which some supermarkets already carry out, will mean extra costs for retailers at a time of weak consumer confidence.

Suppliers reckon they will end up bearing the brunt of the cost – adding to the pressure on margins which, some say, caused the problem in the first place.

“The people who in the end will suffer are the food manufacturers, because they will be forced to undertake testing. And the people with the power in this relationship on the whole are the food retailers,” said one industry player.

Many believe equine testing is just the tip of the iceberg. “I am sure this will rapidly move on to other species,” said Adam Couch, chief executive of Cranswick, a meat and pastry goods supplier, which has not been implicated in the scandal.

This is good news for KFC, because once the testing spreads to Yum's restaurant chain, half the DNA that is consumed on the premises will be found to have no earthly basis, and thus, well, "you must acquit".

As for those who are still a lap behind the latest newsflow in the race for the horsemeat-free trifecta, the Guardian has conveniently released the definitive guide to the Equine scandal.

Horsemeat scandal: the essential guide

With the Europewide scandal over the contamination of meat products, from beefburgers to lasagne, showing no sign of abating, study the issue in depth and learn all you need to know about how it came to this with our essential guide.

1. Where did the horsemeat scandal begin?

The Food Safety Authority of Ireland tested a range of cheap frozen beefburgers and ready meals from supermarkets last November for the presence of DNA from other species which were undeclared. It found horse DNA in over one-third of the beefburger samples, and pig in 85% of them.

The majority of the beef ready meals also contained pig DNA but not horse. One beefburger sample from Tesco turned out to be 29% horse instead of beef. Until then supermarkets and enforcement bodies had not tested for horse in beef products, because no one expected it to be there.

There are conflicting reports as to whether the agency began its investigation as random surveillance or after having been tipped off. Because the findings were so serious and likely to do huge damage to commercial interests, the FSAI then spent two months retesting before announcing its findings on 15 January.

The Irish and UK supermarket supply chains are highly integrated. FSAI says it alerted the UK Food Standards Agency in November since what was on sale in Ireland would also be on sale in the UK; the FSA told MPs that it only found out in January. No one knows how long the adulteration has gone on.

2. Where did the horse and pig found by the Irish in beef products come from?

The Irish survey identified three factories as the source of beef products that had been contaminated or adulterated: Silvercrest Foods in Ireland, Dalepak in Yorkshire and Liffey Meats in Ireland. Silvercrest and Dalepak are both subsidiaries of ABP Food Group, one of the largest beef processors in Europe.

ABP pointed the finger of blame at its continental suppliers, with the FSAI saying these were in the Netherlands and Spain. It later said the horsemeat had entered its chain through suppliers in Poland. The Polish government checked its horse slaughterhouses and found no irregularities in labelling. Five weeks into the scandal and the links in the Irish chain have still not been fully established.

Huge blocks of frozen meat at a cold store in Northern Ireland, Freeza Foods, which had been quarantined by officials suspicious of its labelling and state of packaging, were found to contain 80% horse. Freeza Foods said the meat blocks had been delivered to its store by meat broker McAdam Foods but that it had rejected them and only continued storing them as a "goodwill" measure for McAdam. McAdam said it in turn had been sold them by a meat trader in Hull, Flexi Foods, which imports from Poland and elsewhere. ABP confirmed it had been supplied materials by McAdam but the two companies have given conflicting accounts of what the deliveries have been.

ABP has also confirmed that it has been supplied with beef by Norwest Foods, based in Cheshire, with operations in Poland and Spain, which is now also part of FSA inquiries.

The first case of horsemeat being found in fresh beef surfaced this week, when Asda withdrew its fresh beef bolognese. Its supplier was the Irish company Greencore, which said it had in turn been supplied the meat by ABP.

3. Why did some products contain so much more horse than others?

Industry sources and food safety officials believe there are different types of adulteration taking place. Where trace levels of DNA of the wrong species, particularly pig, have been found in beef, the most likely explanation is that they have been contaminated either by failure to clean production lines thoroughly enough between different processing, or that the DNA is present in protein additives widely used in the industry to bulk out cheap so-called value or economy ranges. An economy beefburger can legally contain as little as 47% beef.

Manufacturers add other cheap ingredients including water and fat, and use concentrated proteins to bind the water and fat in. They may appear on labels as "seasoning". One of the cheapest sources of these protein additives is pork rind. It is possible that horse hide is now also being used. The widespread adulteration of cheap chicken breast with pig and beef proteins and water has been uncovered in previous scandals. The beef proteins were derived from hydrolysed cattle hides. It is not illegal to use these protein concentrates so long as they are identified correctly to the manufacturer.

Where horse has been found above trace levels, however, experts believe they are looking at fraudulent substitution of horse for beef. Where horse has been found in high concentrations, they say it suggests industrial scale adulteration.

4. How did the rest of Europe get involved?

Once the Irish authorities had reported their findings, the UK FSA asked industry to test all its beef products for horse. The next round of tests revealed that the "beef" in frozen lasagne and spaghetti bolognese made for Tesco, Aldi and Findus by a French manufacturer, Comigel, was up to 100% horse.

Comigel was making cheap beef meals for supermarkets and branded companies in 16 different countries so the scandal spread rapidly, with horsemeat meals being withdrawn in Germany, Sweden, Belgium, the Netherlands, Switzerland, as well as Ireland and the UK.

5. Is the source of the Irish horsemeat the same as the French one?

The trail of the French manufacturing scandal has taken a different route to the Irish/British one so far. Comigel had subcontracted its ready meal production to a factory in Luxembourg, Tavola. It was supplied with meat by a company called Spanghero. Spanghero had bought meat from a Dutch fraudster already convicted of passing horse off as beef, Jan Fasen.

The Dutch trader ran a company called Draap, which spelled backwards is paard or Dutch for horse. It was registered in Cyprus in 2008, with an offshore vehicle in the British Virgin Islands. It emerged during Fasen's trial in Holland that he had supplied French companies with horsemeat imported from South America and Mexico fraudulently labelled as Dutch and German "beef" going back to 2007.

The horsemeat found in the recent tests on ready meals exported from France was said to have been sourced by Draap from Romania. The Romanian government has said its meat was legally exported correctly labelled as horse. The French government said Spanghero was the first agent to stamp the horse as beef; Spanghero has denied doing so deliberately. Fasen says Spanghero and French manufacturers were in on the deception from the beginning.

6. Why are the supply chains so complex?

The food and retail industries have become highly concentrated and globalised in recent decades. A handful of key players dominate the beef processing and supermarket sectors across Europe. They have developed very long supply chains, particularly for their economy lines, which enable them to buy the ingredients for processed foods from wherever they are cheapest at any point, depending on exchange rates and prices on the global commodity markets. Networks of brokers, cold stores operators and subcontracted meat cutting plants have emerged to supply rapidly fluctuating orders "just in time". Management consultants KPMG estimate there are around 450 points at which the integrity of the chain can break down.

7. Why has it happenened?

Supermarket buyers and big brands have been driving down prices, seeking special offers on meat products as consumers cut back on their spending in the face of recession. The squeeze on prices has come at a time when manufacturers' costs have been soaring. Beef prices have been at record highs as has the price of grain needed to feed cattle. The cost of energy, heavily used in industrial processing and to fuel centralised distribution chains, has also soared. There has been a mistmatch between the cost of real beef and what companies are prepared to pay.

8. How is the meat industry regulated?

Licensed slaughterhouses across Europe are required to have an official vet in attendance when slaughtering takes place – in the UK most used to be directly employed by the government but many are now supplied under contract to the Food Standards Agency by the private company Eville & Jones. Plants over a certain size are also required to have a meat hygiene inspector. A trend to deregulate and leave industry to police itself, begun under the last government, has seen numbers of inspectors fall from 1,700 at the height of the BSE crisis to around 800 now. Smaller cutting plants are no longer subject to daily inspection. The Food Standards Agency has limited powers – it has depended on industry alerting it to the results of tests voluntarily. Enforcement largely falls to individual local authorities and their trading standards officers, and their budgets have been slashed.

9. What about industry claims that it has full traceability?

The industry has previously boasted that it has full traceability of its supply chain which it audits frequently. The current scandal shows that that traceability is not worth the paper it is generally written on. Most of the factories caught up in the scandal have accreditation with mainstream auditing schemes such as that run by the British Retail Consortium but it failed to spot the problem.

10. What happened to government control of food safety and standards?

The Food Standards Agency was set up in the wake of the BSE crisis when it became clear that one agency that co-ordinated all regulation on food safety and quality was needed. Political memories have been short, however. The coalition government broke up much of the FSA in its bonfire of the quangos, so that responsibility in the current scandal is split. The FSA is still in charge of food safety; the Department of Health is responsible for nutritional standards, and the Department for Environment, Food and Rural Affairs covers labelling and veterinary medicines.

11. Where do the horses come from?

The Polish and Romanian governments have not only protested their innocence of exporting horse as beef but also pointed out that their horse slaughtering industries are not large enough to account for the scale of adulteration that is emerging. Respected animal welfare organisations have warned governments for several years about the growing trade in knackered horses both between Ireland, the UK, France and Belgium, and between North and South America, and continental Europe. Much of the latter is landed via Belgium. The welfare charities have documented horses in the thousands that have been moved by networks of horse dealers without proper passports. They are a mixture of horses bred for racing and pets.

12. What part do UK horse abattoirs play?

There is an established transport corridor for horses for slaughter from Ireland through Scotland or Wales to England and on to Europe. Last week a horse abattoir in Yorkshire, Peter Boddy, was raided along with a Welsh meat trading company. Three men have been arrested on suspicion of offences under the Fraud Act. The Peter Boddy abattoir, now closed, was small, with official records showing it slaughtered 44 horses last year.

13. Why are governments talking about organised crime?

Previous convictions of dealers and traders along with intelligence suggest a link between the horse trade, meat laundering and various forms of trafficking. Lorries transporting horses have been used as cover for smuggling large quantities of cannabis between the UK and Northern Ireland and lorries transporting horsemeat to the continent are believed to be used for people smuggling on the return journey.

14. Is it a health problem?

The government said at first that there was no health risk from horsemeat, but a leading government public analyst pointed out that it could not be sure until it knew the source of the horsemeat. The latest advice from the chief medical officer is that there is a risk but that it is very low.

Horses are routinely treated with an anti-inflammatory drug called phenylbutazone, or "bute". Bute is banned from the human food chain, because it can in rare cases cause a potentially life threatening illness, aplastic anaemia, or bone marrow failure. Since it is not known what triggers the illness, it has not been possible to set any safe level for bute residues in human food. Doses from horsemeat are likely to be very low. Horse passports are supposed to record any bute administered so that animals can be excluded from going for food, but with large numbers of fake passports in circulation, some horses containing bute have been eaten.

Since the scandal the government has changed the rules so that horse carcasses may now only be released for consumption once they have been tested for bute. The first batch of tests found around 4% of horse testing positive. The horse trade from the Americas has similarly been bedevilled by problems with horse passports and drug contamination.

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The Lamest Excuses Money Can Buy

As we try to grasp the reasoning behind cuts to life-saving programs while billion-dollar incomes and trillion-dollar profits are being made, we must understand that extreme wealth deadens parts of the brain. Empathy and honesty go first. Then rationa...

The Lamest Excuses Money Can Buy

As we try to grasp the reasoning behind cuts to life-saving programs while billion-dollar incomes and trillion-dollar profits are being made, we must understand that extreme wealth deadens parts of the brain. Empathy and honesty go first. Then rationa...

Key Macro Events In The Coming Week

With the world engaged in open currency warfare, the only thing that matters are the assorted drivers that push various global currencies higher and lower. Here are the key macro/FX-related catalysts in the week ahead.

2012 Q4 GDP has been weak in G3 and indeed Europe more broadly, (however it has generally surprised to the upside in Asia), consequently, the momentum of business sentiment will be key to watch. The Euro area flash PMI, German Ifo and the Philadelphia Fed survey are released this week (the China flash PMI will be released on Feb 25). The consensus expects a further small rise in the Euro area services and manufacturing readings. The week also brings a batch of central bank commentary, where the focus will be on references to currency strength; these include the RBA minutes followed by testimony, a speech by RBNZ governor Wheeler, Bank of Thailand policy decision and Bank of England minutes. The Federal Reserve will release the minutes from the last meeting and they may contain important clues on the bias of the Committee with respect to how long it expects the current QE program to last. Additionally, the Committee may have discussed the potential merits of outcome-based guidance for balance sheet policy, which may be reflected in the minutes.

Monday 18 February

  • Singapore Exports (Jan): Exports rose by 0.5%yoy, less than the 3.0%yoy expected by the Bloomberg consensus.
  • Thailand GDP (Q4 2012): GDP grew by 3.6%qoq, higher than the 0.5%qoq expected by the Bloomberg consensus. The very strong year-on-year print of 18.9% is influenced the flood-related weakness of Q4 2011.
  • Euro area current account (Dec): Last reading was a record surplus of EUR14.8bn in seasonally adjusted terms.

Tuesday 19 February

  • Australia: RBA Minutes: The Minutes may give some important context around whether a rate cut was seriously entertained. Even so, the information content in these Minutes is somewhat limited – given that they pre-date the far more detailed annunciation of RBA views presented in last Friday’s quarterly Statement on Monetary Policy.
  • Malaysia current account balance (Q4): The previous reading was MYR9.5bn, or only 4% of GDP. Malaysia's smallest surplus in 10 years.
  • Sweden CPI (Jan): Bloomberg consensus expects a reading of 0%yoy, up from -0.1%yoy previously.

Wednesday 20 February

  • Japan Trade balance (Jan): Another huge trade deficit is expected in January as Abe's export-promotinh policies fail to gain any traction.
  • New Zealand: RBNZ Governor Wheeler speaks: The topic of the speech is reportedly the NZD and it will reiterate that the RBNZ believes the NZD is overvalued and would prefer it to be lower. The main question is what else will be said?
  • Thailand Monetary policy meeting: Rates are expected to remain on hold at 2.75%.
  • Malaysia CPI (Jan): Inflation is expected to remain at 1.2%yoy by Bloomberg consensus.
  • Malaysia GDP (Q4): GDP is expected to expand by 5.5%yoy after 5.2% previously by Bloomberg consensus.
  • Germany CPI (Jan): Bloomberg consensus expects a reading of 1.7%yoy
  • France CPI (Jan): Bloomberg consensus expects a reading of 1.4%yoy
  • UK: Bank of England Minutes
  • US PPI (Jan): (GS +0.1%, consensus +0.4%, last -0.3%); core PPI for January (GS +0.1%, consensus +0.2%, last +0.1%). Pipeline inflationary pressures remain very subdued, with core PPI prices for finished goods rising at a modest 0.9% annual rate over the past three months.
  • US FOMC Minutes: The January FOMC meeting was relatively uneventful, with no policy changes announced. However, the meeting minutes may contain important clues on the bias of the Committee with respect to how long it expects the current QE program to last. Additionally, the Committee may have discussed the potential merits of outcome-based guidance for balance sheet policy, which may be reflected in the minutes.

Thursday 21 February

  • Euro area flash PMIs: The Bloomberg Consensus expects a rise to 48.5 from 47.9 for the manufacturing PMI and to 49.0 from 48.6 for the services reading.
  • US CPI (Jan): GS +0.1%, consensus +0.1%, last 0.0%; core CPI for January GS +0.2%, consensus +0.2%, last +0.1%. Core CPI prices likely rose a soft 0.2% (+0.16% unrounded), consistent with an only modest underlying rate of inflation. Headline prices probably increased a smaller 0.1%, as retail gasoline prices -- an important driver of month-to-month changes in headline inflation -- declined on a seasonally adjusted basis in January. Retail gasoline prices have since risen sharply in February.
  • US Philadelphia Fed: Consensus +1, last -5.8. In light of the solid gain in the ISM manufacturing index in January and the sharp improvement in the February Empire manufacturing survey, consensus expects another bounce.

Friday 21 February

  • Australia: RBA Parliamentary Testimony (Feb): This RBA semi-annual parliamentary testimony comes at a very interesting juncture, and it will be a highly market-sensitive event given that it is the first public presentation by Governor Stevens since 12 December. As is typically the case, the initial prepared remarks should stick to the script published in the recent Statement on Monetary Policy. However, with several hours of subsequent Q&A, there is then plenty of scope for the Governor to provide more colour on the RBA’s forecasts and the related risks, including currency related.
  • German Ifo (Feb): Consensus expects a rise to 104.9 from 104.2.
  • Canada CPI (Jan): Consumer price index (Jan). Consensus: +0.2% MoM, +0.7% YoY. Prior -0.6% (+0.8% YoY). Core consumer price index (Jan), 8:30am. Consensus: +0.2% MoM, +1.1% YoY. Prior: -0.6% (+1.1% YoY).
  • Canada Retail sales (Dec): Retail sales (Dec). Consensus: -0.4%MoM. Prior: +0.2%. Retail sales ex autos (Dec), 8:30am. Consensus: +0.1% MoM. Prior: -0.3%.

Summarizing the above in tabular format courtesy of SocGen:

And the weekly narrative, from the same French bank:

EURO AREA SENTIMENT

Kicking off with the February ZEW survey on Tuesday, this week will see the release of a string of sentiment indicators. We expect the German ZEW, euro area PMIs and German IFO to all post some further improvement on the back of continued easing in financial stress. Euro strength, however, may have been a headwind. Overall we expect improvements this month to be less than the previous month. The French INSEE survey is seen flat, however, after the decline last month reflecting still lacklustre demand.

MARKET ISSUES: Economic data are set to take a backseat to the Italian elections this week. The release of the EU Commission’s new set of economic forecast on 22 February should nonetheless attract some interest. Points of particular interest will be the strength of the forecasted recovery and developments on the cyclically adjusted budget deficits. Note, this will mark the first release in a new forecast schedule of three releases per annum (as opposed to two, with two interim updates).

US HOUSING RECOVERY

Presidents’ Day Monday means a shorter week focusing on housing and inflation data. We expect the NAHB housing sentiment indicator to hit a 7-year high in February and look for the housing data (January housing starts, building permits and existing home sales) to generally be in line with our central scenario of a housing recovery. January CPI is set to post its first monthly gain since October on the back of higher food and non-energy service costs. The February Markit PMI indicators should also point to recovery, forecast at 57 after 55.8 previously. While the risk that QE could ultimately trigger inflation remains a debate in the market, there is clearly no sign hereof in actual inflation data and nor do we see any for the foreseeable future.

MARKET ISSUES: We do not expect the minutes of the 29-30 January FOMC (Wednesday) to give grounds for a shift in monetary policy expectations, but just when the Fed will slow the pace of QE is very much at the heart of the market debate as recovery gains traction.

JAPAN TRADE TO IMPROVE

It is still too early to expect the recent yen decline to show up in hard trade data in a significant way, but January trade data should benefit from a recovery in exports to China. As highlighted above, we see further yen depreciation ahead and this should prove a support for the trade data over time. Importantly, we note that for Japan’s policy stimulus to result in a sustainable recovery, wage gains are ultimately needed, which would erode some of the competitiveness gains that a weaker currency can offer.

MARKET ISSUES: Focus is on the yen, and while we expect to hear less speak on the topic, we expect Japan to pursue the type of policy expansion that will see the yen at USD/JPY 100 by year-end.

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Importance of the G20: Not What You Think

There was something important coming from the G20 meeting, but it is not the currency wars that have captured so many imaginations in the media and blogosphere. It was about corporate taxes, but before turning to it, let's try to put the currency statement in perspective.

As many recognize, the currency market is prone to being used to pursue beggar-thy-neighbor policies of competitive devaluations.  The danger is that it leads to trade wars and then shooting wars.  The rules of engagement, as they have evolved over the last quarter of a century or so, are essentially three-fold.

First, exchange rates are not proper goals of policy.  Economic growth and price stability are the proper goals of policy.  Second, foreign exchange prices are best set by the market in a flexible way to help foster the adjustment process and a reduction of global disequilibrium in terms of trade and capital flows.  Third, while avoiding excess volatility, currency prices ought to reflect underlying economic fundamentals and avoid chronic exchange rate misalignments.   On those rare occasions when action, is needed, it should be coordinated and not unilateral.  

The G20 statement, like the G7 statement earlier in the week, restated these longstanding principles.  That members agree not to target exchange rates for competitive purposes was a pointed reminder to Japanese officials to refrain from talking about bilateral exchange rate targets.  And indeed, over the past couple of weeks, Japanese officials have changed their rhetoric and have not talked about specific dollar-yen rates.  

Rarely in stories about currency wars has China been cited.  Yet, it is an indicated co-conspirator, as it were.  The G20 reference to moving more rapidly toward market determined exchange rates  and the importance of avoiding persistent misalignments was clearly addressed to China, and some other East Asian and Middle East countries. 

The rules of engagement allow and encourage countries to pursue monetary and fiscal policies directed at domestic goals.  For several years Japan has been encouraged to reflate its economy.  That it appears to be doing so is not problem.  No one in the G7 or the G20 have objected to that.  The criticism levied against Japanese officials is when they try to manage the currency, suggesting certain targets, and/or overt attempts by the6 government to undermine what is seen as the independence of the central bank.

It also means that the (unconventional) easing of monetary policy by the Federal Reserve is also not an act of (currency) war.  Leaving aside the occasional comment by Brazil's finance minister and a rare comment by a Chinese official, few in positions of responsibility accuse the US of engaging in a competitive devaluation.  

The referees of the rules of engagement as it were, like the IMF, the G20 and the G7 generally agree that although the risks may be there, the conditions and practices now do not meet the threshold of competitive devaluations, a currency war or trade war.  We expect the rhetoric in the traditional and social media about currency wars will die down in the coming period. 

II 

The focus on currency wars distracts from other and arguably more important issues.  Much of coverage of the G20 statement focused on the foreign exchange market, but has missed what is likely an even more important story.

The G20 have begun a process that could lead to the largest overhaul of international corporate tax practices since the 1920s.  The combination of the fiscal pressures at home and the increased importance of intellectual property (e.g., royalties, licensing fees) and questionable transfer pricing corporate practices has elicited a response.  

The official goal is to develop measures to stop tax arbitrage--the shifting of profits from home countries in order to pay lower taxes elsewhere.  A recent OECD study found multinational companies were increasingly booking profits in different countries from where they were generated in order to avoid taxes.

The role of intangibles, like intellectual property rights, services and brands have grown in importance but are difficult to value.  International royalty and license fee payments paid to different subsidiaries within the same business group have soared.  The growing volume of e-commerce also raises issues of the proper tax jurisdiction that are not handled well by the current tax rules.  

This comes even as OECD government have cut statutory corporate tax rates from an average of 32.6% in 2000 to 25.4% in 2011.  The effective tax rate, which is what corporations actually pay, is often much lower due to assorted deductions and allowances.

Recent reports showing that a number of large well-known global companies, such as Starbucks, Apple, Google, Amazon used complicated inter-company transaction to reduce their tax liabilities has helped spur official action.   The big accounting firms are also being called out for the assistance they provide in helping businesses avoid taxes.  

Essentially, the OECD has called for, and the G20 appears to have signed off on, a new effort to modernize the international tax architecture, which could be ready in the next couple of years.  Three committees have been established and more from them will likely be heard around the July G20 meeting.  

The UK will head up a committee to look at transfer prices and the sales to subsidiaries to shift profits from high to low tax jurisdictions.  It is illegal, for example, to structure a particular transaction for the purpose of skirting the law (it is sometimes referred to as "kiting").  For example, it is unlawful for one to withdraw $5000 twice instead of withdrawing $10,000 once in order to avoid reporting requirements.  Can the same principle apply to businesses? 

Germany will head up a committee that investigates way in which companies have reduced the tax base in the accounting of income and assets.  France and the US will lead the third committee, looking at e-commerce in particular, and the proper tax jurisdictions. 

The Obama Administration has been wrestling with the same issue.  Once we get past the sequester and the continuing resolution (authorizes government spending even without a budget), look for corporate tax reform to become more salient.  The fact that it will come after the other events, gives Obama some leverage with the business community, even when it came to the fiscal cliff.  

It is ironic that Obama, who has been accused of being a socialist, is on record of favoring corporate tax reform that include a cut in the top corporate rate to 28% from 35%.  More important than the loopholes he wants to close to pay for the tax cut, is how overseas earnings should be taxed. 

Currently, the US taxes corporate profits earned abroad only when it is repatriated--brought back to the US.  Last month, the nonpartisan Congressional Research Service reported that US-based companies are increasingly shifting profits to tax havens such as Bermuda and Switzerland.  Senator Sanders (VT) has introduced legislation to end the current tax deferral and force companies to pay taxes on their foreign earnings.  Some studies suggest that the higher levels of cash  US corporations are holding is partly a function of these tax avoidance efforts.

At the end of last year, Obama expressed some sympathy for some form of territorial system, which taxes domestic not foreign income.  It could exempt offshore corporate profits from US taxes, seemingly shifting the stance of the 2012 election campaign.  Currently, France, the Netherlands, Belgium and Hong Kong employ a territorial tax system. 

The currency wars have been over-hyped.  There is less there than meets the eye.  The rules of engagement allow for countries to use monetary and fiscal policy for domestic goals.  It does not sanction foreign exchange targeting.  The real news from the G20 meeting is the formal beginning of a process that could very well lead the largest substantial change in international corporate tax system in almost a century.  

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Mehdi’s Morning Memo: Dog Bites Man, Tory Home Secretary Attacks Judges

The five things you need to know on Sunday 17 February 2013...

1) DOG BITES MAN, TORY HOME SECRETARY ATTACKS JUDGES

Eighteen months after the home secretary, Theresa May, falsely claimed that an illegal immigrant was allowed to stay in the UK because of his pet cat, she's picked up the 'human rights help foreign criminals' baton once again - with a coruscating attack on the judiciary in an article for the Mail on Sunday.

The paper itself reports, on its front page:

"Innocent people will be subjected to rape and violent attacks by foreign thugs because judges have sabotaged a bid by Parliament to deport them, Theresa May warned last night.

"In an unprecedented public attack, the Home Secretary accused judges of tearing up the British constitution by flouting a decision by MPs to stop foreign criminals using the European Convention on Human Rights (ECHR) to avoid being thrown out.

"Using highly emotive language, Mrs May claimed there would be more muggings on Britain’s streets because judges let foreign law-breakers stay here. And she vowed to crush the judges’ revolt by rushing through tough new laws.

"Her onslaught follows a long-running row over foreign criminals and immigration cheats who use the ECHR’s ‘right to a family life’ provision to avoid being booted out."

Speaking on the Andrew Marr show this morning, however, human-rights lawyer and Labour peer Helena Kennedy said it was "absolutely imperative judges are not under the thumb of Home Secretaries." Kennedy dismissed May's article as "a populous bit of politicking", pointing out that the number of contentious cases referred to by the home secretary was "minuscule".

Note: There's only five things, not ten things, you need to know this Sunday morning as I am rushing out of the door to do a debate on the (lack of) big ideas in British politics, on the Sky News Murnaghan show at 11:40am, with 'Red Tory' philosopher Philip Blond and 'Blue Labour' thinker Maurice Glasman.

2) HIDE YOUR RINGS!

There's plenty of tax stories in the Sunday papers this morning, off the back of Ed Miliband's surprise 10p/mansion tax announcement on Thursday.

It looks like the Lib Dems are keen to try and wrestle back the wealth tax agenda from the two Eds - from the Mail on Sunday:

"Families will be forced to pay tax on jewellery and other heirlooms under controversial new plans drawn up by the Liberal Democrats.

"Under the scheme, tax inspectors would get unprecedented new powers to go into homes and value rings, necklaces, paintings, furniture and other family treasures.

"Householders would be forced to pay a new ‘wealth’ levy on the assets – with the threat of fines for those who refused to let snoops value their possessions."

That'll go down well with Tory backbenchers already annoyed by various Lib Dem policy measures and proposals.

Meanwhile, the Sunday Times report on the same story reveals that the Lib Dem business secretary Vince Cable is "said to be privately delighted that Labour has come up with the tax policy as it will put pressure on the Conservatives to give in to Lib Dem demands to adopt it. George Osborne, the chancellor, is said to have been sympathetic although Cameron vetoed it".

3) 'NARROWLY AND EXCLUSIVELY FOCUSED'

Once again, the Observer lays into Michael Gove on its front page:

"Education secretary Michael Gove has been savaged by learned societies, academics and even one of his own advisers for devising a new national history curriculum that is narrowly and exclusively focused on Britain.

"In a letter in the Observer signed by the presidents of the Royal Historical Society, the Historical Association, the higher education group History UK and senior members of the British Academy, Gove is condemned for drawing up the curriculum without substantive consultation with teachers and academics.

"... Stephen Mastin, head of history at a school in Cambridge, who worked alongside historian Simon Schama as an adviser to Gove, said the curriculum bore 'no resemblance' to the drafts he worked on as late as last month... Mastin, who stood for the Tories at the last general election, said: 'Between January and the publication of this document – which no one involved in the consultation process had seen – someone has typed it up and I have no idea who that is. It would be scary if we become the only nation in the western world to not teach anything beyond our shores.'"

The paper's political editor Toby Helm adds:

"Michael Gove's Department for Education has taken steps to stop the Twitter feed @toryeducation – to which his own advisers have contributed – from issuing any more abuse against political opponents, critics and journalists.

"Senior government sources said the department had acted to ensure those contributing to the feed will now put out information in a neutral way and free of its previously abusive tone."

BECAUSE YOU'VE READ THIS FAR...

Watch this funny if slightly terrifying video of goats shouting like human beings.

4) AUSTERITY WATCH, PART 223

There's another schools story on the front of the Independent on Sunday - this time related to George Osborne, not Michael Gove:

"George Osborne is secretly breaking his flagship pledge to protect spending on schools, according to the Government's own analysis, revealed in a document leaked to The Independent on Sunday.

"A confidential paper drawn up by civil servants assessing the Department for Education's finances reveals that the Chancellor's promise in 2010 to increase the front-line schools budget in real terms for four years 'is not, in fact, what is happening'.

"The document says: 'Schools are subject to a real-terms cut in their funding because the rate of inflation is currently higher than forecast at the time of the Spending Review [in November 2010].'"

(On a side note, the chancellor will be pleased, however, with the splash headline on the front of the Observer:
"Osborne in pledge to help world's poor fight tax abuse".)

5) I TOLD YOU SO

It's whistleblower time! The Sunday Times reports:

"Ministers were warned more than 18 months ago that illegal horsemeat was getting into the human food chain.

"John Young, a former manager with the Food Standards Agency (FSA), says he alerted the government to a potential scandal of illicit horsemeat with drug residues in human food but was ignored."

Meanwhile, the Sunday Telegraph splashes on news that "British consumers face paying the price for the horse meat scandal": "Mark Price, the chief executive of Waitrose, says that in return for families knowing food is safe and genuine, it cannot be seen as a “cheap commodity” any longer."

The paper adds: "A European Union directive in 2006 ordered 'light touch' regulation, which led to the FSA cutting the number of meat inspectors."

Whistleblowers ignored. Light tough regulation. Loss of public trust. The horsemeat crisis is starting to sound a lot like the financial crisis - well, without the global recession and trillion-pound bailout.

QUOTE UNQUOTE

"William is very gifted, which gives us another interesting challenge in finding the right sort of education for him - impossible in the state system." - the Tory candidate in the Eastleigh by-election, Maria Hutchings, provoked, in the words of the Observer, "a storm of protest as political opponents and state-educated celebrities, said she had insulted state schools, including two local ones with glowing Ofsted reports".

PUBLIC OPINION WATCH

From the Sunday Times/YouGov poll:

Labour 43
Conservatives 32
Lib Dems 12
Ukip 9

That would give Labour a majority of 114.

From the Independent on Sunday/Sunday Mirror/ComRes Observer fortnightly poll:

Labour 36
Conservatives 31
Ukip 14
Lib Dems 8

That would give Labour a majority of 58.

140 CHARACTERS OR LESS

@paulwaugh Paterson 'completely' refutes claims that he was "asleep at the wheel" re horsemeat. But leaves open possibility Spelman was taking 40 winks

@jameskirkup Owen Paterson tells #murnaghan: "It is absolutely illegal to present a horse for slaughter that has taken drugs." Do horses *take* drugs?

@StewartWood Theresa May declares war on judges to deport foreign criminals, Cameron says we're a "soft touch" for foreigners... Lynton Crosby's arrived.

900 WORDS OR MORE

Andrew Rawnsley, writing in the Observer, says: "Ed Miliband's 10p tax pledge is smart politics but poor policy."

John Rentoul, writing in the Independent on Sunday, says: "Ed Miliband, the candidate from the planet Zog"

Rafael Behr, writing in the Sunday Times, says: "Gordon Brown is dead. Long live Gordon Brown."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

REVEALED: Donors Trust is the Secret ATM Machine for Climate Deniers

WASHINGTON - February 15 - A new Greenpeace analysis released today shows that Donors Trust, a shadowy funding vehicle, has laundered $146 million in climate denial funding from 2002 to 2011. Yesterday’s article in the Guardian referenced part of the Greenpeace analysis. Today’s report is now up to date with the latest available funding from 2011. As climate denial funding from traceable Big Oil sources like Exxon and the Koch brothers is declining, the anonymous money funneled through Donors Trust is skyrocketing.

This interesting coincidence is illustrated in the graph from the Greenpeace report:Big Oil funding of climate denial declines... "Anonymous" funding through Donors Trust skyrockets. Interesting.

In addition to today’s Greenpeace analysis, yesterday a Center for Public Integrity report detailed the efforts of Donors Trust to set up conservative media megaphones in state capitals. Today, the Guardian reported that these ideological media outlets have been instrumental in anti-climate fights at the state level. These include state and regional attacks against wind power, solar power, and carbon pollution reduction programs.

The key findings of the Greenpeace analysis on Donors Trust:

  • Donors Trust and its associated organization, Donors Capital Fund, have funded 102 climate-denial organizations since 2002.
  • From 2002 to 2011, Donors Trust and Donors Capital Fund have provided $146 million to climate denial groups.
  • In 2010, a dozen climate denial groups received between 30% to 70% of their funding from Donors Trust, including the Koch-founded Americans for Prosperity, as well as Committee for a Constructive Tomorrow (CFACT)
  • Additional climate denial organizations that have received major funding in recent years by Donors Trust include the Heartland Institute, Competitive Enterprise Institute, Cato Institute and the James Partnership (Cornwall Alliance).

Wait, so what is Donors Trust, exactly? It’s a shadowy funding operation for anti-government extremists and climate deniers. The mission of Donors Trust is to provide ultra-conservative funders a way to support their controversial pet-causes without leaving fingerprints on the grants.

But don’t take our word for it – here’s an excerpt from the Donors Trust FAQ webpage:

Who is behind this untraceable money? It’s impossible to track all of the big-pockets hiding behind Donors Trust. One notable individual is Charles Koch, the secretive oil billionaire who was discovered to have funneled $8 million through Donors Trust from two of his foundations. And that’s only the amount that we can track – we don’t know the full extent of the Koch’s account with Donors Trust.

As posted yesterday on our blog and detailed in another great Guardian article, several climate denial organizations rely on Donors Trust for a large share of their budgets. The Heartland Institute, creator of the famously reviled “Unabomber billboard” and coordinators of the annual Denial-palooza conference, relies heavily on a single anonymous donor that sends money through Donors Trust. According to internal Heartland plans leaked to the public, this Anonymous Donor has been responsible for up to 60% of the organization’s annual revenue, with the majority of fund earmarked to “global warming programs.” Even though the leaked documents prove this money is specific for climate projects, the Donors Trust tax forms only disclose the funding’s purpose as “general operations.”

The deep dependence on Donors Trust by climate deniers goes far beyond the Heartland Institute. Marc Morano’s organization, the Committee for a Constructive Tomorrow, has received between 40% and 46% of its budget through Donors Trust in recent years. Morano was named 2012 “Climate Misinformer of the Year,” often found as a talking head on Fox News or CNN denying that human activity is affecting the climate. In response to the President’s 2013 State of the Union address, Morano published a point by point rebuttal to the section on climate change.

CFACT is among over a dozen organizations that get 30% to 70% of their total budgets from Donors Trust and Donors Capital Fund. Other noteworthy groups include Americans for Prosperity Foundation, the Cornwall Alliance (James Partnership), and the State Policy Network.

Independent campaigning organization that uses non-violent, creative confrontation to expose global environmental problems, and to force solutions that are essential to a green and peaceful future.

Venezuelan President Gives Heating Aid to U.S. Poor

Venezuelan President Gives Heating Aid to U.S. Poor

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Posted on Feb 15, 2013
www_ukberri_net (CC BY 2.0)

Venezuelan President Hugo Chavez.

As many as 400,000 Americans suffering from a 25 percent cut in the government’s home heating assistance program will stay warm this winter thanks to a 100 gallon donation of heating oil each from Venezuelan officials.

The federal Low Income Home Energy Assistance Program will lose $1.2 billion this year, reducing its total budget to $3.47 billion. The Obama administration initially wanted to cut funding to $2.5 billion. In 2011, 8.3 million Americans were helped by the program, though some were left out.

According to the National Energy Assistance Directors’ Association, 90 percent of families participating in the program have at least one “vulnerable” member, defined as elderly, disabled or under 18, Policymic reports. The cost of heating oil has hit a 22-year high at $3.93 a gallon, up 57 cents from last year.

More than 200 U.S. homeless shelters are also slated to receive assistance from the Venezuelan government.

—Posted by Alexander Reed Kelly.

Policymic:

Venezuela’s generosity towards its northern neighbor began in 2005, after Hurricane Katrina had ravaged the Gulf Coast, when Citgo donated $1 million to disaster relief and President Hugo Chavez offered to send food, water, fuel, and other humanitarian assistance.  Chavez was not taken up on his offer by the U.S. administration.  That same year, in response to a call by 12 U.S. Senators for oil companies and oil producing nations to donate heating oil to help ease the pain of high prices caused by hurricanes Katrina and Rita, Venezuela rose to the occasion once again. Despite criticism from the American government, the program has continued each winter since.

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Fossil Fuels ‘May Prove Worthless’

Fossil Fuels ‘May Prove Worthless’

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Posted on Feb 15, 2013
The Webhamster (CC BY-SA 2.0)

By Alex Kirby, Climate News Network

This story first appeared at Climate News Network.

LONDON—The University of Oxford has begun a programme of research to identify high-carbon sectors and assets that could be devalued or written off if the world takes resolute action to limit emissions of greenhouse gases.

It seeks to help investors to avoid sinking money in potentially useless assets that might ultimately lose their entire value, turning into what are known as “stranded assets”.

Assets become stranded if they are replaced by greener alternatives or new technologies, or are subject to new regulations or resource constraints.

In 2012 the International Energy Agency said the world was on course for average temperature rises of at least 4°C, double the limit agreed by world governments. So, it said, a significant part of the world’s known fossil fuel stores would have to stay in the ground to fulfil international climate commitments and reduce dangerous impacts.

The Potsdam Institute for Climate Impact Research has calculated that to reduce the chance of exceeding 2°C warming to 20%, the global carbon budget for 2000-50 is 886 gigatonnes of CO2. Discounting emissions from the first decade of this century leaves a budget of 565 gigatonnes for the remaining 40 years to mid-century.

However, the known fossil fuel reserves declared by energy and mining companies is equivalent to 2,795 gigatonnes of CO2. If the world wants to keep climate change to below 2°C, then, 80% of those reserves can never be burned: they are in fact valueless.

According to the Carbon Tracker Initiative, “this means that governments and global markets are currently treating as assets reserves equivalent to nearly five times the carbon budget for the next 40 years. The investment consequences of using only 20% of these reserves have not yet been assessed.’’

Safer homes for funds

Asset stranding is currently little understood, but the implications are potentially very significant. It could have a direct effect on millions of small savers too, as many universities and pension funds have big investments in hydrocarbon companies (and see our story on 1 February).

The researchers, from Oxford’s Smith School of Enterprise and the Environment, will try to find out which assets and sectors are most at risk and how to respond to the challenges.

The former MP John Gummer, now Lord Deben, chairs the Committee on Climate Change, an independent group which advises the UK Government. Speaking at the School, he stressed the need for businesses and policy makers to adapt to the new economic landscape.

He said: “Investors continue to deploy hundreds of billions of pounds into polluting and unsustainable sectors. In many cases these investments will not be worth what investors think.

“Climate change, scarcer resources and new disruptive technologies will reduce value and strand assets. If investors better understand the risks of investing in these assets they will be attracted to greener alternatives and see them as better business propositions and safer places for their funds.”

Professor Gordon Clark, director of the Smith School, said: “We are looking at how changes in regulation, pricing, technology, society and climate could be a risk to a range of polluting assets.. Our new programme is creating a critically important space for these issues to be understood and for appropriate responses to be developed.”

The four-year research programme’s first project is to focus on the international supply chain for the agricultural sector, examining methods of transport and production. Later projects will probably include transport, power generation, real estate and a range of commodities.

The researchers aim to create new tools to understand and manage the risks of asset stranding. They will also analyse investor portfolios to learn about risk exposures and will compile case studies of best practice.

The programme is being supported by Aviva Investors, Bunge Ltd, Climate Change Capital Ltd and HSBC Holdings plc, with non-financial partners including the Carbon Tracker Initiative, Trucost and WWF-UK.

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Notes from the Brink: The Economy in the Winter of 2013



Workers’ Woes

Workers at a non-union Toyota plant in Kentucky have been offered incentives to retire early in order for management to replace them with new hires at a lower starting wage. The labor cost advantages formerly enjoyed by Toyota—the non-union premium—is no longer available to non-union plants in the auto industry. It seems the wages and benefits long ago won by a more aggressive UAW have retreated to the extent that non-union plants must now secure lower compensation in order to compete!

Since the UAW has conceded starting pay in the unionized industry down to about $14-16 per hour, Toyota seeks to replace older workers making around $26 per hour in their Kentucky plant with new hires at $16 per hour. Thus, the union shops are paradoxically pressuring downward the wages and benefits of non-union employees .

As reported in The Wall Street Journal, industry experts claim that the non-union manufacturers enjoyed a $29 an hour competitive advantage in wages and benefits as recently as 2008. By the end of 2011, they report that non-union labor costs were about equal with General Motors and actually higher than Chrysler!

It is hard to imagine a more demoralizing consequence for the union movement in the US: if only the market, and not a fighting union, is to competitively determine wages and benefits, how does one entice workers to join the union? For the bankrupt UAW leadership, union growth comes only from striking a deal with the employers-- a deal that would promise collaboration and stability at the expense of workers’ pay and benefits.

The decimation of the living standards of US unionized auto workers came with the bailout and subsequent temporary stewardship of the auto industry by a Democratic Party administration. That same administration demanded plant closings and layoffs as a condition of the bailout.

With friends like these, workers are sadly in dire straits.

Clearly, radical changes are in order, changes that cry out for class struggle unionism and independent political action. Without a new direction, US workers will continue the descent towards Depression-era living standards.

Currency Wars 

The 1917 text of Lenin’s Imperialism projected intense struggles between rival capitalist powers. Written during an unprecedented total war between the most economically advanced countries, a war that when settled cost the lives of millions of  people, Lenin’s tract explained the First World War as a contest between empires seeking global advantage for the spoils of capitalist exploitation.

Less than twenty years later, the same empire-building forces were again unleashed to carve the world in a desperate attempt to secure markets and sources of strategic resources. World War Two further confirmed Lenin’s thesis that competing capitalist powers were unable to collaborate and cooperate for some greater, universal good. Instead, competition always begets aggression, national chauvinism, and war.

Many were dismissive of Lenin’s prophecies when witnessing the Cold War expediencies of inter-imperial cooperation against the emerging post-war socialist community. With well over a third of the world’s population in the socialist camp, the imperial rivals found a temporary basis of unity around fears and resistance to the success of socialist revolution. The survival of capitalism tamed the inherent rivalries for that moment.

The demise of that threat with the collapse of Eastern European socialism and the accommodation with capitalism by Asian Communists has unleashed the beast of imperial competition. The global economic crisis only serves to fuel the tensions and expose the rivalries.

I wrote in November of 2008 of the “global crackup”, noting that the US was no longer in a position to impose its will on the rest of the world, unable to slough its problems easily upon others. I drew attention to the logic of capitalist competition that, in the long run, denies any hope of cooperation and common solutions.

Today, that tendency— aggressive imperialist rivalry—has found its expression in a new war, a war waged around the relative value of national currencies.

Rulers understand that in a climate of stagnant or declining world trade, nation-states will draw an advantage from devaluing national currencies; by cheapening money—the medium of exchange— domestic enterprises will be able to offer their products at a more favorable price in international markets.

The US tepid “recovery” from the depths of the crisis has largely been won by hyper-exploitation of a docile work force and the dramatic expansion of exports through the Federal Reserve’s massive devaluation of the dollar via the printing press. The Qualitative Easing programs aim to suppress interest rates and remove the corporate garbage generated by the financial promiscuity of the period before the collapse of 2008. But they also have the not-so-unintended consequence of bolstering the competitiveness of US export manufacturing.

At the same time, US policy makers pointed an accusatory finger at the Peoples’ Republic of China, charging its leaders with currency manipulation. While the charge got little traction from those who closely studied these relationships, it served as a useful diversion from US policies and bolstered rounds of anti-China bashing by do-nothing politicians and labor mis-leaders.

European Union leaders, occupied with the desperate effort to save the Euro, offered little resistance to US currency manipulation.

But with the election of Shinzo Abe in Japan, the currency war was joined. Abe, a right-wing nationalist, exploited the Japanese public’s frustration with years of ineffective governance and economic stagnation to scorn cooperation and offer an aggressive economic program geared towards restoring Japanese competitiveness. Assuming the office of Prime Minister, he launched an aggressive campaign to devalue the Yen. His pressure on the Bank of Japan has already (in less than two months!) produced a drop of 10% in the Yen’s value against the dollar and 15% against the Euro. This means that Japanese products are enjoying a growing competitive advantage in international markets.

International bankers see these moves clearly as the opening salvos in a major escalation of the currency/trade wars. Politicians in countries throughout the world have quietly made similar moves to spur competitiveness, but never with the open audacity shown by Abe.

Perhaps even more disturbing is the unabashed belligerence and arrogant nationalism accompanying these economic moves. The Japanese government has provoked disputes with nearly every Asian Pacific government over barren islands claimed as part of Greater Japan. Imperial aggression is as great a danger today as it was nearly a hundred years ago when Lenin established it as a structural feature of mature capitalism.

A Hushed Mea Culpa       

Capital’s policeman, the International Monetary Fund, has offered a quiet confession of an arcane theoretical mistake of enormous consequence. As the leading cheerleader for decades of the “fiscal responsibility” approach to public programs, the IMF can take dubious credit for the policy of austerity as a general panacea for economic duress. A cursory look at the IMF legacy shows a constant, unrelenting enforcement of balanced budgets and meager public spending. Developing countries seeking IMF loans have felt the lash of austerity as a condition of relief.

A cornerstone of IMF thinking was a little discussed macro-economic assumption of the compounding effects of debt reduction. Where “unschooled” common sense might suggest that removing a dollar of public spending from economic activity would remove at least a dollar from a nation’s gross domestic product, the IMF postulated that it would reduce economic activity by only half of a dollar. That is, the “multiplier” for a reduction of public spending was only .5. The assumption, of course, is the neo-liberal axiom that the dollar spent elsewhere in the private sector MUST always be far more productive, must always be greater than unity and, therefore, must always outweigh the loss of “inefficient” public sector spending.

Unfortunately, the axiom is wrong. IMF empirical studies show that, in fact, the multiplier of public spending reductions ranges between .9 and 1.7. In other words, the negative impact of public spending cuts was underestimated by two to three times! The IMF confessed as much in its October report. Unstated, however, is the negative impact of this “error” on hundreds of thousands, perhaps millions, of people who have lost public benefits to the discipline of IMF imposed “fiscal responsibility”. Even more have suffered from the constraint on economic growth produced by the regimen of austerity.

And yet debt reduction through choking government spending remains a priority of political parties from the far right to the social democratic left.

The Sky is Falling, but not on Everyone yet!  

You would never know it from the Wall Street pundits loudly proclaiming the best January stock market in two years, but the US GDP shrank in the final quarter of 2012 (as it did in the UK, the EU, and even the seemingly bullet-proof German economy).

Generally, negative GDP panics investors and disrupts markets, but we live in special times. To the extent that labor remains quiescent and social movements fail to translate into anti-capitalist uprisings, investors and the capitalist class have made their peace with historically unacceptable unemployment and stagnating, but stable economic growth. It’s the earnings that catch the eye of the investors and the wealthy. And they have been holding up rather well so far.

In fact, they are creating the conditions for another round of risk-taking. Money market funds are flush with cash and seeking greater returns, securitization of debt is on the rise again (securities built on auto loans are greater than at any time since 2005), and banks are again growing their real-estate loan portfolios. Capitalism and the lust for ever greater accumulation never sleep!

Of course it is the very mechanism of accumulation, the search for yield on swelling capital (and the accompanying pressures on profitability), that announces the next round in the crisis.

Zoltan Zigedy
zoltanzigedy@gmail.com




    

   
    

Ed Miliband’s 10p Tax Plan Attacked As ‘PR Wheeze’ By Tory Who Favours Move

Ed Miliband’s dramatic decision to outflank David Cameron on the economy by calling for the 10p rate of income tax to be brought back had been dismissed as a "PR wheeze" by the Conservative MP who has campaigned in favour of the move.

On Thursday the Labour leader said reintroducing the band - controversially scrapped by Gordon Brown - would make society fairer. In a keynote speech, he said the move could be funded by a new "mansion tax" on homes worth more than £2m.

Tory backbenchers, led by Harlow MP Robert Halfon, have been campaigning for the 10p rate to be brought back by George Osborne in next month's Budget.

But writing on The Huffington Post UK, Halfon said Miliband’s surprise announcement was "a half-hearted Damascus conversion" to the cause, suggesting it was made with one eye on the impending Eastleigh by-election.

"Only in 2008, HuffPost readers will remember, the Labour Leader said that abolishing the 10p rate of income tax for the poorest Brits was ‘fairer’, and he voted that way in Parliament," Halfon said.

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"What are voters to make of this? In my view, what the public want to know is this: is this just jam for the Eastleigh by-election or is this a substantive policy pledge?

Robert Halfon: Can We Trust Labour's Surprise 10p Announcement?

"Consider the record of the two main parties: Ed Miliband has whipped his MPs to vote against every single tax-cut for the poorest Brits that the Coalition has delivered; whether this is on council tax, fuel duty, or income tax.

"By contrast, Conservatives in government this April will cut income taxes for 25 million people. Two million will have been taken out of income tax altogether.

"And, the poorest who benefited from the 10p rate under Labour (until they scrapped it in 2008) now pay no income tax at all."

Halfon adds: "Today could have been a real policy announcement from Labour, rather than a PR wheeze written on the back of an envelope. As it stands, Labour’s suggestion would only mean an extra £34 a year for a family."

Labour's tax plan has been dismissed by David Cameron, who said it appeared as though it was not properly "costed".

"We'll discover over the course of the day all sorts of problems and issues with a policy that looks like it's been cobbled together overnight," he said.

Lib Dem Chief Secretary to the Treasury Danny Alexander said: "The two Eds are rather late to the party, wanting to cut taxes for those on low and middle incomes.

"After 13 years in government, the only action Ed Balls took was to raise the amount of tax those on low incomes paid by abolishing the 10p rate. It was the biggest tax mistake they ever made and it has taken them until now to realise their error.

Related on HuffPost:

Ed Miliband Announces Plans To Re-Introduce 10p Tax Rate

Ed Miliband has announced a Labour government would reintroduce the 10p tax rate abolished by his predecessor, Gordon Brown, potentially benefitting 25m basic tax rate payers.

In a much-anticipated speech in Bedford on Thursday morning, the Labour leader said his plan would be funded by a mansion tax on houses worth over £2m.

He said: "Let me tell you about one crucial choice we would make, which is different from this government.

"We would tax houses worth over £2 million. And we would use the money to cut taxes for working people.

"We would put right a mistake made by Gordon Brown and the last Labour government."


Jim Pickard

Okay here is how miliband 10p rate only costs 2bn - only applies to first 1k of income above threshold. So only partial reversal of Gordo.

Despite being introduced by then-chancellor, Brown, in 1999, he then abolished the 10p tax rate it to much outcry eight years later.

As well as trying distancing himself from the sins of the previous Labour government, Miliband is keen for his 'One Nation' Labour Party to be seen as supporting hard-working people on lower incomes.

This is in contrast to a Conservative-led government that, according to the polls, is seen as favouring the wealthy with policies such as the controversial cut to the 50p top rate of tax and a reluctance to implement a tax on higher priced properties.

On Wednesday, at PMQs, David Cameron mocked the Labour leader for planning to give a speech without any policies in it.

Miliband declared: “Moving Labour on from the past and putting Labour where it should always have been, on the side of working people.


Joey Jones
So takes up an emblematic libdem policy and junks an emblematic gordon brown policy. V interesting.

“Britain is at a fork in the road. We can carry on as we are: falling wages, low growth, failure to tackle the deficit.

“Or Britain can take the path I have outlined: a recovery made by the many, tackling low growth and reducing the deficit, building not squeezing the middle, all of us playing our part in turning this economy around.”

In a Q&A session after the speech, shadow chancellor, Ed Balls, outlined how the mansion tax would work, saying he would work with the Lib Dems to ensure it's success.

Balls claimed it could raise over £1.7bn and he would be happy to start talks with the Treasury on Monday and work on plans with chief secretary, Danny Alexander.


Owen Jones

Labour's plan to reintroduce 10p tax - disastrously scrapped by Brown - funded by mansion tax will be very popular. Redistribution is back

Speaking to the BBC Balls said: "This is a very clear statement. It's what we want to do now and it's what we want to do in 2015."

Questions have been raised however in the wake of the speech as to the viability of funding the required cut through a mansion tax alone.


Jim Pickard

Sorry to break this to you all but return of 10p income tax rate would cost about 7bn pounds

Cameron rubbished the proposals on a visit to Eastleigh on Thursday.

He said: "My prediction is that they won't have thought it through or costed it properly and we will discover over the course of the day all sorts of problems and issues with a policy that looks like it has been cobbled together overnight," reports Sky News.

Treasury sources told the BBC the plans lacked "economic credibility".


James Chapman (Mail)
No-one who paid Gordon Brown's 10p tax rate pays any tax at all today http://t.co/GjrrmzfM

The government will have a chance to respond when chancellor George Osborne announces the Budget on March 20th.

Also in his speech Miliband stressed it was up to individuals to play their part in a successful British economy and to increase their own living standards.

He said: "When you play your part, when you make your contribution to the economy, you will be rewarded.

"And that Britain’s economic success will be built by the many, not just by a few at the top."

The Labour leader also highlighted the importance of skills training for young people who don't go to university and outlined a new vocational qualification.


Jonathan Freedland

As for Cam's "no policy" jibe, one Lab source says "Cameron yesterday was v helpful for expectations management! It set us up nicely."

He said: "We must end the culture which says University is always best and vocational education is second-best.

"It simply isn’t true.

"That’s why One Nation Labour will create a new technical baccalaureate, to complement A-levels."


Tim Montgomerie

Can't strategically disagree with Ed Miliband's speech. We should be increasing tax on high value properties and cutting income tax (1/2)

Other Labour proposals covered in the speech are to:

  • Break the stranglehold of the big six energy suppliers.
  • Stop the train company price rip-offs on the most popular routes.
  • Introduce new rules to stop unfair bank charges.
  • And cap interest on payday loans.


Joe Murphy
Something borrowed (Vince's Mansion Tax), Something blue (Halfon's 10p restoration) - Ed Miliband grabs both http://t.co/s7rogzdE

Miliband contrasted today's economic climate to that of 1957 when Conservative prime minister Harold Macmillan gave a speech just across the river celebrating a booming British economy, in a speech that became known as the “you’ve never had it so good” speech.

He said: "It’s what Harold MacMillan understood when he spoke here in Bedford more than half a century ago.

"We can rebuild this country, we can offer people hope.

"We can make an economy that works for working people.

"It’s a goal worth fighting for.

"It’s what One Nation Labour will do."

Ed Miliband's speech text network visualised

Mehdi’s Morning Memo: The Living Standards Election

The ten things you need to know on Thursday 14 February 2013...

1) THE LIVING STANDARDS ELECTION

Ed Miliband is going to do his best impression of Ronald Reagan in a 'major speech' (is there ever a minor speech?) on the economy in Bedford today. It's all about living standards, it seems.

The Labour leader has been speaking to - who else? - the Guardian ahead of his address:

"Ed Miliband promises to make the 2015 general election a 'living standards election' as he claims that the coalition's squeeze on middle-income Britain has deepened the recession and created the "chilling prospect" of a further decade of pressure on most families' living standards.

"... Bidding to set the frame for the next election, and drawing on some of the strategy that helped re-elect Barack Obama, the Labour leader says: 'I am offering a choice between an economic recovery made by the many, not just a few at the top, and a Conservative strategy that consists of trickle-down from the top, a squeeze on the middle and a race to the bottom.'

"He goes on: 'I will be asking the question 'are you better off than you were four years ago?' and I don't think it is in dispute – people are worse off. The Office for Budget Responsibility figures are showing earnings behind inflation, and the Institute for Fiscal Studies shows the same. It would be a good start if David Cameron could just admit the facts.'"

Miliband will be speaking in Bedford - where the 'One Nation' prime minister Harold Macmillan, of course, declared that "You've never had it so good" in 1957.

Meanwhile, the Labour leader's shrewdest adviser and close ally (Lord) Stewart Wood, in an exclusive piece for the Huffington Post UK, sets out the context and thinking behind Miliband's speech. He writes:

"In 2013, the problem of the Middle has become the central economic challenge facing our country. It is at the heart of our growth crisis as well as our living standards crisis."

Wood adds that "our economy is too dependent on a low-skill, low-wage model of competitiveness. One measure of this is the UK’s historic (and continuing) deficit in skills" and says that the Tory idea "that the key to our economic turnaround is further deregulation of one of the most deregulated economies in the advanced industrial world is somewhere between dubious and ridiculous."

The shadow cabinet minister also claims that Labour has begun to "flesh out" new policies on the economy over the past two years.

I guess we'll have to wait till later this morning to see what policies, if any, Miliband unveils in Bedford. Either way, the Labour leader is right to focus on (falling) living standards. I mean, it worked for the Gipper, right?

2) BREAKING: BLAIRITE REJECTS BLAIRISM

It isn't just Ed Miliband giving a big speech today. Hats off to shadow defence secretary and arch-Blairite Jim Murphy for being willing to make some painful concessions about Blair's failures on foreign and defence policy - from the Independent:

"A new approach to intervening in foreign countries will be set out by Labour today as the shadow Defence Secretary, Jim Murphy, accuses David Cameron of failing to learn the lessons from Tony Blair's mistakes in Iraq and Afghanistan.

"Ten years after the Iraq War, Labour will attempt to further distance itself from a conflict which alienated many voters by warning against the 'ideological' crusade against al-Qa'ida favoured by Mr Blair and Mr Cameron."

Murphy will also admit that "an almost primitive understanding of the Afghan population, culture and geography prior to Nato intervention severely undermined international attempts to work with proxies and our political strategy was in its conception insufficiently representative. In Iraq there was a serious deficit in Western comprehension of the Sunni-Shia or intra-Shia dynamics."

Hear, hear!

3) BLAST FROM THE PAST

And it isn't just Labour figures who are giving 'big' speeches today, either. Former Conservative prime minister Sir John Major plans to dole out some advice for his party in a speech on Europe at Chatham House later today.

Sir John will welcome his successor but two's promise of an in/out referendum on the EU, saying it's a "gamble" but one that Cameron can't avoid and which could remove "the poison" of Europe from British - and, specifically, Tory - politics.

In a nice phrase, the ex-PM will also warn the current PM to beware of MPs with "with Tory heads and UK independence hearts looking to leave the EU".

He'll also warn eurosceptic Conservative MPs to stop bombarding their leader with demands on the EU and making him look like he's under duress and behaving in the interests of his party, rather than the country.

In an interview with me a few months ago, backbench MP Nadine Dorries said the current political climate reminded her of the early 1990s, with all the instability at the top of government and the attacks on Major over Europe from eurosceptics. I guess we now know that Major himself kinda agrees with her.

4) WHO KNEW WHAT AND WHEN?

Worried about the row over horsemeat? Perhaps you should be - whether you're a member of the public or a member of the government. From the Times splash:

"The Government knew last summer that a sudden ban on cheap British beef and lamb meant it was 'inevitable' that unlawful meat would be imported from Europe.

"MPs will demand today that the food watchdog is given powers to order supermarkets to carry out safety tests after it failed to identify the use of horsemeat in ready meals for up to a year, despite a warning from a government minister last June.

"The Times can also reveal that tests at British abattoirs in the past two weeks have confirmed that eight out of 200 horses slaughtered were contaminated with the veterinary drug phenylbutazone (“bute”), which is banned from food."

5) EYE ON EASTLEIGH

Satirist, comedian and new Labour candidate in Eastleigh, John O'Farrell, comes under some scrutiny in today's papers - from the Daily Telegraph:

"Labour's candidate for the Eastleigh by–election once backed the idea of voting for the Liberal Democrats to keep out the Conservatives in a marginal seat – just like the one he is now contesting.

"... it has emerged that [O'Farrell] once advised his brother to vote Lib Dem in Richmond to keep out the Tories in 1997."

Whoops!

BECAUSE YOU'VE READ THIS FAR...

Planning to propose to your beloved on this Valentine's Day? Check out this video of 22 crazy and amusing wedding proposals...

6) ARE YOU LISTENING, MR PRESIDENT?

Whatever you think of Barack Obama, it is difficult to dispute that the US president has been a disaster for civil liberties. Remember, for instance, how he promised to shut down Gitmo? Well, he'll be reminded of his failure - and the human cost of it - later today. From the Huffington Post UK:

"A 20,000-strong petition will be presented to US President Barack Obama to urge the release of a British detainee at Guantanamo Bay who has been held at the camp for exactly 11 years.

"Shaker Aamer, 44, was taken to the notorious US detention centre on 14 February 2002 under suspicion of recruiting and financing terror group al Qaida.

"Aamer has never been charged or tried with an offence and remains detained despite the US authorities officially approving him for transfer in 2009."

(via Huffington Post UK)

7) DELHI DAVE

From the FT:

"The prime minister will take a delegation of British business leaders to Mumbai and New Delhi to exploit what he called "a special relationship" between the two countries, despite trade links having been strained."

Two points worth mentioning here: 1) Dave will be under pressure to explain to Indian authorities and the country's media why his government seems to be openly discriminating against university students from the subcontinent who want to study in the UK, and 2) it's a rather lopsided special relationship, given it's Cameron's second visit to India since becoming prime minister while his Indian counterpart, Manmohan Singh, has not reciprocated with a visit to London and shows no signs of planning to do so.

8) NEED HELP?

From the Times:

"A mental health clinic is to be set up for MPs at Westminster to help the rising number of politicians who admit that they suffer depression and anxiety.

"Specialist treatment will be offered after officials approved funding of £25,000 a year. On Monday Parliament gave final approval to the Mental Health (Discrimination) Bill, scrapping the law that says that MPs lose their seats if they have been sectioned for more than six months, as well as a rule allowing company directors to be removed because of mental illness."

9) UNGAGGED

The BBC's Today programme has this exclusive:

"A health service manager claims he was gagged by the NHS from speaking out about his dismissal and his concerns over patient safety.

"Gary Walker said he had no choice but to sign an agreement linked to a confidentiality clause in April 2011.

"He said it was a case of either signing the so-called 'super gag' agreement or losing his house.

"... It comes a week after Robert Francis QC, who led the public inquiry into the Stafford hospital scandal, demanded that such agreements should be 'banned'."

10) IT'S ALL IN THE MIND

Are all those speeches, debates, arguments, pamphlets, columns and manifestos a waste of time? Scientists now say that brain scans provide a better clue to our political allegiances than the party loyalties of our parents.

From the Daily Telegraph:

"Liberals and conservatives use different parts of their brain when they respond to risk, according to a team of British and American scientists. They were able to predict if people voted Democrat or Republican with 83 per cent accuracy just by studying their brain activity.

"Volunteers from the parties were asked to play a gambling game while their brains were scanned. Republicans and Democrats were no different in terms of the risks they took during the game, but there was a marked contrast in the way their brains dealt with risk–taking. Democrats showed significantly greater activity in the left insula, a brain region associated with social and self–awareness. Republicans had a more active right amygdala, a region involved in defensive "fight–or–flight" responses.

According to the study, brain activity in these two regions alone was enough to predict with pretty astonishing accuracy whether the participant was a Democrat or Republican.

PUBLIC OPINION WATCH

From the latest Sun/YouGov poll:

Labour 42
Conservatives 32
Lib Dems 9
Ukip 9

That would give Labour a majority of 114.

140 CHARACTERS OR LESS

@damiangreenmp How modern media works. Keith Vaz demands to know why I am not in Commons. I get abuse on Twitter. Reason? My wife in hospital. Happy now?

‏@BorisWatch All sympathy to @damiangreenmp but some reflection on where this view that 'if you're not working you're shirking' came from might help?

@ChrisBryantMP Cracking qu by anas sarwar: when the pm's answers are analysed will they be found to be 100% bull?

900 WORDS OR MORE

Peter Oborne, writing in the Telegraph, says: "Nick Clegg and his poor Lib Dems are having a nervous breakdown."

John O'Farrell, writing in the Guardian, explains: "Why I'm standing for Labour in the Eastleigh byelection."

Leo McKinstry, writing in the Daily Mail, says: "What's the point of a food safety quango that couldn't save us from eating stallion burgers?"


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

Ed Miliband Under Pressure On The Economy

Ed Miliband will use a major speech on Thursday to attempt to regain lost ground on the economy and set out his vision of how the nation's finances should be run.

Living standards will be at the centrepiece of his message and, in an interview in the Guardian ahead of his speech, the Labour leader says he is "offering a choice between an economic recovery made by the many, not just a few at the top, and a Conservative strategy that consists of trickle-down from the top, a squeeze on the middle and a race to the bottom."

Channeling Ronald Reagan, he adds: "I will be asking the question 'are you better off than you were four years ago?' and I don't think it is in dispute – people are worse off. The Office for Budget Responsibility figures are showing earnings behind inflation, and the Institute for Fiscal Studies shows the same. It would be a good start if David Cameron could just admit the facts."

In a deliberate dig at the Tories, Miliband will make his speech in Bedford, where 'One Nation' Conservative prime minister Harold Macmillan famously declared, in 1957: "You've never had it so good."

However, the latest polls suggest the public is still more likely to trust the Tories to handle the economy and the leader of the opposition has been warned by his party's own policy chief, MP Jon Cruddas, that 'simply opposing the cuts without an alternative is no good.'

On Wednesday, at PMQs, Miliband was mocked by Prime Minister David Cameron, who claimed publicity for the speech said it would contain 'no new policies', after the Labour leader had attacked Cameron on the key issue of living standards, demanding to know whether people would be better off at the 2015 general election than they were in 2010.

In an exclusive article for The Huffington Post UK, to accompany the Labour leader's speech, one of the key figures in Miliband's inner circle sets out "the battle for the middle".

Writing for HuffPost UK, (Lord) Stewart Wood, a shadow cabinet minister and one of Miliband's most senior advisers, says the plight of people on middle incomes - previously labelled the 'squeezed middle' by Labour - is "the central economic challenge facing our country."

In an article that helps contextualise Miliband's approach to the economy, Wood says the UK is "too dependent on a low-skill, low-wage model of competitiveness," and castigates Cameron's 'global race' mantra. "The [Tory] idea that the key to our economic turnaround is further deregulation of one of the most deregulated economies in the advanced industrial world is somewhere between dubious and ridiculous."

For Wood, "strengthening the high-skill/high-wage parts of our economy, and thereby boosting productivity-per-worker of those in the Middle, is essential to altering the relative shares of national income that go to the top and the rest of Britain’s workforce."

The shadow cabinet minister insists that Labour has "begun to flesh out" its approach, pointing to pledges to tackle the power of banks, pension and utility companies. He hints at future support for the 'Living Wage' and "new methods of setting pay in the workplace".

Gideon Skinner, head of political research of the pollster Ipsos Mori, told The Huffington Post UK that living standards formed "an important part" of the debate on the economy. The overall economic outlook is overwhelmingly ranked at the top of voters' concerns, he said, underlining how important it is for both parties to get their tactics right.

Skinner said the Conservatives and Labour had exchanged the lead in recent polls, suggesting it is still up for grabs in 2015.

"No party is particularly owning the economy issue," he added.

Prime Minister’s Questions Dominated By Debate On Living Standards

Labour is banking on the nation's falling living standards to help decide the outcome of the 2015 General Election. Opposition leader Ed Miliband said people feeling worse off than in 2010 would be "the issue of the next two years", attempting to pin ...

Millions Of Families Face A Decade Of Economic Hardship

Millions of families might not see see a return to pre-recession standards of living for another decade, a think-tank warned today.

The Resolution Foundation said many low to middle income households would never fully recover the ground they lost due to the prolonged economic downturn.

Even if typical earnings for such families were to rise by 1.1% a year, the report calculated that would take until 2023 before they recovered to £22,000 a year at current prices - the equivalent of where they stood in real terms in 2008.

Without the prolonged downturn, the report estimates that typical earnings could now be expected to stand at £27,500 a year.

However to reach that level over the next decade would require real terms growth of 3.3%-a-year - figure the report described as "unattainable" based on current forecasts and past experience.

The report defines low and middle income households as being of working age and relying primarily on their own earned resources but with incomes below the median for the UK.

In practice, it means couples without children living on a joint income of between £12,000 and £30,000 or between £17,000 and £41,000 for a couple with two children.

On average this group has seen a 2.4% cut in real incomes since 2009-10, and the report calculated that it would now take 22 years for such households to save for an average deposit on a first time buyer property.

At the same time, polling conducted by Ipsos Mori for the report found many people remained pessimistic about the outlook for the economy.

More than one in three - 36% - did not believe the economy would be growing again by 2015, compared to 47% who thought it would.

Views were divided on whether people expect to be better off by 2015 than they are now - with 42% saying they thought they would against 40% who thought they would not.

The report's author, Matthew Whittaker, said: "There is a long road to travel just to get back to where living standards stood before the crisis - and the prospects of actually recovering the ground lost over recent years appear vanishingly thin.

"Every extra month of falling household incomes is harder to take than the last as household budgets get closer to the edge."

Ipsos Mori interviewed 1,005 British adults aged 18 and over by telephone between February 1 and 3.

Mehdi’s Morning Memo: The Horsemeat Summit

The ten things you need to know on Wednesday 13 February...

1) THE HORSEMEAT SUMMIT

"Now it's British horsemeat in burgers," screams the Daily Mail on its front page. The paper says:

"Meat from British horses was discovered in takeaway burgers and kebabs yesterday.

"The shocking find, which implicates the UK for the first time in the food fraud scandal, came during police raids in Yorkshire and West Wales.

"Environment Secretary Owen Paterson described the development as ‘utterly and totally disgraceful’ but pulled out of making an emergency statement to the House of Commons."

His opposite number, Labour's Mary Creagh said she wouldn't be buying mince of any kind for the moment: "Let's just say that I'm not very keen on mince at the moment, I think I know a bit too much now."

And you know you're in the middle of a crisis when our rulers start having 'summits'.

The BBC reports that "Environment Secretary Owen Paterson will travel to Brussels on Wednesday for a meeting of European countries linked to the horsemeat scandal.

"Ministers from the Irish Republic, France, Romania, Luxembourg, Sweden and Poland will attend."

I can't wait for the official picture of the French and Romanian ministers shaking hands...

2) NO POUND OF FLESH

From the Huffington Post:

"University graduate Cait Reilly has won her Court of Appeal claim that requiring her to work for free at a Poundland discount store was unlawful.

"Three judges in London ruled that the regulations under which most of the Government's back-to-work schemes were created are unlawful and quashed them. The Department for Work and Pensions has not been given leave to appeal, but has said that, regardless, it will appeal to the Supreme Court."

The papers are divided on straight left-right grounds - the Telegraph leader says: "Workfare can still do the job for Britain." The Guardian, however, pens an editorial "in praise of... Cait Reilly", noting: "[T]he point is that Whitehall had assumed a free hand in foisting arbitrary, harsh conditions on unemployed people. Cait Reilly has caught it out – for failing to play by the rules."

Writing in today's Sun, 'compassionate Conservative' Iain Duncan Smith, the work and pensions secretary, is defiant: "Let me be very clear — our back to work schemes are successful and are not slave labour." He adds: "I disagree with the part of the ruling that found against our regulations and we will appeal against that, but crucially the court did not find that anyone's humans rights have been breached because we asked them to do a work placement in return for Jobseeker's Allowance."

3) 'OUR GENERATION'S TASK'

The issue of in-work poverty isn't just a big issue in the UK - last night, President Obama decided to tackle the issue head-on during his State of the Union speech:

From the Huffington Post:

"President Barack Obama on Tuesday night laid out a vision for a society in which everyone has a fair shot at a decent education, adequate health care and a job that pays a living wage.

"'It is our generation's task, then, to reignite the true engine of America’s economic growth -- a rising, thriving middle class,' said the president in the first State of the Union address of his second term. 'It is our unfinished task to restore the basic bargain that built this country -- the idea that if you work hard and meet your responsibilities, you can get ahead, no matter where you come from, no matter what you look like, or who you love.'

"The president's most notable proposal was to raise the minimum wage from its current $7.25 an hour to $9 an hour."

Will George Osborne follow Obama's lead in the Budget next month? Two stats are always worth remembering: 1) the majority of the children living in poverty in Britain live in working, not workless, households, and 2) the UK's minimum wage is now worth less in real terms than it did in 2004.

4) WATERBOTTLEGATE

Obama may have been giving the SOTU speech, but all eyes were on the Republican 'rebuttal' - my US colleague Jon Ward reports on the speech from 41-year-old Florida senator Marco Rubio, who is one of the favourites for the 2016 GOP presidential nomination:

"In his remarks, Rubio hit two things hard: stereotypes of conservatives, and the president. He came out against the former stronger than the latter, devoting an entire passage to rebutting the charge that Republicans want to protect the rich from higher taxes, and another to making clear his devotion to Medicare, in an attempt to stake out a politically viable position on entitlement reform."

Amusingly, Ward adds:

"The media-savvy Republican got favorable reviews, but his night was almost derailed by a bottle of water. When Rubio came to the 10-minute mark in his 14-minute speech, he paused, looked down and to his left, and then looked back at the camera as he bent and reached for a small Poland Spring bottle. For a few brief, excruciating seconds, Rubio took a sip of the water as he looked directly into the camera, and then put it quickly down and resumed speaking.

"Twitter exploded. Video of the moment was quickly posted, Democratic operatives cackled, and journalists complained about the volume of chatter about Rubio's thirst."

5) LEGISLATING FOR LEVESON

David Cameron's plans for a Royal Charter to regulate the press may be nowhere near as tough as the system recommended by Lord Justice Leveson but, according to a story on the front of today's Independent, a 'compromise' deal is close:

"Parts of David Cameron's blueprint to regulate the press could breach European law, the newspaper industry warned yesterday, as his plan to implement the Leveson Report was attacked from all sides.

"But despite criticism from Labour and the Liberal Democrats, some sources suggested the compromise was still possible with all-party talks due to begin tomorrow."

BECAUSE YOU'VE READ THIS FAR...

Off the back of Obama's State of the Union last night, why not re-watch this classic video of the US president slow-jamming the news on Jimmy Fallon's late-night show from April 2012?

6) EYE ON EASTLEIGH

From the Guardian:

"As the author of a seminal account of an activist's life during Labour's 'wilderness years', and later as a writer of jokes for Tony Blair and Gordon Brown, John O'Farrell has been cheering up the party's rank-and file for decades as the self-deprecating chronicler of middle class, left-wing angst.

"But after local members in Eastleigh last night selected him to be the party's candidate in the upcoming byelection, the comedy writer was settling down for the challenge of capturing the south-coast seat - although not quite immediately.

"'There is a great deal of hard work ahead. But first I am going to the pub,' he tweeted immediately after news emerged of his official selection over two other Labour members."

O'Farrell won't win in Eastleigh - where the two coalition parties are slugging it out for the top spot - and, thankfully, nor will Ukip's Diane James, who is reported to have said yesterday that all immigration into the UK should be halted in order to prevent Romanians from coming to the country and committing crimes here. Who says Ukip are a bunch of bigots, eh?

7) CLEGG THE CREDIT TAKER

Whatever happens to the Lib Dems in Eastleigh, for now, their leader continues be mauled by the papers - from the Telegraph front page:

Nick Clegg has been ridiculed after he appeared to claim credit for his part in securing a cut in the European Union budget.

Mr Clegg, the Deputy Prime Minister, last year claimed that Conservatives who wanted a budget cut had 'absolutely no hope'.

"At his weekly Deputy Prime Minister’s Questions session in the Commons yesterday, however, Mr Clegg claimed that he had spent 'months making the case for the tough approach' adopted by David Cameron in Brussels last week.
Tory backbenchers have described Mr Clegg’s comments as 'ludicrous and implausible'.

8) CASH-FOR-ACADEMIES

Ever wondered why so many schools are so keen to become academies? The Independent this morning splashes on news that

"Officials from Michael Gove's department are offering £65,000 'bribes' to convince reluctant headteachers to convert their schools to academies.

"The sweeteners are being offered to schools which drop their opposition to academy status – sparking claims that taxpayers' money is being spent on "buying off" critics of the Education Secretary's pet project."

Follow, as they say, the money...

9) 'GET OFF OUR PLANES'

To those of you who think Islamophobia is a myth, meet New Zealand MP Richard Prosser - from the Huffington Post:

"A New Zealand politician who sparked condemnation for suggesting Muslim men should be banned on Western airlines will not stand down.

"Writing in his column in Investigate Magazine, First Leader Richard Prosser said: 'If you are a young male, aged between say about 19 and about 35, and you're a Muslim, or you look like a Muslim, or you come from a Muslim country, then you are not welcome to travel on any of the West's airlines.'

"Labelling Islam a 'stone age religion', and claiming most terrorists are 'angry young Muslim men who hate the West', Prosser added: 'I will not stand by while my daughters' rights and freedoms, and those of other New Zealanders and Westerners, are denigrated by a sorry pack of misogynist troglodytes from 'Wogistan'.'"

Charming.

10) 'POLITICALLY CORRECT CENSORSHIP'

From the Telegraph:

"The BBC has been criticised as 'Stalinist' and 'politically correct' for allegedly trying to play down Harold Wilson’s pipe smoking in a five hour television special tomorrow night.

"However, Lord Donoughue, a former right hand man to Mr Wilson in Number 10, claimed that producers had been told to downplay Mr Wilson’s pipe smoking.

"Describing it as 'Stalinist', he said: 'Is the licence payers money being paid for these people. It is censorship – politically correct censorship. How many people do they have monitoring politically correct behaviour?'"

Donoughue adds: “He didn’t smoke it much in private. It was not always lit because he had to put it away in his pocket.

“If he was being interviewed or questioned, the moment he was asked a difficult question he would take out his lighter and light the pipe to give him time to think of an answer.”

QUOTE UNQUOTE

"The position is this. One of the most powerful, talented, intelligent and trusted women in the country wishes you to think that when she took some points for her husband in 2003 she had no real choice in doing so. It is the prosecution's function, if they can, to disprove that before she can be convicted." - Andrew Edis QC, who is prosecuting the Vicky Pryce case at Southwark Crown Court, giving his closing speech yesterday.

PUBLIC OPINION WATCH

From the Sun/YouGov poll:

Labour 43
Conservatives 32
Lib Dems 10
Ukip 9

That would give Labour a majority of 116.

140 CHARACTERS OR LESS

@LizMair: .@CNBC asks what Republicans want to hear in #SOTU. My guess: "I'm resigning and handing this job off to a stealthily preserved Reagan."

@EJDionne Poor Marco Rubio: It was the gulp that roared. TV can be a cruel medium #sotu

@ShippersUnbound Don't understand the fuss over food. I love Haggis and I definitely don't want to know what goes into that...

900 WORDS OR MORE

Seumas Milne, writing in the Guardian, says: "Michael Gove is not just a bungler, he's a destructive ideologue."

Mary Riddell, writing in the Telegraph, says: "Ed Miliband can draw a line under the Labour Party’s war by opposing plans for secret courts."

Martin Wolf, writing in the FT, makes the "case for helicopter money".


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

Besieged, Abused, Ignored: Ethiopian Annihilation Of The Ogaden People

ethiopia

In the harsh Ogaden region of Ethiopia, impoverished ethnic Somali people are being murdered and tortured, raped, persecuted and displaced by government paramilitary forces. Illegal actions carried out with the knowledge and tacit support of donor countries, seemingly content to turn a blind eye to war crimes and crimes against humanity being committed by their brutal, repressive ally in the region; and a deaf ear to the pain and suffering of the Ogaden Somali people.

Around five million traditionally nomadic pastoralists – live in what is one of the least developed corners of the world besieged by military oppression, drought and famine.

Democracy denied

When the British, with due colonial duplicity, arrogantly handed the Ogaden region over to Ethiopia in 1954, the ethnic Somali people found themselves under occupation by, what they regard as a foreign power. The centuries old struggle for self-determination, has since 1984 been taken up by the Ogaden National Liberation Front (ONLF), predictably regarded as ‘terrorists’ by the Ethiopian government; which hunts them down and, with impunity, tortures, imprisons and rapes its members and suspected supporters while carrying out widespread extrajudicial killings.

In 1992 as part of the Ethiopian Peoples Revolutionary Democratic Front’s (EPRDF) much trumpeted, never realized policy of Ethnic Federalism, that promised autonomy and cultural respect to the many tribal groups in the country; ethnic Somalis in the Ogaden were officially acknowledged and inaugural regional elections held. The ONLF, a secular group in a largely Muslim region, “won 60% of seats… and formed the new (regional) government” Human Rights Watch (HRW) reported. Two years later, and in response to the will of the people, the ONLF called for a referendum on self-determination. The government’s reaction to such democratic gall was to kill 81 unarmed civilians in the town of Wardheer, disband the regional parliament, arrest and imprison the vice-president and several other members of the parliament, instigate mass arrests and indiscriminate killings; this brutal act ignited the current struggle and drove the ONLF into the shadows and its current guerilla war.

Resource rich

The region, rich in oil and gas reserves, is potentially the wealthiest area of Ethiopia. Resources that the indigenous people are understandably keen to benefit from, that the EPRDF sees as another party asset to add to its burgeoning portfolio. Genocide Watch (GW) tell us that, “immediately after oil and gas were discovered in the Ogaden, Ethiopian government forces evicted large numbers of [Ogaden Somalis] from their ancestral grazing lands and herded them into Internally Displaced Persons (IDP) camps, causing a humanitarian disaster”. If the ONLF are correct and their view sounds more than plausible, the Ethiopian military intends to secure the resources for the government and exclude the local people. The Africa Faith and Justice Network confirms such suspicions, saying: “With the discovery of petroleum leading to exploration missions by foreign companies, the government’s motives are questionable.”

Upfront fees for exploration rights are reputed to have been sold to foreign corporations for between $50 – $100 million, paid by under-informed, overexcited multinationals, who subsequently pull out, having underestimated the logistical problems of working in the region. China Petroleum was one such; they were subjected to an unprecedented ill-judged attack by the ONLF in 2007 that caused the deaths of nine Chinese workmen and, according to China Daily , “65 Ethiopian employees”. The Ethiopian government, itching to intensify the conflict that had been simmering for over three decades, retaliated with excessive brutality, by HRW reports, “launching a brutal counter-insurgency campaign in the five zones of [the] Somali Region primarily affected by the conflict… [Where] the Ethiopian National Defense Forces (ENDF) has deliberately and repeatedly attacked civilian populations,” killing hundreds of men women and children.

Displaced & destitute

Thousands of terrified Ogaden Somalis have since fled the affected areas. They seek refuge “in neighbouring Somalia and Kenya from widespread Ethiopian military attacks on civilians and villages that amount to war crimes and crimes against humanity,“(ibid). Large numbers have been made homeless and destitute, accurate numbers are difficult to collate due to restricted access, however human rights groups estimate the number, to be greater than one hundred thousand.

The Ogaden, GW states “has been transformed into a vast military occupied area, with thousands in internally displaced persons (IDP) camps.” Most displaced persons, the International Displacement Monitoring Centre (IDMC) reports, “sought shelter with relatives or safety in the bush, rather than gathering in organized camps,” where widespread abuse is known to take place, including starvation that GW describes as “genocide by attrition”. These desperate, frightened people are not regarded as refugees and so receive no humanitarian aid support from the United Nations High Commission for Refugees (UNHCR). And the EPRDF, consistent with their duplicitous approach to governance, fails to meet dutiful obligations under the historic Kampala Convention which “reaffirms that national authorities have the primary responsibility to provide assistance to IDPs…. (And) … to address the plight of people uprooted within their borders”. The ruling party ignores these requirements, acting not in accordance with international law, the federal constitution or indeed their moral duty.

Especially violent

In 2009, after widespread condemnation of the Ethiopian army’s conduct in the region, the regime formed the highly suspect Liyu (Special) Police. Somaliland Press (26/9/12) states, the government “deliberately recruited unemployed youths from the streets”. This shadowy paramilitary force of 10,000 – 14,000, fits, HRW says, “into the context of impunity where security forces can more or less do what they want.” Not a group, then, that the British government should be supporting. In a baffling move however, according to The Guardian (10/1/13) , the Department for International Development (DFID) has submitted, a “tender to train security forces in the Somali region of Ogaden”, Amnesty International’s Claire Beston said: “It was highly concerning that the UK was planning to engage with the Special Police..…. There is no doubt that the Special Police have become a significant source of fear in the region.”(Ibid) The DFID in denying the report ambiguously states that, “reforming the Special Police is critical for achieving a safe and secure Somali Region”, failing to recognize that the Liyu force needs not reforming but disbanding and, along with all Ethiopian military personnel, marched out of the region immediately.

State-sanctioned terrorism and genocide

In addition to murder and rape, appalling levels of torture and extrajudicial execution are reported. Thousands, according to GW, “have been arrested without any charges and held in desolate desert prisons”. Mass detention “without any judicial oversight are routine. Hundreds—and possibly thousands—of individuals have been arrested and held in military barracks, sometimes multiple times, where they have been tortured, raped, and assaulted”, HRW report.

Children and women being the most vulnerable suffer acutely, the rape of Ogaden Somali women is a favored weapon of the Ethiopian paramilitary; held in military barracks women are imprisoned as sex slaves, where they are subjected to multiple gang rape and torture. African Rights Monitor (ARM) recount one woman’s story that mirrors many and shocks us all. She claims to have been, “raped by fifty soldiers for a period of twelve hours and hung upside down over a pit of fire that had chili powder in…. to suffocate her lungs”.

Statistics of abuse are impossible to state, the numbers are perhaps of less importance than the crimes and the suffering caused, survivors bear the physical scars and mental trauma of their ordeals, from which many may never recover.

A scorched-earth policy involving burning of crops and homes and killing cattle is part of the campaign of state terror, as HRW record, “Confiscation of livestock [the main asset], restrictions on access to water, food, and other essential commodities” have “been used as weapons in an economic war”. As has the destruction of villages, confirmed by evidence from the American Association for the Advancement of Science, proving, “that the Ethiopian military has attacked civilians and burned towns and villages in eight locations across the remote Ogaden region of eastern Ethiopia.” Such inhumane methods are employed by the EPRDF to instill fear in the Ogaden Somali people and suppress their legitimate demands for autonomy. It is shocking criminal abuse which staggeringly, “GW considers to have already reached stage 7 [of 8], genocidal massacres against many [Ogadeni, Anuk, Oromo and Omo] of its people”. International donors however, who provide a third of Ethiopia’s total federal budget – around $4 billion a year, to their utter shame say and do nothing; neglect constituting complicity.

Village executions

With the region virtually shut off, video evidence smuggled out of Ethiopia by Abdullahi Hussein, a former Ethiopian civil servant is rare. Revealing Somaliland Press (26/9/12) say that, “whole villages have been emptied of inhabitants through executions and mass flight from terror… you can hear members of the Liyu Police desecrate a civilian they have just killed. They stomp on his head and poke his face with a stick.” Such attacks on settlements are routine: Demanding our attention is Qurille village in the Wardeer district attacked in September 2012: Ogaden Online recounts how troops: “Shoot each resident of the town in their custody at point blank range” including women and children. Bodies are hung from trees in a public display of state terrorism, to engender lasting fear. This type of brutality is widespread. HRW records how in Raqda village in the Gashaamo district during March 2012, “the Liyu police force summarily executed at least 10 men – in their custody, killed at least nine residents… [and] abducted at least 24 men.”

The killing continued two days later on 17th March, when “Liyu police took another four men from their homes and summarily executed them. A woman whose brother was a veterinarian told HRW: “They caught my brother and took him outside. They shot him in the head and then slit his throat.” Defenseless villages are easy prey for the Liyu and their brutal methodology, as HRW state, “troops have forcibly displaced entire rural communities, ordering villagers to leave their homes within a few days or witness their houses being burnt down and possessions destroyed—and risk death”. Page upon page could be filled with such violent disturbing accounts.

Exclusion of foreign media and aid workers

Contrary to constitutional and human rights law, the EPRDF has imposed a widespread blockade on the Ogaden region, seeking to control the flow of information outside the country as it does within its borders, where it allows no freedom of the media; of expression, of assembly or of political dissent. Add to this the outlawing of trade unions and the partisan distribution of aid and a picture of a brutal totalitarian regime emerges from the duplicitous mist of politically correct, democratic rhetoric.

Attempts to work in the region by international media and humanitarian groups are seen as criminal acts, punishable under the widely condemned anti-terrorist proclamation.
Two Swedish journalists investigating human rights abuses in the Ogaden, made headlines in July 2011 when they were attacked and arrested by the Liyu police and subjected to a terrifying ‘mock’ execution. Charged and sentenced in Ethiopia’s kangaroo court to 11 years imprisonment, they were later released having served 400 days in appalling conditions. Reporters from the New York Times, The Telegraph and Voice of America have also been imprisoned and expelled, so too United Nations (UN) workers and staff from Medecins Sans Frontieres (MSF) who were arrested and accused of being spies! Wrapped in paranoia, the EPRDF suspended 42 NGOs in 2009 for reporting government human rights abuses in the region and, in 2007 in what must be the EPRDF’s Pièce de résistance, the International Committee of the Red Cross were expelled.

In addition to the information embargo, the region is subject to what HRW describe as “severe restrictions on movement and commercial trade, minimal access to independent relief assistance,” and the “politicized manipulation of humanitarian operations, particularly food distribution”; meaning food supplied by donor countries is stolen to feed the Ethiopian army and the Liyu force. This in one of the worst areas for drought and famine in the country, where, In-Depth Africa reports, “1,539,279 people (30% of the population) in the region lack food, water and health services”.

Peace and justice for the people

The little known conflict in the Ogaden is a cause of intense tension between Ethiopia and Somalia and a destabilizing issue in an unstable region. It is a fight that has been distorted by the former Government of Somalia, which sought to misrepresent the issue and transform it into a boundary dispute; a misconception that suits the Ethiopian regime keen to avoid the substantive point of regional autonomy.

All efforts to facilitate a lasting peaceful resolution to what is an age-old struggle should be urgently made, Ethiopia’s donors and facilitators, principally America, along with the European Union and Britain must act with due responsibility. Action should be taken to: Close down IDP camps and the people allowed to return to their communities; aid provided for rebuilding villages (not to train the Liyu) destroyed by the military; regional elections organised and a referendum on self-determination held.

The appalling atrocities committed daily by the Ethiopian paramilitary constitute war crimes and crimes against humanity that should immediately be referred to the International Criminal Court for prosecution. They are, though, just the deepest wounds within a scarred body of human rights abuses, violating federal and international law, being perpetrated by the EPRDF regime throughout the country and with utter impunity. This must end and the Ogaden Somali people, allowed to determine their own destiny and to live in peace.

Graham Peebles is an artist, writer and director of The Create Trust, which he founded in 2006. He has run education projects & teacher training programs in Palestine, India and Ethiopia, where he spent two years working with local groups in Addis Ababa. Contact: graham@thecreatetrust.org

Notes

[i] http://www.chinadaily.com.cn/china/2007-04/24/content_858956.htm

[ii] http://www.hrw.org/node/62175/section/4

[iii] http://www.genocidewatch.org/ethiopia.html

[iv] http://www.genocidewatch.org/ethiopia.html

[v] http://www.internal-displacement.org/countries/ethiopia

[vi] http://www.internal-displacement.org/kampala-convention

[vii] http://somalilandpress.com/ethiopia-a-wave-of-atrocities-against-villages-in-ogaden-35429

[viii] http://www.aljazeera.com/indepth/features/2012/09/201291795840290803.html

[ix] http://www.aaas.org/news/releases/2008/0612ethiopia_intro.shtml

[x] http://ogaden.com/hornnews/ogaden/1495-ethiopian-mass-murder-in-miirdanbas-qoriile.html– By Mohamud A. Dubet

[xi] http://www.hrw.org/news/2012/05/28/ethiopia-special-police-execute-10

[xii] http://www.hrw.org/sites/default/files/features/ethiopia/index.html

[xiii] http://indepthafrica.com/in-ethiopia-a-war-on-humanitarian-agencies-and-staff/#.UPBCpVRl8Xw In Ethiopia: A War on Humanitarian Agencies and Staff

Osborne Summit To Avoid ‘Omnishambles II’

Chancellor George Osborne is today holding a Treasury summit at his official country retreat in an attempt to prevent a repeat of last year's Budget "omnishambles". Treasury ministers and officials have gathered together with Conservative Party HQ sta...

Nigel Farage Pledges To Make Eastleigh A Four-Way Fight

Ukip leader Nigel Farage has pledged to make the Eastleigh by-election a four-way marginal fight and said his party's number one issue will be immigration.

Kicking off the party's campaign in Hampshire, the seat vacated by Chris Huhne's resignation earlier this week, Mr Farage said: "We have nothing against people from Bulgaria and Romania, we wish them well, but we do not think it's right this country has a total open door policy."

He said the pressure on housing, education and services from immigration "poses a major problem" especially if people from other countries claim benefits.

Citizens from Romania and Bulgaria will have full movement rights across Europe from 2014. Farage said other parties were ignoring the issue of immigration.

He did admit that the Liberal Democrats have the advantage in the constituency but he added that he was "delighted" that the Tory candidate, Maria Hutchings, is Eurosceptic.

"If we can rally our support like we have in the last three by-elections in Rotherham, in Middlesbrough and in Corby then this seat could become a four-way marginal," he said.


Guido Fawkes

Eastleigh polling: Conservatives on 34%, the Lib Dems on 31% and Labour on 19%. The UKIP is fourth with 13%.

Mr Farage also called the EU budget reduction negotiated by Prime Minister David Cameron as "a rotten deal for Britain".

"If you go and knock on 100 doors here in Eastleigh and tell them that they will Pay £50 million a day to Europe for the next seven years they will think that's not a good deal."

He also said that "the years of mockery and derision" for the party were over since he had been Ukip's first ever candidate in another Eastleigh by-election in 1994 - coming second to last and just in front of the Monster Raving Loony Party.

"The whole tenor of the debate in this country has changed since then, it's now an in/out debate on Europe," he said.

He explained that in Eastleigh the party would also be campaigning on how a EU subsidy that Britain had put money into had allowed Ford to close its Transit van factory nearby.

But Mr Farage added he would not be standing in the by-election and denied it was because of Mr Cameron's EU referendum promise.

"Good God no," the MEP said. "I do not think a vague promise of a referendum five years from now is a reason for not standing.

"The reason is simple: I am leading this party into the local elections in England and then the European elections and thirdly, it's quite busy in Brussels and I need to be there."


Matt Chorley

UKIP supporters on Twitter seem very bullish about winning Eastleigh. Shame their leader didn't share their confidence

Mr Farage said that the party now had good candidates and denied it was just a one-man party and that he was that man.
"If we went into Eastleigh and asked people to name four front bench Labour politicians they couldn't," he claimed.

He said the party now had a shortlist of five candidates that the local branch would choose tomorrow with the candidate unveiled in Eastleigh on Tuesday morning.

Labour have also started campaigning in the constituency with Southampton Itchen MP John Denham campaigning in the town with activists but the party has not yet picked a candidate.

The Liberal Democrats, who held the seat in the 2010 General Election with a majority of 3,684, will announce their candidate for the February 28 poll on Saturday night.

The US Should Grow the Deficit, Not Shrink It

There is an astounding level of confusion surrounding the current US deficit. There are three irrefutable facts about the deficits:

First, the United States has large deficits because the collapse of the housing bubble sank the economy.President Obama speaks at a White House press conference. Photograph: Rex Features

Second, if we had smaller deficits the main result would slower growth and higher unemployment.

Third, large projected long-term deficits are the result of a broken health care system, not reckless government "entitlement" programs.

The first point can be easily shown by examining the Congressional Budget Office's projections from January 2008 (pdf), before it recognized the impact of the collapse of the housing bubble on the economy. The deficit in 2007 was just 1.2 percent of GDP. The deficit was projected to stay near 1.5 percent of GDP until well into the current decade, even if the Bush tax cuts did not expire.

With deficits of this magnitude, the debt-to-GDP ratio was actually shrinking. In fact, the deficit exploded.

It wasn't because of a surge in reckless spending and/or a splurge of tax cuts, it exploded because tax collections plummeted when the economy went into a downturn. In addition, we increased spending on programs like unemployment insurance. We also had temporary stimulus measures that were explicitly intended to raise the deficit in order to boost the economy.

All of these changes were temporary. If the economy returned to its pre-recession level of unemployment tomorrow, deficits would again be quite manageable, even with no further budget cuts or tax increases.

This feeds directly into the second point: deficits are supporting the economy at present. Any steps that we take to reduce the deficit, either by cutting spending or raising taxes, would pull money out of the economy. This means slower growth and higher unemployment.

There is no plausible story that private sector demand will expand to fill the gap. In more normal times, lower deficits might mean lower interest rates, which could lead to more investment and consumption. However with interest rates already at extraordinarily low levels it is not plausible that deficit reduction would have a noticeable impact.

This means that deficit reduction is throwing people out of work. This will ruin the lives of millions of workers. It can also be a disaster for their families. One of the surest ways of hurting the life prospects for today's children is to put their parents out of work.

Finally, the long-term deficit horror stories that fill Washington parlor discussions are entirely the result of a health care system that now costs more than twice as much per person as the average for other wealthy countries. The ratio is projected to rise to three and four to one in the decades ahead.

Serious people talk about fixing the health care system, a process that may have already begun with Obamacare. Health care costs have increased far less than projected for the last five years. If this slower growth path continues, we will have no long-term deficit problem.

In short, we need deficits today to fill a huge hole in demand created by the private sector. We can best see this as an opportunity to finance public investments in the future. With a negative real long-term interest rate on federal debt, this is a great time to borrow for those with any business sense. By contrast, austerity is a great recipe for pain today and even more pain tomorrow.

© 2012 The Guardian

Dean Baker

Mehdi’s Morning Memo: ‘Misery And Hardship’

The five things you need to know on Friday 8 February 2013...

1) 'MISERY AND HARDSHIP'

So the real villain of the row over disability and incapacity benefits isn't Atos, it's the Department of Work and Pensions (DWP). That's the verdict of the Public Accounts Committee (nowadays, incidentally,the source of at least one big political story a week).

From the BBC:

"The government is to blame for "misery and hardship" imposed upon claimants being re-assessed for benefits eligibility, the Commons public accounts committee says.

"Chairwoman Margaret Hodge accused the Department for Work and Pensions of being 'unduly complacent' and 'getting far too many decisions wrong'.

