carapace – Not your father's america

“Perfectly Legal” and “Free Lunch” by David Cay Johnston

From the inside cover

*Roberto Goizueta, CEO of Coca-Cola, built a billion-dollar fortune without paying a dime in taxes on it.

*Tom and Cindy Toth, a corporate trainer and stay-at-home mom, live on $90,000 a year. But the alternative minimum tax will take back much of the tax cuts Congress voted them in 2001 and 2003. By 2010, 35.6 million households will pay this “stealth tax.”

*Ingersoll-Rand pays $26,000 a year to maintain a Bermuda post office box as its legal headquarters. That little trick lets them escape $40 million in corporate taxes each year.

*The IRS unjustly came after Maritza Reyes, a cleaning woman in East Los Angeles who earns $7,000 per year, but ignored the fact that billionaire art dealer Alec Wildenstein and his wife Jocelyn never filed a tax return in three decades

The rapidly widening gulf between the super-rich and everyone else is an American tragedy. Pundits have raged about it, but until now, no one has explained exactly how it happened, why it’s not a normal part of capitalism, or how much damage it’s really causing—not just to the poor, but to 99 percent of all Americans.

Whether your family makes $30,000 or $300,000 a year, you are being robbed because the IRS and other institutions have been systematically corrupted—under both Republican and Democratic administrations—to serve the needs of people who make millions. Your future is being undermined and chances are you will never come out ahead.

If you’re the kind of person who works hard and plays by the rules, prepare to be outraged. Perfectly Legal will show you why the American Dream is turning into a lie. This explosive book, by an award-winning investigative reporter, reveals exactly how the tax code and many other laws have been twisted over the past three decades to subsidize the incomes and extravagant lifestyles of the richest and most powerful fraction of 1 percent of our country.

For nine years, David Cay Johnston has been exposing this covert campaign, piece by piece, on the front page of The New York Times. His scoops about outrageous tax scams have ruffled the feathers of powerful business leaders, politicians, and members of the political donor class. He routinely exposes the CEOs who fly free corporate jets to Myrtle Beach for a day of golf and stick you with the bill; the business owners who build overseas factories to earn tax-free dollars; the former IRS employees who now teach multimillionaires how to hide their assets from the government.

Now Johnston offers a raft of compelling new stories, about real people across all areas of society. In Perfectly Legal, you’ll meet sleazy accountants and brazen tax cheats, clueless congressmen and crafty lobbyists. You’ll meet frustrated IRS agents who have been handcuffed from pursuing the most blatant lawbreakers. And you’ll meet ordinary Americans who are struggling to make a decent living with the system stacked against them, in ways they don’t even realize.

Compared to thirty years ago, every American now lives in a society much less equal and much more fraught with financial risk. Perfectly Legal lays out the details in plain English, and shows how we can stop these trends before it’s too late.

David Cay Johnston won a Pulitzer Prize in 2001 for his investigative reporting in The New York Times and has been a Pulitzer finalist three other times since 2000. He lives in Rochester, New York, and New York City.

Portfolio
A member of Penguin Group (USA) Inc.
375 Hudson Street
New York, N.Y. 10014
www.penguin.com
Printed in U.S.A.

ICE-FREE POWER LINES

Scientists from Dartmouth College and Ice Engineering LLC have invented a way to cheaply and effectively keep ice off power lines. Called a variable resistance cable (VRC) de-icing system, the technology switches the electrical resistance of a standard power line from low to high. The high resistance automatically creates heat to melt ice build-up, or keeps it from forming in the first place.

“The beauty of the VRC system is that it’s fully customizable and is an affordable addition to the current manufacturing and installation process,” said Gabriel Martinez, Ice Engineering’s Vice President, who worked with Dartmouth Professor Victor Petrenko on the project. Martinez added that manufacturing and installation changes required to implement the VRC system would result in a less than 10 percent increase in overall cost.

Moreover, the life span of the de-icing system would match or exceed the life-span of the utility cable, approximately 30-50 years. The system would pay for itself during the next storm by practically eliminating the cost of fixing downed cables and power outages due to ice and snow, according to Martinez. Another benefit is that utility companies using the system would have full control over its functionality. Time, temperature, and location can all be adjusted manually, or be set and controlled automatically with electronic sensors.

Find out more at

http://link.abpi.net/l.php?20090127A2 .

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JOHN THAIN: CORPORATE JERK OF THE MOMENT

By Greg Palast, Suicide Girls

Maybe John Thain, the guy who demanded $30 million after screwing up Merrill Lynch, should be our Secretary of Treasury.

http://www.alternet.org/workplace/122767/

BofA played role in $4 billion Merrill bonuses: report

25 Jan 2009

Bank of America played a role in Merrill Lynch’s controversial decision to pay $4 billion in bonuses in December, the Financial Times reported on Sunday. Bank of America had said the payment of $4 billion in compensation in a fourth quarter in which Merrill suffered $15 billion in losses was sanctioned by John Thain, Merrill’s chief executive.

At:

http://www.reuters.com/article/ousiv/idUSTRE50P0KP20090126

From: CLG News

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PFC Energy 50 Ranking of World’s Top Energy Companies:

Flight to Quality as Combined Value Falls 46%

Monday, January 26, 2009

WASHINGTON, DC–(January 26, 2009) – Last year, four of the six largest companies on the PFC Energy 50 ranking of the world’s largest traded oil and gas industry companies were National Oil Companies (NOCs): PetroChina, Gazprom, Sinopec and Petrobras. This year, ExxonMobil, Royal Dutch Shell, Chevron, BP and TOTAL occupy five of the top six positions. Shares in PetroChina, the only remaining NOC among the top six, fell 65% in 2008. As a result, ExxonMobil, which markets valued at 41% below PetroChina one year ago, reclaimed its long-standing leadership of the PFC Energy 50 and a 56% market premium over PetroChina.

“In a crisis like this, the financial sector likes the SuperMajors’ strong balance sheets and diversified portfolios of quality assets,” said J. Robinson West, Chairman and CEO of PFC Energy. “They have the cash and borrowing power to create significant opportunities for themselves during a market downturn by investing in exploration and development at much lower cost, acquisitions, and potentially through access to new resources in partnership with NOCs who are now less able to go it alone.”

Following a year in which the eight traded NOCs experienced the largest decline of any group, losing 64% of their combined market capitalization, PetroChina and Petrobras are the only NOCs remaining among the top ten companies on the PFC Energy 50. In comparison, Integrated Oil companies (IOCs) experienced average value losses of 35%. Within the integrated group, the six SuperMajors (ExxonMobil, Royal Dutch Shell, Chevron, BP, TOTAL and ConocoPhillips) proved the most resilient, posting a combined value decline of only 30%. While ExxonMobil’s value fell 21% and Chevron’s 24%, stock repurchases limited their share price declines to 15% and 21%, respectively. Boosted in part by a strengthening currency, Tokyo Gas was the only PFC Energy 50 company to post a share price gain for the year (+9%).

One of the surprising features of last year’s PFC Energy 50 was the exceptionally high price-earnings (P/E) multiples that service sector stocks enjoyed relative to energy producers. Following a 58% average value decline in this sector, led by Transocean, which shed 67% of its value and fell furthest in rank on the list (from #25 to #45), the P/E gap has largely evaporated. Schlumberger and ExxonMobil began the year with P/E ratios of 25 and 14, respectively; at year end both companies were valued at nine times earnings.

The companies on PFC Energy’s Top 15 Alternative Energy list, which in 2007 posted an average 145% share price increase, also suffered substantial value losses. The companies on this year’s list declined an average 61%.

Companies, consumers and governments are increasingly concerned about the greenhouse gas emissions that contribute to global climate change. This year’s PFC Energy 50 includes PFC Energy’s first ever ranking of companies by greenhouse gas emissions from upstream and downstream operations. These rankings are estimated based on the PFC Energy Carbon Strategy Service’s modeling of 30 leading companies based on the nature of resources being extracted and processed and the technologies employed.

