Saturday, April 5, 2008

Blackwater contract in Iraq renewed for one year

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The US State Department said Friday it is extending its diplomat protection contract for private security firm Blackwater USA, despite the incident last September in which Blackwater guards killed 17 Iraqi civilians.

"I have requested and received approval to have Task Order 6, which Blackwater has to provide personal protective services in Baghdad, renewed for one year," said Gregory Starr at the State Department's Bureau of Diplomatic Security.

Blackwater is the most controversial of several private security firms tasked with protecting high-profile US officials and foreign dignitaries visiting Iraq.

Blackwater guards fatally shot 17 Iraqi civilians while escorting a US diplomat through Baghdad in a September 16, 2007 incident that the Iraqi government considers a crime. Blackwater says its guards reacted in self-defense.

The company's contract was set to expire on May 7. It was renewed because Federal Bureau of Investigation agents have not yet concluded their inquiry into the September shooting, Starr said.

The US government, and especially US Ambassador Ryan Crocker, "will take a very close look at the FBI reports and then we will decide whether it is consistent with the US government goals and policies to continue the contract of Blackwater," said Starr.

Foreign security companies at present are not subject to Iraq law, but at the same time are not governed by US military tribunals, allowing them to operate without any repercussions for their actions.

Pentagon Looks to Network Science to Predict Future

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By Sharon Weinberger

20071030network The University of Pennsylvania School of Engineering and Applied Science just announced that it’s been awarded a $7.5 million grant to work in this fast emerging field of network science, which melds everything from mathematics to sociology.

Network science is increasingly the "hot" area for Pentagon research. Why? Because the Pentagon hopes that if it can understand complex networks, then it can understand terrorist networks, and even predict who will join such a network.

What exactly is network science? According a 2005 study done for the Army:

A working definition of network science is the study of network representations of physical, biological, and social phenomena leading to predictive models of these phenomena. Initiation of a field of network science would be appropriate to provide a body of rigorous results that would improve the predictability of the engineering design of complex networks and also speed up basic research in a variety of applications areas

Prediction is a tricky thing, something that researchers involved in the field readily acknowledge:

“Network science is something that is still in its infancy,” Michael Kearns, professor in the Department of Computer and Information Science at Penn, said. “But the idea is to use the mathematical knowledge of graph theory and other discrete objects, as well as domain-specific, to understand, predict and design the behavior of networks.”

The 2005 study is worth the read, if only because it discusses the difference between network centric warfare, which focused on information technology, and this new field of network science, which looks at human networks. These are very much related to the issues Noah discussed in his Iraq article last year.

Actually, the emergence of "network science" may prove that prediction does work in at least one key regard. Isaac Asimov came up with the fictional idea of "psychohistory," which combined history, sociology and mathematics to predict the actions of large groups. It seems he wasn’t far off.

Senator to Widen Housing Proposal

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By Lori Montgomery

Dodd to seek more mortgage help for distressed owners.

The chairman of the Senate Banking Committee, reacting to criticism that a bipartisan housing bill would do little for homeowners facing foreclosure, vowed yesterday to move quickly on broader legislation to help troubled borrowers get cheaper mortgages backed by public funds.

Sen. Christopher J. Dodd (D-Conn.) said he will hold hearings next week on the measure, which is aimed at assisting distressed borrowers, particularly those who owe banks more than their homes are worth because of plummeting prices - an issue at the heart of the nation's housing crisis. Under the proposal, the Federal Housing Administration would encourage lenders to forgive a portion of the loans and issue new, more affordable mortgages in exchange for the federal government's financial backing.

In the House, Financial Services Committee Chairman Barney Frank (D-Mass.) will hold hearings next week on a similar measure. He and Dodd said they hope to bring the matter to a vote in their respective chambers by the end of May.

In a conference call with reporters, Dodd said he "tried desperately" this week to persuade Senate Republicans to support the FHA proposal as part of a bipartisan agreement to address the mortgage meltdown . But Republicans declined to include the complex measure in the hastily drafted housing bill being debated in the Senate.

That measure would provide tax breaks for homeowners and home buyers, more money for foreclosure counseling, and $4 billion in grants so cities can buy foreclosed properties. But most of the money in the bill - $25.5 billion through 2010 - would be the in form of tax rebates to the slumping home-building industry and other businesses that are losing money, a fact that has drawn fire from some economists and consumer groups.

Yesterday, Dodd acknowledged that he had reservations about the business-tax breaks. "I would have been more moderate on that, to put it mildly," he said.

But he defended the overall housing bill, saying it contains some "very good provisions" and has broken the political impasse that had prevented lawmakers from addressing the problems driving the nation toward recession.

"Let me remind you, this is the first time we've gotten anything done. So it's a little frustrating when I hear people say you didn't get as much as you'd like," Dodd said. "Would I have liked more in this bill? You bet. But a month ago, we couldn't even debate a bill."

Yesterday, the Senate voted to expand the bipartisan housing bill, agreeing to add tax breaks for struggling Rust Belt manufacturers and for Gulf Coast residents who have received grants to rebuild homes destroyed by Hurricane Katrina. A long line of senators has formed to offer other provisions, including a temporary tax break for first-time home buyers, a plan to let people who are late with mortgage payments take money penalty-free from their retirement accounts, and a proposal to overhaul the oversight of Fannie Mae and Freddie Mac, government-chartered companies that buy up mortgages.

Senate leaders expect to wrap up work on that bill early next week. Then it would move to the House, where its fate is far from certain.

