Tuesday, September 30, 2008

No Grand Jury for Gonzales

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By Carrie Johnson

Former attorney general Alberto R. Gonzales will not be referred to a federal grand jury for his role in the 2006 firings of nine U.S. attorneys, but a long-awaited report to be released today will recommend that a prosecutor continue to probe the involvement of lawmakers and White House officials in the episode, according to two people familiar with the case.

Justice Department Inspector General Glenn A. Fine and Office of Professional Responsibility Director H. Marshall Jarrett, who wrote the report, will not absolve department officials of blame but will recommend that efforts to resolve unanswered questions continue, said the sources, who spoke on the condition of anonymity because the findings had not been made public.

Attorney General Michael B. Mukasey is preparing to name a prosecutor from within the department to address the questions, ensuring that the politically charged issue will extend into the next administration, the sources said. An intense effort to determine how the firing plan originated and whether perjury or obstruction-of-justice laws were violated in refusing to reveal the basis for the dismissals has been thwarted, partly because investigators lack the power to compel testimony from people outside the department. Some of those officials could have played a critical role in recommending that specific prosecutors be fired.

In their 18-month review, investigators sifted through thousands of documents and interviewed scores of people to test the reasons that department leaders offered for the prosecutors' dismissals. They also set out to determine whether the prosecutors were sacked in an improper attempt to influence particular cases.

The basis for the dismissals is the subject of a tug of war between Congress and the executive branch. This year, Democrats on the House Judiciary Committee sued to seek documents and testimony from former White House counsel Harriet E. Miers and from President Bush's chief of staff, Joshua B. Bolten. A federal appeals court in Washington is deliberating the case. Meanwhile, the House panel recently voted to hold former presidential adviser Karl Rove in contempt for refusing to answer questions about the firings.

The political heat intensified last year amid more than half a dozen congressional hearings into the issue. Ultimately, 19 Justice Department officials in Washington resigned.

Current and former lawyers in the department, however, said criminal charges against Gonzales, who stepped aside in August 2007, were unlikely absent the emergence of new e-mails or witness accounts that directly contradict his statements about the firings.

Monica M. Goodling, who served as the department's White House liaison, told Congress last year that she felt "uncomfortable" during a March 2007 conversation with Gonzales that focused on her recollections of the circumstances surrounding the dismissals. Her account of the meeting prompted lawmakers to accuse Gonzales of improperly trying to influence her testimony. He denied the allegations, saying he was only trying to comfort a distraught employee. Goodling is one of several former aides who declined to be interviewed by investigators, who lack the power to issue subpoenas.

A bipartisan group of lawmakers challenged Gonzales's truthfulness in a series of hostile hearings in the summer of 2007. The sessions highlighted his inability to remember key meetings, e-mails and memos laying out plans for the dismissals. Gonzales, who has not landed full-time legal work since his resignation, told Congress that he delegated many decisions to his subordinates and should have exercised more oversight.

"We are gratified that the report apparently verifies . . . that Judge Gonzales's action in the removal of certain U.S. Attorneys was proper and appropriate," said George J. Terwilliger III, Gonzales's attorney.

U.S. attorneys serve at the pleasure of the president and can be fired for any reason. But contradictory explanations for the dismissals, and the steady release of internal e-mails suggesting the plan had evolved over two years in consultation with White House officials, damaged the department's reputation and credibility. The report will sift through all of the conflicting data about prosecutors who found themselves on lists prepared by D. Kyle Sampson, former chief of staff to Gonzales.

Among the most closely watched of the cases is one involving former New Mexico U.S. attorney David C. Iglesias, who says he received troubling phone calls from GOP Sen. Pete V. Domenici and Republican Rep. Heather A. Wilson about the status of a criminal corruption probe against a prominent local Democrat shortly before the 2006 elections. In April, the Senate Ethics Committee admonished Domenici, who is retiring.

Investigators failed in their attempts to interview lawmakers, their assistants or former White House aides. As a result, they asked Mukasey to continue the probe by appointing a prosecutor.

Despite calls from some of the fired U.S. attorneys, Mukasey has not named a special prosecutor from outside the department. He intends to hand over the project to a career prosecutor with experience in public corruption work, the sources said.

Earlier this year, Mukasey tapped a veteran federal prosecutor from Connecticut to investigate the destruction of CIA videotapes that depicted the interrogation of prisoners suspected of ties to al-Qaeda. In that case, the attorney general said more inquiry was needed to determine whether laws had been broken but warned that criminal charges would not necessarily follow.

Mukasey is expected to adopt a similar approach in the case of the U.S. attorneys' firings, picking a career prosecutor who will report to the Justice Department's second in command.

Any documents and interviews that are gathered by the career prosecutor presumably will be covered under federal grand jury and investigative protections, keeping them under wraps for months, until after Bush leaves office.

House Rejects Bailout Package, 228-205; Stocks Plunge

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In a moment of historic import in the Capitol and on Wall Street, the House of Representatives voted on Monday to reject a $700 billion rescue of the financial industry. The vote came in stunning defiance of President Bush and Congressional leaders of both parties, who said the bailout was needed to prevent a widespread financial collapse.

The vote against the measure was 228 to 205, with 133 Republicans turning against President Bush to join 95 Democrats in opposition. The bill was backed by 140 Democrats and 65 Republicans.

Supporters vowed to try to bring the rescue package up again as soon as possible, perhaps late Wednesday or Thursday, but there were no definite plans to do so. A former Treasury Department official predicted that the administration would try to get another House vote before the end of the week, and with only “tiny tweaks” to the package, given the relative closeness of the vote.

Stock markets plunged as it appeared that the measure would go down to defeat, and kept slumping into the afternoon when that appearance became a reality. By late afternoon the Dow industrials had fallen more than 5 percent, and other indexes even more sharply. Oil prices fell steeply on fears of a global recession; investors bid up prices of Treasury securities and gold in a flight to safety.

The vote was a catastrophic political defeat for President Bush, who tried to muster national support for a recovery plan in a televised address last Wednesday, then lobbied wavering Republican legislators in intensely personal telephone calls on Monday morning.

“We put forth a plan that was big because we got a big problem,” the president said afterward. “And we’ll be working with members of Congress, leaders of Congress on the way forward. Our strategy is to continue to address this economic situation head on.”

The president was described as “very disappointed” by a spokesman, Tony Fratto. Mr. Bush’s disappointment may have been deepened by the fact that members of his own party voted against the package by more than 2 to 1.

Treasury Secretary Henry M. Paulson Jr., appearing at the White House late Monday afternoon, warned that the failure of the rescue plan could dry up credit for businesses big and small, making them unable to make payrolls or buy inventory. Vowing to continue working with Congress to revive the rescue plan, Mr. Paulson said it was “much too important to simply let fail.”

Supporters of the bill had argued that it was necessary to avoid a collapse of the economic system, a calamity that would drag down not just Wall Street investment houses but possibly the savings and portfolios of millions of Americans. Moreover, supporters argued, a lingering crisis in America could choke off business and consumer loans to a degree that could prompt bank failures in Europe and slow down the global economy.

Opponents said the bill was cobbled together in too much haste and might amount to throwing good money from taxpayers after bad investments from Wall Street gamblers.

House leaders pushing for the package kept the voting period open for some 40 minutes past the allotted time at mid-day, trying to convert “no” votes by pointing to damage being done to the markets, but to no avail.

The former Treasury Department official who predicted another House vote this week said that before there could be another vote, he would expect Speaker Nancy Pelosi, the California Democrat, and Representative John A. Boehner of Ohio, the Republican minority leader, to approach members with seats in safe districts and tell them, in effect: “You’ve got to do this. The fate of the country hangs on your vote.”

On the other hand, the former official, who spoke on condition of anonymity, said he was not sure what adjustments would satisfy the Republican lawmakers who voted against the package, given that the Republicans had already succeeded in tacking government insurance on to the bill, and that other items on their list of proposals, like a suspension of the capital gains tax, are non-starters.

The United States Chamber of Commerce vowed to exert pressure, warning in a letter to members of Congress that it would keep track of who votes how. “Make no mistake,” the letter said. “When the aftermath of Congressional inaction becomes clear, Americans will not tolerate those who stood by and let the calamity happen.”

Secretary Paulson, in promising to continue working with Congressional leaders to win passage of a rescue plan, alluded to remedial steps that the Treasury and Federal Reserve could take on their own, like lowering short-term interest rates. “Our tool kit is substantial,” he said, “but insufficient.”

Immediately after the vote, many House members appeared stunned. Some Republicans blamed Ms. Pelosi for a speech before the vote that disdained President Bush’s economic policies, and did so, in the opinion of the speaker’s critics, in too partisan a way.

“Clearly, there was something lacking in the leadership here,” said Representative Eric Cantor, Republican of Virginia.

Democrats, meanwhile, blamed the Republicans for not coming up with enough support for the measure on their side of the aisle.

Members of both parties, doing a quick political post-mortem, said those who voted no had encountered too much hostility for the bill among their constituents, and were worried that a vote in favor would be political suicide.

The Senate had been expected to vote later in the week if the bill had cleared the House on Monday. Senate vote-counters had predicted that there was enough support in the chamber for the measure to pass. But the stunning vote in the House, coupled with the Jewish holidays, made it difficult to predict when other votes might be held. Many House members who voted for the bill held their noses, figuratively speaking, as they did so.

Mr. Boehner, the Republican minority leader, called the measure “a mud sandwich” at one point, but he said that there was too much at stake not to support it. He urged members to reflect on the damage that a defeat of the measure could mean “to your friends, your neighbors, your constituents” as they might watch their retirement savings “shrivel up to zero.”

And Representative Steny Hoyer of Maryland, who as Democratic majority leader often clashes with Mr. Boehner, said that on this “day of consequence for America” he and Mr. Boehner “speak with one voice” in pleading for passage.