Notes to the Editor

The PFC Energy 50 is the definitive ranking of the world’s leading private sector energy companies by market capitalization. The listing includes companies from nine sectors: International Oil Companies; National Oil Companies; Exploration & Production; Refining & Marketing; Gas Utilities; Oilfield Services; Drilling & Seismic; Equipment and Engineering, Procurement, Construction and Installation; and Alternative Energy. The full report is available at www.pfcenergy50.com. The web site also provides dynamic charts illustrating key trends, interactive tools for testing market capitalization drivers and tracking 2008 performance as well as the PFC Energy 100 listing, which includes power, coal and nuclear companies.

PFC Energy, headquartered in Washington, DC, is a leading strategic advisory firm in global energy with main offices in Houston, Kuala Lumpur, Paris, Beijing, Bahrain, Lausanne and Buenos Aires. PFC Energy’s clients include all major international oil and gas companies, many national oil companies, oilfield service companies, financial institutions and government agencies and ministries involved in energy policy and energy-driven economic development. PFC Energy’s coverage includes competitor analysis, energy sector strategies (exploration and production, natural gas, refining and marketing), commercial opportunities, short and long-term oil and gas market projections and geopolitical forces affecting energy policy and energy economics.

Click here to visit PFC Energy 50 Website

http://www.pfcenergy.com/pfc50.aspx

From: “PFC Energy Press Release”

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EIA, the Nation’s clearinghouse for energy statistics – Today’s Gasoline Prices

Monday, January 26, 2009

RETAIL GASOLINE: (Self Service Prices per Gallon, Including Taxes) This report contains price estimates for gasoline sold in ozone non-attainment areas which require the sale of reformulated gasoline (RFG) as designated by the Environmental Protection Agency, and Conventional areas which includes both attainment areas and carbon monoxide non-attainment areas.

Mogas web site url

http://www.eia.doe.gov/oil_gas/fwd/wrgp.html

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Maine Snowmobilers Complain About E10 Ethanol Issues in Snowmobile Engines

14 Jan 2009

Portland, Maine media WCSH6.com reports that area snowmobilers are unhappy and complaining about the use of E10 ethanol in their snowmobiles. Owners reports that the fuel, when allowed to sit for as little as ten days, goes through a process where the ethanol separates from the gasoline in addition to condensation problems in the cold weather of the area. These issues create a problem that destroy snowmobile engines when they run on straight ethanol from separation or ethanol-absorbed-by-condensation fuel. An additive is available to help eliminate these issues, but due to high snowmobile use in the area, the additive is often scarce.

Ethanol Is A Political Boondoggle

The Chattanoogan – Chattanooga,TN,USA

Then he mention that the city’s flex-fuel vehicles are running on E-85, which is 85 percent ethanol. First, ethanol is not an environmental friendly, …

http://tinyurl.com/6z782z (www.chattanoogan.com)

Ethanol is stupid

Concord Monitor – Concord,NH,USA

But another attempt is not working out so well: ethanol. The problems start at the very beginning. Most ethanol is made from corn. …

http://tinyurl.com/8fyn5c (www.cmonitor.com)

CME Group Ethanol Outlook Report – January 26, 2009

Inside Futures – Chicago,IL,USA

by CRB Research Team of Commodity Research Bureau blender demand which is weak due to high ethanol prices relative to gasoline but should see support from …

http://tinyurl.com/boq3ea (www.insidefutures.com)

Economist: Ethanol exuberance will hit fan

AG Week – Grand Forks,ND,USA

FARGO, ND — An Iowa State University agricultural economist who is famous for criticizing the ethanol fuel industry recently made his third appearance in a …

http://tinyurl.com/bdg5kn (www.agweek.com)

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Strategic Divergence: The War Against the Taliban and the War Against Al Qaeda

January 26, 2009

By George Friedman

Washington’s attention is now zeroing in on Afghanistan. There is talk of doubling U.S. forces there, and preparations are being made for another supply line into Afghanistan — this one running through the former Soviet Union — as an alternative or a supplement to the current Pakistani route. To free up more resources for Afghanistan, the U.S. withdrawal from Iraq probably will be accelerated. And there is discussion about whether the Karzai government serves the purposes of the war in Afghanistan. In short, U.S. President Barack Obama’s campaign promise to focus on Afghanistan seems to be taking shape.

We have discussed many aspects of the Afghan war in the past; it is now time to focus on the central issue. What are the strategic goals of the United States in Afghanistan? What resources will be devoted to this mission? What are the intentions and capabilities of the Taliban and others fighting the United States and its NATO allies? Most important, what is the relationship between the war against the Taliban and the war against al Qaeda? If the United States encounters difficulties in the war against the Taliban, will it still be able to contain not only al Qaeda but other terrorist groups? Does the United States need to succeed against the Taliban to be successful against transnational Islamist terrorists? And assuming that U.S. forces are built up in Afghanistan and that the supply problem through Pakistan is solved, are the defeat of Taliban and the disruption of al Qaeda likely?

Al Qaeda and U.S. Goals Post-9/11

The overarching goal of the United States since Sept. 11, 2001, has been to prevent further attacks by al Qaeda in the United States. Washington has used two means toward this end. One was defensive, aimed at increasing the difficulty of al Qaeda operatives to penetrate and operate within the United States. The second was to attack and destroy al Qaeda prime, the group around Osama bin Laden that organized and executed 9/11 and other attacks in Europe. It is this group — not other groups that call themselves al Qaeda but only are able to operate in the countries where they were formed — that was the target of the United States, because this was the group that had demonstrated the ability t o launch intercontinental strikes.

Al Qaeda prime had its main headquarters in Afghanistan. It was not an Afghan group, but one drawn from multiple Islamic countries. It was in alliance with an Afghan group, the Taliban. The Taliban had won a civil war in Afghanistan, creating a coalition of support among tribes that had given the group control, direct or indirect, over most of the country. It is important to remember that al Qaeda was separate from the Taliban; the former was a multinational force, while the Taliban were an internal Afghan political power.

The United States has two strategic goals in Afghanistan. The first is to destroy the remnants of al Qaeda prime — the central command of al Qaeda — in Afghanistan. The second is to use Afghanistan as a base for destroying al Qaeda in Pakistan and to prevent the return of al Qaeda to Afghanistan.

To achieve these goals, Washington has sought to make Afghanistan inhospitable to al Qaeda. The United States forced the Taliban from Afghanistan’s main cities and into the countryside, and established a new, anti-Taliban government in Kabul under President Hamid Karzai. Washington intended to deny al Qaeda bases in Afghanistan by unseating the Taliban government, creating a new pro-American government and then using Afghanistan as a base against al Qaeda in Pakistan.

The United States succeeded in forcing the Taliban from power in the sense that in giving up the cities, the Taliban lost formal control of the country. To be more precise, early in the U.S. attack in 2001, the Taliban realized that the massed defense of Afghan cities was impossible in the face of American air power. The ability of U.S. B-52s to devastate any concentration of forces meant that the Taliban could not defend the cities, but had to withdraw, disperse and reform its units for combat on more favorable terms.

At this point, we must separate the fates of al Qaeda and the Taliban. During the Taliban retreat, al Qaeda had to retreat as well. Since the United States lacked sufficient force to destroy al Qaeda at Tora Bora, al Qaeda was able to retreat into northwestern Pakistan. There, it enjoys the advantages of terrain, superior tactical intelligence and support networks.

Even so, in nearly eight years of war, U.S. intelligence and special operations forces have maintained pressure on al Qaeda in Pakistan. The United States has imposed attrition on al Qaeda, disrupting its command, control and communications and isolating it. In the process, the United States used one of al Qaeda’s operational principles against it. To avoid penetration by hostile intelligence services, al Qaeda has not recruited new cadres for its primary unit. This makes it very difficult to develop intelligence on al Qaeda, but it also makes it impossible for al Qaeda to replace its losses. Thus, in a long war of attrition, every loss imposed on al Qaeda has been irreplaceable, and over time, al Qaeda prime declined dramatically in effectiveness — meaning it has been years since it has carried out an effective operation.

