carapace – Not your father's america

Insiders Exit Shares at the Fastest Pace in Two Years (Update3)

By Lynn Thomasson and Michael Tsang

June 22 (Bloomberg) — Executives at U.S. companies are taking advantage of the biggest stock-market rally in 71 years to sell their shares at the fastest pace since credit markets started to seize up two years ago.

Insiders of Standard & Poor’s 500 Index companies were net sellers for 14 straight weeks as the gauge rose 36 percent, data compiled by InsiderScore.com show. Amgen Inc. Chairman and Chief Executive Officer Kevin Sharer and five other officials sold $8.2 million of stock. Christopher Donahue, the CEO of Federated Investors Inc., and his brother, Chief Financial Officer Thomas Donahue, offered the most in three years.

Sales by CEOs, directors and senior officers have accelerated to the highest level since June 2007, two months before credit markets froze, as the S&P 500 rebounded from its 12-year low in March. The increase is making investors more skittish because executives presumably have the best information about their companies’ prospects.

“If insiders are selling into the rally, that shows they don’t expect their business to be able to support current stock- price levels,” said Joseph Keating, the chief investment officer of Raleigh, North Carolina-based RBC Bank, the unit of Royal Bank of Canada that oversees $33 billion in client assets. “They’re taking advantage of this bounce and selling into it.”

Banks Downgraded

The S&P 500 slid 2.6 percent to 921.23 last week, the first weekly decline since May 15, as investors speculated the three- month jump in share prices already reflected a recovery in the economy and profits. Stocks dropped as the Federal Reserve reported that industrial production fell in May and S&P cut credit ratings on 18 U.S. banks, saying lenders will face “less favorable” conditions.

The S&P 500 slid the most in two months today, losing 3.1 percent to 893.04 at 4:05 p.m. in New York, after the Washington-based World Bank said the global recession this year will be deeper than it predicted in March.

Insiders increased their disposals as S&P 500 companies traded at 15.5 times profit on June 2, the highest multiple to earnings in eight months, Bloomberg data show. Equities climbed as the U.S. government and the Fed pledged $12.8 trillion to rescue financial markets during the first global recession since World War II.

Executives at 252 companies in the S&P 500 unloaded shares since March 10, with total net sales reaching $1.2 billion, according to data compiled by Princeton, New Jersey-based InsiderScore, which tracks stocks. Companies with net sellers outnumbered those with buyers by almost 9-to-1 last week, versus a ratio of about 1-to-1 in the first week of the rally.

Bear Stearns

“They’re looking to take some money off the table because they think the rally will come to an end,” said Ben Silverman, the Seattle-based research director at InsiderScore. “It’s the most bearish we’ve seen insiders, on a whole, in two years.”

The last time there were more U.S. corporations with executives reducing their holdings than adding to them was during the week ended June 19, 2007, the data show. The next month, two Bear Stearns Cos. hedge funds filed for bankruptcy protection as securities linked to subprime mortgages fell apart, helping trigger almost $1.5 trillion in losses and writedowns at the world’s biggest financial companies and the 57 percent drop in the S&P 500 from Oct. 9, 2007, to March 9, 2009.

Insider selling during the height of the dot-com bubble in the first quarter of 2000 climbed to a record $41.7 billion on a net basis, according to data compiled by Bethesda, Maryland- based Washington Service. The sales coincided with the end of the S&P 500’s bull market and preceded a 2 1/2 year slump that erased half the value of U.S. equities.

‘Clouding the Picture’

Bill Latimer, the director of research at O’Shaughnessy Asset Management, says insider transactions aren’t an accurate barometer of stock performance because executives often reduce their stakes for reasons that have little to do with a company’s prospects.

“When you’re dealing with an individual’s buying or selling, you’re clouding the picture with what their specific financial situation may be,” said Latimer, whose Stamford, Connecticut-based firm oversees about $4.5 billion.

During January 2008, executives at New York Stock Exchange- listed companies bought more shares than they sold for the first time since 1995, Washington Service data show. The S&P 500 slumped 40 percent in the next 12 months.

Citigroup Inc. CEO Vikram Pandit purchased 750,000 on Nov. 13, paying an average of about $9.25 apiece, the New York-based bank said in a U.S. Securities and Exchange Commission filing. Citigroup closed last week at $3.17.

Unrestricted Stake

U.S. laws require executives and directors to disclose stock purchases or disposals within two business days to the SEC.

Sharer, the chairman at Thousand Oaks, California-based Amgen since January 2001, disposed of $1.76 million worth in the world’s largest biotechnology company on May 12, an SEC filing showed.

The sale of 36,411 shares trimmed his unrestricted stake by 13 percent and came three weeks after the company reported first-quarter earnings that trailed analysts’ estimates. Between May 22 and June 9, five Amgen officers, including George Morrow, the executive vice president for global commercial operations, and Roger Perlmutter, the executive vice president for research and development, sold a combined $6.4 million.

“From time to time, and within appropriate trading windows, Amgen executives exercise their right to sell shares for tax planning, to prevent stock option expiries and other purposes,” spokesman David Polk wrote in an e-mailed response to questions.

Eight-Month High

Federated’s Christopher and Thomas Donahue together sold about 65,000 for $1.68 million on June 4 and June 5 through a family trust, according to SEC filings. The transactions were the biggest outright sales for each since December 2005 and followed a 52 percent rally this year that recouped more than a third of 2008’s stock losses.

The executives began selling two days after the third- biggest U.S. manager of money-market funds, which was founded by their father, John Donahue, in 1955, reached an almost eight- month high compared with reported profits.

Federated said in a statement on June 8 that the officers sold as part of a “longer-term” diversification strategy. Ed Costello, a spokesman, said the Pittsburgh-based company had no comment beyond the news release.

“If these folks don’t have confidence in the company and don’t feel that it’s an attractive value, then why as a shareholder would I think it’s a good value?” said Jason Cooper, who helps manage $3 billion at 1st Source Investment Advisors in South Bend, Indiana.

Amgen shares dropped 2.6 percent to $50.99 today, while Federated slumped for a seventh day, tumbling 5.4 percent to $23.15, for the longest streak of losses since 2003.

Stock Options

Seven directors at CME Group Inc., the world’s largest futures exchange, disposed of almost $3 million since May. John Pietrzak sold for the first time since becoming a director of the Chicago-based company in July 2007, according to data compiled by InsiderScore. Board member Joseph Niciforo cut his stake by 28 percent. CME shares sank 7.4 percent, the most since May 7, to $303.48 today.

“It’s our policy to never comment on any executive sale of shares,” said Allan Schoenberg, a CME spokesman.

Nine insiders at TiVo Inc., the maker of digital video recorders, sold $10.6 million between June 3 and June 11, after the Alviso, California-based company jumped to a five-year high. That was the most by value over a one-month period in more than five years, InsiderScore data show.

A 53 percent jump in TiVo’s stock on June 3 initiated trading plans of some insiders such as CFO Anna Brunelle, who cut her holdings by 17 percent, according to regulatory filings to the SEC compiled by InsiderScore.

TiVo Director

The so-called 10b5-1 programs allow executives to cash out a portion of their holdings when stocks reach predetermined prices. Brunelle also sold through her plan from exercising options with average expiration dates about seven years away, InsiderScore data show.

Geoffrey Yang, a TiVo director since 1997, cut his stake by 8.4 percent, raising $1.5 million. The sale was the first by Yang in almost two years. Chief Technical Officer James Barton reaped an 89 percent profit from selling $2.8 million that he received from exercising stock options that were due to expire in four years, according to InsiderScore. TiVo shares dropped 5 percent to $10.50 today.

Whit Clay, a spokesman for TiVo, declined to comment.

Electronic Arts Inc. Chairman Lawrence Probst and two other executives sold a combined $1.2 million worth since May 28, after the world’s second-largest video-game publisher jumped 49 percent from an almost nine-year low.

‘Out of Steam’

Probst, who joined the Redwood City, California-based company in 1984 and was CEO between 1991 and 2007, trimmed his holdings by 25,000 shares on May 28, SEC filings show.

Frank Gibeau, president of the EA games division, slashed his stake by 66 percent after unloading about $538,300 worth the same day, the filings show. The sales came three weeks after Electronic Arts, which makes “Madden NFL,” the world’s most- popular sports video game, reported a narrower fiscal fourth- quarter loss than analysts estimated. Shares of the company retreated 3.6 percent, the most since May 7, to $19.97 today.

Jeff Brown, a spokesman for Electronic Arts, didn’t immediately return a telephone call seeking comment.

“It does make you wonder if the market rebound is running out of steam,” said Scott Leiberton, the managing director for the equities division of Principal Global Investors, which oversees $189 billion in Des Moines, Iowa. “If you see broad- based selling among the management team or large holders, that’s generally not a good sign because presumably who knows that business better than they do?”

To contact the reporters on this story:

Lynn Thomasson in New York at lthomasson@bloomberg.net;
Michael Tsang in New York at mtsang1@bloomberg.net.

Complete article at:

http://www.bloomberg.com/apps/news?pid=20602003&sid=aflROe0Pe0QM#

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The Great American Bubble Machine, Matt Taibbi

From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression — and they’re about to do it again

…

Complete article at:

http://bigpicture.posterous.com/goldman-sachs-the-great-american-bubble-machi

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Patients Shortchanged by Big Pharma

Feb 15 2008 (Vol. 28, No. 4)

Point of View
Patients Shortchanged by Big Pharma
Drug Firms Focus Sights on Shareholder Profits rather than Innovative Therapeutics

Marc-André Gagnon

According to Bill Burns, chief of Roche’s pharmaceutical division, the dominant business model in pharmaceuticals is the “me-slightly-different-marketed-like-hell” model. It is a model based on overpromotion of me-too drugs in order to transform them into blockbusters. It is also a model, according to Burns who was quoted in a 2005 Barron’s article, from which the industry has to depart.

In the meantime, expensive new drugs with low therapeutic benefits continue to flood the market. “Today’s medicines finance tomorrow’s miracles,” says GlaxoSmithKline’s advertising slogan. Pharmaceutical firms remind us endlessly that the high price of drugs is justified by the high costs of therapeutic innovation. The exceptional profit rates of this industry are thus, frequently justified by the hope they give sick people. Profits, we are told, are the key to R&D, and R&D promises to bring better health.

The fact is that while the pharmaceutical industry’s financial situation has never been better, the situation in terms of therapeutic innovation has never been worse. The industry’s business model seems more than ever based on the aggressive promotion of low-benefit drugs. This model’s sole purpose is to extend the lifetime of patents on existing drugs. Blockbusters are created through enormous promotional campaigns aimed at every level of the medical establishment.

Marc-André Gagnon

The goal is to influence prescription habits even if the drug prescribed does not result in improved health. For instance, the New York Times recently reported that although the minimum 40% of statin prescriptions are considered baseless, recent clinical trials showed that Zetia, a cholesterol-lowering drug prescribed to one million people a week, plus generic Zocor did not have any medical benefits over Zocor alone.

In a 2007 issue of Prescrire, a French independent medical journal that analyzes new drugs entering that country’s market every year, it was reported that, of the 535 new drugs entering the market in 2006, 10 represented a significant therapeutic progress, 469 did not contribute to the progress of the existing pharmacopeia, and 17 were labeled by doctors as potential dangers for public health. From this perspective, it is not surprising to learn that entire generations of new drugs (e.g., to fight schizophrenia or hypertension) are, in fact, less efficient than the preceding generation, even if they cost 10 times more than the previous drug for which the patent has expired.

Economists have a hard time explaining this state of affairs. They normally believe that the profits of a firm are a reward for the social wealth it has created. Traditional market corollaries, however, do not apply to this industry, which has a great monopolistic capacity. As the business historian Alfred D. Chandler wrote in his 2006 book, Shaping the Industrial Century: The Remarkable Story of the Evolution of the Modern Chemical and Pharmaceutical Industries, barriers to entry have been so high since the 1920s that no new company has managed to become one of the world’s top 30 pharmaceutical firms since then.

Access to the market is so restrained that smaller firms have no choice but to let themselves be bought by bigger players. This is the only way they can gain access to global distribution networks. Should we then be surprised when we observe that, in this industry, for every dollar spent in real investment to create new productive capacities (gross fixed capital formation), $10 are invested to buy back already existing productive capacities (mergers and acquisitions).

R&D versus Marketing

Research and development has become secondary for the dominant firms, which have managed to externalize the bulk of R&D to smaller players that they will simply buy back in case of promising results. The focus of bigger players is rather to transform medical practices and habits with big-scale promotion campaigns.

In a recent study published in PloS Medicine in January, Joel Lexchin and I showed that, in the U.S., the pharmaceutical industry spends two times more on promotion than on R&D. Of the almost $58 billion spent annually to promote drugs, only $4 billion is earmarked for direct-to-consumer advertising. Thus, on average, $61,000 is spent per year per practicing physician. We consider those numbers to be incomplete since they do not include off-label promotion or other possible unethical forms of promotion.

The top pharmaceutical firms have become brand-management firms. Their relative promotional budgets are more significant than those of pure brand-management firms like PepsiCo. Pfizer spends more promoting Celebrex than Budweiser spends promoting its beer.

Pharmaceutical promotion has reached every level of medical research and practice. Big pharma funds universities, supports pseudoscientific publications, donates massive quantities of samples, sponsors continuing medical education, and makes frequent doctor visits.

Advertising campaigns demonstrate increasing stealth. According to a 2007 PloS Medicine article by Sergio Sismondo, confidential documents from Pfizer, made public in a trial, showed that 85 scientific articles on sertraline, the antidepressant Zoloft, were coordinated by the firm’s public relations company. Pfizer had itself produced a critical mass of articles that were favorable to the drug; Sismondo places the number between 18% and 40%, thus allowing its representatives to drown out any unfavorable study to convince doctors. The Vioxx scandal rests on the same premise.

Necessary Change

This general state of affairs is increasingly in the news and the public is more and more aware of the abundance of drugs with unfulfilled promises and the paucity of genuine breakthroughs. In a page 1 story in Le Monde last month, it was disclosed that drug companies themselves are pining for a new business model based on innovation and one in which the image of life-saving researchers in white coats could replace the image of greedy sales representatives descending on physicians.

We must not overlook the fact, however, that with net returns on equity of 28% for the ten top pharmaceutical firms in the last decade and with 77% of all net benefits going to shareholders, this low-innovation, aggressive-promotion business model is a financial success. As long as new regulations or the public do not transform the actual financial incentives of this industry, we should not underestimate the entropic force of a business model that serves well the interests of the shareholders’ wallets, even if it is to the detriment of patients’ health.

Complete article at:

Genetic Engineering & Biotechnology News
http://www.genengnews.com/articles/chitem_print.aspx?aid=2368&chid=0

Marc-André Gagnon is completing a Ph.D. dissertation in political science at York University about capitalization in the pharmaceutical industry and teaches economics, political science, and sociology at Université de Montréal and Université du Québec à Montréal.
E-mail: ma.gagnon@umontreal.ca

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Nice Work If You Can Get It

Life and Labor in Precarious Times
By Andrew Ross, NYU’s Department of Social and Cultural Analysis

“There are no easy answers in Ross’s often surprising case studies of work in the new millennium. His reach is global, from North America to Europe to Asia, as he teases out the contradictory character of contemporary employment.” Cary Nelson, University of Illinois

“Ross takes us on a wide-ranging journey through the global economy to analyze the dynamics of precarious work in the twenty-first century. Along the way, he poses an urgent question: can creative-class professionals make common cause with low-wage laborers, based on their shared experience of economic insecurity?” Ruth Milkman, University of California, Los Angeles

In Nice Work If You Can Get It, Andrew Ross surveys the new topography of the global workplace and finds an emerging pattern of labor instability and uneven development on a massive scale. Combining detailed case studies with lucid analysis and graphic prose, he looks at what the new landscape of contingent employment means for workers across national, class, and racial lines — from the emerging “creative class” of high-wage professionals to the multitudes of temporary, migrant, or low-wage workers. Developing the idea of “precarious livelihoods” to describe this new world of work and life, Ross explores what it means in developed nations — comparing the creative industry policies of the United States, United Kingdom, and European Union, as well as developing countries — by examining the quick fire transformation of China’s labor market. He also responds to the challenge of sustainability, assessing the promise of “green jobs” through restorative alliances between labor advocates and environmentalists. Ross argues that regardless of one’s views on labor rights, globalization, and quality of life, this new precarious and “indefinite life,” and the pitfalls and opportunities that accompany it is likely here to stay and must be addressed in a systematic way. A more equitable kind of knowledge society emerges in these pages” less skewed toward flexploitation and the speculative beneficiaries of intellectual property, and more in tune with ideals and practices that are fair, just, and renewable.

From:

http://heterodoxnews.com/n/htn84.htm#Heterodox_Journals_and_Newsletters

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Class Action

By Archie Kennedy

We are in the midst of class war. You may not have noticed; one side isn’t fighting. It’s the side that isn’t even aware that classes exist. The other side are keenly aware.

For the docile side to fight the fight, they first must be aware that they are on a side, are being fought against, and that they are being attacked by the enemy. Class war isn’t new and neither is ubiquitous oblivion to it. It has just become and will continue to become considerably hotter and wider. It’s about time that we take notice that we are under attack.

Class Oppression

Racism, sexism, nationalism are a few of the -isms that have been written about, debated, and discussed in popular leftist publications and in schools of social work over the past several decades. Classism has been relatively taboo however. It has been regulated to red publications and venues that sport stacks of large red lettered newspapers sold by religious Marxists that are generally treated like pariahs. These Marxists use a lot of words like bourgeoisie, proletariat, and dialectical materialism. They may be strong in debate and are well armed with economic, social, and historical analysis but nobody listens to them.

Oddly enough, they might be onto something. Class oppression is real and so is class war.

War on the poor has been continuing unabated over the years and their deprivation has been increasing since at least the 1980s. You may not have noticed because you were not one of them. But the security that the working class has enjoyed over the past half a century is on very shaky ground. Maybe we should have listened to some of that religious ‘whatever you do to the least of my brethren…’ because now we will be joining the ranks of ‘the least of you brethren’ in greater numbers. Many have. Unemployment is a threat to most and many have already been cast to the lower castes.

The war on the poor that you may have not been noticing has been persistent and relentless.

Not so long ago, for instance, various jurisdictions in Canada passed laws to forbid poor people from panhandling. In B.C. and in other jurisdictions such as Toronto, the ‘Beautiful People’ are armed with safe streets acts or similar legislation aimed at removing unsightly poor people from their beautiful streets. The legislation sports names like ‘The Safe Streets Act’ to indicate to noble taxpayers that these people are a danger to us.

In the mid 80’s governments everywhere threw people out of mental hospitals with the promise that they would supply money for less intrusive measures such as community care. That was a promise that was, predictably, broken. And now that they have done this, they are worried that those who are panhandling are neglected mentally ill people and present a danger to pedestrians. That’s how karma works. If you kill and hurt little animals, little animals will give you the creeps. If you kill and hurt poor people, poor people will give you the creeps.

But poor people are simply that – poor people. Panhandlers are youth fleeing abuse, people that cannot find work, people with addiction problems, people with neglected mental health problems and people that have been thrown out of work due to the instability of capitalism. Increasingly, poor people are victims of neo-liberal globalization, people that have been thrown out of work because auto manufacturing plants are shutting down even though people still need cars. People are going homeless even though many houses are emptied each day. But the absurdities and contradictions of capitalism remain unnoticed for the most part.

Anti-poor people laws were passed prohibiting people from employing themselves with squeegees and laws have been passed prohibiting poor people from sleeping in this or under that. This war, the war on the poor, has been in full swing for a long long time. It is about to ratchet up considerably. Many of us were/are just a firing, a redundancy, or an accident away from inhabiting the forgotten ignored class. A reality few of us want to accept.

Silent Violence

When we think of violence, we generally think of war, or revolution, or shooting or some sort of physical brutality. But now, children, women and men all over the world are dying because they can’t access or are not free to get what they need to survive. In the capitalist world freedom and money are synonymous. They are dying because they don’t have the money to get the food or the medicine or medical attention they need.

When we ignore the plight of people in need we are committing an act of silent violence. There are people in our communities that are unemployed, under-employed, elderly, and disabled that live and die in unbearable misery because they can’t access what they need. It is held back from them because they can’t pay for it. This situation is cruel and barbaric. And it is a sin inherent to but not exclusive to capitalism.

Human needs and especially vital human needs should never be at the mercy of the instability of capitalism or the whims of philanthropists. The needs of Torontonians are different in many respects to the needs of hunter gatherers in the Amazon. As societies change and evolve, so do needs. In Toronto you can freeze to death and you can have your power cut or face eviction. What statistics don’t measure is the fear and subjective reality that people in these conditions must live with.

At this point one billion people on the planet face daily starvation. This brutality isn’t considered a crisis. But when billionaires profits are in jeopardy it is portrayed in mainstream media with hysteria and panic. To calm the privileged class many billions of tax dollars are granted to them to pay for their crimes.

In modern, complex societies human needs grow. The structural backdrop of capitalism appears to be unable to meet the most basic needs of substantial segments of the population. At what point will the plight of the poor be considered a crisis? The unsettling fact of the matter is, humanity has been in crisis all along.

The Current Crisis

We have with us now what is generally thought of as an economic crisis. And it is certainly a crisis. Our economic worlds are in the midst of massive upheaval. Even the ultra wealthy are in danger of being affected.

This crisis will find its bottom at some point and when that happens, unlike typical recessions, the jobs that have been lost won’t be coming back. The crisis will be deemed to be over because the ultra wealthy will find a measure of stability for their massive plunder. The reality of increased and permanent homelessness and joblessness will remain. It will become a new status quo. There will remain a constituency of the working class that will still be okay, a large part of that population will have fallen to poverty, and those that have been poor all along will be worse off. But then and now, the stock market numbers will be percolating and the collective response from mainstream media will be: Crisis, what crisis?

The economic crisis has been handled by the wealthy classes and their political gophers by landing the heaviest blows on the chin of the working class. Workers were forced to accept massive job and wage cuts. The working class across the board has had to accept very tough measures and a tax bill (especially in the USA) that is inconceivable.

What is happening and will continue to happen is further reductions to social programs and to programs reliant on public spending such as health care and education. Where private sector employees have taken it on the chin thus far, the public sector will be next. Government spending is bound to be slashed to the bone.

Politicians and pundits talk of green shoots in the economy. The fact is, we are still hemorrhaging jobs and they shout for glee when the flow of blood is less than the month before. Just this week economists in the USA anticipated such a decrease but the numbers have shown far more first time benefits applications than they thought. Initial jobless claims rose by 15,000 to 627,000. And in the USA, the number of people receiving unemployment benefits rose from 3 million to 9 million since the beginning of the year. In time, those people will run out of unemployment benefits and when that happens, if you squint your eyes just right, you’ll be able to look at statistics and say; hey, there’s a green shoot.

Social safety nets are in bad shape all over but the broken, tattered, and completely inadequate social safety nets in the USA were that way before this crisis occurred. Things are bound to get much worse for the increasing ranks of the unemployed.

