US core no longer the magnet

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Doug Noland
Jun 2, 2009 - Asia Times

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Last week provided ample confirmation for the global reflation thesis. The dollar index dropped another 0.9%. Gold surged US$22 to $979. Crude oil jumped $4.67 to a six-month high, posting the largest one-month percentage gain since 1999 (according to Bloomberg). The Goldman Sachs Commodities index rallied 5.5% to an almost seven-month high (up 27% year-to-date). Emerging markets remain on fire. And the Baltic Dry Index rose again on Friday, increasing its streak of consecutive gains to 19.

Leading the "BRIC" sweepstakes, Russia's RTS equities index jumped 7.3% last week, while India's Sensex rose 5.3%. Russian stocks are now up 72% year-to-date, followed by India's 52%, China's 45%, and Brazil's 42%. Elsewhere, stocks in Taiwan are up 50%, South Korea 24%, Argentina 47%, and Hungary 22%. The "commodity" currencies led the charge again last week. The South African rand gained 4.1%, the New Zealand dollar 3.3%, the Brazilian real 3.0%, the Australian dollar 2.4%, and the Canadian dollar 2.7%.

It was quite a week in US interest rate markets. Ten-year Treasury yields jumped 29 basis points (bps) during the shortened week's first two trading sessions (to 3.74%), before backing off to end the week up only 2 bps to 3.47%. The mortgage marketplace turned rather tumultuous, with benchmark Fannie Mae mortgage-backed security (MBS) yields spiking 55 bps from last Friday's close before ending the week 19 bps higher at 4.33%.

Some interest-rate hedging markets seemed in disarray, with the dollar swaps market demonstrating price discontinuity. After closing last week at 14.4 bps, the 10-year dollar swap spread traded as high as 38.25 before ending the week at 19.50.

Importantly, at least for the week, mortgage-related market tumult didn't broaden to other risk markets. Corporate credit spreads were mostly narrower on the week, even as the company debt issuance boom ran unabated. The junk-bond market enjoyed another week of strong fund inflows more than matched by huge issuance.

It is also worth noting the resilience of the "emerging" debt markets. Brazilian benchmark dollar bond yields were down 14 bps to 5.86%. Mexican dollar bond yields fell 14 bps to 5.74%. Brazil's credit default swap (CDS) prices declined to the lowest level since early October (197 bps, down from the October high of 600 bps). It is no longer the case that when the Treasury market catches a cold others get really sick.

At this point, the markets' sanguine attitude toward US dollar and Treasury/MBS weakness is understandable. From a global perspective, a weaker dollar bolsters the inflationary bias that had prior to the credit meltdown been driving robust economic performance throughout the energy and commodities-based economies. Dollar devaluation also works to reinforce already heady financial flows to "emerging" markets and non-dollar assets more generally. There are facets of inflation that seductively salve recovery.

The dramatic loosening of financial conditions globally is supporting an improvement in economic conditions. The optimists are looking for Asia and the developing world to lead a global recovery, and a sinking dollar on a short-term basis would seem to support such a scenario. Our weak currency also empowers the global government finance bubble. Amazingly, most countries today have unprecedented flexibility to issue debt without fear of negative market reaction or a run against their currencies.

I again want to emphasize the dramatic change in circumstances that is increasingly in view throughout global markets and economies. During the 1990s - and stretching through the "King Dollar" period earlier this decade - there was an overarching inflationary bias that worked to direct flows to the "core" (the US credit system and securities markets). Whether it was a crisis that initially erupted in Mexico, Southeast Asia, Russia, Argentine or Brazil, the immediate market response was an abrupt reversal of financial flows from the developing countries to US dollar securities. While there was an ongoing acceleration in speculative flows meandering about the globe in search of big returns, the first sign of trouble would incite a panic straight to the dollar.

The "core" absolutely dominated the system, providing our policymakers (especially the US Federal Reserve) extraordinary latitude. The periphery-to-core bias fostered financial crises, along with general periphery financial and economic instability. This dynamic worked to keep global inflationary pressures in check. Or, better said, the nature of the inflationary flow of finance kept inflation pressures directed to US dollar securities markets - as opposed to energy, commodities and more traditional inflation.

The global financial and economic backdrop has changed profoundly. Today, there exists a powerful inflationary bias working to direct flows away from the core out to the periphery. This dynamic helps to explain the dramatic change in the cost and availability of finance for the developed world over the past several years - the virtually unlimited cheap finance that funded historic booms in China and Asia.

Granted, this flow was abruptly interrupted by last year's global credit crisis. It is, however, my view that the dynamic of powerful core-to-periphery flows has resumed. Moreover, it is the nature of this type of dynamic that if such a trend recovers it will likely resume stronger-than-ever (think tech stock reflation post the Long Term Capital Management collapse or mortgages reflation post the tech bubble). This analysis is supported by the periphery's recent dramatic economic and market outperformance relative to the core.

So, is this bullish or bearish? Well, I believe the core-to-periphery dynamic is supportive of a more rapid than expected global economic recovery. I definitely expect global inflation to surprise on the upside. Adherents to the global deflationary spiral thesis may be left wondering what the heck happened. The backdrop seems to be set for surprising revival in energy and commodities markets. And I would not be surprised if the global equities rally has some legs.

Yet I view the core-to-periphery dynamic as profoundly bearish for the US. At its core, this historic redirection of global flows and inflationary pressures is the consequence of a breakdown in the dollar standard. Failed policies, a resulting deeply impaired economic structure, and massive ongoing devaluation have ended the dollar's reign as the globe's premier reserve currency and perceived stable store of value. There is today no sound currency to replace the dollar, so the global financial system operates rudderless and with great uncertainties.

It is more certain, however, that the great benefits commanded to our economy and markets over the decades from governing the world's reserve currency are drawing to an end. Our policymakers still believe they can inflate credit and manipulate interest rates - and not have to pay a price for it. But the new global reality may be that currency markets will protest against massive US fiscal deficits and activist monetary policy, while global markets come to dictate US market yields. Over the past two weeks, we have seen the dollar and US Treasuries/MBS come under significant pressure. Is this the beginning of global markets disciplining Washington?

A robust core-to-periphery dynamic and the re-emergence of dollar vulnerability are a potent combination. US markets to this point remain sanguine with the prospect of an expanding Federal Reserve balance sheet rectifying any spike in interest rates. But currency markets are no doubt increasingly fixated on our propensity to monetize current and prospective stimulus.

At some point, increasingly unwieldy flows out of our currency may force the Fed's hand. The scenario where the Fed is forced to choose between loose monetary policy and currency crisis sits out there as a potential big negative surprise for US markets.

Zen Moment of the Day

BOY, it stinks to be Bernie Madoff's sons.

Andrew and Mark Madoff -- who claim to know nothing of their dad's Ponzi scheme despite having made millions working in the family business -- are portrayed in a new Vanity Fair piece as feeling deeply betrayed by Bernie, whom "they were always trying to please, but never could."

David Margolick, who spoke to people close to the brothers Madoff, writes:

* Andrew recently "lamented" to an African-American friend, "I'm unemployed, I don't have any money, and I'm just trying to stay out of jail -- my name is mud," to which the friend replied, "Well, now you're just like every black man in America."

* Andrew's fiancée, Catherine Hooper, gave him a card on his birthday in April that said, "Hope you have a fun day doing all the things people in prison wish they could do." Andrew told her, "I wish I had my parents back," and she retorted, "Yeah, they were a really nice idea."

* When Andrew's estranged wife, Deborah, orders groceries from FreshDirect, she uses her maiden name. For the same reason, Andrew and Hooper use her last name when they make restaurant reservations.

* Parents of classmates of Andrew's daughters, who attend Dalton, are worried about letting their kids attend parties at his house because they are "evidently fearful of assassins crouching in vestibules."

* Although the Wilpon family, which owns the Mets, lost hundreds of millions on Bernie Madoff's schemes, Jeff Wilpon has maintained his long-standing ties to Mark Madoff. But a Wilpon-family friend says "Jeff has tired of Mark's excessive self-pity."

* Andrew and Mark don't speak to their mom, Ruth, "not because they think she was involved [they don't] but because they believe her tendency to side with [Bernie], no matter what, when they complained to her about him, enabled his dirty deeds."

- June 3, 2009 - New York Post

Tillman's Mother Says General Lied Again About His Death

Pat Tillman died in Afghanistan in 2004 after giving up a lucrative NFL career to serve in the Army.

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June 3, 2009 - CNN

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The latest explanation for why Pat Tillman's Silver Star citation failed to mention that friendly fire killed the former NFL star in Afghanistan is another lie by the U.S. military, Tillman's mother said Tuesday.

Mary Tillman was responding to remarks made Tuesday by the general nominated to lead Allied forces in Afghanistan, who apologized before a Senate committee for his role in the matter.

Lt. Gen. Stanley McChrystal told the Senate Armed Services Committee that he helped expedite the Silver Star award for Tillman before confirming that the Army corporal was killed by friendly fire in 2004.

Tillman's family has long complained that the memorial service, which included the Silver Star presentation, deliberately avoided mention of fratricide.

McChrystal acknowledged the problem Tuesday, calling it a mistake. He said the Silver Star citation was "not well-written" but denied any intent to mislead.

"I didn't see any activity by anyone to deceive," he said.