She said the medical assessments were hitting 'vulnerable claimants hardest'.

"... Although private firm Atos Healthcare has faced criticism for its role in the assessments process, 'most of the problems lie firmly within the Department for Work and Pensions', she said."

The government's response to this damning PAC report? Well, DWP minister Mark Hoban accused the committee of "scaremongering". The problem, of course, for Hoban and his pals is that the PAC report shows that 40% of appeals against Atos' decisions were successful, even though, as the BBC report notes, "no new evidence had been presented in one-third of these cases".

Over to you, Mark...

NOTE: Apologies for the much shorter memo this morning - five things you need to know, rather than ten - because I am still shattered after last night's Huffington Post UK debate, 'Was It Worth It? Iraq, Ten Years On', featuring, among others, Clare Short, Bernard Jenkin MP, David Aaronovitch and, er, me. It was a packed house at Goldsmiths, with more than 500 people in attendance, and if you want to know who won, what was said, etc, check out the HuffPost report and live blog on the event.

2) EU BUDGET

His backbenchers may hate him over gay marriage, but, these days, they love him over Europe - and they may love him even more today if David Cameron returns from Brussels with... wait for it... an historic EU budget cut. From the Guardian:

"European leaders were inching towards a deal in the early hours of Friday morning that would see the first cut in the EU's budget in its 56-year history.

"David Cameron, who had demanded a freeze in real terms in the near-€1tn budget, was planning to claim victory after the European council president proposed a €34.4bn cut over the next seven years.

"Herman Van Rompuy finally tabled his budget proposals in Brussels at 6am after a night of haggling at the EU summit that was described by one official as like a 'bazaar'."

But the BBC's Nick Robinson is reporting on the Today programme that while the overall budget may be cut in real-terms, the British contribution may actually go up - as a result of changes to our rebate agreed by David Cameron's predecessor-but-one, Tony Blair.

The devil, as is so often the case on all matters related to the EU, may be in the detail.

But Eurosceptics won't care for now - the Mail Online has splashed on: "Victory For David Cameron..."

After a tough start to the week, Downing Street will be very pleased this morning.

3) 'HUHNE FORCED ME TO ABORT MY BABY'

The newspapers are all over the Vicky Pryce trial this morning; the ex-wife of disgraced ex-energy secretary Chris Huhne is on the front of the Indy, the Guardian, the Times, the Mirror, the Telegraph and the Daily Mail - from the Mail's splash:

"Vicky Pryce broke down as she told yesterday how Chris Huhne forced her to have an abortion for the sake of his career.

"The high-flying economist, 60, told a jury that her fiercely ambitious husband warned her that a baby would be 'bad timing' for his political future.

"Pryce, who went on to have another child, wept as she said she had 'regretted it ever since'. Her revelation came as she launched an attack on the shamed former Cabinet minister during her trial for perverting the course of justice."

Pryce has pleaded not guilty to perverting the course of justice by taking Huhne's penalty points after a speeding offence in 2003 and, as the Guardian notes, "her defence is one of marital coercion".

Meanwhile the paper also reports on how the Lib Dems "look to have a tough job on their hands to retain Chris Huhne's seat in the Eastleigh byelection after a starting-pistol poll put them three points down on the Conservatives, largely due to the defection of some of their supporters to Labour.

"The survey, conducted on 4-5 February by the former Conservative deputy chairman, Lord Michael Ashcroft... shows the Conservatives on 34%, the Lib Dems on 31% and Labour on 19%. The UK Independence party (Ukip) is fourth with 13%. The figures reveal a 16-point fall in the Lib Dem vote since the 2010 general election, and nine-point rises for Labour and Ukip."

BECAUSE YOU'VE READ THIS FAR...

Watch this video of a gopher performing in a ballet dress. Yep, this is what the internet was invented for...

4) 'FACEBOOK HITLIST'

It's not looking good for the Arab Spring, with Tunisia plunged into political crisis - and violence. The Times reports:

"A leading secular politician accused Muslim extremists yesterday of trying to establish a religious dictatorship in Tunisia after the assassination of a prominent critic of the country's main Islamist party.

"Ahmed Nejib Chebbi, of the centrist Republican Party, said that he had been under police protection for months during rising tension between Islamists and secular parties."

"... The Kapitalis news site posted a hitlist of prominent secular politicians and journalists that it said had been circulating on Islamist Facebook pages. The list, last updated on Monday, featured Chokri Belaid, a politician and human rights lawyer who was shot dead outside his home in Tunis two days later. He had recently warned of growing violence by Islamist enforcers close to the ruling Ennahda party.

"Mr Belaid's murder has pushed Tunisia farther into danger, two years after the start of the Arab Spring. The political deadlock gripping the country has tightened and the ruling party has blocked an attempt by Hamadi Jebali, its Prime Minister, to form a unity government."

5) DOWN WITH DRONES?

Finally, America is having a debate (of sorts!) about the Obama administration's drone war - from the FT:

"John Brennan, the Obama administration's nominee to head the Central Intelligence Agency, gave a vigorous defence of the policy of killing suspected terrorists with drone strikes but suggested yesterday that the agency might conduct fewer such operations.

"Mr Brennan insisted that the US government had 'rigorous standards' for considering targeted killings and that its military operations against al-Qaeda were welcomed in many of the countries in which they have taken place.

"Mr Brennan, who was a career CIA official for more than two decades, said the agency needed to be able to conduct covert operations but he hinted that it might scale back its use of drone strikes. Some of the CIA's activities since the September 11 attacks had been 'a bit of an aberration', he said, adding that the agency "should not be doing traditional military activities and operations".

If you want to read evidence of why Brennan is wrong about "rigorous standards" and drones supposedly "saving lives", check out my drone-myth-debunking blog post from last October: 5 Things They Don't Tell You About Drone Strikes.

PUBLIC OPINION WATCH

From the Sun/YouGov poll:

Labour 41
Conservatives 33
Lib Dems 11
Ukip 9

That would give Labour a majority of 92.

140 CHARACTERS OR LESS

@TomHarrisMP I know he's a liar, a hypocrite and a LibDem to boot, and he deserves everything he gets, but I feel sorry for Chris Huhne. #bbctw

@jameschappers Cameron is going to have a lethal new line against Miliband: even the *EU* has agreed to big spending cuts #eubudget

@benedictbrogan See @marycreagh_mp is making running against Defra by saying she wouldn't eat Findus horsemeat lasagne. Will Owen Paterson tuck into one?

900 WORDS OR MORE

Fraser Nelson, writing in the Telegraph, says: "Michael Gove may have lost a skirmish over the EBacc, but he’s winning the war."

Philip Collins, writing in the Times, says: "It’s not heresy to demand that hospitals treat people like customers. More listening would have meant fewer deaths."

Polly Toynbee, writing in the Guardian, says: "Mid Staffs will be used to justify further reforms – and of the very kind that contributed to that horror in the first place."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

Defence cuts ‘close to the bone’

The armed forces cannot afford any further spending cuts if Britain is to maintain its ability to project military power around the globe, a former defence minister has warned.

Sir Nick Harvey, who lost his job as armed forces minister in last year's reshuffle, said the forces risked being reduced to little more than a home guard if the defence budget was squeezed any further.

In an interview with Parliament's The House magazine, Sir Nick, a Liberal Democrat, said the Royal Navy already had too few warships to carry out all the tasks allotted to it. He also questioned whether the Treasury really would come up with the £20 billion needed to replace the Trident submarine fleet which carries Britain's nuclear deterrent.

His intervention comes after Downing Street was forced to admit last week that the Ministry of Defence would not be immune from further cuts in the 2015-16 spending review.

"You can cut and cut and cut and cut until there's nothing left, but you will cease to have coherence and you will cease to have the ability to deploy a worthwhile number in a conflict situation if you take it much further. We're pretty close to the bone anyway. I don't think we can take it any further," he said.

"If we all we wanted to do was to defend our shores you could move to a sort of home guard, but if we want to continue our international efforts to defend out global interests, and the UK does have global economic reach, there is a critical mass below which you cannot dip and still make a worthwhile contribution - and we're not far from it.

"We lost things we could not afford to lose already. The Royal Navy has got too few vessels in service, too little manpower, to execute the tasks already being asked of it."

Sir Nick said morale in the forces was already suffering in the face of the cuts implemented over the last two years - and it had was not helped that the latest round of redundancies in the Army came the day after the announcement that up to 350 personnel were being deployed to Africa in relation to operations in Mali.

"It's a pretty cruel bloody irony that the very next day his ministers are back in the Commons justifying the third tranches of the military redundancies. There was nothing new there, but in presentational terms (it was) a bit sub-optimal in term of Downing Street grid management," he said.

"You freeze pay. You cut allowances, you slash numbers. You work those who are left all the harder to make up for those who have gone. You throw in, for good measure, doubt about where people are going to be based, doubt about what their future pensions are going to look like," he said. "By the time you have compounded all those things together its just inevitable that morale is going to be suffering."

$4bn hole revealed in Russia’s defense spending

Mistral-class amphibious assault ship (RIA Novosti / Alexey Danichev)

Mistral-class amphibious assault ship (RIA Novosti / Alexey Danichev)

Russia's Audit Chamber has revealed the misuse of funding to the tune of 117.5 billion rubles (US$3.9 billion) in national defense spending last year.

That includes “unauthorized use” of 10.6 million rubles and the inefficient spending of over 23 billion rubles ($765 million), Viktor Zavarzin from the lower house’s Committee on Defense told journalists. Some 114 million ($3.7 million) was refunded from the federal budget, he added.

On Thursday, the committee met behind closed doors to hear the Audit Chamber’s report on the results of their inspection into the use of money allocated to provide Russia’s defense.

Experts found violations in the fulfillment of the state armament program and defense procurement. That is largely because executors of state contracts fail to comply with their obligations, the Duma committee said in a statement after the meeting.

The quality of hardware supplied for the country’s defense needs has also been criticized. In particular, because of poor quality of equipment, three satellite launches (one in 2009 and two in 2011) were unsuccessful.

The report comes amid a major corruption scandal in the Russian military which resulted in the replacement of Defense Minister Anatoly Serdyukov.

Last year, investigators launched over a dozen of criminal cases into alleged embezzlement of budget funds and abuse of office by high-ranking military officials.

On Thursday, the Investigative Committee announced it will question the ministry’s officials in relation to yet another episode if the chain scandals – an alleged sale of real estate at artificially low prices in the resort city of Anapa on the Black Sea.

According to investigators, back in July 2010, the city transferred a large piece of land together with buildings to the Defense Ministry at the request of Serdyukov.

The territory was meant for the construction of a navigation station. The land then went through a complicated chain of transfers and privatized. Later, the property was sold for 110 million rubles, much lower than its commercial value of 167 million rubles ($5.5 million).

Currently, elite housing is being built on the land under order of Valery Puzikov, husband of Serdyukov’s sister, the Investigative Committee’s spokesman Vladimir Markin said, cites RIA Novosti.

Frontrunning: February 7

  • Bersani's lead over Berlusconi continues to erode, now just 3.6 Pts, or inside error margin, in Tecne Poll
  • Spain gears up for U.S. debt investor meetings (Reuters)
  • PBOC Set for Record Weekly Liquidity Injection (WSJ)
  • RBS Trader Helped UBS’s Hayes With Libor Bribes, Regulators Say (BBG)
  • ECB, Ireland reach bank debt deal (Reuters)
  • AMR-US Airways Near Merger Agreement (WSJ)
  • Monte Paschi says no more derivatives losses (Reuters) ... remember this
  • Harvard’s Gopinath Helps France Beat Euro Straitjacket (BBG) - by sliding into recession?
  • Obama Relents on Secret Drone Memo (WSJ)
  • Brennan to face questions on interrogations, drones and leaks (Reuters)
  • Wall Street Success With Germans Boomerangs (BBG)
  • Khamenei rebuffs U.S. offer of direct talks (Reuters)
  • Boeing Preps Redesign to Get 787 Flying  (WSJ)
  • Jim Rogers Joins Bill Gross Warning on Treasuries (BBG)
  • Alcatel Chief Is Out as Turnaround Stalls (WSJ)

Overnight Media Digest

WSJ

* U.S. President Barack Obama agreed to let a small group of lawmakers look at a classified opinion explaining his administration's legal justification for targeting killings of American terror suspects in other countries.

* American Airlines parent AMR Corp and US Airways Group Inc are hashing out the last major details of a merger agreement that would create the world's largest airline and are racing to finalize a deal, said people close to the discussions.

* Standard & Poor's Ratings Services could face a much higher legal bill than the $5 billion sought by the federal government as more and more states join the battle against the credit-ratings firm.

* Royal Bank of Scotland agreed to pay more than $610 million in fines to settle interest-rate-rigging charges with U.S. and UK authorities, and the bank's Japanese unit will plead guilty to U.S. fraud charges.

* Boeing Co is proposing a series of battery design changes that it believes would minimize the risks of fire on its 787 Dreamliners and allow the grounded jets to fly again while it continues searching for a longer-term fix, say government and industry officials briefed on the matter.

* Monte dei Paschi di Siena, the Italian bank at the center of a burgeoning financial scandal, was so strapped for cash in late 2011 that it negotiated a covert loan of nearly 2 billion euros ($2.71 billion) from the Bank of Italy even as executives were describing the lender's funding position as comfortable, according to the Bank of Italy and people familiar with the deal.

* Google Inc said it will require current advertisers using its AdWords online-ad system to pay for ads on some mobile devices, like tablets, for the first time.

* News Corp's earnings more than doubled in the three months to December, helped by one-time gains related to acquisitions, but the media and entertainment company cut its profit outlook.

FT

A day before the Bank of England's monetary policy committee announces the outcome of its monthly meeting, Chancellor George Osborne has called on BoE for a looser monetary policy to boost economic recovery.

Buyout firms are racing to raise funds for a possible 10 billion pounds bid for EE - the United Kingdom's largest mobile-phone operator. A group formed by Apax and KKR and another led by Blackstone and CVC Capital Partners are working on competing bids.

A News Corp executive said the company would hold on to its 39.1 percent stake in BSkyB for now. Chief Operating Officer Chase Carey said the media conglomerate was still looking at the long-term case for either selling its stake or trying again to take full control to BSkyB, after scrapping plans in wake of the phone hacking scandal in the UK.

Cantor Fitzgerald was in advanced talks, that stretched into Wednesday night, to buy British brokerage firm Seymour Pierce.

Institutional Shareholder Services, ISS, the influential adviser on corporate governance matters, has recommended that Bumi's shareholders vote against Nat Rothschild's proposals to replace all the miner's independent directors.

Royal Bank of Scotland will pay $612 million to U.S. and British authorities to settle allegations it manipulated benchmark interest rates. Five traders at Deutsche Bank's Frankfurt-based money market desk have been suspended as part of an internal inquiry by the bank to find out whether its staff manipulated the Euro Interbank Offered Rate, Euribor.

Dell's $24.4 billion deal to go private was almost derailed by a debate over whether the company would continue paying its quarterly dividend over the next few months, according to several people involved in the transaction.

Property tycoon Vincent Tchenguiz is seeking 200 million pounds in damages from UK's Serious Fraud Office over the agency's mishandling of investigations linking him to the collapse of Iceland's banking system

NYT

* Emails and employee interviews filed as part of a lawsuit show that JPMorgan Chase & Co flouted quality controls as it bundled mortgages into complex financial instruments.

* The Royal Bank of Scotland on Wednesday reached a combined $612 million settlement with American and British authorities over accusations that it manipulated interest rates, the latest case to emerge from a broad international investigation.

* U.S. federal regulators approved one flight of a Boeing 787, with a crew but no passengers, as engineers study ways to reduce the risks of another battery fire.

* Revenue from advertisements and subscription fees from Time Warner Inc's cable properties helped overcome a challenging quarter for the media conglomerate's publishing and movie divisions.

* Monte dei Paschi di Siena, an ancient Tuscan bank whose troubles have shaken Italian politics and caused jitters around the euro zone, on Wednesday confirmed earlier estimates of losses from a series of secret transactions that were used to conceal the scope of the bank's problems.

* GlaxoSmithKline Plc plans to cut costs in its struggling European drugs division and promised investors a return to growth this year, after failing to deliver a hoped-for recovery in sales and profits in 2012.

* Cravath, Swaine & Moore has hired David Kappos, the departing director of the United States Patent and Trademark Office, the second time the law firm has added a former senior Obama administration official to its partnership

Canada

THE GLOBE AND MAIL

* Stephen Harper's Conservative Party is fighting changes to federal ridings in Saskatchewan after an independent commission recommended new boundaries that should make it easier for Tom Mulcair's New Democratic Party to regain a foothold there.

* Ottawa's finances are taking a hit from discounted prices for Canadian oil, and Finance Minister Jim Flaherty says this will force him to hold a harder line on spending as he prepares the 2013 budget.

Reports in the business section:

* Canadian consumers are victims of higher prices driven by less competition than in the United States, the Senate says, as it formally urged the federal government to close that price gap by reducing tariffs and other barriers at the border.

* With demand among air travelers showing no signs of waning, WestJet Airlines Ltd posted strong fourth-quarter and year-end profits, beating most industry watchers' expectations.

NATIONAL POST

* Ontario Finance Minister Dwight Duncan will be resigning his seat in the legislature next week.

A government source tells The Canadian Press that Duncan will make it official when he holds a news conference Thursday at Queen's Park.

* Attawapiskat Chief Theresa Spence has called a band council meeting for Thursday to discuss a blockade on a winter road leading to a De Beers diamond mine.

De Beers Canada says a group of residents of the remote northern Ontario reserve set up the blockade on Monday on a road the company uses to move in supplies like fuel, machine parts and equipment that would be too heavy to fly in.

FINANCIAL POST

* Consumers are asking for clear language in their cellphone contracts and want to be able to put a cap on extra fees, says a draft of a national wireless code.

Thousands of Canadians contributed their ideas to the first draft of the national wireless code, which was released Monday by the Canadian Radio-television and Telecommunications Commission.

China

CHINA SECURITIES JOURNAL

-- Some Chinese provinces and cities, including Zhejiang on the coast near Shanghai, could raise natural gas prices in the third quarter, sources said.

-- Top-tier cities could cut the amount of housing pre-sale certificates and reduce approvals for new houses in the first half of the year, sources said.

SHANGHAI SECURITIES NEWS

-- The ministry of finance said China would allocate 120 billion yuan ($19.26 billion) to support domestic traffic infrastructure construction.

CHINA DAILY (www.chinadaily.com.cn)

-- Inflation is fine at present and potential money supply risks can be effectively contained, said a central bank official who declined to be identified.

-- Yunnan province has suspended the approval of "laojiao" punishment, or re-education through labour, a system established in the 1950s that Chinese lawmakers expect to abolish this year.

PEOPLE'S DAILY

-- Chinese Premier Wen Jiabao said at an executive meeting of the State Council that Chinese oil refining enterprises should speed up the upgrading of equipment and strengthen oil product quality supervision.

Fly On The Wall 7:00 Am Market Snapshot

ANALYST RESEARCH

Upgrades

BlackBerry (BBRY) upgraded to Outperform from Market Perform at Wells Fargo
Con-way (CNW) upgraded to Buy from Neutral at Citigroup
DeVry (DV) upgraded to Neutral from Underweight at JPMorgan
Fortune Brands (FBHS) upgraded to Buy from Hold at KeyBanc
Goodrich Petroleum (GDP) upgraded to Outperform from Sector Perform at RBC Capital
Molycorp (MCP) upgraded to Neutral from Underweight at JPMorgan
Owens Corning (OC) upgraded to Buy from Neutral at Longbow
Reliance Steel (RS) upgraded to Buy from Hold at Dahlman Rose
ViaSat (VSAT) upgraded to Buy from Hold at Needham
Vipshop (VIPS) upgraded to Buy from Hold at Deutsche Bank
Yandex (YNDX) upgraded to Overweight from Neutral at HSBC

Downgrades

Aaron's (AAN) downgraded to Hold from Buy at Canaccord
Akamai (AKAM) downgraded to Hold from Buy at Jefferies
Akamai (AKAM) downgraded to Neutral from Buy at Janney Capital
Apollo Investment (AINV) downgraded to Market Perform from Outperform at Wells Fargo
Elan (ELN) downgraded to Sector Perform from Outperform at RBC Capital
Endo Health (ENDP) downgraded to Underperform from Sector Perform at RBC Capital
Ignite Restaurant (IRG) downgraded to Neutral from Outperform at RW Baird
PACCAR (PCAR) downgraded to Neutral from Buy at UBS
Peregrine (PSMI) downgraded to Perform from Outperform at Oppenheimer
Rexnord (RXN) downgraded to Market Perform from Outperform at BMO Capital
Stryker (SYK) downgraded to Neutral from Outperform at Credit Suisse
TriQuint (TQNT) downgraded to Neutral from Buy at Longbow
United Microelectronics (UMC) downgraded to Neutral from Overweight at HSBC
Virgin Media (VMED) downgraded to Hold from Buy at Deutsche Bank
Visa (V) downgraded to Market Perform from Outperform at Wells Fargo

Initiations

Delta Apparel (DLA) initiated with a Buy at Roth Capital
Fly Leasing (FLY) initiated with a Buy at Deutsche Bank
Google (GOOG) initiated with a Neutral at Sterne Agee
Optimer (OPTR) initiated with an Outperform at RW Baird
Trulia (TRLA) initiated with a Neutral at Goldman
ValueClick (VCLK) initiated with a Buy at Goldman
Vertex (VRTX) initiated with an Outperform at RW Baird

HOT STOCKS

Dell (DELL): Silver Lake's equity contribution to deal is $1.4B
Yahoo! (YHOO) to run Google's (GOOG) AdSense, AdMob services on some sites
Landry's Restaurant (LNY) offered to acquire ARK Restaurants (ARKR) for $22.00 per share
BGI-Shenzhen extended tender offer for Complete Genomics (GNOM) to February 22 from February 6
O'Reilly Automotive (ORLY) sees 190 new store openings in FY13
Sees FY13 free cash flow $450M-$500M, gross profit margin 49.9%-50.3%
Spectrum Brands (SPB) sees improvements in financial results 2H weighted
Visa (V) authorized new $1.75B share repurchase program
Allstate (ALL) raised repurchase program by $1B to $2B
AT&T (T), Communications Workers of America reached tentative agreement
Green Mountain (GMCR) expects to build brewer inventory in 2H13
Vornado (VNO) received $124M in settlement of Stop & Shop (AHONY) litigation
Fujitsu (FJTSY) to cut approximately 5,000 employees

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Starwood Hotels (HOT), Cigna (CI), Prestige Brands (PBH), Towers Watson (TW), O'Reilly Automotive (ORLY),Visa (V), News Corp. (NWSA), Spectrum Brands (SPB), Green Mountain (GMCR)

Companies that missed consensus earnings expectations include:
Rand Logistics (RLOG), Albany International (AIN), Tesoro (TSO), Prudential (PRU), Yelp (YELP), Con-way (CNW), Plains All American (PAA)

Companies that matched consensus earnings expectations include:
FMC Corporation (FMC), Atmel (ATML)

NEWSPAPERS/WEBSITES

  • The $24.4B deal to take Dell (DELL) private shows what is possible in the leveraged-buyout market but doesn't necessarily portend a return of the mega deals popular before the financial crisis. The deal has components that are unusual and will make its size difficult to replicate, bankers, private-equity executives and analysts said, the Wall Street Journal reports
  • Standard & Poor's Ratings Services (MHP) could face a bigger bill than the $5B sought by the federal government as more states join the battle against the credit-ratings firm, the Wall Street Journal reports
  • Chrysler Group (FIATY) agreed to make Banco Santander's (SAN) U.S. arm its preferred lender for auto loans to broaden the financing it can offer its buyers and dealers, Reuters reports
  • Boeing (BA) said contract talks with India for military helicopters will be unaffected by planned budget cuts, after the country's defense minister said spending on arms would be tightened, Reuters reports
  • Sovereign wealth funds which pushed their real estate deal making to a record last year, are set to extend their buying spree as they seek alternatives to low-yielding bonds and volatile stocks. The funds made 38 property investments valued at almost $10B in 2012, Bloomberg reports
  • Japan’s major banks (MTU, MFG, SMFG) are following Goldman Sachs (GS) into domestic solar-power projects, anticipating an eightfold increase for investments in the industry. The banks expect the market to be worth as much as $19B over the next three years, Bloomberg reports

SYNDICATE

BreitBurn Energy (BBEP) files to sell 13M shares of common stock
Disney (DIS) registers 37.07M shares of common stock for Lucas Trust
ExOne (XONE) 5.3M share IPO priced at $18.00
Hudson Pacific (HPP) files to sell 7.5M shares of common stock
Nexstar (NXST) announces secondary offering of 3M shares by selling stockholders

Your rating: None

USPS Seeks to Cut Saturday Mail Delivery

USPS Seeks to Cut Saturday Mail Delivery

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Posted on Feb 6, 2013
quinn.anya (CC BY-SA 2.0)

Struggling under the weight of mandatory future retiree benefit payments, the U.S. Postal Service said it would move to a five-day schedule in August to save $2 billion a year.

It would still drop off packages on Saturdays and mail would be deposited in post office boxes. The agency contends that it has the authority to reduce service, but some in Congress argue that legislators should make the decision.

In November, the agency reported a record annual loss of $15.9 billion for the last budget year and forecast more shortages in 2013. Since 2006, the USPS has cut annual costs by about $15 billion and reduced the size of its career workforce by 28 percent, or 193,000 employees, officials say.

—Posted by Alexander Reed Kelly.

The Guardian:

The agency’s biggest problem was not due to reduced mail flow but rather to mounting mandatory costs for future retiree health benefits, which made up $11.1bn of the losses. Without that and other related labor expenses, the mail agency sustained an operating loss of $2.4bn, lower than the previous year.

The health payments are a requirement imposed by Congress in 2006 that the post office set aside $55b in an account to cover future medical costs for retirees. The idea was to put $5.5bn a year into the account for 10 years – $5.5bn the post office doesn’t have.

No other government agency is required to make such a payment for future medical benefits. Postal authorities wanted Congress to address the issue last year, but lawmakers finished their session without getting it done. So officials are moving ahead to accelerate their own plan for cost-cutting.

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Waves of Anti-Greed Movements in the United States

I was doing some research for the ‘origins’ section of the Occupy Wall Street page on Wikipedia which I have had free rein on for a while now. Doing that research gave me an idea.

The U.S. Congress: From One Crisis to Another, The Politics of Debt Default

washington

“The full consequences of a default — or even the serious prospect of default — by the United States are impossible to predict and awesome to contemplate… Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and on the value of the dollar in exchange markets.”

-Ronald Reagan (1911-2004), 40th President of the United States (1981–89), (1983)

“Decisions about the debt level [should] occur in conjunction with spending and revenue decisions as opposed to the after-the-fact approach now used… [doing so] would help avoid the uncertainty and disruptions that occur during debates on the debt limit today.”

-U.S. Government Accountability Office (G.A.O.)

“I will not have another debate with this Congress over whether they should pay the bills for what they’ve racked up… We can’t not pay bills that we’ve already incurred.”

-President Barack Obama, Tuesday January 1, 2013

That’s why the American people hate Congress.”

-Chris Christie, New Jersey Republican Governor, (January 2, 2013, after the Republican House majority refused to vote on a $60 billion aid package for victims of Superstorm Sandy)

One crisis averted, three to come! Indeed, that’s what can be said after the U.S. House of Representatives passed legislation on January 23, 2013, to suspend the government’s statutory borrowing limit for three months.

In fact, the cycle of artificially created crises will go on and on in Washington D.C. Now, the next crises are scheduled for March 1s, for March 27th and for May 19th. Stay tuned. On March 1st, automatic sequester cuts agreed by Congress in 2012 will take effect, causing an immediate cut of $69 billion in public discretionary spending. Then, on March 27, the U.S. government’s ability to fund itself (the “continuing resolution”) will run out. And, of course, come May 19, the melodrama of raising the debt ceiling will be back again in force.

Ever since Republicans took control of the 435-member U.S. House of Representatives in 2010, a fiscal drama with the White House and the U.S. Senate has been replayed time and again. One of the political gimmick is called the “raising of the country’s debt limit.

Why so many artificial crises in the current American political system? Extreme political polarization seems to be the answer.

Indeed, since the 2010 mid-term election, when the Republican Party took control of the House of Representatives with some 242 seats, this party has behaved as if it were in fact two parties in one. There is the traditional conservative Republican Party on one side, and the radical Republican Tea Party on the other side. With some 67 anarchist anti-tax and anti-establishment Tea Party House members voting as a block, the latter has been in a position to hold the balance of power in the House and to prevent compromised solutions to the country’s fiscal problems.

A good example was the 2011 showdown between the Democratic Obama administration and the Republican-controlled House of Representatives regarding raising the U.S. government’s debt ceiling.

In the spring of 2011, House Republicans, spurred by Tea Party members who practice no party discipline toward the Republican Party except to themselves, and reneging on a decades-long bipartisan tradition, refused to raise the nation’s debt ceiling, thus threatening to push the U.S. government toward debt default. They demanded that the Obama administration concede to freezing tax revenues and to enacting massive spending cuts. In the midst of a financial crisis and an economic slowdown, such huge public spending cuts could have pushed the U.S. economy toward an economic depression similar to the 1930’s Great Depression.

For the first time, therefore, House Tea Party members decided to use the perfunctory requirement to raise the debt limit to gain partisan political advantage. That move has introduced into the functioning of the U.S. Congress an element of radicalism and brinkmanship that could prevent the U.S. government from operating properly for years to come.

Mind you, the obligation for Congress to vote on raising the U.S. government’s debt ceiling has existed since a 1917 law to that effect was enacted. It allows the U.S. Treasury to proceed with borrowing to finance government operations as outlined in an already approved budget for a given fiscal year.

Economically speaking, indeed, there are three main ways to finance public expenditures: -through tax revenues; -through borrowing; -or, through the printing press, when a government borrows from its own central bank. The latter is in fact an inflation tax imposed on every user of the national currency.

Therefore, if the U.S. Congress has already approved a public budget of operations that does not raise taxes in a sufficient amount to cover outlays, and if an inflation tax is out of question, the only other avenue left is to borrow the required funds.

For years, the 1917 requirement to raise the debt limit was considered redundant since the budget had already been approved and it was seen as a simple bipartisan formality. Since 1940, for example, the U.S. debt ceiling has been raised 94 times, 54 times by a Republican administration and 40 times by a Democratic administration. Altogether the debt ceiling has been raised 102 times since 1917. It has been raised every year that the U.S. government has run a deficit.

If the Tea Party members of the House keep on routinely using the 1917 law to formally raise the debt limit as an obstructionist tool, Congress may be constantly gridlocked and the U.S. government will continue going from crisis to crisis. A small minority of House members could then hold the U.S. government hostage. As a consequence, it could become increasingly difficult for the U.S. Administration to implement sensible economic and fiscal policies along the principle of majority rule. The U.S. economy is bound to suffer severely from such a political paralysis.

In 2011, former president Bill Clinton expressed the view that the 1917 law is unconstitutional since it goes against Article I, sec. 8 of the U.S. Constitution that requires that Congress pay “the Debts and provide for the … general Welfare of the United States.” Besides, the Fourteenth Amendment (section 4) of the U.S. Constitution states that: “the validity of the public debt of the United States… shall not be questioned.

Therefore, if Congress does not fulfill its duties for one reason or another, the President in whom executive power is vested may have the right to act for the “general Welfare of the United States”.

In the coming weeks, if the House of Representatives refuses bipartisan cooperation and keeps stonewalling the Administration, President Obama may have no other choice but to call the Tea Party members’ bluff by unilaterally declaring the 1917 law unconstitutional and letting the courts sort it out later.

A constitutional crisis may seem to many to be a better alternative than a repetitive and protracted economic and financial crisis and an economy constantly teetering on the brink of a permanent fiscal cliff.

Dr. Rodrigue Tremblay, a Canadian-born economist, is the author of the book “The Code for Global Ethics, Ten Humanist Principles”, and of “The New American Empire”)

The American Lockdown State

The American Lockdown State

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Posted on Feb 5, 2013
Live4Soccer(L4S) (CC BY-ND 2.0)

By Tom Engelhardt, TomDispatch

This piece first appeared at TomDispatch.

Consider Inauguration Day, more than two weeks gone and already part of our distant past.  In its wake, President Obama was hailed (or reviled) for his “liberal” second inaugural address.  On that day everything from his invocation of women’s rights (“Seneca Falls”), the civil rights movement (“Selma”), and the gay rights movement (“Stonewall”) to his wife’s new bangs and Beyoncé’s lip-syncing was fodder for the media extravaganza.  The president was even praised (or reviled) for what he took pains not to bring up: the budget deficit.  Was anything, in fact, not grist for the media mill, the hordes of talking heads, and the chattering classes?

One subject, at least, got remarkably little attention during the inaugural blitz and, when mentioned, certainly struck few as odd or worth dwelling on.  Yet nothing better caught our changing American world.  Washington, after all, was in a lockdown mode unmatched by any inauguration from another era—not even Lincoln’s second inaugural in the midst of the Civil War, or Franklin Roosevelt’s during World War II, or John F. Kennedy’s at the height of the Cold War.

Here’s how NBC Nightly News described some of the security arrangements as the day approached:

“[T]he airspace above Washington… [will be] a virtual no-fly zone for 30 miles in all directions from the U.S. capital.  Six miles of the Potomac and Anacostia Rivers will be shut down, with 150 blocks of downtown Washington closed to traffic, partly out of concern for car or truck bombs… with counter-snipers on top of buildings around the capital and along the parade route… [and] detectors monitoring the air for toxins… At the ready near the capital, thousands of doses of antidotes in case of a chemical or biological attack… All this security will cost about $120 million dollars for hundreds of federal agents, thousands of local police, and national guardsmen from 25 states.”

Consider just the money.  It’s common knowledge that, until the recent deal over the renewal of the George W. Bush tax cuts for all but the richest of Americans, taxes had not been raised since the read-my-lips-no-new-taxes era of his father.  That’s typical of the way we haven’t yet assimilated the new world we find ourselves in.  After all, shouldn’t that $120 million in taxpayer money spent on “safety” and “security” for a single event in Washington be considered part of an ongoing Osama bin Laden tax?

Maybe it’s time to face the facts: this isn’t your grandfather’s America. Once, prospective Americans landed in a New World.  This time around, a new world’s landed on us.

Making Fantasy Into Reality

Bin Laden, of course, is long dead, but his was the 9/11 spark that, in the hands of George W. Bush and his top officials, helped turn this country into a lockdown state and first set significant portions of the Greater Middle East aflame.  In that sense, bin Laden has been thriving in Washington ever since and no commando raid in Pakistan or elsewhere has a chance of doing him in.

Since the al-Qaeda leader was aware of the relative powerlessness of his organization and its hundreds or, in its heyday, perhaps thousands of active followers, his urge was to defeat the U.S. by provoking its leaders into treasury-draining wars in the Greater Middle East.  In his world, it was thought that such a set of involvements—and the “homeland” security down payments that went with them—could bleed the richest, most powerful nation on the planet dry.  In this, he and his associates, imitators, and wannabes were reasonably canny.  The bin Laden tax, including that $120 million for Inauguration Day, has proved heavy indeed.

In the meantime, he—and 9/11 as it entered the American psyche—helped facilitate the locking down of this society in ways that should unnerve us all.  The resulting United States of Fear has since engaged in two disastrous more-than-trillion dollar wars and a “Global War on Terror” that shows no sign of ending in our lifetime. (See Yemen, Pakistan, and Mali.)  It has also funded the supersized growth of a labyrinthine intelligence bureaucracy; that post-9/11 creation, the Department of Homeland Security; and, of course, the Pentagon and the U.S. military, including the special operations forces, an ever-expanding secret military elite cocooned within it.

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The Nefarious Ways 9-11 Turned America into a Lockdown State

Even after his death, Osama bin Laden thrives in the U.S.'s transformation into a lockdown state.

February 5, 2013  |  

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Consider Inauguration Day, more than two weeks gone and already part of our distant past.  In its wake, President Obama was  hailed (or reviled) for his “liberal”  second inaugural address.  On that day everything from his invocation of women’s rights (“Seneca Falls”), the civil rights movement (“Selma”), and the gay rights movement (“Stonewall”) to his wife’s  new bangs and Beyoncé’s lip-syncing was fodder for the media extravaganza.  The president was even  praised (or reviled) for what he took pains not to bring up: the budget deficit.  Was anything, in fact, not grist for the media mill, the hordes of talking heads, and the chattering classes?

One subject, at least, got remarkably little attention during the inaugural blitz and, when mentioned, certainly struck few as odd or worth dwelling on.  Yet nothing better caught our changing American world.  Washington, after all, was in a lockdown mode unmatched by any inauguration from another era -- not even Lincoln’s second inaugural in the midst of the Civil War, or Franklin Roosevelt’s during World War II, or John F. Kennedy’s at the height of the Cold War.

Here’s how NBC Nightly News  described some of the security arrangements as the day approached:

“[T]he airspace above Washington... [will be] a virtual no-fly zone for 30 miles in all directions from the U.S. capital.  Six miles of the Potomac and Anacostia Rivers will be shut down, with 150 blocks of downtown Washington closed to traffic, partly out of concern for car or truck bombs... with counter-snipers on top of buildings around the capital and along the parade route... [and] detectors monitoring the air for toxins... At the ready near the capital, thousands of doses of antidotes in case of a chemical or biological attack… All this security will cost about $120 million dollars for hundreds of federal agents, thousands of local police, and national guardsmen from 25 states.”

Consider just the money.  It’s common knowledge that, until the  recent deal over the renewal of the George W. Bush tax cuts for all but the richest of Americans, taxes had not been raised  since the read-my-lips-no-new-taxes era of his father.  That’s typical of the way we haven’t yet assimilated the new world we find ourselves in.  After all, shouldn’t that $120 million in taxpayer money spent on “safety” and “security” for a single event in Washington be considered part of an ongoing Osama bin Laden tax?

Maybe it's time to face the facts: this isn’t your grandfather’s America. Once, prospective Americans landed in a New World.  This time around, a new world’s landed on us.

Making Fantasy Into Reality

Bin Laden, of course, is  long dead, but his was the 9/11 spark that, in the hands of George W. Bush and his top officials, helped turn this country into a lockdown state and first set significant portions of the Greater Middle East  aflame.  In that sense, bin Laden has been thriving in Washington ever since and no commando raid in Pakistan or elsewhere has a chance of doing him in.

Since the al-Qaeda leader was aware of the relative powerlessness of his organization and its hundreds or, in its heyday, perhaps thousands of active followers, his urge was to defeat the U.S. by  provoking its leaders into treasury-draining wars in the Greater Middle East.  In his world, it  was thought that such a set of involvements -- and the “homeland” security down payments that went with them -- could  bleed the richest, most powerful nation on the planet dry.  In this, he and his associates, imitators, and wannabes were reasonably canny.  The bin Laden tax, including that $120 million for Inauguration Day, has proved heavy indeed.

US Congress to request details of foreign account holders with US banks

Reuters / Jessica Rinaldi

Reuters / Jessica Rinaldi

The US government is reportedly considering requesting details from banks of foreigners holding accounts in America. The news follows US demands for details of foreign nationals’ accounts abroad.

­Labeled ‘part of a crackdown on tax evasion’, the US will potentially have access to the details of millions of foreign customers who hold accounts with America-based branches, according to Reuters. The move is expected to face strong resistance from the banking industry.

Wealthy foreigners and financial institutions that bank in the US could have their account details given to the US government. The Obama administration is expected to make the request of Congress in a forthcoming Whitehouse budget proposal. 

The Foreign Account Tax Compliance Act (FATCA) already requires overseas financial companies to identify their American customers to the Internal Revenue Service. 

In January this year, Switzerland’s oldest bank, Wegelin & Co., was forced to close after the US imposed a $22 million fine on the institution, alongside restitution of $20 million to the IRS, and a $15.8 million fee. The bank was accused of allowing American nationals to hide their earnings after US judge gave the Internal Revenue Service (IRS) permission to obtain data on the bank from Swiss financial institution UBS. On January 5th, a Manhattan federal court ruled the information on Wegelin & Co’s former clients could be demanded by the US.  

It’s highly possible that the new proposal will be part of a move to aid negotiations with foreign financial agencies. Reuters published part of a letter written last October by Mark Mazur, Treasury Assistant Secretary for Tax Policy, saying that the government aimed “to pursue equivalent levels of reciprocal automatic exchange in the future.” America is requesting data from foreign sources even now, and some are resisting its pressure. If successful, it is likely further fines will be imposed. 

Bilateral agreements mean that four countries have already started sharing information on the finances of their US residents – the United Kingdom, Denmark, Ireland and Mexico. The US is negotiating with another 50 countries. 

Many have been unable to meet the US’s requirements as they would come into direct conflict with local privacy laws. 

Some countries, including France, Germany and China have been delaying the sharing of information, as they consider it one-sided and unreasonable that they are expected to share details of the US accounts of French, German and Chinese nationals abroad. However, the US has already progressed in their negotiations with the three. 

Reuters said that although China appears reluctant to comply, the country is in ‘behind the scenes’ discussions. 

FATCA requires financial institutions (non-US banks and investment funds) to inform the IRS about accounts held by those from the US with balances of more than $50,000. They face economic restrictions should they fail to provide data. FATCA was set into motion in 2010, and will come into play towards the end of 2013.

The IRS held an ‘offshore amnesty’ in October 2011, which offered the opportunity for people with money in offshore bank accounts to come forward, before the IRS found them through data sharing.  

Switzerland is following the UK and signed a FATCA deal with the US in December 2012, which is due to come into play in January 2014. Switzerland attracts many rich foreigners and has already been subject to US action.  

“The United States is committed to a policy of transparency and equivalence, where appropriate, in furtherance of international cooperation to combat offshore tax evasion,” said a Treasury spokesman. 

Swiss Federal Data Protection and Information Commissioner (FDPIC) stated in 2012 that the model for the agreement raised numerous privacy and data protection concerns. FDPIC’s 19th annual report called the agreement effectively an ‘automatic exchange of information,’ adding “We are very critical of this law that has been imposed unilaterally by the United States.”

On January 18th, the European commission also warned the Swiss over its tax practices, saying that if the country did not agree to an automatic exchange of information, it would be ‘blacklisted’, and sanctions could be imposed.

Supervisor of Intelligence Estimate Hailed for Preventing War With Iran

Transcript

Hassan Ghani

An award for integrity and honesty, for work that essentially prevented a war.Thomas Fingar, now a Professor at Stanford University, oversaw the National Intelligence Estimate on Iran in 2007, during a period when the Bush administration was beating the drums of war. Its conclusion, that all 16 US intelligence agencies judged with high confidence that Iran had given up its nuclear weapons programme in 2003, placed an insurmountable obstacle on the path to conflict.Critics of the report's conclusions say it was politicised. But speaking to us in Oxford, where he's currently teaching as part of an overseas programme, Thomas Fingar told us that unlike the flawed WMD report on Iraq in 2002, his assessment has withstood scrutiny over the years.Professor Thomas Fingar, Chairman of National Intelligence Council (2005-2008)“The assessment of our estimate has been reviewed many times. Many times before we issued it, many times in the years since, in the years since with additional information. Judging by the public statements, the annual threat testimony and the other statements of the administration, which must be consistent with the classified report, they haven’t changed it. It stood up as good analytic tradecraft. There are people who characterise it as if it was written in order to prevent war – that’s not why it was written, it was written to describe the situation as best we understood it.Hassan GhaniWhen asked what went wrong in 2002, Fingar says those authoring the NIE on Iraq caved in to pressure to produce a rushed report.Professor Thomas Fingar, Chairman of National Intelligence Council (2005-2008)“They produced an estimate in 17 days. That was the congressionally imposed deadline agreed to by George Tenet. So they produced something in 17 days, which had two weekends in there. It’s a classic case of you want something real bad, you get something real bad. Stuff pulled off the shelf not really re-evaluated, no ability to go back and really tear into this stuff. And we were not going to make that mistake again with the Iran estimate. So we took the heat and said ‘you don’t get it until we’re ready’.”Hassan GhaniBut he that ultimately politicians can choose to ignore the intelligence agencies, if they don't get the results they want.Professor Thomas Fingar, Chairman of National Intelligence Council (2005-2008)“The decision to go to war had clearly been made before that estimate was undertaken. Troops were moving, you could not have been in Washington and not known there was going to be war. For I&R we said there’s not evidence of a reconstituted nuclear programme – that was the only one that really mattered – and we said no, evidence isn’t there, the evidences can all be explained in other ways. That’s the third sentence of the estimate. So if you cared about this enough to read to the third sentence, you’d know that there was a dissent on the major justification for the conflict.”Hassan GhaniThe Sam Adams associates present their award each year for integrity in intelligence. Many previous awardees have been intelligence professionals and whistleblowers.2010 Sam Adams awardee, Julian Assange of Wikileaks, was piped into the ceremony by video link. He used the opportunity to tackle an upcoming Hollywood movie, which he says is an attack on Wikileaks, and renews the push for war with Iran.Julian Assange, Wikileaks“We have something here, which is a recent acquisition of Wikileaks. The script to a tens of millions of dollar budget Dreamworks movie. What is it about? It is about us, nominally. It is about Wikileaks the organisation. It is a mass propaganda attack against Wikileaks the organisation and the character of my staff and our activities and so on. But it is not just an attack against us, it fans the flames to start a war with Iran. It’s coming out in November, it’s being filmed now. So that’s the reality of where we’re at. Not merely a war of intelligence agencies, but a war of corrupt media, corrupt culture.”Hassan GhaniSam Adams himself was a CIA analyst in the Vietnam-era, tasked with estimating enemy strength in numbers. His conclusion that the Viet-cong numbered at least half a million, twice the official figure, was swept under the rug at the time, seen as politically unacceptable. He later did go public, but too late to have an impact on the war.Raymond McGovern, Former CIA Analyst“He went to an early death at age 55, with great remorse that he had not gone outside the system, that he had not said what he knew back in 1967, half way through the war. The way he explained it to me is, that Vietnam memorial, made of granite in a V, that whole left section wouldn’t be there, because there would be no names to carve into that granite. If he had spoken out, if I had spoken out, if we had spoken around 1967, when we had that cable from General Abrahams saying ‘we can’t go with the honest figures, because we’ve been projecting a view of progress’.”Hassan GhaniAnd so just as interesting as this year's award winner, are those presenting it to him. Former US Army Colonel Ann Wright resigned as a State department official in protest over the Iraq War. She argues that too many within government are carried along with political tides, often at the expense of what's best for the nation.Ann Wright, Former US State Dep. Official“There were so many people, that were a part of the decision to go ahead and invade and occupy Iraq, that knew better. That knew that the rationale for it was wrong, but they went along with the senior leadership of our country, who for whatever reason it was, whether it was for oil or for whatever it was, wanted to take out the Saddam Hussein regime.”Hassan GhaniLike other Sam Adams associates, she sees whistleblowers as an essential check to keep the system in balance.Ann Wright, Former US State Dep. Official“So many whistleblowers find that the system doesn’t want to hear what they have to say. Because usually it’s something that the government system is doing wrong and whistleblowers are saying ‘wait wait, this is going wrong’ or ‘maybe there’s even criminal acts that are happening that the government’s involved in and we’ve got to stop that and change it’. And we find that many times the government and senior officials in the government don’t want to hear that.”Hassan GhaniPrevious Sam Adams award winner, Coleen Rowley, blew the whistle after 9/11 on major intelligence sharing failures within the FBI in the run up to the attacks. Her 9/11 commission testimony helped re-organise the agency and the way information is shared.Coleen Rowley, Former FBI Agent, Whistleblower“They realised that 9/11 occurred because the agencies blocked information from each other, they blocked it vertically, horizontally, and they blocked it from the public. So the people who are in those environments, when information is blocked and there is lack of sharing, what is their choice? They almost have to either become a whistleblower or then live forever with the consequences of knowing that they could have done something. That’s why Wikileaks, or a method of sharing information, and of course I talked about sharing information between agencies, but it’s also with the public. The 9/11 commission said if the information even had been shared of Moussawi’s arrest, that would have probably prevented 9/11. So it’s an incredible situation, most people think that secrecy is protecting them, and it’s the exact opposite.”Hassan GhaniRowley believes much more information should be made public, whether or not it's politically embarrassing.Coleen Rowley, Former FBI Agent, Whistleblower“We’ve had some good inspector general investigations, for instance of torture in the CIA, to this day though it remains secret. And you see the opposite is Abu Ghraib, that report was made public, and so at least the public learned about it, and there was at the time an outcry about the fact that it was discovered that abuses were occurring in Abu Ghraib. But the CIA torture report, I think it’s probably a good investigation, but the public still doesn’t know, and so what’s happened? There’s a movie out there that’s using a false narrative – the public doesn’t know that it’s false, because how would they know? Because they’ve never seen the truth. It’s a pretty incredible situation, the truth really matters.”Hassan GhaniThe US government says it’s necessary to prosecute whistleblowers to protect national security. And for whistleblowers who do choose to go public, the consequences are increasingly dangerous.Coleen Rowley, Former FBI Agent, Whistleblower“Especially under Obama, there have been prosecutions, I think it’s 7 now, twice as many as all Presidents of all time, under the official espionage act. If you go back to deepthroat, and the FBI who knew that the highest level of President’s men were actually engaging wrongdoing – would that repeat today? I really wonder, especially now with the surveillance and the monitoring.”Hassan GhaniThomas Drake is the only whistleblower so far who's managed to fight espionage charges under Obama and win - there are six other cases. A former senior executive at the NSA, he blew the whistle to the media on a failed billion dollar surveillance programme which he believed violated the constitution.Thomas Drake, Former NSA Executive, Whistleblower“I would I eyewitness to massive fraud, waste and abuse on a multi-billion dollar program, a boondoggle programme called trailblazer, when there was actually a superior alternative, and was also a program that would have completely honoured the fourth amendment and the exclusive statute by which the US government, NSA, was authorised to violate the fourth amendment rights fo Americans. That was under FISA, the Foreign Intelligence Surveillance Act. They wilfully broke the law, criminally. But what happened later, as all of this came out and I ended up going to a reporter, decriminalised the reporting of the government wrong doing. They criminalized the reporting of government criminal conduct.”Hassan GhaniDrake says he was careful not to reveal any classified information, and after reviewing laws on disclosure, thought that the worst that could happen is that he would lose his job. Instead, he faced espionage charges amounting to 35 years in prison.Thomas Drake, Former NSA Executive, Whistleblower“I was turned into enemy of the state, I mean I'm charged with the espionage act, I'm being put into the same category as historical spies in US history, the Alder Hiss’, the Robert Hanssens, the Alrdich Ames of the world. That the category of people you become associated with. So it's probably one of the worst things an american can be charged with, under the espionage act, because you are painted into a very dark corner, you have betrayed your country. I was put under investigation by the bush administration, but the Bush administration never actually indicted me, it took the Obama administration to actually indictment me. And when they indicted me, they threw everything they had at me.In 2008, his presidential campaign, he actually lauded whistleblowers, he called them out as patriots. Who better to call the government onto the carpet when they’re up to no good. And yet he’s presided over the most draconian crackdown on truth tellers and whistleblowers of any administration, actually all administrations combined. It truly is unprecedented.Hassan GhaniDespite immense pressure to plead out, Drake maintained his innocence, and on the eve of trial government prosecutors dropped the charges. But Thomas Drake has been left blacklisted, financially bankrupt, and disturbed at the path his country is following.Thomas Drake, Former NSA Executive, Whistleblower“I'm having great difficulty recognising my own country, in terms of the government, the form of government under which I took an oath to support and defend four times in my government career. Any yet I was criminalized, and was painted as an enemy of the state, for simply speaking truth to power, and it was clear they were going to make me an object lesson, and they threw everything they had at me.Hassan GhaniOf course, it's not just US administrations that face accusations of covering up fraud and criminal acts under the guise of national security. Annie Machon was an agent in the British spy agency MI5. She claims Britain is ahead of the US in terms of stifling whistleblowers from within the intelligence community.Annie Machon, Former MI5 Agent, Whistleblower“They a rethink about the official secrets act and launched a new in 1989, the 1989 official secrets act, which obviated, got rid of, the public interest defence. And the only reason that clause was put in was to stifle whistleblowing. There’s already that old law to stop treachery, so this is designed to stifle whistleblowers. And it has been used many times in the UK since, against David Shayler, Richard Tomlinson, Katherine Gun, and it has a very chilling effect on the idea that if you see crimes committed by the spy agencies, what do you do with that information? The only person that you can go to legally under the OSA of 1989 is the head of the agency you wish to make a complaint against. So you can imagine how many of those complaints are upheld.And I think it’s particularly pertinent at the moment, certainly in the last 10 years, where we’ve seen false information fed into the political process, where we’ve seen politicisation of intelligence in the run up to the Iraq war, with the Downing Street memo and the head of MI6 saying the intelligence facts had to be fitted around the policy. And also where we see torture and extraordinary rendition, where our British spies are being used to do that and they are protected under a lot of secrecy laws, and the government in fact wants to make greater protection for them by setting up secret courts, where the accused can’t even see what they’re accused of. It’s Kafkaesque.”Hassan GhaniAllegations against British intelligence services of complicity in torture do still make it through to the media when the alleged victims speak out. But with tight laws around disclosure in the UK, it's impossible to say whether or not what we hear is just a fraction of what's taking place.Annie Machon, Former MI5 Agent, Whistleblower“I worked in MI5 in the mid-1990s for six years. That I would say would be the only marginally ethical decade of its hundred year existence, because up until 1989 it did not officially exist - it could do whatever it wanted - and post 9/11 the gloves came off with the intelligence agencies. So in the 1990s peace was breaking out, they didn’t get involved in torture, they stopped looking at political activists, the whole shebang. So that was actually the more ethical era, and yet in those six years David Shayler and I saw so much going wrong that we felt compelled to blow the whistle. So how much worse is it now? That has to be the question. I think all we’re seeing now with extradition and torture cases is definitely very much the tip of the iceberg.Hassan GhaniIt’s clear that the act of whistleblowing, even in the public interest, is under serious threat. Some may consider this a positive development in terms of national security. Others see it as the end of public accountability for those in positions of power.Thomas Drake, Former NSA Executive, Whistleblower“If the government begins to exercise increasing influence, even if it’s self-censorship where people will not speak up because they’re afraid that they’re going to be noticed by the government, that means that critical information about government activities will never see the light of day. And especially the secret side of government, you would think that’s the part of government you want the most accountability with. Well, if they’re choking off the sources and they’re making it very clear, even though I was able to prevail and hold off the government and remained a free man, the message was still sent.”

Report: Japanese Whaling ‘Dead in the Water’ Without Millions in Subsidies

The controversial Japanese whaling industry, which has met fierce criticism and often combative oversea confrontations, is "effectively dead in the water" without large government subsidies says a new report by animal watchdog group, the International Fund for Animal Welfare (Ifaw).

A Japanese whaling fleet's mothership, the Nisshin Maru, seen from Sea Shepherd vessel the Bob Barker. (Photo: Sam Sielen/AFP/Getty) Breaking the story on the uneaten 'warehouses of whale meat,' the Guardian cites a new report, to be published Tuesday, which found that—despite a dramatic drop in whale meat consumption—the Japanese government continues to siphon millions from public tax dollars to keep the industry afloat.

Whale meat consumption has reportedly fallen to about 1% of its 1960s peak, with stockpiles of unsold whale meat topping 5 million kilograms.

According the report, despite this obvious glut, the Japanese government spent at least ¥30bn ($4.8bn) on whaling between 1987 and 2012, including last year's subsidies of ¥2.28bn ($366m) which were siphoned off from money budgeted for reconstruction from the 2011 tsunami.

"With growing wealth and modernisation, the people of Japan have lost their yen for whale meat," the report says. "Yet fisheries officials and other government figures continue to siphon off millions of taxpayer yen to prop up an industry that is effectively dead in the water."

An unnamed Japanese anti-whaling activist and volunteer with ocean conservationist group Sea Shepard says that, despite the significant drop in popularity, Japanese whaling continues primarily because of "greed and bureaucracy, and also because the Japanese, like any country, don't like being told what to do by other countries."

"The fisheries agency is using international opposition to whaling to build domestic support," said Patrick Ramage, the director of Ifaw's global whale program. "But I don't think that argument is selling any better than all that whale meat now sitting in warehouses."

Key Macro Events And Developments In The Coming Week

One-stop summary of the key events and issues in the week ahead.

From Goldman

Monday 4 February

  • European Services PMIs (Jan)
  • US Factory Orders (Dec): GS: 2.7%, Consensus: 2.3%, Previous: 0.0%
  • Also interesting: UK Construction PMI

Tuesday 5 February

  • RBA Meeting: We expect no change to the Cash Rate at 3.00%, in line with consensus. The market is pricing a cut of  approximately 10bp.
  • US ISM Non-manufacturing Index (Jan): GS: 55.0, Consensus: 55.0, Previous: 55.7
  • China HSBC Services PMI (Jan): Previous: 51.7

Wednesday 6 February

  • Germany Factory Orders (Dec): Consensus: 0.9% mom, Previous: -1.8% mom
  • Czech Central Bank Meeting: GS: 0.05%, Consensus: 0.05%, Previous: 0.05%.
  • Poland Central Bank Meeting: In line with consensus we expect a 25bp cut to 3.75%.
  • Also interesting: Czech Industrial Output, Czech Trade Balance

Thursday 7 February

  • ECB Meeting: We expect no change to either the re-fi or deposit rate.
  • BoE Meeting: We expect no change to either the Bank Rate or the £375bn asset purchase program, in line with consensus.
  • Peru Central Bank Meeting: We expect the MPC to keep the policy rate unchanged at 4.25% but the post meeting policy  statement could turn slightly more dovish.
  • Germany Industrial Production (Dec): Consensus: 0.2% mom, Previous: 0.2% mom
  • UK Industrial Production (Dec): Consensus: 0.9% mom, Previous: 0.3% mom
  • UK Trade Balance (Dec): Consensus: -£8.9bn, Previous: -£9.2bn
  • Brazil IPCA Inflation (Jan): GS: 0.80% mom, Previous: 0.79% mom
  • Also interesting: US Initial Claims, US Nonfarm Productivity, US Unit Labour Costs, Australia Labour Market data, Swiss Foreign
  • Exchange Reserves, Mexico Inflation, Chile Trade Balance (Jan).

Friday 8 February

  • China CPI (Jan): Consensus: 2.0% yoy, Previous: 2.5%.
  • China Exports (Jan): Consensus: 14.9%, Previous: 14.1%.
  • US Trade Balance (Dec): GS: -$45bn, Consensus: -45.8bn, Previous: -48.7bn
  • Also interesting: Sweden Industrial Production

Key issues in the coming days, via SocGen

EUROPE’S GROWTH CHALLENGE

As the ECB Governing Council convenes in Frankfurt, European leaders will be gathering in Brussels for a two-day European Council. Both will be concerned about the continued economic weakness and recent euro strength will no doubt be a topic of discussion at both venues. In our opinion, the ECB will remain on hold this week, but any hints of a more dovish tone will raise hopes that the March meeting – when the ECB presents it new staff forecasts – could see a rate cut. While not unwelcome, a rate cut alone is unlikely to bring about any significant change to the euro area’s growth outlook. Fast-tracking fiscal and banking union would have a much more significant impact on the euro area economy; unfortunately progress remains slow to date. This week European leaders will seek to tackle the EU’s 2014-20 budget and while we do not see a material immediate growth impact from an agreement, this would lift confidence on the ability of the EU to resolve issues. Trade is also likely to figure on the agenda, with the idea that strengthening trade relationships will promote investment, jobs and growth medium term. Note, Chancellor Merkel is due to meet Prime Minister Rajoy early this week and President Hollande on 6 February.

MARKET ISSUES: With no action seen at this week’s ECB meeting, focus will be on the press conference and any hints of a more dovish tone, which would raise hopes for a March rate cut (albeit not our baseline scenario).

UK TRIPLE DIP RECESSION CALLS PREMATURE

Overall, weak economic data add to the risk of easing, but we believe that the MPC will opt to stay on hold this week. A bounce back up in December manufacturing output – we look for +1.2% mom – would confirm our view that cries of a triple-dip recession are premature. The upcoming Inflation Report (13 February) will shed further light on the Bank’s analysis of the economic situation. 

MARKET ISSUES: The bank remaining on hold and slightly better data could bring some near-term respite for sterling. Market attention remains centred on the arrival of Mark Carney on 1 July, who is widely seen as being willing to take aggressive action to boost the UK economy. He will appear before the Treasury Select Committee on 7 February.

SEASONAL BOUNCE IN CHINESE DATA

The timing of Chinese New Year often brings some distortion to the data early in the year. 2013 is no exception as the Lunar New Years falls on 10 February, 3 weeks later than last year and adding 4 working days to January 2013 compared to January 2012. This seasonal effect should bring an extra boost to January trade data, lifting both exports (21% after 14.1% yoy) and imports (14% after 6.0% yoy). January loan data should also see a boost.

MARKET ISSUES: Overall, we continue to see a cyclical bounce in the Asia data, but we do urge caution when interpreting the January data from China.

Your rating: None

Frontrunning: February 4

  • Euro Tremors Risk Market Respite on Spain-Italy, Banks (Bloomberg)
  • Obama Says U.S. Needs Revenue Along With Spending Cuts (Bloomberg
  • China Regulators Moved to Restrain Lending (WSJ)
  • Low Rates Force Companies to Pour Cash Into Pensions (WSJ)
  • JAL wants to discuss 787 grounding compensation with Boeing (Reuters)
  • Abe Shortens List for BOJ Chief as Japan Faces Monetary Overhaul (Bloomberg)
  • Monte Paschi probe to widen as Italian election nears (Reuters)
  • Hedge funds up bets against Italy's Monte Paschi (Reuters)
  • Spain's opposition Socialists tell Rajoy to resign (Reuters)
  • Electric cars head toward another dead end (Reuters)
  • BlackRock Sued by Funds Over Securities Lending Fees (Bloomberg)
  • Amplats plunges to an annual loss (FT)
  • Youngest American Woman Billionaire Found With In-N-Out (Bloomberg)

Overnight Media Digest

WSJ

* The Baltimore Ravens survived a 35-minute blackout and a fierce comeback from San Francisco to win the Super Bowl.

* The U.S. is fighting Anheuser-Busch InBev's acquisition proposal for Grupo Modelo with a game plan developed in earlier antitrust cases, casting the Budweiser brewer as a dominant player that wants to eliminate a scrappy rival.

* U.K. Treasury chief George Osborne on Monday will announce new powers for regulators to split up banks that flout rules designed to ring-fence retail banking from riskier investment-banking activity.

* Two top Barclays Plc executives announced their resignations Sunday, as the giant British bank swept out some of the last vestiges of its scandal-plagued prior management team.

* U.S. regulators on Monday will mandate enhanced inspections and repairs where necessary to cables that control tail surfaces on about 30,000 Piper aircraft, some of the most popular general-aviation planes sold in the United States.

* The European Union has asked national bank regulators in the 27-nation bloc to explain policies that may be preventing free flows of funds across national borders, the first public step in a campaign by EU authorities to combat fragmentation of the region's financial markets.

* Boeing Co is expected to begin piecing together the next version of its Dreamliner jet in the coming weeks, even without a fix for what has bedeviled the plane's electrical system or a timetable for resuming flights.

FT

EUROPEAN BANK BONUSES FACE 20 PCT CUT - European investment banks are set to cut their bonus pools in the coming weeks by 20 percent in a move that will exacerbate the pay gap with their US rivals.

BLACKSTONE SECURES UNDERWRITING LICENCE - Blackstone, one of the world's largest alternative asset managers, has quietly secured a securities underwriting licence as its expanding capital markets operation strays into investment banking territory.

BARCLAYS FINANCE CHIEF TO STEP DOWN - Chris Lucas, Barclays' finance director since 2007, and Mark Harding, general counsel, are to step down, in the latest sign of the pressure piling on the British bank's top management following a string of scandals and a probe into the lender's capital raising efforts during the financial crisis. AB INBEV TO FIGHT DOJ MOVE OVER MODELO - Anheuser-Busch InBev has signalled it intends to fight a Department of Justice lawsuit seeking to block its $20 billion deal to take full control of Modelo, the Mexican brewer.

CITIGROUP STARTS SENIOR HIRING AMID CUTS - Citigroup has hired one of Europe's best-known dealmakers as the US group seeks to add a string of top investment bankers even as it is sharply reducing junior staff. Luigi de Vecchi, a former Credit Suisse and Goldman Sachs banker, has been appointed as chairman for corporate and investment banking in continental Europe, the US bank will announce on Monday. APPLE REVERSES STANCE ON VOTING REFORM - Apple has sought the help of one of the sharpest critics of its corporate governance policies to push through reforms on shareholder voting rights at its annual meeting this month. The technology giant has enlisted the aid of Calpers, the largest US pension fund, to lobby other big shareholders on the vote.

TRAFIGURA BETS $800M ON AUSTRALIA ENERGY - Trafigura, one of the world's largest commodities trading houses, has bet roughly $800 million on the transformation of the Australian energy market with the acquisition of two petrol station and oil import terminal companies. BUYOUT GROUPS EXPLORE PROSIEBEN EXIT - KKR and Primera, the private equity owners of ProsiebenSat.1, are exploring a sale of their controlling stake in Germany's largest private broadcaster to a trade buyer, as they look to cash out from a multi-billion euro leveraged buyout done before the financial crisis.

SIR STUART TO BECOME FAT FACE CHAIRMAN - Sir Stuart Rose, the high profile former Marks and Spencer boss who last month took on the chairmanship of online grocery company Ocado , is adding UK clothing retailer Fat Face to his jobs portfolio.

CENTRICA SET FOR 'NEW NUCLEAR' EXIT - Centrica, owner of British Gas, is believed to be ready to pull out of plans to build nuclear power stations in Britain, clearing the way for Chinese investors to step in.

NYT

* About 90 seconds into the second half of Sunday's Super Bowl, the lights on one half of the Superdome's roof suddenly went out, internet connections in the press box were cut, and the scoreboards went dark. The power failure was one of the oddest moments in Super Bowl history, and officials said they were still investigating its cause.

* U.S. President Obama said on Sunday that he could foresee a budget deal in Congress that did not include further increases in tax rates but instead focused on eliminating loopholes and deductions.

* Barclays Plc said its chief financial officer and its general counsel would resign, the latest departures after the British bank's involvement in a series of scandals, including an investigation into the manipulation of global interest rates.

* Bank of America Corp continued dubious mortgage modification practices even after its acquisition of Countrywide, court documents show.

* New details raise questions on whether the U.S. government will be able to build its insider trading case against Steven Cohen, the billionaire owner of hedge fund SAC Capital Advisors.

* The Medicines Co is licensing the rights to a powerful type of cholesterol-lowering drug from Alnylam Pharmaceuticals Inc, entering one of the hottest races in the industry.

Canada

THE GLOBE AND MAIL

* Prime Minister Stephen Harper has categorically rejected Quebec's demands for changes to tough new employment insurance rules that Premier Pauline Marois says will have "dramatic consequences" on seasonal workers in her province.

* As Canada prepares to take the helm of the eight-nation Arctic Council, a proposed treaty dealing with blowouts and oil spills is being criticized as so pro-development that it will delight drillers but leave the fragile Arctic environment exposed to catastrophic damage, according to Greenpeace Canada.

Reports in the business section:

* Canada's most ubiquitous coin will play a dwindling part in everyday business beginning Sunday, as Ottawa phases it out to cut costs. The passing of the penny will affect the full spectrum of the nation's economy, from big banks to the corner store - forcing businesses and consumers to change some of their habits.

NATIONAL POST

* A winter storm is dumping heavy snow on Eastern Canada, with more than 30 centimeters expected in parts of Nova Scotia by Monday afternoon. Environment Canada has issued snowfall warnings for the Halifax area and along the southwestern coast of the province.

* Police say a mob-linked multi-million dollar illegal gambling ring was dismantled Sunday night when heavily armed tactical teams raided a massive Super Bowl party in Markham, Ontario.

FINANCIAL POST

* The Supreme Court of Canada on Friday struck a blow to workers and retirees who want pension plans to rank first in line for payouts to creditors in corporate bankruptcies or restructurings.

In the landmark case, Sun Indalex Finance LLC vs United Steelworkers et al., the court found that pension funds do not rank ahead of "debtor-in-possession" (DIP) lenders in bankruptcy protection proceedings.

China

PEOPLE'S DAILY

-- A commentary urges government departments to stop using public money during the Chinese lunar new year, which falls on Feb. 10 this year, as part of a government campaign to fight official corruption.

SHANGHAI SECURITIES NEWS

-- The recent lingering pollution in Beijing and some other northern cities is expected to force Chinese refineries to upgrade the quality of fuel and gasoline.

-- The government campaign to fight official corruption has caused share prices of alcohol producers to drop in recent weeks. Alcohol is widely used in public entertainment in China, and investors believe the campaign will reduce consumption of alcohol and thus weaken earnings of producers.

CHINA SECURITIES JOURNAL

-- As China's stock market has staged a strong rally since early December, the ratio of stock holdings by domestic mutual funds has now reached a high level of 89.53 percent among all their securities holdings.

-- A commentary says China needs to expand overseas investment to make better use of its big foreign trade surplus.

CHINA DAILY (www.chinadaily.com.cn)

-- An increasing number of Chinese people are realising the value of Internet domain names. Those who manage to buy good names can make a lot of money. By the end of 2012, China had 13.4 million domain names registered in the country, a 73.1 percent increase from a year earlier.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

BlackBerry (BBRY) upgraded to Outperform from Market Perform at Bernstein
Franklin Resources (BEN) upgraded to Outperform from Market Perform at Keefe Bruyette
Maxwell (MXWL) upgraded to Overweight from Neutral at Piper Jaffray
Mead Johnson (MJN) upgraded to Conviction Buy from Neutral at Goldman
St. Jude Medical (STJ)  upgraded to Outperform from Neutral at Credit Suisse
Timken (TKR) upgraded to Buy from Neutral at BofA/Merrill
Ultra Clean (UCTT) upgraded to Buy from Hold at Needham
Western Union (WU) upgraded to Buy from Hold at Deutsche Bank

Downgrades

AkzoNobel (AKZOY) downgraded to Reduce from Neutral at Nomura
Cash America (CSH) downgraded to Neutral from Buy at Janney Capital
Charles Schwab (SCHW) downgraded to Neutral from Buy at UBS
Chevron (CVX) downgraded to Neutral from Buy at UBS
Columbia Sportswear (COLM) downgraded to Sell from Neutral at Citigroup
Comfort Systems USA (FIX) downgraded to Hold from Buy at BB&T
Copart (CPRT) downgraded to Neutral from Outperform at RW Baird
Google (GOOG) downgraded to Market Perform from Outperform at BMO Capital
Hershey (HSY) downgraded to Neutral from Conviction Buy at Goldman
LeapFrog (LF) downgraded to Buy from Strong Buy at Ascendiant Capital
Merck (MRK) downgraded to Underweight from Equal Weight at Morgan Stanley
Michael Baker (BKR) downgraded to Hold from Buy at KeyBanc
PennyMac (PMT) downgraded to Market Perform from Outperform at Keefe Bruyette
Vodafone (VOD) downgraded to Neutral from Buy at Citigroup
WESCO (WCC) downgraded to Neutral from Buy at UBS
WSFS Financial (WSFS) downgraded to Neutral from Buy at Janney Capital
Wal-Mart (WMT) downgraded to Neutral from Overweight at JPMorgan

Initiations

CEMEX (CX) coverage reinstated with a Neutral at Citigroup
Dover (DOV) initiated with a Buy at Ascendiant Capital
Fusion-io (FIO) initiated with a Neutral at UBS

HOT STOCKS

Aegon (AEG) ended joint venture with Unnim Banc, sells stake for EUR 353M
US Airways' (LCC) Piedmont Airlines and ALPA reached tentative agreement
American Safety Insurance (ASI) rating revised to negative from stable at A.M. Best
Third Point sold a portion of holdings in Yahoo (YHOO)
Commerzbank (CRZBY) sees employee cuts of 4,000 to 6,000 through 2016
Blackstone (BX) acquired stake in two Maldives-based seaplane operators
Cowen Group (COWN) to acquire Dahlman Rose, terms not disclosed

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
HomeStreet (HMST), Humana (HUM), Sohu.com (SOHU), Changyou.com (CYOU), Brown & Brown (BRO)

Companies that missed consensus earnings expectations include:
Eloqua (ELOQ), Cape Bancorp (CBNJ), First Bancorp (FBNC)

NEWSPAPERS/WEBSITES

  • Ford (F) expects to spend $5B this year shoring up its pension funds. The automaker is one of a who's who of U.S. companies pouring cash into pension plans now being battered by record low interest rates, the Wall Street Journal reports
  • Google (GOOG), Microsoft (MSFT) and Amazon.com (AMZN) have battled each other for dominance in mobile gadgets and Web searches. The latest front in their war is invisible: computing horsepower, the Wall Street Journal reports
  • Japan Airlines Co. said it will talk to Boeing (BA) about compensation for the grounding of the 787 Dreamliner, adding that the idling of its jets would cost it about $8M from its earnings through to the end of March, Reuters reports
  • Recent moves by Japan's two largest automakers, Toyota (TM) and Nissan (NSANY), suggest that the electric car, after more than 100 years of development and several brief revivals, still is not ready for prime time, and may never be, Reuters reports
  • Investment returns earned by “mega” public pensions, with assets of more than $5B, topped those of the smaller plans by almost 1% last year. Big government-employee pensions reported median returns of 13.43% for the year. Funds with less than $1B in assets had median returns of 12.47%, according to Wilshire Associates, Bloomberg reports
  • Stocks in the world’s developed nations posted the best start to a year in two decades, a sign the global economy is poised to accelerate after contractions in Japan, the U.S. and Europe, if history is a guide. The MSCI World Index of stocks in 24 markets gained 5% in January, the most since 1994, Bloomberg reports

BARRON’S

Tata Motors (TTM) could offer a 25% upside within the next 18 months
SanDisk (SNDK) could rise 20% due to increased use of flash memory
GulfMark Offshore (GLF) stock could rise 30% or higher this year
BlackBerry's (RIMM, BBRY) 10 provides hope to Research in Motion
An increase in buyers and sellers will drive Amazon's (AMZN) stock

SYNDICATE

NXP Semiconductors (NXPI) files to sell 30M shares of common stock for holders
PURE Bioscience (PURE) files to sell $15M of common stock
Qualstar (QBAK) files to sell 530K shares of common stock for holders
U.S. Silica (SLCA) files to sell 41.17M shares of common stock for holders

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Obamacare: A Deception

Obamacare was formulated on the concept of health care as a commercial commodity and was cloaked in ideological slogans such as “shared responsibility,” “no free riders” and “ownership society.”

$3 mln to be spent on ‘internet trolls’ as EU looks to 2014 election

AFP Photo / Dominique Faget

AFP Photo / Dominique Faget

The EU will spend more than $3 million on ‘troll monitors’ to trawl Eurosceptic debates on the internet ahead of European elections in June 2014, UK media reports. It comes amid fears that hostility against the EU is growing.

The new strategy will include “public opinion monitoring” to “identify at an early stage whether debates of a political nature among followers in social media and blogs have the potential to attract media and citizens’ interest,” according to internal documents reportedly discovered by the Telegraph.

Spending on “qualitative media analysis” will be increased by more than $2.6 million. Most of the money will be found in existing budgets, although an additional $1.2 million will be needed.

"Particular attention needs to be paid to the countries that have experienced a surge in Euroscepticism," a confidential document said.

The monitors’ roles are clearly laid out in the documents. The controversial plan is designed to promote a stronger Europe, while engaging in conversation with those who hold an anti-EU sentiment.

"Parliament's institutional communicators must have the ability to monitor public conversation and sentiment on the ground and in real time, to understand 'trending topics' and have the capacity to react quickly, in a targeted and relevant manner, to join in and influence the conversation, for example, by providing facts and figures to deconstructing myths."

"In order to reverse the perception that 'Europe is the problem', we need to communicate that the answer to existing challenges… is 'more Europe' – not 'less Europe'."

But the EU is facing an uphill battle, as it seeks to change the minds of those who associate the bloc with economic crisis and high rates of unemployment.

“It is evident that the EU’s image is suffering,” the document said.

The information has been met with disapproval by many, who say the strategy is a waste of time.

“Spending over a million pounds ($1.5 million) for EU public servants to become Twitter trolls in office hours is wasteful and truly ridiculous,” UK Independent Party Deputy Leader Paul Nuttall told the Telegraph.

Training for the so-called “Twitter trolls” is set to take place later this month.

The news comes as Eurosceptic moods continue to gain momentum in the union.

UK Prime Minister David Cameron has pledged to renegotiate the terms of Britain’s EU membership.

Without reform, “Europe will fail and Britain will drift to the exit,” the leader said in a January speech.

Cameron has been dubbed a “trendsetter” by Conservative MP David Campbell Bannerman, who believes many other countries are seeking more flexibility within the EU.

But it’s not just governments looking for a bit more leeway when it comes to EU membership – individual workers in crisis-hit countries are unhappy with the bloc’s leadership and austerity measures, too.

Last Wednesday, anti-austerity protesters in Athens broke into a government building and threatened the labor minister. Riot police then responded with tear gas, batons, and pepper spray.

Even German citizens have expressed interest in leaving the EU – despite German Chancellor Angela Merkel’s ongoing support of EU policy.  

Last September, a poll conducted by the Bertelsmann Foundation showed that 49 per cent of Germans believed things would be improved by leaving the European Union.

And the Germans aren’t alone – 34 per cent of French citizens also said they would be better off without the EU.

The Tories Rebels Vowing To Fight Gay Marriage

Conservative Cabinet members, junior ministers and party enforcers are among around 180 MPs poised to oppose or abstain in a vote on gay marriage.

Prime Minister David Cameron has also been sent a letter, signed by 25 chairmen or former chairmen of Conservative Party associations, warning that the policy will cause "significant damage" at the ballot box, according to the Sunday Telegraph.

daivd jones

Wales Secretary David Jones could oppose the bill

SENIOR TORIES WHO COULD OPPOSE BILL

Owen Paterson
David Jones
Philip Hammond

SENIOR TORIES WHO COULD ABSTAIN

Iain Duncan Smith
Stephen Crabb
David Evennett
Robert Goodwill
Mark Lancaster
Nicky Morgan
John Randall
Mike Penning
John Hayes
Jeremy Wright

The news comes after a poll for ComRes, on behalf of the anti-gay marriage Coalition For Marriage, found 40,000 teachers said they would refuse to teach pupils about gay marriage, and risk the sack.

The survey out showed 74,000 — one in six — “wouldn’t be happy about it.”

Colin Hart of the Coalition for Marriage warned: “Thousands of teachers face the real prospect of being disciplined or sacked.”

But Education Secretary Michael Gove said that teachers would not be forced to teach anything against their beliefs.

Writing in the Mail on Sunday, he said: "Some teachers are concerned that equal marriage legislation may require them to teach views which go against their beliefs and open them to threats - either in the workplace or the courts - from those who hold diverging views.

"I want to reassure those teachers today because so many of our best, and wisest, teachers are people of deep religious faith.

"Some of the schools I most admire are faith schools and their success is inextricably bound up with their religious ethos.

"If I thought any legislation, however well-intentioned, would make life more difficult for great teachers and great schools I wouldn't support it."

MPs will vote on the proposals, which will also allow civil partners to convert their partnership to a marriage and enable married people to change their legal gender without having to end their union, for the first time when the Bill has its second reading on Tuesday.

Backbenchers have made no secret of their opposition to the move and were left even more angered when the Tory leadership made clear earlier this week it would not include marriage tax breaks in next month's budget - something that would have been seen as a concession to disgruntled traditionalists.

owen paterson

Environment Secretary Owen Paterson is to vote against the bill

Cameron views the introduction of same-sex marriage as the "Conservative Party delivering the promise it made".

Health Secretary Jeremy Hunt, a big supporter of reforms, said: "Every year thousands of people choose to marry in a church rather than a registry office because they believe marriage is sacred.

"Religious freedom is not just for heterosexuals - we should not deny anyone the right to make a lifelong commitment to another person in front of God if that is what they believe and that is what their church allows."

Cameron is giving Conservative MPs a free vote on the Marriage (Same Sex Couples) Bill.

Environment Secretary Owen Paterson and Welsh Secretary David Jones are expected to vote against the plans while Defence Secretary Philip Hammond will vote against or abstain and Work and Pensions Secretary Iain Duncan Smith is poised to abstain, according to Sunday Telegraph.

It names whips Stephen Crabb, David Evennett, Robert Goodwill, Mark Lancaster, Nicky Morgan and John Randall as likely to oppose of abstain as well as junior ministers Mike Penning, John Hayes and Jeremy Wright.

Wright said: "I will listen to the arguments in favour on Tuesday, but I am not persuaded by what I have heard so far."

Culture Secretary Maria Miller insists the plans will ensure "equal and fair" treatment for same-sex couples, while protecting religious institutions that do not want to perform ceremonies.

Culture minister Ed Vaizey insisted the vote would not tear the Tory party apart and claimed internal divisions over the issue were "good-natured".

"We'll see what happens in the vote on Tuesday, various numbers have been bandied about but what I would say is that it is good-natured division," he told Murnaghan on Sky News.

"Is this going to tear the Tory party apart? No, I don't think it will. I think there is a difference of opinion among colleagues but it is a civilised debate."

Vaizey insisted the Bill was not diverting government from rebuilding the economy, welfare reform and pushing through major infrastructure projects.

"Equal civil marriage is not distracting government from these important tasks," he said.

Former children's minister Tim Loughton agreed that it would not tear the party apart but warned the Bill was "full of pitfalls" and would set MP against MP.

He told Murnaghan: "There's quite a lot of things that were in our manifesto which made it to the coalition agreement which we have yet to deliver, and yet gay marriage is something which we had no green paper, no white paper, no manifesto commitment of any party, it wasn't in the coalition agreement, and all of a sudden it is taking huge priority, it is going to take up a lot of parliamentary time and is going set MP against MP, and we don't need it.

Foreign Secretary William Hague said he became a supporter of gay marriage "over the last couple of years".

He said he considered whether it was right in principle, if there was enough public support and if there were protections for people who did not agree with it.

"I think as times have changed, civil partnerships came in, within a remarkably short period of time those things become accepted," he told BBC 1's Sunday Politics. "I think the same will happen with this."

Obama’s Geopolitical China ‘Pivot’: The Pentagon Targets China

Obama’s Geopolitical China ‘Pivot’: The Pentagon Targets China

Since the collapse of the Soviet Union and the nominal end of the Cold War some twenty years back, rather than reducing the size of its mammoth defense spending, the US Congress and all US Presidents have enormously expanded spending for new weapons systems, increased permanent military bases around the world and expansion of NATO not only to former Warsaw Pact countries on Russia’s immediate periphery; it also has expanded NATO and US military presence deep into Asia on the perimeters of China through its conduct of the Afghan war and related campaigns.

Part I The Pentagon Targets China

On the basis of simple dollar outlays for military spending, the US Pentagon combined budget, leaving aside the huge budgets for such national security and defense-related agencies of US Government as the Department of Energy and US Treasury and other agencies, the US Department of Defense spent some $739 billion in 2011 on its military requirements. Were all other spending that is tied to US defense and national security included, the London-based International Institute for Strategic Studies estimates an annual military spending of over $1 trillion by the United States. That is an amount greater than the total defense-related spending of the next 42 nations combined, and more than the Gross Domestic Product of most nations.

China officially spent barely 10% of the US outlay on its defense, some $90 billions, or, if certain defense-related arms import and other costs are included, perhaps $111 billion a year. Even if the Chinese authorities do not publish complete data on such sensitive areas, it is clear China spends a mere fraction of the USA and is starting from a military-technology base far behind the USA.

China today, because of its dynamic economic growth and its determination to pursue sovereign Chinese national interests, merely because China exists, is becoming the Pentagon new “enemy image,” now replacing the earlier “enemy image” of Islam used after September 2001 by the Bush-Cheney Administration to justify the Pentagon’s global power pursuit, or that of Soviet Communism during the Cold War. The new US military posture against China has nothing to do with any aggressive threat from the side of China. The Pentagon has decided to escalate its aggressive military posture to China merely because China has become a strong vibrant independent pole in world economics and geopolitics. Only vassal states need apply to Washington’s globalized world.

Obama Doctrine: China is the new ‘enemy image’

After almost two decades of neglect of its interests in East Asia, in 2011, the Obama Administration announced that the US would make “a strategic pivot” in its foreign policy to focus its military and political attention on the Asia-Pacific, particularly Southeast Asia, that is, China. The term “strategic pivot” is a page out of the classic textbook from the father of British geopolitics, Sir Halford Mackinder, who spoke at various times of Russia and later China as “pivot powers” whose geographical and geopolitical position posed unique challenges toAnglo-Saxon and after 1945, to American hegemony.

During the final months of 2011 the Obama Administration clearly defined a new public military threat doctrine for US military readiness in the wake of the US military failures in Iraq and Afghanistan. During a Presidential trip to the Far East, while in Australia, the US President unveiled what is being termed the Obama Doctrine.[1]

Obama told the Australians then:

With most of the world’s nuclear power and some half of humanity, Asia will largely define whether the century ahead will be marked by conflict or cooperation…As President, I have, therefore, made a deliberate and strategic decision — as a Pacific nation, the United States will play a larger and long-term role in shaping this region and its future…I have directed my national security team to make our presence and mission in the Asia Pacific a top priority…As we plan and budget for the future, we will allocate the resources necessary to maintain our strong military presence in this region. We will preserve our unique ability to project power and deter threats to peace…Our enduring interests in the region demand our enduring presence in the region.

The United States is a Pacific power, and we are here to stay. Indeed, we are already modernizing America’s defense posture across the Asia Pacific. It will be more broadly distributed — maintaining our strong presence in Japan and the Korean Peninsula, while enhancing our presence in Southeast Asia. Our posture will be more flexible — with new capabilities to ensure that our forces can operate freely .. I believe we can address shared challenges, such as proliferation and maritime security, including cooperation in the South China Sea.[2]

The centerpiece of Obama’s visit was the announcement that at least 2,500 elite US Marines will be stationed in Darwin in Australia’s Northern Territory. In addition, in a series of significant parallel agreements, discussions with Washington were underway to fly long-range American surveillance drones from the remote Cocos Islands — an Australian territory in the Indian Ocean. Also the US will gain greater use of Australian Air Force bases for American aircraft and increased ship and submarine visits to the Indian Ocean through a naval base outside Perth, on the country’s west coast.

The Pentagon’s target is China.

To make the point clear to European members of NATO, in remarks to fellow NATO members in Washington in July 2012, Phillip Hammond, the UK Secretary of State for Defense declared explicitly that the new US defense shift to the Asia-Pacific region was aimed squarely at China. Hammond said that, “the rising strategic importance of the Asia-Pacific region requires all countries, but particularly the United States, to reflect in their strategic posture the emergence of China as a global power. Far from being concerned about the tilt to Asia-Pacific, the European NATO powers should welcome the fact that the US is willing to engage in this new strategic challenge on behalf of the alliance.” [3]

As with many of its operations, the Pentagon deployment is far deeper than the relatively small number of 2,500 new US soldiers might suggest.

In August 2011 the Pentagon presented its annual report on China’s military. It stated that China had closed key technological gaps. Deputy Assistant Secretary of Defence for East Asia, Michael Schiffer, said that the pace and scope of China’s military investments had “allowed China to pursue capabilities that we believe are potentially destabilizing to regional military balances, increase the risk of misunderstanding and miscalculation and may contribute to regional tensions and anxieties.” [4] He cited Chinese refurbishing of a Soviet-era aircraft carrier and China’s development of its J20 Stealth Fighter as indications of the new capability requiring a more active US military response. Schiffer also cited China’s space and cyber operations, saying it was “developing a multi-dimensional program to improve its capabilities to limit or prevent the use of space-based assets by adversaries during times of crisis or conflict.” [5]

Part II: Pentagon’s ‘Air-Sea Battle’

The Pentagon strategy to defeat China in a coming war, details of which have filtered into the US press, is called “Air-Sea Battle.” This calls for an aggressive coordinated US attack. US stealth bombers and submarines would knock out China’s long-range surveillance radar and precision missile systems deep inside the country. This initial “blinding campaign” would be followed by a larger air and naval assault on China itself.[6] Crucial to the advanced pentagon strategy, deployment of which has already quietly begun, is US military navy and air presence in Japan, Taiwan, Philippines, Vietnam and across the South China Sea and Indian Ocean. Australian troop and naval deployment is aimed at accessing the strategic Chinese South China Sea as well as the Indian Ocean. The stated motive is to “protect freedom of navigation” in the Malacca Straits and the South China Sea. In reality it is to be positioned to cut China’s strategic oil routes in event of full conflict.

Air-Sea Battle’s goal is to help US forces withstand an initial Chinese assault and counterattack to destroy sophisticated Chinese radar and missile systems built to keep US ships away from China’s coastline.[7]

US ‘Air-Sea Battle’ against China

In addition to the stationing of the US Marines in the north of Australia, Washington plans to fly long-range American surveillance drones from the remote Cocos Islands — an Australian territory in the strategically vital Indian Ocean. Also it will have use of Australian Air Force bases for American military aircraft and increased ship and submarine visits to the Indian Ocean through a naval base outside Perth, on Australia’s west coast.[8]

The architect of the Pentagon anti-China strategy of Air-Sea battle is Andrew Marshall, the man who has shaped Pentagon advanced warfare strategy for more than 40 years and among whose pupils were Dick Cheney and Donald Rumsfeld. [9] Since the 1980s Marshall has been a promoter of an idea first posited in 1982 by Marshal Nikolai Ogarkov, then chief of the Soviet general staff, called RMA, or ‘Revolution in Military Affairs.’ Marshall, today at the ripe age of 91, still holds his desk and evidently very much influence inside the Pentagon.

The best definition of RMA was the one provided by Marshall himself: “A Revolution in Military Affairs (RMA) is a major change in the nature of warfare brought about by the innovative application of new technologies which, combined with dramatic changes in military doctrine and operational and organizational concepts, fundamentally alters the character and conduct of military operations.” [10]

It was also Andrew Marshall who convinced US Defense Secretary Donald Rumsfeld and his successor Robert Gates to deploy the Ballistic Missile “defense” Shield in Poland, the Czech Republic, Turkey and Japan as a strategy to minimize any potential nuclear threat from Russia and, in the case of Japan’s BMD, any potential nuclear threat from China.

PART III: ‘String of Pearls’ Strategy of Pentagon

In January 2005, Andrew Marshall issued a classified internal report to Defense Secretary Donald Rumsfeld titled “Energy Futures in Asia.” The Marshall report, which was leaked in full to a Washington newspaper, invented the term “string of pearls” strategy to describe what it called the growing Chinese military threat to “US strategic interests” in the Asian space.[11]

The internal Pentagon report claimed that “China is building strategic relationships along the sea lanes from the Middle East to the South China Sea in ways that suggest defensive and offensive positioning to protect China’s energy interests, but also to serve broad security objectives.”

In the Pentagon Andrew Marshall report, the term China’s “String of Pearls” Strategy was used for the first time. It is a Pentagon term and not a Chinese term.

The report stated that China was adopting a “string of pearls” strategy of bases and diplomatic ties stretching from the Middle East to southern China that includes a new naval base under construction at the Pakistani port of Gwadar. It claimed that “Beijing already has set up electronic eavesdropping posts at Gwadar in the country’s southwest corner, the part nearest the Persian Gulf. The post is monitoring ship traffic through the Strait of Hormuz and the Arabian Sea.” [12]

The Marshall internal report went on to warn of other “pearls” in the sea-lane strategy of China:

• Bangladesh: China is strengthening its ties to the government and building a container port facility at Chittagong. The Chinese are “seeking much more extensive naval and commercial access” in Bangladesh.

• Burma: China has developed close ties to the military regime in Rangoon and turned a nation wary of China into a “satellite” of Beijing close to the Strait of Malacca, through which 80 percent of China’s imported oil passes. China is building naval bases in Burma and has electronic intelligence gathering facilities on islands in the Bay of Bengal and near the Strait of Malacca. Beijing also supplied Burma with “billions of dollars in military assistance to support a de facto military alliance,” the report said.

• Cambodia: China signed a military agreement in November 2003 to provide training and equipment. Cambodia is helping Beijing build a railway line from southern China to the sea.

• South China Sea: Chinese activities in the region are less about territorial claims than “protecting or denying the transit of tankers through the South China Sea,” the report said. China also is building up its military forces in the region to be able to “project air and sea power” from the mainland and Hainan Island. China recently upgraded a military airstrip on Woody Island and increased its presence through oil drilling platforms and ocean survey ships.

• Thailand: China is considering funding construction of a $20 billion canal across the Kra Isthmus that would allow ships to bypass the Strait of Malacca. The canal project would give China port facilities, warehouses and other infrastructure in Thailand aimed at enhancing Chinese influence in the region, the report said… The U.S. military’s Southern Command produced a similar classified report in the late 1990s that warned that China was seeking to use commercial port facilities around the world to control strategic “chokepoints.” [13]

Breaking the String of Pearls

Significant Pentagon and US actions since that 2005 report have been aimed to counter China’s attempts to defend its energy security via that “String of Pearls.” The US interventions since 2007 into Burma/Myanmar have had two phases.

The first was the so-called Saffron Revolution, a US State Department and CIA-backed destabilization in 2007 aimed at putting the international spotlight on the Myanmar military dictatorship’s human rights practices. The aim was to further isolate the strategically located country internationally from all economic relations, aside from China. The background to the US actions was China’s construction of oil and gas pipelines from Kunming in China’s southwest Yunnan Province, across the old Burma Road across Myanmar to the Bay of Bengal across from India and Bangladesh in the northern Indian Ocean.

Forcing Burma’s military leaders into tighter dependency on China was one of the factors triggering the decision of the Myanmar military to open up economically to the West. They declared that the tightening of US economic sanctions had done the country great harm and President Thein Sein made his major liberalization opening, as well as allowing US-backed dissident, Aung San Suu Kyi, to be free and to run for elective office with her party, in return for promises from US Secretary of State Hillary Clinton of US investment in the country and possible easing of US economic sanctions. [14]

The US corporations approaching Burma are hand-picked by Washington to introduce the most destructive “free market” reforms that will open Myanmar to instability. The United States will not allow investment in entities owned by Myanmar’s armed forces or its Ministry of Defense. It also is able to place sanctions on “those who undermine the reform process, engage in human rights abuses, contribute to ethnic conflict or participate in military trade with North Korea.” The United States will block businesses or individuals from making transactions with any “specially designated nationals” or businesses that they control — allowing Washington, for example, to stop money from flowing to groups “disrupting the reform process.” It’s the classic “carrot and stick” approach, dangling the carrot of untold riches if Burma opens its economy to US corporations and punishing those who try to resist the takeover of the country’s prize assets. Oil and gas, vital to China, will be a special target of US intervention. American companies and people will be allowed to invest in the state-owned Myanma Oil and Gas Enterprise.[15]

Obama also created a new power for the government to impose “blocking sanctions” on any individual threatening peace in Myanmar. Businesses with more than $500,000 in investment in the country will need to file an annual report with the State Department, with details on workers’ rights, land acquisitions and any payments of more than $10,000 to government entities, including Myanmar’s state-owned enterprises.

American companies and people will be allowed to invest in the state-owned Myanma Oil and Gas Enterprise, but any investors will need to notify the State Department within 60 days.

As well, US “human rights” NGOs, many closely associated with or believed to be associated with US State Department geopolitical designs, including Freedom House, Human Rights Watch, Institute for Asian Democracy, Open Society Foundations, Physicians for Human Rights, U.S. Campaign for Burma, United to End Genocide— will now be allowed to operate inside Myanmar according to a decision by State Secretary Clinton in April 2012.[16]

Thailand, another key in China’s defensive String of Pearl Strategy has also been subject of intense destabilization over the past several years. Now with the sister of a corrupt former Prime Minister in office, US-Thai relations have significantly improved.

After months of bloody clashes, the US-backed billionaire, Former Thai Prime Minister Thaksin Shinawatra , managed to buy the way to put his sister, Yingluck Shinawatra in as Prime Minister, with him reportedly pulling the policy strings from abroad. Thaksin himself was enjoying comfortable status in the US as of this writing, in summer 2012.

US relations with Thaksin’s sister, Yingluck Shinawatra, are moving in direct fulfillment of the Obama “strategic pivot” to focus on the “China threat.” In June 2012, General Martin E. Dempsey, chairman of the US Joint Chiefs of Staff, after returning from a visit this month to Thailand, the Philippines and Singapore stated: “We want to be out there partnered with nations and have a rotational presence that would allow us to build up common capabilities for common interests.” This is precisely key beads in what the Pentagon calls the String of Pearls.

The Pentagon is now quietly negotiating to return to bases abandoned after the Vietnam War. It is negotiating with the Thai government to create a new “disaster relief” hub at the Royal Thai Navy Air Field at U-Tapao, 90 miles south of Bangkok.

The US military built the two mile long runway there, one of Asia’s longest, in the 1960s as a major staging and refueling base during the Vietnam War.

The Pentagon is also working to secure more rights to US Navy visits to Thai ports and joint surveillance flights to monitor trade routes and military movements. The US Navy will soon base four of its newest warships — Littoral Combat Ships — in Singapore and would rotate them periodically to Thailand and other southeast Asian countries. The Navy is pursuing options to conduct joint airborne surveillance missions from Thailand.[17]

In addition, Deputy Defense Secretary Ashton Carter went to Thailand in July 2012 and the Thai government has invited Defense Secretary Leon Panetta, who met with the Thai minister of defense at a conference in Singapore in June.[18]

In 2014, the US Navy is scheduled to begin deploying new P-8A Poseidon reconnaissance and anti-submarine aircraft to the Pacific, replacing the P-3C Orion surveillance planes. The Navy is also preparing to deploy new high-altitude surveillance drones to the Asia-Pacific region around the same time. [19]

PART IV: India-US Defense ‘Look East Policy’

US Secretary of Defense Leon Panetta was in India in June of this year where he proclaimed that defence cooperation with India is the lynchpin of US security strategy in Asia. He pledged to help develop India’s military capabilities and to engage with India in joint production of defence “articles” of high technology. Panetta was thr fifth Obama Cabinet secretary to visit India this year. The message that they have all brought is that, for the US, India will be the major relationship of the 21st century. The reason is China’s emergence. [20]

Several years ago during the Bush Administration, Washington made a major move to lock India in as a military ally of the US against the emerging Chinese presence in Asia. India calls it India’s “Look East Policy.” In reality, despite all claims to the contrary, it is a “look at China” military policy.

In comments in August 2012, Deputy Secretary of defense Ashton Carter stated, “India is also key part of our rebalance to the Asia-Pacific, and, we believe, to the broader security and prosperity of the 21st century. The US-India relationship is global in scope, like the reach and influence of both countries.” [21] In 2011, the US military conducted more than 50 significant military activities with India.

Carter continued in remarks following a trip to New Delhi, “Our security interests converge: on maritime security, across the Indian Ocean region; in Afghanistan, where India has done so much for economic development and the Afghan security forces; and on broader regional issues, where we share long-term interests. I went to India at the request of Secretary Panetta and with a high-level delegation of U S technical and policy experts.” [22]

Indian Ocean

The Pentagon “String of pearls” strategy against China in effect is not one of beautiful pearls, but a hangman’s noose around the perimeter of China, designed in the event of major conflict to completely cut China off from its access to vital raw materials, most especially oil from the Persian Gulf and Africa.

