Wednesday, June 17, 2009

Stay the Course

Paul Krugman
Photo: Fred R. Conrad/The New York Times

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Paul Krugman
June 14, 2009 - The New York Times

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The debate over economic policy has taken a predictable yet ominous turn: the crisis seems to be easing, and a chorus of critics is already demanding that the Federal Reserve and the Obama administration abandon their rescue efforts. For those who know their history, it's déjà vu all over again — literally.

For this is the third time in history that a major economy has found itself in a liquidity trap, a situation in which interest-rate cuts, the conventional way to perk up the economy, have reached their limit. When this happens, unconventional measures are the only way to fight recession.

Yet such unconventional measures make the conventionally minded uncomfortable, and they keep pushing for a return to normalcy. In previous liquidity-trap episodes, policy makers gave in to these pressures far too soon, plunging the economy back into crisis. And if the critics have their way, we'll do the same thing this time.

The first example of policy in a liquidity trap comes from the 1930s. The U.S. economy grew rapidly from 1933 to 1937, helped along by New Deal policies. America, however, remained well short of full employment.

Yet policy makers stopped worrying about depression and started worrying about inflation. The Federal Reserve tightened monetary policy, while F.D.R. tried to balance the federal budget. Sure enough, the economy slumped again, and full recovery had to wait for World War II.

The second example is Japan in the 1990s. After slumping early in the decade, Japan experienced a partial recovery, with the economy growing almost 3 percent in 1996. Policy makers responded by shifting their focus to the budget deficit, raising taxes and cutting spending. Japan proceeded to slide back into recession.

And here we go again.

On one side, the inflation worriers are harassing the Fed. The latest example: Arthur Laffer, he of the curve, warns that the Fed's policies will cause devastating inflation. He recommends, among other things, possibly raising banks' reserve requirements, which happens to be exactly what the Fed did in 1936 and 1937 — a move that none other than Milton Friedman condemned as helping to strangle economic recovery.

Meanwhile, there are demands from several directions that President Obama's fiscal stimulus plan be canceled.

Some, especially in Europe, argue that stimulus isn't needed, because the economy is already turning around.

Others claim that government borrowing is driving up interest rates, and that this will derail recovery.

And Republicans, providing a bit of comic relief, are saying that the stimulus has failed, because the enabling legislation was passed four months ago — wow, four whole months! — yet unemployment is still rising. This suggests an interesting comparison with the economic record of Ronald Reagan, whose 1981 tax cut was followed by no less than 16 months of rising unemployment.

O.K., time for some reality checks.

First of all, while stock markets have been celebrating the economy's "green shoots," the fact is that unemployment is very high and still rising. That is, we're not even experiencing the kind of growth that led to the big mistakes of 1937 and 1997. It's way too soon to declare victory.

What about the claim that the Fed is risking inflation? It isn't. Mr. Laffer seems panicked by a rapid rise in the monetary base, the sum of currency in circulation and the reserves of banks. But a rising monetary base isn't inflationary when you're in a liquidity trap. America's monetary base doubled between 1929 and 1939; prices fell 19 percent. Japan's monetary base rose 85 percent between 1997 and 2003; deflation continued apace.

Well then, what about all that government borrowing? All it's doing is offsetting a plunge in private borrowing — total borrowing is down, not up. Indeed, if the government weren't running a big deficit right now, the economy would probably be well on its way to a full-fledged depression.

Oh, and investors' growing confidence that we'll manage to avoid a full-fledged depression — not the pressure of government borrowing — explains the recent rise in long-term interest rates. These rates, by the way, are still low by historical standards. They're just not as low as they were at the peak of the panic, earlier this year.

To sum up: A few months ago the U.S. economy was in danger of falling into depression. Aggressive monetary policy and deficit spending have, for the time being, averted that danger. And suddenly critics are demanding that we call the whole thing off, and revert to business as usual.

Those demands should be ignored. It's much too soon to give up on policies that have, at most, pulled us a few inches back from the edge of the abyss.

Audit Finds That US Overpaid Blackwater by Tens of Millions of Dollars

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Yochi J. Dreazen
June 16, 2009 - Wall Street Journal

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A government audit found that the State Department overpaid the contract-security firm once known as Blackwater Worldwide by tens of millions of dollars because the company failed to properly staff its teams in Iraq.

The report didn't identify any specific security breaches, but it said the State Department should have withheld at least $55 million in payments to the company because of the shortfalls.

The audit by the Special Inspector General for Iraq Reconstruction and the State Department's Inspector General said the firm didn't employ enough guards, medics, marksmen and dog handlers to fully man the teams, which were responsible for protecting the U.S. ambassador to Iraq and other high-level officials.

The failure to consistently field the right numbers of guards endangered the U.S. officials whom the company was being paid to protect, the report concluded.

"We believe the full manning of protective details is important to the safety of the principal being protected, as well as to the members of the protective details," the audit noted. "Insufficient manning exposed the department to unnecessary risk."

The audit also found that Blackwater, which this year changed its name to Xe, sometimes overcharged for airfare to and from Iraq and failed to properly account for some equipment received from the U.S. government.

Anne Tyrell, a company spokeswoman, said it had been "fully compliant with the terms and conditions of the contract." Ms. Tyrrell said the company believed it was entitled to all of the disputed $55 million.

Officials in the State Department's Diplomatic Security office, which oversaw the contract, referred questions to the department's Bureau of Administration, which declined to comment.

The audit is the latest report to raise questions about Blackwater, which was for years the best known Western contractor in Iraq. Under the new name, Xe, the company is seeking new contracts worth tens of millions of dollars in Afghanistan for services ranging from training Afghan personnel to flying cargo for the U.S. military.

Blackwater wound down its Iraq operations earlier this year, after the Iraqi government refused to renew its operating license because of a 2007 shooting incident involving one of its security teams in which 17 Iraqis died. In December, U.S. prosecutors charged five former Blackwater guards with manslaughter and weapons charges for their alleged roles in the incident. Families of several of the dead Iraqis have also sued Blackwater in federal court seeking financial compensation.

The company also faces civil and criminal scrutiny stemming from the alleged killing of an Iraqi guard by a Blackwater employee inside Baghdad's heavily protected Green Zone on Christmas Eve 2006.

In Afghanistan, four U.S. contractors affiliated with Xe are under U.S. military investigation in the shooting of a civilian vehicle in Kabul last month, wounding at least two Afghan civilians.

The company has said it is cooperating with the investigations into all three incidents but denied responsibility. When the five former guards were indicted in December, the company said it didn't believe "criminal violations occurred" but that the men should be held accountable for any wrongdoing. The company fired the guard involved in the Christmas Eve shooting, fined him thousands of dollars and sent him back to the U.S.

Last month, the company said it terminated the contracts of all four of the guards involved in the Kabul shooting.

Detainee says he lied to CIA in harsh interrogations

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Khalid Shaikh Mohammed, the self-proclaimed mastermind of the Sept. 11 attacks, told the U.S. military that he made up stories, documents show. The news could intensify the debate over interrogations.

Julian E. Barnes and Greg Miller
June 16, 2009 - Los Angeles Times

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Self-proclaimed Sept. 11 mastermind Khalid Shaikh Mohammed told U.S. military officials that he had lied to the CIA after being abused, according to documents made public Monday. The claim is likely to intensify the debate over whether harsh interrogation techniques generated accurate information.

Mohammed made the assertion during hearings at Guantanamo Bay, Cuba, where he was transferred in 2006after being held at secret CIA sites since his capture in 2003.


"I make up stories," Mohammed said, describing in broken English an interrogation probably administered by the CIA concerning the whereabouts of Al Qaeda leader Osama bin Laden. "Where is he? I don't know. Then, he torture me," Mohammed said of his interrogator. "Then I said, 'Yes, he is in this area.' "

Mohammed also appeared to say that he had fingered people he did not know as being Al Qaeda members in order to avoid abusive treatment. Although there is no way to corroborate his statements, Mohammed is one of the militants whom the CIA repeatedly subjected to the simulated-drowning technique known as waterboarding.

The newly released information could amplify calls for the Obama administration to make public more details about the treatment of terrorism suspects or allow a broader inquiry into the George W. Bush administration's interrogation policies. Monday's disclosure represented a rare allegation by a detainee that he had lied while being subjected to harsh practices.


A lawyer for the American Civil Liberties Union, which obtained the documents through a Freedom of Information Act lawsuit, said Mohammed's statements raised questions about the effectiveness of the CIA's interrogation program.

"It underscores the unreliability of statements obtained by torture," said Jameel Jaffer, director of the ACLU's National Security Project.

The CIA, however, took issue with the description of its interrogation techniques as torture and the assertion that they were not useful.

"The CIA plainly has a very different take on its past interrogation practices -- what they were and what they weren't -- and on the need to protect properly classified national security information," said Paul Gimigliano, an agency spokesman.