Mary Tillman said McChrystal knew at the memorial service that her son died from friendly fire.

"McChrystal was lying," she said of his comments Tuesday. "He said he didn't know for certain Pat was killed by fratricide. That isn't true in and of itself, but the fact is, it doesn't matter whether he knew it for certain."

Army protocol at the time required families to be told of possible fratricide, whether or not it had been confirmed, she said.

She also criticized Sen. John McCain of Arizona, the ranking Republican on the committee, who questioned McChrystal on Tuesday, for "playing dumb" by not following up on McChrystal's explanation.
Don't Miss

* McChrystal says minimizing casualties is crucial
* McChrystal's covert career could be questioned

"If the Army chain of command didn't know what happened to Pat, why did it present us with a false story" at the memorial service? Tillman asked. "That is not an error; that is not a misstep; that is deliberate deception. McCain was at Pat's service. He was read a false narrative like the rest of us. Where is his outrage? Did he know all along?"

Investigations by the Army's Criminal Investigations Division and the Defense Department's inspector general concluded that officers in Tillman's chain of command knew almost immediately that he had been killed by fire from his own platoon. That information, however, was withheld from his family for more than a month, in violation of Army regulations.

McChrystal, one of four generals identified in the report, was later cleared in the investigation but was faulted for not immediately notifying Tillman's family of suspicions that it was a friendly fire incident.

On Tuesday, McChrystal said the mistake in the Tillman situation involved attempts to simultaneously support the awarding of a Silver Star while investigating the reports that he died from friendly fire.

A policy to have awards approved in time to present them to families at memorial ceremonies should be changed to prevent competing pressures, McChrystal said.

"I would do this differently if I had the chance again," he said.

Asked whether he believed that Tillman earned the Silver Star before his death, McChrystal said: "I did then; I do now. ... I don't believe that the circumstance of death detracts from the courage and commitment of his contribution."

Later, Sen. Jim Webb, D-Virginia, pressed McChrystal harder on the issue, prompting the general to agree that the Army had failed the Tillman family.

"I was a part of that, and I apologize for it," McChrystal said.

Ronald Reagan: Worst President Ever?

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There's been talk that George W. Bush was so inept that he should trademark the phrase "Worst President Ever," though some historians would bestow that title on pre-Civil War President James Buchanan. Still, a case could be made for putting Ronald Reagan in the competition.

Robert Parry
June 3, 2009 - Consortiumnews.com

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Granted, the very idea of rating Reagan as one of the worst presidents ever will infuriate his many right-wing acolytes and offend Washington insiders who have made a cottage industry out of buying some protection from Republicans by lauding the 40th President.

But there's a growing realization that the starting point for many of the catastrophes confronting the United States today can be traced to Reagan's presidency. There's also a grudging reassessment that the "failed" presidents of the 1970s – Richard Nixon, Gerald Ford and Jimmy Carter – may deserve more credit for trying to grapple with the problems that now beset the country.

Nixon, Ford and Carter won scant praise for addressing the systemic challenges of America's oil dependence, environmental degradation, the arms race, and nuclear proliferation – all issues that Reagan essentially ignored and that now threaten the America's future.

Nixon helped create the Environmental Protection Agency; he imposed energy-conservation measures; he opened the diplomatic door to communist China. Nixon's administration also detected the growing weakness in the Soviet Union and advocated a policy of détente (a plan for bringing the Cold War to an end or at least curbing its most dangerous excesses).

After Nixon's resignation in the Watergate scandal, Ford continued many of Nixon's policies, particularly trying to wind down the Cold War with Moscow. However, confronting a rebellion from Reagan's Republican Right in 1976, Ford abandoned "détente."

Ford also let hard-line Cold Warriors (and a first wave of young intellectuals who became known as neoconservatives) pressure the CIA's analytical division, and he brought in a new generation of hard-liners, including Dick Cheney and Donald Rumsfeld.

After defeating Ford in 1976, Carter injected more respect for human rights into U.S. foreign policy, a move some scholars believe put an important nail in the coffin of the Soviet Union, leaving it hard-pressed to justify the repressive internal practices of the East Bloc. Carter also emphasized the need to contain the spread of nuclear weapons, especially in unstable countries like Pakistan.

Domestically, Carter pushed a comprehensive energy policy and warned Americans that their growing dependence on foreign oil represented a national security threat, what he famously called "the moral equivalent of war."

However, powerful vested interests – both domestic and foreign – managed to exploit the shortcomings of these three presidents to sabotage any sustained progress. By 1980, Reagan had become a pied piper luring the American people away from the tough choices that Nixon, Ford and Carter had defined.

Cruelty with a Smile

With his superficially sunny disposition – and a ruthless political strategy of exploiting white-male resentments – Reagan convinced millions of Americans that the threats they faced were: African-American welfare queens, Central American leftists, a rapidly expanding Evil Empire based in Moscow, and the do-good federal government.

In his First Inaugural Address in 1981, Reagan declared that "government is not the solution to our problem; government is the problem."

When it came to cutting back on America's energy use, Reagan's message could be boiled down to the old Bob Marley lyric, "Don't worry, be happy." Rather than pressing Detroit to build smaller, fuel-efficient cars, Reagan made clear that the auto industry could manufacture gas-guzzlers without much nagging from Washington.

The same with the environment. Reagan intentionally staffed the Environmental Protection Agency and the Interior Department with officials who were hostile toward regulation aimed at protecting the environment. George W. Bush didn't invent Republican hostility toward scientific warnings of environmental calamities; he was just picking up where Reagan left off.

Reagan pushed for deregulation of industries, including banking; he slashed income taxes for the wealthiest Americans in an experiment known as "supply side" economics, which held falsely that cutting rates for the rich would increase revenues and eliminate the federal deficit.

Over the years, "supply side" would evolve into a secular religion for many on the Right, but Reagan's budget director David Stockman once blurted out the truth, that it would lead to red ink "as far as the eye could see."

While conceding that some of Reagan's economic plans did not work out as intended, his defenders – including many mainstream journalists – still argue that Reagan should be hailed as a great President because he "won the Cold War," a short-hand phrase that they like to attach to his historical biography.

However, a strong case can be made that the Cold War was won well before Reagan arrived in the White House. Indeed, in the 1970s, it was a common perception in the U.S. intelligence community that the Cold War between the United States and the Soviet Union was winding down, in large part because the Soviet economic model had failed in the technological race with the West.

That was the view of many Kremlinologists in the CIA's analytical division. Also, I I was told by a senior CIA's operations official that some of the CIA's best spies inside the Soviet hierarchy supported the view that the Soviet Union was headed toward collapse, not surging toward world supremacy, as Reagan and his foreign policy team insisted in the early 1980s.

The CIA analysis was the basis for the détente that was launched by Nixon and Ford, essentially seeking a negotiated solution to the most dangerous remaining aspects of the Cold War.

The Afghan Debacle

In that view, Soviet military operations, including sending troops into Afghanistan in 1979, were mostly defensive in nature. In Afghanistan, the Soviets hoped to prop up a pro-communist government that was seeking to modernize the country but was beset by opposition from Islamic fundamentalists who were getting covert support from the U.S. government.

Though the Afghan covert operation originated with Cold Warriors in the Carter administration, especially national security adviser Zbigniew Brzezinski, the war was dramatically ramped up under Reagan, who traded U.S. acquiescence toward Pakistan's nuclear bomb for its help in shipping sophisticated weapons to the Afghan jihadists (including a young Saudi named Osama bin Laden).

While Reagan's acolytes cite the Soviet defeat in Afghanistan as decisive in "winning the Cold War," the counter-argument is that Moscow was already in disarray – and while failure in Afghanistan may have sped the Soviet Union's final collapse – it also created twin dangers for the future of the world: the rise of al-Qaeda terrorism and the nuclear bomb in the hands of Pakistan's unstable Islamic Republic.

Trade-offs elsewhere in the world also damaged long-term U.S. interests. In Latin America, for instance, Reagan's brutal strategy of arming right-wing militaries to crush peasant, student and labor uprisings left the region with a legacy of anti-Americanism that is now resurfacing in the emergence of populist leftist governments.

In Nicaragua, for instance, Sandinista leader Daniel Ortega (whom Reagan once denounced as a "dictator in designer glasses") is now back in power. In El Salvador, the leftist FMLN won the latest elections. Indeed, across the region, hostility to Washington is now the rule, creating openings for China, Iran, Cuba and other American rivals.

In the early 1980s, Reagan also credentialed a young generation of neocon intellectuals, who pioneered a concept called "perception management," the shaping of how Americans saw, understood and were frightened by threats from abroad.

Many honest reporters saw their careers damaged when they resisted the lies and distortions of the Reagan administration. Likewise, U.S. intelligence analysts were purged when they refused to bend to the propaganda demands from above.

To marginalize dissent, Reagan and his subordinates stoked anger toward anyone who challenged the era's feel-good optimism. Skeptics were not just honorable critics, they were un-American defeatists or – in Jeane Kirkpatrick's memorable attack line – they would "blame America first."

Under Reagan, a right-wing infrastructure also took shape, linking media outlets (magazines, newspapers, books, etc.) with well-financed think tanks that churned out endless op-eds and research papers. Plus, there were attack groups that went after mainstream journalists who dared disclose information that poked holes in Reagan's propaganda themes.