Former Pentagon adviser Robert D. Kaplan, now with Stratfor, has noted that the Indian Ocean is becoming the world’s “strategic center of gravity” and who controls that center, controls Eurasia, including China. The Ocean is the vital waterway passage for energy and trade flows between the Middle East and China and Far Eastern countries. More strategically, it is the heart of a developing south-south economic axis between China and Africa and Latin America.

Since 1997 trade between China and Africa has risen more than twenty-fold and trade with Latin America, including Brazil, has risen fourteen fold in only ten years. This dynamic, if allowed to continue, will eclipse the economic size of the European Union as well as the declining North American industrial economies in less than a decade. That is a development that Washington circles and Wall Street are determined to prevent at all costs.

Straddled by the Islamic Arch–which stretches from Somalia to Indonesia, passing through the countries of the Gulf and Central Asia– the region surrounding the Indian Ocean has certainly become the world’s new strategic center of gravity.[23]

No rival economic bloc can be allowed to challenge American hegemony. Former Obama geopolitical adviser Zbigniew Brzezinski, a student of Mackinder geopolitics and still today along with Henry Kissinger one of the most influential persons in the US power establishment, summed up the position as seen from Washington in his 1997 book, The Grand Chessboard: American Primacy and It’s Geostrategic Imperatives:

It is imperative that no Eurasian challenger emerges, capable of dominating Eurasia and thus of also challenging America. The formulation of a comprehensive and integrated Eurasian geo-strategy is therefore the purpose of this book. [24]

For America, the chief geopolitical prize is Eurasia…. America’s global primacy is directly dependent on how long and how effectively its preponderance on the Eurasian continent is sustained. [25]

In that context, how America ‘manages’ Eurasia is critical. Eurasia is the globe’s largest continent and is geopolitically axial. A power that dominates Eurasia would control two of the world’s three most advanced and economically productive regions. A mere glance at the map also suggests that control over Eurasia would almost automatically entail Africa’s subordination, rendering the Western Hemisphere and Oceania geopolitically peripheral to the world’s central continent. About 75 per cent of the world’s people live in Eurasia, and most of the world’s physical wealth is there as well, both in its enterprises and underneath its soil. Eurasia accounts for 60 per cent of the world’s GNP and about three-fourths of the world’s known energy resources. [26]

The Indian Ocean is crowned by what some call an Islamic Arch of countries stretching from East Africa to Indonesia by way of the Persian Gulf countries and Central Asia. The emergence of China and other much smaller Asian powers over the past two decades since the end of the Cold war has challenged US hegemony over the Indian Ocean for the first time since the beginning of the Cold War. Especially in the past years as American economic influence has precipitously declined globally and that of China has risen spectacularly, the Pentagon has begun to rethink its strategic presence in the Indian Ocean. The Obama ‘Asian Pivot’ is centered on asserting decisive Pentagon control over the sea lanes of the Indian Ocean and the waters of the South China Sea.

The US military base at Okinawa, Japan is being rebuilt as a major center to project US military power towards China. As of 2010 there were over 35,000 US military personnel stationed in Japan and another 5,500 American civilians employed there by the United States Department of Defense. The United States Seventh Fleet is based in Yokosuka. The 3rd Marine Expeditionary Force in Okinawa. 130 USAF fighters are stationed in the Misawa Air Base and Kadena Air Base.

The Japanese government in 2011 began an armament program designed to counter the perceived growing Chinese threat. The Japanese command has urged their leaders to petition the United States to allow the sale of F-22A Raptor fighter jets, currently illegal under U.S law. South Korean and American military have deepened their strategic alliance and over 45,000 American soldiers are now stationed in South Korea. The South Koreans and Americans claim this is due to the North Korean military’s modernization. China and North Korea denounce it as needlessly provocative.[27]

Under the cover of the US war on Terrorism, the US has developed major military agreements with the Philippines as well as with Indonesia’s army.

The military base on Diego Garcia is the lynchpin of US control over the Indian Ocean. In 1971 the US military depopulated the citizens of Diego Garcia to build a major military installation there to carry out missions against Iraq and Afghanistan.

China has two Achilles heels—the Straits of Hormuz at the mouth of the Persian Gulf and the Strait of Malacca near Singapore. Some 20% of China oil passes through the Straits of Hormuz. And some 80% of Chinese oil imports pass through the Strait of Malacca as well as major freight trade.

To prevent China from emerging successfully as the major economic competitor of the United States in the world, Washington launched the so-called Arab Spring in late 2010. While the aspirations of millions of ordinary Arab citizens in Tunisia, Libya, Egypt and elsewhere for freedom and democracy was real, they were in effect used as unwitting cannon fodder to unleash a US strategy of chaos and intra-islamic wars and conflicts across the entire oil-rich Islamic world from Libya in North Africa across to Syria and ultimately Iran in the Middle East. [28]

The US strategy within the Islamic Arch countries straddling the Indian Ocean is, as Mohamed Hassan, a strategic analyst put it thus:

The US is…seeking to control these resources to prevent them reaching China. This was a major objective of the wars in Iraq and Afghanistan, but these have turned into a fiasco. The US destroyed these countries in order to set up governments there which would be docile, but they have failed. The icing on the cake is that the new Iraqi and Afghan government trade with China! Beijing has therefore not needed to spend billions of dollars on an illegal war in order to get its hands on Iraq’s black gold: Chinese companies simply bought up oil concessions at auction totally within the rules.

[T]he USA’s…strategy has failed all along the line. There is nevertheless one option still open to the US: maintaining chaos in order to prevent these countries from attaining stability for the benefit of China. This means continuing the war in Iraq and Afghanistan and extending it to countries such as Iran, Yemen or Somalia.[29]

PART V: South China Sea

The completion of the Pentagon “String of Pearls” hangman’s noose around China to cut off vital energy and other imports in event of war by 2012 was centered around the increased US manipulation of events in the South China Sea. The Ministry of Geological Resources and Mining of the People’s Republic of China estimated that the South China Sea may contain 18 billion tons of crude oil (compared to Kuwait with 13 billion tons). The most optimistic estimate suggested that potential oil resources (not proved reserves) of the Spratly and Paracel Islands in the South China Sea could be as high as 105 billion barrels of oil, and that the total for the South China Sea could be as high as 213 billion barrels. [30]

The presence of such vast energy reserves has not surprisingly become a major energy security issue for China. Washington has made a calculated intervention in the past several years to sabotage those Chinese interests, using especially Vietnam as a wedge against Chinese oil exploration there. In July 2012 the National Assembly of Vietnam passed a law demarcating Vietnamese sea borders to include the Spratly and Paracel islands. US influence in Vietnam since the country opened to economic liberalization has become decisive.

In 2011 the US military began cooperation with Vietnam, including joint “peaceful” military exercises. Washington has backed both The Philippines and Vietnam in their territorial claims over Chinese-claimed territories in the South China Sea, emboldening those small countries not to seek a diplomatic resolution.[31]

In 2010 US and UK oil majors entered the bidding for exploration in the South China Sea. The bid by Chevron and BP added to the presence of US-based Anadarko Petroleum Corporation in the region. That move is essential to give Washington the pretext to “defend us oil interests” in the area. [32]

In April 2012, the Philippine warship Gregorio del Pilar was involved in a standoff with two Chinese surveillance vessels in the Scarborough Shoal, an area claimed by both nations. The Philippine navy had been trying to arrest Chinese fishermen who were allegedly taking government-protected marine species from the area, but the surveillance boats prevented them. On April 14, 2012, U.S. and the Philippines held their yearly exercises in Palawan, Philippines. On May 7, 2012, Chinese Vice Foreign Minister Fu Ying called a meeting with Alex Chua, Charge D’affaires of the Philippine Embassy in China, to make a serious representation over the incident at the Scarborough Shoal.

From South Korea to Philippines to Vietnam, the Pentagon and US State Department is fanning the clash over rights to the South China Sea to stealthily insert US military presence there to “defend” Vietnamese, Japanese, Korean or Philippine interests. The military hangman’s noose around China is being slowly drawn tighter.

While China’s access to vast resources of offshore conventional oil and gas were being restricted, Washington was actively trying to lure China into massive pursuit of exploitation of shale gas inside China. The reasons had nothing to do with US goodwill towards China. It was in fact another major weapon in the destruction of China, now through a form of environmental warfare.

F. William Engdahl author of, Es klebt Blut an Euren Händen  (FinanzBuchVerlag)

Notes:

[1] President Barack Obama, Remarks By President Obama to the Australian Parliament, November 17, 2011, accessed in
http://www.whitehouse.gov/the-press-office/2011/11/17/remarks-president-obama-australian-parliament.

[2] Ibid.

[3] Otto Kreisher, UK Defense Chief to NATO: Pull Your Weight in Europe While US Handles China, July 22, 2012, accessed in
http://defense.aol.com/2012/07/19/uk-defense-chief-to-nato-pull-your-weight-in-europe-while-us-ha/?icid=related4 .

[4] BBC, China military ‘closing key gaps’, says Pentagon, 25 August 2011, accessed in http://www.bbc.co.uk/news/world-asia-pacific-14661027 .

[5] Ibid.

[6] Greg Jaffe , US Model for a Future War Fans Tensions with China and inside Pentagon, Washington Post, August 2, 2012, accessed in
http://www.turkishweekly.net/news/139681/us-model-for-a-future-war-fans-tensions-with-china-and-inside-pentagon.html.

[7] Ibid.

[8] Matt Siegel, As Part of Pact, U.S. Marines Arrive in Australia, in China’s Strategic Backyard, The New York Times,

April 4, 2012, accessed in http://www.nytimes.com/2012/04/05/world/asia/us-marines-arrive-darwin-australia.html.

[9] Greg Jaffe, op. cit.

[10] F. William Engdahl, Full Spectrum Dominance: Totallitarian democracy in the New World Order, Wiesbaden, 2009, edition.engdahl, p. 190.

[11] The Washington Times, China Builds up Strategic Sea Lanes, January 17, 2005, accessed in http://www.washingtontimes.com/news/2005/jan/17/20050117-115550-1929r/?page=all#pagebreak

[12] Ibid.

[13] Ibid.

[14] Wall Street Journal, An Opening in Burma: The regime’s tentative liberalization is worth testing for sincerity,

Wall Street Journal, November 22, 2011, accessed in
http://online.wsj.com/article/SB10001424052970204443404577049964259425018.html

[15] Radio Free Asia, US to Invest in Burma’s Oil, 7 November, 2011, accessed in
http://www.rfa.org/english/news/burma/sanctions-07112012185817.html

[16] Shaun Tandon, US eases Myanmar restrictions for NGOs, AFP, April 17, 2012, accessed in
http://www.google.com/hostednews/afp/article/ALeqM5jmwmJ3e0yIjyD-7N52GAFISnweAA?docId=CNG.a8c1c3e2edf92a30cc1b3c9bd5ed11c1.131

[17] Craig Whitlock, U.S. eyes return to some Southeast Asia military bases, Washington Post, June 23, 2012, accessed in
http://www.washingtonpost.com/world/national-security/us-seeks-return-to-se-asian-bases/2012/06/22/gJQAKP83vV_story.html

[18] Ibid.

[19] Ibid.

[20] Premvir Das, Taking US-India defence links to the next level, June 18, 2012, accessed in http://www.rediff.com/news/slide-show/slide-show-1-taking-us-india-defence-links-to-the-next-level/20120618.htm

[21] Zeenews, US-India ties are global in scope: Pentagon, August 02, 2012, accessed in
http://zeenews.india.com/news/world/us-india-ties-are-global-in-scope-pentagon_791212.html

[22] Ibid.

[23] Gregoire Lalieu, Michael Collon, Is the Fate of the World Being Decided Today in the Indian Ocean?, November 3, 2010, accessed in
http://www.michelcollon.info/Is-the-fate-of-the-world-being.html?lang=fr

[24] Zbigniew Brzezinski, The Grand Chessboard: American Primacy And It’s Geostrategic Imperatives, 1997, Basic Books, p. xiv.

[25] Ibid., p. 30.

[26] Ibid., p. 31.

[27] Cas Group, Background on the South China Sea Crisis, accessed in
http://casgroup.fiu.edu/pages/docs/3907/1326143354_South_China_Sea_Guide.pdf

[28] Gregoire Lalieu,, et al, op. cit.

[29] Ibid.

[30] GlobalSecurity.org, South China Sea Oil and Natural Gas, accessed in
http://www.globalsecurity.org/military/world/war/spratly-oil.htm

[31] Agence France Presse, US, Vietnam Start Military Relationship, August 1, 2011, accessed in
http://www.defensenews.com/article/20110801/DEFSECT03/108010307/U-S-Vietnam-Start-Military-Relationship

[32] Zacks Equity Research, Oil Majors Eye South China Sea, June 24, 2010, accessed in www.zacks.com/stock/news/36056/Oil+Majors+Eye+South

Cameron Faces Revolt Over Marriage Tax Breaks

David Cameron is facing further pressure from Tory backbenchers after it was confirmed that marriage tax breaks will not be included in next month's Budget.

It had been planned that one member of a married couple or civil partnership would be allowed to transfer £750 of their tax-free personal allowance to their partner, reducing their tax bill. This would be worth around £150 a year to basic-rate taxpayers.

There had been speculation that the Government was planning to introduce the tax break in an attempt to appease backbenchers angry over same-sex marriage legislation.

In 2010, the Conservative general election manifesto pledged to introduce the marriage tax break, and the commitment was also included in the coalition agreement with the Lib Dems.

But the government is yet to bring in the tax break, angering sections on the right of the party.

Senior Government sources have also had to dismiss calls for George Osborne to be sacked - instead insisting Osborne will remain as Chancellor through to the 2015 general election.

Amid fevered speculation over plots against the Prime Minister - currently in Liberia ahead of a UN meeting - there have been rumours that rebels have set a deadline of summer 2014 for the party's electoral fortunes to turn around.

cameron osborne

Cameron stood by his close friend and Chancellor Osborne this week

A number of backbenchers have suggested the change should be included in Osborne's Budget next month in return for their supporting controversial plans to introduce gay marriage.

However, a senior Government source flatly rejected the idea of a "quid pro quo" deal, and ruled out a marriage tax break featuring in this Budget.

"It won't be in the Budget but it will be in this Parliament," the source told the Press Association. "This Budget obviously, with all that has happened in recent weeks and months, will be very much focused on growth in the economy."

The source also made clear that Osborne had the "full confidence" of the Prime Minister.

"He is an extremely successful Chancellor. He is battling very difficult economic circumstances," the source said.

"George Osborne will be Chancellor at the next general election."

According to the Times, the issue of gay marriage is causing Conservative members to leave the party in significant numbers.

The newspaper claimed that as many as 100 members had revoked their affiliation in some constituencies.

Tory MP David Burrowes is quoted as saying: "There's serious unrest in the grassroots. You cannot avoid the fact that the troops are unhappy. People are drifting away."

READ MORE:

Earlier on HuffPost:

Weekly Bull/Bear Recap: Jan. 28-Feb. 1, 2013

From Rodrigo Serrano of Rational Capitalist Speculator,

This objective report concisely summarizes important macro events over the past week.  It is not geared to push an agenda.  Impartiality is necessary to avoid costly psychological traps, which all investors are prone to, such as confirmation, conservatism, and endowment biases.

Bull

U.S. Economic Activity is beginning to reaccelerate:

+  The global economy is set to reaccelerate in the coming months according to JP Morgan’s Global Manufacturing PMI, led by a reacceleration in China (due to domestic demand) and firming U.S. activity.  Improvement in these countries is spilling over into Europe…

+  …Germany’s Markit Manufacturing PMI is now just a smidgen below 50, which delineates between contraction and expansion, at 49.8 (an 11-month high).  Furthermore, Consumer climate, reported by the Gesellschaft für Konsumforschung (Gfk) group, reveals an improving state of confidence.  Perhaps this is due to a recovering job market.  Meanwhile, while still contracting, the majority of country-specific PMIs (Spain, Italy, Hungary, and Czech Republic) indicate the worse is over of the region’s recession.  The improvement in the global economy can also be seen in Brazil, where the unemployment rate has fallen to a record low.

image

(Source: Markit Economics

 

Bear

- Investors have piled into bullish bets (but earnings have flatlined since Q2 2011), economists all agree that the economy is poised to expand, the VIX is at 2007 levels before the crisis struck, and the bears are capitulating.  All are signs of extreme complacency in the face of festering bearish macro trends……  

image

(Weekly Readings —— Solid Line = 32-week average)

- …..and why are investors giddy?  Because stocks keep on rising.  But smart investors know to use REAL, not Nominal gains to correctly value wealth.  “Zimbabwe’s stock market was the best performer this decade — but your entire portfolio now buys you 3 eggs.” — Kyle Bass

- The U.S. Economy is extremely vulnerable and is on the cusp of recession: 

  • Bull are doused with a bucket of cold water as 4th quarter U.S. GDPprints negative for the first time since Q2 2009.  The negative print is a crystal clear indication of how weak and vulnerable this recovery is.  Curtailing government expenditures, higher taxes, and rising gas prices as the summer approaches will be too much for the economy to bear.
  • U.S. Consumer confidence, as per the Conference Board Consumer Confidence survey, plunges again in January, erasing all of 2012’s gains.  Furthermore, the Bloomberg Consumer Comfort Index falls for the fourth straight week.  Weekly sales metrics, such as Goldman ICSCand Redbook, reveal weakening consumption trends.  This ongoing trend casts a cloud over the direction of consumer spending as worries over reduced incomes due to the expiring 2-yr payroll tax holiday ferment.
  • The Household Survey, embedded beneath the widely touted headline jobs number this morning, has not confirmed the improving job market for the third successive month.  
  • The FOMC meeting reveals that Fed officials are worried about a stalling economy (confirmed by Q4 numbers) as well as creeping disinflation.  Monetary policy is powerless to arrest continued sluggish in the economy; worse, as investors appreciate the negative impact of reduced consumer incomes, there will be a crisis of confidence.  ”Don’t Fight the Fed” will be a maxim of the past.  

- Europe’s troubles lurk in the background, receiving very little press.  The budget scandal in Spain is quietly picking steam and Retail Sales in the country fell for the 30th consecutive month in December.  Spanish 10-yr borrowing costs advance roughly 5% this week.  Looking at a 3-month view, we now see a higher high.  Meanwhile, car sales throughout the periphery remain in a distinguishable downtrend and retail sales throughout the region signal consumer retrenchment.  Moreover, Italian Consumer Confidence slumps to a 17-yr low and Business Confidence unexpectedly falls.

- If China has really bottomed and is on the brink of a sustainable recovery, try telling that to the Australians.  Straya’s mining-based economy is signaling a red flag for global recovery enthusiasts.

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Hagel-ography and the Tired, Destructive Thinking of Washington, DC

Former senator Chuck Hagel, Obama's pick to be the next defense chief, faced many of his old senate colleagues Thursday. (Photo: Reuters)Think of it as the Great Obama Shuffle.  When U.N. ambassador Susan Rice went down in flames as the president’s nominee for secretary of state, he turned to ally, former presidential candidate, and chairman of the Senate Foreign Relations Committee John Kerry (who had essentially been traveling the world as a second secretary of state during Obama’s first term). Next, he nominated his counterterrorism “tsar” and right-hand man in the White House-directed drone wars to be the next head of the CIA, which dominates those drone wars.  Then he picked White House chief of staff (and former Citigroup exec) Jack Lew to head the Treasury Department.  Meanwhile, he tapped his key foreign policy advisor and West Wing aide Denis McDonough to replace Lew as chief of staff.

He also renominated Richard Cordray, whose recess appointment as director of the Consumer Financial Protection Bureau was recently endangered by a federal appeals court, to the same position, and picked B. Todd Jones, the acting director of the Bureau of Alcohol, Tobacco, Firearms, and Explosives, as the man to reinvigorate that agency.  Otherwise, Tom Donilon will remain his national security advisor and James Clapper, his director of national intelligence.  And so it goes in Obama’s Washington where new faces and fresh air are evidently not an operative concept.

In such an atmosphere, the nomination of retired Republican Senator Chuck Hagel, the co-chairman of the president’s Intelligence Advisory Board, as secretary of defense was the equivalent of a thunderbolt from the blue.  Republicans, in particular, reacted as if the president had just picked Noam Chomsky to run the Pentagon, as if, that is, Hagel were the outsider’s outsider.  When it comes to military and foreign policy, the former Nebraska senator remains the sole breath of fresh air in today’s Washington.  That’s because he has expressed the most modest of doubts about the U.S.-Israeli relationship, as well as the efficacy of the U.S. sanctions program against Iran and a possible attack on that country’s nuclear facilities, and because he has spoken, again in mild terms, of “paring” a Pentagon budget that has experienced year after year of what he's called "bloat."

Of course, what little fresh space might exist between the Obama I and Obama II years (not to speak of the George W. Bush II years) has been rapidly closed.  Hagel was soon forced to mouth the pieties of present-day Washington, offering an ever friendlier take on Israel and an ever-tougher set of positions on Iran, while assuring everyone in sight that his previous positions had been sorely misunderstood.  This should be a healthy reminder that, at least when it comes to war and national security policy, debate in Washington can be fierce and bitter (as over the Benghazi affair), even as what Andrew Bacevich calls “the Washington Rules” ensure that not a genuine new thought, nor a genuinely different position, can be tolerated, no less seriously discussed in that town.

Barack Obama arrived in Washington in 2009 buoyed by the slogan “change we can believe in.”  The bitter Hagel hearings will be a fierce reminder that, when it comes to foreign policy, old is new, and the words “change” and “Washington” don’t belong in the same sentence.  It remains something of an irony that, whether it’s John Kerry or Chuck Hagel, what little breathing room exists in the corridors of power can be credited to a now-ancient war whose realities, as Nick Turse, author of the new book, Kill Anything that Moves, reminds us in his latest piece, most Americans -- Chuck Hagel evidently among them -- could never truly face or take in.

© 2012 TomDispatch.com

Tom Engelhardt

Frontrunning: February 1

  • 'London Whale' Sounded an Alarm on Risky Bets (WSJ)
  • Deadly Blast Strikes U.S. Embassy in Turkey (WSJ)
  • Abe Shortens List for BOJ Chief as Japan Faces Monetary Overhaul (BBG)
  • Endowment Returns Fail to Keep Pace with College Spending (BBG) - More student loans
  • Mexico rescue workers search for survivors after Pemex blast kills 25 (Reuters)
  • Lingering Bad Debts Stifle Europe Recovery (WSJ)
  • Peregrine Founder Hit With 50 Years (WSJ) - there is hope Corzine will get pardoned yet
  • Deutsche Bank to Limit Immediate Bonuses to 300,000 Euros
  • France's Hollande to visit Mali Saturday (Reuters)
  • France, Africa face tough Sahara phase of Mali war (Reuters)
  • Barclays CEO refuses bonus (Barclays)
  • Edward Koch, Brash New York Mayor During 1980s Boom, Dies at 88 (BBG)
  • Samsung Doubles Tablet PC Market Share Amid Apple’s Lead (BBG)
  • Hagel Endures Republican Criticism as Levin Sees Approval (BBG)
  • U.S. sues to stop beer deal to unite Bud and Corona (Reuters)

Overnight Media Digest

WSJ

* The JP Morgan Chase & Co trader known as the "London whale" tried to alert others at the bank to mounting risks months before his bets ballooned into more than $6 billion in losses, according to people familiar with emails reviewed by J.P. Morgan and a U.S. Senate panel.

* The U.S. government filed suit to block Anheuser-Busch InBev's $20.1 billion deal to buy the rest of Grupo Modelo, saying it would reduce competition.

* Chinese hackers believed to have government links have been conducting wide-ranging electronic surveillance of media companies including The Wall Street Journal, apparently to spy on reporters covering China and other issues, people familiar with incidents said.

* President Barack Obama let his jobs council disband Thursday as its two-year charter expired, sparking criticism among Republicans and conservative economists that the group had provided more show than substantive policy.

* Morgan Stanley said it would increase the salaries of Chairman and Chief Executive James Gorman and other top executives to make their pay more competitive.

* AirAsia Bhd's chief executive hopes to list the group's Indonesia arm on the Jakarta stock exchange in the third quarter as the budget carrier seeks to expand its foothold in Southeast Asia's largest air travel market.

* Roomy Khan, one of the first cooperating witnesses who helped build the U.S. government's case against convicted hedge-fund manager Raj Rajaratnam, was sentenced to one year in prison Thursday.

* Animal-medicine maker Zoetis Inc, which is being carved into a standalone company by drug maker Pfizer Inc, raised about $2.2 billion in an initial public offering, a strong showing for the largest IPO deal from a U.S. company since Facebook Inc debuted last May.

* Best Buy Co is closing 15 of its 75 big-box stores in Canada as its new chief executive tries to stem slumping sales and profits at the consumer electronics chain.

FT

BARCLAYS IN QATAR LOAN PROBE - UK authorities are looking into an allegation that Barclays lent Qatar money to invest in the bank during the height of the 2008 financial crisis, allowing it to avoid a government bailout, according to unnamed sources cited by the newspaper.

SEYMOUR PIERCE'S FUTURE UP IN THE AIR - The board of Seymour Pierce held talks on Thursday night over the future of the stockbroker, with an unnamed source saying this has come about due to the FSA previously blocking funding from Ukrainian backers.

AB INBEV'S 20 BILLION DOLLAR DEAL THREATENED BY US SUIT - The United States moved to block Anheuser-Busch InBev in its 20 billion dollar acquisition of Grupo Modelo , the Mexican brewer, saying it would lead to an increase in prices and deter competition.

BERTELSMANN SEEKS BUYER FOR TWO BILLION EURO RTL STAKE - German media group Bertelsmann said it intends to sell a stake in broadcasting subsidiary RTL, aiming to raise up to 2 billion euros

LAWSON URGES FULL NATIONALISATION OF RBS - Former Conservative finance minister, Nigel Lawson said the UK government should nationalise RBS and there was a case for no bonuses to paid this year.

DEUTSCHE BANK RISES ON CAPITAL STRENGTH - The bank offered good news to investors reporting a capital base above expectations, bolstering its share price.

CHINA'S WORKERS ENDURE UNHAPPY NEW YEAR - An austerity drive by the new Chinese leadership of Xi Jinping has led government departments and state-owned enterprises to cut back or cancel new year festivities.

US BANKS SQUEEZED AS MORTGAGE PROFITS HIT - Bonanza profits at US banks from mortgages are being squeezed, raising doubts about earnings at lenders such as Wells Fargo, Bank of America and others.

WASENDORF GETS 50 YEARS JAIL FOR FRAUD - A federal court in the United States sentenced the ex head of collapsed future broker Peregrine Financial Group, Russell Wasendorf Sr., to 50 years in prison.

NYT

* The Justice Department has sued to block Anheuser-Busch InBev's proposed $20.1 billion deal to buy control of Grupo Modelo, the first major roadblock in a decade of consolidation by brewers around the world.

* A bankruptcy court judge approved a broad settlement deal on Thursday that paves the way for MF Global customers to recover much of the $1.6 billion that disappeared when the brokerage firm blew up in 2011.

* European antitrust officials on Thursday accused drug giants Johnson & Johnson and Novartis of colluding to delay the availability of a less expensive generic version of a powerful medication often used to ease severe pain in cancer patients.

* James Gorman, chief executive of Morgan Stanley, will receive a huge raise in his base salary this year, but his overall pay package for 2012 was down from 2011, according to a regulatory filing.

* Pfizer Inc's animal health unit, known as Zoetis, raised $2.2 billion in its initial public offering on Thursday, exceeding expectations by pricing its stock at $26 a share, above the expected range of $22 to $25 a share. The sale values the company at about $13 billion.

* Roomy Khan, a central figure in the investigation that led to the conviction of hedge fund manager Raj Rajaratnam, was sentenced to one year in prison on Thursday for illegally passing inside information and obstructing justice.

* Fabrice Tourre, the Goldman Sachs trader accused of misleading clients over a controversial mortgage deal, is no longer working at the firm.

Canada

THE GLOBE AND MAIL

* Canada will begin a two-year stint at the helm of the eight-nation Arctic Council amid a clamor of competing calls for leadership, as the ice recedes and the race heats up to extract resource riches while protecting a fragile and now-exposed environment.

* Toronto Mayor Rob Ford is publicly at odds with a key member of his team again, this time in a he-said, she-said spat with the Toronto Transit Commission chair.

The verbal tussle over the approval last week by the transit commission of a 15-year sole-source contract is the latest example of Ford's difficulty seeing eye to eye with even fiscal conservatives on council.

Reports in the business section:

* The Canadian economy expanded at its fastest pace in more than half a year, but the bigger picture is still one of slow growth. The country's gross domestic product rose 0.3 percent in November, Statistics Canada said Thursday, its strongest showing in seven months as auto makers and oil firms ramped up activity.

NATIONAL POST

* Prime Minister Stephen Harper says while some of his Conservative Members of Parliament may not agree, abortion is legal in Canada. Harper made the comments while under questioning in the House of Commons over a letter written by three Tory MPs who want the Royal Canadian Mounted Police to investigate hundreds of abortions as possible homicides.

FINANCIAL POST

* Two of Canada's biggest retailers, Best Buy Canada and Sears Canada Inc, announced layoffs Thursday in what is shaping up to be a turbulent and competitive year for the country's retail sector.

China

PEOPLE'S DAILY

-- Premier Wen Jiabao pledged that China would continue its opening up policy during a meeting with foreign experts on Monday.

SHANGHAI SECURITIES NEWS

-- The People's Bank of China (PBOC) drained a net 300 billion yuan ($48 billion) via reverse bond repurchase agreements in its open market operations in January as the country's interbank market was flooded with cash.

-- The recent serious pollution in Beijing has given rise to suspicion of the quality of China's fuel and gasoline.

CHINA SECURITIES JOURNAL

-- Sources say Chinese authorities have suspended a plan to expand an experimental property tax now levied in a few cities including Shanghai and Chongqing.

-- A monthly index issued by China's national fund for protecting stock investors shows that in January, investor confidence in the domestic equity market reached its highest since April 2011 as the main Shanghai Composite Index began a sharp rebound since early December.

CHINA BUSINESS NEWS

-- High costs and bureaucracy have made 78 percent of Chinese firms feel it is difficult to operate in the European Union, according to a survey by the European Union Chamber of Commerce in China.

CHINA DAILY (www.chinadaily.com.cn)

-- In a move aimed at strengthening personal data protection, companies will be instructed to delete customer information after use, according to new guidelines implemented on Friday.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

AB InBev (BUD) upgraded to Outperform from Market Perform at Bernstein
Arthur J. Gallagher (AJG) upgraded to Outperform from Market Perform at William Blair
Audience (ADNC) upgraded to Hold from Sell at Deutsche Bank
Chubb (CB) upgraded to Buy from Hold at Deutsche Bank
Deutsche Bank (DB) upgraded to Buy from Neutral at Citigroup
Ericsson (ERIC) upgraded to Neutral from Underperform at Credit Suisse
GameStop (GME) upgraded to Overweight from Neutral at Piper Jaffray
Greenway Medical (GWAY) upgraded to Strong Buy from Market Perform at Raymond James
Neutral Tandem (IQNT) upgraded to Market Perform from Underperform at Raymond James
Oracle (ORCL) upgraded to Outperform from Market Perform at BMO Capital
PACCAR (PCAR) upgraded to Outperform from Market Perform at Wells Fargo
Verizon (VZ) upgraded to Overweight from Neutral at Piper Jaffray
W. R. Berkley (WRB) upgraded to Hold from Sell at Deutsche Bank
WMS Industries (WMS) upgraded to Neutral from Sell at Goldman
Wynn Resorts (WYNN) upgraded to Buy from Neutral at Janney Capital

Downgrades

AB InBev (BUD) downgraded to Hold from Buy at Societe Generale
ARMOUR Residential (ARR) downgraded to Neutral from Buy at BofA/Merrill
Alkermes (ALKS) downgraded to Neutral from Buy at BofA/Merrill
Amerseco (AMRC) downgraded to Perform from Outperform at Oppenheimer
Bob Evans (BOBE) downgraded to Hold from Buy at KeyBanc
Brightcove (BCOV) downgraded to Outperform from Top Pick at RBC Capital
Colfax (CFX) downgraded to Hold from Buy at KeyBanc
Constellation Brands (STZ) downgraded to Neutral from Buy at BofA/Merrill
Constellation Brands (STZ) downgraded to Neutral from Buy at Goldman
Copart (CPRT) downgraded to Hold from Buy at BB&T
Edison International (EIX) downgraded to Neutral from Buy at SunTrust
HSBC (HBC) downgraded to Neutral from Buy at Citigroup
Harris Teeter (HTSI) downgraded to Hold from Buy at BB&T
Harris Teeter (HTSI) downgraded to Market Perform from Outperform at BMO Capital
HealthSouth (HLS) downgraded to Hold from Buy at Deutsche Bank
Hologic (HOLX) downgraded to Reduce from Neutral at SunTrust
Life Time Fitness (LTM) downgraded to Market Perform from Outperform at William Blair
MasterCard (MA) downgraded to Market Perform from Outperform at Wells Fargo
Quiksilver (ZQK) downgraded to Neutral from Outperform at RW Baird
Royal Dutch Shell (RDS.A) downgraded to Underperform from Neutral at BofA/Merrill
Time Warner Cable (TWC) downgraded to Hold from Buy at Deutsche Bank
Time Warner Cable (TWC) downgraded to Market Perform from Outperform at Wells Fargo
UPS (UPS) downgraded to Neutral from Buy at Citigroup
Viacom (VIAB) downgraded to Neutral from Overweight at Piper Jaffray
Whirlpool (WHR) downgraded to Outperform from Strong Buy at Raymond James

Initiations

Blue Nile (NILE) initiated with an Outperform at Wells Fargo
Edwards Lifesciences (EW) initiated with a Buy at Janney Capital
Helmerich & Payne (HP) initiated with a Neutral at Credit Suisse
NCI Building Systems (NCS) initiated with a Buy at BB&T
Nabors Industries (NBR) initiated with an Underperform at Credit Suisse
National Oilwell (NOV) initiated with a Neutral at Credit Suisse
Oceaneering (OII) initiated with a Neutral at Credit Suisse
Oil States (OIS) initiated with an Outperform at Credit Suisse
Patterson-UTI Energy (PTEN) initiated with a Neutral at Credit Suisse
Precision Drilling (PDS) initiated with a Neutral at Credit Suisse
Shutterfly (SFLY) initiated with a Market Perform at Wells Fargo
Sunshine Heart (SSH) initiated with an Overweight at Piper Jaffray
Zoetis (ZTS) initiated with a Buy at ISI Group

HOT STOCKS

Sprint (S): DISH (DISH) proposal for Clearwire (CLWR) is “illusory”
Moody's said DOJ suit is credit negative for AB InBev (BUD) but doesn’t change rating
Barrick (ABX) considering sale of Barrick Energy unit, other assets, Bloomberg reports
Chubb (CB) announced new $1.3B share repurchase plan
Sees FY13 net written premiums up 2% to 4%
Goodyear Tire (GT) to exit farm tire business in Europe, Middle East and Africa region
OCZ Technology (OCZ) sees 20%-30% company growth year-over-year
Brink's (BCO) to divest cash-in-transit operations in Germany
Said will be “very difficult” to match 2012 earnings
Viad (VVI) sees FY13 revenue decreasing “at a low to mid single-digit rate”
Newell Rubbermaid (NWL) sees FY13 net sales up 1% to 3%

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Viad (VVI), Chubb (CB), C.R. Bard (BCR), Fortune Brands (FBHS), Bally Technologies (BYI), Affymetrix (AFFX), Principal Financial (PFG)

Companies that missed consensus earnings expectations include:
Brink's (BCO), Consolidated Edison (ED), McKesson (MCK), Wynn Resorts (WYNN), bebe stores (BEBE)

Companies that matched consensus earnings expectations include:
Eastman Chemical (EMN), Reinsurance Group (RGA), PerkinElmer (PKI)

NEWSPAPERS/WEBSITES

The JPMorgan Chase (JPM) trader known as the "London whale"--Bruno Iksil--tried to alert others at the bank to mounting risks months before his bets ballooned into more than $6B in losses, sources say, the Wall Street Journal reports
Asian manufacturing data today suggested the region's economic recovery is continuing. HSBC's China PMI reached a two-year high of 52.3 from December's 51.5, while the official PFLP number fell to 50.4 from December's 50.6, the Wall Street Journal reports
Dell (DELL) is close to an agreement to sell itself to a buyout consortium led by its founder and CEO Michael Dell and private equity firm Silver Lake Partners, with a deal coming as soon as Monday, sources say, Reuters reports
Airbus (EADSY) studied alternatives to lithium-ion batteries for its next jet, the A350, and has time to adapt to any rule changes prompted by the problems that have grounded Boeing’s (BA) 787 Dreamliner, says CEO Fabrice Bregier, Reuters reports
Anheuser-Bush InBev (BUD) may have to give up more control of U.S. beer distribution or sell a brewery to settle an antitrust lawsuit by the U.S. to block its $20.1B takeover of the rest of Grupo Modelo SAB (GPMCF), Bloomberg reports
Equity funds attracted six times the money that went into bonds in the week ended January 30, according to a Citigroup (C) report that cited EPFR Global data. Stock funds drew $18.8B, exceeding the $3B that went into bonds, as 58% of the equity inflows went into North American funds, with exchange-traded funds being the largest beneficiaries, the analysts wrote, Bloomberg reports

SYNDICATE

Bonanza Creek (BCEI) 11.5M share Secondary priced at $29.50
Chesapeake Lodging (CHSP) files to sell 6.25M shares of common stock
Echo Therapeutics (ECTE) 13.33M share Spot Secondary priced at 75c
Navios Maritime Partners (NMM) files to sell 4.25M shares of common stock
Penn National (PENN) files to sell convertible preferreds and stock for REIT structure
United Insurance (UIHC) files to sell 717K shares of common stock for holders
Zoetis (ZTS) 86.1M share IPO priced at $26.00

Your rating: None

David Cameron Backs George Osborne Amid Rumours Of Tory Plots To Oust Leadership

David Cameron has said he has "full confidence" in George Osborne, amid reports of backbench Tory plots to oust the chancellor or even the prime minister himself. On Friday the Daily Mail reported that Tory MPs plotting against the leadership intend t...

Cameron’s Aid Targets Risk Angering Tory Backbenchers

David Cameron risked angering Tory backbenchers on Friday by backing ambitious tagets for UK aid spending. Speaking in Liberia where he is to attend a UN meeting, Cameron called for the next wave of international development targets to focus on extrem...

Mehdi’s Morning Memo: In Pole Position

The ten things you need to know on Friday 1 February 2013...

1) IN POLE POSITION

The German foreign minister took to the comment pages of yesterday's Times to warn our prime minister that renegotiating Britain's membership of the EU might not be as easy as David Cameron suggested in his Bloomberg speech last month.

The Poles, however, seem to want to give the PM a bit of a boost - my colleague Ned Simons has been speaking to the Polish ambassador:

"Poland is willing to let the UK renegotiate its relationship with the EU in an attempt to stop David Cameron leading Britain out of the union, the Polish ambassador has said.

"In an interview with The HuffingtonPost UK, ambassador Witold Sobkow said Warsaw was willing to 'accommodate' some British demands.

"Asked if Poland would be willing to allow Cameron to substantially change Britain’s relationship with Brussels ahead of a in/out referendum, he said: 'Yes. We see a lot of room for manoeuvre.'

"'We all want a better functioning EU, respecting subsidiarity, and reducing its bureaucratic burden.'

"'...There is no appetite for such far reaching changes now, but, who knows, in 2-3 years,' he said. 'The EU is changing, as we can see, for example, in the case of new banking supervision arrangements.'"

Dave will be delighted. Good ol' Poles, eh?

2) WATCH YER BACKS, DAVE AND GIDEON...

The Guardian and the Daily Mail both have some pretty worrying news for the PM and his chancellor. The Guardian splashes on news that:

"Downing Street has been warned that David Cameron risks facing a confidence vote over his leadership in the summer of 2014 if his poll ratings fail to improve and the party performs poorly in the local elections.

"A diehard group of party rebels, who would like to remove the prime minister immediately, will significantly grow in numbers over the next 17 months if the Tories fail to achieve a breakthrough, according to MPs inside and outside the government."

The Mail says that Osborne is the real target of the rebels' ire:

"The Tories were facing fresh turmoil last night as plotters prepared to demand the sacking of Chancellor George Osborne after failing to oust David Cameron.

"Rebel MPs intend to whip up support for a letter to the Prime Minister, calling on him to move Mr Osborne from the Treasury if the UK plunges into a triple dip recession.

"... The possibility of a job swap between the Chancellor and Foreign Secretary William Hague has been floated privately before by senior Tories."

Oh dear. Plots, plots and more plots - the Tory party reverts to type...

3) THE WAR ON WELFARE, PART 66

"Ministers: spare our budgets for more welfare cuts," screams the splash headline in the i.

It's sister paper, the Independent, reports:

"Conservative Cabinet ministers are pressing for another round of cuts in the welfare budget in an attempt to protect their own departments from the Treasury’s demand for a further £10bn of savings.

"Defence Secretary, Philip Hammond, Education Secretary, Michael Gove, and Home Secretary, Theresa May, are among senior Tories arguing for another squeeze on welfare."

To 'squeeze' another £10bn out of the welfare budget in the midst of the slowest economic recovery in living memory, and after slashing the top rate of income tax on millionaires, is, frankly, immoral and callous.

The truth about this government is that it isn't in favour of austerity per se, just austerity for the 'undeserving' poor. Forget taxing bank bonuses - CUT BENEFITS!

4) DEFENSIVE DAVE

The Telegraph continues its (front page) crusade against defence cuts while Cameron (and Osborne) wish Coulson was back in Downing Street running 'the grid':

"Amid accusations that defence policy is now a shambles, Downing Street attempted to 'clarify' an apparent promise by David Cameron that overall spending on the military would rise in 2015-16.

"On Wednesday Mr Cameron said that he would stand by a pledge he made in 2010 to provide “year-on-year real-terms growth in the defence budget in the years beyond 2015.”

"However, the Government’s position descended into confusion on Thursday as No  10 attempted to argue that Mr Cameron’s commitment to increase spending 'beyond 2015' does not apply to the 2015-16 financial year."

Dave's defence secretary isn't onboard either:

"Philip Hammond, the Defence Secretary, on Thursday confirmed that he would fight the Treasury for increases in defence spending in the coming spending review."

5) 'HALF OF OUR WOMEN LOOK LIKE KATE. THE OTHER HALF, LIKE HER SISTER'

That's the slogan on a new Romanian ad, featuring Kate and Pippa Middleton, plugging the attractions of Romania - to Brits! The Independent explains:

"Romania has hit back at British fears of a sudden influx of immigrants, launching its own tongue-in-cheek advertising campaign to persuade disillusioned Britons to travel east and swap Bognor for Bucharest.

"'You have bad weather, no jobs, no houses? That sounds bad. Why don’t you come live here instead?' reads one poster on the Romanian news website Gandul, which is behind the humorous campaign, entitled 'Why don’t you come over? - We may not like Britain, but you’ll love Romania.'"

I never knew the Romanians had such a great sense of humour. Can't wait to meet them when they all arrive here en masse...

BECAUSE YOU'VE READ THIS FAR...

Watch this video of a ginger kitten attacking a large potato. Go on...

6) BRITS OUT, BRITISH PM IN

Just a week ago, British citizens in Benghazi were told to get out of the country; yesterday, the British PM flew into Libya on a 'surprise' visit. The Times reports:

"The Prime Minister went ahead with the visit despite the detection of a 'potential threat' to Britain's embassy in Tripoli only days ago... During his one-day trip, Mr Cameron said that securing the country would be even more important than toppling the regime of Colonel Gaddafi. In a concerted diplomatic drive, Britain will increase the assistance it is giving to police and to military training, with new advisers being dispatched to Tripoli."

Dave announced he'd done with Libyan authorities, which will allow British police to continue their investigation into the Lockerbie bombing:

"A team from Dumfries and Galloway Police has been cleared to go out to Tripoli as they attempt to hunt down those behind the bombing of Pan Am flight 103, which killed 270 people... They will be able to talk to officials there next month about the questions that remain about the bombing."

7) 'WOEFULLY UNDEREQUIPPED AND HAMSTRUNG'

From the i:

"The existing system to root out police wrongdoing is being undermined by poor-quality investigations and lacks the powers and resources to get to the bottom of serious cases of corruption and misconduct, according to a damning report published today.

"IPCC inquiries into alleged police wrongdoing start too late and take too long, according to the Home Affairs Select Committee. It is 'woefully underequipped and hamstrung' in achieving its objectives, with less funding than the professional standards department of the Metropolitan Police."

8) BASHING BARCLAYS

I still chuckle when I remember how City apologists used to jump to Barclays' defence in 2008/2009: 'They didn't take any taxpayers' cash,' they'd whine.

Today's FT front-page story is worth a look:

"UK authorities are probing an allegation that Barclays loaned Qatar money to invest in the bank as part of its cash call at the height of the financial crisis in 2008, which enabled the bank to avoid a UK government bailout.

"... If confirmed, such an arrangement could contravene market regulations if it was not properly disclosed at the time, legal and industry experts warned. 'The concept of lending money to any investor to purchase your own shares raises a series of immediate questions about disclosure and other regulatory issues,' said Peter Hahn, a former banker at Citi now at Cass Business School.

"The revelation is yet another blow for attempts by Antony Jenkins, Barclays’ chief executive, to clean up the bank’s image that has been tarnished by high-profile scandals ranging from Libor manipulation to the mis-selling of payment protection insurance."

You can that again.

9) NO THANKS, WILLIAM

Yet another diplomatic spat over the Falklands, reports the Times:

"Buenos Aires Argentina's Foreign Minister has rejected an invitation from William Hague to meet members of the Falkland Islands government on his visit to London next week. Hector Timerman said the islands were not a matter for a 'third party'."

10) 'THE FABULOUS EMANUEL BROTHERS'

That's the headline to a fascinating feature in the Independent about a trio of high-achieving US brothers from the worlds of medicine, politics and entertainment:

"Dr Ezekiel "Zeke" Emanuel... [is] a professor at the University of Pennsylvania, where he heads the Department of Medical Ethics and Health Policy; a fellow at non-profit research institute The Hastings Center; an oncologist; a bioethicist; and an expert in end-of-life care, who writes frequently for the New York Times.

"And yet, remarkably, Ezekiel, 55, has a lower profile than his two younger brothers. That's because they are the Mayor of Chicago, 53-year-old Rahm Emanuel; and Ari Emanuel, 51, the co-CEO of William Morris Endeavor, Hollywood's biggest talent agency.

"... There are celebrated families of doctors, politicians and entertainment professionals, but it's almost unheard-of for siblings to rise to such prominence in three such varied fields."

QUOTE UNQUOTE

"I have been involved in Conservative politics for 20 years. The Conservative party is never not plotting," says an unnamed minister, speaking to the Guardian's Nick Watt.

PUBLIC OPINION WATCH

From today's Sun/YouGov poll:

Labour 44
Conservatives 32
Lib Dems 10
Ukip 8

That would give Labour a majority of 120.

140 CHARACTERS OR LESS

@tnewtondunn RT @Sun_Politics Sun/YouGov poll tonight: CON 32, LAB 44, LDEM 10, UKIP 8. Lab's 12 point lead back. Cam's EU bounce dead after just a week?

@TimMontgomerie Lord Ashcroft on @ConHome: We need to change perceptions of the Tory Party and the Europe speech hasn't done that

@TomHarrisMP The SNP are bitching about HS2 not reaching Scotland. So they expect Scotland to be "independent" by then, but for UK Govt to finance it?

900 WORDS OR MORE

Fraser Nelson, writing in the Telegraph, says: "If the Prime Minister truly wants to confront the threat from Islamists in Africa, he must find the money to increase the defence budget."

Jonathan Steele, writing in the Guardian, says: "Israel's attack on Syria shows how volatile this conflict is. A political solution is now urgent."

Philip Collins, writing in the Times, says: "For Cameron aid is not a badge. It’s a mission."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

Meet the Contractors Turning America’s Police Into a Paramilitary Force

The national security state has an annual budget of around $1 trillion. Of that huge pile of money, large amounts go to private companies the federal government awards contracts to. Some, like Lockheed Martin or Boeing, are household names, but many of the contractors fly just under the public's radar. What follows are three companies you should know about (because some of them can learn a lot about you with their spy technologies).

L3 Communications

L3 is everywhere. Those night-vision goggles the JSOC team in Zero Dark Thirty uses? That's L3. The new machines that are replacing the naked scanners at the airport? That's L3. Torture at Abu Ghraib? A former subsidiary of L3 was recently ordered to pay $5.28 million to 71 Iraqis who had been held in the awful prison.

Oh, and drones? L3 is on it. Reprieve, a UK-based human rights organization, earlier this month wrote on its Web site:

“L-3 Communications is one of the main subcontractors involved with production of the US’s lethal Predator since the inception of the programme. Predators are used by the CIA to kill ‘suspected militants’ and terrorise entire populations in Pakistan and Yemen. Drone strikes have escalated under the Obama administration and 2013 has already seen six strikes in the two countries.”

Unsurprisingly, L3 Communications is well connected beyond the national security community. Its chief financial officer recently spoke at Goldman Sachs, at what the financial titan hilariously refers to as a “fireside chat.”

L3 also supplies local law enforcement with its night-vision products and makes a license-plate recognition (LPR) device, a machine with disturbing implications. LPR can be mounted on cop cruisers or statically positioned at busy intersections and can run potentially thousands of license plates through law enforcement databases in a matter of hours. In some parts of the country LPR readers can track your location for miles. As the Wall Street Journal noted, surveillance of even “mundane” activities of people not accused of any crime is now “the default rather than the exception.”

L3 Communications embodies the totality of the national security and surveillance state. There is only minimal distinction between its military products and police products. Its night-vision line is sold to both military and law enforcement. Its participation in the drone program is now, as far as we know, limited to countries in the Middle East and North Africa. But in the words of the New York Times editorial board, “[i]t is not a question of whether drones will appear in the skies above the United States but how soon.” The NYT estimates the domestic drone market at $5 billion, likely a conservative estimate, and contractors will vie for that money in the public and private sphere. L3's venture into airports, the border of where domestic policy meets foreign policy in the name of national security, is therefore significant both symbolically and materially.

In many ways, that is the most important story of the post-9/11 United States: the complete evaporation of the separation of foreign and domestic polices. Whether we're talking about paramilitarized police, warrantless wiretapping, inhumane prison conditions, or drone surveillance, there exist few differences between a United States perpetually at war and a United States determined to police and imprison its people in unacceptable ways and at unacceptable rates.

Harris Corporation: Stingray “IMSI catcher”

Harris Corp. is a huge provider of national security and communications technology to federal and local law enforcement agencies. Though many people have never heard of it, Harris is a major player in the beltway National Security community. President and CEO William M. Brown was recently appointed to the National Security Telecommunications Advisory Committee, and in 2009 the Secret Service offered Harris a contract to train its agents in the use of Harris' Stingray line. The Secret Service awarded the company additional contracts in 2012.

If you've heard of Harris at all, it's likely been because its controversial Stingray product has been getting attention as an information-gathering tool with major privacy implications. The Stingray allows law enforcement to cast a kilometers' wide digital net over an area to determine the location of a single cell phone signal – and in the process collect cell data on potentially hundreds of people who aren't suspected of any crimes. EFF claims the device is a modern version of British soldiers canvassing the pre-Revolutionary colonies, searching people's homes without probable cause – exactly what the Fourth Amendment was created to prevent. EFF describes the process this way:

“A Stingray works by masquerading as a cell phone tower—to which your mobile phone sends signals to every 7 to 15 seconds whether you are on a call or not— and tricks your phone into connecting to it. As a result, the government can figure out who, when and to where you are calling, the precise location of every device within the range, and with some devices, even capture the content of your conversations.”

According to the Electronic Privacy Information Center (EPIC),the FBI has been using similar technology since 1995. But a recent federal case, United States v. Rigmaiden, has raised Fourth Amendment questions regarding whether law enforcement officials need to obtain a warrant before employing a Stingray. The judge in that case determined that the government hadn't provided enough information about how the devices work, and ordered that the information collected in Rigmaiden couldn't be used in court.

What's especially troubling about Stingrays is that the government either won't say, or doesn't understand, how the technology works. The WSJ reported that the US Attorney making the requests “seemed to have trouble explaining the technology.”

And it's not just the federal government that uses Stingrays. As Slate notes,referencing FOIA documents recently obtained by EPIC, “the feds have procedures in place for loaning electronic surveillance devices (like the Stingray) to state police. This suggests the technology may have been used in cases across the United States, in line with a stellar investigation by LA Weekly last year, which reported that state cops in California, Florida, Texas, and Arizona had obtained Stingrays.”

Harris has been tightlipped about the Rigmaiden case, but expect to be hearing a lot about Stingrays in the future.

BI2 Technologies

BI2 makes a fine pitch. Its iris-scanning technology can be made to sound very appealing. Iris scans are relatively non-invasive, there's no touching involved so the likelihood of spreading disease is reduced, and as B12 states on its Web site, "there are no lasers, strong lights or any kind of harmful beams.” It also claims that iris scanning is "strictly opt-in," and that a “user" (who in most cases would be better described as an “arrestee”) “must consciously elect to participate” in the scanning. (When I was arrested by the NYPD while covering a protest, the scan was voluntary -- though the NYPD didn't tell me that, a protester did. But if I refused to submit to it I could have been punished with an extra night in jail.)

Reuters reported that BI2's iPhone-based iris scanner -- called MORIS -- is capable of taking an accurate scan from four feet away, “potentially without the person being aware of it.” MORIS has drawn harsh condemnation from the ACLU. The primary concern from privacy advocates is that law enforcement will deploy this technology in an overly broad way. ACLU senior policy analyst Jay Stanley told Reuters that he didn't want the police “using them routinely on the general public, collecting biometric information on innocent people.”

MORIS isn't just for irises; it also scans faces. In 2011, the Wall Street Journal reported that the sheriff's office in Pinellas County, Florida, “uses digital cameras to take pictures of people, download the pictures to laptops, then use facial-recognition technologies to search for matching faces.” New database technology like Trapwire, a data mining system that analyzes “suspicious behavior” in purported attempts to predict terrorist behavior, makes face scanning potentially more worrisome. Trapwire uses at least “CCTV, license-plate readers, and open-source databases” as input sources, and although it doesn't employ facial-recognition software, the incentives to combine these types of technology is clear.

Beginning in 2014, BI2 will manage a national iris-scan database for the FBI, called Next-Generation Identification (NGI).Lockheed Martin is also involved in building the database.Much of BI2's iris data comes from inmates in 47 states, and despite BI2's claims that iris scanning can't be gamed, that is not the case. Experts showed last summer that the iris can be “reverse-engineered” to fool the scanners, which are generally thought to be more accurate than fingerprinting.

The usual suspects lamented in 2011 that iris scanning isn't used at airports or borders, but security creep is difficult to combat, especially once “national security” is invoked. Just days ago it was reported that the FBI is teaming with the Department of Homeland Security to ramp up iris scanning at US borders. AlterNet has previously reported that the Department of Defense scans the irises of people arriving at and departing from Afghanistan.

The story of BI2 is important because the initial technology is superficially appealing. The company's first projects were called the Child Project, designed to help locate missing children; and Senior Safety Net, developed to identify missing seniors suffering from Alzheimer's. According to B12's Web site, sheriffs' departments in 47 states use the BI2 iris-scanning device and database, which makes it easy to mobilize support to facilitate the safe return of children and seniors.

While the desire to find missing children and seniors is perfectly legitimate, the collection of biometric data is a pandora's box. Once it's opened, it's proven difficult if not impossible to limit.

Frontrunning: January 31

  • Risky Student Debt Is Starting to Sour (WSJ)
  • Political scandal in Spain as PP secret accounts revealed (El Pais)
  • New York Times claims Chinese hackers hijacked its systems (NYT)
  • Spain's Rajoy, ruling party deny secret payment scheme (Reuters)
  • Iran crude oil exports rise to highest since EU sanctions (Reuters)
  • BlackBerry 10’s Debut Fizzles as U.S. Buyers Left Waiting (BBG)
  • Costs drag Deutsche Bank to €2.2bn loss  (FT)
  • And the gaming of RWA continues - Deutsche Bank Beats Capital Goal as Jain Shrugs Off Loss (BBG)
  • More fun out of London - Barclays, RBS May Pay Billions Over Improper Derivatives Sales (BBG)
  • Hagel to face grilling by Senate panel on Mideast, budget (Reuters)

Overnight Media Digest

WSJ

* Israel bombed a suspected shipment of anti-aircraft missiles in Syria on Wednesday, according to regional and U.S. officials, in its most ambitious strike inside its neighbor's territory in nearly two chaotic years of civil war there.

* Research in Motion Ltd executives excused more than a year of delays by saying they wanted the next BlackBerrys to be just right. But the smartphones that took more than two years to develop won't be available for the key U.S. market until mid-March, when carriers are expected to complete their tests.

* The U.S. economy shrank for the first time in more than three years in the fourth quarter, underscoring the halting nature of the recovery. But the strength of consumer spending and business investment suggested that the economy will grow, albeit slowly, this year.

* The U.S. Treasury for the first time auctioned holdings in U.S. banks that had missed a series of dividend payments, allowing the government to close out financial-crisis era investments only at steep discounts.

* Facebook reported a 40 percent fourth-quarter revenue jump as it ramped up its mobile business and offered new tools to advertisers, but the firm's shares slipped in after-hours trading.

* Boeing Co executives said it was business as usual despite the crisis surrounding its 787 Dreamliner, though airlines worldwide made preparations for an extended grounding of the aircraft.

* Illinois took the rare step Wednesday of postponing a bond auction just hours before it was expected to launch, as concerns grew among investors over the state's deep pension hole.

FT

FLEE 'SAFE' SOVEREIGN DEBT, SAYS HASENSTAB - The man who oversees 175 billion dollars in bonds for Californian asset manager, Franklin Templeton, says its time to get out of government debt now before it is too late.

UNION REQUESTS IAG MEETING ON IBERIA - The chief executive of International Airlines Group, Willie Walsh will reject a request from a pilots' union to discuss the restructuring of Iberia.

MPS ATTACK BARCLAYS OVER BONUS CULTURE - The parliamentary commission on banking standards accused Barclays of empty rhetoric, tearing into the bank's remuneration committee.

FACEBOOK MOBILE AD GROWTH DRIVES SALES - An aggressive advertising drive by the Facebook during the U.S. presidential elections and shopping season saw the website post its first quarterly revenue growth since going public.

DEUTSCHE BANK CHIEFS MAINTAIN COURSE - To the dismay of analysts and some investors, Deutsche Bank's Anshu Jain and Jurgen Fitschen are firmly rejecting the need for the bank to raise more capital.

RIMLESS BLACKBERRY HOPES TO REGAIN TOUCH - The struggling handset maker Blackberry is taking a gamble by launching two touchscreen smartphones in a direct challenge to Apple and Samsung.

ÇUKUROVA WINS RIGHT TO CONTROL TURKCELL - A court decision by the UK Privy Council will allow one of Turkey's richest men, Mehmet Karamehmet, the chance to regain control of the country's biggest mobile phone operator, Turkcell.

NYT

* For the last four months, Chinese hackers have persistently attacked The New York Times, infiltrating its computer systems and getting passwords for its reporters and other employees.

* Research in Motion Ltd introduced a new operating system and a new generation of phones, along with a new corporate name, with the hope of restoring its products' status as a symbol of executive cool.

* The U.S. government played a role in slowing the economic recovery as cuts in military spending and other factors overwhelmed the Federal Reserve's expanded campaign to spur growth.

* Despite two serious safety failures and new questions about the reliability of its lithium-ion batteries, Boeing Co's chief executive said Wednesday that he saw no reason to retreat from using the new but volatile technology on its 787 jets.

* Chrysler, the smallest of the American automakers, on Wednesday reported a big increase in 2012 earnings that helped its Italian parent company, Fiat SpA, become profitable for the year as well.

* Time Inc joined the many news organizations trying to tighten their belts in a tough advertising climate by announcing layoffs and offering employees buyout packages on Wednesday.

* In a legal dispute that had been closely watched by multinational companies and environmental organizations, a Dutch court dismissed most of the claims brought by Nigerian farmers seeking to hold Royal Dutch Shell accountable for damage by oil spilled from its pipelines.

China

CHINA SECURITIES JOURNAL

-- Livzon Pharmaceutical Group Inc said in a statement it will become the third company to move its dollar-denominated B shares to the Hong Kong H-share market.

-- Metallurgical Corporation of China Ltd said it expected to book a loss of 7.2 billion yuan ($1.16 billion) in 2012.

21st CENTURY BUSINESS HERALD

-- Galaxy Securities could give up its plan for a dual listing of yuan-denominated shares in Shanghai and Hong Kong, but it still expects to list H-shares in May.

CHINA DAILY (www.chinadaily.com.cn)

-- The State Council, China's cabinet, has approved an energy consumption target as part of efforts to correct overuse and foster greener growth. The government aims to keep total energy consumption below 4 billion metric tonnes of standard coal equivalent by 2015, with electricity consumption below 6.15 trillion kwh.

-- Domestic and foreign inbound mergers and acquisition deals by strategic investors fell to a five-year low last year, but activity will rebound in 2013, a report by accounting firm PricewaterhouseCoopers said.

Corp Fin

* Germany plans a modest reform of its banking sector that would put a cap on risky activities but not lead to the breakup of banks or significantly impair big institutions like flagship lender Deutsche Bank, according to a draft law seen by Reuters.

* Prosecutors are investigating the former management of Italy's troubled Monte dei Paschi bank for bribery and fraud, judicial sources said on Wednesday, as pressure grew on the Bank of Italy and bourse watchdog Consob.

* Endo Health Solutions Inc has held talks in recent weeks with drugmakers potentially interested in buying the maker of pain relief medication, people familiar with the matter said.

* Russian state technology firm Rusnano is planning to sell through a private placing of 10 percent of its shares between March and June, its chief executive Anatoly Chubais said in an interview with the Interfax news agency.

* Quintiles Transnational Corp, the largest provider of testing services to drugmakers, has chosen Morgan Stanley, Barclays Plc and JPMorgan Chase & Co as joint bookrunners for a planned initial public offering, people familiar with the matter said.

* Germany's second-biggest lender Commerzbank by 2015 plans to shed half of the workforce at its mortgage unit Hypothekenbank Frankfurt, formerly known as Eurohypo, according to an internal paper obtained by Reuters

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Arthur J. Gallagher (AJG) upgraded to Buy from Neutral at BofA/Merrill
Arthur J. Gallagher (AJG) upgraded to Outperform from Market Perform at Keefe Bruyette
AudioCodes (AUDC) upgraded to Outperform from Perform at Oppenheimer
Citrix Systems (CTXS) upgraded to Buy from Neutral at BofA/Merrill
Core Laboratories (CLB) upgraded to Outperform from Market Perform at FBR Capital
MB Financial (MBFI) upgraded to Outperform from Market Perform at Keefe Bruyette
Vale (VALE) upgraded to Buy from Neutral at BofA/Merrill

Downgrades

Comerica (CMA) downgraded to Underperform from Market Perform at Bernstein
Endo Health (ENDP) downgraded to Perform from Outperform at Oppenheimer
Facebook (FB) downgraded to Hold from Buy at Stifel Nicolaus
Facebook (FB) downgraded to Market Perform from Outperform at BMO Capital
Facebook (FB) downgraded to Neutral from Buy at Citigroup
Fusion-io (FIO) downgraded to Neutral from Outperform at Credit Suisse
Fusion-io (FIO) downgraded to Neutral from Overweight at JPMorgan
Fusion-io (FIO) downgraded to Neutral from Overweight at Piper Jaffray
KeyCorp (KEY) downgraded to Underperform from Market Perform at Bernstein
Netgear (NTGR) downgraded to Equal Weight from Overweight at Barclays
Regions Financial (RF) downgraded to Underperform from Market Perform at Bernstein
Seagate (STX) downgraded to Underweight from Equal Weight at Barclays
Velti (VELT) downgraded to Market Perform from Outperform at Wells Fargo
Zions Bancorp (ZION) downgraded to Underperform from Market Perform at Bernstein

Initiations

Cubist (CBST) initiated with a Buy at Janney Capital
Depomed (DEPO) initiated with a Buy at Janney Capital
Forest Labs (FRX) initiated with a Buy at Janney Capital
NPS Pharmaceuticals (NPSP) initiated with a Buy at Janney Capital
Salix (SLXP) initiated with a Buy at Janney Capital
Santarus (SNTS) initiated with an Outperform at Leerink

HOT STOCKS

Apollo (APO), Metropoulos acquired majority of Hostess snack cake business for $410M
Annaly Capital (NLY) to acquire CreXus (CXS) for $872M
ACI Worldwide (ACIW) acquired Online Resources (ORCC) for $3.85 per share or $263M in cash
Facebook (FB) said mobile driving greater engagement
Said search could be “meaningful” business in the future
Said more clients using the site for “new launches”
Capital Southwest (CSWC) sold Heelys for $2.25 per share to Sequential Brands
Las Vegas Sands (LVS) said U.S. market saturated or near saturated
Cabot (CBT) remains cautious in near-term, cited mixed results across portfolio
Lucas Energy (LEI) cut staff by 40%, to cut 2013 expenses by 40% vs. 2012
Cardinal Health (CAH) reorganizing medical segment organization
AstraZeneca (AZN) said no share repurchases will take place in 2013

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Dunkin' Brands (DNKN), Time Warner Cable (TWC), Whirlpool (WHR), AstraZeneca (AZN), ConocoPhillips (COP), Ameriprise (AMP), Silicon Graphics (SGI), Quantum (QTM),  Owens-Illinois (OI), Facebook (FB), Qualcomm (QCOM), Electronic Arts (EA)

Companies that missed consensus earnings expectations include:
Destination Maternity (DEST), Aetna (AET), Regis (RGS), Ball Corp. (BLL), Murphy Oil (MUR), Cabot (CBT), Las Vegas Sands (LVS)

Companies that matched consensus earnings expectations include:
Callaway Golf (ELY), Knight Transportation (KNX)

NEWSPAPERS/WEBSITES

  • Investors in Chesapeake Energy (CHK) cheered when it announced that CEO Aubrey McClendon will leave, but its problems won’t end there. Chesapeake cannot count on rising natural prices to help bail it out, and the company still needs to sell at least $4B in assets in 2013 to keep afloat, the Wall Street Journal reports
  • The yen's recent drop is giving hard-hit corporate Japan its biggest break in years, raising hopes of a long-awaited earnings recovery. Daiwa Securities estimates that profit growth at the top 200 Japanese companies will nearly double to 13% for the fiscal year through March, reversing a 16% decline in the previous year, assuming exchange rates remain roughly at current levels for two months, the Wall Street Journal reports
  • Glencore (GLNCY) is becoming a Russian oil trade leader from an outsider by mending fences in just one year with Rosneft, and is extending its grip to a sector where it played second fiddle to companies such as rival trader Vitol or Royal Dutch Shell (RDS.A), Reuters reports
  • Citigroup (C) is looking to pull out of consumer banking in more countries in an effort to lower costs and boost profits, sources say, Reuters reports
  • Diminishing rubber supplies and record car sales are extending a five-month bull market that’s poised to raise costs for tire makers (GT, BRDCY, CTB), Bloomberg reports
  • Johnson & Johnson (JNJ) President Andrew Ekdahl told jurors the company recalled 93,000 all-metal hip implants because they “did not meet the clinical needs for the product” and not because they were unsafe, Bloomberg reports

SYNDICATE

Adecogro (AGRO) 13.9M share Spot Secondary priced at $8.00
AmeriGas (APU) files to sell 29.57M common units for holders
Fleetmatics (FLTX) 7M share Secondary priced at $25.00
Golar LNG Partners (GMLP) announces offering of 3.9M common units
Idera Pharmaceuticals (IDRA) files to sell 9.08M shares of common stock for holders
Keryx (KERX) 6.58M share Spot Secondary priced at $8.49
TRI Pointe Homes (TPH) 13.689M share IPO priced at $17.00
Towerstream (TWER) to offer common stock
Vanguard Natural (VNR) commences offering of 8M common units

Your rating: None

Austerity Is Dead: Can Someone Please Tell Paul Ryan and His Deluded GOP Cohorts?

Republicans cling to a policy that pretty much everyone agrees is a total disaster.

January 30, 2013  |  

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Most of the recent economic data out of Europe has been exceedingly grim. A record high number of workers across the Eurozone are unemployed. Economies are shrinking. Debts are rising.

The anecdotes, though, are even worse. Hospitals are asking patients to supply their own syringes due to lack of funds. Trees on public land are being cut down by workers desperate for firewood to warm their homes. An entire generation of young workers is going to experience lower wages for the rest of their lives, due to years of being unemployed while in their 20s.

At this point, it’s safe to say that Europe’s response to the financial crisis of 2008 and its ensuing recession has failed. Austerity packages that were meant to jumpstart business investment and reduce what were viewed as unsustainable debt loads have instead crippled growth and caused untold amounts of human misery.

America, meanwhile, eschewed austerity for stimulus in the wake of the ’08 crisis. The result has been a return to slow, steady, if not overwhelming growth. But for Republicans in Congress, who constantly warn about the menace of the European social safety net, European austerity is a model to be emulated. And their insistence on cutting government spending no matter its effect on growth is bad news for the fragile economic recovery.

Here Comes Ryan, Again

With the so-called fiscal "cliff" firmly behind them and debt ceiling sufficiently punted away for a few months, House Republicans are turning their attention back to the federal budget process. House Budget Committee Chairman Paul Ryan (R-WI), fresh off his failed run for the vice-presidency, plans to release a budget that will balance in 10 years. Such a move, according to the Center for Budget and Policy Priorities, will require cutting one-sixth to one-third of most of the federal government, depending on how Ryan structures it.

But in the shorter term, congressional Republicans are planning to use a few pending deadlines to secure deep cuts in government spending. For instance, the current round of funding for the federal government expires in March, giving Republicans leverage to push for reductions. “The CR [Continuing Resolution]– it’s one of the areas where there is indeed an absolute deadline. Washington and Congress respond to crises and deadlines, and we need to address the spending side of the equation,” said Rep. Tom Price (R-GA).

Ryan himself has also said that the $1.2 billion in spending cuts known as the “sequester” are going to go into effect that same month. “I think the sequester’s going to happen, because that $1.2 trillion in spending cuts, we can’t lose those spending cuts,” Ryan said. The sequester will knock 0.7 percent off of economic growth in 2013, according to MacroEconomic Advisers.

The GOP is also agitating for $69 billion in new discretionary spending cuts that it hopes to trade for cuts to entitlements and the social safety net. All of this would be in addition to the $1.5 trillion in spending cuts ($2.5 trillion in total deficit reduction) to which President Obama has already agreed since Republicans took back the House in 2010.

What Austerity Hath Wrought

To see the effect such austerity can have, the GOP (and some Democrats) only needs to gaze across the Atlantic. Austerity measures have run the gamut in Europe, from mass public sector layoffs to increases in the retirement age, and of course, billions of dollars in spending cuts and tax increases. So what has Europe received for its efforts?

According to the latest data from Eurostat, Europe’s official statistics office, 18.8 million workers in the Eurozone and 26 million across the European continent are out of work. Spain leads the pack with a 27 percent unemployment rate and 6 million jobless workers. Youth unemployment in Spain is a whopping 55 percent. In Italy, 11 percent of workers are unemployed, including 38 percent of young workers. The story is the same across most of the continent.

Meet the Contractors Turning America’s Police Into a Paramilitary Force

You should know about them because they may already know about you.

January 30, 2013  |  

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The national security state has an annual budget of around $1 trillion. Of that huge pile of money, large amounts go to private companies the federal government awards contracts to. Some, like Lockheed Martin or Boeing, are household names, but many of the contractors fly just under the public's radar. What follows are three companies you should know about (because some of them can learn a lot about you with their spy technologies).

L3 Communications

L3 is everywhere. Those night-vision goggles the JSOC team in Zero Dark Thirty uses?  That's L3. The new machines that are replacing the naked scanners at the airport?  That's L3. Torture at Abu Ghraib? A former subsidiary of L3 was recently ordered to pay $ 5.28 million to 71 Iraqis who had been held in the awful prison. 

Oh, and drones? L3 is on it. Reprieve, a UK-based human rights organization, earlier this month  wrote on its Web site:

“L-3 Communications is one of the main subcontractors involved with production of the US’s lethal Predator since the inception of the programme. Predators are used by the CIA to kill ‘suspected militants’ and terrorise entire populations in Pakistan and Yemen. Drone strikes have escalated under the Obama administration and 2013 has already seen six strikes in the two countries.”

Unsurprisingly, L3 Communications is well connected beyond the national security community. Its chief financial officer recently spoke at  Goldman Sachs, at what the financial titan hilariously refers to as a “fireside chat.”

L3 also supplies local law enforcement with its night-vision products and makes a license-plate recognition  (LPR) device, a machine with disturbing implications. LPR can be mounted on cop cruisers or statically positioned at busy intersections and can run potentially thousands of license plates through law enforcement databases in a matter of hours. In some parts of the country LPR readers can track your location for miles. As the Wall Street Journal noted, surveillance of even “mundane” activities of people not accused of any crime is now “the default rather than the exception.”

L3 Communications embodies the totality of the national security and surveillance state. There is only minimal distinction between its military products and police products. Its night-vision line is sold to both military and law enforcement. Its participation in the drone program is now, as far as we know, limited to countries in the Middle East and North Africa. But in the words of the  New York Times editorial board, “[i]t is not a question of whether drones will appear in the skies above the United States but how soon.” The NYT estimates the domestic drone market at $5 billion, likely a conservative estimate, and contractors will vie for that money in the public and private sphere. L3's venture into airports, the border of where domestic policy meets foreign policy in the name of national security, is therefore significant both symbolically and materially.

In many ways, that is the most important story of the post-9/11 United States: the complete evaporation of the separation of foreign and domestic polices. Whether we're talking about paramilitarized police, warrantless wiretapping, inhumane prison conditions, or drone surveillance, there exist few differences between a United States perpetually at war and a United States determined to police and imprison its people in unacceptable ways and at unacceptable rates.

Harris Corporation: Stingray “IMSI catcher”

Harris Corp. is a huge provider of national security and communications technology to federal and local law enforcement agencies. Though many people have never heard of it, Harris is a major player in the beltway National Security community. President and CEO William M. Brown was recently appointed to the National Security Telecommunications Advisory Committee, and in 2009 the Secret Service offered Harris a contract to train its agents in the use of Harris' Stingray line. The Secret Service awarded the company additional contracts in 2012.

Towards a World War III Scenario? The Role of Israel in Triggering an Attack...

Towards a World War III Scenario? The Role of Israel in Triggering an Attack on Iran

This article was first published in August 2010.

For further details consult Michel Chossudovsky’s book, 

Towards a World War III Scenario: The Dangers of Nuclear War 

available in hardcover or pdf from Global Research.

The stockpiling and deployment of advanced weapons systems directed against Iran started in the immediate wake of the 2003 bombing and invasion of Iraq. From the outset, these war plans were led by the US, in liaison with NATO and Israel.

Following the 2003 invasion of Iraq, the Bush administration identified Iran and Syria as the next stage of “the road map to war”. US military sources intimated that an aerial attack on Iran could involve a large scale deployment comparable to the US “shock and awe” bombing raids on Iraq in March 2003:

“American air strikes on Iran would vastly exceed the scope of the 1981 Israeli attack on the Osiraq nuclear center in Iraq, and would more resemble the opening days of the 2003 air campaign against Iraq.(See Globalsecurity )

“Theater Iran Near Term”

Code named by US military planners as TIRANNT, “Theater Iran Near Term”, simulations of an attack on Iran were initiated in May 2003 “when modelers and intelligence specialists pulled together the data needed for theater-level (meaning large-scale) scenario analysis for Iran.” ( (William Arkin, Washington Post, 16 April 2006).

The scenarios identified several thousand targets inside Iran as part of a “Shock and Awe” Blitzkrieg:

“The analysis, called TIRANNT, for “Theater Iran Near Term,” was coupled with a mock scenario for a Marine Corps invasion and a simulation of the Iranian missile force. U.S. and British planners conducted a Caspian Sea war game around the same time. And Bush directed the U.S. Strategic Command to draw up a global strike war plan for an attack against Iranian weapons of mass destruction. All of this will ultimately feed into a new war plan for “major combat operations” against Iran that military sources confirm now [April 2006] exists in draft form.

… Under TIRANNT, Army and U.S. Central Command planners have been examining both near-term and out-year scenarios for war with Iran, including all aspects of a major combat operation, from mobilization and deployment of forces through postwar stability operations after regime change.” (William Arkin, Washington Post, 16 April 2006)

Different “theater scenarios” for an all out attack on Iran had been contemplated:  “The US army, navy, air force and marines have all prepared battle plans and spent four years building bases and training for “Operation Iranian Freedom”. Admiral Fallon, the new head of US Central Command, has inherited computerized plans under the name TIRANNT (Theatre Iran Near Term).” (New Statesman, February 19, 2007)

In 2004, drawing upon the initial war scenarios under TIRANNT,  Vice President Dick Cheney instructed USSTRATCOM to draw up a “contingency plan” of a large scale military operation directed against Iran “to be employed in response to another 9/11-type terrorist attack on the United States” on the presumption that the government in Tehran would be behind the terrorist plot. The plan included the pre-emptive use of nuclear weapons against a non-nuclear state:

“The plan includes a large-scale air assault on Iran employing both conventional and tactical nuclear weapons. Within Iran there are more than 450 major strategic targets, including numerous suspected nuclear-weapons-program development sites. Many of the targets are hardened or are deep underground and could not be taken out by conventional weapons, hence the nuclear option. As in the case of Iraq, the response is not conditional on Iran actually being involved in the act of terrorism directed against the United States. Several senior Air Force officers involved in the planning are reportedly appalled at the implications of what they are doing—that Iran is being set up for an unprovoked nuclear attack—but no one is prepared to damage his career by posing any objections.” (Philip Giraldi, Deep Background,The American Conservative  August 2005)

The Military Road Map: “First Iraq, then Iran”

The decision to target Iran under TIRANNT was part of the broader process of military planning and sequencing of military operations. Already under the Clinton administration, US Central Command (USCENTCOM) had formulated  “in war theater plans” to invade first Iraq and then Iran. Access to Middle East oil was the stated strategic objective:

“The broad national security interests and objectives expressed in the President’s National Security Strategy (NSS) and the Chairman’s National Military Strategy (NMS) form the foundation of the United States Central Command’s theater strategy. The NSS directs implementation of a strategy of dual containment of the rogue states of Iraq and Iran as long as those states pose a threat to U.S. interests, to other states in the region, and to their own citizens. Dual containment is designed to maintain the balance of power in the region without depending on either Iraq or Iran. USCENTCOM’s theater strategy is interest-based and threat-focused. The purpose of U.S. engagement, as espoused in the NSS, is to protect the United States’ vital interest in the region – uninterrupted, secure U.S./Allied access to Gulf oil.” (USCENTCOM, http://www.milnet.com/milnet/pentagon/centcom/chap1/stratgic.htm#USPolicy, link no longer active, archived at http://tinyurl.com/37gafu9)

The war on Iran was viewed as part of a succession of military operations.  According to (former) NATO Commander General Wesley Clark, the Pentagon’s military road-map consisted of a sequence of countries: “[The] Five-year campaign plan [includes]… a total of seven countries, beginning with Iraq, then Syria, Lebanon, Libya, Iran, Somalia and Sudan.”  In “Winning Modern Wars” (page 130) General Clark states the following:

“As I went back through the Pentagon in November 2001, one of the senior military staff officers had time for a chat. Yes, we were still on track for going against Iraq, he said. But there was more. This was being discussed as part of a five-year campaign plan, he said, and there were a total of seven countries, beginning with Iraq, then Syria, Lebanon, Libya, Iran, Somalia and Sudan. (See Secret 2001 Pentagon Plan to Attack Lebanon, Global Research, July 23, 2006)

The Role of Israel

There has been much debate regarding the role of Israel in initiating an attack against Iran.

Israel is part of a military alliance. Tel Aviv is not a prime mover. It does not have a separate and distinct military agenda.

Israel is integrated into the “war plan for major combat operations” against Iran formulated in 2006 by US Strategic Command (USSTRATCOM). In the context of large scale military operations, an uncoordinated unilateral military action by one coalition partner, namely Israel, is from a military and strategic point almost an impossibility. Israel is a de facto member of NATO. Any action by Israel would require a “green light” from Washington.

An attack by Israel could, however, be used as “the trigger mechanism” which would unleash an all out war against Iran, as well retaliation by Iran directed against Israel.

In this regard, there are indications that Washington might envisage the option of an initial (US backed) attack by Israel  rather than an outright US-led military operation directed against Iran. The Israeli attack –although led in close liaison with the Pentagon and NATO– would be presented to public opinion as a unilateral decision by Tel Aviv. It would then be used by Washington to justify, in the eyes of World opinion, a military intervention of the US and NATO with a view to “defending Israel”, rather than attacking Iran. Under existing military cooperation agreements, both the US and NATO would be “obligated” to “defend Israel” against Iran and Syria.

It is worth noting, in this regard, that at the outset of Bush’s second term, (former) Vice President Dick Cheney hinted, in no uncertain terms, that Iran was “right at the top of the list” of the “rogue enemies” of America, and that Israel would, so to speak, “be doing the bombing for us”, without US military involvement and without us putting pressure on them “to do it” (See Michel Chossudovsky, Planned US-Israeli Attack on Iran, Global Research, May 1, 2005): According to Cheney:

“One of the concerns people have is that Israel might do it without being asked… Given the fact that Iran has a stated policy that their objective is the destruction of Israel, the Israelis might well decide to act first, and let the rest of the world worry about cleaning up the diplomatic mess afterwards,” (Dick Cheney, quoted from an MSNBC Interview, January 2005)

Commenting the Vice President’s assertion, former National Security adviser Zbigniew Brzezinski in an interview on PBS, confirmed with some apprehension, yes: Cheney wants Prime Minister Ariel Sharon to act on America’s behalf and “do it” for us:

“Iran I think is more ambiguous. And there the issue is certainly not tyranny; it’s nuclear weapons. And the vice president today in a kind of a strange parallel statement to this declaration of freedom hinted that the Israelis may do it and in fact used language which sounds like a justification or even an encouragement for the Israelis to do it.”

What we are dealing with is a joint US-NATO-Israel  military operation to bomb Iran, which has been in the active planning stage since 2004. Officials in the Defense Department, under Bush and Obama, have been working assiduously with their Israeli military and intelligence counterparts, carefully identifying targets inside Iran. In practical military terms, any action by Israel would have to be planned and coordinated at the highest levels of the US led coalition.

An attack by Israel would also require coordinated US-NATO logistical support, particularly with regard to Israel’s air defense system, which since January 2009 is fully integrated into that of the US and NATO. (See Michel Chossudovsky,  Unusually Large U.S. Weapons Shipment to Israel: Are the US and Israel Planning a Broader Middle East War?  Global Research, January 11,2009)

Israel’s X band radar system established in early 2009 with US technical support has “integrate[d] Israel’s missile defenses with the U.S. global missile [Space-based] detection network, which includes satellites, Aegis ships on the Mediterranean, Persian Gulf and Red Sea, and land-based Patriot radars and interceptors.” (Defense Talk.com, January 6, 2009,)

What this means is that Washington ultimately calls the shots. The US rather than Israel controls the air defense system: ”’This is and will remain a U.S. radar system,’ Pentagon spokesman Geoff Morrell said. ‘So this is not something we are giving or selling to the Israelis and it is something that will likely require U.S. personnel on-site to operate.’” (Quoted in Israel National News, January 9, 2009).

The US military oversees Israel’s Air Defense system, which is integrated into the Pentagon’s global system. In other words, Israel cannot launch a war against Iran without Washington’s consent. Hence the importance of the so-called “Green Light” legislation in the US Congress sponsored by the Republican party under House Resolution 1553, which explicitly supports an Israeli attakc on Iran:

“The measure, introduced by Texas Republican Louie Gohmert and 46 of his colleagues, endorses Israel’s use of “all means necessary” against Iran “including the use of military force.” … “We’ve got to get this done. We need to show our support for Israel. We need to quit playing games with this critical ally in such a difficult area.”’ (See Webster Tarpley, Fidel Castro Warns of Imminent Nuclear War; Admiral Mullen Threatens Iran; US-Israel Vs. Iran-Hezbollah Confrontation Builds On, Global Research, August 10, 2010)

In practice, the proposed legislation is a “Green Light” to the White House and the Pentagon rather than to Israel. It constitutes a rubber stamp to a US sponsored war on Iran which uses Israel as a convenient military launch pad. It also serves as a justification to wage war with a view to defending Israel.

In this context, Israel could indeed provide the pretext to wage war, in response to alleged Hamas or Hezbollah attacks and/or the triggering of hostilities on the border of Israel with Lebanon. What is crucial to understand is that a minor ”incident” could be used as a pretext to spark off a major military operation against Iran.

Known to US military planners, Israel (rather than the USA) would be the first target of military retaliation by Iran. Broadly speaking, Israelis would be the victims of the machinations of both Washington and their own government. It is, in this regard, absolutely crucial that Israelis forcefully oppose any action by the Netanyahu government to attack Iran.

Global Warfare: The Role of US Strategic Command (USSTRATCOM)

Global military operations are coordinated out of US Strategic Command Headquarters (USSTRATCOM) at the Offutt Air Force base in Nebraska, in liaison with the regional commands of the unified combatant commands (e.g.. US Central Command  in Florida, which is responsible for the Middle East-Central Asian region, See map below)  as well as coalition command units in Israel, Turkey, the Persian Gulf and the Diego Garcia military base in the Indian Ocean.  Military planning and decision making at a country level by individual allies of US-NATO as well as “partner nations” is integrated into a global military design including the weaponization of space.

Under its new mandate, USSTRATCOM has a responsibility for “overseeing a global strike plan” consisting of both conventional and nuclear weapons. In military jargon, it is slated to play the role of “a global integrator charged with the missions of Space Operations; Information Operations; Integrated Missile Defense; Global Command & Control; Intelligence, Surveillance and Reconnaissance; Global Strike; and Strategic Deterrence…. ”

USSTRATCOM’s responsibilities include: “leading, planning, & executing strategic deterrence operations” at a global level, “synchronizing global missile defense plans and operations”, “synchronizing regional combat plans”, etc. USSTRATCOM is the lead agency in the coordination of modern warfare.

In January 2005, at the outset of the military deployment and build-up directed against Iran, USSTRATCOM was identified as “the lead Combatant Command for integration and synchronization of DoD-wide efforts in combating weapons of mass destruction.” (Michel Chossudovsky, Nuclear War against Iran, Global Research, January 3, 2006).

What this means is that the coordination of a large scale attack on Iran, including the various scenarios of escalation in and beyond the broader Middle East Central Asian region would be coordinated by USSTRATCOM.

Map: US Central Command’s Area of Jurisdiction

Tactical Nuclear Weapons directed against Iran

Confirmed by military documents as well as official statements, both the US and Israel contemplate the use of nuclear weapons directed against Iran. In 2006, U.S. Strategic Command (USSTRATCOM) announced it had achieved an operational capability for rapidly striking targets around the globe using nuclear or conventional weapons. This announcement was made after the conduct of military simulations pertaining to a US led nuclear attack against a fictional country. (David Ruppe, Preemptive Nuclear War in a State of Readiness: U.S. Command Declares Global Strike Capability, Global Security Newswire, December 2, 2005)

Continuity in relation to the Bush-Cheney era:  President Obama has largely endorsed the doctrine of pre-emptive use of nuclear weapons formulated by the previous administration. Under the 2010 Nuclear Posture Review, the Obama administration confirmed  “that it is reserving the right to use nuclear weapons against Iran” for its non-compliance with US demands regarding its alleged (nonexistent) nuclear weapons program. (U.S. Nuclear Option on Iran Linked to Israeli Attack Threat – IPS ipsnews.net, April 23, 2010). The Obama administration has also intimated that it would use nukes in the case of an Iranian response to an Israeli attack on Iran. (Ibid). Israel  has also drawn up its own “secret plans” to bomb Iran with tactical nuclear weapons:

“Israeli military commanders believe conventional strikes may no longer be enough to annihilate increasingly well-defended enrichment facilities. Several have been built beneath at least 70ft of concrete and rock. However, the nuclear-tipped bunker-busters would be used only if a conventional attack was ruled out and if the United States declined to intervene, senior sources said.”(Revealed: Israel plans nuclear strike on Iran – Times Online, January 7, 2007)

Obama’s statements on the use of nuclear weapons against Iran and North Korea are consistent with post 9/11 US nuclear weapons doctrine, which allows for the use of tactical nuclear weapons in the conventional war theater.

Through a propaganda campaign which has enlisted the support of “authoritative” nuclear scientists, mini-nukes are upheld as an instrument of peace, namely a means to combating “Islamic terrorism” and instating Western style “democracy” in Iran. The low-yield nukes have been cleared for “battlefield use”. They are slated to be used against Iran and Syria in the next stage of America’s “war on Terrorism” alongside conventional weapons.

“Administration officials argue that low-yield nuclear weapons are needed as a credible deterrent against rogue states. [Iran, Syria, North Korea] Their logic is that existing nuclear weapons are too destructive to be used except in a full-scale nuclear war. Potential enemies realize this, thus they do not consider the threat of nuclear retaliation to be credible. However, low-yield nuclear weapons are less destructive, thus might conceivably be used. That would make them more effective as a deterrent.” (Opponents Surprised By Elimination of Nuke Research Funds Defense News November 29, 2004)

The preferred nuclear weapon to be used against Iran are tactical nuclear weapons (Made in America), namely bunker buster bombs with nuclear warheads (e.g. B61.11), with an explosive capacity between one third to six times a Hiroshima bomb. The B61-11 is the “nuclear version” of the “conventional”  BLU 113. or Guided Bomb Unit GBU-28. It can be delivered in much same way as the conventional bunker buster bomb. (See Michel Chossudovsky, http://www.globalresearch.ca/articles/CHO112C.html, see also http://www.thebulletin.org/article_nn.php?art_ofn=jf03norris) . While the US does not contemplate the use of strategic thermonuclear weapons against Iran, Israel’s nuclear arsenal is largely composed of thermonuclear bombs which are deployed and could be used in a war with Iran. Under Israel’s Jericho‐III missile system with a range between 4,800 km to 6,500 km, all Iran would be within reach.


Conventional bunker buster Guided Bomb Unit GBU-27


B61 bunker buster bomb

Radiactive Fallout

The issue of radioactive fallout and contamination, while casually dismissed  by US-NATO military analysts, would be devastating, potentially affecting a large area of  the broader Middle East (including Israel) and Central Asian region.

In an utterly twisted logic, nuclear weapons are presented as a means to building peace and preventing “collateral damage”.  Iran’s nonexistent nuclear weapons are a threat to global security, whereas those of the US  and Israel are instruments of peace” harmless to the surrounding civilian population“.

“The Mother of All Bombs” (MOAB) Slated to be Used against Iran

Of military significance within the US conventional weapons arsenal is the 21,500-pound “monster weapon” nicknamed the “mother of all bombs” The GBU-43/B or Massive Ordnance Air Blast bomb (MOAB) was categorized “as the most powerful non-nuclear weapon ever designed” with the the largest yield in the US conventional arsenal. The MOAB was tested in early March 2003 before being deployed to the Iraq war theater. According to US military sources, The Joint Chiefs of Staff  had advised the government of  Saddam Hussein prior to launching the 2003 that the “mother of all bombs” was to be used against Iraq. (There were unconfirmed reports that it had been used in Iraq).

The US Department of Defence has confirmed in October 2009 that it intends to use the “Mother of All Bombs” (MOAB) against Iran. The MOAB is said to be  ”ideally suited to hit deeply buried nuclear facilities such as Natanz or Qom in Iran” (Jonathan Karl, Is the U.S. Preparing to Bomb Iran? ABC News, October 9, 2009). The truth of the matter is that the MOAB, given its explosive capacity, would result in extremely large civilian casualties. It is a conventional “killing machine” with a nuclear type mushroom cloud.

The procurement of four MOABs was commissioned in October 2009 at the hefty cost of $58.4 million, ($14.6 million for each bomb). This amount  includes the costs of development and testing as well as integration of the MOAB bombs onto B-2 stealth bombers.(Ibid). This procurement is directly linked to war preparations in relation to Iran. The notification was contained in a 93-page “reprogramming memo” which included the following instructions:

“The Department has an Urgent Operational Need (UON) for the capability to strike hard and deeply buried targets in high threat environments. The MOP [Mother of All Bombs] is the weapon of choice to meet the requirements of the UON [Urgent Operational Need].” It further states that the request is endorsed by Pacific Command (which has responsibility over North Korea) and Central Command (which has responsibility over Iran).” (ABC News,  op cit, emphasis added). To consult the reprogramming request (pdf) click here

The Pentagon is planning on a process of extensive destruction of Iran’s infrastructure and mass civilian casualties through the combined use of tactical nukes and monster conventional mushroom cloud bombs, including the MOAB and the larger GBU-57A/B or Massive Ordnance Penetrator (MOP), which surpasses the MOAB in terms of explosive capacity.

The MOP is described as “a powerful new bomb aimed squarely at the underground nuclear facilities of Iran and North Korea. The gargantuan bomb—longer than 11 persons standing shoulder-to-shoulder [see image below] or more than 20 feet base to nose” (See Edwin Black, “Super Bunker-Buster Bombs Fast-Tracked for Possible Use Against Iran and North Korea Nuclear Programs”, Cutting Edge, September 21 2009)

These are WMDs in the true sense of the word. The not so hidden objective of the MOAB and MOP, including the American nickname used to casually describe the MOAB (“mother of all bombs’), is “mass destruction” and mass civilian casualties with a view to instilling fear and despair.


“Mother of All Bombs” (MOAB)

GBU-57A/B Mass Ordnance Penetrator (MOP)


MOAB: screen shots of test: explosion and mushroom cloud

State of the Art Weaponry: “War Made Possible Through New Technologies”

The process of US military decision making in relation to Iran is supported by Star Wars, the militarization of outer space and the revolution in communications and information systems. Given the advances in military technology and the development of new weapons systems, an attack on Iran could be significantly different in terms of the mix of weapons systems, when compared to the March 2003 Blitzkrieg launched against Iraq. The Iran operation is slated to use the most advanced weapons systems in support of its aerial attacks. In all likelihood, new weapons systems will be tested.

The 2000 Project of the New American Century (PNAC) document entitled Rebuilding American Defenses, outlined the mandate of the US military in terms of large scale theater wars, to be waged simultaneously in different regions of the World:

“Fight and decisively win multiple, simultaneous major theater wars”. 

This formulation is tantamount to a global war of conquest by a single imperial superpower. The PNAC document also called for the transformation of  U.S. forces to exploit the “revolution in military affairs”, namely the implementation of  “war made possible through new technologies”. (See Project for a New American Century, Rebuilding Americas Defenses  Washington DC, September 2000, pdf).  The latter consists in developing and perfecting a state of the art global killing machine based on an arsenal of sophisticated new weaponry, which would eventually replace the existing paradigms.

“Thus, it can be foreseen that the process of transformation will in fact be a two-stage process: first of transition, then of more thoroughgoing transformation. The breakpoint will come when a preponderance of new weapons systems begins to enter service, perhaps when, for example, unmanned aerial vehicles begin to be as numerous as manned aircraft. In this regard, the Pentagon should be very wary of making large investments in new programs – tanks, planes, aircraft carriers, for example – that would commit U.S. forces to current paradigms of warfare for many decades to come. (Ibid, emphasis added)

The war on Iran could indeed mark this crucial breakpoint, with new space-based weapons systems being applied with a view to disabling an enemy which has significant conventional military capabilities including more than half a million ground forces.

Electromagnetic Weapons

Electromagnetic weapons could be used to destabilize Iran’s communications systems, disable electric power generation, undermine and destabilize command and control, government infrastructure, transportation, energy, etc.  Within the same family of weapons, environmental modifications techniques (ENMOD) (weather warfare) developed under the HAARP programme could also be applied. (See Michel Chossudovsky, “Owning the Weather” for Military Use, Global Research, September 27, 2004). These weapons systems are fully operational. In this context, te US Air Force document AF 2025 explicitly acknowledgedthe military applications of weather modification technologies:

“Weather modification will become a part of domestic and international security and could be done unilaterally… It could have offensive and defensive applications and even be used for deterrence purposes. The ability to generate precipitation, fog, and storms on earth or to modify space weather, improve communications through ionospheric modification (the use of ionospheric mirrors), and the production of artificial weather all are a part of an integrated set of technologies which can provide substantial increase in US, or degraded capability in an adversary, to achieve global awareness, reach, and power.” (Air Force 2025 Final Report, See also US Air Force: Weather as a Force Multiplier: Owning the Weather in 2025, AF2025 v3c15-1 | Weather as a Force Multiplier: Owning… | (Ch 1) at www.fas.org).

Electromagnetic radiation enabling “remote health impairment” might also be envisaged in the war theater. (See Mojmir Babacek, Electromagnetic and Informational Weapons:, Global Research, August 6, 2004). In turn, new uses of biological weapons by the US military might also be envisaged as suggested by the PNAC: “[A]dvanced forms of biological warfare that can “target” specific genotypes may transform biological warfare from the realm of terror to a politically useful tool.” (PNAC, op cit., p. 60).

Iran’s Military Capabilities: Medium and Long Range Missiles

Iran has advanced military capabilities, including medium and long range missiles capable of reaching targets in Israel and the Gulf States. Hence the emphasis by the US-NATO Israel alliance on the use of nuclear weapons, which are slated to be used either pr-emptively or in response to an Iranian retaliatory missile attack.


Range of Iran’s Shahab Missiles. Copyright Washington Post

In November 2006, Iran tests of surface missiles 2 were marked by precise planning in a carefully staged operation. According to a senior American missile expert (quoted by Debka),  “the Iranians demonstrated up-to-date missile-launching technology which the West had not known them to possess.” (See Michel Chossudovsky, Iran’s “Power of Deterrence”  Global Research, November 5, 2006) Israel acknowledged that “the Shehab-3, whose 2,000-km range brings Israel, the Middle East and Europe within reach” (Debka, November 5, 2006)

According to Uzi Rubin, former head of Israel’s anti-ballistic missile program, “the intensity of the military exercise was unprecedented… It was meant to make an impression — and it made an impression.” (www.cnsnews.com 3 November 2006)

The 2006 exercises, while  creating a political stir in the US and Israel, did not in any way modify US-NATO-Israeli resolve to wage on Iran.

Tehran has confirmed in several statements that it will respond if it is attacked. Israel would be the immediate object of Iranian missile attacks as confirmed by the Iranian government. The issue of Israel’s air defense system is therefore crucial. US and allied military facilities in the Gulf states, Turkey, Saudi Arabia, Afghanistan and Iraq could also be targeted by Iran.

Iran’s Ground Forces

While Iran is encircled by US and allied military bases, the Islamic Republic has significant military capabilities. (See maps below) What is important to acknowledge is the sheer size of Iranian forces in terms of personnel (army, navy, air force) when compared to US and NATO forces serving in Afghanistan and Iraq.

Confronted with a well organized insurgency, coalition forces are already overstretched in both Afghanistan and Iraq. Would these forces be able to cope if Iranian ground forces were to enter the existing battlefield in Iraq and Afghanistan? The potential of the Resistance movement to US and allied occupation would inevitably be affected.