When it comes to America’s economy, Mr. Hoyer said, “none of us is an island.”

The House vote came after a weekend of tense negotiations produced a rescue plan that Congressional leaders said was greatly strengthened by new taxpayer safeguards. “If we defeat this bill today, it will be a very bad day for the financial sector of the economy,” said Representative Barney Frank, Democrat of Massachusetts and the chairman of the Financial Services Committee. Earlier Monday, President Bush urged Congress to act quickly. Calling the rescue bill “bold,” Mr. Bush praised lawmakers “from both sides of the aisle” for reaching agreement, and said it would “help keep the crisis in our financial system from spreading throughout our economy.”

After long favoring a hands-off approach and deregulation of the financial industry, the Bush administration has found itself in recent weeks interceding repeatedly in the private market to try to avert one calamity after another.

Even before the House vote, European and Asian stock markets declined sharply on Monday, especially in countries where major banks have had significant problems with mortgage investments, like Britain and Ireland. In the credit markets, investors once again bid up prices of Treasury securities and shunned more risky debt.

Early in the House debate, Jeb Hensarling, Republican of Texas, said he intended to vote against the package, which he said would put the nation on “the slippery slope to socialism.” He said that he was afraid that it ultimately would not work, leaving the taxpayers responsible for “the mother of all debt.”

Another Texas Republican, John Culberson, spoke scathingly about the unbridled power he said the bill would hand over to the Treasury secretary, Henry M. Paulson Jr., whom he called “King Henry.”

A third Texan, Lloyd Doggett, a Democrat, said the negotiators had “never seriously considered any alternative” to the administration’s plan, and had only barely modified what they were given. He criticized the plan for handing over sweeping new powers to an administration that he said was to blame for allowing the crisis to develop in the first place.

The administration accepted limits on executive pay and tougher oversight; Democrats sacrificed a push to allow bankruptcy judges to rewrite mortgages. But Republicans fell short in their effort to require that the federal government insure, rather than buy, the bad debt.

The final version of the bill included a deal-sealing plan for eventually recouping losses; if the Treasury program to purchase and resell troubled mortgage-backed securities has lost money after five years, the president must submit a plan to Congress to recover those losses from the financial industry.

Presumably that plan would involve new fees or taxes, perhaps on securities transactions.

The deal would also restrict gold-plated farewells for executives of companies that sell devalued assets to the Treasury Department. But by mid-afternoon on Monday, no one could safely predict whether the provisions in the 110-page bill were strictly academic.

“The legislation has failed,” Speaker Pelosi said at a news conference after the vote. “The crisis has not gone away. We must continue to work in a bipartisan manner.”

Ahmadinejad accepts Israel's right to exist

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By Peter Tatchell

The Iranian president has said he would accept a two-state solution if the Palestinians agree. So where are the headlines?

Iranian President, Mahmoud Ahmadinejad, has made a remarkable announcement. He's admitted that Iran might agree to the existence of the state of Israel.

Ahmadinejad was asked: "If the Palestinian leaders agree to a two-state solution, could Iran live with an Israeli state?"

This was his astonishing reply:

If they [the Palestinians] want to keep the Zionists, they can stay ... Whatever the people decide, we will respect it. I mean, it's very much in correspondence with our proposal to allow Palestinian people to decide through free referendums.

Since most Palestinians are willing to accept a two-state solution, the Iranian president is, in effect, agreeing to Israel's right to exist and opening the door to a peace deal that Iran will endorse.

Ahmadinejad made this apparently extraordinary shift in policy during an
interview last week when he was in New York to address the UN general assembly.

He was interviewed on September 24 by reporters Juan Gonzalez, writing for the New York Daily News, and Amy Goodman for the current affairs TV programme, Democracy Now.

You can watch the full interview and read the full text on the Democracy Now website.

Surprisingly, Ahmadinejad's sensational softening of his long-standing, point-blank anti-Israeli stance was not even headlined by the two reporters. Perhaps this was a decision by their editors? Did they not want to admit that Ahmadinejad may have, for once, said something vaguely progressive?

Equally odd, the story wasn't picked up by the world's media. For many years, the Iranian president has been vilified, usually justifiably. Now, when he says something positive and helpful, the media ignores it. Is this because of some anti-Iran or pro-Israel agenda?

Why ignore a statement that is, from any political and journalistic perspective, a radical departure from Ahmadinejad's previous unyielding anti-Israel tirades? Only a week earlier in Tehran he was saying that the Israeli state would not survive.

Confused? Aren't we all. Will the real Mahmoud Ahmadinejad please stand up?

Is he a deceiver and an unprincipled opportunist who will say anything to further Iran's political agenda? Or could it be that beneath his often demagogic public rhetoric against Israel he is, in fact, open to options more moderate than his reported remarks about wiping the Israeli state off the map?

I am not defending or endorsing Ahmadinejad in any way, shape or form. Indeed, I am on record as being one of Ahmadinejad's harshest critics. I've protested dozens of times outside the Iranian Embassy in London and written scores of articles exposing his regime's persecution of trade unionists, students, journalists, human rights defenders, women's equality campaigners, gay people, Sunni Muslims and ethnic minorities such as the Arabs, Kurds, Azeris and Balochis.

You can watch my Talking with Tatchell online TV programmes on the Iranian regime's anti-Arab racism here, and on the rising popular resistance to its police state methods here.

But I also hope I am open-minded and fair. Even I can see that Ahmadinejad appears to have moderated his position and is now apparently willing, with Palestinian agreement, to accept the co-existence of two states: Israel and Palestine.

Many Israelis and their allies will no doubt say Ahmadinejad can't be trusted; that his comments were part of a manipulative charm offensive during his visit to the UN in New York. They may be right. But even if he is being disingenuous, that fact that he's made this public concession on Israel at all is a softening of sorts.

News of what he said will filter back to Tehran and he'll have to account for his words to his government, including the hardline anti-Israel ayatollahs and revolutionary guards. I wonder what they think?

Call me naive, but in my view Ahmadinejad's words were of major significance. He ought be pressed by world leaders, and Israel, to repeat them and to clarify them. His statement might, and I emphasise might, be evidence that Iran is open to some negotiation on the future of the Israeli state.

If Israel's leaders had any sense, they would ignore past provocations by Iran and seize this moment to have dialogue with the Palestinian and Iranian leaders on a two-state solution. What Ahmadinejad has said could be an opening to diffuse the stand-off between Iran and Israel.

I am not relenting one inch in my condemnation of Ahmadinejad's regime, with its grisly torture chambers, execution of juvenile offenders and neocolonial subjugation of national minorities. But I do find myself in considerable agreement with the Iranian president's analysis of why the Middle East peace process has stalled. He told Gonzales and Goodman:

The first reason is that none of the solutions have actually addressed the root cause of the problem. The root cause is the presence of an illegitimate government regime that has usurped and imposed itself on, meaning they have brought people from other parts of the world, replaced them with people who had existed in the territory and then forced the exit of the old people out, the people who lived there, out of the country or the territories. So there have been two simultaneous displacements. The indigenous people were forced out and displaced, and a group of other people scattered around the globe were gathered and placed in a new place ... A second reason is that none of those peace plans offered so far have given attention to the right to self-determination of the Palestinians. If a group of people are forced out of their country, that doesn't mean their rights are gone, even with the passage of 60 years. Can you ignore the rights of those displaced? How is it possible for people to arrive from far-off lands and have the right to self-determination, whereas the indigenous people of the territory are denied that right?

Much as I loathe his regime, Ahmadinejad is basically right. The key to peace in the Middle East is concessions from the occupying power. As the stronger, wealthier and conquering partner, Israel should take the initiative and help kick-start the peace process by withdrawing unilaterally and totally from the territories it has occupied illegally (according to international law) since the 1967 war. This means pulling out from all of the West Bank and dismantling all the illegal Israeli settlements.

The West Bank, plus Gaza, should become the independent, sovereign state of Palestine, backed with international aid and investment to create the infrastructure for economic development and for social provision (new houses, schools, hospitals, transport links and sports facilities).

Jobs and prosperity in Palestine will undercut and isolate the men of violence. They will lose support and become marginalised in a self-governing state where ordinary Palestinians experience the tangible benefits of peace.

This is so damn obvious. When will Israel's leaders wake up and realise that peace with justice is the only way to give their people lasting security?

I've watched the economy for 30 years. Now I'm truly scared

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By Will Hutton

If more people understood what has happened in the British and American banking system, the financial crisis would only be containable by the immediate partial nationalisation of every bank in Britain and America. There was not a run on the banks by depositors queuing in the streets to withdraw their savings. Rather, it was an escalating and terrifying run on the banks in effect by themselves, which, if it spread to millions of small savers, would reproduce the events of 1929.

In Britain, the money markets that the banks organise between themselves completely froze. Such was the break down in trust and sense of panic that some of the most familiar names in British high street banking would not lend to each other at all or, at best, just overnight. Instead, the Bank of England had to supply tens of billions to banks who found the normal sources of funds blocked.

I have been writing on the financial markets for nearly 30 years. I have known the system was becoming increasingly fragile, but for all the ferocity of my criticisms, I never expected the scale of today's events. Or that I would begin to wonder whether my own bank would survive without nationalisation. The negotiations in Washington over this weekend to finalise the $700bn Paulson financial bail-out plan, and the expected vote on Sunday, are all that stands between the Anglo-American banking system and a first-order disaster. The scheme had better work.

This is not the end of capitalism, as some wildly claim; there is no intellectual, social or political challenge to a market system based on respect for private property rights, even by the Chinese Communist party. Rather, it is a crisis of a particular capitalism that has set aside respect for trust, integrity and fairness as fuddy-duddy obstacles to 'wealth generation'. What we are relearning is that without trust and fairness, capitalism risks its own sustainability, even while it unleashes forces that undermine those self-same values. London's money markets froze because of a trust collapse; banks simply don't believe each other when they say their businesses are sound and will not default on their obligations. Trust matters.