In effect, Reagan's team created a faux reality for the American public. Civil wars in Central America between impoverished peasants and wealthy oligarchs became East-West showdowns. U.S.-backed insurgents in Nicaragua, Angola and Afghanistan were transformed from corrupt, brutal (often drug-tainted) thugs into noble "freedom-fighters."

With the Iran-Contra scandal, Reagan also revived Richard Nixon's theory of an imperial presidency that could ignore the nation's laws and evade accountability through criminal cover-ups. That behavior also would rear its head again in the war crimes of George W. Bush. [For details on Reagan's abuses, see Robert Parry's Lost History and Secrecy & Privilege.]

Wall Street Greed

The American Dream also dimmed during Reagan's tenure.

While he played the role of the nation's kindly grandfather, his operatives divided the American people, using "wedge issues" to deepen grievances especially of white men who were encouraged to see themselves as victims of "reverse discrimination" and "political correctness."

Yet even as working-class white men were rallying to the Republican banner (as so-called "Reagan Democrats"), their economic interests were being savaged. Unions were broken and marginalized; "free trade" policies shipped manufacturing jobs abroad; old neighborhoods were decaying; drug use among the young was soaring.

Meanwhile, unprecedented greed was unleashed on Wall Street, fraying old-fashioned bonds between company owners and employees.

Before Reagan, corporate CEOs earned less than 50 times the salary of an average worker. By the end of the Reagan-Bush-I administrations in 1993, the average CEO salary was more than 100 times that of a typical worker. (At the end of the Bush-II administration, that CEO-salary figure was more than 250 times that of an average worker.)

Many other trends set during the Reagan era continued to corrode the U.S. political process in the years after Reagan left office. After 9/11, for instance, the neocons reemerged as a dominant force, reprising their "perception management" tactics, depicting the "war on terror" – like the last days of the Cold War – as a terrifying conflict between good and evil.

The hyping of the Islamic threat mirrored the neocons' exaggerated depiction of the Soviet menace in the 1980s – and again the propaganda strategy worked. Many Americans let their emotions run wild, from the hunger for revenge after 9/11 to the war fever over invading Iraq.

Arguably, the descent into this dark fantasyland – that Ronald Reagan began in the early 1980s – reached its nadir in the flag-waving early days of the Iraq War. Only gradually did reality begin to reassert itself as the death toll mounted in Iraq and the Katrina disaster reminded Americans why they needed an effective government.

Still, the disasters – set in motion by Ronald Reagan – continued to roll in. Bush's Reagan-esque tax cuts for the rich blew another huge hole in the federal budget and the Reagan-esque anti-regulatory fervor led to a massive financial meltdown that threw the nation into economic chaos.

Love Reagan; Hate Bush

Ironically, George W. Bush has come in for savage criticism, but the Republican leader who inspired Bush's presidency – Ronald Reagan – remained an honored figure, his name attached to scores of national landmarks including Washington's National Airport.

Even leading Democrats genuflect to Reagan. Early in Campaign 2008, when Barack Obama was positioning himself as a bipartisan political figure who could appeal to Republicans, he bowed to the Reagan mystique, hailing the GOP icon as a leader who "changed the trajectory of America."

Though Obama's chief point was that Reagan in 1980 "put us on a fundamentally different path" – a point which may be historically undeniable – Obama went further, justifying Reagan's course correction because of "all the excesses of the 1960s and 1970s, and government had grown and grown, but there wasn't much sense of accountability."

While Obama later clarified his point to say he didn't mean to endorse Reagan's conservative policies, Obama seemed to suggest that Reagan's 1980 election administered a needed dose of accountability to the United States when Reagan actually did the opposite. Reagan's presidency represented a dangerous escape from accountability – and reality.

Still, Obama and congressional Democrats continue to pander to the Reagan myth. On Tuesday, as the nation approached the fifth anniversary of Reagan's death, Obama welcomed Nancy Reagan to the White House and signed a law creating a panel to plan and carry out events to honor Reagan's 100th birthday in 2011.

Obama hailed the right-wing icon. "President Reagan helped as much as any President to restore a sense of optimism in our country, a spirit that transcended politics — that transcended even the most heated arguments of the day," Obama said. [For more on Obama's earlier pandering about Reagan, see Consortiumnews.com's "Obama's Dubious Praise for Reagan."]

It's a sure thing that the Reagan Centennial Committee won't do much more than add to the hagiography surrounding the 40th President.

Despite the grievous harm that Reagan's presidency inflicted on the American Republic and the American people, it may take many more years before a historian has the guts to put this deformed era into a truthful perspective and rate Reagan where he belongs -- near the bottom of the presidential list.

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Robert Parry broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest book, Neck Deep: The Disastrous Presidency of George W. Bush.

Controversial Coal Mining Method Gets Obama's OK

Singer-Actress Ashley Judd speaks during a rally in Frankfort, Ky. on Feb. 17, 2009 calling for an end to mountaintop coal mining. (AP Photo/Roger Alford)

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Tom Hamburger and Peter Wallsten
June 2, 2009 - Chicago Tribune

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With the election of Barack Obama, environmentalists expected to see the end of the "Appalachian apocalypse" -- their name for exposing coal deposits by blowing the tops off of whole mountains.

But in recent weeks, the Obama administration has quietly decided to open the way for at least two dozen more "mountaintop removal" projects.

The decision to clear a path for the controversial projects was never officially announced, but instead conveyed in a letter this month to a West Virginia congressman and coal ally, Democratic Rep. Nick Rahall. The letter said that the Environmental Protection Agency would not block 42 of 48 mine projects that it had reviewed so far, including some of the most controversial mountaintop mines.

In mountaintop removal, explosives blast away a peak and expose coal seams. Coal companies say the practice is safer and more efficient than traditional shaft mining. Critics say the process scars the landscape and dumps tons of waste, some of it toxic, into streams and valleys.

The administration's decisions are not the final word on the projects -- or on the future of mountaintop removal -- but it removes a major obstacle. And the decision, coupled with the light it sheds on relations between the mining industry and the Obama White House, has disappointed environmentalists. Some say they feel betrayed by a president they thought would end or sharply limit the practice.

What makes the issue politically sensitive is the fact that environmentalists were an active force behind Obama's election, while his standing among Democratic voters in coal states is tenuous. Halting mountaintop removal could eliminate jobs in those states and put upward pressure on energy prices.

Coal advocates have solicited help from officials as high as White House chief of staff Rahm Emanuel, and the issue sparked contentious debates among administration officials, including one shouting match in which top officials of two government agencies were heard pounding their fists on the table.

The White House is "searching for a way to walk this tightrope," said Phil Smith, a spokesman for the United Mine Workers of America, whose president, Cecil Roberts, has urged administration officials to allow the procedure. "They have a large constituency of people who want to see an immediate end to mountaintop removal, and an equally large constituency -- many of them Democrats, I might add -- whose communities depend on those jobs."

Earlier, Obama had won praise from the green lobby for taking a skeptical view of the procedure. And the EPA announced in March that it would review mountaintop projects.

The EPA has the authority to review and ultimately block mountaintop removal under the Clean Water Act, but if the agency raises no objections, the final decision is made by the Army Corps of Engineers. The corps previously indicated its intention to approve the 48 permits.

A review of Obama campaign statements showed the presidential candidate expressing concern about the practice without specifically promising to end it. On a West Virginia visit, he said he wanted "strong enforcement of the Clean Water Act" and added, "I will make sure the head of the Environmental Protection Agency believes in the environment."

And EPA Administrator Lisa Jackson said this year that the agency had "considerable concern" about the projects. She pledged that her agency would "use the best science and follow the letter of the law in ensuring we are protecting our environment."

Soon afterward, the agency blocked six major mountaintop projects in West Virginia, Kentucky and Ohio.

But this month, after White House meetings with coal companies and advocates such as Rahall and West Virginia Gov. Joe Manchin, the EPA gave the green light to at least two dozen projects.

"It was a big disappointment," said Joan Mulhern, a lawyer for Earthjustice, an environmental law firm that has led court challenges to mountaintop removal.

Mulhern charged that the EPA "blew off" Jackson's earlier promises that the agency would adhere to science and conduct an open process.

Ed Hopkins, a top Sierra Club official, said that some of the projects that obtained the EPA's blessing "are as large and potentially destructive as the ones they objected to.

"It makes us wonder what standards -- if any -- the administration is using."

Economic Recovery is Wishful Thinking

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The media has been touting whatever good economic news it can find. But the truth is economic recovery is nowhere in sight

Dean Baker
June 2, 2009 - The Guardian/UK

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Last week we got a whole series of bad reports on the state of the economy. New and existing home sales both remain near their lowest level for the downturn, as house prices continue to drop at the rate of 2% a month. New orders for capital goods, a key measure of investment demand, fell by 2% in April. Excluding the volatile transportation sector, new orders were still down by 1.5%.

On Friday, the Chicago Purchasing Managers Index fell by more than 5 percentage points from its April level, approaching its low for the downturn. The employment component of the index did hit a new low.

These reports might have led to gloomy news stories, but not in the US media. The folks who could not see an $8tn housing bubble are still determined to find the silver lining in even the worst economic news.