Iranian ground forces are of the order of 700,000 of which 130,000 are professional soldiers, 220,000 are conscripts and 350,000 are reservists. (See  Islamic Republic of Iran Army – Wikipedia). There are 18,000 personnel in Iran’s Navy and 52,000 in the air force. According to the International Institute for Strategic Studies, “the Revolutionary Guards has an estimated 125,000 personnel in five branches: Its own Navy, Air Force, and Ground Forces; and the Quds Force (Special Forces).” According to the CISS, Iran’s Basij paramilitary volunteer force controlled by the Revolutionary Guards “has an estimated 90,000 active-duty full-time uniformed members, 300,000 reservists, and a total of 11 million men that can be mobilized if need be” (Armed Forces of the Islamic Republic of Iran – Wikipedia), In other words, Iran can mobilize up to half a million regular troops and several million militia. Its Quds special forces are already operating inside Iraq.


US Military and Allied Facilties Surrounding Iran

For several years now Iran has been conducting its own war drills and exercises. While its Air force has weaknesses, its intermediate and long-range missiles are fully operational. Iran’s military is in a state of readiness. Iranian troop concentrations are currently within a few kilometers of the Iraqi and Afghan borders, and within proximity of Kuwait. The Iranian Navy is deployed in the Persian Gulf within proximity of US and allied military facilities in the United Arab Emirates.

It is worth noting that in response to Iran’s military build-up, the US has been transferring large amounts of weapons to its non-NATO allies in the Persian Gulf including Kuwait and Saudi Arabia.

While Iran’s advanced weapons do not measure up to those of the US and NATO, Iranian forces would be in a position to inflict substantial losses to coalition forces in  a conventional war theater, on the ground in Iraq or Afghanistan. Iranian ground troops and tanks in December 2009 crossed the border into Iraq without being confronted or challenged by allied forces and occupied a disputed territory in the East Maysan oil field.

Even in the event of an effective Blitzkrieg, which targets Iran’s military facilities, its communications systems, etc. through massive aerial bombing, using cruise missiles, conventional bunker buster bombs and tactical nuclear weapons, a war with Iran, once initiated, could eventually lead into a ground war. This is something which US military planners have no doubt contemplated in their simulated war scenarios.

An operation of this nature would result in significant military and civilian casualties, particularly if nuclear weapons are used.

The expanded budget for the war in Afghanistan currently debated in the US Congress is also intended to be used in the eventuality of an attack on Iran.

Within a scenario of escalation, Iranian troops could cross the border into Iraq and Afghanistan.

In turn, military escalation using nuclear weapons could lead us into a World War III scenario, extending beyond the Middle East Central Asian region.

In a very real sense, this military project, which has been on the Pentagon’s drawing board for more than five years, threatens the future of humanity.

Our focus in this essay has been on war preparations. The fact that war preparations are in an advanced state of readiness does not imply that these war plans will be carried out.

original

The US-NATO-Israel alliance realizes that the enemy has significant capabilities to respond and retaliate. This factor in itself has been crucial over the last five years in the decision by the US and its allies to postpone an attack on Iran.

Another crucial factor is the structure of military alliances. Whereas NATO has become a formidable force, the Shanghai Cooperation Organization (SCO), which constitutes an alliance between Russia and China and a number of former Soviet republics has been significantly weakened.

The ongoing US military threats directed  against China and Russia are intended to weaken the SCO and discourage any form of military action on the part of Iran’s allies in the case of a US NATO Israeli attack.

What are the countervailing forces which might prevent this war from occurring? There are numerous ongoing forces at work within the US State apparatus, the US Congress, the Pentagon and NATO.

The central force in preventing a war from occurring ultimately comes from the base of society, requiring forceful antiwar action by hundred of millions of people across the land, nationally and internationally.

People must mobilize not only against this diabolical military agenda, the authority of the State and its officials must be also be challenged.

This war can be prevented if people forcefully confront their governments, pressure their elected representatives, organize at the local level in towns, villages and municipalities, spread the word, inform their fellow citizens as to the implications of a nuclear war, initiate debate and discussion within the armed forces. 

The holding of mass demonstrations and antiwar protests is not enough. What is required is the development of a broad and well organized grassroots antiwar network which challenges the structures of power and authority. 

What is required is a mass movement of people which forcefully challenges the legitimacy of war, a global people’s movement which criminalizes war.

Michel Chossudovsky is an award-winning author, Professor of Economics (Emeritus) at the University of Ottawa and Director of the Centre for Research on Globalization (CRG), Montreal. He is the author of The Globalization of Poverty and The New World Order (2003) and America’s “War on Terrorism” (2005). He is also a contributor to the Encyclopaedia Britannica. His writings have been published in more than twenty languages. he can be reached at the globalresearch.ca website


Author’s note:
Dear Global Research Readers, kindly forward this text far and wide to friends and family, on internet forums, within the workplace, in your neighborhood, nationally and internationally, with a view to reversing the tide of war.  Spread the Word!  

To consult Part I of this essay click below

Preparing for World War III, Targeting Iran
Part I: Global Warfare 

- by Michel Chossudovsky – 2010-08-01


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- by Rick Rozoff – 2010-08-07

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- by Muriel Mirak-Weissbach – 2010-07-31


original

Michel Chossudovsky

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Mehdi’s Morning Memo: Not So Fast Dave

The ten things you need to know on Wednesday 30th January 2013...

1) NOT SO FAST DAVE

Hurrah! From the Huffington Post:

"David Cameron’s hopes of limiting the impact of the 2015 TV debates by staging them before the election campaign gets underway appear dead in the water, after the head of Sky News torpedoed the idea.

"... [S]peaking to The Huffington Post UK, John Ryley, the head of Sky News, flatly rejected the idea.

"'Well, we believe the debates need to take place during the election campaign to be relevant to the voters," he said. "It would be bizarre to hold the debates while Parliament is sitting.'

"Ryley reminded Cameron of his threat to 'empty chair' Gordon Brown in 2010 if he refused to take part and said it would 'bad for democracy, bad for politics, and bad form' if Cameron tried to duck the debates."

Bad luck, Dave. Ryley - a former boss of mine - is a tough, no-nonsense character. It looks like those debates are going to happen - with or without the PM...

Meanwhile, if you read the full HuffPost UK feature on the 2015 TV debates - by Ned Simons and me - you'll learn, among other things, that senior Labour sources are suggesting Nick Clegg's time be cut and redistributed to Ed Miliband. Read our full piece here.

2) GAMBLING ON GAY MARRIAGE

From the Times splash:

"David Cameron is under mounting pressure to push through tax breaks for married couples as a way of averting a Tory rupture over gay marriage.

"Ministers are pressing Downing Street to make a Budget announcement in March implementing the party's promise to reward married couples in the tax system. Cabinet sources told The Times that George Osborne should act 'sooner rather than later' and that the Budget would be 'a good time to placate an awful lot of people'.

"MPs plan to use the coming weeks to warn a reluctant Chancellor that he will increase the risk of losing lifelong Tories from the party unless he acts."

It's a bizarre proposal - but Dave is desperate. Next week, MPs vote on the coalition's bill to introduce same-sex marriage and it's expected that almost half of the party's 303 MPs will vote against, on a free vote.

3) NASTY NICK

Was yesterday the day the Tory dream of a 2015 Commons majority finally came to an end? And were 'Nasty Nick' and his rebellious Lib Dems to blame? My colleague Ned Simons reports:

"Nick Clegg took his revenge on David Cameron today by successfully killing Tory hopes of redrawing the electoral map in a way that would aid the prime minister's reelection, prompting a serious rift between the coalition parties.

"Lib Dem and Labour MPs cheered as they narrowly defeated by 334 votes to 292 an attempt by the Conservative Party to change the number and size of constituencies before 2015.

"In an unprecedented move reflecting the split between coalition parties on the issue, Cameron agreed to suspend the requirement for government ministers to exercise collective responsibility for the vote."

Remember ConHome editor Tim Montgomerie's reaction to the boundary review failure last August? He called it the "worst single electoral setback [for the Tories] since Black Wednesday". Indeed it is...

4) DAVE THE WARRIOR

Today, as a story on the front of the Guardian reports, David Cameron will become

"... the first western leader to visit Algeria since the recent terrorist assault on the country's gas installations that left 35 foreign energy workers dead and saw 36 militants killed by Algerian security forces. Cameron's show of solidarity at the meeting in Algiers comes amid Tory fears that the prime minister is being slowly sucked into a long-term military conflict in the region, symbolised by his decision to send 330 British military personnel to the region to train African troops and support the French intervention in Mali."

Meanwhile, the FT reports that Cameron and George Osborne are "under pressure from Tory MPs to shield the armed forces from further defence cuts in this year's spending review, as the military is dispatched to a new war zone in Mali". And the Telegraph splashes on the threat to the SAS from "new defence cuts".

5) 'MALI WAR COULD BE BRITAIN'S VIETNAM'

That's the headline in the Mirror, which reports on Dave's decision to send another 200 British troops to train an African intervention force (taking the total UK deployment to 330) and quotes former cabinet minister Frank Dobson's comments in the Commons yesterday:

"The American catastrophe in Vietnam started with American troops in a training capacity."

Indeed it did - JFK hid behind the phrase 'military advisers'. Dobson's remarks were echoed by, of all people, Sir Mike Jackson, former chief of the armed forces, who supports the Mali deployment but also warns that a highly successful "conventional" conflict could give way to "a protracted guerrilla warfare away from the conurbations".

BECAUSE YOU'VE READ THIS FAR...

Watch this video of a kid who's won over the internet with his dance moves during a break in the recent Houston Rockets vs Indiana Pacers basketball game.

6) TORTURE INC

The Guardian's award-winning Ian Cobain reports:

"Allegations that British troops in Iraq were responsible for the widespread and systemic abuse of detainees through "terrifying acts of brutality, abuse and intimidation" were raised in the high court yesterday as lawyers representing former prisoners demanded a public inquiry.

"More than a thousand former prisoners complain that they were severely mistreated after being detained by the British military during the five-year occupation of the south-east of the country, while others - including women and children - say they were abused when their male relatives were being detained.

"... The hearing is the latest skirmish in a three-year legal battle between lawyers for the former detainees and the Ministry of Defence (MoD)."

On a related note, HuffPost UK will be hosting a public debate on Iraq - 'Was It Worth It? Iraq, Ten Years On' - on 7 February at 7pm at Goldsmiths, University of London. Speakers include former cabinet minister Clare Short, Times columnist David Aaronovitch, the Independent's Owen Jones and yours truly. Get your free tickets here.

7) 'BROTHERLY SHOVE'

This is my favourite headline from the morning papers - from the Sun, which reveals:

"Ed Miliband was talked out of matching the Tories' EU referendum pledge — by his brother David.

"The under-fire Labour leader's refusal to offer a nationwide vote on Britain's membership has infuriated some senior party figures.

"One claimed Ed vetoed the idea after his older sibling sneered it was 'too populist'."

Meanwhile, the BBC reminds us that "MPs will have their first chance later to discuss the UK's future in Europe since David Cameron promised to hold a referendum on UK membership if he wins the next general election... The Commons debate will take place after Prime Minister's Questions."

Perhaps, just perhaps, we'll get some clarity on what Labour's referendum position actually is, and what the Tories will do if the Europeans don't agree to a 'renegotiation'. But I wouldn't hold your breath.

8) BANKERS NOT SO BASHED

More good news from the world of finance. From the Independent:

"Royal Bank of Scotland is facing criminal charges in the US over allegations its traders tried to fix Libor interest rates, it emerged yesterday.

"... It came as Britain's financial watchdog admitted that top bankers had escaped sanction for misdeeds during the financial crisis because it was 'easier to get the little guys' under Britain's regulatory system."

RBS, says the report, is likely to pay around £500m in fines - but still wants to pay out £250m in bonuses to its investment bankers. You could not make this stuff up.

9) PUSHED INTO POVERTY

From the Guardian:

"Thousands of children and their families who have sought refuge in the UK have been pushed into severe poverty by the low levels of asylum support, a parliamentary inquiry has revealed, concluding that the support system for asylum seekers is in urgent need of reform.

"The inquiry found evidence of children being left destitute and homeless, without state support, and forced to rely on food parcels."

The chair of this cross-party inquiry? Er, the former children's minister Sarah Teather MP.

10) STREWTH!

They're going to the polls down under. Well, not quite yet. From the BBC:

"Australian Prime Minister Julia Gillard has called a general election for 14 September... She said the announcement, eight months in advance, was "not to start the nation's longest election campaign" but to give 'shape and order' to the year."

"... Opinion polls suggest that the opposition, led by Liberal Party leader Tony Abbott, would win an election if the polls were held now."

Oh dear. For a laugh, though, (re)watch this classic video of Gillard tearing strips out of the "sexist" Abbott in the Australian House of Representatives.

PUBLIC OPINION WATCH

From today's Sun/YouGov poll:

Labour 42
Conservatives 33
Lib Dems 11
Ukip 8

That would give Labour a majority of 96.

140 CHARACTERS OR LESS

@ShippersUnbound Tory MPs selling shares in Jesse Norman after Lords rebellion sinks boundary changes. One texts to say: 'Jesse Norman: t***.'

@jameschappers What issue will Tory MPs pick for revenge on LibDems for last night's boundaries vote? (Labour are calling it 'Twit for Twat politics')

@heavencrawley "Clear examples from the past show no correlation between levels of support and numbers of asylum seekers in the UK". Finally, some sense.

900 WORDS OR MORE

Guido Westerwelle, Germany's foreign minister, writing in the Times, says: "Berlin shares Mr Cameron’s desire for reform in Brussels but not his vision for Europe."

Simon Jenkins, writing in the Guardian, says: "UK intervention in Mali treads a familiar – and doomed – path."

Mary Riddell, writing in the Telegraph, says: "Britain badly needs an Abraham Lincoln who will think big and act big."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

Child Soldiers, Torture, A Humanitarian Crisis And An ‘Invisible War’

As Britain prepares to send hundreds of troops to West Africa to support French forces fighting Islamists in Mali, charities and human rights groups have warned of serious atrocities being committed on both sides of the conflict.

Reports from workers on the ground suggest child soldiers are being drafted into a war that is split down ethnic and geographical lines, and one that is threatening to turn into a major humanitarian crisis.

More than 2,000 French soldiers are currently supporting the army in Mali after Islamist fighters seized hold of several regions in the North more than nine months ago.

mali

Malian soldiers boarding a French Transall military plane in Bamako, Mali

“We are winning in Mali," French President Francois Hollande told a news conference on Monday, after armed forces secured the key city of Timbuktu.

While news footage showed local Malians celebrating the departure of the Islamists and cheering the French, the situation is far more complicated than some bulletins suggest.

Phillipe Bolopion, the UN Director of Human Rights Watch, told the Huffington Post UK the organisation was documenting "serious evidence of multiple killings by the Malian army", recounting how bodies are dumped and wilfully ignored by the local police.

mali

Malian soldiers walking through the rubble of a former army base leveled during fighting with Islamist rebels in Konna

Bolopion, speaking from Sévaré, a town in the Mopti Region of Mali, said a number of people from different ethnic groups were rounded up from around town and bus stations a few weeks ago and then slaughtered.

"The bodies were dumped in a well close to the Gendarmerie station and they are still there. No one is interested in investigating," he said.

Islamist groups have been driven from the area, yet Bolopion painted a stark picture of the scene that will greet British troops, adding: “If Sevare is the test case of things to come in other liberated areas it is very worrying."

“We are trying to piece it all together but the army are intimidating people and telling them not to talk. We told the Gendarmerie; ‘the bodies are still there, you can see them, but they say ‘why dont you ask my boss? or 'it's the fire service’s fault.’ And what this shows is there is no interest in investigation from local authorities.’

malian soldiers

Malian soldiers outside Gao airport

His disturbing account follows a report by The International Federation for Human Rights (FIDH) alleging that the Malian army is responsible for at least 33 killings since Jan 10, particularly in the towns of Sévaré, Nioro, and Mopti.

Refugees have told of horrific atrocities committed by the Islamists too, with public whippings, children being recruited to fight and rebels chopping off people’s hands.

As displaced families struggle with the emotional and physical toll of what they have witnessed, both Save The Children and UNHCR have reported on how members of different ethnic communities blame each other for supporting the separatist rebellion which led to the present conflict.

Many of these people have already survived the worst food crisis in living memory and there are fears that the situation could develop into a major humanitarian crisis.

burnt out car in konna

A burnt-out car in Konna after the fighting

Sévaré is not the only town that has seen conflict. Konna, in the centre of Mali, witnessed fierce fighting less than a week ago. Many of the town’s main buildings were razed to the ground after clashes between Malian army and rebel groups and then the French forces moved their troops in.

Bolopion claims they have collected evidence of civilian casulties after a French airstrike in Konna and said there had also been reports of people being taken away from the Malian army and turning up either dead or missing.

french soldiers mali

A crowd cheers the arrival of French soldiers in Timbuktu, in northern Mali

He said they had documented four civilians who were killed in the airstrike so far, with one woman, and three children, aged six, ten and 11.

He added: "Reports suggested there may be more but we did not have enough time to check as the Malian army did not allow it."

There has been widespread frustration at the lack of access to the places where fighting has taken place, either to journalists or to people providing humanitarian aid. Al Jazeera's Yasmine Ryan, who is in Mali, described the conflict as an 'invisible war' with no official death tolls for civilians or soldiers.

french soldier timbuktu

A French soldier guards the Timbuktu airport in Mali

Despite these accounts of violence, Tom McCormack of Save the Children said most people seem happy that the West has intervened.

Speaking from the capital Boloko, McCormack told the Huffington Post UK: "It seems most Malians accept that forceful intervention was needed and most people feel relieved that armed groups (Islamists) are gone."

The brutal violence of these groups was documented in a January 2013 report by Amnesty, which told how Tuareg and Islamist armed opposition groups engaged in widespread rape and torture and killed of captured Malian soldier and recruited child soldiers.

"We dont have first hand reports but we are hearing stories of child soldiers being involved in the fighting, being lured into training camps with a little bit of money and being used in the conflict in various ways."

McCormack said he thought the recent flurry of violence was now settling down into a "long simmering conflict" which came with its own set of challenges.

mali islamists

Angry crowds shout at suspected Islamist extremists in the back of an army truck in Gao

Thousands of people have been displaced by the fighting, with very few refugee camps and instead refugees staying with host families or extended relatives.

According to UNCHR some 380,000 people have fled northern Mali since the start of the conflict a year ago. This includes 230,000 who fled South, and more than 150,000 who are living as refugees in Mauritania, Niger, Burkina Faso and Algeria (despite the border being closed)

McCormack said this displacement threatens to push communities to breaking point. "These are some of the poorest people in the world and it wont take very much for people to be pushed over the edge," he added.

"People have always been able to accept the many different ethnic groups in Malian society and prided themselves on getting along but these Islamist groups have proved really divisive.

"There’s an added factor of social strain now. A lot of people resent this, and blame the Touregs for this tension and some Northern Malians living down south fear they could be stigmatised and blamed for the crisis. People are pitted against people and there have been isolated cases where northern malians have been targeted.

"I fear there will be some social damage with reprisals as those in the south see it a chance to punish people in the north for the unrest."

mali looting

Hundreds of Malians looted stores in Timbuktu, saying the shops belonged to 'Arabs' and 'terrorists' linked to the radical Islamists who occupied the desert town for 10 months

This is supported by a report by the UNHCR which talks of "tension between ethnic communities" and appeals to community leaders and to the Malian authorities "to give urgent priority to initiatives to promote peace and reconciliation between various ethnic groups."

Additionally both the Red Cross and Crescent and Plan International have raised concern over the developing humanitarian situation in the region. ICRCC have been involved in large scale food distribution in the north, amid shortages of fuel needed to power water pumps and lack of chemicals to treat the water.

Dr Krishnan of Plan International told the Huffington Post UK: "We, the global humanitarian community, have been struggling to raise money to help almost 400,000 people displaced by the fighting. We are asking for just one-third of the military budget – US$370 million. But as of this morning only 1% has been committed.”

Lindsay German of Stop the War Coalition told the Huffington Post UK that intervention in these kinds of situations never worked "because it doesnt address the problems and grievances people are facing on the ground."

"Every time the government does a knee jerk reaction like this you know its not addressing the real problems.

"They need to address the inequality of people living there. Islamists do well in part in these regions because the state is not functioning for the people and they provide some sort of alternative for people who are very very poor."

If You Don’t Want The U.S. to Be Greece, Forget Austerity

I hate the analogy that Lindsey Graham and his deficit-scold buddies use -- that America is moments away from becoming Greece if we don’t Fix The Debt © now. It’s good for fear mongering to destroy our social safety nets, but not much else. But after seeing the Internation Monetary Fund implore Great Britain to ease off its austerity program so their economy could heal, I had a little change of heart.

See, one of the only reasons why many countries in Europe have suffered so much after the financial collapse has been because, instead of turning towards Keynesian policies that Paul Krugman has begged for, they’ve embraced the Conservative principles that the UK’s Cameron touted. And that decision ushered in very painful austerity measures upon the people of their nations. The effects of those decisions has been a non-existent financial recovery to their economy and an accompanying nightmare to their population.

“The IMF has never been wildly enthusiastic about Osborne's tough austerity plan for the British economy and has been saying for at least a year that the Treasury should ease off if recovery falters. But up until now it has tended to avoid telling Osborne that his policy is failing.

No longer, it appears. "We said that if things look bad at the beginning of 2013 – which they do – then there should be a reassessment of fiscal policy", Blanchard said.

Fiscal policy involves changes to tax and public spending, and Blanchard noted that the chancellor has the perfect opportunity "to take stock and make adjustments" in the March budget, due in less than two months.”

So in a way, Graham is right -- only his formula is wrong. If we don’t want to become Greece (which can't happen, anyway), we should never, ever consider austerity measures or conservative principles. How quickly the world forgets that it was under a conservative George Bush presidency that the global economy collapsed. Why should we ever turn to his acolytes' beliefs to fix the problem now?

Mehdi’s Morning Memo: Did He Really Say That?

The ten things you need to know on Tuesday 29 January 2013...

1) DID HE REALLY SAY THAT?

Uh-oh. Yesterday, a Tory MP made a link between women wearing short skirts and then getting raped. Today, the papers go after a Tory cabinet minister for allegedly comparing gay marriage to incest - from the Guardian:

"Philip Hammond, the defence secretary, became embroiled in a row over equal marriage yesterday amid claims that he likened it to incest. The minister, who opposes David Cameron's plans to grant gay couples the right to marry, denied equating equal marriage with incest after Pink News reported that he had linked the two issues.

"Hammond released a statement after Pink News said he had made the comments to two students at Royal Holloway, University of London, on Friday. The website reported that Hammond 'told students in Surrey that allowing gay couples to marry would be like sanctioning "incest" ... when the students asked why the MP [opposed] same-sex marriages he responded by likening the current ban on equal marriage to 'incest', where it is illegal for two siblings to enter into wedlock.'

"A spokesman for the defence secretary said: 'It's untrue. He didn't equate equal marriage to incest.'"

2) BOUNDARY WARS

Today the Lib Dems will vote against the Tories in the Commons for the first time since the coalition was formed. My colleague Ned Simons reports:

"Furious Tory MPs will attempt use a Commons vote on Tuesday to overturn a Lib-Lab alliance that could cost David Cameron the next election.

"Earlier this month Lib Dem peers sided against their coalition colleagues and joined with Labour in order to delay a planned redrawing of the electoral map until after 2015.

"... Nick Clegg initially supported the plan. But after Tory MPs killed off proposals to reform the House of Lords he instructed his MPs and ministers to vote against it.

Cameron needs SNP and DUP votes in order to overturn a Lib-Lab alliance on this - but some of his own MPs may vote against him. There's a hilarious quote from Philip Davies in the piece:

"Shipley MP Philip Davies has confirmed he plans to vote with Labour and the Lib Dems in the interests of self-preservation.

"Davies, who is no fan of the coalition, told HuffPost UK that while Clegg’s decision to oppose the changes helped him personally, he was less than impressed.

"'How he has behaved is abysmal, It’s like a primary school child. It suits me on this issue but I don’t endorse his tactics,' he said."

Ahh....

3) HEY BMES, WE LOVE YOU

The Tories seem to have finally woken up to the fact that they probably need a few more BME voters on side if they're going to win a majority at the next general election - from the Times splash:

"Big companies would be urged to publish the ethnic breakdown of their workforce under Conservative plans to help to repair the party’s image with Black and Asian voters.

"David Cameron has told the Cabinet to come up with policies to appeal to ethnic communities amid fears that without them the party will struggle to win an outright majority. One idea would encourage Stock Exchange-listed companies to state how many ethnic minority employees they have and how many they have recruited over the past year."

Er, call me cynical, but I suspect BME communities will want a bit more than that, in order to wipe out the Tories' dodgy legacy on race issues - from Enoch Powell to the primary purpose rule.

4) CHILD MINDER? IT'S HARDER TO BE AN ANIMAL MINDER

It's long been claimed that the political party which can come up with a method for cutting soaring childcare costs will be able to vacuum up votes from 'hard-working families' in the 'squeezed middle' - from the Independent:

"Nursery staff and childminders will be better paid, require more qualifications and look after more children under a government drive to improve a childcare system lagging well behind its European counterparts.

"... After criticism that students need more qualifications to look after animals than children in England, childcare professionals will be required to have a GCSE grade C or above in English and Maths... Staff to child ratios will be relaxed to bring England more into line with the continent, but only when nurseries hire qualified people. Nursery staff will be able to look after four babies up to a year old instead of three as at present..."

Labour, and some childcare experts, say the plans could jeopardise child safety and won't cut costs in the long-run. According to the Indy, the opposition also "released figures showing that more than 400 Sure Start children's centres closed during the Coalition's first two years after £430m earmarked for them was cut from council budgets, with more than half of those that are still open no longer providing any onsite childcare".

5) MISSION TO MALI

Ever heard of the phrase 'mission creep', Dave? On Mali, our prime minister is getting more and more stuck in.

From the Guardian's splash:

"Britain is prepared to take the risk of sending a 'sizeable amount' of troops, to Mali and neighbouring West African countries as David Cameron offers strong support to France in its operation to drive Islamist militants from its former colony.

"As news emerged that insurgents retreating from Timbuktu had set fire to a library containing thousands of priceless historic manuscripts, Downing Street said the prime minister told François Hollande on Sunday night Britain was 'keen' to provide further military assistance to France.

"... Downing Street is adamant that British troops will play no part in combat."

Hmm. Let's see how long that line holds...

BECAUSE YOU'VE READ THIS FAR...

Watch this weird video of 'classic movies' from the perspective of Google Street View.

6) 'NOT GUILTY'

We have a date. From the Sun:

"Former Cabinet Minister Chris Huhne will stand trial next Monday over claims he got his ex-wife to take a threepoint drive fine for him. The Lib Dem MP, 58, denied perverting the course of justice in court yesterday. He spoke only to confirm his name and enter a 'not guilty' plea."

7) MY FRIEND RUPERT

Who says King Rupert's power has waned since Leveson? Top Tories who have their eye on their party's leadership still seem keen to get the media mogul's backing - despite everything.

From the Guardian:

"George Osborne has become the latest person revealed to have attended a private dinner last week with Rupert Murdoch at the media mogul's apartment in Mayfair.

"... Murdoch regularly assembles some of London's elite for dinners, and last Tuesday's event was no different. Described by insiders at News International as a collection of 'very interesting people', the dinner was also attended by Boris Johnson and several NI executives and editors and given a sprinkling of Hollywood stardust with the attendance of the London mayor's fellow Old Etonian, Damian Lewis, star of Homeland - a Fox21 production."

8) LUCKY GEORGE

Perhaps Osborne, in between dining out with foreign billionaires, should keep on eye on his own backyard. From the Mail:

"Chancellor George Osborne is facing a personal backlash over the HS2 route, which carves through the countryside in his Cheshire constituency of Tatton.

"Tory councillors questioned the value of the project, with one calling it an 'enormous waste of money'.

"Mr Osborne insisted it was essential for the economy, describing it as an 'engine for growth'."

My favourite bit of the piece:

"Mr Osborne will not be financially affected by the new line as he sold his £900,000 constituency home in January last year. Documents released yesterday revealed that officials at one point considered a route for the line that would have gone much closer to his old house than the final route."

Meanwhile, the Telegraph adds:

"The Government faced claims of hypocrisy after it emerged that the northern section of the HS2 network, the route of which was unveiled yesterday, would include a £600million 'detour' around parts of the Chancellor's seat of Tatton in Cheshire.

"... A spokesman for Mr Osborne insisted that he played no part in choosing the route. A Department for Transport spokesman said Mr Osborne's constituents had not been given special treatment."

Hmm...

9) 'TOTALLY BANKRUPT'

Meet the French Liam Byrne (via the Daily Mail):

"Socialist France is 'totally bankrupt', a senior government minister admitted yesterday. Michel Sapin, President Francois Hollande's jobs minister, appeared to be saying that his government's tax-and-spend policies were not working.

Mr Sapin said: 'There is a state but it is a totally bankrupt state. That is why we had to put a deficit reduction plan in place, and nothing should make us turn away from that objective.'

"... Pierre Moscovici, the finance minister, insisted: 'France is a really solvent country. France is starting to recover.'"

Poor Pierre. Silly Sapin.

10) QUEEN GIVES UP HER THRONE TO SON

"Easy, Charles," the Mirror explains, "it's Queen Beatrix of Netherlands."

Oh.

The paper adds:

"Her decision will undoubtedly open up the debate about Britain's ageing monarchy as the Queen, 86, and Prince Philip, 91, prepare for another busy year of royal engagements.

"But while it is common in the Netherlands for monarchs to "retire" - Beatrix's mother and grandmother both abdicated - Britain's Queen has made it clear she sees her role as a "job for life".

"So as Willem-Alexander becomes the first Dutch king since 1890 on April 30, at the age of 46, Britain's Prince Charles, 65 this November, remains no closer to taking over as monarch."

Poor ol' Charles.

PUBLIC OPINION WATCH

From today's Sun/YouGov poll:

Labour 41
Conservatives 35
Lib Dems 10
Ukip 9

That would give Labour a majority of 78.

140 CHARACTERS OR LESS

@Mike_Fabricant Irony: Labour has now adopted Conservatives' pre 2010 route for HS2, while the Conservatives have accepted Labour's route (Birm to London).

@TomHarrisMP Why oh why can't we have more televised debates about "independence"? It's like the Scottish media are just trying to avoid the subject...

@Queen_UK Don't get any ideas, Charles. A party hat is the closest you'll be getting to a crown any time soon. #abdication #beatrix

900 WORDS OR MORE

David Owen, writing in the Guardian, says: "My plan to save the NHS - in the nick of time."

Rachel Sylvester, writing in the Times, says: "Why the 'ethnicity effect' terrifies Tories."

Benedict Brogan, writing in the Daily Telegraph, says: "A big play from Osborne could stop Labour hijacking his legacy."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

Counting Down to 2014 in Afghanistan: Three Lousy Options, Pick One

Don’t let the forces of regression dominate the media in 2013 - click here to support brave, independent reporting today by making a contribution to Truthout.

Compromise, conflict, or collapse: ask an Afghan what to expect in 2014 and you’re likely to get a scenario that falls under one of those three headings. 2014, of course, is the year of the double whammy in Afghanistan: the next presidential election coupled with the departure of most American and other foreign forces. Many Afghans fear a turn for the worse, while others are no less afraid that everything will stay the same.  Some even think things will get better when the occupying forces leave.  Most predict a more conservative climate, but everyone is quick to say that it’s anybody’s guess.

Only one thing is certain in 2014: it will be a year of American military defeat.  For more than a decade, U.S. forces have fought many types of wars in Afghanistan, from a low-footprint invasion, to multiple surges, to a flirtation with Vietnam-style counterinsurgency, to a ramped-up, gloves-off air war.  And yet, despite all the experiments in styles of war-making, the American military and its coalition partners have ended up in the same place: stalemate, which in a battle with guerrillas means defeat.  For years, a modest-sized, generally unpopular, ragtag set of insurgents has fought the planet’s most heavily armed, technologically advanced military to a standstill, leaving the country shaken and its citizens anxiously imagining the outcome of unpalatable scenarios.

The first, compromise, suggests the possibility of reaching some sort of almost inconceivable power-sharing agreement with multiple insurgent militias.  While Washington presses for negotiations with its designated enemy, “the Taliban,” representatives of President Hamid Karzai’s High Peace Council, which includes12 members of the former Taliban government and many sympathizers, are making the rounds to talk disarmament and reconciliation with all the armed insurgent groups that the Afghan intelligence service has identified across the country. There are 1,500 of them.

One member of the Council told me, “It will take a long time before we get to Mullah Omar [the Taliban’s titular leader].  Some of these militias can’t even remember what they’ve been fighting about.”

The second scenario, open conflict, would mean another dreaded round of civil war like the one in the 1990s, after the Soviet Union withdrew in defeat -- the one that destroyed the Afghan capital, Kabul, devastated parts of the country, and gave rise to the Taliban.

The third scenario, collapse, sounds so apocalyptic that it’s seldom brought up by Afghans, but it’s implied in the exodus already underway of those citizens who can afford to leave the country.  The departures aren’t dramatic.  There are no helicopters lifting off the roof of the U.S. Embassy with desperate Afghans clamoring to get on board; just a record number of asylum applications in 2011, a year in which, according to official figures, almost 36,000 Afghans were openly looking for a safe place to land, preferably in Europe.  That figure is likely to be at least matched, if not exceeded, when the U.N. releases the complete data for 2012.

In January, I went to Kabul to learn what old friends and current officials are thinking about the critical months ahead.  At the same time, Afghan President Karzai flew to Washington to confer with President Obama.  Their talks seem to have differed radically from the conversations I had with ordinary Afghans. In Kabul, where strange rumors fly, an official reassured me that the future looked bright for the country because Karzai was expected to return from Washington with the promise of American radar systems, presumably for the Afghan Air Force, which is not yet “operational.” (He actually returned with the promise of helicopters, cargo planes, fighter jets, and drones.) Who knew that the fate of the nation and its suffering citizens hinged on that?  In my conversations with ordinary Afghans, one thing that never came up was radar.

Another term that never seems to enter ordinary Afghan conversation, much as it obsesses Americans, is “al-Qaeda.” President Obama, for instance, announced at a joint press conference with President Karzai: “Our core objective -- the reason we went to war in the first place -- is now within reach: ensuring that al-Qaeda can never again use Afghanistan to launch attacks against America.”  An Afghan journalist asked me, “Why does he worry so much about al-Qaeda in Afghanistan? Doesn’t he know they are everywhere else?”

At the same Washington press conference, Obama said, “The nation we need to rebuild is our own.” Afghans long ago gave up waiting for the U.S. to make good on its promises to rebuild theirs. What’s now striking, however, is the vast gulf between the pronouncements of American officialdom and the hopes of ordinary Afghans.  It’s a gap so wide you would hardly think -- as Afghans once did -- that we are fighting for them.

To take just one example: the official American view of events in Afghanistan is wonderfully black and white.  The president, for instance, speaks of the way U.S. forces heroically “pushed the Taliban out of their strongholds.” Like other top U.S. officials over the years, he forgets whom we pushed into the Afghan government, our “stronghold” in the years after the 2001 invasion: ex-Taliban and Taliban-like fundamentalists, the most brutal civil warriors, and serial human rights violators.

Afghans, however, haven’t forgotten just whom the U.S. put in place to govern them -- exactly the men they feared and hated most in exactly the place where few Afghans wanted them to be.  Early on, between 2002 and 2004, 90% of Afghans surveyed nationwide told the Afghan Independent Human Rights Commission that such men should not be allowed to hold public office; 76% wanted them tried as war criminals.


In my recent conversations, many Afghans still cited the first loya jirga, an assembly convened in 2003 to ratify the newly drafted constitution, or the first presidential election in 2004, or the parliamentary election of 2005, all held under international auspices, as the moments when the aspirations of Afghans and the “international community” parted company. In that first parliament, as in the earlier gatherings, most of the men were affiliated with armed militias; every other member was a formerjihadi, and nearly half were affiliated with fundamentalist Islamist parties, including the Taliban.

In this way, Afghans were consigned to live under a government of bloodstained warlords and fundamentalists, who turned out to be Washington’s guys.  Many had once battled the Soviets using American money and weapons, and quite a few, like the former warlord, druglord, minister of defense, and current vice-president Muhammad Qasim Fahim, had been very chummy with the CIA.

In the U.S., such details of our Afghan War, now in its 12th year, are long forgotten, but to Afghans who live under the rule of the same old suspects, the memory remains painfully raw.  Worse, Afghans know that it is these very men, rearmed and ready, who will once again compete for power in 2014.

How to Vote Early in Afghanistan

President Karzai is barred by term limits from standing for reelection in 2014, but many Kabulis believe he reached a private agreement with the usual suspects at a meeting late last year. In early January, he seemed to seal the deal by announcing that, for the sake of frugality, the voter cards issued for past elections will be reusedin 2014.  Far too many of those cards were issued for the 2004 election, suspiciously more than the number of eligible voters.  During the 2009 campaign, anyone could buy fistfuls of them at bargain basement prices.  So this decision seemed to kill off the last faint hope of an election in which Afghans might actually have a say about the leadership of the country.

Fewer than 35% of voters cast ballots in the last presidential contest, when Karzai’s men were caught on video stuffing ballot boxes.  (Afterward, President Obama phoned to congratulate Karzai on his “victory.”) Only dedicated or paid henchmen are likely to show up for the next “good enough for Afghans” exercise in democracy. Once again, an “election” may be just the elaborate stage set for announcing to a disillusioned public the names of those who will run the show in Kabul for the next few years.

Kabulis might live with that, as they’ve lived with Karzai all these years, but they fear power-hungry Afghan politicians could “compromise” as well with insurgent leaders like that old American favorite from the war against the Soviets, Gulbuddin Hekmatyar, who recently told a TV audience that he intends to claim his rightful place in government. Such compromises could stick the Afghan people with a shaky power-sharing deal among the most ultra-conservative, self-interested, sociopathic, and corrupt men in the country.  If that deal, in turn, were to fall apart, as most power-sharing agreements worldwide do within a year or two, the big men might well plunge the country back into a 1990s-style civil war, with no regard for the civilians caught in their path.

These worst-case scenarios are everyday Kabuli nightmares.  After all, during decades of war, the savvy citizens of the capital have learned to expect the worst from the men currently characterized in a popular local graffiti this way: “Mujahideen=Criminals. Taliban=Dumbheads.”

Ordinary Kabulis express reasonable fears for the future of the country, but impatient free-marketeering businessmen are voting with their feet right now, or laying plans to leave soon. They’ve made Kabul hum (often with foreign aid funds, which are equivalent to about 90% of the country’s economic activity), but they aren’t about to wait around for the results of election 2014.  Carpe diem has become their version of financial advice.  As a result, they are snatching what they can and packing their bags.

Millions of dollars reportedly take flight from Kabul International Airport every day: officially about $4.6 billion in 2011, or just about the size of Afghanistan’s annual budget. Hordes of businessmen and bankers (like those who, in 2004, set up the Ponzi scheme called the Kabul Bank, from which about a billion dollars went missing) are heading for cushy spots like Dubai, where they have already established residence on prime real estate.

As they take their investments elsewhere and the American effort winds down, the Afghan economy contracts ever more grimly, opportunities dwindle, and jobs disappear.  Housing prices in Kabul are falling for the first time since the start of the occupation as rich Afghans and profiteering private American contractors, who guzzled the money that Washington and the “international community” poured into the country, move on.

At the same time, a money-laundering building boom in Kabul appears to have stalled, leaving tall, half-built office blocks like so many skeletons amid the scalloped Pakistani palaces, vertical malls, and grand madrassas erected in the past four or five years by political and business insiders and well-connected conservative clerics.

Most of the Afghan tycoons seeking asylum elsewhere don’t fear for their lives, just their pocketbooks: they’re not political refugees, but free-market rats abandoning the sinking ship of state.  Joining in the exodus (but not included in the statistics) are countless illegal émigrés seeking jobs or fleeing for their lives, paying human smugglers money they can’t afford as they head for Europe by circuitous and dangerous routes.

Threatened Afghans have fled from every abrupt change of government in the last century, making them the largest population of refugees from a single country on the planet.  Once again, those who can are voting with their feet (or their pocketbooks) -- and voting early.

Afghanistan’s historic tragedy is that its violent political shifts -- from king to communists to warlords to religious fundamentalists to the Americans -- have meant the flight of the very people most capable of rebuilding the country along peaceful and prosperous lines.  And their departure only contributes to the economic and political collapse they themselves seek to avoid.  Left behind are ordinary Afghans -- the illiterate and unskilled, but also a tough core of educated, ambitious citizens, including women’s rights activists, unwilling to surrender their dream of living once again in a free and peaceful Afghanistan.

The Military Monster

These days Kabul resounds with the blasts of suicide bombers, IEDs, and sporadic gunfire.  Armed men are everywhere in anonymous uniforms that defy identification.  Any man with money can buy a squad of bodyguards, clad in classy camouflage and wraparound shades, and armed with assault weapons.  Yet Kabulis, trying to carry on normal lives in the relative safety of the capital, seem to maintain a distance from the war going on in the provinces.

Asked that crucial question -- do you think American forces should stay or go? -- the Kabulis I talked with tended to answer in a theoretical way, very unlike the visceral response one gets in the countryside, where villages are bombed andcivilians killed, or in the makeshift camps for internally displaced people that now crowd the outer fringes of Kabul. (By the time U.S. Marines surged into Taliban-controlled Helmand Province in the south in 2010 to bring counterinsurgency-style protection to the residents there, tens of thousands of them had already moved to those camps in Kabul.)  Afghans in the countryside want to be rid of armed men.  All of them.  Kabulis just want to be secure, and if that means keeping some U.S. troops at Bagram Air Base near the capital, as Afghan and American officials are currently discussing, well, it’s nothing to them.

In fact, most Kabulis I spoke to think that’s what’s going to happen.  After all, American officials have been talking for years about keeping permanent bases in Afghanistan (though they avoid the term “permanent” when speaking to the American press), and American military officers now regularly appear on Afghan TV to say, “The United States will never abandon Afghanistan.”  Afghans reason: Americans would not have spent nearly 12 years fighting in this country if it were not the most strategic place on the planet and absolutely essential to their plans to “push on” Iran and China next.  Everybody knows that pushing on other countries is an American specialty.

Besides, Afghans can see with their own eyes that U.S. command centers, including multiple bases in Kabul, and Bagram Air Base, only 30 miles away, are still being expanded and upgraded.  Beyond the high walls of the American Embassy compound, they can also see the tall new apartment blocks going up for an expanding staff, even if Washington now claims that staff will be reduced in the years to come.

Why, then, would President Obama announce the drawdown of U.S. troops to perhaps a few thousand special operations forces and advisors, if Washington didn’t mean to leave?  Afghans have a theory about that, too.  It’s a ruse, many claim, to encourage all other foreign forces to depart so that the Americans can have everything to themselves.  Afghanistan, as they imagine it, is so important that the U.S., which has fought the longest war in its history there, will be satisfied with nothing less.

I was there to listen, but at times I did mention to Afghans that America’s post-9/11 wars and occupations were threatening to break the country.  “We just can’t afford this war anymore,” I said.

Afghans only laugh at that.  They’ve seen the way Americans throw money around.  They’ve seen the way American money corrupted the Afghan government, and many reminded me that American politicians like Afghan ones are bought and sold, and its elections won by money. Americans, they know, are as rich as Croesus and very friendly, though on the whole not very well mannered or honest or smart.

Operation Enduring Presence      

More than 11 years later, the tragedy of the American war in Afghanistan is simple enough: it has proven remarkably irrelevant to the lives of the Afghan people -- and to American troops as well.  Washington has long appeared to be fighting its own war in defense of a form of government and a set of long-discredited government officials that ordinary Afghans would never have chosen for themselves and have no power to replace.

In the early years of the war (2001-2005), George W. Bush’s administration was far too distracted planning and launching another war in Iraq to maintain anything but a minimal military presence in Afghanistan -- and that mainly outside the capital.  Many journalists (including me) criticized Bush for not finishing the war he started there when he had the chance, but today Kabulis look back on that soldierless period of peace and hope with a certain nostalgia.  In some quarters, the Bush years have even acquired something like the sheen of a lost Golden Age -- compared, that is, to the thoroughgoing militarization of American policy that followed.

So commanding did the U.S. military become in Kabul and Washington that, over the years, it ate the State Department, gobbled up the incompetent bureaucracy of the U.S. Agency for International Development, and established Provincial Reconstruction Teams (PRTs) in the countryside to carry out maniacal “development” projects and throw bales of cash at all the wrong “leaders.”

Of course, the military also killed a great many people, both “enemies” and civilians.  As in Vietnam, it won the battles, but lost the war.  When I asked Afghans from Mazar-e-Sharif in the north how they accounted for the relative peacefulness and stability of their area, the answer seemed self-evident: “Americans didn’t come here.”

Other consequences, all deleterious, flowed from the militarization of foreign policy.  In Afghanistan and the United States, so intimately ensnarled over all these years, the income gap between the rich and everyone else has grown exponentially, in large part because in both countries the rich have made money off war-making, while ordinary citizens have slipped into poverty for lack of jobs and basic services.

Relying on the military, the U.S. neglected the crucial elements of civil life in Afghanistan that make things bearable -- like education and health care.  Yes, I’ve heard the repeated claims that, thanks to us, millions of children are now attending school.  But for how long?   According to UNICEF, in the years 2005-2010, in the whole of Afghanistan only 18% of boys attended high school, and 6% of girls.  What kind of report card is that?  After 11 years of underfunded work on health care in a country the size of Texas, infant mortality still remains the highest in the world.

By 2014, the defense of Afghanistan will have been handed over to the woefulAfghan National Security Force, also known in military-speak as the “Enduring Presence Force.”  In that year, for Washington, the American war will be officially over, whether it’s actually at an end or not, and it will be up to Afghans to do the enduring.

Here’s where that final scenario -- collapse -- haunts the Kabuli imagination.  Economic collapse means joblessness, poverty, hunger, and a great swelling of the ranks of children cadging a living in the streets.  Already street children are said to number a million strong in Kabul, and 4 million across the country.  Only blocks from the Presidential Palace, they are there in startling numbers selling newspapers, phone cards, toilet paper, or simply begging for small change. Are they the county’s future?

And if the state collapses, too?  Afghans of a certain age remember well the last time the country was left on its own, after the Soviets departed in 1989, and the U.S. also terminated its covert aid.  The mujahideen parties -- Islamists all -- agreed to take turns ruling the country, but things soon fell apart and they took turns instead lobbing rockets into Kabul, killing tens of thousands of civilians, reducing entire districts to rubble, raiding and raping -- until the Taliban came up from the south and put a stop to everything.

Afghan civilians who remember that era hope that this time Karzai will step down as he promises, and that the usual suspects will find ways to maintain traditional power balances, however undemocratic, in something that passes for peace.  Afghan civilians are, however, betting that if a collision comes, one-third of those Afghan Security Forces trained at fabulous expense to protect them will fight for the government (whoever that may be), one-third will fight for the opposition, and one-third will simply desert and go home.  That sounds almost like a plan.

Counting Down to 2014 in Afghanistan: Three Lousy Options, Pick One

Don’t let the forces of regression dominate the media in 2013 - click here to support brave, independent reporting today by making a contribution to Truthout.

Compromise, conflict, or collapse: ask an Afghan what to expect in 2014 and you’re likely to get a scenario that falls under one of those three headings. 2014, of course, is the year of the double whammy in Afghanistan: the next presidential election coupled with the departure of most American and other foreign forces. Many Afghans fear a turn for the worse, while others are no less afraid that everything will stay the same.  Some even think things will get better when the occupying forces leave.  Most predict a more conservative climate, but everyone is quick to say that it’s anybody’s guess.

Only one thing is certain in 2014: it will be a year of American military defeat.  For more than a decade, U.S. forces have fought many types of wars in Afghanistan, from a low-footprint invasion, to multiple surges, to a flirtation with Vietnam-style counterinsurgency, to a ramped-up, gloves-off air war.  And yet, despite all the experiments in styles of war-making, the American military and its coalition partners have ended up in the same place: stalemate, which in a battle with guerrillas means defeat.  For years, a modest-sized, generally unpopular, ragtag set of insurgents has fought the planet’s most heavily armed, technologically advanced military to a standstill, leaving the country shaken and its citizens anxiously imagining the outcome of unpalatable scenarios.

The first, compromise, suggests the possibility of reaching some sort of almost inconceivable power-sharing agreement with multiple insurgent militias.  While Washington presses for negotiations with its designated enemy, “the Taliban,” representatives of President Hamid Karzai’s High Peace Council, which includes12 members of the former Taliban government and many sympathizers, are making the rounds to talk disarmament and reconciliation with all the armed insurgent groups that the Afghan intelligence service has identified across the country. There are 1,500 of them.

One member of the Council told me, “It will take a long time before we get to Mullah Omar [the Taliban’s titular leader].  Some of these militias can’t even remember what they’ve been fighting about.”

The second scenario, open conflict, would mean another dreaded round of civil war like the one in the 1990s, after the Soviet Union withdrew in defeat -- the one that destroyed the Afghan capital, Kabul, devastated parts of the country, and gave rise to the Taliban.

The third scenario, collapse, sounds so apocalyptic that it’s seldom brought up by Afghans, but it’s implied in the exodus already underway of those citizens who can afford to leave the country.  The departures aren’t dramatic.  There are no helicopters lifting off the roof of the U.S. Embassy with desperate Afghans clamoring to get on board; just a record number of asylum applications in 2011, a year in which, according to official figures, almost 36,000 Afghans were openly looking for a safe place to land, preferably in Europe.  That figure is likely to be at least matched, if not exceeded, when the U.N. releases the complete data for 2012.

In January, I went to Kabul to learn what old friends and current officials are thinking about the critical months ahead.  At the same time, Afghan President Karzai flew to Washington to confer with President Obama.  Their talks seem to have differed radically from the conversations I had with ordinary Afghans. In Kabul, where strange rumors fly, an official reassured me that the future looked bright for the country because Karzai was expected to return from Washington with the promise of American radar systems, presumably for the Afghan Air Force, which is not yet “operational.” (He actually returned with the promise of helicopters, cargo planes, fighter jets, and drones.) Who knew that the fate of the nation and its suffering citizens hinged on that?  In my conversations with ordinary Afghans, one thing that never came up was radar.

Another term that never seems to enter ordinary Afghan conversation, much as it obsesses Americans, is “al-Qaeda.” President Obama, for instance, announced at a joint press conference with President Karzai: “Our core objective -- the reason we went to war in the first place -- is now within reach: ensuring that al-Qaeda can never again use Afghanistan to launch attacks against America.”  An Afghan journalist asked me, “Why does he worry so much about al-Qaeda in Afghanistan? Doesn’t he know they are everywhere else?”

At the same Washington press conference, Obama said, “The nation we need to rebuild is our own.” Afghans long ago gave up waiting for the U.S. to make good on its promises to rebuild theirs. What’s now striking, however, is the vast gulf between the pronouncements of American officialdom and the hopes of ordinary Afghans.  It’s a gap so wide you would hardly think -- as Afghans once did -- that we are fighting for them.

To take just one example: the official American view of events in Afghanistan is wonderfully black and white.  The president, for instance, speaks of the way U.S. forces heroically “pushed the Taliban out of their strongholds.” Like other top U.S. officials over the years, he forgets whom we pushed into the Afghan government, our “stronghold” in the years after the 2001 invasion: ex-Taliban and Taliban-like fundamentalists, the most brutal civil warriors, and serial human rights violators.

Afghans, however, haven’t forgotten just whom the U.S. put in place to govern them -- exactly the men they feared and hated most in exactly the place where few Afghans wanted them to be.  Early on, between 2002 and 2004, 90% of Afghans surveyed nationwide told the Afghan Independent Human Rights Commission that such men should not be allowed to hold public office; 76% wanted them tried as war criminals.


In my recent conversations, many Afghans still cited the first loya jirga, an assembly convened in 2003 to ratify the newly drafted constitution, or the first presidential election in 2004, or the parliamentary election of 2005, all held under international auspices, as the moments when the aspirations of Afghans and the “international community” parted company. In that first parliament, as in the earlier gatherings, most of the men were affiliated with armed militias; every other member was a formerjihadi, and nearly half were affiliated with fundamentalist Islamist parties, including the Taliban.

In this way, Afghans were consigned to live under a government of bloodstained warlords and fundamentalists, who turned out to be Washington’s guys.  Many had once battled the Soviets using American money and weapons, and quite a few, like the former warlord, druglord, minister of defense, and current vice-president Muhammad Qasim Fahim, had been very chummy with the CIA.

In the U.S., such details of our Afghan War, now in its 12th year, are long forgotten, but to Afghans who live under the rule of the same old suspects, the memory remains painfully raw.  Worse, Afghans know that it is these very men, rearmed and ready, who will once again compete for power in 2014.

How to Vote Early in Afghanistan

President Karzai is barred by term limits from standing for reelection in 2014, but many Kabulis believe he reached a private agreement with the usual suspects at a meeting late last year. In early January, he seemed to seal the deal by announcing that, for the sake of frugality, the voter cards issued for past elections will be reusedin 2014.  Far too many of those cards were issued for the 2004 election, suspiciously more than the number of eligible voters.  During the 2009 campaign, anyone could buy fistfuls of them at bargain basement prices.  So this decision seemed to kill off the last faint hope of an election in which Afghans might actually have a say about the leadership of the country.

Fewer than 35% of voters cast ballots in the last presidential contest, when Karzai’s men were caught on video stuffing ballot boxes.  (Afterward, President Obama phoned to congratulate Karzai on his “victory.”) Only dedicated or paid henchmen are likely to show up for the next “good enough for Afghans” exercise in democracy. Once again, an “election” may be just the elaborate stage set for announcing to a disillusioned public the names of those who will run the show in Kabul for the next few years.

Kabulis might live with that, as they’ve lived with Karzai all these years, but they fear power-hungry Afghan politicians could “compromise” as well with insurgent leaders like that old American favorite from the war against the Soviets, Gulbuddin Hekmatyar, who recently told a TV audience that he intends to claim his rightful place in government. Such compromises could stick the Afghan people with a shaky power-sharing deal among the most ultra-conservative, self-interested, sociopathic, and corrupt men in the country.  If that deal, in turn, were to fall apart, as most power-sharing agreements worldwide do within a year or two, the big men might well plunge the country back into a 1990s-style civil war, with no regard for the civilians caught in their path.

These worst-case scenarios are everyday Kabuli nightmares.  After all, during decades of war, the savvy citizens of the capital have learned to expect the worst from the men currently characterized in a popular local graffiti this way: “Mujahideen=Criminals. Taliban=Dumbheads.”

Ordinary Kabulis express reasonable fears for the future of the country, but impatient free-marketeering businessmen are voting with their feet right now, or laying plans to leave soon. They’ve made Kabul hum (often with foreign aid funds, which are equivalent to about 90% of the country’s economic activity), but they aren’t about to wait around for the results of election 2014.  Carpe diem has become their version of financial advice.  As a result, they are snatching what they can and packing their bags.

Millions of dollars reportedly take flight from Kabul International Airport every day: officially about $4.6 billion in 2011, or just about the size of Afghanistan’s annual budget. Hordes of businessmen and bankers (like those who, in 2004, set up the Ponzi scheme called the Kabul Bank, from which about a billion dollars went missing) are heading for cushy spots like Dubai, where they have already established residence on prime real estate.

As they take their investments elsewhere and the American effort winds down, the Afghan economy contracts ever more grimly, opportunities dwindle, and jobs disappear.  Housing prices in Kabul are falling for the first time since the start of the occupation as rich Afghans and profiteering private American contractors, who guzzled the money that Washington and the “international community” poured into the country, move on.

At the same time, a money-laundering building boom in Kabul appears to have stalled, leaving tall, half-built office blocks like so many skeletons amid the scalloped Pakistani palaces, vertical malls, and grand madrassas erected in the past four or five years by political and business insiders and well-connected conservative clerics.

Most of the Afghan tycoons seeking asylum elsewhere don’t fear for their lives, just their pocketbooks: they’re not political refugees, but free-market rats abandoning the sinking ship of state.  Joining in the exodus (but not included in the statistics) are countless illegal émigrés seeking jobs or fleeing for their lives, paying human smugglers money they can’t afford as they head for Europe by circuitous and dangerous routes.

Threatened Afghans have fled from every abrupt change of government in the last century, making them the largest population of refugees from a single country on the planet.  Once again, those who can are voting with their feet (or their pocketbooks) -- and voting early.

Afghanistan’s historic tragedy is that its violent political shifts -- from king to communists to warlords to religious fundamentalists to the Americans -- have meant the flight of the very people most capable of rebuilding the country along peaceful and prosperous lines.  And their departure only contributes to the economic and political collapse they themselves seek to avoid.  Left behind are ordinary Afghans -- the illiterate and unskilled, but also a tough core of educated, ambitious citizens, including women’s rights activists, unwilling to surrender their dream of living once again in a free and peaceful Afghanistan.

The Military Monster

These days Kabul resounds with the blasts of suicide bombers, IEDs, and sporadic gunfire.  Armed men are everywhere in anonymous uniforms that defy identification.  Any man with money can buy a squad of bodyguards, clad in classy camouflage and wraparound shades, and armed with assault weapons.  Yet Kabulis, trying to carry on normal lives in the relative safety of the capital, seem to maintain a distance from the war going on in the provinces.

Asked that crucial question -- do you think American forces should stay or go? -- the Kabulis I talked with tended to answer in a theoretical way, very unlike the visceral response one gets in the countryside, where villages are bombed andcivilians killed, or in the makeshift camps for internally displaced people that now crowd the outer fringes of Kabul. (By the time U.S. Marines surged into Taliban-controlled Helmand Province in the south in 2010 to bring counterinsurgency-style protection to the residents there, tens of thousands of them had already moved to those camps in Kabul.)  Afghans in the countryside want to be rid of armed men.  All of them.  Kabulis just want to be secure, and if that means keeping some U.S. troops at Bagram Air Base near the capital, as Afghan and American officials are currently discussing, well, it’s nothing to them.

In fact, most Kabulis I spoke to think that’s what’s going to happen.  After all, American officials have been talking for years about keeping permanent bases in Afghanistan (though they avoid the term “permanent” when speaking to the American press), and American military officers now regularly appear on Afghan TV to say, “The United States will never abandon Afghanistan.”  Afghans reason: Americans would not have spent nearly 12 years fighting in this country if it were not the most strategic place on the planet and absolutely essential to their plans to “push on” Iran and China next.  Everybody knows that pushing on other countries is an American specialty.

Besides, Afghans can see with their own eyes that U.S. command centers, including multiple bases in Kabul, and Bagram Air Base, only 30 miles away, are still being expanded and upgraded.  Beyond the high walls of the American Embassy compound, they can also see the tall new apartment blocks going up for an expanding staff, even if Washington now claims that staff will be reduced in the years to come.

Why, then, would President Obama announce the drawdown of U.S. troops to perhaps a few thousand special operations forces and advisors, if Washington didn’t mean to leave?  Afghans have a theory about that, too.  It’s a ruse, many claim, to encourage all other foreign forces to depart so that the Americans can have everything to themselves.  Afghanistan, as they imagine it, is so important that the U.S., which has fought the longest war in its history there, will be satisfied with nothing less.

I was there to listen, but at times I did mention to Afghans that America’s post-9/11 wars and occupations were threatening to break the country.  “We just can’t afford this war anymore,” I said.

Afghans only laugh at that.  They’ve seen the way Americans throw money around.  They’ve seen the way American money corrupted the Afghan government, and many reminded me that American politicians like Afghan ones are bought and sold, and its elections won by money. Americans, they know, are as rich as Croesus and very friendly, though on the whole not very well mannered or honest or smart.

Operation Enduring Presence      

More than 11 years later, the tragedy of the American war in Afghanistan is simple enough: it has proven remarkably irrelevant to the lives of the Afghan people -- and to American troops as well.  Washington has long appeared to be fighting its own war in defense of a form of government and a set of long-discredited government officials that ordinary Afghans would never have chosen for themselves and have no power to replace.

In the early years of the war (2001-2005), George W. Bush’s administration was far too distracted planning and launching another war in Iraq to maintain anything but a minimal military presence in Afghanistan -- and that mainly outside the capital.  Many journalists (including me) criticized Bush for not finishing the war he started there when he had the chance, but today Kabulis look back on that soldierless period of peace and hope with a certain nostalgia.  In some quarters, the Bush years have even acquired something like the sheen of a lost Golden Age -- compared, that is, to the thoroughgoing militarization of American policy that followed.

So commanding did the U.S. military become in Kabul and Washington that, over the years, it ate the State Department, gobbled up the incompetent bureaucracy of the U.S. Agency for International Development, and established Provincial Reconstruction Teams (PRTs) in the countryside to carry out maniacal “development” projects and throw bales of cash at all the wrong “leaders.”

Of course, the military also killed a great many people, both “enemies” and civilians.  As in Vietnam, it won the battles, but lost the war.  When I asked Afghans from Mazar-e-Sharif in the north how they accounted for the relative peacefulness and stability of their area, the answer seemed self-evident: “Americans didn’t come here.”

Other consequences, all deleterious, flowed from the militarization of foreign policy.  In Afghanistan and the United States, so intimately ensnarled over all these years, the income gap between the rich and everyone else has grown exponentially, in large part because in both countries the rich have made money off war-making, while ordinary citizens have slipped into poverty for lack of jobs and basic services.

Relying on the military, the U.S. neglected the crucial elements of civil life in Afghanistan that make things bearable -- like education and health care.  Yes, I’ve heard the repeated claims that, thanks to us, millions of children are now attending school.  But for how long?   According to UNICEF, in the years 2005-2010, in the whole of Afghanistan only 18% of boys attended high school, and 6% of girls.  What kind of report card is that?  After 11 years of underfunded work on health care in a country the size of Texas, infant mortality still remains the highest in the world.

By 2014, the defense of Afghanistan will have been handed over to the woefulAfghan National Security Force, also known in military-speak as the “Enduring Presence Force.”  In that year, for Washington, the American war will be officially over, whether it’s actually at an end or not, and it will be up to Afghans to do the enduring.

Here’s where that final scenario -- collapse -- haunts the Kabuli imagination.  Economic collapse means joblessness, poverty, hunger, and a great swelling of the ranks of children cadging a living in the streets.  Already street children are said to number a million strong in Kabul, and 4 million across the country.  Only blocks from the Presidential Palace, they are there in startling numbers selling newspapers, phone cards, toilet paper, or simply begging for small change. Are they the county’s future?

And if the state collapses, too?  Afghans of a certain age remember well the last time the country was left on its own, after the Soviets departed in 1989, and the U.S. also terminated its covert aid.  The mujahideen parties -- Islamists all -- agreed to take turns ruling the country, but things soon fell apart and they took turns instead lobbing rockets into Kabul, killing tens of thousands of civilians, reducing entire districts to rubble, raiding and raping -- until the Taliban came up from the south and put a stop to everything.

Afghan civilians who remember that era hope that this time Karzai will step down as he promises, and that the usual suspects will find ways to maintain traditional power balances, however undemocratic, in something that passes for peace.  Afghan civilians are, however, betting that if a collision comes, one-third of those Afghan Security Forces trained at fabulous expense to protect them will fight for the government (whoever that may be), one-third will fight for the opposition, and one-third will simply desert and go home.  That sounds almost like a plan.

Pentagon’s New Massive Expansion of ‘Cyber-Security’ Unit is About Everything Except Defense

As the US government depicts the Defense Department as shrinking due to budgetary constraints, the Washington Post this morning announces "a major expansion of [the Pentagon's] cybersecurity force over the next several years, increasing its size more than fivefold."

The National Security Agency (NSA) headquarters in Fort Meade, Maryland. Among other forms of intelligence-gathering, the NSA secretly collects the phone records of millions of Americans, using data provided by telecom firms AT&T, Verizon and BellSouth. (Photo: NSA/Getty Images)

Specifically, says the New York Times this morning, "the expansion would increase the Defense Department's Cyber Command by more than 4,000 people, up from the current 900." The Post describes this expansion as "part of an effort to turn an organization that has focused largely on defensive measures into the equivalent of an Internet-era fighting force." This Cyber Command Unit operates under the command of Gen. Keith Alexander, who also happens to be the head of the National Security Agency, the highly secretive government network that spies on the communications of foreign nationals - and American citizens.

The Pentagon's rhetorical justification for this expansion is deeply misleading. Beyond that, these activities pose a wide array of serious threats to internet freedom, privacy, and international law that, as usual, will be conducted with full-scale secrecy and with little to no oversight and accountability. And, as usual, there is a small army of private-sector corporations who will benefit most from this expansion.

Disguising aggression as "defense"

Let's begin with the way this so-called "cyber-security" expansion has been marketed. It is part of a sustained campaign which, as usual, relies on blatant fear-mongering.

In March, 2010, the Washington Post published an amazing Op-Ed by Adm. Michael McConnell, Bush's former Director of National Intelligence and a past and current executive with Booz Allen, a firm representing numerous corporate contractors which profit enormously each time the government expands its "cyber-security" activities. McConnell's career over the last two decades - both at Booz, Allen and inside the government - has been devoted to accelerating the merger between the government and private sector in all intelligence, surveillance and national security matters (it was he who led the successful campaign to retroactively immunize the telecom giants for their participation in the illegal NSA domestic spying program). Privatizing government cyber-spying and cyber-warfare is his primary focus now.

McConnell's Op-Ed was as alarmist and hysterical as possible. Claiming that "the United States is fighting a cyber-war today, and we are losing", it warned that "chaos would result" from an enemy cyber-attack on US financial systems and that "our power grids, air and ground transportation, telecommunications, and water-filtration systems are in jeopardy as well." Based on these threats, McConnell advocated that "we" - meaning "the government and the private sector" - "need to develop an early-warning system to monitor cyberspace" and that "we need to reengineer the Internet to make attribution, geolocation, intelligence analysis and impact assessment - who did it, from where, why and what was the result - more manageable." As Wired's Ryan Singel wrote: "He's talking about changing the internet to make everything anyone does on the net traceable and geo-located so the National Security Agency can pinpoint users and their computers for retaliation."

The same week the Post published McConnell's extraordinary Op-Ed, the Obama White House issued its own fear-mongering decree on cyber-threats, depicting the US as a vulnerable victim to cyber-aggression. It began with this sentence: "President Obama has identified cybersecurity as one of the most serious economic and national security challenges we face as a nation, but one that we as a government or as a country are not adequately prepared to counter." It announced that "the Executive Branch was directed to work closely with all key players in US cybersecurity, including state and local governments and the private sector" and to "strengthen public/private partnerships", and specifically announced Obama's intent to "to implement the recommendations of the Cyberspace Policy Review built on the Comprehensive National Cybersecurity Initiative (CNCI) launched by President George W. Bush."

Since then, the fear-mongering rhetoric from government officials has relentlessly intensified, all devoted to scaring citizens into believing that the US is at serious risk of cataclysmic cyber-attacks from "aggressors". This all culminated when Defense Secretary Leon Panetta, last October, warned of what he called a "cyber-Pearl Harbor. This "would cause physical destruction and the loss of life, an attack that would paralyze and shock the nation and create a profound new sense of vulnerability." Identifying China, Iran, and terrorist groups, he outlined a parade of horribles scarier than anything since Condoleezza Rice's 2002 Iraqi "mushroom cloud":

"An aggressor nation or extremist group could use these kinds of cyber tools to gain control of critical switches. They could derail passenger trains, or even more dangerous, derail passenger trains loaded with lethal chemicals. They could contaminate the water supply in major cities, or shut down the power grid across large parts of the country."

As usual, though, reality is exactly the opposite. This new massive new expenditure of money is not primarily devoted to defending against cyber-aggressors. The US itself is the world's leading cyber-aggressor. A major purpose of this expansion is to strengthen the US's ability to destroy other nations with cyber-attacks. Indeed, even the Post report notes that a major component of this new expansion is to "conduct offensive computer operations against foreign adversaries".

It is the US - not Iran, Russia or "terror" groups - which already is the first nation (in partnership with Israel) to aggressively deploy a highly sophisticated and extremely dangerous cyber-attack. Last June, the New York Times' David Sanger reported what most of the world had already suspected: "From his first months in office, President Obama secretly ordered increasingly sophisticated attacks on the computer systems that run Iran's main nuclear enrichment facilities, significantly expanding America's first sustained use of cyberweapons." In fact, Obama "decided to accelerate the attacks . . . even after an element of the program accidentally became public in the summer of 2010 because of a programming error that allowed it to escape Iran's Natanz plant and sent it around the world on the Internet." According to the Sanger's report, Obama himself understood the significance of the US decision to be the first to use serious and aggressive cyber-warfare:

"Mr. Obama, according to participants in the many Situation Room meetings on Olympic Games, was acutely aware that with every attack he was pushing the United States into new territory, much as his predecessors had with the first use of atomic weapons in the 1940s, of intercontinental missiles in the 1950s and of drones in the past decade. He repeatedly expressed concerns that any American acknowledgment that it was using cyberweapons - even under the most careful and limited circumstances - could enable other countries, terrorists or hackers to justify their own attacks."

The US isn't the vulnerable victim of cyber-attacks. It's the leading perpetrator of those attacks. As Columbia Professor and cyber expert Misha Glenny wrote in the NYT last June: Obama's cyber-attack on Iran "marked a significant and dangerous turning point in the gradual militarization of the Internet."

Indeed, exactly as Obama knew would happen, revelations that it was the US which became the first country to use cyber-warfare against a sovereign country - just as it was the first to use the atomic bomb and then drones - would make it impossible for it to claim with any credibility (except among its own media and foreign policy community) that it was in a defensive posture when it came to cyber-warfare. As Professor Glenny wrote: "by introducing such pernicious viruses as Stuxnet and Flame, America has severely undermined its moral and political credibility." That's why, as the Post reported yesterday, the DOJ is engaged in such a frantic and invasive effort to root out Sanger's source: because it reveals the obvious truth that the US is the leading aggressor in the world when it comes to cyber-weapons.

This significant expansion under the Orwellian rubric of "cyber-security" is thus a perfect microcosm of US military spending generally. It's all justified under by the claim that the US must defend itself from threats from Bad, Aggressive Actors, when the reality is the exact opposite: the new program is devoted to ensuring that the US remains the primary offensive threat to the rest of the world. It's the same way the US develops offensive biological weapons under the guise of developing defenses against such weapons (such as the 2001 anthrax that the US government itself says came from a US Army lab). It's how the US government generally convinces its citizens that it is a peaceful victim of aggression by others when the reality is that the US builds more weapons, sells more arms and bombs more countries than virtually the rest of the world combined.

Threats to privacy and internet freedom

Beyond the aggressive threat to other nations posed by the Pentagon's cyber-threat programs, there is the profound threat to privacy, internet freedom, and the ability to communicate freely for US citizens and foreign nationals alike. The US government has long viewed these "cyber-security" programs as a means of monitoring and controlling the internet and disseminating propaganda. The fact that this is all being done under the auspices of the NSA and the Pentagon means, by definition, that there will be no transparency and no meaningful oversight.

Back in 2003, the Rumsfeld Pentagon prepared a secret report entitled "Information Operations (IO) Roadmap", which laid the foundation for this new cyber-warfare expansion. The Pentagon's self-described objective was "transforming IO into a core military competency on par with air, ground, maritime and special operations". In other words, its key objective was to ensure military control over internet-based communications:

dod cyber

It further identified superiority in cyber-attack capabilities as a vital military goal in PSYOPs (Psychological Operations) and "information-centric fights":

dod cyber

And it set forth the urgency of dominating the "IO battlespace" not only during wartime but also in peacetime:

dod cyber

As a 2006 BBC report on this Pentagon document noted: "Perhaps the most startling aspect of the roadmap is its acknowledgement that information put out as part of the military's psychological operations, or Psyops, is finding its way onto the computer and television screens of ordinary Americans." And while the report paid lip service to the need to create "boundaries" for these new IO military activities, "they don't seem to explain how." Regarding the report's plan to "provide maximum control of the entire electromagnetic spectrum", the BBC noted: "Consider that for a moment. The US military seeks the capability to knock out every telephone, every networked computer, every radar system on the planet."

Since then, there have been countless reports of the exploitation by the US national security state to destroy privacy and undermine internet freedom. In November, the LA Times described programs that "teach students how to spy in cyberspace, the latest frontier in espionage." They "also are taught to write computer viruses, hack digital networks, crack passwords, plant listening devices and mine data from broken cellphones and flash drives." The program, needless to say, "has funneled most of its graduates to the CIA and the Pentagon's National Security Agency, which conducts America's digital spying. Other graduates have taken positions with the FBI, NASA and the Department of Homeland Security."

In 2010, Lawrence E. Strickling, Assistant Secretary of Commerce for Communications and Information, gave a speech explicitly announcing that the US intends to abandon its policy of "leaving the Internet alone". Noting that this "has been the nation's Internet policy since the Internet was first commercialized in the mid-1990s", he decreed: "This was the right policy for the United States in the early stages of the Internet, and the right message to send to the rest of the world. But that was then and this is now."

The documented power of the US government to monitor and surveil internet communications is already unfathomably massive. Recall that the Washington Post's 2010 "Top Secret America" series noted that: "Every day, collection systems at the National Security Agency intercept and store 1.7 billion e-mails, phone calls and other types of communications." And the Obama administration has formally demanded that it have access to any and all forms of internet communication.

It is hard to overstate the danger to privacy and internet freedom from a massive expansion of the National Security State's efforts to exploit and control the internet. As Wired's Singel wrote back in 2010:

"Make no mistake, the military industrial complex now has its eye on the internet. Generals want to train crack squads of hackers and have wet dreams of cyberwarfare. Never shy of extending its power, the military industrial complex wants to turn the internet into yet another venue for an arms race.

Wildly exaggerated cyber-threats are the pretext for this control, the "mushroom cloud" and the Tonkin Gulf fiction of cyber-warfare. As Singel aptly put it: "the only war going on is one for the soul of the internet." That's the vital context for understanding this massive expansion of Pentagon and NSA consolidated control over cyber programs.

Bonanza for private contractors

As always, it is not just political power but also private-sector profit driving this expansion. As military contracts for conventional war-fighting are modestly reduced, something needs to replace it, and these large-scale "cyber-security" contracts are more than adequate. Virtually every cyber-security program from the government is carried out in conjunction with its "private-sector partners", who receive large transfers of public funds for this work.

Two weeks ago, Business Week reported that "Lockheed Martin Corp., AT&T Inc., and CenturyLink Inc. are the first companies to sign up for a US program giving them classified information on cyber threats that they can package as security services for sale to other companies." This is part of a government effort "to create a market based on classified US information about cyber threats." In May, it was announced that "the Pentagon is expanding and making permanent a trial program that teams the government with Internet service providers to protect defense firms' computer networks against data theft by foreign adversaries" - all as "part of a larger effort to broaden the sharing of classified and unclassified cyberthreat data between the government and industry."

Indeed, there is a large organization of defense and intelligence contractors devoted to one goal: expanding the private-public merger for national security and intelligence functions. This organization - the Intelligence and National Security Alliance (INSA) - was formerly headed by Adm. McConnell, and describes itself as a "collaboration by leaders from throughout the US Intelligence Community" and " combines the experience of senior leaders from government, the private sector, and academia."

As I detailed back in 2010, one of its primary goals is to scare the nation about supposed cyber-threats in order to justify massive new expenditures for the private-sector intelligence industry on cyber-security measures and vastly expanded control over the internet. Indeed, in his 2010 Op-Ed, Adm. McConnell expressly acknowledged that the growing privatization of internet cyber-security programs "will muddy the waters between the traditional roles of the government and the private sector." Indeed, at the very same time McConnell published this Op-Ed, the INSA website featured a report entitled "Addressing Cyber Security Through Public-Private Partnership." It featured a genuinely creepy graphic showing the inter-connectedness between government institutions (such as Congress and regulatory agencies), the Surveillance State, private intelligence corporations, and the Internet:

Private-sector profit is now inextricably linked with the fear-mongering campaign over cyber-threats. At one INSA conference in 2009 - entitled "Cyber Deterrence Conference" - government officials and intelligence industry executives gathered together to stress that "government and private sector actors should emphasize collaboration and partnership through the creation of a model that assigns specific roles and responsibilities."

As intelligence contractor expert Tim Shorrock told Democracy Now when McConnell - then at Booz Allen - was first nominated to be DNI:

Well, the NSA, the National Security Agency, is really sort of the lead agency in terms of outsourcing . . . . Booz Allen is one of about, you know, ten large corporations that play a very major role in American intelligence. Every time you hear about intelligence watching North Korea or tapping al-Qaeda phones, something like that, you can bet that corporations like these are very heavily involved. And Booz Allen is one of the largest of these contractors. I estimate that about 50% of our $45 billion intelligence budget goes to private sector contractors like Booz Allen.

This public-private merger for intelligence and surveillance functions not only vests these industries with large-scale profits at public expense, but also the accompanying power that was traditionally reserved for government. And unlike government agencies, which are at least subjected in theory to some minimal regulatory oversight, these private-sector actors have virtually none, even as their surveillance and intelligence functions rapidly increase.

What Dwight Eisenhower called the military-industrial complex has been feeding itself on fear campaigns since it was born. A never-ending carousel of Menacing Enemies - Communists, Terrorists, Saddam's chemical weapons, Iranian mullahs - has sustained it, and Cyber-Threats are but the latest.

Like all of these wildly exaggerated cartoon menaces, there is some degree of threat posed by cyber-attacks. But, as Single described, all of this can be managed with greater security systems for public and private computer networks - just as some modest security measures are sufficient to deal with the terrorist threat.

This new massive expansion has little to do with any actual cyber-threat - just as the invasion of Iraq and global assassination program have little to do with actual terrorist threats. It is instead all about strengthening the US's offensive cyber-war capabilities, consolidating control over the internet, and ensuring further transfers of massive public wealth to private industry continue unabated. In other words, it perfectly follows the template used by the public-private US National Security State over the last six decades to entrench and enrich itself based on pure pretext.

© 2013 Guardian News and Media Limited

Glenn Greenwald

Pentagon’s New Massive Expansion of ‘Cyber-Security’ Unit is About Everything Except Defense

As the US government depicts the Defense Department as shrinking due to budgetary constraints, the Washington Post this morning announces "a major expansion of [the Pentagon's] cybersecurity force over the next several years, increasing its size more than fivefold."

The National Security Agency (NSA) headquarters in Fort Meade, Maryland. Among other forms of intelligence-gathering, the NSA secretly collects the phone records of millions of Americans, using data provided by telecom firms AT&T, Verizon and BellSouth. (Photo: NSA/Getty Images)

Specifically, says the New York Times this morning, "the expansion would increase the Defense Department's Cyber Command by more than 4,000 people, up from the current 900." The Post describes this expansion as "part of an effort to turn an organization that has focused largely on defensive measures into the equivalent of an Internet-era fighting force." This Cyber Command Unit operates under the command of Gen. Keith Alexander, who also happens to be the head of the National Security Agency, the highly secretive government network that spies on the communications of foreign nationals - and American citizens.

The Pentagon's rhetorical justification for this expansion is deeply misleading. Beyond that, these activities pose a wide array of serious threats to internet freedom, privacy, and international law that, as usual, will be conducted with full-scale secrecy and with little to no oversight and accountability. And, as usual, there is a small army of private-sector corporations who will benefit most from this expansion.

Disguising aggression as "defense"

Let's begin with the way this so-called "cyber-security" expansion has been marketed. It is part of a sustained campaign which, as usual, relies on blatant fear-mongering.

In March, 2010, the Washington Post published an amazing Op-Ed by Adm. Michael McConnell, Bush's former Director of National Intelligence and a past and current executive with Booz Allen, a firm representing numerous corporate contractors which profit enormously each time the government expands its "cyber-security" activities. McConnell's career over the last two decades - both at Booz, Allen and inside the government - has been devoted to accelerating the merger between the government and private sector in all intelligence, surveillance and national security matters (it was he who led the successful campaign to retroactively immunize the telecom giants for their participation in the illegal NSA domestic spying program). Privatizing government cyber-spying and cyber-warfare is his primary focus now.

McConnell's Op-Ed was as alarmist and hysterical as possible. Claiming that "the United States is fighting a cyber-war today, and we are losing", it warned that "chaos would result" from an enemy cyber-attack on US financial systems and that "our power grids, air and ground transportation, telecommunications, and water-filtration systems are in jeopardy as well." Based on these threats, McConnell advocated that "we" - meaning "the government and the private sector" - "need to develop an early-warning system to monitor cyberspace" and that "we need to reengineer the Internet to make attribution, geolocation, intelligence analysis and impact assessment - who did it, from where, why and what was the result - more manageable." As Wired's Ryan Singel wrote: "He's talking about changing the internet to make everything anyone does on the net traceable and geo-located so the National Security Agency can pinpoint users and their computers for retaliation."

The same week the Post published McConnell's extraordinary Op-Ed, the Obama White House issued its own fear-mongering decree on cyber-threats, depicting the US as a vulnerable victim to cyber-aggression. It began with this sentence: "President Obama has identified cybersecurity as one of the most serious economic and national security challenges we face as a nation, but one that we as a government or as a country are not adequately prepared to counter." It announced that "the Executive Branch was directed to work closely with all key players in US cybersecurity, including state and local governments and the private sector" and to "strengthen public/private partnerships", and specifically announced Obama's intent to "to implement the recommendations of the Cyberspace Policy Review built on the Comprehensive National Cybersecurity Initiative (CNCI) launched by President George W. Bush."

Since then, the fear-mongering rhetoric from government officials has relentlessly intensified, all devoted to scaring citizens into believing that the US is at serious risk of cataclysmic cyber-attacks from "aggressors". This all culminated when Defense Secretary Leon Panetta, last October, warned of what he called a "cyber-Pearl Harbor. This "would cause physical destruction and the loss of life, an attack that would paralyze and shock the nation and create a profound new sense of vulnerability." Identifying China, Iran, and terrorist groups, he outlined a parade of horribles scarier than anything since Condoleezza Rice's 2002 Iraqi "mushroom cloud":

"An aggressor nation or extremist group could use these kinds of cyber tools to gain control of critical switches. They could derail passenger trains, or even more dangerous, derail passenger trains loaded with lethal chemicals. They could contaminate the water supply in major cities, or shut down the power grid across large parts of the country."

As usual, though, reality is exactly the opposite. This new massive new expenditure of money is not primarily devoted to defending against cyber-aggressors. The US itself is the world's leading cyber-aggressor. A major purpose of this expansion is to strengthen the US's ability to destroy other nations with cyber-attacks. Indeed, even the Post report notes that a major component of this new expansion is to "conduct offensive computer operations against foreign adversaries".

It is the US - not Iran, Russia or "terror" groups - which already is the first nation (in partnership with Israel) to aggressively deploy a highly sophisticated and extremely dangerous cyber-attack. Last June, the New York Times' David Sanger reported what most of the world had already suspected: "From his first months in office, President Obama secretly ordered increasingly sophisticated attacks on the computer systems that run Iran's main nuclear enrichment facilities, significantly expanding America's first sustained use of cyberweapons." In fact, Obama "decided to accelerate the attacks . . . even after an element of the program accidentally became public in the summer of 2010 because of a programming error that allowed it to escape Iran's Natanz plant and sent it around the world on the Internet." According to the Sanger's report, Obama himself understood the significance of the US decision to be the first to use serious and aggressive cyber-warfare:

"Mr. Obama, according to participants in the many Situation Room meetings on Olympic Games, was acutely aware that with every attack he was pushing the United States into new territory, much as his predecessors had with the first use of atomic weapons in the 1940s, of intercontinental missiles in the 1950s and of drones in the past decade. He repeatedly expressed concerns that any American acknowledgment that it was using cyberweapons - even under the most careful and limited circumstances - could enable other countries, terrorists or hackers to justify their own attacks."

The US isn't the vulnerable victim of cyber-attacks. It's the leading perpetrator of those attacks. As Columbia Professor and cyber expert Misha Glenny wrote in the NYT last June: Obama's cyber-attack on Iran "marked a significant and dangerous turning point in the gradual militarization of the Internet."

Indeed, exactly as Obama knew would happen, revelations that it was the US which became the first country to use cyber-warfare against a sovereign country - just as it was the first to use the atomic bomb and then drones - would make it impossible for it to claim with any credibility (except among its own media and foreign policy community) that it was in a defensive posture when it came to cyber-warfare. As Professor Glenny wrote: "by introducing such pernicious viruses as Stuxnet and Flame, America has severely undermined its moral and political credibility." That's why, as the Post reported yesterday, the DOJ is engaged in such a frantic and invasive effort to root out Sanger's source: because it reveals the obvious truth that the US is the leading aggressor in the world when it comes to cyber-weapons.

This significant expansion under the Orwellian rubric of "cyber-security" is thus a perfect microcosm of US military spending generally. It's all justified under by the claim that the US must defend itself from threats from Bad, Aggressive Actors, when the reality is the exact opposite: the new program is devoted to ensuring that the US remains the primary offensive threat to the rest of the world. It's the same way the US develops offensive biological weapons under the guise of developing defenses against such weapons (such as the 2001 anthrax that the US government itself says came from a US Army lab). It's how the US government generally convinces its citizens that it is a peaceful victim of aggression by others when the reality is that the US builds more weapons, sells more arms and bombs more countries than virtually the rest of the world combined.

Threats to privacy and internet freedom

Beyond the aggressive threat to other nations posed by the Pentagon's cyber-threat programs, there is the profound threat to privacy, internet freedom, and the ability to communicate freely for US citizens and foreign nationals alike. The US government has long viewed these "cyber-security" programs as a means of monitoring and controlling the internet and disseminating propaganda. The fact that this is all being done under the auspices of the NSA and the Pentagon means, by definition, that there will be no transparency and no meaningful oversight.

Back in 2003, the Rumsfeld Pentagon prepared a secret report entitled "Information Operations (IO) Roadmap", which laid the foundation for this new cyber-warfare expansion. The Pentagon's self-described objective was "transforming IO into a core military competency on par with air, ground, maritime and special operations". In other words, its key objective was to ensure military control over internet-based communications:

dod cyber

It further identified superiority in cyber-attack capabilities as a vital military goal in PSYOPs (Psychological Operations) and "information-centric fights":

dod cyber

And it set forth the urgency of dominating the "IO battlespace" not only during wartime but also in peacetime:

dod cyber

As a 2006 BBC report on this Pentagon document noted: "Perhaps the most startling aspect of the roadmap is its acknowledgement that information put out as part of the military's psychological operations, or Psyops, is finding its way onto the computer and television screens of ordinary Americans." And while the report paid lip service to the need to create "boundaries" for these new IO military activities, "they don't seem to explain how." Regarding the report's plan to "provide maximum control of the entire electromagnetic spectrum", the BBC noted: "Consider that for a moment. The US military seeks the capability to knock out every telephone, every networked computer, every radar system on the planet."

Since then, there have been countless reports of the exploitation by the US national security state to destroy privacy and undermine internet freedom. In November, the LA Times described programs that "teach students how to spy in cyberspace, the latest frontier in espionage." They "also are taught to write computer viruses, hack digital networks, crack passwords, plant listening devices and mine data from broken cellphones and flash drives." The program, needless to say, "has funneled most of its graduates to the CIA and the Pentagon's National Security Agency, which conducts America's digital spying. Other graduates have taken positions with the FBI, NASA and the Department of Homeland Security."

In 2010, Lawrence E. Strickling, Assistant Secretary of Commerce for Communications and Information, gave a speech explicitly announcing that the US intends to abandon its policy of "leaving the Internet alone". Noting that this "has been the nation's Internet policy since the Internet was first commercialized in the mid-1990s", he decreed: "This was the right policy for the United States in the early stages of the Internet, and the right message to send to the rest of the world. But that was then and this is now."

The documented power of the US government to monitor and surveil internet communications is already unfathomably massive. Recall that the Washington Post's 2010 "Top Secret America" series noted that: "Every day, collection systems at the National Security Agency intercept and store 1.7 billion e-mails, phone calls and other types of communications." And the Obama administration has formally demanded that it have access to any and all forms of internet communication.

It is hard to overstate the danger to privacy and internet freedom from a massive expansion of the National Security State's efforts to exploit and control the internet. As Wired's Singel wrote back in 2010:

"Make no mistake, the military industrial complex now has its eye on the internet. Generals want to train crack squads of hackers and have wet dreams of cyberwarfare. Never shy of extending its power, the military industrial complex wants to turn the internet into yet another venue for an arms race.

Wildly exaggerated cyber-threats are the pretext for this control, the "mushroom cloud" and the Tonkin Gulf fiction of cyber-warfare. As Singel aptly put it: "the only war going on is one for the soul of the internet." That's the vital context for understanding this massive expansion of Pentagon and NSA consolidated control over cyber programs.

Bonanza for private contractors

As always, it is not just political power but also private-sector profit driving this expansion. As military contracts for conventional war-fighting are modestly reduced, something needs to replace it, and these large-scale "cyber-security" contracts are more than adequate. Virtually every cyber-security program from the government is carried out in conjunction with its "private-sector partners", who receive large transfers of public funds for this work.

Two weeks ago, Business Week reported that "Lockheed Martin Corp., AT&T Inc., and CenturyLink Inc. are the first companies to sign up for a US program giving them classified information on cyber threats that they can package as security services for sale to other companies." This is part of a government effort "to create a market based on classified US information about cyber threats." In May, it was announced that "the Pentagon is expanding and making permanent a trial program that teams the government with Internet service providers to protect defense firms' computer networks against data theft by foreign adversaries" - all as "part of a larger effort to broaden the sharing of classified and unclassified cyberthreat data between the government and industry."

Indeed, there is a large organization of defense and intelligence contractors devoted to one goal: expanding the private-public merger for national security and intelligence functions. This organization - the Intelligence and National Security Alliance (INSA) - was formerly headed by Adm. McConnell, and describes itself as a "collaboration by leaders from throughout the US Intelligence Community" and " combines the experience of senior leaders from government, the private sector, and academia."

As I detailed back in 2010, one of its primary goals is to scare the nation about supposed cyber-threats in order to justify massive new expenditures for the private-sector intelligence industry on cyber-security measures and vastly expanded control over the internet. Indeed, in his 2010 Op-Ed, Adm. McConnell expressly acknowledged that the growing privatization of internet cyber-security programs "will muddy the waters between the traditional roles of the government and the private sector." Indeed, at the very same time McConnell published this Op-Ed, the INSA website featured a report entitled "Addressing Cyber Security Through Public-Private Partnership." It featured a genuinely creepy graphic showing the inter-connectedness between government institutions (such as Congress and regulatory agencies), the Surveillance State, private intelligence corporations, and the Internet:

Private-sector profit is now inextricably linked with the fear-mongering campaign over cyber-threats. At one INSA conference in 2009 - entitled "Cyber Deterrence Conference" - government officials and intelligence industry executives gathered together to stress that "government and private sector actors should emphasize collaboration and partnership through the creation of a model that assigns specific roles and responsibilities."

As intelligence contractor expert Tim Shorrock told Democracy Now when McConnell - then at Booz Allen - was first nominated to be DNI:

Well, the NSA, the National Security Agency, is really sort of the lead agency in terms of outsourcing . . . . Booz Allen is one of about, you know, ten large corporations that play a very major role in American intelligence. Every time you hear about intelligence watching North Korea or tapping al-Qaeda phones, something like that, you can bet that corporations like these are very heavily involved. And Booz Allen is one of the largest of these contractors. I estimate that about 50% of our $45 billion intelligence budget goes to private sector contractors like Booz Allen.

This public-private merger for intelligence and surveillance functions not only vests these industries with large-scale profits at public expense, but also the accompanying power that was traditionally reserved for government. And unlike government agencies, which are at least subjected in theory to some minimal regulatory oversight, these private-sector actors have virtually none, even as their surveillance and intelligence functions rapidly increase.

What Dwight Eisenhower called the military-industrial complex has been feeding itself on fear campaigns since it was born. A never-ending carousel of Menacing Enemies - Communists, Terrorists, Saddam's chemical weapons, Iranian mullahs - has sustained it, and Cyber-Threats are but the latest.

Like all of these wildly exaggerated cartoon menaces, there is some degree of threat posed by cyber-attacks. But, as Single described, all of this can be managed with greater security systems for public and private computer networks - just as some modest security measures are sufficient to deal with the terrorist threat.

This new massive expansion has little to do with any actual cyber-threat - just as the invasion of Iraq and global assassination program have little to do with actual terrorist threats. It is instead all about strengthening the US's offensive cyber-war capabilities, consolidating control over the internet, and ensuring further transfers of massive public wealth to private industry continue unabated. In other words, it perfectly follows the template used by the public-private US National Security State over the last six decades to entrench and enrich itself based on pure pretext.

© 2013 Guardian News and Media Limited

Glenn Greenwald

Only Three Choices for Afghan Endgame: Compromise, Conflict, or Collapse

KABUL, Afghanistan – Compromise, conflict, or collapse: ask an Afghan what to expect in 2014 and you’re likely to get a scenario that falls under one of those three headings. 2014, of course, is the year of the double whammy in Afghanistan: the next presidential election coupled with the departure of most American and other foreign forces. Many Afghans fear a turn for the worse, while others are no less afraid that everything will stay the same.  Some even think things will get better when the occupying forces leave.  Most predict a more conservative climate, but everyone is quick to say that it’s anybody’s guess.

Only one thing is certain in 2014: it will be a year of American military defeat.  For more than a decade, U.S. forces have fought many types of wars in Afghanistan, from a low-footprint invasion, to multiple surges, to a flirtation with Vietnam-style counterinsurgency, to a ramped-up, gloves-off air war.  And yet, despite all the experiments in styles of war-making, the American military and its coalition partners have ended up in the same place: stalemate, which in a battle with guerrillas means defeat.  For years, a modest-sized, generally unpopular, ragtag set of insurgents has fought the planet’s most heavily armed, technologically advanced military to a standstill, leaving the country shaken and its citizens anxiously imagining the outcome of unpalatable scenarios.

The first, compromise, suggests the possibility of reaching some sort of almost inconceivable power-sharing agreement with multiple insurgent militias.  While Washington presses for negotiations with its designated enemy, “the Taliban,” representatives of President Hamid Karzai’s High Peace Council, which includes 12 members of the former Taliban government and many sympathizers, are making the rounds to talk disarmament and reconciliation with all the armed insurgent groups that the Afghan intelligence service has identified across the country. There are 1,500 of them.

One member of the Council told me, “It will take a long time before we get to Mullah Omar [the Taliban’s titular leader].  Some of these militias can’t even remember what they’ve been fighting about.”

The second scenario, open conflict, would mean another dreaded round of civil war like the one in the 1990s, after the Soviet Union withdrew in defeat -- the one that destroyed the Afghan capital, Kabul, devastated parts of the country, and gave rise to the Taliban.

The third scenario, collapse, sounds so apocalyptic that it’s seldom brought up by Afghans, but it’s implied in the exodus already underway of those citizens who can afford to leave the country.  The departures aren’t dramatic.  There are no helicopters lifting off the roof of the U.S. Embassy with desperate Afghans clamoring to get on board; just a record number of asylum applications in 2011, a year in which, according to official figures, almost 36,000 Afghans were openly looking for a safe place to land, preferably in Europe.  That figure is likely to be at least matched, if not exceeded, when the U.N. releases the complete data for 2012.

In January, I went to Kabul to learn what old friends and current officials are thinking about the critical months ahead.  At the same time, Afghan President Karzai flew to Washington to confer with President Obama.  Their talks seem to have differed radically from the conversations I had with ordinary Afghans. In Kabul, where strange rumors fly, an official reassured me that the future looked bright for the country because Karzai was expected to return from Washington with the promise of American radar systems, presumably for the Afghan Air Force, which is not yet “operational.” (He actually returned with the promise of helicopters, cargo planes, fighter jets, and drones.) Who knew that the fate of the nation and its suffering citizens hinged on that?  In my conversations with ordinary Afghans, one thing that never came up was radar.

Another term that never seems to enter ordinary Afghan conversation, much as it obsesses Americans, is “al-Qaeda.” President Obama, for instance, announced at a joint press conference with President Karzai: “Our core objective -- the reason we went to war in the first place -- is now within reach: ensuring that al-Qaeda can never again use Afghanistan to launch attacks against America.”  An Afghan journalist asked me, “Why does he worry so much about al-Qaeda in Afghanistan? Doesn’t he know they are everywhere else?”

At the same Washington press conference, Obama said, “The nation we need to rebuild is our own.” Afghans long ago gave up waiting for the U.S. to make good on its promises to rebuild theirs. What’s now striking, however, is the vast gulf between the pronouncements of American officialdom and the hopes of ordinary Afghans.  It’s a gap so wide you would hardly think -- as Afghans once did -- that we are fighting for them.

To take just one example: the official American view of events in Afghanistan is wonderfully black and white.  The president, for instance, speaks of the way U.S. forces heroically “pushed the Taliban out of their strongholds.” Like other top U.S. officials over the years, he forgets whom we pushed into the Afghan government, our “stronghold” in the years after the 2001 invasion: ex-Taliban and Taliban-like fundamentalists, the most brutal civil warriors, and serial human rights violators.

Afghans, however, haven’t forgotten just whom the U.S. put in place to govern them -- exactly the men they feared and hated most in exactly the place where few Afghans wanted them to be.  Early on, between 2002 and 2004, 90% of Afghans surveyed nationwide told the Afghan Independent Human Rights Commission that such men should not be allowed to hold public office; 76% wanted them tried as war criminals.

In my recent conversations, many Afghans still cited the first loya jirga, an assembly convened in 2003 to ratify the newly drafted constitution, or the first presidential election in 2004, or the parliamentary election of 2005, all held under international auspices, as the moments when the aspirations of Afghans and the “international community” parted company. In that first parliament, as in the earlier gatherings, most of the men were affiliated with armed militias; every other member was a former jihadi, and nearly half were affiliated with fundamentalist Islamist parties, including the Taliban.

In this way, Afghans were consigned to live under a government of bloodstained warlords and fundamentalists, who turned out to be Washington’s guys.  Many had once battled the Soviets using American money and weapons, and quite a few, like the former warlord, druglord, minister of defense, and current vice-president Muhammad Qasim Fahim, had been very chummy with the CIA.

In the U.S., such details of our Afghan War, now in its 12th year, are long forgotten, but to Afghans who live under the rule of the same old suspects, the memory remains painfully raw.  Worse, Afghans know that it is these very men, rearmed and ready, who will once again compete for power in 2014.

How to Vote Early in Afghanistan

President Karzai is barred by term limits from standing for reelection in 2014, but many Kabulis believe he reached a private agreement with the usual suspects at a meeting late last year. In early January, he seemed to seal the deal by announcing that, for the sake of frugality, the voter cards issued for past elections will be reused in 2014.  Far too many of those cards were issued for the 2004 election, suspiciously more than the number of eligible voters.  During the 2009 campaign, anyone could buy fistfuls of them at bargain basement prices.  So this decision seemed to kill off the last faint hope of an election in which Afghans might actually have a say about the leadership of the country.

Fewer than 35% of voters cast ballots in the last presidential contest, when Karzai’s men were caught on video stuffing ballot boxes.  (Afterward, President Obama phoned to congratulate Karzai on his “victory.”) Only dedicated or paid henchmen are likely to show up for the next “good enough for Afghans” exercise in democracy. Once again, an “election” may be just the elaborate stage set for announcing to a disillusioned public the names of those who will run the show in Kabul for the next few years.

Kabulis might live with that, as they’ve lived with Karzai all these years, but they fear power-hungry Afghan politicians could “compromise” as well with insurgent leaders like that old American favorite from the war against the Soviets, Gulbuddin Hekmatyar, who recently told a TV audience that he intends to claim his rightful place in government. Such compromises could stick the Afghan people with a shaky power-sharing deal among the most ultra-conservative, self-interested, sociopathic, and corrupt men in the country.  If that deal, in turn, were to fall apart, as most power-sharing agreements worldwide do within a year or two, the big men might well plunge the country back into a 1990s-style civil war, with no regard for the civilians caught in their path.

