Saturday, March 29, 2008

Economic Meltdown: A 'Teachable Moment' About Socialism for the Rich

By Dean Baker, TruthOut.org
Posted on March 24, 2008
http://www.alternet.org/story/80495/

Progressives usually fight for the interests of those at the middle and bottom at the expense of those on top. However, during this period of unprecedented financial crisis, when the Wall Street rich are begging for the helping hand of the government, most progressives appear to be on the sidelines. Rather than taking advantage of this extraordinary opportunity to reduce inequality and educate the public about how the economy really works, progressive voices have been unusually quiet.

While the basic story on the economic crisis should be well known, it is nonetheless worth repeating. The Federal Reserve Board allowed the growth of an $8 trillion housing bubble ($110,000 of housing bubble wealth for every homeowner) in the years from 1996 to 2006. While this bubble was easily recognizable to competent economists, the entire political and financial establishments managed to ignore the housing bubble until it began to burst last year.

The collapse of the bubble is now pushing the economy into a recession. This is the result of both the direct effect of the collapse on the housing market and, more importantly, because of the indirect effect the loss of trillions of dollars of housing wealth has on consumption. Homeowners are rapidly scaling back their consumption after losing much of their life's savings in the last year.

The collapse of the housing bubble has inflicted enormous pain on tens of millions of people, but it is also inflicting pain on Wall Street and the financial sector. The honchos in this sector include many of the richest people in the country. With the collapse of the housing bubble, we are finding out they were far less financially sophisticated than any of us could have imagined. Many banks, brokerage houses and investment funds took highly leveraged bets that assumed the housing bubble would not burst. Now that it has burst, some of the richest people in the country face the risk of a middle-class lifestyle - unless the government comes to the rescue.

This is where things really get painful. Rather than taking this opportunity to tighten the screws, many progressives are standing by the sidelines or actually cheering on plans to bail out the ridiculously rich. The same people - who, on other days, are fighting to raise the income tax rate on the rich or for preserving the estate tax - are just watching as the Fed hands taxpayer dollars to Wall Street, and hoping Congress will come up with tens of billions for buying the bankers' bad mortgage debt.

There is, of course, a cover story - there always is. We have to let the Fed bail out the banks or the financial system would collapse. This would hurt everyone, especially ordinary workers. And the mortgage bailout is supposed to help low- and moderate-income homeowners.

But the cover stories don't hold water. We can keep the banks running without bailing out the incredibly rich people who drove them to ruin. England showed us the way earlier this year with its takeover of Northern Rock, a major bank that got itself in trouble with bad mortgage debt.

We can also help homeowners without bailing out the banks. The rescue proposals currently on the table would have the government buy or guarantee mortgages on homes that are still hugely overpriced. These proposals could give hundreds of billions of dollars to the banks, while providing little help to homeowners. Most would still be paying far more on their mortgage, property taxes and insurance than they would to rent a comparable home. Furthermore, the bailout conditions virtually guarantee they will never have a dime in equity.

As an alternative to bailing out the banks, we can temporarily change the rules on foreclosure to give homeowners the right to rent at the fair market rate. This would provide them with security in their home. More importantly, it would likely create a situation where most homeowners stay in their house as owners, since banks would rather renegotiate mortgage terms than end up as landlords.

The Wall Street boys got themselves in a huge mess through their own greed and stupidity. Now is the time to make sure they enjoy the fruits of their labor.

These are the same people who don't think they should have to pay higher taxes so kids can get health care and childcare. There is no reason the rest of us should pay higher taxes so they can keep their mansions in the Hamptons, their private jets and retinue of personal services. Let's leave this one to the market.

Dean Baker is co-director of the Center for Economic and Policy Research.

© 2008 TruthOut.org All rights reserved.
View this story online at: http://www.alternet.org/story/80495/

Why Did Spitzer Do It, You Ask? Why Wouldn't He?

BY RUSS WELLEN, FREEZERBOX

How could Eliot Spitzer be so stupid? What made him risk everything he worked and stood for? How could he betray his wife, his children, and the citizens of New York, not to mention idealists everywhere?

We've got this whole thing backwards. The more relevant -- and realistic -- question is: How could he have been anything but that stupid?

In other words, why wouldn't Eliot Spitzer buy a 22-year-old?

He had rationalizations by the bushel-full with which to regale himself:

I'm a super-achiever with big appetites. Isn't it all part of the same package?

Politicians have always gotten some on the side. Try walking a mile in our shoes. You can't imagine the pressure. We need to blow off some steam.

While being governor has been a study in frustration, my accomplishments as attorney-general of the state of New York are legendary. What's one black mark next to rows of gold stars?

True, I busted prostitution rings. The owners of the Emperors Club are a couple of Jersey guys, but they're not affiliated with the Mob. Don't you think I made sure of that before giving them my business?

Besides, wouldn't it be more self-righteous to place my ideological purity above the demands of my job? Consumed by my urges, I would never have gotten any work done if I were constantly distracted by temptation. Wasn't it better for my constituents if I yielded?

My wife is less interested in sex. Besides, as she's aged, she's become less attractive to me anyway.

Why not just use porn then? For a mover and shaker like me, that's the next worst thing to impotence. If I was going to get caught with one or the other, I'd rather leave the public with the image of me being serviced rather than servicing myself.

Why didn't I ask a friend for a referral to a more discreet service? I never asked for the image of a paragon of moral virtue. But, saddled with it, I couldn't buck it with those close to me.

You may not buy these rationalizations. However, as we speak, Eliot Spitzer is probably consoling himself with them. Meanwhile, in the rush to condemn him, we neglected to stop and take a look in the mirror.

Middle-aged men especially need to ask themselves: If we were wealthy like Spitzer and able to spend the money without our spouses noticing it, wouldn't we too be tempted to buy a 22-year-old? Deep down, aren't we envious of what he had been getting away with up to now?

Speaking personally, I have looked in the mirror and the mirror spoke back: You would have to take it one day at a time.

In other words, until your hormones wander off into the sunset, should you be able to afford it, the temptation to hire a young woman would never go away.

Alas, poor Eliot -- like Bill Clinton, relegated to Internet porn forevermore.

About the Author
Russ Wellen is an editor at Freezerbox who specializes in foreign affairs and nuclear deproliferation.

Wednesday, March 26, 2008

Satire break

The Onion

Gibson Sues Over Guitar Hero

Guitar maker Gibson is suing MTV Networks and Electronic Arts, stating that the company has not been paid for a patent it owns for virtual guitar...

Monday, March 24, 2008

McCain Is Now Officially a Campaign Finance Criminal

By Jane Hamsher, Firedoglake
Posted on March 24, 2008
http://www.alternet.org/blogs/peek/80479/

According to the latest Federal Election Commission report, John McCain has now spent $58.4 million dollars. McCain applied for public financing, and according to FEC chairman David Mason (in a letter to McCain), he can't withdraw without permission of the FEC. So he is now legally in violation of campaign finance law.

But as Media Matters points out, you'd never know it from reading AP writer Jim Kuhnhenn:

A March 21 Associated Press article reported that Sen. John McCain "has now spent $58.4 million in his primary bid, surpassing the $50 million limit he would have faced if he participated in the public financing system he had been certified to join." The article, by staff writer Jim Kuhnhenn, continued:
McCain has decided not to accept the public matching funds, but the FEC [Federal Election Commission] wants him to assure regulators that he did not use the promise of public money as collateral for the loan." Kuhnhenn also reported that "[t]he Democratic National Committee [DNC] has filed a complaint with the FEC arguing McCain cannot withdraw from the public finance system without FEC approval." In fact, as Kuhnhenn himself has noted in previous articles, in addition to the DNC, FEC Chairman David Mason has also asserted that McCain cannot legally withdraw from the public finance system without such approval.

The Wall Street Journal article makes the same convenient omission.

Barbecue buddies forever, eh?

Jane Hamsher is the founder of FireDogLake. Her work has also appeared on the Huffington Post, Alternet and The American Prospect.

© 2008 Firedoglake All rights reserved.
View this story online at: http://www.alternet.org/bloggers/http://www.firedoglake.com//80479/

From Cuba, Fidel Slew The Monroe Doctrine!

From Washington, Viva The Monroe Doctrine!