For example, National Public Radio told listeners that the new home sales figure reported for April was up from the March level. While this was true, the April figure was only 1,000 higher than a March level that had just been revised down by 5,000. April new home sales were 4,000 below the sales level that had originally been reported for March. USA Today touted a "surge" in durable goods orders, which was also based on a sharp downward revision to the prior month's data.

The media have obviously abandoned economic reporting and instead have adopted the role of cheerleader, touting whatever good news it can find and inventing good news when none can be found. This leaves the responsibility of reporting on the economy to others.

Any serious examination of the data shows that recovery is nowhere in sight. The basic story of the downturn is painfully simple. We have seen a collapse of a housing bubble which has devastated the construction sector and also caused consumption to plunge.

The construction sector is suffering from the enormous overbuilding during the bubble years. Measured in months of sales, the inventories of both new and existing homes are close to double their normal levels. This inventory will ensure that construction remains badly depressed at least through 2010, if not much longer.

The plunge in house prices has sent consumption plummeting. The problem is not consumer attitudes, as many commentators seem to believe. Rather, the reason that most homeowners aren't buying a lot right now is the same reason that homeless people don't buy a lot of things: they don't have the money.

The decline in house prices since the peak in 2006 has cost homeowners close to $6tn in lost housing equity. In 2009 alone, falling house prices have destroyed almost $2tn in equity. People were spending at an incredible rate in 2004-2007 based on the wealth they had in their homes. This wealth has now vanished.

Housing is weak and falling. Consumption is weak and falling. New orders for capital goods in April, the main measure for investment demand, is down 35.6% from its level a year ago. And, state and local governments across the country, led by California, are laying off workers and cutting back services.

If there is evidence of a recovery in this story, it is very hard to find. The more obvious story is one of a downward spiral, as more layoffs and further cuts in hours continue to reduce workers' purchasing power. Furthermore, the weakness in the labour market is putting downward pressure on wages, reducing workers' purchasing power through a second channel.

Happy talk will not turn this economy around. The economy needs more demand, which can only be provided by another larger dose of stimulus from the federal government. There are easy, quick and effective ways to boost the economy with additional stimulus.

First, let's give more money to state and local governments so that they don't have to lay off workers, cut back services and raise taxes. This should be a complete no-brainer since this spending will immediately boost the economy.

The government could also provide a large boost to the economy by jump-starting healthcare reform with an employer tax credit (e.g. $2,500 per worker) for firms who do not currently provide coverage. This could quickly get us to near universal coverage as Congress works to restructure the system to contain costs.

It could also provide a $2,500 tax credit to employers for giving workers paid time off. This should both increase demand in the economy and provide workers with more leisure and flexibility at the workplace.

There are other ways in which the government could quickly generate new demand, but these will not be seriously discussed until there is more general recognition that additional stimulus is needed. At some point it will be impossible to conceal the bad news and Congress' attention will return to stimulus. But the media's reality defying happy talk on the economy is delaying this moment.

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Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer (www.conservativenannystate.org) and the more recently published Plunder and Blunder: The Rise and Fall of The Bubble Economy. He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues. You can find it at the American Prospect's web site.

U.S. Report Finds Airstrike Errors in Afghan Deaths

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Eric Schmitt and Thom Shanker
June 2, 2009 - The New York Times

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A military investigation has concluded that American personnel made significant errors in carrying out some of the airstrikes in western Afghanistan on May 4 that killed dozens of Afghan civilians, according to a senior American military official.

The official said the civilian death toll would probably have been reduced if American air crews and forces on the ground had followed strict rules devised to prevent civilian casualties. Had the rules been followed, at least some of the strikes by American warplanes against half a dozen targets over seven hours would have been aborted.

The report represents the clearest American acknowledgment of fault in connection with the attacks. It will give new ammunition to critics, including many Afghans, who complain that American forces too often act indiscriminately in calling in airstrikes, jeopardizing the United States mission by turning the civilian population against American forces and their ally, the Afghan government.

Since the raid, American military commanders have promised to address the problem. On Tuesday, Lt. Gen. Stanley A. McChrystal, nominated to be the American commander in Afghanistan, vowed that reducing civilian casualties was "essential to our credibility."

Any American victory would be "hollow and unsustainable" if it led to popular resentment among Afghanistan's citizens, General McChrystal told the Senate Armed Services Committee during a confirmation hearing.

According to the senior military official, the report on the May 4 raids found that one plane was cleared to attack Taliban fighters, but then had to circle back and did not reconfirm the target before dropping bombs, leaving open the possibility that the militants had fled the site or that civilians had entered the target area in the intervening few minutes.

In another case, a compound of buildings where militants were massing for a possible counterattack against American and Afghan troops was struck in violation of rules that required a more imminent threat to justify putting high-density village dwellings at risk, the official said.

"In several instances where there was a legitimate threat, the choice of how to deal with that threat did not comply with the standing rules of engagement," said the military official, who provided a broad summary of the report's initial findings on the condition of anonymity because the inquiry was not yet complete.

Before being chosen as the new commander in Afghanistan, General McChrystal spent five years as commander of the Joint Special Operations Command, overseeing commandos in Iraq and Afghanistan. Special Operations forces have been sharply criticized by Afghans for aggressive tactics that have contributed to civilian casualties.

During his testimony, General McChrystal said that strikes by warplanes and Special Operations ground units would remain an essential part of combat in Afghanistan. But he promised to make sure that these attacks were based on solid intelligence and that they were as precise as possible. American success in Afghanistan should be measured by "the number of Afghans shielded from violence," not the number of enemy fighters killed, he said.

The inquiry into the May 4 strikes in the western province of Farah illustrated the difficult, split-second decisions facing young officers in the heat of combat as they balance using lethal force to protect their troops under fire with detailed rules restricting the use of firepower to prevent civilian deaths.

In the report, the investigating officer, Brig. Gen. Raymond A. Thomas III, analyzed each of the airstrikes carried out by three aircraft-carrier-based Navy F/A-18 strike aircraft and an Air Force B-1 bomber against targets in the village of Granai, in a battle that lasted more than seven hours.

In each case, the senior military official said, General Thomas determined that the targets that had been struck posed legitimate threats to Afghan or American forces, which included one group of Marines assigned to train the Afghans and another assigned to a Special Operations task force.

But in "several cases," the official said, General Thomas determined either that the airstrikes had not been the appropriate response to the threat because of the potential risk to civilians, or that American forces had failed to follow their own tactical rules in conducting the bombing runs.

The Afghan government concluded that about 140 civilians had been killed in the attacks. An earlier American military inquiry said last month that 20 to 30 civilians had been killed. That inquiry also concluded that 60 to 65 Taliban militants had been killed in the fight. American military officials say their two investigations show that Taliban fighters had deliberately fired on American forces and aircraft from compounds and other places where they knew Afghan civilians had sought shelter, in order to draw an American response that would kill civilians, including women and children.

The firefight began, the military said, when Afghan soldiers and police officers went to several villages in response to reports that three Afghan government officials had been killed by the Taliban. The police were quickly overwhelmed and asked for backup from American forces.

American officials have said that a review of videos from aircraft weapon sights and exchanges between air crew members and a ground commander established that Taliban fighters had taken refuge in "buildings which were then targeted in the final strikes of the fight," which went well into the night.

American troop levels in Afghanistan are expected to double, to about 68,000, under President Obama's new Afghan strategy.

In his previous job as commander of the Joint Special Operations Command, General McChrystal oversaw units assigned to capture or kill senior militants. In his appearance before Congress on Tuesday, he was questioned on reports of abuses of detainees held by his commandos.

Under questioning by Senator Carl Levin, the Michigan Democrat who is the committee chairman, General McChrystal said he was uncomfortable with some of the harsh techniques that were officially approved for interrogation. At the time, such approved techniques included stress positions, sleep deprivation and the use of attack dogs for intimidation.

He said that all reports of abuse during his command were investigated, and that all substantiated cases of abuse resulted in disciplinary action. And he pledged to "strictly enforce" American and international standards for the treatment of battlefield detainees if confirmed to the post in Afghanistan.

Under questioning, General McChrystal also acknowledged that the Army had "failed the family" in its mishandling of the friendly-fire death of Cpl. Pat Tillman, the professional football star who enlisted in the Army after the attacks on Sept. 11, 2001.

A final review by a four-star Army general cleared General McChrystal of any wrongdoing, but punished a number of senior officers who were responsible for administrative mistakes in the days after Corporal Tillman's death. Initially, Army officials said the corporal had been killed by an insurgent ambush, when in fact he had been shot by members of his own Ranger team.

Should We Waterboard the Domestic Terrorist Who Shot Dr. Tiller?

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Cenk Uygur
June 2, 2009 - Smirking Chimp

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I think we can all agree that the man who shot Dr. George Tiller is a domestic terrorist. I know what Republicans think we should do with accused terrorists -- waterboard them. So, let's get it on.

Initial reports are that the suspect is an anti-abortion activist named Scott Roeder. Good enough. Let's torture the son of a bitch. Remember the people in Guantanamo Bay were just detainees, they were not convicted of anything before we started the "enhanced interrogation" techniques. Most of them didn't even have the verifiable criminal and terroristic history of Roeder who was previously arrested with bomb making material and has called murder of doctors "justifiable homicide" before. So, if you can't waterboard Roeder, then who can you waterboard? He is the perfect candidate.