These worst-case scenarios are everyday Kabuli nightmares.  After all, during decades of war, the savvy citizens of the capital have learned to expect the worst from the men currently characterized in a popular local graffiti this way: “Mujahideen=Criminals. Taliban=Dumbheads.”

Ordinary Kabulis express reasonable fears for the future of the country, but impatient free-marketeering businessmen are voting with their feet right now, or laying plans to leave soon. They’ve made Kabul hum (often with foreign aid funds, which are equivalent to about 90% of the country’s economic activity), but they aren’t about to wait around for the results of election 2014.  Carpe diem has become their version of financial advice.  As a result, they are snatching what they can and packing their bags.

Millions of dollars reportedly take flight from Kabul International Airport every day: officially about $4.6 billion in 2011, or just about the size of Afghanistan’s annual budget. Hordes of businessmen and bankers (like those who, in 2004, set up the Ponzi scheme called the Kabul Bank, from which about a billion dollars went missing) are heading for cushy spots like Dubai, where they have already established residence on prime real estate.

As they take their investments elsewhere and the American effort winds down, the Afghan economy contracts ever more grimly, opportunities dwindle, and jobs disappear.  Housing prices in Kabul are falling for the first time since the start of the occupation as rich Afghans and profiteering private American contractors, who guzzled the money that Washington and the “international community” poured into the country, move on.

At the same time, a money-laundering building boom in Kabul appears to have stalled, leaving tall, half-built office blocks like so many skeletons amid the scalloped Pakistani palaces, vertical malls, and grand madrassas erected in the past four or five years by political and business insiders and well-connected conservative clerics.

Most of the Afghan tycoons seeking asylum elsewhere don’t fear for their lives, just their pocketbooks: they’re not political refugees, but free-market rats abandoning the sinking ship of state.  Joining in the exodus (but not included in the statistics) are countless illegal émigrés seeking jobs or fleeing for their lives, paying human smugglers money they can’t afford as they head for Europe by circuitous and dangerous routes.

Threatened Afghans have fled from every abrupt change of government in the last century, making them the largest population of refugees from a single country on the planet.  Once again, those who can are voting with their feet (or their pocketbooks) -- and voting early.

Afghanistan’s historic tragedy is that its violent political shifts -- from king to communists to warlords to religious fundamentalists to the Americans -- have meant the flight of the very people most capable of rebuilding the country along peaceful and prosperous lines.  And their departure only contributes to the economic and political collapse they themselves seek to avoid.  Left behind are ordinary Afghans -- the illiterate and unskilled, but also a tough core of educated, ambitious citizens, including women’s rights activists, unwilling to surrender their dream of living once again in a free and peaceful Afghanistan.

The Military Monster

These days Kabul resounds with the blasts of suicide bombers, IEDs, and sporadic gunfire.  Armed men are everywhere in anonymous uniforms that defy identification.  Any man with money can buy a squad of bodyguards, clad in classy camouflage and wraparound shades, and armed with assault weapons.  Yet Kabulis, trying to carry on normal lives in the relative safety of the capital, seem to maintain a distance from the war going on in the provinces.

Asked that crucial question -- do you think American forces should stay or go? -- the Kabulis I talked with tended to answer in a theoretical way, very unlike the visceral response one gets in the countryside, where villages are bombed and civilians killed, or in the makeshift camps for internally displaced people that now crowd the outer fringes of Kabul. (By the time U.S. Marines surged into Taliban-controlled Helmand Province in the south in 2010 to bring counterinsurgency-style protection to the residents there, tens of thousands of them had already moved to those camps in Kabul.)  Afghans in the countryside want to be rid of armed men.  All of them.  Kabulis just want to be secure, and if that means keeping some U.S. troops at Bagram Air Base near the capital, as Afghan and American officials are currently discussing, well, it’s nothing to them.

In fact, most Kabulis I spoke to think that’s what’s going to happen.  After all, American officials have been talking for years about keeping permanent bases in Afghanistan (though they avoid the term “permanent” when speaking to the American press), and American military officers now regularly appear on Afghan TV to say, “The United States will never abandon Afghanistan.”  Afghans reason: Americans would not have spent nearly 12 years fighting in this country if it were not the most strategic place on the planet and absolutely essential to their plans to “push on” Iran and China next.  Everybody knows that pushing on other countries is an American specialty.

Besides, Afghans can see with their own eyes that U.S. command centers, including multiple bases in Kabul, and Bagram Air Base, only 30 miles away, are still being expanded and upgraded.  Beyond the high walls of the American Embassy compound, they can also see the tall new apartment blocks going up for an expanding staff, even if Washington now claims that staff will be reduced in the years to come.

Why, then, would President Obama announce the drawdown of U.S. troops to perhaps a few thousand special operations forces and advisors, if Washington didn’t mean to leave?  Afghans have a theory about that, too.  It’s a ruse, many claim, to encourage all other foreign forces to depart so that the Americans can have everything to themselves.  Afghanistan, as they imagine it, is so important that the U.S., which has fought the longest war in its history there, will be satisfied with nothing less.

I was there to listen, but at times I did mention to Afghans that America’s post-9/11 wars and occupations were threatening to break the country.  “We just can’t afford this war anymore,” I said.

Afghans only laugh at that.  They’ve seen the way Americans throw money around.  They’ve seen the way American money corrupted the Afghan government, and many reminded me that American politicians like Afghan ones are bought and sold, and its elections won by money. Americans, they know, are as rich as Croesus and very friendly, though on the whole not very well mannered or honest or smart.

Operation Enduring Presence      

More than 11 years later, the tragedy of the American war in Afghanistan is simple enough: it has proven remarkably irrelevant to the lives of the Afghan people -- and to American troops as well.  Washington has long appeared to be fighting its own war in defense of a form of government and a set of long-discredited government officials that ordinary Afghans would never have chosen for themselves and have no power to replace.

In the early years of the war (2001-2005), George W. Bush’s administration was far too distracted planning and launching another war in Iraq to maintain anything but a minimal military presence in Afghanistan -- and that mainly outside the capital.  Many journalists (including me) criticized Bush for not finishing the war he started there when he had the chance, but today Kabulis look back on that soldierless period of peace and hope with a certain nostalgia.  In some quarters, the Bush years have even acquired something like the sheen of a lost Golden Age -- compared, that is, to the thoroughgoing militarization of American policy that followed.

So commanding did the U.S. military become in Kabul and Washington that, over the years, it ate the State Department, gobbled up the incompetent bureaucracy of the U.S. Agency for International Development, and established Provincial Reconstruction Teams (PRTs) in the countryside to carry out maniacal “development” projects and throw bales of cash at all the wrong “leaders.”

Of course, the military also killed a great many people, both “enemies” and civilians.  As in Vietnam, it won the battles, but lost the war.  When I asked Afghans from Mazar-e-Sharif in the north how they accounted for the relative peacefulness and stability of their area, the answer seemed self-evident: “Americans didn’t come here.”

Other consequences, all deleterious, flowed from the militarization of foreign policy.  In Afghanistan and the United States, so intimately ensnarled over all these years, the income gap between the rich and everyone else has grown exponentially, in large part because in both countries the rich have made money off war-making, while ordinary citizens have slipped into poverty for lack of jobs and basic services.

Relying on the military, the U.S. neglected the crucial elements of civil life in Afghanistan that make things bearable -- like education and health care.  Yes, I’ve heard the repeated claims that, thanks to us, millions of children are now attending school.  But for how long?   According to UNICEF, in the years 2005-2010, in the whole of Afghanistan only 18% of boys attended high school, and 6% of girls.  What kind of report card is that?  After 11 years of underfunded work on health care in a country the size of Texas, infant mortality still remains the highest in the world.

By 2014, the defense of Afghanistan will have been handed over to the woeful Afghan National Security Force, also known in military-speak as the “Enduring Presence Force.”  In that year, for Washington, the American war will be officially over, whether it’s actually at an end or not, and it will be up to Afghans to do the enduring.

Here’s where that final scenario -- collapse -- haunts the Kabuli imagination.  Economic collapse means joblessness, poverty, hunger, and a great swelling of the ranks of children cadging a living in the streets.  Already street children are said to number a million strong in Kabul, and 4 million across the country.  Only blocks from the Presidential Palace, they are there in startling numbers selling newspapers, phone cards, toilet paper, or simply begging for small change. Are they the county’s future?

And if the state collapses, too?  Afghans of a certain age remember well the last time the country was left on its own, after the Soviets departed in 1989, and the U.S. also terminated its covert aid.  The mujahideen parties -- Islamists all -- agreed to take turns ruling the country, but things soon fell apart and they took turns instead lobbing rockets into Kabul, killing tens of thousands of civilians, reducing entire districts to rubble, raiding and raping -- until the Taliban came up from the south and put a stop to everything.

Afghan civilians who remember that era hope that this time Karzai will step down as he promises, and that the usual suspects will find ways to maintain traditional power balances, however undemocratic, in something that passes for peace.  Afghan civilians are, however, betting that if a collision comes, one-third of those Afghan Security Forces trained at fabulous expense to protect them will fight for the government (whoever that may be), one-third will fight for the opposition, and one-third will simply desert and go home.  That sounds almost like a plan.

© 2013 Ann Jones

Ann Jones

Ann Jones, writer and photographer, is the author of seven previous books, including War Is Not Over When It's Over, Kabul in Winter, Women Who Kill, and Next Time She'll Be Dead. Since 2001, Jones has worked with women in conflict and post-conflict zones, principally Afghanistan, and reported on their concerns. An authority on violence against women, she has served as a gender adviser to the United Nations. Her work has appeared in numerous publications, including The New York Times and The Nation. For more information, visit her website.

Only Three Choices for Afghan Endgame: Compromise, Conflict, or Collapse

KABUL, Afghanistan – Compromise, conflict, or collapse: ask an Afghan what to expect in 2014 and you’re likely to get a scenario that falls under one of those three headings. 2014, of course, is the year of the double whammy in Afghanistan: the next presidential election coupled with the departure of most American and other foreign forces. Many Afghans fear a turn for the worse, while others are no less afraid that everything will stay the same.  Some even think things will get better when the occupying forces leave.  Most predict a more conservative climate, but everyone is quick to say that it’s anybody’s guess.

Only one thing is certain in 2014: it will be a year of American military defeat.  For more than a decade, U.S. forces have fought many types of wars in Afghanistan, from a low-footprint invasion, to multiple surges, to a flirtation with Vietnam-style counterinsurgency, to a ramped-up, gloves-off air war.  And yet, despite all the experiments in styles of war-making, the American military and its coalition partners have ended up in the same place: stalemate, which in a battle with guerrillas means defeat.  For years, a modest-sized, generally unpopular, ragtag set of insurgents has fought the planet’s most heavily armed, technologically advanced military to a standstill, leaving the country shaken and its citizens anxiously imagining the outcome of unpalatable scenarios.

The first, compromise, suggests the possibility of reaching some sort of almost inconceivable power-sharing agreement with multiple insurgent militias.  While Washington presses for negotiations with its designated enemy, “the Taliban,” representatives of President Hamid Karzai’s High Peace Council, which includes 12 members of the former Taliban government and many sympathizers, are making the rounds to talk disarmament and reconciliation with all the armed insurgent groups that the Afghan intelligence service has identified across the country. There are 1,500 of them.

One member of the Council told me, “It will take a long time before we get to Mullah Omar [the Taliban’s titular leader].  Some of these militias can’t even remember what they’ve been fighting about.”

The second scenario, open conflict, would mean another dreaded round of civil war like the one in the 1990s, after the Soviet Union withdrew in defeat -- the one that destroyed the Afghan capital, Kabul, devastated parts of the country, and gave rise to the Taliban.

The third scenario, collapse, sounds so apocalyptic that it’s seldom brought up by Afghans, but it’s implied in the exodus already underway of those citizens who can afford to leave the country.  The departures aren’t dramatic.  There are no helicopters lifting off the roof of the U.S. Embassy with desperate Afghans clamoring to get on board; just a record number of asylum applications in 2011, a year in which, according to official figures, almost 36,000 Afghans were openly looking for a safe place to land, preferably in Europe.  That figure is likely to be at least matched, if not exceeded, when the U.N. releases the complete data for 2012.

In January, I went to Kabul to learn what old friends and current officials are thinking about the critical months ahead.  At the same time, Afghan President Karzai flew to Washington to confer with President Obama.  Their talks seem to have differed radically from the conversations I had with ordinary Afghans. In Kabul, where strange rumors fly, an official reassured me that the future looked bright for the country because Karzai was expected to return from Washington with the promise of American radar systems, presumably for the Afghan Air Force, which is not yet “operational.” (He actually returned with the promise of helicopters, cargo planes, fighter jets, and drones.) Who knew that the fate of the nation and its suffering citizens hinged on that?  In my conversations with ordinary Afghans, one thing that never came up was radar.

Another term that never seems to enter ordinary Afghan conversation, much as it obsesses Americans, is “al-Qaeda.” President Obama, for instance, announced at a joint press conference with President Karzai: “Our core objective -- the reason we went to war in the first place -- is now within reach: ensuring that al-Qaeda can never again use Afghanistan to launch attacks against America.”  An Afghan journalist asked me, “Why does he worry so much about al-Qaeda in Afghanistan? Doesn’t he know they are everywhere else?”

At the same Washington press conference, Obama said, “The nation we need to rebuild is our own.” Afghans long ago gave up waiting for the U.S. to make good on its promises to rebuild theirs. What’s now striking, however, is the vast gulf between the pronouncements of American officialdom and the hopes of ordinary Afghans.  It’s a gap so wide you would hardly think -- as Afghans once did -- that we are fighting for them.

To take just one example: the official American view of events in Afghanistan is wonderfully black and white.  The president, for instance, speaks of the way U.S. forces heroically “pushed the Taliban out of their strongholds.” Like other top U.S. officials over the years, he forgets whom we pushed into the Afghan government, our “stronghold” in the years after the 2001 invasion: ex-Taliban and Taliban-like fundamentalists, the most brutal civil warriors, and serial human rights violators.

Afghans, however, haven’t forgotten just whom the U.S. put in place to govern them -- exactly the men they feared and hated most in exactly the place where few Afghans wanted them to be.  Early on, between 2002 and 2004, 90% of Afghans surveyed nationwide told the Afghan Independent Human Rights Commission that such men should not be allowed to hold public office; 76% wanted them tried as war criminals.

In my recent conversations, many Afghans still cited the first loya jirga, an assembly convened in 2003 to ratify the newly drafted constitution, or the first presidential election in 2004, or the parliamentary election of 2005, all held under international auspices, as the moments when the aspirations of Afghans and the “international community” parted company. In that first parliament, as in the earlier gatherings, most of the men were affiliated with armed militias; every other member was a former jihadi, and nearly half were affiliated with fundamentalist Islamist parties, including the Taliban.

In this way, Afghans were consigned to live under a government of bloodstained warlords and fundamentalists, who turned out to be Washington’s guys.  Many had once battled the Soviets using American money and weapons, and quite a few, like the former warlord, druglord, minister of defense, and current vice-president Muhammad Qasim Fahim, had been very chummy with the CIA.

In the U.S., such details of our Afghan War, now in its 12th year, are long forgotten, but to Afghans who live under the rule of the same old suspects, the memory remains painfully raw.  Worse, Afghans know that it is these very men, rearmed and ready, who will once again compete for power in 2014.

How to Vote Early in Afghanistan

President Karzai is barred by term limits from standing for reelection in 2014, but many Kabulis believe he reached a private agreement with the usual suspects at a meeting late last year. In early January, he seemed to seal the deal by announcing that, for the sake of frugality, the voter cards issued for past elections will be reused in 2014.  Far too many of those cards were issued for the 2004 election, suspiciously more than the number of eligible voters.  During the 2009 campaign, anyone could buy fistfuls of them at bargain basement prices.  So this decision seemed to kill off the last faint hope of an election in which Afghans might actually have a say about the leadership of the country.

Fewer than 35% of voters cast ballots in the last presidential contest, when Karzai’s men were caught on video stuffing ballot boxes.  (Afterward, President Obama phoned to congratulate Karzai on his “victory.”) Only dedicated or paid henchmen are likely to show up for the next “good enough for Afghans” exercise in democracy. Once again, an “election” may be just the elaborate stage set for announcing to a disillusioned public the names of those who will run the show in Kabul for the next few years.

Kabulis might live with that, as they’ve lived with Karzai all these years, but they fear power-hungry Afghan politicians could “compromise” as well with insurgent leaders like that old American favorite from the war against the Soviets, Gulbuddin Hekmatyar, who recently told a TV audience that he intends to claim his rightful place in government. Such compromises could stick the Afghan people with a shaky power-sharing deal among the most ultra-conservative, self-interested, sociopathic, and corrupt men in the country.  If that deal, in turn, were to fall apart, as most power-sharing agreements worldwide do within a year or two, the big men might well plunge the country back into a 1990s-style civil war, with no regard for the civilians caught in their path.

These worst-case scenarios are everyday Kabuli nightmares.  After all, during decades of war, the savvy citizens of the capital have learned to expect the worst from the men currently characterized in a popular local graffiti this way: “Mujahideen=Criminals. Taliban=Dumbheads.”

Ordinary Kabulis express reasonable fears for the future of the country, but impatient free-marketeering businessmen are voting with their feet right now, or laying plans to leave soon. They’ve made Kabul hum (often with foreign aid funds, which are equivalent to about 90% of the country’s economic activity), but they aren’t about to wait around for the results of election 2014.  Carpe diem has become their version of financial advice.  As a result, they are snatching what they can and packing their bags.

Millions of dollars reportedly take flight from Kabul International Airport every day: officially about $4.6 billion in 2011, or just about the size of Afghanistan’s annual budget. Hordes of businessmen and bankers (like those who, in 2004, set up the Ponzi scheme called the Kabul Bank, from which about a billion dollars went missing) are heading for cushy spots like Dubai, where they have already established residence on prime real estate.

As they take their investments elsewhere and the American effort winds down, the Afghan economy contracts ever more grimly, opportunities dwindle, and jobs disappear.  Housing prices in Kabul are falling for the first time since the start of the occupation as rich Afghans and profiteering private American contractors, who guzzled the money that Washington and the “international community” poured into the country, move on.

At the same time, a money-laundering building boom in Kabul appears to have stalled, leaving tall, half-built office blocks like so many skeletons amid the scalloped Pakistani palaces, vertical malls, and grand madrassas erected in the past four or five years by political and business insiders and well-connected conservative clerics.

Most of the Afghan tycoons seeking asylum elsewhere don’t fear for their lives, just their pocketbooks: they’re not political refugees, but free-market rats abandoning the sinking ship of state.  Joining in the exodus (but not included in the statistics) are countless illegal émigrés seeking jobs or fleeing for their lives, paying human smugglers money they can’t afford as they head for Europe by circuitous and dangerous routes.

Threatened Afghans have fled from every abrupt change of government in the last century, making them the largest population of refugees from a single country on the planet.  Once again, those who can are voting with their feet (or their pocketbooks) -- and voting early.

Afghanistan’s historic tragedy is that its violent political shifts -- from king to communists to warlords to religious fundamentalists to the Americans -- have meant the flight of the very people most capable of rebuilding the country along peaceful and prosperous lines.  And their departure only contributes to the economic and political collapse they themselves seek to avoid.  Left behind are ordinary Afghans -- the illiterate and unskilled, but also a tough core of educated, ambitious citizens, including women’s rights activists, unwilling to surrender their dream of living once again in a free and peaceful Afghanistan.

The Military Monster

These days Kabul resounds with the blasts of suicide bombers, IEDs, and sporadic gunfire.  Armed men are everywhere in anonymous uniforms that defy identification.  Any man with money can buy a squad of bodyguards, clad in classy camouflage and wraparound shades, and armed with assault weapons.  Yet Kabulis, trying to carry on normal lives in the relative safety of the capital, seem to maintain a distance from the war going on in the provinces.

Asked that crucial question -- do you think American forces should stay or go? -- the Kabulis I talked with tended to answer in a theoretical way, very unlike the visceral response one gets in the countryside, where villages are bombed and civilians killed, or in the makeshift camps for internally displaced people that now crowd the outer fringes of Kabul. (By the time U.S. Marines surged into Taliban-controlled Helmand Province in the south in 2010 to bring counterinsurgency-style protection to the residents there, tens of thousands of them had already moved to those camps in Kabul.)  Afghans in the countryside want to be rid of armed men.  All of them.  Kabulis just want to be secure, and if that means keeping some U.S. troops at Bagram Air Base near the capital, as Afghan and American officials are currently discussing, well, it’s nothing to them.

In fact, most Kabulis I spoke to think that’s what’s going to happen.  After all, American officials have been talking for years about keeping permanent bases in Afghanistan (though they avoid the term “permanent” when speaking to the American press), and American military officers now regularly appear on Afghan TV to say, “The United States will never abandon Afghanistan.”  Afghans reason: Americans would not have spent nearly 12 years fighting in this country if it were not the most strategic place on the planet and absolutely essential to their plans to “push on” Iran and China next.  Everybody knows that pushing on other countries is an American specialty.

Besides, Afghans can see with their own eyes that U.S. command centers, including multiple bases in Kabul, and Bagram Air Base, only 30 miles away, are still being expanded and upgraded.  Beyond the high walls of the American Embassy compound, they can also see the tall new apartment blocks going up for an expanding staff, even if Washington now claims that staff will be reduced in the years to come.

Why, then, would President Obama announce the drawdown of U.S. troops to perhaps a few thousand special operations forces and advisors, if Washington didn’t mean to leave?  Afghans have a theory about that, too.  It’s a ruse, many claim, to encourage all other foreign forces to depart so that the Americans can have everything to themselves.  Afghanistan, as they imagine it, is so important that the U.S., which has fought the longest war in its history there, will be satisfied with nothing less.

I was there to listen, but at times I did mention to Afghans that America’s post-9/11 wars and occupations were threatening to break the country.  “We just can’t afford this war anymore,” I said.

Afghans only laugh at that.  They’ve seen the way Americans throw money around.  They’ve seen the way American money corrupted the Afghan government, and many reminded me that American politicians like Afghan ones are bought and sold, and its elections won by money. Americans, they know, are as rich as Croesus and very friendly, though on the whole not very well mannered or honest or smart.

Operation Enduring Presence      

More than 11 years later, the tragedy of the American war in Afghanistan is simple enough: it has proven remarkably irrelevant to the lives of the Afghan people -- and to American troops as well.  Washington has long appeared to be fighting its own war in defense of a form of government and a set of long-discredited government officials that ordinary Afghans would never have chosen for themselves and have no power to replace.

In the early years of the war (2001-2005), George W. Bush’s administration was far too distracted planning and launching another war in Iraq to maintain anything but a minimal military presence in Afghanistan -- and that mainly outside the capital.  Many journalists (including me) criticized Bush for not finishing the war he started there when he had the chance, but today Kabulis look back on that soldierless period of peace and hope with a certain nostalgia.  In some quarters, the Bush years have even acquired something like the sheen of a lost Golden Age -- compared, that is, to the thoroughgoing militarization of American policy that followed.

So commanding did the U.S. military become in Kabul and Washington that, over the years, it ate the State Department, gobbled up the incompetent bureaucracy of the U.S. Agency for International Development, and established Provincial Reconstruction Teams (PRTs) in the countryside to carry out maniacal “development” projects and throw bales of cash at all the wrong “leaders.”

Of course, the military also killed a great many people, both “enemies” and civilians.  As in Vietnam, it won the battles, but lost the war.  When I asked Afghans from Mazar-e-Sharif in the north how they accounted for the relative peacefulness and stability of their area, the answer seemed self-evident: “Americans didn’t come here.”

Other consequences, all deleterious, flowed from the militarization of foreign policy.  In Afghanistan and the United States, so intimately ensnarled over all these years, the income gap between the rich and everyone else has grown exponentially, in large part because in both countries the rich have made money off war-making, while ordinary citizens have slipped into poverty for lack of jobs and basic services.

Relying on the military, the U.S. neglected the crucial elements of civil life in Afghanistan that make things bearable -- like education and health care.  Yes, I’ve heard the repeated claims that, thanks to us, millions of children are now attending school.  But for how long?   According to UNICEF, in the years 2005-2010, in the whole of Afghanistan only 18% of boys attended high school, and 6% of girls.  What kind of report card is that?  After 11 years of underfunded work on health care in a country the size of Texas, infant mortality still remains the highest in the world.

By 2014, the defense of Afghanistan will have been handed over to the woeful Afghan National Security Force, also known in military-speak as the “Enduring Presence Force.”  In that year, for Washington, the American war will be officially over, whether it’s actually at an end or not, and it will be up to Afghans to do the enduring.

Here’s where that final scenario -- collapse -- haunts the Kabuli imagination.  Economic collapse means joblessness, poverty, hunger, and a great swelling of the ranks of children cadging a living in the streets.  Already street children are said to number a million strong in Kabul, and 4 million across the country.  Only blocks from the Presidential Palace, they are there in startling numbers selling newspapers, phone cards, toilet paper, or simply begging for small change. Are they the county’s future?

And if the state collapses, too?  Afghans of a certain age remember well the last time the country was left on its own, after the Soviets departed in 1989, and the U.S. also terminated its covert aid.  The mujahideen parties -- Islamists all -- agreed to take turns ruling the country, but things soon fell apart and they took turns instead lobbing rockets into Kabul, killing tens of thousands of civilians, reducing entire districts to rubble, raiding and raping -- until the Taliban came up from the south and put a stop to everything.

Afghan civilians who remember that era hope that this time Karzai will step down as he promises, and that the usual suspects will find ways to maintain traditional power balances, however undemocratic, in something that passes for peace.  Afghan civilians are, however, betting that if a collision comes, one-third of those Afghan Security Forces trained at fabulous expense to protect them will fight for the government (whoever that may be), one-third will fight for the opposition, and one-third will simply desert and go home.  That sounds almost like a plan.

© 2013 Ann Jones

Ann Jones

Ann Jones, writer and photographer, is the author of seven previous books, including War Is Not Over When It's Over, Kabul in Winter, Women Who Kill, and Next Time She'll Be Dead. Since 2001, Jones has worked with women in conflict and post-conflict zones, principally Afghanistan, and reported on their concerns. An authority on violence against women, she has served as a gender adviser to the United Nations. Her work has appeared in numerous publications, including The New York Times and The Nation. For more information, visit her website.

Mehdi’s Morning Memo: The Great Train Rebellion

The ten things you need to know on Monday 28 January 2013...

THE GREAT TRAIN REBELLION

First, there were the Euro-rebels. Then the gay-marriage rebels. Now, it's the train-spotting rebels. David Cameron, it seems, can't stop picking fights with his backbenchers.

The Times splashes on the Tories' "high speed rebellion":

"David Cameron faces a grassroots Tory rebellion after he unveils plans today to drive the fastest railway in Europe through the party’s heartlands to Manchester and Leeds.

"The Times can reveal that a blueprint for the £33 billion High Speed 2 line, to be published this morning, will" - among other things - "pledge to create 100,00 jobs, including 10,000 during construction". Hmm, they had me at "100,000 jobs".

This could be the moment that former Welsh secretary Cheryl Gillan - leader of parliament's Nimby brigade, whose Amersham and Chesham seat is on the route and has described it as "the wrong railway in the wrong place at the wrong time and for such a high cost" - takes revenge on the PM for sacking her from the cabinet last year. Dave may come to regret giving Cheryl the boot while swilling a glass of red wine...

Note: Apologies for the lack of a Morning Memo yesterday. I was out of the country, at a conference. Normal Sunday service will resume next weekend.

2) DAVE VS ADAM

Perhaps Cheryl Gillan will have to get in line. Yesterday, a new challenger appeared on the scene: (backbench) Conservative MP for Windsor, Adam Afriyie. (Adam who?)

The Independent's Andy McSmith reports:

"The debate began after three Tory-supporting Sunday newspapers reported a 'well-organised' campaign to secure the leadership for Mr Afriyie, who was a frontbench spokesman for the Conservatives in opposition but was excluded from the Government.

"... Mr Afriyie said he almost choked on his breakfast cereal when he read the reports. He told Sky News: 'I will never stand against David Cameron. I am 100 per cent supportive of David Cameron... There is no truth to any of it. We are working very hard to keep David Cameron secure, to make sure there is not a vacancy.'

"However, he also said he and his allies had talked about 'the long-term future of the party,' indicating that he sees himself as a candidate in a post-2015 leadership contest if the Tories lose the general election.

"The promise not to stand against Mr Cameron is actually meaningless, because the rules of the Conservative Party, revised after the fall of Margaret Thatcher, do not permit a direct challenge to a Tory Prime Minister, who must be felled by a vote of no confidence before an election can be held to choose a successor."

The Telegraph reveals, on its front page, that "a handful of former ministers who were sacked by Mr Cameron in the reshuffle have been working for weeks, trying to cement support for Mr Afriyie if the Tories lose the likely May 2015 election".

The paper's leader concludes: "The silly season appears to have started early this year."

Indeed.

3) LIB DEMS FOREVER

"England does not love coalitions," Benjamin Disraeli famously remarked. This morning's Independent has this as one of its front-page headlines: "Prepare for an era of coalitions, say Lib Dems."

The paper's Andrew Grice has interviewed the Tories' favourite Lib Dem minister, David Laws, and reports:

"Liberal Democrat leaders want all three main parties to draw up a slimline manifesto for an era of 'coalition politics' as well as an 'age of austerity' at the 2015 general election.

"In an interview with The Independent, David Laws, who heads the Liberal Democrats' manifesto group, said: 'We have to learn the lesson of tuition fees.'"

The Indy also notes how party leader Clegg told the BBC's Andrew Marr programme yesterday that the Lib Dems would be up for joining a coalition with Labour if the latter beat the Conservatives at the next election.

Is the country ready for its own version of Germany's Free Democrats - i.e. a third party that is permanently in government via ever-changing coalitions?

4) DON'T COME TO BRITAIN. IT SUCKS HERE.

This is my favourite story of the day - from the Guardian's front page:

"Please don't come to Britain – it rains and the jobs are scarce and low-paid. Ministers are considering launching a negative advertising campaign in Bulgaria and Romania to persuade potential immigrants to stay away from the UK.

"The plan, which would focus on the downsides of British life, is one of a range of potential measures to stem immigration to Britain next year when curbs imposed on both country's citizens living and working in the UK will expire.

"A report over the weekend quoted one minister saying that such a negative advert would 'correct the impression that the streets here are paved with gold'."

Well, of course, they're not. We're on the verge of a triple-dip recession, with real wages falling and child poverty on the rise. Thanks, in part, to policies backed by that unnamed, anonymous minister.

But, take a step back, what kind of government is so obsessed with 'cracking down' on immigration that it's willing to consider doing down the country's international image in order to keep migrants out? You could not make it up.

To be fair, the FT reports: "Downing Street played down any such campaign yesterday, with one aide dismissing the idea as 'kite flying'."

5) DON'T FORGET MALI

Hats off to the Indy and the Guardian for keeping news the conflict in Mali on their front pages.

The Independent's splash headline reads: "Revealed: how French raid killed 12 Malian villagers."

The paper reports:

"A father last night described the moment a French attack helicopter bombed his town in Mali, killing his wife and at least three children from another family. Amadou Jallo, 57, lost his wife, Aminata, in the attack on Konna, in which 12 civilians died and 15 more were injured."

Meanwhile, the Guardian's Luke Harding reports:

"Just two weeks after intervening in Mali, French troops, together with the Malian army, have wrested back control of most of the north of the country from Islamist rebels.

But, he adds:

"... despite these swift successes, it is uncertain whether France's giddy military advance will deliver any kind of lasting peace. So far the 'war' in Mali has involved little fighting. Instead Islamist rebels have simply melted back into the civilian population, or disappeared."

Hmm. Sounds like Afghanistan circa late 2001.

BECAUSE YOU'VE READ THIS FAR...

Watch this video: "Six dogs. One Dish. One incredibly cute trick."

6) ERIC PICKLES VS 'CHEATING' COUNCILS

The Telegraph splashes on the "minister at war over 'cheating' councils":

"Councils are treating local residents 'with contempt' and will be cheating taxpayers if they increase local taxes without public backing, the Local Government Secretary warns.

"In an article for The Daily Telegraph, Eric Pickles says he will introduce new laws to stop councils abusing the system by hitting householders with stealth tax rises next year.

"Mr Pickles, who describes some councils as 'cheating their taxpayers', discloses that only about a third have so far signed up for a national council tax freeze, with dozens more threatening to defy government calls for restraint amid the ongoing economic turmoil."

Perhaps, just perhaps, if the coalition hadn't frontloaded their cuts to local government budgets, councils wouldn't need to raise council tax.

7) VOTE TORY, GET NO HOLIDAYS?

From the Guardian:

"David Cameron will use EU reforms to repatriate and weaken workers' rights, Frances O'Grady, the new leader of the Trades Union Congress will warn on Monday.

"Speaking at a conference in Madrid she will say that, if the prime minister gets his way, employees across Europe may no longer receive health and safety protection, equal treatment as part-time workers and women, or paid holidays."

8) NO NEED TO SMELL THE COFFEE

The papers this morning are all ove the so-called 'spat' between the government and Starbucks. The Express reports:

"Conservative party chairman Grant Shapps yesterday denied that the Tories had 'singled out' coffee giant Starbucks over how much tax it paid.

"His comments follow claims that the US firm had threatened to stop investing in Britain after Prime Minister David Cameron urged business last week to 'wake up and smell the coffee' about public anger over tax avoidance.

"It was seen as a dig at Starbucks, which has paid no corporation tax in the last three years and only £8.6million in 14 years in Britain."

9) 'DIVERSITY CRISIS'

The Guardian's splash is a self-professed 'exclusive':

"Police forces should be made to positively discriminate in favour of black and ethnic minority officers in the face of a growing diversity crisis, according to one of the country's leading chief constables.

"The radical proposal – which would mean a change in the law – from Sir Peter Fahy, of Greater Manchester, comes in the face of what he said was an embarrassing paucity of black and minority ethnic officers (BME) at the top of British policing."

I'm all for more diversity, and even - as a last resort - positive discrimination, but Fahy's rather odd comments about more BME officers helping with "undercover surveillance" won't go down that well with BME communities...

10) BARACK AND HILLARY SITTING IN A TREE...

It's not often you see the president of the United States sit down for a joint interview alongside his secretary of state.

From the Guardian:

"Barack Obama and Hillary Clinton coyly batted away questions over any White House succession plan during a mutually appreciative interview on Sunday...

"'You guys in the press are incorrigible. I was literally inaugurated four days ago, and you're talking about the elections four years from now,' offered Obama.

"Clinton likewise gave an answer that could be interpreted any number of ways: 'Obviously the president and I care deeply about what's going to happen for our country in the future. And I don't think, you know, either he or I can make predictions about what's going to happen tomorrow or the next year,' she said."

Obama declared, with Clinton at his side: "I'm going to miss her." Awww - to think it was only five years ago that they were tearing strips out of each other in public as they tried to destroy each other's political careers.

PUBLIC OPINION WATCH

From yesterday's Sunday Times/YouGov poll:

Labour 41
Conservatives 35
Lib Dems 12
Ukip 7

That would give Labour a majority of 78.

140 CHARACTERS OR LESS

@TomHarrisMP If Cameron fails to win a majority in 2015, then obviously *someone* will take over. That doesn't necessarily mean there's a conspiracy.

@BevanJa Is it possible for newspapers to suggest a black politician may be a future party leader without a crude comparison to Obama?

@DanHannanMEP Does Nick Clegg lack all self-awareness? A referendum on AV was critical, but a referendum on the EU is a distraction?

900 WORDS OR MORE

Boris Johnson, writing in the Telegraph, says: "Only a coward would deny the people their voice on Europe."

Gavin Kelly, writing in the Guardian, says: "Could the Tories' plan for re-election in 2015 cost just 10p?"

David Blunkett, writing in the Daily Mail, says: "Coalition's constituency boundary reforms are a complete mess and an insult to voters."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

The Hidden War on Nature

world

Western governments are blind to the campaign they should be waging, that of climate change, the degradation of the environment and the destruction of the natural world upon which all humanity depends.

We have been told for years about the catastrophic felling of the rain forests; the reduction of tiger, gorilla, whale or bluefin tuna populations; the extinction of countless species of small insects, reptiles, birds and plants; and the loss of biodiversity and habitats in far-off lands.  But closer to home and far more subtle is the gentle, almost invisible eating away of the environment and its protections by governments, even while they prate about destruction elsewhere.  It is happening in all those countries whose governments are in thrall and tied to big business and making money regardless of tomorrow.  It is happening near you.  And it is accompanied by a lot of cynical promises, pledges and ‘public consultations’ that the genuine public never seem to be involved in.

Politicians kowtow to voters’ concerns by parading their ‘green’ credentials, but statements are cheap.  So are new logos.  Back in 2006 the Conservatives, recognising that many voters were tired of the lack of environmental action by the Labour government, produced the new Tory logo , a scribbled tree.  Meant to show off new green credentials, what it really suggests is that all things green can be rubbed out and redrawn to suit the Tory agenda.  At the same time David Cameron demonstrated just how green he was by flying up to the Arctic Circle for a photo-shoot with huskies.  Bearing in mind that the Tories are the party of the ‘landed gentry’ who own an awful lot of Britain (only 0.6 per cent of the UK’s population owns 50 per cent of our rural land), how green have they proved to be?

When Cameron became Prime Minister he said he was going to head the ‘greenest government ever’. They showed their true colours when they announced the sell-off of publicly-owned forests to private buyers.  Such was the outcry from people waking up to the realisation that ‘their’ woods meant a lot to them, that a U turn was taken and the policy finally scrapped.  But it was clear that the only value our beloved countryside had for the Tories was monetary.

Having to manage a large national debt, they announced massive cuts in the budgets of various ministries.  Fair enough – but look at this:  Defra (Department for Environment, Farming & Rural Affairs) was asked to cut its small annual budget of £2.9bn by 25%.  Yet the £46.1bn budget of the Ministry of Defence was only cut by 8%, demonstrating all too clearly where the government’s priorities lie.  Within Defra is the Environment Agency.  A major part of the EA’s role is flood defence work.  Last summer Britain suffered exceptionally wet weather with thousands of homes flooded – not helped by the fact that flood defence schemes had not been built because of the cuts.

In their drive for cuts they have axed, among other bodies, the Renewables Advisory Board, Advisory Committee on Organic Standards, the Commons Commissioners, Expert Panel on Air Quality Standards and the Royal Commission on Environmental Pollution.  Natural England, whose remit is to conserve the natural environment, was threatened, as were Wildlife Trusts across the country.  No change there then.  Back in 1995 a former Conservative government cut the budget of Scottish Natural Heritage, apparently in retaliation for its support of the campaign against the proposed super quarry on the Isle of Harris.

The Tories do not like wildlife.  The Chancellor, George Osborne, accused  the habitats directive, aimed at safeguarding wildlife and biodiversity, of “placing ridiculous costs on British businesses”.  After this country finally banned the hunting of animals (mainly foxes, deer and hares) by dogs in 2004, Tory MPs mutter about repealing the law so they can get back to killing for fun.  And the Heythrop Hunt, which Cameron himself follows, was convicted  last December of illegally hunting foxes.

All birds of prey, protected by law, are seen as enemies of the rich who own large estates and love shooting pheasant and grouse.  Such a man is Owen Paterson, appointed by Cameron to be the Environment Secretary, an appointment that provoked outrage among environmentalists.  His department, Defra, came up with a scheme to deal with the awful threat to young pheasants.  As the RSPB’s conservation director Martin Harper said, “We are shocked by Defra’s plans to destroy buzzard nests and to take buzzards into captivity to protect a non-native game bird released in its millions”.  Pheasants are bred almost entirely for the idle rich to shoot.  And Defra admitted no studies had been done to find out whether buzzards really are a threat.  Another public outcry and a retreat into ‘consultations and studies’.

For many of these people our ‘green and pleasant land’ is not there to be cherished and protected, but simply a place to enjoy yourself in, (the Labour party, urban-oriented as they are, also have little interest in the countryside other than as a place for entertainment).  But even when farming, truly the one essential ‘industry’ as it provides our food, is considered, more killing is proposed.  This time badgers, also protected by law, were the target.  They were to be culled because they are carriers of bovine TB and some of our milk herds are infected.  In vain did people point out that killing the badgers made the survivors move into other TB-free areas.  In vain did people call for cattle or badgers to be vaccinated.  In vain did the government’s chief scientist advise against it.  The killing would go ahead.  Luckily for the badgers, Defra got its figures, timing and finance wrong and the cull has been delayed.  For now.

But the war against the environment is relentless.  If we are down to just one breeding pair of hen harriers, we may also lose that iconic animal of the Highlands, the wildcat.  One of our few remaining predators, the wildcat is about to become extinct in the wild.  But the people who protect these endangered species are also in danger of becoming extinct.  The National Wildlife Crime Unit, a strategic police unit, will probably lose its funding – hardly a great saving: 10 people and a budget of £136,000.  I was told the other day that my county police force has already lost its wildlife officer.  But these are the people who go after and successfully prosecute those who kill our birds of prey.  Funny, that.

Despite pleas the government refused to prevent the import of ash trees until too late and the ash dieback disease is now established in our woodlands.  It refuses to ban the use of neonicotinoid pesticides that studies say are damaging bees.  As usual it wants even more ‘proof’.  Even where the voters are concerned, its green policies are worthless.  The ‘green deal’, providing subsidies to help people insulate Britain’s cold and draughty homes was introduced in 2012.  It could have made a major contribution in cutting our carbon emissions.  But it then decided to restrict the deal to the very poor (who can’t take up the offer because they don’t own their own homes) with the result that only a tiny percentage of the homes will be insulated.

Last year the GM companies started to promote GM crops again on the premise again that many of the world’s people were starving.  They were backed up by an endless parade of government spokesmen including Owen Paterson insisting that GM food will sort our problems – no worries.  Their campaign was spoilt early this year by a report stating that almost 50% of the world’s food is wasted.  The hunger is a result of how we manage the world, not the earth’s inability to feed us.  But politicians in favour of genetically modified food do gloriously get it wrong at times in their eagerness to earn their biotech wages.

Of course, governments aren’t alone in trying to present themselves as ‘green’.  In 2000 British Petroleum launched a new logo telling us how they were working towards a green sustainable future.  They weren’t the only energy company to take that line, but their corporate-speak doesn’t mention that now.  They’re too busy rushing after Arctic drilling, tar sands or shale gas.  They will have a champion in Paterson who is really enthusiastic about fracking.

Britain isn’t alone in this – far from it.  Wherever you live you will find politicians chipping away at our precious environment on behalf of big business and the rich.  But if they won’t protect the small things, there’s no hope they will take action on the huge issue of climate change.  They are now admitting that the likely global temperature rise will be between 4-6 degrees C by the end of this century, but still pretending this is ‘manageable’.

Life does not depend on money, on economic growth, national interests or politicians.  It depends on the rocks and the soil, the water and the air, the miracle of seeds sprouting and animals giving birth.

Footnote:  just occasionally nature succeeds in getting in the way of ‘progress’.  Great Crested Newts, another protected species, held up the proposed development of the St. Athan Military Academy in Wales.  They’ve done it again!

Osborne Vows Not To ‘Run Away’ From Economy

George Osborne is under pressure to do more to jump start the ailing economy after another set of negative growth figures put the UK on course for an unprecedented triple-dip recession. The Chancellor George Osborne vowed not to "run away" from Britai...

Is Britain Intent Upon Leaving the European Union?

ukmap

British Prime Minister David Cameron finally set out his position on Britain’s relationship with the European Union (EU).

His speech [January 23 2013], committing the Conservative Party to a referendum on EU membership in 2017, had been postponed for a week, ostensibly due to the hostage crisis in Algeria. In truth, it was a speech that Cameron had postponed for seven years, since taking over leadership of the Tories, for fear that it would rip his party apart. In the end, it is primarily the fact that the Tories are already being pulled apart by opposing positions on the EU that forced his hand.

As Philip Stephens commented in the Financial Times, this was “politics on a tightrope”, motivated by Cameron’s hope that his commitment to a referendum would “forestall a historic split in his own party comparable to its 19th century ruptures over the Corn Laws and imperial trade preferences in the early 20th”.

But Cameron’s attempt to hold his party together, at least through the general election scheduled for 2015, came at a price. In the first place, his “red line commitment” to a referendum has placed the Conservatives in opposition to their Liberal Democrat coalition partners, who have attacked the move.

More worryingly for Cameron, and the British bourgeoisie as a whole, has been condemnation of the prospect of a British referendum by EU members and, more especially, by Washington.

Although the referendum is not scheduled for another four years and is dependent on the Tories winning re-election—itself a big ask—Cameron had been admonished for injecting further uncertainty into the European project when it is already in crisis. Philip Gordon, US assistant secretary of state for European affairs, publicly made clear Washington’s displeasure last week when he stressed that Britain’s continued membership of the EU was “in the American interest”.

Cameron’s remarks were crafted to try and appease several constituencies—each of which is just as reactionary as the other.

To placate the sizeable anti-EU wing of his own party, and face off the political challenge from the UK Independence Party, he pledged to renegotiate the terms of Britain’s membership of the EU and then put these terms to an “in-out” referendum in 2017.

To his EU partners, Washington and the substantial section of big business opposed to such a risky move, Cameron pledged that in such a referendum he would campaign for British membership with all his “heart and soul”.

Notwithstanding justified fears that the ballot would result in Britain’s exit from the EU, Cameron presented his move as a means of saving the European project, rather than burying it. Europe’s crisis, he said, stemmed from its lack of competitiveness and flexibility in the “new global race of nations” now underway, and the challenge posed by the “surging economies in the east and south”.

With “Europe’s share of world output … projected to fall by almost a third in the next two decades”, Cameron condemned “complex rules restricting our labour markets” and “excessive regulation” on business as “self-inflicted” wounds.

To underscore his point, the prime minister cited German Chancellor Angela Merkel’s earlier pronouncement that Europe’s system of welfare and social provision is unsustainable and has to go.

His entreaty essentially consists of a demand that the austerity measures that have created a social catastrophe in Greece, Spain and elsewhere must be extended and deepened across the continent, in tandem with the levelling down of wages and working conditions to the benchmark set in Asia.

It is for this reason that, even while demanding a “loosening” of the EU so as to protect the City of London, the prime minister gave his backing for greater fiscal and political consolidation within the euro zone. He insisted that the euro zone countries needed “the right governance and structures to secure a successful currency for the long term”—i.e., it must have the economic and political mechanisms in place to enforce the diktats of finance capital—while stressing that Britain had no intention of adopting the currency itself.

On the decimation of the living standards of the European working class, Cameron, the EU, Washington and big business are united. All of which makes Cameron’s poise as the defender of “democratic accountability and consent” hogwash. The prime minister hypocritically referenced “growing frustration” with the EU across the continent that has led to “demonstrations on the streets of Athens, Madrid and Rome” In Britain too, he said, “democratic consent for the EU … is now wafer-thin”.

But Cameron’s proposed referendum has nothing to do with establishing the democratic right of working people to oppose and defeat the vicious austerity being imposed by the “troika”—the EU, European Central Bank and the International Monetary Fund—that has brought millions onto the streets. Quite the opposite. He hopes to consolidate a right-wing bloc pledged to even more draconian economic measures, in which the interests of the City are paramount, while overturning workers’ remaining legal rights. Hence his attack on legislation limiting working hours.

This is the EU to which Cameron is committed. And again, on this the prime minister is knocking on an open door. While various European foreign ministers criticised Cameron’s speech, it was not on its substance but for his lack of a collegiate approach and for opening up a nest of worms with his pledge for a referendum.

Referring to Cameron’s demand to renegotiate the terms of EU membership, German Foreign Minister Guido Westerwelle said that “cherry picking was not an option” while his French equivalent Laurent Fabius complained, “If you join a [football] club, you can’t say you want to play rugby.”

Merkel, however, said that Berlin would listen to “British wishes” over EU membership in the hope of finding a “fair compromise”. Only on Tuesday, Merkel and French President Francois Hollande had vowed to speed up euro zone integration and promote European competitiveness in terms similar to Cameron’s. Speaking on the 50th anniversary of the Franco-German Alliance, they stressed the need for “budget discipline” and labour reforms.

The Labour Party condemned the prospect of a referendum, with leader Ed Miliband flatly rejecting an “in-out” referendum. In doing so, Labour made clear that its overtly anti-democratic stance is motivated by fears that uncertainty over the result will damage London’s leading role as a financial centre.

Writing in the Financial Times, Labour’s Peter Mandelson opined that a better example for the UK in re-negotiating its terms of EU membership had been given by Labour Prime Minister Harold Wilson in 1974. When Wilson re-negotiated Britain’s accession to the European Community as it was at the time, Mandelson wrote, “he did so by finessing the agreement and not by re-opening the accession treaty itself.”

The Confederation of British Industry and the Institute of Directors welcomed Cameron’s speech, stating that a “reformed EU” and a “competitive and deregulated” Europe represented the “best deal for Britain”.

Mark Boleat, chairman of the policy and resources committee of the City of London, was more cautious. Cameron’s “lengthy timetable for the planned referendum … in itself risks delaying important investment decisions by international businesses in the City,” he warned. “[I]t is vital that we are up front about the need for the UK to remain a full member of the European Union, continue to operate completely within the single market and continue to have its say on EU regulations affecting us. Europe needs to adapt and meet the competitiveness challenge posed by the changing global economic landscape.”

Petrol price rise on way as ‘floodgates open’

Petrol prices are set to rise by up to four pence a litre in the next few days, retailers have predicted.

The rise was forecast by the Petrol Retailers Association (PRA), and would add around £2 to the cost of filling a typical family car.

It comes as forecourts pass on increased wholesale costs to motorists.

"Independent retailers have been soaking up this increase at the expense of already tight margins because they know how hard the motorist is squeezed," said PRA chairman Brian Madderson.

But he warned: "The floodgates will have to open soon."

The AA forecast a smaller rise of about 2.5 pence per litre, as it accused the industry of failing to pass on falls in wholesale prices as quickly as increases.

The Office of Fair Trading will decide next week whether to launch an investigation into the fuel market.

AA president Edmund King told the Daily Telegraph: "Another new year, another new round of pump price rises after the industry failed to pass on fully wholesale price savings.

"The insight we are now getting on wholesale price movements rams home the need for this information to be out in the public domain immediately."

Throughout the whole of 2012, the average price of a litre of petrol rose by 2.75p.

Despite a fall in fuel demand across northern Europe, and an apparent glut of petrol capacity, wholesale costs have risen steeply in the four weeks since Christmas.

Industry figures show the daily average selling prices in the UK have risen by less than one pence per litre for both petrol and diesel since January 1.

Mr Madderson also said that George Osborne should abandon plans to increase fuel duty from September.

"If fuel costs continue to rise as our sluggish economy and loss of AAA credit rating weaken the pound sterling against the US dollar, the Chancellor must abandon plans to increase duty ... when he presents his Spring Budget.

"Householders and businesses will be hard pressed to cope with market fluctuations let alone more Government tax intervention."

What the Japanese Trade Deficit Says About the Fraying Fabric In China And Europe

Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

European talking heads have been reassuring us on an hourly basis, lest we forget, that the worst of the debt crisis is over. But the Japanese trade deficit, a measure of reality, not words, tells a different story about the crisis in Europe. And about troubles coming to a boil in China. But neither issue can be resolved by Prime Minister Shinzo Abe’s plan to decapitate the yen.

Trade deficits aren’t the end of the world for Japan. But they’re the end of an era. Since the mid-1980s, Japan has booked large annual trade surpluses, to the total and ineffectual aggravation of US presidents and lawmakers. The surpluses helped fund Japan’s budget deficits without having to rely on foreign investors. Now, these deficits have become a mountain of debt over twice the size of GDP, unequalled in the developed world.

But in 2011, that seemingly endless string of surpluses, on which the Japanese economy had become dependent, broke. Instead there was a deficit of ¥2.56 trillion, small by US standards. It was ascribed to the earthquake and tsunami, fuel imports, etc. A temporary blip. In 2012, the monthly trade deficits got worse, and over the last six months, they occurred in an uninterrupted sequence to reach ¥6.93 trillion ($78 billion), almost tripling from 2011. An all-time record.

Yet, even during the campaign late last year, Shinzo Abe, now prime minister, vowed to toss all fiscal restraints overboard and pile even more deficit spending on that mountain of debt that had been funded by the now evaporated trade surpluses. So the cabinet just approved another round of stimulus spending, $117 billion, the largest since the financial crisis. It will be up to the Bank of Japan to print enough yen and mop up the red ink.

It’s Abe’s effort to goose the economy, or at least remain prime minister for longer than 15 months, which was the limit for his hapless six predecessors, including himself, ever since Junichiro Koizumi vacated the post in 2006 (graph). And it’s causing a ruckus around the world. Politicians and lobbyists are accusing Japan of yen manipulation and of starting the next round in the currency wars, forgetting conveniently that it was the Fed that has been trying with all its might and for years to demolish the dollar, and is still doing so by printing $85 billion a month [The Currency Wars: Now US Automakers Are Squealing].

But Abe’s gyrations had no impact on the trade deficit in December. At ¥641.5 billion, it was once again worse “than expected.” Exports deteriorated 5.8% from December 2011, imports rose 1.9%. Of Japan’s three largest export markets—China, the US, and Europe—two had turned into a veritable trade catastrophe.

China had overtaken the US as Japan’s largest export market. And Japanese companies were brimming with optimism. Then the Senkaku Islands “dispute” erupted—in quotes because Japan insists that there is no “dispute,” the islands being Japanese. It didn’t take the Chinese government long to rile up its people against everything Japanese. And the images floating around the world were ugly.

At first, it appeared to be a spat that, like others, would be, after sufficient commotion, put back in the dirty-underwear drawer, unresolved, but out of sight. Instead, jets were scrambled by the Japanese to counter jets approaching the islands from China, and ships were involved, and perhaps shots might be fired. Rather than a spat, it has become an element of China’s growing territorial assertiveness.

Japan, which spends only about 1% of GDP on its military, can’t rattle its saber loud enough for China to notice. Instead, it has to rely on the resolve of its ally, the US, to keep the Chinese at bay. A resolve that China is testing. While a shooting war is somewhere between unlikely and unthinkable, given the economic ties between the three countries, tensions are rising, and tempers aren’t settling down, and Japanese exports to China are crashing.

In November they were down 14.5%; in December, 15.8% to ¥906 billion. Worst hit were cars, trucks, and parts (-47.5%), machinery (-22.2%), and electrical machinery, which includes tech products like semiconductors (-16.8%). Imports from China edged down by 2.1% to ¥1.24 trillion. And the trade deficit jumped by 76.8%.

This debacle is unrelated to the strength of the yen. It’s caused by the deteriorating relationship between two of the world’s largest trading partners. Knocking the yen off its lofty perch—it’s down 11% against the dollar and 15% against the euro since November—won’t have much impact. In that respect, Abe’s cure won’t work.

Then there’s Europe. In December, exports skidded by 12.3% to ¥561 billion, after having plunged 20% in November. To Germany, which now may be in a recession, they declined by 9.2%, to the UK by 10.2%, to France by 16.8%, to Spain by 26.2%, and to Italy by 28.2%.

These are crisis numbers, a function not of a strong yen but of the European economies that, despite ceaseless declarations to the contrary, have stepped up from a debt crisis to a full-blown economic crisis. And in this environment, Abe’s cure—demolishing the yen—will largely be ineffective.

And here is an awesome, amazing, and powerful appeal (video with lyrical English text) to the people of Japan to open their eyes. It slams the nuclear industry, the mainstream media, government bureaucrats, and politicians of all stripes.... humanERROR by “Frying Dutchman” (video).

Your rating: None

Cameron takes aim at corporate tax avoiders

(Reuters) - Prime Minister David Cameron on Thursday attacked multinational corporations that avoid paying their fair share of tax, promising action against such aggressive strategies after a public backlash in Britain. The issue of tax avoidance by b...

Police Accused Of Overstating Crime Reduction Targets

Fears have been fuelled that budget cuts and pressure to hit targets have prompted police officers to exaggerate the rate at which crime has fallen in the last five years. Police records have appeared to "overstate the true rate at which crime has bee...

“Green Socialism” and the Left

“Another grand, left-wing concept with an adjective… Shouldn’t we rather work on concrete social-ecological projects – on initiatives for conversion, a process of ‘energy transition,’ or free public transport?” Undoubtedly, many problems of the left have resulted from its tendency to create grand utopias and attempt to bring social reality in line with them. Transformation starts with concrete entry projects, but where does this road go to? What is the common ground, the common direction of manifold initiatives? Ultimately, we need an antidote to pragmatism – American activists call it a ‘vision.’

What does this imply for green politics? One of the core tasks of left-wing politics is to constantly work on connecting the social and the ecological question. The left is credible on the social question – and there are promising attempts to become more convincing on ecology, even if the mainstream media does not seem to notice this much. There is the notion of ‘social-ecological transformation,’ which belonged to the agenda of the green parties in the 1980s. Today, it is used from the left as a paradigm for the ‘mosaic left’ in formation. But how can we make sure that it remains rooted in a counter-hegemonic project? How far is the profile of the socialist left different from that of Friends of the Earth? It is surely right to build bridges between diverging approaches to social change, but in the process, contradictions are often covered up, and a debate on contentious issues like property and the state is avoided. In this article, we are experimenting with the concept of ‘green socialism.’ We want to discuss whether it could fill the void of a left-wing, ecological, feminist imagination.

Background

If we consider the present relations of forces, the ‘green’ question does not appear to be a contentious issue – ‘socialism’ is what is controversial. The idea of ‘eco-socialism’ failed because its intervention coincided with deep ruptures in global history, namely the collapse of state socialism and the rise of neoliberalism. Socialism was no longer en vogue; it was seen as an ossified and defeated project. The eco-socialist current of the left shrank into a friendly cult, which emphasized what ought to be but rarely intervened in concrete social-ecological struggles. Around the same time, green issues became fashionable, not least because of the 1992 global summit in Rio de Janeiro. There was a “passive revolution” (Gramsci) divorcing the ecological from the social question. The ecological question was absorbed into neoliberal strategies of managing globalization. This happened through the institutionalization of environmental policy and global climate summits, as well as through the integration of green parties and NGOs into mainstream politics. From an ecological standpoint, the successes of the passive revolution were limited; there is an unbroken trend toward deepening ecological and social crises; the ecological crises have accrued considerable social costs and vice versa. Consequently, ‘green socialism’ has to be linked up with concrete struggles such as struggles over energy production and projects of conversion based on a ‘just transition.’

In the midst of the great crisis of neoliberalism and the authoritarian imposition of austerity throughout Europe, the prospect of a transition to ‘green capitalism’ (Fücks/Steenboom 2007; for a critique see Candeias/Kuhn 2008) or a ‘green economy’ (Heinrich-Böll-Stiftung 2012; for a critique see Brand 2012) raises the hopes of many people. The underlying political strategy focuses on channelling investment toward a process of ‘energy transition’ and kick-starting ecological modernization with the help of new technologies and an accumulation strategy that is supposed to create millions of jobs. The notion of a ‘green economy’ promotes growth and an increase in exports; it is not about limiting the use of resources. In contrast to older approaches, which were centred on ‘sustainability,’ it does not aim to overcome the contradiction between the economy and ecology. Rather, it advocates the commodification of nature and environmental protection, which means that the political management of the ecological crisis becomes a factor in, and a driver of, capitalist accumulation. In sum, the ‘green economy’ approach is about reproducing capitalist hegemony by taking on board ecological interests – it represents an elite consensus garnished with the vague hope that there will be a few new jobs.

Recently, the predominance of the politics of austerity in Europe has restrained the momentum behind the push for a green economy. And yet, there are debates whether the ‘growth components’ of the European Fiscal Compact should include incentives for, and investment in, ecological modernization. In this context, capitalist interests converge with those of social democracy and the trade unions (and this even applies to clearly left-wing appeals such as “Founding Europe Anew!,” which emerged out of the German trade union movement).

‘Green socialism’ is about taking a stand against – not for a long time realized – ‘green capitalism.’ The concept is about linking up a range of interests and movements in the name of “revolutionary Realpolitik,” ensuring that “their particular efforts, taken together, push beyond the framework of the existing order” (Rosa Luxemburg, Marxist Theory and the Proletariat). In the process, many of the old socialist themes – e.g., redistribution, power and property, planning and democracy – are updated and linked up with new issues. It is necessary to link ‘green socialism’ to real contradictions and conditions – to real social forces and movements that are tackling different issues, getting involved in different conflicts and developing concrete, experimental practices.

The Example of Redistribution

Redistribution is a key aspect of any kind of left-wing politics. It does not figure at all in the present conceptions of a ‘green economy’ and only plays a subordinate role in the project of a ‘Green New Deal’ even in times of austerity. This suggests that the issue is not taken seriously. For the German Green Party, softening the demand for redistribution is an act of “being straight” with the population, they say. From the neoliberal point of view, the debts of the financial institutions bailed out by the state have to be serviced. Social Democrats and Greens tend to go along with this: they want to regain the “trust of the markets,” which is why most of their party organizations in Europe have agreed to the ratification of the European Fiscal Compact. The pact will not only bring a new wave of ‘bottom-up’ redistribution, but it will also exacerbate the economic crisis and drive entire countries into depression. Importantly, it will not lead to a permanent reduction in debt.

It is necessary to discuss the illegitimate debt weighing down on many European countries. This issue requires democratic consultation and decision-making and serious attempts to design a procedure for a debt audit (cf. Candeias 2011b). A comprehensive cancellation of debt, comparable to a currency reform, would be needed – not just for Greece. This should be combined with a just tax policy based on forcing the capital – and asset-owners to contribute more to financing the public sector, which would be an act of returning some of the social surplus product to the general public. This would put a stop to processes of “bottom-up” redistribution and open spaces for a politics based on social-ecological concerns. The people in Europe are prepared for a political intervention along these lines because they are currently exposed to the existential threat posed by debt. Numerous forces from civil society agree to it, for example the CDTM (the Greek campaign for a debt audit, cf. LuXemburg 2/2012) and left-wing parties like SYRIZA and Izquierda Unida. These organizations intervene in the current wave of European protests against the effects of the crisis and demand a debt audit, the taxation of assets, a financial transactions tax, a levy on banks etc.

The Socialization of Investment

Over the medium-term, it is necessary to socialize the investment function, which is an old Keynesian demand. Who in society should determine the use of (physical and social) resources, and who should decide which types of work are socially necessary? The market – purportedly the most efficient mechanism for the allocation of investment – has embarrassed itself. The over-accumulation of capital is regularly producing financial bubbles, followed by the destruction of capital and jobs. At the same time, the number of sectors of social reproduction that are deprived of funding and neglected until they collapse is constantly increasing. Childcare, education, environmental protection, the general infrastructure and public services are all affected. The “green economy” focuses on commodification and the market. Yet the market takes too long to resolve problems, and the big corporations behind “fossil capitalism” want to get a foothold in the “green economy” at the same time as keeping their fixed capital.

What is needed is financial regulation, the nationalization of “systemically relevant” banks, a network of public banks, and the introduction of participatory budgeting at all levels of society. The socialization of investment and participatory investment decisions are two of the preconditions for a left-wing and socialist project of structural transformation. ”

There will not be a smooth passage to a restructured economy: it is impossible to meet the challenge of reducing greenhouse gas emissions by 80 per cent and catapulting the entire economy from the 150-year old age of “fossils” into the “solar future” without ruptures and crises. If the transition is pursued with tenacity, it is unavoidable that some of the old branches of industry and their capital will come under attack, which in turn will trigger resistance. If the markets prove incapable of ensuring investment, this has to become, to a much stronger degree, a public project. What is needed is financial regulation, the nationalization of “systemically relevant” banks, a network of public banks, and the introduction of participatory budgeting at all levels of society. The socialization of investment and participatory investment decisions are two of the preconditions for a left-wing and socialist project of structural transformation. Without them, the gains made through successful policies of redistribution can be reversed easily.

Reclaiming the Public Sphere

It is necessary to transform the mode of production and living. This should not be done through the commodification and privatization of natural resources, but through the preservation of the universal and public character of the natural commons and other public goods, and through the expansion of collective public services that are cheap and eventually free. For example, free public transport networks should be expanded while subsidies for car-makers should be stopped. Green socialism focuses on the public sector; it is about “remunicipalizing” key parts of the infrastructure and guaranteeing democratic decision-making on issues concerning the transformation of the mode of production and consumption. Moreover, it is based on promoting collective forms of consumption rooted in the social infrastructure and universal, solidarity-based forms of social security. Demanding their expansion would also allow us to respond to the fixation of some left-wing trade unionists on wage increases and material consumption – and would do so without forcing us to get involved in debates on the need to rein in consumption. Besides, an expansion of the public sphere not based on commodification would also amount to markets and processes of privatization being pushed back.

In contrast, the idea of a “green economy” favours technological fixes based on private property, for example large-scale projects such as Desertec,[1] huge offshore wind parks, and monopolized, transcontinental super-grids for long-distance energy exports. Strong fractions of capital are already gathering behind the project. Their strategies undermine the potential for de-centralization inherent in the new technologies; they produce “false solutions” that create social-ecological conflict.

In light of this, the demands of social movements and local initiatives have started to converge with those of left-wing politicians operating at the local and the regional level. Both sides are fighting against attempts by big corporations to impose a process of “energy transition” from above; they are advocating de-centralized, local solutions, for example the remunicipalization of services of general interest and the establishment of energy cooperatives and bio-energetic villages. A variety of movements and groups are using the concept of “energy democracy” in order to create a shared perspective.

Focussing on Economies of Reproduction

For a successful socio-ecological transformation, it is necessary to focus on reproductive needs; existing, growth-oriented capitalist economies should be transformed into “economies of reproduction,” which know both how to limit themselves and to produce new wealth (cf. Candeias 2011a, 96). Sectors that are captured by a broad conception of “reproduction work” or “care work” would be at the heart of this transformation. There would be an expansion of needs-oriented social services such as healthcare, elder care, childcare, education, research, nutrition, environmental protection and others. In these areas, evrybody has been complaining about shortages for years; at the same time, they are the only sectors in the industrialized countries where employment is on the rise. They should remain under public control and should not be exposed to the market. This would be a contribution to the “ecologization” of the existing mode of production (working with people usually does not lead to environmental destruction), and to addressing the crises of wage labour and unpaid reproduction work. A process of transformation along these lines could contribute to shape gender relations in an emancipatory fashion.

This includes redefining and redistributing what we understand by “socially necessary labour” (4in1-perspective by Frigga Haug). This could be achieved by reducing labour time and expanding publicly funded, collective work processes. Such interventions are emphatically not about increasing surplus value, but about reducing the consumption of energy and raw materials, as well as assessing work on the grounds of its contribution to human development and the overall wealth in social relations.

In this context, it is important to see that the poor’s experience of being ruled and exploited by others coincides with the desire for participation and solidarity of the left-libertarian sections of the middle class. There is potential for a convergence of the demands of social movements critical of growth, feminist organizations, and service-sector unions like the German ver.di. Besides, the reorientation toward reproductive needs entails an economic shift toward domestic markets and production. Global chains of production have been overstretched for a long time, and they are wasting resources. This assessment should not be taken as a reflection of “naïve anti-industrialism” (Urban). It is motivated by the need to envisage an alternative production (the term used in the debates on conversion in the 1980s). It would be wrong to assume that continuing the export-oriented strategy of German car makers by promoting electric cars contributes to the emergence of an alternative form of production. After all, the production of the batteries needed for electric cars consumes considerable amounts of energy and raw materials and pollutes the environment because it involves a number of highly toxic substances. Moreover, the switch to electric cars does not do anything about the enormous use of space and the soil sealing caused by the construction of roads. Rather than talking about electric cars, we should discuss how the conversion of car makers into green service providers can be achieved, and how they can be transformed into companies dedicated to facilitating public mobility on the grounds of regionally rooted conceptions of transport.

Against the backdrop of such discursive shifts, trade unions like German metal union IG Metall, which are entangled in the export-oriented strategies of German corporations and in forms of “crisis corporatism,” could start to develop independent strategies. As a result, they would not constantly find themselves at loggerheads with other sections of the “mosaic left” – or appear as victors in a crisis that badly hits sister organizations in other parts of Europe.

A new focus on reproduction could trigger a process of economic de-globalization and re-nationalization. This would contribute to the reduction of current account imbalances and alleviate the pressure on countries in the global south to become part of global chains of production and policies of extraction. They would no longer have to accept the global flows of raw materials and the imperial way of life in the global north. In other words, spaces for independent development would emerge. This would have to be complemented by the development of global planning in the area of raw material and resources, which would guarantee a just distribution of wealth, limit consumption and address reproductive needs. In sum, an economy of reproduction means that people’s needs and the economy in general develop in qualitative not in quantitative ways.

Just Transitions

Transformation is not an easy path but produces a lot of social problems. Therefore the great transformation has to be combined with a just transition. This entails the shrinking of some sectors (e.g., those with a high turnover of raw materials), and the growth of others (e.g., the entire care economy). In any case, economic growth should be de-coupled from material growth. Temporarily, qualitative growth is necessary. After all, various national economies have deficiencies in the area of reproduction, especially those in the so-called global south. As a result, it is counterproductive to operate on the grounds of a simple juxtaposition of “pro-growth” and “post-growth” positions. The recent debates in the global south about Buen Vivir (“the good life,”) and social-ecological modes of development that go beyond western life-styles transcend standard conceptions of growth and modernization. In this context, it also important to avoid false juxtapositions: “Development” and “modern” civilization are not problematic concepts as such. They become problematic once they are bound up with certain forms of capitalist (or state socialist) expansion and the corresponding social relations of nature. At the political level, we have to work on “translating” the experiences of actors from different contexts. This will create opportunities for linking up social-ecological and transformative struggles in the global south with those in the north.

Just transitions are about creating new perspectives for the people worst affected by the climate crisis. But they also take into account the situation of the workers, communities and countries faced with increases in cost of living and a fundamental restructuring of employment, which may be caused by the switch to renewables and the conversion of certain industries, for example the arms industry. In this sense, the initiatives for a just transition try to bring together the movement for climate justice and the labour movement. In any other scenario, social and ecological interests are either played off against each other or the interests of the working classes and of employees more generally (a better environment, a conscious way of consuming, more jobs) are simply not considered. These are some criteria for a just transition to green socialism: It should be assessed whether the measures taken contribute to

  • a reduction in CO2 emissions;
  • a drop in poverty and vulnerability;
  • a decline in income inequality and other forms of inequality;
  • the creation of jobs and the promotion of “good work”; and
  • the democratic participation of individuals.

Obviously, this list can be extended endlessly. Nevertheless, these points are crucial for developing a provisional method of quantitative evaluation, which can be used for political interventions.

Participatory Planning

The need to instigate quick structural change under conditions of “time pressure” (Schumann 2011) also means that it is necessary to phase in participative planning, consultas populares, people’s planning processes and decentralized democratic councils. (The introduction of regional councils formed part of the recent German debate on the crisis of car manufacturing and the export industries, cf. IG Metall Esslingen 2009, Lötzer 2010, Candeias/Röttger 2009). There are some historical instances where planning proved highly effective in bringing about social change that had to be achieved quickly (e.g., the New Deal in the U.S. in the 1930s and 40s). Joseph Schumpeter was passionately in favour of the “creative destruction” caused by capitalism; nevertheless, even he spoke of the “superiority of the socialist central plan” (1942, 310ff). Considering the need for a quick transition, socialists have a strong case for planning – but this time it should be participatory planning (Williamson 2010). This approach to planning is the only one capable of establishing a mode of societalization that breaks with the obsolete relations of power and property in capitalism. In the light of negative experiences with authoritarian and centralized planning mechanisms, experimenting with participatory planning at the regional level might be the right entry point. Another potential entry point is the democratization and decentralization of existing transregional processes of planning, for example in healthcare, energy, the railways, education etc. The global allocation of raw material and resources is a more difficult issue: it seems hard to envisage the democratization of the modes of planning used by international organizations and transnational corporations.

Real Democracy

The crisis of representation and legitimacy of the political system is in many ways linked to the fact that the political system does not take into account the essential needs of the people, and that they are not invited to participate in decision-making. The public sphere should be extended with the aim of creating a “provision economy,” but this should be accompanied by the radical democratization of the state. The ‘benevolent,’ paternalistic and patriarchal welfare state from Fordist times; authoritarian state socialism; the neoliberal restructuring of public services on the grounds of the principles of competition and managerial efficiency – none of these ventures had an emancipatory character. A left-wing state project has to instigate the extension of participation and transparency demanded by the new movements for democracy and to work for the absorption of the state into civil society, as Gramsci put it. Participation does not just mean that people are able to voice their opinion, but that they are able to influence decision-making. This is where the movement against Stuttgart 21 converges with Occupy and the Indignad@s. The authoritarian-neoliberal mode of crisis management, in contrast, is at odds with this principle.

Yet democratization is not just about the public dimension of the state, but also about the economy. Today, there are serious doubts about the socio-economic “contribution” of management strategies based on shareholder value. This is due to their short-termism and their part in the financial crisis, in excessive remuneration for senior managers, tax evasion, mass redundancies and environmental destruction. Similarly, the classic forms of firm-level co-determination have proven incapable of challenging the pressure of transnational competition and of the dominance of finance. Sometimes, co-determination bodies became entangled in practices of collaboration and corruption. Therefore, it is time for a democratization of the economy that goes beyond co-determination and the in-depth participation of employees, trade unions, the consumers and the wider population in firm-level decision-making (along the lines of the entire transnational chain of production).

It is vital that all the mechanisms discussed become part of a wider project that amplifies collective agency. In other words, they should enable individuals to become the protagonists of their own (hi)stories. It is “the task of every one of us to unify the divergent” (Peter Weiss [1975] 1983, 204). The resulting association should be seen as a political association – as a left-in-transformation, which is aware of the fact that its political goals can only be achieved through fierce struggles (Goldschmidt et al. 2008, 836ff). •

Translated from the German by Alexander Gallas.

Mario Candeias is a political economist, senior researcher at the Institute for Critical Social Analysis at Rosa Luxemburg Foundation in Berlin, and co-editor of the journal LuXemburg where this article first appeared (3/2012).

Brand, Ulrich, 2012, Schöne Grüne Welt. Über die Mythen der Green Economy, LuXemburg argumente series, no. 3, Berlin

Candeias, Mario, 2011a: Strategische Probleme eines gerechten Übergangs, LuXemburg, No. 1, 90–7

Candeias, Mario, 2011b: Schuldentribunal und grüner Sozialismus. Die Schuldenkrise politisieren, Mehring-1, 18. November.

Candeias, Mario, and Armin Kuhn, 2008: Grüner New Deal – kapitalistischer Weg aus der Krise?, in: Das Argument 279, vol. 50, 805–12

Candeias, Mario, and Bernd Röttger, 2009: Ausgebremste Erneuerung? Gewerkschaftspolitische Perspektiven in der Krise, in: Das Argument 284, vol. 51, 894–904

Fücks, Ralf, and Kristina Steenbock, 2007: Die Grosse Transformation. Kann die ökologische Wende des Kapitalismus gelingen?, Böll.Thema, no. 1, www.böll.de

Goldschmidt, Werner, Colin Barker and Wolfram Adolphi, 2008: Klassenkampf, in: Wolfgang Fritz Haug (ed.), Historisch-kritisches Wörterbuch des Marxismus, vol. 7/1, Berlin, 836–73

Lötzer, Ulla, 2010: Industriepolitische Offensive – Konversion, Zukunftsfonds, Wirtschaftsdemokratie, in: LuXemburg 3/2010, 86–93

Schumann, Harald and Hans-Jürgen Urban, 2011: Gespräch über Konversion und Mosaiklinke, in: LuXemburg 1/2011, 84–89

Schumpeter, Joseph A., 1942, Kapitalismus, Sozialismus und Demokratie, Tübingen 1987

Williamson, Thad, 2010: Democratic Social Planning and Worker Control, in: LuXemburg

Frontrunning: January 24

  • When the cash runs out dividends go away: Nokia to Omit Dividend for First Time in 143 Years (BBG)
  • Passing Debt Bill, GOP Pledges End to Deficits (WSJ)
  • Japan logs record trade gap in 2012 as exports struggle (Reuters)
  • so naturally... Yen at 100 Per Dollar Endorsed by Japan Government’s Nishimura (BBG)
  • Japan rejects currency war fears (FT)
  • Investors grow cagey as Italy election nears (Reuters)
  • In Amenas attack brings global jihad home to Algeria (Reuters)
  • Mafia Victim’s Son Holds Key to Bersani Winning Key Region (BBG)
  • Bernanke Seen Pressing On With Stimulus Amid Debate on QE (BBG)
  • U.S. to lift ban on women in front-line combat jobs (Reuters)
  • Red flags revealed in filings of firm linked to Caterpillar fraud (Reuters)
  • Apple Sales Gain Slowest Since ’09 as Competition Climbs (BBG)
  • Spanish Jobless Rate Hits Record After Rajoy’s First Year (BBG)
  • North Korea Threatens Nuclear Test to Derail U.S. Policies (BBG)

Overnight Media Digest

WSJ

* Apple Inc recorded a flat profit despite selling 18 million more iPhones and iPads as it spent heavily to roll out new products to fend off intensifying competition.

* The U.S. House of Representatives defused one potential debt crisis Wednesday, while a top Republican set the stage for a far broader debate over whether it is possible to actually balance the U.S. budget in coming years.

* A government informant has implicated a prominent former trader at SAC Capital Advisors, telling federal investigators the two swapped confidential stock tips for years, according to people briefed on the matter.

* NYSE Euronext has no intention of selling its European unit to a rival following a planned takeover by IntercontinentalExchange Inc, according to NYSE Euronext's chief executive.

* The value of Goldman Sachs Group Inc's investment portfolio doubled last year. Bond underwriting hit a five-year high. The firm's workforce shrank and remaining employees were paid a smaller chunk of overall revenue.

* General Dynamics Corp swung to a fourth-quarter loss, posting a $2 billion write-down in its information-technology business that Chief Executive Phebe Novakovic called a "reset".

* McDonald's Corp's fourth-quarter earnings beat expectations, reversing two quarters of misses, but the world's largest restaurant chain said it expects tough times ahead.

* Netflix Inc capped a turbulent year by posting a surprise fourth-quarter profit and adding more Internet subscribers than expected, news that sent its stock rocketing about 35 percent in after-hours trading.

* As Novartis AG Chairman Daniel Vasella steps down from the company he helped build over 25 years, he leaves behind one of the health-care industry's most admired firms - but also some shareholder resentment and big questions about Novartis's future.

* Loretta Fredy Bush, the high-profile founder of China's Xinhua Finance Ltd who was later indicted over an alleged $50 million fraud, has agreed to a plea deal and appears poised to plead guilty to a reduced charge.

FT

FSA PROBES ICAP OVER LIBOR FIXING ICAP, the world's largest interdealer broker, has become a focus of the UK Libor rate-rigging investigation and is being investigated by the UK financial watchdog for possible breaches of market conduct rules. () CAMERON PUTS EU FUTURE ON THE LINE David Cameron put Britain's future in the EU on the line in an audacious gamble that united his Conservative party but could have profound implications for the country.

UK LABOUR MARKET DEFIES GLOOM The puzzle of Britain's productivity performance grew on Wednesday, with an unexpectedly buoyant set of employment figures ahead of Friday's output data for last year's fourth quarter, which many economists think will show a dip.

GMG ENDS TALKS TO SELL TRADER STAKE Guardian Media Group has called off talks with interested buyers over the sale of its half stake in the car classifieds company Trader Media Group following a failure to agree a price. Apax, its joint venture partner in Trader Media, had been interested in buying out the 50.1 per cent owned by GMG in a deal that would have netted the publisher of the Guardian and the Observer around 300 million pounds in cash.

CHINESE FUND AND SCHMIDT-BACKED BANK UNITE A boutique merchant bank backed by Google executive chairman Eric Schmidt has struck a deal with a Chinese state-owned fund to work together on media, sport and entertainment acquisitions. Raine's partnership with China Media Capital, which manages a Rmb5bn ($805m) fund, is the latest sign that China's nascent but fast-growing media sector is keen to borrow expertise and contacts from established western operators.

NYT

* Investors have come to expect nothing short of perfection from Apple Inc but with the company's stock sinking 11 percent, it is clear there are a range of challenges.

* Avoiding an economic showdown with President Obama, the House on Wednesday passed legislation to eliminate the nation's statutory borrowing limit until May, without including the dollar-for-dollar spending cuts that Republicans once insisted would have to be part of any debt limit bill.

* Prime Minister David Cameron of Britain has added to Europe's malaise, vowing to reduce British entanglement with the European Union - or allow his people to vote in a referendum to leave the bloc altogether.

* Daniel Vasella, the longtime chairman and former chief executive of Novartis, the Swiss drug maker, plans to step down next month, the company said on Wednesday, when it also reported a jump in fourth-quarter profit.

* The International Monetary Fund said on Wednesday that it continued to expect a modest upturn in global growth in 2013, with fewer risks of major policy mistakes and lower levels of financial stress.

* Netflix Inc reported $8 million in net income, surprising analysts who had expected a slight loss. It increased the number of subscribers for its streaming service to 27 million.

* The Boeing 787's difficulties have raised questions about how regulators certify new technology and how they balance advances in design and engineering with safety.

* Japan on Thursday reported a record annual trade deficit in 2012, the second straight year in the red for an exporting nation that has long built its wealth on its vast trading surpluses.

* A survey of manufacturing activity in China on Thursday provided more reassurance that the Chinese economy, buoyed by somewhat improved global trade and a string of government stimulus measures last year, has settled into a muted recovery.

* US Airways Group Inc reported on Wednesday that its net income doubled in the fourth quarter from a year earlier, and its executives said strong passenger demand for the airline could lead to higher fares.

* The long decline in the number of American workers belonging to labor unions accelerated sharply last year, according to data reported on Wednesday, sending the unionization rate to its lowest level in close to a century.

Canada

THE GLOBE AND MAIL

* Nigeria, the leading power in West Africa, wants Canada and other western nations to take on the conflict in Mali as an international problem and provide funding and heavy equipment like helicopters.

* As Canadian finance minister Jim Flaherty prepares the Conservative government's 2013 budget, his main target will be to balance the books by 2015. With that horizon in mind, economists see several reasons for him to be optimistic, including positive signs from the United States and European economies, as well as the country's housing market.

Reports in the business section:

* The Bank of Canada is setting aside worries over a housing bust to double down on a broader concern, the country's sputtering economy.

The central bank surprised Bay Street and Wall Street on Wednesday by dropping from its latest policy statement any hint that it would raise interest rates to deter Canadians from bidding up housing prices and adding to record levels of household debt.

* RBC Dominion Securities raised its price target for Research In Motion Ltd to C$19 from C$11 ahead of the crucial launch of the smartphone maker's BlackBerry 10 devices, but warned that it is "far too early" to call the company's turnaround a success.

NATIONAL POST

* Canadian Prime Minister Stephen Harper said he was searching for a "consensus" within Canada and the Parliament on how to contribute to stopping the spread of terrorism in Mali, but he would not allow a direct Canadian military mission into the African country.

* Manitoba chiefs are not poised to cede from the assembly of First Nations, but leaders gathered in Winnipeg on Wednesday raised questions about the national body's mandate to represent aboriginals on treaty issues.

FINANCIAL POST

* Bombardier Inc CEO and President Pierre Beaudoin said he hopes that its CSeries airliners will take its first flight in June, demonstrating that the Quebec transportation giant has learned the lessons from Boeing Co's difficulties with its 787 Dreamliner.

* The Canadian and global economies will continue struggling to maintain momentum this year, but in a relatively hopeful new outlook, the International Monetary Fund (IMF) said it saw light at the end of the tunnel.

The IMF now expects Canada's economy to expand by a modest 1.8 percent this year and by 2.3 percent in 2014.

China

CHINA SECURITIES JOURNAL

--The value-added growth of large industrial enterprises is expected to rise 10 percent, said Zhu Hongren, chief engineer at the Ministry of Industry.

--The Industrial & Commercial Bank of China, the world's biggest bank by market value, said the volume of its renminbi cross-border business hit over 1.5 trillion yuan ($241.24 billion) in 2012, rising 70 percent from a year earlier.

SHANGHAI SECURITIES NEWS

- Hong Kong is working closely with Chinese authorities to promote the mutual recognition of investment funds, which would pave the way for these funds to be sold into both sides of the market, said the deputy chief executive of Securities & Futures Commission of Hong Kong.

- Steam coal prices on the Bohai Bay Rim Index fell 2 yuan from week ago to 629 yuan ($100)a tonne this week, marking the sixth consecutive session of falls, which has brought prices down by a total of 11 yuan since mid-December.

SHANGHAI DAILY

--Chinese companies are becoming increasingly confident in venturing overseas to expand trade and cement their prescence on a global scale, a private survey showed. About four in every five international Chinese companies surveyed by HSBC plan to boost overseas expansion, according to the survey.

--China will continue testing and expand the trial run of the new 4G network technology that allows 10-20 times faster internet access, the industry's top regulator said.

CHINA DAILY (www.chinadaily.com.cn)

--The yuan-denominated business of two major Chinese banks - Industrial and Commercial Bank of China Ltd and Bank of China Ltd - surged in 2012 as global demand for the currency increased.

--China's first locally manufactured, battery-powered vehicle has been handed over to its buyer in Shanghai.

Fly On The Wall 7:00 Market Snapshot

ANALYST RESEARCH

Upgrades

ASML (ASML) upgraded to Buy from Neutral at BofA/Merrill
Autodesk (ADSK) upgraded to Outperform from Sector Perform at RBC Capital
Bed Bath & Beyond (BBBY) upgraded to Outperform from Perform at Oppenheimer
CSX (CSX) upgraded to Outperform from Sector Perform at RBC Capital
Cubist (CBST) upgraded to Hold from Sell at Cantor
Dillard's (DDS) upgraded to Outperform from Neutral at Credit Suisse
Emerson (EMR) upgraded to Buy from Hold at Deutsche Bank
Gol Linhas (GOL) upgraded to Buy from Neutral at Goldman
Netflix (NFLX) upgraded to Buy from Neutral at Lazard Capital
Netflix (NFLX) upgraded to Market Perform from Underperform at Raymond James
Netflix (NFLX) upgraded to Neutral from Underperform at Macquarie
Netflix (NFLX) upgraded to Overweight from Neutral at JPMorgan
Ross Stores (ROST) upgraded to Outperform from Neutral at Credit Suisse
Tenet Healthcare (THC) upgraded to Outperform from Market Perform at Raymond James
Torchmark (TMK) upgraded to Buy from Neutral at SunTrust

Downgrades

Albermarle (ALB) downgraded to Hold from Buy at Deutsche Bank
Albermarle (ALB) downgraded to Neutral from Buy at Citigroup
Allegheny Technologies (ATI) downgraded to Neutral from Buy at Goldman
Altera (ALTR) downgraded to Market Perform from Outperform at William Blair
Apple (AAPL) downgraded to Hold from Buy at Jefferies
Apple (AAPL) downgraded to Sector Perform from Outperform at Scotia Capital
Coach (COH) downgraded to Neutral from Buy at ISI Group
Copa Holdings (CPA) downgraded to Neutral from Buy at Goldman
Douglas Dynamics (PLOW) downgraded to Neutral from Outperform at Credit Suisse
Energizer (ENR) downgraded to Market Perform from Outperform at BMO Capital
Magnum Hunter (MHR) downgraded to Hold from Buy at Jefferies
Netflix (NFLX) downgraded to Neutral from Outperform at Credit Suisse
Parkway Properties (PKY) downgraded to Sell from Hold at Cantor
Primerica (PRI) downgraded to Reduce from Neutral at SunTrust
Redwood Trust (RWT) downgraded to Market Perform from Outperform at JMP Securities
Reinsurance Group (RGA) downgraded to Equal Weight from Overweight at Morgan Stanley
Safeway (SWY) downgraded to Underweight from Equal Weight at Barclays
Stillwater Mining (SWC) downgraded to Neutral from Outperform at Credit Suisse
Tiffany (TIF) downgraded to Hold from Buy at Canaccord
Veeco (VECO) downgraded to Neutral from Buy at UBS

Initiations

Atwood Oceanics (ATW) initiated with an Overweight at Barclays
Church & Dwight (CHD) initiated with an Outperform at Credit Suisse
Clorox (CLX) initiated with an Outperform at Credit Suisse
Colgate-Palmolive (CL) initiated with an Outperform at Credit Suisse
Expedia (EXPE) initiated with a Buy at Ascendiant Capital
Kimberly Clark (KMB) initiated with an Underperform at Credit Suisse
Ocean Rig UDW (ORIG) initiated with an Overweight at Barclays
PBF Energy (PBF) initiated with an Overweight at Morgan Stanley
Pacific Drilling (PACD) initiated with an Overweight at Barclays
Procter & Gamble (PG) initiated with a Neutral at Credit Suisse
Splunk (SPLK) initiated with an Outperform at BMO Capital

HOT STOCKS

Apple (AAPL) CEO Cook: Very confident in our product pipeline
Apple said changing approach to guidance
Nokia (NOK) to propose no dividend be paid for 2012
Starwood Property (STWD), Starwood Capital to acquire LNR Property LLC for $1.05B
American Airlines (AAMRQ) signed 12-year capacity purchase agreement with Republic (RJET). Republic signed an agreement with Embraer (ERJ) to purchase 47 new aircraft
Amgen (AMGN) said on track to hit upper end of 2015 revenue guidance
Said no plans to raise additional debt in 2013
SanDisk (SNDK) said positioned for strong profitability in 2013
Netflix (NFLX) said no plans to launch additional international markets in 1H13
Said more and more interested in exclusive content
Symantec (SYMC) reorganized management, will reduce middle-management workforce
United Rentals (URI) sees FY13 increase in rental rates of approximately 4.5%

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Stanley Black & Decker (SWK), Cash America (CSH), Knight Capital (KCG), Jacobs Engineering (JEC), Teradyne (TER), Hill-Rom (HRC), Apple (AAPL), United Rentals (URI), Western Digital (WDC), Sealy (ZZ), SanDisk (SNDK), Netflix (NFLX), Stryker (SYK)

Companies that missed consensus earnings expectations include:
Cabot Microelectronics (CCMP), Logitech (LOGI), Noble Corp. (NE), F.N.B. Corp. (FNB), Energen (EGN), Hexcel (HXL), Greenhill & Co. (GHL)

Companies that matched consensus earnings expectations include:
KeyCorp (KEY), Susquehanna (SUSQ), Celadon Group (CGI), Cubist (CBST)

NEWSPAPERS/WEBSITES

Last year Japan's trade deficit nearly tripled to a record $78.3B and few expect a drastic improvement anytime soon, leaving Tokyo no choice but to continue with efforts to boost the economy, the Wall Street Journal reports
Citigroup’s (C) U.S. retail and commercial banking has the highest average deposits per branch among top lenders but generates lower profits than the others. The bank is attempting to turn that around, including an upgrade of computer systems, remodel branches and make employees more accountable in what is arguably the biggest internal overhaul at Citibank in decades, the Wall Street Journal reports
Growth in China's factory sector surged to a two-year high in January as manufacturers received more local and foreign orders in an encouraging sign for the country's economic rebound. The HSBC flash purchasing managers' index (PMI) increased to 51.9 in January, the highest since January 2011 and above the 50-point level that shows accelerating growth in the sector from the previous month, Reuters reports
Japanese regulators joined the U.S. in all but ruling out overcharged batteries as the cause of recent fires on the Boeing (BA) 787 Dreamliner, which has been grounded for a week. The FAA said there are still no firm answers as to the cause and no clear timetable yet for returning the plane to flight, Reuters reports
With toxic smog engulfing Beijing and much of the rest of the country for weeks, China is considering tighter vehicle curbs and emissions standards like Europe’s. That could benefit GM (GM), Volkswagen (VLKAY) and Hyundai Motor  in a market where sales are forecast to pass 20M units this year, Bloomberg reports
Building supply stocks such as USG (USG) in which Warren Buffett (BRK.A) holds a 16% stake, and Eagle Materials (EXP) that more than doubled last year look to rise further as the U.S. housing market extends its recovery, Bloomberg reports

SYNDICATE
ARIAD (ARIA) files to sell common stock
American Realty (ARCP) announces public offering of 1.5M shares of common stock
Buckeye Partners (BPL) files to sell 6M common units
KB Home (KBH) 5.5M share Secondary priced at $18.25

Your rating: None

Mehdi’s Morning Memo: Warsi’s War On The Islamophobes

The ten things you need to know on Thursday 24th January 2013...

1) WARSI'S WAR ON THE ISLAMOPHOBES

She may have been demoted from the Cabinet but Baroness Warsi still doesn't pull any punches. Tonight, she'll take aim at "certain sections" of Britain's Islamophobia-fuelling media in a speech which will also endorse Lord Justice Leveson's conclusions about anti-Muslim prejudice in the press.

From the Huffington Post:

"In a speech in London this evening, the minister for faith and communities and senior Foreign Office minister will say there is an 'underlying, unfounded mistrust' among many Britons towards Muslims as well as a 'misinformed suspicion of people who follow Islam'.

"Warsi will make the comments at a dinner held by Mama, a new government-backed group dedicated to measuring and monitoring anti-Muslim attacks.

"... 'Sadly, much of this negative narrative is being perpetuated by certain sections of the media,' she will say.

'"Lord Justice Leveson's report event revealed journalists were encouraged to make up stories about Muslims. And concluded that the unbalanced reporting of ethnic minorities was endemic.'

You've got to admire her guts. The former Tory chairman's speech comes almost two years to the day since her now-notorious 'dinner-table test' speech in which she argued that prejudice against Muslims had become socially acceptable in the UK - at the time, she was denounced by right-wing columnists while Downing Street sources distanced themselves from the baroness, claiming she'd not cleared the speech with the PM.

Let's see how Dave responds this time round...

2) TIME FOR PLAN B, GIDEON

Even the chancellor's former bezzy mates think he's got it wrong on austerity. Remember the IMF? Yesterday, they downgraded their growth forecasts for this year and next - ahead of tomorrow's fourth-quarter GDP figures which are expected to be pretty bad.

This morning, their chief economist did his best impression of Ed Balls on the Today programme - from the BBC:

"The IMF chief economist has told the BBC that Chancellor George Osborne should consider toning down austerity in his March budget.

'We think this would be a good time to take stock,' said Olivier Blanchard, speaking to Radio 4's Today programme."

Are you listening, Gideon?

3) THE MORNING AFTER

The prime minister may have won the support of his backbenchers, getting cheered and applauded as he arrives in the Commons chamber for PMQs yesterday after his announcement of an in-out referendum (in, er, 2017...), and he may have even pleased big business (a letter to The Times signed by 56 industry and City leaders says his promise of a negotiation followed by a referendum is "good for business and good for jobs in Britain") but not everyone's pleased with his brazen sop to the eurosceptics. I'm not talking about the French or the Germans - I'm referring here to the Yanks and Dave's BFF, Barry.

As my colleague Ned Simons reports:

"The United States has repeated its warning that the United Kingdom must not leave the European Union, following David Cameron's announcement he wants to hold a referendum.

"President Obama's press secretary Jay Carney said on Wednesday the White House believed the UK was 'stronger' as a member of the EU.

"'We welcome the prime minister's call for Britain to remain in the EU and to retain a leading role in Europe's institutions,' he said.

"'And as the President told the prime minister when they spoke last week, the United States values a strong United Kingdom and a strong European Union.'"

Who does Cameron want to impress more? Barack Obama or Daniel Hannan? His behaviour over the next couple of years will tell us the answer.

On a related note, Europe minister David Lidington told BBC2's Newsnight last night that the next Tory election manifesto will outline exactly how his party would try to renegotiate new and looser ties with the EU.

4) ED'S GAMBLE

In one day Cameron appeared to unite his own party behind him and cause utter confusion in Labour ranks. To the utter delight of Tory backbenchers Ed Milband appeared to rule out holding an in/out referendum during prime minister's questions. Only for other members of his front bench to then walk back the comments later on in the day.

John Denham told the Daily Echo there had been "a bit of over-interpretation" of Miliband's comments. He said: "We do not absolutely rule it out in the future, we do not know what issues will come up in the future. And shadow foreign secretary Douglas Alexander said the party would "never said never" on the issue. Perhaps we can have a referendum on whether Labour should support a referendum.

5) THE DRONE PRESIDENT

Dave's mate Barry's got his own problems to deal with. Like, y'know, accusations of war crimes. Bit awkward when you're a Nobel Peace Prize winner.

From the Guardian:

"A United Nations investigation into targeted killings will examine drone strikes in Afghanistan, Pakistan, Yemen and Somalia, according to the British lawyer heading the inquiry.

"Ben Emmerson QC, a UN special rapporteur, will reveal the full scope of his review which will include checks on military use of unmanned aerial vehicles (UAVs) in UK operations in Afghanistan, US strikes in Pakistan, as well as in the Sahel region of Africa where the conflict in Mali has erupted...

"The inquiry will report to the UN general assembly in New York this autumn... Emmerson has previously suggested some drone attacks - particularly those known as 'double tap' strikes where rescuers going to the aid of a first blast have become victims of a follow-up strike - could possibly constitute a 'war crime'."

Oh, Dubya, come back. All is forgiven. (Not.)

BECAUSE YOU'VE READ THIS FAR...

Watch this video of what happens when tourists try and mess with the Queen's Guard at Windsor Castle.

6) SNP BLUES

Talking of referendums (or is that referenda?), the Times reports:

"Alex Salmond is facing a devastating defeat in next year’s Scottish independence referendum, according to a new opinion survey.

"The survey of more than 1,200 Scots shows that support for independence north of the Border has plummeted to its lowest level since devolution in 1999 — and the decline has gained pace since Mr Salmond’s Nationalist administration came to power in Holyrood in 2007.

"Backing for Scotland leaving the UK now sits at just 23 per cent, a drop of nine points in a year. The annual Scottish Social Attitudes survey shows that Scots are losing any appetite they had for separation, with less than half now believing independence would give their country a stronger voice in the world."

7) 'NOT FIT FOR PURPOSE'

From the Mirror:

"A backlog of 16,000 immigration cases dating back up to a decade has been uncovered by watchdogs.

"Around 14,000 people are waiting for the UK Border Agency to consider appeals against decisions to kick them out - with the list growing by 700 a month."

8) HATTY, DOLLY AND BRIAN

Brian Leveson's report into media ethics and practises is still dividing and provoking politicians.

From the Guardian:

"Harriet Harman, the deputy Labour leader, has said government proposals to create a royal charter for a new press watchdog are akin to Dolly the sheep, the first animal to be cloned from a cell.

"Speaking at the Oxford Media Convention on Wednesday, Harman also said Labour was not ruling out agreeing with the government's plan to introduce a royal charter for the newspaper regulator in conjunction with a statute to ensure the charter cannot be tweaked by a future government.

"But she said the problem was no one knew how a royal charter would work in relation to the press. 'It's a bit like Dolly the sheep, it might look like a sheep, but we do not know if it will do all the thing that a sheep is supposed to do,' she said."

9) MESSY EXIT

Afghanistan is likely to be "messy" after western troops pull out in 2014, Defence Secretary Philip Hammond admitted yesterday.

Hammond said there was little prospect of the Kabul-based government defeating the Taliban "outright", and the most it could hope for was securing key cities and infrastructure. The frank assessment came as Hammond gave evidence to the Commons Defence Committee.

"The ability to see a long-term sustainable peace in Afghanistan fundamentally rests upon a political compromise and political accommodation being made within that country between the different ethnic groups, the government and the Taliban," he told the MPs. "Such an accommodation will require the active support of the neighbours, particularly Pakistan."

