Thursday, June 11, 2009

Wall Street's False Armistice

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William Greider
June 11, 2009 - The Nation

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The best names in Wall Street banking have announced victory. Their crisis is over, back to business as usual. So why isn't the Obama White House celebrating this good news? Because this may not be a lasting peace for the president and his lieutenants. They are left standing in the mudhole of financial ruin, still surrounded by the failing economy and gradually losing their control over events. The leading bankers worked out a rare deal for themselves that essentially says to the government in Washington "heads we win, tails you lose."

If Jamie Dimon of JPMorgan Chase and Lloyd Blankfein of Goldman Sachs turn out to be correct about the financial crisis, their institutions emerge unscathed and restored to their old dominance over the US economy. Minus a few old rivals who went bust.

If the bankers are wrong, Barack Obama will be the big loser--compelled to rescue them again with still more public money. The big dogs of banking know this, so does the president. That's why he didn't throw his hat in the air when ten of the largest banks were allowed to pay back the emergency aid they received from the feds, some $68 billion. The financiers could thus declare themselves free and clear of the heavy hand of government meddling. Another triumph of free-market capitalism. A brilliant success for Goldman Sachs socialism. Barack Obama is holding the bag for what happens next.

There is rough justice in his predicament. The essential bet Obama made as president was to insist on a "voluntary" approach to rescuing the financial system, picking up the main policies launched by his predecessor. An odd-lot chorus of left and right critics (myself included) urged Obama to step up and employ the full force of government's emergency powers to take charge of the troubled system and direct their behavior. Heal the wounded banks or liquidate them, use government financing to insure the lending and investing needed to finance economic recovery. Don't leave it to the bank executives who will naturally take care of themselves first, maybe the country later.

Obama rejected that option. He was most reluctant to nationalize banks or to assert full control of those zombies that government has had to keep on life support. His political logic was obvious--maintain the appearance of temporary interventions to assist private enterprise and avoid any accusations of left-wing activism. The right called him a socialist anyway.

What are the odds Obama will win his bet? Not so hot right now, despite frequent pep talks from his economic advisers. If you think back to where this crisis began last year and what the authorities described then as their emergency response, big pieces are still missing in action.

Bush's treasury secretary, Hank Paulson, stampeded the Democratic Congress into providing $750 billion to soak up the rotten assets burdening the balance sheets of the largest banks. That plan was not pursued. The rotten assets are still largely there.

Obama's treasury secretary, Timothy Geithner, came up with an alternative approach--a complicated Monopoly game in which government would underwrite private investors to buy up the bad financial paper. That didn't happen either. The bankers let it be known they would not sell the stuff--not at discounted prices, not if it meant admitting the depths of their true losses.

Meanwhile, the government has also ducked the explosive question of derivatives--the casino-like "credit default swaps" that were very, very profitable for banks like JP Morgan Chase but became the time bomb threatening to blow up the entire system. The time bomb is still ticking. The bankers don't want give up that lucrative business. The Obama officials have not yet found the nerve to go against the bankers' desires.

Finally, there is the real economy where most Americans dwell. Obama's team is counting on a recovery in the second half of this year and his advisors keep predicting it with increasing confidence. The president is betting on that too. If his optimism is not confirmed by events, his problems multiply. The stock-market restoration celebrated by the bankers will begin to look like another financial bubble, driven by false hopes. Banking problems will worsen and they will he back for still more bailouts. And President Obama will have to take a second look at his happy assumptions. He might start by replacing some of the cheerleaders.

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William Greider is national affairs correspondent for The Nation. He is author of "Secrets of the Temple: How the Federal Reserve Runs the Country" and, most recently, "Come Home, America: The Rise and Fall (and Redeeming Promise) of Our Country."

The Wheels Are Coming Off Obama's and the Democrats' Recovery Program

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Where's the Anger?

Dave Lindorff
June 11, 2009 - Smirking Chimp
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My bank, a small regional institution that was not involved in sub-prime lending, and that was not a recipient of any TARP bailout money, cut off my home equity line of credit two weeks ago. They did it abruptly, with no notice--I only discovered it had happened when I tried to get a $500 advance from it to cover a payment I was making on my credit card. When I asked what was going on, the local branch manager informed me that "we are closing out a lot of credit lines while we reassess the value of houses in this region, which have been falling."

Now, in my particular case this was ridiculous. First of all, in our county, just north of Philadelphia, property prices have been static, but not falling. Furthermore, I had taken out a $160,000 mortgage 12 years ago, and it was now paid down to $60,000, and my balance on the home equity credit line was pretty small, so there was no way that we were in any way "under water"--in fact our equity in our home is much higher than it was 12 years ago.

The bank informed me that it was no problem. I could simply take out a new credit line, at no charge, and transfer the balance on the current line over to the new one. The only hitch: Instead of paying one percent over prime as I had been, I would be paying nearly 4 percent over prime on that balance, effectively doubling the cost of borrowing money.

This kind of thing is going on all across America, as banks that once spread around credit like a Philadelphia Democratic Party ward captain on Election Day, start tightening the screws on individuals and on small businesses.

While the Obama administration and the Treasury and the Fed are bulldozing funds into the coffers of the big banks, allegedly to get them to lend, the banks, from the largest to the smallest, are pulling back, afraid that borrowers will end up going bust on them. So much for economic stimulus efforts.

Not that borrowers have been lining up to get credit. Rather, most people, if they aren't simply going bankrupt or letting collection agents harass them for nonpayment, are trying to pay off credit card balances, and to cut expenses. In April, the savings rate of Americans, which has been negative in recent years as people tried to maintain living standards by borrowing on their credit cards and their homes, boosted their savings rate to a 14-year high of 5.7%. With official unemployment approaching 10%--a level it may hit this month--and real unemployment, as measured the way it used to be back in 1980, at closer to 20 percent, the majority of Americans not only have friends and family members who are unemployed or working part-time or at odd jobs involuntarily, but are worried about getting the axe themselves.

Meanwhile, the short-lived but incredibly expensive Obama rescue program, like a stagecoach at the end of a spaghetti western chase scene, is about to have the wheels fall off and go sliding over a cliff.

Bond yields and commodity prices are spiking as investors are waking up to the reality that massive borrowing by the US Treasury and massive printing of money by the Federal Reserve are going to lead to serious, perhaps even hyper inflation of the dollar. That in turn will force the Fed at some point, probably fairly soon, to raise interest rates, choking off not only those so-called economic "green shoots" that the cheerleading media have been citing as evidence that the recession is "bottoming out," but also even the recent stock market rise, which was being touted as one of those signs of economic "spring." On Tuesday, the interest rate or "yield" on the benchmark 10-year Treasury Bill jumped from 3.86% to 3.98 percent, and at one point went over 4%. Meanwhile, crude oil prices rose to over $70/barrel--an odd thing given the significant decline in demand caused by the global recession, but evidence that investors are anticipating a dollar slump and
aren't interested in supply and demand issues. Other commodity prices are also jumping for the same reason.

News that the big banks that were recipients of hundreds of billions of dollars in federal TARP loans were paying some of that money back to the government in order to be able to go back to their old ways was hardly reassuring. Those banks, like Bank of America and Citibank and Goldman Sachs, are not suddenly healthy. They have used accounting gimmicks to disguise the fact that they are what some economists have dubbed "zombies," with bad debts far in excess of their assets. And they will stay that way, while enriching their top managers with bloated salaries and "bonus" payments, while keeping credit tight and available only to the absolutely best corporate borrowers.

Obama's wars in Iraq and Afghanistan are going from bad to worse. There is no savings coming out of Iraq, as he had claimed would happen during last year's presidential campaign, and even if there were, it's all simply being transferred over to Iraq, where the US war effort is morphing from a small special forces operation into a full-scale war, destined to rival or even surpass the one in Iraq in terms of human and financial costs.

It's all coming unglued, just as the president puts forward his signature program--a health care reform scheme that is supposed to guarantee health care for everyone in the country.

Fat chance that one has. When America's economic house of cards finally really collapses, which looks to be starting to happen now, there simply won't be any cash in the till for health care.

So far, most Americans remain unaware of the scale of this crisis. The news media continue to tout shamelessly whatever signs of recovery they can detect, leaving all those whose personal finances are falling apart to feel like it's just their problem. Astonishingly, given the extent of the joblessness, there has been no national jobs march on Washington, no mass protests over the inadequacy of unemployment benefits, which reach only a minority of workers and are at levels far below what they were in prior recessions, no sit-down strikes at companies that are laying workers off or cutting salaries. The labor movement, such as it is at this point, is so wedded to Obama and the ruling Democrats, and so narrowly focused on trying to win passage of the seemingly doomed Employee Free Choice labor law reform bill, that the unions aren't trying to organize any mass actions to demand economic justice.

Maybe this public passivity in the face of rampant corporate welfare and corporate pillage will come to an end as unemployment benefits begin to run out and unemployment rates continue to climb.

The coach is heading for the cliff, but there is still time for people to jump out.

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Dave Lindorff is the author of Killing Time: an Investigation into the Death Row Case of Mumia Abu-Jamal. His new book of columns titled "This Can't be Happening!" is published by Common Courage Press. Lindorff's new book is "The Case for Impeachment," co-authored by Barbara Olshansky.

Is Israel's Aggression a Question of Pride?

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Ira Chernus
June 11, 2009 - Smirking Chimp

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Suppose Barack Obama really does want to herd the Israelis and Palestinians into serious, fruitful peace negotiations. How could he, or anyone, hope to get an agreement from these seemingly intractable enemies? Two researchers think they've found at least the beginning of an answer.