Translation

The Unseen Battles of the 1990s

In the 1990s the war on the poor was in full swing. In Canada, the Canada Assistance Act was thrown out by Prime Minister Paul Martin. The Act had provided a measure of social security for all Canadians. It was unceremoniously thrown out to unbearable silence on the part of opposition parties, welfare rights groups, and the media. ‘Work for your welfare’ attitudes were the latest fad. In that period funding to health care and other social programs was slashed to the bone. Politicians were quick to blame bond rating agencies for the need to slash and burn. The Fraser Institute and other right wing lobby groups were shrill and panicked by national and local deficits. These bond rating agencies and think tanks never harass people about funding used to kill foreigners or to prop up the wealthy class. They spout hysterical when a dime is spent to feed somebody but say nothing about funding for war and profits to ammunition makers. They attack expenditures to the poor but never lay a glove on servicing the debt.

At the same time in the USA, Slick Willy brought forward some of the most vile and mean spirited welfare legislation that country has seen. Clintons TANF (Temporary assistance for Needy Families) placed the problem of poverty squarely on the laps of the victims. Aside from the notion that in an area where x% are unemployed because that’s how many jobs actually exist, the implicit assumption has always been that the unemployed are so because they choose it that way. As it is, one in seven Michigan residents are on food stamp assistance but individuals are required to show they are looking for work when there is none. As irrational as this seems, it isn’t. It is about fixing blame on the victim.

The Working Class

The old alliance and silent deal between large scale capitalists and the middle classes has been scrapped. This is not a recession. This is a matter of large scale capitalists behaving like pigeons in a skinner box. They are simply programmed to maximize profits and if that means shipping manufacturing plants to places where they can pay for assemblage with pennies, that’s what they will do. Expecting anything else is folly and it is stupid. This is not a recession if recession implies ‘temporary’. This is a full scale shift in fortunes and in manufacturing.

The middle classes have been asleep for the most part while the poor have been under heavy artillery fire. The life of comforts that comes with nesting under American and British hegemony tended to encourage political apathy. Why upset the apple cart when me and mine are doing okay?

The middle/working classes have been living off not only capitalist exploitation of foreign resources. They have also been living off the demands for goods and services that are drying up domestically. And for people in that situation; people that have been oblivious to class consciousness and oblivious to the starvation and oppression of our brothers and sisters at home and abroad, you have been sold out by your masters. They have no loyalty to nations, religions, or to anything except to their own class. Where ‘they’ (the poor) have been you are. In fact, you have always been there. As much as it hurts to say this; you/we are not one of them. You/we are not in that class no matter how many status symbols you can/we afford. They (the owners of the politicians) simply don’t care what happens to us.

The banks and the large corporations have created the present crisis. And it is they that are reaping a financial harvest at the moment courtesy of the taxpayers. They don’t need to worry. Their employees, the Federal Reserve’s Bernanke and President Obama will ensure that they are unharmed. They will collude and are colluding with the operators/gamblers and ensure that the games that have brought the economy to this crisis continues. The Federal Reserve has underwritten and guaranteed about $13 trillion to keep their gambling addiction alive. And at the same time, the lower classes are in full crisis. Sinister and foggy financial credit default swaps and other mechanisms to keep the game alive are still in the cards. They fooled us once, they fooled us twice and they will fool us again. The shell games should be outlawed and the fraudsters that have reaped from the games should be jailed – but they are rewarded and the shell games continue. They are rewarded because it is they that pay and control the Bernankes and the Obamas.

We are living in a world where the instruments needed to produce for everybody are available. They are shut down. We live in a world where the numbers of homeless are increasing at an alarming rate and homes sit empty, while the homeless sleep in cars, under bridges, or anywhere that seems safe.

And on it goes. And on it goes because we believe we live in a classless society. And if you really believe that, ask one of them out for a beer. In reality, they don’t associate with the likes of you/me.

Archie Kennedy An associate editor of MWC is an activist/organizer and has organized in coal mines, with professionals, and with victims of poverty. He has worked as a coal miner, a community worker, a teacher and is now a social worker. Archie writes polemical articles on human rights, political economy, and war. You may find his articles archived on his blog, Left Lite http://www.leftlite.blogspot.com/

Complete article at:

http://mwcnews.net/index.php?option=com_content&task=view&id=31526&Itemid=26

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ABYSS OF JOBLESSNESS: THE ECONOMY CAN’T IMPROVE UNLESS WE PUT PEOPLE BACK TO WORK

By Bob Herbert, The New York Times

How do you put together a consumer economy that works when the consumers are out of work?

http://www.alternet.org/workplace/140961/abyss_of_joblessness%3A_the_economy_can%27t_improve_unless_we_put_people_back_to_work/

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CNN’s Feyerick advances charge that hate crimes bill could ban speech

CNN’s Deborah Feyerick reported the charge from “some lawmakers and religious groups” that the hate crimes bill “could be used to criminalize conservative speech on abortion or homosexuality.” But she did not note that the bill specifically states, “Nothing in this Act shall be construed to allow prosecution based solely upon an individual’s expression of racial, religious, political, or other beliefs.”

Read More

http://mediamatters.org/items/200906260003?lid=1047054&rid=30720142

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Borowitz Report – An Extremely Personal Note from Andy Borowitz

June 29, 2009

An Extremely Personal Note from Andy Borowitz
About the Future of the Borowitz Report

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Narrated by Bernie Madoff’s cellmate, it’s gotten raves everywhere from USA Today to The Washington Post to The Guardian (UK), which has called it “a strong candidate for our book-of-the-year award.”

If you click here now, you will receive the book for only $9.95. That’s a small price to pay to keep your favorite fake-news service up and running. (Free shipping on orders of three books or more.)
http://www.amazon.com/Who-Moved-My-Soap-Surviving/dp/0743251423/ref=sr_1_1?ie=UTF8&s=books&qid=1245248342&sr=1-1

And if you’re in New York this Thursday, July 2, get an autographed copy at my show at 92Y Tribeca – tickets only $10, available here.

One last thing: please forward this email to everyone you share the Borowitz Report with. They’ve had a free ride long enough.

Love,

Andy

Reviews for Who Moved My Soap? The CEO’s Guide to Surviving in Prison: The Bernie Madoff Edition

“Pitch-perfect.” – Publishers Weekly

“Delightful.” — USA Today

“The funniest business-book title we’ve come across.” – The Washington Post

“Laugh-out-loud funny.” – CBS Early Show

“Combines ridiculous reality and scandalous fantasy with hilarious consequences… Should be required reading in the boardrooms of the U.S.” – The Times of London

Andy’s Upcoming Events

Upcoming Events

July 2, 2009 at 9:00PM
New York!

Come see Andy in his only scheduled show of 2009 and celebrate the launch of his new book, Who Moved My Soap? The CEO’s Guide to Surviving in Prison: Bernie Madoff Edition

Location:
92Y Tribeca, 200 Hudson Street
For tickets go to 92Y Tribeca

July 9, 2009 at 7:00PM
Washington, DC!

Andy performs a free stand-up show and talks to his wife Olivia Gentile about her new book, LIFE LIST: A Woman’s Quest for the World’s Most Amazing Birds. Olivia will sign her book and Andy will sign copies of his new book, WHO MOVED MY SOAP? The CEO’s Guide to Surviving in Prison: Bernie Madoff Edition.

Location:
Politics & Prose Bookstore, 5015 Connecticut Ave.

http://www.borowitzreport.com/

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Jimmy Kimmel

“Needless to say, this not great news for the Republican party. So many prominent Republicans have been caught in these situations lately: Mark Sanford, Larry Craig, David Vitter, John Ensign from Nevada. And do you want to know why this is happening? The gays. They’ve destroyed the institution of marriage and now this is what we get”

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three thousand word

(click here to view)

Chuck Asay Creators Syndicate Inc. Jun 28, 2009 EditorialCartoonists.com

Mike Keefe: Democrat and Republican Affairs
(www.intoon.com)

Signe Wilkinson: state taxpayers/state businesses/ state gov’t
(www.investmentpostcards.com)

14 states now have double-digit unemployment

Tuesday, June 23, 2009

New data released Friday by the Bureau of Labor Statistics showed that five more states — Florida, Illinois, Indiana, Kentucky, and Tennessee — had crossed into double-digit unemployment, while Michigan’s unemployment rate rose from 12.9% to 14.1% in a single month. With 14 U.S. states now in double-digit unemployment and many continuing to see large increases month to month, EPI convened experts from three of the hardest-hit states — Michigan, Ohio, and Oregon — who discussed what these staggering job losses had meant for their local economies and shared their concerns that the pain could last long after the recession ends. Michigan’s job situation, for instance, has gone from bad to worse with the recent bankruptcies of GM and Chrysler, while in Oregon, May unemployment of 12.4% represents a 33-year high.

Although officials from Oregon say they are starting to see a slowdown in the pace of job loss, they also fear that jobs will remain scarce well into the next decade. A front-page Washington Post story on June 21 described the same trend nationwide and said new jobs were the missing ingredient in a long-awaited economic recovery. The Post story quoted EPI President

See:

http://www.epi.org/page/-/pdf/20090619-unemployment-by-state.pdf

From: Economic Policy Institute http://www.epi.org/pages/epinews/

Bait and Switch The (Futile) Pursuit of the American Dream

by Barbara Ehrenreich

The bestselling author of Nickel and Dimed goes back undercover to do for America’s ailing middle class what she did for the working poor.

Barbara Ehrenreich’s Nickel and Dimed explored the lives of low-wage workers. Now, in Bait and Switch, she enters another hidden realm of the economy: the shadowy world of the white-collar unemployed. Armed with a plausible résumé of a professional “in transition,” she attempts to land a middle-class job — undergoing career coaching and personality testing, then trawling a series of EST-like boot camps, job fairs, networking events, and evangelical job-search ministries. She gets an image makeover, works to project a winning attitude, yet is proselytized, scammed, lectured, and — again and again — rejected.

Bait and Switch highlights the people who’ve done everything right — gotten college degrees, developed marketable skills, and built up impressive résumés — yet have become repeatedly vulnerable to financial disaster, and not simply due to the vagaries of the business cycle. Today’s ultra-lean corporations take pride in shedding their “surplus” employees — plunging them, for months or years at a stretch, into the twilight zone of white-collar unemployment, where job searching becomes a full-time job in itself. As Ehrenreich discovers, there are few social supports for these newly disposable workers — and little security even for those who have jobs.

Like the now classic Nickel and Dimed, Bait and Switch is alternately hilarious and tragic, a searing exposé of economic cruelty where we least expect it.

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The Need for Mass Transit

June 25, 2009

National Transportation Safety Board officials have stated in recent days that they had warned the D.C.-area Metro that trains were in need of upgrades or replacement. Video is here:

http://www.youtube.com/watch?v=W6gktsHxWvE&eurl= .

HARVEY WASSERMAN, windhw@aol.com, http://www.harveywasserman.com,

http://www.solartopia.org

Author of the new book “Solartopia: Our Green-Powered Earth, AD 2030″ (which includes an introduction by Robert F. Kennedy Jr.), Wasserman said today: “The fatal crash on the D.C. Metro system underscores the critical funding needs faced by our ailing mass transit system. The crash of America’s auto industry reflects more than bad management — it signifies an epic shift from the car to light rail. Passenger train service both between and within our cities holds the key to a green future. This is where the Obama administration must re-focus its attention. If Detroit is to be re-made, it must be in building passenger rail cars rather than private automobiles.”

Wasserman’s recent articles include “Is this the end of the age of the automobile?” He can also address aspects of the energy bill.

From: Institute for Public Accuracy

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Planning to Pave Without Planning to Pay

Volume XIV No. 26: June 26, 2009

You could be forgiven if you thought you saw Mad Magazine’s Alfred E. Neuman wandering around Capitol Hill recently. Worthy of his motto “What, me worry?” Congress is spending money now and worrying about how to pay for it later.

The latest example appeared last week, when House Transportation and Infrastructure (T&I) Committee Chairman Jim Oberstar (D-MN), along with House colleagues Ranking Committee Member John Mica (R-FL), Subcommittee Chairman Peter DeFazio (D-OR), and Ranking Subcommittee Member John Duncan (R-TN), stood before the American people and announced that Congress will pass a half a trillion dollar transportation plan (large pdf of entire proposed bill; smaller summaries are also available here and here) before the current program expires on September 30th, but didn’t give us a clue as to how they’ll pay for it.

This announcement brought on an eerie sense of déjà vu. In November 2003, then T&I Committee Chairman Don Young (R-AK) stood alongside then-Ranking Member Oberstar and told a packed room with complete confidence that they would shepherd through a $375 billion transportation bill, paid for with an unpopular nickel per gallon increase in the Highway Trust Fund.

In the nearly two years it took to get a final bill to President George W. Bush, it became obvious that Rep. Young’s proposal never had a snowball’s chance of getting passed. Instead, we got a bill, dubbed SAFETEA-LU, which rang in at $286 billion and didn’t include an increase in the gas tax, but was stuffed full of so many earmarks we were afraid it was going to burst. This was the bill that carried the Bridge to Nowhere, after all.

We said at the time that this bill was too large to be paid for with reasonably projected revenues, and lo and behold: the Highway Trust Fund went broke, requiring an $8 billion infusion last year and likely the same or more this year just to keep its head above water. The Government Accountability Office recently revealed a Department of Transportation estimate that indicates the transportation program will need as much as $15 billion in additional funds to make it through fiscal year 2010 at current spending levels.

Now another transportation deadline looms, and Rep. Oberstar is proposing a $450 billion plan, with an additional $50 billion on top from the general fund (regular spending, not trust fund) for high speed rail, and expressed all the same confidence of passage that we saw during that November 2003 hearing.

But it gets worse. Rep. Oberstar proffered this increase in spending while putting off for another day the toughest question of all: how will we pay for it? At least Rep. Young gets some credit for proposing to pay for his oversized plan. Rep. Oberstar’s bill is much larger, and we’re supposed to buy the wink and a nod that says we’ll find a way to pay for it later? It’s that kind of accounting that has us staring down the barrel of trillions in debt and has the Highway Trust Fund teetering on the brink of collapse.

Don’t get us wrong, there are some proposals to cheer about in Rep. Oberstar’s bill. We appreciate efforts to speed up project delivery, collapse the number of programs that the bill funds, and create a results-driven process that focuses on unsnarling the nation’s worsening congestion and making our roads safer. But without a plan to pay for it, this is just more wide-eyed dreaming. Congress needs to spend as much – or more – time figuring out how to overcome the tremendous revenue challenges our nation’s transportation program faces as it does coming up with new and grander ways to spend the money.

Let us know what you think.

Going on at Taxpayer.net This Week

Captain Morgan’s Bailout Binge

Oversight and Government Reform Hearing on the V-22 Osprey

Obama Waves Veto Pen at Wasteful Fighter Jet

Senate Environment and Public Works Committee: Hearing on Highway Trust Fund Insolvency

PMA Group Earmarks in House Defense Bills

No More F-22s: Strip Funding from Defense Authorization

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

“The fact is that temporary tax subsidies are not reviewed for substance when they are renewed. Instead, the entire herd of ‘extenders’ is paraded through the legislative process as a unit,” he says. “And just as good cowboys do not lose many yearlings, it is virtually unheard of for an ‘extender’ to get separated from the rest of the herd and not get renewed.”

Ed Kleinbard, former Chief of Staff of the nonpartisan Congressional Joint Committee on Taxation, quoted by Bloomberg News.

Complete article at:

weekly wastebasket at www.taxpayer.net

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All Those Arrows

Donald MacKenzie

Fool’s Gold: How Unrestrained Greed Corrupted a Dream, Shattered Global Markets and Unleashed a Catastrophe by Gillian Tett

Few people’s reputations have been improved by the credit crisis. One is the BBC’s Robert Peston; another is Vince Cable. A third is Gillian Tett, capital markets editor of the Financial Times. Prior to the crisis, she and her team were the only mainstream journalists who covered in any detail the arcane world of ‘credit derivatives’. Tett saw – however imperfectly – the huge risks that were accumulating unnoticed within that world, and spoke out about them.

Fool’s Gold begins in a conference room in Nice in spring 2005. Tett admits that at that point she was baffled by the technical language – ‘Gaussian copula’, ‘attachment point’, ‘delta hedging’ – used by the participants. However, before joining the FT she had conducted fieldwork in Soviet Tajikistan for a PhD in social anthropology, and the ethnographer in her was now reawakened. The conference reminded her of a Tajik wedding. Those attending it were forging social links and celebrating a tacit world-view – in this case, one in which ‘it was perfectly valid to discuss money in abstract, mathematical, ultra-complex terms, without any reference to tangible human beings.’

She whispered to the man sitting beside her, asking who the key actors in the ceremony were – those up on the conference hall’s stage. ‘They used to all work at J.P. Morgan,’ he answered. ‘It’s like this Morgan mafia thing. They sort of created the credit derivatives market.’ The answer surprised her. J.P. Morgan was not Goldman Sachs; it wasn’t an exciting bank. It bore the name of America’s most celebrated financier, but it was ‘dull’: safe, boring, perhaps a little snobbish. (When its current chief executive, the now well-respected Jamie Dimon, joined the bank from Bank One, whose headquarters were in Chicago, Tett reports that one Morgan banker muttered: ‘Not another retail banker from Hicksville, USA!’)

The core of Tett’s book, which is by far the most insightful of the first wave of books on the crisis, is the story of J.P. Morgan’s credit derivatives team. For all the bank’s traditionalism – the door staff at its London offices wouldn’t look out of place outside the Ritz – it was quietly innovative. One of the team’s driving forces was a young Englishwoman, Blythe Masters; another, Terri Duhon, makes no secret of her upbringing in a trailer in Louisiana; central to its technical work was an Indian mathematician, Krishna Varikooty. Boisterousness that would have horrified John Pierpont Morgan was tolerated. At one gathering in Florida, one of the team’s managers broke his nose when drunken colleagues were pushing him into a hotel swimming-pool.

The team’s pivotal innovation, introduced in December 1997, was a deal they called ‘Bistro’ (Broad Index Secured Trust Offering). For a decade, banks had been experimenting with credit derivatives, which are ways of separating out the ‘credit risk’ involved in lending (the risk that borrowers will default on their obligations, failing to make the required interest payments or not repaying their loans) and turning that risk into a product that can be bought and sold. Bistro helped make this tentative activity big business: it transferred to outside parties the credit risk of loans totalling $9.7 billion that J.P. Morgan had made to 307 companies. The scheme was an influential version of a CDO (collateralised debt obligation), and like other CDOs, Bistro was divided into ‘tranches’, of which originally there were two. Investors in the lower or ‘junior’ tranche received a healthy rate of return, 375 basis points over Libor (London Interbank Offered Rate), which is the average rate at which a panel of leading banks report they can borrow from other banks.[*] (A basis point is a hundredth of a percentage point.) This compensated the junior investors for the fact that their investments would bear the initial losses, beyond a small reserve built up during the deal’s first five years, should any of the 307 borrowers default.

Only if those losses were to exceed the entirety of the investments in the junior tranche would the holders of Bistro’s senior tranche – which paid only 60 basis points over Libor – suffer. The loans that made up Bistro were well diversified across industries, and were made predominantly to blue-chip companies, so losses to Bistro’s senior tranche seemed unlikely enough for Moody’s – one of the three leading credit rating agencies, along with Standard & Poor’s and Fitch – to award the tranche its highest rating, Aaa.

Aaa was a rare distinction. Only a dozen corporations and fewer than two dozen governments were judged worthy of it: neither Italy nor Japan has an Aaa rating. (Standard & Poor’s recently indicated that the UK is now in some danger of losing its top rating.) Blythe Masters had formidable powers of persuasion, which helped when selling a deal that looked ‘like a science experiment, with all those arrows’, as one investor quoted by Tett described Bistro’s documentation. Yet 60 basis points over Libor, for an investment judged safer than the sovereign bonds of some of the world’s leading economies, was the most powerful argument of all: an investor would normally struggle to find an Aaa investment that yielded as much as Libor.

For J.P. Morgan, Bistro solved one problem and potentially addressed a second. First, while the 307 corporations were generally low risks, even the most creditworthy borrowers can default. So $9.7 billion in loans was a significant constraint on the bank’s future lending. Bistro removed that constraint. Second, the Basel Capital Accord, signed by the world’s leading banking regulators in 1988 and implemented by them in 1992, forced banks to carry reserves equal to 8 per cent of their risk-weighted lending. While certain categories of lending – to other OECD banks, for example – qualified for a reduced reserve requirement, loans to even the safest industrial corporation incurred the full 8 per cent, a figure that bankers felt was far larger than justified by the risks involved. J.P. Morgan hoped that the transfer of credit risk achieved by Bistro would persuade regulators to reduce that requirement considerably, and Tett reports that Masters and her colleague Bill Demchak pushed the Federal Reserve and the Office of the Comptroller of the Currency to clarify what exactly would be needed to achieve that.

Bistro differed from earlier CDOs in that it did not, in fact, transfer to external investors all the credit risk of the $9.7 billion of loans. The junior and senior tranches amounted in total to only $700 million; the bank believed that the chances of losses ever exceeding that figure were too tiny for it to be worth paying investors to shoulder them. The regulators, however, demanded that the bank do something to remove that residual ‘unfunded risk’ before they would relax the 8 per cent capital requirement.

The residual risk was like a topmost tranche, sitting above the senior tranche; it would come into play only if losses entirely wiped out the latter. The senior tranche was Aaa, as safe as it gets; the residual ‘super-senior’ tranche (as the J.P. Morgan team christened it) was safer than safe. To satisfy the regulators, however, the team turned to the Financial Products division of the leading US insurer, AIG. Sharing J.P. Morgan’s analysis that the super-senior tranche was ultrasafe, AIG agreed to insure it against all remaining losses, charging an annual premium of only a fiftieth of 1 per cent of the sum insured. From the viewpoint of AIG, it was small-scale business, but apparently highly profitable: by covering an effectively non-existent risk, the firm earned $1.8 million a year.

In that little afterthought to Bistro – what to do with the super-senior tranche – lay the germ of much of the credit crisis, especially its disastrous effects on many of the world’s leading banks. Bistro-like deals started in the world of corporate borrowing, but from 1999 began also to be implemented in the world of consumer debt, especially mortgages. Lenders actually had a longer experience of packaging mortgages into securities than of packaging corporate debt into CDOs, and mortgage-backed securities had acquired an admirable reputation for safety. They have a structure like that of CDOs, with different tranches carrying various levels of exposure to risk. The safest, Aaa tranches had impeccably default-free records, and even the riskier tranches had performed well: indeed, on average better than corporate bonds with the same ratings. It wasn’t that people never defaulted on their mortgages – they did – but the securities were designed to take this into account, for example by building up reserve funds (analogous to but usually proportionally larger than Bistro’s small reserve) that would absorb the anticipated losses. For many years, such provisions proved in general fully adequate.

What happened from 1999 onwards was that mortgage-backed securities, which already represented one layer of packaging of debt, started to be repackaged into CDOs, thus creating a Russian doll product: a tranched, packaged product each component of which was itself a tranche of a packaged product. Given their excellent reputation, putting mortgage-backed securities rather than corporate bonds or loans inside CDOs might seem a small step. Yet when in 1999 Bayerische Landesbank, which had become involved in the US mortgage market, approached J.P. Morgan to package $14 billion of bundles of mortgages and other forms of predominantly consumer debt into a Bistro structure, there were initially serious doubts within the Morgan team.