10) CLINTON VS CONGRESS

From the Telegraph:

"Hillary Clinton has given an angry and emotional defence of her handling of last year's attack on the American consulate in Benghazi, while warning of the need for a long–term US effort to address the rise of al–Qaeda in north Africa.

"... Mrs Clinton banged the table in frustration as she denied claims of a coverup. She said the issue was "not just a matter of policy, it's personal" and choked back tears as she described comforting the families of the victims.

"...Mrs Clinton faced attacks from several senior Republicans during the hearing... Mrs Clinton banged the table with impatience at the line of questioning, saying: 'Was it because of a protest, or was it because of guys out for a walk one night who decided they'd go kill some Americans? What difference, at this point, does it make? It is our job to figure out what happened and do everything we can to prevent it from ever happening again.'"

You can watch the exchanges here on HuffPost.

Was this a preview of 2016? A couple of those Republican senators, Marco Rubio of Florida and Rand Paul of Kentucky, will probably run for president in four years time- and could find themselves up against the combative Clinton. Good luck to them...

PUBLIC OPINION WATCH

From today's Sun/YouGov poll:

Labour 43
Conservatives 31
Lib Dems 11
Ukip 10

That would give Labour a majority of 116.

140 CHARACTERS OR LESS

@TimMontgomerie A montage of today's referendum-tastic newspaper headlines http://twitpic.com/bxs7ac

@Slate Since When Is France a Global Military Power? http://slate.me/XAEuO0

900 WORDS OR MORE

Timothy Garton-Ash, writing in the Guardian, says: "From outside, it's clear why Britain has to stay in Europe."

Peter Oborne, writing in the Telegraph, says: "David Cameron may have finished off the Tories - but he had no choice."

Steve Richards in the Independent says: "Cameron's speech on Europe makes it less likely he will be Prime Minister after the next election."

Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

The Extremist Cult of Capitalism

A 'cult,' according to Merriam-Webster, can be defined as "Great devotion to a person, idea, object, movement, or work..(and)..a usually small group of people characterized by such devotion."

Ownership, Full Employment and Community Economic Stability

Job networking(Image: Job networking via Shutterstock)The great British economist the late Joan Robinson once observed that the only thing worse than being exploited by capitalism is not being exploited by capitalism. This truth is felt acutely by anyone who is unemployed and looking for work. As the pain of the economic crisis continues and millions struggle to find employment there is an obvious imperative to create jobs—any jobs. But we shouldn’t stop there. In Back to Full Employment, Robert Pollin makes the essential point that “a workable definition of full employment should refer to an abundance of decent jobs.” Poor jobs that keep workers minimally employed but leave them in precarious circumstances and unable to participate fully in civic and political life are better than no jobs at all. But in terms of public policy we can and should aim higher—especially as decent jobs not only benefit the workers that hold them but also the communities in which they live. Absent a stable economic base, community itself is compromised.

Three elements of the instability challenge lend critical perspective to the issue. The first can be seen in the long-term results of the decline of manufacturing industry in the rust belt. We have in fact been quite literally “throwing away” entire cities—cities like Cleveland, Detroit and St. Louis. Since 1950, Cleveland and St. Louis have each lost half a million people, drops of more than 50 and 60 percent respectively; in Detroit, the fall in numbers has topped a million, more than 60 percent. The uncontrolled corporate decision-making that results in the elimination of jobs in one community—leaving behind empty houses, half-empty schools, roads, hospitals, public buildings, and so forth—implicitly requires that they be rebuilt in a different location. Quite apart from the human costs involved, the process is extremely costly in terms of capital and also of carbon content—and at a time when EPA studies show that greenhouse gas emissions caused by human activity in the United States are still moving in the wrong direction (having jumped by over 3 percent between 2009 and 2010 alone).

A second aspect relates to democracy. Substantial local economic stability is clearly necessary if democratic decision-making is a priority. A local population tossed hither and yon by uncontrolled economic forces is unable to exercise any serious interest in the long-term health of the community. To the extent local budgets are put under severe stress by instability, local community decision-making (as political scientist Paul E. Peterson has shown) is so financially constrained as to make a mockery of democratic process. This becomes still more problematic if we recognize—as theorists from Alexis de Tocqueville and John Stuart Mill to Benjamin Barber, Jane Mansbridge, and Stephen Elkin have argued—that an authentic experience of local democratic practice is also absolutely essential for there to be genuine national democratic practice.

Thirdly, and straightforwardly, it will be impossible to do serious local “sustainability planning”—mass transit, high-density housing, and so forth—that reduces a community’s carbon footprint if such planning is disrupted and destabilized by economic turmoil.

So yes, we need jobs. And yes, we need good jobs. But we also need an approach to good jobs that will allow us to grapple with the challenges indicated above while at the same time begin tackling the grotesque maldistribution of wealth in this country—a distribution that has reached literally medieval proportions. The top 400 individuals now control as much wealth as the bottom 180 million Americans taken together.

How to go about all this? As we—hopefully—begin to adopt smarter public policies aimed at reaching full employment, we should maximize the impact of these policies by choosing strategies likely to economically stabilize our cities and regions. A decent job should be understood as one which not only pays well, but which is anchored in a community, and which in turn anchors a worker and participant in the civic life of that community. If the culprit behind economic destabilization, and its catastrophic effects in terms of employment, is capital mobility, the solution will require increasing the proportion of capital held by actors with a long-term commitment to a given locality or region.

The problem, however, is that major footloose corporations are not only able but willing to jump from one city to another as they chase “incentives”—and mayors and governors waste taxpayer dollars in endless bidding wars. This raises the question of alternative ownership forms (something Pollin also began to take up in a 2012 article in the Cambridge Journal of Regions, Economy and Society). By rooting ownership broadly in the community, jobs stay put. And jobs that stay put create more jobs, through the multiplier effect of money circulating within a community as well as by expanding the tax base of cash-strapped local governments.

Worker and community ownership—whether through employee stock ownership plans or more egalitarian or community strategies—are forms of ownership relevant to thinking about jobs, job creation, and local economic stability. Crucially, community or cooperative ownership of jobs appears all but certain to yield more stable long-term employment than traditional corporate strategies, and is thus more valuable as part of a package of policies aimed at full employment. Companies owned by people who live in the community rarely if ever get up and move.

Traditional employers also have an incentive to keep labor costs low and will use workers only for as long as they are needed on a particular job. A number of community enterprises now aim to maximize employment over the long term. Instead of treating employees as disposable, such employers seek ways to find new work for their workforce or share existing work. (The BBC recently provided a striking example of this in their coverage of the resilience of the Basque country’s Mondragón cooperatives. In the regions where Mondragón has a significant presence, the unemployment rate is around half that of the rest of Spain.)

Worker ownership works in the US, as well. It’s not often realized that there are over 10 million Americans who work at jobs they also own—more than are members of unions in the private sector. In Cleveland an innovative complex of worker owned cooperatives, linked through a revolving fund and a non-profit corporation—and in part supported by procurement from non-profit hospitals and universities—has become a model for several other community efforts. A large part of this recent boom in worker ownership is due to federal policy; specifically, legislation that created substantial tax advantages for business owners who sell their ownership stake to their workers.

Another example of how smart policy has been used to cost-effectively support a worker-ownership job retention strategy can be found in the Ohio Employee Ownership Center (OEOC). The OEOC has used a relatively modest amount of state and federal funding (less than $1 million annually) to facilitate worker takeovers of firms whose owners are retiring or that are threatened with closure. Such firms, owned by workers, are city (and tax base) stabilizers: they do not get up and move. The OEOC has created enormous economic returns—retaining jobs at a cost of less than $800 per job and helping stabilize thousands of jobs in Ohio cities. This is in sharp contrast to traditional economic subsidies aimed at job retention, which cost far more, deliver less, and often lead to a destructive—and destabilizing—subsidy arms-race between different cities and states.

How might we begin, on a national level, to build a strategy to mobilize worker and community ownership as a means of reaching full employment? One policy intervention that could go a long way intersects with another of Robert Pollin’s concerns in Back to Full Employment. He notes that while successive rounds of economic stimulus have kept interest rates low, they have not always succeeded in making credit available to small businesses. Small worker owned businesses could benefit from policies that specifically expanded their access to credit. (In addition to the general reticence around lending Pollin highlights, these kinds of projects, especially cooperatives, have to deal with lending institutions that are often unfamiliar with or even hostile to democratized enterprises.)

Legislation has also been proposed that would start to modestly address this problem: Chaka Fattah’s National Cooperative Act or Bernie Sanders’ United States Employee Ownership Bank Act. But there are also existing programs that could be expanded: the Small Business Administration, for example, is running a very interesting initiative, the Intermediary Lending Pilot Program, which leverages existing local and regional community-oriented nonprofits to decentralize the loan-making process. One of the intermediaries here is the Cooperative Fund of New England, which is using the funds made available to the program to fund cooperatives; we can imagine, with adequate support, similar local cooperative funding initiatives across the country.

In short, if we’re serious about full employment, and about creating and preserving decent jobs, we shouldn’t limit ourselves to traditional conceptions of the kinds of companies that create jobs. Indeed, by leveraging worker and community ownership strategically, we’re not just embracing a potentially transformative strategy to democratize wealth in the long term, we’re picking potentially one of the most effective strategies available to support a long-term process of job creation that could lead us back both to full employment and community stability. At the same time, we can also help develop concrete ways to begin the long, hard task of democratizing the ownership of wealth in the United States.

Economists’ Statement on Regulation

We are economists who think that the economy should serve people, the planet and the future.

Rules are as important in an economy as they are in sports. When gamblers rig the game, players flout the rules, or competent referees are not on the field, the result is a charade and not a fair contest.

Yet some claim that regulations are always bad for the economy. They believe that “freeing” business from rules that protect public health, maintain competitive markets, and ensure financial solvency is the route to prosperity. This ideological opposition to regulation, epitomized by the repeal of the Glass-Steagall Act, dismantled the firewall between commercial banking and investment banking, and opened the door to the greed and reckless behavior that culminated in our current economic crisis.

Also see: The Bottom Line; Economists' Statement on Jobs; Economist's Statement on Housing; Economists' Statement on Health Care.

Some claim that regulation “kills jobs.” They tell us that firms will hire more workers if they don't have to worry about such things as safe workplaces, fair wages, clean air and water, or transparent accounting standards. They're dead wrong. Sound regulations don't deter investment. Sound regulations don't deter job creation. On the contrary, sound regulations are a necessary ingredient in any healthy economy.

It was unregulated financial markets that killed millions of jobs, as surely as unregulated pollution kills people.

Some claim that we should treat corporations as people, allowing big business and banks to finance political campaigns, and giving free rein to their lobbyists. We've tried letting politicians and corporate CEOs police themselves. The verdict is in: we've paid the price in stolen lives, damaged health, massive bailouts, and vanished jobs. It turns out that “anything goes” means that anything goes to those who can pay for it. We need fair and transparent rules to govern our political system that are robustly enforced.

Sound economics supports sound regulation, and sound regulation supports a sound economy.

We call for regulations that prevent big banks from making our nation's financial system a heads-they-win, tails-we-lose casino.

We call for regulations that safeguard the solvency of working families, the health of the public, and the natural environment as the common heritage of present and future generations.

We call for regulations that put the burden of proof on corporations to prove that it is safe to introduce new chemicals into our air and water, and new financial instruments into our capital markets, just as food and drug manufacturers must do under FDA rules.

We extend our support to the goal of building an economy where businesses, banks, and politicians are held accountable to the people, the planet, and the future.

If you’re an economist and would like to add your name to this statement, please send us an email by This email address is being protected from spambots. You need JavaScript enabled to view it. .

Gar Alperovitz / University of Maryland College Park

James K. Boyce / University of Massachusetts Amherst

Omar S. Dahi / Hampshire College

George DeMartino / University of Denver

Gerald Epstein / University of Massachusetts Amherst

Gerald Friedman / University of Massachusetts Amherst

Eban Goodstein / Bard College

Julie Nelson / University of Massachusetts Boston

Juliet Schor / Boston College

Douglas Smith / Econ4

Tim Koechlin / Vassar College

Hannah Appel / University of California Berkeley

Michael Ash / University of Massachusetts Amherst

Lee Badgett / University of Massachusetts Amherst

Ron Baiman / Center for Tax and Budget Accountability

Scott Baker / Common Ground – NYC

Erdogan Bakir / Bucknell University

Benjamin Balak / Rollins College

Radhika Balakrishnan / Rutgers University

Fabian Balardini / Borough of Manhattan Community College (CUNY)

Ahmet Baytas / Montclair State University

Carole Biewener / Simmons College

Marc Bilodeau / Indiana University – Purdue University Indianapolis

Cyrus Bina / University of Minnesota

Peter C. Bloch / University of Wisconsin-Madison

Elissa Braunstein / Colorado State University

Antonio Callari / Franklin and Marshall College

Martha Campbell / SUNY Potsdam

Jessica Carrick-Hagenbarth / University of Massachusetts Amherst

Kimberly Christensen / Sarah Lawrence College

Jennifer Cohen / Whitman College

J. Kevin Crocker / University of Massachusetts Amherst

James Crotty / University of Massachusetts Amherst

Susan M. Davis / Buffalo State College

Carmen Diana Deere / University of Florida

Geert Dhondt / John Jay College, The City University of New York

P.K. Dollar / Gem Communications

Laura Dresser / Center on Wisconsin Strategy

Marie Christine Duggan / Keene State College

Amitava Krishna Dutt / University of Notre Dame

Justin A. Elardo / Portland Community College

Bilge Erten / United Nations, DESA

Joshua Farley / University of Vermont

Kade Finnoff / University of Massachusetts Boston

Heidi Garrett-Peltier / University of Massachusetts Amherst

Barbara Garson / “Author “”Down the Up Escalator: How the 99% live in the Great Recession”"

Armagan Gezici / Keene State College

David Gold / The New School

Jonathan P. Goldstein / Bowdoin College

Eban Goodstein / Bard College

Doug Henwood /”Left Business Observer, “”Behind the News”"

Wolfgang Hoeschele / Truman State University

Julio Huato / St. Francis College

Mary C. King / Portland State University

Mark Klinedinst / University of Southern Mississippi

Kazim Konyar / California State University, San Bernardino

Philip Kozel / Rollins College

David Laibman / City University of New York

June Lapidus / Roosevelt University

Joelle J. Leclaire / Buffalo State College, SUNY

Frederic Lee / University of Missouri Kansas City

Fernando Leiva / University at Albany (SUNY)

Charles Levenstein / University of Massachusetts Lowell

Margaret Levenstein / University of Michigan Ann Arbor

Patricia J. Lindsey / Retired

Sean MacDonald / New York City College of Technology, City University of New York

Arthur MacEwan / University of Massachusetts Boston

Stephanie Martin / Allegheny College

Peter Hans Matthews / Middlebury College

Elaine McCrate / University of Vermont

Michael Meeropol / John Jay College of Criminal Justice (CUNY)

Ralph Meima Marlboro / College Graduate School

John D. Messier / University of Maine Farmington

Peter B. Meyer / University of Louisville, The E.P. Systems Group, Inc.

John Miller / Wheaton College

Fred Moseley / Mount Holyoke College

Tracy Mott / University of Denver

Ellen Mutari / The Richard Stockton College of New Jersey

Julie A. Nelson / University of Massachusetts Boston

Eric Nilsson / California State University San Bernardino

Jennifer Olmsted / Drew University

Shaianne Osterreich / Ithaca College

Aaron Pacitti / Siena College

Karl Petrick / Western New England University

Thomas Michael Power / The University of Montana

Paddy Quick / St. Francis College

Wendy Rayack / Wesleyan University

Stephen Resnick / University of Massachusetts Amherst

Meenakshi Rishi / Seattle University

Leopoldo Rodriguez / Portland State University

Frank Roosevelt / Sarah Lawrence College

Luis D. Rosero / Fitchburg State University

Blair Sandler / University of Massachusetts Amherst PhD, now teaching T’ai Chi

Ted P. Schmidt / SUNY Buffalo State

Markus P. A. Schneider / University of Denver

Barry Shelley / Brandeis University

Thomas Simmons / Greenfield Community College

Bryan Snyder / Bentley University

Peter Spiegler / University of Massachusetts Boston

Howard Stein / University of Michigan Ann Arbor

Masao Suzuki / Skyline College

Pavlina R. Tcherneva / Franklin and Marshall College

Frank Thompson / University of Michigan Ann Arbor

Renee Toback / URPE

Mariano Torras / Adelphi University

Mayo Toruño / California State University San Bernardino

A. Dale Tussing Syracuse University

Hasmet Uluorta / University of Miami

Valerie Voorheis University of / Massachusetts Amherst and Marlboro College Graduate Center

Mwangi wa Gĩthĩnji / University of Massachusetts Amherst

James Wagner / John Burrough Schools, Webster University

Scott A. Weir / Wake Technical Community College

Thomas E. Weisskopf / University of Michigan

Maggie Winslow / University of San Francisco

Yavuz Yaşar / University of Denver

Notes:

“anti-regulation ideology led to the repeal of the Glass-Steagall Act’s financial safeguards”: see Haldane 2010.

“sound regulations don’t deter investment”: see Shapiro 2011 and Shapiro and Irons 2011.

“put the burden of proof on corporations to demonstrate that it is safe to introduce new chemicals into our air and water”: see U.S. Government Accountability Office 2007.

“or new financial instruments into our capital markets”: see Crotty and Epstein 2009.

If I Were Attorney General

Context: As yet there are no context links for this item.

Bio

Michael Ratner is President Emeritus of the Center for Constitutional Rights (CCR) in New York and Chair of the European Center for Constitutional and Human Rights in Berlin. He is currently a legal adviser to Wikileaks and Julian Assange. He and CCR brought the first case challenging the Guantanamo detentions and continue in their efforts to close Guantanamo. He taught at Yale Law School, and Columbia Law School, and was President of the National Lawyers Guild. His current books include "Hell No: Your Right to Dissent in the Twenty-First Century America," and “ Who Killed Che? How the CIA Got Away With Murder.” NOTE: Mr. Ratner speaks on his own behalf and not for any organization with which he is affiliated.

Transcript

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Baltimore. And welcome to this week's edition of The Ratner Report with Michael Ratner, who now joins us from New York City.

Michael is the president emeritus of the Center for Constitutional Rights in New York. He's chair of the European Center for Constitutional and Human Rights in Berlin. He's a board member of The Real News. Thanks for joining us again, Michael.MICHAEL RATNER, PRESIDENT EMERITUS, CENTER FOR CONSTITUTIONAL RIGHTS: Good to be with you, Paul.JAY: So I'm—let's kick this one off with a question. So President Obama gets inaugurated, and all of a sudden he has this brilliant flash: oh, no, I need Michael Ratner as attorney general. Now, that's as likely to happen as—well, okay, I'm not going to crack any joke, but let's say it happened. What would you do as attorney general?RATNER: Well, you know, it's an interesting question. And I was asked the question by a progressive newspaper called The Indepedent as well, along similar lines. And, of course, you could decide, you could have a different government, a socialist government. But, of course, that's not going to be decided by the attorney general. So what does the attorney general do? Attorney general heads the Department of Justice. In, like, 200 and some years there's been one woman heading the Department of Justice. So you have to assume it's probably going to be a man this time, which is going to be me. And I came up with some ideas, perhaps eight, nine, ten ideas of what I could actually do. So the first one is a nice—for all of us activists out there, 'cause you get social change through activism. And what I said was, handcuff the FBI, not activists. So the first thing that they could do is get the FBI off the backs of political activists, Muslim activists, people who are out in the streets, Occupy Wall Street people, and just get rid of government, political FBI spying, put handcuffs on the FBI, not on all of us, because that's how social change is made.And right now we're in a situation where Obama and the FBI are still operating under the FBI guidelines that were suggested by President Bush's last attorney general, Mukasey. And they're terrible, because they allow spying and surveillance and wiretapping on people who they have never been even accused or even implicated in a crime without reasonable doubt. They can spy on anybody.So number one, handcuff the FBI and not activists.Number two—and this is the power of attorney general. Even if there's laws on the books saying it's illegal for me to smoke marijuana or take cocaine, the attorney general doesn't have to enforce those federal laws. And so the second thing I would do as attorney general, I would just stop all drug prosecutions. That's not the same as passing laws that says they're legal. But as attorney general, the chief law enforcement officer, stop all drug prosecutions. Already you're going to see our jails getting empty, less people going, huge budget cuts that will make a big difference in, of course, people's personal lives.The third is: what do we do about jails, and what can I do as attorney general? Well, I could ask that every single juvenile, every single person convicted as a juvenile in prison, under 18 years old, should be immediately paroled. They had no place in prison to begin with. They should have been treated. They should have been rehabilitated. Get rid of that right away.Then I would ask that all the political prisoners be released—Leonard Peltier, Mumia Abu-Jamal, etc., anybody—. Mumia, I wouldn't have the authority. He's in a state prison. But all the federal prisoners, such as the Indian activist Leonard Peltier. Get them out. And then, out of federal prisons, ask for parole of anybody who's served over 20 years. Europe really has a maximum of 20 years. Let's get rid of those. They're just being in there for punitive reasons.So I have FBI, drugs, prisons. Then I would end the prosecution of any undocumented workers in the United States. No longer would we use a criminal system, such as operation streamline to jail tens and tens of thousands of people. End the prosecution of undocumented.Fifth, I would stop the prosecution of my own client, Julian Assange, the investigation of him as well as WikiLeaks. I would have stopped the prosecution of Aaron Swartz, the young internet activist who committed suicide really in part as a result, if not even in big part, as a result of the government's persecution of Aaron Swartz, the internet activist. I would stop the prosecution of Bradley Manning. I would stop the one of Jeremy Hammond. Those are two people who allegedly uploaded documents to WikiLeaks. So I would just stop with prosecuting whistleblowers, just get rid of that, because they're exposing secrets that we really have to know. That's the sixth thing.The seventh thing—and this is a hard one to get into for the attorney general, because you think, how do I make this country more equal from an economic point of view. So I've thought long and hard about that. I can't change the tax code. But what could I do? I could decide that anyone making under a certain amount will not be prosecuted if they don't pay taxes.So let's set the figure at, let's say, $40,000. Anyone making under $40,000, if they decide not to pay taxes, I will not prosecute them as the Department of Justice, nor will I use civil jurisdiction or civil courts to try and collect those taxes. That would automatically raise the salary levels, raise the levels of income of, you know, probably the majority of the United States. That's the sixth thing.The seventh thing. I don't want to let the bad guys off the hook here. I have two sets of bad guys. The first thing I would do is begin an investigation and hope to get an indictment of President Obama for operating the drone strikes throughout the world. I would particularly go after them for the killing of al-Aulaqi in Yemen or al-Aulaqi's son in Yemen, a 16-year-old boy, and for another U.S. citizen in Yemen. There's a U.S. law—and a federal judge actually just cited it in a recent decision on drones. It says the president is not exempt from a law that prohibits people from killing Americans overseas. So I'd begin an investigation of President Obama because he has killed American citizens with drones.JAY: Now, not only will you never get appointed, but if in the wildest chance you did, you wouldn't hold the job for very long. Go on.RATNER: Well, once I get him indicted, you know, he can't get rid of me. Anyway, anything I would do is I would go after, obviously, the Bush–Cheney torture kill teams—implemented not only indefinite detention at Guantanamo and Bagram, but who actually tortured people all over the world—Guantanamo, Bagram—who rendered people to torture, and I would investigate and prosecute those people. That seems like a no-brainer. It should have been a no-brainer to Obama. It should have been a no-brainer to Eric Holder, the current person who I'm replacing. But apparently even that has been difficult.JAY: Now, you're talking Bush–Cheney themselves?RATNER: Yes, of course. Bush and Cheney have both admitted that they ordered waterboarding, a form of torture, and they would do it again. That's—you don't need much more. They've openly admitted to ordering people to be tortured. And we know that people have been tortured as a result. Materials were released. Various people at black sites, one person 83 times waterboarded, another person well over 100. Torture's completely illegal. We have an obligation to prosecute torturers under the Convention Against Torture. It hasn't been done by Obama. I as attorney general would actually—of the ones I mentioned, I think a number of them are actually realistic. That one certainly should be carried out.Then, you know, how else do we get at the financial crisis? I gave us one way [unintel.] stop people having to pay taxes. I just won't prosecute them. The other way, and what I made up for this, is: too big to fail, too big not to be in jail. So rather than just give all of these big banks civil penalties, or these investment houses, even if they're $10 billion or $5 billion or $500 million, let's actually have investigations where we jail the crooked bankers, jail the crooked investment houses, because that's the way, at least, we can avert not crisis—'cause we're going to have crisis in capitalism for a long time, economic crisis, but maybe we can take some of the really deep edge off the next economic crisis by trying to get our banks, our mortgage fraud people, etc., to operate in a better way. That's number nine. Number ten. This was an interesting one. This was actually suggested by my daughter, modeled after a law in Bolivia called the Rights of Mother Earth, Ley de Derechos de la Madre Tierra. And what it does is rather than just talk about rights for human beings, talks about rights for the ecosystem and the cultural system that you're in, so that when you do something, you have to not just think about what's going to happen, you know, to me or when you build a dam, but what's going to happen to the whole ecosystem. Bolivia has such a law. And as attorney general, of course, I can't pass that law, but at least I could try and put that law forward. So these are ten real positions that the next attorney general could take. And were I the attorney general, despite the political pushback I could get, these are things that I would actually like to carry out. And while they wouldn't be revolutionary in the sense of overturning this society, what they represent to me are transitional actions, transitional demands and actions that ultimately can lead to a much more equal society.JAY: Well, that's great. I mean, I think if this was an elected position, you could probably get elected to this. Unfortunately, it's not.RATNER: I love you, Paul.JAY: Thanks very much for joining us, Michael.RATNER: Thank you, Paul.JAY: And thank you for joining us on The Real News Network.

End

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Frontrunning: January 23

  • Doubt Greets Bank of Japan's Easing Shift (WSJ)
  • Japan hits back at currency critics (FT)
  • Japan upgrades economic view for first time in eight months (Australian) - only to lower them in a few months again
  • GOP critics get opportunity to grill Secretary Clinton on Benghazi (Hill)
  • Global economy set for ‘slow recovery’ (FT)
  • Obama to back short debt limit extension (FT)
  • Spain economy contracted 1.3% in 2012: Bank of Spain (Presstv)
  • Unfinished Luxury Tower Is Stark Reminder of Las Vegas’s Economic Reversal (NYT)
  • Draghi Says ‘Darkest Clouds’ Over Europe Have Subsided (BBG)
  • High-Speed Dustup Hits a Clubby Corner (WSJ)
  • U.S. Budget Discord Is Top Threat to Global Economy in Poll (BBG)
  • Sir Mervyn King says abandoning inflation target would be 'irresponsible' (Telegraph)
  • Spain Says It May Cover 13% of 2013 Funding in January (BBG)
  • BOE Cites Pound as Rebalancing Obstacle in 8-1 Stimulus Vote (BBG)
  • Riksbank Has Room for More Cuts as Krona Gains, Ekholm Says (BBG)

Overnight Media Digest

WSJ

* Microsoft Corp entered discussions in recent days with private equity firm Silver Lake Partners and Dell Inc founder Michael Dell to help finance a leveraged buyout of the computer maker, according to people familiar with the deliberations. (http://link.reuters.com/vuq45t)

* Google Inc reversed the trend of slowing revenue growth in its core online advertising business, signaling that the internet giant is beginning to get a handle on how the consumer shift toward mobile devices is affecting the online ad industry. (http://link.reuters.com/xuq45t)

* Johnson & Johnson officials learned of problems with a metal hip-replacement implant in 2008, a year before the company stopped making the joints and two years before recalling them, according to documents unsealed in a California state court. (http://link.reuters.com/gyq45t)

* Allergan Inc said it will buy MAP Pharmaceuticals Inc in a $958 million deal that would help the Botox maker expand sales of medical treatments. (http://link.reuters.com/jyq45t)

* IBM Corp got back on track in the fourth quarter after disappointing investors the previous quarter as its software business and sales in emerging markets returned to growth. (http://link.reuters.com/byq45t)

* The White House offered a tacit endorsement of a House Republican plan to defer a fight over the U.S.'s borrowing limit, likely clearing the way for a deal that would forestall a showdown over the country's borrowing limit until late spring. (http://link.reuters.com/tuq45t)

* Prime Minister David Cameron plans to let the British people vote in about five years on whether or not to stay in the European Union, a surprise move critics say will hurt both economies and cast a new shadow over the troubled bloc. (http://link.reuters.com/suq45t)

* Two prominent names in semiconductors, Advanced Micro Devices Inc and Texas Instruments Inc, provided more evidence of soft demand for personal computers and other products. (http://link.reuters.com/myq45t)

* Dish Network Corp plans to close a further 300 Blockbuster stores in the U.S. in the coming weeks, leaving the video chain with less than one-third of the stores acquired by the satellite-television company in 2011. (http://link.reuters.com/nyq45t)

* Banks are fighting an effort by Fannie Mae to cut costs on backup insurance policies often imposed on cash-strapped homeowners, a step that would crimp the lucrative fees the lenders collect on the coverage. (http://link.reuters.com/hyq45t)

* The U.S. Securities and Exchange Commission barred Egan-Jones Ratings Co from issuing ratings on certain bonds, an unprecedented step by the regulator and a setback for a small credit-rating firm. (http://link.reuters.com/zuq45t)

* IKEA is poised to embark on a global spending spree, but its departing chief executive says red tape is slowing how fast the home-furnishings retailer can open its pocket book. (http://link.reuters.com/dyq45t)

FT

 CAMERON TO PROMISE IN-OUT EU BALLOT David Cameron will on Wednesday vow to settle Britain's future in the European Union with a straight in-out referendum by 2017, in a high-risk strategy which will test the willingness of Paris and Berlin to cut the UK a better membership deal.

KING STANDS BY INFLATION TARGETING The governor of the Bank of England has called for it to shed some of the burden of reviving Britain's economy, suggesting the UK government should do more to support the "disappointingly slow" recovery.

POSEN ATTACKS BANK OF ENGLAND'S CULTURE A former policy maker at the Bank of England has attacked the management and culture of the bank, saying its directors abdicated responsibility for reining in a governor who had become far too powerful.

BoJ ACTION TRIGGERS CURRENCY WAR FEARS The Bank of Japan bowed to domestic political pressure and pledged to buy government bonds in potentially unlimited quantities as international policy makers aired fresh concern about the possibility of a global currency war.

BARCLAYS REVAMP TO COST UP TO 2,000 JOBS Barclays is cutting up to 2,000 jobs in its investment bank as part of a strategic overhaul by the bank's chief executive Antony Jenkins. BUMI MOVES CLOSER TO TAKING LEGAL ACTION Bumi intends to take legal action to recover lost funds at its Indonesian subsidiary, Berau Coal, as well as considering other claims resulting from a four-month long investigation into "financial irregularities" at its mining businesses.

NYT

* Microsoft Corp is in talks to help finance a takeover bid for Dell Inc that would exceed $20 billion, a person briefed on the matter said. Microsoft is expected to contribute up to several billion dollars. (http://link.reuters.com/gar45t)

* A closer look at Google Inc's results shows that while the company continues to be a moneymaking machine, its most lucrative business, search on desktop computers, is slowing, while it has not yet figured out how to make equivalent profits on mobile devices. (http://link.reuters.com/har45t)

* Allergan Inc has agreed to pay nearly $1 billion to acquire MAP Pharmaceuticals and gain full control of its experimental treatment for migraine headaches, the two companies announced Tuesday night. (http://link.reuters.com/par45t)

* Investigators in the United States and Japan indicated on Tuesday that many questions remained unanswered in their search for the cause of two incidents in which lithium-ion batteries burned on Boeing Co's 787 aircraft. (http://link.reuters.com/var45t)

* An internal analysis conducted by Johnson & Johnson in 2011 not long after it recalled a troubled hip implant estimated that the all-metal device would fail within five years in nearly 40 percent of patients who received it, newly disclosed court records show. (http://link.reuters.com/kar45t)

* Celgene Corp's drug Abraxane prolonged the lives of patients with advanced pancreatic cancer by almost two months in a clinical trial, researchers reported Tuesday, signifying an advance in treating a notoriously difficult disease but not as big a leap as some doctors and investors had hoped. (http://link.reuters.com/nar45t)

* A hotly contested tax on financial trades took a big step forward on Tuesday when European Union finance ministers allowed a vanguard of member states to proceed with the plan. (http://link.reuters.com/qar45t)

* The governor of Nebraska on Tuesday approved a revised route through the state for the Keystone XL pipeline, setting up a decision for President Obama that pipeline opponents say will be a crucial test of his intentions on climate change. (http://link.reuters.com/rar45t)

* Facing criticism for selling garments made at a Bangladesh factory where 112 workers died in a fire last November, Wal-Mart Stores Inc told its worldwide suppliers that it was adopting tougher rules on fire safety at its contractors and would have "zero tolerance" for suppliers that used unauthorized subcontractors.

Canada

THE GLOBE AND MAIL

* British Columbia community minister Bill Bennett said on Tuesday that the final regulatory pieces have fallen in place for a new liquefied natural gas plant to be built on a native reserve near Kitimat.

The massive LNG plant, a joint venture by Apache Canada Ltd and Chevron Canada Ltd, in cooperation with the Haisla First Nation, will process about 700 million cubic feet of gas per day, becoming a key link in the transportation chain between the province's northeast gas fields and off-shore markets.

* Cash-strapped Parks Canada is consulting the public on a long list of proposed fee hikes for the country's national parks and historic sites, pointing out that the rates have been frozen since 2008 and costs are on the rise.

But at the same time as fees are going up, many services are in decline following C$55 million in announced budget cuts and the resultant 600 jobs lost across the system.

Reports in the business section:

* Quebecor Inc may be the next Canadian regional cable company that will strike a deal to eventually sell some of its unused wireless spectrum, predicts a new analyst report.

* The Canadian federal government is ready to offer financial incentives as part of a pitch to get Volkswagen AG to locate some manufacturing facilities in the country.

Industry minister Christian Paradis said he urged senior Volkswagen executives to "look north" during meetings in Berlin this week, offering the prospect of tapping into Ottawa's newly-replenished C$250 million ($252 million) auto innovation fund.

NATIONAL POST

* Calgary energy firm Griffiths Energy International Inc (GEI) pleaded guilty to a bribery charge under the Corruption of Foreign Public Officials Act and faces fines in excess of C$10.3 million. The company admitted that it paid C$2 million to officials in Chad to get an advantage in two exploration blocks in the oil-rich African country.

* Manitoba chiefs meeting in Winnipeg this week are reportedly slated to consider pulling out of the Assembly of First Nations, highlighting the fragility of a national body that some say needs a reset of its own.

FINANCIAL POST

* Inmet Mining Corp made its long-awaited rejection of First Quantum Minerals Ltd's C$5.1 billion hostile bid on Tuesday.

The Toronto-based miner disputed First Quantum's assertion that it could realize enormous cost savings at Cobre Panama project by using its internal project team and hiring far fewer contractors.

* Supermarket chain Metro Inc will sell about half of its 25-year investment in convenience store operator Alimentation Couche-Tard to three Canadian banks for C$479 million.

The Montreal-based company said on Tuesday that it has agreed to sell 10 million Class B subordinate voting shares to BMO Nesbitt Burns, National Bank Financial and TD Securities for C$47.90 per share.

* Air Canada's Chief Executive Calin Rovinescu said he had faith that Boeing Co will be able to resolve the issues plaguing its 787 Dreamliner and believed in the benefits the plane will bring the country's largest carrier.

China

CHINA SECURITIES JOURNAL

--Analysts expect China's inflation to fall below 2 percent in January due to a high base from last year and as food prices have remained stable.

--China could cut its reserve requirement ratio twice at the beginning of this year with a reduction of 0.5 percent each time, the Bank of Communications said in its outlook report.

SHANGHAI SECURITIES NEWS

--Party Chief Xi Jinping took his campaign against corruption to the petty bureaucracy and minor infractions of low-level officials. Xi said it was just as important to go after junior officials as it was to tackle the seniors in the battle against graft. He called for a "disciplinary prevention and guarantee mechanism" to be set up to prevent corruption.

SHANGHAI DAILY

--Investors who lost money in a wealth management product sold in Hua Xia Bank have recouped their principal amount from the credit guarantee firm, a local TV station reported. Investors recently recovered their principal after Zhongfa Investment Guarantee Co stepped in to acquire the whole investment plan, Shanghai TV station said.

--The national security fund and foreign investors were the two biggest net buyers of Chinese mainland shares last year, the top securities regulator said.

CHINA DAILY (www.chinadaily.com.cn)

--China's State Development and Investment Corp (SDIC), the country's major investment holding company, saw profit grow 16 percent in the first eleven months of 2012 and plans to expand its overseas businesses, its chairman said. SDIC plans to raise the share of its overseas investment business, currently focused on fuel tank manufacturing, to 10 percent in the near future.

PEOPLE'S DAILY

--Turnover in China's land market fell 14 percent in 2012, the finance ministry said.

Fly On The Wall 7:00 am Market Snapshot

ANALYST RESEARCH

Upgrades

Alcatel-Lucent (ALU) upgraded to Neutral from Sell at Citigroup
Costco (COST) upgraded to Market Perform from Underperform at Bernstein
D.R. Horton (DHI) upgraded to Market Perform from Underperform at Raymond James
Honda (HMC) upgraded to Outperform from Neutral at Macquarie
IBM (IBM) upgraded to Hold from Sell at Societe Generale
KB Home (KBH) upgraded to Market Perform from Underperform at Raymond James
Middleby (MIDD) upgraded to Outperform from Neutral at RW Baird
Novartis (NVS) upgraded to Buy from Neutral at Citigroup
Platinum Group (PLG) upgraded to Outperform from Sector Perform at RBC Capital
Questar (STR) upgraded to Buy from Neutral at Citigroup
Spirit Realty (SRC) upgraded to Outperform from Market Perform at Raymond James
Unum Group (UNM) upgraded to Overweight from Equal Weight at Barclays
Verizon (VZ) upgraded to Buy from Hold at Canaccord

Downgrades

Ellie Mae (ELLI) downgraded to Market Perform from Outperform at William Blair
Ford (F) downgraded to Hold from Buy at Deutsche Bank
France Telecom (FTE) downgraded to Underperform from Market Perform at Bernstein
GrafTech (GTI) downgraded to Neutral from Buy at Davenport
Grupo Aeroportuario (ASR) downgraded to Equal Weight at Morgan Stanley
Hartford Financial (HIG) downgraded to Market Perform from Outperform at FBR Capital
Incyte (INCY) downgraded to Underweight from Equal Weight at Morgan Stanley
NewBridge (NBBC) downgraded to Market Perform from Outperform at Keefe Bruyette
Synovus (SNV) downgraded to Market Perform from Outperform at Bernstein

Initiations

Allot Communications (ALLT) initiated with an Overweight at Barclays
Avago (AVGO) initiated with an Outperform at RBC Capital
Emulex (ELX) initiated with a Neutral at Piper Jaffray
FIS (FIS) initiated with a Buy at UBS
Fiserv (FISV) initiated with a Neutral at UBS
Global Eagle Acquisition (EAGL) initiated with an Outperform at Imperial Capital
Harbinger Group (HRG) initiated with a Buy at Jefferies
Mellanox (MLNX) initiated with an Overweight at Piper Jaffray
QLogic (QLGC) initiated with a Neutral at Piper Jaffray
Starz (STRZA) initiated with a Neutral at ISI Group
Workday (WDAY) initiated with a Neutral at RW Baird

HOT STOCKS

Allergan (AGN) to acquire MAP Pharmaceuticals (MAPP) for $25 per share
IBM (IBM) said good opportunities to drive profit growth, margin expansion in FY13
Said 1H13 growth rate will be “slightly higher” than 2H13
Texas Instruments (TXN) CEO Templeton said demand environment still weak
Praxair (PX) said backlog will contribute 4%-6% growth in 2013
Reported $2.6B project backlog at FY12-end
Heinz (HNZ) made $60M earn-out payment to China business
First Cash Financial (FCFS) to open 75-85 new stores in 2013, majority in Mexico
Gannett's (GCI) USA TODAY, American Media announced partnership
Choice Hotels (CHH) and Bluegreen (BXG) announced strategic alliance

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Air Products (APD), Wellpoint (WLP), Novartis (NVS), Texas Instruments (TXN), International Game (IGT), AMD (AMD), IBM (IBM), Celestica (CLS), Norfolk Southern (NSC), CA Technologies (CA), Google (GOOG), Cree (CREE)

Companies that missed consensus earnings expectations include:
Textron (TXT), Southwest Bancorp (OKSB), Praxair (PX), Baker Hughes (BHI), Woodward (WWD), Total System (TSS)

NEWSPAPERS/WEBSITES

The estimated $1.7T that American companies say they have indefinitely invested overseas is actually sitting right here at home. Some companies, including Google (GOOG), Microsoft (MSFT) and EMC Corp. (EMC), keep over three-quarters of the cash owned by their foreign subsidiaries at U.S. banks, held in U.S. dollars or parked in U.S. government and corporate securities, sources say, the Wall Street Journal reports
U.K. Prime Minister Cameron today pledged to hold a referendum on whether the country should remain a member of the EU within two and a half years of the next general election, due in 2015, the Wall Street Journal reports
Fewer investors are taking corporate America to court for fraud as the number of new federal securities fraud lawsuits seeking class-action status fell to a seven year low in 2012, according to a study by Stanford Law School and Cornerstone Research, Reuters reports
In 2007, the FAA cleared Boeing's (BA) use of a highly flammable battery in the 787 Dreamliner, deciding it was safe to let the lithium-ion battery burn out if it caught fire mid-air as long as the flames were contained, and smoke and fumes vented properly, according to documents reviewed by Reuters.That decision is now coming under scrutiny, Reuters reports
Clients of the largest U.S. banks withdrew funds this month at the fastest weekly pace since the September 11 attacks as a deposit-insurance program ended and customers tapped into a year-end cash hoard. Net withdrawals at the 25 largest U.S. banks totaled $114.1B in the week ended January 9, pushing deposits down to $5.37T, according to Federal Reserve data, Bloomberg reports
Global investors say the state of the U.S. government’s finances is the greatest risk to the world economy and nearly 50% are curbing their investments in response to continuing budget battles, according to a Bloomberg poll

SYNDICATE

Invesco Mortgage (IVR) files to sell 15M shares of common stock
KB Home (KBH) files to sell $100M in common stock; $150M in convertible senior notes
Numerex (NMRX) files to sell common stock
Senior Housing (SNH) files to sell 8M shares of common stock

Your rating: None

Mehdi’s Morning Memo: The London Speech

The ten things you need to know on Wednesday 23rd January 2013...

1) THE LONDON SPEECH

Is it a bird? Is it a plane? Nope, it's David Cameron's long-awaited, much-anticipated, repeatedly-delayed, 'tantric' speech on Britain's relationship with the European Union. You only need to know two words to understand the main message: "in" and "out".

From the Times splash:

"Voters will have the chance to leave the European Union before the end of 2017, David Cameron will pledge today as he sets Britain on course for a momentous referendum.

"The Prime Minister will commit himself to winning an 'in-out' vote even if the campaign puts him at odds with much of his party or even if the EU remains largely unreformed. But he will seek to give the referendum unstoppable momentum by publishing a draft Bill before 2015 and setting a deadline of November 2017 before which it must be held.

"'It is time for the British people to have their say,' he will declare."

The prime minister is on his feet right now at Bloomberg's HQ in the City of London telling his audience why they shouldn't vote Ukip. Well, not quite.

But to pretend this speech is anything other than an attempt to head off Nigel Farage's gang, and see off the internal threat to his leadership from his eurosceptic backbenchers, is either naive or disingenuous. Remember: Cameron never wanted - or planned - to give this speech and, thanks to a combination of Al Qaeda and Angela Merkel, had to keep putting it off.

To be fair, though, as the Guardian's Patrick Wintour acknowledges: "The prime minister's call for an in-out referendum is a moment of truth for a pragmatic man assumed to be instinctively opposed to political risk."

The morning papers almost all lead on the PM's 'London speech' (why didn't he just go to Bruges and be done with it? Bloomberg? Ed Balls beat him to it in 2010):

"You will get an in or out vote on Europe" (Daily Mail)

"Cameron to pledge an 'in-out' vote on Europe" (Financial Times)

"Cameron: I'll hold an in-out vote on Europe" (Telegraph)

"Cameron pledges in-out referendum on Europe" (Times)

"In or out? PM pledges EU exit vote by 2017" (Independent)

You can read full coverage and analysis of Cameron's EU address at www.huffingtonpost.co.uk/politics

2) BIBI'S BACK

From the BBC:

"Israeli Prime Minister Benjamin Netanyahu has pledged to form 'as broad a government as possible' after his alliance won a narrow election victory.

"His right-wing Likud-Beitenu bloc will have 31 seats in parliament - a sharp drop from 42, exit polls suggest.

"In a major surprise, the centrist Yesh Atid (There is a Future) party came second with a predicted 18-19 seats, with Labour next on 17.

"Analysts now predict weeks of political horse-trading to form a new cabinet."

Here are my own two predictions: 1) Bibi will continue to pay no attention to the so-called 'peace process' with the Palestinians, who were barely mentioned in this Israeli election campaign. 2) Bibi will continue to fear-monger about Iran in order try and divert attention away from Israel's ongoing (and illegal) settlement programme in the occupied West Bank.

3) BACK TO THE FUTURE

From the Financial Times:

"A-level grades could be awarded solely on marks for examinations taken and coursework submitted at the end of two years of study, as they once were, under proposals to be unveiled today by the government.

"In a letter to Ofqual, the qualifications regulator, Michael Gove, the education secretary, has said the 'primary purpose of A-levels is to prepare students for degree-level study' and that he wanted to 'restore' the reputation of the A-level with changes to its structure.

"... Stephen Twigg, shadow education secretary, said the government 'is all about turning the clock back. This plan would narrow the options for young people.'"

Meanwhile, the Mirror reports that nearly 100 groups, including the National Theatre, say the Tory-led Coalition is "pushing through [its GCSE] reforms too fast".

4) THE KING'S SPEECH

Watch out, Mark Carney! From the Guardian:

"Sir Mervyn King last night launched a thinly disguised attack on his successor as Bank of England governor, deriding proposals to ditch the central bank's inflation target in favour of a growth target based as 'wishful thinking'.

"King warned that policies designed to meet a growth target - a strategy backed by the incoming governor, Mark Carney - was unrealistic and for 'dreamers', signalling a rift with the man due to take over in Threadneedle Street in the summer after being lured by George Osborne from his post as Canada's central bank chief.

"... King told an audience in Belfast: 'To drop the objective of low inflation would be to forget a lesson from our postwar history... So a long-run target of 2% inflation should be an essential part of our macroeconomic framework.'"

Is Merv perhaps miffed because the 2% inflation target is something that he came up with, as chief economist at the bank, in the 1990s?

5) CAMPAIGNING LIKE IT'S 2005

From the Guardian:

"A coalition of 100 UK development charities and faith groups will today launch a campaign to lobby David Cameron to use Britain's presidency of the G8 to leverage action on ending global hunger. The If campaign is the largest coalition of its kind since Make Poverty History in 2005, the last time Britain held the G8 presidency. This time, organisers are seeking more radical change. Although pegged around hunger and malnutrition, the campaign focuses more on the underlying causes of hunger, such as 'land grabs', tax avoidance and a lack of transparency over investments in poor countries."

Tax avoidance and land grabs? Progressives will be pleased.

BECAUSE YOU'VE READ THIS FAR...

Watch this video of Hollywood actor James Franco's unintentionally hilarious poem on Obama inauguration.

6) GOING, GOING, GONG

The war between ministers and civil servants moves onto a new front. From the Independent:

"Ministers are to be given the power to 'fast-track' nominations for knighthoods and other awards as part of plans to radically shake up Britain's ancient honours system.

"Under proposals, discussed by the Cabinet, ministers would be able to circumvent Civil Service vetting procedures and recommend candidates for awards directly to the independent Honours Committee.

"... The move is facing resistance from some senior officials, who fear it will politicise the honours system and insist that ministers must follow the same procedures as charities and members of the public who want to nominate individuals for awards."

7) BLACKLISTED?

From the Times:

"Trade union officials helped to blacklist their own members from working on some of the most prestigious construction projects of the past 20 years, The Times has learnt.

"The names and personal details of workers deemed 'perennial troublemakers' by unions including Ucatt, the construction union, and Amicus, now part of Unite, were fed to a database run by a secretive vetting company set up and financed by several of Britain's biggest builders.

"In a Commons debate this afternoon, Labour is expected to call for an investigation into allegations that publicly funded construction projects, including the Olympics and Crossrail, consulted the... blacklist."

8) LIAR, LIAR, BENEFITS ON FIRE

The demonisation of welfare claimants continues apace. From the Metro:

"A lie detector test will be used by a council to see if benefits claimants are telling the truth, it emerged yesterday.

"The method called 'voice risk analysis' has been introduced to check details that people have provided about their claims.

"... But numerous academic studies have cast doubt on the accuracy of lie detectors with some claiming they are little better than chance."

The Guardian reports that a Conservative councillor, Fiona Ferguson, has quit the council after claiming that using voice risk analysis wouldn't help the council pursue fraud and would be "extremely damaging to our reputation". Let's hope so...

9) STRIVERS VS SHIRKERS, PART 44

From the Independent:

"A Treasury minister has warned the Conservative Party not to divide the British people into "shirkers and strivers" as it defends the squeeze on the welfare budget.

"Greg Clark, the Financial Secretary to the Treasury, appeared to distance himself from the more hardline approach of George Osborne...

"Writing on the ConservativeHome website, he said there is nothing wrong with being a "striver", but argued that not everyone wants to be one... 'Not being a striver doesn't make you a shirker - it's simply a matter of working to live, not living to work.'"

10) BEYONCE'S BLUFF

"Oh, say could you see Beyoncé was just miming," reads the headline on the front of today's Times, which broke the story yesterday of how the first pop star in US inauguration history to be invited to sing the national anthem was, believe it or not, lip-syncing:

"It was the most celebrated rendition of America’s national anthem in a generation, but Beyoncé had left nothing to chance... Unbeknownst to millions of viewers, however, The Times has learned that the perfect note had been struck in advance: in a recording studio on the eve of Inauguration Day."

Uh oh. Then again, as my US colleagues over at HuffPost Hill tweeted last night: "Can't believe someone lip synched... AT THE FAKE INAUGURATION."

(On a side note, Kelly Clarkson's representative was quick to point out that her client "sang live as always". Oooohh...)

QUOTE UNQUOTE

"The fact is that ours is not just an island story – it is also a continental story." David Cameron's throws a bone to the dwindling band of British europhiles during his eurosceptic speech at Bloomberg this morning.

PUBLIC OPINION WATCH

From today's Sun/YouGov poll:

Labour 41
Conservatives 31
Lib Dems 12
Ukip 10

That would give Labour a majority of 110.

140 CHARACTERS OR LESS

@chrisshipitv Farage on #EUspeech: the genie is out of the bottle. Once the "out" word is out there - it's going to be difficult to put it back in

@rafaelbehr So, the big speech, eh. Looks like Cam buying security for himself now in exchange for certain Tory split c.2017

@AliAbunimah Did you hear the scandal about how Beyoncé ordered the extrajudicial murders of Americans and others? Oh wait, sorry, that was Obama.

900 WORDS OR MORE

Mary Riddell, writing in the Telegraph, says: "Fear of the grey vote has turned politicians into cowards."

Daniel Finkelstein, writing in the Times, says: "Obama is far better at hope than at audacity."

Seumas Milne, writing in the Guardian, says: "French intervention in Mali will fuel terrorism, but the west's buildup in Africa is also driven by the struggle for resources."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

Frontrunning: January 22

  • Geithner allegations beg Fed reform (Reuters)
  • BOJ Adopts Abe’s 2% Target in Commitment to End Deflation (BBG)
  • Bundesbank Head Cautions Japan (WSJ)
  • In speech, Obama pushes activist government and takes on far right (Reuters)
  • Atari’s U.S. Operations File for Chapter 11 Bankruptcy (BBG)
  • Israel goes to polls, set to re-elect Netanyahu (Reuters)
  • Apple May Face First Profit Drop in Decade as IPhone Slows (BBG)
  • EU states get blessing for financial trading tax (Reuters)
  • Indian Jeweler Becomes Billionaire as Gold Price Surges (BBG)
  • Europe Stocks Fall; Deutsche Bank Drops on Bafin Request (BBG)
  • Algeria vows to fight Qaeda after 38 workers killed (Reuters)
  • GS Yuasa Searched After Boeing 787s Are Grounded (BBG)
  • Slumping pigment demand eats into DuPont's profit (Reuters)

Overnight Media Digest

WSJ

* U.S. President Barack Obama began his second term on Monday by setting an agenda for the next four years built on bedrock Democratic social policies, in a provocative speech coming at a time of deep partisanship in the capital and lingering economic uncertainty across the country.

* Jonathan Baum, chairman and chief executive of Bank of New York Mellon Corp's mutual-fund unit, has left the firm, the company said Monday.

* International investigations into the battery malfunctions that grounded Boeing Co's 787 jet are accelerating, with U.S. and Japanese experts pursuing some new and possibly differing leads.

* Wal-Mart Stores Inc is warning suppliers that it is adopting a "zero tolerance policy" for violations of its global sourcing standards, and soon plans to immediately sever ties with anyone who subcontracts work to factories without the retailer's knowledge.

* Japan's central bank agreed to adopt a 2 percent inflation target and strengthened its monetary-easing program in a bid to rid the economy of long-running deflationary pressures.

* Bundesbank President Jens Weidmann warned Japan not to "politicize" its exchange rate by pursuing an overly aggressive monetary policy, reflecting mounting concern in Europe that other central banks may cheapen their currencies as a means of stimulating economic growth.

* Federal officials are expected to slap a Deutsche Bank AG unit with a $1.5 million penalty in coming days after concluding that its energy-trading arm extracted illicit profits from the California electricity marketplace in 2010.

* Mary Jo White, who made her name pursuing terrorists, mobsters and white-collar criminals as a federal prosecutor in New York, is the Obama administration's likely pick to lead the Securities and Exchange Commission, according to people familiar with the administration's search.

* House Republicans on Monday moved to extend U.S. borrowing authority until May 19, setting a timeline for the next phase of budget wrangling between the White House and Congress.

FT

RULES ON OFFICE-FLAT CONVERSION TO EASE Developers will be able to convert office buildings into blocks of flats without asking councils for permission under radical changes to the English planning system. (link.reuters.com/keh45t) WEIDMANN WARNS OF CURRENCY WAR RISK The erosion of central bank independence around the world threatens to unleash a round of competitive exchange rate devaluations, which leading economies have so far avoided during the financial crisis, the president of Germany's Bundesbank warned. (link.reuters.com/qeh45t)

OBAMA DEFENDS ROLE OF STRONG GOVERNMENT Barack Obama mounted a vigorous defence of interventionist government and the role of a social safety net in an uplifting and uncompromising speech that marked the formal opening of his second term as president. (link.reuters.com/seh45t) HEATHROW AND BA DID NOT ACT ON SNOW ALERT The operator of Heathrow and airlines led by British Airways decided against taking pre-emptive measures to deal with snow that could have prevented the airport's descent into chaos on Friday, the Financial Times has learnt. (link.reuters.com/heh45t)

GRADE TO STEP DOWN AS OCADO CHAIRMAN Online grocer Ocado will reveal on Tuesday that Michael Grade will step down as chairman later this year. Grade has been chairman of Ocado for seven years and brought the lossmaking company to market in an 800 million pound float three years ago. (link.reuters.com/geh45t)

HUAWEI IN PLEDGE TO DISCLOSE MORE INFORMATION Huawei has pledged to start disclosing more detailed financial and shareholding information as the Chinese telecoms equipment maker tries to dispel fears over suspected ties to the Chinese military, which are hampering its global expansion. (link.reuters.com/veh45t)

FRUIT FARMERS LOOK TO FOREIGN LABOUR INFLUX British ministers are under pressure to allow migrant workers from Russia, Ukraine and Turkey into the UK to mitigate a predicted shortage of fruit pickers which is threatening the 3 billion pounds a year horticulture industry. (link.reuters.com/duh45t)

NYT

* U.S. President Barack Obama ceremonially opened his second term on
Monday with an assertive Inaugural Address, arguing that "preserving our
individual freedoms ultimately requires collective action."

*
The Bank of Japan set an ambitious 2 percent inflation target and
pledged to ease monetary policy "decisively" by introducing open-ended
asset purchases, following intense pressure from the country's audacious
new prime minister, Shinzo Abe.

* As Facebook and Twitter
become as central to workplace conversation as the company cafeteria,
federal regulators are ordering employers to scale back policies that
limit what workers can say online. The agency has pushed companies
nationwide, including giants like General Motors, Target Corp and
Costco, to rewrite their social media rules.

* Aerospace
represents the latest frontier for China, which is eyeing parts
manufacturers, materials producers, leasing businesses, cargo airlines
and airport operators. The country now rivals the United States as a
market for civilian airliners. And the new leadership named has publicly
emphasized long-range missiles and other aerospace programs in its push
for military modernization.

* Atari's U.S. unit, Atari
Interactive, filed for Chapter 11 protection on Monday as part of an
effort to cleave itself from its French parent.

* After four
months of fierce bidding between two Asian tycoons, a
multibillion-dollar battle for control of Fraser & Neave appears to
have reached its end. A bidding deadline on Monday evening came and
went, meaning the victor will probably be TCC Assets, which is
controlled by Charoen Sirivadhanabhakdi of Thailand.

* The
Maloof family has agreed to sell a controlling stake in the Sacramento
Kings, one of the NBA's most troubled and well-traveled franchises, to
an investment group led by Christopher Hansen, a hedge fund manager who
intends to move the team to Seattle by next season and rename them the
SuperSonics.

* A report from the International Labor
Organization predicted jobless levels to rise to 202 million worldwide
this year, and said government budget-balancing was hurting employment.

*
Jeroen Dijsselbloem, the new president of the group of ministers
overseeing the euro, said on Monday he wanted to heal the rift over
austerity policies that had bred mistrust between southern and northern
nations using the currency

Canada

THE GLOBE AND MAIL

* The demand for university education is not slowing down, as high school students continue to apply to Ontario institutions in record numbers. Preliminary figures released by the Ontario Universities' Application Centre showed that the number of high school students applying to first-year programs in the fall climbed by 2.4 per cent over the previous year.

* Cable sweepers and "hydrophobic" coatings are part of the British Columbia government's new plan to winterize the Port Mann Bridge, where last month vehicles and motorists were pummelled with ice falling from overhead cables. More than 340 insurance claims have been filed since the Dec. 19 snowstorm, according to ICBC spokesman Adam Grossman.

Reports in the business section:

* Rona Inc's two largest shareholders are taking matters into their own hands, installing a turnaround expert who is familiar with reducing costs to lead the board of directors.

The hardware retailer named Robert Chevrier as executive chairman, replacing Robert Paré, a Montreal lawyer who took the chairman's role in May, but who had little retail or operational experience.

* Sun News Network is pinning its hopes for survival on a ruling by Canada's broadcast regulator. Canada's newest and most controversial news channel has argued its signal must be broadcast into every Canadian home if it is ever going to recover from losses that have already reached C$17 million a year.

NATIONAL POST

* Canadian Prime Minister Stephen Harper's government said on Monday it will not include Governor General David Johnston in any future policy discussions with First Nations, further clouding its battle of wills with aboriginal leaders.

* Dan Ross, the former assistant deputy minister of defence materiel, has blamed the Stephen Harper government's culture of secrecy and a lack of accountability at all levels for the failure of the F-35 stealth fighter program.

FINANCIAL POST

* Bank of Canada will deliver a one-two punch on Wednesday, combining its latest interest rate decision with the central bank's latest quarterly outlook for the domestic and global economies.

* The Alberta provincial government said on Monday that its March 7 budget for 2013-14 will make a course correction from big spending to big belt tightening as a shortage of pipeline space and competition in oil production in the United States have tempered the surge in global oil prices.

China

CHINA SECURITIES JOURNAL

--A total of 1,271 funds in 70 fund companies made profits of 104.6 billion yuan ($16.81 billion) in the fourth quarter of last year, from a loss of 179.6 billion yuan in the third quarter, data showed.

--China's National Development and Reform Commission said it will reduce credit card comissions next month, with analysts expecting it could help merchants save 4 billion yuan a year.

SHANGHAI SECURITIES NEWS

--A netizen has demanded U.S. fruit distributor Chiquita explain why slices of apples sold in FamilyMart stores in Shanghai fail to turn brown after 80 hours, sparking a debate online whether the steps Chiquita is taking to protect apple slices from oxidizing are unhealthy.

SHANGHAI DAILY (www.chinadaily.com.cn)

--Subsidised license plates for new energy vehicles in Shanghai received a lukewarm welcome, with only one customer applying for the plates on the first day they were made available.

CHINA DAILY (www.chinadaily.com.cn)

--Chinese vehicle exports topped 1 million units for the first time in 2012, up 29.7 percent.

--Shanghai saw a contraction in total trade in 2012, the first time in three years.

PEOPLE'S DAILY

--China's central government will invest 122.2 billion yuan to support the domestic spring ploughing industry, the finance ministry said.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

ASML (ASML) upgraded to Buy from Hold at ABN Amro
ASML (ASML) upgraded to Hold from Sell at Deutsche Bank
Bank of Kentucky (BKYF) upgraded to Outperform from Neutral at RW Baird
Goodrich Petroleum (GDP) upgraded to Outperform from Market Perform at BMO Capital
Precision Castparts (PCP) upgraded to Buy from Neutral at UBS
Research in Motion (RIMM) upgraded to Outperform from Sector Perform at Scotia Capital
Viacom (VIAB) upgraded to Buy from Neutral at Goldman
VimpelCom (VIP) upgraded to Overweight from Neutral at HSBC
WESCO (WCC) upgraded to Outperform from Neutral at Credit Suisse

Downgrades

ARM Holdings (ARMH) downgraded to Hold from Buy at Benchmark Co.
Amgen (AMGN) downgraded to Neutral from Outperform at Credit Suisse
Becton Dickinson (BDX) downgraded to Neutral from Buy at Mizuho
Diamond Offshore (DO) downgraded to Neutral from Outperform at Credit Suisse
F5 Networks (FFIV) downgraded to Hold from Buy at Needham
FirstEnergy (FE) downgraded to Underperform from Hold at Jefferies
Fortinet (FTNT) downgraded to Market Perform from Outperform at JMP Securities
LRR Energy (LRE) downgraded to Neutral from Outperform at RW Baird
Och-Ziff Capital (OZM) downgraded to Market Perform from Outperform at Keefe Bruyette
Open Text (OTEX) downgraded to Hold from Buy at Stifel Nicolaus
Roche (RHHBY) downgraded to Neutral from Outperform at Exane BNP Paribas
Trinity Biotech (TRIB) downgraded to Neutral from Buy at Roth Capital
Urban Outfitters (URBN) downgraded to Neutral from Overweight at Atlantic Equities
Uroplasty (UPI) downgraded to Market Perform from Outperform at JMP Securities

Initiations

ExactTarget (ET) initiated with an Outperform at Credit Suisse
LivePerson (LPSN) initiated with a Neutral at Credit Suisse
PBF Energy (PBF) initiated with a Hold at Deutsche Bank
PBF Energy (PBF) initiated with an Outperform at Credit Suisse
S&W Seed (SANW) initiated with an Overweight at Piper Jaffray
Verint Systems (VRNT) initiated with a Neutral at Credit Suisse

HOT STOCKS

Ericsson (ERIC) to acquire IT services capabilities from Devoteam in France
KKR (KKR), Blackstone (BX) said to be among those in talks for Life Technologies (LIFE), Bloomberg reports
Caterpillar (CAT) to record $580M goodwill impairment charge in Q4
Shaw Communications (SJR) reported Shaw family acquired 750,000 class B shares
SeaCube (BOX) to be acquired by Ontario Teachers' Pension for $23 per share
NeoPhotonics (NPTN) subsidiary to acquire OCU unit from LAPIS Seminconductor for $36.8M
BGI-Shenzhen extended tender offer for Complete Genomics (GNOM)
FDA approved Botox (AGN) to treat overactive bladder
FDA approved Mallinckrodt's (COV) Gablofen prefilled syringe
OM Group (OMG) divested Advanced Materials business for up to $435M (FCX)
DaVita (DVA) formed JV with RHC in Taiwan
Daimler AG (DDAIF) created subsidiary for innovative mobility services
Pearson (PSO) sees tough market conditions continuing into 2013

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
DuPont (DD), Signature Bank (SBNY), TAL Education (XRS)

Companies that missed consensus earnings expectations include:
Verizon (VZ), Sierra Bancorp (BSRR)

NEWSPAPERS/WEBSITES

International investigations into the battery troubles that grounded Boeing’s (BA) Dreamliner 787, are growing, with U.S. and Japanese experts pursuing some new and possibly differing leads, the Wall Street Journal reports
Apple’s (AAPL) future is getting harder to read. Their move into new markets and its more complex supply chain are making its growth prospects more difficult to understand and predict, say longtime investors and analysts, the Wall Street Journal reports
Microsoft (MSFT) CEO Steve Ballmer is not the right leader for the software company but holds his grip on it by systematically forcing out any rising manager who challenges his authority, claims former senior executive Joachim Kempin, who has written a book about his time at the company, Reuters reports
South Africa's Competition Tribunal today gave the green light to the proposed takeover of global miner Xstrata (XSRAY) by Glencore (GLNCY). But the tribunal attached some conditions to the $33B deal to limit the merger's impact on job losses in the mining sector, Reuters reports
Consumption of high fructose corn syrup, used to sweeten products from Coca-Cola (KO) to H.J. Heinz (HNZ) ketchup and linked to obesity, is falling in the U.S. as health-conscious consumers drink less soda, Bloomberg reports
The world’s biggest investors are moving away from allocating money to government bond markets based on their amount of debt, a strategy that has favored the largest borrowers for three decades, Bloomberg reports

BARRON’S

A $14 per share LBO undervalues Dell (DELL)
Rockwell Automation, ABB provide good opportunities for robotics (ROK, ABB, ADEP, CGNX)
Crocs' (CROX) operational shifts could raise 2013 EPS by 11% to $1.55
Fossil (FOSL) could reach over $120 per share as earnings are reported
Data usage providing return on LTE investment for Verizon (VZ), AT&T (T)
Intel's (INTC) “branch prediction” on hybrid PCs a risky move

SYNDICATE

Performant Financial (PFMT) files to sell 7M shares of common stock

Your rating: None

The One Chart That Explains the Massive Risk of Investing in Gold & Gold...

chart of S&P performance v. gold & gold stocks from 2001 to 2012

Viewing the chart above, a six-year old child could tell you that investing in physical gold and gold mining stocks (as indicated by the AMEX HUI gold bugs index) yielded returns from 2001 to 2012 far superior to the returns of the US S&P 500 Index over the same time period. In fact, the truth of this statement is so self-evident, that if this same child was asked what asset classes he should have been invested in over the past decade by viewing the above chart, the simplicity of that question might lead him to think that one is asking a trick question. So why is it that all the leading Wall Street investment firms stated during the visible onset of the global financial crisis in 2008 (versus the real onset of the global financial crisis quite a few years earlier) that gold was one of the riskiest assets in which one could possibly invest? The simple answer, of course, is that if they were the ones involved in the scam to take gold and silver prices down, then certainly they would not tell you that the steep, rapid (but short-lived) drop in gold/silver prices was a massive buying opportunity. However, if a six-year old can see what is so obvious, then why should a man of Warren Buffet’s prominence continue to slander gold and why does his right-hand man, Charlie Munger, make idiotic statements like “gold is a great thing to sew in your garments if you’re a Jewish family in 1939” but not to own, instead of just stating the truth that “physical gold (and physical silver) was one of the best assets to build wealth since 2001”? And if a six-year old can look at the above chart and immediately know that he or she should have beeen invested in gold and gold assets, why, according to the World Gold Council, is still only 1%, or $146 billion of the $146 trillion investable global assets, invested in gold, and 9.1% invested in money markets, 48.7% in fixed income, 37.2% in equities and 4.0% in alternative investments? (though these most recent statistics are from the end of 2010, it is doubtful that these statistics have changed much in the past two years.)

One of the main reasons why it is still likely that only 1% of all global invested assets are invested in gold is the psychological hatchet job that Wall Street and the global banking industry has performed on gold and gold stocks. For decades, bankers have repeated their false mantra that “gold and silver are incredibly risky”, using the strategy that if you tell a lie often enough, it may just be accepted as truth by the masses. The fact that millions of investors today still won’t even consider buying the top performing asset classes for more than the past decade (physical gold and physical silver, NOT the GLD and SLV), serves as testimony to the success of the bankers’ anti-gold, anti-silver propaganda campaign. Thus, the reason why just a piddling amount of investors around the world have allocated a substantial amount of their resources to gold, silver and PM stocks as of today is due to, quite simply, investor psychology. The commercial banking industry spends billions of dollars every year in marketing campaigns (exclusive of their investor relations budget), influencing and shaping investors’ beliefs into accepting a heaping pile of false beliefs. For example, according to Forbes Magazine, Bank of America spent $2 billion and Citigroup spent $1.6 billion in 2010 marketing expenses, and the biggest banks spent even far more for their annual advertising budget in recent years. As a result, bankers have been able to convince their clients that what is right for them (physical gold, silver and PM stocks) is wrong, and what is wrong for them (investing in global developed stock markets) is right.

Why else would anyone stay invested in the US S&P 500, an index, that from 2001 to the start of 2012, was still in the red (not even accounting for the effects of inflation), but for one’s blind obedience to one’s investment adviser that sells his clients on that moronic 100-year chart of US stock returns that shows an upward progression of US stocks over an entirely irrelevant 100-year period, and keeps telling his clients to be patient, because the “US market, in the long-run, has always returned a phenomenal yield”? So here is how investment advisers, all over the world, convince their clients to ignore a chart, that in plain sight, tells them that being invested in gold & gold stocks (and silver & silver stocks) for the last 12 years over any of the developed broad stock market indexes in the world was clearly the unequivocal correct decision.

Below are the four methods global investment bank investment advisers employ to convince their clients to keep doing what is best for himself and his firm (earning the firm management fees) and what is worst for themselves (degrading their investment portfolios and wealth):

(1) Frame stock market and PM stock volatility in a biased, skewed and unforthcoming manner that sells their mission while ignoring reality.

For example, when the S&P 500 index crashed, US investment advisers used the bounce from 666.79 in March, 2009 to a high of 1219.80 in April, 2010 to falsely promote the “soundness” of the US stock market like ravenous hyenas that had stumbled upon an abandoned lion kill. In other words, they ignored the “bad” volatility of a 57.69% crash to take the S&P500 down to 666.79 level and repeatedly promoted the fact that the 82.94% increase in the S&P500 was “one of the best in history” over and over and over again on television, radio and newspapers, even though the S&P 500 has still failed to regain its previous high of 1576.09 prior to the crash in October of 2007. Furthermore, though gold stocks had crashed too during this time, all global bank advisers absolutely ignored the much more significant 343% increase of the HUI gold mining index between October 24, 2008 from 150.27 to a high of 516.16 on December 2, 2009. Forget that over this same time period, gold stocks outperformed the US S&P 500 index by 313%. How many people knew that gold stocks rose 343% during this time? Probably less than 1% of all investors. The focus of global investment advisers is to bury statistics like this that compete with their precious legalized casinos called stock markets and to keep their clients invested in their legalized casinos that are stacked against their clients even when far better opportunities exist.

(2) Frame performance in a manner that again sells only their desire to keep their clients invested in global stock markets and keeps the management fees rolling in.

For example, there have been tons of articles written over the last 3-years that have titles like “What’s Wrong With Gold and Gold Stocks?” and “Why You Should Not Invest in Gold or Gold Stocks”. Commercial investment advisers are amazingly keen to talk about holding on to stocks for a long period of time because they state that one can’t judge performance over a 2-3 year period when stocks are not performing. Yet when broad stock markets go through flat periods, as the US stock market has been trapped in a 12-year period now with virtually no gains, you will never ever, not once in a blue moon, not in a million years, see a blizzard of articles shouting, “What’s Wrong With the US Stock Market!" Yet, bankers ensure that the mass media is flooded with articles about flat or poor performance of gold and silver stocks during the past three years to keep their clients away from PM stocks and they harp incessantly about this matter while completely ignoring multi-year trends in gold and silver mining stocks and keeping this information buried as well. So let’s look at both asset classes and compare performance over a reasonable 12-year investment period, not the ridiculous 100-year chart investment advisers are so keen to use. If one looks at a reasonable 12-year period between 2001 and 2013, the S&P 500 has not even returned a piddling 9% during this period, while gold has returned a whopping +524.77% (silver also returned a phenomenal yield over this same period as well). And what about gold stocks even when including the very flat last three years of performance? An almost unfathomable +1009.86% return when compared to the US S&P 500’s anemic return of 8% and change.

(3) Sell rubbish diversification strategies as “expert” advice when it is the worst advice in the world.

A great many people are afraid to concentrate their assets in gold and silver, among the best performing assets of the last 12 years, because for decades, the commercial investment industry has pounded into their brains that anything but diversification when it comes to investing is unsafe, unsound and risky. Yet diversification is a rubbish strategy used by all commercial investment advisers precisely because they lack the expertise and knowledge to know how to concentrate a portfolio properly without excessive amounts of risk. If you have the expertise, you can utilize concentration without increasing the risk of a portfolio. That’s why for years, we’ve been advocating our clients to invest very substantial amounts of their portfolio into physical gold and physical silver because frankly, despite the notorious volatility of gold and silver, we just didn’t consider gold and silver risky when they were respectively $560 a troy ounce and $9 a troy ounce. In fact, every year for the past 12 years, gold and silver has fallen, at some point during each year, to price ranges that marked solid entry prices that were low-risk, high-reward. The artificial banker-created volatility through manipulation of gold and silver prices ensured this.

A recent study by Nobel Laureate Daniel Kahneman tracked a group of 25 wealth advisers/portfolio managers and the variance of their portfolio yields over an 8-year period. At the end of his study, Kahneman stated that he was “shocked” to discover almost no variance in the portfolio performance over the group of managers, simply because he believed that portfolio management was a task that depended upon skill and expertise. Consequently, Kahneman expected wide-variance among the managers as far as performance yields over an 8-year period were concerned. Instead, he discovered that the variances among the performance yields suggested that portfolio management was not a skilled job but one that nearly entirely revolved around blind luck. My first reaction to Kahneman’s study was that he should have started his study by sitting in an office of Goldman Sachs or JP Morgan for 3-months and he would have learned within 3-months what it took him 8-years to conclude - that Portfolio Managers have no skill and that they all use the terrible strategy of diversification to cover up their severe skill deficiencies rather than diversification being a strategy that allows them to demonstrate their skill. How many US clients were protected by the strategy of diversification in 2008 when US markets collapsed by 38.50%? By the anecdotal information I gathered, all my contacts at the big US global investment firms told me that nearly all their clients were down the same 35% to 40% that year as the S&P 500 Index. Therefore, diversification did nothing but assure that nearly all clients suffered the same uniform losses as the major global developed indexes that year. In fact, diversification is a protective strategy embraced by the global investment industry as insurance against "client flight". In other words, if all client portfolios show remarkably similar losses across multiple commerical investment firms during poor years of stock performance, the risk of client flight is small.

On the contrary, we at SmartKnowledgeU, have always taken the strategy of concentration over diversification, and in 2008, though it was a nominal gain, we still managed to yield nominal positive returns in our newsletter investment portfolio despite massive losses in all developed global stock markets. Massive outperformance can, and often, will be the result when skill and expertise, instead of luck, is applied to investment strategies. If concentration is so dangerous, and if diversification is a far superior strategy as nearly all investment advisers claim, then it may be possible for one fluke year to occur. But it is near impossible for five fluke years to occur. However, we at SmartKnowledgeU have been concentrating our Crisis Investment Opportunities portfolio since mid-2007 when we first launched, every year now for more than five years. Over that 5-&frac12; year period, we’ve outperformed the S&P 500 by +161.95% and even outperformed the HUI gold bugs index by +120.80% due to the strategies we use to take advantage of the banker-induced volatilty in gold and silver markets. So much for diversification and buy & hold being wise investment strategies.

(4) Sell “volatility” as “dangerous & risky” even though this simply is not true.

The reason some of you may be shocked by the chart I’ve presented above is not only due to the tactics of #1 to #3 employed by the global investment industry, but also because of one additional key factor. Many of you may think that gold & gold stocks are way more volatile than my chart above shows, and you would be correct. I’ve only plotted the beginning price level of each asset above at the beginning of each year to smooth out all the interim volatility, so that everyone can clearly see the trends of each asset, even in the notoriously volatile gold (& silver) mining stocks. The reason I’ve stripped out the volatility in the above chart is because anyone that has studied the price behavior of gold & silver assets knows that Central Banks and bullion banks deliberately introduce volatility into gold & silver assets to intimidate gold & silver newbie investors into terrible decisions of selling all their gold & silver assets, or to scare off potentially new gold & silver buyers from ever buying. Though a commercial investment adviser would never tell you this secret, the evidence of this is overwhelming and since I’ve blogged many times about this very topic over the past 7 years, I’m not going to go into detail about the mechanisms by which the banking industry deliberately creates volatile prices in gold and silver assets in this article. However, since the banking industry has already sold the masses of the very false mantra that “volatility = risk”, by artificially and deliberately causing short-term volatility every year in gold and silver assets, commercial investment advisers can show their clients charts of gold, silver and mining stocks with all intra-day, intra-month or intra-year volatility, and keep convincing their clients that gold and silver are the riskiest assets in the entire investment universe while convincing them that broad stock market indexes are the safest arenas in which to invest, when indeed, the exact opposite has been true for 12 years, and will likely be true for the next decade as well.

Sure, one has to understand how and why the bankers create volatility in gold and silver assets to ensure that one enters these assets at low-risk, high-reward price points instead of high-risk, low-reward price points in order to be successful, but anyone that has studied gold and silver price behavior and understands how bankers manipulate gold and silver prices should now have the expertise to do provide this guidance. If one doesn't understand what drives gold and silver prices and one enters at a high-risk, low-reward entry price, then certainly, one could have been taken to the cleaners after banker conducted raids against gold and silver executed in the paper markets, despite what the above chart illustrates. In addition, bankers also attempt to keep people out of buying physical gold and silver and PM mining stocks by painting charts to drive and intensify fear of gold and silver collapses during their multiple, annual banker raids on gold and silver prices. Every year, after there is intense short-term volatility in gold & silver in the form of a 3-5% drop in gold and/or silver in just a couple days, more than a handful of technical chartists will come out of the woodwork to predict massive collapses of silver and gold. Last year, when these situations occurred, more than a few chartists unnecessarily stoked fires of panic by predicting imminent collapses of silver to $20 an ounce and gold back to $1200 an ounce (or even lower). And every year, these predicted collapses of a gold “bubble” and silver “bubble” never materialize. But these false predictions gain enough publicity to keep many too scared from buying their first ounce of physical gold, physical silver or their first PM mining stock. Again, remember that bankers deliberately paint these gold and silver charts to give the appearance of an imminent collapse in prices even though the underlying, undiscussed fundamentals of the physical bullion world often directly contradict the price action of gold and silver during banker-executed raids on the PMs. This is why I have maintained for many years that technical analysis in gold and silver (and even in the highly rigged stock markets) is quite useless if conducted in a vacuum. However, if one uses technical analysis in conjunction with analyzing the underlying fraudulent mechanisms of what is causing great volatility in gold & silver markets, then one is much more likely to accurately assess these rapid declines in gold and silver price as buying opportunities as opposed to fostering clients to panic sell their PMs like fleeing lemmings off a cliff's edge.

As Nobel Laureate Daniel Kahneman recently discovered, and as we’ve been stating at SmartKnowledgeU for nearly a decade now, the entire financial industry is built upon deception and rigging of markets. Their entire existence as ongoing, viable entities is based upon the creation and maintenance of an illusion among all their clients that they know what they are doing even though they do not, and even though they have recommended the same course of action for the past 12-years that has greatly failed. As long as the commercial investment industry can keep this illusion going, they can keep convincing their clients that gold and gold stocks (as well as silver) are the riskiest investments ever and simultaneously prevent their clients from realizing the simple truth self-evident in my one chart above and escaping the inertia of their poor advice.

Furthermore, since the conditions that launched this present gold & silver bull are even stronger and more favorable today than at the start of this PM bull, the reasons to be invested in gold (silver) and gold stocks (& silver stocks) are even stronger today than they were 12 years ago. In conclusion, ignore the simplicity of the above chart at grave risk to your own future financial health and security.

About the author: JS Kim is the Founder & Managing Director of SmartKnowledgeU, a fiercely independent investment research & consulting firm with a mission of education and helping Main Street beat the corruption of Wall Street. SmartKnowledgeU was the first company in the west to move to a gold standard of pricing, a pricing mechanism to which the firm has remained firmly committed, even when gold prices have been moved lower by bankers as in recent times. Currently, we are offering a 5% to 10% discount on all SmartKnowledgeU services until the end of January only, a discount that when combined with our significant discount in prices due to current lower gold prices, will almost assuredly mark our lowest prices of the year for 2013. Follow us on twitter @smartknowledgeu.

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Barack Obama versus Martin Luther King Jr.

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The Greatest Way to Dishonor Martin Luther King Jr.

What’s the greatest way to dishonor Martin Luther King Jr.? Compare him with US President Barack Obama – a servant of an engine for the greatest disparity, inequality, and injustice on Earth – driven by the very corporate-financier interests King stood up against, was opposed by throughout his entire life, and most likely was killed by. For Martin Luther King Jr. – whose famous speeches still echo through the halls of time, who spoke a message of peace and of the importance of character over the mere color of one’s skin – he is ironically compared to Barack Obama simply because of the color of their skin, despite the fact that these two men possess the opposite in character, and represent infinitely opposing causes.

Image: A visual representation of the corporate-financier special interests represented by US President Barack Obama’s cabinet, past and present. 

….

Indeed, despite the left-leaning facade President Obama displays publicly, his entire cabinet, past and present, is a collection of corporate-financier special interests, warmongers, criminals, and elitists who merely couch a corporate-fascist, self-serving agenda behind well-meaning liberal-esque causes. A look at these characters more closely reveals just this:

Timothy Geithner (Secretary of the Treasury): Group of 30, Council on Foreign Relations, private Federal Reserve
Eric Holder (Attorney General): Covington & Burling lobbying for Merck and representing Chiquita International Brands in lawsuits brought by relatives of people killed by Colombian terrorists.
Eric Shinseki (Secretary of Veteran Affairs): US Army, Council on Foreign Relations, Honeywell director (military contractor), Ducommun director (military contractor).
Rahm Emanuel (former Chief of Staff): Freddie Mac
William Daley (former Chief of Staff): JP Morgan executive committee member
Jacob “Jack” Lew (Chief of Staff) Council on Foreign Relations, Brookings Institution (Hamilton Project)
Susan Rice (UN Ambassador): McKinsey and Company, Brookings Institution, Council on Foreign Relations
Peter Orszag, (former Budget Director): Citi Group, Council on Foreign Relations
Paul Volcker: Council on Foreign Relations, private Federal Reserve, Group of 30
Ronald Kirk (US Trade Representative): lobbyist, part of Goldman Sachs, Kohlberg, Kravis, Roberts, and Texas Pacific Group partnership to buyout Energy Future Holdings.
Lawrence Summers (National Economic Council Director): World Bank, Council on Foreign Relations

Image: Brookings Institution’s corporate backers – clearly nothing to do with left-leaning liberal a

….

Of course, representation of the Council on Foreign Relations and the Brookings Institution (page 19, .pdf) should give any genuine left-leaning liberal pause for thought. These are think-tanks created by and for big business. The Brookings Institution in particular is home of the very architects of “George Bush’s” myriad of wars – wars the faux-left in America claim Obama only grudgingly has been stuck with.

In reality, his policy is driven by not only the exact same corporate-financier interests that drove Bush’s, but in fact, many of the exact same individuals are writing the policy versus nations like Libya, Syria, and Iran today who were behind “Bush’s” Iraq and Afghanistan wars – the consequences of which still are reverberating. This is what is called, “continuity of agenda,” with the feigned political proclivities of both Bush and Obama being nothing more than carefully orchestrated theater to divide and distract the public as a singular agenda transcends presidencies and perceived political lines.

And in reality, Martin Luther King Jr., should he still walk this world today, would undoubtedly be taking the podium and speaking out against this outrageous conspiracy against free humanity, and the affront to equality poseurs like President Barack Obama are attempting to foist upon the public and the world at large. He would undoubtedly condemn the global war Obama is waging from Mali to Libya, from Syria to Afghanistan and the borders of Pakistan, from Yemen to Somalia, to Uganda and beyond.

In a speech given on April 4, 1967 in New York City titled, “Beyond Vietnam – A Time to Break Silence,” King gives what is perhaps the widest encapsulation of his philosophy and worldview, one that would undoubtedly criticize and clash with the disingenuous US presidents of today, celebrating Martin Luther King Jr. Day. And the beauty of the equality King helped usher in is, the fact that Obama is black should not shield him from the criticism of the very man that helped pave the way for his accession to office.

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One section of King’s enlightening speech criticizing the Vietnam War states:

“It is with such activity in mind that the words of the late John F. Kennedy come back to haunt us. Five years ago he said, “Those who make peaceful revolution impossible will make violent revolution inevitable.” Increasingly, by choice or by accident, this is the role our nation has taken, the role of those who make peaceful revolution impossible by refusing to give up the privileges and the pleasures that come from the immense profits of overseas investments. I am convinced that if we are to get on the right side of the world revolution, we as a nation must undergo a radical revolution of values. We must rapidly begin…we must rapidly begin the shift from a thing-oriented society to a person-oriented society. When machines and computers, profit motives and property rights, are considered more important than people, the giant triplets of racism, extreme materialism, and militarism are incapable of being conquered.

A true revolution of values will soon cause us to question the fairness and justice of many of our past and present policies. On the one hand, we are called to play the Good Samaritan on life’s roadside, but that will be only an initial act. One day we must come to see that the whole Jericho Road must be transformed so that men and women will not be constantly beaten and robbed as they make their journey on life’s highway. True compassion is more than flinging a coin to a beggar. It comes to see that an edifice which produces beggars needs restructuring. A true revolution of values will soon look uneasily on the glaring contrast of poverty and wealth. With righteous indignation, it will look across the seas and see individual capitalists of the West investing huge sums of money in Asia, Africa, and South America, only to take the profits out with no concern for the social betterment of the countries, and say, “This is not just.” It will look at our alliance with the landed gentry of South America and say, “This is not just.” The Western arrogance of feeling that it has everything to teach others and nothing to learn from them is not just.

A true revolution of values will lay hand on the world order and say of war, “This way of settling differences is not just.” This business of burning human beings with napalm, of filling our nation’s homes with orphans and widows, of injecting poisonous drugs of hate into the veins of peoples normally humane, of sending men home from dark and bloody battlefields physically handicapped and psychologically deranged, cannot be reconciled with wisdom, justice, and love. A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death.

America, the richest and most powerful nation in the world, can well lead the way in this revolution of values. There is nothing except a tragic death wish to prevent us from reordering our priorities so that the pursuit of peace will take precedence over the pursuit of war. There is nothing to keep us from molding a recalcitrant status quo with bruised hands until we have fashioned it into a brotherhood.

This kind of positive revolution of values is our best defense against communism. War is not the answer. Communism will never be defeated by the use of atomic bombs or nuclear weapons. Let us not join those who shout war and, through their misguided passions, urge the United States to relinquish its participation in the United Nations. These are days which demand wise restraint and calm reasonableness. We must not engage in a negative anticommunism, but rather in a positive thrust for democracy, realizing that our greatest defense against communism is to take offensive action in behalf of justice. We must with positive action seek to remove those conditions of poverty, insecurity, and injustice, which are the fertile soil in which the seed of communism grows and develops.”

It is safe to say that America has not mended its ways and only traveled further down the dark path King warned us of back in 1967. The man “leading” us, or at least the front-man for the corporate-financier interests that drive America’s destiny, may honor King with carefully contrived words and well orchestrated public stunts, but in deeds and actions Obama and the corporate-financier elite that hold his leash, defame and dishonor King in every way imaginable.

If you want to honor King and his life’s work, honor it by implementing the words he uttered while alive, not by playing along with a system that resisted him until his death, and has since dishonored and exploited his memory with disingenuous praise while maliciously carrying out an agenda contra to everything King ever stood for.

You can read and listen to the whole April 4, 1967 speech, “Beyond Vietnam – A Time to Break Silence” on AmericanRhetoric.com.

MLK Injustice Index 2013: Racism, Materialism and Militarism in the US

“We as a nation must undergo a radical revolution of values…when machines and computers, profit motives and property rights, are considered more important than people, the giant triplets of racism, materialism and militarism are incapable of being conquered.”
– Martin Luther King, Jr., April 4, 1967

While the US celebrates the re-election of its first African American President and the successes of numerous African Americans in all walks of life, there remain troubling challenges.

While remembering how far this nation has come since Dr. King was alive, we cannot forget how far we have still to go to combat the oppressions of racism, materialism and militarism.

Racism

Whites have 22 times more wealth than blacks and 15 times more wealth than Latinos. Median household net worth for whites was $110,000 versus $4,900 for blacks versus $7,424 for Latinos, according to CNN Money and the Census Bureau.

African Americans are 12.3 percent of the population but 4.7 percent of attorneys.

Latinos are 15.8 percent of the population but only 2.8 percent of attorneys.

African American students face harsher discipline, have less access to rigorous high school classes and are more likely to be taught by less experienced and lower paid teachers according to a government sponsored national survey of 72,000 schools.

13% of whites, 21% of blacks and 32% of Hispanics lack health insurance, according to a Kaiser Foundation study (pdf).

The latest Census analysis (pdf) shows 9% of white families below the US poverty level and 23% of Black and Hispanic families below the same levels.

Materialism

The chairman of Goldman Sachs was awarded $21 million in total pay for 2012, according to the Wall Street Journal.6

From 1978 to 2011, compensation for workers grew by 5.7 percent. During the same time, CEO compensation grew by 725 percent. In 1965 CEO earned about 20 times the typical worker. In 2011, the typical CEO “earned” over 200 times the typical worker.

The top 1% of earners took home 93% of the growth in incomes in 2010, while middle income household have lower incomes than they did in 1996, according to Nobel Laureate Joseph Stiglitz.

People in the US spent $52 billion on pets in 2012, according to the American Pet Products Association. The latest figures from the Census Bureau indicate the US spends less than $50 billion per year in non-military foreign aid.

Student loan debt is now higher than total credit card debt and total auto loan debt.

Over 2.8 million children in the US live in homes of extreme poverty, less than $2 per person per day before government benefits. This is double what it was 15 years ago.

Nearly one in six people in the US live in poverty according to the Census. One in five children live in poverty. Latest information shows 17% of white children in poverty, 32% of Hispanic children and 35% of black children (pdf).

Militarism

The US spends more (pdf) on its military than any country in the world. The US spends more on its military than the next 10 countries combined! More than China, Russia, UK, France, Japan, Indian, Saudi Arabia, German and Brazil together.

The 2013 military budget authorizes spending $633 billion on our military defense, not including money for the Veterans Administration. The VA budget submission for 2013 is $140 billion. To compare, total federal spending on Social Security for 2012 was about $773 billion.

The US has 737 military bases outside the US around the world and over 2 million military personnel, including Defense Department and local hires.

The US leads the world in the sale of weapons in the global arms market. In 2011 the US tripled sales to $66 billion making up three-quarters of the global market. Russia was second with less than $5 billion in sales.

45% of the 1.6 million veterans from wars in Iraq and Afghanistan are seeking disability benefits from physical and mental injuries suffered while in the service.

Suicides in active US military, 349 in 2012, exceeded the 295 total combat deaths in Afghanistan in 2012, according to the Associated Press.

Conclusion

These are challenges we should face with the hope and courage Dr. King and so many others have taught us as we celebrate his accomplishment and his inspiration.

Bill Quigley

Bill Quigley is Associate Director of the Center for Constitutional Rights and a law professor at Loyola University New Orleans.  He is a Katrina survivor and has been active in human rights in Haiti for years. He volunteers with the Institute for Justice and Democracy in Haiti (IJDH) and the Bureau de Avocats Internationaux (BAI) in Port au Prince. Contact Bill at quigley77@gmail.com

The Extremist Cult of Capitalism

A 'cult,' according to Merriam-Webster, can be defined as "Great devotion to a person, idea, object, movement, or work..(and)..a usually small group of people characterized by such devotion."Capitalism has been defined by adherents and detractors: Mil...

US Markets Closed On Fifth Anniversary Of Jerome Kerviel Day

To some, today is Martin Luther King day and as a result the US markets are closed, especially since today is also the day when Obama celebrates his second inauguration with Beyonce, Kelly Clarkson and James Taylor at his side (hopefully not on the taxpayers' dime). To others, January 21 is nothing more than the anniversary of the real beginning of the end, when five years ago a little known SocGen trader named Jerome Kerviel could no longer hide his massive futures positions and was forced to unwind them, sending global indices plunging resulting in the biggest single day drop in the Dax (-7.2%), and punking the Fed into an unannounced 75 bps cut. Luckily, today such cataclysmic unwinds are impossible as the market is priced perfectly efficiently, without central bank intervention, price transparency is ubiquitous and the Volcker rule has made prop trading by banks, funded by Fed reserves (which are nothing more than the monetization of excess budget deficits) and excess deposits, impossible.

Sarcasm aside, and hoping nobody will blow up forcing the Fed to cut rates by another 75 bps as a precaution to keeping markets float, as Deustche Bank summarizes we can expect a rather eventful calendar ahead for global macro despite the shortened trading week in the US. In Asia the much anticipated Bank of Japan 2-day meeting will conclude tomorrow where markets are expecting the central bank to embark on a more aggressive easing programme that could include inflation targeting. These hopes are somewhat dampened by the weekend comments from the government’s economic advisor Mr Hamada who said that the BoJ may need to slow the pace of easing if the effect on inflation and Yen “goes too far”. Overnight the Nikkei is about 1% lower while the JPY is off its 2.5 year low at 89.53 against the USD as we type.

In Europe, we have the Eurogroup/ECOFIN meetings on Monday and Tuesday. Wednesday sees the start of the five-day World Economic Forum in Davos where global leaders from Ms Merkel to Mr Dimon are set to speak/interact under the official theme of “Resilient Dynamism”. The same day will also see the IMF publish its updated outlook on the global economy. The Washington based group slashed its 2013 global GDP forecast to 3.6% from 3.9% in October so it’ll be interesting to see where they go from there. On the data front, flash PMIs from Europe, China and the US on Thursday will be the week’s highlights. The US earnings season shifts up a gear with 84 S&P 500 companies expected to report this week. Apple’s results on Wednesday will be a prime focus as market consensus is looking for its first year-on-year earnings decline since 2003. On that note, we also include our oft-updated earnings beat/miss tracker below as well as a recap of the stats for previous reporting season. The current earnings season is tracking rather well relative to the previous one.

Before we get to all that let’s recap the Asian session overnight. Equities are mixed despite the stronger finish to the US session on Friday. Gains in equities are being paced by the Hang Seng (+0.05%) and Shanghai Comp (+0.16%), while the KOSPI (-0.1%) is lagging but there aren’t too many catalysts in what has been a light session in terms of data. In credit markets, Asian bonds are quoted slightly tighter amidst better new issue performance and the Australian and Asian IG indices are marked flat to 1bp tighter.

It was a rather quiet weekend in terms of news flow, but one of the more interesting developments was the outcome of state elections in Lower Saxony on Sunday where the centre-left coalition scored what was described by the Spiegel as an “upset” victory. Early exit polls suggested that Angela Merkel’s CDU and its allies, the FDP, would manage to cling on to a one-seat majority, but that turned later in the evening after preliminary results gave the “red-green” alliance of the opposition SPD and Greens Party a total of 69 seats in the state parliament, against 68 for the CDU-FDP. Perhaps the silver lining for Merkel is that her allies, the FDP, polled much stronger than expected, after previously being in danger of falling below the 5% support threshold needed to retain seats in the state parliament.

The FDP ended up winning almost 10% of votes, however most of the gains came at the expense of Merkel’s CDU.

In other headlines, Bundesbank chief Jens Weidmann reiterated his opposition to the ECB’s OMT program. Weidmann added that it was “wrong and dangerous” to think of the ECB as the only able “crisis manager”. The IMF warned that the EU will need to come up with an additional EU10bn in funds for Greece even if the current programme stays on track, in a 260 page report issued on Friday (FT). In the UK, PM David Cameron’s office is expected to announce a date for his highly anticipated speech on the future of the UK’s relations with  the EU this week.

Briefly recapping the US session on Friday, the S&P500 rallied from the early lows to close moderately higher (+0.34%). Gains were broad-based with nine out of 10 industry sectors posting gains. The sole laggard was the tech sector (-0.36%) which was weighed by a  mixed result from Intel (-6.3%) which reported weak sales in the PC market and disappointed with its Q1 outlook. On the earnings front we had encouraging news as Morgan Stanley and GE both beat top and bottom line expectations. More broadly, the catalyst for the  midday turnaround in risk sentiment was a report that House Republicans are considering extending the US debt ceiling by three months in a bill to be considered next week. According to the Washington Post, the move is a retreat from earlier GOP demand that a debt  ceiling increase is matched by spending cuts. However in exchange for the concession, Republicans are expected to demand that a longer-term budget is passed by both houses of Congress by April 15th. The move was described as a means of forcing the Democrat-controlled Senate to pass a budget, which it hasn’t done in about four years. Over the weekend, Democrat Senator Charles Schumer responded that the Senate was working on a budget anyway which will include an overhaul to the tax code that is intended to raise  significant revenue over the next decade (NY Times).

Last but not least previewing the data calendar for the week we’ll have the German ZEW survey on Tuesday, Japanese trade data on Thursday, German IFO and Japanese inflation both on Friday. US existing and new home sales are out this Tuesday and Friday,  respectively. BoE minutes are out on Wednesday followed by the UK's advance Q4 GDP estimate on Friday.

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Mehdi’s Morning Memo: A ‘Jinxed’ Speech

The ten things you need to know on Monday 21 January 2013...

1) A 'JINXED' SPEECH

So, it seems the long-awaited, much-delayed, 'tantric' speech from the prime minister on Britain and Europe will be delivered on... drum roll... Wednesday! Or will it? As the Times points out, the speech seems to be "jinxed':

"It was delayed by the Algerian hostage crisis. It clashed with a celebration of Franco-German friendship. But David Cameron’s speech on the EU will finally be delivered this week — snow permitting.

"William Hague, the Foreign Secretary, said yesterday that it would go ahead 'in the coming week', with details released today.

"The most likely day is Wednesday, before the Prime Minister leaves for the World Economic Forum in Davos.

"Downing Street had hoped that the speech, which is expected to propose the repatriation of powers from Brussels followed by a referendum on Britain’s membership, could be made on the Continent. Given the weather, it will probably settle for Britain.

"It can hardly be blamed for such pessimism. “The Speech” seems jinxed."

There is, however, a bit of 'good' news for the Tory leader on the Europe front: arch-Eurosceptic Liam Fox has given the speech his seal of approval. From the Guardian:

"Liam Fox, the former defence secretary and one of the party's most vocal critics of Brussels, said he had been briefed on the contents of the speech and was 'broadly satisfied' with what Cameron was intending to say. 'If that is the speech that is finally delivered, a great many of us will think that it's a speech that we've been waiting a long time for any prime minister to deliver,' Fox said."

2) THE SNOW ATE MY GROWTH

If we do enter an unprecedented 'triple-dip' recession later this year, Gideon now has a(nother) ready-made excuse.