By Saul Landau, ZNet Commentary

Commentaries are a premium sent to Sustainer donors of ZNet. To learn more, consult: ZNet

As very few celebrate the anniversary of the US invasion of Iraq, most of the world recognizes Bush's compulsion to mass violence as an act of pre-medieval arrogance and ignorance. Like Vietnam and Korea before it, the Iraq and Afghanistan experiences have sapped imperial resources at home.

Far from dead, however, imperial axioms rein supreme in US politics. The Monroe Doctrine continues to provide guidance to policy makers. This 1823 statement of chutzpah, viewing European interference in Latin America "as dangerous to our peace and safety," came long before Washington could enforce it. The US vitiated the Doctrine's other clause -- US out of Europe - when it entered World Wars I and II.

By the 1890s, and through the 20th Century, Washington dictated policy to the Hemisphere. No longer! Compare Latin American relations today to its bondage 50 years ago. In 1958, Washington called all the shots. Latin American nations wouldn't dare vote against US interests in the OAS or UN, or disagree with US economic policy. The CIA removed the few who resisted, like reform minded Guatemalan President Jacobo Arbenz in 1954.

In 1959, under Fidel Castro's leadership, the Cuban Revolution forged long term resistance. In retaliation, the United States launched an exile invasion at the Bay of Pigs, instituted assassination and terrorism as official policies and enacted an embargo, while maintaining a a US naval and now torture base on Cuban territory. All this, plus imposed diplomatic isolation and possibly chemical and biological war fare, didn't deprive Fidel of a meal or a conjugal opportunity. It hurt Cubans, but failed to raise even a small welt on the Comandante's back. Officials in Washington still tell you -- off the record -- restoration of relations with Cuba must wait until Fidel gets properly punished.

While Cuba averted US destabilization, the CIA ensured no other "upstarts" would challenge its hegemony. They ousted Brazilian President Joao Goulart in 1964, helped destabilize Chilean President Salvador Allende's regime for a coup in 1973, and waged a 10 year long covert war against the Sandinista government of Nicaragua. US troops prevented noncompliance in the Dominican Republic in 1965 and in Haiti in the 1990s. Independent minded Presidents Omar Torrijos of Panama and Jaime Roldos of Ecuador died mysterious deaths in 1981 airplane crashes. No cause has yet been determined for the "accidents."

In 2008, noncompliance has become widespread. Washington had to rely on Alvaro Uribe's dubious regime in Colombia as a "model" and a platform state to do its bidding. In 2008, such "obedience" costs US taxpayers some $600 million to buy that loyalty. (Anastasia Moloney 15 Feb 2007 World Politics Review) Uribe presides over a kleptocracy that routinely violates human rights. Labeled a democracy by the three monkeys at the State Department, Colombia's government continues to encourage its super rich to not pay taxes; a place where poverty and injustice coincide with violence and corruption. These very material reasons stand behind the Colomobian government's inability to stifle an insurgency - a cruel and cynical one - that has endured for more than four decades.

During that period, Colombia's government has not stifled an insurgency that has gained a bad reputation even with revolutionaries for its narco-trafficking and kidnapping policies. Indeed, the FARC and other insurgent group still control an estimated 20 percent of Colombia's territory.

Desperate to show hemispheric clout after suffering setbacks in the Middle East and electoral reverses for its candidates in Latin America, Washington - in the name of the war on terror -- provided intelligence to Colombia to target the position of FARC guerrillas in Ecuadorian territory. On March 1, Colombia's military, with US tactical, logistic and weapons support, attacked a guerrilla camp inside Ecuador and assassinated Raúl Reyes, FARC's international spokesman and some 16 other guerrillas.

Not wanting Venezuelan President Hugo Chavez to claim prestige for having helped free captives kidnapped by the Colombian rebels, Washington surreptitiously encouraged this extraterritorial operation. Ecuadorian Defense Minister Sandoval more than implied that when he said the Colombians dropped explosives "that are normally known as smart bombs which the US has." Sandoval explained that to locate the target, FARC leader Reyes' "equipment was used that Latin American armed forces do not possess." Troops and aircraft moved in to assassinate FARC guerrillas, and ironically delay the

As war clouds gathered over Colombia, Venezuela and Ecuador, the Latin Americans settled the dispute themselves, without US or OAS intervention when they met under the auspices of left leaning Dominican President Leonel Fernandez. Uribe apologized to Ecuador and swore never to repeat such aggression. Behind the scenes, US officials tried unsuccessfully to pressure certain governments at the summit to condemn the victims.

Latin American governments viewed US efforts to provoke violence using Colombia as its agent as threating to their fragile sovereignty. Indeed, citizens of most Latin American countries would have mocked their President had they backed Colombian aggression in the name of fighting terror.

By late 1986, US failure to provide a sensible policy for Latin American and the Caribbean for so many decades -- unless one includes looting as sensible - led leaders of the region to create the 18 member Rio Group (meeting in Rio de Janeiro). Although it excluded Cuba, it also barred the US from membership. It became in a kind of alternative to the OAS and reflected the first stages of collective disillusionment with US policy in the region.

Latin Americans can celebrate their quiet emancipation from The Monroe Doctrine, which remains axiomatic in official Washington circles as its coincidence with reality diminishes.

Whom to credit for sidelining this seemingly eternal Doctrine? Ironically, Fidel Castro, has played a lead role in making the Doctrine -- well, so last century. As Washington officials condescendingly predicted -and waited expectantly -Castro's death, they failed to see the terminal illness in their own policies.

Neither the political class nor the media have acknowledged the new reality. They continue to ridicule the policy dragon slayer as he sits in his hospital suite in Havana writing analytical essays. Four of his ideological sons run Latin American governments: Hugo Chavez in Venezuela, Evo Morales in Bolivia, Rafael Correa in Ecuador and Daniel Ortega in Nicaragua. Fidel's ideological cousins govern Brazil, Argentina, Chile, Guatemala, Panama, the Dominican Republic and Honduras. And, all of them won free and fair elections -more than Bush can say. More cousins or even closer relatives might soon emerge victorious in Paraguay, El Salvador and Peru.

The left should celebrate cautiously. The US has risen before from imperial ashes, as it did after defeat in Vietnam. And Cuban socialist achievements in health, education and social welfare, notwithstanding, stand second to the example of Fidel's Guinness Wolrd Record status as King of disobedience to empire.

Without his defiance, would Security Council members Chile and Mexico have dared challenge the United States during the 2003 Iraq War resolution? Would Brazil and Chile have casually switched major trade partners from the United States to China?

One additional reason for declining US influence relates to the fall of the dollar. Latin American countries export coffee and cocoa, but receive approximately the same price as they did 50 years ago, when, as Fidel Castro noted, "the dollar had a few dozen times the purchasing power it has today. Simple trade, increasingly unequal, is crushing the economies of many Latin American countries." (Cuban News Agency March 8, 2008)

Venezuela, Bolivia and Ecuador show how citizens could elect governments to represent their interests, rather than those of "free traders." As Cuba struggles to adjust its order to meet popular grievances ranging from more freedom to buy to greater liberty to speak, its government benefits from the fact that the United States arrogantly imported Fidel's enemies. These Miami-based exiles cause problems in the United States. They have governed the "autonomous republic of Miami" for decades. Men in their 70s continue to "train" in the Everglades with guns or continue to proclaim as did Miami radio screamer Armando Perez Roura that "the only way to overthrow the Communist tyranny is through arms."

Some older members of Perez Roura and his listeners' generation still dream of returning, reclaiming their wealth, power and prestige on the island. They invoke the good old days, when the Monroe Doctrine meant Batista and the Mafia, that brutal security blanket that made them happy.

The "good old days" in Cuba like the Monroe Doctrine have died. In Miami, younger generations of Cubans and other Latin Americans populate the city, making the old guard seems stale and stifling, just as when it ruled Cuba. As the 50th anniversary of Cuba's revolution approaches, in some nine months, a few Miamians will acknowledge the importance of the event that helped bury the Monroe Doctrine and allowed Latin Americans to forge a more independent path in the 21st Century.