The situation was very different with the Taliban. The Taliban, it is essential to recall, won the Afghan civil war that followed the Soviet withdrawal despite Russian and Iranian support for its opponents. That means the Taliban have a great deal of support and a strong infrastructure, and, above all, they are resilient. After the group withdrew from Afghanistan’s cities and lost formal power post-9/11, it still retained a great deal of informal influence — if not control — over large regions of Afghanistan and in areas across the border in Pakistan. Over the years since the U.S. invasion, the Taliban have regrouped, rearmed and increased their operations in Afghanistan. And the conflict with the Taliban has now become a conventional guerrilla war.

The Taliban and the Guerrilla Warfare Challenge

The Taliban have forged relationships among many Afghan (and Pakistani) tribes. These tribes have been alienated by Karzai and the Americans, and far more important, they do not perceive the Americans and Karzai as potential winners in the Afghan conflict. They recall the Russian and British defeats. The tribes have long memories, and they know that foreigners don’t stay very long. Betting on the United States and Karzai — when the United States has sent only 30,000 troops to Afghanistan, and is struggling with the idea of sending another 30,000 troops — does not strike them as prudent. The United States is behaving like a power not planning to win; and, in any event, they would not be much impressed if the Americans were planning to win.

The tribes therefore do not want to get on the wrong side of the Taliban. That means they aid and shelter Taliban forces, and provide them intelligence on enemy movement and intentions. With its base camps and supply lines running from Pakistan, the Taliban are thus in a position to recruit, train and arm an increasingly large force.

The Taliban have the classic advantage of guerrillas operating in known terrain with a network of supporters: superior intelligence. They know where the Americans are, what the Americans are doing and when the Americans are going to strike. The Taliban declines combat on unfavorable terms and strikes when the Americans are weakest. The Americans, on the other hand, have the classic problem of counterinsurgency: They enjoy superior force and firepower, and can defeat anyone they can locate and pin down, but they lack intelligence. As much as technical intelligence from unmanned aerial vehicles and satellites is useful, human intelligence is the only effective long-term solution to defeating an insurgency. In this, the Taliban have the advantage: They have been there longer, they are in more places and they are not going anywhere.

There is no conceivable force the United States can deploy to pacify Afghanistan. A possible alternative is moving into Pakistan to cut the supply lines and destroy the Taliban’s base camps. The problem is that if the Americans lack the troops to successfully operate in Afghanistan, it is even less likely they have the troops to operate in both Afghanistan and Pakistan. The United States could use the Korean War example, taking responsibility for cutting the Taliban off from supplies and reinforcements from Pakistan, but that assumes that the Afghan government has an effective force motivated to engage and defeat the Taliban. The Afghan government doesn’t.

The obvious American solution — or at least the best available solution — is to retreat to strategic Afghan points and cities and protect the Karzai regime. The problem here is that in Afghanistan, holding the cities doesn’t give the key to the country; rather, holding the countryside gives the key to the cities. Moreover, a purely defensive posture opens the United States up to the Dien Bien Phu/Khe Sanh counterstrategy, in which guerrillas shift to positional warfare, isolate a base and try to overrun in it.

A purely defensive posture could create a stalemate, but nothing more. That stalemate could create the foundations for political negotiations, but if there is no threat to the enemy, the enemy has little reason to negotiate. Therefore, there must be strikes against Taliban concentrations. The problem is that the Taliban know that concentration is suicide, and so they work to deny the Americans valuable targets. The United States can exhaust itself attacking minor targets based on poor intelligence. It won’t get anywhere.

U.S. Strategy in Light of al Qaeda’s Diminution

From the beginning, the Karzai government has failed to take control of the countryside. Therefore, al Qaeda has had the option to redeploy into Afghanistan if it chose. It didn’t because it is risk-averse. That may seem like a strange thing to say about a group that flies planes into buildings, but what it means is that the group’s members are relatively few, so al Qaeda cannot risk operational failures. It thus keeps its powder dry and stays in hiding.

This then frames the U.S. strategic question. The United States has no intrinsic interest in the nature of the Afghan government. The United States is interested in making certain the Taliban do not provide sanctuary to al Qaeda prime. But it is not clear that al Qaeda prime is operational anymore. Some members remain, putting out videos now and then and trying to appear fearsome, but it would seem that U.S. operations have crippled al Qaeda.

So if the primary reason for fighting the Taliban is to keep al Qaeda prime from having a base of operations in Afghanistan, that reason might be moot now as al Qaeda appears to be wrecked. This is not to say that another Islamist terrorist group could not arise and develop the sophisticated methods and training of al Qaeda prime. But such a group could deploy many places, and in any case, obtaining the needed skills in moving money, holding covert meetings and the like is much harder than it looks — and with many intelligence services, including those in the Islamic world, on the lookout for this, recruitment would be hard.

It is therefore no longer clear that resisting the Taliban is essential for blocking al Qaeda: al Qaeda may simply no longer be there. (At this point, the burden of proof is on those who think al Qaeda remains operational.)

Two things emerge from this. First, the search for al Qaeda and other Islamist groups is an intelligence matter best left to the covert capabilities of U.S. intelligence and Special Operations Command. Defeating al Qaeda does not require tens of thousands of troops — it requires excellent intelligence and a special operations capability. That is true whether al Qaeda is in Pakistan or Afghanistan. Intelligence, covert forces and airstrikes are what is needed in this fight, and of the three, intelligence is the key.

Second, the current strategy in Afghanistan cannot secure Afghanistan, nor does it materially contribute to shutting down al Qaeda. Trying to hold some cities and strategic points with the number of troops currently under consideration is not an effective strategy to this end; the United States is already ceding large areas of Afghanistan to the Taliban that could serve as sanctuary for al Qaeda. Protecting the Karzai government and key cities is therefore not significantly contributing to the al Qaeda-suppression strategy.

In sum, the United States does not control enough of Afghanistan to deny al Qaeda sanctuary, can’t control the border with Pakistan and lacks effective intelligence and troops for defeating the Taliban.

Logic argues, therefore, for the creation of a political process for the withdrawal of U.S. forces from Afghanistan coupled with a recommitment to intelligence operations against al Qaeda. Ultimately, the United States must protect itself from radical Islamists, but cannot create a united, pro-American Afghanistan. That would not happen even if the United States sent 500,000 troops there, which it doesn’t have anyway.

A Tale of Two Surges

The U.S. strategy now appears to involve trying a surge, or sending in more troops and negotiating with the Taliban, mirroring the strategy used in Iraq. But the problem with that strategy is that the Taliban don’t seem inclined to make concessions to the United States. The Taliban don’t think the United States can win, and they know the United States won’t stay. The Petraeus strategy is to inflict enough pain on the Taliban to cause them to rethink their position, which worked in Iraq. But it did not work in Vietnam. So long as the Taliban have resources flowing and can survive American attacks, they will calculate that they can outlast the Americans. This has been Afghan strategy for centuries, and it worked against the British and Russians.

If it works against the Americans, too, splitting the al Qaeda strategy from the Taliban strategy will be the inevitable outcome for the United States. In that case, the CIA will become the critical war fighter in the theater, while conventional forces will be withdrawn. It follows that Obama will need to think carefully about his approach to intelligence.

This is not an argument that al Qaeda is no longer a threat, although the threat appears diminished. Nor is it an argument that dealing with terrorism in Afghanistan and Pakistan is not a priority. Instead, it is an argument that the defeat of the Taliban under rationally anticipated circumstances is unlikely and that a negotiated settlement in Afghanistan will be much more difficult and unlikely than the settlement was in Iraq — but that even so, a robust effort against Islamist terror groups must continue regardless of the outcome of the war with the Taliban.