They asked nearly 4,000 Israelis and Palestinians what kind of peace deal they would accept. When they proposed "rational" bargains, like land for peace or sharing control of Jerusalem, the answers were generally negative. For both sides, the researchers found, the real sticking points are about values that people hold sacred. The tangible issues -- land, resources, political control, and the like -- are only symbols of these sacred values.

That's the best way for the U.S. to understand -- Israeli relations emerging over "natural growth" in the West Bank settlements. In itself it's a relatively small matter. "Natural growth" boosted the settler population by only 3 percent in 2007. Settler families that expand could easily move and find housing elsewhere, as all other expanding Israeli families do.

But the Obama administration has chosen this particular issue as the symbolic gesture Israel must make. And the Israeli government has responded by making "natural growth" the new symbol of all Israel's sacred values.

If they have to give up settlement expansion, what will they have to give up next, they ask. Jerusalem? The Jews' right to have their own state? Perhaps even the state of Israel itself? A people with such a long history of persecution might very well be afraid of losing everything the Jews hold dear. That fear could well explain their intransigence.

Except that's not quite what the research shows. For Israelis -- and for Palestinians -- the crux of the conflict is not about what values each side is afraid of losing and wants to protect. It's about how much they can force the other side to give up.

Most of the respondents on each side demanded a settlement "that involved their enemies making symbolic but difficult gestures." The respondents said they would make concessions as long as "the other side agreed to a symbolic sacrifice of one of its sacred values."

What sacred values? The researchers offered only examples of actions: Palestinians want an apology from the Jews, while Jews want recognition of Israel's right to exist. But what are the deeper values symbolized by these actions? And why is forcing sacrifice from the other side the crucial goal?

I don't know much about the Palestinians. But having grown up in an observant Jewish home, been active in Jewish community life, studied and taught the history of Judaism for decades, and had close relatives living in Israel for decades, I have a pretty good idea of the values driving the Jewish side of the conflict.

One of the key values, perhaps the most important of all, is national pride. And the most cherished symbol of pride is a victory over an enemy -- forcing it to give up something, anything, that symbolizes a loss of its pride.

I first saw this clearly on Yom Kippur 1973. I was in synagogue, observing the holiest day of the Jewish year, when I heard that the Egyptians had crossed the Suez Canal and attacked the Israeli troops stationed on the other side. My immediate response was something like this:

The Israelis are at the Suez Canal because they captured the Sinai Peninsula in the Six Day War in 1967. Why do the Egyptians want the Sinai back? It's a barren desert with no resources of any value. So I jumped to the conclusion (as a young man I was quicker to make assumptions about people I didn't know or understand) that the Egyptians did not want the land back. They wanted their national pride back. They had been humiliated in '67, and now they were going to recoup their self-esteem.

Therefore, I said, the Israelis can gain a huge advantage by withdrawing to the 1967 border, letting Egypt have the Sinai, throwing up their hands and crying "We lost!" They would have lost nothing of value. The Egyptians would be content. The way would be open for peace and security.

A few years later, the Israelis did give Sinai back to Egypt as part of a peace deal, and few Israelis expressed any regrets. How much easier to have done it on Yom Kippur 1973 and saved all that bloodshed.

But when I shared my logical solution with others in the synagogue, they simply didn't get it. I had no more success with my best friend, as I drove him to JFK Airport so he could fly back to Israel and rejoin his army unit for the Sinai war. To most Jews then, as to most Jews now, it was just obvious that when the enemy attacks, you fight back and inflict a loss on the attacker. That's how you bolster your national pride.

Is national pride a truly sacred value? Few Jews will say so directly. But for many Israeli Jews, and for most American Jews since the Six Day War, religion and nationalism have been intertwined. The theologian Emil Fackenheim fused them in his very influential idea that, since the Holocaust, God has given the Jews a new commandment that trumps all others: The Jewish people must survive as a distinct people, or else Hitler's goal of a Jew-free world will be realized.

Now Israel is the fundamental symbol of Jewish survival. So Israel's war victories have an "inescapably religious dimension" because they keep Israel safe from destruction.

But when I heard Fackenheim speak a few years after the Yom Kippur war, I discovered that his real belief was rather different. Someone in the audience asked a question: "You say that Israel must fight its enemies to insure Jewish survival. Yet what guarantee is there that Israel will win every war and always insure Jewish survival?"

The distinguished theologian gave this rather shocking reply: "There is no guarantee. Israel may indeed be destroyed. But the important point is that next time we will go down fighting."

There was no need to spell out the obvious implication: If we go down fighting, we can feel proud of ourselves, even if the last Jew disappears from the earth. Survival is not as sacred to us as pride, and pride comes from fighting the enemy. "Never Again" means never again will we let ourselves be shamefully herded to slaughter without resisting to the last woman and man.

This commitment has always been a central pillar of Israeli life. The widely admired, recently deceased Israeli author Amos Elon wrote (in his 1971 best-seller, The Israelis) that the memory of the Holocaust "explains the obsessive suspicion [and] the towering urge for self-reliance" that marks Israeli Jews. But he added that the same memory also plagues Israelis with "a suspended confusion, a neurotic constriction ... compounded by pangs of conscience, guilt and shame."

Israeli children are taught in school about "the disgraceful shame and cowardice" of all victims of anti-Semitic massacres in the Diaspora, to convince them that only a Jewish state with an invincible army could take away the shame. And Israelis exaggerate the degree of Jewish resistance to the Nazis because it "seems essential to their dignity as a group."

Elon knew that the theme of shame and pride lay at the very root of Zionism. In his biography of Theodore Herzl, he claimed that the father of the Zionist movement was motivated, above all, by "wounded pride" -- being denied what he thought was his rightful place among the elite of European society, simply because he was Jewish. Herzl was well aware that he was making national pride a sacred symbol. He urged the early Zionists to "turn the Jewish question into a question of Zion."

Even earlier, the first important Zionist writer, Leo Pinsker, told the Jews (in his famous tract "Self-Emancipation"): "You are foolish, because you expect of human nature something which it has never had -- humanity. You are also contemptible, because you have no real self-esteem and no national self-respect. National self-respect! Where can we find it?" Pinsker's answer, the answer of most Zionists ever since, was: only in a nation-state of our own.

Pinsker's words and Herzl's wounded pride reveal one root of the profound dilemma that has kept Israel trapped in a seemingly irrational cycle of intransigence and conflict for all these years. It is shameful and contemptible to let oneself fall victim to persecution, the argument goes. But Gentiles will always be persecutors. So Jews living in Diaspora will always feel shame and self-contempt. The mistake that Pinsker, Herzl and most other Zionists made was to assume that a state of their own would free them from this trap.

Instead, the state became a projection of the individual Jew, writ large. And the surrounding Arab nations became projections of individual Gentiles. Since Gentiles were by definition persecutors (according to the dominant Zionist worldview), the inevitable political conflicts between Israel and neighboring Arab peoples were bound to be seen as merely more of the same old persecution and victimization, bringing with it the same sense of shame.

Every tangible goal of Israeli policy became a symbol of the ultimate goal: defeating the Gentiles in order to escape from shame, to gain pride and self-respect.

Today, Israel pursues that aim by demanding the right of "natural growth" in its West Bank settlements. In other words, Israel wants the Palestinians to accept not merely the settlements that exist, but the larger settlements planned for the future, along with abandoning Jerusalem and the right of return. Inevitably, the Palestinians balk at such drastic sacrifices.

For most Jews, every such refusal becomes further "evidence" that the Palestinians are moved by the same irrational anti-Semitism that Jews suffered in Diaspora. To fail to resist it would only increase the sense of shame. So resist the Jews must, no matter what the rest of the world thinks of such intransigence. Indeed, since the rest of the world is Gentile, defying world opinion reaps the benefit of added pride.

And what if the other side does accede to Israeli demands? When the researchers asked Prime Minister Benjamin Netanyahu about a rational bargain -- accepting a two-state solution in return for all major Palestinian factions (including Hamas) recognizing Israel as a Jewish state -- he answered by demanding further sacrifice: "O.K., but the Palestinians would have to show that they sincerely mean it, change their textbooks and anti-Semitic characterizations."

There's more here than distrust of the enemy. Since the whole process is in the realm of symbolism, no tangible gain may ever be enough.

The ideology formulated by Pinsker has become a viciously self-confirming cycle. Israeli leaders fear that anything less than intransigence will cost them dearly at the polls. Unable to turn from resistance to reconciliation, they lock their nation into ongoing conflict and all the insecurity it brings.

Most Israelis do feel insecure. They fear that Palestinians and other Arabs will attack them, if given a chance. But a mere glance at the immense military advantage Israel has over all its neighbors makes that fear seem irrational.

It all becomes far more understandable if we recognize that what most Israelis fear, above all, is losing not their land or even their lives, but their very tenuous sense of national pride. Couple that with a natural desire to blame all the problems on the other side, so that Jews can feel morally pure and innocent, and it's hard to see how they can break out of this vicious cycle.

Are Palestinians caught in the same trap? The researchers who studied both sides found them equally focused on inflicting symbolic defeats on the other side. Perhaps Palestinians are as afraid, as are Israelis, of losing their pride. Perhaps that's why Hamas leaders resist formal recognition of Israel, even though they have clearly signaled their de facto acceptance of the Jewish state for several years and affirm the same view now. But that is for Palestinians and those who know them well to say. If it does turn out that the two sides are mirror images of each other, the conflict might seem even more insoluble.

Yet, the researchers who collected all this data suggest a more hopeful view. Once mediators from outside, like George Mitchell, the U.S. special envoy to the Middle East, and former British Prime Minister Tony Blair, understand that all the tangible issues in dispute are basically counters in a symbolic contest, they can begin to work with both sides more constructively.