Landau is an Institute for Policy Studies Fellow. His new book is BUSH AND BOTOX WORLD. His award winning film is WE DON'T PLAY GOLF HERE, available on dvd (roundworldproductions@gmail.com)

The Coming War on Venezuela

Eva Golinger's Bush vs. Chavez
By George Ciccariello-Maher
http://www.counterpunch.org/maher03242008.html

More than a year ago, I attended the official book release for the Venezuelan edition of Eva Golinger's Bush Versus Chávez, published by Monte Avila, and the book had previously been printed in Cuba by Editorial José Martí. I recount this to make the following point: long before the publication of Bush Versus Chávez in the current English-language edition, the book was already a crucial contribution to international debates regarding United States' efforts to destroy Venezuela's Bolivarian Revolution.

In choosing to publish the English edition of the book, Monthly Review Press has opened that debate to an entirely new audience, and for this we should be grateful. Furthermore, in an effort to streamline production, Monthly Review has further made the appendices to Bush Versus Chávez, largely composed of declassified or leaked documents, available publicly on its website, at the address: http://monthlyreview.org/bushvchavez.htm.

A New Toolbox

Golinger, a U.S.-born lawyer who has recently taken up full-time residence in Venezuela (and Venezuelan citizenship), first shot to prominence with her 2005 book The Chávez Code: Cracking U.S. Intervention in Venezuela. There, Golinger drew on a multitude of documents requested via the Freedom Of Information Act (FOIA) to thoroughly and convincingly document the role of the U.S. government in funding and sponsoring those Venezuelan opposition groups that participated in the undemocratic and illegal overthrow of Chávez in April 2002, most of which also signed the interim government's Carmona Decree which dissolved all constitutionally-sanctioned branches of Venezuelan power. All this against Condoleezza Rice's recent claim, patently preposterous, that "we've always had a good relationship with Venezuela."

In Bush Versus Chávez, Golinger continues this diabolical narrative, this time relying less on FOIA requests than on a series of other key documents and bits of testimony gleaned from anonymous sources. After the failed 2002 coup, Golinger documents how the United States changed its tack slightly, drawing upon the variety of experiences gained in the military overthrow of Salvador Allende in Chile and the electoral overthrow of the Nicaraguan Sandinistas. While it would be easy to say that this represented a "Nicaraguanization" of U.S. policy in the aftermath of the botched coup, in reality this new policy draws equally heavily on the many other elements that constituted the multifaceted war against Allende, and hence the thesis of the "Chileanization" of Venezuela remains all-too-relevant.

The key institutional devices deployed by the U.S. in its covert support for the coup remained the same in its aftermath: the neoconservative National Endowment for Democracy (NED) and the U.S. Agency for International Development (USAID), both convenient mechanisms for bypassing Congressional oversight. What was new on this front, as Golinger demonstrates, was the establishment by USAID in the months following the coup of a sinister-sounding Office of Transition Affairs (OTI). Both the NED and USAID (via the OTI) immediately began to shift strategies, providing covert support for the opposition-led bosses lockout of the oil industry which crippled the Venezuelan economy for two months in late 2002 and early 2003, and when this failed, by providing direct support for efforts to unseat Chávez electorally (a là Nicaragua) in a 2004 recall referendum spearheaded by opposition "civil society" organization Súmate. Needless to say, doing so entailed continuing to support those very same organizations who had proven their anti-democratic credentials in 2002, but such things are hardly scandalous these days.

Through the popular and military support enjoyed by the Chávez government, all these efforts failed, which is unprecedented in and of itself. In response to the emptying of its traditional toolbox, the U.S. government has been forced to diversify its tactics even more drastically than ever before, and this is where Bush Versus Chávez comes in.

Domestic Continuity

In her analysis of contemporary U.S. strategies to unseat Chávez, Golinger speaks of three broad fronts: the financial, the diplomatic, and the military (43-48). But we should be extremely wary of distinguishing too cleanly between such tightly-interwoven categories: the "financial front" remains largely in the hands of the NED and USAID, agencies directly controlled by the U.S. government and the embassy in Caracas, funding the domestic side of the equation through support for destabilizing opposition organizations and even psychological operations (psyops) targeting the Venezuelan press and military.

Since 2004, the NED and USAID have seen massive budgets earmarked for activities in Venezuela: currently, some $3 million for the former and $7.2 million for the latter's OTI operation (77). Of the NED funds, most went to the very same groups that participated in the 2002 coup, the 2003-4 oil lockout, and the 2004 recall referendum. Súmate, which headed up the recall effort, and whose spokesperson and Bush confidant Maria Corina Machado had signed the Carmona Decree, was granted more than $107,000 in 2005 alone. Súmate, to which Golinger devotes a chapter, had also received $84,000 in 2003 from USAID and $53,000 in 2003 and $107,000 in 2004 from the NED, as well as an inexplicable $300,000 from the U.S. Department of Health and Human Services (90). All of which demonstrates, for Golinger, that "Súmate is and continues to be Washington's main player in Venezuela" (91).

While USAID's funding structure has become more secretive, a turn that Golinger deems illegal, one project in particular has been publicly discussed: the establishment of "American Corners" throughout Venezuela, institutions which even the U.S. Embassy deem "satellite consulates" (145). Aside from the patent illegality of such underground U.S. institutions, Golinger points out that their primary function is the distribution of pro-U.S. propaganda to the Venezuelan population.

Perhaps most frightening on the domestic front is the strategic transformation that such U.S. funding has undergone. Specifically, such funding has increasingly begun to target what had previously been considered core Chavista constituencies, such as the nation's Afro and Indigenous populations (77-78). What Golinger doesn't emphasize is the fact that this has occurred alongside a concerted effort by opposition political parties, notably the NED-funded Primero Justicia, to penetrate the poorest and most dangerous Venezuelan barrios, like Petare in eastern Caracas.

While this domestic element has remained shockingly continuous, with the U.S. continuing to directly fund the groups involved in Chávez's 2002 overthrow, the military and diplomatic fronts are where Golinger reveals some veritably frightening new developments.

Asymmetrical Aggression

Perhaps the most intriguing and frightening revelation in Bush Versus Chávez surrounds a 2001 NATO exercise carried out in Spain under the title "Plan Balboa." Here we should bear in mind the open support provided by then Popular Party Prime Minister José Maria Aznar for the brief coup against Chávez. And while we might be struck by the irony of naming a NATO operation after the Spanish conquistador who invaded Panama, the name is far more accurate than we might initially believe.

Plan Balboa was, in fact, a mock invasion plan for taking over the oil-rich Zulia State in western Venezuela. In thinly veiled code-names (whose coded nature is undermined by the satellite imagery showing the nations involved), it entailed a "Blue" country (the U.S.) launching an invasion of the "Black" zone (Zulia) of a "Brown" country (Venezuela), from a large base in a "Cyan" country (Howard Air Force Base, in Panama) with the support of an allied "White" country (Colombia) (95-98). The fact that a trial-run invasion was carried out less than 11 months before the 2002 coup against Chávez should further convince us that this was mere contingency planning.

But Plan Balboa would be only the beginning, and Golinger deftly documents a series of increasingly overt military maneuvers carried out in recent years by the U.S. government in an effort to intimidate the Chávez government while preparing for any necessary action. Here, Golinger rightly trains her sights on the small Dutch Antillean island of Curaçao, which she deems the U.S.'s "third frontier." Curaçao hosts what is nominally a small U.S. Forward Operating Location (FOL) as well as, not coincidentally, a refinery owned by Venezuelan national oil company PDVSA. Furthermore, it sits fewer than 40 miles off Venezuela's coast, and more specifically, off the coast of the oil-rich "Black Zone" of Plan Balboa that is Zulia State.

Until February 2005, Curaçao probably seemed to be of little concern to Venezuelan security, given that its FOL housed only 200 U.S. troops. But this all changed when the U.S.S. Saipan made its unannounced arrival. The United States' premier landing craft for invasion forces, the Saipan arrived in Curaçao with more than 1,400 marines and 35 helicopters on board (104). When the Venezuelan government responded to the hostile gesture, U.S. Ambassador William Brownfield claimed there had been a "lack of communication," while simultaneously declaring that "it is our desire to have more visits by ships to Curaçao and Aruba [only 15 miles off the Venezuelan coast] in the coming weeks, months, and years" (105).