The problematic issue was correlation, which is at the core of evaluating a CDO. Low correlation means that defaults are essentially idiosyncratic events, with the consequence that only the bottommost tranche of a typical CDO is at significant risk. High correlation means that if defaults happen they tend to cluster, and the clustering of defaults puts investors in the higher, apparently safer, tranches at risk of loss. Participants in the emerging credit-derivatives market tended to be confident that they had a fair grasp of the correlation of corporate defaults. The rating agencies had large databases of such defaults from which the extent of clustering could be inferred at least roughly, and other market participants often took the easily measured level of correlation between the moves of different corporations’ stock prices as a guide to the correlation of their net asset values. (The link between the latter and default is that the most important cause of corporate default is bankruptcy, which can be thought of as happening when a corporation’s net asset value falls below zero: that is, when its liabilities exceed its assets.) Clearly, the correlation of the asset values of two different corporations was unlikely to be zero, since general economic conditions will affect both; it wasn’t likely to be 1.0 either, since that would indicate perfect correlation. A commonly used figure was 0.3: it was, for example, the standard level of correlation between the asset values of firms in the same industry that Standard & Poor’s initially assumed in CDO Evaluator, the software system it began using in 2001 to rate CDOs.

The credit crisis has inured us to gigantic numbers – losses measured in billions or trillions of dollars – but we need to pay attention to its small numbers as well if we’re going to understand it properly. A correlation of 0.3 was modest. If it was correct it was highly unlikely that the senior tranche of a CDO such as Bistro would suffer a loss – unlikely enough to warrant an Aaa rating – and effectively inconceivable that the super-senior tranche would be hit.

However, the figure of 0.3 was produced by analysis of corporate debt. How could one estimate the equivalent correlation for mortgage-backed securities? Paradoxically, their safety was a disadvantage in this respect: there was effectively no record of default that could be scrutinised for traces of clustering. Nor did such securities trade often enough for the correlation of their prices to be measured: most investors simply held them until they matured. Intuitively, though, it seemed conceivable that defaults in bundles of mortgages or other forms of consumer debt could be quite highly correlated, because of the likely influence of factors such as the overall unemployment level, and that could make a CDO based on mortgage-backed securities an unduly risky product.

Terri Duhon, who led the Bayerische Landesbank mortgage-backed CDO, told me in an interview that some of her J.P. Morgan colleagues doubted at first that the deal should go ahead: they argued that ‘there is no way we should be doing this because it’s way too correlated.’ Tett reports that Krishna Varikooty, for example, was concerned by a correlation risk that seemed to him to be unquantifiable. After intensive discussion and analysis, and very conservative structuring of the deal, the team eventually agreed that it was safe to go ahead (it helped that, unlike in many more recent deals, the ratings of the underlying assets were high – around 95 per cent had Aaa ratings – and none of the securities was based on sub-prime mortgages). Yet the reservations remained, and from this point onwards, J.P. Morgan constructed only one further large CDO, and a limited number of smaller ones, in which the underlying assets were bundles of mortgages.

Consequently, the bank remained on the sidelines as the once largely distinct worlds of CDOs and mortgage-backed securities became more closely linked from 2002 onwards. It was an encounter of two subtly different cultures, with, for example, quite different mathematical approaches. The CDO world developed explicit and increasingly elaborate models of correlation – the ‘Gaussian copula’ that initially puzzled Tett is one of them – while the mortgage world handled the phenomenon entirely implicitly. In most investment banks, and also – as far as I have been able to discover – in the New York head offices of the rating agencies, separate groups or departments handled mortgage-backed securities and CDOs based on corporate debt. In investment banks, for instance, those different departments seem to have had surprisingly little to do with each other. The two cultures never really merged; instead, the CDO, a structure invented by the corporate-debt world, was applied to the products of the mortgage world.

Members of both cultures now see the encounter as corrupting. ‘They’ – constructors of CDOs based on mortgage-backed securities – ‘took our tools’ and misused them, one specialist in corporate credit derivatives told me a few weeks ago. Those with a background in mortgage-backed securities blame CDOs (with some justice) for being indiscriminate buyers of those securities, concerned only with their ratings and the spreads (increments over Libor) they offered. Two experienced industry observers, Mark Adelson and David Jacob, suggest that a fatal point was reached when CDOs became almost the only purchasers of the riskier tranches of mortgage-backed securities. Previously, those tranches had either been guaranteed against default by specialist insurers, or bought by canny investors, who would carefully assess the risks involved. These insurers and investors acted as a brake on the riskiness of the lower tranches, and thus on the overall riskiness of mortgage-backed securities, and they demanded a healthy rate of return for taking on the risks. They were displaced by those buying tranches in order to package them into CDOs, who were prepared to buy them at lower rates of return, and who cared a lot less about their riskiness, because those risks were going to be passed on to investors in the CDOs.

With the brake removed, the construction of CDOs based on mortgage-backed securities became a fast-moving assembly line (participants frequently turn to machine metaphors when describing the process). Brokers sold mortgages knowing that they could readily be sold on in the form of mortgage-backed securities. Instead of having to worry whether the couple sitting on the other side of their desk really had the wherewithal to keep up their payments, all that mattered were the dozen or so quantitative characteristics – such as borrowers’ FICO (Fair Isaac Corporation) creditworthiness scores – that influenced rating agencies’ mortgage models. The constructors of mortgage-backed securities no longer had to satisfy specialist insurers or experienced investors: CDOs had an apparently insatiable demand for those securities.

If the assembly line was to keep moving, it was essential that the higher tranches of its final products – CDOs in which the underlying assets were mortgage-backed securities – gained Aaa ratings. A critical issue was the likely correlation of mortgage-backed securities. Standard & Poor’s, for example, used the same system, CDO Evaluator, that it employed for CDOs based on corporate debt, and it used the same modest baseline correlation assumption, 0.3, for mortgage-backed securities that it initially used for corporations within the same industry. (S&P would later reduce this last figure, while increasing its assumption about cross-industry correlation.) These baseline correlation figures could be increased by the analysts rating a specific CDO if it was highly concentrated in a particular industry or consumer debt sector. I haven’t been able to ascertain the equivalent figures used by the other agencies, whose methods differed somewhat from Standard & Poor’s, but the similarity of their ratings to S&P’s suggest similar judgments. I am focusing on S&P simply because – commendably – it seems to have been more explicit than the other agencies, in the publicly available documentation for CDO Evaluator, about the crucial assumptions underpinning the system.

The choice of 0.3, or a number close to it, as the baseline was critical: one specialist told me that even a moderate increase in the baseline correlation assumption, to 0.5 for example, would have made many CDOs based on mortgage-backed securities much less attractive, perhaps even not economically viable. However, as far as I can discover, analysing CDOs built out of mortgage-backed securities using only modest correlation levels seems in general to have been uncontroversial. Certainly, the performance of mortgage-backed securities offered little reason to be more stringent when rating CDOs based on them. For example, S&P’s statistical analyses suggested a correlation of mortgage-backed securities lower than 0.3; this figure was retained as a baseline because it was understood that the correlation would rise when economic conditions became less benign.

Had the world remained as it was in 2002, the agencies’ assumptions and ratings might well have turned out to be perfectly appropriate. The trouble with an assembly line, though, is that it produces identical products. The only person outside J.P. Morgan I’ve found so far who thought at the time that the correlation estimates being used to analyse CDOs of mortgage-backed securities were much too low had made the discovery by accident. In a previous job as an auditor, he had checked the statistical tables that the sellers of mortgage-backed securities provide to prospective buyers. These tables show the breakdown of the underlying loans by state, FICO score, loan-to-value ratio and so on. When checking the tables for one security, he inadvertently used the loan tape (the underlying mortgage data) for another, and found that they were in almost complete agreement. ‘These deals’ – apparently different mortgage-backed securities – ‘were the same deal,’ he told me. Even geographical dispersion of the underlying mortgages across the US (a desirable feature when an individual mortgage-backed security was considered in isolation, because it reduced exposure to the vagaries of a particular local housing market) had the paradoxical effect of increasing the homogeneity of different mortgage-backed securities. In a situation of severe economic stress – falling house prices, rising unemployment – it wasn’t just that some of those securities would perform badly; they all would. Instead of correlation remaining modest, my interviewee came to fear that it would be close to perfect.

Specialists in mortgage-backed securities in the US have not been entirely surprised at the fraud and malpractice that has come to light: it was always present, and has changed only in scale. (There was a US sub-prime crisis in the late 1990s, which only specialists seem to remember.[†] It was much more limited in scale, but it revealed extensive over-optimistic accounting by lenders.) That mortgage defaults have risen, and the value of repossessed homes fallen, is not in itself surprising to specialists, although the size of the changes certainly is. At least some of them began to suspect that long-standing statistical relationships – for example between individuals’ credit scores and the risk that they would default on their mortgages – had ceased to be valid, but as far as I can tell this didn’t happen until as late as 2006, by which time the processes that led to the credit crisis were well underway. One problem, for instance, seems to have been that as individuals’ scores increasingly determined their access to credit and the rates of interest they had to pay, they found ways to manipulate those scores. A modest web-based industry developed which arranged (in return for a fee of one or two thousand dollars per person) for people – in some cases, apparently, dozens of people – with low credit scores to be added as ‘authorised users’ to the credit card account of someone with a high score and an impeccable payment record. It took just a month or two for the benefits of the primary cardholder’s regular payments to feed through into improvements in the credit scores of the card’s ‘renters’.

If CDOs backed by mortgages had worked as the J.P. Morgan team had envisaged when designing Bistro, the losses to investors in those CDOs that the US housing bubble and its collapse have caused, though very large, would have been spread widely across the many institutions that bought tranches of such CDOs. As Tett notes, what has shocked the members of that team – many of whom now work for other banks and hedge funds, but still stay in touch – is the concentration of such losses, especially at apparently sophisticated global banks such as Bear Stearns, Lehman Brothers, UBS, Citigroup, Merrill Lynch, Morgan Stanley and the Royal Bank of Scotland.

The primary vehicle by which risk was concentrated was Bistro’s afterthought, the super-senior tranches of CDOs. Even the riskiest mortgage-backed CDOs – those that predominantly bought ‘mezzanine’ (next-to-lowest) tranches of mortgage-backed securities – have super-senior tranches that are bigger than all the other tranches put together. These super-senior tranches were hard to sell to most outside investors, because the need for attractive returns on lower tranches means a super-senior tranche can offer only a slender increment over Libor. By 2005, Tett reports, that spread was as low as 15 basis points.

Thus many banks did as J.P. Morgan did with Bistro: they kept the super-senior tranches, sometimes insuring them via AIG or specialist bond insurers. (Adelson and Jacob point out the irony: risks that mortgage experts in the insurers would have charged heavily for or perhaps even declined were insured in packaged form in huge amounts – and quite cheaply – by different departments of the same firms.) If only a handful of deals had been insured in this way, it would have made perfect sense. As Tett observes, however, AIG insured super-senior tranches amounting to $560 billion. Its bail-out by the US taxpayer dwarfs that of any bank, and it keeps rising (the current total is $173 billion). But AIG cannot be allowed to fail, because the loss of these crucial super-senior insurance contracts could bring much of the banking system down with it.

Perhaps most surprising of all, top banks also bought super-senior tranches originated by other banks. If you are a top bank, you can borrow at around Libor (that is, after all, what Libor means); if you are particularly well regarded, it may be possible to borrow at a rate a tiny bit lower than Libor. So you could borrow at Libor or below, buy a tranche that seemed safer than safe, and from it earn a slender spread over Libor. It looked like free money. It was especially tempting to traders whose banks ‘charged’ them for their use of capital, in the systems by which traders’ profit is measured, at around Libor, and credited them with the small additional spread that super-senior tranches offered. The slenderness of the spread meant that you had to do the trade on a very large scale to earn a really big bonus, so traders did just that.

As I’ve already indicated, the vulnerability of super-senior tranches is correlation. Losses on uncorrelated assets are unlikely ever to impact on super-senior tranches. When correlation approaches 1.0, however, a CDO’s asset pool starts to behave like a single investment. It may suffer no defaults, or it may default effectively in its entirety. If the latter happens, even the super-senior tranche, safer than safe, is doomed.

As the historian of economics Perry Mehrling has pointed out, events in financial markets cast shadows ahead, not behind. What has loomed over the banking system for the last two years is the shadow of the gigantic, system-wide default of the super-senior tranches of all the CDOs based on the US mortgage-backed securities issued towards the end of the bubble. (Residential mortgages have been the focus of most of the attention, but there are also lots of problems with commercial mortgages.) Although, alas, the losses will not stop there, most immediately at risk have been CDOs made up primarily of the mezzanine tranches of sub-prime mortgage-backed securities issued from late 2005 on. Defaults have risen enough, the value of repossessed homes has fallen enough, and the structure and composition of these securities has been similar enough, that as far as I can tell almost all such tranches have been or will be completely wiped out. If a CDO contains little but such tranches, even its super-senior portion faces close to total losses. So far, only a limited portion of those losses have actually been realised. The banking system is braced for the rest of them but, with the massive aid of taxpayers, it is, one hopes, now well enough capitalised to survive these and the other losses that sharp recession will bring.

Unfortunately, this analysis – that the crux of the problem has been not in CDOs per se but in the uncomfortable encounter between the world of CDOs and that of mortgage-backed securities – remains only a hypothesis. The world of corporate CDOs has itself manifested some of the phenomena of the mortgage CDO assembly line: increasingly risky loans were made to private equity firms and to other highly indebted corporate borrowers because it was possible to package and sell on those loans in the form of CDOs. I’ve just come back from New York, where I asked some of those I spoke to about the magnitude of the problems that may lurk beneath the still comparatively quiet surface of this sector of the CDO market, which, although not as large as the mortgage sector, is still huge. My interviewees seem convinced that while the problems are real, they are on nothing like the same scale: the amount of truly irresponsible lending to corporations was much smaller. I hope they are right.

At its heart, Tett’s tale is a moral one. She believes that the history of the J.P. Morgan credit derivatives team shows that banking can be technically innovative while remaining responsible. Her readers may fear that the anthropologist has gone native, but I don’t think so. I have met a good number of the people she is writing about, and have studied many of the same events, and I largely share her judgment. In particular, J.P. Morgan’s decision not to set up a mortgage CDO assembly line has saved the bank from the catastrophic losses so many of its peers have suffered; unlike theirs, its solvency has never been in doubt. It is too easy just now to condemn all of those who work at the heart of the financial system as either rogues or fools. Tett is right to emphasise that despite all the pressures and all the temptations, prudent banking was still practised – sometimes – even at the centre of history’s largest ever credit bubble.

11 June

Complete article at:

http://www.lrb.co.uk/v31/n12/mack01_.html

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USGAO: Energy Markets: Estimates of the Effects of Mergers and Market Concentration on Wholesale Gasoline Prices. GAO-09-659, June 12.

http://www.gao.gov/cgi-bin/getrpt?GAO-09-659
Highlights -
http://www.gao.gov/highlights/d09659high.pdf

USGAO: Combating Nuclear Smuggling: DHS Improved Testing of Advanced Radiation Detection Portal Monitors, but Preliminary Results Show Limits of the New Technology. GAO-09-655, May 21.

http://www.gao.gov/cgi-bin/getrpt?GAO-09-655

Highlights – http://www.gao.gov/highlights/d09655high.pdf

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Last Week’s Health Reform “Shocker”, the Latest “Pulling It Together, From Drew Altman”

In the latest column from his “Pulling It Together” series, the Kaiser Family Foundation’s President and CEO Drew Altman explores the meaning of last week’s reaction to Congressional Budget Office cost and coverage estimates for health reform legislation and why it should not have come as a surprise. You can read the full column online at

http://www.kff.org/pullingittogether/062509_altman.cfm .

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Op-Ed: 10 lessons for national health care reform

San Francisco Chronicle

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/06/23/ED9R18BIOO.DTL&type=printable

Melissa A. Rodgers

MELISSA A. RODGERS IS THE ASSOCIATE DIRECTOR OF THE BERKELEY CENTER ON HEALTH, ECONOMIC & FAMILY SECURITY AT UC BERKELEY SCHOOL OF LAW and the former director of the Health Consumer Center at the Legal Aid Society of San Mateo County. To download the center’s report, go to
www.law.berkeley.edu/files/PrescriptionforSuccessJune2009.pdf.

June 23, 2009

President Obama and a Democratic-controlled Congress have made health care reform a priority for the first time in 15 years. In the past two weeks, the House and Senate have released draft bills whose key features closely resemble the policies hotly debated previously in California. Although the economic situation in 2007-2008 derailed health care reform in California, it is today’s economic crisis that may make national reform a reality.

The status quo is simply not a sustainable option. The increasing economic insecurity that Americans and their families face is mirrored in the worsening financial situation of employers, state governments, private insurers and health providers. The president and Congress must act now.

But if they are not careful, policymakers in Washington risk falling into the same pitfalls that brought down reform efforts in California. Last week’s release of the surprising cost estimate from the Congressional Budget Office was an eerie reminder of the California challenges. In addressing the health care crisis quickly and boldly, national leaders would do well to heed the lessons that California’s health care debate offers….

Drew Sheneman: … critical condition
(www.cagle.com)

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Wash. Post misleads on Medicare cost growth

The Washington Post suggested that the rising cost of Medicare and Medicaid is driven primarily by the aging of the American population. But the CBO has found that the principal factor behind these rising costs is the “growth in per capita costs rather than from the aging of the population.”

Read More

http://mediamatters.org/items/200906250003?lid=1046652&rid=30563245

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Obama administration seeks to quash suit by 9/11 families

by Barry Grey .
Global Research, June 26, 2009

The Obama administration has intervened to quash a civil suit filed against Saudi Arabia by survivors and family members of victims of the September 11, 2001 terrorist attacks. The suit seeks to hold the Saudi royal family liable, charging that it provided financial and other support to Al Qaeda and was thereby complicit in the hijack bombings that killed nearly 3,000 people in New York and Washington DC.

According to an article by Eric Lichtblau in the June 24 New York Times, documents assembled by lawyers for the 9/11 families “provide new evidence of extensive financial support for Al Qaeda and other extremist groups by members of the Saudi royal family.” However, the article states, the documents may never find their way into court because of legal challenges by Saudi Arabia, which are being supported by the US Justice Department.

The administration is taking extraordinary measures to kill the suit and suppress the evidence of Saudi support for Al Qaeda and complicity in the 9/11 attacks. Last month, the Justice Department sided in court with the Saudi monarchy in seeking to halt further legal action. Moreover, it had copies of American intelligence documents on Saudi finances that had been leaked to lawyers for the families destroyed, and is now seeking to prevent a judge from even looking at the material.

Two federal judges and the Second Circuit Court of Appeals have already ruled against the 7,630 people represented in the lawsuit, rejecting the suit on the grounds that the plaintiffs cannot sue in the US against a sovereign nation and its leaders. The Supreme Court is expected to rule this month on whether to hear an appeal, but the families’ prospects have been weakened by the intervention of the Obama administration, which has called on the court not to hear the plaintiffs’ appeal.

The Times reports that it obtained the new documents from the families’ lawyers, adding that they are among “several hundred thousand pages of investigative material” assembled by the 9/11 families in their long-running suit against the Saudi royal family.

Lichtblau writes that the documents “provide no smoking gun connecting the royal family to the events of September 11, 2001.” However, there is a wealth of evidence in the public record strongly pointing to such a connection. And there is the 28-page, classified section of the 2003 joint congressional inquiry into 9/11 that deals with the Saudi role in the attacks. Lichtblau writes that “the secret section is believed to discuss intelligence on Saudi financial links to two hijackers.”

Then-President George W. Bush ordered that section of the congressional report to be classified, and its contents were blacked out in the findings released to the public by Congress. The Obama administration is continuing this policy of shielding the Saudi monarchy.

Lichtblau reports that the material obtained by the Times from the families’ lawyers includes “thousands of pages of previously undisclosed documents” that provide “an unusually detailed look at some of the evidence.” He cites as one example “internal Treasury Department documents” that show that the International Islamic Relief Organization, a “Saudi charity,” heavily supported by members of the Saudi royal family, “provided ‘support for terrorist organizations’ at least through 2006.”

He gives other examples of evidence of Saudi support for Islamist terrorists in Bosnia in the 1990s and witness statements and intelligence reports of money being given by Saudi princes to the Taliban and to “militants’ activities” in Pakistan and Bosnia during the same decade.

What are the motives behind the Obama administration’s efforts to cover up the connections between the Saudi monarchy and Al Qaeda?

The Justice Department, according to the Times, cites “potentially significant foreign relations consequences” should the 9/11 families’ suit be allowed to go to trial. This is undoubtedly a factor. The US has an immense political and economic interest in protecting the Saudi dictatorship, which is a major American ally in the Middle East, a supporter of Washington’s wars in Iraq and Afghanistan, and the world’s biggest producer of oil.

But there is a more immediate and compelling reason for suppressing any exposure of the Saudi connection to Al Qaeda and 9/11. The revelations would undoubtedly shatter the official explanations of the September 11 attacks and point to complicity on the part of US intelligence and security agencies.

Given its longstanding and intimate ties to the Saudi royal family and Saudi intelligence, it is not possible to believe that the CIA would have been unaware of Saudi support for Al Qaeda and at least some of the 19 hijackers, 15 of whom were Saudi nationals, as they were preparing to carry out the attacks on New York and Washington.

The ties between the Saudi and US intelligence establishments were strengthened during the US-backed war against the pro-Soviet regime in Afghanistan, beginning in 1979 and continuing through the 1980s. The US poured billions of dollars in arms and financing into this war, most of it funneled through the ISI, the Pakistani intelligence agency.

The Saudi regime also helped fund the anti-Soviet guerrillas, many of whom were brought to Afghanistan by Islamist forces in the Middle East. Osama bin Laden served as the Saudi regime’s personal emissary in this cause, helping to organize, train and equip Arab volunteers for the Afghan war. The movement now known as Al Qaeda was spawned through the interaction of these three intelligence agencies—the CIA, the ISI and the Saudis.

The bipartisan 9/11 commission, in its July 2004 report, echoed the Bush administration’s whitewash of Saudi ties to the terrorist attacks, declaring that it found “no evidence that the Saudi government as an institution or senior Saudi officials individually funded” Al Qaeda.

However, in a book published later that year, Intelligence Matters, then-Florida Senator Bob Graham charged the Bush administration with orchestrating a cover-up of Saudi involvement in the September 11 attacks. Graham was at the time the ranking Democrat on the Senate Intelligence Committee, which had carried out, along with its House counterpart, the joint congressional investigation into 9/11.

He wrote that “evidence of official Saudi supportî for at least some of the hijackers was ìincontrovertible.” Graham’s charges focused on the extraordinary cases of Nawaf al-Hazmi and Khalid al-Mihdhar, who were identified as hijackers of American Airlines Flight 77, which crashed into the Pentagon.

The two men, both Saudi nationals, are undoubtedly the “two hijackers” to whom Times reporter Lichtblau refers in connection with the secret section of the joint congressional report on 9/11.