In principle, anything can serve equally well as a symbolic counter. So no specific issue need be a sticking point. A truly skilled mediator could identify assets that each side could afford to lose, from a practical point of view, and suggest that they be sacrificed in a show of graceful concession.

Then each side could do what I wish the Israelis had done way back in 1973: throw up its hands, cry "We lost!" this or that or some other thing, and give the other side a reason to feel proud of its victory. As implausible as it sounds, that may be the only way to Middle East peace.

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Ira Chernus is Professor of Religious Studies at the University of Colorado at Boulder and author of American Nonviolence: The History of an Idea and the forthcoming book "Monsters to Destroy: The Neoconservative War on Terror and Sin."

Zen Proverb of the Day

Will there be Zimbabwe-type Hyperinflation in the U.S.A.?

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Mike Whitney
June 10, 2009 - Smirking Chimp

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The Republicans are convinced that hyperinflation is just around the corner, but don't bet on it. The real enemy is deflation, which is why Fed chief Bernanke has taken such extraordinary steps to pump liquidity into the system. The economy is flat on its back and hemorrhaging a half a million jobs per month. The housing market is crashing, retail sales are in a funk, manufacturing is down, exports are falling, and consumers have started saving for the first time in decades. There's excess capacity everywhere and aggregate demand has dropped off a cliff. If it wasn't for the Fed's monetary stimulus and myriad lending facilities, the economy would be stretched out on a marble slab right now. So, where's the inflation? Here's Paul Krugman with part of the answer:

"It's important to realize that there's no hint of inflationary pressures in the economy right now. Consumer prices are lower now than they were a year ago, and wage increases have stalled in the face of high unemployment. Deflation, not inflation, is the clear and present danger....

Is there a risk that we'll have inflation after the economy recovers? That's the claim of those who look at projections that federal debt may rise to more than 100 percent of G.D.P. and say that America will eventually have to inflate away that debt - that is, drive up prices so that the real value of the debt is reduced....Such things have happened in the past....

Some economists have argued for moderate inflation as a deliberate policy, as a way to encourage lending and reduce private debt burdens (but)... there's no sign it's getting traction with U.S. policy makers now." ("The Big Inflation Scare" Paul Krugman New York Times)

Krugman believes that conservatives have conjured up the inflation hobgoblin for political purposes to knock Obama's recovery plan off-course. But even he's mistaken, there's little chance that inflation will flare up anytime soon because the economy is still contracting, albeit at a slower pace than before. A good chunk of the Fed's liquidity is sitting idle in bank vaults instead of churning through the system as Bernanke it could do some good. According to Econbrowser, excess bank reserves have bolted from $96.5 billion in August 2008 to $949.6 billion by April 2009. Bernanke hoped the extra reserves would help jump-start the economy, but he was wrong. The people who need credit, can't get it; while the people who qualify, don't want it. It's just more proof that the slowdown is spreading.

That doesn't mean that the dollar won't tumble in the next year or so when the trillion dollar deficits begin to pile up. It probably will. Foreign investors have already scaled back on their dollar-based investments, and central banks are limiting themselves to short-term notes, mostly 3 month Treasuries. If Bernanke steps up his quantitative easing (QE) and continues to monetize the debt, there's a good chance that central bankers will jettison their T-Bills and head for the exits. That means that if keeps printing money like he has been, there's going to be a run on the dollar.

Now that the stock market is showing signs of life again, investors are moving out of risk-free Treasuries and into equities. That's pushing up yields on long-term notes which could potentially short-circuit Bernanke's plans for reviving the economy. Mortgage rates are set off the 10 year Treasury, which shot up to 3.90% by market's close on Friday. The bottom line is that if rates keep rising, housing prices will plummet and the economy will tank. This week's auctions will be a good test of how much interest there really is in US debt.

At some point in the next year, the dollar will lose ground and commodities will surge, causing uneven inflation. But for how long? That depends on the state of the economy. Dollar weakness and speculation can drive up the price of oil, (oil is up 100% in the last two and a half months, from $34. to $68.) but falling demand will eventually bring prices back to earth. Presently, there's a bigger glut of oil sitting in tankers offshore than anytime in the last 15 years. Which brings us back to the original question; how bad is the economy?

The answer is, really bad! Here's a short blurp from economist Dean Baker in an article in the UK Guardian:

"The decline in house prices since the peak in 2006 has cost homeowners close to $6 trillion in lost housing equity. In 2009 alone, falling house prices have destroyed almost $2 trillion 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 percent from its year ago level. 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 labor market is putting downward pressure on wages, reducing workers' purchasing power through a second channel. (Dean Baker "Cheerleading the Economy" UK Guardian)

Don't be fooled by the cheery news in the media. The economy is hanging by a thread and recovery is still a long way off. The only way to dig out of this mess is to address the underlying problems head-on. That means removing the toxic assets from the banks, revamping the credit system, and rebuilding battered household balance sheets. If these issues aren't resolved, the problems will drag on for years to come. And even if they are fixed, the economy is still facing a long period of deleveraging and retrenching followed by an anemic recovery. Obama's fiscal stimulus might give GDP a jolt in the third quarter, but without help from the government checkbook, economic activity will stay in the doldrums.

Last month, personal savings increased to nearly 6 percent while consumer credit fell by $15.7 billion, the second largest decline in debt on record. According to Brad Setser of the Council on Foreign Relations, "Total borrowing by households and firms fell from over 15% of GDP in late 2007 to a negative 1% of GDP in q4 2008." How can these losses to GDP be made up when private borrowing has vanished without a trace? Consumers have shut their wallets, locked their purses and are refusing to take on any more debt. Despite government efforts to restart the credit markets by backing up loans for 0% financing on auto sales and $8,000 tax credit on the purchase of a new home, (which is tantamount to subprime lending) consumers are digging in their heels. All the hype about inflation hasn't sent them racing back to the shopping malls or the auto showrooms. Consumers have reached their saturation point and they are not budging. It's the end of an era.

The unemployment picture is getting bleaker and bleaker. Last week's report from the Bureau of Labor Statistics concealed the real magnitude of the job losses by using the discredited "Birth-Death" model which exaggerates the number of people reentering the workforce. Here's what former Merrill Lynch chief economist David Rosenberg had to say about Friday's BLS report:

"The headline nonfarm payroll figure came in above expectations at -345,000 in May - the consensus was looking for something closer to -525,000. The markets are treating this as yet another in the line-up of 'green shoots' because the decline was less severe than it was in April (-504,000), March (-652,000), February (-681,000) and January (-741,000). However, let's not forget that the fairy tale Birth-Death model from the Bureau of Labour Statistics (BLS) added 220,000 to the headline - so adjusting for that, we would have actually seen a 565,000 headline job decline."

The BLS figures have been denounced by every econo-blogger on the Internet. The figures are another example of the government's determination to airbrush any unpleasant news about the recession. Here's a better summary of the unemployment numbers from Edward Harrison at credit writedowns:

The Business Birth-Death Model added 220,000 jobs to the headline seasonally-adjusted number. Without this number, we are looking at a loss of 565,000 jobs....The number of jobs lost in the last 12 months increased from 5.34 million in April to 5.51 million in May....Other indicators suggest that the shadow supply of discouraged workers not counted in the numbers will now return to the labor force, pushing up the unemployment number. For example, the U-6 unemployment number was a gargantuan 16.4 %, the highest ever."(Edward Harrison credit writedowns)

Unemployment now stands at 9.4% (16.4%?) and will continue to rise whether there's an uptick in economic activity or not. Businesses are shedding jobs at record pace, and slashing hours at the same time. The average workweek slipped to 33.1 hours (down 2 hours from April) a new low. It goes without saying, that unemployment is highly deflationary because jobless people have to cut out all unnecessary spending. Beyond the 500,000 layoffs per month; wages and benefits are also under pressure, making a rebound in consumer spending even less probable. This is from Brian Pretti's article "Place Your Wagers":

"The year over year change in the Employment Cost Index (ECI) is the lowest number in the history of the data.... in the absence of household credit acceleration... aggregate demand (will fall)

The year over year change in wages has never been this low in the records of the data. .. Wages and salaries.... are all in negative rate of change territory. They are ALL contracting year over year.

Absent household balance sheet reacceleration in leverage it sure seems a good bet forward corporate earnings are now as dependent on household wages, salaries and broader personal income as at any time in recent memory. And corporations to protect margins and nominal profits are pressuring wages and salaries downward." ("Place Your Wagers" Brian Pretti, Financial Sense Observations)

From a workers point of view, things have never been worse. Demand is falling, employers are slashing inventory and handing out pink slips, and entire industries are being boarded up and shut down or shipped overseas. Economists Barry Eichengreen and Kevin O'Rourke make the case that, in many respects, conditions are deteriorating faster now than they did in the 1930s. Here's what they found:

*1  World industrial production continues to track closely the 1930s fall, with no clear signs of 'green shoots'.

*2  World stock markets have rebounded a bit since March, and world trade has stabilized, but these are still following paths far below the ones they followed in the Great Depression.

*3  The North Americans (US & Canada) continue to see their industrial output fall approximately in line with what happened in the 1929 crisis, with no clear signs of a turn around. (A Tale of Two Depressions" Barry Eichengreen and Kevin O'Rourke VOX) http://www.voxeu.org/index.php?q=node/3421

Their conclusion: "Today's crisis is at least as bad as the Great Depression."

Yeah, times are tough, but what happens when housing prices stabilize and the jobs market begins to pick up; won't that put the Fed's trillions of dollars into circulation and create Wiemar-type hyperinflation?