The bulk of the documents released Monday, consisting of transcripts of court hearings held at Guantanamo Bay for accused Al Qaeda members, had been previously released. But the Bush administration classified many parts of them, including detainees' allegations that they were abused while in CIA custody. The re-released transcripts remained heavily redacted, containing long passages of blacked-out text.

The ACLU expressed disappointment that President Obama, who has pledged greater openness, had decided to withhold so much of the information.

"The public has a right to know what took place in the CIA's secret prisons," Jaffer said, adding that the ACLU would continue to press in court for completely unclassified versions of transcripts from the Guantanamo Bay tribunals.

In addition to Mohammed's allegation that he had offered false information after being tortured, the documents contained some new details about the detention of terrorism suspects.

A newly declassified portion of Mohammed's transcript showed that the CIA apparently told him that he had no constitutional rights.

"This is what I understand he told me: You are not American and you are not on American soil," Mohammed said in the military hearing. "So you cannot ask about the Constitution."

Ben Wizner, the lead ACLU lawyer in the lawsuit seeking an unclassified version of the transcripts, said the fact that the CIA had previously sought to classify that statement was extraordinary.

"Why would the Bush administration suppress [Mohammed's] statement that he was told by the CIA that he was not protected by the Constitution?" Wizner said. "This was suppressed to avoid embarrassment."

The newly declassified material provided little new information on the treatment of another detainee, accused Al Qaeda facilitator Abu Zubaydah. He was captured in a violent raid on a Pakistani compound in March 2002.

On one page, the CIA declassified two paragraphs in which Abu Zubaydah complained about a lack of treatment for injuries he sustained in the shootout, including the loss of a testicle.

"They did not care about my injuries that they inflicted to my eye, to my stomach, to my bladder, and my left thigh and my reproductive organs," Abu Zubaydah said.

He went on to complain that he was "losing my masculinity. Even my beard is falling out, not from injuries but from the lack of treatment."

Wizner said the techniques the CIA used to interrogate Al Qaeda suspects were made public when the Obama administration this year released Justice Department legal memos authorizing them, so there was no reason to keep the detainees' testimony secret.

"There is only one explanation for the continued suppression. It is not to protect national security, it is to protect the CIA from accountability," Wizner said.

Despite the CIA's efforts to suppress prisoners' statements about their treatment, other sources have provided highly detailed accounts -- including a 2007 Red Cross report that surfaced publicly this year.

In that document, Abu Zubaydah described his reaction to being waterboarded, saying he thought he was going to die.


"I lost control of my urine," Abu Zubaydah told the Red Cross, according to the organization's report. "Since then I still lose control of my urine when under stress."

In the documents released Monday, Rahim Nashiri, who is accused of involvement in the bombing of the U.S. destroyer Cole in 2000, described the aftereffects of his questioning.

"Before I was arrested I used to be able to run about 10 kilometers," he said at the hearing in March 2007. "Now I cannot walk for more than 10 minutes. My nerves are swollen in my body."

And in another newly released portion of the transcript, he described how government officials would "drown me in water," a reference to the CIA's waterboarding technique.

More than 7 1/2 pages of the hearing transcript of Majid Khan, another accused Al Qaeda member, remained classified and appeared as one long block of blacked-out text. Among the few newly released statements of Khan's include his assertion that the evidence against him was a result of torture.

"In the end," he said, "any classified information you have is through [redacted] agencies who physically and mentally tortured me."

Water Risks Ripple Through the Beverage Industry

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Martinne Geller
June 16, 2009 - Reuters

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At New York's Del Posto, diners can share a $130 entree of wild branzino fish with roasted fennel and peperonata concentrato and a $3,600 bottle of Dom Perignon. They cannot share a bottle of Perrier or San Pellegrino water.

The Italian restaurant backed by celebrities Mario Batali and Joseph Bastianich is one of several shunning bottled water, along with the city of San Francisco and New York state.

"The argument for local water is compelling and obvious," said Bastianich, who is phasing out bottled water across his restaurant empire, which stretches to Los Angeles.

"It's about transportation, packaging, the absurdity of moving water all over the world," he said.

As environmental worries cut into sales from traditionally lucrative bottled water, beverage companies such as Coca-Cola, PepsiCo, Nestle and SABMiller are becoming more attuned to the risks of negative consumer environmental perceptions.

Water is becoming scarcer, raising a fear that so-far manageable price increases could spike and leading drink companies to take action to maintain access to water and fight their image as water hogs.

"Water is the new oil," said Steve Dixon, who manages the Global Beverage Fund at Arnhold & S. Bleichroeder, repeating what has become a mantra as climate change and population growth tax water supplies.

"As an investor, I'm not concerned about the reality," Dixon said, guessing there will always be enough water overall. "But I'm aware of the perceptions ... and you can't totally shrug it off because perceptions are important."

About a third of the world's people now live in areas of water stress, said Brooke Barton, manager of corporate accountability for Ceres, a network of environmental groups and investors seeking to address sustainability challenges. By 2025, she said it will be more like two-thirds.

COST

Water is still cheap, but that is changing.

"(Water) is currently not a very big cost. The issue is where it will it go in the future," said Andy Wales, head of sustainable development for brewer SABMiller, which used 94.5 billion liters of water in its latest fiscal year. That works out to 4.5 liters for every liter of beer it made.

Water and energy combined only made up 5 percent of its costs, overshadowed by brewing ingredients, bottling materials and labor. Still the brewer said water costs at a Bogota, Colombia plant are rising some 12 percent a year from increased soil being washed into the river as cattle grazing upstream causes deforestation.

New water pricing schemes are emerging, such as the European Union's Water Framework Directive that will tax water from 2010 to encourage more sustainable use.

Some 70 percent of the water the world uses is for agriculture, while industry uses 20 percent. But any industry reliant on agriculture -- from meat to jeans -- has more to wade through than its own use.

SABMiller is one of a few companies, including Coke and Pepsi, calculating "water footprints." It found that water used throughout its supply chain, such as to grow barley and hops, can be 34 times more than its use alone.

With 139 breweries on six continents, the brewer's total water use can range from about 40 liters for a liter of beer in Central Europe to 155 liters in South Africa. Using the smaller ratio as a proxy, SABMiller's entire "water footprint" was roughly 8.4 trillion liters of water last year, more than double what the small nation of Iceland used in 2004.

"In the long term we do see it as a risk," Wales said.

REPUTATION

As they face criticism, multinational drink companies are setting water conservation targets, building community wells and more efficient factories, working with locals on sustainable farming, water harvesting and reforestation and looking for new technologies to reduce their water consumption even as they make more drinks.

"For our type of business, or any that have a very direct link to water ... We've got to play that role," said Greg Koch, Coke's managing director of global water stewardship.

Within their own walls, nonalcoholic drink makers use one out of every 3,300 gallons, or 0.03 percent, of the groundwater used in the United States, according to the American Beverage Association. But its symbolism as a visible user puts the sector at the forefront of the fight over water resources, said Kim Jeffery, chief executive of Nestle Waters North America.

"Picking on our industry is like a gnat on the elephant," said Jeffery, whose 2003 contract to build a bottling plant in McCloud, California has been derailed by opposition from residents and groups concerned about the environmental impact and the threat of water privatization.

Nestle just began a 3-year study of the area's resources, but Jeffery said there is a good chance the project will never happen, due to changing economics and cold feet on both sides.

"At the end of the day, if they don't want us there, we won't be there," he said.

Tom Pirko, president of consulting firm Bevmark LLC, said it is key for companies to act in line with consumers' mindsets on such issues, since it is hard in such a crowded marketplace to regain support once it evaporates.

Coca-Cola learned that the hard way, after a drought in the Indian state of Kerala led to the closure of its bottling plant there amid criticism that it was sucking the water table dry.

Coke said its plant did not fuel the shortages, but an outcry still spread across the globe, with students in Britain and North America urging boycotts. Massachusetts' Smith College even severed a five-decade relationship with the company by refusing to let it bid for its soft drink contract.

"What we lost there was the social license to operate," Koch said. Environmental and community groups are still fighting to kick Coke out of other villages in India.

"When the consumer turns against you, you're dead," Pirko said.

CIA Axes $1000-A-Day Waterboarding Experts

Psychologists Bruce Jessen, left, and Jim Mitchell shaped the CIA's interrogation program of al Qaeda detainees, including Abu Zubaydah. Both refused to speak to ABC News citing confidentiality agreements with the U.S. government.(ABC News)

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'Architects' of Enhanced Interrogation Program Among Recent Contractor Purge

Matthew Cole
June 16, 2009 - ABC News

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The CIA has reportedly cut its ties to the two psychologists credited for being the architects of the CIA's brutal interrogation program after 9/11, a news report said yesterday. Dr. James Mitchell and Dr. Bruce Jessen, who suggested and supervised waterboarding at secret prisons around the world have been told their services are no longer needed. Mitchell and Jessen, according to their associates, boasted of being paid $1,000 a day by the CIA to oversee the use of the technique on top al Qaeda suspects.