And although some conservatives in Britain and America continue to make the ideological case against any government action as a response to the recent turmoil - governments necessarily do everything worse than the market - they have no alternative proposal about how to restore trust once it has gone. Trust is a reciprocal relationship, dependent upon a desire to be considered decent and honourable. Even in the dog-eat-dog financial markets, trust and integrity are matters of self-interest. However amoral you may be, it is in your interest to care about your reputation, because if you behave badly you will not do business with me - or others - on favourable terms again.

But the scale of the personal rewards now available in London and Wall Street - £15m-£20m at the top is the norm - along with the greed-is-good doctrine associated with extreme laissez-faire economics, has trashed the need for individuals to worry about integrity. They don't need to be concerned about their reputations; they just need one deal or one year at the top and they need never work again. The incentive structure has so departed from one of the principal norms of fairness - proportionality between value added and reward - that it has eviscerated trust relationships and integrity.

Everybody tries to 'game' the system on their route to vast personal fortunes - whether short-selling, packaging up dud mortgages as prime mortgages or telling lies about their financial viability - and the result is that the system is getting wise. The best course today in any financial transaction is to presume zero integrity. Credit is drying up and with it the very lifeblood of the economy.

Worse, now that the system is in trouble, financiers are turning to taxpayers in the US and Britain for help without understanding the other key principal of fairness - that we will consider helping those who for no fault of their own get into trouble, but not those who freely created their own bad circumstances.

Hank Paulson certainly acted decisively in launching his plan, but the former Goldman Sachs CEO, who negotiated a special exemption from tax when he took the job, like his former Wall Street colleagues is not well endowed with the fairness gene. It polluted the very design of the scheme.

He knows that unless the US government does something comprehensive, the entire financial system is at stake, but his original plan was designed to bail out the system intact. It made no demands that any financial executives sacrifice pay or bonuses despite having driven their firms and wider economy to the point of bankruptcy. He does not want the government to provide new bank capital to help recapitalise a bust banking system. Instead, he wants the government to buy their toxic debt and so leave the banks unreformed. On top he wanted complete discretion to act as he chose without any oversight.

American economists of every persuasion signed a joint letter complaining not at the aim of the bail out, which is plainly vital, but for its lack of fairness. Conservative papers and politicians echoed the complaint. Suddenly, Wall Street is coming back to earth. The transactions from which it skims such riches are built on the savings of ordinary Americans to whom it has obligations, as it has to other Wall Street firms. What we know now about the yet to be agreed compromise is that Paulson has accepted Congressional oversight, will offer direct help to distressed US homeowners as well as banks, and will accept some constraints on the worst excesses of executive pay.

But the core proposal remains. The government will buy toxic debt rather than inject government funds into the banks' capital base, in other words, reject even partially nationalising the entire US banking system as the Swedes had to in 1992. I don't know - nobody does - whether the Paulson plan would be sufficient or whether ultimately the Americans will have to go for nationalisation. What I do know is that unless there is a radical and government-led change in ownership, structure, regulation and incentives so that the principles of fairness are put at the heart of the Anglo American financial system - proportionality of reward and fair distribution of risk - there is no chance of the return of trust and integrity upon which long-term recovery depends.

The political debate in Britain and America so far little reflects this need - but it will. Barack Obama's election as President is much more likely. And the discourse in Britain will follow. Brown may be crampingly cautious but, unlike Cameron, he does understand that without government action the restoration of trust and fairness may never happen. This week, I expect the nationalisation of the stricken Bradford & Bingley to join Northern Rock. It is but another in a long sequence of interventions that are imperative to save the system from its own proclivities. Once again, the left is coming to capitalism's rescue.

Will Wall Street's Meltdown Turn America Into a Police State?

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By Scott Thill

"Raw capitalism is dead." -- Henry Paulson, U.S. Treasury secretary

"Can’t we just all go out and say things are OK?" -- President Bush, to congressional leaders during bailout negotiations

I’m not much of an Army Times reader, but after reading that a brigade was shipping from Iraq in October to serve as "an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks" in the homeland right before the election, my antennae perked up. Same as they did when I read that an electoral college doomsday scenario exists in which Dick Cheney casts the deciding vote that gives McCain-Palin the White House.

That is, if Cheney and Bush don’t take it for themselves. That may sound like fantasy, but don’t kill the messenger. They are all strands of the Gordian knot the Bush administration has tied around the neck of the American people for the last two presidential terms, best represented today by the failed bailout of banks, brokers and other complicit parties that have since jacked the American people out of trillions. And while the Army Times revelation or election doomsday may turn out to be paranoia rather than prescience, the evidence just isn’t there.

Like I said: antennae.

They’ve come in handy as bullshit detectors since Bush stole the election from a flat-footed Al Gore and set about engineering the greatest transfer of public wealth into private hands in American history. If you factor in Monday’s failed takeover, as well as the $5 trillion the American people now owe thanks to the "bailout" of Fannie Mae and Freddie Mac, not to mention the continuing hyper-expensive occupation of Iraq and so on, our citizenry is now so far in the hole that it’s pointless griping about numbers. If you want one, use the figure put forth by Dennis Kucinich: half a quadrillion dollars. We have evolved past the point of economic or geopolitical reality and entered a phase of pure concept.

And all vectors of that phase point toward the conclusion that the proverbial shit has totally hit the fan -- head on, and all over again.

Meet the New Rome, Same as the Old Rome

"Franklin Roosevelt had to save capitalism from itself," Los Angeles Times business editor Tom Petruno told me as Washington Mutual and Wachovia became the latest banking dominoes to fall. "Is history repeating?"

Indeed, it is, as one could tell from the repetitive usage of loaded terms and phrases like "Great Depression," "meltdown," "apocalypse," "Armageddon" and more to describe the just-on-time cratering of the American economy. After the strange bedfellows in both parties torpedoed Bush, Bernanke and Paulson’s so-called bailout, more than $1 trillion of market value in American equities disappeared in a single day. The Dow Jones average set a record for quickest suicide dive in a single day. Other indexes sunk to multiyear lows, wiping out years of value, and stocks across the board went negative like Ann Coulter. In fact, the only major stock that actually advanced on Monday was Campbell Soup.

Can there be a more fitting metaphor for the American economy stuck beneath the Bush administration’s thumb?

But the reruns, and their loaded terminology, are merging: Bush himself is just another iteration of the infamous "New World Order" instituted by his father while trying to, what else, convince the American public that it needed to go to war against Saddam Hussein. The revisionism is transparent, befitting a government that cares nothing of what its people actually think. Jon Stewart of "The Daily Show" recently juxtaposed Bush’s address on the financial cataclysm with his pre-invasion speech in 2003 and found -- surprise! -- they were exactly the same.

This is a long way of saying that this particularly frightening crux of historical geopolitics, fascism and environmental calamity has been a long time coming. Failing banks? Deregulation. Endless war? Homeland security. Total information awareness? Transparent government. Bankrupt economy? The fundamentals are strong.

"Here’s my question," Petruno adds. "If this is remembered as Black September, will that end up being too gentle a reference to what actually happened to the American financial system this month? It is beyond comprehension for people who have been on Wall Street their entire lives. I can only imagine how absolutely stunned the American public must be. Stunned, and very afraid."

It should be. From a military brigade armed for action in the homeland in blatant transgression of Posse Comitatus to what ex-hedge funder and financial personality Jim Cramer recently called "financial terrorism," the United States is pushing forward back.

To start with, the bailout was obvious theft, but our situation is more precarious than you think. The hyperreal credit default swap market, which few understand although it is estimated to involve tens if not hundreds of global trillions, is faltering under the weight of its own Ponzi origins. The scenario significantly worsens once you factor in the given that countries like China and others who have denominated their loans in dollars are shouldering our exploding debt, along with oil-soaked sovereign wealth funds from nations whose civil liberties records suck ass. As I wrote last year on this clusterfuck, if the Chinese call in our debts and oil-producing countries decide to peg their petrodollars to the euro, you can more or less kiss the dollar goodbye. Which means the last thing you’ll need to worry about is your stocks, retirement or credit cards. You will instead worry whether or not the cash you have on hand will be worth anything at all. That is the loaded gun that bankers, brokers and the White House is holding to the public’s head, as I write. That trillion erased on Monday, as well as the trillions that have been lost and will be lost in the coming months, was nothing more than a hostage situation engineered by the Bush administration, the Federal Reserve and their partners in crime in finance, insurance and real estate business.

They don’t call that sector FIRE for nothing. Fire destroys everything and leaves little in its catastrophic wake. Which raises the question: What’s left to burn?

"I think our economic situation can get much worse," argues Danny Schechter, the veteran producer and author whose 2006 indie documentary "In Debt We Trust" covered this volatile territory long before CNN would. "Jobless claims are already at a seven-year high, but the government is worried about the reaction from Asia. We are living on other countries’ money, and when that spigot gets cut off, we will be in deeper doo-doo. Part of the reason for the scale of the bailout is to show Asia and sovereign wealth funds that we will protect their interests."

But for how long? The Bush administration and Congress’ disdain for the American people has been painfully obvious, so it’s hard to believe they will call from sky-high Dubai to see how we are doing after making off with almost all of our money.

"It’s a high-stakes gamble, which is why Paulson tried to do it quickly in a climate of shock and crisis," Shechter says. "He knew that the longer it takes, the more opposition it will attract. This plan, if eventually passed, will pre-empt the next president from doing anything about it, because there will be no money. They are wrecking the government by wrecking the economy first."