Many people think so, but Edward Harrison anticipates a completely different scenario. The author takes into account the psychological effects of a deep recession and shows how trauma can have a lasting effect on consumer habits, thus, minimizing the chance of inflation. It's a persuasive thesis. Here's what he says:

"Richard Koo goes further in his book "The Holy Grail of Macro Economics". Here, he argues that the unwind of great bubbles suffers from what he labels a 'balance sheet recession.' In essence, companies go from maximizing profits, as they had done in normal times, to a post-bubble concern of reducing debt. Regardless of how much priming of the pump monetary authorities do, the psychology of debt reduction will limit the effectiveness of monetary policy as a policy tool.

In my view, the catalyst for this change of psychology is the 'debt revulsion' that ushers in the panic phase of an asset bubble collapse. (Charles Kindleberger highlights the various stages of a bubble and its implosion in his seminal book "Manias, Panics and Crashes". In this particular bubble, debt revulsion began post-Lehman Brothers. What we have seen, therefore, is a reduction in leverage and debt as the most leveraged players have gone to the wall. But, more than that, the household sector has gotten religion about debt reduction as the savings rate has increased dramatically since Lehman. In fact, I would argue that companies learned their lesson about debt from the aftermath of the tech bubble. It is the household sector in the U.S. (and the U.K.) which is heavily indebted. Therefore, if the psychology of a balance sheet recession does take form, it will be the household sector leading the charge.

In sum, the psychology after a major bubble is very different than the psychology before its collapse. The post-bubble emphasis becomes debt reduction and savings, making monetary policy ineffective, not because financial institutions are unwilling lenders but because companies and individuals are unwilling borrowers. These are forces to be reckoned with for some to come." (Edward Harrison, "Central banks will face a Scylla and Charybdis flation challenge for years" Credit Writedowns)

Seductive interest rates, lax lending standards and nonstop public relations campaigns, persuaded millions of people that they could live beyond their means by simply filling out a credit app. or fudging a few numbers on a mortgage loan. These are the real victims of Wall Street's speculative bubble-scam. For many of them, the agony of losing their home, or their job, or filing for personal bankruptcy will be felt for years to come. At the same time, the experience will keep many of them from getting in over their heads again. The same phenomenon occurred during the Great Depression. The pain of losing everything shapes behavior for a lifetime, which is why the savings rate has spiked so dramatically in the last few months. There's been a tectonic shift in attitudes towards consumption and there's no going back to the pre-bubble era.

If Harrison is right, our decades-long spending-spree is over and people will be looking for ways to live more modestly, pay-as-they-go and avoid red ink. This is good news for the economy's long-term strength, but bad for short-term recovery. Deflation will persist even while savings grow and consumption comes more into line with personal income. The dollar will fall hard if Bernanke continues to load up on Treasuries, but with a few slight adjustments, he should be able to avoid a full-blown currency crisis. Thus, Zimbabwe-type hyperinflation is unlikely; the ongoing slowdown should keep inflation in check.

U.S. War Privatization Results in Billions Lost in Fraud, Waste and Abuse--Report

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Half of the personnel the US has working on its wars in Iraq and Afghanistan are private contractors. A new report reveals how much of a rip-off this system has been to US taxpayers.

Jeremy Scahill
June 10, 2009 - RebelReports

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At a hearing in Washington today, the federal Commission on Wartime Contracting in Iraq and Afghanistan is releasing a 111-page report that represents its "initial investigations of the nation's heavy reliance on contractors." According to a release on the hearing:

More than 240,000 contractor employees, about 80 percent of them foreign nationals, are working in Iraq and Afghanistan to support operations and projects of the U.S. military, the Department of State, and the U.S. Agency for International Development. Contractor employees outnumber U.S. troops in the region. While contractors provide vital services, the Commission believes their use has also entailed billions of dollars lost to waste, fraud, and abuse due to inadequate planning, poor contract drafting, limited competition, understaffed oversight functions, and other problems.

These statistics support a recent DoD report on the extent of the US reliance on contractors. That report also found that there has been a 23% increase in the number of "Private Security Contractors" working for the Department of Defense in Iraq in the second quarter of 2009 and a 29% increase in Afghanistan, which "correlates to the build up of forces" in the country. In Iraq, the Pentagon attributes the increase to better accounting. There are currently more private contractors (counting both armed and unarmed) in Afghanistan (68,197) than US troops (40,000). In Iraq, the number of contractors (132,610) is basically equal to the number of US troops.

(NOTE: I recently discussed this issue on Bill Moyers Journal)

The single greatest beneficiary of the US wars in Iraq and Afghanistan is KBR, the former Halliburton subsidiary. KBR has been paid nearly $32 billion since 2001. In May, April Stephenson, director of the Defense Contract Audit Agency, testified that KBR was linked to "the vast majority" of war-zone fraud cases and a majority of the $13 billion in "questioned" or "unsupported" costs. According to Agency, it sent the inspector general "a total of 32 cases of suspected overbilling, bribery and other violations since 2004."

According to the Associated Press, which obtained an early copy of the commission's report, "billions of dollars" of the total paid to KBR "ended up wasted due to poorly defined work orders, inadequate oversight and contractor inefficiencies."

KBR is at the center of a lethal scandal involving the electrocution deaths of more than a dozen US soldiers, allegedly as a result of faulty electrical work done by the company. The DoD paid KBR more than $80 million in bonuses for the very work that resulted in the electrocution deaths.

Among the other scandals involving KBR that the commission is investigating is a questionable contract to rebuild a large dining facility at Camp Delta in Iraq:

In July 2008, the Army said a new dining facility was badly needed at the Camp Delta forward operating base because the existing one was too small, had a saggy ceiling, poor lighting and an unsanitary wooden floor.

KBR was awarded a contract in September. Work began in late October as American and Iraqi officials negotiated the agreement setting the dates for the U.S. troop withdrawal.

But during an April visit to Camp Delta, the commission learned that the existing mess hall had just been renovated. The $3.36 million job was done by KBR and completed in June 2008. Commission staff toured the renovated hall "without seeing or hearing of any problems or shortfalls," the report says.

Here's the kicker:

The decision to push ahead with the new hall was based on paperwork that was never updated and a failure to review the need for the project after the security agreement was signed. Most of the materials have been ordered and construction is well under way. That means canceling the project would save little money because KBR would have a legitimate claim for payment based on the investment it has already made.

So, are all these investigations and scandals hurting KBR? Apparently not:

Today, neither Halliburton nor KBR are suffering from their divorce. Halliburton reported $4 billion in operating profits in 2008, while KBR recently said its first quarter revenues in 2009 were up 27%, for a total of $3.2 billion. Its sales in 2008 were up 33%, and according to the Financial Times, the company had $1 billion in cash, no debt, and was looking for acquisitions.

One last note for context: While the Wartime Contracting Commission is doing very important work revealing the scope of the corruption, shoddy work and abuses within this system, it also includes several members who are either pro-war or have worked for major war contractors. This is the composition of the commissioners:

Co-chair Michael J. Thibault, a former deputy director of the Defense Contract Audit Agency, was appointed by Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi. Former Republican Congressman Co-Chair Shays was appointed by House Minority Leader John Boehner. The other six commissioners are Clark Kent Ervin, Grant S. Green, Linda J. Gustitus, Robert J. Henke, Charles Tiefer, and Dov S. Zakheim.

Blackwater Still Working in Iraq for the International Republican Institute, According to New Lawsuit

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As Blackwater gets sued again today for an alleged civilian killing in Iraq, new allegations surface about the company's continued presence there—using different corporate names.

Jeremy Scahill
June 10, 2009 - RebelReports

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It seems as though every week there is a new lawsuit filed against Blackwater for the killing of civilians in Iraq. While the Justice Department has failed to prosecute most of these cases (the September 2007 Nisour Square massacre being an exception), attorney Susan Burke has dedicated a substantial part of her practice to holding the company responsible for its crimes. She works in cooperation with the Center for Constitutional Rights.

Not only is Burke representing the victims of Nisour Square in their civil suit, and the family of an Iraqi guard allegedly murdered by a drunken Blackwater operative, but she has filed at least a half a dozen other cases against the company. "Erik Prince, a modern-day merchant of death, acts as if he is above the rule of law," charges Burke.

But beyond the specifics of her lawsuits, Burke is also alleging Blackwater/Xe remains firmly entrenched in Iraq, using affiliate companies like Greystone. She also says Blackwater is working for a "non-profit" organization, started under the Reagan administration, with a history of interference in internal affairs and elections of various nations, including allegations it helped foment a coup in Haiti: the International Republican Institute.

"The Iraqi government has barred Xe-Blackwater from operating in Iraq, and has refused to grant the licenses needed to carry weapons in Iraq," Burke says.  "Yet Prince continues to provide armed personnel to the International Republican Institute. Such repeated illegal conduct by Prince must be stopped."

According to SourceWatch:

Loosely affiliated with the Republican Party, the International Republican Insitute (IRI) works closely with the the National Endowment for Democracy and United States foreign policy instruments, including the U.S. Department of State and U.S. Agency for International Development, to support economic and political development programs around the world. The organization is almost exclusively funded by the U.S. government and related agencies.

IRI is also closely linked to Sen. John McCain. According to IRI's vice president, "Since the summer of 2003, IRI has conducted a multi-faceted program aimed at promoting democracy in Iraq. Toward this end, IRI works with political parties, civil society groups, and government officials and administrators. In support of these efforts, IRI also conducts numerous public opinion research projects and assists its Iraqi partners in the production of radio and television ads and programs." One IRI grant recipient in Iraq told author Nikolas Kozloff, "Instead of promoting impartial, better understanding of certain ideas and concepts, they [the IRI] are actually trying to further the cause of the Republican administration." Kozloff notes that in 2005-6 Blackwater donated $30,000 to IRI.