Their firings came during a purge by CIA Director Leon Panetta of all contractors involved in the interrogation program. In early April, Panetta told CIA employees that contractors involved in the interrogation program and secret prisons were being "promptly terminated."

Tuesday, June 16, 2009

TOON

Whistling Past the Economic Graveyard

- Congressional Budget Office

For the top one percent, that's a pretty impressive period. For the next 19 percent, there's something happening. But for the bottom 80 percent, there's just very little going on in terms of real income growth. There was, however, pretty robust consumption growth fueled by the credit boom and declining savings rates. The current downturn is now threatening that and calling into question the sustainability and worth of the overall growth throughout the period. - Yglesias

Additional graphs:

http://www.cbo.gov/publications/collections/tax/2009charts.cfm

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Whistling Past the Economic Graveyard: The Audacity of Misplaced Hope

Arianna Huffington
June 15, 2009 - Huffington Post
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Is it possible to have too much hope? To be too optimistic? Yes, if that hope keeps you from facing -- and dealing with -- unpleasant realities.

That seems to be what's happening regarding the financial institutions responsible for the economic meltdown.

Let's start with the banks' toxic assets. When Tim Geithner unveiled the Public Private Investment Program, he said that dealing with these assets was a "core" part of solving the financial crisis.

But the banks would much rather keep pretending that their toxic assets are not that toxic, and worth much more than they really are -- a risky charade the relaxed mark-to-market rules allow them to continue to pull off.

So, last week, the PPIP program was apparently scrapped. Does this mean that the toxic assets are no longer a "core" part of the problem? Or that hoping they're no longer part of the problem will somehow make them no longer part of the problem?

"Hope sustains life, but misplaced hope prolongs recessions." So says Jim Grant, publisher of the Grant's Interest Rate Observer newsletter, whom I interviewed last week on Squawk Box. Because of misplaced hope, Grant says, business people, homeowners -- and administrations -- often refuse to admit the truth and take the painful steps necessary to turn things around.

On Wednesday, President Obama will lay out the details of his administration's plan to remake the financial regulatory system. Geithner and Larry Summers offered a sneak peak at the plan in an op-ed in today's Washington Post, proclaiming, "we must begin today to build the foundation for a stronger and safer system."

Among the proposals: "raising capital and liquidity requirements for all institutions"; "consolidated supervision by the Federal Reserve"; "robust reporting requirements on the issuers of asset-backed securities" including "strong oversight of 'over the counter' derivatives"; and providing "a stronger framework for consumer and investor protection across the board."

The devil, of course, will be in the details. And on how much muscle Obama puts behind pushing these measures through and ensuring they become law without being watered down. Especially at a time when the latest stock market bubble has undermined the urgent push for reform, which seems to have given way to a push to move on to other things and leave that little financial kerfuffle behind us.

And investors seem anxious to do the same. Witness the "fierce rally" in the collateralized loan obligation market. CLOs are made up of sliced and diced assets (including high-risk and junk loans) -- and are kissing cousins to the collateralized-debt obligations (i.e. crap) at the heart of the financial meltdown. But according to analysts at Morgan Stanley there has recently been a "remarkable change" in investor sentiment towards these securities, including an "exuberance" for the lowest grade junk being sold.

In other words, we are right back to risky business as usual. No harm, no foul. Let's get back to the fun we were having before this whole worldwide economic collapse thing started happening.

It puts a whole other spin on the audacity of hope.

Too many in Washington -- and in the media continue to take the well-being of Wall Street as the proper gauge for the well-being of the rest of America. Yes, the Dow is up 33 percent since March. But another 345,000 jobs were lost in May, raising the number of the unemployed to 14.5 million, and the unemployment rate to 9.4 percent. Since the start of the recession in December 2007, unemployment has almost doubled.

What's more, as this chart shows, over the past two decades, the top one percent of Americans has done very well in terms of wage growth. Things have not been nearly as good for everybody else.

Are the reforms going to be sufficiently fundamental to avoid a repeat of the boom and bust cycles, in which only a select few enjoy the boom and everybody else pays for the bust?

The American Empire Is Bankrupt

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Chris Hedges
June 15, 2009 - TruthDig.com

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This week marks the end of the dollar's reign as the world's reserve currency. It marks the start of a terrible period of economic and political decline in the United States. And it signals the last gasp of the American imperium. That's over. It is not coming back. And what is to come will be very, very painful.

Barack Obama, and the criminal class on Wall Street, aided by a corporate media that continues to peddle fatuous gossip and trash talk as news while we endure the greatest economic crisis in our history, may have fooled us, but the rest of the world knows we are bankrupt. And these nations are damned if they are going to continue to prop up an inflated dollar and sustain the massive federal budget deficits, swollen to over $2 trillion, which fund America's imperial expansion in Eurasia and our system of casino capitalism. They have us by the throat. They are about to squeeze.

There are meetings being held Monday and Tuesday in Yekaterinburg, Russia, (formerly Sverdlovsk) among Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization. The United States, which asked to attend, was denied admittance. Watch what happens there carefully. The gathering is, in the words of economist Michael Hudson, "the most important meeting of the 21st century so far."

It is the first formal step by our major trading partners to replace the dollar as the world's reserve currency. If they succeed, the dollar will dramatically plummet in value, the cost of imports, including oil, will skyrocket, interest rates will climb and jobs will hemorrhage at a rate that will make the last few months look like boom times. State and federal services will be reduced or shut down for lack of funds. The United States will begin to resemble the Weimar Republic or Zimbabwe. Obama, endowed by many with the qualities of a savior, will suddenly look pitiful, inept and weak. And the rage that has kindled a handful of shootings and hate crimes in the past few weeks will engulf vast segments of a disenfranchised and bewildered working and middle class. The people of this class will demand vengeance, radical change, order and moral renewal, which an array of proto-fascists, from the Christian right to the goons who disseminate hate talk on
Fox News, will assure the country they will impose.

I called Hudson, who has an article in Monday's Financial Times called "The Yekaterinburg Turning Point: De-Dollarization and the Ending of America's Financial-Military Hegemony." "Yekaterinburg," Hudson writes, "may become known not only as the death place of the czars but of the American empire as well." His article is worth reading, along with John Lanchester's disturbing exposé of the world's banking system, titled "It's Finished," which appeared in the May 28 issue of the London Review of Books.

"This means the end of the dollar," Hudson told me. "It means China, Russia, India, Pakistan, Iran are forming an official financial and military area to get America out of Eurasia. The balance-of-payments deficit is mainly military in nature. Half of America's discretionary spending is military. The deficit ends up in the hands of foreign banks, central banks. They don't have any choice but to recycle the money to buy U.S. government debt. The Asian countries have been financing their own military encirclement. They have been forced to accept dollars that have no chance of being repaid. They are paying for America's military aggression against them. They want to get rid of this."

China, as Hudson points out, has already struck bilateral trade deals with Brazil and Malaysia to denominate their trade in China's yuan rather than the dollar, pound or euro. Russia promises to begin trading in the ruble and local currencies. The governor of China's central bank has openly called for the abandonment of the dollar as reserve currency, suggesting in its place the use of the International Monetary Fund's Special Drawing Rights. What the new system will be remains unclear, but the flight from the dollar has clearly begun. The goal, in the words of the Russian president, is to build a "multipolar world order" which will break the economic and, by extension, military domination by the United States. China is frantically spending its dollar reserves to buy factories and property around the globe so it can unload its U.S. currency. This is why Aluminum Corp. of China made so many major concessions in the failed attempt to salvage its
$19.5 billion alliance with the Rio Tinto mining concern in Australia. It desperately needs to shed its dollars.

"China is trying to get rid of all the dollars they can in a trash-for-resource deal," Hudson said. "They will give the dollars to countries willing to sell off their resources since America refuses to sell any of its high-tech industries, even Unocal, to the yellow peril. It realizes these dollars are going to be worthless pretty quickly."

The architects of this new global exchange realize that if they break the dollar they also break America's military domination. Our military spending cannot be sustained without this cycle of heavy borrowing. The official U.S. defense budget for fiscal year 2008 is $623 billion, before we add on things like nuclear research. The next closest national military budget is China's, at $65 billion, according to the Central Intelligence Agency.

There are three categories of the balance-of-payment deficits. America imports more than it exports. This is trade. Wall Street and American corporations buy up foreign companies. This is capital movement. The third and most important balance-of-payment deficit for the past 50 years has been Pentagon spending abroad. It is primarily military spending that has been responsible for the balance-of-payments deficit for the last five decades. Look at table five in the Balance of Payments Report, published in the Survey of Current Business quarterly, and check under military spending. There you can see the deficit.