Therefore, we expect that the United States will separate the two conflicts in response to these realities. This will mean that containing terrorists will not be dependent on defeating or holding out against the Taliban, holding Afghanistan’s cities, or preserving the Karzai regime. We expect the United States to surge troops into Afghanistan, but in due course, the counterterrorist portion will diverge from the counter-Taliban portion. The counterterrorist portion will be maintained as an intense covert operation, while the overt operation will wind down over time. The Taliban ruling Afghanistan is not a threat to the United States, so long as intense counterterrorist operations continue there.

The cost of failure in Afghanistan is simply too high and the connection to counterterrorist activities too tenuous for the two strategies to be linked. And since the counterterror war is already distinct from conventional operations in much of Afghanistan and Pakistan, our forecast is not really that radical.

This report may be forwarded or republished on your website with attribution to www.stratfor.com

Please feel free to distribute this Intelligence Report to friends or repost to your Web site linking to www.stratfor.com .

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National Security Archive Update, January 26, 2009

Jan Palach Week, 1989:
The Beginning of the End for Czechoslovak Communism

Documents from Secret Police, Party, and Dissidents Published on Web

Posting Commemorates Demonstrations and Repression 20 Years Ago

For more information
National Security Archive – 202/994-7000
Czechoslovak Documentation Centre – http://www.csds.cz

http://www.nsarchive.org

Washington, D.C., January 26, 2009 – The brutal suppression by Czechoslovak Communist authorities of commemorative ceremonies for “Palach Week” 20 years ago this month marked the beginning of the end of the regime in the annus mirabilis 1989, according to secret police, Communist Party, and dissident documents posted today on the Web by the Czechoslovak Documentation Centre (Prague) and the National Security Archive at George Washington University (Washington, D.C.).

Various independent civic initiatives (also known in the official Communist press as “anti-state” and “anti-socialist forces”) had planned to lay wreaths at the site in Prague’s main Wenceslas Square where the student Jan Palach in January 1969 had burned himself to death in protest against the repression that followed the Soviet occupation of Czechoslovakia in August 1968. Also planned was a pilgrimage to the rural cemetery where Palach’s ashes were interred.

But the Communist secret police cracked down with beatings, tear gas, and mass arrests, including the dissident playwright and future Czechoslovak president Václav Havel. The repression occurred at the exact moment in January 1989 that the signatory countries to the Helsinki Final Act (the Conference on Security and Cooperation in Europe, or CSCE) were meeting in Vienna, and drew widespread protests from abroad, including from U.S. Secretary of State George Shultz, leading Soviet dissident Andrei Sakharov, and perhaps most eloquently, American playwright Arthur Miller.

Today’s Web posting includes never-before-published documents from Czechoslovak archives, including the secret police reports on the demonstrations in January 1989 and the internal Communist Party briefings and instructions (the Party line) to cadres about the events of January. Also included are key Charter 77 and other dissident and samizdat statements, and several international protests of the time.

The posting republishes the detailed chronology of events in January and February 1989, originally written by the Czechoslovak Documentation Centre for its quarterly publication Acta (Vol. 3, No. 9-12), compiled and edited by Jan Vladislav in collaboration with Vilém Precan, titled “Czechoslovakia: Heat in January 1989″ and ultimately printed in December 1989 just as the “velvet revolution” toppled the Communist regime and put former prisoner Havel in the presidential office in Prague Castle.

Visit the Web site of the National Security Archive for more information.

http://www.nsarchive.org

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Hannity supports his claim that Obama is “an ideologue” with falsehood

While interviewing Rudy Giuliani, Sean Hannity repeated the false claim that “[s]ixty-one” Guantánamo detainees who have been released are “back on the battlefield” to support his assertion that President Barack Obama is “an ideologue.” Hannity and Giuliani also repeated the claims that fiscal stimulus packages were ineffective during the Great Depression and during Japan’s “lost decade,” but both those claims have been challenged by economists.

Read More

http://mediamatters.org/items/200901260003?lid=860227&rid=20652547

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And now for the important news ….

By Argus Hamilton

Iraqi officials said Wednesday they have less money to spend on infrastructure and salaries because the falling price of oil has hit government revenues hard. They said they can’t spend money they don’t have. Have we taught them nothing in six years?

http://www.JewishWorldReview.com

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three thousand words

Tom Tomorrow: In an alternate universe, Americans begin a painful period of soul-searching.

http://tinyurl.com/abvze4 (www.salon.com)

Mike Keefe: Cell Phone Driving

http://www.intoon.com/toons/2009/KeefeM20090124.jpg

(click here to view)

Monte Wolverton Cagle Cartoons, Inc. Jan 26, 2009 EditorialCartoonists.com

THE NEXT 100 YEARS: A Forecast for the 21st Century

I have no crystal ball. I do, however, have a method that has served me well, imperfect though it might be, in understanding the past and anticipating the future. Underneath the disorder of history, my task is to try to see the order – and to anticipate what events, trends, and technology that order will bring forth. Forecasting a hundred years ahead may appear to be a frivolous activity, but, as I hope you will see, it is a rational, feasible process, and it is hardly frivolous. I will have grandchildren in the not-distant future, and some of them will surely be alive in the twenty-second century. That thought makes all of this very real.

In this book, I am trying to transmit a sense of the future. I will, of course, get many details wrong. But the goal is to identify the major tendencies – geopolitical, technological, demographic, cultural, military – in their broadest sense, and to define the major events that might take place. As I think you will see, it is not as long or daunting a process as it would seem. I will be satisfied if I explain something about how the world works today, and how that, in turn, credibly defines how it will work in the future. And I will be delighted if my grandchildren, glancing at this book in 2100, have reason to say, “Not half bad.”

George Friedman, Author and STRATFOR Founder

Congressman Ron Paul’s Texas Straight Talk – Stimulus for Who?

Monday, January 26, 2009

“This week the House is expected to pass an $825 billion economic stimulus package. In reality, this bill is just an escalation of a government-created economic mess. As before, a sense of urgency and impending doom is being used to extract mountains of money from Congress with minimal debate. So much for change. This is déjà vu. We are again being promised that its passage will help employment, help homeowners, help the environment, etc. These promises are worthless. This time around especially, Congress should know better than to pass anything of this magnitude without first reading the fine print. There a many red flags that I have found in this bill…”

Click here for the full article:

http://www.house.gov/paul/index.shtml

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ECONOMY: Commodities Price Bubble Bursts

Edward H. Boss, Jr., Chief Economist

Commodity prices have plummeted in recent months in a manner not seen in modern times. As shown in Chart 1 on the top of the following page, after more than doubling between mid-2002 and mid- 2008, the Reuters/Jefferies CRB Index fell from a high in the middle of the year to less than half that value by year-end, an unprecedented rate of descent.

…

Complete article at:

http://tinyurl.com/c8zqj5

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Guest Columnist: Mortgage crisis is our responsibility

January 22, 2009

By MARCOLA NIXON
GUEST COLUMNIST

As a mortgage default counselor, I spend 40 hours a week monitoring a mortgage hotline and counseling homeowners facing foreclosure, people who desperately wanted the American dream and have ended up with the American nightmare.

Through this experience, these questions remain unanswered: Who will hear the cries and answer the calls for those homeowners now facing homelessness? Where was the judgment and the understanding that as a nation within a global community we are all interconnected, that what affects any one of us will eventually affect us all?

While precious time has been spent fault-finding and devising plans that don’t fully address or resolve the mortgage crisis, the fact remains that according to foreclosure.com, there are currently 1,447,451 households in the pre–foreclosure process, 832,381 set to go to auction and 1,217,885 homes that have been taken back by the banks and sit in their inventory.