These new allegations surfaced today as Burke filed yet another lawsuit against Blackwater-Xe—this one over a 2007 civilian shooting in Iraq. Burke alleges that "Xe-Blackwater 'shooters' operating in Hilla, Iraq unnecessarily fired shots, killing Husain Salih Rabea and traumatizing Ali Kareem Fakhri, a student at the Babylon University College of Biology."

According to the lawsuit, the men were shot at as they drove in separate vehicles on a public roadway on August 13, 2007. Mr. Rabea died from the gunshot wound, leaving behind five sons and three daughters.

The complaint, which was filed today in U.S. District Court for the Eastern District of Virginia, alleges that Blackwater/Xe:

• continues to flout Iraqi law and operate without a license by continuing to provide armed men  under contract to protect employees of the International Republican Institute, an American government-funded organization,

• tries to hide its continued illegal operations in Iraq by using the Greystone name rather than the Blackwater or Xe name,

• captured illegal conduct of personnel on videotape and audiotape, but did not report or punish the illegal conduct of "shooters" and instead intentionally destroyed the evidence of illegal conduct, and encouraged the "shooters" to do the same.

Blackwater affiliate, Greystone, which Burke alleges is still operating in Iraq, is covered in-depth in my book, Blackwater: The Rise of the World's Most Powerful Mercenary Army, is registered offshore in Barbados. It is an old-fashioned mercenary operation offering "personnel from the best militaries throughout the world" for hire by governments and private organizations. It also boasts of a "multi-national peacekeeping program," with forces "specializing in crowd control and less than lethal techniques and military personnel for the less stable areas of operation."

The most recent lawsuit names as defendants 12 companies or entities owned by Erik Prince. It alleges "war crimes, assault and battery, wrongful death, intentional infliction of emotion distress, negligent infliction of emotional distress, negligent hiring, training and supervision, and tortious spoliation of evidence."

Wednesday, June 10, 2009

Grief, Shock After a 'Gentle Giant' Loses His Life in the Line of Duty

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Colleagues called Stephen T. Johns "Big John," for he was well over 6 feet tall. But mostly friends recalled the security guard's constant courtesy and friendliness.

Christian Davenport and Paul Duggan
June 11, 2009 - Washington Post

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Colleagues called Stephen T. Johns "Big John," for he was well over 6 feet tall. But mostly friends recalled the security guard's constant courtesy and friendliness.

"A soft-spoken, gentle giant," said Milton Talley, a former employee of the U.S. Holocaust Memorial Museum, where Johns was killed yesterday in the line of duty -- shot, authorities said, by an avowed white supremacist who entered the museum with a rifle.

Details of the shooting remained sketchy last night, but apparently the 39-year-old, who was armed with a .38-caliber revolver, did not have time to react when James W. von Brunn walked into the museum, according to police sources.

"Immediately upon entering the front doors of the museum, he raised the rifle and started shooting," D.C. Police Chief Cathy L. Lanier said of von Brunn, 88, adding that he "was engaged by security guards, and there was an exchange of gunfire."

When the smoke cleared, von Brunn was critically wounded. The only casualty among the guards was Johns, who lived in Prince George's County. At least one bullet from a small-caliber rifle hit Johns in his upper-left torso, according to Johns's employer, the Wackenhut security company.

"Two other . . . armed security officers opened fire with their service revolvers," the company said. "The intruder was hit at once" and wounded.

Johns died at George Washington University Hospital.

"There are no words to express our grief and shock over these events," the museum said in a statement, describing Johns as "an outstanding colleague who greeted us every day with a smile."

Johns, a 1988 graduate of Crosslands High School in Temple Hills, lived in an apartment in the Temple Hills area. Friends said he had a son.

Allen Burcky, another former museum employee, said last night that workers there considered each other "like family" and that Johns was "very courteous, very helpful."

Lourdes Padilla, the mother of a close friend, said that Johns trained as a plumber but that she didn't think he had ever entered the trade. He remarried about a year ago, Padilla said.

Johns's sister, Jacqueline Carter, declined to comment as she entered her home in Temple Hills. "She's in bad shape right now," said a man who was driving her.

Wackenhut describes itself as the U.S. government's "largest contractor for professional security services." An official with the union that represents Wackenhut employees at the museum said Johns was paid about $20 an hour.

"It's a heavy loss," said Assane Faye, the Washington district director of the Security, Police and Fire Professionals of America.

Like other guards at the museum, on Raoul Wallenberg Place SW near the Mall, Johns underwent training for which he received the D.C. police designation of "special police officer," which permitted him to carry a revolver on duty.

Faye said that during contract negotiations with Wackenhut two years ago, the union pressed for company-issued protective vests. Although Wackenhut seemed open to the idea, vests have not been issued, Faye said.

"I hammered this in our negotiations two years ago because of how sensitive that museum is," he said. "Our guards needed more protection." He said that one of the guards at the museum was "verbally assaulted by one guy walking by, saying anti-Semitic remarks. For that reason, I made that the center of the negotiation."

Authorities said Johns was not wearing a protective vest.

Susan Pitcher, a Wackenhut spokeswoman, declined to comment on the shooting beyond the company's statement.

Rabbi Abraham Cooper, associate dean of the Simon Wiesenthal Center and director of the Museum of Tolerance in Los Angeles, said officials at those institutions took immediate steps to enhance security after the shooting in Washington.

"The key component is not only to have your own security, but to work with the local police force," he said. "In our case, the LAPD has a very good grasp of where all sorts of extremists might be and are able to deploy very quickly."

William S. Parsons, the Holocaust museum's chief of staff, praised Johns and his colleagues.

"Never take your guard force or your security people for granted," Parsons said. "They did exactly what they were supposed to do."

Taking Time Takes Patience

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Desperate and Afraid, People Trust Leader

Ted Rall
June 10, 2009 - TedRall.com

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WASHINGTON, NORTH AMERICAN PROTECTORATE, GREATER GERMAN REICH--

From Honolulu to Portland, Maine, North American citizens of the Greater German Reich gathered on June 6th to celebrate the 65th anniversary of the victory of Axis forces at D-Day, the battle that decided World War II. Fallen heroes of the Wehrmacht and SS were commemorated at solemn ceremonies and Party rallies throughout the Reich, but the day held special meaning in Washington, which until 1945 was the capital of the former United States.

Speaking at the Supreme Kommandatur, which was built at the site of the former American presidential palace, Chancellor Adolf Hitler III said the war against the Western Allies paved the way for the years of peace and prosperity that followed. "It was unknowable then, but so much of the progress that would define the 20th century, on both sides of the Atlantic, came down to the battle for a slice of beach only six miles long and two miles wide," he said.

Recollections of the National Socialist triumph at Normandy were clouded by several developments--a severe recession, a war with no apparent end in sight, and continuing concerns over human rights abuses.

Hitler III swept into power last November with a slogan--"change you can believe in"--that charmed members of the Reichstag across the political spectrum from far right to extreme right. Since that time, however, changes have proven either incremental or non-existent. For example, Hitler III promised during the campaign to help national comrades in danger of losing their homes--but instead spent trillions of marks to bail out feckless banks. He promised to withdraw from the Eastern Front, but has extended the pullout timeline by a year, is leaving tens of thousands of troops in place, and even plans to open a new front in South Asia.

Finally, he declared his intent to close Auschwitz ("Germany does not 'do' genocide," he said) only to move the remaining inmates to other camps, which are being expanded.

Despite the lack of action, most people continue to support the charismatic new Leader. "He has a lot on his plate," says Kristof Mathewsohn, the cable TV commentator. "Give the guy time."

Indeed, five months into his chancellorship, the Leader remains the most trusted figure in North American politics. A new poll of homeless, recently dispossessed workers found that 72 percent trust Hitler III "to do the right thing."

"In watching and listening to Hitler III's press conferences, it's easy to appreciate why people trust him," said a man who preferred to remain anonymous because, as a Jew, he could be arrested and murdered by the state. "Sure, I wish he'd shut down the gas chambers and the ovens, but he has a lot of other problems to fix first. I'm sure he'll get around to investigating the guys in the previous administration for their role in the Holocaust--nothing drastic, maybe a truth and reconciliation commission or something."

Members of the media remain in thrall to the Leader's suave persona, which is magnified by the glamour his statuesque wife and adorable daughters have brought to Germania (formerly Berlin). "Finally--parties we can believe in!" quipped a reporter as he slipped into a sold-out Wagner performance where Hitler III and his family appeared for a long-promised "date night."

Few have forgotten that Hitler III offered the best alternative. "We live in a one-party system," pointed out Rachel Maddoff, host of "The Rachel Maddoff Show." "Can you imagine how much worse it would have been had Hitler III lost?"

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Ted Rall is the author of the new book "Silk Road to Ruin: Is Central Asia the New Middle East?," an in-depth prose and graphic novel analysis of America's next big foreign policy challenge.

Water Stress, Ocean Levels to Unleash 'Climate Exodus'

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June 10, 2009 - Agence France Presse

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Tens of millions of people will be displaced by climate change in coming years, posing social, political and security problems of an unprecedented dimension, a new study said on Wednesday.

"Unless aggressive measures are taken to halt global warming, the consequences for human migration and displacement could reach a scope and scale that vastly exceed anything that has occurred before," its authors warned.

"Climate change is already contributing to migration and displacement.