From the Financial Times:

"Economists have warned that heavy snowfall sweeping across the country could increase the chances that the UK enters a triple-dip recession, as commuters brace for another week of bad weather.

"High-street spending is expected to be badly affected by the snow, which has caused widespread disruption across the transport system.

"... The warnings come as figures due out on Friday are expected to show that the economy shrunk in the fourth quarter of last year... Peter Spencer, chief economic adviser to the Ernst & Young ITEM club, an economic forecasting group, said the snow increased the probability of a negative number in the first quarter and the prospect of two consecutive quarters of negative growth, a widely used measure of recession."

3) WAR ON TERROR - THE SEQUEL

Both the EU and the state of the economy take a backseat on the front pages of most broadsheets this morning. They're more worried about David Cameron's comments yesterday about the (new) war against al Qaeda, in the wake of the horrific massacre in Algeria:

"New front opens in war against al-Qaeda," proclaims the Times.

"West faces 'decades' of conflict in N Africa," says the FT.

"North Africa terror could last decades - PM," reports the Guardian.

"War against al-Qaeda in Africa could last decades," declares the Telegraph.

The paper reports:

"Britain faces a battle against Islamic extremism in North Africa and the Sahara that could last for decades, David Cameron warned on Sunday.

"The Prime Minister said that countering the rise of al-Qaeda-affiliated groups in the Sahel region will require an 'iron resolve' and greater military, diplomatic and economic engagement with the region.

"He spoke as it was confirmed that six British citizens had died after extremists took scores of hostages at a gas plant in eastern Algeria.

"... Speaking at Chequers on Sunday, Mr Cameron acknowledged that the terrorist threat in North Africa had grown and he predicted a prolonged struggle to meet it.

“'It will require a response that is about years, even decades, rather than months and it requires a response that is patient, that is painstaking, that is tough but also intelligent, but above all has an absolutely iron resolve; and that is what we will deliver over these coming years,' he said.

"William Hague, the Foreign Secretary, signalled that could mean directing more of Britain’s growing aid budget to countries in the region.

"There is 'no all-military solution' to the problem, he said."

Hague is 100% correct. Violence, as they say, begets violence. The past 12 years of the so-called 'war on terror' should have taught us that..

4) 'I DID IT'

From the Guardian:

"Barack Obama was officially sworn in at noon yesterday as president for a second term, in which he has mapped out a programme of economic, social and cultural change that includes new gun control legislation and immigration reform.

"Obama, smiling throughout, delivered the oath in the Blue Room with first lady Michelle holding her family bible and their two daughters, Sasha and Malia, watching.

"Afterwards, he kissed his wife and daughters, telling them: "I did it."

The paper adds:

"The main public events will be held today, with Obama being sworn in again on the steps of Congress, in front of a crowd expected to be between 500,000 to 800,000."

Will we see a more aggressive, more confident president in the second term? A leader less likely to back away from confrontation with irreconcilable Republicans? The Huffington Post in the US is running a series of specially-commissioned articles on 'The Road Forward: Obama's Second-Term Challenges' which you can read here.

I've done a piece on how both Conservative and Labour parties here in the UK are keeping a close eye on the path that Obama is trying to chart between austerity and stimulus, in the hope of proving that their own fiscal policies will be vindicated by the public as the right ones: "To be economically credible in Westminster, it seems, is to be aligned with Barack Obama."

5) PLEBGATE, PART 118

From the Guardian:

"David Cameron and his most senior civil servant, Sir Jeremy Heywood, have been criticised by an all-party committee of MPs over the way they handled the Andrew Mitchell "plebgate" controversy.

"The public administration committee said Heywood, the cabinet secretary, should have challenged the claim in a leaked police log that Mitchell called officers at the gates of No 10 "plebs" after Cameron asked Heywood to investigate what happened.

But, in a report published on Monday, the committee also said Cameron himself should have ordered a much more thorough investigation. Heywood was 'not the appropriate person to investigate allegations of ministerial misconduct', they said, and instead Cameron should have involved Sir Alex Allan, the independent adviser on ministers' interests."

And so it goes on.

BECAUSE YOU'VE READ THIS FAR...

Watch this video of a dad making a ponytail for his daughter in five seconds (hint: it involves a vacuum cleaner!).


6) TARGETING TAX DODGERS

The FT splashes on a tax evasion story:

"Middle-class professionals are to be targeted in a crackdown on tax evasion promised by the chief prosecutor of England and Wales.

"The Crown Prosecution Service will dramatically ramp up the number of tax evasion cases it takes on - with a view to prosecution - in the next two years, Keir Starmer, director of public prosecutions, has told the Financial Times. The CPS will increase fivefold the number of tax files it handles to 1,500 a year by 2014-15.

"... The CPS's tougher stance matches that of HM Revenue & Customs, which investigates cases before referring criminal files to the CPS. Both organisations are trying to rein in the £14bn a year the UK economy loses from tax evasion. HMRC's prosecution office was merged into the CPS in 2010."

7) HEY PENSIONERS, HOSPITALS ARE BAD FOR YOUR HEALTH

Some pretty dire warnings about the NHS from a couple of pretty influential figures.

From the Independent:

"Hospitals are 'very bad places" to care for frail, elderly patients and new ways must be found to treat them in the community, the new independent head of the NHS has warned. In his first newspaper interview since being appointed head of the NHS Commissioning Board, Sir David Nicholson told The Independent that a revolution was needed in the way the health service cared for Britain's ageing population."

And from the Guardian:

"The kind of neglect that disgraced Stafford hospital, where patients were left in soiled sheets, sitting on commodes for hours at a time and often denied pain relief, exists across the NHS, the health secretary, Jeremy Hunt, has said."

8) MILLIONS STARVE, GOLDMAN PROFITS

A new angle on bank-bashing - from the front of the Independent:

"Goldman Sachs made more than a quarter of a billion pounds last year by speculating on food staples, reigniting the controversy over banks profiting from the global food crisis.

"Less than a week after the Bank of England Governor, Sir Mervyn King, slapped Goldman Sachs on the wrist for attempting to save its UK employees millions of pounds in tax by delaying bonus payments, the investment bank faces fresh accusations that it is contributing to rising food prices."

9) DON'T BLAME US FOR FUEL POVERTY

From the Times:

"More than 100 energy companies, charities and businesses have joined forces to warn David Cameron that Britain is heading for a fuel poverty crisis owing to a failure of government policy.

"In a letter to the Prime Minister, seen by The Times, they argue that ministers are not doing enough to tackle soaring gas and electricity bills that leave a growing number of people unable to heat their homes.

"An unprecedented alliance, including Npower, the Co-operative, Age UK and Barnardo’s, urges Mr Cameron to use money raised from the “carbon tax” to be levied from April to tackle the 'national disgrace' of cold homes."

So let me get this straight: the same 'profiteering' energy companies that are responsible for much of the fuel poverty in Britain are attacking the government for no tdoing enough to...tackle fuel poverty. Really?

10) PRIVACY FOR KIDS? DON'T. BE. SILLY.

The Daily Mail splashes on a rather interesting 'snooping' story:

"Parents should insist on seeing their children’s texts and internet exchanges, David Cameron’s new adviser on childhood urged last night.

"Claire Perry said that in a world where youngsters are surrounded by online dangers, parents should challenge the ‘bizarre’ idea that their children have the right to keep their messages private.

"... The Tory MP for Devizes added that parents had to take clearer responsibility for internet access on their children’s laptops and mobile phones.

"‘So many people say “I have got children on their laptop at 2am – what do I do?” Well, turn the router off when you go to bed,’ she said."

As the father of two young children myself, I'm with Perry.

PUBLIC OPINION WATCH

From yesterday's Sunday Times/YouGov poll:

Labour 42
Conservatives 33
Lib Dems 11
Ukip 7

That would give Labour a majority of 96.

140 CHARACTERS OR LESS

@BarackObama President Obama has been sworn in for a second term as President of the United States.

@samhaqitv PM to chair a final session of COBRA this morning on the Algerian hostage sit. This time, the priority is bringing British nationals home

‏@sturdyAlex I can never hear William Hague's monotone without thinking of a Rotherham auctioneer "going once... anyone? going twice..."

900 WORDS OR MORE

Paul Collier, writing in the Financial Times, says: "The west has let negligence in the Sahel turn into a nightmare."

Tim Montgomerie, writing in the Times, says: "Devastation in Syria, Islamist terror in North Africa — there is a bloody cost to when the US fails to intervene."

David Owen, writing in the Guardian, says: "[EU] Treaty amendment should not wait until 2015 – and Labour should co-operate, in the spirit of one-nation politics."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

Mehdi’s ‘Sunday Lunchtime’ Memo: ‘A Vicious and Cowardly Attack’

The ten things you need to know on Sunday 20 January 2013...

1) 'A VICIOUS AND COWARDLY ATTACK'

From the Press Association:

"David Cameron has confirmed that three British nationals have been killed in Algeria, a further three are believed to be dead and a British resident has also died.

"The remaining 22 British survivors have returned to the UK and been reunited with their loved-ones, the Foreign Secretary has confirmed.

"Mr Cameron said: 'I know the whole country will want to join me in sending our sympathies and condolences to the families who have undergone an absolutely dreadful ordeal and who now face life without these very precious loved ones.'

"Speaking from Chequers, the PM echoed President Barack Obama and blamed the terrorists for the deaths, saying 'of course people will ask questions about the Algerian response to these events, but I would just say that the responsibility for these deaths lies squarely with the terrorists who launched a vicious and cowardly attack.'"

NOTE: For reasons I won't bore you with, this Memo was delayed today, hence it's 'Sunday Lunchtime', rather than 'Morning', title. Normal service will resume tomorrow morning. Fingers crossed.

2) 'RED MEAT'

Forget the horse meat, it's all about red meat when it comes to the PM and Europe.

From the Observer:

"David Cameron will deliver a 'redmeat announcement' on Britain's future in the EU, which he believes will satisfy all but a hard core of Conservative MPs, when he makes his much-delayed keynote speech on Europe in the next few days.

"Amid uncertainty over the exact timing of the jinxed address, senior government sources told the Observer that the prime minister intends to make the speech this week - possibly tomorrow - if a resolution has been found to the Algerian hostage crisis.

"'He wants to go ahead as soon as possible. There will be something in it which will pacify all but the hard core,' said the source. 'But he could deliver the same kind of speech that Margaret Thatcher gave in Bruges in 1988 and around 25 MPs would not be happy. It is not possible to please everyone.'"

Speaking on the Andrew Marr programme, foreign secretary William Hague confirmed that the PM's 'tantric' speech on Europe would take place in the coming week.

Hague told stand-in presenter Jeremy Vine that an announcement on the location and timing of the speech would happen tomorrow, and said the British public "need their say" on the UK's relationship with Brussels - suggesting that was what his boss, the prime minister, would offer. Watch this space.

3) COUP AGAINST CAMERON?

Remember the letters to Graham Brady and the 1922 Committee? The ones from Tory backbenchers that could trigger a vote of no-confidence in Dave's leadership of the Conservative Party? There's now 17 of them, apparently.

From the Sunday Times:

"An increasing number of backbenchers are privately discussing the possibility of attempting to unseat the prime minister before the poll in 2015 if the party continues to trail in the polls.

"While there is no immediate threat to his position, a well-placed source said that up to 17 MPs had now written letters of 'no confidence', and there are rumours that at least one list of MPs willing to back a coup is being gathered.

"For the first time, discussions about ousting Cameron before 2015 appear to be spreading beyond the so-called 'usual suspects' — a hard core of about 20 backbenchers who are hostile to his leadership."

Oh dear.

On a side note, Nigel Farage still isn't happy with the Ukip-abusing Tory leader. This morning, on the Andrew Marr programme, Ukip leader Nigel Farage ruled out a post-2015 "deal" with a Cameron-led Conservative Party:

“I think with David Cameron as leader, that is virtually impossible to even contemplate."

4) PLEBGATE, PART 99

Uh-oh. It's not looking so good for Sir Jeremy Heywood. From the Mail on Sunday:

"Britain’s most powerful mandarin faces public humiliation after MPs claimed his bungled investigation cost ‘plebgate’ ex-Tory Minister Andrew Mitchell his job.

"A report by a powerful Commons committee will tomorrow accuse Cabinet Secretary Sir Jeremy Heywood of failing to give the former Chief Whip a chance to prove he was the victim of a police conspiracy.

"A copy of an explosive report by the Commons Public Administration Select Committee, obtained by The Mail on Sunday, shows that MPs lambast Sir Jeremy’s handling of a Downing Street investigation into Mr Mitchell."

5) TAXING TIMES

Last Sunday, this Memo noted how the two Eds had were keen to position the Labour Party behind an anti-tax-avoidance campaign; this Sunday, it's the turn of the Liberal Democrats.

From the Sunday Telegraph:

"Senior Liberal Democrats are drawing up plans for a new levy on Starbucks, Amazon and other global businesses that pay low levels of tax on their British operations.

"As part of preparation for this year’s Budget negotiations, Lib Dems are looking to introduce a minimum tax charge on multinationals based on their global profits.

"Tim Farron, the party’s president, said the charge would address the 'natural outrage' many British people have felt at how little some multinationals contribute to the public finances."

I guess dealing with the 'national outrage' over tax avoidance helps the Lib Dems deal with some of the 'national outrage' over... the Lib Dems themselves.

BECAUSE YOU'VE READ THIS FAR...

In honour of yesterday's 'National Gun Appreciation Day' in the United States, watch this amusing video of US gun owners making idiots of themselves.

6) 'WAR ON BENEFIT CHEATS' ANNOUNCED. UGH.

Remember how Iain Duncan Smith, saviour of the poor, claimed in a recent Today programme interview that he and his department never demonised people on benefits? Remember that?

Well, check out some of today's headlines and news reports. The Sun on Sunday ("£5bn benefiddle") says:

"Ministers will this week step up the war on benefit cheats after false claims hit a record £5.3billion.

Hit squads will be sent into welfare hot spots to target suspect claimants."

The Sunday Express quotes IDS as saying: “The welfare state has over the years become so complex and confusing that fraudsters basically have been given the green light to pick the pockets of hard working taxpayers.

Green light? Hit squads? 'Benefiddle'? I wonder how many papers IDS/the DWP briefed about illegal tax evasion, which is estimated to cost the exchequer tens of billions of pounds compared to illegal benefit fraud which costs just over £1bn (or around 0.7% of the benefits bill).

7) HERE COMES THE TRIPLE DIP?

From the Observer:

"The Office for National Statistics will publish its first estimate of GDP growth for the final quarter of 2012 on Friday and many experts, including at the Bank, expect it to show that the economy contracted. A second negative quarter, from January to March, would mark the onset of Britain's third recession in five years."

The paper says the "Ernst and Young Item Club forecasting group joins those calling on the government to abandon the 2% inflation target, forcing the Bank of England to take more drastic action to lift the economy out of its slump".

No pressure then on Mark Carney, the new bank governor from Canada who takes over Sir Mervyn King in the summer...

8) LIVING WAGE 'ZONES'

Triple-dip or no triple-dip, wages will continue to stagnate over the next few years - and have been in decline since around 2003. Would a living wage help? Ed Miliband thinks so - from the Observer:

"The first detailed blueprint for boosting the wages of millions of low-paid private and public sector workers, while saving the Treasury billions of pounds a year, is released today by two leading thinktanks as support for the living wage grows at Westminster.

"Labour welcomed the radical ideas from the independent Resolution Foundation and the Institute for Public Policy Research (IPPR) as an "extremely valuable contribution" to the living wage debate, amid signs they could be taken up by Ed Miliband's party for inclusion in its next general election manifesto."

9) KENNETH BAKER VS MICHAEL GOVE

My former New Statesman colleague George Eaton has done a rather interesting interview with former Thatcher cabinet minister and Tory grandee Kenneth Baker - 'the most transformative education secretary in recent history' - which Michael Gove won't be too pleased with.

The top lines:

1) He describes Gove's English Baccalaureate (EBacc), which will replace GCSEs from 2015, as "a throwback", comparing it to the School Certificate he sat as a 16-year-old in 1951.
2) He says the "jury's out" on free schools and says he doesn't think "allowing them to be run for profit would necessarily change very much, quite frankly. I really don’t think it would".
3) He says "the jump [in tuition fees] to £9,000 was just too much, quite frankly".

10) OBAMA 2.0

It's time for the second term. From the BBC:

"Barack Obama is due to be officially sworn in for his second term as US president in a small ceremony at the White House.

Although the US Constitution requires the oath of office to be taken by noon on 20 January, as that falls on a Sunday the public inauguration will take place on Monday."

The president wants the Almighty on his side. From the Huffington Post:

"When President Obama rests his hand on two historic Bibles to take his second-term oath of office Monday (Jan. 21), he'll add a phrase not mentioned in the Constitution: 'So help me God.'

"... Although the phrase was used in federal courtrooms since 1789, the first proof it was used in a presidential oath of office came with Chester Arthur's inauguration in September 1881.

"Every president since, including Obama, has followed suit."

The Huffington Post has commissioned a series of special pieces on 'Obama's second-term challenges' which you can read here.

PUBLIC OPINION WATCH

From the Sunday Times/YouGov poll:

Labour 42
Conservatives 33
Ukip 11
Lib Dems 7

That would give Labour a majority of 96.

140 CHARACTERS OR LESS

‏@TimMontgomerie Never seen Cameron looking so tired, making his Algeria statement. Doesn't look like he's been to bed. Must have been v challenging few days

@OllyGrender Prob remains if PM does go for "in/out referendum" I know precisely where my party stands on that but his party will be chronically divided

@campbellclaret Success of Borgen (currently trending) and West Wing (which I have not seen) a sign of gap in market for essentially pro politics TV?

900 WORDS OR MORE

Liam Fox, writing in the Mail on Sunday, says: "Lethal force, not rational argument, must be our response to these violent fanatics."

Andrew Rawnsley, writing in the Observer, says: "Ed Miliband and Nick Clegg's relationship is starting to thaw."

Lord Wolfson, writing in the Sunday Telegraph, says: "I back the single market – but not at any cost."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

Revolving Wars: Towards An Age of Constant and Perpetual Conflict

british empire

We have entered an age of constant conflict….Only the foolish will fight fair. Lt Col Ralph Peters

It seems to be a worldwide given that senior politicians and military personnel make use of the revolving door when they retire from politics, and mostly it involves getting highly-paid directorships in arms manufacturing and other defence-related businesses.  Britain’s record is as good as it gets – depending on your interpretation of ‘good’.

For example: Lord Reid, Defence Secretary to G4S; Michael Portillo, Defence Secretary to BAE Systems; Air Chief Marshal Sir Glenn Torpy, chief of staff to BAE Systems; Admiral Sir John Slater, to Lockheed Martin UK; Major-General Graham Binns to Aegis Defence Services; Sir Kevin Tebbit, MoD permanent under-secretary to Finmeccanica UK, owner of Westlands; David Gould, MoD procurement to Selex Systems, part of Finmeccanica; and Lady Taylor, defence equipment minister then minister for international defence and security until May 2010.  In December 2010 she joined the arms contractor Thales.  This last revolver is particularly indefensible, seeing that as the procurement minister she oversaw a huge budget deficit, much of it caused by a contract with Thales.

According to research done by the Guardian, senior military officers and Ministry of Defence officials have taken up more than 3,500 jobs in arms companies over the past 16 years.  Let’s not forget the civil servants who follow the same route.

And what of the rule that prohibits them from taking a post related to their governmental responsibilities too soon after leaving office?  (Mind you, other members of the great and good also benefit from revolving doors.  Archbishop Rowan Williams, giving his final sermon in Canterbury Cathedral before retiring, exhorted his flock to give more respect to the elderly (apparently including those in their late fifties) who are ignored, marginalised and unable to gain or keep a job consistent with their qualifications and experience.  Then he tottered off to a comfortable ‘retirement’ (housing and servants included) as Master of Magdalene College, Cambridge.)

But, with such a well-trodden path from Defence to Arms, it is no wonder that to a man and woman they’re all gung-ho for war, wherever it might be – all in the name of defending our country’s interests of course.  It is also no wonder that we are now engaged in a revolving war.

Prime Ministers don’t help.  David Cameron likes travelling abroad with an escort of arms manufacturers and dealers, taking them to Cairo’s Tahrir Square only days after Mubarak fell.  Late last year he was in Saudi Arabia, UAE and Jordan, drumming up business for arms manufacturers while telling the world he is on the side of peace and democracy, neither of which he appears to care for when money is on the table.

None of these people recognise that international law says a state can only wage war on another state if the second state has physically attacked the first – not threatening the state or their interests or by possessing weapons of mass destruction – which we sold them.  They get round all that by drafting a UN resolution which allows them to ‘intervene’ in the name of peace.  Or they do it under the umbrella of Nato, which seems to have greatly increased the area covered by the North Atlantic.  Or they give themselves fancy titles like ISAF (International Security Assistance Force).  And they hope that no one notices that all of this is illegal, that they are interfering in countries that are truly no threat to our safety but are often resource rich.

Since 9/11 and the illegal ‘war on terror’ no war is ever won nor does it actually end.  It simply migrates.  So we went into Afghanistan, then Iraq, then turned our attention back to Afghanistan.  Drones took the war into the Yemen and Pakistan, then into Somalia.  We took sides in Libya, provided ‘support’ including illegal boots on the ground and arms to the rebels, and reduced much of Tripoli and Misrata to rubble with air strikes.  We took sides again over Syria, supporting the rebels (a dodgy term this, seeing that many of the fighters hold non-Syrian passports) against ‘the regime’ although we haven’t yet sent in troops.  There are constant mutterings about Iran.  And now Mali – and more innocent civilians will be killed, not by their own people but by French air strikes.

President Hollande is worried about Islamists ‘on Europe’s doorstep’.  Unless Europe has expanded since I last looked, his geography is a little at fault.  I’d interpret ‘on Europe’s doorstep’ as being something that was literally on the border of a European state, which Mali isn’t, although it had the misfortune of being a French colony.  But on our doorstep?  No.

Admittedly Europe in its imperial and colonial heyday treated Africa as its backyard, much as the US has treated South and Central America.  Most people’s backyards used to contain the outside toilet and a vegetable patch.  In the colonial backyards we still dump our rubbish but instead of potatoes we did, and still do, dig for gold, diamonds, oil and other goodies to put on the corporate plate.

Of course the UK was only ‘helping’ France by providing transport planes, planes which had to be diverted from their commitments to Afghanistan, because we really don’t have the equipment to fight all these wars.  No troops on the ground, oh no, no!  Ah… well… maybe some to help train the government forces.  Haven’t we heard that before?  Where next?  Which country will be accused of housing ‘Al Qaeda’ or other ‘Islamist rebels’?  Hardly had one asked the question when the crisis in Algeria reared its head.  We have to get involved now – after all we have nationals working at the In Amenas gas plant, prompting Hilary Clinton to come out with the very silly statement that, as hostages’ lives were in danger, ‘utmost care must be taken to preserve innocent life.’  When did that ever truly bother Western leaders as they sent in the drones?  But, of course, it is only our innocent lives that matter.

So, from Mali to Algeria, to the whole of North Africa?  Cameron, Prime Ministerial as ever, said that a diplomatic response would not be enough to tackle the growing terrorist threat in North Africa, and that Britain faced ‘a large and existential threat from organisations like Al Qaeda in the Magreb’.  Didn’t Tony Blair tell us that Saddam posed a ‘real and existential threat to Britain’?  Has it not occurred to people like Cameron and Clinton that much of the problem (apart from the West’s desire to control other people’s resources) has been their love of sending in the troops rather than diplomats? One thing you can be sure of – those dreaded people we are waging war upon will probably, at some point, have been supplied with our weapons.

In Reversal, House GOP Agrees to Lift Debt Limit

House Speaker John Boehner (R-Ohio) walks to the House floor on the first day of the 113th Congress in Washington, Jan. 3, 2013. (Photo: Luke Sharrett / The New York Times)House Speaker John Boehner (R-Ohio) walks to the House floor on the first day of the 113th Congress in Washington, Jan. 3, 2013. (Photo: Luke Sharrett / The New York Times)Washington - Backing down from their hard-line stance, House Republicans said Friday that they would agree to lift the federal government’s statutory borrowing limit for three months, with a requirement that both chambers of Congress pass a budget in that time to clear the way for negotiations on long-term deficit reduction.

The new proposal, which came out of closed-door party negotiations at a retreat in Williamsburg, Va., seemed to significantly reduce the threat of a default by the federal government in coming weeks. The White House press secretary, Jay Carney, said he was encouraged by the offer; Senate Democrats, while bristling at the demand for a budget, were also reassured and viewed it as a de-escalation of the debt fight.

The change in tack represented a retreat for House Republicans, who were increasingly isolated in their refusal to lift the debt ceiling. Speaker John A. Boehner of Ohio had previously said he would raise it only if it were paired with immediate spending cuts of equivalent value. The new strategy is designed to start a more orderly negotiation with President Obama and Senate Democrats on ways to shrink the trillion-dollar deficit.

To add muscle to their efforts to bring Senate Democrats to the table, House Republicans will include a provision in the debt ceiling legislation that says lawmakers will not be paid if they do not pass a budget blueprint, though questions have been raised whether that provision is constitutional.

That “no budget, no pay” provision offered Republicans a face-saving way out of a corner they had painted themselves into — and an effort to shift blame for any default onto the Senate if it balks. The House Republicans’ campaign arm quickly moved from taunting Democrats about raising the government’s borrowing limit to demanding that they sacrifice their paychecks if they fail to pass a budget.

“The Democratic-controlled Senate has failed to pass a budget for four years. That is a shameful run that needs to end, this year,” Mr. Boehner said in a statement from Williamsburg. “We are going to pursue strategies that will obligate the Senate to finally join the House in confronting the government’s spending problem.”

House Democrats met the deal with scorn, indicating they would inflict maximum political pain by making Republicans either break a campaign promise to carry it to passage or defy their leaders. But other Democrats were more sanguine. The president had said he would not sign a short-term debt ceiling increase, but a senior administration official said that as long as there were no surprises, the White House was likely to accept the House’s offer. Most important, the official said, Republicans had broken from the “Boehner rule” imposed in 2011: any debt ceiling increase was to include a dollar-for-dollar spending reduction.

The decision represents a victory — at least for now — for Mr. Obama, who has said for months that he will not negotiate budget cuts under the threat of a debt default. By punting that threat into the spring, budget negotiations instead will center on two earlier points of leverage: March 1, when $1 trillion in across-the-board military and domestic cuts are set to begin, and March 27, when a stopgap law financing the government will expire.

Reordering the sequences of those hurdles was central to the delicate Republican deliberations that resulted in the new plan. In the days leading to the Williamsburg retreat, Representative Paul D. Ryan of Wisconsin, the House Budget Committee chairman and former vice-presidential nominee, had been meeting with the leader and three past chairmen of the conservative House Republican Study Committee to discuss a way through the debt ceiling morass.

Those conversations led into Thursday morning, when Mr. Boehner and Representative Eric Cantor of Virginia, the No. 2 House Republican, opened the retreat by going through the timeline for the coming budget fights, according to aides who were there.

They turned the floor over to Representative Dave Camp of Michigan, the House Ways and Means chairman, who delivered a blow-by-blow description of the economic disaster that could be wrought by a government default. Mr. Camp also talked through the notion held by some Republicans that the Treasury Department could manage a debt ceiling breach by channeling the daily in-flow of tax dollars to the most pressing needs, paying government creditors, sending out Social Security checks and financing the military. His message was that it would not work, the aides said.

Then Mr. Ryan stood to talk over the options he had developed with the House conservative leaders. They could do a longer-term debt ceiling extension with specific demands, like converting Medicare into a voucherlike program. Or they could lower expectations, reorder the budget hurdles with a three-month punt, and add the “no budget, no pay” provision.

Persuading Republicans who adamantly oppose raising the debt ceiling took some time, and the ensuing discussion stretched on and on, breaking at noon for lunch on Thursday, resuming at 2:30, until 4 p.m., then concluding Friday.

Representative Kevin McCarthy of California, the House majority whip, met with freshmen early Friday to make sure they were on board. Mr. Boehner and Mr. Cantor joined Mr. Ryan for one last meeting with conservative leaders — Representatives Steve Scalise of Louisiana, Jim Jordan of Ohio, Jeb Hensarling of Texas and Tom Price of Georgia — to make sure they were on board. Then the top four leaders sealed the agreement midmorning.

Mr. Obama will unveil his own 10-year budget plan in February, laying out his tax and spending plans for his second term. But Senate Democrats, for the past four years, have refused to move a budget blueprint to the Senate floor, in violation of the Budget Act of 1974, which laid out new rules for controlling deficits.

For the past two years, House Republicans have approved sweeping budget plans that would fundamentally remake Medicare and Medicaid, sharply reduce domestic spending, increase military spending and order a wholesale rewriting of the federal tax code. But without Senate negotiating partners, those plans, written by Mr. Ryan, have been more political statement than legislative program.

“This is the first step to get on the right track, reduce our deficit and get focused on creating better living conditions for our families and children,” Mr. Cantor said. “It’s time to come together and get to work.”

Ashley Parker contributed reporting from Williamsburg, Va.

Guest Post: Fiscal Farce, Failure, Fantasy, & Fornication

Submitted by Jim Quinn of The Burning Platform blog,

I’ve put off writing an article about what is likely to happen in 2013 so I could peruse the thousands of other articles by reputable bloggers, paid pundits, Wall Street shills and captured charlatans to gather their wisdom. It’s essential that I make predictions for 2013 so I can write another article in December rationalizing why 90% of my predictions failed to materialize. Reading all of these 2013 prediction articles made things much clearer for me. I now know for sure:

  • The stock market will reach an all-time high.
  • The stock market will fall 42%.
  • The economy will strengthen as the year progresses.
  • The economy will descend into a depression.
  • The USD will strengthen.
  • The USD will collapse.
  • Gas prices will set new highs.
  • Gas prices will fall below 2012 levels.
  • Gold will rise to $10,000 per ounce.
  • Gold will drop below $1,000 per ounce.
  • We will experience hyperinflation.
  • We will experience horrific deflation.
  • Obama will compromise with the Republicans and put the country on a path to prosperity.
  • Obama will create a debt ceiling crisis and assume dictatorial powers as a result.
  • Snooki will be a better mother than Kim Kardashian.
  • Honey Boo Boo will beat I Didn’t Know I Was Pregnant in the Neilson ratings.

The majority of 2013 prediction articles are written to support the agenda of the writer. Many are trying to sell newsletter subscriptions or investment services. Their predictions will match the theme of their newsletter. Others are Wall Street paid shills who will predict what they are paid to predict by their owners. Then there are the political hacks who tow the party line with their predictions. But no one can top the predictive powers of the CBO. They just put out their ten year updated forecast reflecting the fabulous fiscal cliff deal that saved the country. According to the CBO, the “compromise” to reduce our deficits will add a mere $4 trillion to the national debt over the next ten years. I’m sure this will prove to be accurate. Just take a look at their 2002 projection, after passage of the Bush tax cuts:

The CBO predicted the FY2012 surplus would be $641 billion, the national debt would total $3.5 trillion, the debt held by the public would total $1.273 trillion, and GDP would total $17.2 trillion. They missed by that much.

 

The actual FY12 results were:

  • The true deficit was $1.37 trillion (amount national debt increased – not the phony deficit number reported by the mainstream media).
  • The national debt was $16.1 trillion.
  • The debt held by the public was $11.3 trillion.
  • GDP was $15.8 trillion.

Based on these results, I won’t be asking the CBO for help with my Super Bowl bet. Making ten year predictions is beyond worthless, but public policy in Washington DC is based on these useless CBO projections. The entire fiscal cliff kabuki theater fictitious crisis reveals the politicians and mainstream media pundits to be liars, fools and frauds. The tax the rich to cut the deficit storyline was sold to the public and won the day. Of course, the highly accurate CBO immediately revealed that the Orwellian named American Taxpayer Relief Act of 2012 adds $4 trillion to the national debt over the next ten years. Based on the accuracy of their previous predictions, it’s a guarantee the national debt goes up by $8 trillion, as the rich take advantage of the thousands of loopholes in the IRS code they paid for to avoid paying the taxes expected by the CBO.

Hypocrisy abounds on both sides of the aisle in Washington DC and on the media company propaganda channels. As the national debt soared from $10.6 trillion on the day Obama took office to $16.4 trillion today, I heard shrieking liberal talking heads on MSNBC, CNN, and the rest of the liberal media blame the debt on the Bush tax cuts and the Bush wars. If the Bush tax cuts were so horrific, why did Obama and his minions just make 98% of these tax cuts permanent? Liberals held protest marches across the country against Bush’s wars and burned him in effigy. Obama’s defense budgets have been larger than Bush’s and he doubled down on our miserable failure in Afghanistan. You don’t hear a peep from the liberals about the warmongering Barack Obama who has kill lists and unleashes predator drones, killing women and children across the globe. Liberals pretend to be concerned about the welfare of the citizens, but continue to support a President that uses executive orders to imprison citizens indefinitely without charges, has expanded surveillance on citizens, has kept Guantanamo open, signs the continuation of the Patriot Act, and proposes overturning the Second Amendment by executive order. Liberals shriek about the evils of an unregulated Wall Street, while remaining silent as Obama hasn’t prosecuted a single banker for the greatest financial fraud in world history. You don’t hear a peep about Jon Corzine, who stole $1.2 billion from the accounts of farmers and ranchers. Liberals talk about regulation and then stand idly by while Wall Street lobbyists wrote the Dodd Frank law and insurance and drug company lobbyists wrote the Obamacare law. Liberal hypocrisy knows no bounds and is only matched by Neo-Con hypocrisy.

The Neo-Con controlled Republican Party is a pathetic joke. They have the guts to declare themselves the party of fiscal responsibility, after Bush’s eight year reign of error. He and his fiscally responsible party were handed a budget in surplus and managed to add $4.9 trillion to the national debt by waging undeclared wars, encouraging Wall Street to create the biggest fraudulent financial bubble in history, creating a new $16 trillion unfunded entitlement (Medicare Part D), cutting taxes without paying for them, and creating a massive new government agency (DHS) to take away our liberties and freedom. Federal government spending grew from $1.9 trillion to $3.0 trillion under Bush and the Republicans. Does that sound fiscally responsible?

Does anyone believe the Republican Party is serious about cutting anything? Tough guy Republicans like Big Chris Christie preach fiscal responsibility when going to war with teachers’ unions, but he squeals  like a stuck pig when a $60 billion pork filled, unpaid for, Sandy Relief bill is held up in Congress. The courageous fiscally responsible Congress critters passed the entire pork filled, unfunded, bloated, vote buying joke. It included $28 billion to mitigate future disasters, $3 billion to repair or replace Federal assets, and $6 billion for transportation projects completely unrelated to Sandy damage.   The hypocrisy of politicians who proclaim the $50 billion of 2013 fiscal cliff tax revenue as deficit cutting, and then immediately piss it away by paying people to rebuild their houses yards from the Atlantic Ocean while funding billions of non-disaster related projects is disgusting to behold. There is nothing like compromise to add another $60 billion to the national debt.

Our entire economic and political system is a farce. The American people are being played by the powerful interests that provide them with an illusion of choice. Both parties serve the interests of their masters and the fiscal cliff show and debt ceiling show are a form of reality TV to keep the masses alarmed, fearful, and believing there is actually a difference between the policies of the ruling class. The charade has played out in its full glory in the last few weeks with Obama convincing the masses he had stuck it to the rich, while in reality the working middle class got it good and hard when they got their January paychecks. This chart details the tax changes that went into effect on January 1.          

 taxbill

The funniest part this fiscal fiasco farce is watching the reaction of the sheep who believed Obama and the mainstream media storyline. Obama was able to raise the published top rate on people making over $400,000. The newly defined “rich” laughed heartily as they know only fools pay anywhere near the top rate. The rich just call their tax advisor and instruct them to use one of the thousands of tax loopholes in the 75,000 page IRS tax code to “legally” avoid the new Obama rates. Meanwhile, both parties and their mainstream media mouthpieces downplayed the 2% payroll tax increase on every working American. This tax increase has been a complete surprise to the reality TV zombies and Facebook aficionados. Even college educated professionals in my office had no idea their next monthly paycheck was going to be $150 to $200 lighter. This will wipe out most, or all, of the annual raise they received. The tax will fall heavily on the 75% of households that make less than the $113,700 Social Security cutoff. For a struggling family of four earning the median income of $50,000, the $1,000 less in their paychecks will mean less food, putting off trips to the doctor, driving on bald tires, or not taking the family on a vacation to the Jersey shore. The $2,274 increase in taxes (.57%) for the Wall Street banker making $400,000 probably won’t put too much of a crimp in his Hamptons lifestyle.

The joke is on the American people as the rich will ante up maybe $50 billion of taxes in 2013, while the working middle class will be skewered for $125 billion. How’s that “Tax the Rich” slogan working out for you?     

 

Only in the Orwellian capital of Washington DC would a bill that was supposed to provide tax relief to the middle class and spending cuts to reduce the deficit, actually increase the tax burden of a median household by $1,000 and perpetuate the pork spending payoffs to campaign contributors and friends of the slimy politicians that slither through the halls of Congress. The list of pork and bribes should be nauseating to hard working Americans across the country:

$30 billion extension of the 99 weeks of unemployment benefits, even though we are supposedly in the 3rd year of economic recovery. Continuing to pay people to not work for two years will surely boost employment.

$14.3 billion for a two-year extension of the corporate research credit benefiting large technology companies like IBM and Hewlett Packard.

$12.2 billion one-year extension of the production tax credit for wind power.

$11.2 billion two- year extension of the active financing exception, which lets GE, Caterpillar Inc. (CAT) and Citigroup Inc. (C), among others, defer taxes on financing income they earn outside the U.S.

$1.9 billion extension of the Work Opportunity Tax Credit for hiring workers from disadvantaged groups, benefitting mega-restaurant chains like McDonalds.

$1.8 billion extension of the New Markets Tax Credit for investments in low- income areas, benefitting JP Morgan and other Wall Street shyster banks.

$650 million tax credit for manufacturing energy-efficient appliances, benefitting mega-corps like Whirlpool.

$430 million for Hollywood through “special expensing rules” to encourage TV and film production in the United States. Producers can expense up to $15 million of costs for their projects. NBC thanks you.

$331 million for railroads by allowing short-line and regional operators to claim a tax credit up to 50% of the cost to maintain tracks that they own or lease.

$248 million in special expensing rules for films and television programs.

$222 million for Puerto Rico and the Virgin Islands through returned excise taxes collected by the federal government on rum produced in the islands and imported to the mainland.

$78 million for NASCAR by extending a “7-year cost recovery period for certain motorsports racing track facilities.”

$59 million for algae growers through tax credits to encourage production of “cellulosic biofuel” at up to $1.01 per gallon.

$4 million for electric motorcycle makers by expanding an existing green-energy tax credit for buyers of plug-in vehicles to include electric motorbikes.

So when you see the cut in your take home pay, just comfort yourself knowing that JP Morgan, Citigroup, GE and hundreds of mega-corporations were able to retain their tax breaks. As they have done for decades, Congress and the President agreed to address spending cuts at a future date. Of course, a government spending cut isn’t actually a cut. It’s a lower increase than their previous projection. Nothing is ever cut in Washington DC. The austerity storyline is a lie. Not a dime has been cut from the Federal budget. Intellectually dishonest ideologues try to peddle the wind down of the Obama $800 billion porkulus program as a cut in Federal spending. They sold this Keynesian “shovel ready” crap to a gullible public as stimulus to jumpstart the economy. Federal spending was $3.0 trillion before the Obama stimulus. After the two year stimulus was pissed away without helping the economy one iota, the baseline should have been back in the $3.2 trillion range. Instead, FY13 Federal spending will be $3.8 trillion. This hasn’t kept liberal ideologues like Krugman and his minions in the mainstream media from blaming crazy Tea Party Republicans for inflicting horrendous austerity measures on the poor and disadvantaged.

 

The chart above reveals a few truths:

  • The country has been blessed with two of the worst presidents in U.S. history over the last twelve years.
  • When Federal spending as a percentage of GDP is beyond two standard deviations over the normal range during the last sixty years, your problem is not lack of tax revenue.
  • Obama and the current Congress are spending at a level of 24% of GDP versus the 18% of GDP when Clinton left office. This amounts to a nose bleed altitude $950 billion higher than the level Clinton was spending in his final year in office.

The Op-eds in liberal rags across the land decry the lack of civility in Washington DC and plead for politicians on both sides of the aisle to come together and compromise for the good of the country. This line of bullshit would be laughable if it wasn’t so wretched in its falsity. Compromise is what has left this country with a $16.4 trillion national debt, $200 trillion of unfunded liabilities, and $1 trillion deficits as far as the eye can see. Democrats have compromised and let the Republicans create a warfare state. Republicans have compromised and let Democrats create a welfare state. The two headed monster living in the swamps of Washington DC just voted to increase taxes on all Americans. They voted to hand criminal Wall Street banks $700 billion. They voted to pass the Patriot Act. They voted to pass the NDAA. They’ve allowed the President to wage undeclared wars in Iraq, Afghanistan, Libya, and now Iran. They voted for a $663 billion Defense bill that includes tens of billions the Secretary of Defense doesn’t even want. They will vote to raise the debt ceiling in the next two months. The last thing this country needs is more compromise. We can’t afford any more compromise. The chart above proves what can happen when gridlock ensues, spending restrictions are enforced, and confrontation displaces compromise. After the 1994 Republican takeover of Congress, gridlock ensued for the next six years. PAYGO restrictions in the Omnibus Budget Reconciliation Act of 1990 didn’t allow unfettered spending increases. The result was Federal spending falling from 22% of GDP to 18% of GDP and a budget surplus. The Pay-Go restrictions expired in 2002 and Democrats and Republicans have compromised to the tune of a $10.2 trillion increase in the national debt in ten years. The hypocrisy of pandering deceitful politicians is boundless and shows utter contempt for the intelligence of the American populace.  

“Raising the debt ceiling does not authorize more spending. It simply allows the country to pay for spending that Congress has already committed to. If congressional Republicans refuse to pay America’s bills on time, Social Security checks, and veterans benefits will be delayed. We might not be able to pay our troops, or honor our contracts with small business owners. Food inspectors, air traffic controllers, specialist who track down loose nuclear materials wouldn’t get their paychecks. Investors around the world will ask if the United States of America is in fact a safe bet. Markets could go haywire, interest rates would spike for anybody who borrows money – Every homeowner with a mortgage, every student with a college loan, every small business owner who wants to grow and hire. We are not a deadbeat nation.

It would be a self-inflicted wound on the economy. It would slow down our growth, might tip us into recession. And ironically it would probably increase our deficit. So to even entertain the idea of this happening, of the United States of America not paying its bills, is irresponsible. It’s absurd. Republicans in Congress have two choices here. They can act responsibly, and pay America’s bills, or they can act irresponsibly and put America through another economic crisis. But they will not collect a ransom in exchange for not crashing the American economy.” – President Barack Obama – January 14, 2013

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. The Senate continues to reject a return to the common sense Pay-go rules that used to apply. Previously, Pay-go rules applied both to increases in mandatory spending and to tax cuts.

The Senate had to abide by the common sense budgeting principle of balancing expenses and revenues. But we must remember that the more we depend on foreign nations to lend us money, the more our economic security is tied to the whims of foreign leaders whose interests might not be aligned with ours. Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘‘the buck stops here.’’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit.” – Senator Barack Obama – March 16, 2006

I could have shown quotes from George W. Bush during the 2000 Presidential campaign talking about a non-interventionist foreign policy and no need for the U.S. to get involved in nation building and then proceeding to pre-emptively attack sovereign countries while wasting trillions and impoverishing unborn generations trying to create “democracy” in the Middle East at the point of a gun as a cover to protect “our” oil. The point is that we are being given the illusion of choice. Everyone knows the debt ceiling will be raised after another episode of Washington DC Kabuki Theater, presented by the corporate mainstream media in breathtaking detail, because the politicians are beholden to their owners and those owners want more of our money. That is why spending will never be willingly cut by the spineless puppet congressmen, as their strings are pulled by the corporate puppet masters and they dance to the tune of the banking oligarchs that own this country.

After witnessing the fighting of undeclared never ending wars, passage of freedom destroying legislation like the Patriot Act & NDAA, approval of pork barrel spending to the tune of hundreds of billions, rule by Executive Order, using ZIRP to extract hundreds of billions from senior citizen savers and give it to criminal Wall Street banks, forcing the American people at gunpoint to replenish the Wall Street banks with $700 billion after they had committed the greatest financial fraud in history, and a continuing trampling of the U.S. Constitution, the American people continue to remain willfully ignorant of the truth. The American Dream is dead. We’ve allowed a rich, privileged, elite few to achieve hegemony over our economic and political system with their control of the media and manipulation of our financial markets. They will collapse the country because they will never be satisfied with the amount of wealth and power they’ve accumulated. Their voracious greed will be their downfall. The sooner we can channel the anger of George Carlin, the sooner we can put an end to this corporate fascist reign of terror.         

“Politicians are put there to give you that idea that you have freedom of choice. You don’t. You have no choice. You have owners. They own you. They own everything. They own all the important land, they own and control the corporations, and they’ve long since bought and paid for the Senate, the Congress, the State Houses, and the City Halls. They’ve got the judges in their back pockets. And they own all the big media companies so they control just about all the news and information you get to hear. They’ve got you by the balls.

They spend billions of dollars every year lobbying to get what they want. Well, we know what they want; they want more for themselves and less for everybody else. But I’ll tell you what they don’t want—they don’t want a population of citizens capable of critical thinking. They don’t want well informed, well educated people capable of critical thinking. They’re not interested in that. That doesn’t help them. That’s against their interest. You know something, they don’t want people that are smart enough to sit around their kitchen table and figure out how badly they’re getting fucked by a system that threw them overboard 30 fucking years ago.

It’s a big club and you ain’t in it! You and I are not in the Big Club. By the way, it’s the same big club they use to beat you in the head with all day long when they tell you what to believe. All day long beating you over the head with their media telling you what to believe, what to think and what to buy. The table is tilted folks, the game is rigged. And nobody seems to notice, nobody seems to care. That’s what the owners count on, the fact that Americans are and will probably remain willfully ignorant of the big red, white, and blue dick that’s being jammed up their assholes every day. Because the owners of this country know the truth, it’s called the American Dream, because you have to be asleep to believe it.” George Carlin

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New World Order – Attack On Sovereignty

Those concerned about “The New World Order” speak as if the United States is coming under the control of an outside conspiratorial force. In fact, it is the US that is the New World Order.

Worldwide Political and Financial Tensions, Spiralling Debt Crisis in America

recession

Until now the course of the crisis has been accurately described according to the five phases identified by our team from May 2006 (GEAB n°5) and completed in February 2009 (GEAB n°32): release, acceleration, impact, decanting and global geopolitical dislocation, the last two stages developing simultaneously. In the last issues and in particular the GEAB n°70 (December 2012), we commented extensively on the ongoing processes of the two last phases, a decantation from which the world-after painfully emerges on the rubble of world geopolitical dislocation.

But we had underestimated the decanting period’s duration which we have gone through for more than four years, a period during which all the crisis’ players have worked to a common goal, to gain time: the United States, whilst making every effort to prevent the appearance of alternative solutions to the dollar, in spite of the catastrophic situation of all its systemic fundamentals, to prevent its creditors from abandoning it (discrediting other currencies including the Yen from now on, tenacity against the attempts to disconnect oil from the dollar, etc…); the rest of the world, in setting up skilful strategies consisting of maintaining its assistance towards the United States to avoid a sudden collapse from which it would be the first to suffer, and at the same time constructing alternative and of decoupling solutions.At the end of this long period of the system’s apparent “anaesthesia”, we consider it necessary to add a sixth phase to our description of the crisis: the last impact phase which will occur in 2013.

The United States certainly believed that the rest of the world would have an interest in keeping its economy on artificial respiratory assistance ad infinitum but it is likely that they don’t believe it any more today. As regards the rest of the world, the final chapters of the US crisis (major political crisis, decisional paralysis, near miss of the fiscal cliff, perspective of a payment default in March, and always the incapacity to implement the least structural solution) convinced it of the imminence of a collapse, and all the players are on the look-out for the least sign of a swing to extricate themselves, conscious that by doing so they will precipitate the final collapse.

Our team considers that in the context of the extreme tensions – both domestic political and world financial tensions – induced by the next raising of the US debt ceiling in March 2013, the signs will not be lacking to cause the disappearance of US treasury bonds’ last purchasers, a disappearance which the Fed will no longer be able to compensate for, resulting in an increase in interest rates which will propel American indebtedness to astronomical levels, leaving no hope of ever being repaid to creditors who will prefer to throw in the towel and let the dollar collapse… a collapse of the dollar which will de facto correspond to the first genuine solution, painful certainly but real, for US indebtedness.

It’s for this reason also that our team anticipates that 2013, the first year of the World-Afterwards, will see a setting up of this “purifying” of US and world accounts. All the players are tending towards this step whose consequences are very difficult to predict but which is also an unavoidable solution to the crisis taking into account the United States structural incapacity to set up genuine debt-reduction strategies.But in order to take the measure of the causes and consequences of this last impact phase, let’s reconsider the reasons for which the system lasted for so long. Our team will then analyze the reasons for which the shock will take place in 2013 afterwards.

Saving time: When the world rejoices at the US status-quo

Since 2009 and the temporary measures to save the global economy, the world has been waiting for the famous “double dip”, the relapse, as the situation continues to worsen day by day for the United States: breathtakingly high national debt, mass unemployment and poverty, political paralysis, loss of influence, etc. However, this relapse still hasn’t arrived. Admittedly, the “exceptional measures” of assistance to the economy (lowest interest rates, public expenditure, debt repurchase, etc.) are still in force. But against all expectations and contrary to any objective and rational judgment, the markets still seem to have confidence in the United States.

Actually, the system isn’t based on confidence any more but on calculating the best moment to extricate themselves and the means of hanging on until then.The time has passed when China challenged the United States to implement a second round of quantitative easing (1): the world seems to have adapted itself to the fact that this country is still growing its debt and is inescapably turning towards a payment default, provided that it’s still standing and doesn’t make too many waves again. Why don’t the other countries press the United States to reduce its deficit, but on the contrary are delighted (2) when agreement on the fiscal cliff keeps the status-quo? However nobody is fooled, the situation cannot last indefinitely, and the world economy’s main problem is really the United States and its dollar (3).

Countries’ public debt by the number of months tax receipts (4) - Source: LEAP / European Commission, ONS, FRB

Countries’ public debt by the number of months tax receipts (4) – Source: LEAP / European Commission, ONS, FRB

According to the LEAP/E2020 team, the various players are seeking to gain time. For the markets, it is a question of gaining maximum benefit from the Fed and the US government’s largesse in order to make easy money; for the foreign countries, it’s a question of extracting their economies to the maximum from that of the United States in order to be able to shelter themselves at the time of the coming shock. Thus, for example, it’s how Euroland makes the most of it in order to strengthen itself and China takes advantage of it to sink its dollars in foreign infrastructures (5) which will always be better value than dollars when that currency is on the floor.

Acceleration of the tempo and a build-up of challenges

But this period of complicit leniency is coming to an end because of intense pressures. It is interesting to note that the pressures don’t really come from abroad, confirming our analysis above; those are rather of two sorts, internal and financial-economic.On the one hand, it’s the internal political battle which threatens the house of cards. If Obama appears to be traversing a period of political grace facing a seemingly subjugated republican camp, the battle will begin again even more violently than ever starting from March. Indeed, if the republican representatives will be undoubtedly obliged to vote the increase in the debt ceiling, they will make Obama pay dearly for this “capitulation”, pushed here by their electoral base half of which in fact wants a US default considered by them as the only solution to free them from the country’s pathological debt (6). The republicans thus hope to do battle on the many issues and challenges which are shaping up: on the social side, firearms regulation (7), taking a new look at immigration and the legalization of 11 million illegal immigrants (8), health care reform, and more generally questioning the Federal state’s role; on the economic side, lowering expenditure, debt settlement (9), fiscal cliff « redux » (10), etc… All these issues are on the next few months’ agenda and the least hitch can prove to be fatal. Given the republicans’ pugnacity and their supporters’ even more so, it’s rather the hope that there is no hitch which is utopian.On the other hand, it’s the international markets, Wall Street at the forefront, which threaten not to extend their confidence in the US economy. Since Hurricane Sandy and especially since the episode of the fiscal cliff which hasn’t fixed any problems, the pessimistic analyses and doubts are becoming increasingly strong (11). It’s necessary to keep in mind that the stock markets are stateless and, even domiciled in New York, have only one goal, profits. In 2013, the world is sufficiently extensive so that investors and their capital, just like a flight of sparrows, slip away to other skies on the slightest warning (12).Whereas agreement on the debt ceiling in 2011 settled the question for 18 months (13), that on the fiscal cliff defers the problem for only two months. Whilst one felt the effects of QE1 for a year, QE3 had an effect for only a few weeks (14). Besides, with a diary loaded with negotiations to come, one sees the tempo accelerate significantly, a sign that the abyss is approaching and players’ nervousness along with it.

S&P performance during each quantitative easing action - Source: ZeroHedge/SocGen

S&P performance during each quantitative easing action – Source: ZeroHedge/SocGen

March-June 2013, extreme tension: the least spark lights the blue touch-paper

In addition to these US challenges, the whole world also has many tests to pass, here again its economic challenges above all. In particular it’s Japan and the United Kingdom, key elements in the US sphere of influence, which are fighting for their survival, both in recession, with insupportable debts, household savings on the deck and with no prospect of a short-term solution. We will examine these two countries in detail later in this issue. But it’s also a Brazilian economy which is just ticking over (15); difficulty to manage inflation rates in the emerging powers; the deflation of the Canadian, Chinese and European real estate bubbles (16), etc…

The challenges are also of a geopolitical nature: to quote only three examples, African conflicts among which of course France’s intervention in Mali, conflicts and indirect confrontation of the Middle Eastern powers around Syria, Israel and Iran, as well as the territorial tensions around China which we will examine during our following analysis on Japan.All these factors, economic, geopolitical, American, global, are coming together at the same moment in time: the second quarter of 2013.

Our team has identified the period running from March to June 2013 as being explosive, in particular at the conclusion of the negotiations in the United States on the debt ceiling and the fiscal cliff. The least spark will light the blue touch-paper, unleashing the second impact phase of the global systemic crisis. \

And there are many opportunities to create sparks, as we have seen.So what are the consequences of and the calendar for this second impact phase? On the markets initially, a significant fall will spread out until the end of 2013. All economies being inter-connected, the impact will spread throughout the whole planet and will drag the global economy into recession. Nevertheless, thanks to other countries’ decoupling which we mentioned previously, all countries won’t be affected in the same way. Because, more so than in 2008, opportunities exist for capital in Asia, Europe and Latin America, in particular.

In addition to the United States, the countries the most affected will be those in the US sphere, namely the United Kingdom and Japan primarily. And, while these countries will still struggle in 2014 with the social and political consequences of the impact, the other regions, BRICS and Euroland at the forefront, will finally see the end of the tunnel at that time.In order to understand the formation of this second impact phase, we next review the “suicidal tendencies” of four powers of the world before: the United States, the United Kingdom, Japan and Israel.

Then we will present the traditional January “Ups & Downs”, rising and falling trends for 2013, also serving as recommendations for this New Year. Finally, as in each month, our readers will also find the GlobalEurometre.

Notes:

(1) One can refresh one’s memory here (Wall Street Journal, 18/10/2010) or here (US News, 29/10/2010).

(2) « Relief after the happy epilogue of the fiscal cliff » headline ForexPros.fr (02/01/2013); « Relief at fiscal cliff crisis deal » headline BBC (03/01/2013)…

(3) As identified by LEAP/E2020 since 2006 from the GEAB n°2.

(4) The banks’ public reflation is included in the United Kingdom’s debt.

(5) The Chinese being very active in this arena; one has numerous examples such as the port of Piraeus in Greece, Heathrow airport in the UK, in Africa, but also the takeover of industrial jewels (Volvo for example) etc. See, for example Emerging Money (China to invest in Western infrastructure, 28/11/2011).

(6) Read, for example, ZeroHedge, 14/01/2013.

(7) Source: Fox News, 30/12/2012.

(8) Source: New York Times, 12/01/2013.

(9) Source: New York Times, 15/01/2013.

(10) The budgetary cuts debate has simply been pushed back two months. Source: New Statesman, 02/01/2013.

(11) Like here (CNBC, 11/01/2013), here (MarketWatch, 14/01/2013) or here (CNBC, 08/01/2013).

(12) The United States will in their turn taste the irony of history: the financial market deregulation and globalisation which they promoted so much is going to turn round dramatically against them.

(13) It’s as at this point in time that the automatic cuts of 01/01/2013 were enacted to force a bipartisan agreement. Source: CNN Money (02/08/2011) or Wikipedia.

(14) For a reminder on these quantitative easing operations, one can refer to BankRate.com, Financial crisis timeline.

(15) Source: Les Échos, 05/12/2012.(16) See previous GEAB issues.

Common Ground: It’s All Happening at the Park

Parks stand as the foremost symbol of the commons because they are literally common ground—a place where everyone can come and rub shoulders, interact, share an experience, get to know one another better. They are the foundation of community and democracy.Milwaukee’s Lake Park, one of many national treasures designed by Frederick Law Olmsted. (Photo by Julia Taylor under a Creative Commons license from flickr.com)

Parks are also one of America’s great gifts to the world. Not only did we introduce the idea of national parks with Yellowstone in 1872, Frederick Law Olmsted earlier showed the immense promise of public parks with the creation of Central Park. Until then most of the major work by landscape architects such as Capability Brown was done on private estates. Olmsted showcased the idea that the public sphere could also inspire us with beauty and grandeur, an idea he developed based on the work of British designer Joseph Paxton.

Olmsted’s parks around North America—New York, Boston, Chicago, Seattle Louisville, Milwaukee, Buffalo and Montreal—are treasures ranking with the Parthenon an Grand Canyon. Yet sadly, some of the these parks have not been treated with the care worthy of masterpieces. Buffalo’s Delaware Park now is bisected by an expressway and Detroit’s Belle Isle is in disrepair. Indeed, even Central and Prospect Parks in New York City were deteriorating in the 1980s until citizens’ groups came forward to help the financially-strapped park board maintain them.

Do We Still Need Parks?

Too often, there is a sense from leaders that parks are not as necessary as they used to be. It’s not Olmsted’s era anymore when most people lived in tenements with no access to nature. Now the great majority of people, especially in suburban areas, live in houses or apartments with yards. Parks aren’t a top priority—especially in these times of tight fiscal budgets.

But actually, we need great parks as much as ever:

  • In a time when bitter divisions and increasing alienation characterize American life, parks are one of the few spots where people still connect in a congenial setting. They are the literal common ground of our democracy, where people of all backgrounds can realize how much we share in common.
  • As economic inequality deepens, which is now spreading to suburban areas, it is important to emphasize the fact that for most people, the park system is their equivalent of a lake cabin, a performing arts center, a country club, a health club, grandpa’s farm, and a classroom for continuing education. As the gap in personal opportunities and quality-of-life between people of different income levels is increasing, the park is one place where everyone counts. That experience is critically important for lower- and middle-income people to feel a continuing sense of possibility for the future of their families.
  • In post-World War II suburban communities, where typically fewer people walk and enjoy less opportunities for spontaneous encounters on the street, parks play an even more important role than in older cities. Whether at sports facilities, beaches, trails or public events, the park is central to people’s sense of community and belonging.
  • More than just pleasant places to play, parks are places to learn. Even beyond environmental education, parks are an ideal setting for classes, workshops, and experiential learning of all kinds. Many people might be more drawn to programming in a park than in a library or local school, and the opportunity for hands-on experience are more plentiful.

This work is licensed under a Creative Commons License

Jay Walljasper

Jay Walljasper, editor of OnTheCommons.org and author of All That We Share and The Great Neighborhood Book, writes widely about cities, community, sustainability and travel. On The Commons is a commons movement strategy center.

Mehdi’s Morning Memo: Cable Vs Cameron

The ten things you need to know on Thursday 17 January 2013...

1) CABLE VS CAMERON

First there was an American diplomat. Then a German politician. Then a former British ambassador. And then, of course, a group of eurosceptic Tory backbenchers. Everyone seems to have something to say on Britain's relationship with Europe ahead of David Cameron's 'tantric' speech on the subject in the Netherlands tomorrow.

Tonight, just a few hours ahead of the PM's address, it's Vince Cable's turn. As Ned Simons and I report:

"In a speech to business leaders on Thursday, the Lib Dem business secretary will say it is a 'terrible time' to have the 'diversion and uncertainty' which build up to a referendum would entail.

“'Uncertainty is the enemy of investment. At a time of extreme fragility in business confidence such uncertainty would add to the sense of unresolved crisis and weaken Britain’s ability to deliver more reform inside the EU,' he will say.

"... Taking aim at eurosceptic Tory backbenchers, Cable will use his speech on Thursday evening to say that it will be “next to impossible” to safeguard the UK national interest in the Single Market if London tries to disengage from its existing commitments.

“'The eurosceptic calculation is that British permission is necessary for closer integration- via treaty change- and that this permission can be traded for the negotiating objectives. That seems to me a dangerous gamble to make,' he will say."

There aren't many Tories who like Vince Cable and there'll be even fewer after he delivers tonight's speech in Oxfordshire. A senior Lib Dem official tells us that the the party wants "to give the Tories enough rope to hang themselves with".

Meanwhile, the Guardian reports:

"In the runup to the [Cameron] speech, a group of prominent City figures have written to the Telegraph in support of an in-out referendum, and a group of 30 pro-European Tory MPs, including Ken Clarke and Sir Malcolm Rifkind, have written a letter charging the prime minister with jeopardising Margaret Thatcher's foremost European legacy, the single market. The MPs warn: 'We fear that a renegotiation which seems to favour the UK alone would force other capitals to ask why they cannot simply dispense with those parts of the single market that don't suit them, potentially endangering Margaret Thatcher's defining European legacy.'"

2) 'THE EDGE OF THE CLIFF'

The Tories' seem pretty divided on Europe - something Ed Miliband was keen to highlight during prime minister's questions yesterday. But what's Labour's position? We may found out today when shadow foreign secretary Douglas Alexander gives his own speech on Europe (yep, everyone's at it!) in which he will say:

“The gap between the minimum the Tories will demand and the maximum our European partners can accept remains unbridgeable."

Meanwhile, his boss, the Labour leader Ed Miliband, has told the Financial Times that David Cameron was about to take Britain "to the edge of an economic cliff" with a promise of an EU referendum, which he believes will also reawaken "collective" hysteria" in the Conservative Party.

Miliband told the FT that he is "not in favour now of committing to an in-out referendum - it wouldn't be the right thing for our country. The priority for this country is to focus on our economic difficulties and getting out of those difficulties and you don't do that by putting a big 'closed for business' sign around Britain."

Cameron "should be listening to the CBI and not Nigel Farage", the Labour leader added.

Oooh...

3) COLLECTIVE (IR)RESPONSIBILITY

Europhobes in the cabinet (IDS? Owen Paterson? Chris Grayling?) will be delighted - from the Guardian:

"The prime minister has refused to confirm or deny claims that he has given cabinet colleagues freedom to campaign for Britain to exit the European Union in a future referendum."

It could be 1975 all over again...

4) 'ROM THEIR WAY'

That's the headline in the Sun this morning, which reports:

"Up to 350,000 Romanians and Bulgarians could flock to Britain when restrictions are lifted at the end of this year, a report warns today.

"The influx would equal a city the size of Leicester.

"A new analysis estimates 50,000 Romanians and Bulgarians could arrive each year — or 250,000 over the next five years. But that figure could hit 70,000 annually — or 350,000 over five years, according to..."

Hmm. According to who? Yep, you guessed it:

"...campaign group Migration Watch."

But earlier this week, the prime minister said that the detail for such calculations "wasn't there yet" and as the BBC reports:

"Sarah Mulley, of the Institute for Public Policy Research (IPPR) think tank said that although it was 'very difficult to predict migration flows with any degree of confidence in these circumstances' the estimates put forward by Migration Watch 'look high'.

"She said: 'The UK is opening access to its labour markets along with the rest of Europe and the process of opening up to Bulgaria and Romania has been a gradual one, in contrast with 2004 when the UK was the only large EU country to open its labour market and when borders and labour market access were opened at the same time.

"'So it would be very surprising if net migration from Bulgaria and Romania was on the scale predicted by Migration Watch.'"

Watch this space.

5) BARACK OBAMA VS THE NRA

Second-term Obama seems to have found his cojones - from my HuffPost colleagues in the US:

"In a bold and potentially historic attempt to stem the increase in mass gun violence, President Barack Obama unveiled on Wednesday the most sweeping effort at gun control policy reform in a generation.

"'This is our first task as a society: keeping our children safe. This is how we will be judged,' Obama said. 'We can’t put this off any longer.'

"... [T]he president recommended requiring criminal background checks for all gun sales; reinstating the assault weapons ban; restoring a 10-round limit on ammunition magazines; eliminating armor-piercing bullets; providing mental health services in schools; allocating funds to hire more police officers; and instituting a federal gun trafficking statute, among other policies. The cost of the package, senior officials estimated, would be roughly $500 million, some of which could come from already budgeted funds."

The NRA isn't happy. Prior to the president's announcement, America's largest gun lobby released a TV ad in which

"... a narrator argued that the Secret Service protection provided to Obama's two daughters, Sasha and Malia, is evidence that the president is an 'elitist hypocrite,' who wants armed guards for his own daughters, but not for other people's children. The ad was widely panned as soon as it was released, and White House spokesman Jay Carney called it 'repugnant and cowardly.'"

"Has the NRA lost it entirely?" asks Salon's Joan Walsh.

Er, yes.

BECAUSE YOU'VE READ THIS FAR...

Watch this video of two dogs Skypeing each other.

6) AFGHAN REDUX?

From the Times splash:

"British special forces were on standby last night to mount a rescue mission after al-Qaeda militants in Algeria took scores of foreign workers hostage, including up to five Britons.

"One British citizen was killed in the bloody siege at a BP gas plant in the East of the country — the worst terrorist crisis of David Cameron's premiership and one of the largest foreign kidnappings of recent times. The militants, from neighbouring Mali, claimed that they were responding to a decision by France, supported by Britain, to attack al-Qaeda Islamists in their country."

The paper adds:

"In a move that could increase tensions further, MPs approved plans yesterday to send a small number of British military personnel to help to train Mali's demoralised army as it battles to reclaim the sprawling north of the country from jihadists.

"Britain has contributed two transport aircraft to help the French mission, but was expected to send a small number of soldiers to Bamako, the Malian capital, as early as next month under proposals drawn up by the European Union."

But the Daily Mail's leader argues that "it would surely be disastrous for Britain to commit more of our overstretched men and equipment to a cause not obviously our own". It says:

"Indeed, in the rapidly escalating conflict in Mali, where France will triple its troop deployment 'within days', aren't there chilling echoes of Afghanistan? There, too - where the bloodshed continues after more than a decade - Britain took arms against a tribal enemy as a gesture of solidarity with an ally.

"In Mali, as in Afghanistan, the insurgents are proving a more formidable foe than expected, armed as they are with heavy machine guns, Kalashnikovs and rocketpropelled grenades.

"... As France calls for more international support, is it too much to hope that David Cameron will remember the British lives lost and the sobering lessons of our oh-so-recent history - and just say No?"

7) LABOUR'S IRON MAN?

The cover story of the Guardian's G2 supplement has a rather startling headline this morning: "Could Ed be Labour's Thatcher?"

Author Andy Beckett, a long-time Miliband-watcher, draws a fascinating comparison between the Labour leader and the Tories' most famous, successful and right-wing leader. He writes:

"Members of Miliband's unusually small inner circle are also open about their preoccupation with – and even sometimes admiration for – what Thatcher subsequently achieved in her 15 years as opposition leader and prime minister."

The whole thing is worth a read - and not just because Beckett plugs my biog of the Labour leader in the opening paragraph.

8) AUSTERITY WATCH, PART 129

From the Times:

"More than 100,000 disabled people will lose basic home support under government reforms of social care, leading disability groups are warning.

"Five charities including Scope, Mencap and Leonard Cheshire argue that the care system is already underfunded by at least £1.2 billion and “is on the verge of breakdown”.

"... In a report published today the charities say that 40 per cent of disabled people are already failing to get the basic care they need, such as help with washing, dressing, cooking and eating."

9) FORMER ISRAELI PM ACCUSES CURRENT ISRAELI PM

From the Daily Beast:

"Former Israeli Prime Minister Ehud Olmert says the government of Benjamin Netanyahu spent almost $3 billion in the past two years preparing for a war against Iran's nuclear program that it probably never intended to wage.

In an interview with The Daily Beast, Olmert said the sum was above and beyond the billions allocated to the defense budget and helped raise Israel’s fiscal deficit to heights it hadn’t reached in years. As a result, he said, Netanyahu would be forced to make broad spending cuts, if reelected next week..."

Now that's what I call a deficit debate...

10) 'MY MATHS ISN'T GOOD ENOUGH'

From the HuffPost UK:

"Wonga's head of regulatory and public affairs has told a committee of MPs that he could not work out the interest on a loan from his own company because 'my maths isn't good enough.'

"Henry Raine, head of regulatory and public affairs at the payday loans company, defended his business to the House of Commons Public Accounts committee, where he was grilled by chair and Labour MP Margaret Hodge on the effectiveness of consumer credit regulation."

PUBLIC OPINION WATCH

From the latest Ipsos-MORI poll:

Labour 43
Conservatives 30
Ukip 9
Lib Dems 8

That would give Labour a majority of 124.

140 CHARACTERS OR LESS

@DanHannanMEP The lobby is covering the PM's coming speech in terms of party management. They're missing the epochal significance of an In/Out referendum.

@edballsmp When David Cameron gets so desperate he has to claim Labour wants Britain to join the single currency, you know he's really losing it..

@TheOnion On Tonight's ONNCast: NRA Fights Legislation That Would Ban Gun Sales To Those Currently On Killing Sprees

900 WORDS OR MORE

James Forsyth, writing in this week's Spectator, says: "Cameron’s European moment has come – a year late."

Peter Oborne, writing in the Telegraph, says: "Tony Blair’s record in the Middle East is a sorry one – it’s time he quit."

Slavoj Zizek, writing in the Guardian, says: "The west's crisis is one of democracy as much as finance."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

Congo’s M23 Conflict: Rebellion or Resource War?

M23 rebels in DR Congo have threatened to march to the capital and depose the government. UN reports confirm that rebels receive support from key US allies in the region, and Washington’s role in the conflict has become difficult to ignore. Instability, lawlessness and violence are nothing new to those who live in the troubled eastern regions of the Democratic Republic of the Congo. An 

 Congolese have perished since 1996 in a spate of ceaseless military conflicts that have long gripped this severely-overlooked and underreported region. In late November 2012, members of the M23 rebel group invaded and took control of Goma, a strategic provincial capital in North Kivu state with a population of 1 million people, with the declared purpose of marching to the nation’s capital, Kinshasa, to depose the ruling government. M23′s president, Jean Marie Runiga, later agreed to withdraw only if the ruling President Joseph Kabila listened to the group’s grievances and adhered to their demands. Rebel leaders have threatened to abandon peace talks unless Kinshasa signs an official ceasefire, a demand the government dismissed as unnecessary.

Kinshasa called on M23 to respect previous agreements to withdraw 20km outside of Goma in a move to prevent the region falling back into war after two decades of conflict, fought largely over the DRC’s vast wealth of copper, cobalt diamonds, gold and coltan. The United Nation’s peacekeeping mission in DR Congo has come under fire for allowing M23 to take Goma without firing a single shot, despite the presence of 19,000 UN troops in the country. The UN’s Congo mission is its largest and most expensive peacekeeping operation, costing over US$1 billion a year. UN forces recently announced they would introduce the use of surveillance drones over the DRC, in addition to imposing a travel ban and asset freeze on M23 leader Jean-Marie Runiga and Lt. Col. Eric Badege. A confidential 44-page report issued by a United Nations panel accused the governments of neighboring Rwanda and Uganda of supporting M23 with weapons, ammunition and Rwandan military personnel. Despite both nations denying these accusations, the governments of the United States, Britain, Germany and the Netherlands have publicly suspended military aid and developmental assistance to Rwanda. The governments of both Rwanda and Uganda, led by President Paul Kagame and President Yoweri Museveni respectively, have long been staunch American allies and the recipients of millions in military aid.

M23 President Jean-Marie Runiga (2nd R) arrives to address the media in Bunagana in eastern Democratic Republic of Congo.(Reuters / James Akena)

M23 President Jean-Marie Runiga (2nd R) arrives to address the media in Bunagana in eastern Democratic Republic of Congo.(Reuters / James Akena)

Historical precedent

The DRC has suffered immensely during its history of foreign plunder and colonial occupation; it maintains the second-lowest GDP per capita despite possessing an estimated $24 trillion in untapped raw minerals deposits. During the Congo Wars of the 1996 to 2003, the United States provided training and arms to Rwandan and Ugandan militias who later invaded the Congo’s eastern provinces where M23 are currently active. In addition to enriching various Western multinational corporations, the regimes of Kagame in Rwanda and Museveni in Uganda both profited immensely from the plunder of Congolese conflict minerals such as cassiterite, wolframite, coltan (from which niobium and tantalum are derived) and gold; the DRC holds more than 30 per cent of the world’s diamond reserves and 80 per cent of the world’s coltan.

In 1990, civil war raged between Hutu and Tutsi ethnic groups in neighboring Rwanda; Washington sought to overthrow the 20-year reign of then-President Juvénal Habyarimana (a Hutu) by installing a Tutsi client regime. At the time, prior to the outbreak of the Rwandan civil war, the Tutsi Rwandan Patriotic Army (RPA), led by the current president, was part of Uganda’s United People’s Defense Forces (UPDF). Kagame, who received training at the US Army Command and Staff College in Leavenworth, Kansas, invaded Rwanda in 1990 from Uganda under the pretext of liberating the Tutsi population from Hutu subjugation. Kagame’s forces defeated the Hutu government in Kigali and installed himself as head of a minority Tutsi regime in Rwanda, prompting the exodus of 2 million Hutu refugees (many of whom took part in the genocide) to UN-run camps in Congo’s North and South Kivu provinces.

Following Kagame’s consolidation of power in Rwanda, a large invasion force of Rwandan Tutsis arrived in North and South Kivu in 1996 under the pretext of pursuing Hutu militant groups, such as the Democratic Forces for the Liberation of Rwanda (FDLR). Under the banner of safeguarding Rwandan national security, troops from Rwanda, Uganda and Burundi invaded Congo and ripped through Hutu refugee camps, slaughtering thousands of Rwandan and Congolese Hutu civilians, including many women and children. US Special Forces trained Rwandan and Ugandan troops at Fort Bragg in the United States and supported Congolese rebels, who brought down Congolese dictator Mobutu Sese Seko – they claimed he was giving refuge to the leaders of the genocide.

After deposing Mobutu and seizing control in Kinshasa, a new regime led by Laurent Kabila, father of the current president, was installed. Kabila was quickly regarded as an equally despotic leader, eradicating all opposition to his rule; he turned away from his Rwandan backers and called on Congolese civilians to violently purge the nation of Rwandans, prompting Rwandan forces to regroup in Goma. Laurent Kabila was assassinated in 2001 at the hands of a member of his security staff, allowing his son, Joseph, to usurp the presidency. The younger Kabila derives his legitimacy from the support of foreign heads of state and the international business community, primarily for his ability to comply with foreign plunder.

During the Congo’s general elections in November 2011, the international community and the UN remained silent regarding the mass irregularities observed by the electoral committee. The United Nations Organization Stabilization Mission in the Democratic Republic of the Congo (MONUSCO) has faced frequent allegations of corruption, prompting opposition leader Étienne Tshisikedi, who is currently under house arrest, to call for the UN mission to end its deliberate efforts to maintain the system of international plundering and to appoint someone “less corrupt and more credible” to head UN operations. MONUSCO has been plagued with frequent cases of peacekeeping troops caught smuggling minerals such as cassiterite and dealing weapons to militia groups. Kabila is seen by many to be self-serving in his weak oversight of the central government in Kinshasa. M23 rebels have demanded the liberation of all political prisoners, including opposition leader Étienne Tshisikedi, and the dissolution of the current electoral commission that was in charge 2011’s elections, widely perceived to be fraudulent.

Displaced civilians from Walikale arrive at Magunga III camp outside of the eastern Congolese city of Goma.(Reuters / Alissa Everett)

Displaced civilians from Walikale arrive at Magunga III camp outside of the eastern Congolese city of Goma.(Reuters / Alissa Everett)

Role of US in Rwanda’s M23 backing

M23, or The March 23 Movement, takes its name from peace accords held on March 23, 2009, which allowed members of the National Congress for the Defense of the People (CNDP), an earlier incarnation of today’s M23, to integrate into the Armed Forces of the Democratic Republic of the Congo (FARDC) and be recognized as an official political party. The CNDP was an entirely Rwandan creation, and was led by figures such as Bosco Ntaganda. In accordance to the deal reached in 2009, the Congolese government agreed to integrate 6,000 CNDP combatants into the FARDC, giving Ntaganda, a Rwandan Tutsi and former member of the Rwandan Patriotic Army, a senior position in the integrated force. The current M23 offensive began in April 2012, when around 300 former CNDP personnel led by Ntaganda defected from FARDC, citing poor working conditions and the government’s unwillingness to meaningfully implement the 23 March 2009 peace deal.

According to UN reports, Ntaganda controls several mining operations in the region and has derived enormous profits from mineral exploitation in eastern Congo, in addition to gaining large revenues from taxation levied by Rwandan-backed “mining police.” Bosco Ntaganda appears to be assisting Rwanda’s Tutsi government in plundering eastern Congo’s natural resources, which has gone on since Kagame came to power in 1994; M23 is basically paid for with the money from tin, tungsten and tantalum smuggled from Congolese mines. UN reports detail Rwanda’s deep involvement by even naming Rwandan personnel involved; Ntaganda takes direct military orders from Rwandan Chief of Defense Staff General Charles Kayonga, who in turn acts on instructions from Minster of Defense General James Kabarebe. Both Britain and France reportedly found the UN report to be “credible and compelling.”

Susan Rice, US Ambassador to the United Nations, finds herself mired in scandal yet again; Rice has come under fire for suppressing information on Rwanda’s role in the ongoing resource looting and rebellion in eastern Congo. Rice delayed the publication of a UN Group of Experts report detailing Rwandan and Ugandan depredations in Congo, while simultaneously subverting efforts within the State Department to rein in Kagame and Museveni. Rice, in her role as assistant secretary of state for African affairs in 1997 under the Clinton administration, tacitly approved Rwanda and Uganda’s invasion of the Democratic Republic of Congo and was quoted in the New York Times as saying, “…they [Kagame & Museveni] know how to deal with that, the only thing we have to do is look the other way.” Another article published in the New York Times by Helen Cooper detailed Rice’s business connections to the Rwandan government:

“Ms. Rice has been at the forefront of trying to shield the Rwandan government, and Mr. Kagame in particular, from international censure, even as several United Nations reports have laid the blame for the violence in Congo at Mr. Kagame’s door… Aides to Ms. Rice acknowledge that she is close to Mr. Kagame and that Mr. Kagame’s government was her client when she worked at Intellibridge, a strategic analysis firm in Washington… After delaying for weeks the publication of a United Nations report denouncing Rwanda’s support for the M23 and opposing any direct references to Rwanda in United Nations statements and resolutions on the crisis, Ms. Rice intervened to water down a Security Council resolution that strongly condemned the M23 for widespread rape, summary executions and recruitment of child soldiers. The resolution expressed ‘deep concern’ about external actors supporting the M23. But Ms. Rice prevailed in preventing the resolution from explicitly naming Rwanda when it was passed on Nov. 20.”

M23 rebel fighters walk as they withdraw near the town of Sake, some 42 km (26 miles) west of Goma.(Reuters / Goran Tomasevic)

M23 rebel fighters walk as they withdraw near the town of Sake, some 42 km (26 miles) west of Goma.(Reuters / Goran Tomasevic)

Geopolitics of plunder

It must be recognized that Kagame controls a vastly wealthy and mineral-rich area of eastern Congo – an area that has long been integrated into Rwanda’s economy – with total complicity from the United States. As Washington prepares to escalate its military presence throughout the African continent with AFRICOM, the United States Africa Command, what long-term objectives does Uncle Sam have in the Congo, considered the world’s most resource-rich nation? Washington is crusading against China’s export restrictions on minerals that are crucial components in the production of consumer electronics such as flat-screen televisions, smart phones, laptop batteries, and a host of other products. The US sees these Chinese export policies as a means of Beijing attempting to monopolize the mineral and rare earth market.

In a 2010 white paper entitled “Critical Raw Materials for the EU,” the European Commission cites the immediate need for reserve supplies of tantalum, cobalt, niobium, and tungsten among others; the US Department of Energy 2010 white paper “Critical Mineral Strategy” also acknowledged the strategic importance of these key components. In 1980, Pentagon documents acknowledged shortages of cobalt, titanium, chromium, tantalum, beryllium, and nickel. The US Congressional Budget Office’s 1982 report “Cobalt: Policy Options for a Strategic Mineral” notes that cobalt alloys are critical to the aerospace and weapons industries and that 64 per cent of the world’s cobalt reserves lay in the Katanga Copper Belt, running from southeastern Congo into northern Zambia.

Additionally, the sole piece of legislation authored by President Obama during his time as a Senator was SB 2125, the“Democratic Republic of the Congo Relief, Security, and Democracy Promotion Act of 2006”. In the legislation, Obama acknowledges Congo as a long-term interest to the United States and further alludes to the threat of Hutu militias as an apparent pretext for continued interference in the region; Section 201(6) of the bill specifically calls for the protection of natural resources in the eastern DRC. The United States does not like the fact that President Kabila in Kinshasa has become very comfortable with Beijing, and worries that Congo will drift into Chinese economic orbit. Under the current regime in Congo, Chinese commercial activities have significantly increased not only in the mining sector, but also considerably in the telecommunications field.

In 2000, the Chinese ZTE Corporation finalized a $12.6 million deal with the Congolese government to establish the first Sino-Congolese telecommunications company; furthermore, the DRC exported $1.4 billion worth of cobalt between 2007 and 2008. The majority of Congolese raw materials like cobalt, copper ore and a variety of hardwoodsare exported to China for further processing and 90 per cent of the processing plants in resource rich southeastern Katanga province are owned by Chinese nationals. In 2008, a consortium of Chinese companies were granted the rights to mining operations in Katanga in exchange for US$6 billion in infrastructure investments, including the construction of two hospitals, four universities and a hydroelectric power project. In 2009, the International Monetary Fund (IMF) demanded renegotiation of the deal, arguing that the agreement between China and the DRC violated the foreign debt relief program for so-called HIPC (Highly Indebted Poor Countries) nations. The IMF successfully blocked the deal in May 2009, calling for a more feasibility study of the DRCs mineral concessions. An article published by Shamus Cooke of Workers Action explains:

“This act instantly transformed Kabila from an unreliable friend to an enemy. The US and China have been madly scrambling for Africa’s immense wealth of raw materials, and Kabila’s new alliance with China was too much for the US to bear. Kabila further inflamed his former allies by demanding that the international corporations exploiting the Congo’s precious metals have their super-profit contracts re-negotiated, so that the country might actually receive some benefit from its riches.”

During a diplomatic tour of Africa in 2011, US Secretary of State Hilary Clinton herself has irresponsibly insinuatedChina’s guilt in perpetuating a creeping “new colonialism.” China annually invests an estimated $5.5 billion in Africa, with only 29 per cent of direct investment in the mining sector in 2009 – while more than half was directed toward domestic manufacturing, finance, and construction industries. China has further committed $10 billion in concessional loans to Africa between 2009 and 2012. As Africa’s largest trading partner, China imports 1.5 million barrels of oil from Africa per day, accounting for approximately 30 per cent of its total imports. Over the past decade, 750,000 Chinese nationals have settled in Africa; China’s deepening economic engagement in Africa and its crucial role in developing the mineral sector, telecommunications industry and much needed infrastructural projects is creating “deep nervousness” in the West, according to David Shinn, the former US ambassador to Burkina Faso and Ethiopia.

Too big to fail, or too big to succeed?

In December 2012, Dr J Peter Pham published a bizarre Op-Ed in the New York Times titled, “To Save Congo, Let It Fall Apart.” Pham is the director of the Michael S. Ansari Africa Center and is a frequent guest lecturer on the US Army War College, the Joint Special Operations University, and other US Government affiliated educational institutions; he is a Washington insider, and understanding his rationale is important, as his opinion may very well shape US policy in Congo. Pham argues that Congo is an “artificial entity” that is “too big to succeed,” and therefore, the policy direction taken by the US should be one of promoting balkanization:

“Rather than nation-building, what is needed to end Congo’s violence is the opposite: breaking up a chronically failed state into smaller organic units whose members share broad agreement or at least have common interests in personal and community security… If Congo were permitted to break up into smaller entities, the international community could devote its increasingly scarce resources to humanitarian relief and development, rather than trying, as the United Nations Security Council has pledged, to preserve the ‘sovereignty, independence, unity, and territorial integrity’ of a fictional state that is of value only to the political elites who have clawed their way to the top in order to plunder Congo’s resources and fund the patronage networks that ensure that they will remain in power.”

What Pham is suggesting is policy to bring out the collapse of the Congolese nation by creating tiny ethno-nationalist entities too small to stand up to multinational corporations. The success of M23 must surely have shaken President Kabila, whose father came to power with the backing of the Ugandan and Rwandan regimes in 1996, employing the same strategies that M23 is using today. If Kabila wants to stay in power, he needs the capability of exercising authority over the entire country. Sanctions should be imposed on top-level Rwandan and Ugandan officials and all military aid should be withheld; additionally, Rwandan strongman Paul Kagame should be investigated and removed from his position. Kambale Musavuli, of the Washington DC-based NGO, Friends of Congo, has it right when he says:

“People need to be clear who we are fighting in the Congo… We are fighting Western powers, the United States and the United Kingdom, who are arming, training and equipping the Rwandan and Ugandan militaries.”

M23 military leader General Sultani Makenga attend press conference in Bunagana in eastern Democratic Republic of Congo.(Reuters / James Akena)

M23 military leader General Sultani Makenga attend press conference in Bunagana in eastern Democratic Republic of Congo.(Reuters / James Akena)

Nile Bowie is an independent political commentator and photographer based in Kuala Lumpur, Malaysia. He can be reached at nilebowie@gmail.com 

Two 787 Fleets Grounded, As Well As Overnight Optimism

Those who went long Boeing in the last few days on hopes the "smoking battery" issue had been resolved, especially following Ray LaHood comment's he would fly the Dreamliner, which is rapidly becoming the Nightmareliner for Boeing, anytime anywhere, are about to be grounded, as is the entire 787 fleet of All Nippon Airlines and Japan Airlines following yet another incident forcing an emergency Dreamliner landing. This happened after ANA "alarms indicated smoke in the forward area of the plane, which houses batteries and other equipment, the airline said, and there was a "burning-like smell" in the cockpit and parts of the cabin. The plane landed at Takamatsu airport in western Japan, where the 129 passengers were evacuated using the plane's emergency chutes. The plane also carried eight crew members. ANA said that the exact cause was still undetermined. The event was designated as a "serious incident" by Japan's transport ministry, setting off an immediate investigation by the Japan Transport Safety Board, which dispatched a team to the scene." The result - a 4% drop in the stock so far premarket, and if any more airlines are to ground their fleet the implications for the backlog could be devastating, it will only get far worse for both the company and the Dow Jones average, of which it is part.

Elsewhere, as we already reported, Germany cut its 2013 growth outlook to 0.4%, down from 0.7% in 2012. However, while Juncker yesterday launched the first shot of verbal intervention in an attempt to keep German exports strong, today ECB's Nowotny confirmed that the confusion in Europe is as prevalent as ever, following remarks that the "panic in markets over the EUR is over, and the exchange rate is not a matter of major concern", which pushed the EURUSD higher by some 50 pips. While these remarks directly negated Juncker's, they also made sure that the export-growth driven Germany's recession is here to stay as every yard higher in the EURUSD means, several German GDP ends up several ticks lower. Pick your poison.

In other news the earnings season revs up a gear today as JPMorgan and Goldman Sachs kick off the reporting season for the US investment banks (before US market open). This should set the tone for the rest of the banking sector who report over the following few days including Bank of America and Citigroup tomorrow and Morgan Stanley on Friday. For the record, the market is expecting EPS of $1.22 and $3.66 for JPM and GS respectively. Importantly though, in recent months Q4 expectations themselves have been raised by around 7% and 18% for JPM and GS respectively, according to Bloomberg data. Indeed, expectations for the broader financial sector as a whole are high, with the financials industry sector rallying more than 13% since the lows in mid-November (vs a 8.7% gain for the broader S&P500).

Deutsche Bank's recap continues: In terms of yesterday’s US session, it was a day of two halves as a weaker-than-expected Empire Manufacturing print (-7.8 vs 0.0 expected) and another 3% drop in Apple set the scene for a weak open. From there, the S&P500 managed a 0.6% intraday rally to close with a gain of 0.11%, taking the benchmark to a new postfinancial crisis high of 1472. Driving the rally was a better than expected retail sales number (+0.5% vs +0.2% expected) which as our US economists point out, came amidst a recent spate of weaker consumer sentiment indicators including the UofMichigan (72.9 Dec vs. 82.6 Oct) and Conference board surveys (65.1 Dec vs. 73.1 Oct). Indeed retail stocks (+0.75%) outperformed on the day led by JC Penney (+3.4%), Tiffany’s (+3.3%) and Macy’s (+2.2%) – helping to offset another weak day for telecoms (-0.9%) and technology stocks (-0.6%). While on the topic of technology, Apple had its second consecutive day of +3% losses. Its stock price closed below $500/share for the first time since February 10th 2012 and is now about 31% below the all-time peak of $702 reached in mid-September 2012.

Across the Atlantic, the head of Fitch’s sovereign ratings team reiterated that another last minute US budget deal isn't consistent with a AAA rating, and the "self inflicted crisis" will put into question the predictability and reliability of US fiscal policy. The agency also said that the risks of the UK losing its AAA rating are increasing, adding that the Treasury's Autumn Statement that it would miss its 2015-16 target to start cutting the level of net debt had weakened the Treasury's "credibility".

In an interview in the FT, PM Rajoy said that his government’s reform programme will begin to bear fruit in the form of an economic recovery later this  year, and will “come through very clearly in 2014”. Rajoy also called for expansionist policies from countries that could afford it, probably referring to Germany. Mr Rajoy also insisted that Spain was right not to request aid from the ECB last year - and ruled out any such move for the time being. Mr Rajoy suggested he would only consider OMT in the event of fresh market turmoil. "The option is there, and it would be absurd to rule it out for all time," the PM said. (FT) Turning to overnight markets, most Asian markets are trading with a weaker tone paced by losses on the Hang Seng (-0.22%) and Shanghai Composite (-0.56%).

The Nikkei (-2%) is underperforming broader regional markets, despite better than expected November machine orders (+3.9%mom vs +0.3% expected), partly driven by profit taking following four straight sessions of gains. The JPY is continuing to strengthen across the board following comments on the newswires from the LDP’s Secretary General that a weaker JPY may be of concern for some industries. Staying in Japan, the Nikkei reported that the Abe government will present successors to BoJ Governor Shirakawa and his two deputies around February 15th.

In other interesting headlines, the EU’s Jean-Claude Juncker said that Euro’s recent rise against major currencies had resulted in an exchange rate that was “dangerously high”. The comment drove a late selloff in EURUSD (-0.57%) yesterday, although it remains about 1.7% higher than before the ECB’s meeting last Thursday. On the topic of central banks, Boston Fed President Rosengren said that the Fed could enlarge asset purchases if it were to become necessary. He highlighted that the Fed would want to see about a 0.5ppt drop in unemployment before it would begin to decide whether to halt purchases.

Turning to the day ahead, the German government is expected to publish its annual economic report that is reported to revise down the country’s 2013 growth estimate to 0.5% from a previous estimate of 1% (Reuters). Eurozone CPI, Italian trade data for November and a German 10yr bund auction are the other highlights of today’s European calendar. In the US, December CPI, industrial production, the Fed’s beige book and the NAHB housing market index are the main data releases. But all eyes will be on the JPM and GS results which are due at 12 noon and 12:30pm London time respectively.

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Conservative MPs Tell David Cameron To Take Powers Back From EU

Conservative backbenchers will today tell David Cameron he must claw back full British control over social and employment law from Brussels and warn the "status quo is no longer an option". The Fresh Start group, which is said to have wide support amo...

Mehdi’s Morning Memo: Fiddling The Figures

The ten things you need to know on Wednesday 16 January 2013...

1) 'FIDDLING THE FIGURES'

Coalition ministers - led by George Osborne and Iain Duncan Smith - have been keen to highlight "record high" employment figures in the UK, as well as the net creation of around half a million new jobs over the past year, but the Guardian has some rather interesting news for us this morning:

"Government claims to have created an additional 500,000 jobs in the past year have been called into question after it was revealed that one in five of the people involved are on government work schemes, including tens of thousands still claiming unemployment benefits.

".. [F]igures obtained by the Guardian from the Office for National Statistics show that just over 20% of this total (105,000) involves those on largely unpaid government back-to-work schemes, the majority of whom are still claiming jobseeker's allowance.

"They include unpaid workers doing voluntary and mandatory work experience in supermarkets and charity shops.

"Many more tens of thousands with no jobs, training or pay, who simply attend regular job hunt workshops as part of the work programme run by the Department for Work and Pensions, are also being counted as employed."

You couldn't make it up...

2) EUROPE: EVERYONE'S GOT AN OPINION

Less than 72 hours to go till the big Cameron speech on Europe in the Netherlands. Everyone - everyone - seems to want to give the PM some advice on what he should say/do. First, there's Eurosceptic Tory MPs - from the Telegraph:

"The Fresh Start group of Conservative backbenchers will throw down the gauntlet to the Prime Minister... as it sets out proposals to return responsibility for laws to Westminster and cut Britain’s bill for EU membership by billions of pounds a year."

"A copy seen by The Daily Telegraph recommends four “significant revisions” to the EU treaties:

"• The repatriation of all social and employment law, such as the Working Time Directive;
"• An opt-out from all existing policing and criminal justice measures;
"• An “emergency brake” on any new legislation that affects financial services;
"• An end to the European Parliament’s costly monthly move from Brussels to Strasbourg."

Then there's the "veteran Europhile", Ken Clarke, who issues this warning to the PM in the FT:

"Europe is not the primary interest of the British public and all kinds of things can arouse protest," Mr Clarke said in an interview with the Financial Times.

"... Mr Clarke admits that pro-Europeans have abandoned the battlefield and must regroup quickly. 'All referenda are a bit of a gamble. I don't think we can take a Yes vote for granted,' he said. 'I think one of the problems is, because so much of the media is overwhelmingly eurosceptic, no one has really campaigned very vigorously for the case for British leadership in the European Union for probably a decade or more.'"

Then there's Sir Nigel Sheinwald, the UK's former ambassador to Washington DC and Brussels, who tells the Guardian:

"I just cannot see any logical basis for thinking a move to the sidelines, or particularly a move out of Europe, would be anything other than diminishing to UK's capacity, standing, influence, ability to get things done and capacity to build coalitions internationally.

"... In any event other members of the EU would regard any really significant proposals by us to renegotiate as opportunistic, given the main areas they are going to be examining are ones they would say are necessary for the euro to survive and prosper."

Finally, there's the former (Labour) foreign secretary, David Miliband, writing in the Times: "Don’t be the PM who takes us out of Europe."

Lots to digest. Dave - over to you.

3) OUT OF CREDIT?

Perhaps, just perhaps, the PM should focus less on Europe and more on the British economy. He also might want to re-read the Conservative Party's 2010 manifesto, which promised to "safeguard Britain’s credit rating".

Because the Guardian has some bad news for Dave and for Gideon:

"Fitch, the credit ratings agency, has warned the chancellor that Britain could be stripped of its prized AAA status if he fails to boost the country's economic situation in the spring budget

"The agency said the UK remains under "significant pressure" following the autumn statement in December, when George Osborne conceded that growth would be lower over the next two years and for that reason he was likely to miss one of his two debt reduction targets."

Losing the triple-A crown at some point in 2013 could cost the chancellor, in particular, any little credibility that he might have left. He has, as the HuffPost UK documents here, staked his political and economic reputation on 'AAA'.

4) "STALINIST" NHS

The coalition's safest pair of hands, Jeremy Hunt, is back in the headlines again. From the Daily Mail:

"All medical records - including prescriptions and test results - are to be stored on computers and shared between hospitals, GPs, care homes and councils.

"Jeremy Hunt will pledge a 'paperless NHS' by 2018 to help save lives by allowing different parts of the NHS to communicate more effectively.

"... But the records 'free-for-all' raises fears that confidential information could be accessed inappropriately.

"Mr Hunt admitted the system was 'Stalinist' - in being driven from the top - but he said this was vital for patient safety."

5) OBAMA VS THE SECOND AMENDMENT

From the BBC:

"US President Barack Obama is expected on Wednesday to unveil wide-ranging measures aimed at curbing gun violence.

"The proposals could echo measures, considered the toughest in the nation, passed in New York state on Tuesday.

"Mr Obama has said he favours bans on assault weapons and high-capacity ammunition magazines, as well as broader background checks."

Good luck, Barack!

BECAUSE YOU'VE READ THIS FAR...

Watch this video of a drunk guy sing 'Bohemiam Rhapsody' - really loudly - on the New York subway.

6) BANKS WIN, WE LOSE (PART 1)

From the Telegraph:

"Taxpayers are sitting on a loss of £18 billion on government shareholdings in RBS and Lloyds Banking Group, which were acquired during the financial crisis.

"Grant Shapps, the Conservative Party chairman, compared the bank bail-out to Labour’s decision to sell the country’s gold reserves. 'Labour sold gold at a record low price and now it seems they massively overpaid for the taxpayer stakes in the banks,' he said.

"... Michael Cohrs, a member of the Bank of England’s financial policy committee, told MPs on the Treasury committee that the government had 'probably' overpaid for its stakes in the nationalised banks and that taxpayers were unlikely to enjoy the returns that had been seen in America."

Thanks, Gordon and Alistair.

7) BANKS WIN, WE LOSE (PART 2)

From the FT splash:

"In the face of withering criticism, Goldman Sachs has abandoned a plan which would have allowed bankers to benefit from a cut in the top rate of income tax by delaying UK bonus payments until after the start of the new British tax year.

"The Wall Street bank decided at a board meeting not to press ahead with the proposal after the governor of the Bank of England denounced the plan."

So, banks on the run, eh? Not quite. After all, why are banks still paying out massive bonuses to begin with, given the lack of lending and the ongoing economic stagnation? As the Telegraph reported earlier this week:

"Analysts expect the Wall Street bank to have amassed a total compensation pot, which includes bonuses and salaries, of between $13.3bn (8.2bn pounds) and $13.8bn for 2012... [t]hat is up from $12.2bn in 2011."

All in this together? I think not.

8) ROYAL 'VETO' UPDATE

The Guardian follows up on its exclusive from yesterday:

"Government ministers have exploited the royal family's secretive power to veto new laws as a way to quell politically embarrassing backbench rebellions, it was claimed on Tuesday.

"Tam Dalyell, the sponsor of a 1999 parliamentary bill that aimed to give MPs a vote on military action against Saddam Hussein, said he is 'incandescent and angry' that it was blocked by the Queen under apparent influence from Tony Blair's government. It also emerged that Harold Wilson used the Queen's power to kill off politically embarrassing bills about Zimbabwe and peerages."