To fund our permanent war economy, we have been flooding the world with dollars. The foreign recipients turn the dollars over to their central banks for local currency. The central banks then have a problem. If a central bank does not spend the money in the United States then the exchange rate against the dollar will go up. This will penalize exporters. This has allowed America to print money without restraint to buy imports and foreign companies, fund our military expansion and ensure that foreign nations like China continue to buy our treasury bonds. This cycle appears now to be over. Once the dollar cannot flood central banks and no one buys our treasury bonds, our empire collapses. The profligate spending on the military, some $1 trillion when everything is counted, will be unsustainable.

"We will have to finance our own military spending," Hudson warned, "and the only way to do this will be to sharply cut back wage rates. The class war is back in business. Wall Street understands that. This is why it had Bush and Obama give it $10 trillion in a huge rip-off so it can have enough money to survive."

The desperate effort to borrow our way out of financial collapse has promoted a level of state intervention unseen since World War II. It has also led us into uncharted territory.

"We have in effect had to declare war to get us out of the hole created by our economic system," Lanchester wrote in the London Review of Books. "There is no model or precedent for this, and no way to argue that it's all right really, because under such-and-such a model of capitalism ... there is no such model. It isn't supposed to work like this, and there is no road-map for what's happened."

The cost of daily living, from buying food to getting medical care, will become difficult for all but a few as the dollar plunges. States and cities will see their pension funds drained and finally shut down. The government will be forced to sell off infrastructure, including roads and transport, to private corporations. We will be increasingly charged by privatized utilities—think Enron—for what was once regulated and subsidized. Commercial and private real estate will be worth less than half its current value. The negative equity that already plagues 25 percent of American homes will expand to include nearly all property owners. It will be difficult to borrow and impossible to sell real estate unless we accept massive losses. There will be block after block of empty stores and boarded-up houses. Foreclosures will be epidemic. There will be long lines at soup kitchens and many, many homeless. Our corporate-controlled media, already banal and
trivial, will work overtime to anesthetize us with useless gossip, spectacles, sex, gratuitous violence, fear and tawdry junk politics. America will be composed of a large dispossessed underclass and a tiny empowered oligarchy that will run a ruthless and brutal system of neo-feudalism from secure compounds. Those who resist will be silenced, many by force. We will pay a terrible price, and we will pay this price soon, for the gross malfeasance of our power elite.

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Chris Hedges writes a regular column for Truthdig.com. Hedges graduated from Harvard Divinity School and was for nearly two decades a foreign correspondent for The New York Times. He is the author of many books, including: War Is A Force That Gives Us Meaning, What Every Person Should Know About War, and American Fascists: The Christian Right and the War on America.  His most recent book is called, Empire of Illusion: The End of Literacy and the Triumph of Spectacle, and it will be out in July.

World Bank Loan Withdrawn From Brazilian Cattle Corporation

The US based Cargill corporation burns large areas of rainforest to prepare for soya plantations. (Greenpeace)

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Frank McDonald
June 15, 2009 - The Irish Times

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The International Finance Corporation (IFC), private lending arm of the World Bank, has withdrawn a $90 million loan to Brazilian cattle industry giant Bertin, following complaints that it was using the money to expand further into the Amazon region.

"It is good news that the World Bank is withdrawing these funds, yet scandalous that it was feeding a company that causes Amazon deforestation and climate change in the first place," said Paulo Adario, Greenpeace Brazil's Amazon campaign director.

The move came two weeks after a Greenpeace report, Slaughtering the Amazon, revealed that financial backing for the Brazilian cattle industry had turned it into the largest single source of deforestation in the world.

The report, based on a three-year undercover investigation, showed how Bertin and two other Brazilian companies supplying the global market with cattle products for top brands and supermarkets buy cattle from Amazon farms involved in illegal deforestation.

By helping Bertin to expand into the Amazon, Greenpeace said the IFC had been driving further destruction of the rainforest, a haven for biodiversity and one of the world's key defences against climate change because of its crucial role as a "carbon sink".

"For a bank that portrays itself as the 'knowledge bank', this was a very ill-conceived and thoroughly destructive use of its resources", Mr Adario said at the weekend. "It must now guarantee that it will not invest in such damaging projects in the future."

The last $30 million loan from the IFC will no longer be given to Bertin and it is anticipated that the World Bank subsidiary will ask that the $60 million it had already invested in the company be returned early.

Tropical deforestation is responsible for approximately 20 per cent of global greenhouse gas emissions, and Brazil has been ranked by Greenpeace as the world's fourth biggest "climate polluter".

Following the slow progress of climate talks in Bonn over the past two weeks, Greenpeace is calling on world leaders to "take personal responsibility for securing an effective climate-saving deal" by attending the UN Climate Summit in Copenhagen next December.

"This would include providing $110 million a year for developing countries to tackle the climate crisis, $40 million a year of which should go towards forest protection in return for commitments to end deforestation in the Amazon by 2015 and globally by 2020."

Last week, Brazilian president Lula da Silva announced that he would veto clauses in an Amazon land reform Bill that would legalise the landholdings of millions of people who have settled in the region - a move that could spur more deforestation.

"We want to be an example to the world in taking care of our own things," he said, adding that Brazil was now open to adopting targets to cut its own greenhouse gas emissions if rich countries agreed to do more.

Neo-Nazis are in the Army now

Iraq veteran Forrest Fogarty sailed through recruitment despite his neo-Nazi tattoos. (Photo: Salon)

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Why the U.S. military is ignoring its own regulations and permitting white supremacists to join its ranks.

Editor's note: Research support for this article was provided by the Nation Institute's Investigative Fund.

Matt Kennard
June 15, 2009 - Salon

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On a muggy Florida evening in 2008, I meet Iraq War veteran Forrest Fogarty in the Winghouse, a little bar-restaurant on the outskirts of Tampa, his favorite hangout. He told me on the phone I would recognize him by his skinhead. Sure enough, when I spot a white guy at a table by the door with a shaved head, white tank top and bulging muscles, I know it can only be him.

Over a plate of chicken wings, he tells me about his path into the white-power movement. "I was 14 when I decided I wanted to be a Nazi," he says. At his first high school, near Los Angeles, he was bullied by black and Latino kids. That's when he first heard Skrewdriver, a band he calls "the godfather of the white power movement." "I became obsessed," he says. He had an image from one of Skrewdriver's album covers — a Viking carrying a staff, an icon among white nationalists — tattooed on his left forearm. Soon after he had another white power symbol, a Celtic cross, emblazoned on his stomach.

At 15, Fogarty moved with his dad to Tampa, where he started picking fights with groups of black kids at his new high school. "On the first day, this bunch of niggers, they thought I was a racist, so they asked, 'Are you in the KKK?'" he tells me. "I said, 'Yeah,' and it was on." Soon enough, he was expelled.

For the next six years, Fogarty flitted from landscaping job to construction job, neither of which he'd ever wanted to do. "I was just drinking and fighting," he says. He started his own Nazi rock group, Attack, and made friends in the National Alliance, at the time the biggest neo-Nazi group in the country. It has called for a "a long-term eugenics program involving at least the entire populations of Europe and America."

But the military ran in Fogarty's family. His grandfather had served during World War II, Korea and Vietnam, and his dad had been a Marine in Vietnam. At 22, Fogarty resolved to follow in their footsteps. "I wanted to serve my country," he says.

Army regulations prohibit soldiers from participating in racist groups, and recruiters are instructed to keep an eye out for suspicious tattoos. Before signing on the dotted line, enlistees are required to explain any tattoos. At a Tampa recruitment office, though, Fogarty sailed right through the signup process. "They just told me to write an explanation of each tattoo, and I made up some stuff, and that was that," he says. Soon he was posted to Fort Stewart in Georgia, where he became part of the 3rd Infantry Division.

Fogarty's ex-girlfriend, intent on destroying his new military career, sent a dossier of photographs to Fort Stewart. The photos showed Fogarty attending white supremacist rallies and performing with his band, Attack. "They hauled me before some sort of committee and showed me the pictures," Fogarty says. "I just denied them and said my girlfriend was a spiteful bitch." He adds: "They knew what I was about. But they let it go because I'm a great soldier."

In 2003, Fogarty was sent to Iraq. For two years he served in the military police, escorting officers, including generals, around the hostile country. He says he was granted top-secret clearance and access to battle plans. Fogarty speaks with regret that he "never had any kill counts." But he says his time in Iraq increased his racist resolve.

"I hate Arabs more than anybody, for the simple fact I've served over there and seen how they live," he tells me. "They're just a backward people. Them and the Jews are just disgusting people as far as I'm concerned. Their customs, everything to do with the Middle East, is just repugnant to me."