As the calls to Solid Ground Mortgage Default Counseling office, where I work, increase from 15 to 50 a week, I ask: Who will stand up and be responsible for the housing market meltdown and work tirelessly to bring relief to the endless array of struggling homeowners?

We — the American people, Wall Street, lenders and the foreign markets — must all share in the responsibility of the mortgage crisis.

Americans wanted the price of homeownership without taking on the responsibility of arming themselves with knowledge and education about the mortgage products they were offered. The lending community must also take responsibility for its old-fashioned greed, which drove lenders to offer homeowners mortgages without fully disclosing the terms of their contracts.

But I believe the biggest responsibility lies at the doorstep of Wall Street and investors, who, in the face of increasing profits, forgot that the nation and global community are inter-connected. Wall Street cannot exist without the mainstream; the rich cannot exist without the poor.

And when one class tries to reproach the other what simply takes place is what we as a nation are now experiencing: We all fall down.

As a new bailout plan is in its implementation stage and lenders have lined up to receive billions of dollars in taxpayers’ money, the powers that be are giving few concessions to the average homeowner facing this crisis. The homeowners’ tax dollars are being given to everyone but the homeowners.

In 2008 the U.S. gave $26 billion in foreign aid, according to this year’s intelligence report. A large portion of that went to countries in the Middle East for weapons and security efforts. I was always taught that charity begins at home.

But I am optimistic. Has America fallen? Yes, we have. But if we can look up and be honest, we can get up. We need increased funding to hire additional mortgage counselors. We need to help homeowners who have already lost their homes and those who are currently at risk.

When homeowners lose their home because of foreclosure, it will stay on their credit report seven to 10 years, which can prevent them from buying or renting suitable accommodations. If we want the housing market to stabilize and eventually become prosperous again, we need a forgiveness plan that will allow these homeowners to rent and eventually re-enter the homeownership market.

Marcola Nixon is a mortgage counselor with Solid Ground, a Seattle-based nonprofit that helps people with foreclosure issues and has a range of programs addressing hunger, homelessness and poverty.

http://tinyurl.com/cgpka5 (seattlepi.nwsource.com)

==========

GOP keeps 2010 in mind on stimulus

By: Josh Kraushaar

The reticence of many moderate conservatives suggests an emerging GOP political calculus.

more:

http://www.politico.com/news/stories/0109/17932.html

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A Killing in Vienna and the Chechen Connection

January 22, 2009

By Fred Burton and Ben West

As Umar Israilov, a 27-year-old Chechen political refugee living in Vienna, Austria, returned home on foot after grocery shopping Jan. 13, he spotted two men standing outside his apartment building — one of whom had a gun. Upon spotting the men, Israilov dropped his groceries and fled down Leopoldauer Street in the Floridsdorf neighborhood of Vienna, dodging cars and pedestrians. But the gunman managed to wound Israilov, halting his flight. The two men then approached him in a side alley, where the armed man shot Israilov twice in the head, killing him.

One man has been detained in connection with the killing, which a Stratfor source alleges was carried out by organized criminal assets in Vienna at the behest of Chechen President Ramzan Kadyrov and with Kremlin approval. Israilov was an outspoken critic of Kadyrov and Russian Prime Minister Vladimir Putin. Because of this, Israilov had frequently expressed concerns for his safety and that of his family.

Before seeking asylum in Austria, Israilov fought during the Second Chechen War against Russian forces, which captured him in 2003. Afterward, he served as one of Kadyrov’s bodyguards, a position that gave him a front-row seat to the activities of Kadyrov, who at that time led the militia of his father, then-Chechen President Akhmed Kadyrov. (Ramzan Kadyrov became Chechen president in 2007, three years after his father’s assassination.) Israilov and the younger Kadyrov had a falling-out in 2004, after which Israilov said his former boss tortured him using electric charges.

Israilov fled to the West shortly thereafter, first seeking asylum in Poland and later obtaining asylum in Austria. Once in Europe, he often spoke out against Ramzan Kadyrov, filing complaints about his alleged torture with the European Court of Human Rights in Strasbourg, France, and talking to reporters from The New York Times about his experiences. While allegations that Kadyrov and his associates committed torture were not new, Israilov’s former position in Kadyrov’s circle set him apart as a dissident — and marked him as a security risk to his former employers due to his firsthand knowledge of how Kadyrov operates. Israilov reportedly told police in Vienna that he felt threatened and asked for extra security.

Austria has long been a popular place for political asylum-seekers who are facing threats due to their political views; providing adequate protection for all of these dissidents is impossible. Israilov further endangered himself by maintaining a relatively high profile due to his court filings and conversations with journalists. (He might have sought publicity in a bid to support himself and his family financially.)

Chechnya, Russia and the Israilov Killing
According to Israilov’s father, in June 2008 a Chechen visited the younger Israilov, showing him a hit list of 300 Chechens who oppose Kadyrov. Ramzan Kadyrov is well-known for not tolerating detractors, allegedly having ordered the deaths of dissenters before. While spokesmen for Kadyrov have distanced the Chechen president from the Israilov killing, saying the latter did not pose a significant threat to Chechnya, Israilov’s killing could well have been intended as an example to other Chechen dissidents who felt safe abroad. While Chechen dissidents routinely die or disappear under murky circumstances in their country, this is the first time a vocal Chechen dissident has been slain abroad. The brazen nature of Israilov’s killing in particular suggests an effort to highlight the vulnerability of exiled Chechen dissidents.

According to Stratfor sources, agents were not sent from Chechnya to carry out this operation. After getting permission from Moscow for the Israilov killing — Russia keeps a tight grip on Chechnya, so Moscow would interpret a unilateral assassination abroad as subversive — Kadyrov allegedly mobilized organized criminals in Austria to carry out the deed. While it is not clear exactly which organized criminal faction carried out the killing, the man detained in connection with the killing was a Chechen who has lived in Austria for several years under the name Otto Kaltenbrunner. While he has not been charged with anything, the getaway car was registered in his name — suggesting the involvement of Chechen organized crime, which has a strong presence in Russia and Europe as well as in the Caucasus.

As major fighting in the Second Chechen War wound down from 2005 to 2007, many of the militants who had fought the Russians disbanded and fled the country. These soldiers, highly trained and accustomed to using violence to get their way, had limited options beyond putting their skills to use with the various Chechen organized criminal factions that thrived in postwar Chechnya. Chechen gangs are prized for their high level of training and brutality, abilities that have proved very valuable to criminal groups in Russia, the Caucasus and Europe.

The high degree of professionalism in the Israilov killing tends to support the existence of a Chechen organized criminal angle. This professionalism includes the audacity of Israilov’s killers, who attacked in broad daylight on a busy street. It also includes their ability to kill Israilov (himself a militant trained under Kadyrov) without any significant struggle or collateral damage. Moreover, at least a low level of surveillance must have been carried out on Israilov’s residence to confirm that he lived there and to establish his schedule so the attackers could wait for him.

The Chechen leadership has a relationship with Chechen organized crime because of the military and security service background of many Chechen criminals, and because Kadyrov led these militias during the Russo-Chechen wars of the 1990s. Such a relationship could be called on in commissioning a killing in Vienna.

Using hired guns from Austria would allow any foreign entity that ordered the killing to distance itself from the crime. Even if Austrian police managed to track down and initiate a prosecution of those who carried out the killing, arranging the extraditions of suspects from Russia would be virtually impossible without Moscow’s cooperation. Russia has not cooperated with British authorities investigating the killing of Alexander Litvinenko in 2006, for example, and the investigation has turned into a political skirmish in an already-tense relationship between the two countries. Attempting to pursue the Israilov case with Russia probably would bring a similar outcome for Austria: inconclusive findings and weakened relations with a Russia that is asserting itself much more than it did in 2006.