Both were known to US intelligence as Al Qaeda operatives at least since 1999. Malaysian agents, acting in concert with the CIA, photographed and videotaped them and others during a 2000 meeting of Islamist terrorist groups in Kuala Lumpur, Malaysia.

Nevertheless, after the meeting, al-Hazmi and al-Mihdhar were allowed to fly to the US using their own passports and visas issued by US consular authorities in Saudi Arabia. While the CIA knew of their presence in the US, it did not inform the Federal Bureau of Investigation, according to the FBI. (The CIA disputes this claim, insisting that it did alert the FBI). Nor did the CIA inform immigration authorities.

After landing in Los Angeles in January of 2000, al-Hazmi and al-Mihdhar were met by Omar al-Bayoumi, an employee of the Saudi civil aviation authority. US investigators have concluded that al-Bayoumi was a Saudi intelligence agent.

Al-Bayoumi invited the pair to move to San Diego, where he found them an apartment, provided them with money and helped enroll them in flight school.

It has been reported that al-Bayoumi served as a conduit for thousands of dollars in funding for the future hijackers sent by Princess Haifa, the wife of Prince Bandar, the Saudi ambassador to the US and a close confidante of the Bush family.

Al-Hazmi and al-Mihdhar lived openly in the US, one of them even having his name listed in the telephone directory.

Within months, al-Hazmi moved into the home of Abdussattar Shaikh, a retired professor at San Diego State University. Shaikh was on the FBI payroll, charged with monitoring the activities of Islamist groups in the San Diego region.

In his book, Graham wrote that the FBI concealed from the joint congressional committee the fact that its paid informant, Abdussattar Shaikh, had established a close personal relationship with the two hijackers.

When the committee staff discovered Shaikh’s role and the committee issued a subpoena to question him under oath, the FBI and then-Attorney General John Ashcroft refused to serve the subpoena. Graham said that a senior FBI official wrote to him and the Republican co-chair of the joint committee declaring that the administration would neither allow the FBI to serve a subpoena on Shaikh nor allow the committee staff to interview him.

Graham wrote that this was the only time he had ever heard of the FBI refusing to serve a congressional subpoena. He commented, “We were seeing in writing what we had suspected for some time: the White House was directing a cover-up.”

Bush’s extraordinary intervention to block questioning of FBI informant Shaikh was consistent with his administration’s actions in the immediate aftermath of the September 11 attacks, when it allowed chartered planes to ferry some 140 prominent Saudis—including at least a dozen of Osama bin Laden’s relatives—to Boston for evacuation to Saudi Arabia. The pick-up flights were organized at a time when all non-military and non-emergency aviation had been grounded by government order. Bin Laden’s relatives were allowed to leave the country with little or no questioning by the FBI.

In his book, Graham himself posed the question of why the congressional committee was denied access to the San Diego FBI informant. After offering several possible answers, he suggested in deliberately obscure language a “far more damning possibility”—“perhaps the informant did know something about the plot that would be even more damaging were it revealed, and that this is what the FBI is trying to conceal.”

Graham did not spell out what “damning” information about the 9/11 conspiracy the informant might have revealed. But the role of the CIA, the FBI and the Bush administration in the case of al-Hazmi and al-Mihdhar suggests that it went beyond involvement by the Saudi government. It strongly suggests he was blocked from being questioned out of concern that he would reveal that elements within the US state apparatus knew of plans for an impending hijacking and allowed them to go forward.

Eight years after the attacks, no one has been held accountable for what on its face is the greatest failure of national security in US history. The question is: Was it a failure, or was a decision taken to permit a terrorist attack on US soil in order to provide the pretext for implementing plans for wars abroad and repressive policies at home that had been drawn up well in advance of September 11, 2001?

That a new administration is continuing the policy of shielding the Saudi monarchy and suppressing evidence of its complicity in 9/11 points strongly to the latter explanation.

Barry Grey is a frequent contributor to Global Research.

Complete article at:

http://globalresearch.ca/index.php?context=va&aid=14110

See:
http://www.nytimes.com/2009/06/24/world/middleeast/24saudi.html?_r=1

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CrowdEye — What all the Twitter is about

Real time … Social … Search …

That’s what those of us at CrowdEye are obsessed with. The internet has been evolving for years into a place where information flows quicker and quicker. Now it is becoming increasingly possible to tap into that stream of bits and bytes and use it to draw conclusions and make informed decisions based on the “wisdom of the crowds”.

Twitter is a phenomenon. Its growth is a genuine hockey-stick. It’s everywhere from Oprah to the front page of Time Magazine, and countless Hollywood celebrities are using it. Together with sites like Facebook and MySpace, it forms the core of today’s “social web.” CrowdEye is happy to be part of a thriving ecosystem growing out from this core.

CrowdEye is a new generation of search engine which looks at the worldwide web in a new way. By tracking discussions on Twitter, we can help our users find out what’s important to them right now in real time. CrowdEye has created innovative technology to scan through tweets, retweets, twitter links and more. We then provide you with powerful yet easy ways to slice, dice, summarize and categorize the data to answer your questions. Whether you’re interested in following your brand, baseball, celebrities, movies, or anything else people are talking about – CrowdEye can help you know what people are thinking.

Go to:
http://www.crowdeye.com/home.aspx

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Jon Stewart …

“Oh. Marital infidelity. You are just another run-of-the-mill human being whose simple moralizing about the sanctity of marriage is only marred by the complexities of their own life. Well, just another politician with a conservative mind and a liberal penis.”

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three thousand words

(click here to view)

Elena Steier Center for American Blogress Jun 28, 2009 EditorialCartoonists.com

Tom Toles: wilderness years
(d.yimg.com)

Ed Stein: health care reform
(www.cagle.com)

Security at Places of Worship: More Than a Matter of Faith

June 17, 2009
By Scott Stewart and Fred Burton

In recent months, several high-profile incidents have raised awareness of the threat posed by individuals and small groups operating under the principles of leaderless resistance. These incidents have included lone wolf attacks against a doctor who performed abortions in Kansas, an armed forces recruitment center in Arkansas and the U.S. Holocaust Memorial Museum in Washington, D.C. Additionally, a grassroots jihadist cell was arrested for attempting to bomb Jewish targets in the Bronx and planning to shoot down a military aircraft at an Air National Guard base in Newburgh, N.Y.

In addition to pointing out the threat posed by grassroots cells and lone wolf operatives, another common factor in all of these incidents is the threat of violence to houses of worship. The cell arrested in New York left what they thought to be active improvised explosive devices outside the Riverdale Temple and the Riverdale Jewish Community Center. Dr. George Tiller was shot and killed in the lobby of the Reformation Lutheran Church in Wichita. Although Abdulhakim Mujahid Muhammad conducted his attacks against a Little Rock recruiting center, he had conducted preoperational surveillance and research on targets that included Jewish organizations and a Baptist church in places as far away as Atlanta and Philadelphia. And while James von Brunn attacked the Holocaust Museum, he had a list of other potential targets in his vehicle that included the National Cathedral.

In light of this common thread, it might be instructive to take a more detailed look at the issue of providing security for places of worship.

Awareness: The First Step

Until there is awareness of the threat, little can be done to counter it. In many parts of the world, such as Iraq, India and Pakistan, attacks against places of worship occur fairly frequently. It is not difficult for religious leaders and members of their congregations in such places to be acutely aware of the dangers facing them and to have measures already in place to deal with those perils. This is not always the case in the United States, however, where many people tend to have an “it can’t happen here” mindset, believing that violence in or directed against places of worship is something that happens only to other people elsewhere.

This mindset is particularly pervasive among predominantly white American Protestant and Roman Catholic congregations. Jews, Mormons, Muslims and black Christians, and others who have been targeted by violence in the past, tend to be far more aware of the threat and are far more likely to have security plans and measures in place to counter it. The Jewish community has very well-developed and professional organizations such as the Secure Community Network (SCN) and the Anti-Defamation League that are dedicated to monitoring threats and providing education about the threats and advice regarding security. The Council on American-Islamic Relations has taken on a similar role for the Muslim community and has produced a “Muslim community safety kit” for local mosques. The Church of Jesus Christ of Latter-day Saints (LDS) also has a very organized and well-connected security department that provides information and security advice and assistance to LDS congregations worldwide.

There are no functional equivalents to the SCN or the LDS security departments in the larger Catholic, evangelical Protestant and mainline Protestant communities, though there are some organizations such as the recently established Christian Security Network that have been attempting to fill the void.

Following an incident, awareness of the threat seems to rise for a time, and some houses of worship will put some security measures in place, but for the most part such incidents are seen as events that take place elsewhere, and the security measures are abandoned after a short time.

Permanent security measures are usually not put in place until there has been an incident of some sort at a specific house of worship, and while the triggering incident is sometimes something that merely provides a good scare, other times it is a violent action that results in tragedy. Even when no one is hurt in the incident, the emotional damage caused to a community by an act of vandalism or arson at a house of worship can be devastating.

It is important to note here that not all threats to places of worship will emanate from external actors. In the midst of any given religious congregation, there are, by percentages, people suffering from serious mental illnesses, people engaged in bitter child-custody disputes, domestic violence situations and messy divorces. Internal disputes in the congregation can also lead to feuds and violence. Any of these situations can (and have) led to acts of violence inside houses of worship

Security Means More than Alarms and Locks

An effective security program is more than just having physical security measures in place. Like any man-made constructs, physical security measures — closed-circuit television (CCTV), alarms, cipher locks and so forth — have finite utility. They serve a valuable purpose in institutional security programs, but an effective security program cannot be limited to these things. Devices cannot think or evaluate. They are static and can be observed, learned and even fooled. Also, because some systems frequently produce false alarms, warnings in real danger situations may be brushed aside. Given these shortcomings, it is quite possible for anyone planning an act of violence to map out, quantify and then defeat or bypass physical security devices. However, elaborate planning is not always necessary. Consider the common scenario of a heavy metal door with very good locks that is propped open with a trashcan or a door wedge. In such a scenario, an otherwise “secure” door is defeated by an internal security lapse.

However, even in situations where there is a high degree of threat awareness, there is a tendency to place too much trust in physical security measures, which can become a kind of crutch — and, ironically, an obstacle to effective security.

In fact, to be effective, physical security devices always require human interaction. An alarm is useless if no one responds to it, or if it is not turned on; a lock is ineffective if it is not engaged. CCTV cameras are used extensively in corporate office buildings and some houses of worship, but any competent security manager will tell you that, in reality, they are far more useful in terms of investigating a theft or act of violence after the fact than in preventing one (although physical security devices can sometimes cause an attacker to divert to an easier target).

No matter what kinds of physical security measures may be in place at a facility, they are far less likely to be effective if a potential assailant feels free to conduct preoperational surveillance, and is free to observe and map those physical security measures. The more at ease someone feels as they set about identifying and quantifying the physical security systems and procedures in place, the higher the odds they will find ways to beat the system.

A truly “hard” target is one that couples physical security measures with an aggressive, alert attitude and sense of awareness. An effective security program is proactive — looking outward to where most real threats are lurking — rather than inward, where the only choice is to react once an attack has begun to unfold. We refer to this process of proactively looking for threats as protective intelligence.

The human interaction required to make physical security measures effective, and to transform a security program into a proactive protective intelligence program, can come in the form of designated security personnel. In fact, many large houses of worship do utilize off-duty police officers, private security guards, volunteer security guards or even a dedicated security staff to provide this coverage. In smaller congregations, security personnel can be members of the congregation who have been provided some level of training.

However, even in cases where there are specially designated security personnel, such officers have only so many eyes and can only be in a limited number of places at any one time. Thus, proactive security programs should also work to foster a broad sense of security awareness among the members of the congregation and community, and use them as additional resources.

Unfortunately, in many cases, there is often a sense in the religious community that security is bad for the image of a particular institution, or that it will somehow scare people away from houses of worship. Because of this, security measures, if employed, are often hidden or concealed from the congregation. In such cases, security managers are deprived of many sets of eyes and ears. Certainly, there may be certain facets of a security plan that not everyone in the congregation needs to know about, but in general, an educated and aware congregation and community can be a very valuable security asset.

Training

In order for a congregation to maintain a sense of heightened awareness it must learn how to effectively do that. This training should not leave people scared or paranoid — just more observant. People need to be trained to look for individuals who are out of place, which can be somewhat counterintuitive. By nature, houses of worship are open to outsiders and seek to welcome strangers. They frequently have a steady turnover of new faces. This causes many to believe that, in houses of worship, there is a natural antagonism between security and openness, but this does not have to be the case. A house of worship can have both a steady stream of visitors and good security, especially if that security is based upon situational awareness.

At its heart, situational awareness is about studying people, and such scrutiny will allow an observer to pick up on demeanor mistakes that might indicate someone is conducting surveillance. Practicing awareness and paying attention to the people approaching or inside a house of worship can also open up a whole new world of ministry opportunities, as people “tune in” to others and begin to perceive things they would otherwise miss if they were self-absorbed or simply not paying attention. In other words, practicing situational awareness provides an excellent opportunity for the members of a congregation to focus on the needs and burdens of other people.

It is important to remember that every attack cycle follows the same general steps. All criminals — whether they are stalkers, thieves, lone wolves or terrorist groups — engage in preoperational surveillance (sometimes called “casing,” in the criminal lexicon). Perhaps the most crucial point to be made about preoperational surveillance is that it is the phase when someone with hostile intentions is most apt to be detected — and the point in the attack cycle when potential violence can be most easily disrupted or prevented.

The second most critical point to emphasize about surveillance is that most criminals are not that good at it. They often have terrible surveillance tradecraft and are frequently very obvious. Most often, the only reason they succeed in conducting surveillance without being detected is because nobody is looking for them. Because of this, even ordinary people, if properly instructed, can note surveillance activity.

It is also critically important to teach people — including security personnel and members of the congregation — what to do if they see something suspicious and whom to call to report it. Unfortunately, a lot of critical intelligence is missed because it is not reported in a timely manner — or not reported at all — mainly because untrained people have a habit of not trusting their judgment and dismissing unusual activity. People need to be encouraged to report what they see.

Additionally, people who have been threatened, are undergoing nasty child-custody disputes or have active restraining orders protecting them against potentially violent people need to be encouraged to report unusual activity to their appropriate points of contact.

As a part of their security training, houses of worship should also instruct their staff and congregation members on procedures to follow if a shooter enters the building and creates what is called an active-shooter situation. These “shooter” drills should be practiced regularly — just like fire, tornado or earthquake drills. The teachers of children’s classes and nursery workers must also be trained in how to react.

Liaison

One of the things the SCN and ADL do very well is foster security liaison among Jewish congregations within a community and between those congregations and local, state and federal law enforcement organizations. This is something that houses of worship from other faiths should attempt to duplicate as part of their security plans.

While having a local cop in a congregation is a benefit, contacting the local police department should be the first step. It is very important to establish this contact before there is a crisis in order to help expedite any law enforcement response. Some police departments even have dedicated community liaison officers, who are good points of initial contact. There are other specific points of contact that should also be cultivated within the local department, such as the SWAT team and the bomb squad.

Local SWAT teams often appreciate the chance to do a walk-through of a house of worship so that they can learn the layout of the building in case they are ever called to respond to an emergency there. They also like the opportunity to use different and challenging buildings for training exercises (something that can be conducted discreetly after hours). Congregations with gyms and weight rooms will often open them up for local police officers to exercise in, and some congregations will also offer police officers a cup of coffee and a desk where they can sit and type their reports during evening hours.

But the local police department is not the only agency with which liaison should be established. Depending on the location of the house of worship, the state police, state intelligence fusion center or local joint terrorism task force should also be contacted. By working through state and federal channels, houses of worship in specific locations may even be eligible for grants to help underwrite security through programs such as the Department of Homeland Security’s Urban Areas Security Initiative Nonprofit Security Grant Program.

The world is a dangerous place and attacks against houses of worship will continue to occur. But there are proactive security measures that can be taken to identify attackers before they strike and help prevent attacks from happening or mitigate their effects when they do.

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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VIRGINITY MOVEMENT ON THE DEFENSIVE, SCRAMBLING TO REBRAND

By Jessica Valenti, The Nation

Progressives have to fight back to ensure that abstinence groups don’t regain their cultural footing.

http://www.alternet.org/sex/140817/virginity_movement_on_the_defensive%2C_scrambling_to_rebrand/

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DEAR ANTI-CHOICERS: PLEASE SHUT UP ABOUT THE NON-EXISTENT LINK BETWEEN ABORTION AND BREAST CANCER

By Melissa McEwan, Shakesville

I guess hard evidence is easy to ignore when you don’t really believe in science.

http://www.alternet.org/blogs/reproductivejustice/140903/dear_anti-choicers%3A_please_shut_up_about_the_non-existent_link_between_abortion_and_breast_cancer/

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KENTUCKY PASTOR TELLS FOLLOWERS TO BRING GUNS TO CHURCH

By Melissa McEwan, Shakesville

“Guns and God were part of the foundation of this country,” said Ken Pagano . “I don’t see any contradiction in this.”

http://www.alternet.org/blogs/peek/140949/kentucky_pastor_tells_followers_to_bring_guns_to_church/

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SPIES IN THE CLASSROOM: THE GOVERNMENT IS RUNNING A SECRETIVE INTELLIGENCE RECRUITMENT PROGRAM IN SCHOOLS

By David Price, CounterPunch

The “Pat Roberts Intelligence Scholars Program” may become a permanent budget item, making universities unwitting agents of state intelligence.

http://www.alternet.org/story/140872/spies_in_the_classroom%3A_the_government_is_running_a_secretive_intelligence_recruitment_program_in_schools/

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WHY DO ATHEISTS HAVE TO TALK ABOUT ATHEISM? BECAUSE WE’RE RIGHT.

By Greta Christina, AlterNet

Thinking you’re right, and trying to persuade other people you’re right is not intolerant or close-minded — it’s a cornerstone of democracy.

http://www.alternet.org/story/140914/why_do_atheists_have_to_talk_about_atheism_because_we%27re_right./

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In the light of evolution III

June 23rd, 2009

Read more:

http://ncseweb.org/news/2009/06/light-evolution-iii-004861

A special supplement to the June 16, 2009, issue of Proceedings of the National Academy of Sciences entitled “In the light of evolution III: Two centuries of Darwin” is now freely available.

http://www.pnas.org/content/106/suppl.1.toc

The Dynamics of Dinosaurs and Other Extinct Giants

Examines how prehistoric animals lived, moved, and finally died out by using drawings and charts to make comparisons with large modern animals such as elephants.

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Texas School District Has No Right To Force Native American Boy To Cut Hair, Says Americans United

Watchdog Group Says Private Religious Activity In School Is Protected

June 26, 2009

Officials at a Texas public school have no right to force a Native American elementary school student to cut his hair, which he wears long for religious reasons, says Americans United for Separation of Church and State.

Americans United today filed a friend-of-the-court brief supporting student Adriel Arocha and his family. The family is challenging a grooming policy at the Needville Independent School District that bans long hair for male students.

“Public schools must never sponsor prayer or other religious activities,” said the Rev. Barry W. Lynn, executive director of Americans United. “At the same time, they have an obligation to allow voluntary student religious expression that doesn’t interfere with the rights of others.

Read the full press release at au.org

http://www.au.org/media/press-releases/archives/2009/06/texas-school-district-has-no.html

Americans United (AU) is a nonpartisan organization dedicated to preserving the constitutional principle of church-state separation as the only way to ensure religious freedom for all Americans.

Americans United for Separation of Church and State http://www.au.org/

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Americans United Urges Attorney General to Act On Unlawful ‘Earmark’ Funding Of Nine Religious Institutions

Watchdog Group Says Private Religious Activity In School Is Protected

June 26, 2009

Officials at a Texas public school have no right to force a Native American elementary school student to cut his hair, which he wears long for religious reasons, says Americans United for Separation of Church and State.

Americans United today filed a friend-of-the-court brief supporting student Adriel Arocha and his family. The family is challenging a grooming policy at the Needville Independent School District that bans long hair for male students.

“Public schools must never sponsor prayer or other religious activities,” said the Rev. Barry W. Lynn, executive director of Americans United. “At the same time, they have an obligation to allow voluntary student religious expression that doesn’t interfere with the rights of others.

Read the full press release at au.org

http://www.au.org/media/press-releases/archives/2009/06/au-urges-attorney-general-to.html

Americans United (AU) is a nonpartisan organization dedicated to preserving the constitutional principle of church-state separation as the only way to ensure religious freedom for all Americans.

Americans United for Separation of Church and State http://www.au.org/

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HOUSE COMMITTEE APPROVES RELIGIOUS SLOGANEERING AT CAPITAL VISITOR CENTER

A congressional committee has approved a resolution that would use public money to have the current national lotto (“In God We Trust”) and the Pledge of Allegiance (“One Nation Under God”) included at the new Capitol Hill Visitor Center in Washington, D.C.

H. Con. Res. 131 directs the Architect of the Capitol to install the texts, but makes no direct reference to religion. The motto and the Pledge, however, have been at the center of lawsuits and growing controversy, and charges that they promote religious belief. The current motto was adopted in 1956 when then-President Dwight Eisenhower signed Public Law 851, replacing the earlier, original slogan “Out of Many, One” or “E Pluribus Unum.” Christian advocacy groups had been promoting the religious version since 1861 when the latter was proposed by Rev. M. R. Watkinson. In 1864, Congress enacted legislation that placed “In God We Trust” on the nation’s money.

The religionized Pledge of Allegiance came about in 1954 with the addition of the words “under God.”

Both practices have been challenged unsuccessfully as establishments of religion by the government. The sloganeering was part of a wider effort during the cold war to combat what was perceived as “godless Communism.” Today, defenders of the religious motto and pledge describe these practices as instruments which “acknowledge our nation’s religious heritage,” or promote public morality.

Critics charge that they place the government in the position of supporting religious belief, and often sectarian Christianity.

The Resolution was introduced by Rep. Dan Lungren (R-Calif.). “While the Capitol Visitor Center did a good job of incorporating many elements, I believe there are two important items (that) were absent — the Pledge of Allegiance and the National Motto ‘In God We Trust,” ” Lungren told reporters. “I am pleased that this resolution remedies this oversight and incorporates important parts of our national heritage into the CVC.”

Lungren added that his Resolution addresses the concerns of social and religious conservatives who are “extremely unhappy” that the Center curator supposedly removed certain language from historical
displays prior to the opening of the $621 million facility. A supporter of the legislation, Sen. Jim DeMint (R-S.C.) grumbled that the Center”generally ignores” the role of religious belief in the founding of the United States.

“There are a few articles in the CVC that reflect elements of faith,” said DeMint. “There are two bibles, a picture of the congressional nondenominational faith space and the oath of office — but I believe they grossly understate the prominent role of faith and Judeo-Christian values in the history of this great building.”