Frank said the House is likely to concur with the portion of the housing bill that would streamline the FHA, one of the top priorities of the Bush administration. That proposal would increase the size of the loans the FHA can insure, to $550,000 in the nation's most expensive housing markets. The economic stimulus bill recently signed by the president temporarily raised the limit to $729,750 from $362,790. The FHA provision in the housing bill is separate from the proposal by Dodd and Frank to permit the FHA to underwrite risky mortgages.

The House is also likely to approve of the Senate's plan to authorize an additional $10 billion in tax-exempt mortgage revenue bonds, Frank said. That provision of the housing bill would permit state and local housing-finance agencies to help an additional 80,000 borrowers, including, for the first time, homeowners trying to shed expensive subprime loans.

But Frank said there is "a lot of opposition in the House to the other tax cuts."

Questions in Portugal About CIA Flights to Guantánamo

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By Mario de Queiroz

Lisbon - Portuguese Prime Minister José Sócrates and his predecessor José Manuel Barroso should answer "clearly and transparently" questions about secret CIA flights transporting prisoners to Guantánamo, says British lawyer and activist Clive Stafford Smith.

Speaking to the press in Lisbon on Thursday, Stafford Smith, the head of the non-governmental British human rights group Reprieve, said the Portuguese government may be sued if it fails to cooperate voluntarily in the search for the truth.

Reprieve says it has documentary evidence that Portugal was involved in the illegal transfer of U.S. Central Intelligence Agency (CIA) prisoners, in CIA or chartered planes, to the U.S. base at Guantánamo Bay in Cuba.

The case of the so-called CIA "extraordinary renditions" flights goes back to November 2005, when a U.S. newspaper, The Washington Post, revealed the existence of secret CIA prisons in several countries, and the illegal transport of prisoners, particularly to Guantánamo.

The CIA extraordinary rendition programme involves flying or otherwise transferring terror suspects from their place of detention to countries where they are not nationals, and where the security services are known to practise torture.

Stafford Smith, who is also the defence lawyer for three detainees in Guantánamo, added that many prisoners were transported aboard ships which made port calls in Portugal, when conservative Social Democratic Party (PSD) leader Barroso was prime minister, from 2002 to 2004.

Barroso is now the president of the European Commission, the executive branch of the European Union.

"There is zero doubt that the Portuguese government was complicit with the rendering of prisoners," said Stafford Smith.

Reprieve, which among its activities defends prisoners facing the death penalty, said the intention of its questions to the Portuguese government was to provide evidence urgently needed to prove their clients' innocence and save their lives.

In January, the group released a report stating that 728 prisoners at the notorious U.S. detention camp in Cuba had been transported through Portuguese jurisdiction, and that at least 94 rendition flights used Portuguese airspace or facilities between 2002 and 2006.

Stafford Smith said that he was not in Lisbon to make accusations against anyone in the socialist Sócrates administration, but that everyone had an obligation to cooperate when a person was facing the death penalty, especially in a place like Guantánamo.

According to the lawyer and activist, the fight against terrorism cannot be undertaken at any price, but must be based on the values accepted by civilised society that are the foundation of the United States and every democracy.

As a student, he said, he never dreamed that when he became a lawyer he would be asking why the U.S. government allowed torture such as cutting prisoners' genitals with razor blades.

Even in war and the fight against terrorism, human rights must be respected, and the truth cannot be extracted by torture, on Washington's say-so, he said.

He added that although the Guantánamo prison camp is the most notorious and has received the heaviest media coverage, it is far from being the only detention centre where torture is practised.

He said his group estimates that there are presently about 27,000 illegal prisoners, which means that more than 95 percent of them are not at Guantánamo, but at different secret prisons.

Asked about the cooperation Lisbon may or may not provide, Stafford Smith said he hopes that the government will understand that it has not only a legal but also a moral obligation toward individuals facing the death penalty.

"There are two ways of making the Portuguese government cooperate: the nice way, by voluntary cooperation with our investigation, and the not so nice way. The not so nice way is to sue them and make them do it," he said.

On Thursday afternoon Stafford Smith was received by Attorney-General Antonio Pinto Monteiro, to whom he handed a list of names of the prisoners transferred to Guantánamo and information on dates when ships docked in Portugal with illegally detained suspected terrorists on board.

So far, transport by sea had been excluded from investigations of the secret CIA renditions programme, widely used by the United States after the Sept. 11, 2001 terrorist attacks in New York and Washington.

In January 2007, Pinto Monteiro ordered an investigation into the alleged illegal actions of the two most recent Portuguese governments, after receiving a complaint presented by Portuguese socialist Ana Gomes, a Member of the European Parliament (MEP) where she is one of the most visible leaders of legal action against the CIA flights in EU airspace.

In contrast to Portuguese government declarations saying the Reprieve report was "irrelevant," Gomes told IPS that the work done by the British human rights group "is extremely important."

"Clearly the attorney-general considers the Reprieve report to be relevant, which is my view too, but unfortunately the Socrates administration holds the opposite view," Gomes said.

What is known to date about the CIA flights "is only the tip of the iceberg," Gomes told IPS after Stafford Smith's press conference, which she said she attended "out of solidarity," as an "observer."

After persistent allegations by Reprieve, the British government finally admitted in March that several CIA planes had in fact passed through its territory, contradicting a series of denials by London since the scandal erupted in late 2005, "which shows that an inquiry is necessary, to investigate the evidence in the report that has now been published about Portugal," she said.