That shock doctrine, as Naomi Klein explained in her brilliant book of the same name, has foisted this same kind of disaster capitalism on country after country over the last century. Klein’s book is littered with democracies that slept their way through coups and takeovers, entranced by one simulation or another. The United States was plugged into a matrix that onetime White House press secretary Ari Fleischer described as "an American way of life," adding without deceit that "it should be the goal of policy makers to protect the American way of life."

By destroying it? Mission accomplished.

"This is the September of surprise," Schechter concluded, "not a war on Iran but on America."

Civil War, the Rerun?

So, what’s the next step for the shoe yet to drop? Perhaps the Army Times has the clues:

(The brigade) may be called upon to help with civil unrest and crowd control or to deal with potentially horrific scenarios such as massive poisoning and chaos in response to a chemical, biological, radiological, nuclear or high-yield explosive, or CBRNE, attack. ... The 1st BCT’s soldiers also will learn how to use "the first ever nonlethal package that the Army has fielded," 1st BCT commander Col. Roger Cloutier said, referring to crowd and traffic control equipment and nonlethal weapons designed to subdue unruly or dangerous individuals without killing them.

Like every move the Bush administration has ever made, from the Patriot Act to the occupation of Iraq and down to bankrupting the American economy, this maneuver is a solution in search of a problem that it seems destined to create. Look around you. Housing is over. Stocks are nosediving. The banks are gone. War is ceaseless. Civil liberties are disappearing. Nerds at the Federal Reserve and the Treasury are taking hostages. It is madness.

And mad people have a tendency to infect everyone around them. The difference is that when you go mad ... well, that’s the question mark: What will happen?

Ask the late Iman Morales, who went crazy in Brooklyn on a ledge 10 feet above ground and was illegally tasered by New York police officers, eventually falling to his death, immobilized. A perfect metaphor for our economy, sure, but it’s also the type of literal shock we might be awaiting, as the November election creeps nearer and shit begins to hit the fan with ferocity. Many of us so-called alternative journos are not conspiracy nuts, but realists. We look at galvanizing leaders like Barack Obama, America’s next president, and compare his impact to that of Lincoln, Kennedy or King -- without forgetting that all three were eventually assassinated. We are the type of realists who live through two Bush presidents, both of whom configured a New World Order, with and without the approval of the American people and the world at large. The type of realists that notice that after 9/11, we couldn’t fly to Vegas, but Osama bin Laden’s family was flown out of the country on government charter.

And here is what we see today: Crowds protesting in the streets, the people’s money wiped out thanks to the Bush administration’s latest economic shock and awe. An army brigade matter-of-factly betraying Posse Comitatus for the purpose of crowd control. The public trust and wealth almost robbed cleanly with congressional approval.

In other words, we see another unfolding coup, which is to say, a rerun. And there is no telling what the future may hold, or whether or not we are connecting vectors that should remain solitary. But our math has worked just fine in the past -- better than Ben Bernanke and Henry Paulson’s math, that’s for sure.

And we’d love to be wrong about what’s coming. But unfortunately that isn’t up to us, and it never has been: It’s up to the Bush administration. And it has never failed to let us down.

Israel’s plan to attack Iran confirmed

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By Jean Shaoul

Last week, the Guardian newspaper confirmed that Israel was actively considering a military strike against Iran’s nuclear facilities last spring. It reported that when Israel’s then prime minister, Ehud Olmert, raised this during US President George W. Bush’s visit to Israel last May, Bush vetoed it.

The Guardian’s veteran Middle East commentator, Jonathan Steele, cited senior diplomatic personnel working for a European head of government who met Olmert some time after Bush’s visit.

According to the Guardian’s sources, the talks were so sensitive that they were held in private, with no note-takers in attendance. They said that Olmert “took it [the refusal of a US green light] as where they were at the moment, and that the US position was unlikely to change as long as Bush was in office.”

Bush’s refusal to sanction an attack was apparently based on several factors. Firstly, the US was concerned that such an attack would provoke Iran to retaliate, which would probably include a wave of attacks on US military and contract personnel in Iraq, and Afghanistan and US shipping in the Gulf. Iraq’s Shiite-dominated government, installed by the US, retains close ties with and is dependent upon Tehran.

Secondly, it was unlikely that an Israeli air raid—even with dozens of aircraft—would succeed in knocking out Iran’s nuclear facilities, which are widely dispersed in fortified underground locations throughout the country.

Furthermore, the shortest route to Natanz, Iran’s uranium enrichment plant, is more than 700 miles from Israel and would entail flying over Iraq’s airspace, which is controlled by the US. So it would be impossible for Israel to launch such an attack without explicit US approval.

This would have left the US unable to officially deny knowledge of the attack. Iran would have every reason to assume that Bush had concurred with such an act of war, and to retaliate.

Iran has repeatedly said it would defend itself against any attacks on its nuclear facilities, which it maintains are for civilian purposes only. An air strike would precipitate a full-scale war, going far beyond Iran, underlining Washington’s increasing isolation in the region. It would precipitate attacks by Hezbollah on Israel and even terrorist attacks within the US itself.

One official said, “It is over 10 years since Hezbollah’s last terror attack outside Israel, when it hit an Argentine-Israel association building in Buenos Aires [killing 85 people].” “There is a large Lebanese diaspora in Canada which must include some Hezbollah supporters. They could slip in the US and take action,” he continued.

Olmert’s press spokesman, by denying that Bush had refused Israel a green light to attack Iran in “any working meeting,” only served to confirm the Guardian’s story.

US National Security Council spokesman Gordon Johndroe refused to comment on the content of a private conversation between Bush and Olmert, saying, “The president’s position is that all options are on the table but diplomacy remains our first course of action.”

While it appears that Bush vetoed Israel’s plans to attack Iran in private, publicly he continued his bellicose attitude towards Iran and gave no hint that he had, for the time being at least, excluded the military option.

In his speech to the Knesset the following day, Bush told legislators, “America stands with you in firmly opposing Iran’s nuclear weapons ambitions. Permitting the world’s leading sponsor of terror to possess the world’s deadliest weapon would be an unforgivable betrayal of future generations. For the sake of peace, the world must not allow Iran to have a nuclear weapon.”

Israel’s plans to attack Iran’s nuclear facilities in fact continued, despite the fact that 16 US intelligence agencies had issued a long delayed National Intelligence Estimate (NIE) last December concluding that Tehran had ended any nuclear weapons program in 2003.

The Israeli political and military establishment, which regards Iran as its main rival in the region, rejected the NIE’s assessment and has repeatedly sought assurances that the Bush administration would “deal with” Tehran before leaving office.

It is determined to maintain its military supremacy in the Middle East and to prevent the possibility that Iran or any of its neighbours will master nuclear technology that could assist in the building of weapons. It is an open secret that Israel itself has an arsenal of more than 200 nuclear missiles. In order to retain its nuclear monopoly, the Israeli ruling elite is fully prepared to plunge the entire region into war through an unprovoked and criminal attack on Iran.

Senior ministers, including Olmert himself last November, have warned that Israel would take military action of its own to disable the “threat” posed by Iran’s nuclear facilities. In September last year, Israel destroyed a deserted Syrian target that Washington and Tel Aviv claimed was a North Korean-built nuclear installation. This attack evoked no serious international condemnation and is viewed as a precursor to a future attack on Iran.

Last April, National Infrastructure Minister Benjamin Ben-Eliezer threatened Iran with complete destruction should it attack in Israel. This threat was made amid a massive five-day civil defence drill and continuing hints of a pre-emptive Israeli strike against Iranian nuclear facilities.

Even after Bush’s apparent veto, verbal threats and speculation of imminent air strikes against Iran have continued. In June, Israel carried out a long-range exercise over the eastern Mediterranean involving more than 100 F-15 and F-16 fighter jets, refuelling planes and rescue helicopters. Citing unnamed sources, the New York Times reported that the operation was a dry run for an attack on Iran.

Shaul Mofaz, deputy prime minister and a former defence minister, warned a few weeks later that a unilateral attack against Iran was “unavoidable” as international sanctions had been ineffective.

The official position in Washington and Tel Aviv is that diplomacy is the preferred way of dealing with Iran. And these bellicose threats and war games are widely seen as part of an orchestrated pressure campaign against Iran to submit to US demands for the suspension of its nuclear enrichment programme. But since Israel does not have the capacity to carry out a successful attack on Iran’s nuclear facilities on its own, the ultimate purpose of such threats as far as influential figures in both Tel Aviv and Washington are concerned is to draw the US into such an attack.

There are without doubt elements within the Israeli and American ruling elite that are pressing for an escalation of militarism in the region, with the question of Iran one of the most divisive issues in the US presidential election.

Israel recently signed a deal with Washington for the purchase of F-22 stealth bombers, which are ideally suited to the type of targeted bombing raids planned by an Israeli air force command. Israel’s existing fleet of F15 fighter jets could also be used to launch an attack on Iran.

The Israeli military has bought 90 F-161 fighter bombers that can reach Iran and will receive 11 more by the end of next year. It has also bought two new Dolphin-class submarines from Germany, in addition to the three it already has, that are reported to be capable of firing nuclear missiles.

Earlier this month, the US Defense Department told Congress it intended to sell Israel 1,000 smart bombs capable of penetrating 90cm of steel-reinforced concrete.

On Sunday, it was announced that the US had supplied Israel with an advanced radar system that will provide an early warning in the event of an Iranian missile attack. Known as FBX-T, it will be linked to the US military’s Joint Tactical Ground Station and will be run by 120 US military personnel. Israel’s Arrow II ballistic missile shield currently works with less advanced radar.

While Bush refused to give Israel the nod to attack Iran last May, judging that it would be too precipitous a step, the military build-up in the region makes clear that such an attack is far from being off the agenda permanently. Indeed, elements within the Bush administration might still contemplate an unprovoked attack on Iran before the presidential election in November.