Because of his tattoos and his racist comments, most of his buddies and his commanding officers were aware of his Nazism. "They all knew in my unit," he says. "They would always kid around and say, 'Hey, you're that skinhead!'" But no one sounded an alarm to higher-ups. "I would volunteer for all the hardest missions, and they were like, 'Let Fogarty go.' They didn't want to get rid of me."

Fogarty left the Army in 2005 with an honorable discharge. He says he was asked to reenlist. He declined. He was sick of the system.

Since the launch of the wars in Afghanistan and Iraq, the U.S. military has struggled to recruit and reenlist troops. As the conflicts have dragged on, the military has loosened regulations, issuing "moral waivers" in many cases, allowing even those with criminal records to join up. Veterans suffering post-traumatic stress disorder have been ordered back to the Middle East for second and third tours of duty.

The lax regulations have also opened the military's doors to neo-Nazis, white supremacists and gang members — with drastic consequences. Some neo-Nazis have been charged with crimes inside the military, and others have been linked to recruitment efforts for the white right. A recent Department of Homeland Security report, "Rightwing Extremism: Current Economic and Political Climate Fueling Resurgence in Radicalization and Recruitment," stated: "The willingness of a small percentage of military personnel to join extremist groups during the 1990s because they were disgruntled, disillusioned, or suffering from the psychological effects of war is being replicated today." Many white supremacists join the Army to secure training for, as they see it, a future domestic race war. Others claim to be shooting Iraqis not to pursue the military's strategic goals but because killing "hajjis" is their duty as white militants.

Soldiers' associations with extremist groups, and their racist actions, contravene a host of military statutes instituted in the past three decades. But during the "war on terror," U.S. armed forces have turned a blind eye on their own regulations. A 2005 Department of Defense report states, "Effectively, the military has a 'don't ask, don't tell' policy pertaining to extremism. If individuals can perform satisfactorily, without making their extremist opinions overt … they are likely to be able to complete their contracts."

Carter F. Smith is a former military investigator who worked with the U.S. Army Criminal Investigation Command from 2004 to 2006, when he helped to root out gang violence in troops. "When you need more soldiers, you lower the standards, whether you say so or not," he says. "The increase in gangs and extremists is an indicator of this." Military investigators may be concerned about white supremacists, he says. "But they have a war to fight, and they don't have incentive to slow down."

Tom Metzger is the former grand wizard of the Ku Klux Klan and current leader of the White Aryan Resistance. He tells me the military has never been more tolerant of racial extremists. "Now they are letting everybody in," he says.

The presence of white supremacists in the military first triggered concern in 1976. At Camp Pendleton in California, a group of black Marines attacked white Marines they mistakenly believed to be in the KKK. The resulting investigation uncovered a KKK chapter at the base and led to the jailing or transfer of 16 Klansmen. Reports of Klan activity among soldiers and Marines surfaced again in the 1980s, spurring President Reagan's Defense Secretary, Caspar Weinberger, to condemn military participation in white supremacist organizations.

Then, in 1995, a black couple was murdered by two neo-Nazi paratroopers around Fort Bragg in North Carolina. The murder investigation turned up evidence that 22 soldiers at Fort Bragg were known to be extremists. That year, language was added to a Department of Defense directive, explicitly prohibiting participation in "organizations that espouse supremacist causes" or "advocate the use of force or violence."

Today a complete ban on membership in racist organizations appears to have been lifted — though the proliferation of white supremacists in the military is difficult to gauge. The military does not track them as a discrete category, coupling them with gang members. But one indication of the scope comes from the FBI.

Following an investigation of white supremacist groups, a 2008 FBI report declared: "Military experience — ranging from failure at basic training to success in special operations forces — is found throughout the white supremacist extremist movement." In white supremacist incidents from 2001 to 2008, the FBI identified 203 veterans. Most of them were associated with the National Alliance and the National Socialist Movement, which promote anti-Semitism and the overthrow of the U.S. government, and assorted skinhead groups.

Because the FBI focused only on reported cases, its numbers don't include the many extremist soldiers who have managed to stay off the radar. But its report does pinpoint why the white supremacist movements seek to recruit veterans — they "may exploit their accesses to restricted areas and intelligence or apply specialized training in weapons, tactics, and organizational skills to benefit the extremist movement."

In fact, since the movement's inception, its leaders have encouraged members to enlist in the U.S. military as a way to receive state-of-the-art combat training, courtesy of the U.S. taxpayer, in preparation for a domestic race war. The concept of a race war is central to extremist groups, whose adherents imagine an eruption of violence that pits races against each other and the government.

That goal comes up often in the chatter on white supremacist Web sites. On the neo-Nazi Web site Blood and Honour, a user called 88Soldier88, wrote in 2008 that he is an active duty soldier working in a detainee holding area in Iraq. He complained about "how 'nice' we have to treat these fucking people … better than our own troops." Then he added, "Hopefully the training will prepare me for what I hope is to come." Another poster, AMERICANARYAN.88Soldier88, wrote, "I have the training I need and will pass it on to others when I get out."

On NewSaxon.org, a social networking group for neo-Nazis, a group called White Military Men hosts numerous contributors. It was begun by "FightingforWhites," who identified himself at one point as Lance Cpl. Burton of the 2nd Battalion Fox Company, but then removed the information. The group calls for "All men with military experience, retired or active/reserve" to "join this group to see how many men have experience to build an army. We want to win a war, we need soldiers." FightingforWhites — whose tagline is "White Supremacy will prevail! US Military leading the way!" — goes on to write, "I am with an infantry battalion in the Marine Corps, I have had the pleasure of killing four enemies that tried to kill me. I have the best training to kill people." On his wall, a friend wrote: "THANKS BROTHER!!!! kill a couple towel heads for me ok!"

Such attitudes come straight from the movement's leaders. "We do encourage them to sign up for the military," says Charles Wilson, spokesman for the National Socialist Movement. "We can use the training to secure the resistance to our government." Billy Roper, of White Revolution, says skinheads join the military for the usual reasons, such as access to higher education, but also "to secure the future for white children." "America began in bloody revolution," he reminds me, "and it might end that way."
 
When it comes to screening out racists at recruitment centers, military regulations appear to have collapsed. "We don't exclude people from the army based on their thoughts," says S. Douglas Smith, an Army public affairs officer. "We exclude based on behavior." He says an "offensive" or "extremist" tattoo "might be a reason for them not to be in the military." Or it might not. "We try to educate recruiters on extremist tattoos," he says, but "the tattoo is a relatively subjective decision" and shouldn't in itself bar enlistment.

What about something as obvious as a swastika? "A swastika would trigger questions," Smith says. "But again, if the gentlemen said, 'I like the way the swastika looked,' and had clean criminal record, it's possible we would allow that person in." "There are First Amendment rights," he adds.

In the spring, I telephoned at random five Army recruitment centers across the country. I said I was interested in joining up and mentioned that I had a pair of "SS bolts" tattooed on my arm. A 2000 military brochure stated that SS bolts were a tattoo image that should raise suspicions. But none of the recruiters reacted negatively, and when pressed directly about the tattoo, not one said it would be an outright problem. A recruiter in Houston was typical; he said he'd never heard of SS bolts and just encouraged me to come on in.

It's in the interest of recruiters to interpret recruiting standards loosely. If they fail to meet targets, based on the number of soldiers they enlist, they may have to attend a punitive counseling session, and it could hurt any chance for promotion. When, in 2005, the Army relaxed regulations on non-extremist tattoos, such as body art covering the hands, neck and face, this cut recruiters even more slack.

Even the education of recruiters about how to identify extremists seems to have fallen by the wayside. The 2005 Department of Defense report concluded that recruiting personnel "were not aware of having received systematic training on recognizing and responding to possible terrorists" — a designation that includes white supremacists — "who try to enlist." Participation on white supremacist Web sites would be an easy way to screen out extremist recruits, but the report found that the military had not clarified which Web forums were gathering places for extremists.

Once white supremacists are in the military, it is easy to stay there. An Army Command Policy manual devotes more than 100 pages to rooting them out. But no officer appears to be reading it.

Hunter Glass was a paratrooper in the 1980s and became a gang cop in 1999 in Fayetteville, North Carolina, near Fort Bragg. "In the early 1990s, the military was hard on them. They could pick and choose," he recalls. "They were looking for swastikas. They were looking for anything." But the regulations on racist extremists got jettisoned with the war on terror.

Glass says white supremacists now enjoy an open culture of impunity in the armed forces. "We're seeing guys with tattoos all the time," he says. "As far as hunting them down, I don't see it. I'm seeing the opposite, where if a white supremacist has committed a crime, the military stance will be, 'He didn't commit a race-related crime.'"

In fact, a 2006 report by the Army's Criminal Investigation Command shows that military brass consistently ignored evidence of extremism. One case, at Fort Hood, reveals that a soldier was making Internet postings on the white supremacist site Stormfront.org. But the investigator was unable to locate the soldier in question. In a brief summary of the case, an investigator writes that due to "poor documentation," "attempts to locate with minimal information met with negative results." "I'm not doing my job here," the investigator notes. "Needs to get fixed."