"All major estimates project that the trend will rise to tens of millions of migrants in coming years. Within the next few decades, the consequences of climate change for human security efforts could be devastating."

The report, "In Search of Shelter," was compiled by specialists from Columbia University in New York and the United Nations University, and from a non-governmental organisation, CARE International.

It was presented to journalists on the sidelines of the UN climate talks in Bonn, a staging post to an envisioned new global pact for tackling global warming and its impacts.

The study swung the spotlight on several regions that, according to projections, will be badly hit by rising sea levels, flood or drought.

Rather than a migration from poor countries to rich ones, the exodus is most likely to unfold within poor nations, with a movement mainly from the countryside to cities, thus further burdening urban infrastructure, it said.

In central Mexico, where tens of millions of people live, rainfall in some areas could decline by up to 50 percent by 2080, "rendering many livelihoods unviable and dramatically raising the risk of chronic hunger," the report said.

South Asia faces both short- and long-term threats.

Warming will accelerate melting from Himalayan glaciers in springtime, thus heightening the probability of flooding. But glacier shrinkage will eventually affect the flow of major rivers that wind down from the Himalayan foothills.

"This has a lot of consequences for agricultural production in one of the world's most populous regions," said Charles Ehrhart, climate-change coordinator at CARE.

The Ganges Delta, small island states and other low-lying areas, meanwhile, are in peril from rising sea levels.

If ocean levels rise by two metres (seven feet), "9.4 million people would be completely flooded out" in Bangladesh alone, said Ehrhart.

A two-metre (seven-feet) rise is seen by most climate scientists as being at the top end of predictions for what could happen this century.

In 2007, the UN's Intergovernmental Panel for Climate Change (IPCC) predicted sea levels will rise by up to 59 centimeters (23 inches) before 2100 due the expansion of warmer waters.

But this figure does not factor in a partial melting of massive ice sheets in western Antarctica and Greenland, a scenario now identified by more recent research.

The new report urged policymakers to develop tools to identify regions and populations at risk of being displaced by climate change.

And they said funds mustered to help cope with climate change under the future global treaty must also be directed at poor migrants.

The new pact, designed to run from 2012, would chiefly slash emissions from fossil fuels and deforestation that are warming Earth's atmosphere, affecting weather patterns.

The report admits that the definition of a climate migrant is complex, as poverty, a run of bad harvests or civil strife are usually the immediate, and thus most visible, triggers for displacement.

Estimates of the likely numbers range from 25 to 50 million people by 2010, while the International Organisation for Migration (IOM) has pitched a figure of 200 million by 2050.

The term "climate refugee" is shunned by UN organisations, as "refugee" is a term with legal connotations under the 1851 Geneva Convention.

A healthcare reform bill will affect nearly everyone

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Despite the looming brawl in Congress, the Democratic majority is expected to pass some form of legislation.

Noam N. Levey
June 10, 2009 - Los Angeles Times

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Reporting from Washington -- Spurred on by President Obama and an array of businesses, medical providers and consumers clamoring for change, congressional Democrats have begun to lay out specific plans for overhauling the nation's healthcare system -- proposing changes that would affect almost every American, old or young, sick or well, rich, poor or middle-class.

Despite a looming brawl over key details, the Democratic majority is expected to pass a bill that will make ordinary Americans the ultimate stakeholders who must live with the system, adjust to changes and -- one way or another -- absorb the costs.

For laid-off autoworkers, there could be a new guarantee that they won't lose their family health insurance. A patient with heart disease could receive more advanced treatment to avoid hospitalization. Small shop owners could get help figuring out coverage for employees. An overweight teenager might find a new slim-down program at school.

And for some Americans, especially the affluent and those with traditional job-based medical insurance, there could be new or higher taxes.

After months of spadework and consultation with the interested parties, lawmakers begin the most sweeping healthcare debate in a generation with broad agreement on the need to control costs, improve the care Americans receive and expand coverage to nearly everyone.

But shadowing the debate, which is expected to dominate Washington's summer and extend into the fall, are the same vexing controversies that have derailed almost all previous efforts to reshape the U.S. healthcare system.

There is still no consensus, for example, about how large a role the federal government should play. Nor is there agreement on who should bear the cost, which could surpass $1.5 trillion over the next decade.

Obama's proposals include higher taxes for the wealthiest Americans. But that idea has generated widespread opposition in Congress.

Other financing schemes may be just as unpopular, such as taxing employer-provided health benefits or putting new levies on sugary beverages to raise revenue and encourage healthier behavior.

The first concrete legislation emerged Tuesday as Sen. Edward M. Kennedy (D-Mass.) filed a mammoth bill that, among other things, outlines a dizzying new government regulatory structure to ensure that every American gets health insurance.

Other bills are expected to follow from a trio of senior House Democrats, including Rep. Henry A. Waxman (D-Beverly Hills), and Senate Finance Committee Chairman Max Baucus (D-Mont.), whose bill may offer the best hope for gaining Republican support.

In addition, a phone-book-size catalog of amendments and less-detailed alternatives -- including many from Republicans seeking to shape the debate themselves -- are expected to compete for attention.

Though they differ on important details, the Democrats' plans all focus on three broad goals, each of which has contributed to stalemate in the past:

* Improving the quality of care for everyone by encouraging doctors, hospitals and others to adopt the best, most effective courses of treatment. Research shows that many doctors fail to adopt advances in treatment and that more than 25% of all treatment may be medically ineffective or unnecessary.

Achieving this goal moves the government into the sensitive area of relations between individual patients and their doctors.

But many health policy experts say such changes could do the most to reduce medical costs and improve care.

"At the end of the day, that may be the most important thing we end up doing," said Ken Thorpe, a healthcare economist at Emory University.

* Curbing the explosive growth in costs by prodding the medical system to make more cost-effective decisions and to increase efficiency by moving to computerized medical records.

The public and employers are staggering under the cost of the present system -- rising at more than twice the rate of inflation and expected to surpass $2.2 trillion this year. But reining in prices can narrow freedom of choice and impose changes on providers.

* Making health insurance readily available to the 46 million people who don't have it, as well as more affordable and less burdensome to those who do, and to the employers who still deliver the bulk of medical insurance to workers.

In one of their most controversial proposals, Obama and congressional Democrats want to create an optional government insurance plan that individuals could choose instead of a private plan. Supporters argue that such a plan would curb costs and improve quality by creating competition for the handful of private insurance companies now dominating the market.

Few proposals ignite hotter partisan passions.

"It's just very, very difficult," a frustrated Sen. Charles E. Grassley (R-Iowa) said after emerging from one meeting with fellow lawmakers last week.

Grassley, the senior Republican on the Senate Finance Committee, is a leading member of a bipartisan group that has been working for months on healthcare legislation with input from dozens of interest groups.

This is the seventh major push over the last century, and senior senators from both parties say they are trying to find common ground.

"I think we have been surprised at the amount of agreement there is," said Wyoming Sen. Michael B. Enzi, the senior Republican on the Senate Health, Education, Labor and Pensions Committee.

One thing lawmakers in both parties have agreed on is that people's existing healthcare arrangements should be disrupted as little as possible. In particular, people should be able to keep their insurance and their doctor if they want to.

"For lots of Americans, there won't be much change right away," said Drew Altman, an expert on healthcare politics and president of the nonprofit Henry J. Kaiser Family Foundation.

"That is inherent in the strategy."

Altman said that approach reflected the fact that most Americans report high satisfaction with their own care, even as they worry about rising costs.

In the same spirit, senior lawmakers and the administration are working to preserve the current employer-based system through which most Americans get insurance, while rejecting a single-payer system favored by some liberals, as well as a more free-market system favored by conservatives.

But signs of tension are already emerging, especially over provisions that Republicans charge would lead to government intrusion into the private relationships between patients and care providers.

Sensitive as those issues may be, many healthcare analysts worry that paying the bills may ultimately be where cooperation breaks down.

"The stars are aligned. The signs are promising," said Jacob Hacker, a political scientist at UC Berkeley who has studied previous efforts to overhaul the nation's healthcare system.

"But so far there has not been much congressional willingness to consider even relatively modest revenue-raising ideas," he said. "And in the healthcare debate, time is one of the greatest dangers. It gives people a chance to decide they are against whatever is on the table."

Grand Theft Auto

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June 01, 2009
Greg Palast - GregPalast.com

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Screw the autoworkers. They may be crying about General Motors' bankruptcy today. But dumping 40,000 of the last 60,000 union jobs into a mass grave won't spoil Jamie Dimon's day.

Dimon is the CEO of JP Morgan Chase bank. While GM workers are losing their retirement health benefits, their jobs, their life savings; while shareholders are getting zilch and many creditors getting hosed, a few privileged GM lenders - led by Morgan and Citibank - expect to get back 100% of their loans to GM, a stunning $6 billion.

The way these banks are getting their $6 billion bonanza is stone cold illegal.

I smell a rat.

Stevie the Rat, to be precise. Steven Rattner, Barack Obama's "Car Czar" - the man who essentially ordered GM into bankruptcy this morning.

When a company goes bankrupt, everyone takes a hit: fair or not, workers lose some contract wages, stockholders get wiped out and creditors get fragments of what's left. That's the law. What workers don't lose are their pensions (including old-age health funds) already taken from their wages and held in their name.

But not this time. Stevie the Rat has a different plan for GM: grab the pension funds to pay off Morgan and Citi.

Here's the scheme: Rattner is demanding the bankruptcy court simply wipe away the money GM owes workers for their retirement health insurance. Cash in the insurance fund would be replaced by GM stock. The percentage may be 17% of GM's stock - or 25%. Whatever, 17% or 25% is worth, well ... just try paying for your dialysis with 50 shares of bankrupt auto stock.