Also, in this case, there might literally be a ticking time bomb. He's been arrested for having bomb making material before! And he's a god-damned terrorist who just killed someone. What more do we need? We can't afford to wait while there might be another ticking time bomb out there.

We should start with waterboarding him and work our way up to even more enhanced interrogation. Now, some squeamish liberals who are soft on terrorism might disagree, but I'm sure all of my conservative friends agree, right? Sean Hannity? Rush Limbaugh? Bill O'Reilly? You're all on board for torturing this terrorist detainee, right?

I'm sure they'll be on TV talking about it. I'm sure of it. Because I know they don't think waterboarding and torture is just what we do to Muslim detainees. I know they're men of their word and would torture anyone suspected of terrorism, no matter what their race or political affiliation is. Right?

Zen Moment of the Day

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Having gotten over $150 billion in bailout money, insurance giant AIG is now trying to take back millions they – oops – gave away for health care for homeless children, meals for the elderly, youth baseball and other questionable causes. They are going to court to seize a $490 million charitable endowment, including $27 million given out, so they can pay their executives obscene salaries and bonuses that dwarf what the homeless kids got but may now lose.

Abby Zimet
Common Dreams

Christian Fundamentalist Terrorism

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Shannyn Moore
June 1, 2009 - Huffington Post

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Christian Fundamentalist Terrorism.

It's shocking to write. But it's time to start calling it what it is.

When Jim D. Adkisson walked into the Tennessee Valley Unitarian Universalist Church with 76 rounds and a shot-gun, he killed 2 people and was charged with murder. His motive was "he hated the liberal movement" and was upset with "liberals in general as well as gays." He should have been charged with terrorism.

Sunday George Tiller, a Wichita doctor, was killed INSIDE the lobby of his Wichita church. Reformation Lutheran Church became a crime scene; fundamentalist terrorism.

The right wing media hacks make targets of the left. The fundamentalist reverends blather their intolerance of other Americans. Their marriages are in jeopardy if the GLBT community can walk down an aisle. Their children are going to be molested if you have to rent to a same sex couple. Fear...fear...fear the queer.

Bill O'Reilly's hit piece on Dr. Tiller is a training tape for Christian Fundamentalist Terrorists. Never did he ask the woman interviewed how she, as a 13 year old, got pregnant, who was the father, or where her parents were when she underwent an abortion at Dr. Tiller's clinic. I'm sure O'Reilly's drivel will insist on personal accountability for the murderer. I'm sure he won't be in line for any "accountability" for calling the doctor "Tiller the baby-killer" or his clinic a "death mill."

Are anti-choice groups celebrating today? An abortion doctor is dead so women won't have unwanted pregnancies!

The "war on terror" needs to include domestic religious, fundamentalist terrorists.

Who is next?

The Trauma of 9/11 Is No Excuse

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Top officials from the Bush administration have hit upon a revealing new theme as they retrospectively justify their national security policies. Call it the White House 9/11 trauma defense.

Richard A. Clarke
May 31, 2009 - Washington Post

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"Unless you were there, in a position of responsibility after September 11, you cannot possibly imagine the dilemmas that you faced in trying to protect Americans," Condoleezza Rice said last month as she admonished a Stanford University student who questioned the Bush-era interrogation program. And in his May 21 speech on national security, Dick Cheney called the morning of Sept. 11, 2001, a "defining" experience that "caused everyone to take a serious second look" at the threats to America. Critics of the administration have become more intense as memories of the attacks have faded, he argued. "Part of our responsibility, as we saw it," Cheney said, "was not to forget the terrible harm that had been done to America."

I remember that morning, too. Shortly after the second World Trade Center tower was hit, I burst in on Rice (then the president's national security adviser) and Cheney in the vice president's office and remember glimpsing horror on his face. Once in the bomb shelter, Cheney assembled his team while the crisis managers on the National Security Council staff coordinated the government response by video conference from the Situation Room. Many of us thought that we might not leave the White House alive. I remember the next day, too, when smoke still rose from the Pentagon as I sat in my office in the White House compound, a gas mask on my desk. The streets of Washington were empty, except for the armored vehicles, and the skies were clear, except for the F-15s on patrol. Every scene from those days is seared into my memory. I understand how it was a defining moment for Cheney, as it was for so many Americans.

Yet listening to Cheney and Rice, it seems that they want to be excused for the measures they authorized after the attacks on the grounds that 9/11 was traumatic. "If you were there in a position of authority and watched Americans drop out of eighty-story buildings because these murderous tyrants went after innocent people," Rice said in her recent comments, "then you were determined to do anything that you could that was legal to prevent that from happening again."

I have little sympathy for this argument. Yes, we went for days with little sleep, and we all assumed that more attacks were coming. But the decisions that Bush officials made in the following months and years -- on Iraq, on detentions, on interrogations, on wiretapping -- were not appropriate. Careful analysis could have replaced the impulse to break all the rules, even more so because the Sept. 11 attacks, though horrifying, should not have surprised senior officials. Cheney's admission that 9/11 caused him to reassess the threats to the nation only underscores how, for months, top officials had ignored warnings from the CIA and the NSC staff that urgent action was needed to preempt a major al-Qaeda attack.

Thus, when Bush's inner circle first really came to grips with the threat of terrorism, they did so in a state of shock -- a bad state in which to develop a coherent response. Fearful of new attacks, they authorized the most extreme measures available, without assessing whether they were really a good idea.

I believe this zeal stemmed in part from concerns about the 2004 presidential election. Many in the White House feared that their inaction prior to the attacks would be publicly detailed before the next vote -- which is why they resisted the 9/11 commission -- and that a second attack would eliminate any chance of a second Bush term. So they decided to leave no doubt that they had done everything imaginable.

The first response they discussed was invading Iraq. While the Pentagon was still burning, Secretary of Defense Don Rumsfeld was in the White House suggesting an attack against Baghdad. Somehow the administration's leaders could not believe that al-Qaeda could have mounted such a devastating operation, so Iraqi involvement became the convenient explanation. Despite being told repeatedly that Iraq was not involved in 9/11, some, like Cheney, could not abandon the idea. Charles Duelfer of the CIA's Iraq Survey Group recently revealed in his book, "Hide and Seek: The Search for Truth in Iraq," that high-level U.S. officials urged him to consider waterboarding specific Iraqi prisoners of war so that they could provide evidence of an Iraqi role in the terrorist attacks -- a request Duelfer refused. (A recent report indicates that the suggestion came from the vice president's office.) Nevertheless, the lack of evidence did not deter the administration from
eventually invading Iraq -- a move many senior Bush officials had wanted to make before 9/11.

On detention, the Bush team leaped to the assumption that U.S. courts and prisons would not work. Before the terrorist attacks, the U.S. counterterrorism program of the 1990s had arrested al-Qaeda terrorists and others around the world and had a 100 percent conviction rate in the U.S. justice system. Yet the American system was abandoned, again as part of a pattern of immediately adopting the most extreme response available. Camps were established around the world, notably in Guantanamo Bay, where prisoners were held without being charged or tried. They became symbols of American overreach, held up as proof that al-Qaeda's anti-American propaganda was right.

Similarly, with regard to interrogation, administration officials conducted no meaningful professional analysis of which techniques worked and which did not. The FBI, which had successfully questioned al-Qaeda terrorists, was effectively excluded from interrogations. Instead, there was the immediate and unwarranted assumption that extreme measures -- such as waterboarding one detainee 183 times -- would be the most effective.

Finally, on wiretapping, rather than beef up the procedures available under the Foreign Intelligence Surveillance Act (FISA), the administration again moved to the extreme, listening in on communications here at home without legal process. FISA did need some modification, but it also allowed for the quick issuance of court orders, as when President Clinton took stepped-up defensive measures in late 1999 under the heightened threat of the new millennium.

Yes, Dick Cheney and Condoleezza Rice may have been surprised by the attacks of Sept. 11, 2001 -- but it was because they had not listened. And their surprise led them to adopt extreme counterterrorism techniques -- but it was because they rejected, without analysis, the tactics the Clinton administration had used. The measures they uncritically adopted, which they simply assumed were the best available, were in fact unnecessary and counterproductive.

"I'll freely admit that watching a coordinated, devastating attack on our country from an underground bunker at the White House can affect how you view your responsibilities," Cheney said in his recent speech. But this defense does not stand up. The Bush administration's response actually undermined the principles and values America has always stood for in the world, values that should have survived this traumatic event. The White House thought that 9/11 changed everything. It may have changed many things, but it did not change the Constitution, which the vice president, the national security adviser and all of us who were in the White House that tragic day had pledged to protect and preserve.

.....

Richard A. Clarke, the national coordinator for security and counterterrorism under Presidents Bill Clinton and George W. Bush, is the author of "Against All Enemies" and "Your Government Failed You."

Reagan Did It

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Paul Krugman
June 1, 2009 - The New York Times

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"This bill is the most important legislation for financial institutions in the last 50 years. It provides a long-term solution for troubled thrift institutions. ... All in all, I think we hit the jackpot." So declared Ronald Reagan in 1982, as he signed the Garn-St. Germain Depository Institutions Act.

He was, as it happened, wrong about solving the problems of the thrifts. On the contrary, the bill turned the modest-sized troubles of savings-and-loan institutions into an utter catastrophe. But he was right about the legislation's significance. And as for that jackpot - well, it finally came more than 25 years later, in the form of the worst economic crisis since the Great Depression.

