Monday, July 20, 2009

Bailout Overseer Says Banks Misused TARP Funds

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Binyamin Appelbaum
July 20, 2009 - Washington Post

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Many of the banks that got federal aid to support increased lending have instead used some of the money to make investments, repay debts or buy other banks, according to a new report from the special inspector general overseeing the government's financial rescue program.

The report, which will be published Monday, surveyed 360 banks that got money through the end of January and found that 110 had invested at least some of it, that 52 had repaid debts and that 15 had used funds to buy other banks.

Roughly 80 percent of respondents, or 300 banks, also said at least some of the money had supported new lending.

The report by special inspector general Neil Barofsky calls on the Treasury Department to require regular, more detailed information from banks about their use of federal aid provided under the Troubled Asset Relief Program. The Treasury has refused to collect such information.

Doing so is "essential to meet Treasury's stated goal of bringing transparency to the TARP program and informing the American people and their representatives in Congress about what is being done with their money," the report said.

In a written response, the Treasury again rejected that call. Officials have taken the view that the exact use of the federal aid cannot be tracked because money given to a bank is like water poured into an ocean.

"Although it might be tempting to do so, it is not possible to say that investment of TARP dollars resulted in particular loans, investments or other activities by the recipient," Herbert M. Allison Jr., the assistant Treasury secretary who administers the rescue program, wrote in a letter to Barofsky.

The Treasury has required 21 of the nation's largest banks to file public reports each month showing the dollar volume of their new lending.

The government so far has invested more than $200 billion in more than 600 banks under a program that began in October with investments in nine of the largest banks. Some banks have started to repay the aid even as others continue to apply for it.

Officials said the program intended to increase the capital reserves of healthy banks, allowing them to make more loans. From the beginning, however, the government invested in troubled banks -- most prominently Citigroup -- that had publicly announced intentions to reduce lending.

The government has also used the money to encourage mergers, such as Bank of America's acquisition of Merrill Lynch and PNC's deal for National City.

The report provides the most comprehensive look to date at how banks have used the money, based on voluntary responses to a March survey. Banks were asked to describe how they used the money, but they were not asked to break down the amounts.

One response, which the report described as typical, said the money had been used "to make loans to credit worthy customers, and to facilitate resolution of problem assets on our books."

TOON

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Why Israel Is Fighting Toward its Own Demise

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Ira Chernus
July 19, 2009 - Religion Dispatches

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Israeli Jews are deeply worried about their nation's image around the world, and with good reason. Military occupation is never a pretty sight, especially when the occupiers have been there for 42 years, steadily taking over the occupied people's lands as the whole world watches on television and the internet. It's not surprising that Israel gets so little sympathy when it complains about its image problem—which only makes many Israelis worry more about their public image.

But if Israeli Jews want to escape that vicious cycle and improve their image, no amount of money spent on clever PR campaigns will help until they do something about a basic root of the problem: their own cultural self-image. Not all Israeli Jews have the same self-image, of course. But there is a complex one embedded in their national culture; a set of basic assumptions that shape their political discourse and their government's policy decisions.

The first assumption is obvious whenever Israelis hear that others don't see them in a positive light. Their culture gives them a ready-made response, one that goes back to the very roots of Zionism: The world criticizes us, picks on us, dislikes us, victimizes us simply because we are Jews.

Certainly not all Israelis Jews respond this way. Some assess the criticisms objectively and see whether there is any truth in them; though they are fighting an uphill battle against the dominant tendency of their society and its history. Since so many Israelis have learned to see themselves as victims, they take every criticism as further proof that they are unfairly singled out for the world's harsh judgment.

So in order to even approach a solution to the crisis in Israel/Palestine, it's necessary to ask: Where did this self-image come from? The whole Zionist project to create a Jewish state began not merely because Jews felt victimized, but because so many felt powerless to do anything about it as long as they lived among the goyim (gentiles). What's more, many early Zionists were ashamed of their weakness, seeing it as a sign that Jews were "abnormal." They expected to escape all those feelings once they had their own independent nation, with its own armed forces.

It doesn't seem to have worked out that way. They have the power, to be sure (by various accounts, the fourth, fifth, or sixth most effective military in the world) which they frequently put on display. But all that expenditure of effort and money—much of it from American tax dollars, but a considerable amount from Israelis' taxes—has apparently not purchased feelings of powerfulness, confidence, and pride.

On the contrary, Israeli political life seems dominated by anxiety. So, for example, the fear of an Iranian nuclear bomb (even just one, against Israel's two hundred or more) makes headlines in Israel nearly every day, like this one from the Jerusalem Post: "Iran Could Build Bomb Within a Year"; even though, as the article clearly states, the Israeli government "currently believes that worst-case scenario is not likely to materialize."

Israel's Defense Minister Ehud Barak betrayed the same sense of anxiety about weakness when he complained to the New York Times that with the Obama administration "focusing solely on settlement building and not on what the Arab countries should also be doing for peace, Israel felt that it was being driven to its knees and delivered to the other side."