The dispute over the new visitor center has also become a cause celebre for former House of Representatives Speaker Newt Gingrich, who has been mentioned as a possible candidate for the GOP presidential nomination in 2012. Traditionally identified as a social conservative with ties to religious right groups, Gingrich has become more outspoken in recent months over the need to keep evangelical extremists in the party ranks. His book “Rediscovering God in America” is seen as a part of a larger effort to win religious-right support. Rob Boston of Americans United told the People for the American Way web site: “The idea of Newt Gingrich as the next leader of the religious right is not as odd as it sounds. During his tenure as Speaker, Gingrich was known mainly for his
promotion of small government, low taxes, and libertarian ideas, but a lot has changed since 1999; in recent years, Gingrich has been stressing religious-right themes.”

Boston cited the 2006 publication of Gingrich’s book where he argues that America is a “Christian nation.” Gingrich also told U.S. News & World Report magazine that he is launching a new effort
to unite evangelical Christians with Roman Catholics to support a faith-based social agenda. Gingrich has also been teaming up with David Barton, a proponent of “Christian America” revisionist history; many of Barton’s claims have been critically panned by researchers and historians.

One vehicle for Gingrich is his new political committee, “Renewing American Leadership.” This group has jumped into the fray over the Congressional Visitors Center with a 23-page report, “Reconstructing American History” that accuses center officials of “bias” and other transgressions. The report also charges that the curator of CVC, the Capitol Preservation Committee and even the House Architect and staff designed the new visitor center so that it “presents visitors with a biased, unbalanced, incomplete and in many cases inaccurate history if America and the Capitol.”

One specific target of the group’s concern was the original center presentation of the national motto. In a display titled “Unity,” the center noted that “E Pluribus Unum” symbolized: “Out of many– one –(and) expresses the ideal of our Union; many states, one nation. Representing all the states, Congress has promoted national unity through a process of inquiry, debate, compromise,
and consensus. These documents record the continuing legislative efforts to meet the broadest needs of the people.”

On the Hill, 108 Congressional Representatives joined in a letter to the Capitol Architect protesting the lack of religious themes in the current center exhibition space. One was Rep. Randy Forbes
(R-Va.) who complained to reporters: “Our concern is not just with the Capitol Visitor Center, but an increasing pattern of attempts to remove references to our religious heritage from our nation’s
capital. The Capitol Visitor Center is just one example of efforts to censor God, faith and religion from our historical buildings, documents and ceremonies.”

Complete article at:

AANEWS for Saturday, June 27, 2009 http://www.atheists.org

Thomas Paine …

“The study of theology, as it stands in the Christian churches, is the study of nothing; it is founded on nothing; it rests on no principles; it proceeds by no authority; it has no data; it can demonstrate nothing; and it admits of no conclusion.”

Thomas Jefferson, Autobiography, in reference to the Virginia Act for Religious Freedom

Where the preamble declares, that coercion is a departure from the plan of the holy author of our religion, an amendment was proposed by inserting “Jesus Christ,” so that it would read “A departure from the plan of Jesus Christ, the holy author of our religion;” the insertion was rejected by the great majority, in proof that they meant to comprehend, within the mantle of its protection, the Jew and the Gentile, the Christian and Mohammedan, the Hindoo and Infidel of every denomination.

Milt Priggee: there, but for the grace of …
(www.cagle.com)

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Former SC youth minister charged with lewd acts And more …

WBTV – Charlotte,NC,USA

AP – June 19, 2009 12:15 PM ET COLUMBIA, SC (AP) -

A former youth minister at a South Carolina church has been arrested and charged with sex crimes
…

http://www.wbtv.com/Global/story.asp?S=10562598

Minister charged with sexual abusing 4 females

Chicago Tribune – United States

AP COUNCIL BLUFFS, Iowa -

A minister who led churches in Lincoln, Neb. and Council Bluffs has been charged with sexually abusing four females, …

http://www.chicagotribune.com/news/chi-ap-ne-ministercharged,0,2503207.story

Preacher Charged with Murder, DUI

Avvo – Seattle,WA,USA

The case against an Ohio preacher who is charged with wanton murder and a DUI is expected to go in front of a grand jury tomorrow, WKRC-TV Local12.com …

http://www.avvo.com/news/preacher-charged-with-murder–dui-295.html

Judge grants bond for Belle Glade minister accused of sexual acts …

Palm Beach Post – FL, United States

James Richard Harris, 61, is charged with sexual battery, unlawful sexual activity with a minor, lewd and lascivious battery, and showing obscene material …

http://www.palmbeachpost.com/localnews/content/local_news/epaper/2009/06/18/0618harris.html

Ga Minister Charged With Child Molestation

News Story WSB Atlanta

GORDON COUNTY, Ga. — A Gordon County minister was arrested, accused of molesting a then 11-year-old girl.

Sunday, June 21, 2009.

http://www.wsbtv.com/news/19815287/detail.html

N.Y. Minister Charged With Sexually Abusing Girl in Jamaica …

NY Minister Charged With Sexually Abusing Girl in Jamaica, Jamaican police say Paul Lewis is charged with carnal abuse and indecent assault in an incident …

http://www.foxnews.com/story/0,2933,526990,00.html

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Three pastors …

Three pastors went to the pastor convention and were all sharing one room.

The first pastor said, “Let’s confess our secret sins one to another.

I’ll start – my secret sin is I just love to gamble.

When I go out of town, it’s cha-ching cha-ching, let the machines ring.”

The second pastor said, “My secret sin is that I just hate working.

I copy all my sermons from those given by other pastors.”

The third pastor said, “My secret sin is gossiping and, oh boy, I just can’t wait to get out of this room!”

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three thousand words

(click here to view)

Nick Anderson Houston Chronicle May 19, 2009 EditorialCartoonists.com

150 years ago, this is what “traditional” marriage meant.
(flickr.com)

Matt Davies: … defending traditional marriage
(davies.lohudblogs.com)

Where Do The Dollars Drain?

By Emily Spence

In order to raise sales and personal royalty gains, Alan Greenspan, just prior to the release of his book The Age of Turbulence, carried out a public relations blitz dragged out for a whole week in which he made remarks similar to those conveyed in his hardback. These included statements such as “I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil.”

Indeed, many Americans and people from other countries knew that domination of a region rich in fossil fuels represented the primary motive for the Iraq incursion and the only significant reason that Iran is not similarly assaulted is that it has an arsenal, unlike Saddam Hussein, capable of rendering serious damage in retaliation (i.e., aimed at U.S. troops in Iraq). Besides, the U.S. military is stretched too thin as it is with approximately 1,000 bases worldwide, along with operations occurring on every continent, such as the AFRICOM sorties, which are generally tied to oil company interests as the map at the first reference shows. [1]

Furthermore, plans to invade Iraq were long in the making, but the problem was finding the grounds, legal or not, to obtain the support of the public for such an outrageous act of violence, which to date has led to the displacement of millions of Iraqis and the slaughter of more than one million individuals, including over 4,300 U.S. troops. In tandem, George W. Bush and Tony Blair knew that the UN inspectors would not find Iraqi weapons of mass destruction and were hard pressed to find a reason that could justify the war. So the U.S. President came up with imaginative alternatives:

“Bush told Blair the US had drawn up a provocative plan ‘to fly U2 reconnaissance aircraft painted in UN colours over Iraq with fighter cover’. Bush said that if Saddam fired at the planes this would put the Iraqi leader in breach of UN resolutions.

“The president expressed hopes that an Iraqi defector would be ‘brought out’ to give a public presentation on Saddam’s WMD or that someone might assassinate the Iraqi leader. However, Bush confirmed [in a memo written approximately two months prior to America's preemptive attack on Iraq that] even without a second [United Nations] resolution, the US was prepared for military action. The memo said Blair told Bush he was ‘solidly with the president.’” [2]

This in mind, it behooves the public, particularly the American public, to realize that U.S. armed invasions and covert operations, in general, have little to do with protection of Americans from global terrorists and more to do with obtainment of fossil fuels on behalf of the Pentagon and favored companies, whose heads contribute to government officials’ campaign funds and offer other perks like high paying jobs upon the completion of terms in office. As such, it would be more accurate were the directors of the Department of Defense to change its name to the Department of Assault. Doing so would, certainly, better reflect the United States history that has been well chronicled by Bill Blum, who indicates, “From 1945 to the end of the century, the United States attempted to overthrow more than 40 foreign governments, and to crush more than 30 populist-nationalist movements struggling against intolerable regimes. In the process, the US caused the end of life for several million people, and condemned many millions more to a life of agony and despair.” [3]

He, further, reminds that, prior to 1945, there existed a total of 168 separate invasions of countries around the world by the United States. This information was derived from the revision to the 1969 rendition of the Appendix to a report researched by the Foreign Affairs Division, Congressional Research Service, Library of Congress, US Government Printing Office, Washington, DC, 1975 and listed as “Instances of Use of United States Armed Forces Abroad, 1798-1945. [4]

Meanwhile, Alan Greenspan summarized, in talks and The Age of Turbulence, his displeasure with the Bush administration. “My biggest frustration remained the president’s unwillingness to wield his veto against out-of-control spending,” Greenspan indicated. “Not exercising the veto power became a hallmark of the Bush presidency. . . To my mind, Bush’s collaborate-don’t-confront approach was a major mistake.”

It, certainly, was and, in the Obama administration, it still is a major mistake compounded by other factors. These include the bailout funds committed as of December 2008 in the amount of $8.5 trillion, which represents 60% of the GDP [5] and the $1,449 billion, 54% of the federal budget, allocated for military expenditures in 2009. (This is in contrast to $1,210 billion, which represents 46% of the $2,650 billion total intended for the 2009 federal outlay, which is largely comprised of money borrowed from Chinese government controlled institutions). [6]

Out of such a reckless and cavalier setting, the total federal debt, itself, has blossomed to around $100 trillion [7], according to some researchers, based on the ongoing pattern of spending loaned funds and expecting future taxpayers to foot the ultimate bill in a ponzy-like scheme, one that makes the USA inarguably the world’s biggest debtor. (While Barack Obama seems to consider spiraling healthcare costs as the primary driver of the public deficit, surely he jests. Based on the tabulations above, it is clear that warfare and preparedness for extended wars is the largest cost that taxpayers subsume.)

Simultaneously, the IMF and WB directors, in a way, must be beside themselves with glee over the mounting shortfall. Like the personification of Bernie Madoff, Simon Legree and Uncle Scrooge all rolled into one, they draw together in a perfect vision of eager anticipation over the financial killing yet to come.

As Vi Ransel explains about them in two sections of “Manufacturing Poor People”:

“The World Bank loans money to a poor country to “help” in its development, to build up a part of its economy. “If”, and almost certainly when (that’s The Plan) the poor country is unable to pay the usurious interest on the loan because of declining exports (again, The Plan), the country has to borrow more money in order to service the debt. Enter the [International Monetary Fund].

“The IMF extends more loans, with more of those stainless steel strings more tightly bound around the victim, er, I mean, loan recipient, trussing up the “benefiting” poor nation like a Thanksgiving turkey about to be devoured by the West, The Rich. The country which borrows money… must give tax breaks to Western transnationals. The country must slash wages and refuse to protect local businesses from being ravaged by cheap imports and corporate takeovers.

“The country is further strong-armed to sell, at fire sale prices, all its government-owned mines, its railroads, industries and utilities to privately-owned, mostly-foreign corporations. The country must allow its forests to be clearcut and its land to be strip-mined. Money for education, healthcare, food assistance and the transportation infrastructure must be sheared back to service the debt. And the interest on the debt, through the wondrously magical Western miracle of compound interest, keeps growing and growing and growing and growing and on and on and on and on… And all the while, the people of the country are less able to feed themselves, since they are forced to grow cash crops for export to feed that debt service.

“Well, U.S. transnationals didn’t intend to ever let that happen again. There would be no more giving a real leg up to potential competitors. And thus we arrived at where we are today. And, in fact, the ruse works so well, that since the Seventies the plutocracy has been using the very same template here at home, – with an increasingly heavy hand. See U.S. auto workers, healthcare, the bank bailout, foreclosed homes, 600,00 jobs a month jettisoned, the murder of California, et al. Who, or what, will be next?” [8]

Will it be the entire USA? Perhaps it will be in that the public finances in America are, currently, arranged along this line:

In Fiscal Year 2008, $412 Billion was spent to pay back interest on money owed to holders of the National Debt. It represents the third biggest federal expense and the full amount owed in 2009, due to continued borrowing, will be, in all likelihood, higher as it equaled $214 Billion by May. Furthermore, educational spending in 2008 received a mere 4.4 percent of the budget while the accumulated estimated total for the interest owed on the National Debt is estimated to be $445,095,000,000, although the sum will, obviously, increase as more money is borrowed. [9]

Meanwhile, the current monthly aggregate for the 2009 interest owed comes to roughly $42.8 billion per month while the entire monthly federal outlay is approximately $220.8 billion per month. Therefore, the $42.8 billion in interest paid back each month represents around 5% of each tax dollar spent or, posed another way, totals over nineteen cents for each dollar expended while the budget deficit, itself, entails loans close to fifty cents on every dollar paid out with an increase in borrowing in 2010 by $87 billion to $1.3 trillion over 2009 anticipated to occur according to a White House spokesperson. [10]

In addition, there will, ultimately, be less tax dollars to collect in that presently America is hemorrhaging jobs at one every thirty seconds according to some analysts. So why not spend money to bail out the families living in their cars and under tarps in tent cities by providing employment and income through a widespread Works Progress Administration (WPA) and extended Civilian Conservation Corps (CCC) programs as occurred during the Great Depression?

Wouldn’t such a plan go further than bailouts to financial institutions and the ever present resource wars as a way to jumpstart the American economy, as well as US taxpayers who are watching 73 % of every tax dollar going to military expenditures (54%) and interest payments (19+%)? (With only 27% left for everything else, it forces one to wonder from where funds are going to derive for universal public health care, future Social Security payments, Medicare, Medicaid, public education and assorted other programs, such sustainable benign energy provision on a model close to energy independent Denmark’s enviable prototype as described by Thomas L. Friedman in “Flush With Energy”. [11]

Then again, the Pentagon directors probably have concluded that they need their resource wars in that the U.S. military is the single biggest user of oil in the world and it takes lots of oil to get the further oil supplied to American favored oil companies so that it can be returned in large measure and at high expense to the armed forces. In other words, it requires the type of assurance for a continued oil supply that only beaten down countries and puppet governments can render.

On account, open combat and covert operations will continue to be the favored means to obtain fossil fuels. Consequently, the military will continue to drain away the majority of the U.S. federal budget while the US covert operations budget, by itself, will surpass a staggering $50 billion for 2009.

“‘That’s the largest-ever sum,’ according to Aviation Week’s Bill Sweetman, a longtime black-budget seer — a three percent increase over last year’s total. It makes the Pentagon’s secret operations, including the intelligence budgets nested inside, ‘roughly equal in magnitude to the entire defense budgets of the UK, France or Japan,’ Sweetman adds. All in all, about seven and a half percent of the Defense Department’s total spending is now classified.” [12]

By and large, the ongoing U.S. financial mess provides signs that, while China’s rising, the USA will never gain back its former glory days that gave rise to both world dominance and a large middle class. As the country continues to lose jobs at the rate of approximately one every thirty seconds to either offshore company sites or business cutbacks, it has nowhere else to go except to sink down into increased hardship, as well as some degree of destitution, for an increasing number of Americans and the nation as a whole.

The unending act of misappropriating a land’s collective assets year after year has a way of ensuring this final result. As Ethel Grodzins Romm alleges,“What could our worst enemy do to damage this strong and beautiful country? He could do no better than to get us to squander our human and natural resources on dubious missions and then trick us into plugging our ears against the howls of those who object.”

[1] Major Oil Corporation and U.S. Military Activities in Africa.
[2] Confidential memo reveals US plan to provoke an invasion of Iraq.
[3] The question of oil: U.S. corporate interests in control of …
[4] APPENDIX II from ‘KILLING HOPE’ by William Blum.
[5] Cost Of Bailout Hits $8.5 Trillion-Total sum represents 60 per …
[6] The Federal Pie Chart.
[7] The Real US Federal Debt Has Ballooned to More than $100 …
[8] Manufacturing Poor People.

http://www.opednews.com/articles/Manufacturing-Poor-People-by-Vi-Ransel-090619-262.html

[9] Tax Chart 2009 Notes & Sources.
[10] US to borrow 46 cents for every dollar spent.
[11] Op-Ed Columnist – Flush With Energy – Op-Ed – NYTimes.com.
[12] Pentagon’s Black Budget Grows to More Than $50 Billion …

Emily Spence is an author living in Massachusetts. She has spent many years involved in human rights, environmental and social services efforts.

Complete article at:

http://mwcnews.net/index.php?option=com_content&task=view&id=31457&Itemid=26

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USGAO: Corporate Crime: Preliminary Observations on DOJ’s Use and Oversight of Deferred Prosecution and Non-Prosecution Agreements

by Eileen R. Larence, director, homeland security and justice, before the Subcommittee on Commercial and Administrative Law, House Committee on the Judiciary.

GAO-09-636T, June 25.

http://www.gao.gov/cgi-bin/getrpt?GAO-09-636T

Highlights – http://www.gao.gov/highlights/d09636thigh.pdf

USGAO: “The Recovery Act and TARP: GAO’s Oversight Role”

by Gene L. Dodaro, acting comptroller general, before the National State Auditors Association annual conference, in Savannah, Georgia.

GAO-09-846CG, June 17, 2009

http://www.gao.gov/cghome/d09846cg.pdf

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Obama needs input from companies that stay put

Alan Tonelson
Tuesday, June 02, 2009

ERAB’s makeup is a case in point. Headed by former Federal Reserve Chairman Paul Volcker, the panel contains members from many perspectives beyond what Mr. Obama calls the Washington “echo chamber.” But ERAB needs more than the academics, labor leaders, financiers, chief executive officers and former officials whom the president has appointed (along with a media representative and a major Realtor).

Like the rest of Mr. Obama’s advisory team, the board also needs adequate business representation from the economy’s real wealth-creating sector – the goods-producing industries that Washington has too long neglected and whose revival is essential to overcome a crisis born of overconsuming, overborrowing and excessive debt.

ERAB does contain two representatives from manufacturing – which dominates the goods-producing sectors. But the picks – Jeffrey Immelt of General Electric (GE) and Jim Owens of Caterpillar – head multinational companies whose top declared priorities do not include expanding output in the United States.

Two years ago, for example, senior GE executive Lloyd Trotter told an investor conference that by 2010, more than 50 percent of the company’s worldwide manufacturing would be performed outside the United States. As recently as 2002, that figure was only 28 percent. At the end of 2006, Mr. Immelt said that in five years, GE would likely at least double the share of its global purchases from low-income countries, like China and India, from the then-current level of 19 percent.

As Mr. Trotter explained: “Low-cost country savings are generally 20 [percent] every time we do it.” As Mr. Immelt made clear, except for goods restricted by export controls, there are many other products “that we can move substantially outside the United States.” Mr. Immelt did specify that these offshored goods wouldn’t be sold only locally, but worldwide, including of course to U.S. customers.

Because the United States still represents nearly a third of the world economy and an outsize share of its consumption, it’s easy to see how Americans fit into this business model as customers. It’s much harder to see how they fit in as producers to any comparable extent. With America’s chances for recovery depending ultimately boosting production relative to consumption, Mr. Obama clearly needs to hear a fundamentally different manufacturing perspective.

Caterpillar doesn’t fit the bill, either – even though the president keeps touting its achievements (during a visit to its Peoria, Ill., headquarters) and its challenges (at the Group of 20 summit). For many years, the company has indeed kept a much higher share of its worldwide employees in the United States than most other U.S. multinational manufacturers. But it preserved U.S. jobs mainly by crushing its unions and slashing wages, down to near Wal-Mart levels for new hires. That’s a recipe for fixing Americans’ broken finances only if living standards fall even more dramatically.

Moreover, Mr. Owens lately has been moving many more Caterpillar jobs and production offshore despite these employee sacrifices. From 2006 to 2008 alone, according to the company’s latest figures, its U.S. work force rose by nearly 10 percent, but its foreign work force increased by more than 29 percent. As a result, the U.S. share of its global work force has slipped during this period from 51.5 percent to 47.4 percent. And during this period, Caterpillar’s foreign work force grew fastest by far – more than doubling – in predominantly low-wage Asia.

Caterpillar proudly reported exports of $16.15 billion from the United States in 2008 (though, like multinationals generally, it didn’t reveal its imports). But CAT’s overseas sales increasingly come from its foreign factories, meaning fewer growth and other direct benefits for the U.S. economy. Indeed, CAT’s final 2008 earnings release specified that its gains in China stemmed not simply from the nation’s construction boom but from “higher sales of locally produced wheel loaders.”

And the company has announced that new factories in China for engines, wheel loaders, motor graders, and hydraulics components are all on the way.

The GE and Caterpillar business model may one day stimulate growth and employment on net domestically. But America’s huge debt-generating trade deficits indicate that, to date, these multinationals’ offshoring activities have produced considerably more U.S. imports than exports. Thus, they have been a net drag on gross domestic product.

Unquestionably, the views of companies this large and international deserve to be heard by Mr. Obama, though their powerhouse Washington lobbying already guarantees this whatever official panels their leaders sit on. Moreover, some recent Immelt comments hint at a new commitment to domestic production. But the company remains far from walking this walk.

More important, the economy remains so weak that Mr. Obama can’t afford to wait for new priorities from Mr. Immelt or any of his peers. The administration urgently needs to start hearing consistently from executives fiercely devoted to producing, innovating, and creating good jobs in the United States, and boasting decades of experience in succeeding. The U.S. Business and Industry Council knows nearly 1,900 of them. It owns our member companies. We would be honored to recommend any of them to help the president put the economy back on track.

Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).

Complete article at:

http://americaneconomicalert.org/view_art.asp?Prod_ID=3253

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With the price of oil creeping upwards, are we in danger of a new recession?

With the price of oil creeping back up, folks in the energy patch are beginning to breathe cautious sighs of relief. While higher costs per barrel generally have positive implications for the industry, how high is too high?

New research by Wall Street energy business analysts, Douglas-Westwood LLC, suggests that when oil consumption costs exceed 4% of US GDP, recession almost always occurs. And in general, a sustained rise in the oil price of 50% or more has always been followed by a recession.

“In every case when oil consumption breeched 4% of GDP, the US suffered a recession and indeed, the current US recession began within two months of oil hitting the 4% threshold, most recently, when oil reached $80 a barrel,” said Steven Kopits, managing director at Douglas-Westwood.

Another factor is the maximum rate of adjustment for the economy, which appears to be about 0.8% of GDP per year. That is, the economy cannot shed oil consumption instantaneously; society needs time to adjust. When the economy is adjusting at full speed, it will tend to struggle. Adjustment will tend to be characterized by recession, inflation or generally low GDP growth.

“Our research suggests that a return to $80 oil could kill the present recovery and trigger a new recession – today’s oil prices means we are again teetering on the edge,” he added.

While last year’s $140/barrel oil proved fruitful for the industry, the benefits were short-lived and companies were left struggling in the depths of the recession. An increase in the price of oil is needed to get companies and the economy back on track, but at what price do we risk a new recession?