US government brokers Citigroup takeover of Wachovia Bank

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By Barry Grey

The restructuring of the US financial system, concentrating financial resources and power in the hands of a few banking behemoths, took a further step Monday with the sale of the banking operations of Wachovia to Citigroup, the nation’s largest bank.

The demise of Charlotte, North Carolina-based Wachovia, the fourth largest US bank, came only four days after the biggest bank failure in American history, the collapse of Washington Mutual. The banking operations and deposits of Seattle-based WaMu, the largest savings and loan and sixth biggest bank in the US, were immediately sold off to JPMorgan Chase, in a deal brokered by the Federal Deposit Insurance Corporation (FDIC), the federal agency that insures deposits at commercial banks.

Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke were both involved in an intensive effort over the weekend to find a buyer for Wachovia. President Bush was also consulted, according to press reports.

Wachovia is the first major US commercial bank to fall in the widening credit and banking crisis.

The FDIC announced early Monday that Citigroup would acquire Wachovia, which was teetering on the edge of collapse, at the fire-sale price of $1 a share, or about $2.2 billion. Citigroup demanded that the government assume some of Wachovia’s losses as a condition for its purchase of the firm’s banking operations, assets and liabilities.

Citigroup will absorb more than $42 billion of losses on Wachovia’s $312 billion pool of loans, the FDIC said in a statement. The regulator said it would take on losses beyond that amount in exchange for $12 billion in preferred stock and warrants.

This obligation could further erode the FDIC’s deposit insurance fund, which is used to guarantee customers’ deposits in commercial banks up to $100,000. The collapse of IndyMac last July drained $8.9 billion from the $45.2 billion fund, leaving it dangerously depleted under conditions of a growing banking crisis that threatens to claims dozens more institutions, big and small.

Citigroup will acquire Wachovia’s $400 billion in deposits as well as its network of some 3,300 branches and offices in 21 states.

Wachovia had invested heavily in high-risk adjustable rate mortgages, which have defaulted at an ever-rising rate since the implosion of the housing and credit bubbles last year. The bank holds about $122 billion of adjustable-rate home loans, making it the largest holder of such assets, ahead of the now-bankrupt Washington Mutual. Analysts at Fitch Ratings predict default rates on such loans packaged as securities may reach 45 percent.

The bank also faced losses on loans made to homebuilders and commercial real estate developers. Wachovia reported $9.7 billion of losses in the first half of 2008.

In June, the board ousted G. Kennedy Thompson, the bank’s longtime chief executive. He was succeeded in July by Robert K. Steel, a former top lieutenant of Treasury Secretary Henry Paulson at Goldman Sachs and then the Treasury Department.

Following the failure of Lehman Brothers two weeks ago, Wachovia customers began withdrawing their deposits in large numbers and the bank’s stock plummeted. It shares, which finished last week at $10 on the New York Stock Exchange, traded for 95 cents at 9 a.m. in early transactions on Monday. It sold for more than $48 in February 2007.

Following the purchase of Merrill Lynch two weeks ago by Bank of America, the rash of failures and buyouts of major US institutions has left fully one-third of all US bank deposits in the hands of three monoliths—Citigroup, Bank of America and JPMorgan Chase. These financial companies now control a vast network of branches and trillions of dollars in assets, putting them in a position to set fees and interest payments on everything from commercial loans to credit cards and home mortgages.

The further monopolization of the financial system will increase pressure on small and midsize banks, undermining their competitive position and forcing many of them to close or sell out to bigger rivals.

Since last March, the investment bank Bear Stearns has been sold off to JPMorgan Chase, in a rescue operation that included a $29 billion subsidy to JPMorgan by the Federal Reserve; IndyMac Bankcorp., a large California savings and loan, has failed; Lehman Brothers, another Wall Street titan, has filed for bankruptcy; and the government has taken over the mortgage giants Fannie Mae and Freddie Mac and the insurance conglomerate American International Group (AIG).

Even without the Bush administration’s proposed $700 billion-plus bailout of Wall Street, the US Treasury and the Federal Reserve have pumped hundreds of billions of dollars into the financial industry, in low-cost loans and taxpayer-financed subsidies, in an attempt to contain the greatest financial crisis since the Great Depression. At the same time, the government has used the crisis to engineer a vast consolidation of the banking system.

The takeover of Wachovia by Citigroup will likely result in major job cuts, adding to the more than 150,000 jobs that have already been slashed at US banks and financial institutions since the onset of the credit crisis in August of 2007.

G. Kennedy Thompson, the CEO who was ousted last June, received a severance package of $1.45 million and accelerated vesting of $7.25 million in restricted stock.

Bush Wants To Bankrupt America: There is Method To His Madness

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By Sam Hamod

Some have wondered if GW Bush knows what he's doing with his tax cut that benefits the corporations and the very rich, and cuts away the remaining money of the poor and the middle class. I say yes, he does know what he'd up to, as do his corporate advisors and his neo-con economist friends and theorists, chief among them Grover Norquist. Norquist has been the chief architect behind the dismantling of the American federal financial structure in terms of benefits for the common citizen, but has helped to create the superstructure of tax breaks for the very rich and the corporatocracy that now has a choke-hold on America.

The plan is very simple, but not obvious on first blush. Make sure that all the money is gone from the U.S. treasury, make sure the deficits are so great that all social and educational programs are cut, increase the military and security budgets to "protect our nation" with all these monies going to corporations and security firms who are extra-national (not tied to any country, but actually more than multi-national in that they are outside the purview of any nation at any single moment) and stave in the social security fund by allowing it to go to private corporations for "investment"-and you have the perfect scenario for saying, "only the private sector can save us-we're broke and they have the money to run every program, fund every program, but of course, at huge costs and profits for the private corporations." Our only resource will be the corporate lenders, especially the large extra-national corporations who will have loyalty to no one except their corporate coffers and large share owners throughout the world.

This plan is so obvious at this point that it is hard to believe because it is happening so fast and the Democrats and even conservative non- neo-con Republicans don't realize what Bush and his neo-con buddies are up to.

Of course, this is easier to accomplish with all of our attention being focused on 9/11 matters, Bin Laden, Saddam Hussein, the WMDs, threats to our nation, threats to our troops in Iraq and Afghanistan (where we lose troops everyday to Iraqis and Afghans fighting against our occupation), but we keep sending in more troops to basically protect Bechtel and Halliburton. Soon, we'll also hire private contractor troops, some from other countries and others from selected American security firms. All the time we are occupied with this, just as Orwell predicted in his novel, 1984, the Bush team will be destroying our civil liberties and taking away our social and educational programs in order to fund "security measures" and will keep blinking yellow, orange, and red codes at us.

I want to make this article short so that you have time to think about this and alert your congressperson and senator as to what's really going on. Bush has already started pushing for privatization in Iraq and Afghanistan and in America-it's only a short step from this huge debt he has created from the great surplus he inherited. *God only knows what kind of deficit he's going to create as he lets the dollar drop freely, so that consumers have to pay more for goods and our balance of trade goes to hell, the national debt at its current rate will take over 100 years to pay off-if we can even then get a hold on it according to some economists who are upset (see articles by Paul Krugman and others)sat the Bush team's actions. But they fail to see the real motive behind all this seeming disaster. Yes, it's a disaster for us, but it's a windfall for Bush and his corporate friends who will soon be running everything. *Actually, through their lobbying, they are running most things at this point-simply see the astounding inflation in drug prices compared to the low national inflation rate, the false "shortage of natural gas"-a commodity that is endless in the world and in its supply in America-the artificial shortage of electricity (as done by Enron and others to jack up prices and now FERC saying that though California did sign contracts with utilities under duress, they are still bound by the contracts even though they were lied to when signing the contracts-which is fraud in any honest person's mind, but not in the mind of FERC) and now our need for added security that is endless because it will not be long before Bush brings terrorists to our shores by either his behavior, or allows some actors within the Republican camp to fake terrorist raids so that possibly martial law will follow.

Friends, we are in a mess of catastrophic proportions on so many fronts that it will be difficult to unravel all the various strains of this explosive Bushian virus. I use the term virus, because Bush is trying to pack the courts with his appointees from the neo-con right, placing government officials in corporations and in some cases, in law schools so that the neo-con approach to the destruction of the federal government may have academic credentials and blessings. Yes, this is an artificially created virus intended to kill the patient-namely, our democracy and our formerly free and decent lives.

Friday, September 26, 2008

Sarah Palin's Very Bad Interview

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The first half of the Katie Couric interview with Sarah Palin did not start off well. It was a complete disaster in fact.

It’s like watching a train wreck, she seems to have no idea what she is talking about.

But hey, people sometimes get off on the wrong foot. It couldn’t get any worse right? She just probably needed to find her rhythm, right?

Well, no. If the first half of the interview was bad, well then the second half of the interview was much, much worse.

From Ryan Powers over at Think Progress:

During the interview, Couric asked Palin why she believes the Wall Street bailout is needed. Palin responded incoherently by claiming that the bailout would "help those who are concerned about health care reform." Palin then appeared to look down at her notes and said, "Oh, it’s got to be all about job creation":

COURIC: Why isn’t it better, Governor Palin, to spend $700 billion helping middle-class families struggling with health care, housing, gas and groceries? ... Instead of helping these big financial institutions that played a role in creating this mess?

PALIN: Ultimately, what the bailout does is help those who are concerned about the health care reform that is needed to help shore up the economy- Oh, it’s got to be about job creation too. So health care reform and reducing taxes and reining in spending has got to accompany tax reductions

"She’s not always responsive when she’s asked questions," Couric said of Palin. "It was a really interesting experience for me to interview her yesterday," she added.