Yet Citibank and Morgan, says Rattner, should get their whole enchilada - $6 billion right now and in cash - from a company that can't pay for auto parts or worker eye exams.

Preventive Detention for Pensions

So what's wrong with seizing workers' pension fund money in a bankruptcy? The answer, Mr. Obama, Mr. Law Professor, is that it's illegal.

In 1974, after a series of scandalous take-downs of pension and retirement funds during the Nixon era, Congress passed the Employee Retirement Income Security Act. ERISA says you can't seize workers' pension funds (whether monthly payments or health insurance) any more than you can seize their private bank accounts. And that's because they are the same thing: workers give up wages in return for retirement benefits.

The law is darn explicit that grabbing pension money is a no-no. Company executives must hold these retirement funds as "fiduciaries." Here's the law, Professor Obama, as described on the government's own web site under the heading, "Health Plans and Benefits."

"The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits."

Every business in America that runs short of cash would love to dip into retirement kitties, but it's not their money any more than a banker can seize your account when the bank's a little short. A plan's assets are for the plan's members only, not for Mr. Dimon nor Mr. Rubin.

Yet, in effect, the Obama Administration is demanding that money for an elderly auto worker's spleen should be siphoned off to feed the TARP babies. Workers go without lung transplants so Dimon and Rubin can pimp out their ride. This is another "Guantanamo" moment for the Obama Administration - channeling Nixon to endorse the preventive detention of retiree health insurance.

Filching GM's pension assets doesn't become legal because the cash due the fund is replaced with GM stock. Congress saw through that switch-a-roo by requiring that companies, as fiduciaries, must:

"... act prudently and must diversify the plan's investments in order to minimize the risk of large losses."

By "diversify" for safety, the law does not mean put 100% of worker funds into a single busted company's stock.

This is dangerous business: The Rattner plan opens the floodgate to every politically-connected or down-on-their-luck company seeking to drain health care retirement funds.

House of Rubin

Pensions are wiped away and two connected banks don't even get a haircut? How come Citi and Morgan aren't asked, like workers and other creditors, to take stock in GM?

As Butch said to Sundance, who ARE these guys? You remember Morgan and Citi. These are the corporate Welfare Queens who've already sucked up over a third of a trillion dollars in aid from the US Treasury and Federal Reserve. Not coincidentally, Citi, the big winner, has paid over $100 million to Robert Rubin, the former US Treasury Secretary. Rubin was Obama's point-man in winning banks' endorsement and campaign donations (by far, his largest source of his corporate funding).

With GM's last dying dimes about to fall into one pocket, and the Obama Treasury in his other pocket, Morgan's Jamie Dimon is correct in saying that the last twelve months will prove to be the bank's "finest year ever."

Which leaves us to ask the question: is the forced bankruptcy of GM, the elimination of tens of thousands of jobs, just a collection action for favored financiers?

And it's been a good year for Senor Rattner. While the Obama Administration made a big deal out of Rattner's youth spent working for the Steelworkers Union, they tried to sweep under the chassis that Rattner was one of the privileged, select group of investors in Cerberus Capital, the owners of Chrysler. "Owning" is a loose term. Cerberus "owned" Chrysler the way a cannibal "hosts" you for dinner. Cerberus paid nothing for Chrysler - indeed, they were paid billions by Germany's Daimler Corporation to haul it away. Cerberus kept the cash, then dumped Chrysler's bankrupt corpse on the US taxpayer.

("Cerberus," by the way, named itself after the Roman's mythical three-headed dog guarding the gates of Hell. Subtle these guys are not.)

While Stevie the Rat sold his interest in the Dog from Hell when he became Car Czar, he never relinquished his post at the shop of vultures called Quadrangle Hedge Fund. Rattner's personal net worth stands at roughly half a billion dollars. This is Obama's working class hero.

If you ran a business and played fast and loose with your workers' funds, you could land in prison. Stevie the Rat's plan is nothing less than Grand Theft Auto Pension.

It doesn't make it any less of a crime if the President drives the getaway car.

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Economist and journalist Greg Palast, a former trade union contract negotiator, is author of the New York Times bestsellers "The Best Democracy Money Can Buy" and "Armed Madhouse." He is a GM bondholder and card-carrying member of United Automobile Workers Local 1981. Palast's latest reports for BBC Television and Democracy Now! are collected on the newly released DVD, "Palast Investigates: From 8-Mile to the Amazon - on the trail of the financial marauders."

Is Your Newest Facebook Friend a Sleazeball Debt Collector?

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Exposing the latest and slimiest ways the "financial services" industry is raking it in from cash-crunched Americans.

Liliana Segura
June 10, 2009 - AlterNet

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With millions of Americans struggling in the current economic crisis, it should come as no surprise that a growing number of people are falling behind paying their bills. This is no cause for celebration -- unless of course, you happen to make your living as a debt collector, a debt-settlement company or other notoriously sleazy outfits engineered to profit off people's financial misery.

It's bad enough that while newspapers and car companies die off, the debt business is booming. But recent months have brought a number of reports and lawsuits that exposed some of the latest -- and slimiest -- ways the "financial services" industry is using to cash in on already-struggling Americans.

Is Your Newest Facebook Friend a Debt Collector?

When Michigan resident Paula Newland fell behind in her car payments, she found herself battling some typical -- and not so typical -- tactics used by debt collectors. In addition to repeated, harassing phone calls from three companies -- including 15 calls on one Saturday and claims that phone calls were "concerning a 'family emergency' " -- Newland was told that if she did not pay up, her car would be reported stolen, and she would be arrested. The company also threatened to deploy what they called a "shame automobile" and "camp out all weekend" in front of her house.

And then came a novel approach: As if all this weren't enough, the fact there were overdue payments for her 2005 Chevy Impala were broadcast on her MySpace account.

Outraged and humiliated, Newland filed a civil suit earlier this year claiming "damage to her business and community reputation, extreme mental distress, aggravation, humiliation and embarrassment."

Newland is hardly alone. Debt collectors are increasingly using social-networking technology to go after people in debt. Ever get "friended" on Facebook by a cute stranger? Think twice before you add them. Some debt collectors have been caught posing as random "friends" on Facebook.

According to a post on Consumerist last month, "Debt collectors are using cute chicks as bait on Facebook to track down and keep track of debtors." It told the story of one employee of a debt-collection agency, who after "friending" some 658 people, declared (rather bizarrely):


"haha you guys i tricked you all my name is actually Emily and i work for cbv collections as a skip tracer i bet you guys got calls from them saying you owe money thats all my doing :) you want to call and bitch? i dare you to call me 604-[redacted]!!! I wait to hear from you :)"


Writing about the Consumerist story, blogger Angela Connor who writes at Social MediaToday, noted a trend in the Google searches that lead people to her site. "Here are a few I've seen in the last two weeks," she wrote:


1. "facebook debt collectors" (there are many instances of this one!)
2. "debt collectors are going to start infiltrating social media"
3. "Do bill collector's use LinkedIn?"

"This clearly is a topic on the minds of many," Connor wrote. "I have no idea who is conducting these searches (bill collectors or those trying to avoid them), but I know we will see this more often."

Indeed, another recent lawsuit tells the story of James Ricobene, who sued a Chicago company called Universal Tracing in April after "a senior investigator for the collection agency posted a message on [Ricobene's] daughter's MySpace page asking her to 'contact our office immediately so we can discuss the peaceful recovery' of his 2007 Mercedes GL450.

"The suit identifies JP Morgan Chase Bank as the lender on the vehicle. 'Failure to contact me will result in further action against your father,' the investigator, Chris Flanagan, warned Gina Ricobene."

Because friends and family members saw the MySpace message, James Ricobene says he was "humiliated, embarrassed and suffered substantial emotional distress."

Harassing You for Debt That Belongs to Someone Else

The Fair Debt Collection Practices Act is supposed to prohibit debt collectors from contacting third parties, like family members, when going after people. But this remains one of the oldest tactics in the book. What's more, consumer rights advocates tell horror stories about the relentless harassment of people who find themselves in debt collectors' crosshairs because of identity theft -- or simply because they share a name with a person with debt.

Human logic would suggest it would be simple to clear up such an obvious mistake. Wrong. Getting off a debt collector's call list is apparently harder than getting off a no-fly list.

One New York lawyer (who, full disclosure, happens to be my sister) represents poor people in debt-collection lawsuits; she tells the story of a client who is blind and partially paralyzed and yet continues to be harassed by a debt collector insisting that he pay money he owes on a gym membership.

"He was like, 'I'm stuck in a wheelchair, and I can't see! Why would I go to the gym?' " says Anamaria Segura, a staff attorney at MFY Legal Services. Neither this -- nor the fact that the man shares a name with his son, whose debt he was possibly being harassed for -- seems to be convincing the debt collector to back off.

"The thing that was hard about helping this client is that he'd not only apparently had his identity stolen; his credit report mistakenly reported debt that belonged to his son, under his son's Social Security number (they have the same name, just Jr. and SR.)"

When the collectors would call, he would explain that there was a mistake -- and they would immediately ask for his Social Security number, to confirm the account. When he refused to provide them with it due to privacy concerns -- after all, this was probably the reason his identity had been stolen in the first place -- the caller would take his reluctance as proof of a challenge or refusal to pay.

"His son was incarcerated, and they barely kept in touch, so he couldn't ask his son about the accounts, so he had to constantly field these phone calls from aggressive debt collectors who demanded payment."

Aside from the gym membership, a debt collector also accused him of owing money on a car rental. This, too, was a mistake, since the client cannot drive.