The CIA flights "clearly did not only pass through Portugal, because they came from Spain and Italy, and in the European Parliament we also investigated Germany, Sweden and the United Kingdom," she said. But the difference in the case of Portugal is that, unlike the other countries, "here the investigation was wilfully obstructed."

In late February, Sócrates "denied the existence of those flights, just as then British Prime Minister Tony Blair had done previously, based on information received from the United States. I hope the lesson from the UK is learned, because the evidence presented is extremely serious," Gomes said.

The investigation is not progressing, "because a cover-up has been agreed by several governments, but especially by the Barroso administration, which kept the facts secret for the sake of its alliance with the United States," she said.

"Now the main source of information is the United States, and they will be even more forthcoming when, as I hope, the Democratic Party wins the U.S. elections," she said.

The MEP complained that the Socialist government, "my party, the party that defends human rights and democracy in Portugal, should now be colluding in the cover-up and obstructing investigations." She said she would continue to press the issue, "no matter who gets hurt," because it is "fundamental for our democracy."

"The more we cover up what happened, the more we expose our country to being seen as a state that obstructs the search for truth in a case involving murders, torture, kidnappings, deaths and other violations of human rights," Gomes said.

US Charges Contractor at Iraq Post in Stabbing

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By Michael R. Gordon

Baghdad - The American military has charged a contractor with assault in a case that may emerge as a major test of the military's legal jurisdiction over civilians who accompany the armed forces into the field, military officials and legal experts said Friday.

The charge was made under expanded authority that the United States Congress provided the military to crack down on contractor abuses. It is the first time since 1968 that a contractor has been charged under military law.

While the exact scope of the new authority has yet to be tested in court, experts said there might be some circumstances in which it could be interpreted to apply to security contractors, like those supplied by Blackwater.

The contractor in the coming case, Alaa Mohammad Ali, was working as an interpreter at a combat outpost near Hit, a town in Anbar Province. He was accused of stabbing a fellow contractor with a knife in the chest and sternum on Feb. 23. He was detained at Camp Victory, an American military base near the Baghdad airport, later that month. According to military officials, Mr. Ali has Canadian and Iraqi citizenship. A pretrial hearing has been scheduled for Thursday, at which an Army officer will determine whether there is sufficient evidence to support the charge.

"It is an important case because it is a test of the permissible limits of military criminal jurisdiction," said Eugene R. Fidell, president of the National Institute of Military Justice, a nonprofit organization.

During the Vietnam War, the military charged civilians under the Uniform Code of Military Justice for various crimes but was thwarted when federal courts reversed some convictions on the grounds that Congress had never formally declared war.

In 2006, Senator Lindsey Graham, a South Carolina Republican, sponsored an amendment to a military spending bill in an effort to stem contractor abuses. It expanded the provisions of the Uniform Code of Military Justice to give the military the right to charge civilians who not only serve with or accompany the armed forces if war is declared, but also during a "contingency operation."

Defense Secretary Robert M. Gates issued a memo on March 10 outlining procedures to carry out the legislation.

According to his memo, when offenses are committed, American commanders are to contact the Justice Department to give them the opportunity to transfer the case to the United States for trial under existing legal procedures. But if the Justice Department does not take on such a case, Mr. Gates wrote, "commanders should be prepared to act."

The Ali case represents the first instance in which the military decided to use its expanded authority.

Details of the case first emerged this week when Michael J. Navarre, who served in the Judge Advocate General's Corps in the Navy and is now an associate at the Washington law firm Steptoe & Johnson, disclosed them on a blog for experts on military law.

Mr. Ali has been provided with a military lawyer, officials said. The New York Times submitted a request through the military to talk with the lawyer, but did not receive a response.

At the pretrial hearing, Mr. Ali will have the right to be represented by a lawyer, present evidence and cross-examine witnesses. The Army officer who presides over that hearing will issue a recommendation on how to proceed, but the decision on whether to convene a trial will be made by Lt. Gen. Lloyd J. Austin III, the day-to-day commander of military forces in Iraq.

The broader issue is what the case may mean for the effort to stem contractor abuses while protecting the rights of civilians. Some experts say that the expanded authority from Congress provides an important tool for bringing corrupt and violent contractors to justice.

The case "is a huge first step from a legal and policy standpoint," said Peter W. Singer, a senior fellow at the Brookings Institution, who has written about the role of private contractors. Before Congress expanded the military's authority, Mr. Singer said, "you had an absolute vacuum in terms of law and policy and you had people abusing that vacuum. Contractors were committing pretty serious crimes, extending from prisoner abuses up to civilian shootings."

Lt. Col. Matt Ramsey, deputy staff judge advocate for the Multinational Corps, which is handling the case, said the expanded authority under the Uniform Code of Military Justice, or U.C.M.J., to prosecute contractors was an important tool for military commanders.

"Contractors have assumed an essential role supporting combat forces in Iraq," Col. Ramsey said. "Congress extended U.C.M.J. jurisdiction over civilians who accompany our armed forces during contingency operations, and this change provides commanders with another important and necessary means of establishing good order and discipline across the force."

But some legal experts say that the case raises important legal issues. Civilians generally have a right to broader protections, including the right to trial by a jury of their peers. If this case goes to trial, it will be decided by a military judge or, if the defendant opts for a jury trial, a panel appointed by General Austin. While Congress has voted to give the American military additional authority to prosecute civilians, the constitutionality of that authority may be challenged if the case goes to trial.

"It is a significant test case because the constitutionality of the new amendment will be litigated," Mr. Navarre said. "There is a question as to whether the Congress extended the power of the military too far."