Suspicions of Moscow’s involvement in the assassinations of Russian dissidents by various means have become common in the past three years. Russian organized criminal groups, as well as the Russian domestic security and intelligence service, the FSB, are the most likely culprits behind the increase in high-profile assassinations of Russian dissidents over the last few years. Many of the assassinations have been connected to the issue of Chechnya and alleged human rights abuses there.

The Chechen wars are a sensitive issue for both Russians and Chechens. Those who stir up tales of past offenses by either side are seen as undermining the stability in Chechnya that has come about because of the ongoing alliance between Putin and Kadyrov. The suspicious deaths of individuals (followed by their date of death) who fall into this category include:

Paul Klebnikov, July 2004. The editor of Forbes’ Russian edition, Klebnikov was shot dead in Moscow as he was heading into a subway station. The driver of a stolen car that pulled out of a parking lot and drove toward Klebnikov fired four shots before fleeing the scene.
Anna Politkovskaya, October 2006. A prominent journalist and critic of the Kremlin, Politkovskaya was in the process of publishing a series condemning the government’s policy in Chechnya. She was shot in the head in her apartment building.

Alexander Litvinenko, November 2006. Litvinenko was a former KGB agent who had defected to the United Kingdom and published books on the internal workings of Putin’s FSB networks, and he was critical of the new Russian state. He was poisoned with radioactive polonium-210.
Ivan Safronov, March 2007. Safronov was a journalist who criticized the state of the Russian military and was accused of leaking military affairs to foreign parties. He allegedly committed suicide by jumping from the fifth floor of his apartment building, though some reports say a person behind him forced him out of the building.

Oleg Zhukovsky, December 2007. Zhukovsky was an executive of the VTB bank, which at the time of his death was being taken over by the state so the Kremlin could handpick its senior officers to oversee many strategic state accounts. Zhukovsky allegedly performed the feat of committing suicide by being tied to a chair and thrown into his swimming pool, where he drowned.

Arkady Patarkatsishvili, February 2008. A wealthy Georgian-Russian businessman, Patarkatsishvili was extensively involved in Georgian politics. Patarkatsishvili died in the United Kingdom of coronary complications that resembled a heart attack. His family and many in Georgia have accused the FSB of involvement, however, saying the FSB has many untraceable poisons at its disposal.
Leonid Rozhetskin, March 2008. Rozhetskin was an international financier and lawyer who held stakes in strategic companies, like mobile phone giant MegaFon. He disappeared while in Latvia after losing Kremlin backing by selling his assets to multiple parties, including some government ministers who are former FSB agents.

Ruslan Yamadayev, September 2008. Yamadayev was a Chechen military leader and former member of the State Duma. He was shot in his Mercedes as it was stopped at a red light near the Kremlin in Moscow.
Stanislav Markelov, January 2009. A prominent Russian lawyer who had prosecuted an army colonel convicted of murdering a Chechen woman, Markelov was shot dead along with a journalist in broad daylight on a Moscow street near the Kremlin. He was also involved in the case of Anna Politkovskaya.

Vienna, City of International Intrigue

Vienna has long been a key battleground for international disputes between competing countries’ security and intelligence operatives. No stranger to international intrigue and attacks, the Austrian capital has had a reputation for assassination plots, intelligence gathering and foreign operatives conducting missions against dissidents who thought they were safe living in a Western city in an otherwise peaceful country.

In one example of this tradition, Iranian agents linked to Iran’s Ministry of Intelligence and Security shot and killed three members of a Kurdish delegation conducting negotiations with the Iranian leadership in 1989. Similarly, many cases of espionage between the United States and the Soviet Union unfolded in Vienna, including the cases of Marine Sgt. Clayton Lonetree and Felix Block, who passed information to the Soviets when he was second-in-command at the U.S. Embassy in Vienna. The Israilov case is thus probably only the latest in a long tradition of foreign intrigue.

Austria’s central location between the former Warsaw Pact countries of Czechoslovakia and Hungary and NATO countries of Italy and West Germany, along with Vienna’s official neutrality, made Austria a natural Cold War battleground. The Soviet Union, the United Kingdom and the United States all focused intelligence-gathering capabilities there. And as Cold War battle lines are redrawn with Russia’s resurgence, the significance of places like Vienna re-emerges. Considering that these activities only began to slacken less than 20 years ago, old intelligence networks could be put into operation again with relative ease.

The blurring of the line between Russian intelligence agents and organized crime that occurred during the 1990s means that Russia still has a considerable network around the world, though now, elements of this network also are engaged in criminal activities. This network must be considered when looking at cases like that of Israilov.

Significantly, Austria is home to the largest Chechen refugee population in Europe. An estimated 20,000 Chechens — not all of them legal residents — live in the Central European country; many of them fled the bloody Chechen wars with Russia. In general, ethnic organized criminal outfits flourish among immigrants or refugee populations because they can offer illegal immigrants services that they cannot get from the state. They also flourish there because they can use the immigrant community to operate with more secrecy. This is because many immigrant communities live apart from the indigenous population, often in separate neighborhoods, speak a different language and generally stick together in opposition to their host country’s police services. Additionally, family bonds (intensified when around strangers) strengthen ties within immigrant communities, allowing for the kind of secrecy that lets organized crime thrive.

The establishment of a strong Chechen presence in Austria, along with a pre-existing Russian presence, means that Chechnya and Russia have a long reach in the country. Considering the organized crime-FSB nexus, the increase in politically motivated murders of Russian dissidents and how Moscow most likely was pleased with Israilov’s demise, Russian assets in Vienna could well have been involved in the murder. While Russia is broadly suspected of killing dissidents abroad in recent years, Chechnya is not known to have carried out attacks in the European Union before — meaning the Israilov killing will send chills down the spines of exiled Chechen dissidents.

Editor’s Note: An earlier version of this analysis, which was emailed to customers, incorrectly stated that Paul Klebnikov was killed in July 2008.

This report may be forwarded or republished on your website with attribution to www.stratfor.com

==========

Farewell to All That: An Oral History of the Bush White House

The threat of 9/11 ignored. The threat of Iraq hyped and manipulated. Guantánamo and Abu Ghraib. Hurricane Katrina. The shredding of civil liberties. The rise of Iran. Global warming. Economic disaster. How did one two-term presidency go so wrong? A sweeping draft of history—distilled from scores of interviews—offers fresh insight into the roles of George W. Bush, Dick Cheney, and other key players.

by Cullen Murphy and Todd S. Purdum February 2009

…

Complete article at:

http://tinyurl.com/8qqeac (www.vanityfair.com)

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Overturning ‘midnight’ regulations presents challenges

By Mary Gilbert, National Journal

President George W. Bush ended his White House tenure by issuing a flurry of regulatory actions, many of which are considered questionable, if not offensive, by the left. While the Obama administration has already taken steps to freeze those rules still in the pipeline, the new president and Democratically-controlled Congress will have to decide how much time and effort they want to expend undoing what Bush has done and how they will go about rescinding rules they want to see wiped from the books.

At a press conference on Thursday afternoon at the Center for American Progress, Anne Joseph O’Connell, assistant professor of law at the University of California-Berkeley, presented a new report analyzing data on federal rule-making between 1983 and 2008, focusing on transition periods. The study indicates that the spike in regulations coming in the final year, and particularly the last several months, of the Bush administration is typical of most outgoing presidents. That said, O’Connell noted that some steps taken by Bush’s team were “unprecedented,” in that they were designed specifically to make his regulations harder to overturn.

Also at the event, a report from CAP’s Reece Rushing and Rick Melberth and Matt Madia of OMB Watch was released, detailing some of Bush’s “midnight” regulations and suggesting actions the Obama administration can take to block or undo them.

Full story:

http://www.govexec.com/story_page.cfm?articleid=41862&dcn=e_gvet

==========

Goldberg falsely attacks NY Times Obama coverage

In yet another instance of mangling the facts to show purported media favoritism toward then-presidential candidate Barack Obama, Bernard Goldberg writes in his new book: “Finally, in the last month of the campaign, the [New York] Times returned to the Obama-Ayers story, but only after McCain and (mostly) Palin began making it an issue on the campaign trail.” In fact, in what was reported as the “first time” Gov. Sarah Palin raised Obama’s connection to William Ayers, Palin actually cited the October 4, 2008, New York Times story to which Goldberg refers.