Yet debt collectors resorted to callous tactics -- including bigotry -- to try to get the money: "One collector said to him once, 'you Hispanics, you're all the same, you don't want to take responsibility.' "

While such harassment is appalling and annoying, it shouldn't actually end up costing you anything, right?

Think again.

A different New York man described being called multiple times by a Buffalo, N.Y.-based collection agency called Capital Management Services regarding debt on a Chase Bank credit card. The man, Paul Alappat, "told the collector he had never possessed a Chase Bank card and asked them to stop calling him."

When he applied for a home-equity loan two years later, however, the collection showed up on his credit report. His lender told him that if the $394.74 debt were not resolved, the loan couldn't be made.

"Since I was in a hurry to get the loan approved," Alappat said, "I paid the full amount, including the interest."

The Rise of 'Debt-Settlement' Firms

OK, so debt collectors can be total bullies. But what about those seemingly kindler, gentler companies that promise to settle your debt for a fee? According to the International Association of Professional Debt Arbitrators, theirs is a "profession that truly makes a difference."

And making a difference is lucrative, apparently. "The debt-settlement industry is growing very rapidly," boasts the IAPDA Web site. The IAPDA cites historic levels of credit card debt, as well as changes in bankruptcy laws that make it harder for consumers to clear debts, as reasons to "be a part of this exciting industry." In fact, it calls it one of the "top-rated career opportunities of the new millennium."

Last month, however, New York Attorney General Andrew Cuomo announced a nationwide investigation into debt-settlement companies, calling it a "rogue industry" that offers consumers "false hope, charging tremendous fees and leaving them in a worse financial situation."

"The debt-settlement plans offered by these companies are often inherently flawed and, based upon consumer complaints, it appears that many consumers are being misled regarding the nature of the services offered by these companies," according to a press release released last month by the attorney general's office. "For example, some companies falsely represent that they can reduce consumers' credit card debt by as much as 75 percent through negotiations with creditors. In addition, the companies often take their fees up front and keep their fees even when they do not provide the promised services."

The cruelty of these plans is that they are based on a payment plan that is a set-up from the start.

"The debt-settlement plans are generally premised on consumers aggregating savings, over one to three years, from which both the payment of the company's fees and any negotiated settlement are to be made. Yet most consumers who are targeted by these companies are unable to meet the savings requirements because of their precarious financial situation."

"The real racket," says Anamaria Segura at MFY Legal Services, "is that they'll say, 'Oh you owe $4,000? We'll negotiate with your creditors and settle that for $2,500!' But the fact is, that if the consumer ever is able to compile the $2,500 to pay off the creditors, by the time that happens, the $4,000 balance is now $6,000, because of interests, fees and late charges -- and the debt-settlement companies know that,"

When people come up short, these companies end up telling consumers to find other ways to cough up the cash. This, according to the AG's office can include telling people to mow lawns, "cut down" on car insurance, "borrowing from their neighbors and church," and perhaps most memorably, "selling their blood plasma."

"Debt collectors are totally different from debt-settlement companies," explains Segura. "I've had some debt-collection lawyers say to me, 'Oh they are terrible, we don't work with them, they really mislead people.' And they're right. But in my experience debt-collection lawyers are no better."

Tuesday, June 9, 2009

Monday, June 8, 2009

Debunking Canadian Health Care Myths

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Rhonda Hackett
Jun 7, 2009 - Denver Post

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What do we pay for, anyway? As a Canadian living in the United States for the past 17 years, I am frequently asked by Americans and Canadians alike to declare one health care system as the better one.

Often I'll avoid answering, regardless of the questioner's nationality. To choose one or the other system usually translates into a heated discussion of each one's merits, pitfalls, and an intense recitation of commonly cited statistical comparisons of the two systems.

Because if the only way we compared the two systems was with statistics, there is a clear victor. It is becoming increasingly more difficult to dispute the fact that Canada spends less money on health care to get better outcomes.

Yet, the debate rages on. Indeed, it has reached a fever pitch since President Barack Obama took office, with Americans either dreading or hoping for the dawn of a single-payer health care system. Opponents of such a system cite Canada as the best example of what not to do, while proponents laud that very same Canadian system as the answer to all of America's health care problems. Frankly, both sides often get things wrong when trotting out Canada to further their respective arguments.

As America comes to grips with the reality that changes are desperately needed within its health care infrastructure, it might prove useful to first debunk some myths about the Canadian system.

* Myth: Taxes in Canada are extremely high, mostly because of national health care.

In actuality, taxes are nearly equal on both sides of the border. Overall, Canada's taxes are slightly higher than those in the U.S. However, Canadians are afforded many benefits for their tax dollars, even beyond health care (e.g., tax credits, family allowance, cheaper higher education), so the end result is a wash. At the end of the day, the average after-tax income of Canadian workers is equal to about 82 percent of their gross pay. In the U.S., that average is 81.9 percent.

* Myth: Canada's health care system is a cumbersome bureaucracy.

The U.S. has the most bureaucratic health care system in the world. More than 31 percent of every dollar spent on health care in the U.S. goes to paperwork, overhead, CEO salaries, profits, etc. The provincial single-payer system in Canada operates with just a 1 percent overhead. Think about it. It is not necessary to spend a huge amount of money to decide who gets care and who doesn't when everybody is covered.

* Myth: The Canadian system is significantly more expensive than that of the U.S.

Ten percent of Canada's GDP is spent on health care for 100 percent of the population. The U.S. spends 17 percent of its GDP but 15 percent of its population has no coverage whatsoever and millions of others have inadequate coverage. In essence, the U.S. system is considerably more expensive than Canada's. Part of the reason for this is uninsured and underinsured people in the U.S. still get sick and eventually seek care. People who cannot afford care wait until advanced stages of an illness to see a doctor and then do so through emergency rooms, which cost considerably more than primary care services.

What the American taxpayer may not realize is that such care costs about $45 billion per year, and someone has to pay it. This is why insurance premiums increase every year for insured patients while co-pays and deductibles also rise rapidly.

* Myth: Canada's government decides who gets health care and when they get it.

While HMOs and other private medical insurers in the U.S. do indeed make such decisions, the only people in Canada to do so are physicians. In Canada, the government has absolutely no say in who gets care or how they get it. Medical decisions are left entirely up to doctors, as they should be.

There are no requirements for pre-authorization whatsoever. If your family doctor says you need an MRI, you get one. In the U.S., if an insurance administrator says you are not getting an MRI, you don't get one no matter what your doctor thinks — unless, of course, you have the money to cover the cost.

* Myth: There are long waits for care, which compromise access to care.There are no waits for urgent or primary care in Canada.

There are reasonable waits for most specialists' care, and much longer waits for elective surgery. Yes, there are those instances where a patient can wait up to a month for radiation therapy for breast cancer or prostate cancer, for example. However, the wait has nothing to do with money per se, but everything to do with the lack of radiation therapists. Despite such waits, however, it is noteworthy that Canada boasts lower incident and mortality rates than the U.S. for all cancers combined, according to the U.S. Cancer Statistics Working Group and the Canadian Cancer Society. Moreover, fewer Canadians (11.3 percent) than Americans (14.4 percent) admit unmet health care needs.

* Myth: Canadians are paying out of pocket to come to the U.S. for medical care.

Most patients who come from Canada to the U.S. for health care are those whose costs are covered by the Canadian governments. If a Canadian goes outside of the country to get services that are deemed medically necessary, not experimental, and are not available at home for whatever reason (e.g., shortage or absence of high tech medical equipment; a longer wait for service than is medically prudent; or lack of physician expertise), the provincial government where you live fully funds your care. Those patients who do come to the U.S. for care and pay out of pocket are those who perceive their care to be more urgent than it likely is.

* Myth: Canada is a socialized health care system in which the government runs hospitals and where doctors work for the government.

Princeton University health economist Uwe Reinhardt says single-payer systems are not "socialized medicine" but "social insurance" systems because doctors work in the private sector while their pay comes from a public source. Most physicians in Canada are self-employed. They are not employees of the government nor are they accountable to the government. Doctors are accountable to their patients only. More than 90 percent of physicians in Canada are paid on a fee-for-service basis. Claims are submitted to a single provincial health care plan for reimbursement, whereas in the U.S., claims are submitted to a multitude of insurance providers. Moreover, Canadian hospitals are controlled by private boards and/or regional health authorities rather than being part of or run by the government.

Myth: There aren't enough doctors in Canada.

From a purely statistical standpoint, there are enough physicians in Canada to meet the health care needs of its people. But most doctors practice in large urban areas, leaving rural areas with bona fide shortages. This situation is no different than that being experienced in the U.S. Simply training and employing more doctors is not likely to have any significant impact on this specific problem. Whatever issues there are with having an adequate number of doctors in any one geographical area, they have nothing to do with the single-payer system.

And these are just some of the myths about the Canadian health care system. While emulating the Canadian system will likely not fix U.S. health care, it probably isn't the big bad "socialist" bogeyman it has been made out to be.

It is not a perfect system, but it has its merits. For people like my 55-year-old Aunt Betty, who has been waiting for 14 months for knee-replacement surgery due to a long history of arthritis, it is the superior system. Her $35,000-plus surgery is finally scheduled for next month. She has been in pain, and her quality of life has been compromised. However, there is a light at the end of the tunnel. Aunt Betty — who lives on a fixed income and could never afford private health insurance, much less the cost of the surgery and requisite follow-up care — will soon sport a new, high-tech knee. Waiting 14 months for the procedure is easy when the alternative is living in pain for the rest of your life.

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Rhonda Hackett of Castle Rock is a clinical psychologist.