Well, people make mistakes. But that has to be the worst of it right? Nope, as Steve Benen over at the Washington Monthly reported:

Earlier, I suggested Sarah Palin’s response to Katie Couric’s question on the bailout was a low point in Palin’s brief career as a candidate for national office. I spoke too soon.

As regular readers know, almost immediately after Palin was added to the Republican ticket, a number of conservatives, including McCain himself, argued Alaska’s proximity to Russia necessarily amounts to foreign policy experience. I’ve been having some fun with this, because, well, it’s the dumbest argument I’ve ever heard.

In the second part of the CBS interview with Palin Couric, to her enormous credit, asks Palin to explain what this talking point means:

COURIC: You’ve cited Alaska’s proximity to Russia as part of your foreign policy experience. What did you mean by that?

PALIN: That Alaska has a very narrow maritime border between a foreign country, Russia, and on our other side, the land -- boundary that we have with -- Canada. [...]

COURIC: Explain to me why that enhances your foreign policy credentials.

PALIN: Well, it certainly does because our -- our next door neighbors are foreign countries. They’re in the state that I am the executive of. And there in Russia --

COURIC: Have you ever been involved with any negotiations, for example, with the Russians?

PALIN: We have trade missions back and forth. We -- we do -- it’s very important when you consider even national security issues with Russia as Putin rears his head and comes into the air space of the United States of America, where -- where do they go? It’s Alaska. It’s just right over the border. It is -- from Alaska that we send those out to make sure that an eye is being kept on this very powerful nation, Russia, because they are right there. They are right next to -- to our state.

Usually, candidates for national office get better as time goes on. Palin is clearly getting worse.

I mean, really, think about Palin’s argument here. She has foreign policy experience because Russian leaders flies over Alaskan air space on their way to the U.S.? Seriously, that’s what Palin told a national television audience.

First, it’s probably not true. Moscow is in Western Russia, and if a Russian leader were flying to the U.S., he or she would probably fly over the Atlantic. But geography aside, what does this have to do with foreign policy experience? If a head of state flies over you, you necessarily gain a background in international affairs?

I’m afraid Sarah Palin is not only embarrassing herself, she’s quickly become a national joke.

It’d be funny, if it wasn’t so painful to watch.

Bailout Backlash: Five Surprising Things That Happened on Thursday

Even news junkies had a hard time keeping up with a flurry of events on September 25 on Wall Street, Washington and the presidential campaigns. Here’s a round-up of what happened:

1. Outrage over the bailout spreads across the Internet and to Wall Street

The Internet is flooded with angst about Treasury Secretary Paulson’s proposed $700 billion bailout:

A lot of the online rage is channeled in the form of signatures on petitions and electronic letters to members of Congress. Senator Bernie Sanders (Independent-Vt.) is circulating a popular one on the left-wing blog Huffington Post. The 1.9-million member Service Employees International Union is also circulating a sign-on letter to Congress that reads in part: "No deal. No blank check." StopTheHousingBailout.com reasons: "A bailout tells responsible Americans that they are suckers."

The anger is coming from right-leaning groups as well. The National Taxpayers Union’s "No More Bailouts!" petition reads: "Bailouts that keep mismanaged organizations afloat delay natural corrections to unsound business practices . Enough is enough. No more bailouts. Not with my tax dollars."

The conservative site townhall.com features a similar petition. Right-wing blogger Patrick Ruffini, meanwhile, urges Republicans to vote against the bailout, since "God Himself couldn’t have given rank-and-file Republicans a better opportunity to create political space between themselves and the Administration."

And as Steven Wishnia reports for AlterNet, protesters took to New York’s financial district:

Enraged by the prospect of $700 billion of their taxes going to reimburse Wall Street speculators for their dubious investments, about 500 protesters paraded through Lower Manhattan’s financial district Thursday afternoon, their chants of "You broke it, you bought it" reverberating through the narrow office building canyons and off the flag-draped wall of the New York Stock Exchange.

2. White House pow-wow flops

The White House summit originally billed as a bipartisan, non-partisan effort to come to a deal on Treasury Secretary Hank Paulson’s proposed $700 billion bailout plan ended bitterly. With the entire Senate and House leadership along with Barack Obama and John McCain in attendance, Paulson apparently got down on one knee at the end of the meeting and begged the Democratic congressional leaders not to publicly disclose how poorly the session had gone:

Inside the White House session, House Republican leader John Boehner announced his concerns about the emerging plan and asked that the conservatives’ alternative be considered.

Financial Services Chairman Barney Frank, the feisty Democrat who has been leading negotiations with Paulson, reacted angrily, saying Republicans had waited until the last moment to present their proposal.

McCain, who dramatically announced Wednesday that he was suspending his campaign to deal with the economic crisis, stayed silent for most of the session and spoke only briefly to voice general principles for a rescue plan.

"If money isn’t loosened up, this sucker could go down," Bush apparently warned as the meeting broke up. Republican Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee summed up the White House meeting, saying there was "obviously no agreement."

3. The entire bailout discussion implodes entirely

As the Washington Post reports, "A renegade bloc of Republicans moved to reshape a massive bailout of the U.S. financial system yesterday, surprising and angering Bush administration and congressional leaders who hours earlier announced agreement on the ’fundamentals’ of a deal":

Democrats accused Boehner of acting on behalf of GOP presidential candidate Sen. John McCain (Ariz.) in trying to disrupt a developing consensus

Democrats say they would not approve the legislation without a significant number of Republican votes to share in any political fallout from the controversial proposal, which comes just weeks before the November election. "We are working to try to get this bill ready, but if House Republicans continue to reject the president’s approach, then there’s no bill," said Rep. Barney Frank (D-Mass.), an architect of the bailout legislation. "We told Paulson the whole thing is at risk if the president can’t get his own party to participate."

Marc Ambinder of the Atlantic Monthly reports that there are less than 100 of the 202 GOP house members who would support the Paulson plan.

4. Obama says he’ll host a townhall meeting if McCain doesn’t show up

Sam Stein of the Huffington Post reported on Thursday, "Barack Obama is committed to hosting a public, televised event Friday night in Mississippi even if John McCain does not show up," according to an Obama official. "In McCain’s absence, the Senator is willing to make the scheduled debate a townhall meeting, a one-on-one interview with NewsHour’s Jim Lehrer, or the combination of the two, the official said."

Interestingly, Mississippi governor and former chair of the Republican Party Haley Barbour also said Thursday that he believed the debate would continue as planned. And later in the day, McCain spokesman Tucker Bounds implied that the McCain campaign was going into the debate.

5. John McCain’s fake campaign suspension

On Wednesday, McCain said he would "suspend" his campaign and return to Washington to work on the bailout proposal. But it was soon clear that this was a gigantic political stunt. As Think Progress reports, "Five hours after McCain said he would suspend his campaign, aides Nancy Pfotenhauer, Tucker Bounds, and Mike Duhaime appeared on Fox News and MSNBC five times, frequently criticizing Obama and Democrats."

The Huffington Post also reported that:

Across the country, McCain campaign offices are up and running, accepting volunteers, conducting phone banking, literature dropping and other GOTV activities. This held true on a local, state, and even regional level. The Huffington Post called up 15 McCain-Palin and McCain Victory Committee headquarters in various battleground states. Not one said that it was temporarily halting operations because of the supposed "suspension" in the campaign. Several, in fact, enthusiastically declared the continuation of their work. Others hadn’t even heard that the candidate for whom they were devoting their time had officially stopped campaigning.

Broken US promises undermine North Korean nuclear agreement

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By Peter Symonds

The six-party agreement on the denuclearisation of North Korea is threatened with breakdown after Pyongyang took a series of steps this week to restart the plutonium reprocessing plant adjoining its nuclear reactor at Yongbyon. While the US and international media have focussed attention on North Korea, its actions clearly have been taken in response to the US administration’s refusal to meet Washington’s commitments under the deal.

According to the International Atomic Energy Agency (IAEA), North Korea is planning to introduce nuclear material into the plant next week. IAEA inspectors completed the removal of seals and surveillance cameras from the facility on Wednesday, as instructed by North Korean authorities, and will be barred from the plant, but not at this stage from the reactor and other facilities at the site.

US officials immediately criticised North Korea’s decision. Secretary of State Condoleezza Rice warned on Wednesday that the step would only heighten Pyongyang’s international isolation. At the same time, she dismissed the suggestion that six-party talks, involving China, Russia, South Korea and Japan, as well as the US and North Korea, were dead, declaring: “By no means. We’ve been through ups and downs in this process before.”

The deal has been fraught with difficulties since it was initially reached in February 2007. In the first phase, North Korea agreed shut down its reactor and reprocessing plant at Yongbyon, allow IAEA inspectors and provide details of its nuclear programs, in return for 50,000 tonnes of desperately needed heavy fuel oil. In the second stage, finalised in October 2007, Pyongyang agreed to disable its nuclear facilities under the supervision of US experts and provide a full list of its nuclear programs, in return for a schedule for providing another 900,000 tonnes of fuel.

Apart from vague commitments to ending economic sanctions and establishing normal diplomatic relations, the only US pledge was to remove North Korea from its list of state sponsors of terrorism and end the application of the Trading with the Enemy Act. The US has maintained punitive economic sanctions against North Korea since the end of the Korean War in 1953 and has no diplomatic relations with Pyongyang.

North Korea carried out the process of disablement but only handed over a 60-page report on its nuclear programs in June, nearly six months after the December deadline, due to disagreements with Washington about its contents. As a demonstration of good will, Pyongyang demolished the cooling tower of its nuclear reactor in front of TV cameras, even though it was not immediately required by the agreement.

President Bush initially welcomed the steps and announced that the US would end North Korea’s listing under the Trading with the Enemy Act and commence the 45-day process for removing North Korea from the list of state sponsors of terrorism. He made clear, however, that the two actions would be little more than symbolic, as “North Korea will remain one of the most heavily sanctioned nations in the world”. Even so, the Bush administration was denounced by right-wing extremists such as former ambassador to the UN, John Bolton, who proclaimed the “final collapse of Bush’s foreign policy”.