Complete article at:

http://www.ogfj.com/index/blogs/Engrossed-In-Energy.html

==========

June 2009 Monthly Energy Review has been released

Wednesday, June 24, 2009

Monthly Energy Review (06/24/2009)

http://www.eia.doe.gov/emeu/mer/contents.html

EIA ‘ s primary report of recent energy statistics: total energy production, consumption, and trade; energy prices; overviews of petroleum, natural gas, coal, electricity, nuclear energy, renewable energy, and international petroleum; and data unit conversions. In the first quarter of 2009, total net imports of energy as a share of consumption in the United States stood at 24.8 percent, up slightly from 24.5 percent in the first quarter of 2008 but down noticeably from 27.2 percent in the first quarter of 2007.

See What’s New in the Monthly Energy Review for a record of changes in this report.

http://www.eia.doe.gov/emeu/mer/wni.html

==========

Iraq opens fields; Exxon, Shell seek foothold

26 June 2009

Iraq is set to welcome back foreign oil companies into the war-torn nation to develop the world’s third-largest crude reserves three decades after expelling them. Eight of the world’s top 10 nonstate oil producers, including Exxon Mobil Corp. and Royal Dutch Shell Plc, are vying for the right to help Iraq develop six oilfields and two natural-gas deposits. More than 30 companies in total are bidding for $16 billion worth of technical service contracts for producing fields that will be awarded in Baghdad on June 29 and 30. “Iraq is the big prize in the region,” said Raja Kiwan, a Dubai-based analyst at consultants PFC Energy.

At:

http://businessmirror.com.ph/home/world/12333-iraq-opens-fields-exxon-shell-seek-foothold.html

From: CLG News

Iraq oilfields offered for long-term contracts

25 Jun 2009

Following are the Iraqi oilfields on offer for long-term development contracts in the first bidding round since the U.S.-led invasion of the country in 2003. The reserves the fields hold are larger than those of the United States and Britain combined, according to the following data from consultancy Wood Mackenzie. Over 43 billion barrels of Iraq’s 115 billion barrels of reserves lie in the fields.

At:

http://www.reuters.com/article/worldNews/idUSTRE55O47G20090625

From: CLG News

New articles at Iraq Oil Report …

Thursday, June 25, 2009

Iraq Oil Report has posted a new item

Oil in Parliament’s scope

http://www.iraqoilreport.com/politics/oil-in-parliaments-scope-1822/

Iraq’s oil minister is in the midst of a two-day session explaining oil matters to fired-up MPs. Meanwhile, the Nassiriya project is delayed until after bidding round.

Addax confirms China purchase

http://www.iraqoilreport.com/the-biz/addax-confirms-china-purchase-1827/

Firm active in Iraqi Kurdistan to be purchased by overseas arm of one of China’s state oil company.

One month til KRG elections

http://www.iraqoilreport.com/politics/one-month-til-krg-elections-1835/

Stalwart parties and reformist-minded challengers mix it up for Iraqi Kurdistan provinces’ government election, and a new controversial constitution.

New articles at Iraq Oil Report …

Friday, June 26, 2009

Iraq Oil Report has posted a new item

Op-Ed: Assessment of the oil and gas contracts in Iraq

http://www.iraqoilreport.com/the-biz/op-ed-assessment-of-the-oil-and-gas-contracts-in-iraq-1841/

Iraqi-Norwegian expert critiques Iraq’s oil and gas bidding round contracts.

==========

A Twitter Revolution?

Wednesday, June 24, 2009

REESE ERLICH, rerlich@pacbell.net, http://www.alternet.org/authors/853,

http://www.motherjones.com/news/outfront/2007/03/brad_pitt_and_the_girl_guerrillas.html,

http://marketplace.publicradio.org/display/web/2009/06/10/pm_iran_elections

Foreign correspondent and author of “The Iran Agenda: The Real Story of U.S. Policy and the Middle East Crisis,” Erlich said today: “This isn’t a ‘Twitter Revolution.’ That description trivializes the broad mass movement that has swept Iran. It is not just the affluent of northern Tehran who are protesting. It’s poorer people from southern Tehran — who organize by plain old phone calls and word of mouth.

“The movement has gone beyond protesting election fraud and now challenges the system. Some protesters want a more moderate Islamic government, others want a return to a parliamentary system that existed in the early 1950s under Prime Minister Mohammed Mossadegh. Mossadegh headed the last democratic government in Iran, which included freedom for political parties to organize, free press and freedom of religion. It was overthrown in a CIA coup in 1953. That’s why the government is cracking down so hard; it is threatened to its core.

“There’s a big controversy in the U.S. about President Obama’s statements on Iran. But they are largely irrelevant to the people of Iran. Given the long history of U.S. meddling in Iran, it’s best that the U.S. not further intervene and [instead] let the people of Iran deal with their own government. The U.S. has a long history of sanctions [and] supporting terrorist attacks against Iran that bolster the rightwingers in Iran. The U.S. cannot and should not try to intervene in Iran’s upheaval; anything the U.S. does would be counterproductive. It’s much more important that Iranians receive people-to-people support in the form of rallies, marches, etc. from American grassroots groups.”

From: Institute for Public Accuracy

==========

Fox News omits Republican scandals in assessment of Sanford prospects

In two segments over the course of four hours on June 25, Fox News’ James Rosen highlighted only scandals involving Democrats during reports that purported to examine earlier political sex scandals in an effort to assess South Carolina Gov. Mark Sanford’s situation.

Read More

http://mediamatters.org/items/200906250041?lid=1046660&rid=30563245

==========

Satire: Larry Craig: I Did Not Meet Governor Sanford In Buenos Aires

By R J Shulman

25 Jun 2009

Idaho Senator Larry Craig is denying rumors that he was the object of Governor Mark Sanford’s affections in Argentina. The South Carolina governor admitted today that he has had a yearlong affair with a woman in Argentina. South Carolina’s largest newspaper, The State, published alleged e-mail exchanges between Governor Sanford and the woman named Maria. “I love my wife, I am not gay, and I abhor the bathrooms at that Buenos Aires Airport,” Craig told reporters in Boise today after the news broke that he may be romantically involved with Sanford. “While I sometimes I go by the name of Maria,” Craig said. “I am not his Maria.” (Satire)

At:

http://www.legitgov.org/shulman_craig_not_meet_sanford_250609.html

From: CLG News

==========

And now for the important news ….

By Argus Hamilton

The USGA started widening seaside holes at Pebble Beach Golf Club in Monterey Tuesday for added TV drama during next year’s U.S. Open. It’s always exciting when the golfers go into the ocean. The sharks love hookers even more than the senators do.

http://www.JewishWorldReview.com

==========

three thousand words

(click here to view)

Ann Cleaves Freelance Jun 26, 2009 EditorialCartoonists.com

Daryl Cagle: I’m with …
(www.cagle.com)

Matt Davies: The Welcome Wagon
(davies.lohudblogs.com)

The Health Care Industry vs. Health Reform

Wendell Potter on June 24, 2009

I’m the former insurance industry insider now speaking out about how big for-profit insurers have hijacked our health care system and turned it into a giant ATM for Wall Street investors, and how the industry is using its massive wealth and influence to determine what is (and is not) included in the health care reform legislation members of Congress are now writing.

Although by most measures I had a great career in the insurance industry (four years at Humana and nearly 15 at CIGNA), in recent years I had grown increasingly uncomfortable serving as one of the industry’s top PR executives. In addition to my responsibilities at CIGNA, which included serving as the company’s chief spokesman to the media on all corporate and financial matters, I also served on a lot of trade association committees and industry-financed coalitions, many of which were essentially front groups for insurers. So I was in a unique position to see not only how Wall Street analysts and investors influence decisions insurance company executives make but also how the industry has carried out behind-the-scenes PR and lobbying campaigns to kill or weaken any health care reform efforts that threatened insurers’ profitability.

I also have seen how the industry’s practices — especially those of the for-profit insurers that are under constant pressure from Wall Street to meet their profit expectations — have contributed to the tragedy of nearly 50 million people being uninsured as well as to the growing number of Americans who, because insurers now require them to pay thousands of dollars out of their own pockets before their coverage kicks in — are underinsured. An estimated 25 million of us now fall into that category.

What I saw happening over the past few years was a steady movement away from the concept of insurance and toward “individual responsibility,” a term used a lot by insurers and their ideological allies. This is playing out as a continuous shifting of the financial burden of health care costs away from insurers and employers and onto the backs of individuals. As a result, more and more sick people are not going to the doctor or picking up their prescriptions because of costs. If they are unfortunate enough to become seriously ill or injured, many people enrolled in these plans find themselves on the hook for such high medical bills that they are losing their homes to foreclosure or being forced into bankruptcy.

As an industry spokesman, I was expected to put a positive spin on this trend that the industry created and euphemistically refers to as “consumerism” and to promote so-called “consumer-driven” health plans. I ultimately reached the point of feeling like a huckster.

I thought I could live with being a well-paid huckster and hang in there a few more years until I could retire. I probably would have if I hadn’t made a completely spur-of-the-moment decision a couple of years ago that changed the direction of my life. While visiting my folks in northeast Tennessee where I grew up, I read in the local paper about a health “expedition” being held that weekend a few miles up U.S. 23 in Wise, Va. Doctors, nurses and other medical professionals were volunteering their time to provide free medical care to people who lived in the area. What intrigued me most was that Remote Area Medical, a non-profit group whose original mission was to provide free care to people in remote villages in South America, was organizing the expedition. I decided to check it out.

That 50-mile stretch of U.S. 23, which twists through the mountains where thousands of men have made their living working in the coalmines, turned out to be my “road to Damascus.”

Nothing could have prepared me for what I saw when I reached the Wise County Fairgrounds, where the expedition was being held. Hundreds of people had camped out all night in the parking lot to be assured of seeing a doctor or dentist when the gates opened. By the time I got there, long lines of people stretched from every animal stall and tent where the volunteers were treating patients.

That scene was so visually and emotionally stunning it was all I could do to hold back tears. How could it be that citizens of the richest nation in the world were being treated this way?

A couple of weeks later I was boarding a corporate jet to fly from Philadelphia to a meeting in Connecticut. When the flight attendant served my lunch on gold-rimmed china and gave me a gold-plated knife and fork to eat it with, I realized for the first time that someone’s insurance premiums were paying for me to travel in such luxury. I also realized that one of the reasons those people in Wise County had to wait in long lines to be treated in animal stalls was because our Wall Street-driven health care system has created one of the most inequitable health care systems on the planet.

Although I quit my job last year, I did not make a final decision to speak out as a former insider until recently when it became clear to me that the insurance industry and its allies (often including drug and medical device makers, business groups and even the American Medical Association) were succeeding in shaping the current debate on health care reform. While the thought of speaking out had crossed my mind during the months leading up to the day I gave notice, I initially decided instead to hang out my shingle as a consultant to small businesses and nonprofit organizations.

I decided to take the shingle down, though, at least for a while, when I heard members of Congress reciting talking points like the ones I used to write to scare people away from real reform. I’ll have more to say about that over the coming weeks and months, but, for now, remember this: whenever you hear a politician or pundit use the term “government-run health care” and warn that the creation of a public health insurance option that would compete with private insurers (or heaven forbid, a single-payer system like the one Canada has) will “lead us down the path to socialism,” know that the original source of the sound bite most likely was some flack like I used to be.

Bottom line: I ultimately decided the stakes are too high for me to just sit on the sidelines and let the special interests win again. So I have joined forces with thousands of other Americans who are trying to persuade our lawmakers to listen to us for a change, not just to the insurance and drug company executives who are spending millions to shape reform to benefit them and the Wall Street hedge fund managers they are beholden to.

Take it from me, a former insider, who knows what really motivates those folks. You need to know where the hard-earned money you pay in health insurance premiums — if you lucky enough to have coverage at all — really goes.

I decided to speak out knowing that some people will not like what I have to say and will do all they can to discredit me. In anticipation of that, here are some facts:

* I am not doing this because my former employer was pushing me out the door or because I had become a disgruntled employee. I had not been passed over for a promotion or anything like that. As I noted earlier, I had a financially rewarding career in the industry, and I’m very grateful for that. I had numerous promotions, raises, bonuses, stock options and stock grants over the years. When I left my last job, I was as close on the corporate ladder to the CEO as any PR person has ever climbed at the company. I reported to the general counsel, the company’s top lawyer, whose boss is the chairman and CEO, a man I like and worked closely with over many years.

* The decision to leave was entirely my own, and I left on good terms with everybody at the company. In fact, I agreed to postpone my last day at work by more than two months at the company’s request. My coworkers gave me a terrific going-away party, and I received dozens of kind notes from people all across the country including friends at other companies and at America’s Health Insurance Plans, the industry trade association.

I still consider all of them my friends. In fact, the thing I have missed most since I left is working as part of a team, even though I eventually came to the conclusion that I was playing for the wrong side. Being a consultant has its advantages, but I have missed the camaraderie. After a few months, I thought that maybe I should consider working for another company again. At one point, a former boss told me that another insurer had posted a PR job and encouraged me to contact a former CIGNA executive who worked there about it. Against my better judgment, I did, but I immediately decided not to pursue it. The last thing I wanted to do was to go from one big insurer to another one. What the hell was I thinking?

I’m writing this because, knowing how things work, I’m fully expecting insurers’ PR firms to quietly feed friends of the industry (which include a roster of editorial writers and pundits, lawmakers and many others who fall under the broad category of “third-party advocates,”) with anything they can think of to discredit me and what I say. This will go on behind the scenes because the insurers will want to preserve the image they are working so hard to cultivate — as a group of kind and caring folks who think only of you and your health and are working hard as real partners to Congress and the White House to find “a uniquely American solution” to what ails our system.

I expect this because I have worked closely with the industry’s PR firms over many years whenever the insurers were being threatened with bad publicity, litigation or legislation that might hinder profits.

One of the reasons I chose to become affiliated with the Center for Media and Democracy is because of the important work the organization does to expose often devious, dishonest and unethical PR practices that further the self interests of big corporations and special interest groups at the expense of the American people and the democratic principles this country was founded on.

After a long career in PR, I am looking forward to providing an insider’s perspective as a senior fellow at CMD, and I am very grateful for the opportunity to speak out for the rights and dignity of ordinary people. The people of Wise County and every county deserve much better than to be left behind to suffer or die ahead of their time due to Wall Street’s efforts to keep our government from ensuring that all Americans have real access to first-class health care.

Wendell Potter is the Senior Fellow on Health Care for the Center for Media and Democracy in Madison, Wisconsin.

Complete article at:

http://www.prwatch.org/node/8422

Mike Lane: medical lobby picnic
(www.cagle.com)

Jack Ohman: pre-existing condition
(images.ucomics.com)

==========

New Analysis Compares Impacts of Three Approaches to Health Care Reform

Wednesday, June 24, 2009

New Analysis Compares Impacts of Three Approaches to Health Care Reform

A comprehensive approach to health insurance, provider payment, and care delivery system reforms has the potential to slow health care cost increases while achieving near-universal coverage. However, the potential savings for families, businesses, and the federal government vary markedly, depending on whether or not a public insurance plan option is included and how such a plan is structured, a new Commonwealth Fund analysis finds.

The new report, Fork in the Road: Alternative Paths to a High Performance U.S. Health System,
http://www.commonwealthfund.org/Content/Publications/Fund-Reports/2009/Jun/Fork-in-the-Road.aspx
is the first to compare three different scenarios: one that includes a public plan option in which health care providers would be paid at rates that fall midway between current Medicare rates and private plan rates, among other payment reforms; one that includes a public plan option that links payments more closely to Medicare rates; and one that includes no public plan, instead relying exclusively on private plans.

According to the analysis, cumulative health system savings between 2010 and 2020, compared with projected trends for that period, would range from a high of $3.0 trillion under the approach that includes a public plan paying providers at Medicare rates in competition with private plans, to $2.0 trillion for a public plan paying providers at rates midway between current Medicare and private plan rates, to $1.2 trillion in the private plans approach. All three approaches would make affordable coverage available to everyone.

Each reform path would include significant reforms to the way the nation pays for care, in order to reward value and efficiency rather than volume. But the two scenarios that include a public plan choice alongside private plans would spread reforms more quickly, reduce insurance administrative costs, and enable the federal government to expand coverage at less expense.

“The nation will be spending one out of every five dollars on health care by 2020, and millions more people will be uninsured,” said Commonwealth Fund president Karen Davis, a coauthor of the report. “This analysis shows we have a choice of paths that could lead to access for everyone, lower costs, and improved quality of care.”

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[SeniorNews] ANALYSIS – MANUFACTURERS AVOID WORST WITH U.S. DRUGS DEAL – News for Suddenly Seniors

Wednesday, June 24, 2009

ANALYSIS – MANUFACTURERS AVOID WORST WITH U.S. DRUGS DEAL

Jun 23, 2009
By Ben Hirschler

LONDON (Reuters) – The pharmaceutical industry has headed off the threat of more onerous imposed cost savings by stepping up to the plate on healthcare reform in the all-important U.S. market.
A weekend deal, announced by President Barack Obama, offering some $80 billion in prescription discounts over 10 years to help elderly Americans afford drugs will crimp profits, but the figure is a less than initially feared.

“Negotiations began with government asking for $130 billion, so $80 billion would represent a relatively benign outcome,” said Savvas Neophytou, an analyst at Panmure Gordon.

What’s more, the plan agreed with Senate Finance Committee Chairman Max Baucus, with the backing of the Obama administration, means concessions will be funnelled in an area that could generate additional sales volume.

Drugmakers have agreed to provide a 50 percent discount for those elderly and disabled Americans in the Medicare health insurance program who face a gap in coverage after their drug costs reach a certain level, known as the “doughnut hole”.

“Roughly 20-25 percent of Medicare D patients reach the doughnut hole, and the majority of them either stop or switch their medications,” Deutsche Bank analyst Barbara Ryan said in a research note.
“Therefore, pharma may be providing discounts for branded drugs which will primarily represent incremental demand.”

DEGREE OF CERTAINTY

In contrast to the 1990s, when companies fought President Bill Clinton’s health reform plans tooth and nail, this time around drugmakers have recognised they need to make sacrifices.
The result, for investors, is a deal that now gives a degree of certainty as Obama battles to drive through his ambitious reform package, according to Andy Smith, a healthcare fund manager at AXA Framlington in London.

“Healthcare reform, for the pharmaceutical sector at least, now doesn’t stand there as being open-ended, with a worst-case scenario of virtually everything going to generics. That’s no longer the case; you can move on and manage it from here,” he said.

The globalised nature of the pharmaceuticals industry means U.S. policy is critical for companies like GlaxoSmithKline Plc and Novartis AG, as well as home-grown businesses such as Pfizer Inc and Merck & Co.

The DJ STOXX European healthcare index was the best performing sectoral benchmark by 1122 GMT on Monday, down 0.2 percent, while the broader market fell 1.3 percent.

The goal all along has been to stop the U.S. government getting more directly involved in drug pricing, as happens in Europe and Japan, where profits and sales growth have suffered as a result.

“Our initial take is that this is a win for the industry because it appears to short-circuit the prospect of direct government price negotiation outside of Medicaid,” Leerink Swann analysts said in a note.

2-3 PCT OF U.S. DRUG SPEND
Deutsche Bank calculates that $80 billion translates into roughly 2-3 percent of U.S. drug spend, but the nature of the deal is more palatable than alternative measures that could have increased the government’s direct purchasing power.
Although medicines represent only about 10 percent of the whole healthcare budget, the high-profile nature of the industry makes it an obvious target for cutbacks.

Significantly, by striking a deal now the pharmaceuticals industry may be lending a helping hand to Obama as his reform proposals face a rocky road through Congress.

AstraZeneca Plc Chief Executive David Brennan, who also chairs the trade organisation Pharmaceutical Research and Manufacturers of America, said in a statement the deal reflected a commitment “to make comprehensive healthcare reform a reality this year”.

From: Rx Newsletter suddenlysenior.com

==========

General Strike: Possible in Iran? U.S.?

PM Tuesday, June 23, 2009

The British Guardian reports today that Mir Hossein Mousavi “appears to be planning a general strike. A discussion on his Facebook page says: ‘We are working on a general strike plan. Please help us with your ideas if you have expertise on this issue.’”

NELSON LICHTENSTEIN, nelson@history.ucsb.edu, http://www.history.ucsb.edu/faculty/lichtenstein.htm

Lichtenstein is professor of history at the University of California, Santa Barbara, where he directs the Center for the Study of Work, Labor and Democracy. He is the author of “State of the Union: A Century of American Labor” and “The Retail Revolution: How Wal-Mart Created a Brave New World of Business.”

He said today: “By making the secondary boycott illegal in strikes and organizing campaigns, the 1947 Taft-Hartley law made solidarity itself illegal, thus ending the great tradition of general strikes which had broken out each decade since the massive railroad strike of 1877 first shut down American commerce 70 years before.”

From: Institute for Public Accuracy

==========

This Week in Petroleum (TWIP)

Wednesday, June 24, 2009

This Week in Petroleum (TWIP) has been updated to the EIA website:

http://tonto.eia.doe.gov/oog/info/twip/twip.asp

==========

Economics Fights for Relevancy

Two economists say their profession has forgotten people. But so have they.

East Bay Express
http://www.eastbayexpress.com/ebx/PrintFriendly?oid=1026864

By Jay Youngdahl

June 24, 2009

Does mainstream economics have any relevance today given its poor performance in the Great Recession? In a new book, CAL PROFESSOR GEORGE AKERLOF and Yale’s Robert J. Schiller claim that it does….

Various non-humorous attempts are now being made by economists to try and resuscitate their profession. One of the most important of these CPR efforts comes from two “liberal” mainstream economists who take the Reagan/Thatcher free-market theories to task and claim to explain the current mess and tell us “what we need to do to get out of it.” In their new book, Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism, Cal professor and Nobel laureate George A. Akerlof, and Yale’s Robert J. Schiller, the co-creator of the Case/Schiller index of housing, try to make mainstream macroeconomics relevant in the post-crisis period. The Internet rumors say this is a favorite book at 1600 Pennsylvania Avenue….

This book seeks to reassure us that their profession really can predict future economic activity, or at least understand it in time to ward off catastrophes. The authors hope such reassurance can calm the fears that make economic actors reticent to act “normally.” This attempt is laudatory. Their attempt to reassure us that proper understanding of animal spirits will tame the violent economic swings of market capitalism is off the mark, however. Occasional earthquakes are the real scientific reality of capitalism….

==========

Beck falsely claimed “bean head” Paul Krugman “missed” the housing bubble

Glenn Beck falsely claimed that Paul Krugman “missed the industry’s $8 trillion housing bubble.” In fact, Krugman wrote that he was “getting worried” about a “real estate bubble” as early as 2002.

Read More

http://mediamatters.org/items/200906240004?lid=1046352&rid=30514693

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Algeria: Taking the Pulse of AQIM

June 24, 2009

Global Security and Intelligence Report

By Scott Stewart and Fred Burton

Late in the evening of June 17, 2009, militants affiliated with al Qaeda in the Islamic Maghreb (AQIM) detonated two improvised explosive devices (IEDs) against a convoy near Bordj Bou Arreridj, Algeria, which is located in a mountainous area east of Algiers that has traditionally been an Islamist militant stronghold. The convoy consisted of Algerian paramilitary police vehicles escorting a group of Chinese workers to a site where they were building a new highway to connect Bordj Bou Arreridj with Algiers. After disabling the convoy using IEDs, the militants then raked the trapped vehicles with small-arms fire. When the ambush was over, 18 policemen and one Chinese worker had been killed. Another six gendarmes and two Chinese workers were wounded in the attack.