9) MINISTERS VS LAWYERS

From the Times:

"The Government is facing a backlash from senior legal figures over plans to curb what ministers see as a 'growth industry' in judicial review challenges.

"Lord Woolf, the former Lord Chief Justice, and Lord Goldsmith, the former Attorney-General, warned that the Government should proceed with “caution” with any changes that could be seen as restricting the right to hold politicians to account.

"... The number of judicial review cases jumped from 160 in 1974 to more than 11,000 in 2011, costing the taxpayer millions in legal fees. But in 2011 only one in six applications was granted and even fewer were successful when they went ahead."

10) THE RETURN OF GORDO

Our ex-premier returned to the Commons yesterday to participate in a debate and give a speech - it's worth reading Ann Treneman's sketch in the Times:

"For the first time in 14 months, Gordo was in the Chamber.

"Dozens of MPs came to watch, peering at him as he appeared, at 6.44pm, at the tail end of a debate on Scotland. His fellow Scots stared at him as if they hardly recognised him. Alistair Darling, his Chancellor, moved as far away as possible. A small doughnut of hardcore Gordo fans formed around him."

"Almost Never Spotted was there for the adjournment debate on why the Government should save the Remploy factory in Fife. It started at 7pm.

"... When the lesser mortals stopped speaking, Gordo arose, his voice booming, his stomach protruding to the extent that his shirt-button deserves to be mentioned in despatches. He had known the factory for 30 years and he had a plan to save it. This involved the Government relaxing its financial restrictions. Gordon Brown asking for money!

"... When it was over, the Almost Never Spotted left, his shirt button relieved to have survived. When, I wondered, would we see him again?"

A very good question.

PUBLIC OPINION WATCH

From the latest Sun/YouGov poll:

Labour 44
Conservatives 32
Lib Dems 10
Ukip 9

That would give Labour a majority of 120.

140 CHARACTERS OR LESS

‏@David_Cameron Delighted that principle of wearing religious symbols at work has been upheld – ppl shouldn't suffer discrimination due to religious beliefs

‏@BenPBradshaw Bad ministers blame the #civilservice & if No 10 find out what's happening from the media it's because they don't have a grip @BBCr4today

@ShippersUnbound As we hang earnestly on the wisdom of Sir Nigel Sheinwald remember it was he who thought Barak Obama had no chance of getting elected

900 WORDS OR MORE

Mary Riddell, writing in the Telegraph, says: "Ed Miliband needs bolder answers over the European Union and immigration."

Simon Jenkins, writing in the Guardian, says: "Europe: no more talk of in-or-out. Let's think opt-outs."

Daniel Finkelstein, writing in the Times, says: "Public servants have private interests, just like the rest of us. They’ll only change if we make it worth their while."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

The GOP’s Boldest Election-Rigging Move Yet

Ballots are run though counting machines at a polling station in Janesville, Wis., on Election Day, Nov. 6, 2012. (Photo: Narayan Mahon / The New York Times)Ballots are run though counting machines at a polling station in Janesville, Wis., on Election Day, Nov. 6, 2012. (Photo: Narayan Mahon / The New York Times)Boris Bazhanov was Joseph Stalin’s personal secretary from 1923 to 1928, and later served as secretary of the Soviet Political Bureau. In his memoirs published in 1980, he recounts something Stalin told him about voting.

I consider it completely unimportant who in the party will vote, or how,” Stalin said. “But what is extremely important is this – who will count the votes, and how.” Despite never having to worry about surviving popular elections, or really being a fan of democracy, Stalin knew the trick to subverting a democracy wasn’t in getting your people to vote, but instead was in making sure their votes were counted in a way that made sure your side won.

You can get 100% of the population voting, but if you can selectively decide which votes to count and which to throw out, you’ll win every time.  As playwright Tom Stoppard quips in his play, Jumpers, “It’s not the voting that’s democracy; it’s the counting.”  

Now it appears the Republican Party has picked up on this, and is preparing for its boldest maneuver yet to ensure Democrats never again win the White House, by changing the way presidential Electoral Votes are counted.

The plan works like this: Instead of giving all of a state’s Electoral College votes to the popular vote winner of that state, Republicans want Electoral College votes in a small number of states to be doled out based on who won each Congressional district, plus two votes going to the popular vote winner. 

Of course, those Congressional districts in several traditionally blue states like Pennsylvania, Wisconsin, Ohio, and Michigan were drawn by newly-elected Republicans state legislatures after the 2010 census. And they were drawn in a way that already gives Republicans an advantage by carving up Democratic strongholds and creating “safe” Republican seats. That’s how Republicans kept control of the House of Representatives in 2012, despite House Democrats winning  a million and a half more votes nationwide than House Republicans.

For example, last November President Obama won the popular vote in Wisconsin and thus received all of Wisconsin’s 10 Electoral College votes. But under this new Republican plan, he would have only received one Electoral College vote for each Congressional district that he won. Since he only won three newly-gerrymandered districts, he would have only gotten three votes, plus two more votes for winning the popular vote. Mitt Romney, who won five gerrymandered districts, would have received five votes. So, under this scenario, despite winning the popular vote in Wisconsin by a 7-point landslide last November, President Obama would have walked away from the Badger State with an equal number of Electoral College votes as Mitt Romney – five each.

Now you can see why Republicans like this idea!

With this simple tweak in how Electoral College votes are counted, the big win for the President in Wisconsin turns into a tie. In fact, had all the battleground states adopted this new vote counting scheme, Mitt Romney would be our President today, despite losing the popular, majority vote in every single battleground state: Ohio, Wisconsin, Florida, Virginia, Pennsylvania, Michigan, and so on.

The way Congressional districts in several blue states are drawn today means it would be virtually impossible for a Democrat to win the White House should all of these states adopt this new method of counting Electoral College votes – at least until 2020, when the next census comes due and Congressional districts are redrawn.

Again, as Stalin said, it’s not about who votes, it’s about how the votes are counted.

Now, as you might imagine, an idea like this is explosive. It would hand the White House over to Republican one-party rule. And any political party that truly believes in a democracy that reflects the will of the people would never embrace an election-rigging scheme like this.      

But Republicans have no shame.

This exact idea was first proposed in 2011 by Pennsylvania’s Republican Governor Tom Corbett. Again, that’s a Governor proposing it and not some local crackpot party official. Luckily, Corbett abandoned it before the election, or else Mitt Romney would have won the state’s majority share of Electoral College votes despite losing the popular vote statewide.

But, after seeing how bad they got shellacked in November, more and more prominent Republicans are voicing their support for this idea. The idea has been revived in Pennsylvania. Also, Wisconsin’s Governor Scott Walker said he supports it, and his colleague, Republican Assembly Speaker Robin Vos is promising to introduce legislation to make it happen. Ohio’s Republican Secretary of State, Jon Husted, wants to do it, too. And so, too, do Republican state lawmakers in Michigan.

But most shocking of all, the latest endorser of this election-rigging scheme is none other than the top Republican Party official himself, RNC Chair Reince Preibus. In an interview with the Milwaukee Journal-Sentinel, Priebus said, “I think it’s something that a lot of states that have been consistently blue that are fully controlled red out to be looking at.” 

What all this adds up to is this: Republicans are really going to try to do this. Over the next few years, they really are going to try to rig the next election.

After all, what other choice do they have?

They could ditch trickle-down economics, which the American middle class now knows is nothing more than a scam that makes the rich richer while making the poor poorer. But since that would mean casting aside what George W. Bush referred to as his “base” – the billionaire class – we know that won’t happen.

Republicans could just accept the issue of women’s’ choice as settled and stop trying to limit women’s access to contraceptives or talking about “legitimate” rape. But that might cause the religious zealots on the Right who are preparing for the rapture to stop donating, and even leave the Republican Party. So, that won’t happen.

They could adopt a more compassionate approach to minorities in hopes of adapting to America’s changing demographics. Or they could just ditch their war on the New Deal and accept that the majority of Americans like social insurance programs like Medicare and Social Security. But we know that won’t happen, either – there’s too much money there that their bankster buddies on Wall Street want to get their hands on.

The truth of the matter is, Republicans simply aren’t willing to say “no” to the billionaires, and evolve from their prehistoric and unelectable current form into a political party that can actually build majority coalitions once again.

So, the only option left for a party that can’t win elections is to rig elections.

Consider this a warning. We thought we’d seen the worse.  But Voter Suppression ID laws, cuts to early voting, long lines in heavily Democratic precincts, and new hurdles to voter registration are nothing compared to this latest vote-rigging scheme.

While most of us are focused on “fiscal cliffs” and budget battles in Washington, DC, the real fight for the future of our democracy is, right now, happening in State legislatures in Wisconsin, Ohio, and Michigan.

To badly paraphrase Paul Revere: Awaken the citizenry and spread the word!

$1 Trillion++ Global Warfare: For Whom the War Bill Tolls

The $1 trillion-plus Iraq and Afghanistan wars were the first US wars since the American Revolution to have been fought without a general tax increase to cover them.

Goldman Backtracks After King Broadside

Goldman Sachs has decided not to hold back investment bankers' bonuses until the new financial year to benefit from the cut in the top rate of income tax from 50p to 45p, which comes into effect on April 6.

The development emerged just hours after Bank of England Governor Sir Mervyn King delivered a broadside at anyone planning to defer their bonus in this way, which he said would be "depressing" and "lacking in care and attention" to the rest of society.

He warned banks that they risk losing public goodwill if they defer payments to exploit the cut in the top rate, announced by Chancellor George Osborne in last year's Budget.

Over the past few days, it became known that Goldman Sachs was considering holding back bonuses until after April 6, a move which could potentially cost the Treasury millions of pounds.

The company, which publishes its full-year results tomorrow and is expected to inform staff of 2012 bonus levels shortly afterwards, has declined to comment publicly on the issue.

But, according to people familiar with the process, the bank's compensation committee decided at a meeting today not to go ahead with the deferral.

Earlier, the King slammed bosses at Goldman Sachs for considering delaying bonus payments so its millionaire bankers can pay less tax.

Goldman was one of a number of City institutions contemplating deferring bonuses until after April 6th when the top rate of income tax drops from 50p to 45p.

Mervyn King said he found the proposed tactic "depressing" given the country's current economic situation.

goldman sachs tax

In 2011 Goldman Sachs paid out nearly £8billion in bonuses

He said: "I find it a bit depressing that people who earn so much find it would be even more exciting to adjust their payouts to benefit from the tax rate, knowing that this must have an impact of the rest of society.

"I think it would be a rather clumsy and lacking in care and attention to how other people might react. And in the long run, financial institutions do depend on goodwill from society."

Such a move could cost the Treasury of millions of pounds.

King said that it would not be "unlawful" for banks to defer bonus payments in this way.

The chairman of the Commons Public Accounts Committee, Margaret Hodge, also condemned the reported move by Goldman Sachs.

"What we are seeing now is the immoral situation whereby people who earn a lot of money just believe it's cool not to pay tax," she told The Times.

"It fails to understand the importance of everyone contributing to the common good and Goldman Sachs just don't get it. They feel no responsibility for paying their fair share of tax."

His sentiments echoed those made in Westminster on Monday as Labour increased pressure on Chancellor George Osborne to prevent the "opportunistic money grab".

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chris leslie tax

Chris Leslie accused the government of being "out of touch"

Chris Leslie, shadow Treasury minister, said: "It cannot be right that this out-of-touch government is making millions of working people and pensioners on modest incomes pay more while giving millionaires and bankers a huge tax cut.

'Banks need to think carefully about their own reputations if they seek to avoid tax in this way, but the ultimate responsibility lies with David Cameron and George Osborne."

Congo’s M23 conflict: Rebellion or resource war? (Op-Ed)

M23 rebels in DR Congo have threatened to march to the capital and depose the government. UN reports confirm that rebels receive support from key US allies in the region, and Washington's role in the conflict has become difficult to ignore.

Instability, lawlessness and violence are nothing new to those who live in the troubled eastern regions of the Democratic Republic of the Congo. An estimated 6.9 million Congolese have perished since 1996 in a spate of ceaseless military conflicts that have long gripped this severely-overlooked and underreported region. In late November 2012, members of the M23 rebel group invaded and took control of Goma, a strategic provincial capital in North Kivu state with a population of 1 million people, with the declared purpose of marching to the nation’s capital, Kinshasa, to depose the ruling government.

M23's president, Jean Marie Runiga, later agreed to withdraw only if the ruling President Joseph Kabila listened to the group's grievances and adhered to their demands. Rebel leaders have threatened to abandon peace talks unless Kinshasa signs an official ceasefire, a demand the government dismissed as unnecessary.

Kinshasa called on M23 to respect previous agreements to withdraw 20km outside of Goma in a move to prevent the region falling back into war after two decades of conflict, fought largely over the DRC’s vast wealth of copper, cobalt diamonds, gold and coltan.

The United Nation’s peacekeeping mission in DR Congo has come under fire for allowing M23 to take Goma without firing a single shot, despite the presence of 19,000 UN troops in the country. The UN’s Congo mission is its largest and most expensive peacekeeping operation, costing over US$1 billion a year. UN forces recently announced they would introduce the use of surveillance drones over the DRC, in addition to imposing a travel ban and asset freeze on M23 leader Jean-Marie Runiga and Lt. Col. Eric Badege.

A confidential 44-page report issued by a United Nations panel accused the governments of neighboring Rwanda and Uganda of supporting M23 with weapons, ammunition and Rwandan military personnel. Despite both nations denying these accusations, the governments of the United States, Britain, Germany and the Netherlands have publicly suspended military aid and developmental assistance to Rwanda. The governments of both Rwanda and Uganda, led by President Paul Kagame and President Yoweri Museveni respectively, have long been staunch American allies and the recipients of millions in military aid.

M23 President Jean-Marie Runiga (2nd R) arrives to address the media in Bunagana in eastern Democratic Republic of Congo.(Reuters / James Akena)
M23 President Jean-Marie Runiga (2nd R) arrives to address the media in Bunagana in eastern Democratic Republic of Congo.(Reuters / James Akena)

Historical precedent

 The DRC has suffered immensely during its history of foreign plunder and colonial occupation; it maintains the second-lowest GDP per capita despite possessingan estimated $24 trillion in untapped raw minerals deposits.

During the Congo Wars of the 1996 to 2003, the United States provided training and arms to Rwandan and Ugandan militias who later invaded the Congo’s eastern provinces where M23 are currently active. In addition to enriching various Western multinational corporations, the regimes of Kagame in Rwanda and Museveni in Uganda both profited immensely from the plunder of Congolese conflict minerals such as cassiterite, wolframite, coltan (from which niobium and tantalum are derived) and gold; the DRC holds more than 30 per cent of the world's diamond reserves and 80 per cent of the world's coltan.

In 1990, civil war raged between Hutu and Tutsi ethnic groups in neighboring Rwanda; Washington sought to overthrow the 20-year reign of then-President Juvénal Habyarimana (a Hutu) by installing a Tutsi client regime. At the time, prior to the outbreak of the Rwandan civil war, the Tutsi Rwandan Patriotic Army (RPA), led by the current president, was part of Uganda’s United People's Defense Forces (UPDF).

Kagame, who received training at the US Army Command and Staff College in Leavenworth, Kansas, invaded Rwanda in 1990 from Uganda under the pretext of liberating the Tutsi population from Hutu subjugation. Kagame’s forces defeated the Hutu government in Kigali and installed himself as head of a minority Tutsi regime in Rwanda, prompting the exodus of 2 million Hutu refugees (many of whom took part in the genocide) to UN-run camps in Congo’s North and South Kivu provinces.

Following Kagame’s consolidation of power in Rwanda, a large invasion force of Rwandan Tutsis arrived in North and South Kivu in 1996 under the pretext of pursuing Hutu militant groups, such as the Democratic Forces for the Liberation of Rwanda (FDLR). Under the banner of safeguarding Rwandan national security, troops from Rwanda, Uganda and Burundi invaded Congo and ripped through Hutu refugee camps, slaughtering thousands of Rwandan and Congolese Hutu civilians, including many women and children.

US Special Forces trained Rwandan and Ugandan troops at Fort Bragg in the United States and supported Congolese rebels, who brought down Congolese dictator Mobutu Sese Seko – they claimed he was giving refuge to the leaders of the genocide.

After deposing Mobutu and seizing control in Kinshasa, a new regime led by Laurent Kabila, father of the current president, was installed. Kabila was quickly regarded as an equally despotic leader, eradicating all opposition to his rule; he turned away from his Rwandan backers and called on Congolese civilians to violently purge the nation of Rwandans, prompting Rwandan forces to regroup in Goma.

Laurent Kabila was assassinated in 2001 at the hands of a member of his security staff, allowing his son, Joseph, to usurp the presidency. The younger Kabila derives his legitimacy from the support of foreign heads of state and the international business community, primarily for his ability to comply with foreign plunder.

During the Congo’s general elections in November 2011, the international community and the UN remained silent regarding the mass irregularities observed by the electoral committee. The United Nations Organization Stabilization Mission in the Democratic Republic of the Congo (MONUSCO) has faced frequent allegations of corruption, prompting opposition leader Étienne Tshisikedi, who is currently under house arrest, to call for the UN mission to end its deliberate efforts to maintain the system of international plundering and to appoint someone “less corrupt and more credible” to head UN operations.

MONUSCO has been plagued with frequent cases of peacekeeping troops caught smuggling minerals such as cassiterite and dealing weapons to militia groups. Kabila is seen by many to be self-serving in his weak oversight of the central government in Kinshasa. M23 rebels have demanded the liberation of all political prisoners, including opposition leader Étienne Tshisikedi, and the dissolution of the current electoral commission that was in charge 2011’s elections, widely perceived to be fraudulent.

Displaced civilians from Walikale arrive at Magunga III camp outside of the eastern Congolese city of Goma.(Reuters / Alissa Everett)
Displaced civilians from Walikale arrive at Magunga III camp outside of the eastern Congolese city of Goma.(Reuters / Alissa Everett)

Role of US in Rwanda’s M23 backing

M23, or The March 23 Movement, takes its name from peace accords held on March 23, 2009, which allowed members of the National Congress for the Defense of the People (CNDP), an earlier incarnation of today’s M23, to integrate into the Armed Forces of the Democratic Republic of the Congo (FARDC) and be recognized as an official political party.

The CNDP was an entirely Rwandan creation, and was led by figures such as Bosco Ntaganda. In accordance to the deal reached in 2009, the Congolese government agreed to integrate 6,000 CNDP combatants into the FARDC, giving Ntaganda, a Rwandan Tutsi and former member of the Rwandan Patriotic Army, a senior position in the integrated force.

The current M23 offensive began in April 2012, when around 300 former CNDP personnel led by Ntaganda defected from FARDC, citing poor working conditions and the government's unwillingness to meaningfully implement the 23 March 2009 peace deal.

According to UN reports, Ntaganda controls several mining operations in the region and has derived enormous profits from mineral exploitation in eastern Congo, in addition to gaining large revenues from taxation levied by Rwandan-backed “mining police.” Bosco Ntaganda appears to be assisting Rwanda’s Tutsi government in plundering eastern Congo’s natural resources, which has gone on since Kagame came to power in 1994; M23 is basically paid for with the money from tin, tungsten and tantalum smuggled from Congolese mines.

UN reports detail Rwanda's deep involvement by even naming Rwandan personnel involved; Ntaganda takes direct military orders from Rwandan Chief of Defense Staff General Charles Kayonga, who in turn acts on instructions from Minster of Defense General James Kabarebe. Both Britain and France reportedly found the UN report to be "credible and compelling."

Susan Rice, US Ambassador to the United Nations, finds herself mired in scandal yet again; Rice has come under fire for suppressing information on Rwanda’s role in the ongoing resource looting and rebellion in eastern Congo. Rice delayed the publication of a UN Group of Experts report detailing Rwandan and Ugandan depredations in Congo, while simultaneously subverting efforts within the State Department to rein in Kagame and Museveni.

Rice, in her role as assistant secretary of state for African affairs in 1997 under the Clinton administration, tacitly approved Rwanda and Uganda’s invasion of the Democratic Republic of Congo and was quoted in the New York Times as saying, “…they [Kagame & Museveni] know how to deal with that, the only thing we have to do is look the other way.”

Another article published in the New York Times by Helen Cooper detailed Rice’s business connections to the Rwandan government:

“Ms. Rice has been at the forefront of trying to shield the Rwandan government, and Mr. Kagame in particular, from international censure, even as several United Nations reports have laid the blame for the violence in Congo at Mr. Kagame’s door… Aides to Ms. Rice acknowledge that she is close to Mr. Kagame and that Mr. Kagame’s government was her client when she worked at Intellibridge, a strategic analysis firm in Washington… After delaying for weeks the publication of a United Nations report denouncing Rwanda’s support for the M23 and opposing any direct references to Rwanda in United Nations statements and resolutions on the crisis, Ms. Rice intervened to water down a Security Council resolution that strongly condemned the M23 for widespread rape, summary executions and recruitment of child soldiers. The resolution expressed ‘deep concern’ about external actors supporting the M23. But Ms. Rice prevailed in preventing the resolution from explicitly naming Rwanda when it was passed on Nov. 20.”

M23 rebel fighters walk as they withdraw near the town of Sake, some 42 km (26 miles) west of Goma.(Reuters / Goran Tomasevic)
M23 rebel fighters walk as they withdraw near the town of Sake, some 42 km (26 miles) west of Goma.(Reuters / Goran Tomasevic)

Geopolitics of plunder

It must be recognized that Kagame controls a vastly wealthy and mineral-rich area of eastern Congo – an area that has long been integrated into Rwanda’s economy – with total complicity from the United States.

As Washington prepares to escalate its military presence throughout the African continent with AFRICOM, the United States Africa Command, what long-term objectives does Uncle Sam have in the Congo, considered the world’s most resource-rich nation?

Washington is crusading against China's export restrictions on minerals that are crucial components in the production of consumer electronics such as flat-screen televisions, smart phones, laptop batteries, and a host of other products. The US sees these Chinese export policies as a means of Beijing attempting to monopolize the mineral and rare earth market.

In a 2010 white paper entitled Critical Raw Materials for the EU,” the European Commission cites the immediate need for reserve supplies of tantalum, cobalt, niobium, and tungsten among others; the US Department of Energy 2010 white paper Critical Mineral Strategy also acknowledged the strategic importance of these key components.

In 1980, Pentagon documents acknowledged shortages of cobalt, titanium, chromium, tantalum, beryllium, and nickel. The US Congressional Budget Office’s 1982 report Cobalt: Policy Options for a Strategic Mineral notes that cobalt alloys are critical to the aerospace and weapons industries and that 64 per cent of the world’s cobalt reserves lay in the Katanga Copper Belt, running from southeastern Congo into northern Zambia.

Additionally, the sole piece of legislation authored by President Obama during his time as a Senator was SB 2125, the Democratic Republic of the Congo Relief, Security, and Democracy Promotion Act of 2006. In the legislation, Obama acknowledges Congo as a long-term interest to the United States and further alludes to the threat of Hutu militias as an apparent pretext for continued interference in the region; Section 201(6) of the bill specifically calls for the protection of natural resources in the eastern DRC.

The United States does not like the fact that President Kabila in Kinshasa has become very comfortable with Beijing, and worries that Congo will drift into Chinese economic orbit. Under the current regime in Congo, Chinese commercial activities have significantly increased not only in the mining sector, but also considerably in the telecommunications field.

In 2000, the Chinese ZTE Corporation finalized a $12.6 million deal with the Congolese government to establish the first Sino-Congolese telecommunications company; furthermore, the DRC exported $1.4 billion worth of cobalt between 2007 and 2008. The majority of Congolese raw materials like cobalt, copper ore and a variety of hardwoods are exported to China for further processing and 90 per cent of the processing plants in resource rich southeastern Katanga province are owned by Chinese nationals.

In 2008, a consortium of Chinese companies were granted the rights to mining operations in Katanga in exchange for US$6 billion in infrastructure investments, including the construction of two hospitals, four universities and a hydroelectric power project.

In 2009, the International Monetary Fund (IMF) demanded renegotiation of the deal, arguing that the agreement between China and the DRC violated the foreign debt relief program for so-called HIPC (Highly Indebted Poor Countries) nations.

The IMF successfully blocked the deal in May 2009, calling for a more feasibility study of the DRCs mineral concessions. An article published by Shamus Cooke of Workers Action explains:

“This act instantly transformed Kabila from an unreliable friend to an enemy. The US and China have been madly scrambling for Africa’s immense wealth of raw materials, and Kabila’s new alliance with China was too much for the US to bear. Kabila further inflamed his former allies by demanding that the international corporations exploiting the Congo’s precious metals have their super-profit contracts re-negotiated, so that the country might actually receive some benefit from its riches.”

During a diplomatic tour of Africa in 2011, US Secretary of State Hilary Clinton herself has irresponsibly insinuated China’s guilt in perpetuating a creeping “new colonialism.” China annually invests an estimated $5.5 billion in Africa, with only 29 per cent of direct investment in the mining sector in 2009 – while more than half was directed toward domestic manufacturing, finance, and construction industries. China has further committed $10 billion in concessional loans to Africa between 2009 and 2012.

As Africa’s largest trading partner, China imports 1.5 million barrels of oil from Africa per day, accounting for approximately 30 per cent of its total imports. Over the past decade, 750,000 Chinese nationals have settled in Africa; China’s deepening economic engagement in Africa and its crucial role in developing the mineral sector, telecommunications industry and much needed infrastructural projects iscreating "deep nervousness" in the West, according to David Shinn, the former US ambassador to Burkina Faso and Ethiopia.

Too big to fail, or too big to succeed?

In December 2012, Dr J Peter Pham published a bizarre Op-Ed in the New York Times titled, To Save Congo, Let It Fall Apart.” Pham is the director of the Michael S. Ansari Africa Center and is a frequent guest lecturer on the US Army War College, the Joint Special Operations University, and other US Government affiliated educational institutions; he is a Washington insider, and understanding his rationale is important, as his opinion may very well shape US policy in Congo. Pham argues that Congo is an “artificial entity” that is “too big to succeed,” and therefore, the policy direction taken by the US should be one of promoting balkanization:

“Rather than nation-building, what is needed to end Congo’s violence is the opposite: breaking up a chronically failed state into smaller organic units whose members share broad agreement or at least have common interests in personal and community security… If Congo were permitted to break up into smaller entities, the international community could devote its increasingly scarce resources to humanitarian relief and development, rather than trying, as the United Nations Security Council has pledged, to preserve the ‘sovereignty, independence, unity, and territorial integrity’ of a fictional state that is of value only to the political elites who have clawed their way to the top in order to plunder Congo’s resources and fund the patronage networks that ensure that they will remain in power.”

What Pham is suggesting is policy to bring out the collapse of the Congolese nation by creating tiny ethno-nationalist entities too small to stand up to multinational corporations. The success of M23 must surely have shaken President Kabila, whose father came to power with the backing of the Ugandan and Rwandan regimes in 1996, employing the same strategies that M23 is using today.

If Kabila wants to stay in power, he needs the capability of exercising authority over the entire country. Sanctions should be imposed on top-level Rwandan and Ugandan officials and all military aid should be withheld; additionally, Rwandan strongman Paul Kagame should be investigated and removed from his position. Kambale Musavuli, of the Washington DC-based NGO, Friends of Congo, has it right when he says:

“People need to be clear who we are fighting in the Congo… We are fighting Western powers, the United States and the United Kingdom, who are arming, training and equipping the Rwandan and Ugandan militaries.”

M23 military leader General Sultani Makenga attend press conference in Bunagana in eastern Democratic Republic of Congo.(Reuters / James Akena)
M23 military leader General Sultani Makenga attend press conference in Bunagana in eastern Democratic Republic of Congo.(Reuters / James Akena)

­Nile Bowie for RT

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.

Dangerous Crossroads: Japan to Seek NATO Support Against China

By Liu Sha

Japanese Prime Minister Shinzo Abe will write a letter to the North Atlantic Treaty Organization (NATO) to call for closer ties in the face of China’s rising maritime power.

The letter will say that China’s frequent patrols in the disputed Diaoyu Islands and increasing maritime power has intensified the security situation in East Asia, Japanese newspaper Yomiuri Shimbun reported on Sunday.

In the letter, Abe will also mention that Japan is ready to take a more active role in maintaining stability and prosperity in East Asia, NHK reported.

According to the report, Katsuyuki Kawai, chairman of the Lower House Foreign Affairs Committee of Japan, will arrive at Brussels next Wednesday and bring Abe’s personal letter to NATO Secretary General Anders Fogh Rasmussen.

This letter, viewed as another move by Japan to enhance its military capability, comes after the nation increased its defense budget for the first time in 11 years last Sunday against the background of the Diaoyu Islands disputes.

Japan Self-Defense Forces also conducted a 2,000-man island-retaking drill on Sunday, China Central Television reported.

Liu Jiangyong, deputy director and professor of the Institute of International Studies at Tsinghua University, said that Japan would not succeed in uniting NATO.

“NATO’s main task was to maintain the peace and protect human rights in Europe and many member countries of NATO are facing economic problems, which they hope to fix with the help of China,” Liu told the Global Times.

Liu said Abe was repeating failed moves, referring to the fact that Abe was the first Japanese head to visit NATO headquarters in 2007 but no military ties resulted, as he wished.

Although the two sides shared security threats such as the North Korean nuclear and missile programs, most NATO members do not have a conflict of interest with China in terms of sea territory, Liu said.

In the letter that will be sent to NATO, Abe will also note that North Korea’s behavior led to the tense security environment in East Asia, NHK reported.

Abe’s first overseas trip after re-taking the position of prime minister was to South East Asian countries in January after his visit to the US was delayed due to US President Barack Obama’s tight schedule, Reuters reported.

However, most Southeast countries would not take a side and risk conflict with China, Liu said, adding Japan is on the way to being isolated from other countries.

Lü Chao, a researcher with the Liaoning Academy of Social Sciences, told the Global Times that despite Japan’s efforts to fix the relationship with South Korea, Seoul’s release of attempted Yasukuni arsonist Liu Qiang, a Chinese national, showed common ground with China.

Abe gave a speech on Friday, accusing China of deliberately targeting Japanese companies during protests against Japan as part of a strategy of confrontation over the territorial dispute.

Agencies contributed to this story

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Protestors and Former Detainees Mark Guantanamo Anniversary in London

Context: As yet there are no context links for this item.

Transcript

Hassan Ghani

Another year, and another sombre vigil outside the US embassy in London. A somewhat eclectic gathering in near freezing temperatures ensured that 11 years of Guantanamo did not go unmarked.Aisha Maniar, London Guantanamo Campaign“It’s down to the public now. President Obama broke his promise four years ago to close Guantanamo Bay. The argument with so-called terrorists, is that terrorists act outside of the law; but what we actually see is governments acting like mafia, like terrorists themselves, and they too are acting outside the known confines of the law. There’s no exceptions for the use of torture, there’s no reason for arbritrary detention – if people have committed crimes then try them, in a normal court of law. Try them and then lock them up. Don’t lock them up and then hold them for eleven years and say ‘oh these people are bad because we say so’.”Alice, Student Activist“It’s just unintelligible that it would still be open. And especially the inhumane treatment to people that have been proven innocent.”Hassan GhaniOf the nearly 800 men and children held in Guantanamo over the years, today 166 still remain. More than half of them have also cleared for release, some many years ago. But despite having come out clean after years of detention without trial, interrogations, and torture - or what the US department of defence called ‘enhanced interrogation techniques’, they remain trapped in this legal blackhole.Staff at ‘Reprieve’, the legal action charity, have been working on some of the cases.Hilary Stauffer, Deputy Director of Reprieve“The US Congress in 2010 passed a law called the National Defence Authorisation Act – that is the defence bill for the year, that’s just the spending bill that manages the budget for the army. But they also tacked on a provision in there that had a lot to do with Guantanamo.It said that no US funds could be used to transfer detainees. It said that detainees could never be transferred or resettled in the United States, even the ones that are completely innocent. And it said that if they were going to be released, the Secretary of Defence, the Secretary of State, and the Director of National Intelligence all had to agree. And that the country he went to had to certify that he would never commit an act of terrorism again, certify that he would never pose a threat to the United States ever again, and had to certify that they would watch him in perpetuity. And it’s very difficult to meet those, no one’s been released since the NDAA came into effect, except through political deals behind the scenes.”Hassan GhaniAmong those cleared for release several years ago is the last remaining British resident in Guantanamo, Shaker Aamer. His family have been campaigning on his behalf. But, for the moment, there doesn’t seem to be any light at the end of the tunnel.Hilary Stauffer, Deputy Director of Reprieve“In many cases these men don’t want to go back to where they are from. Shaker is a British resident, he’s married to a British citizen, has children who are British citizens, but he’s originally from Saudi Arabia. If he went back to Saudi Arabia he’d probably be very very mistreated or tortured, because that happens in a lot of places, these guys go back to countries that are less democratic than others, and it’s guilt by suspicion. So they don’t want to go back to their country of origin, they want to be resettled to a third country. But in many cases these countries say ‘if the US wont take them, why should we?’”Hassan GhaniFor those who’ve survived rendition, torture and detention without trial, and have begun rebuilding their lives, the mental scars are enduring. And the anniversary brings with it a reminder of those left behind.Bisher al-Rawi, Guantanamo Detainee 2002-2007“We write them letters, we keep in touch with their families, we try to send them news. And although it’s extremely important to work, it’s extremely painful. Every day is a reminder. I look in the faces of my children and I think of the brothers who have left their children behind, the brothers who have not had families – people who got married and never had kids.”Hassan GhaniOmar Deghayez was held in Guantanamo for five years. At one point he was beaten so badly, that he lost the use of one of his eyes.Omar Deghayes, Guantanamo Detainee 2002-2007“They were holding my head back and holding me down, and then he pushed his fingers into my eyes. I didn’t understand what he was doing so I had my eyes clearly open, until I felt the pain of his fingers coming wholly inside the eyes, and he was pushing harder. So I closed my eyes but it was too late when his fingers were already inside. And the officer kept saying to him ‘more more’, and the guard was screaming, because he was I think frightened himself, saying ‘I am I am’.I think they wanted to make an example of us, we were in a ‘Oscar’ block where they thought we were rebellious, because they did that to me and then they went to the next cell and the next cell, and they did it to all of them. It was one night they did that. Several people lost their eyes.The mistreatment in Guantanamo will last with you, I think, forever. It’s a grave wound, probably it will stay in the heart, in the psyche, of the person.”Hassan GhaniLike other former detainees, he too feels a sense of guilt at being free when others remain inside.Omar Deghayes, Guantanamo Detainee 2002-2007“There are still people who were with us, comrades, people who are inmates, friends of ours, people who we lived with and we promised that when we go out.. they had expectations that we would be able to speak about them – especially us in the United Kingdom, because many who are released to Saudi Arabia, Yemen and others are gagged, imprisoned, sometimes silenced by force.When they heard the announcement in Guantanamo that I was going to be released, people were celebrating as if they were going to be released. Because they know my background, I’m a lawyer, a human rights lawyer, and on top of that I speak English, on top of that I’m in the UK.”Hassan GhaniBut while media attention is generally drawn to Guantanamo, the US administration and the CIA hold prisoners in even more controversial facilities in other countries around the world, known as black sites, where few know what really goes on. And now, with drone strikes, human rights organisations say the Obama administration has completely bypassed the whole legal process.Hilary Stauffer, Deputy Director of Reprieve“It’s a controversial policy, but instead of capturing terrorism suspects he’s often just killing them abroad through drone strikes, so that you negate the need for a prison if you’re not even bringing people to any kind of trial, or you’re just killing them on the ground. Generally, the vast majority of them are just unnamed alleged terrorists abroad, but nobody has any idea what they’re being charged with. And drone strikes are particularly problematic because Obama has said that his justification is basically anybody in military age, between 18 and 65, is a target, a potential militant, and it’s up to them to prove after the fact that they weren’t a militant. But if they’re dead, it’s very difficult to prove that.”Hassan GhaniFor protestors outside the US embassy in London, Guantanamo remains a powerful symbol of a wider unjust system, and they say they know their work isn’t over if the prison closes tomorrow.“It’s likely that opponents of the US government’s network of renditions, black sites, and drone killings will be meeting here for many more years to come. The US administration says that some of the detainees it currently holds can be held indefinitely, without charge or trial, pending an end to hostilities, as prisoners of war. The seemingly never-ending, ever-expanding, war on terror. Hassan Ghani, for the Real News, London.


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‘We Do Not Support Blowing Up Planets’: Death Star Petition Rejected

A petition calling on President Obama to build a working Death Star has been rejected by the White House.

The proposal to build an inter-stellar space station with unimaginable destructive power passed the needed 25,000 signatures last month.

The petition was launched in the name of "national security".

stormtroopers

Close but no Death Star

Yet on Friday in a somewhat sarcastic response, Paul Shawcross, chief of the Science and Space Branch of the Office of Management and Budget, pointed out: "The Administration does not support blowing up planets."

In the Star Wars film series, the Death Star was a space station about the size of a small moon that was equipped with laser weapons powerful enough to destroy planets.

Shawcross added: "The construction of the Death Star has been estimated to cost more than $850,000,000,000,000,000. We're working hard to reduce the deficit, not expand it.

"Why would we spend countless taxpayer dollars on a Death Star with a fundamental flaw that can be exploited by a one-man starship?"

Sad face for all those Star Wars fans then...

The official wording of the petition was:

"We petition the Obama administration to:

Secure resources and funding, and begin construction of a Death Star by 2016.

By focusing our defense resources into a space-superiority platform and weapon system such as a Death Star, the government can spur job creation in the fields of construction, engineering, space exploration, and more, and strengthen our national defense."

Several fictional characters added their signatures to the 34,000 long list, including a mysterious Mr Darth V, who listed his location as "Imperial Battlecruiser".

Earlier this year it was calculated that the Death Star would cost more than £541 trillion just for the raw materials - or 13,000 times the gross domestic product of the Earth.

While the very idea of the American government sanctioning the construction of such a thing may sound ridiculous, let's not forget the US once considered blowing up the Moon during the Cold War, hence nothing is off the table.

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  • REBELS NEED A CAUSE

    Princess Leia and the Alliance didn’t just oppose Emperor Palpatine on general principles. Their rebellion aimed to restore the Republic that Palpatine had dismantled a generation earlier. Joan of Arc’s rebellion against the English takeover of France in the early fifteenth century was another uprising seeking to restore the old order. Henry VI’s rule in France wasn’t as despotic as the Emperor’s dark regime: but Frenchmen and women saw the English as foreign occupiers in their kingdom. Joan dreamed of restoring the French monarchy: it was a dream so compelling that an ordinary farmgirl would put aside her quiet life in the country to don a warrior’s armor and fight for France. When she raised the siege at Orléans, her legend grew and England soon was on the defensive. Similarly, Leia’s role in defeating the Death Star both raised her profile and benefited the Alliance. Leaders may come and go but causes last: Joan was captured and executed in 1431. Twenty-two years later, her vision became reality with the final French victory at Castillon. Joan and Leia were both important but, in the end, the causes were bigger than they were.

  • YOU HAVE TO TOUGH IT OUT TO WIN

    Hoth is a harsh and inhospitable hideout for Luke, Leia, Han and the rest of the rebel forces as they struggle against the Empire. History shows us that resistance fighters survive, even thrive, by taking to the hills, the swamps and other hostile terrain that conventional forces avoid. Like Washington’s Continental Army surviving the brutal winter at Valley Forge over 1777 to 1778, the Alliance faces great difficulties operating from Echo Base, and that’s even before Luke encounters a wampa! Hiding out and enduring hardship, even deadly risks, was better than certain capture. History shows us that operating in punishing landscapes allows guerrilla warriors to outlast their better-armed and supplied opponents, just as the American rebels did against their British opponents in the eighteenth century or, conversely, the Viet Cong when faced with the overwhelming might of the Americans two centuries later. Of course, they never enjoyed the Force powers that the Jedi employ to hide in plain sight or cloud the minds of their opponents. Even so, the greatest Jedi, Yoda, retreats to the safety of Dagobah when threatened by the might of the Empire. He understands that a little hardship might just win the war.

  • WHEN MONEY TALKS, IT USUALLY MEANS WAR

    Both the British and the Dutch built their colonial empires on the backs of corporations. The British East India Company, founded in the last years of Queen Elizabeth’s reign, eventually controlled most of India while the Dutch company, founded soon after, claimed a fair bit of Southeast Asia. In both cases, these companies used private armies or local puppet rulers to protect and expand their role in the lucrative trade in spices and luxury goods from these regions. Their historical experiences closely parallel the rise of the Trade Federation and its allies during the Republic’s dying days. Viceroy Nute Gunray, the calculating and ambitious leader of the Trade Federation who directs the occupation of Naboo, would feel right at home with historical wheeler-dealers such as Jan Pieterszoon Coen, governor general in the Dutch East India Company who mercilessly conquered Banda. In history or Star Wars, big business pushes agendas of war and conquest in pursuit of higher profits. In both cases, powerful companies control the entire enterprise, from initial voyage to established settlement, and the armies needed to enforce their ambitions by overthrowing local rulers, if the bottom line demands it.

  • THERE’S PROFIT IN LONG-TERM PLANS

    Palpatine plays a very long game as he rises from senator to chancellor and, finally, emperor. He does so with the eager assistance of the business interests he courts in his political career. Similarly, in history, we see politicians rise and their opponents fall, when they coordinate with the rich and powerful. Queen Elizabeth granted the charter to create and empower the East India Company, and the monarchy profited for centuries from this wise decision until the British government swallowed up the company entirely in 1858. Soon after Queen Victoria was crowned empress. She ruled over a state so large that it was claimed that “the sun never set on the British empire”. Similarly, Palpatine assists the Trade Federation and other corporate groups to rise under his apprentice, Count Dooku. Their ambitions help to spark the very crises he needs to rise in the Senate and seize power. Soon he, too, claims an imperial power: one strengthened immeasurably after his new apprentice, Darth Vader, executes Nute Gunray of the Trade Federation and other former allies.

  • ONE MAN’S PIRATE IS ANOTHER’S PATRIOT

    Whether you’re a scoundrel or a hero depends on perspective. Han Solo and Lando Calrissian start out as disreputable smugglers and pirates but, after aiding the Alliance, become respected generals in the fight against the Empire. So did John Hancock, the first signer of the Declaration of Independence. Long before he set his pen to that document, Hancock made his fortune running circles around the British navy and His Majesty’s customs officers. Hancock’s business thrived through his smuggling of Dutch tea, French molasses and other luxury goods that would have been subjected to a high tax if legally imported. By offloading away from the ports where authorities kept a watchful eye, John Hancock grew rich, powerful and admired. In fact, when he was captured by the authorities in 1768, the people of Boston rose to his defense as Hancock’s smuggling was now vital to the city’s economy. Not a decade later, Hancock led the Boston Tea Party in a public attack on Britain’s imperial might, rather like Lando Calrissian roused the people of Cloud City against the Empire. Both men publicly defied power to rebrand themselves from pirate to patriot.

  • NEVER UNDERESTIMATE THE POWER OF EMOTIONS

    Sometimes great changes start at the personal level. Opposition to the evils of slavery grew one person at a time, as when Harriet Jacobs told the story of the unbearable anguish experienced by a North Carolina enslaved woman who saw her seven children sold before the Civil War. Slaves could be and were freed by some owners. George Washington’s will emancipated his slaves after his wife’s death. He was a rare exception: many slave-owners valued profit and property above the humanity of their slaves. Watto the Toydarian sees his slaves, Anakin and Shmi Skywalker, as assets in his business. He wagers only Anakin’s freedom in the podrace bet with Qui-Gon Jinn. When Watto loses the bet, Anakin is freed but mother and son are painfully divided. That anguish fuels Anakin’s darker emotions and when he returns to Tatooine too late to rescue Shmi, he believes that Palpatine’s absolute power is the only protection he can trust. Heartbreak also scarred the lives of former slaves in the Civil War era but, unlike Anakin, Harriet Jacobs and others used their painful experiences to rally people against slavery in the United States.

  • THAT’S THE LAW, BUT IN REALITY. . . .

    Padmé is shocked to discover that slavery, outlawed in the Republic, nevertheless thrives on the Outer Rim world of Tatooine. History is filled with examples of laws that weren’t always followed or even enforced. If you write your history from the laws and official plans, you miss a lot of what really happened. For example, the Eighteenth Amendment banned the sale and manufacture of alcohol in the United States. From 1920 until the ban was repealed in 1933, the country was officially dry and sober. But a thriving trade in alcohol led to a culture of rum-runners and bootleggers, driving up the crime rate across the nation. Mobsters such as Al Capone profited handsomely from the illicit alcohol their gangs provided to an eager public including a lot of the same lawmakers who had pushed so vigorously to ban booze in the first place: Jabba the Hutt benefited from a lawless environment, too, enslaving women who fell into his trap. Finding out that the world isn’t always as it should be is the start of wisdom. Luke Skywalker’s adventure begins when Ben Kenobi corrects his mistaken personal history. Once he learns that his father wasn’t an anonymous navigator but a renowned Jedi Knight, Luke’s eyes are opened to the differences between the stories he’s been told and real history.

  • STEP INTO A LARGER WORLD

    Winning wars isn’t just about superior firepower. Sometimes the most critical forces in history are the ones that you can’t see. Obi-Wan knows this when he embraces death at Darth Vader’s hand. His connection with the Force will only strengthen when he dies. Samurai culture also trained followers to face death in battle without fear. But the samurai weren’t simply great and fearless warriors. They followed a philosophy of bunbu itchi, meaning “the pen and sword in equal measure.” Like the Jedi, the samurai valued the skills of peace and wisdom along with the way of the warrior. Miyamoto Musashi embodied this in his seventeenth-century text that blended Zen philosophy and sword fighting: The Book of Five Rings. In the samurai tradition which he helped to express, the long sword that was the samurai’s weapon of choice became more than a tool. Like the lightsaber, the samurai’s sword was the life, the symbol and the soul of the samurai and helped them remain an important force into the nineteenth century. When Admiral Motti scorns Vader’s belief in the Force, he, too, is suddenly faced with the power of the intangible.

  • THIS IS ALL YOUR FAULT

    C-3PO unfairly blames R2-D2 for their many predicaments: that’s an amusing habit in droids, but sobering in the real world. History shows us that ambitious people reap great benefits when they make someone else the scapegoat for their problems. When Adolf Hitler sought to rally the German people behind his Nazi party, he suggested that Communists, Jews and traitors were the real problem. This began with the mysterious fire that destroyed the German parliament, the Reichstag, in 1933. Hitler suggested the fire was the work of Communists and arrested all of the Communist politicians, leaving the Nazis with a majority government. In 1934, the SA leader Ernst Röhm and other high-profile politicians were murdered in what became known as the Night of the Long Knives. Hitler’s Gestapo and the SS carried out these executions, claiming the victims were all traitors to Germany. They were hailed by many, including ailing Chancellor Hindenburg, for “nipping treason in the bud”. Rather like Palpatine after Order 66 caused the stormtroopers to mow their Jedi commanders suddenly identified as traitors and enemies, Hitler enjoyed a ‘purified’ Nazi party and widespread public support.

  • LIBERTY DIES TO THUNDEROUS APPLAUSE

    Politics is a popular sport: if you don’t have the people behind you, you won’t last for long. Caesar Augustus knew this: he wooed the Romans with bribes, bread and circuses to win their support. Napoleon was so popular that, when he escaped Elba in 1815, the French army sent to capture him instead defected to his cause. Adolf Hitler also understood how to appeal to the people. He was the first politician to embrace air travel in his campaigns, allowing him to make personal appeals across the country. Hitler mastered the new media of film and television: broadcasting Nazi spectacles that promoted himself as well as his Nazi causes. Palpatine is also a master of manipulation, beginning when he takes over as chancellor and continuing when he creates crises to force the Republican Senate to grant him emergency powers. A few critics, including Bail Organa and Padmé Amidala, see through his pretence. “So this is how liberty dies,” Padmé comments in Revenge of the Sith, “with thunderous applause.” Her ability to see through Palpatine sets her apart from the swell of adoring supporters who celebrate the inauguration of the Galactic Empire.

  • YOU IGNORE HISTORY AT YOUR PERIL

    Historians hate it when people talk about history repeating itself. It doesn’t: new people and new situations mean that everything’s different. You can’t truly equate the rise of the Roman Empire and the rise of the Napoleonic Empire, since first-century Rome was very different from nineteenth-century France. History may not be doomed to repeat itself, but there are patterns in the past that the wise person should heed. Jedi Masters such as Yoda scoff at the idea that the Dark Lords of the Sith were an active threat. Yes, the Sith had been long-ago rivals of the Jedi but that was ages ago. They were history: dead and long gone! Qui-Gon and Obi-Wan discover that comfortable certainty was groundless when they confront the Sith, Darth Maul. The old enemies of the Jedi Order were a living threat, not a historical curiosity. If the Jedi had taken that history seriously and kept a close watch for the Sith, they might have discovered Palpatine’s plot before the galaxy was doomed to suffer under his ruthless rule. The Emperor, in his turn, ignores the history of rebellions to his own cost, and so the cycle continues.

All images from "Star Wars and History," edited by Nancy R. Reagin and Janice Liedl, published by Wiley, November 2012

Official White House Response To Death Star Petition

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The Brutal Truth About How Childhood Determines Your Economic Destiny

The British class system looks frighteningly rigid in "56 Up." But is America any better?

January 10, 2013  |  

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"Give me the child until he is seven," the old Jesuit teachers say, "and I will give you the man."

Back in 1964, filmmaker Paul Almond set out to test that theory by documenting the lives of a group of seven-year-old British children. Some were born to the manor; others grew up in charity homes. There were tykes from both the countryside and the city. Almond wanted to know if the destiny of the children had already been scripted by the circumstances of their birth -- particularly those of class. His film Seven Up! has grown into a series spanning over five decades. Every seven years, like the cycle in some mythological saga, Michael Apted, the assistant on the original project, has returned to these children as they have morphed before our eyes into awkward adolescents, tentative adults, and now, the paunchy survivors of late middle-age.

As bright-eyed children, participants like Jackie Bassett, the product of a working-class neighborhood, or Andrew Brackfield, who attends a posh prep school, are already miles apart in attitude and habits. Tellingly, the children speak very differently about what they see in their future. Those from the higher ranks already know which universities they’ll attend, while Paul Kligarman, who lives at the charity home, asks plaintively, “What’s a university?”

As an American watching the film, you probably have a strong urge to see the youngsters launched on stormy seas overcome their disadvantages. (You may also harbor a sneaking desire to see one or two of the most privileged children, like smug little John Brisby, receive some sort of comeuppance in life.)

It doesn’t go quite like that. When the first film in the series was released in the ‘60s, many believed that postwar affluence had translated into increased mobility and opportunity in Britain. Yet with few exceptions, the Up series shows that the children of cabbies tend to grow up to be cabbies and have children who do much the same. Likewise, the children of barristers grow up to be barristers and bequeath their legacies to future masters of the universe. The truth of the Jesuit adage stares starkly from the screen in the eyes of these real human beings.

Class is a touchy, complicated subject. Is it about money? Education? Tastes? Occupation? Above all, class is about social structure. In the UK the old hierarchical structure based on property in the form of land has stubbornly persisted, reinforced by the banking system. Certainly a variety of factors influence destiny that are not directly connected to that system. We don’t learn much about race in the Up series as just a single participant, one of the charity home boys, is of mixed ethnicity. But we do see that gender wields a mighty influence over fate. The lives of the less wealthy girls appear to be more precarious than those of boys with similar backgrounds. Individual circumstances can twist fate this way or that. The moderately comfortable childhood of Liverpudlian Neil Hughes does not prepare him for the ravages of adult-onset mental illness. Even so, he is able to cling to at least a semblance of middle-class existence as a local politician in Scotland.

Several of the participants in this unique documentary project are visibly uncomfortable with the project's implied commentary on the class system. The less affluent tend to blame themselves for not working hard enough in school to make it to university. John Brisby, speaking for the upper class, attributes his success to personal merit as much as birthright, pointing out the hardship of a parent’s death that caused some financial upheaval for his family. But it’s clear that large socio-economic forces can easily wipe out the individual efforts of the working-class folks. Jackie’s rheumatoid arthritis has crippled her so badly she can hardly button her shirt, and yet the austerity-crazed British government has just reviewed her disability benefits and deemed her able to work. So she relies on the support of her sons to keep food on the table. Her childhood friend Lynn Johnson has lost her job as librarian due to budget cuts, and the pain of falling from security to insecurity burns from her gaze.

United Russia voices cautious support to return of election blocs

A woman casting her vote at Polling Station. (RIA Novosti / Andrei Lukovskiy)

A woman casting her vote at Polling Station. (RIA Novosti / Andrei Lukovskiy)

Russia’s parliamentary majority said it may be possible to reintroduce party blocs to the Lower House if a law is created that prevents the reorganization of these unions following the elections.

At present only separate parties are allowed to run in parliamentary elections, but before the New Year holidays the Russian President ordered his administration together with the Central Elections Commission prepared a bill introducing changes to the Lower House elections system. The new elections rules must allow for the mixed parliamentary structure as they bring back the single constituency candidates and also, possibly, the election blocs – unions of smaller parties that could compete with the large and established ones. Putin also promoted the idea of election blocs in his address to the Federal Assembly delivered on December 12.

In the post-holiday comments top United Russia officials supported the idea, but said that it was likely only under certain conditions. The secretary of the party’s General Council, Sergey Neverov, said that the new law must have a rule that the elections blocs must remain for the whole election term and the electoral threshold for blocs must be made higher than for separate parties.

The parliamentary opposition were quick to criticize the idea. Top Communist Party official Sergey Obukhov noted in a press interview that once the party blocs are re-introduced he expected the ruling party United Russia to create a bloc with some of the newly-registered movements that would reinforce their already very strong position.

Deputy Head of the Fair Russia faction Mikhail Yemelyanov agreed, saying that using the bloc tactics could bring United Russia the support of 60 to 70 percent of the voters.

The minor parties, on the contrary, reacted to the news with enthusiasm and announced their readiness to enter the future blocs. However, some politicians noted that sometimes the regional politicians had their own ways of seeing allies and this could make the idea less realistic. Besides, a higher election threshold for blocs would mean bigger election budgets, that were less accessible for smaller parties and this also posed a problem.

After Russia softened the party registration rules last year the number of political parties in the country quickly grew from seven to over fifty. Experts have earlier suggested the number could rise to as many as 140.

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Mehdi’s Morning Memo: Barack Obama Vs Nigel Farage

The ten things you need to know on Thursday 10th January 2013...

1) BARACK OBAMA VS NIGEL FARAGE

Yesterday, it was Richard Branson and a bunch of big business bosses; today, it's the Obama administration. The Guardian and the FT both splash on how the US has warned the UK not to leave the EU.

From the Guardian's front-page story:

"The Obama administration issued a direct challenge to David Cameron over Europe, on Wednesday when it warned of the dangers of holding a referendum on Britain's membership of the EU.

"... With just weeks to go until Cameron delivers a landmark speech in which he is expected to promise to hold a referendum on a 'new settlement' for Britain in the EU, the US assistant secretary for European affairs warned that 'referendums have often turned countries inwards'.

"'We welcome an outward-looking European Union with Britain in it. We benefit when the EU is unified, speaking with a single voice, and focused on our shared interests around the world and in Europe,' Philip Gordon said during a visit to London, adding: 'We want to see a strong British voice in that European Union. That is in the American interest.'"

Take that, Nigel Farage.

The FT has this quote from Jacob Kirkegaard, of the Peterson Institute for International Economics in Washington: "This is essentially [the US] saying to the UK - 'you guys are on your own'. There is an element of pre-emption here and must be clearly intended to create waves."

Oh, it'll definitely "create waves". The Europhobic Sun isn't happy, in its leader: "Thanks for the advice, Mr Prez. But when we need your opinion, we'll ask for it."

Take that, Barack.

2) 'COMPLETELY MISLEADING'

The government finally published its "full and frank", 122-page, 36,000-word audit of its successes and failures yesterday afternoon - after a heated exchange between Ed Miliband and David Cameron at PMQs over why the PM had withheld its publication.

The Guardian reports:

"Labour said the government was guilty of an 'astonishing' omission after failing to mention George Osborne's pledge in his emergency budget of 2010 to ensure debt is falling as a share of GDP by 2015-16.

"The lengthy audit – described by David Cameron as full, frank and 'completely unvarnished' – was panned by Peter Riddell, the director of the non-party Institute for Government, who called the section on university tuition fees 'completely misleading'.

"In an interview with Channel 4 News, Riddell said the audit had not mentioned that university tuition fees had been trebled to £9,000."

Shock! Horror! Ministers turn out not to be "full and frank".

3) TO PROFIT OR NOT TO PROFIT?

From the Independent's front page splash:

"Private companies would be able to run state schools for profit under a plan to be published by Conservative modernisers which could be introduced if the party wins the next general election.

"Michael Gove, the Education Secretary, has told friends he has no objections to 'for profit' firms setting up the free schools independent of local authority control he has pioneered since 2010.

"... Bright Blue, a modernising pressure group regarded as David Cameron's natural ally, will propose the move in a book to be published next week calling for the Coalition's public service reforms to be extended through an injection of market forces."

I wonder what Nick Clegg makes of the Indy splash. In a speech in 2011, the deputy PM was pretty explicit in his pledge: "Let me reassure you: yes to greater diversity; yes to more choice for parents. But no to profit-seeking within our state-funded education sector."

Meanwhile, Labour's Blairite shadow education secretary has come out against Gove and profit-making schools: "Labour is clear that schools should not be run for profit. Our schools are there to provide a good education - not make money.

"The international evidence from countries such as Sweden shows that allowing companies to profit from schools threatens standards."

Over to you, Mr Gove.

4) ACADEMIES: THE INCONVENIENT TRUTH

There's another good (bad?) 'schools' story on the front of the Guardian, which is worth a read and which seems to confirm something I've always suspected:

"Some academy schools are today accused of manipulating admissions to improve results and using covert selection methods, according to a major report into the programme, which also warns that the government's push to boost the number of academies is not leading to a consistent rise in standards.

"A number of academy chains are seemingly more focused on expanding their empires than improving their existing schools, the report concludes.

"The study, led by Ofsted's former chief inspector Christine Gilbert, also notes an overall lack of transparency and openness, particularly over the way academy sponsors are chosen, and warns that too many school governors are not up to the more significant role they play in academies."

5) 'I'VE NEVER BROKEN THE LAW'

The Indy's Andy McSmith takes issue with David Cameron's rather definitive denial of law-breaking in the Commons (he was responding to a question from Labour MP John Spellar, who accused Mr Cameron of wanting to repeal the ban on fox hunting):

“'I’ve never broken the law,' David Cameron claimed at Prime Minister’s Questions. Not 'I’ve never broken the law in this regard…' as he said on 19 December, in relation to fox hunting. Never at all, he implies, forgetting the undenied story that he was fined and gated during his time at Eton College for smoking cannabis. That may be a minor offence, but is undoubtedly against the law – a law David Cameron is opposed to changing. He has also in the past evaded questions about what he may have got up to at Oxford."

The Guardian's Michael White asks: "Has David Cameron ever broken the law? I hope so. He'd be a very odd sort of driver, let alone citizen, if he hadn't."

Meanwhile, Labour MP Chris Bryant used Twitter to post this picture of the PM running a red light on his bike...

BECAUSE YOU'VE READ THIS FAR...

Watch Conan O'Brien's brilliant spoof video version of gun nut Alex Jones's crazy rant on Piers Morgan's CNN show.

6) 'COWARDLY' CAMERON?

From the Huffington Post UK:

"Voters think David Cameron would show himself to be a 'coward' if he dodged televised leaders debates at the next election, a poll published today has found.

"A ComRes survey for the Daily Express found 67% of those asked agreed the prime minister 'would look like a coward if he declined to take part in leader debates in 2015', and just 12% disagree."

So, bad news for Cameron. But good news for Nigel Farage:

"In a boost for Ukip the ComRes poll also found 54% of people believe Nigel Farage 'should be offered the opportunity to take part alongside the other main party leaders' and only one in five – 20% - disagree."

I can see it now - come May 2015, the country is overtaken by Faragemania. Or perhaps not.

7) 'CYNICAL AND SLEAZY'

Should we pay a salary to our local councillors to encourage more people - from different backgrounds - to stand in local elections? And, if so, would it help the Labour Party?

From the Telegraph:

"The Conservative Party chairman has accused Labour of a 'cynical and sleazy' attempt to use a Commons report to benefit its own party funds.

"A recommendation to raise local councillors' allowances has been approved by the cross–party communities and local government select committee.

"Grant Shapps claimed Labour had used its majority on the committee, chaired by Clive Betts MP, to back reforms that would leave it 'quids in'. The committee report states that allowing independent bodies to set an 'appropriate level of compensation' for councillors would encourage a more diverse range of candidates."

8) SEEING RED...TAPE

From the Times splash:

"Millions of pounds of taxpayers’ money has been spent seeking public opinion on subjects ranging from ice-cream van chimes to scallops and the electronic monitoring of pigs.

"An investigation by The Times has revealed that ministers commissioned nearly 1,000 consultations or policy reviews during the past two years, prompting accusations that they are putting off difficult decisions.

"... A survey of the 15 biggest Whitehall departments showed that nearly a third of the consultations set up since 2010 were still awaiting a government response.

9) GIMME YOUR GUNS

For once, it looks like the Obama administration might actually be gearing up for a proper fight with the extreme US right. From the Independent:

"[Vice President Joe] Biden, who is due to meet with representatives of the National Rifle Association, the powerful gun lobby group, told reporters that regardless of what Congress is able to agree on, there would be additional steps the President could take by executive order.

"'We're reaching out to all parties on whatever side of this debate you fall,' Mr Biden noted. 'But the President is going to act. There are executive orders, executive action that can be taken.' New laws that Congress might pass could include the resurrection of a ban on all assault weapons, tighter background checks for purchasers of guns and much tighter restrictions on access to guns for the mentally ill."

On a side note, guess what's happening in the United States on 21sh January, the day before Obama's inauguration? The gun lobby's national "Gun Appreciation Day". I wonder what parents in Newton, Connecticut, make of that...

10) CALL CLEGG. GO ON, CALL HIM

The deputy PM's 'Call Clegg' radio shaw on LBC kicks off at 9am. Will it just be a load of abusive callers or will there be some decent questions to - and answers from - the Lib Dem leader?

Brian Reade, writing in the Mirror, asks:

"Will his theme tune be UB40's Promises and Lies?

"And when the Lib-Dems hand him his UB40 in the next year will he reprise Danny Baker's speech, aiming it at his Tory chums in Cabinet: 'We dwell amid pinheaded weasels who know only timid, the generic and the abacus. I hope they choke on the beads.'"

Ex-BBC radio host Robin Lustig warns Clegg to "watch out" for his trouble-making co-host, LBC presenter (and Tory sympathizer) Nick Ferrari.

QUOTE UNQUOTE

"I managed to get through Christmas without spending any time with either of them...I am closer to all Conservatives than I am to anyone from any other party" - David Cameron's answer to backbencher Philip Davies MP at PMQs yesterday. Davies had asked the Tory leader if he was closer to Norman Tebbit or Nick Clegg.

PUBLIC OPINION WATCH

From the Sun/YouGov poll:

Labour 43
Conservatives 33
Lib Dems 10
Ukip 10

That would give Labour a majority of 120.

140 CHARACTERS OR LESS

@ChrisBryantMP Simple PMQ next week. The PM said last week that he has never broken the law. Is that true?

@Mike_Fabricant Deficit has been cut by 25% in just 2 yrs, but until it is zero, Labour's debt mountain will rise because of the interest etc.

@jameschappers Who is more surprised at 'unexpected' ONS decision not to amend RPI measure, 'experts' or Today prog editors whose lead story has collapsed

900 WORDS OR MORE

Zoe Williams, writing in the Guardian, highlights the dangers of a "privatised NHS": "Without basic financial transparency from public service contractors we can say goodbye to democratic accountability."

Sue Cameron, writing in the Telegraph, reveals how Mark Carney was appointed Bank of England governor: "The Treasury’s cloak-and-dagger interviews are hardly an advert for open government."

Rafael Behr, writing in today's New Statesman, says: "Ed Miliband is about to have the burden of defending the EU foisted on him. Is he ready?"


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

Austerity Creates Highest Unemployment Rise In EuroZone

So how's that austerity been working for you, Mr.Cameron?

Unemployment in the euro zone rose to a new high in November, according to data released Tuesday that also showed that the troubles in the 17-nation currency bloc were straining its strongest member, Germany.
The euro zone jobless rate rose to 11.8 percent in November from 11.7 percent in October, according to Eurostat, the statistical agency of theEuropean Union.

Eurostat estimated that 18.8 million people in the euro zone were unemployed in November, two million more than a year earlier.Germany has provided momentum to the European economy over the past three years, as strong exports protected the country from the crisis.But on Tuesday, the Federal Statistics Office in Berlin said that German exports declined 3.4 percent while imports slid 3.7 percent in November from a month earlier. The weakness narrowed Germany’s trade surplus to €14.6 billion, or $19 billion.German factory orders also fell in November amid weak demand from outside the euro area, the Economy Ministry said Tuesday. Orders, adjusted for seasonal swings and inflation, slid 1.8 percent from October, when they jumped 3.8 percent.

You don't say! But the Beltway Villagers and teaBirchers are demanding the same policies for America. And you've probably read about the new IMF mea-culpa while admitting to really fuc*&ng up on their austerity projections.

The International Monetary Fund is revising its metrics on how fast governments should cut their budgets, with the IMF’s top economist making the case that Europe’s fiscal diets were too severe.In a new paper published Thursday, IMF Economic Counsellor Olivier Blanchardand research-department economist Daniel Leigh show the IMF recommended slashing budgets too fast early in the euro crisis, starving many economies of much-needed growth.

In “Growth Forecast Errors and Fiscal Multipliers,” Messrs. Blanchard and Leigh calculate IMF and European economists underestimated the euro-for-euro effect of cutting government budgets. While economists expected that cutting a euro from the budget would cost around 50 cents in lost growth, the actual impact was more like 1.50 per euro.

Republicans like Goober Graham repeatedly fret over the US becoming Greece and call for raising retirement ages and slashed benefits for our entitlements, but the policies they are trying to force us into will actually pave the way to a Greek-like state of mind.

As my friend Georgia Logothetis writes:

In Greece, which has implemented draconian austerity measures at the request of the IMF, the European Commission and the European Central Bank in order to receive bailout funding, the results are seen on the streets where a middle class has plummeted into poverty. One out of three Greeks now lives in poverty and average salaries have been slashed to just several hundred net euros a month. Homelessness, which was rarely seen in that country, is now endemic in certain parts of Athens. The unemployment rate has reached a record 26 percent, with more than 50 percent of Greece's youth out of a job.

Greece received billions of euros in bailout funds, but a large part of why austerity didn't work in Greece is because it wasn't offset by any growth strategy. In a shocking example of how twisted reality became, Greece's bailout funds at one time were simply wired into an escrow account that the government couldn't touch and then wired back for debt service to European banks just days later (read the NYT report here). In other words, not only were there painful cuts, but any money coming into the country was spent almost exclusively on debt reduction rather than on stimulating the economy.

Here's Goober:

I’m not going to raise the debt ceiling unless we get serious about keeping the country from becoming Greece, saving Social Security and Medicare [sic]. So here’s what i would like: meaningful entitlement reform — not to turn Social Security into private accounts, not to take a voucher approach to Medicare — but,adjust the age for Social Security, CPI changes and means testing and look beyond the ten-year window. I cannot in good conscience raise the debt ceiling without addressing the long term debt problems of this country and I will not.

Graham brings up Greece almost every time he goes on TV.
The evidence is overwhelming that turning to austerity during a down economy only destroys it further and turns us into Greece.

That is what has been happening with a vengeance in Greece, where fund forecasters, as part of the country’s first bailout program in 2010, predicted that the nation could cut deeply into government spending and pretty quickly bounce back to economic growth and rising employment.Two years later, the Greek economy is still shrinking and unemployment is at 25 percent.Of course no two circumstances are alike. Shut out of international bond markets, Greece had little choice but to begin bringing its public finances into line or face a catastrophic default. Financing wasn’t available to sustain prior spending levels. For an economy that has been reeling for several years, however, a billion or two in extra government programs or investment could have kept a few small businesses open and kept a few more families employed and spending.

When will they all get the message? Portugal's President is fighting back against the draconian cuts now. Only Keynesian philosophies can save us.

Does President Obama get this, too?

‘Full And Frank’: Has The Coalition’s Audit Had A Polish?

The government's much anticipated mid-term audit has been criticised for failing to provide the "completely unvarnished" assessment of the coalition the prime minister had promised.

The 119 page document details the government's pledges and what it has done to fulfil them - but the document seems to have had some Ronseal added, with the government breezing over U-turns such as its failure to implement House of Lords reform.

The document merely notes: "The Government took the decision not to proceed with the Bill following second reading in the House of Commons and the lack of support for the necessary timetabling motion."

david cameron and clegg

The government published an audit of the coalition government's first two-and-a-half years in office


The audit was released after Number 10 adviser Patrick Rock was seen carrying a "restricted" document warning of "broken pledges" in the coalition agreement, which suggested the government had delayed publication to avoid overshadowing the favourable media coverage they expected to receive from Monday's mid-term review.


Tom McTague

Looks like Mr Cameron has applied a bit of Ronseal to his unvarnished Coalition audit. Funny that.


Rob Merrick

That so-called audit...only 'failings' I can find Cam/Clegg admitting to are per-passenger APD and Post Office card account discounts?

The self-assessment also notes that the badger cull to help control bovine TB has been "postponed" and a free vote on repealing the hunting ban has "not yet been taken forward."

The Labour party has released its own "audit of broken promises", listing 40 areas in which it said the coalition had failed to live up to its pledges.


Robert Hutton

No10 has just explained to me the significance of the different colours of boxes on the audit. It's hard to type fast when laughing,


John Ashmore
I am taking a break from tweeting due to being overwhelmed by the sheer candour of the Coaliton's mid-term audit. #zzzzz

Top of the list of broken promises identified by Labour was the failure to balance the nation's books within five years - something which is not now expected to happen until 2018 at the earliest.

On deficit reduction, the government say it is their "most urgent priority", failing to note borrowing has risen since they came to power.

Michael Dugher MP said: "It turns out that the document David Cameron tried and failed to cover up is now itself a cover-up.

"There's no mention of his government's failure on growth, of the double-dip recession or of £212 billion extra borrowing. It tries to gloss over David Cameron's broken promises on the £3 billion NHS reorganisation and 7,000 fewer nurses, and doesn't even mention his tax cut worth £107,000 for 8,000 millionaires while millions of hard-working families on low and middle incomes are paying more.

"This is a government that lurches from failure to fiasco. They promised change but things are getting worse, not better, and they stand up for the wrong people."

The audit said that the independent Office for Budget Responsibility had confirmed the government was "on course to meet our fiscal mandate" of balancing the books, which was based on a rolling five-year period and not on the fixed target date of 2015.

The government on: NHS reform

Promise: We will ensure that there is a stronger voice for patients locally through directly elected individuals on the boards of their local primary care trust (PCT). The remainder of the PCT’s board will be appointed by the relevant local authority or authorities, and the Chief Executive and principal officers will be appointed by the Secretary of State on the advice of the new independent NHS board. This will ensure the right balance between locally accountable individuals and technical expertise.

Audit: In light of the abolition of PCTs, we are ensuring greater democratic legitimacy in healthcare through the transferral of responsibility for public health to local authorities. We are also introducing Health and Wellbeing Boards (within local authorities), which will set the overall strategies for healthcare in their localities.

READ: The full coalition audit

Nick Clegg Says Married Couples Should Not Get Tax Break

Nick Clegg has told MPs married couples should not be given a tax break, amid signs George Osborne may bring in the measure in this year's Budget.

Plans to recognise marriage in the tax system were in the Conservative manifesto, however the Lib Dems have long opposed the idea and under the terms of the coalition agreement are permitted to abstain on the measure if it is ever brought to a vote.

"I have always strugged to explain to people why someone who is not married should pay more tax than someone who is not married," Clegg said on Tuesday.

"I think that it would be hard to explain to people why people who are not married should be stung with higher tax.”

It has been reported that the chancellor plans to introduce a tax break for married couples worth £150 - in part to appease Tory MPs unhappy at the coalition's gay marriage legislation.

Tory backbencher Andrea Leadsom asked during a Commons debate on gay marriage in December that culture secretary Maria Miller "articulate her support for marriage in Cabinet by supporting it in the tax system".

She told HuffPost today: "Marriage is special. Statistics as well as human instinct clearly show that the commitment of marriage provides the nurture needed to raise secure children as well as the emotional support needed by each partner.

"Cohabiting is not the same. The tax system should support what is 'good' in our society - tax breaks to encourage marriage are a great deal for the taxpayer and a great deal for our society."

In December Treasury minister David Gauke told the Commons that the government's commitment to introducing a proposal to recognise marriage through the tax and benefits system "remains firm".

"We want to show that we value commitment, so we will consider a range of options and advance proposals at the appropriate time," he told MPs.

Clegg's comments today will irritate many Conservatives who will worry the Lib Dems are set to fight any move to give married couples tax relief even though they are allowed to abstain on the vote.

Last month former Tory children's minister Tim Loughton told HuffPost he wanted to see George Osborne introduce a full marriage tax allowance as soon as possible.

However he said he feared “Lib Dem pet projects” meant that any tax cut for married couples would likely be a “half hearted, token measure that wouldn’t cut the mustard”.

‘Incompetence At The Heart Of Government’

Any political row about redundancies and the future of the Army would "signal an incompetence at the heart of government", Labour said on Tuesday.

Government cuts mean 5,000 posts will go this month and a further 9,500 over the next two years although some fear move could be rushed through to shorten the trauma, reports the Times.

Commanders however, have voiced fears that accepting voluntary rather than compulsory redundancies is leading to a loss of control over which posts lose manpower.

Crucial roles such as combat medics, linguists and interrogators are experiencing what the Army refers to as "gapping".

Jim Murphy MP, Labour’s shadow defence secretary, said: "The future shape of the Army is a critical national issue and any political row would signal an incompetence at the heart of government.

"There are now serious skills shortages in essential areas which could threaten our operational capability.

"We must be told if there is or will be an impact on operations in Afghanistan."

The government hopes that Territorial Army (TA) reservists can be used to fill the gaps, doubling the number available to 30,000.

General Sir Michael Rose, in a report from the UK National Defence Association (UKNDA), said over reliance on the TA "could prove fatal".

He wrote: "Given the past run-down of the TA including the closure of TA centres, the reduction in man training days and lack of funding for recruitment campaigns, it is clearly not possible to increase the trained manpower of the Reserves in time to compensate for regular soldiers being made redundant."

Speaking to the Guardian last week, US ambassador to Nato, Ivo Daalder, warned of the long-term consequences of military budget cuts.

He said: "If we don't start soon in investing in those capabilities then the gap between the US and the rest is going to grow. And if it is bad now, then it will be worse.

"If we have problems, they will be even worse."

Mehdi’s Morning Memo: Dave Won’t Win

The ten things you need to know on Tuesday 8th January 2013...

1) DAVE WON'T WIN

Last March, I penned a column which was entitled: "Why the odds are against a Tory majority."

Almost a year later, I can't help but notice that some shrewd Tory politicians are lining up to agree with me. Former Tory MP Paul Goodman wrote last week: "Two years out from 2015, one fact is already evident: David Cameron will not win an overall majority."

Today, the influential Tory peer and pollster Michael Ashcroft joins the fray. From the Huffington Post UK:

"David Cameron's chances of winning the next election are 'remote', top Tory donor and election strategist Lord Ashcroft has warned.

"Writing on the ConservativeHome website this morning, the former deputy chairman of the Conservative Party cited bookmakers' views that an overall majority for Labour is the most likely result in May 2015.

"'With the polls as they are, and political prospects as they currently seem, it would be hard to argue that the bookmakers are seriously misguided. Any realistic survey of the political landscape surely shows the odds are against the Tories metaphorically as well as literally,' he said.

"Ashcroft added: 'The odds on a Conservative majority look comparatively remote.'

"The peer concludes that the combination of traditional Labour voters and disaffected Lib Dems means Ed Miliband 'ought to be able to put together 40 per cent of the vote without getting out of bed' at the next election."

"Without getting out of bed"? Uh-oh.

2) DIVIDE AND RULE

Ahead of today's Commons vote - on the below-inflation 1% rise in benefits and tax credits announced in George Osborne's Autumn Statement last month - the Guardian splashes on Nick Clegg's attack on "Conservative efforts to single out the 'undeserving' poor":

"With the debate over welfare savings likely to form one of the central political battlegrounds of 2013, the deputy prime minister, speaking at a joint press conference with David Cameron at Downing Street, said: 'I don't think it helps at all to try and portray that decision as one that divides one set of people against another, the deserving and the undeserving poor, people in work and out of work.'

"It is understood Clegg is also involved in a backstage battle on how to ensure that coalition plans for childcare will particularly help the working poor, rather than offer reliefs to the middle class.

"... In a sign that the Lib Dem indiscipline may spread to the Commons as the pressure of the election nears, the former children's minister Sarah Teather announced she would be rebelling in Tuesday's vote to formally break the link between benefits and inflation."

As the FT's Jim Pickard observed on Twitter: "Anyone would think Teather has a tiny majority in a not very affluent London seat."

Meanwhile, Labour MPs will be delighed to see the latest report from the Institute for Fiscal Studies. From the Telegraph:

"Seven million working families will lose money under Coalition plans to cut the value of benefits payments, economists have estimated.

"The Institute for Fiscal Studies said that the changes set out in legislation to be debated in the Commons today will affect far more working households than workless ones.

"... The average loss will be £165 per year, the IFS calculated."

My own take - "Strivers vs Shirkers? Ten Things They Don't Tell You About the Welfare Budget" - is published online here.

Oh, and Iain Duncan Smith, the work and pensions secretary, has just been on the Today programme, defending the 1% squeeze on benefits and tax credits and claiming no benefit claimants have been "demonised" on his "watch". Er, okay...

3) RONSEALED WITH A RESIGNATION

Downing Street spin doctors won't be too pleased with this morning's headlines, in the wake of yesterday's Dave&Nick show in Number 10.

The FT front page headline reads:

"Strains crack coalition show of unity"

The Times front page headline reads:

"Coalition heads for new rift as Tory quits Cabinet"

The paper reports:

"David Cameron is ready to open a new split with Nick Clegg over Tory-friendly boundary changes, as a departing Cabinet minister laid bare the tensions at the top of the coalition.

"Lord Strathclyde, who resigned as Leader of the House of Lords yesterday, conceded that his 'irritation' with the Liberal Democats had prompted him to complain that the coalition in the Upper House was broken. He also criticised Mr Clegg for changing his mind on the boundary review, an issue over which he feels betrayed by the Lib Dems, The Times understands.

"Mr Cameron signalled yesterday that he was ready to confront Mr Clegg again over the issue. The Prime Minister regards it as very much alive, despite Lib Dem efforts to kill it off."

As for the actual 'performance' delivered by the two men inside their wood-panelled room in Number 10, well, to be blunt, it was pretty dull - and the sketchwriters weren't particularly impressed, either. Writing in the Times, Ann Treneman picks up on the PM's bizarre analogy ("To me it's not a marriage," he told reporters, "it is, if you like, it's a Ronseal deal, it does what it says on the tin"):

"Nick's face had that expression that married couples will recognise as one of carefully constructed blankness. Dave had just compared their relationship — the most powerful crucial relationship in the nation — to a tin of wood preserver. Surely this took winter gardening tasks, not to mention product placement, to an entirely new realm. After all, what Ronseal Shed and Fence Preserver actually says on the tin is: 'Colours, Waterproofs and Preserves Against Rot and Decay.' It says nothing about boundary changes and House of Lords reform."

Writing in the Mail, Quentin Letts says:

"As a work of drama, the two men gave performances that were controlled rather than inspiring.

"It was really just a PR exercise, something to stick in the Downing Street diary, something they could all point to when asked, on getting home to their better halves, 'so what did you do today, dear?' Was it perchance a little flat? Possibly. As flat as publican's ullage? Less fizzy than week-old taramasalata? That might be a touch harsh."

But here's a question: why on earth did David Cameron allow Lord Strathclyde, the veteran leader of the Tories in the Lords, to announce his resignation from the Cabinet on the same day that the coalition was doing its very public self-assessment? Where's Andy Coulson when you need him, eh?

The Independent's splash headline sums it up:

"Resignation of top Tory lord leaves a stain on PM's 'Ronseal' relaunch"

4) DEBATING DAVE

So what else did we discover from the Downing Street presser? My colleague Ned Simons reports:

"David Cameron has insisted he is in favour of TV election debates, but refused to commit himself to taking part in 2015.

"Speaking at a joint press conference in Downing Street on Monday, Cameron was challenged over whether he would sign up to the head-to-head clashes at the next election.

"'On TV debates, I'm in favour of them, I think they are good and I think we should go on having them, and I will play my part in trying to make that happen,' he said."

There's a simple solution that would force Dave to commit to participating in pre-election debates with Clegg and Miliband in 2015 - the broadcasters should just threaten to replace him with Nigel Farage.

5) 'CALL CLEGG'

Forget TV debates - talk radio is what it's all about. Nick Clegg's decision to moonlight as a 'presenter' on LBC has upset the Sun:

"The Deputy PM stunned Westminster by announcing he will appear on Call Clegg every Thursday morning.

"Critics branded the decision a desperate attempt by the Lib Dem leader to win back voters.

"Some Lib Dems fear the show is a gamble that could backfire, with Mr Clegg facing a torrent of abusive calls.

"The new half-hour slot at 9am will be part of Nick Ferrari's morning show on LBC and will be aired across London — and online for other parts of the country."

Set your alarm clocks!

BECAUSE YOU'VE READ THIS FAR...

Watch this video of 'Hard of Hearing' Darth Vader, the rather wonderful creation of comedy writer Jon Friedman.

6) TORTURE? THAT'S OLD NEWS

Yesterday, this Memo reported on the row in the United States over President Obama's decision to nominate Vietnam veteran and former two-term Republican senator Chuck Hagel to be his new defence secretary. The neoconservatives in Washington DC don't like the fact that the plain-speaking and independent-minded Hagel doesn't seem too keen on bombing Iran or giving a pass to Israel in the occupied territories.

So shouldn't the real 'row' be over Obama's other national-security team nomination? The decision to nominate the torture-tainted White House counterterrorism chief John Brennan - also the architect of Obama's drone policy - to be the new director of the CIA?

The Guardian reports:

"To replace the disgraced general David Petraeus at the CIA, Obama picked his counter-terrorism adviser, John Brennan. That choice attracted criticism because of Brennan's involvement with the Bush administration's backing for harsh interrogation techniques that many have described as torture, although Brennan denies he supported their use."

The FT adds:

"Mr Brennan's tenure at the agency during Mr Bush's presidency drew criticism from liberals when Mr Obama considered naming him CIA director after the 2008 election. Mr Brennan denied being involved in the Bush administration''s much-criticised interrogation techniques but still withdrew his name from consideration."

Yet the paper concludes:

"White House officials say they do not expect Mr Brennan to face similar trouble this time, given his four years of service in the Obama administration."

Guardian blogger Glenn Greenwald makes the case against Brennan, and reminds us of his actual record, here.

7) AUSTERITY WATCH, PART 412

From the Times splash:

"Downing Street was accused of playing politics with soldiers’ jobs last night, as commanders voiced fears that thousands of Army redundancies were leaving critical roles unfilled.

:Documents seen by The Times show how No 10 has leant on military chiefs to accept voluntary rather than compulsory redundancies when 5,000 posts are due to be cut this month.

8) PLEBGATE VS...ORDINARY CRIMES?

Is the Met's investigation into the 'Plebgate' row distracting the police from tackling more mainstream crimes? That seems to be a real concern for the Home Affairs select committee chair.

From the Mirror:

"An MP yesterday raised concerns over the number of police working on specialist operations — including the 'Plebgate' investigation.

"Home Affairs Select Committee chairman Keith Vaz asked Theresa May if the Met had enough people to deal with 'bread and butter' policing in London.

"Last week The Mirror revealed how more than 800 diplomatic protection group officers will be quizzed about Andrew Mitchell's 'pleb' row.

Later today, the committee will grill Met commissioner Sir Bernard Hogan-Howe on Mitchell, plebs and the Downing Street coppers. Watch this space.

9) 'WE'RE ALL IN THIS TOGETHER'

From the Mail's splash:

"The boss of an energy giant that has doubled its prices in just seven years could pocket a £13million payoff.

"Phil Bentley, who is to leave British Gas within months, has presided over above-inflation hikes that have pushed average bills past £1,300 a year.

"The latest punishing rise of 6 per cent comes as millions endure the greatest squeeze on living standards since the 1920s."

10) SORRELL'S STRIKER

My favourite story of the day, via the Guardian front page:

"Ronaldo, the World Cup winner and highest scorer in the tournament's history after spells at Inter and AC Milan as well as Real Madrid, plans to spend several months in London from next month studying advertising at the global ad firm WPP, run by Sir Martin Sorrell. He retired from football in 2011.

"'Eighteen years have passed and I've hardly studied at all; I feel a great need to become a student again,' Ronaldo told Brazil's Meio & Mensagem newspaper. 'I've learned a lot in life, travelling, living abroad, just in the school of life. But I also have to immerse myself in something.

"'Learning from Martin Sorrell will be perfect. I won't leave him alone, I'll be asking him questions the whole day, just like a striker. He's going to have to tell me everything.'"

You wouldn't want to take on WPP's lunchtime five-a-side team from now on, would you?

PUBLIC OPINION WATCH

From the Sun/YouGov poll:

Labour 41
Conservatives 32
Lib Dems 11

That would give Labour a majority of 96.

140 CHARACTERS OR LESS

@PickardJE Coalition mid-term review. 75 per cent what they've done; 20 per cent what we already knew they said they would do next. 5 per cent new-ish

@Labourpaul The 'Ronseal deal' line is all over the media - but was it scripted or an ad lib?

@PeterHain Labour voting tonight against cuts of up to £1300 for 4.6m women, half working. Two thirds hit by tax credit and benefit cuts are women

900 WORDS OR MORE

Rachel Sylvester, writing in the Times, says: "The austerity Government’s pledge to do what it says on the tin beyond 2015 shifts the centre of political gravity."

Steve Richards, writing in the Independent, says: "Forward, say Cameron and Clegg. But to where?"

Aditya Chakrabortty, writing in the Guardian, produces an "obituary" for the welfare state: "After decades of public illness, Beveridge's most famous offspring has died."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

More Britons join army of homeless

The number of people sleeping rough on the streets in Britain is on the rise according to recent statistics.

More Britons are joining the UK army of homeless and sleeping rough on the streets, according to fresh figures published by the Homelessness Monitor.

Fresh figures show rough sleeping has increased by 100 percent in some areas across the UK, while in a national count an increase of 23 percent has been recorded in a study carried out between autumn 2010 and 2011, local media reported.

As the coalition government continues to cut social services and council budgets, the increase in homelessness is greater than anything seen since the early 1990s. In London, an increase of 43 percent has been recorded as compared with the previous year’s statistics.

From among other countries’ nationals sleeping rough on the streets of London, a growing number of people from some eastern European nations, which are new comers to the European Union, are found sleeping rough on the London streets.

Figures published by the National Housing Federation show the number of people considered as statutory homeless has increased by 34 percent since 2009, while the use of bed-and-breakfast temporary accommodation to house homeless people has also increased dramatically.

Figures also showed that there were 2,750 families forced to live in temporary accommodation between January and March 2011, and the number of families in the same period for 2012 had risen to 3,960.

The Homelessness Monitor is a five year joint project between York University and Herriot Watt University Edinburgh.

Meanwhile, the homelessness charity, Shelter, reported that there are thousands of families across London at risk of losing their homes due to difficulties with falling behind with rents or mortgage payments.

Campbell Rob, chief executive of Shelter, said, “It’s truly shocking how many people in this country are living with the threat of becoming homeless. In some areas, the risk of being evicted or repossessed is so high that one home in every street could be affected.”

MOL/HSN/HE

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Cameron and Obama’s Hired Thugs Now Butchering Their Way Through Syria

David Cameron

Barak Obama and David Cameron, flanked by their ‘diplomats’ Hillary Clinton and William Hague, are all doing their bit to increase the bloodshed in Syria by backing the FSA rebel, al Qaida jihadist terrorists, who are presently working their way through the once stable country like termites eating through a once healthy home.

Blood comes cheap, and with budgets tight at home, western leaders are happy with the current arrangement. Rebel terrorist fighters are being paid between $500 and $2000 per month, and arms are free of charge through various NATO proxies and Gulf States. Their job assignment is a blunt one – to intimidate loyal pro-Syrian citizens, and to butcher thousands of innocent civilians – all in all, inflicting a reign of terror much like that one engineered by Washington in Nicaragua during the 1980′s. This is who Washington, London and Paris are backing in their quest to finally bring Syria under their globalist umbrella.

We have never have witnessed this level of open international criminality and hypocrisy by our puppet leaders in the West.

At least with Iraq, Bush and Blair tried to be creative with their lying by making up unbelievable stories of ”mobile anthrax labs”.

Nine years on, our well-paid elite political prostitutes don’t even bother with fish stories, they just put the weapons in the hands of terrorists, and pay these professional murderers to kill indiscriminately.

All this will eventually bring shame to the citizens of western nations in the long run, much the same way that the Nazis brought shame to the German people (but no shame to the corporations, bankers and elites though – because you can only feel shame if you have a conscious to begin with).

They will keep using the same tried and tested methods, unless they can be stopped by their own electorate.

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What QE3 Will Look Like

The recent financial fireworks in the US and in Europe have made it clear that QE3 is close at hand.  The third installment described herein is much more than just another revving up of the printing presses, as it will involve a paradigm shift intent on restoring currencies and maintaining the current  power structure.

It's an all too common mistake to see the central bankers and their mainstream media propagandists derided as incompetent fools.  These “fools”control the money and the message and it's their game to lose.  Most pundits think the powers that be have lost control and can do little more than kick the can down the road. They are wrong.  We are about to witness one of the greatest orchestrated events in human history; a monumental sleight of hand that will restore economic prosperity, keep the masses happy and most importantly- maintain the parasitic elites in power. 


Mainstream sources deride conspiracy theorists as simpletons unable to  deal with the complexity of the world;  the tin hat crowd are in need of a “God” or “bogeyman” to explain the evils of the world.  The sophisticated academics and journalists tell us that history is the product of countless interests fighting for limited resources. The cabal of bankers is nothing more than a mirage conjured up in the thirsty imagination of simpletons.
If one wears a shiny tin hat then the problem, and the solution, are very different: the 1%  crowd have created an enormous pyramid scheme supported by magnificent lies preached from schools, televisions, governments, churches, newspapers, universities and the like.  The mission is to wake up their brothers and the whole misbegotten scheme will melt into a sea of crisp consciousness.
What is is not in doubt is that the world reserve currency is nearing the end of its viability at least in its current form. The only other two options, the euro and the yen, are in as bad or worse shape.  The end game has arrived for the current monetary system which began with Bretton Woods in 1944. The sub prime crisis, the Fukushima earthquake and nuclear disaster and the PIGS (Portugal, Ireland, Greece & Spain) were the final nails in the coffin of the dollar reserve system. 
When humans existed in small groups as hunter gatherers, societies were generally egalitarian and specialization of labour was limited.  Since there were no full time enforcers, authority was relative and flexible as most tasks could be accomplished by most people; the groups “stickiness” was determined by the incremental benefits of the group.  As society progressed and the groups became larger, labor specialization increased efficiencies, allowing for full time armed forces and propagandists.  Elite rulers thrived off their capacity to control and made it very difficult for individuals to leave and make a go of it on their own. 
Men gave up their freedom as soon as they began plowing to eat.  The larger societies became, the more complex the control mechanisms of religion, slavery, standing armies and caste systems.
The main impulse of history has been for the 1% to maintain their power against the brave few intent on to replacing them.  The key novelty of the information age is the extreme specialization and unprecedented technologies of control the elites have today.  The modern citizen in an industrialized nation is more vulnerable then any other human in history.  He relies on his masters for everything from food and shelter to education and entertainment.  He is incapable of teaching his children, growing crops, entertaining himself, or, most importantly, thinking for himself.  Modern man is the ultimate souless slave.
The modern division of labor consists of a ruling class (top 1%) that control about 40% of all financial assets, a managerial class ( the top 2%-10%) who control about 35% of all assets, with  the other 90% of the working masses dividing up the 25% that’s left.
The pyramid is organized by a complex and highly specialized division of labor, state run education,  massive corporations, government bureaucracy, the judiciary, intelligence organizations, mediatic propaganda machines and mainstream religion.  Those rare few that actually wake up and see the zombie world are quickly diagnosed by the DSM-5 and given anti-depressants.
There are two things everyone wants all the time, and one of them is money.  Control of the money is the magic wand that rules the world.  All the other  religious, patriotic and historical paraphernalia are directly related to allowing the 1% to control the creation of money.  Take that away, and they are nothing but media hacks.
The current era which began with the creation of the Federal Reserve and the involvement  of the United States in WWI  is coming to an end.   The great mistake most “awake” people make is believing redemption is at hand while underestimating the ruling class.  The masters of propaganda and finance and are much more in control then they will ever reveal through their own channels.  Their imaginations are immense and their capacity to orchestrate drama has no limits.  They are the voice of reason while the dissenters are “diagnosed” with a collection of ailments that quickly marginalize them.
The Greatest Brand Ever Created
What should never be underestimated is the importance of the dollar for international commerce.  A dollar collapse would inevitably lead to a mad scramble for commodities and an unprecedented global economic downturn.  While there are solid world currencies, only three are large enough to be a reserve currency, and all three are mortally wounded.  No one will appreciate the incredible role the dollar has provided until it is gone.
The dollar began in the sixteenth century as the Bohemian Tolar which eventually became the eighteenth century standard Spanish silver piece which they pronounced dólar.  The Americans called it the dollar, determined it should have 24.057 grams of pure silver and adopted it as the US "money of account".  In 1933 Roosevelt pegged the dollar to .888 g of gold,  or $35 per ounce. Finally, under pressure from many central banks to convert their dollars to gold, Nixon established  the pure fiat era in 1971 which meant that the dollar was officially backed by nothing more than faith- it had become a pure paper currency.  The dollar was the symbol and expression of the American Empire in the 20th Century and it was the the pillar upon which globalization was accomplished.
No brand in history has ever become so ubiquitous.  From Tijuana to Tehran, from Vladivostock to Vanouver, from Senegal to Stockholm, a fistful of green backs will get you whatever your heart desires.  Through the greatest slight of hand in history, the 1% turned this once receipt for gold into nothing more than paper that they produced at will and for a dear price.  The dollar is the backbone of their parasitic existence, and QE3, the final QE, will be a valiant, brilliant attempt to restore the validity of the dollar regime and their control of it. QE3 will be a radical transition to a new era, similar to the  period of 1912 –1918. 
The top 1% was hurt in 2008. The financial disaster that was the sub prime debacle put them on the ropes leaving QE1 focused on buying up about $1 trillion in mortgage paper that had become almost impossible to move.  QE2 flooded equity and commodities markets with liquidity until the SP500 as well as most major commodities had regained their pre-2008 valuations in one of histories greatest bull markets.  QE1&amp;2 restored the financial wealth that the 1% had lost during the crisis.  Unfortunately, in doing so, the Feds (Federal Reserve and Federal Government) have put the last nails into the current dollar’s coffin.  They would argue that the dollar was already on its last legs post 2001, and they simply hastened the end by a few years- a small price to pay for restoring the fortunes of their masters.
To Kick or not to Kick (the can)
One should never confuse politicians- chronic can kickers- with the 1%.  Politicians are the shills and lackeys of the real power and generally are incapable of any kind of policy creation on their own.  The current stop gap measures to save the euro, the dollar and the yen were never meant to be anything more than breathing room for the 1% to recuperate their massive losses.  Their fortunes have been restored and now it's time to create a new, post American period of wealth and prosperity.  This will be accomplished by none other than mystery man himself, Barack Hussein Obama.
The are nomajor economic, political, or social problems in the developed, industrialized world that threaten the 1% other than excess debt.  The debt problem is not a real problem, but an abstract claim on present and future income (work) by the 1%.  The system is so utterly clogged that is reaching a point of complete paralysis .  We have entered the tumultuous and inevitable debt destruction period that is often the death knell of regimes.  Deflation, hyperinflation, default and revolution are the usual outcomes.  But there is another way.
The Big Finale


The New York Times recently reported on how banks were reducing the principal on thousands of performing  loans by about 50% in exchange for small increases in interest rates and new, clean promissory notes, with no MERS involvement.   As long as the Federal Reserve “adjusts” the reserve requirements for the bank to reflect half of the money that the bank created as “disappeared”, then for the bank, its no harm no foul.  They are off the hook for the same amount that they reduced for the borrower, and the small adjustment in interest rate recaptures some of the lost future interest earnings from the smaller loan size. 
This solution serves two absolutely critical functions for the banks and the 1% that control them.  First, the banks morbid balance sheets are wiped clean, marked to market and made pure.  No more zombie banks threatening the world.  Second, it frees up vast amounts of consumer income to re-charge the economy, create jobs etc.
The second part of the QE3 will be the ‘public debt crisis’.  Act I was  the S&amp;P downgrade and AIG (government owned) lawsuit against Bank of America which by a wild coincidence all happened on the same   "Black Monday" as the European Central Bank beginning quantitative easing by purchasing Spanish and Italian bonds.  Act II will see a few very large banks being ‘nationalised’ in both the US and Europe, (Bank of America and SocGen for example) and a massive mortgage principal reduction of about 50% will  follow as the President can nationalise banks without congressional approval through the “orderly liquidation authority” or OLA  provisions under Dodd-Frank.  Act III will see the US $14 trillion, as well as the Italian, Spanish, UK, Japanese etc.public debt being halved in exchange for balanced budgets and reduced social spending.  The $50 trillion or so in US unfunded liabilities will be wiped out in a new “social contract”.  Some student loan and Third World debt forgiveness will be thrown in for the full Kumbaya effect.
All of this will emerge out of a new “Bretton Woods” type of agreement that will be followed like the World Cup, Dancing with the Stars, Eurovision, the Superbowl, and the rest of the circus events meant to keep the plebs entertained.  The Euro, doomed to failure, will escape the fangs of a new dark age and emerge triumphant with the Ode to Joy playing in the background.  Logic will overcome chaos and a new age of enlightened corporate slavery will begin.  The only difference will be that the dollar will be replaced by a new reserve system that spreads ultimate control over more than one currency.
Barack Obama will emerge as the new Franklin Roosevelt, the reluctant revolutionary who saved the world.  Prosperity will return and the holders of the dollar, euro and yen debt while not avoiding a nasty haircut, will in exchange get a world willing once again to buy hand over fist again their oil and the products of their manufacturing base.  All of this will take place in a massive drama worthy of Hollywood (because it actually will be written by Hollywood types), keeping the sheeple glued to their televisions, talk radio etc.   They  will cheer when it all finishes with the good guys winning, just as they did when Bin Laden was killed, and when “major combat operations” ended in Iraq. 
Will the masses demand to know how banks can simply create and destroy money with a few clicks of a mouse?  Will they insist on dismantling the Fed and halving the size of the Federal Government?  Will they not rest until all their soldiers are brought home and the war mongers who started these conflicts brought to justice?

Unfortunately, no.  They won't ask any questions that can’t be explained away by the talking head de jour on Fox or MSNBC and the charade will continue, the matrix intact, for another generation to try to dismantle.


Special thanks to Jim Horky for editing this article.

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