By August, the Bush administration had reneged on its agreement to remove North Korea from the terrorist list and raised new demands for “a protocol of verification” of the contents of Pyongyang’s report. Quite legitimately, the North Korean regime interpreted the decision as a sign of bad faith—the agreement had all along been premised on an “action for action” approach. In return for shutting its nuclear facilities and disabling its reactor under international supervision, North Korea had received nothing but relatively small amounts of fuel oil. The ending of the country’s status as a sponsor of terrorism, while symbolic, was nevertheless a first step toward easing the economic blockade that has crippled its economy.

In mid-August, the North Korean regime called a halt to work on disabling its nuclear plant and warned that it would “consider a step to restore the nuclear facilities in Yongbyon to their original state,” adding: “The United States is gravely mistaken if it thinks it can make a house search in North Korea as it pleases, as it did in Iraq.” Last Friday, Pyongyang declared that it no longer expected or wished to be removed from the US terrorist list and announced its intention to restart its nuclear facilities.

There is undoubtedly a certain amount of bluster in North Korea’s statements, as it has nothing else to bargain with, except its potential nuclear weapons capacity. But as Joseph Cirincione, president of the Ploughshares Fund, told Australian Broadcasting Corporation (ABC) radio on Thursday, North Korea was not “rushing pell mell” into restarting its facilities. Instead, it was “practically begging us to come back to the negotiating table”. He estimated that it would take Pyongyang at least a year to restart its reactor. Starting the reprocessing plant will only enable the extraction of about 6 kilograms of plutonium from existing spent reactor fuel rods.

North Korea’s announcement has, however, prompted a flood of speculation in the US and international media about the reasons behind its “provocative” act. Attention has been focussed on rumours about the ill-health of North Korean leader Kim Jong-il who failed to appear at a military parade held earlier this month to commemorate the regime’s 60th anniversary. Various analysts have speculated, with little in the way of facts, that Pyongyang’s “hard-line” stance may reflect a decision-making logjam while Kim recovers from a stroke.

A deliberate US provocation

It may be that the North Korean leader is sick. It is also possible that there is a sharp political crisis in the Stalinist regime, which confronts major economic problems. But as far as the uncertainty surrounding the six-party nuclear agreement is concerned, it would be far more legitimate to ask why the White House has provocatively refused to take a very limited step in keeping its side of the bargain. Divisions within the Bush administration, rather than a crisis in Pyongyang, are likely to be the real reason behind the stalling of the nuclear agreement.

Earlier this month, Secretary of State Rice, who pressed for the six-party talks and a deal with North Korea, rather absurdly declared that the administration’s diplomacy on Iran and North Korea was evidence that it would leave the non-proliferation issue “in far better shape than we found it”. In fact, under the influence of Vice President Dick Cheney and US Secretary of State for Non-Proliferation John Bolton, the Bush administration immediately ended Clinton administration’s rather tentative diplomatic opening toward Pyongyang and rapidly undermined the previous Agreed Framework under which North Korea’s nuclear facilities were frozen.

Tensions rapidly escalated as the US accused North Korea of maintaining a secret uranium enrichment program then effectively pulled out of the Agreed Framework by halting promised supplies of fuel oil. Pyongyang responded in late 2002 by expelling IAEA inspectors, restarting its nuclear reactor and reprocessing plant, and withdrawing from the Nuclear Non-Proliferation Treaty. The attitude of the Bush administration was summed up by Bush’s inclusion of North Korea in a so-called “axis of evil” with Iran and Iraq. The White House made clear its strategy was one of “regime change” not negotiations.

However, as the occupation of Iraq turned into a quagmire in 2003, the Bush administration tentatively accepted the start of six-party talks brokered by China. The move was always bitterly opposed by the most militarist elements of the White House, who sought on a number of occasions to obstruct negotiations. An initial deal in 2005 effectively collapsed after US Treasury officials secured the freezing of $25 million of North Korean funds in the Macau-based Banco Delta Asia (BDA) bank and abruptly pulled out of talks. The negotiations were only resumed after Pyongyang exploded a small nuclear device in October 2006.

In his comments to ABC radio, analyst Cirincione pointed to the divisions in the Bush administration between “pragmatists” such as Rice and “hardliners” led by Cheney, saying that he suspected the latter were “behind the decision not to take North Korea off the [terrorist] list”. After noting the earlier steps to freeze North Korea’s bank assets, he added that he saw the refusal to end North Korea’s terrorist status “as the hardliners intervening again to put a stick in the spokes of these negotiations”.

The fact that the Bush administration as a whole is now undercutting the North Korean agreement underscores the tactical character of the differences between the contending factions. One can only speculate as to the motives of the Bush administration as it reaches the end of its second term of office. But it does again raise the possibility that the embattled White House is preparing further provocations in the lead-up to the US presidential elections in a desperate bid to deflect attention from the worst financial crisis since 1929 and to bolster the fortunes of the Republican campaign.

Chrysler 1979: Lessons from an early corporate “bailout”

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By Tom Eley

In 1979, Chrysler Corporation, the third largest US automaker, hovered on the verge of collapse, a victim of sharply declining revenue and cash-on-hand that had reached the level of threatening daily operations. In August 1979, President Jimmy Carter’s Treasury Secretary, G. William Miller, proposed a government intervention in the form of $1.5 billion in guaranteed loans. The sum was considered an astonishing total. It was by far the largest government bailout in US history. On September 7, 1979 Chrysler formally petitioned the US government for the loans, and on December 20, 1979 Congress ratified the appropriation in the “Chrysler Corporation Loan Guarantee Act,” which Carter subsequently signed into law.

The loans stipulated major concessions from Chrysler’s workers, represented by the United Autoworkers Union (UAW). The political and media elite had successfully shifted blame for the corporation’s collapse—and by extension the overall decline of US capitalism—onto the working class. The UAW and the AFL-CIO buckled to the concession demands, a capitulation that cleared the path for an onslaught on working class living standards that has continued to this day.

There were profound pressures at play in the near-bankruptcy of Chrysler. The reemergence of the US’s capitalist rivals, especially Japan and Germany, was felt keenly in the auto industry through declining market share. Even the more immediate cause of Chrysler’s demise—the oil shocks of the 1970s that reduced demand for the large and inefficient vehicles that had been Chrysler’s stock-in-trade—testified to the declining influence of the US, which was reflected in its inability to dictate production quotas to the oil states.

Now, in the midst of the proposed bailout of the entire US financial industry, the experience of Chrysler in 1979 holds critical lessons for the working class.

The Chrysler bailout set in motion processes that have only intensified to this day. First, the working class would henceforth have to foot the bill for the decline of US capitalism through its own impoverishment, carried out in the name of “competitiveness.” Second, the corporate and financial elite, who bore primary responsibility for this decline, would henceforth reap windfall profits not only in spite of this decline, but precisely because of it.

These processes found embodiment in Chrysler CEO Lee Iacocca, who soon after the bailout was making millions of dollars, even as he ruthlessly axed tens of thousands of jobs.

A special place of shame must be given to the national media and political elite. In 1979 they raised a hue and cry about the need for Chrysler’s workers to “sacrifice” and extolled the virtues of the free market. Today they offer few such sermons to the financial elite responsible for the current crisis. But they continue to insist, as they did in the days of the Chrysler bailout, that the working class must pay the bills for the failures of American capitalism. The working class is being asked to fork over trillions of dollars—the sum would have been unfathomable in 1979—to bail out a criminal financial aristocracy that has bankrupted American capitalism, and very nearly the state itself.

The Chrysler bailout

When the bankruptcy of Chrysler appeared imminent, an intense debate developed within the ruling elite over how to approach what was viewed as the most disastrous sign to date of the decline of US capitalism. Should the nation’s third largest automaker and tenth largest industrial employer be allowed to fail? Or should there be a bailout? And, if so, under what conditions should Chrysler be “rescued”?

Ultimately a bailout prevailed over what had been quite intense Congressional opposition. The new consensus in favor of federal intervention was based on pressing wage and benefit concessions on Chrysler workers.

By late October 1979, UAW President Douglas Fraser had already agreed to substantial concessions. The UAW would allow Chrysler to defer $200 million in payments to the union’s pension fund, and it would hand over nearly all of the UAW’s $850 million pension fund to Chrysler as a loan. He also indicated that the UAW might accept a pay cut.

But in November, as the bill to bail out Chrysler hung in the balance, Alfred E. Kahn, chairman of the Carter Administration’s Council on Wage and Price Stability, testified before the Senate Banking Committee that the proposed $1.5 billion loan would be almost totally consumed by the UAW’s three-year contract with Chrysler. Kahn’s testimony was considered quite surprising, inasmuch as it appeared to undermine his own administration’s proposed bailout.

In fact Kahn was supplying the Senate with a new rationale for supporting the bill. In his testimony, he took the position—shared by the Carter Administration—that Chrysler workers had to sacrifice still more in the way of wages, benefits and conditions in order to rescue the corporation’s profit margins. The leading Democrat and Republican on the Senate Banking Committee, William Proxmire of Wisconsin and Jake Garn of Utah, who had previously opposed the bailout, then fell in line. Soon the Banking Committee was proposing stipulations to the package that included a renegotiation of the UAW contract, $525 million in concessions from workers, and a three-year wage freeze.

As New York Times correspondent Judith Miller put it in 1979, “there was widespread agreement ... that workers must make sufficient ‘sacrifices’ to help their employer recover.” The senators bullied, cajoled, and blackmailed the UAW, Garn threatening the union—in words eerily similar to current Treasury Secretary Henry Paulson—that “if they’re not willing to act in response to an extreme situation quickly, then let Chrysler go.”