Read More

http://mediamatters.org/items/200901250009?lid=859256&rid=20610545

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And now for the important news ….

By Argus Hamilton

Harley-Davidson cut eleven hundred jobs Friday due to a slowdown in motorcycle sales. It’s another example of companies ignoring consumer demands. They’ve had eighty years since the last depression to design a motorcycle that people can live in.

http://www.JewishWorldReview.com

==========

three thousand words

Some Guy With a Website: Week One

http://tinyurl.com/bhb4lo (www.someguywithawebsite.com)

David Horsey: is he here to buy opium? …

http://tinyurl.com/cgcsyj (seattlepi.nwsource.com)

(click here to view)

Stephen Rustad Petaluma Argus-Courier Jan 26, 2009 EditorialCartoonists.com

Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World

Amar Bhide

Flap Copy

Many warn that the next stage of globalization—the offshoring of research and development to China and India—threatens the foundations of Western prosperity. But in The Venturesome Economy, acclaimed business and economics scholar Amar Bhidé shows how wrong the doomsayers are.

Using extensive field studies on venture-capital-backed businesses to examine how technology really advances in modern economies, Bhidé explains why know-how developed abroad enhances—not diminishes—prosperity at home, and why trying to maintain the U.S. lead by subsidizing more research or training more scientists will do more harm than good.

When breakthrough ideas know no borders, a nation’s capacity to exploit cutting-edge research regardless of where it originates is crucial: our venturesome consumption—the willingness and ability of our businesses and consumers to effectively use products and technologies derived from scientific research—is far more important than our share of such research. In fact, a venturesome economy benefits from an increase in research produced abroad: the success of Apple’s iPod, for instance, owes much to technologies developed in Asia and Europe.

Many players—entrepreneurs, managers, financiers, salesmen, consumers, and not just a few brilliant scientists and engineers—have kept the U.S. at the forefront of the innovation game. As long as their venturesome spirit remains alive and well we need not fear advances abroad. Read The Venturesome Economy and learn why—and see how we can keep it that way.

When a flow becomes a flood

Economist [UK]

http://tinyurl.com/bowo3q (www.economist.com)

January 22, 2009

Ask people what caused the financial and economic crisis and most are likely to plump for some mix of greed and incompetence….

Few among the public would be likely to pin the blame on “global imbalances”: the pattern of large, persistent current-account deficits in America and, to a lesser extent, Britain and some other rich economies, matched by surpluses in emerging markets, notably China. The damage done to the financial system by lax controls, rotten incentives and passive regulation is plain. Yet underlying the whole mess was the deeper problem of imbalances. A growing number of policymakers and academics believe that these lay at the root of the financial crisis….

Both the old-school worrywarts and the new-school optimists got some elements of the story right and others wrong. “The dollar crisis that was predicted by the central view is the only one that hasn’t happened,” says PIERRE-OLIVIER GOURINCHAS OF THE UNIVERSITY OF CALIFORNIA, BERKELEY. In the depths of the financial crisis in October, the dollar rallied against most currencies. America was not cut off from external funding. But equally there was a crisis—as the pessimists foresaw—and one that has undermined a pillar of the optimists’ thinking on imbalances: that America is a beacon of financial stability….

Mr Gourinchas doubts that depressing the exchange rate could sustain a high rate of saving for long. By flooding the foreign-exchange market with their own money, central banks risk driving up inflation which would erode the gain in competitiveness from a cheap currency. China has avoided that fate because it has been able to “sterilise” its currency interventions by selling bonds to banks, companies and households. That would be an expensive operation, says Mr Gourinchas, were it not for demand for savings. The reserves are collateral for the bonds held privately….

Research by MAURICE OBSTFELD OF BERKELEY, Alan Taylor of the University of California, Davis, and Jay Shambaugh of Dartmouth College views these “excess” reserves as insurance for the domestic banking system. They argue that in economies with managed exchange rates and fast-growing bank deposits, there is increased risk of a “double drain”. When crisis hits, fear of devaluation could spark a rush out of bank deposits into cash, and from cash into hard currency. Reserves are not only a prudent safeguard against a “sudden stop” in foreign finance. They are also needed as insurance against the risk of “sudden flight” by domestic savers….

==========

Taxpayers for Common Sense: Making Government Work

Volume XIV No. 4 – January 23, 2009

In his inaugural address, President Barack Obama made clear his vision for government. Midway through his speech, he said that it is “not whether our government is too big or too small, but whether it works.”

The President also made it clear that if a program is failing or not working, it should end.

Over the last two decades, generally coinciding with the start of each new Congress, the Government Accountability Office (GAO) has written a report that should help the new administration strive to meet this laudable goal. The most recent study chronicles about 30 government programs that are at high risk for waste, fraud, or abuse.

The GAO report on high risk government programs can serve as a road map for the Obama Administration. The objective of rooting out waste, fraud, abuse, and inefficiencies in government, as well as identifying at-risk agencies and programs, will require hard work. Here are some examples from the high-risk list that are a good place to start:

Defense Weapons Purchases: This decade, the military has significantly increased the number of major defense acquisition programs. On average, the cost overruns of the 95 weapons currently under development or in production have increased by $295 billion over initial estimates. And most of these programs are experiencing a 21-month delay in delivering the weapons systems. DOD must then request more funding to cover the overruns, making less money available for other priorities.

Enforcement of Tax Laws: The amount of taxes that taxpayers should have paid but failed to was last estimated to be $345 billion. That is with about an 84 percent compliance rate—a rate that has changed little in 3 decades. After late payments and Internal Revenue Service (IRS) enforcement actions are accounted for, the so called tax gap narrows to $290 billion. And recently IRS began contracting out some of its collections to private companies, which, according to Treasury’s taxpayer advocate, has actually cost taxpayers money.

Another concern is U.S companies using off-shore tax havens. GAO’s recent work showed that many U.S. multinational corporations are shifting profits to low or no-tax jurisdictions. The lost tax revenue is about $56.4 billion.

IRS enforcement of the tax laws is vital. It is a key way to enhance taxpayer confidence that everyone is paying their fair share.

Reforming Department of Energy contracting: The Department of Energy relies more on private contractors than any other government agency. Nearly 90 percent of the agency’s annual budget is spent on contracts. Twelve large Energy Department construction projects exceeded original cost estimates, with cost increases on these projects ranging from $79 million to $7.9 billion, and experienced sizable time delays.

When President Obama said that “us who manage the public’s dollars will be held to account, to spend wisely, reform bad habits, and do our business in the light of day, because only then can we restore the vital trust between a people and their government,” he was essentially saying that cutting wasteful programs is necessary for the public to regain faith in its elected officials.

Sure, there are many government programs that work and there are some that fail. The GAO High Risk report recommendations are a good place to begin reining in waste and cutting fat. When government is planning on spending enormous amounts federal cash on a stimulus, it is even more critical that the wasteful programs are eliminated, and the inefficient ones reformed. This would be an important first step in regaining public trust.

Let us know what you think.

Going on at Taxpayer.net This Week

Senate Finance Committee Releases Portion of Stimulus Bill

House Releases $825 billion Economic Stimulus Bill

Help Us Stop the Congressional Pay Raise

Keep the Stimulus Earmark Free

Bailout Bank Bios

TCS Staff are compiling profiles of all financial institutions receiving funds under the 2008 Emergency Economic Stabilization Act. See all completed bios here.

TCS in the News

TCS was cited in dozens of stories this past week Check them all out in the Headlines About TCS section of our redesigned website.