In another case, investigators found that a Fort Hood soldier belonged to the neo-Nazi group Hammerskins and was "closely associated with" the Celtic Knights of Austin, Texas, another extremist organization, a situation bad enough to merit a joint investigation by the FBI and the Army's Criminal Investigation Command. The Army summary states that there was "probable cause" to believe the soldier had participated in at least one white extremist meeting and had "provided a military technical manual … to the leader of a white extremist group in order to assist in the planning and execution of future attacks on various targets."

Our of four preliminary probes into white supremacists, the Criminal Investigation Command carried through on only this one. The probe revealed that "a larger single attack was planned for the San Antonio, TX after a considerable amount of media attention was given to illegal immigrants. The attack was not completed due to the inability of the organization to obtain explosives." Despite these threats, the subject was interviewed only once, in 2006, and the investigation was terminated the following year.

White supremacists may be doing more than avoiding expulsion. They may be using their military status to help build the white right. The FBI found that two Army privates in the 82nd Airborne Division at Fort Bragg had attempted in 2007 to sell stolen property from the military — including ballistic vests, a combat helmet and pain medications such as morphine — to an undercover FBI agent they believed was involved with the white supremacist movement. (They were convicted and sentenced to six years.) It found multiple examples of white supremacist recruitment among active military, including a period in 2003 when six active duty soldiers at Fort Riley, members of the Aryan Nation, were recruiting their Army colleagues and even serving as the Aryan Nation's point of contact for the state of Kansas.

One white supremacist soldier, James Douglas Ross, a military intelligence officer stationed at Fort Bragg, was given a bad conduct discharge from the Army when he was caught trying to mail a submachine gun from Iraq to his father's home in Spokane, Wash. Military police found a cache of white supremacist paraphernalia and several weapons hidden behind ceiling tiles in Ross' military quarters. After his discharge, a Spokane County deputy sheriff saw Ross passing out fliers for the neo-Nazi National Alliance.

Rooting out extremists is difficult because racism pervades the military, according to soldiers. They say troops throughout the Middle East use derogatory terms like "hajji" or "sand nigger" to define Arab insurgents and often the Arab population itself.

Monday, June 15, 2009

Enough With the Obamathon

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The president is on TV more than the ShamWow guy, but I want to see a little more action.

Bill Maher
June 12, 2009 - The Los Angeles Times

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President Obama should just join the cast of "I'm a Celebrity, Get Me Out of Here!" It's not that farfetched; he's been on everything else.

I'm still a fan, but there's a fine line between being transparent and being overexposed. Every time you turn on the TV, there's Obama. He's getting a puppy! He's eating a cheeseburger with Joe Biden! He's taking the wife to Broadway and Paris - this is the best season of "The Bachelor" yet!

I get it: You love being on TV. I love my bong, but I take it out of my mouth every once in a while. The other day, I caught myself saying to a friend, "Don't tell me if he's fixed the economy yet, I'm Tivo-ing it."

Remember during the campaign when John McCain attacked Obama for acting like a celebrity and we all laughed at the grumpy old shellshocked fool? Well, it turns out he was right. Sorry, senator. I'm sending a nice gift basket of high-fiber muffins your way.

It's getting to where you can't turn on your TV without seeing Obama. Who does he think he is, Dick Cheney? Come on, sir, you don't have to be on television every minute of every day. You're the president, not a rerun of "Law and Order." Save some charisma for a rainy day. Taking strangers from a TV show on a tour of your house? We have that show; it's called "Cribs." And letting reporters ask you questions like "You like to be the one who picks out the shaving cream, don't you?" Or as it's called today, "journalism." I was willing to give the guy the benefit of the doubt until I saw him take Brian Williams into his bedroom, and at the end of the bed there was a teleprompter and it said, "Who's your daddy?"

I mean, selling the personal part to stay popular, I'm all for it, but you got us already. We like you, we really like you! You're skinny and in a hurry and in love with a nice lady. But so's Lindsay Lohan. And like Lohan, we see your name in the paper a lot, but we're kind of wondering when you're actually going to do something.

I know that's harsh. But when I read about how you sat on the sidelines while bailed-out banks used the money we gave them to hire lobbyists who got Congress to stop homeowners from getting renegotiated loans, or how Congress is already giving up on healthcare reform, or how scientists say it's essential to reduce CO2 by 40% in 10 years, but your own bill calls for 4%, I say, enough with the character development, let's get on with the plot.

And let's stop worrying so much about doing anything that might tarnish the brand. See, this is why I don't want my president to be a TV star: Because TV stars are too worried about being popular - and too concerned with getting renewed.

You can relax about that, Mr. President, knowing that there's a large, rich organization doing everything it possibly can to ensure that you'll get reelected: It's called the Republican Party.

Speaking of which, if you can't beat Republicans now, when they're so down they take orders from Rush Limbaugh, then when? The way to get renewed for your reality show that you love so much is to act boldly now.

Obama needs to start putting it on the line in fights against the banks, the energy companies and the healthcare industry. I never thought I'd say this, but he needs to be more like George W. Bush. Bush was all about, "You're with us or against us."

Obama's more like, "You're either with us, or you obviously need to see another picture of this adorable puppy!"

Bush had horrible ideas, like torture and deregulation and preemptive war and tax cuts for the rich, but he pushed them through, in their full measure, never mind Congress or the Constitution or the Geneva Convention or the Magna Carta or the Code of Hammurabi.

The point is, he didn't care if it made him unpopular with every human on the planet not named Cletus or Fred Barnes. Which it did.

And we need to marry the good ideas Obama really believes in with that Bush attitude and Bush certitude. I'd love for Obama to come out one day and say, "Jesus told me to fix healthcare." Or, "History will decide whether stopping the polar ice caps from melting and drowning us all was a good thing."

In conclusion, Bush was a jerk, but he never cared about being seen having a burger with Dick Cheney. He picked up the phone in the White House and said, "I'm the president, bring me a burger." And they'd say, "Sir, this is NORAD. Would you please stop ordering burgers with the red phone?"

I'm glad that Obama is president, but the "Audacity of Hope" part is over. Right now, I'm hoping for a little more audacity.

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Bill Maher is the host of HBO's "Real Time with Bill Maher."

Why the World Should Be Watching Central Asia

Mosque at Naryn, Kyrgyzstan

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Ishaan Tharoor
June 15, 2009 - Time

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When Pakistani troops began to pummel Taliban positions in the Swat Valley last month, there were other military advances against insurgent outposts - barely noticed by the global media - taking place in valleys not so far away. In late May, Uzbek soldiers and tanks patrolled parts of the troubled Ferghana Valley following shootouts with suspected Islamist extremists and a suicide bombing in the valley's main city of Andijan. In neighboring Tajikistan, government forces fanned out across the remote Rasht Valley in a supposed attempt to hunt down a notorious militant commander named Abdullo Rakhimov. The veteran jihadi, according to some local reports, had recently abandoned Taliban allies in Pakistan to resume the struggle in his nearby native land.

While much of the focus of the U.S.-led war on terror now surrounds that theater of operations the Obama administration terms "Af-Pak," the post-Soviet 'Stans to the north present their own strategic quagmire. The tactical support of governments in the region is becoming increasingly vital for U.S. plans to bring stability to Afghanistan. Central Asian countries also sit atop a significant chunk of the world's untapped oil and natural gas reserves, assets which are eyed covetously by both neighboring Russia and China, as well as the West. Yet the region - dominated by corrupt and repressive regimes - is itself precariously poised, home to its own native Islamist insurgencies vulnerable to domestic upheaval. "There is the possibility for really unpredictable change," says Jeffrey Mankoff, a fellow for Russian studies at the Council on Foreign Relations in New York. And it's change few Central Asia watchers expect to be positive. While great powers vie for
resources and influence, countries that were once seen as a bulwark against more turbulent nations to the south and west are themselves lurching toward crisis.

Still, Central Asia exists on the periphery for most policy makers in the U.S. When not the illusory realm of Borat or an exotic waypoint of horse markets and mutton skewers, the region has been cast off as a dysfunctional Russian annex, easily manipulated by a Kremlin that still views these young republics as satellite states. From Ashgabat to Astana, the ruling elites are all holdovers from the Soviet era, and sometimes more fluent in Russian than their national tongues. "Their regimes operate," says Eric McGlinchey, a Central Asia specialist and professor of politics and government at George Mason University, "along almost pathological networks of patronage" - and ones that Moscow knows how to navigate. That close working relationship has been on full display recently in Kyrgyzstan: spurred by a Russian promise of $2 billion in aid, the Kyrgyz government signaled its intent to shut down the U.S.'s pivotal Manas air base there in January, and
reaffirmed that pledge this week despite recent overtures from the Obama administration.