For the more one looks into the origins of the current disaster, the clearer it becomes that the key wrong turn - the turn that made crisis inevitable - took place in the early 1980s, during the Reagan years.

Attacks on Reaganomics usually focus on rising inequality and fiscal irresponsibility. Indeed, Reagan ushered in an era in which a small minority grew vastly rich, while working families saw only meager gains. He also broke with longstanding rules of fiscal prudence.

On the latter point: traditionally, the U.S. government ran significant budget deficits only in times of war or economic emergency. Federal debt as a percentage of G.D.P. fell steadily from the end of World War II until 1980. But indebtedness began rising under Reagan; it fell again in the Clinton years, but resumed its rise under the Bush administration, leaving us ill prepared for the emergency now upon us.

The increase in public debt was, however, dwarfed by the rise in private debt, made possible by financial deregulation. The change in America's financial rules was Reagan's biggest legacy. And it's the gift that keeps on taking.

The immediate effect of Garn-St. Germain, as I said, was to turn the thrifts from a problem into a catastrophe. The S.& L. crisis has been written out of the Reagan hagiography, but the fact is that deregulation in effect gave the industry - whose deposits were federally insured - a license to gamble with taxpayers' money, at best, or simply to loot it, at worst. By the time the government closed the books on the affair, taxpayers had lost $130 billion, back when that was a lot of money.

But there was also a longer-term effect. Reagan-era legislative changes essentially ended New Deal restrictions on mortgage lending - restrictions that, in particular, limited the ability of families to buy homes without putting a significant amount of money down.

These restrictions were put in place in the 1930s by political leaders who had just experienced a terrible financial crisis, and were trying to prevent another. But by 1980 the memory of the Depression had faded. Government, declared Reagan, is the problem, not the solution; the magic of the marketplace must be set free. And so the precautionary rules were scrapped.

Together with looser lending standards for other kinds of consumer credit, this led to a radical change in American behavior.

We weren't always a nation of big debts and low savings: in the 1970s Americans saved almost 10 percent of their income, slightly more than in the 1960s. It was only after the Reagan deregulation that thrift gradually disappeared from the American way of life, culminating in the near-zero savings rate that prevailed on the eve of the great crisis. Household debt was only 60 percent of income when Reagan took office, about the same as it was during the Kennedy administration. By 2007 it was up to 119 percent.

All this, we were assured, was a good thing: sure, Americans were piling up debt, and they weren't putting aside any of their income, but their finances looked fine once you took into account the rising values of their houses and their stock portfolios. Oops.

Now, the proximate causes of today's economic crisis lie in events that took place long after Reagan left office - in the global savings glut created by surpluses in China and elsewhere, and in the giant housing bubble that savings glut helped inflate.

But it was the explosion of debt over the previous quarter-century that made the U.S. economy so vulnerable. Overstretched borrowers were bound to start defaulting in large numbers once the housing bubble burst and unemployment began to rise.

These defaults in turn wreaked havoc with a financial system that - also mainly thanks to Reagan-era deregulation - took on too much risk with too little capital.

There's plenty of blame to go around these days. But the prime villains behind the mess we're in were Reagan and his circle of advisers - men who forgot the lessons of America's last great financial crisis, and condemned the rest of us to repeat it.

.....

Paul Krugman is professor of Economics and International Affairs at Princeton University and a regular columnist for The New York Times. Krugman was the 2008 recipient of the Nobel Prize in Economics. He is the author of numerous books, including The Conscience of A Liberal, and his most recent, The Return of Depression Economics.

Goodbye, GM

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Michael Moore
June 1st, 2009 - MichaelMoore.com

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I write this on the morning of the end of the once-mighty General Motors. By high noon, the President of the United States will have made it official: General Motors, as we know it, has been totaled.

As I sit here in GM's birthplace, Flint, Michigan, I am surrounded by friends and family who are filled with anxiety about what will happen to them and to the town. Forty percent of the homes and businesses in the city have been abandoned. Imagine what it would be like if you lived in a city where almost every other house is empty. What would be your state of mind?

It is with sad irony that the company which invented "planned obsolescence" -- the decision to build cars that would fall apart after a few years so that the customer would then have to buy a new one -- has now made itself obsolete. It refused to build automobiles that the public wanted, cars that got great gas mileage, were as safe as they could be, and were exceedingly comfortable to drive. Oh -- and that wouldn't start falling apart after two years. GM stubbornly fought environmental and safety regulations. Its executives arrogantly ignored the "inferior" Japanese and German cars, cars which would become the gold standard for automobile buyers. And it was hell-bent on punishing its unionized workforce, lopping off thousands of workers for no good reason other than to "improve" the short-term bottom line of the corporation. Beginning in the 1980s, when GM was posting record profits, it moved countless jobs to Mexico and elsewhere, thus destroying the
lives of tens of thousands of hard-working Americans. The glaring stupidity of this policy was that, when they eliminated the income of so many middle class families, who did they think was going to be able to afford to buy their cars? History will record this blunder in the same way it now writes about the French building the Maginot Line or how the Romans cluelessly poisoned their own water system with lethal lead in its pipes.

So here we are at the deathbed of General Motors. The company's body not yet cold, and I find myself filled with -- dare I say it -- joy. It is not the joy of revenge against a corporation that ruined my hometown and brought misery, divorce, alcoholism, homelessness, physical and mental debilitation, and drug addiction to the people I grew up with. Nor do I, obviously, claim any joy in knowing that 21,000 more GM workers will be told that they, too, are without a job.

But you and I and the rest of America now own a car company! I know, I know -- who on earth wants to run a car company? Who among us wants $50 billion of our tax dollars thrown down the rat hole of still trying to save GM? Let's be clear about this: The only way to save GM is to kill GM. Saving our precious industrial infrastructure, though, is another matter and must be a top priority. If we allow the shutting down and tearing down of our auto plants, we will sorely wish we still had them when we realize that those factories could have built the alternative energy systems we now desperately need. And when we realize that the best way to transport ourselves is on light rail and bullet trains and cleaner buses, how will we do this if we've allowed our industrial capacity and its skilled workforce to disappear?

Thus, as GM is "reorganized" by the federal government and the bankruptcy court, here is the plan I am asking President Obama to implement for the good of the workers, the GM communities, and the nation as a whole. Twenty years ago when I made "Roger & Me," I tried to warn people about what was ahead for General Motors. Had the power structure and the punditocracy listened, maybe much of this could have been avoided. Based on my track record, I request an honest and sincere consideration of the following suggestions:

1. Just as President Roosevelt did after the attack on Pearl Harbor, the President must tell the nation that we are at war and we must immediately convert our auto factories to factories that build mass transit vehicles and alternative energy devices. Within months in Flint in 1942, GM halted all car production and immediately used the assembly lines to build planes, tanks and machine guns. The conversion took no time at all. Everyone pitched in. The fascists were defeated.

We are now in a different kind of war -- a war that we have conducted against the ecosystem and has been conducted by our very own corporate leaders. This current war has two fronts. One is headquartered in Detroit. The products built in the factories of GM, Ford and Chrysler are some of the greatest weapons of mass destruction responsible for global warming and the melting of our polar icecaps. The things we call "cars" may have been fun to drive, but they are like a million daggers into the heart of Mother Nature. To continue to build them would only lead to the ruin of our species and much of the planet.

The other front in this war is being waged by the oil companies against you and me. They are committed to fleecing us whenever they can, and they have been reckless stewards of the finite amount of oil that is located under the surface of the earth. They know they are sucking it bone dry. And like the lumber tycoons of the early 20th century who didn't give a damn about future generations as they tore down every forest they could get their hands on, these oil barons are not telling the public what they know to be true -- that there are only a few more decades of useable oil on this planet. And as the end days of oil approach us, get ready for some very desperate people willing to kill and be killed just to get their hands on a gallon can of gasoline.

President Obama, now that he has taken control of GM, needs to convert the factories to new and needed uses immediately.

2. Don't put another $30 billion into the coffers of GM to build cars. Instead, use that money to keep the current workforce -- and most of those who have been laid off -- employed so that they can build the new modes of 21st century transportation. Let them start the conversion work now.

3. Announce that we will have bullet trains criss-crossing this country in the next five years. Japan is celebrating the 45th anniversary of its first bullet train this year. Now they have dozens of them. Average speed: 165 mph. Average time a train is late: under 30 seconds. They have had these high speed trains for nearly five decades -- and we don't even have one! The fact that the technology already exists for us to go from New York to L.A. in 17 hours by train, and that we haven't used it, is criminal. Let's hire the unemployed to build the new high speed lines all over the country. Chicago to Detroit in less than two hours. Miami to DC in under 7 hours. Denver to Dallas in five and a half. This can be done and done now.

4. Initiate a program to put light rail mass transit lines in all our large and medium-sized cities. Build those trains in the GM factories. And hire local people everywhere to install and run this system.

5. For people in rural areas not served by the train lines, have the GM plants produce energy efficient clean buses.

6. For the time being, have some factories build hybrid or all-electric cars (and batteries). It will take a few years for people to get used to the new ways to transport ourselves, so if we're going to have automobiles, let's have kinder, gentler ones. We can be building these next month (do not believe anyone who tells you it will take years to retool the factories -- that simply isn't true).