Notable Quote

“As the nation finds itself in the midst of one of the worst financial crises ever, it has become apparent that the regulatory system is ill-suited to meet the nation’s needs in the 21st century.”

–Gene Dodaro, Acting Comptroller General of the United States, in testimony January 21, 2009.

weekly wastebasket at www.taxpayer.net

==========

Guest Columnist: Mortgage crisis is our responsibility

January 22, 2009

By MARCOLA NIXON
GUEST COLUMNIST

As a mortgage default counselor, I spend 40 hours a week monitoring a mortgage hotline and counseling homeowners facing foreclosure, people who desperately wanted the American dream and have ended up with the American nightmare.

Through this experience, these questions remain unanswered: Who will hear the cries and answer the calls for those homeowners now facing homelessness? Where was the judgment and the understanding that as a nation within a global community we are all interconnected, that what affects any one of us will eventually affect us all?

While precious time has been spent fault-finding and devising plans that don’t fully address or resolve the mortgage crisis, the fact remains that according to foreclosure.com, there are currently 1,447,451 households in the pre–foreclosure process, 832,381 set to go to auction and 1,217,885 homes that have been taken back by the banks and sit in their inventory.

As the calls to Solid Ground Mortgage Default Counseling office, where I work, increase from 15 to 50 a week, I ask: Who will stand up and be responsible for the housing market meltdown and work tirelessly to bring relief to the endless array of struggling homeowners?

We — the American people, Wall Street, lenders and the foreign markets — must all share in the responsibility of the mortgage crisis.

Americans wanted the price of homeownership without taking on the responsibility of arming themselves with knowledge and education about the mortgage products they were offered. The lending community must also take responsibility for its old-fashioned greed, which drove lenders to offer homeowners mortgages without fully disclosing the terms of their contracts.

But I believe the biggest responsibility lies at the doorstep of Wall Street and investors, who, in the face of increasing profits, forgot that the nation and global community are inter-connected. Wall Street cannot exist without the mainstream; the rich cannot exist without the poor.

And when one class tries to reproach the other what simply takes place is what we as a nation are now experiencing: We all fall down.

As a new bailout plan is in its implementation stage and lenders have lined up to receive billions of dollars in taxpayers’ money, the powers that be are giving few concessions to the average homeowner facing this crisis. The homeowners’ tax dollars are being given to everyone but the homeowners.

In 2008 the U.S. gave $26 billion in foreign aid, according to this year’s intelligence report. A large portion of that went to countries in the Middle East for weapons and security efforts. I was always taught that charity begins at home.

But I am optimistic. Has America fallen? Yes, we have. But if we can look up and be honest, we can get up. We need increased funding to hire additional mortgage counselors. We need to help homeowners who have already lost their homes and those who are currently at risk.

When homeowners lose their home because of foreclosure, it will stay on their credit report seven to 10 years, which can prevent them from buying or renting suitable accommodations. If we want the housing market to stabilize and eventually become prosperous again, we need a forgiveness plan that will allow these homeowners to rent and eventually re-enter the homeownership market.

Marcola Nixon is a mortgage counselor with Solid Ground, a Seattle-based nonprofit that helps people with foreclosure issues and has a range of programs addressing hunger, homelessness and poverty.

http://tinyurl.com/dgh5t8 (seattlepi.nwsource.com)

==========

Major Revisions to Money Supply Numbers

Saturday, January 24, 2009

Major Benchmark Revisions Show Recent M3 Growth to Have Been Stronger.

“The Federal Reserve has revised the measures of the money stock and its components to incorporate the results of its annual review of seasonal factors and a new benchmark revision,” advised the U.S. central bank in its most recent release of money stock measures (H.6).

Charts of M1, M2 and SGS-M3 are updated at

http://www.shadowstats.com/alternate_data/money-supply.

SGS Subscribers can access and download the data series

from http://www.shadowstats.com/alternate_data.

Regards
The ShadowStats Team

==========

A World Bank report released in December examined the impact of the financial crisis on GDP growth across the world.

Here are some of the key projections for 2009:

Global GDP growth will slip from 2.5 percent in 2008 to 0.9 percent. Developing country growth is expected to fall from 7.9 percent in 2007 to 4.5 percent in 2009.

For the first time since 1982, world trade will contract by 2.1 percent. Investment growth in the developing world is projected to fall from 13 percent in 2007 to 3.5 percent in 2009.

Compared to 2008, GDP growth in 2009 is expected to drop from 8.4 percent to 6.7 percent in East Asia and the Pacific; from 5.3 percent to 2.7 percent in Europe and Central Asia; from 4.4 percent to 2.1 percent in Latin America and the Caribbean; from 5.8 percent to 3.9 percent in the Middle East and North Africa; from 6.3 percent to in South Asia; and from 5.4 percent to 4.6 percent in Sub-Saharan Africa.

Source: Global Economic Prospects 2009 : Commodities at the Crossroads. The Word Bank, 9 December 2008

Permanent URL : http://go.worldbank.org/Y35X0HA3T0

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CNN’s Henry advanced GOP criticism of stimulus package based on purported CBO “study,” ignored Dems’ response

On Lou Dobbs Tonight, Ed Henry reported that a “study” from the Congressional Budget Office “was suggesting that a lot of the spending proposals in the original [economic stimulus] plan would not really take effect for a couple of years, so it wouldn’t clearly help create jobs in the first two years of the president’s administration.” However, the director of the Office of Management and Budget stated in a letter that his agency’s “analysis indicates that at least 75 percent of the overall package … will be spent over the next year and a half” — which Henry did not report.

Read More

http://mediamatters.org/items/200901240003?lid=858427&rid=20584195

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NOT ONLY IS FOX’S GLENN BECK A BIGOT, HE’S ALSO A LUNATIC

By ZP Heller, Brave New Films

Beck bent on marginalizing President Obama.

http://www.alternet.org/blogs/video/122063

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National Security Archive Update, January 23, 2009

U.S. Nuclear Detection and Counterterrorism, 1998-2009

New Book and Declassified Documents Describe Once-Secret Nuclear Counterterrorism Unit

For more information contact:
Jeffrey T. Richelson – 202/994-7000

http://www.nsarchive.org

Washington, D.C., January 23, 2009 – When the 9/11 hijackers crashed into the World Trade Center and the Pentagon, the U.S. nuclear bomb squad was out of the country on its first foreign deployment since 1998, at a British air base in the Cotswolds, according to the new book “Defusing Armageddon” and key primary sources posted today in the National Security Archive’s Nuclear Vault by Archive senior fellow Jeffrey T. Richelson.

The after-action report from that deployment, “DOE EXERCISE 03-01 JACKAL CAVE,” notes the early termination of the exercise because of the terrorist attacks, but finds some useful “strengths and weaknesses” including the need to “[i]ssue secure international cell phones to control members and team leaders.” According to the book, the exercise involved more than 500 personnel, 62 aircraft, 420 short tons of cargo, and the CIA, as well as a special operations force that would seize a mock nuclear device that the squad would disable.

The documents were obtained by Archive Senior Fellow Jeffrey T. Richelson while conducting research for his new book, “Defusing Armageddon: Inside NEST, America’s Secret Nuclear Bomb Squad.”

Visit the Web site of the National Security Archive for more information.

http://www.nsarchive.org

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And now for the important news ….

By Argus Hamilton

The National Cathedral held a prayer service for President Obama Wednesday. It aired on cable news networks. It took four centuries but with a stock market ticker running on the screen just below the pulpit, the Episcopal Church liturgy is complete.

http://www.jewishworldreview.com/

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three thousand words

Tom Toles: … because I swore him in wrong …

http://tinyurl.com/dcfx79 (d.yimg.com)

Mike Peters: … I hear she’s a real pistol …

http://tinyurl.com/d67xux (www.grimmy.com)

(click here to view)

Rob Rogers Pittsburgh Post-Gazette Jan 25, 2009 EditorialCartoonists.com