It was the deadliest attack of any type in Algeria since an Aug. 19, 2008, suicide vehicle-borne IED (VBIED) attack against a line of job applicants outside a police academy in Les Issers that killed 48 and injured another 45. AQIM regularly launches armed ambushes and roadside IED attacks in Algeria, and ambushes were frequently used by the Salafist Group for Preaching and Combat (GSPC) before it announced in September 2006 that it had become part of al Qaeda’s regional franchise — AQIM. Indeed, we have seen four other ambush and IED attacks since May 20, 2009, but the death tolls in such attacks have usually been smaller than the June 17 attack.

In light of this anomalous attack, we thought it would be an opportune time to take the pulse of AQIM and try to get a sense of where the group stands today and where it might be going over the next few months.

History and Trends

The GSPC began as a splinter of the Armed Islamic Group (GIA) in 1998 as the civil war in Algeria was winding down. At that time, Hassan Hattab led a group of other disaffected GIA members who disagreed with GIA’s targeting of unarmed civilians. Hattab and his followers wanted to distance themselves from the large-scale massacres that had taken place while continuing their struggle against the Algerian government. They formed the GSPC to give themselves a fresh name and a new start.

Hattab eventually ran into disputes within the GSPC as the group was increasingly drawn to the transnational jihadist campaign espoused by al Qaeda. He “resigned” (though he was effectively deposed) as the group’s leader in 2001 and was succeeded by Nabil Sahraoui, who declared the GSPC’s allegiance to al Qaeda. Security forces killed Sahraoui in 2004.

In a message issued on Sept. 11, 2006, al Qaeda second-in-command Ayman al-Zawahiri announced that the GSPC had joined forces with al Qaeda in a union he hoped would be “a thorn in the neck of the American and French Crusaders and their allies, and an arrow in the heart of the traitors and apostates.” On Sept. 13, GSPC acknowledged the merger on its Web site with a message from its emir, Abu Musab Abd al-Wadoud, who wrote, “We have full confidence in the faith, the doctrine, the method and the modes of action of [al Qaeda’s] members, as well as their leaders and religious guides.”

The newly-established al Qaeda franchise in Algeria was not idle for long. On Oct. 19, 2006, it conducted two IED attacks, one against a police station in El Harrach, an eastern suburb of Algiers, the second against a fuel storage site belonging to the French company Razel in Lakhdaria. On Oct. 29, 2006, the group conducted near-simultaneous VBIED attacks against two Algerian police stations in Reghaia and Dergana. While simultaneous VBIED attacks were something seen in al Qaeda operations, these attacks involved vehicles parked near their targets rather than suicide vehicles and, as such, resembled past GSPC attacks, as did the selection of police stations as targets. Because of these features, the attacks were seen as examples of a hybrid, or transitional, kind of attack.

Other transitional attacks continued into early 2007, such as the twin attacks on March 5, 2007, which targeted foreign oil workers and Algerian security forces, indicating AQIM was incorporating the security-force targets of the GSPC with the foreign-influence targets of al Qaeda.

The focus on foreign interests and the energy sector was seen in several other attacks and attempted attacks against foreign oil workers and pipelines in late 2006 and early 2007. In spite of this focus, to date, AQIM has not been able to launch any truly disruptive attacks against the Algerian energy sector.

On April 11, 2007, AQIM passed another threshold when the group employed two suicide VBIEDS in attacks against separate targets in Algiers. One device was directed at the prime minister’s office in the city center and the second targeted a police station near the international airport in the eastern part of the city. At least 33 people reportedly were killed in the blasts and more than 150 wounded. These attacks marked the first suicide attacks in Algeria connected with GSPC or AQIM and signified a change in tactics.

However, the group’s increased operational tempo and less discriminate target selection came with consequences. In mid-2007 the Algerian government launched a massive operation against AQIM that resulted in large losses of men and materiel for the group. AQIM’s shift in targeting strategy also caused disagreements within the insurgency’s leadership. The schism arose between members who favored the tradition GSPC target set and opposed killing civilians, and those members who were more heavily influenced by al Qaeda and wanted to hit foreign and symbolic targets with little regard for civilian casualties.

In spite of the government crackdown, and in the face of growing internal dissent, AQIM accelerated its suicide bombing campaign, and there were several other suicide attacks during the last three months of 2007. These attacks included the Sept. 6 bombing of a crowd waiting to greet Algerian President Abdel Aziz Bouteflika in Batna that killed 22 people and injured more than 100; a Sept. 8 suicide VBIED attack against a naval barracks in Dellys that killed 30; and twin suicide VBIED attacks on Dec. 11 that targeted the constitutional court and the headquarters of the U.N. refugee agency in Algiers that killed 47 people, including 17 U.N. employees.

AQIM conducted six suicide bombing attacks against military and police targets between January 2008 and the Aug. 19, 2008, VBIED attack against the police academy in Les Issers. During this time, military and law enforcement pressure by the Algerian government continued, as did the public criticism of AQIM for killing innocents. The criticism reached a crescendo after the Les Issers attack, which killed largely poor people looking for employment with the police. AQIM has only conducted one suicide attack since August 2008, and the bulk of its operations have been in sparsely populated areas instead of cities. It is unclear at this point whether these observable shifts are in response to the criticism of AQIM’s tactics or if they are a result of the government’s efforts to dismantle the group.

Large VBIEDs are resource intensive. In fact, the explosives required to construct one large VBIED could be used to manufacture many smaller IEDs or suicide vests. Since the Les Issers attack, AQIM has conducted several IED attacks but these have all involved smaller IEDs, and the number of bystander deaths has dropped as the attacks have appeared to have been more carefully aimed at government or foreign targets. Of course, suicide bombers are also a resource that can only be used once, and it takes time and effort to recruit new bombers.

We will be watching carefully to see if the current trend away from the employment of large VBIEDs in urban areas is a temporary lull caused by government pressure and a lack of resources, or if it is an intentional shift designed to assuage public anger. It is very difficult for an insurgent organization to thrive in an environment where the local population turns against it, and perhaps the AQIM leadership has learned a lesson from the high cost the GIA paid after it began killing civilians and lost public support.

In addition to the military and law enforcement pressure, the Algerian government has been very busy in its efforts to apply ideological pressure to AQIM. One way this pressure has been applied is in the form of former militant leaders associated with the group criticizing its change in targeting and tactics. For example, after the Les Issers bombing in August 2008, GSPC founder Hassan Hattab called on the militants to lay down their arms and surrender. There is also talk that the government may soon expand an amnesty offer to include members of the organization who have been excluded from the current amnesty offer because they were deemed to have too much blood on their hands. Like previous amnesty offers, this expansion could serve to further weaken the organization as members choose to turn themselves in.

Regional Franchise?

By design, AQIM incorporated the GSPC with elements of Morocco’s Islamic Combatant Group, Libya’s Islamic Fighting Group, several Tunisian groups, most notably the Tunisian Combatant Group, and jihadists in Mali, Niger and Mauritania. However, in practice, the vast majority of the group’s infrastructure came from the GSPC, and attacks since the founding of AQIM in 2006 have reflected this. Indeed, in spite of the many high-profile Libyan and Moroccan militants who serve as part of the al Qaeda core leadership, Libya and Morocco have been extremely calm since the emergence of AQIM, and the group has remained an Algeria-based phenomenon.

Countries of the Maghreb

In Mauritania, attacks linked to AQIM began as early as December 2007, but AQIM militants there have not displayed the capability to carry out sophisticated attacks. Most attacks in Mauritania involve amateurish small-arms assaults such as the attack on French tourists on Dec. 23, 2007, or the Feb. 1, 2008, shooting at the Israeli embassy in Nouakchott, Mauritania’s capital. As we were writing this, we learned of the June 23 shooting of an American teacher in Nouakchott. The man was reportedly gunned down outside the school where he taught, and Mauritanian officials are blaming the attack on AQIM rather than criminals.

The attacks in Mauritania have shown rudimentary tactics with poor planning, and the militants associated with AQIM in Mauritania simply have not displayed the ability to mount a large-scale, coordinated attack. The group’s activities in Mali and Niger are also mainly constrained to low-level attacks against government or military outposts and foreign mining sites and personnel in the northern stretches of those countries. AQIM also conducts training and engages in smuggling and kidnappings for ransom in this deserted region.

This means that, in the end, in spite of all the hype associated with the AQIM name, the group is essentially a rebranded GSPC and not some sort of revolutionary new organization. It has adapted its target set to include foreign interests, and it did add suicide bombing to its repertoire, but aside from that there has been very little movement toward AQIM’s becoming a truly regional threat.

That said, AQIM has received a lot of attention from the al Qaeda core leadership, which has sought to support it however it can and spur it on beyond Algeria. On June 23, 2009, al Qaeda media wing As Sahab released a 35-minute video statement from Abu Yahya al-Libi entitled “Algeria Between the Sacrifice of Fathers and Faithfulness of Sons.” As his name implies, al-Libi is himself from Libya, and one of the things he does in the video is urge militants in Algeria, Mauritania, Mali, Niger, Libya, Tunisia and Morocco to mobilize and join under the “banner, command and emirate” of AQIM. The video appears to be an attempt by the al Qaeda leadership to counter ideological attacks by the Algerian government as well as AQIM’s regional stagnation.

Coming Home to Roost?

In addition to fighting against the regime in Algeria, Algerian militants have also been very conspicuous on jihadist battlefields such as Bosnia, Chechnya, Afghanistan and Iraq. Some studies have even concluded that Algerians were the single largest group of foreign jihadists who fought in Iraq during the height of the insurgency.

One of the things we have been anticipating for several years now is a boomerang effect as foreign jihadists leave places such as Iraq and Pakistan and return home. While many foreign jihadists have been killed in such places, those who survive after fighting sophisticated foes like the American military are not only hardened but also possess insurgent tradecraft skills that make them far more lethal when they leave those battlefields than when they entered them. Indeed, we have seen a migration of IED technology and tactics from Iraq to other theaters, such as Afghanistan.

With developments in Iraq over the last few years that have made Iraq increasingly inhospitable to foreign jihadists, and with Pakistan now quickly becoming less friendly, many of the Algerian militants in those places may be seeking to return home. And this brings us back to the anomalous vehicular ambush on June 17.

That operation, while a common type of attack in Algeria, was uncharacteristically deadly. It is plainly possible that the high death toll was merely a fluke. Perhaps the AQIM militants got lucky or the Algerian gendarmes targeted in the attack made a fatal mistake. However, the increased death toll could also have been a result of superior IED design, or superior planning by the operational leader of the ambush. Such a shift could indicate that an experienced operational commander or bombmaker has come to AQIM from someplace like Iraq or Pakistan. It will be very important to watch the next few AQIM attacks to see if the June 17 attack was indeed just an anomaly or if it was the beginning of a new and deadly trend.

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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Saudi royals funded 9/11: Lawyers …

24 Jun 2009

Lawyers representing the families of the 9/11 victims, expose evidence allegedly proving the Saudi royal family’s financial support for al-Qaeda [al-CIAduh]. The lawyers provided The New York Times with excerpts of the material they had amassed by putting together the pieces from leaking American intelligence documents among other things, the daily reported on Tuesday. The evidence recounts how the Saudi royalty would use middlemen and financial supply routes to bankroll militants based in Afghanistan and Bosnia. The family, which had strong ties with the Bush administration, is also suspected of having reinforced the militancy otherwise and enlisted militant agents using intermediaries including the Saudi High Commission for Aid to Bosnia.

At:

http://www.presstv.ir/detail.aspx?id=98952&sectionid=3510203



From: CLG News

Documents Back Saudi Link to Extremists

24 Jun 2009

Documents gathered by lawyers for the families of Sept. 11 victims provide new evidence of extensive financial support for Al Qaeda and other extremist groups by members of the Saudi royal family, but the material may never find its way into court because of legal and diplomatic obstacles. The Justice Department is siding with the Saudis in court last month in seeking to kill further legal action. Adding to the intrigue, classified American intelligence documents related to Saudi finances were leaked anonymously to lawyers for the families.

At:

http://www.nytimes.com/2009/06/24/world/middleeast/24saudi.html

From: CLG News

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David Letterman …

“You folks following the Iranian elections? Well, Mahmoud Ahmadinejad is the winner. And lots of protests. And it got to be so crazy that Iran’s supreme leader actually spoke live on television last night. And it preempted Al Jazeera’s most popular show, their number one show over there, which is ‘How I Met Your Camel.’”

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three thousand words

(click here to view)

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

Tony Auth: congress saves health care reform
(politicalirony.com)

Tom the Dancing Bug: the west wing story
(imgsrv.gocomics.com)

The U.S. Auto Industry in 2012

Wonderland or wasteland? Detroit could thrive on U.S. drivers replacing their aging cars—but they’ll need to hurry up

By Ed Wallace

“When do you think the economy is really going to recover?” The question that one of the local weekend news anchors in Dallas-Fort Worth had asked me was simple. But I couldn’t answer the question, because the answer is actually in his hands.

Instead I asked whether he, like millions of Americans, had locked up his discretionary spending when the world’s financial meltdown became impossible to ignore last September. He had, he conceded. And when I asked how his colleagues saw this economic downturn, each from his or her own personal perspective, he agreed that it appeared that they had also pulled back on their personal spending.

“So,” I summed up, “you don’t believe the happy economic stories you’re reporting either.”
Thrice Burned…

This past February I reported in a BusinessWeek column that the biggest threat to the recovery of our economy was going to be the baby boomers’ severely reduced spending habits. The boomers obviously had slashed their spending to the bone in response to the past few years’ repeated disasters on (and by) Wall Street. Even now, though some stabilization is in sight (and I suspect that retail is slowing improving), hard data from the real world suggests that our consumer economy might be months from bottoming out.

Demand for high-ticket consumer services, hard goods, and imports are still all but moribund. Recently American Airlines (AMR) and Delta (DAL) both confirmed they will cut their capacity still further, while Southwest (LUV) reported that its flight bookings for June were even lower than May’s. U.S. Airways claims that its revenue streams today are lower than in the period after 9/11. And British Airways (BAY.L) has asked 40,000 employees to work for one month without pay in order to lighten its financial statements’ red ink.

Add to the mix the fact that U.S. rail loadings for both April and May were down nearly 25%, 16,000 more trucking jobs went away in April, and container dockings at Long Beach and the Port of Los Angeles have been down over 20%. All this seems to suggest that things are not quite as hopeful as they’re being characterized. At best, the promise of pent-up retail demand improving in the near term—which is what it will take for long-term economic growth to start up again—is no easier to see.

Instead of asking any economist where the economy is going, it might be wiser to ask the 16,000 newly unemployed truck drivers.

That Payroll Problem

What may be the most insidious part of this current downturn is that many organizations are not just downsizing their workforces, they’re cutting wages for those individuals lucky enough to be kept on. Many such firms were purchased in leveraged buyouts over the past decade, and they owe so much that they can’t both service their loans and keep paying the same wages. Therefore, the current unemployment figures don’t tell the entire story on where Americans really stand today financially.

Many of those who will continue to be shown as gainfully employed will be forced to cut back on their spending even more to offset their newly lowered incomes. Moreover, once this event passes, it is highly unlikely that those lost incomes will be fully restored. More likely, rehired workers’ pay in the future will be in line with the recently reduced wages of their co-workers.

This is not unusual for a period of major deleveraging, whether for the debt-covered homes that were overpriced and over-mortgaged or for corporations that mirror that description. Washington had a choice: Either allow all loans that aren’t viable under current economic conditions to be written down to manageable levels, or allow workers and wages to be cut to free up enough cash to make those loans perform. It should be obvious to most by now which strategy Washington chose.

Beacon Score: 500

The other big factor that doesn’t favor a substantial resumption of car sales anytime soon is that millions of Americans have lost their credit standing in the massive wave of foreclosures and defaults on credit cards and auto loans. It takes up to seven years after a default to rebuild one’s credit score enough to reenter the new car market. This is where speculation arises concerning the future of the American automobile industry.

Given that the nation’s economic success has long been built on Americans’ personal and business mobility, the positive news is that there are nearly 250 million cars, trucks, and SUVs on the road in this country. Those 250 million vehicles can’t be driven forever; at our current rate of annualized automobile sales it would take a quarter of a century to replace the nation’s entire automotive fleet. As a comparison, in 1933, in the depths of the Great Depression, the turnover sales rate of our auto fleet was just 14.3 years.

So what are the odds that the next vehicle you purchase you will own for 25 years? If you say that’s not likely to happen, then you are one more statistic suggesting that car sales should improve dramatically in the future.

Yet wages for the middle class, historically Detroit’s biggest market, have remained stagnant over the last decade and are falling today; this does not bode well for the auto industry in the near term. Of course, this has been happening since 2001, which explains why most car companies could sell vehicles only by luring individuals into their showrooms with near suicidal incentives.

That, more than anything, clearly indicated how the middle class was struggling. From 2000 to 2008 real family incomes fell by $400 to $1,200, (depending on the survey) while prices of energy, food, and gasoline were skyrocketing, which explains why personal debt also rose to unsustainable heights. Bottom line: When income disappears as quickly as it has in the last eight years, one of the first purchases to be deferred is a new automobile. This is the primary reason why Toyota (TM) believes car sales could hit 17.4 million within six years, or stay critical at 11.5 million.

Fear of Loss is Winning So Far

The media has recently discovered that franchised new car dealers are selling lots more used cars, but this trend actually began in 2003 and has grown every year since. Many new car dealers felt forced to expand their used car operations because manufacturers kept cutting the dealer markup on new vehicles; some models were a guaranteed loss even if they sold for list price.

Dealers never knew from month to month what incentives would be offered, another inducement to sell more used cars, which are historically more profitable than new car sales. Carl Sewell, owner of numerous dealerships in Texas and author of the book, Customers for Life, informed his managers six years ago that he wanted 60 used car sales for each 100 new. Two years later, Sewell altered that used-to-new ratio to one to one. Last year, Sewell raised the bar to two used car sales for each new vehicle sale. While that figure has been harder to hit, last month Sewell’s flagship Lexus store in Dallas retailed 251 new Lexus models, but delivered 368 used cars.

Sewell’s strategy is a broad trend among dealers. A major part of the problem facing auto manufacturers—for which they share much of the blame—is that for years new car dealers have been focused on how to sell higher volumes of used cars A major part of the problem facing auto manufacturers—for which they share much of the blame—is that for years their new car dealer body has been focused on how to sell higher volumes of used cars. However, this situation cannot last. Earlier this year at the local Chrysler auctions, dealers were paying anywhere from $1,400 to $1,700 over NADA (National Automobile Dealers Assn.) wholesale prices to purchase anything for their lots. Such high wholesale prices, combined with lending institutions’ refusing to loan ridiculous amounts of money even to individuals with good credit, has cut the profitability of a used car sale dramatically.

Because new car sales have fallen by nearly 6.5 million units over the last 18 months, the supply of late-model used cars will be drying up quickly, an overlooked future problem. Hence the extremely high wholesale auction values today for the best used cars—and it will get worse.

In essence, the entire industry is now trapped in a “lending capped” used car bubble. Caused by a short-term imbalance in supply and demand, the used car bubble will burst when wholesale prices rise so high that one cannot sell a used car for a profit because lending institutions will not advance more than the vehicle’s loan book value. That point of no return is close. And when this automotive business cycle has run its course, new car dealers will have no alternative but to find ways to again improve their new car volumes.

This brings us back to the two colliding factors that are determining the fate of the automobile industry in America.

1.) Approximately 250 million vehicles are on the road now, but you can’t drive them forever.

2.) High unemployment, millions more Americans with poor credit scores, stagnant or falling wages, and a negative outlook on the near term future of the economy.

If the public’s fear cannot be assuaged and wages and employment numbers aren’t improved, the auto industry will continue to suffer. If there is real economic growth, the auto industry will ascend with it. We’ll know which direction it goes by late this year.

Then again, if it takes years to truly fix the economy and wages and many older cars still will need to be replaced, America just might be the next hot market for the $2,000 Tata (TTM) Nano.

Ed Wallace is a recipient of the the Gerald R. Loeb Award for business journalism, given by the G. and R. Loeb Foundation, and is a member of the American Historical Society. His column leads the Fort Worth Star-Telegram’s “Sunday Drive” section. He reviews new cars every Friday morning at 7:15 on Fox Four’s Good Day, contributes articles to BusinessWeek Online, and hosts the top-rated talk show Wheels Saturdays from 8 a.m. to 1 p.m. on 570 KLIF.

Complete article at:

http://www.businessweek.com/lifestyle/content/jun2009/bw20090623_802671.htm?campaign_id=rss_topStories

Tom Toles
(d.yimg.com)

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Obama’s Financial Reform Proposal: A Stealth Scheme for Global Monetary Control

by Stephen Lendman .
Global Research, June 24, 2009

When politicians plan reform, it’s wise to be skeptical and hold on to your wallets. So fixing the economy by bailing out Wall Street is wrecking it, and Obama’s proposed health care reform taxes more, provides less, places profits above human need, avoids the most vital solutions, and leaves a broken system in place.

Now there’s “Financial Regulatory Reform, A New Foundation: Rebuilding Financial Supervision and Regulation” – announced June 17 with Obama saying he’ll send Congress a plan to create new government agencies, give the private banking cartel Federal Reserve more power, and address five major problems needing regulatory and legislative measures to fix.

Addressing business executives in the White House East Room, he said:

“A culture of irresponsibility took root from Wall Street to Washington to Main Street” with no mention that months of it worsened on his watch. “A regulatory regime basically crafted in the wake of a 20th century economic crisis – the Great Depression – was overwhelmed by the speed, scope and sophistication of a 21st century global economy.” In fact, 30 years of deregulation since the late 1970s, not technology, caused speculative excesses, market bubbles, and inevitable collapses that always follow.

Of course, these problems are endemic under a system that’s crisis-prone, unstable, anarchic, ungovernable, and self-destructive through repeated cycles of booms creating bubbles, then busts, followed by recessions or depressions with today’s collapse grave enough for Michel Chossudovky to call it “far more serious than the Great Depression (because all) major sectors of the global economy are affected.”