7. Transform some of the empty GM factories to facilities that build windmills, solar panels and other means of alternate forms of energy. We need tens of millions of solar panels right now. And there is an eager and skilled workforce who can build them.

8. Provide tax incentives for those who travel by hybrid car or bus or train. Also, credits for those who convert their home to alternative energy.

9. To help pay for this, impose a two-dollar tax on every gallon of gasoline. This will get people to switch to more energy saving cars or to use the new rail lines and rail cars the former autoworkers have built for them.

Well, that's a start. Please, please, please don't save GM so that a smaller version of it will simply do nothing more than build Chevys or Cadillacs. This is not a long-term solution. Don't throw bad money into a company whose tailpipe is malfunctioning, causing a strange odor to fill the car.

100 years ago this year, the founders of General Motors convinced the world to give up their horses and saddles and buggy whips to try a new form of transportation. Now it is time for us to say goodbye to the internal combustion engine. It seemed to serve us well for so long. We enjoyed the car hops at the A&W. We made out in the front -- and the back -- seat. We watched movies on large outdoor screens, went to the races at NASCAR tracks across the country, and saw the Pacific Ocean for the first time through the window down Hwy. 1. And now it's over. It's a new day and a new century. The President -- and the UAW -- must seize this moment and create a big batch of lemonade from this very sour and sad lemon.

Yesterday, the last surviving person from the Titanic disaster passed away. She escaped certain death that night and went on to live another 97 years.

So can we survive our own Titanic in all the Flint Michigans of this country. 60% of GM is ours. I think we can do a better job.

Yours,
Michael Moore

"Weird" Sex Fantasies, And Why They're Good For You

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Brie Cadman
June 1, 2009 - Divine Caroline

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Having sexual fantasies is an absolutely normal, if not necessary, part of being a sexual being. It's not having them that is aberrant.

If you want to enliven your next dinner party, bring out this question: what was the subject of your last sexual fantasy?

Forks and jaws might drop, but only because almost everyone in attendance will be recreating the scene last played in their head, or claiming that they don't fantasize, or claiming to only fantasize about their partner. However, chances are everyone at the table (assuming you're not dining at a senior center) has erotic and illicit fantasies, and does so on a normal basis. But rarely, if ever, do we want to talk about it.

Titillating Taboo

Sexually fantasies are something we rarely discuss, even among good friends. Our deepest sexual thoughts are often considered too weird, perverse, or just plain wrong to be shared amongst polite company; fantasizing might indicate there is something wrong with our relationships, or worse, ourselves. But research indicates that having sexual fantasies is an absolutely normal, if not necessary, part of being a sexual being. It's not having them that is aberrant.

Large research studies indicate that almost everyone fantasizes and almost none of us talk about it. While researching his book, Who's Been Sleeping in Your Head: The Secret World of Sexual Fantasies, Brett Kahr, a psychologist based in the UK, anonymously surveyed 18,000 people in Britain and America. He asked them questions about the frequency and content of their fantasies and found that nine out of ten people have sexual fantasies. What's more, he believes the remaining tenth person has them too, but is too embarrassed to admit it.

Even those of us that admit to fantasizing are reluctant to discuss what it is that gets us going. Ninety-five percent of the research subjects had never detailed their fantasies to another person. While some fantasies might be better left undisclosed -- such as revealing to a new partner that you think about an ex while having sex with him -- we don't even talk about our imaginative sexual escapades with friends. Erotic fantasy is taboo.

Wine Me, Dine Me, 69 Me

Many people suffer shame and guilt about the perverse nature of their fantasies, even though what we think of as "perverse" may actually be quite common. Though a typical and unremarkable fantasy for both men and women is dreaming about sex with their current partner, Kahr also found that bondage, incest, sadomasochism, and voyeurism are also part of the varied fantasy life of "normal" people.

Shame regarding sexual fantasies may stem from earlier notions about the role of fantasy in our lives. In the 1900s, some psychoanalysts interpreted "kinky" sexual fantasies as being caused by "kinky" desires or wishes. Strange fantasies were often treated as pathology.

But we now know that fantasies are no more pathologic than masturbation. They allow us to think about doing something we would never actually do, or about things we've done before and would like to do again. (An ex-flame, for instance.) They allow us to sleep with celebrities. (You and me, Robert Downey Jr., just you and me.) Furthermore, fantasy may help our sex lives by increasing desire and arousal; those who fantasize frequently also tend to have more sex. And cerebral foreplay has certainly helped millions (billions? trillions?) of masturbations end in success.

Safe Sex

Kahr also found that sometimes fantasy is a way of putting a positive spin on a negative childhood memory. For instance, he describes a happily married woman whose fantasies help turn memories of sexual abuse by an older brother into an arousing experience. In this way, fantasy can be a coping mechanism. However, even if you fantasize about abuse, it doesn't necessarily mean you're a survivor of abuse or want it to happen. Women may fantasize about being dominated by a stranger, but we are able to control every one of their actions. Our minds are a safe place to try new and risky deeds without ever getting hurt. In the book, Arousal: The Secret Logic of Sexual Fantasies, Michael Bader writes, "Safety is the concept that functions as the key to unlocking the meaning of our fantasies." Being bound and gagged by a dominating partner may not seem safe, but somewhere in the unconscious, submission is desired.

All this is somewhat reassuring. Rather than feeling guilty about thinking about another person while having sex with your partner, we can see it as a way to help spice up the sex, without committing any transgressions. Just keep it in your head.

Contractors Vie for Plum Work, Hacking for the United States

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Christopher Drew and John Markoff
May 31, 2009 - The New York Times

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The government's urgent push into cyberwarfare has set off a rush among the biggest military companies for billions of dollars in new defense contracts.

The exotic nature of the work, coupled with the deep recession, is enabling the companies to attract top young talent that once would have gone to Silicon Valley. And the race to develop weapons that defend against, or initiate, computer attacks has given rise to thousands of "hacker soldiers" within the Pentagon who can blend the new capabilities into the nation's war planning.

Nearly all of the largest military companies - including Northrop Grumman, General Dynamics, Lockheed Martin and Raytheon - have major cyber contracts with the military and intelligence agencies.

The companies have been moving quickly to lock up the relatively small number of experts with the training and creativity to block the attacks and design countermeasures. They have been buying smaller firms, financing academic research and running advertisements for "cyberninjas" at a time when other industries are shedding workers.

The changes are manifesting themselves in highly classified laboratories, where computer geeks in their 20s like to joke that they are hackers with security clearances.

At a Raytheon facility here south of the Kennedy Space Center, a hub of innovation in an earlier era, rock music blares and empty cans of Mountain Dew pile up as engineers create tools to protect the Pentagon's computers and crack into the networks of countries that could become adversaries. Prizes like cappuccino machines and stacks of cash spur them on, and a gong heralds each major breakthrough.

The young engineers represent the new face of a war that President Obama described Friday as "one of the most serious economic and national security challenges we face as a nation." The president said he would appoint a senior White House official to oversee the nation's cybersecurity strategies.

Computer experts say the government is behind the curve in sealing off its networks from threats that are growing more persistent and sophisticated, with thousands of intrusions each day from organized criminals and legions of hackers for nations including Russia and China.

"Everybody's attacking everybody," said Scott Chase, a 30-year-old computer engineer who helps run the Raytheon unit here.

Mr. Chase, who wears his hair in a ponytail, and Terry Gillette, a 53-year-old former rocket engineer, ran SI Government Solutions before selling the company to Raytheon last year as the boom in the military's cyberoperations accelerated.

The operation - tucked into several unmarked buildings behind an insurance office and a dentist's office - is doing some of the most cutting-edge work, both in identifying weaknesses in Pentagon networks and in creating weapons for potential attacks.

Daniel D. Allen, who oversees work on intelligence systems for Northrop Grumman, estimated that federal spending on computer security now totals $10 billion each year, including classified programs. That is just a fraction of the government's spending on weapons systems. But industry officials expect it to rise rapidly.

The military contractors are now in the enviable position of turning what they learned out of necessity - protecting the sensitive Pentagon data that sits on their own computers - into a lucrative business that could replace some of the revenue lost from cancellations of conventional weapons systems.

Executives at Lockheed Martin, which has long been the government's largest information-technology contractor, also see the demand for greater computer security spreading to energy and health care agencies and the rest of the nation's critical infrastructure. But for now, most companies remain focused on the national-security arena, where the hottest efforts involve anticipating how an enemy might attack and developing the resources to strike back.

Though even the existence of research on cyberweapons was once highly classified, the Air Force plans this year to award the first publicly announced contract for developing tools to break into enemy computers. The companies are also teaming up to build a National Cyber Range, a model of the Internet for testing advanced techniques.

Military experts said Northrop Grumman and General Dynamics, which have long been major players in the Pentagon's security efforts, are leading the push into offensive cyberwarfare, along with the Raytheon unit. This involves finding vulnerabilities in other countries' computer systems and developing software tools to exploit them, either to steal sensitive information or disable the networks.

Mr. Chase and Mr. Gillette said the Raytheon unit, which has about 100 employees, grew out of a company they started with friends at Florida Institute of Technology that concentrated on helping software makers find flaws in their own products. Over the last several years, their focus shifted to the military and intelligence agencies, which wanted to use their analytic tools to detect vulnerabilities and intrusions previously unnoticed.