Russia may be keen to deter an entrenched American presence in its traditional sphere of influence, but is more muted about China's expanding role in the region. Resource-hungry Beijing has steadily made inroads west, tying up lucrative energy contracts in Kazakhstan, while committing tens of million dollars to infrastructure and hydropower projects in impoverished Kyrgyzstan and Tajikistan. China has also become the single largest investor in Afghanistan, building roads through Kabul and setting up a massive $3 billion copper mine. In 2001, China formed the Shanghai Cooperation Organization (SCO), a geo-political grouping aimed at improving economic and political relations with Russia and other Central Asian nations - as well as a vehicle for Beijing to quash support for separatists in its restive Xinjiang province, whose Muslim Uighurs share ethnic ties with Central Asia's Turkic populations. The SCO - which is set to convene at a summit in
Yekaterinaburg, Russia this week - also declared in 2005 that there must be a timeline for withdrawing all U.S. military bases in Central Asia, a clear sign of Beijing and Moscow's intent to limit U.S. influence. "Russia and China are both interested in maintaining the status quo," says Sean Roberts, a Central Asia expert at George Washington University. See pictures of Chinese investment in Africa.

That translates into a somewhat depressing reality for the over 50 million people living in the region. The world's "freedom rankings" compiled by Freedom House, a Washington D.C.-based human rights NGO, place all five of the post-Soviet 'Stans near the bottom. Independent media is almost non-existent. Human rights activists are frequently detained and tortured, and many others live in exile. Even in Kyrgyzstan, where a so-called "velvet" revolution toppled the ruling president in 2005, the subsequent government has done little to distinguish itself from the past. "Central Asians tolerate an awful lot," says Roberts. "They've inherited a mentality from the Soviet days where they don't necessarily believe in politics, or have faith that turning over the government yields a lot of results."

Yet they are hardly isolated from global events: the impact of the worldwide recession is pushing some Central Asian societies to the brink. Tajikistan, like other poor Central Asian nations, has over the years seen many of its able-bodied men leave to work in the more prosperous cities of Russia and oil-rich Kazakhstan - at least a tenth of the Tajik population of 7 million is migrant labor. Remittances sent home comprise some 40% of the country's total GDP, according to UN figures, and account for only slightly less in Uzbekistan and Kyrgyzstan. Now, with the collapse of the Russian economy and the drying up of its construction boom, tens of thousands are returning to rugged homelands that offer few opportunities and to families that depended on their labor abroad. Observers in Tajikistan tell of depressed village after village where groups of unemployed men amble around. The situation "is a potential time bomb," says the International Crisis Group, a
Brussels-based think-tank, in a report earlier this year that labeled the country "on the road to failure."

Analysts fear that the deteriorating economic climate, a legacy of ineffectual governance, and an increasingly frustrated population may feed into the designs of established militant groups in the region. The Ferghana Valley, the most densely populated pocket of Central Asia, straddles the Uzbek, Tajik and Kyrgyz borders, and is home to the Al Qaeda-linked Islamic Movement of Uzbekistan (IMU), a State Department listed terror organization. Militants are known to slip easily across the porous 1,300 km boundary between Tajikistan and Afghanistan, which is also a chief thoroughfare for Afghan opium into the markets of the West. According to Pakistani media, the IMU has helped contribute some 4,000 Uzbek and Tajik fighters to the Taliban forces warring with Islamabad.

The specter of an Islamist threat has often worked in favor of the region's governments. After 9/11, U.S. Central Asian strategy was dictated largely by the Department of Defense under Donald Rumsfeld. Uzbekistan, ruled its entire independent life by the iron-fisted Islam Karimov, was brought into the fold as a staging ground for American operations in Afghanistan, as well as a willing accomplice in the renditions of suspected terrorists. That cozy partnership ended in 2005 when the Uzbek army gunned down hundreds of civilians protesting for reform in the Ferghana Valley under the pretense that it was curbing an Islamist revolt. U.S. and European condemnation only led the government to turn to Moscow's embrace and throw out numerous international NGOs and foreign aid agencies. The country's dissidents receded further into the margins; the more pronounced opposition now tends to be radical and violent. "Islamic militancy here," says McGlinchey, "has
almost always more to do with the oppressiveness of the local governments than some kind of trans-national religious calling."

With the anticipated loss of Manas air base in Kyrgyzstan, the U.S. has again turned to Karimov's Uzbekistan for logistical assistance. Central Asia watchers in the U.S. say that part of the difficulty Washington now faces in the region stems from its own short-sightedness in engaging governments there. "The U.S. approach was one-dimensional," says Mankoff of the Council on Foreign Relations. "A lot of attention has been paid to cooperating with military and security forces at the expense of a broader relationship." The Obama administration has no dedicated Central Asia envoy nor is it willing to pursue a strong agenda for change and reform at the risk of provoking Moscow. "Many think it's a battle not worth fighting," says Roberts.

Events may soon outpace that calculus, given the alarming collapse of the region's economies and spikes in militant violence. It's unclear, though, what a beefed-up American role in the region could look like, and whether it would be in concert - or at odds - with Moscow or Beijing. Headlines in the international press tout the advent of the new "Great Game" in a region that for centuries has been at the whim of larger forces. Not many locals are that interested, though. "We waited and hoped for democratic change after the influence of America," says Umida Niyazova, a journalist and prominent Uzbek activist living in exile in Germany. "But the years since have only brought more instability."

Eating Meat Is Not Natural

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Eating meat is a relatively recent phenomenon in human evolution. And our bodies have never adapted to it.

Kathy Freston
June 15, 2009 - AlterNet

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Going through the reader feedback on some of my recent articles, I noticed the frequently stated notion that eating meat was an essential step in human evolution. While this notion may comfort the meat industry, it's simply not true, scientifically.

Dr. T. Colin Campbell, professor emeritus at Cornell University and author of The China Study (please check out the link), explains that in fact, we only recently (historically speaking) began eating meat, and that the inclusion of meat in our diet came well after we became who we are today. He explains that "the birth of agriculture only started about 10,000 years ago at a time when it became considerably more convenient to herd animals. This is not nearly as long as the time [that] fashioned our basic biochemical functionality (at least tens of millions of years) and which functionality depends on the nutrient composition of plant-based foods."

That jibes with what Physicians Committee for Responsible Medicine President Dr. Neal Barnard says in his book, The Power of Your Plate, in which he explains that "early humans had diets very much like other great apes, which is to say a largely plant-based diet, drawing on foods we can pick with our hands. Research suggests that meat-eating probably began by scavenging -- eating the leftovers that carnivores had left behind. However, our bodies have never adapted to it. To this day, meat-eaters have a higher incidence of heart disease, cancer, diabetes, and other problems."

There is no more authoritative source on anthropological issues than paleontologist Dr. Richard Leakey, who explains what anyone who has taken an introductory physiology course might have discerned intuitively -- that humans are herbivores. Leakey notes that "[y]ou can't tear flesh by hand, you can't tear hide by hand ... We wouldn't have been able to deal with food source that required those large canines" (although we have teeth that are called "canines," they bear little resemblance to the canines of carnivores).

In fact, our hands are perfect for grabbing and picking fruits and vegetables. Similarly, like the intestines of other herbivores, ours are very long (carnivores have short intestines so they can quickly get rid of all that rotting flesh they eat). We don't have sharp claws to seize and hold down prey. And most of us (hopefully) lack the instinct that would drive us to chase and then kill animals and devour their raw carcasses. Dr. Milton Mills builds on these points and offers dozens more in his essay, "A Comparative Anatomy of Eating."

The point is this: Thousands of years ago when we were hunter-gatherers, we may have needed a bit of meat in our diets in times of scarcity, but we don't need it now. Says Dr. William C. Roberts, editor of the American Journal of Cardiology, "Although we think we are, and we act as if we are, human beings are not natural carnivores. When we kill animals to eat them, they end up killing us, because their flesh, which contains cholesterol and saturated fat, was never intended for human beings, who are natural herbivores."

Sure, most of us are "behavioral omnivores" -- that is, we eat meat, so that defines us as omnivorous. But our evolution and physiology are herbivorous, and ample science proves that when we choose to eat meat, that causes problems, from decreased energy and a need for more sleep up to increased risk for obesity, diabetes, heart disease, and cancer.

Old habits die hard, and it's convenient for people who like to eat meat to think that there is evidence to support their belief that eating meat is "natural" or the cause of our evolution. For many years, I too, clung to the idea that meat and dairy were good for me; I realize now that I was probably comforted to have justification for my continued attachment to the traditions I grew up with.

But in fact top nutritional and anthropological scientists from the most reputable institutions imaginable say categorically that humans are natural herbivores, and that we will be healthier today if we stick with our herbivorous roots. It may be inconvenient, but it alas, it is the truth.