This veiled threat would come to fruition with Operation Partnership of the Americas in April 2006. In that instance, which dwarfed the Saipan's visit, the aircraft carrier U.S.S. George Washington arrived in Curaçao with three warships. The total strength of the force was of 85 fighter planes and more than 6,500 marines (106). Were this not worrying enough, then-intelligence chief and Latin American Cold Warrior par excellence John Negroponte admitted around the same time that the U.S. had deployed a nuclear sub to intercept communications off the Venezuelan coast (100). When we factor in the Curaçao-based Operation Joint Caribbean Lion, carried out in June 2006 with the goal of capturing the mock-terrorist rebel leader "Hugo Le Grand," there can remain little doubt that at the very least, the United States is keen to prepare for the possibility of a direct invasion of Venezuelan territory.

Of Terror and Dictators

But, one might ask, what are the chances that the U.S. would actually invade Venezuela, given the predictably harsh international rebuke that such an invasion would earn? It is here that another aspect, what Golinger loosely characterizes the "diplomatic front," comes into play, and it is here that U.S. policies and strategies have seen the most striking innovations.

Here Golinger cites a document by retired U.S. Army Colonel Max G. Manwaring published by the Army's Institute for Strategic Studies in 2005 (112). This document represents above all an inversion of strategies applied to Venezuela, and one which drastically complicates the military picture: Manwaring advocates appropriating the concept of "asymmetrical warfare" that many guerrillas and rebel movements have historically used with success against the United States, and converting it into an explicit U.S. strategy. Somewhat bizarrely, Manwaring compares this employment of asymmetric warfare to the "Wizard's Chess" of Harry Potter, deeming Chávez a "true and wise enemy" who must be dealt with by a panoply of maneuvers on all levels (112-113. Central to this strategy is the deployment of psychological operations (psyops), which had been previously focused on the Venezuelan press (toward the objective of justifying a coup or electoral removal of Chávez) to the international and diplomatic arena (toward what one could presume to be an objective of direct or indirect military action).

While domestic psyops have continued, notably in the 2005 deployment of "Gypsy" (JPOSE, Joint Psychological Operations Support Element) teams to Venezuela with the objective of spreading propaganda among the Venezuelan military and keeping tabs on radical Chavista organizations (117), much of their focus has been the spreading of news stories in the international arena. These stories, as Golinger astutely documents, tend to follow "three major lines of attack":

1.) Chávez is an anti-democratic dictator
2.) Chávez is a destabilizing force in the region
3.) Chávez harbors and supports terrorism (125).

Even the briefest of glances at any mainstream newspaper in the United States, or many other countries for that matter, will show to what degree this mediatically-constructed image has been a success.

New Strategies Unfold

This international effort to discredit the Chávez regime, thereby clearing the way for future intervention, brings us to a series of recent events that have transpired since Golinger first published Bush Versus Chávez.

The first was the sudden rebirth of the Venezuelan "student movement" in early 2007, nominally in response to the non-renewal of the broadcasting license for opposition television station RCTV. I have documented elsewhere the fact that this "student movement" was by and large supported if not directed by the traditional opposition parties, but what is more relevant here is that the strategies and even imagery of the movement were adapted directly from those used in countries such as Serbia and the Ukraine. These strategies, consisting largely of "non-violent" direct action, have been formulated and disseminated through institutions such as the Albert Einstein Institution which, in an irony of ironies, Golinger shows to be directly supported by the State Department (135), and linked to prior attempts to train Colombian paramilitaries to assassinate President Chávez (136-137).

Here again we have an inversion, in which the U.S. government has adopted the very strategies that had previously been deployed against it, and in this case the audience was international: the foreign press was so eager to show a violent repression of the students that it exaggerated the response of the largely unarmed police and, in an infamous incident, transformed an armed attack by opposition students against Chavistas at the Central University into just the opposite. The objective? To discredit and isolate the Chávez regime internationally, clearing the way for more directly offensive action.

Secondly, we have seen a concrete example of such offensive action in Colombia's recent illegal cross-border raid into Ecuador. The particular players involved should not distract our attention: this was a test-run, both militarily and diplomatically, for future U.S. interventions in the region. With Colombia standing in as proxy for the U.S. and the more recently-established Correa government standing in as proxy for the Chávez government, this was above all a test of the international response.

While that response was overwhelming in Latin America, with the OAS and even right-leaning governments condemning the Colombian raid as a violation of sovereignty, the U.S.'s international psyops campaign seems to have been overwhelmingly effective within its own borders. Rather than being presented as an instance of Colombian aggression, the initial raid was immediately erased from the picture in much of the international press, with the focus being diverted to what was perceived as Venezuela's bellicose response. But such a response was a strategic necessity aimed at discouraging any possible future intervention.

Furthermore, the revelations gleaned from the FARC's magic laptop, which allegedly implicate Chávez himself in funding the FARC (a charge which Colombia, not coincidentally, eventually decided not to pursue), are also drawn straight from the playbook of Plan Balboa, which was premised upon the threat posed by an alliance between the radical sectors of the "Brown" and "White" countries. The U.S. seems to be preparing to put that plan into motion with its recent legal gestures toward declaring Venezuela a supporter of terrorism, and given recent evidence of a massive influx of Colombian paramilitaries into the "Black Zone" of western Venezuela, the danger that Plan Balboa might become a reality should not be underestimated.

What would be the international response to such an incursion? Here there is little ground for optimism. After all, during the 2002 coup against Chávez, that bastion of the American left celebrated the maneuver, declaring that "Venezuelan democracy is no longer threatened by a would-be dictator." And all this before the concerted psyops campaign deployed against the Venezuelan government in recent years. Now, one democratic candidate spurns facts to declare Chávez a "dictator" while the other, eager to demonstrate his leftist credentials, deems the massively-popular Venezuelan leader a "despotic oil tyrant," and is promptly pilloried for his soft line.

George Ciccariello-Maher is a Ph.D candidate in political theory at U.C. Berkeley, who is currently writing a people's history of the Bolivarian Revolution. He can be reached at gjcm(at)berkeley.edu.


Sunday, March 23, 2008

Can you afford to feed your family?

Rising Food Costs
By Nicole Colson, Counterpunch

These are tough times. The economy shed more than 80,000 jobs in two months. Prices are up at the gas pump and in the supermarket. Housing values are down. Hard-working Americans are concerned."

It might not seem obvious, but these words from George W. Bush in a recent speech at the Economic Club of New York were meant to reassure the public and investors that the U.S. economy was fundamentally sound and would continue to grow.

But as Bush pointed out, consumer confidence is rapidly tanking. For working families, a skyrocketing grocery bill is one of the most ever-present of reminders that they have been making do with less. Each week, it seems, the price of staple food--everything from eggs to milk to cereal--edges up higher.

"I've spent $300 in a matter of two weeks," one shopper, Roseann Fede, told the New York Times as she left a Bloomfield, N.J., supermarket. "It used to be like $150. Milk, eggs, nonperishable things--everything has gone up in price."

According to U.S. government figures released earlier in March, grocery costs increased 5.1 percent over the past 12 months. The U.S. is undergoing the worst grocery inflation in close to 20 years, and the U.S. Department of Agriculture predicts prices will climb another 3 to 4 percent this year.

The problem is especially obvious when you look at the cost of individual goods. According to the Labor Department, milk prices are up 17 percent. Prices for dried beans, peas and lentils are up the same amount. Cheese is up 15 percent, rice and pasta 13 percent, and bread 12 percent. And the price of eggs has risen 25 percent since February 2007--and 62 percent in the last two years.

In all likelihood, food inflation will continue, driven by a number of factors, including the rising price of oil--hitting as high as $112 a barrel recently--which has raised the cost to deliver food and run farm and factory equipment; increases in the cost of farm commodities like milk, corn and wheat; and the declining value of the dollar, which is encouraging exports of U.S. crops and food products.

Increased government mandates for ethanol production are not only driving up the price of corn used for making it, but are pushing up prices for other staple foods--since, for example, land is being diverted from staples like wheat and soybeans to produce corn. By the end of the 2006-07 crop year, 19 percent of harvested corn was made into ethanol--a 30 percent increase in just one year. Increased demand for ethanol helped boost the price of a bushel of corn from $2 in 2005 to $3.40 in 2007.