Proposed Financial Reforms

An 89-page Treasury Department pdf is available online for those inclined to read it. Along with an introduction and summary of recommendations, its five major objectives are to:

I. “Promote Robust Supervision and Regulation of Financial Markets

II. Establish Comprehensive Regulation of Financial Markets

III. Protect Consumers and Investors from Financial Abuse

IV. Provide the Government with the Tools it Needs to Manage Financial Crises (and)

V. Raise International Regulatory Standards and Improve International Cooperation”

The introduction cites “the most severe financial crisis since the Great Depression,” admits that its “roots….go back decades (and states that) the government could have done more to prevent many of” them. Proposed reforms include:

– a new regulatory “Financial Services Oversight Council;”

– more power to the Fed over “all firms that could pose a threat to financial stability, even those that do not own banks” such as insurance companies;

– stronger capital standards for all financial firms;

– a new “National Bank Supervisor” over all federally chartered banks;

– registering hedge fund advisors;

– new regulation of securitization and derivatives markets;

– increased market transparency and the effectiveness of credit ratings agencies;

– originators of loans packaged into securities to retain some of the credit risk;

– broker and loan originator compensation changes away from income up front to spreading it out over time and making it dependent on the performance of loans they make;

– a new “Consumer Financial Protection Agency” to safeguard them from potentially harmful complex financial products, including securities, mortgages and credit cards;

– “stronger regulations to improve the transparency, fairness, and appropriateness of consumer and investor products and services;”

– new ways to “resolve nonbank financial institutions whose failure could have serious systemic effects;”

– changing the Fed’s “emergency lending authority to improve accountability;”

– establishing “wind down” authority to take over large financial firms like AIG, Fannie and Freddie; and

– international reforms, including greater oversight of global financial markets and more control through a process whereby G-20 countries cooperate in regulating transnational companies. This looks like the most insidious, outlandish, and dangerous provision. More on it below and its likely importance.

The report suggests other proposals may follow and that “More can and should be done in the future.” So what to make of it all given that it’s still a plan, congressional and other critics are attacking some of its provisions, whatever emerges is still a ways off, and large banks, insurers and other influential financial firms have final say on new laws and regulations affecting them, so likely changes coming may further taint an already deeply corrupted system.

America has a legacy of failed public agencies as well as regulatory and legislative reform – for lack of teeth, oversight, and most important because financial and other industries end up self-regulating, consolidating, and growing more powerful at the expense of the public interest. Giving the Federal Reserve more power lets banking giants make their own rules, decide how and whether to enforce them, and thus mainly operate as they wish because no one in Washington dares challenge them.

Michael Hudson agrees in his new article titled: “Instead of Real Financial Reform, Obama’s Plan capitulates to Wall Street.” He explains that supposed reforms promote “Wall Street’s ‘product,’ debt creation, at the expense of the economy at large, and lets financial chieftains continue to self-regulate the debt industry – and by the way, to keep all their gains from the past decade’s worth of fraudulent lending, scot-free….(He) achieved what no Republican could have: rescuing the Bush administration’s pro-creditor policies that fostered the Bubble Economy in the first place.”

The plan is laden with a “false diagnosis” and “fatal flaws,” so clearly what’s proposed are “wrong-headed cures (but hardly) by accident.” If it’s largely accepted as is, Wall Street will get precisely what it wants – a veneer of regulatory cover to keep wrecking the economy and stealing the public blind.

Simon Johnson is also critical. He’s a former IMF chief economist, now teaching at MIT’s Sloan School of Management. After reviewing Obama’s plan, he expressed great skepticism. Even though large banks and other financial institutions caused the global crisis, no wrongdoing on their part is cited nor are punitive measures proposed. He states:

“There appears to be no mention that corporate governance within these large banks failed totally. How on earth can you expect these banks to operate in a responsible manner unless and until you address the reckless manner in which they (a) compensate themselves, (b) destroy shareholder value, and (c) treat boards of directors as toothless wonders? The profound silence on this point from the administration – including some of our finest economic, financial, and legal thinkers – is breathtaking….”

“Based on what we see so far, there is little reason to be encouraged. The reform process appears to have been captured at any early stage – by design the lobbyists were let into the executive branch’s (planning process), so we don’t even get to have a transparent debate or to hear specious arguments about why we really need big banks.”

Johnson (like Hudson) added that financial giants are pleased with Obama’s plan, and why not. They or their lobbyists wrote it. On June 16, even The New York Times suggested it in Stephen Labaton’s article headlined: “Obama Sought a Range of Views on Finance Rules.” Over several weeks, “executives from an array of industries caught up in the financial crisis came to Washington….to make their case for how the new regulatory landscape should look. They came from big banks and small ones, insurance companies, stock exchanges, hedge funds and mutual funds” as well as consumer groups and labor for appearance sake only.

“Now lobbyists….will head to Congress to try to influence the final product” with no doubt they will so once again consumer interests will be shortchanged – perhaps globally given events reported earlier this year and discussed below.

Steps Toward Global Money and Banking Control

In her April 18, 2009 article titled “The Tower of Basel: Do We Really Want the Bank for International Settlements Issuing Our Global Currency,” Ellen Brown quoted Ambrose Evans-Pritchard in the London Telegraph (April 7) saying:

On April 2, “A single clause in Point 19 of the communique issued by the G-20 leaders amounts to a revolution in the global financial order.”

“We have agreed to support a general SDR allocation which will inject $250 (billion) into the world economy and increase global liquidity…SDRs are Special Drawing Rights, a synthetic paper currency issued by the International Monetary Fund that has lain dormant for half a century.”

“In effect, the G-20 leaders have activated the IMF’s power to create money and begin global ‘quantitative easing.’ In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body.”

Brown agrees and highlighted the article’s subtitle: “The world is a step closer to a global currency, backed by a global central bank, running monetary policy for all humanity.” What might it be, she asked? The Bank of International Settlements (BIS) – the secretive 55-member nation, central bank of central bankers. Based in Basel, Switzerland, it’s run by the monetary authorities of six dominant nations – America, Germany, Switzerland, Italy, Japan and Britain.

Objective V in Obama’s financial reform plan addresses “Rais(ing) International Standards and Improving International Cooperation” by promoting global control in a single paragraph:

“The United States is playing a strong leadership role in efforts to coordinate international policy through the G-20, the Financial Stability Board, and the Basel Committee on Banking Supervision. We will use our leadership position in the international community to promote (an) initiative compatible with the domestic regulatory reforms described in this report.”

Near the end of the plan, it recommends “Strengthen(ing) the Financial Stability Board….complet(ing) its restructuring and institutionaliz(ing) its new mandate to promote global financial stability by September 2009.” It also urges “work(ing) with the Bank for International Settlements (BIS) and standard setters to develop macroprudential tools” with Obama asking other nations to follow America’s lead.

What is the FSB, and why is it important?

The Financial Stability Forum (FSF) Becomes the Financial Stability Board (FSB)

Founded at a Bonn, Germany meeting in 1999 when Bundesbank president, Hans Tietmeyer, recommend it to G-7 finance ministers and central bank governors, the FSF consists of central bankers and finance ministers of about a dozen key nations working together for their mutual self-interest.

A decade later at the G-20′s April 2 London Summit, these nations agreed to let a new Financial Stability Board (FSB) regulate their economies henceforth as stated in a concluding communique:

“In particular we agree:

– to establish a new Financial Stability Board (FSB) with a strengthened mandate, as a successor to the Financial Stability Forum (FSF), including all G-20 countries, FSF members, Spain, and the European Commission;

– that the FSB should collaborate with the IMF to provide early warning of macroeconomic and financial risks and the actions needed to address them; (and)

– to extend regulation and oversight to all systemically important financial institutions, instruments and markets.”

The G-20′s same day’s press release headlined: “Financial Stability Forum re-established as the Financial Stability Board (with an) expanded membership (and) a broadened mandate to promote financial stability.”

It “consists of a Chairperson, a Steering Committee, the Plenary with member countries, SSBs (standard setting bodies) and international financial institutions, and a Secretariat. The Chair oversees the Steering Committee, the Plenary and the Secretariat. The FSB Plenary is the decision making organ of the FSB.” It has a “full-time Secretary General and an enlarged Secretariat based in Basel (to) support the FSB.” Membership also obligates countries to “implement international financial standards (including 12 International Standards and Codes)….” with no elaboration about them except in broad terms left for outsiders to imagine what’s meant.

Plenary members include G-20 nations, Spain and the European Commission – represented by their central bankers, immediate deputies, heads of their main regulatory agency, deputy finance ministers, SSB chairs, central bank committees, and representatives of the IMF, World Bank, BIS and OECD – together the world’s monetary movers and shakers.

The FSB appears to be a step closer toward global monetary control under the direction of the G-7 dominated BIS, IMF and other international lending agencies. Given its inclusion in Obama’s financial reform proposal makes the entire package suspect and perhaps just cover for the above-outlined sinister scheme – as well as letting Wall Street be self-regulating.

In her June 21 article titled “Big Brother in Basel: Have We Traded Our National Sovereignty for Financial Stability,” Ellen Brown cites Internet rumors “that the new agency benignly called the Financial Stability Board (FSB) is the latest sinister development in the covert consolidation of global financial power in a few private hands,” – namely dominant G-7 central bankers controlling the BIS, IMF, and other international lending agencies.

So far, there’s still time to prevent it provided enough concerned people know the danger, spread the word to others, and urge them to pass it on. Otherwise, holding on to your wallets won’t matter because everything in them will be emptied the result of (banker-controlled) regulatory bodies pulling off the greatest ever financial heist – a global coup d’etat. The time to stop it is now and expose Obama as a frontman for grand theft and power.

Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached at lendmanstephen@sbcglobal.net .

Also visit his blog site at sjlendman.blogspot.com and listen to The Global Research News Hour on RepublicBroadcasting.org Monday – Friday at 10AM US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listening.

Complete article at:

http://www.globalresearch.ca/index.php?context=va&aid=14057

Stephen Lendman is a frequent contributor to Global Research. Global Research Articles by Stephen Lendman

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Tax evasion we can believe in: Settlement Anticipated in UBS Case –In February, UBS agreed to pay $780 million to settle accusations that it had defrauded the Internal Revenue Service by allowing wealthy Americans to hide billions of dollars in taxes in secret offshore bank accounts.

23 Jun 2009

The ‘Justice’ Department may drop a closely watched legal case aimed at forcing the Swiss bank UBS to divulge the names of 52,000 wealthy American clients suspected of offshore tax evasion, a United States official briefed on the matter said Monday. The move, which would halt an unusually aggressive effort to force Switzerland to lift its veil of banking secrecy, could happen by mid-July. The reversal comes as UBS and senior Swiss government officials have mounted a fierce lobbying campaign to persuade Washington to drop the case.

At:

http://www.nytimes.com/2009/06/23/business/23ubs.html

From: CLG News

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Over-the-counter derivatives

Before the Subcommittee on Securities, Insurance, and Investment, Committee of Banking, Housing, and Urban Affairs, U.S. Senate, Washington, D.C.

June 22, 2009

Chairman Reed, Ranking Member Bunning, and other members of the Subcommittee, I appreciate this opportunity to provide the Federal Reserve Board’s views on the development of a new regulatory structure for the over-the-counter (OTC) derivatives market. The Board brings to this policy debate both its interest in ensuring financial stability and its role as a supervisor of banking institutions. Today, I will describe the broad objectives that the Board believes should guide policymakers as they devise the new structure and identify key elements that will support those objectives. Supervision of derivative dealers is a fundamental element of the oversight of OTC derivative markets, and I also will discuss the steps necessary to ensure these firms employ adequate risk management.

Policy Objectives

Mitigation of Systemic Risk

The events of the last two years have demonstrated the potential for difficulties in one part of the financial system to create problems in other sectors and in the macroeconomy more broadly. OTC derivatives appear to have amplified or transmitted shocks. An important objective of regulatory initiatives related to OTC derivatives is to ensure that improvements to the infrastructure supporting these products reduce the likelihood of such transmissions and make the financial system as a whole more resilient to future shocks.

Centralized clearing of standardized OTC products is a key component of efforts to mitigate such systemic risk. One method of achieving centralized clearing is to establish central counterparties, or CCPs, for OTC products. Market participants have already established several CCPs to provide clearing services for some OTC interest rate, energy, and credit derivative contracts. Regulators both in the United States and abroad are seeking to speed the development of new CCPs and to broaden the product line of existing CCPs.

The Board believes that moving toward centralized clearing for most or all standardized OTC products would have significant benefits. If properly designed, managed, and overseen, CCPs offer an important tool for managing counterparty credit risk, and thus they can reduce risk to market participants and to the financial system. The benefits from centralized clearing will be greatest if CCPs are structured so as to allow participation by end users within a framework that ensures protection of their positions and collateral.

Infrastructure changes in OTC markets will be required to move most standardized OTC contracts into centralized clearing systems in a way that ensures the risk-reducing benefits of clearing are realized. Such changes include agreement on the key terms that constitute “standardization” and the development of electronic systems for feeding trade data to CCPs–in other words, building better pipes to the CCPs. For their part, CCPs must have in place systems to manage the risk from this new business. Of particular importance are procedures to handle defaults in OTC products that are cleared, because these products are likely to be less liquid than the exchange-traded products that CCPs most commonly handle.

Although implementation challenges no doubt lie ahead, the Board will work to ensure that these challenges are addressed quickly and constructively. Major dealers have committed to making improvements in back-office processes such as increased electronic processing of trades and speedier confirmation of trades for equity, interest rate, commodity, foreign exchange, and credit products. These back-office improvements are important prerequisites for centralized clearing, and efforts by supervisors to require dealers to improve these practices have helped lay the groundwork for developing clearing more quickly. Dealers also have committed to clearing standardized OTC products, and they will be expected to demonstrate progress on this commitment even as the broader regulatory reform debate evolves. Clearly there is much to be done, and we are committed to ensuring that the industry moves promptly. An important role of policymakers may be establishing priorities so that efforts are directed first at the areas that offer the greatest risk-reduction potential.

Some market observers feel strongly that all OTC derivative contracts–not just the standardized contracts–should be cleared. Requiring CCPs to clear nonstandard instruments that pose valuation and risk-management challenges may not reduce risk for the system as a whole. If, for example, the CCPs have difficulty designing margin and default procedures for such products, they will not be able to effectively manage their own counterparty credit risk to clearing members. In addition, there are legitimate economic reasons why standardized contracts may not meet the risk-management needs of some users of these instruments. A flexible approach that addresses systemic risk with respect to standardized and nonstandardized OTC derivatives, albeit in different ways, is most likely to preserve the benefits of these products for businesses and investors.

That said, however, it is particularly important that the counterparties to nonstandardized contracts have robust risk-management procedures for this activity. Nonstandard products pose significant risk-management challenges because they can be complex, opaque, illiquid, and difficult to value. Supervisors must ensure that their own policies with respect to risk management and capital for firms active in nonstandardized products fully reflect the risks such products create. If supervisors are not comfortable with their ability to set and enforce appropriate standards, then the activity should be discouraged. I will return to a broader discussion of supervision and risk management later.

Improving the Transparency and Preventing the Manipulation of Markets

Throughout the debates about reform of the OTC derivatives market, a persistent theme has been concern that the market is opaque. Discussions of market transparency generally recognize the multiple audiences that seek information about a market–market participants, the public, and authorities–and the multiple dimensions of transparency itself–prices, volumes, and positions. Participants, the public, and authorities seek different information for different purposes. Transparency is a tool for addressing their needs and, in the process, fostering multiple policy objectives. Transparency to market participants supports investor protection as well as the exercise of market discipline, which has sometimes clearly been lacking. Transparency to the public helps to demystify these markets and to build support for sound public policies. Transparency to authorities supports efforts to pursue market manipulation, to address systemic risk through ongoing monitoring, and, when necessary, to manage crises.

Substantial progress in improving the transparency of volumes and positions in the credit default swap (CDS) market occurred with the creation of the Depository Trust Clearing Corporation’s Trade Information Warehouse, a contract repository that contains an electronic record of a large and growing share of CDS trades. Participation in that repository is voluntary, however, and its present coverage is limited to credit products. Nevertheless, major dealers, who are counterparties to the vast majority of CDS trades, have recently committed to supervisors that they will record all their CDS trades in the warehouse by mid-July.

The Board supports creating contract repositories for all asset classes and requiring a record of all OTC derivative contracts that are not centrally cleared to be stored in these repositories. The Trade Information Warehouse currently makes aggregate data on CDS contracts public. Aggregate data on volumes and open interest should be made public by other repositories that are created, and more detailed data should be made available to authorities to support policy objectives related to the prevention of manipulation and systemic risk.

Enhancing price transparency to the broader public through post-trade reporting of transaction details is also an important goal. Even where contracts are not traded on exchanges or on regulated electronic trading systems, the prompt dissemination of information can provide significant benefits to market participants on a range of valuation and risk-management issues. The Board believes that policymakers should pursue the goal of prompt dissemination of prices and other trade information for standardized contracts, regardless of the trading venue.

Supervision and Risk Management

Although the creation of CCPs will provide an important new tool for managing counterparty credit risk, enhancements to the risk-management policies and procedures for individual market participants will continue to be a high priority for supervisors. If the reforms outlined here are implemented, the firms currently most active in bilateral OTC markets will become the firms most active as clearing members of CCPs. As such, the quality of their internal risk management is important to the CCP because sound risk management by all clearing members is critical if centralized clearing is to deliver risk-reducing benefits. Supervisors have recognized that financial institutions must make changes in their risk-management practices for OTC derivatives by improving internal processes and controls and by ensuring that traditional credit risk-management disciplines are in place for complex products, regardless of the form they take. Efforts already under way include improving collateralization practices to limit counterparty credit risk exposures and examining whether the current capital regime can be improved to increase incentives for sound risk management.

An important parallel process involves ensuring that firms that are large and complex enough to pose risks to the broader system are subject to appropriate oversight and resolution authority, even if they operate outside the traditional regulated banking system. The Board believes that all systemically critical firms should have a consolidated supervisor, as well as be subject to the oversight of any systemic regulator that might be created. The scope of a firm’s activities in the OTC derivatives market will likely be an important factor in making that assessment.

Conclusion

Policy issues associated with OTC derivatives are not limited to the United States. The markets are global. Past work to strengthen OTC derivatives markets has often involved a large measure of international coordination, and the current policy issues are unlikely to be fully and effectively addressed without broad-based input.

Despite the problems that have been associated with OTC derivatives during the financial crisis, these instruments remain integral to the smooth functioning of today’s financial markets. Much work must be done to strengthen the market further. But with effective oversight by supervisors, prudent risk management by end users and dealers, and appropriate changes in the regulatory structure, the systemic risks stemming from OTC derivatives can be reduced, and derivatives can continue to provide significant benefits to the businesses and investors who use them to manage financial market risks.

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General Strike: Possible in Iran? In the U.S.?

Tuesday, June 23, 2009

The British Guardian reports today that Mir Hossein Mousavi “appears to be planning a general strike. A discussion on his Facebook page says: ‘We are working on a general strike plan. Please help us with your ideas if you have expertise on this issue.’”

BILL FLETCHER, billfletcherjr@gmail.com, http://www.blackcommentator.com

Fletcher is co-founder of the Center for Labor Renewal and author of the book “Solidarity Divided: The Crisis in Organized Labor and a New Path toward Social Justice.”

He said today: “For a general strike to be successful, you have to have organized supporters to withstand the attacks that will result. … People in Iran are responding in a way that we should have regarding Florida in the 2000 election.”

From: Institute for Public Accuracy

Tom Toles
(d.yimg.com)

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Fox’s Rosen falsely suggested GOP lawmakers generally agree with McCain on Iran

Fox News’ James Rosen falsely suggested Republicans agree with Sen. John McCain’s position that President Obama has not stood up “forcefully enough” for the protesters in Iran. Rosen did not point out, as Sen. Lamar Alexander reportedly acknowledged, that “there are different views within the Republican Conference” on the issue.

Read More

http://mediamatters.org/items/200906230003?lid=1046127&rid=30473042

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Taxing Times for the Drug Industry

Source: Advertising Age, June 17, 2009

As members of the U.S. Congress consider options on how to fund Obama administration plans to extend health care coverage to those currently uninsured, the drug and advertising are digging in to defend tax breaks on direct-to-consumer advertising. Representative Charles Rangel (D-N.Y.), the chairman of the House Ways and Means Committee, said that “one thing that’s not off the table is that you can pick up $37 billion knocking out the deduction for [drug] advertising.” The possibility that the tax deduction on drug promotion could be removed has angered the Association of National Advertisers (ANA). “What, anytime somebody doesn’t like a particular product category, they’re going to take away their tax deduction?” asked Dan Jaffe, ANA’s Executive Vice-President. In a media statement, the ANA objected to any change that would make “advertising more expensive” as, it claimed, “advertising is critical to the economic recovery of our nation.” The Pharmaceutical Research and Manufacturers of America did not respond to Advertising Age’s request for a comment.

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Interactive Comparison Tool Now Includes House Tri-Committee, Senate HELP Bills

Tuesday, June 23, 2009

Interactive Comparison Tool Now Includes House Tri-Committee, Senate HELP Bills

The Kaiser Family Foundation recently updated the side-by-side comparison tool on its new health reform gateway page to include detailed summaries of new comprehensive health reform legislation proposed by the three key House committees (known as the “Tri-Committee” bill) and from the Senate Health, Education, Labor and Pensions Committee.

With the additions, the interactive online tool at http://www.kff.org/healthreform/sidebyside.cfm
now allows comparisons of nine major congressional health reform proposals, including those from the Senate Finance Committee; Sens. Tom Coburn and Richard Burr and Reps. Paul Ryan and Devin Nunes; Rep. John Conyers; Rep. John Dingell; Sen. Bernie Sanders; Rep. Pete Stark; and Sens. Ron Wyden and Bob Bennett. The tool also includes a summary of President Obama’s reform principles.

Users can choose which proposals to compare, as well as specific characteristics about those proposals, including coverage, cost containment and financing. The tool also allows users to print out the comparison of all the plans together or a version that includes the current House and Senate authorizing committee proposals. The Foundation will continue to update the tool to reflect major new proposals and any significant changes to the plans already introduced.

The comparison tool is one of many key resources on the Foundation’s health reform gateway page at http://healthreform.kff.org/ , which provides a centralized source for key information, news and analysis about national health reform efforts now being considered by Congress.

The gateway also includes briefs explaining key health reform concepts such as health insurance exchanges and pay-or-play requirements, as well as the Foundation’s original research on issues including the cost and coverage impacts of expanding the Medicaid program and trends in employer-sponsored health insurance. Also available are webcasts of reporters-only briefings with key congressional leaders, Kaiser’s polling data on health reform, columns from Kaiser president Drew Altman about health reform topics, and relevant news summaries produced by Kaiser Health News, an editorially independent health policy news service established by the Foundation.

For additional information, please contact:
Craig Palosky at (202) 347-5270 or cpalosky@kff.org
Rakesh Singh at (650) 854-9400 or rsingh@kff.org

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The Quantity Theory of Insanity

What if there is only a limited amount of sanity in the world and the real reason people go mad is because somebody has to? What if a mysterious tribe in the Amazon rainforest turn out to be the most boring people on the earth? What if the afterlife is nothing more than a London suburb, where the dead get new flats, new jobs, and their own telephone directory? These are the sort of truths that emerge in this collection of stories by one of England’s most gifted writers.

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And now for the important news ….

By Argus Hamilton

Italy’s premier Silvio Berlusconi received a public apology Monday from a businessman who recruited starlets and hookers to attend parties at his villa. Imagine the prime minister’s dismay. He actually believed these young women were attracted to him.

http://www.JewishWorldReview.com

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three thousand words

(click here to view)

Clay Bennett Chattanooga Times Free Press Jun 24, 2009 EditorialCartoonists.com

David Horsey: theocracy / democracy
(www.seattlepi.com)

Tony Auth: congress saves health care reform
(politicalirony.com)