Mr. Fidell agreed that the Ali case could establish an important precedent.

"Military jurisdiction is classically intended for people in uniform," he said. "There is a potential constitutional issue here. The mere fact that Congress passed it is not the end of the conversation. I would be surprised if the Supreme Court invalidated it, but I would be more surprised if the issue was not raised."

Native Hawaiian bill to get its turn in Senate

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By Dennis Camire

House already passed measure but it could still face presidential veto

WASHINGTON — Changes in the membership of the U.S. Senate seem to give the Akaka bill a better chance of passage this year than when it was blocked repeatedly in the past.

The bill, which sets up a process for Native Hawaiian self-government, will be considered by the full Senate this year, said a spokeswoman for Senate Majority Leader Harry Reid.

"It will come up this year, I just don't have an exact timing on it yet," said spokeswoman Regan Lachappelle.

The House has twice passed the legislation, nicknamed the Akaka bill, but it has been stymied in the Senate.

U.S. Sen. Daniel Akaka, D-Hawai'i, sponsor of the legislation, said he hopes that the addition of more Democrats to the Senate in the 2006 election has created enough votes for passage.

"It would seem that with the increase in Democratic senators, the chances of the bill passing increases," said Haunani Apoliona, chairwoman of the Office of Hawaiian Affairs.

She said she hopes that means it will move out soon.

However, the Bush administration opposes the bill and the president may veto it if it passes.

The bill's best chance of becoming law could come if a Democratic president is elected.

The two leading Democratic presidential contenders — U.S. Sens. Hillary Rodham Clinton and Barack Obama — both voted for the bill in 2006 and recently reiterated their support for it.

Only the presumptive Republican nominee, U.S. Sen. John McCain, can't be counted as a supporter.

The legislation creates a process for organizing a Native Hawaiian government, including development of a roll of Native Hawaiians and the election of an interim governing council. The council would develop the documents on which the government would be based.

Once the United States recognizes the new government, negotiations would take place on the disposition of Native Hawaiian land, natural resources and other assets.

Akaka has been pushing Reid for almost 11 months to schedule the bill for Senate floor action. "I will continue to work with him to find an appropriate time," he said.

But a crowded Senate schedule dealing with the Iraq war, immigration, health insurance and more recently the mortgage crisis has kept the bill in the background.

An expected filibuster from some Republicans in the Senate means Reid would have to make time for lengthy debate.

The House originally approved the bill in 2000 and passed it again in October.

If Akaka can get the bill on the Senate calendar, he stands a good chance of mustering the 60 votes needed to break the Republican filibuster that stopped the bill last time.

When the bill was last before the Senate in June 2006, he had the unanimous support of all the Democrats voting and 13 Republicans, but the 56-41 vote was still short of the 60 needed for a cloture motion to overcome the Republican filibuster. Since then, more Democrats and an independent have taken seats in the Senate, giving the party a 51-49 edge.

All 13 Republicans who voted for cloture are still in the Senate, but two of them, McCain and Sen. Jon Kyl, R-Ariz., are expected to oppose the bill.

If Akaka can keep the other 11 Republicans — four are co-sponsoring the bill this year — and again gain unanimous Democratic support, he could have 62 votes, more than enough to break a filibuster and bring the bill up for a final vote.

Akaka said he is optimistic that he will have the "bipartisan support necessary for a debate and up-or-down vote."

"I continue to reach out to my colleagues to share with them the unique history of Hawai'i and the long overdue need for federal recognition," Akaka said.

At least four of the new Democratic senators have supported the bill, but the others haven't made up their minds yet.

But even if Akaka and other supporters gain Senate passage, the bill still faces a possible presidential veto.

The White House Office of Management and Budget said the bill was "divisive" and discriminatory and raised "significant constitutional concerns." If the bill went to the president, "his senior advisers would recommend that he veto" it, the statement said.

A veto override requires a two-thirds majority in both the House and the Senate, an unlikely prospect given that only one of Bush's vetoes has been overcome.

Sweeping job losses show 'the fat lady has sung'

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By Jeannine Aversa

WASHINGTON — It's no longer a question of recession or not. Now it's how deep and how long.

Workers' pink slips stacked ever higher in March as jittery employers slashed 80,000 jobs, the most in five years, and the national unemployment rate climbed to 5.1 percent. Job losses are nearing the staggering level of a quarter-million this year in just three months.

For the third month in a row total U.S. employment rolls shrank — often a telltale sign that the economy has jolted dangerously into reverse.

At the same time, the jobless rate rose three-tenths of a percentage point, a sharp increase usually associated with times of deep economic stress.

The grim picture described by the Labor Department yesterday provided stark evidence of just how much the jobs market has buckled under the weight of the housing, credit and financial crises. Businesses and jobseekers alike are feeling the pain.

"It is now very clear that the fat lady has sung for the economic expansion. The country has slipped into a recession," said Stuart Hoffman, chief economist at PNC Financial Services Group. Indeed, there is widening agreement that the first recession since 2001 has arrived. Even Ben Bernanke, in a rare public utterance for a Federal Reserve chairman, used the "r" word, acknowledging for the first time this week that a recession was possible.

Job losses were widespread last month, hitting workers at factories, construction companies, retailers, banks, real-estate firms and even temporary-help agencies. Also mortgage brokers, hotels, computer design shops, accounting firms, architecture and engineering companies, legal services, airlines and other transportation as well as telecommunications companies.

Those cuts swamped employment gains elsewhere, including at hospitals and other heathcare sites, educational services, child day-care providers, bars and restaurants, insurance companies, museums, zoos and parks. And the government, which is almost always up.