* * *

The grim result of the increase in food prices is a record number of requests for help at food pantries around the country.

Eileen O'Shea, director of member services for the Greater Boston Food Bank, told the Boston Herald that more and more working- and middle-class families are showing up at food pantries and soup kitchens. When O'Shea recently visited the St. Francis House homeless shelter in Boston, she noticed people in suits and business attire entering the soup kitchen to eat lunch.

In January 2006, for example, the Sacred Heart Parish Outreach Food Pantry in Middleboro served 39 families a month. This past January, reported the Herald, it served 203 families.

"It's working-class people who no longer have a job," pantry President Bill Pye said. "Builders aren't building, so they don't need plumbers, they don't need electricians, they don't need painters, they don't need carpenters. And when their unemployment runs out, what do they do? They come to the food pantry--reluctantly, most of them."

According to the New York Times, for two weeks last November, the New Hampshire Food Bank was forced to distribute supplies usually reserved for emergency relief. Demand was up 40 percent from 2006, and supply was down 30 percent--an especially striking fact considering that New Hampshire is the state with the lowest reliance on food banks in the U.S.

* * *

While things may be bad for many working and poor families in the U.S., in many parts of the world, it is even darker.

According to the UN's World Food Program (WFP), global food reserves are "at their lowest for 30 years and commodity markets extremely volatile, subject to sudden spikes and speculation. The situation has been exacerbated by the falling value of the dollar, which is the currency in which all major commodities are traded."

Globally, wheat prices have surged 83 percent in the past year. Earlier in March, in Asia, rice prices were at a 20-year high. "When you see those kinds of increases, [people] are simply priced out of the food markets," WFP Executive Director Josette Sheeran recently told BBC News.

The WFP reports that a staggering 854 million people in the world are food "insecure," and 170 million children are undernourished. But UN officials say they may have to begin rationing international food aid because of spiking costs. In West Africa, alone, the WFP's food and operations costs are now 30 percent higher than at the same time last year because of price increases for basic food commodities.

Sheeran says that the hardest hit so far are people in developing countries who live on less than $1 a day. Some 80 to 90 percent of their paltry incomes was already being spent on food.

In Haiti--where a recent Associated Press report described "containers full of food...stacking up in the nation's ports because of government red tape, leaving tons of beans, rice and other staples to rot under a sweltering sun or be devoured by vermin"--food prices have increased so much that some of the country's poor have begun eating cookies made of dirt as a regular source of food.

"When my mother does not cook anything, I have to eat them three times a day," Charlene, a 16-year-old woman with an infant, said of the cookies that are made of salt, vegetable shortening and a form of edible clay that is sold by the bag.

According to the Associated Press, two cups of rice now sell for 60 cents, up 50 percent from a year ago. Beans, condensed milk, and fruit have gone up by a similar amount--and even the price of the edible clay has risen over the past year by almost $1.50.

Even middle-class people and those living in traditionally stable urban areas in countries like Indonesia, Yemen and Mexico are increasingly being priced out of the food market--or forced to sacrifice education and health care in order to feed their families.

Some governments have begun food rationing. The Indian government is having difficulty maintaining a food price subsidy system, and both the Chinese and Russian governments have moved to impose price controls in the wake of rampant inflation.

Shortages and price increases have sparked demonstrations in Burkina Faso, Mexico, Italy and elsewhere--and food riots in Namibia, Zimbabwe, Cameroon, Morocco, Yemen, Senegal, Uzebekistan and other countries.

"The risks of food riots and malnutrition will surge in the next two years as the global supply of grain comes under more pressure than at any time in 50 years, according to one of the world's leading agricultural researchers," the British Guardian reported.

"Recent pasta protests in Italy, tortilla rallies in Mexico and onion demonstrations in India are just the start of the social instability to come unless there is a fundamental shift to boost production of staple foods, warned Joachim von Braun, the head of the International Food Policy Research Institute."

As Von Braun told the Guardian, "The first sign was the tortilla riot in Mexico City, where 70,000 took to the streets. I think that was only the beginning--there will be more. For a year or two, countries can stabilize with stocks. But the risk comes in the next 12 to 24 months. The countries that cannot afford to buy will be the losers, while those with huge foreign exchange reserves will bid up the world market."

Nicole Colson writes for the Socialist Worker.

Saturday, March 22, 2008

Bush Diplomacy: Predator Planes Are Conducting Assassinations by Air

By Tom Engelhardt, Tomdispatch.com
Posted on March 17, 2008
http://www.alternet.org/story/79872/

Imagine, for a moment, that you live in a small town somewhere near the Southern California coast. You're going about your daily life, trying to scrape by in hard times, when the missile hits. It might have come from the Iranian unmanned aerial vehicle (UAV) -- its pilot at a base on the outskirts of Tehran -- that has had the village in its sights for the last six hours or from the Russian sub stationed just off the coast. In either case, it's devastating.

In Moscow and Tehran, officials announce that, in a joint action, they have launched the missile as part of a carefully coordinated "surgical" operation to take out a "known terrorist," a long-term danger to their national security. A Kremlin spokesman offers the following statement:

"As we have repeatedly said, we will continue to pursue terrorist activities and their operations wherever we may find them. We share common goals with respect to fighting terrorism. We will continue to seek out, identify, capture and, if necessary, kill terrorists where they plan their activities, carry out their operations or seek safe harbor."

A family in a ramshackle house just down the street from you -- he's a carpenter; she works at the local Dairy Queen -- are killed along with their pets. Their son is seriously wounded, their home blown to smithereens. Neighbors passing by as the missile hits are also wounded.

As it happens, there are no terrorists in the vicinity. Outraged, you organize your neighbors and march angrily in protest through the town, shouting anti-Russian, anti-Iranian slogans. But, of course, there is nothing you can really do. Iran and Russia are far away, their weaponry powerful, your arms nonexistent. The state of California is incapable of protecting you. This is, in fact, at least the fourth time in recent months that a "terrorist" has been declared "taken out" from the air or by a ship-based cruise missile, when only innocent Californians have died.

As news of the "collateral damage" from the botched operation dribbles out, the Russian and Iranian media pay next to no attention. There are no outraged editorials. Official spokesmen see no need to comment further. No one is held responsible and no promises are made in either Tehran or Moscow that similar assassination strikes won't be launched in the near future, based on "actionable intelligence," possibly even on the same town. In fact, the next day, seeing UAVs once again soaring overhead, you load your pick-up and prepare to flee.

Swatting Flies in Somalia

Philip K. Dick meet George W. Bush. When it comes to such a thing happening in the United States, we are, of course, at the wildest frontiers of science fiction. The U.S. is a sovereign nation. We guard our air space and coastal waters jealously. Any country violating them for purposes of aggressive action, no less by launching a missile against an American town, would be committing an act of war and would certainly be treated accordingly.

If, somehow, such an event did occur, it would be denounced in Washington and on editorial pages across the country as a shocking contravention of international legal conventions and a crime of war unless, of course, we did it in a country where sovereignty has been declared meaningless.

In fact, an almost exact replica of the above fictional incident -- at least the fourth of its kind in recent months -- did indeed take place at the beginning of March in the embattled failed state of Somalia. (For that country's most recent abysmal collapse, the Bush administration, via an invasion by Ethiopian proxy forces, can take significant credit.) One or two houses in Dobley, a Somali town, were hit, possibly by two submarine-launched Tomahawk Cruise missiles in what a U.S. official termed "a deliberate strike against a suspected bed-down of known terrorists."

The missiles were evidently meant for Saleh Ali Saleh Nabhan, an al-Qaedan suspect in the bloody bombings of American embassies in Kenya and Tanzania in 1998. He was, however, not in Dobley, despite the "actionable intelligence" on hand. Accounts of the dead and wounded in the town vary. One report claimed only wounded Somalis (and two dead cows); most spoke of anywhere from four to ten dead civilians. Local district Commissioner Ali Nur Ali Dherre told CNN that three women and three children had been killed and another 20 people wounded. While a "U.S. military official said the United States is still collecting post-strike information and is not yet able to confirm any casualties. He described [the] strike as 'very deliberate' and said forces tried to use caution to avoid hitting civilians."