In the weeks that followed, the national media and leading politicians launched a propaganda campaign demanding that Chrysler workers “sacrifice” in order to “save” Chrysler. The Times editorial page weighed in on December 10 (“What Price Chrysler Jobs?”), sanctimoniously declaring that “Chrysler workers should contribute significantly to their own rescue.” “The possibility of corporate failure,” the Times lectured, “is crucial to the health of a free economy. Without the market’s discipline, incentives for efficiency and innovation disappear.”

If Chrysler were to collapse, the editorial continued, “some workers would lose their jobs; most would be forced to renegotiate their wages downward. But the economy as a whole would benefit: Chrysler’s inefficiency would be removed as a drag on productivity... [i]t makes no sense to put the taxpayers at greater risk than Chrysler’s workers. If saving jobs is the most important rationale for a bailout, surely the public should expect major sacrifice from those with the most to gain.” The editorial then went on to denounce the UAW concessions already on the table as insufficient, warning that if the union “really prefers bankruptcy to a wage freeze, the public would have no reason to decide otherwise.”

(The Times’s idolatry of the free market, as expressed in 1979 when Chrysler workers’ jobs were at stake, is in noticeably short supply in 2008 as the government intervenes to bail out wealthy financiers—albeit once again at the expense of the working class!)

Out of this increasingly belligerent environment, a “compromise plan” was ultimately worked out that required, in exchange for the $1.5 billion guaranteed loan to Chrysler, $462.5 million in wage cuts and benefit concessions from workers.

Lessons from history

The 1979 Chrysler bailout was a significant turning point in US history.

Chrysler had been a major and iconic presence of US industry for decades. Its collapse was a milepost in the long-term decline of US capitalism, which had resulted from the reemergence of major capitalist rivals and the enormous quantities the US spent on its military and related industries. The reemergence of Europe and Japan was the outcome of long processes that had been set in motion much earlier, when in the wake of World War II US capitalism—as a means of forestalling world revolution—rebuilt its major rivals.

At the helm of Chrysler stood Lee Iacocca, the human embodiment of another new historical process: the celebrity CEO whose personal wealth and prestige grows in inverse proportion to the decline of the corporation that he nominally represents.

At the helm of the country was the Democratic Party, which controlled the presidency and Congress. In the bailout, the Democrats joined with the Republicans in isolating the UAW. In so doing, they distanced themselves from the limited reformist agenda that the party had championed between the 1930s and 1960s. Since the 1970s the Democratic Party has been an equal partner with the Republicans in the steady rollback of the social gains and democratic rights won by the working class in the preceding decades.

Finally, the capitulation of the UAW and the AFL-CIO without a fight in order to “save jobs” gave the green light to what has been a three-decades-long assault on the living standards of the working class. The UAW’s plan to “save jobs” has failed miserably—hundreds of thousands of auto jobs have been wiped out since 1979—but much like Iacocca and the managerial elite, the bureaucracy has prospered in spite of its pitiful track record. The Chrysler concessions were a major step toward the open conversion of the bureaucracy into a profit-making enterprise, a process that has come to full fruition in the UAW’s recent ascension to the management of the auto industry’s enormous health care liabilities.

The Bulletin, the forerunner to the World Socialist Web Site, warned in 1979 that “there is one essential question that arises out of the Chrysler bankruptcy: Who is to pay for the breakdown of the capitalist profit system, the working class or big business? The answer of big business, the banks, the Democrats, the Carter administration and the UAW bureaucracy is, of course, the working class.”

Democrats push for quick adoption of Bush plan to bail out Wall Street

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By Barry Grey

The turn of events at the White House summit announced Wednesday night by President Bush and held Thursday to press for bipartisan agreement on his plan for a bailout of Wall Street has underscored the cynical and reactionary role being played by the Democratic Party and its presidential candidate, Barack Obama.

Bush called the meeting, bringing together Obama, Republican presidential candidate John McCain and the congressional leadership of both parties, to signal rapid passage of legislation authorizing Treasury Secretary Henry Paulson to spend at least $700 billion in taxpayer money to purchase virtually worthless financial assets from banks and other financial institutions, enabling them to offload their bad debts and losses at the expense of the American people.

The meeting was called for Thursday afternoon, in the expectation that by that time the Democratic Party would have already signed off on the deal, along with the Republicans in the Senate. As for the House of Representatives, the Republican minority leader, Rep. John Boehner, had joined with the Democratic speaker of the house, Nancy Pelosi, to issue a statement pledging support for a bipartisan bill that would conform to the basic provisions of the proposal first broached by Paulson the previous Friday.

Early Thursday afternoon, prior to the White House summit, the heads of the banking and finance committees of the House and Senate emerged from talks to announce that they had arrived at an agreed framework for a bailout plan which, with minor amendments, accepted the principles of the scheme proposed by Paulson.

Christopher Dodd, the Democratic chairman of the Senate Banking Committee, spoke for the group, saying, “We’re giving [Paulson] authority that he will need in order to act and the funding that he will need.” He predicted that a final bill would pass both houses of Congress within a few days.

But the White House meeting turned into a contentious affair and ended in disarray. Boehner, with the tacit support of McCain, raised objections to the deal that have been voiced by a large number of right-wing House Republicans, and announced that he had a counterproposal. His intervention blindsided the Democrats, who emerged from the meeting denouncing Boehner and McCain and pledging to continue the push for rapid passage of the Paulson plan.

Ever since Paulson presented his bailout plan last week, the Democrats have taken the lead in the drive to pass the necessary legislation. They have lavished praised on Paulson and Federal Reserve Board Chairman Ben Bernanke, who testified before the House and Senate banking committees on Tuesday and Wednesday to promote the deal.

After Bush spoke Wednesday night, the Democratic chairmen of the banking committees went out of their way to praise him, presenting the spectacle of leaders of the nominal opposition party hailing the most hated president in modern American history for his efforts to carry out one of the most antidemocratic and reactionary measures in the history of the country.

Christopher Dodd, the chairman of the Senate Banking Committee, welcomed Bush’s speech as a “quantum leap forward” in gaining passage of the bailout.

Obama, for his part, has made the principal task of his campaign assuring Wall Street of his support for the bailout and his overall reliability as a defender of the interests of the financial elite.

This has opened the door for McCain and right-wing House Republicans to posture as opponents of Wall Street and identify themselves with massive popular opposition to the bailout. The faction of House Republicans who have denounced the measure represents right-wing libertarian elements within the party who identify social spending and government intervention in the capitalist “free market” with what they consider the ultimate evil—socialism. They base themselves on appeals primarily to middle class layers, utilizing anti-tax and nationalist demagogy as their stock in trade.

In opposing the bailout, they are, moreover, responding to bitter opposition to the windfall for Wall Street among their constituents. The media and politicians of both parties have acknowledged that there is massive popular opposition to the bailout scheme.

The Los Angeles Times on Thursday called the proposal “wildly unpopular.” The New York Times reported that the “delicate” negotiations between Paulson and congressional leaders were “complicated” by pressure on rank-and-file legislators “who were fielding torrents of complaints from constituents furious that their own money was going to be spent to clear up a mess created by high-paid financial executives.”

The newspaper gave several examples of lawmakers who have been inundated with hostile emails and phone calls over the past week. “Senator Barbara Boxer, Democrat of California,” it noted, “has received nearly 17,000 email messages, nearly all opposed to the bailout, her office said. More than 2,000 constituents called Ms. Boxer’s California office on Tuesday alone; just 40 favored the bailout. Her Washington office received 918 calls. Just one supported the rescue plan.

“Senator Sherrod Brown, Democrat of Ohio, said he had been getting 2,000 email messages and telephone calls a day, roughly 85 percent opposed.”

What neither the media nor the politicians have pointed out is the brazen violation of any conception of democracy, even by the eviscerated and restricted standards of the American two-party system, represented by the enactment of such a momentous measure, which will impose massive burdens on the American people for decades to come, on the eve of a national election by a lame duck president and a Congress nearing the end of its tenure.

The Democrats’ rush to pass the bailout is driven by the most cynical calculations. They want the decision to be taken before the November elections, so that in the event they win, an Obama administration, with an increased Democratic majority in both houses of Congress, can claim that its hands are tied and it has no alternative but to pursue a right-wing policy of austerity, including savage cuts in social spending.

The Socialist Equality Party completely rejects the bailout of Wall Street and the entire framework within which the Bush administration and the Democratic Party seek to deal with the financial crisis. Our opposition has nothing in common with that of some of the most right-wing sections of the Republican Party.

The responsibility for the economic crisis rests with the capitalist system. The near-collapse of the American banking system has exposed not only the economic bankruptcy of the profit system, but also the fundamentally unrepresentative character of its political system.

This crisis is the product of the unbridled greed and criminality of the financial elite. More fundamentally, it is the outcome of the long-term decline and decay of American capitalism.

There is no progressive or democratic solution within the framework of this system. If the resources of the country must be mobilized to resolve the economic crisis and prevent a catastrophe, then they must be taken out of the hands of the financial parasites and placed under the democratic control of the working people.

The working class must be mobilized as an independent political force, in opposition to both parties of Wall Street, to establish a workers’ government and carry out the socialist nationalization, without compensation, of the banks and finance industry, so that the financial resources of the country can be allocated to meet to social needs of the people, rather than the money-mad strivings of a financial aristocracy.

Only on this basis can the urgent need be met for decent-paying jobs, retirement security, education, health care and high-quality housing for all.

This is the program of the SEP and our candidates for president and vice president, Jerry White and Bill Van Auken. We call on all those who agree on the need for a socialist alternative to support our election campaign and join the SEP.

To find out more about the SEP campaign, visit www.socialequality.com or contact us.