In fact, private employers have shed jobs for four straight months, though December showed an overall gain for the economy because the government increase outweighed the private loss.

March's losses were the most since the same month in 2003, when companies were still struggling to recover from the last recession. Adding to the angst: Revised figures showed losses were actually deeper than first reported for both January and February.

All told, the economy now has lost 232,000 jobs in the first three months of this year.

On Wall Street, investors took the weak employment figures in stride. The Dow Jones industrials lost just 16.61 points, while other indexes edged higher.

All the economy's problems are forcing people and businesses to hunker down, crimping spending and hiring, a vicious cycle.

"Across the board, businesses have become very, very conservative," said Joel Naroff, president of Naroff Economic Advisors. More downbeat about their own sales prospects because of cautious consumers, employers are cutting back. "It only makes sense for them to run leaner if we are going into a recession or already in one" as Naroff now believes.

The new employment figures were much weaker than economists were expecting. They were anticipating a drop of 50,000 payroll jobs.

Michael Gregory, senior economist at BMO Capital Markets Economics, said the employment report was "emitting recession signals."

The national unemployment rate of 5.1 percent, relatively modest by historical standards, is nonetheless the highest since September 2005, following the devastating blows of the Gulf Coast hurricanes.

US jobless figures: The specter of a new depression

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By David Walsh

Friday’s Labor Department report, revealing that US payrolls were cut by 80,000 jobs in March and that 232,000 jobs have been lost in the past three months, can only mean new levels of social misery and raises the specter of a severe economic slump, perhaps the deepest since the Great Depression of the 1930s.

The March decline in jobs is the largest in five years. The number of private sector jobs has dropped by 300,000 since November 2007.

Millions of Americans face the prospect of a sharp decline in living standards and conditions of life. Because of their commitment to the profit system, no section of the US political establishment—neither the Bush administration and the McCain campaign nor the Clinton and Obama camps—is capable of proposing any measures that will materially assist those seeing their jobs, homes nor social benefits disappear or devastated by the present developments.

The figures contained in the Bureau of Labor Statistics (BLS) survey are bleak. The number of those officially counted as jobless rose by 434,000 in March to 7.8 million. The unemployment rate rose from 4.8 to 5.1 percent (the highest since the aftermath of Hurricane Katrina in September 2005). In the past 12 months, 1.1 million people have been added to the jobless rolls and the official jobless rate has climbed by 0.7 percent.

The number of people unemployed because they lost jobs climbed to 4.2 million; that figure has grown by almost one million in a year.

The debacle in the housing, credit and financial sectors is leading to “a broad-based decline,” in the words of Moody’s economist Mark Zandi. March’s figures on jobs, said Zandi, indicated that the problem “wasn’t just housing and Wall Street. The problems in the housing market have now affected the rest of the economy.” (Los Angeles Times)

Construction continued to be hard hit, with a loss of 51,000 jobs in March. Construction employment is down 394,000 since its peak in September 2006. Most of the decrease in March, 42,000 jobs, took place among specialty trade contractors. Both residential and commercial construction employment declined. David Wyss of Standard and Poor’s told the Associated Press that the construction figures were “doubly troubling” because March is “the first good month you get on construction because seasonal factors aren’t as large as they are in January.”

Manufacturing jobs fell by 48,000 in March (the largest drop since October 2006) and 310,000 have been lost in the past 12 months. The biggest job losses have taken place in durable goods, where wages and benefits tend to be higher.

Construction-related industries, such as wood products (5,000 jobs), nonmetallic mineral products (5,000 jobs) and furniture and related products (also 5,000 jobs) all suffered. Plastics and rubber products and textile mills also lost jobs, according to the BLS.

Jobs in employment services fell by 42,000 in March and have decreased by 210,000 since August 2006. Twelve thousand jobs in retail trade were lost, including 9,000 in building material and garden supply stores.

The March employment figures were worse than analysts had predicted. Moreover, the unemployment numbers for January and February were revised upward, adding another 67,000 jobs lost. John Silvia, chief economist for Wachovia, told, “The revisions are the real surprise in the report. If we had known it was anything like that, there would not have been any debate going on about whether we were in a recession. It’s pretty stark.”

Other analysts chimed in with gloomy comments. “Another terrible report,” said Joseph Shapiro of MFR, Inc., an economic forecasting firm in New York. “Private payrolls now down for four consecutive months. Consumer spending outlook is grim, with wage and salary income growth fading fast and other headwinds as strong as ever... This economic slump is going to be a long, grinding one, and a ‘v-shaped’ recovery appears quite unlikely.”

Ian Shepherdson of High Frequency Economics noted that the overall numbers were “significantly worse than expected ... Trends are awful; unemployment will keep rising, squeezing spending.”

The Economic Policy Institute pointed out that for “the fifth month in a row, fewer than half of industries have added jobs, demonstrating the pervasive nature of job loss.”

The government’s jobless rate notoriously underestimates the actual number of people out of work. The BLS reports that the “total unemployed” rate, a somewhat more realistic gauge of the actual job situation, which includes those working part-time involuntarily and those who have given up looking for employment, stood at 9.1 percent in March 2008 (seasonally adjusted), some 13.9 million people, up from 8.0 a year earlier, an increase of 13.75 percent over 12 months.

At the same time, increases in workers’ wages are falling behind inflation. Over the course of the year, wages grew 3.6 percent, less than the inflation rate of approximately 4 percent. Furthermore, since weekly hours also slowed during the past 12 months, weekly earnings are only up 3.3 percent, markedly behind the rate of inflation.