For the dead Somalis, not suprisingly, we have no names. In stories like this, the dead are regularly nobodies and, though the townspeople of Dobley did indeed march angrily in protest yelling anti-American slogans, just about no one noticed.

In our world, only the normal smattering of small news reports dealt with this modest sidebar in the President's Global War on Terror (GWOT). On the GWOT scorecard -- if you remember, for a long time George Bush kept "his own personal scorecard" of top terror suspects in a desk drawer in the Oval Office, crossing off al-Qaedan figures as U.S. forces took them down -- this operation hardly registered. One terrorist missed, and not for the first time, possibly a few dead peasants in some god-forsaken land. Please, move on

In a recent Pentagon briefing for reporters featuring Secretary of Defense Robert Gates and Chairman of the Joint Chiefs Admiral Michael Mullen, who had just returned from a trip to Iraq, Afghanistan, and Pakistan, 4,500 words of back-and-forth were interrupted by this question from a reporter:

"Secretary Gates, the strike on Somalia two days ago -- did the missiles that were fired -- did they strike their target? And was the target Saleh Ali Saleh Nabhan? Do you have a report back from the field? And Admiral Mullen, what message did you give to President Musharraf, and why did you meet with him?"

Gates responded to the Somali part of the question in eight words: "You know we don't talk about military operations." He might have added: …unless they're successful.

That was evidently all that the incident and its minor "collateral damage" deserved in such a global war. So Gates and Mullen moved on immediately. So many matters more important than a single "decapitation" strike that didn't succeed to consider.

The Decapitation Strike as Global Policy

Minor as that Somali mis-strike might seem, this is not, in fact, a small matter. Think of that strike and the many like it around the world over these last years as reflections of George Bush's post-9/11 update of globalization. After all, the most basic principle of his Global War on Terror has been the erasure of global boundaries and whatever international agreements about war-making might go with them.

Across the Islamic world, in particular, boundaries simply no longer matter. In fact, in such regions no aspect of sovereignty can now constrain a U.S. president from acting as he pleases in pursuit of whatever he may personally define as American interests.

"Assassinations by air" are, writes David Case in Mother Jones magazine, "a relatively new tactic in warfare." By the beginning of 2006, however, U.S. Predator drones "bearing Hellfire missiles -- the preferred weapon in decapitation [strikes] -- had already hit 'terrorist suspects overseas' at least 19 times since 9/11." Such strikes and other similar operations by air, land, and sea have been a crucial follow-on to the Bush administration's proclamations, immediately after 9/11, that there would be no "safe havens" for terrorists on the planet, nor safety for those countries which housed them, inadvertently or otherwise. Within days of the destruction of the World Trade Center towers, Bush administration officials were already identifying up to 60 countries-cum-targets.

This aspect of the Bush Doctrine, of what the President likes to call staying "on the offensive," when mixed with a couple of decades of "advances" in air warfare, including the development of sophisticated, missile-armed drones, "smart bombs," "precision-guided munitions," and the like, has resulted in a lethal globalizing brew of assassination and destruction. It recognizes neither boundaries, nor sovereignty across much of the planet. With all its "actionable" possibilities, it will surely be with us long after George W. Bush has left office.

Of course, those few nameless dead or wounded Somali civilians -- swatted like so many flies and forgotten as quickly as flies would be -- don't faintly match up against the "dozens" of Iraqi civilian deaths that, according to Human Rights Watch, were caused by 50 decapitation strikes launched against the top officials of Saddam Hussein's regime back in March 2003. (Not a single official was harmed.) Nor do they quite make it into the company of the "Afghan elders" being taken to President Hamid Karzai's inauguration back in 2001, who were mistaken "for a Taliban group" and bombed, with 20 killed; nor the 30 or more guests at an Afghan wedding party back in 2002 blown away by 2,000-pound bombs after celebratory gunfire was evidently mistaken for an attack (no apologies offered); nor that wedding party in the Western desert of Iraq near the Syrian border wiped out in 2004 with 42 deaths, including 27 in one extended family, 14 children in all. They were, of course, taken for terrorists. (As U.S. Major General James Mathis put the matter in offering an explanation: "How many people go to the middle of the desert… to hold a wedding 80 miles from the nearest civilization?") And these are just a few prominent cases, not including the civilians killed in periodic Predator and other strikes in Pakistani border areas, in Afghanistan, and elsewhere whom no fuss is ever made about -- not here, anyway.

After all, there's always going to be "collateral damage" when you keep your eye -- and your 2,000-pound bomb or Hellfire missile -- focused on the prize.

The "Right" to Kill Civilians

Remember back in the 1990s, when the glories of an economically borderless world were being limned? Just after September 11, 2001, the Bush administration proudly declared us to be in a far darker world without borders (except, of course, when it came to our own). In this new world, whether we knew it or not, whether we cared or not, we granted our highest officials -- specifically our military and intelligence services -- the full powers of prosecutor, defense counsel, judge, jury, and executioner, as well as the right to report on such events only to the extent, and as, they wished. This was the sort of power that monotheistic religions normally granted to an all-powerful god, that kingdoms generally left to absolute rulers, and that dictators have always tried to take for themselves (though just, of course, in the domains under their control).

Our domain, it seems, is now much of the globe, when it comes to the bloody work of assassinating individuals via bombs or missiles that, however precise, surgical, and smart, are weapons meant to kill en masse and largely without discrimination.

There are still limits of sorts on such actions. These put bluntly -- though no one is likely to say this --- are the limits imposed, in part, by racism, by gradations, however unspoken, in the global value given to a human life.

The Bush administration has, so far, only been willing to carry out "decapitation" strikes in countries where human life is, by implication, of less or little value. It has yet to carry one out in London or Hamburg or Tokyo or Moscow or the Chinese countryside, even though "terrorist suspects" abound everywhere, even (as with the Anthrax attacks of 2001) in our own country. On the other hand, given the impetus of this kind of globalization, who knows when such a strike might come. After all, the CIA has already carried out clearly illegal, sovereignty-violating "extraordinary rendition" operations (kidnappings of terror suspects) on the streets of European cities.

In this country, we still theoretically venerate the sovereign self ("the individual") and that self's right to "life, liberty, and the pursuit of happiness." Despite George Bush's "Freedom Agenda," however, the sovereignty, not to say the life, liberty, and happiness of other peoples, individually or collectively, have not really been much on our minds these last years. Our freedom of action, our safety, has been the only freedom, the only "security," to which we have attached much global value. And don't for a second think that, when the "actionable intelligence" comes in to John McCain's, Hillary Clinton's, or Barack Obama's Oval Office, those Predators won't be soaring or those cruise missiles leaving subs lurking off some coast -- and that innocent civilians elsewhere won't continue to die.

In places like Somalia, we deliver death, and every now and then an American bomb or missile actually obliterates a terrorist suspect. Then we celebrate. The rest of time, it's hardly even news. When the deeper principle behind such global strikes is mentioned in our papers, in some passing paragraph, it's done -- as in a recent Washington Post article about a Predator strike, piloted from Nevada, that killed a suspected "senior al-Qaeda commander" in Pakistan -- in this polite way: "Independent actions by U.S. military forces on another country's sovereign territory are always controversial" (Imagine the language that the Washington Post would use, if that had been a Pakistani drone strike in Utah.)

This version of globalization is already so much the norm of our world that few here even blink an eye when it's reported, or consider it even slightly strange. It's already an American right. In the meantime, other people, who obviously don't rise to the level of our humanity, regularly die.

And here's the thing: In our world, there is a chasm that can never be breached between, say, a Sunni extremist clothed in a suicide vest who walks into a market in Baghdad with the barbaric intent of killing as many Shiite civilians as possible, and an air or missile attack, done in the name of American "security" and aimed at a "known terrorist," that just happens to -- repeatedly --- kill innocent civilians. And yet, what if you know before you launch your attack, as American planners certainly must, that the odds are innocents (and probably no one else) will die?

Not so long ago in the United States, presidentially sanctioned assassinations abroad were illegal. But that was then, this is so now. Nonetheless, it's a fact that the "right" to missile, bomb, shell, "decapitate," or assassinate those we declare to be our enemies, without regard to borders or sovereignty, is based on nothing more than the power to do it. This is simply the "right" of force (and of technology). If the tables were turned, any American would recognize such acts for the barbarism they represent.