Link:

http://www.alternet.org/story/140643/eating_meat_is_not_natural/

EPA Withholds Locations of 'High Hazard' Coal Ash Sites

Under the stacks of TVA's Kingston coal-fired power plant, the ash spill cleanup continues. (Photo courtesy TVA)

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Public Not Allowed to Know Location of Hazardous Coal Ash Sites

June 14, 2009 - Environmental News Servivce

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There are 44 coal combustion waste sites nationwide that the U.S. Environmental Protection Agency has identified as "high hazard," but the agency cannot make the locations of these hazardous sites public, Senator Barbara Boxer told reporters today. The California senator chairs the Senate Environment and Public Works Committee, which oversees the federal environmental agency.

In the aftermath of last December's spill of more than a billion gallons of coal ash waste at the Tennessee Valley Authority's Kingston coal-fired power plant, the U.S. EPA conducted inspections of the nation's coal combustion waste sites.

Agency inspectors identified several hundred coal ash piles across the country including 44 sites that pose a "high hazard." These sites are located in such a way that if the coal ash ponds were to fail, they would pose a threat to people living nearby.

But, Senator Boxer said, "the EPA, after consulting with the U.S. Army Corps of Engineers and the Department of Homeland Security, has indicated that they cannot make the list of 'high hazard' sites public."

"If these sites are so hazardous and if the neighborhoods nearby could be harmed irreparably, then I believe it is essential to let people know," Boxer said. "In that way, they can press their local authorities who have responsibility for their safety to act now to make the sites safer."

"There is a huge muzzle on me and on my staff, and the only people I can tell about this are the senators whose states are impacted," said Boxer. "We cannot talk to any of their staffs. This is unacceptable. The committee is going to continue hearings into this matter."

Today, Senator Boxer sent a letter to the Department of Homeland Security, the Army Corps of Engineers, and the EPA seeking further information on whether the public disclosure of coal ash waste sites is consistent with the treatment of other hazardous sites.

"One of the lessons we all learned from the TVA spill is that a close look at these facilities is extremely important, and we cannot rely on general assurances that these sites are safe," the senator said. "That is why I am pleased that on-the-ground inspections have begun."

At 1:00 am on December 22, 2008, a retaining wall failed on an 84-acre surface impoundment holding a half century's worth of coal ash at the TVA's Kingston power plant about 35 miles west of Knoxville, Tennessee, at the junction of the Emory and Clinch Rivers.

More than one billion gallons of coal ash "rushed down the valley like a wave," Boxer said. Ash covered nearly 400 acres, destroying three homes and damaging a dozen others. No one was injured.

"The volume of ash and water was 100 times greater than the amount of oil spilled in the Exxon Valdez disaster," Boxer said today. "The cost of cleaning up that spill has been estimated at over a billion dollars."

After the devastating Kingston spill, the Senate Environment and Public Works Committee held an oversight hearing to better understand this incident and how to avoid similar disasters in the future.

"When EPA Administrator Lisa Jackson came before our committee for her confirmation hearing a week later, she committed to move immediately to address the threat posed by coal ash waste," Boxer said today, expressing confidence Jackson would act to regulate coal combustion waste sites.

"Coal combustion waste is subject to very limited regulation," Boxer said. "In fact, there are stronger protections for household garbage than for coal ash across the country."

The EPA has the authority to regulate coal ash, which can contain toxic substances such as arsenic, selenium, lead, cadmium and chromium.

"I do have great confidence in Administrator Jackson's commitment to move forward with regulations," said the senator. "I hope and expect we will have these regulations by the end of this year."

At the site of the Kingston coal ash spill, cleanup continues. On May 11, the Tennessee Valley Authority, a federal agency that is the nation's largest public power provider, and the EPA signed an agreement by which TVA recognizes EPA's role and specialized expertise in responding to large-scale environmental clean-ups.

While TVA will retain its status as a lead federal agency, EPA will approve all work plans and schedules going forward.

"This agreement will continue the collaborative work between EPA, the Tennessee Department of Environment and Conservation and TVA, using EPA's expertise under the Comprehensive Environmental Response, Compensation and Liability Act," said TVA Senior Vice President of Office of Environment and Research Anda Ray.

"All of the agencies involved have a common goal, to meet the nation's highest standards for effectiveness, transparency, and public involvement," said Ray.

Transparency is exactly what Senator Boxer is after. The Environment and Public Works Committee will continue its ongoing investigation of coal ash waste sites and Boxer announced plans to conduct additional hearings on the 44 "high hazard" sites with the intention of learning why their locations are being withheld from the public.

Sunday, June 14, 2009

Stop Wasting on the Military

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Amitabh Pal
June 14, 2009 - The Progressive

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The global arms madness continues.

A new report by the Stockholm International Peace Research Institute (one of my favorite think tanks) confirms that worldwide military expenditure is again on the up and up, with spending having increased by 4 percent in 2008.

"All regions and subregions have seen significant increases since 1999, except for Western and Central Europe," says the report (available at www.sipri.org).

The United States loomed large over all other countries, with a whopping $607 billion swallowed up by the military in 2008, nearly 10 percent more than the previous year. And SIPRI is being very conservative here, because the total U.S. expenditure was roughly $1 trillion when you add military-related costs that are not in the Pentagon budget. (See my column)

Sadly, the change of Administration has not reversed the trend. The Obama Administration has asked for $663 billion for the military for fiscal year 2010, including supplemental funding for the Iraq and Afghanistan wars. Although some wasteful big-ticket boondoggles have been cut and the budget is more transparently honest, the Pentagon is still being showered with money, even in our current parlous economic condition. Plus, President Obama has appealed for an additional $83.4 billion for fiscal year 2009 for operations in Iraq and Afghanistan.

Bizarrely enough, some of the U.S. media coverage of the SIPRI report has been focused on the faster increase in Chinese military spending. Duh: It's called playing catch up. The United States accounts for nearly half of global military spending, and China's double-digit increase was only slightly more than that of the United States. The U.S.-China rivalry is a strategic game about who can project power most forcefully. And, here, the United States has, by far, the upper hand.

The section of the SIPRI report that gave me the biggest heartburn was the one on international arms transfers. The United States, Russia, Germany, France and United Kingdom continued their gleeful dominance of the arms racket, while China and India, oblivious to the needs of their people, were the biggest importers of weapons.

"Together [the top five arms exporters] accounted for 79 per cent of the volume of exports for 2004–2008," SIPRI states. "They have been the top five suppliers since the end of the cold war and have accounted for at least three-quarters of all exports annually."

Boeing, BAE Systems (British), Lockheed Martin, Northrop Grumman, General Dynamics and Raytheon were the largest producers of death, with arms profits for Boeing itself topping $4 billion. U.S. companies have almost a monopoly on the production of weapons in the big leagues, with almost two-thirds of the total arms manufactures of the top 100 companies being U.S. based.

Perhaps my all-time favorite quotation is by General Dwight David Eisenhower. (I even have a T-shirt with the first sentence printed on it.):

"Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. This is not a way of life at all in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron."

This is such a simple, graspable truth that it penetrated the consciousness of even a career military man like Ike. What will it take for the current crop of leaders around the world to comprehend it?

GAO: No problem smuggling secret weapons out of US

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Daniel Tencer
June 13, 2009 - Raw Story

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You've got to hand it to the U.S. Government Accountability Office — they've got initiative.

When the government agency — which has for years been holding successive administrations' feet to the fire over deficit spending and other management issues — was tasked with investigating how secure America's sensitive technologies are, it set up a dummy corporation to buy American weapons and see if it could ship them to countries known as transit points for smuggling weapons.

What they managed to smuggle out of the United States was astounding: Triggers for nuclear bombs; microchips for smart missiles; components for improvised explosives; even current-issue U.S. Army body armor.

And the method they used to do it was brilliant in its simplicity: To avoid export restrictions, they set up their dummy corporation inside the United States. Then, once in possession of the equipment, they shipped it overseas.

From Geopolitical Monitor:

Since most export-restricted technologies are legal to purchase in the U.S., the front company was able to purchase and export restricted technologies to states known to serve as terrorist transshipment points.

This loophole represents a serious threat to non-proliferation efforts as well as a boon to criminal and terrorist networks. According to the Department of Justice, attempts by foreign states and terrorist networks to acquire U.S. arms and technology occur on a daily basis.
Geopolitical Monitor's report links a recent spike in the quantity and quality of Afghan insurgents' weapons to the ease with which advanced American weaponry is moving around the globe.

But the report also points to "state actors" who are taking advantage of the situation. In 2006, the report mentions, a US company was fined $15 million for sending weapons microchips to China, and in 2007, one person was jailed for trying to smuggle smart bomb parts into China.

The report concludes: "The real legacy from export control loopholes will come in the form of an altered military balance between the U.S. and emerging powers such as China."