For certain staple items, prices have risen far faster than 4 percent. Flour, milk and eggs were up 24 percent for the year ending in February, according to the Consumer Price Index. By March 30, American Automobile Association figures indicate, gasoline had risen to an average of $3.287 a gallon for regular unleaded, more than 61 cents (or 23 percent) above the price a year ago.

Associated Press economics writer Jeannine Aversa commented, “With lofty energy and food prices, workers may feel like their paychecks are shrinking.” This is, in fact, a mass experience, at the same time as Wall Street operators and corporate CEOs continue to rake in vast fortunes. These geniuses, who have proclaimed the wonders of the market for the past quarter-century, preside over the present disaster threatening wide layers of the population.

The process feeds on itself. Economic uncertainty and the loss of jobs lead to decreased purchases, which contribute to further layoffs. US auto sales fell sharply in the first three months of 2008, as domestic and foreign car companies combined to post one of the worst first quarters in years. US auto sales as a whole dropped 12 percent over the same quarter a year ago; General Motors sales were down 19 percent; Ford, 14 percent; Toyota, 10 percent and Honda, 3.2 percent.

The BLS reported Friday that auto jobs fell by 24,000 in March, in part because of the ongoing strike at American Axle in Detroit and western New York state; the average monthly decline in auto was 6,000 jobs per month in the year ending in February.

The day before the bureau issued its report, an influential member of the Federal Reserve, Janet Yellen of San Francisco, told an audience that the US economy has “slowed to a crawl” and said no improvement was likely until 2009 at the earliest.

Addressing a conference in Florida in mid-March, Harvard economist Martin Feldstein, a member of the National Bureau of Economic Research, which dates business cycles in the US, remarked: “I believe the US economy is now in recession. Could this become the worst recession we have seen in the postwar period? I think the answer is yes. I would emphasize the word ‘could.’”

The assault on the working population goes beyond the growth in joblessness and inflation, as serious as they are. This “perfect storm” of an economic crisis means that the value of the only asset many people possess, their home, is dropping even as the job market shrinks and prices rise. Standard & Poor’s recently indicated that US home prices might decline as much as 20 percent by the end of 2008 from their peak in 2006.

The result is a flood of mortgage foreclosures, which rose to an all-time high at the end of 2007, the Mortgage Bankers Association revealed in a March 6 report. RealtyTrac reported at the end of March that 225,000 properties were in some stage of foreclosure, an increase of nearly 60 percent from the same period one year earlier.

The social consequences are appalling.

The increased number of empty houses for sale (now, in percentage terms, as high as at any time since 1956, when records were first kept) has led to an epidemic of break-ins aimed at stripping homes of pipes made of copper and other valuable metals. Reuters reported April 1, “In areas hit hardest by foreclosures, such as the Slavic Village neighborhood of Cleveland, Ohio, copper and other metals used in plumbing, heating systems and telephone lines are now more valuable than some homes.” A Cleveland city councilor, Tony Brancatelli, explained, “We’re seeing houses sold for $100 that are distressed houses that should not be recycled.”

Meanwhile the wars in Iraq and Afghanistan grind on, resulting in the deaths of countless Iraqis and Afghans, the killing and maiming of thousands of Americans and the draining of the US treasury to the eventual tune of trillions of dollars.

The lame-duck Bush administration barely goes through the motions in the face of alarming economic news. The Wall Street Journal noted acerbically Friday that, apart from tracking economic data and advising Treasury Secretary Henry Paulson, “Treasury officials seem to have two clear missions: agree with Federal Reserve Chairman Ben Bernanke and don’t utter the word ‘recession.’”

A White House spokesperson indicated the administration was “not happy” with the jobs report and promised that the economy would pick up later in the year.

George W. Bush spent Friday evening with the president of Croatia, Stjepan Mesic, in Zagreb. Oblivious to popular suffering either in America or the Balkans, during the course of his toast to Mesic, Bush idiotically declared: “We believe there’s a Creator that has given every man, woman and child on the face of the Earth the great gift of freedom. We believe markets are capable of unleashing the entrepreneurial spirit of our peoples. We understand that freedom requires sacrifice.”

Even as this “entrepreneurial spirit” was wreaking havoc in the US and global economy, the various major party rivals for Bush’s office made clear they intend to do nothing to alleviate the economic distress of the broad mass of the population.

Presumptive Republican Party candidate for president, John McCain, promised more of the same “free market” policies that have led to the present calamity, declaring, “it is essential to reduce the burdens on businesses and workers by lowering taxes, streamlining regulation, tackling health care costs, opening markets to American goods and helping those workers in need.”

The Democrats sought to gain political advantage from the bad economic news, without offering any concrete plan for remedying the situation. New York Senator Hillary Clinton praised the $30 billion Bear Stearns bailout and urged “equally aggressive action to help American families struggling in our bearish economy.”

She again endorsed proposals being drafted by Democrats Congressman Barney Frank of Massachusetts and Senator Christopher Dodd of Connecticut, aimed at averting an even deeper financial crisis and propping up the banks by ending the decline in home prices. The Frank-Dodd plan—which will not be enacted, in any event, due to Republican opposition—would aid only a fraction of the millions of families facing foreclosure.

Illinois Senator Barack Obama also criticized the Bush administration without offering a serious alternative. Both Clinton and Obama always have to make certain that they do not offend powerful financial and banking interests, on whose endorsements and funding they depend.