And yet, late last week, like clockwork, the Associated Press brought us the latest notice: "In Afghanistan, a spokesman for the American-led coalition said troops had used 'precision-guided munitions' to strike a compound about a mile inside Pakistan…" This operation was, as they all are, said to be based on "reliable intelligence"; in this case, "senior" Taliban commanders were said to be in residence.

As it happened, according to the Pakistani military and the AP reporter who made it to Tangrai, a village of about forty houses, the residence hit was that of "Noor Khan, a greengrocer who said the house was his family home." The AP reporter added that "only one of its four walls was standing amid a tangle of mud bricks, bedding and cooking pots." And Noor Khan, who was quoted saying, "We are innocent, we have nothing to do with such things," claimed that six of his relatives, four women and two boys, had been killed. (The Pakistani military, on investigating, reported that two women and two children had died.)

This was but the latest minor decapitation strike, and -- we can be sure of this -- not the last. Philip K. Dick move over. We're already in your future.

[Note: Let me strongly recommend David Case's article, "The U.S. Military's Assassination Problem," in the March/April issue of Mother Jones magazine, quoted in the above piece. A well researched, thoughtful, and rare discussion of what we know about the Bush administration's global assassination campaign from the air, it is an accomplishment. I have relied on it in writing this essay.]

Tom Engelhardt, editor of Tomdispatch.com, is co-founder of the American Empire Project and author of The End of Victory Culture.

© 2008 Tomdispatch.com All rights reserved.
View this story online at: http://www.alternet.org/story/79872/

Partying Like It’s 1929

If Ben Bernanke manages to save the financial system from collapse, he will — rightly — be praised for his heroic efforts.

But what we should be asking is: How did we get here?

Why does the financial system need salvation?

Why do mild-mannered economists have to become superheroes?

The answer, at a fundamental level, is that we’re paying the price for willful amnesia. We chose to forget what happened in the 1930s — and having refused to learn from history, we’re repeating it.

Contrary to popular belief, the stock market crash of 1929 wasn’t the defining moment of the Great Depression. What turned an ordinary recession into a civilization-threatening slump was the wave of bank runs that swept across America in 1930 and 1931.

This banking crisis of the 1930s showed that unregulated, unsupervised financial markets can all too easily suffer catastrophic failure.

As the decades passed, however, that lesson was forgotten — and now we’re relearning it, the hard way.

To grasp the problem, you need to understand what banks do.

Banks exist because they help reconcile the conflicting desires of savers and borrowers. Savers want freedom — access to their money on short notice. Borrowers want commitment: they don’t want to risk facing sudden demands for repayment.

Normally, banks satisfy both desires: depositors have access to their funds whenever they want, yet most of the money placed in a bank’s care is used to make long-term loans. The reason this works is that withdrawals are usually more or less matched by new deposits, so that a bank only needs a modest cash reserve to make good on its promises.

But sometimes — often based on nothing more than a rumor — banks face runs, in which many people try to withdraw their money at the same time. And a bank that faces a run by depositors, lacking the cash to meet their demands, may go bust even if the rumor was false.

Worse yet, bank runs can be contagious. If depositors at one bank lose their money, depositors at other banks are likely to get nervous, too, setting off a chain reaction. And there can be wider economic effects: as the surviving banks try to raise cash by calling in loans, there can be a vicious circle in which bank runs cause a credit crunch, which leads to more business failures, which leads to more financial troubles at banks, and so on.

That, in brief, is what happened in 1930-1931, making the Great Depression the disaster it was. So Congress tried to make sure it would never happen again by creating a system of regulations and guarantees that provided a safety net for the financial system.

And we all lived happily for a while — but not for ever after.

Wall Street chafed at regulations that limited risk, but also limited potential profits. And little by little it wriggled free — partly by persuading politicians to relax the rules, but mainly by creating a “shadow banking system” that relied on complex financial arrangements to bypass regulations designed to ensure that banking was safe.

For example, in the old system, savers had federally insured deposits in tightly regulated savings banks, and banks used that money to make home loans. Over time, however, this was partly replaced by a system in which savers put their money in funds that bought asset-backed commercial paper from special investment vehicles that bought collateralized debt obligations created from securitized mortgages — with nary a regulator in sight.

As the years went by, the shadow banking system took over more and more of the banking business, because the unregulated players in this system seemed to offer better deals than conventional banks. Meanwhile, those who worried about the fact that this brave new world of finance lacked a safety net were dismissed as hopelessly old-fashioned.

In fact, however, we were partying like it was 1929 — and now it’s 1930.

The financial crisis currently under way is basically an updated version of the wave of bank runs that swept the nation three generations ago. People aren’t pulling cash out of banks to put it in their mattresses — but they’re doing the modern equivalent, pulling their money out of the shadow banking system and putting it into Treasury bills. And the result, now as then, is a vicious circle of financial contraction.

Mr. Bernanke and his colleagues at the Fed are doing all they can to end that vicious circle. We can only hope that they succeed. Otherwise, the next few years will be very unpleasant — not another Great Depression, hopefully, but surely the worst slump we’ve seen in decades.

Even if Mr. Bernanke pulls it off, however, this is no way to run an economy. It’s time to relearn the lessons of the 1930s, and get the financial system back under control.

Friday, March 21, 2008

Gore Vidal Speaks Seriously Ill of the Dead

Truthdig.com

Posted on Mar 20, 2008

By Gore Vidal

I can recall that day in the 1930s when a “news” (sic) magazine appeared in Washington, D.C.; it was called Newsweek: meant to be a counterbalance to Time Magazine’s uncontrollable malice. In due course the two became sadly alike as Vincent Astor morphed into Henry Luce: Was it something in the water? I once asked Henry Luce why he called Time a news magazine when it was simply Uncle Harry’s means of venting his rage (this was 1960 or so) at liberals, and “degenerate art” like the plays of Tennessee Williams—he had no answer. At Newsweek Vincent Astor was far too stupid to answer any such complaint. Now here we are in the Newsweek of 2008, and it’s still lousy. There have been a few decent writers in between that were less nutty than today’s Newsweek hacks.

But why is Newsweek currently lousy? Here’s an example provided by an editor who keeps a sharp eye on their crimes. He sent me their recent obituary of William F. Buckley, a hero to those who feared democracies.

Buckley bridled at bullies [we are assured]. But one of the rare times he lost his temper was debating Gore Vidal, who “got under his skin,” says son Chris. When Vidal called Buckley a “crypto-Nazi,” Buckley responded, “Now listen, you queer, you stop calling me a crypto-Nazi or I’ll sock you in your goddamn face and you’ll stay plastered.” But usually his public manners were genteel [I think they mean gentile]. With “Firing Line” guests who seemed nervous or over their heads, Buckley was gentle. Behind the scenes, he could show remarkable kindness. In 1980, a rising conservative star, Congressman Bob Bauman, was soliciting a 16-year-old [male] for oral sex. Bauman had been a gay-basher, and he instantly became a pariah. The next day, knowing what lay ahead for the disgraced congressman, Buckley quietly gave him an envelope containing $10,000. “He was a knightly man,” says Chris.

Unknown to them and everyone else who might read that publication, my views on many matters do not conform to the tired hacks who’ve taken over Newsweek, a magazine that has convinced itself that Bobby Kennedy Sr. was a great liberal. They love throwing about misunderstood terms like liberal and conservative that seldom suit their superficial, not to mention malicious, standards. Recently, their words of mourning for the fallen “genteel” paladin were incredible. As my editor friend knew that I seldom read the wilder attacks on me, he deconstructs Newsweek’s obituary of Buckley:

Parenthetically, I should note that, back in 1968, ABC TV had asked me and Buckley to “debate” each other at the Democratic and Republican conventions. Although Buckley was often drunk and out of control, he was always a spontaneous liar on any subject that his dizzy brain might extrude. When we were in Chicago during the Republican convention, the Chicago police decided it would be fun to attack the young co-ed demonstrators in Grant Park, not far from our studio. It was one of the worst displays of police brutality I’ve ever seen, and so I said on air; he liked what the police had done; in no time, the whole country was as shocked as I, but not Buckley. On air he was hissing like a cobra against the young people in Grant Park because, he said, they were egging on the Viet Cong to kill American Marines. They were not, of course. Buckley was a world-class American liar on the far right who would tell any lie he thought he could get away with. Years of ass-kissing famous people in the press and elsewhere had given him, he felt, a sort of license to libelously slander those hated liberals who, from time to time, smoked him out as I did in Chicago, when I defended the young people in Grant Park by denying that they were Nazis and that the only “pro- or crypto-Nazi” I could think of was himself. He sued me and got nowhere. He sued Esquire, in which our words appeared. By then the coming right-wing surge was in view. And so Esquire cravenly agreed to settle with him for a few paragraphs worth of free advertising for his weird little magazine The National Review, hardly the great victory he claimed.