That's a bizarre exaggeration. In fact, the administration is also focusing on what the Arab countries should be doing: moving toward normalized ties with Israel. And even were those demands not being made, the idea that a nation with far more military power than any of its neighbors is being "driven to its knees," simply because people want them to stop expanding settlements (which are illegal in the first place) seems out of touch with reality.

And, to be precise, it's not just "people" who want them to stop expanding settlements. It's the most powerful person in the world, the President of the United States. When POTUS says he wants something from Israel and makes it clear, in private, that he really means it, the Israeli government jumps—no matter who is heading it, no matter how hard they try to hide the fact. That was obvious as far back as the Persian Gulf War of 1991 when Israel was hit with a number of Iraqi missiles the Israeli government, which always boasts that it will respond harshly to any attack, did nothing because Washington put up a big red light.

Washington appears to be flashing the red light once again. According to the Washington Times, "a senior Israeli official said that Israel has not asked for US aid or permission [to attack Iran] because the Netanyahu government doesn't want to risk being told 'no.'" The obvious point is that when the United States says "no" and means it, Israeli leaders kneel down and obey; which is why Barak is so worried about Israel being "driven to its knees."

This is the plight Israel finds itself in: It wants to use force to prove to the world, and to itself, that Jews have finally escaped from their age-old powerlessness and the anxiety it breeds. But Israel can use force only when given permission by the goyim in Washington; which seems to prove that the Jews are still powerless.

If the goyim say "no," they can be dismissed as Jew-haters (or, if they happen to be Jewish, as "self-hating Jews," which is just how Israeli prime minister Benjamin Netanyahu has described Obama confidantes David Axelrod and Rahm Emanuel. But that merely reinforces the sense that Jews are surrounded by enemies, victims of a hatred that seems to have no end, and (once again) powerless.

Netanyahu, doing little to cloak his status in this vicious spiral of insecurity, told a meeting of EU ambassadors that "Israelis are not willing to be suckers." Of course no one is suggesting that Israelis are or should be suckers—except their prime minister. He's standing firm against every call for an end to settlement expansion just to prove that he and his people are not suckers. And his defense minister, Ehud Barak, leader of what was once the opposition party, is standing just as firm to prove that Israel won't be "driven to its knees."

Perhaps that's why they continue to attract the hawks calling for an attack on Iran; perhaps, rather than fear, it's the tempting opportunity to flex their national muscle that moves them. Yet every muscle flexed to prove their strength only reinforces their fear that they may not be, perhaps can never be, strong enough. Whether Israel unleashes or restrains its military power, either way there is no escape from anxiety.

There is a real bond between the leaders and the people on this point, according to columnist Doron Rosenblum in Israel's leading newspaper, Ha'aretz: "Netanyahu and Barak would not have achieved such positions of power if they did not represent at least two outstanding traits of Israeliness: aggressiveness and paranoia… They reflect two sides of the same coin—the fear of being considered weak and, the only thing that's worse, being considered naïve." All of which is really just a kind of psychological weakness.

Rosenblum rightly concludes that if Israelis shun Obama's peace overtures they are the real suckers. Yet he suspects that Israelis will respond to the president with "the usual default option, in which military aggressiveness and diplomatic suckerhood go hand in hand in perfect harmony." That's the tragic fruit of a culture built on a self-image of weakness and victimization.

That self-image is so pervasive, it has now become a self-fulfilling prophecy that can shape Israeli policy. According to an unnamed "senior Israeli official" quoted in Ha'aretz, "Israel is skeptical" that US envoy George Mitchell "would be able to coax Arab states to make concrete normalization commitments if only a temporary settlement freeze was declared." In other words, since we know that the other side hates us and will never make peace, we won't take a first step toward peace.

Most Israelis share this view, according to columnist Shmuel Rosner in the Jerusalem Post:

It is clear to the vast majority of Israelis that freezing the settlements will not bring about peace or security. That's why one doesn't see many Israelis supporting Obama's attempt to freeze the settlements. That's why no major political party in Israel can afford to be identified with the Obama way. It will be politically damaging.
Of course "it is clear" is only based on Israeli beliefs, not facts. Beliefs and feelings, on the other hand, are what drive voter sentiment in Israel as everywhere else.

With so many voters affecting a posture of permanent victimization, the government finds it politically safest to avoid taking even the first baby steps toward peace. Instead Israeli leaders play on the voters' fears (what Rosenblum calls "paranoia") by promising the other side of the coin: a more aggressive stance. They insist on expanding settlements, for example, even though Israel stands to lose far more than it can gain.

Two Israeli academics now have statistical data to confirm that fear has largely muted the Israeli public discourse on peace. The study, by Prof. Daniel Bar-Tal and Dr. Eran Halperin, showed that most Jewish Israelis view the conflict with the Palestinians through the lens of fear, which creates "a selective and distorted processing of information aimed at preserving conflict-beliefs." On the other hand, "only a small minority of Israelis evaluate the conflict through the ethical lenses of justice and morality."

The researchers claim to have found a silver lining: "People who were exposed to a scenario emphasizing the price Israel might have to pay for allowing the conflict to continue were more willing to accept new information and compromise, in comparison to those exposed to a scenario based on the fruits of peace." Logically, then, Israeli leaders should tell their voters that they stand to lose plenty if they don't support compromises for peace.