Obama said, “Instead of doing nothing for out-of-work Americans, we need a second stimulus that extends unemployment insurance and helps communities that have been hit hard by this recession. Instead of tolerating decades of rising inequality, we need to grow the middle class by investing in millions of new Green Jobs and rebuilding our crumbling infrastructure.” These vague promises, which will never be carried out, will not help anyone.

The leading Democrats are insulated from the day-to-day reality and sentiments of broad masses of people in the US and could not respond even if they were aware of them. They speak for one wing of the oligarchy that rules the country.

Meanwhile a radicalization is under way that will blow apart the two-party system and the entire political set-up in America. A poll whose results were published in the New York Times Friday provides a glimpse into the actual state of popular opinion. The newspaper reported that Americans “are more dissatisfied with the country’s direction than at any time since the New York Times/CBS News poll began asking about the subject in the early 1990s.”

The survey found that 81 percent of respondents believed “things have pretty seriously gotten off on the wrong track,” an increase from 69 percent a year ago and 35 percent in early 2002. Only 21 percent of those surveyed said the overall economy was in good shape, and 78 percent felt that the US was in worse condition than 5 years ago. Only 28 percent approved of Bush’s performance.

The decline of the position of American capitalism in the world, its decisive loss of global hegemony, has the most profound implications. For wide layers of the population it means, in the first place, a series of severe shocks. In the end, this process must have revolutionary political consequences.

US Senate leaders agree on pro-industry housing bill

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By Joe Kay

The US Senate is debating a housing bill agreed to by the Democratic and Republican party leaderships that includes tens of billions in tax breaks for corporations, with paltry tokens for distressed homeowners.

On Wednesday, Democrat Christopher Dodd and Republican Richard Shelby, the chairman and ranking member of the Senate Banking Committee, announced the agreement. It is currently being debated on the Senate floor. After a bill is passed, likely sometime next week, it will go to the House of Representatives for debate and approval before reaching the White House.

On Thursday, the Senate rejected an amendment that would have allowed judges to alter mortgage terms for individuals in bankruptcy court. On Friday, it added an additional tax break for corporations, on top of what was already included in the Dodd-Shelby agreement.

In pushing the bill, the Democratic Party leadership is attempting to make a pretense of aiding the millions of Americans who have lost their homes or may shortly lose them in foreclosure. The Bush administration has already moved to bail out investment bank Bear Stearns and Wall Street in general. This past week the Treasury Department announced plans that would have the effect of loosening regulation on banks while making it easier for the Federal Reserve to intervene to save banks in crisis.

“We helped Wall Street... But now is our opportunity to take care of people on Main Street,” said Senate Majority Leader Harry Reid. Dodd echoed the remarks, saying the Senate bill was directed at “millions of people on Main Street who wondered whether or not the Congress is paying attention to their concerns, what’s happened to their hopes, to their economic well being.” The Act is itself misnamed the “Foreclosure Prevention Act of 2008.”

An article in the Associated Press on Thursday noted, however, that the bill “showers money-losing businesses with $25 billion in tax relief in the next few years but offers just $3 billion to homeowners, according to estimates released Thursday by Congress’ Joint Tax Committee.” The Associated Press commented that the Congress study “lends credence to accusations that the measure helps businesses like home builders while doing little to help millions of families threatened with foreclosure.”

The major tax break will allow those companies hit by the housing slump, including home builders and banks, to credit losses against taxes paid in the previous four years, essentially giving them a major tax rebate. On Friday, the Senate voted 76-2 to include another tax provision that would benefit other companies not directly impacted by the housing slump.

The Senate by a vote of 58-36 defeated an amendment that included the major provision touted by Democrats to help homeowners—giving judges greater ability to alter mortgage terms. Eleven Democrats joined Republicans in defeating the measure after heavy lobbying from the banking industry. The Mortgage Bankers Association issued a statement praising the move.

The principal measure included in the bill that would apply directly to those who have had their homes foreclosed is a paltry $100 million for foreclosure counseling. Even this is half of what Democrats had initially proposed.

Other measures of the bill are aimed at slowing the decline in home prices without providing any serious relief to those who have had their homes foreclosed. One measure would give a $7,000 tax credit over two years to individuals who purchase a home in or near foreclosure. Another measure would provide $10 billion in tax-free revenue bonds that could be used to finance lower-interest mortgages to allow borrowers to refinance.

Even the tax credit is a paltry sum. The Washington Post reported, “In the Washington area, where the median price of a home is $420,000, the tax break is ‘peanuts,’ said Jim Whitehead, a real estate agent at Lord & Sanders in Woodbridge.”

Another measure pushed by Democrats would expand the ability of the Federal Housing Administration (FHA) to insure higher-valued mortgages. Some $4 billion would be given to local communities to refurbish foreclosed homes in order to prevent further declines in property values of the surrounding neighborhoods.

The bill does not include a provision supported by Dodd to allow the FHA to use $10 billion to insure $400 billion in mortgages if banks agree to write down the principal and allow the mortgages to be refinanced on less severe terms. This measure is also aimed at putting the breaks on the fall of housing prices, which has hit Wall Street hard. It is entirely voluntary and many homeowners would not qualify.

The collapse of the housing market has been devastating for millions of people. An estimated 8,000 families are forced into foreclosure every day.

Hundreds of billions in cheap loans have been offered to commercial and investment banks, backed up ultimately by the federal government. The Democratic Party, including both of the presidential candidates, has supported these moves. However, no section of the political establishment is interested in coming to the aid of ordinary people caught up in the crisis.