Now, to Newsweek’s obituary of this late dishonorable American in which my editor-friend assures me that his brain-dead son Christopher had a hand: “Buckley bridled at bullies.” And who was the bully in context? Myself. He was also an expert at changing indefensible contexts. Buckley maintained that I supported revolutionaries who favored murdering U.S. Marines. Yet all the talk of Nazis etc. was started by Buckley. There was no lie he would not tell to get back at those who defeated him in debate.

The current editors at Newsweek appear to have listened eagerly to his son Christopher, who is guiding them to a benign view of what had been a most hysterical queen (WFB), much admired by a media that takes everyone at his own evaluation of himself as they did with Capote, who told them that he was a great writer like Proust (pronounced Prowst) and the hacks ate it up.

The correct assessment of any reputation today is so far from plausible reality that it might be a good thing if the hacks of a magazine like Newsweek steered clear of characterizing those disliked by the advertisers; hence his creepy son’s depiction of me as a “bully” when I was simply attending to one, and then—o, joy!—Buckley called me a “queer” and actually threatened me with physical violence, so great was his testosterone level. Next, the loyal son, suspecting that the pejorative use of “queer” is politically incorrect in mag-land, Christopher rambles into a story about his father’s kindness to a Mr. Bauman who had lost his seat in Congress after the congressman had been caught while soliciting Oral Sex from a 16-year-old male (note how prurient Newsweek’s prose is, in describing undesirable people). Chris weeps into his computer as he describes how Dad gave the poor sinner of the flesh an envelope containing $10,000 (I bet?) in cash adding, mysteriously, “He was a knightly man”: Who was—the cocksucker recipient of Buckley’s charity? Or his admirer, Mr. Buckley himself?—Bauman was very right wing, it is said. RIP WFB—in hell.

The unique mess that our republic is in can be, in part, attributed to a corrupt press whose roots are in mendacious news (sic) magazines like Time and Newsweek, aided by tabloids that manufacture fictional stories about actual people. This mingling of opinion and fiction has undone a media never devoted to truth. Hence, the ease with which the Republican smear-machine goes into action when they realize that yet again the party’s permanent unpopularity with the American people will cause them defeat unless they smear individually those who question the junk that the media has put into so many heads. Anyone who says “We gotta fight ’em over there or we’re gonna have to fight ’em over here.” This absurdity has been pronounced by every Republican seeking high office. The habit of lying is now a national style that started with “news” magazines that was further developed by pathological liars that proved to be “good” Entertainment on TV. But a diet of poison that has done none of us any good.

I speak ex cathedra now, ad urbe et orbe, with a warning that no society so marinated in falsity can long survive in a real world.

Gore Vidal

Truthdig / Zuade Kaufman

Why was Spitzer selectively implicated?

Here's a WaPo column from 1 month ago that might be helpful in finding some answers.--Pete

Predatory Lenders' Partner in Crime

How the Bush Administration Stopped the States From Stepping In to Help Consumers

By Eliot Spitzer
Thursday, February 14, 2008; A25

Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive "teaser" rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.

Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers.

Predatory lending was widely understood to present a looming national crisis. This threat was so clear that as New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government. Individually, and together, state attorneys general of both parties brought litigation or entered into settlements with many subprime lenders that were engaged in predatory lending practices. Several state legislatures, including New York's, enacted laws aimed at curbing such practices.

What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no.

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.

Throughout our battles with the OCC and the banks, the mantra of the banks and their defenders was that efforts to curb predatory lending would deny access to credit to the very consumers the states were trying to protect. But the curbs we sought on predatory and unfair lending would have in no way jeopardized access to the legitimate credit market for appropriately priced loans. Instead, they would have stopped the scourge of predatory lending practices that have resulted in countless thousands of consumers losing their homes and put our economy in a precarious position.

When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably. The tale is still unfolding, but when the dust settles, it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. So willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers.

The writer is governor of New York.

Related Video from Brasscheck TV:

http://www.brasschecktv.com/page/291.html

Libby Is Disbarred!

Cold comfort for those of us who wanted to see him do hard time.--Pete
By Paddy , Cliff Schecter's Blog
Posted on March 20, 2008
http://cliffschecter.bravenewfilms.org/blog

I'm all verklempt today over the woes of these people. Will they never get a break? Tucker's dad is going to have to step up the fundraising, or Scooter might have to give up his country club membership!!!

WASHINGTON (CNN) -- I. Lewis "Scooter" Libby was disbarred from practicing law in the nation's capital on Thursday.
The former chief of staff to Vice President Dick Cheney was convicted last year of lying to a grand jury and federal agents probing the leak of the identity of a CIA agent, Valerie Plame Wilson.
"When a member of the Bar is convicted of an offense involving moral turpitude, disbarment is mandatory," the District of Columbia Court of Appeals wrote in its opinion, which is posted on its Web site.

****

Jane Hamsher @ FiredDogLake:

Kind of seems like some old time military "cashiering ceremony" is in order with a formal parade, where they call the miscreant out and break his sword and force him to leave.

I guess we'll have to settle for future disbarring in New York. Sets a nice precedent.

(h/t dakine)

Update: Court order here (PDF), courtesy AZ Matt.

"When convictions on more than one count are involved, disbarment is mandated if any one of them involves moral turpitude," the court added.
Last July, a court sentenced Libby to a 30-month prison term. President Bush later commuted Libby's sentence, calling it "excessive."

Paddy is a regular contributor to Cliff Schecter.com.

© 2008 Cliff Schecter's Blog All rights reserved.
View this story online at: http://www.alternet.org/bloggers/http://cliffschecter.bravenewfilms.org/blog/80361/

Perino Defends "So?" Remark from Cheney, Claims Americans Had Input on War in '04

By Ben Armbruster, Think Progress
http://www.alternet.org/blogs/video/80433/

In an interview with Vice President Dick Cheney yesterday, ABC News’ Martha Raddatz noted that “two-thirds of Americans say” the Iraq war “is not worth fighting.” “So?” Cheney caustically replied. Referring to Cheney’s comment during today’s White House press briefing, a reporter asked Press Secretary Dana Perino: “So is the vice president saying it really doesn’t matter what the American public thinks about the war?”

“No, I don’t think that’s what he’s saying,” Perino responded. But later, she echoed Cheney, saying that the 2004 presidential election was the last time American public opinion on the war really mattered:

HELEN THOMAS: The American people are being asked to die and pay for this. And you’re saying they have no say in this war?
PERINO: No, I didn’t say that Helen. But Helen, this president was elected…
THOMAS: But it amounts to it. You’re saying we have no input at all.
PERINO: You had input. The American people have input every four years, and that’s the way our system is set up.

Like Cheney, Perino is clearly suggesting that current opposition to the Iraq war is inconsequential. But in claiming that American attitudes only matter every four years, Perino leaves out one inconvenient fact: the 2006 mid-term elections.

The 2006 elections — which the Democrats won control of both the House and Senate — were largely a referendum on the Iraq war with most Americans wanting a change in Bush’s Iraq policy. Indeed, exit polling in national House races and Senate contests in which a Democrat defeated an incumbent Republican shows that a large majority of voters cited the Iraq war as “extremely” or “very important” in their decision.

Benjamin J. Armbruster is a Research Associate for The Progress Report and ThinkProgress.org at the Center for American Progress.

© 2008 Think Progress All rights reserved.
View this story online at: http://www.alternet.org/bloggers/http://www.thinkprogress.org//80433/