But here's the rub. If Israeli leaders express, or even hint at, that obvious truth, they will give public voice to the self-image of vulnerability and victimhood. They will reinforce the very anxiety that the existence of Israel was supposed to relieve, yet never did. And the voters will reject them.

Again, Israelis are stuck in a difficult plight: As long as the same old self-image pervades Israeli political culture, any policy their government adopts, whether for war or peace, will only intensify their anxiety. And their most familiar response to anxiety about weakness is to get tough.

The need to be tough—to prove that Israel won't be "driven to its knees" because Israelis are not "suckers"— goes far toward explaining the Netanyahu government's hardline positions. Most voters, having decided that they will always be victims, apparently want their leaders to use force in an endless attempt to prove to the world (but even more to themselves) that they are not powerless victims.

Of course that project is doomed to fail. It only perpetuates the conflict, reinforcing the sense of victimization that provokes more calls for force. Since the root of the problem lies in national self-image, nothing that any other nation does can make much difference. People caught in such a trap naturally have a hard time seeing any way to break out and extend a hand of peace to the other side. Instead they resort to the familiar pattern of blaming others, which sets the vicious cycle going all over again.

Perhaps Israelis will some day be so afraid of the dangerous consequences of rejecting peace that they will turn toward peace.

But it seems more likely that real peace will begin only when enough Israelis decide that they no longer want to define themselves by their traditional self-image, that they want a new one to match the reality of their power. Then the majority of Israeli voters will be able to find national pride not in the exercise of power but in the pursuit of peace. When that day comes, we can expect the Israeli government to begin sincerely and earnestly pursuing peace.

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Ira Chernus is Professor of Religious Studies at the University of Colorado at Boulder.

Air Force Plans for All-Drone Future

As of 2009 the Air Force's robotic drone fleet stands at 195 Predators and 28 Reapers.

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Is the day of the hot-shot fighter jock nearly done?

David Axe
July 19, 2009 - Wired

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An Air Force study, released without much fanfare on Wednesday, suggests that tomorrow's dogfighers might not have pilots in the cockpit. The Unmanned Aircraft System Flight Plan. which sketches out possible drone development through the year 2047, comes with plenty of qualifiers. But it envisions a radical future. In an acronym-dense 82 pages, the Air Force explains how ever-larger and more sophisticated flying robots could eventually replace every type of manned aircraft in its inventory — everything from speedy, air-to-air fighters to lumbering bombers and tankers.

Emphasis on "might" and "could." While revealing how robots can equal the capabilities of traditional planes, the Air Force is careful to emphasize that an all-bot air fleet is not inevitable. Rather, drones will represent "alternatives" to manned planes, in pretty much every mission category.

Some of the missions tapped for possible, future drones are currently considered sacrosanct for human pilots. Namely: dogfighting and nuclear bombing. Drones "are unlikely to replace the manned aircraft for air combat missions in the policy-relevant future," Manjeet Singh Pardesi wrote in Air & Space Power Journal, just four years ago. Dogfighting was considered too fluid, too fast, for a drone's narrow "situational awareness." As for nuclear bombing: "Many aviators, in particular, believe that a 'man in the loop' should remain an integral part of the nuclear mission because of the psychological perception that there is a higher degree of accountability and moral certainty with a manned bomber," Adam Lowther explained in Armed Forces Journal, in June.

Despite this, the Air Force identifies a future "MQ-Mc" Unmanned Aerial System for dogfighting, sometime after 2020. The MQ-Mc will also handle "strategic attack," a.k.a nuke bombing. Less controversial is the conjectural MQ-L, a huge drone that could fill in for today's tankers and transports.

But just because a drone could replace a manned plane, doesn't necessarily mean it definitely will. "We do not envision replacing all Air Force aircraft with UAS," Col. Eric Mathewson told Danger Room by email. "We do plan on considering UAS as alternatives to traditionally manned aircraft across a broad spectrum of Air Force missions … but certainly not all." In other words, in coming years drones might be able to do everything today's manned planes can do — technically speaking. But the Air Force still might find good reasons — moral, financial or otherwise — to keep people in some cockpits.

The Flight Plan represents a new twist in a heated debate raging in Congress over the Pentagon's 3,000-strong fighter force. The legislature is split over whether to fund more F-22 fighters — a move that could draw a veto from President Barack Obama. Secretary of Defense Robert Gates has long favored drone development over buying more manned fighters, and in May Joint Chiefs chair Admiral Mike Mullen predicted Gates' position would win out, over the long term. "There are those that see [the F-35 Joint Strike Fighter] as the last manned fighter," Mullen said. "I'm one that's inclined to believe that." General Atomics, which makes the popular Predator line of drones, underscored Mullen's comment by unveiling its new, faster Predator C.

If Flight Plan proves an accurate predictor, it's not just manned fighters (maybe) headed for extinction, but (maybe) nuclear bombers, transports, tankers … nearly all human-occupied military planes.