Like other contractors, the Raytheon teams set up "honey pots," the equivalent of sting operations, to lure hackers into digital cul-de-sacs that mimic Pentagon Web sites. They then capture the attackers' codes and create defenses for them.

And since most of the world's computers run on the Windows or the Linux systems, their work has also provided a growing window into how to attack foreign networks in any cyberwar.

"It takes a nonconformist to excel at what we do," said Mr. Gillette, a tanned surfing aficionado who looks like a 1950s hipster in his T-shirts with rolled-up sleeves.

The company, which would allow interviews with other employees only on the condition that their last names not be used because of security concerns, hired one of its top young workers, Dustin, after he won two major hacking contests and dropped out of college. "I always approach it like a game, and it's been fun," said Dustin, now 22.

Another engineer, known as Jolly, joined Raytheon in April after earning a master's degree in computer security at DePaul University in Chicago. "You think defense contractors, and you think bureaucracy, and not necessarily a lot of interesting and challenging projects," he said.

The Pentagon's interest in cyberwarfare has reached "religious intensity," said Daniel T. Kuehl, a military historian at the National Defense University. And the changes carry through to soldiers being trained to defend and attack computer and wireless networks out on the battlefield.

That shift can be seen in the remaking of organizations like the Association of Old Crows, a professional group that includes contractors and military personnel.

The Old Crows have deep roots in what has long been known as electronic warfare - the use of radar and radio technologies for jamming and deception.

But the financing for electronic warfare had slowed recently, prompting the Old Crows to set up a broader information-operations branch last year and establish a new trade journal to focus on cyberwarfare.

The career of Joel Harding, the director of the group's Information Operations Institute, exemplifies the increasing role that computing and the Internet are playing in the military.

A 20-year veteran of military intelligence, Mr. Harding shifted in 1996 into one of the earliest commands that studied government-sponsored computer hacker programs. After leaving the military, he took a job as an analyst at SAIC, a large contractor developing computer applications for military and intelligence agencies.

Mr. Harding estimates that there are now 3,000 to 5,000 information operations specialists in the military and 50,000 to 70,000 soldiers involved in general computer operations. Adding specialists in electronic warfare, deception and other areas could bring the total number of information operations personnel to as many as 88,700, he said.

Confirmed: Unreleased Torture Photos Did Show Rape and Sexual Assault

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The Pentagon lied when it said "None of the photos in question depict the images that are described in that article."

May 30, 2009 - Think Progress

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This week, the Daily Telegraph reported that the torture photos President Obama recently decided to withhold from the public depict "rape and sexual abuse." The Pentagon denied the report, saying, "None of the photos in question depict the images that are described in that article." But yesterday, Scott Horton reported that he has confirmed that the photos do, in fact, "depict sexually explicit acts," including "a government contractor engaged in an act of sodomy with a male prisoner and scenes of forced masturbation," as well as "penetration involving phosphorous sticks and brooms." Horton writes further:

A senior military officer familiar with the photos told me that they would likely provoke a storm of outrage if released. … Some show U.S. personnel engaged in sexual acts with prisoners and each other. In one, a female prisoner appears to have been forced to expose her breasts to be photographed. In another, a prisoner is suspended naked upside down from the top bunk of a bed in a stress position.

Still other withheld photographs have been circulating among U.S. soldiers who served in Iraq. One soldier showed them to me, including a photograph in which a male in a U.S. military uniform receives oral sex from a female prisoner.

Horton also obtained what he characterizes as "rarely seen Abu Ghraib torture photos," which can be viewed here:

Warning: They are graphic and disturbing!

http://www.thedailybeast.com/blogs-and-stories/2009-05-29/torture-photos-depict-sex-rape/#gallery=298;page=1

Local Currencies Really Can Buy Happiness

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Matthew Cardinale
June 1, 2009 - Inter Press Service

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In the face of an economic system which seems to be premised on environmental harm and profit-driven growth, a handful of communities across the U.S. and the globe have begun experimenting with alternative forms of local currency as a pathway to sustainability.

Local currencies existing today in the U.S. include the Humboldt Community Currency in Eureka, California; Berkshares in the Massachusetts Berkshire region; Bay Bucks in Traverse City, Michigan; Ithaca Hours in Ithaca, New York; Cascadia Hours, Corvalis Hours, and RiverHours in Oregon; Equal Dollars in Philadelphia, Pennsylvania; and Madison Hours in Madison, Wisconsin, according to the E. F. Schumacher Society, which runs Berkshares.

Canadian community currencies are located in Calgary, Alberta; Salt Spring Island, British Columbia; Tamworth, Toronto and the Madawaska Valley, both in Ontario, which is promoting a "usury-free dollar".

There are also community currencies in Tlaxpana, Mexico; and East Sussex and Devon, England; as well as a regional currency based in Basel, Switzerland, which can also be exchanged in parts of Germany and France.

What these currencies have in common is that they represent an effort to respond to the pressures of globalisation, like the advent of massive chain stores competing with local merchants.

People in Berkshire can go to one of five participating local banks to trade 95 cents for one Berkshare, at a five percent discount to the dollar. Then, they can spend Berkshares at over 400 participating local stores as a direct replacement for dollars, and thus save 5 cents with every Berkshare they spend.

Even though store owners lose the 5 cents whenever they trade Berkshares back for dollars at a bank - which they have to do to buy something that can't be produced locally - they are still typically happy with the loyal, local customers they keep instead of losing them to chains like Wal-Mart, Starbucks, and Barnes & Noble.

"Local currencies are part of what educate people about the importance of their small, independent businesses. It's bringing people off the Internet, back to Main Street, for the face-to-face exchanges. Once they're there, they like it," Susan Witt, founder of Berkshares, told IPS.

There are many ways having a local currency can help create a more sustainable economy, say leaders in the local currency movement.

First, because using a community currency forces people to buy locally, fewer goods have to be imported.

"By having economic transactions be so focused locally, that's definitely, for one thing, reducing use of fossil fuel. If it's a local farmer's market... food [is] produced 30 miles away instead of 3,000 miles away," said Steve Burke, executive director of Ithaca Hours, said.

Trade theorists might object that it is less efficient, or less productive, for diverse goods to be produced in many communities than it is for each community to specialise in producing one product for export, even factoring in transportation costs.

"Is it the real cost of transportation?" asked Susan Witt, founder of Berkshares. "Is the real cost and consequences of our dependence on fossil fuels to transport goods really factored into the cost? Is climate deterioration factored in? Is engaging in conflicts for limited supplies of fossil fuels?"

"Nor all the costs of unemployment in our local communities? Nor the hollowness of our life experiences? Nor the human costs in [other countries]... for maybe manufacturing practices that we would not ourselves allow in this country?" she wondered.

A second way in which community currencies support environmental sustainability is that they can lead to reduced consumption, Witt argues. Witt believes that people purchase more and more "stuff", not because they need it, but to fill a void that community currency can satisfy.

"You know the full story about the goods you purchase. You know how they were produced. You know the carpenter who made the table. You know who her children are. You realise buying the table is supporting that family," Witt said.

The products bought with local currency "link you to your neighbourhood, your place, the people of your place. They're not just stuff... they enrich your life the way that stuff would not. So you need less."

"One hand-knit wool sweater, coming from wool from sheep that graze on the hillside on the way to work, that satisfies you in a way four sweaters from unknown sources fails to do. You care for it in a different way," Witt said.

A third way in which community currency can lead to sustainable economy is communities can print the currency they need to issue interest-free, or non-profit loans. Allowing credit to be issued interest-free eliminates the need to service growing debts. High-interest debt owed by individuals, businesses, and governments to private banks is one of the main factors pushing economies to constantly grow at an exponential rate. As these entities struggle to service the interest on their debts with a total money supply that was mostly created through issuance of credit, more and more new debt must be created in order for the system to be stable.

Thus, because high-interest debt pushes the economy to constantly grow, it also pushes industrialisation into new markets, new products, and new technologies, which often lead to deforestation, air pollution, and the like.

By communities printing and issuing their own currency, in part through productive non-profit loans, the economy can function without the constant growth that is imperiling the environment.

There are at least two different models for how to organise and operate a local currency that local communities are using. One is used by Berkshares; the other was pioneered by the Ithaca Hour.

Founded in 1991, the Ithaca Hour is the oldest local currency to exist in the U.S. since local currencies disappeared in the 1900s. Numerous local currencies have since based their model on the Ithaca Hour.

Businesses become members in Ithaca Hours by purchasing a listing in the Ithaca Hours directory, and they receive two "hours" every year as part of their membership fee. Employees at these businesses then can accept hours instead of dollars for some of their wages. People can accept hours instead of dollars for services, like mowing a lawn, that they provide.

This, in addition to low-cost loans, is the primary way Ithaca Hours enter Ithaca's economy.

"There's a pretty fundamental difference between our model and the Berkshares model," Burke said. "They sell them. With ours, you can't buy them; you can only earn them."

They are called hours "to make a statement", Burke said. The founders "wanted to emphasise the relationship between time and money".

*This story is part of a series of features on sustainable development by IPS and IFEJ - International Federation of Environmental Journalists -­ for Communicators for Sustainable Development (www.complusalliance.org)