Record Home Foreclosures across America

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By Sherwood Ross

Banking Act of 1999 has opened a Pandora's Box

The desire of commercial banks to gut the Glass-Steagall Act(GS) of 1933 so they could get back into the lucrative investment banking business has resulted in today’s subprime mortgage mess, the dean of the Massachusetts School of Law(MSL), a former Justice Department anti-trust lawyer, says.
“When federal agencies began making inroads on Glass-Steagall in the 1980’s and 1990’s, so that banks were allowed by the agencies to do things that Glass-Steagall forbade, I was amazed,” says MSL Dean Lawrence Velvel, of Andover. He noted GS “had deliberately separated commercial banking from investment banking because Congress felt in the 1930’s that the combination of both types of banking in a single institution was one of the reasons for the Great Depression.”
During that era, “when both types of banking were combined in one institution and a bank’s stock business and stock investments went down, the whole bank went down because of huge losses and capital impairments,” Velvel explained. And it was to avoid any repeat of the nation’s financial collapse GS was enacted.
Once the GS safeguards were removed by enactment of the Gramm-Leach-Bliley Act of 1999 (GLBA), Velvel says, “Horrible loans were made, horrible securities were packaged and sold from these loans, and when one side of the bank got into problems, they quickly spread to the other side. As a result, huge banking companies such as Citicorp and Merrill Lynch are in big trouble.”
“If delinquencies in the fourth quarter of 2007 for subprime adjustable-rate mortgages hit an all-time record 5.29%, it’s because the visionary protections in the New Deal legislation(GS) have been abandoned,” Velvel says. Banks are holding billions in mortgage-related instruments for which there is no market.
In a related article published in MSL’s opinion journal “Long Term View,” law Professor Holly Vietzke writes GLBA has more closely connected “the banking industry to the U.S. stock market, ensuring that any significant dive on Wall Street will have disastrous effects on the nation’s financial system.”
Some analysts link GLBA to the Enron scandal and other corporate crises, writes Vietzke: “Enron’s financial backers Citigroup, Inc. (which earned millions of dollars in fees as one of Enron’s biggest backers) and J.P. Morgan Chase are accused of committing securities fraud in connection with the formation and use of Enron Corporation’s special purpose partnerships.”
“It appeared that, with the cooperation of Citigroup and J.P. Morgan Chase, Enron intended to inflate profits and income over debt, and it tried to fool investors by hiding debt from the analysts,” Vietzke continues. The Wall Street Journal, she noted, reported Citigroup and Chase made more than $200 million in fees for transactions that helped Enron among other energy companies, “boost cash flow and hide debt.”
Vietzke asserted this kind of activity is one of the reasons why Congress passed GS in the first place. “The GLBA is, as Enron shows, fermenting stock market manipulations that allow corporate executive to cash in” while their bank loans are outstanding.
GLBA triggered a wave of mergers, including Citigroup with major insurer Travelers and the American-based bank holding company Citicorp, a $70 billion combination. “After the merger, Citigroup’s business included insurance, lending, banking, investing and asset management,” Vietzke pointed out.
If Citigroup expected to reap a profit upwards of $700 million from the deal, Vietzke said, stockholders “saw no such gain.” Before the merger, Citicorp stock was up to $182 and Travelers was $73. After the merger, however, Citicorp dropped to $84 and Travelers to $37.
Other financial institutions that combined: Chase Manhattan joined with J.P. Morgan in a $35 billion merger to form J.P. Morgan Chase; First Union Corp. acquired Wachovia Corp; insurance giant MetLife bought New Jersey-based Grand Bank; Washington Mutual took over Homeside Lending; First Merchants bought Lafayette Bancorp; FleetBoston Financial purchased Summit Bancorp, and, in Ohio, National Bancshares Corp acquired Peoples Financial.
These, and similar mergers, have not always yielded positive results. Vietzke writes: “In addition to causing higher fees, a decline in personal service, privacy issues for consumers, and a decrease in value for stockholders, these unions have suffered internally as well.”
Geoffrey Boisi, the engineer of the J.P. Morgan Chase deal, resigned just two years after the merger as did Allan Wheat (Credit Suisse First Boston) and John Mack (Morgan Stanley) before him.
In a poll of 50 executives, Professor Robert Bruner of the University of Virginia found only 37% of them believed the mergers actually created value for buyers.
Until the GLBA, Vietzke writes, “banks had regularly circumvented the restrictions of the Glass-Steagall Act by sharing office space with securities firms, creating the illusion to consumers that the bank insured securities transactions.”
“The securities firm would benefit from the bank’s steady flow of customers, and the bank would receive a portion of the firm’s commission. The customer often never knew it was conducting business with separate entities. The GLBA effectively made this practice legal,” Vietzke said.

The opinions published in The Long Term View are not necessarily those of The Massachusetts School of Law. MSL is an independent law school founded to provide a quality, affordable legal education to minorities, immigrants and students from working-class backgrounds that otherwise would be unable to attend law school and enter the legal profession.

Fed's interest rate games could destroy the dollar

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By Tim O'Brien

Federal Reserve Chairman Ben Bernanke has reduced the key federal funds rate six times in as many months -- reducing the cost for major borrowers significantly. This combines with providing $270 million in funding, plus $30 billion in additional guarantees, for JP Morgan Chase to buy Bear Stearns Cos.

"Helicopter Ben" is living up to the nickname he earned after he remarked in a 2002 speech that he would stave off a recession even if he had to drop money from helicopters to do it.

The results of these policies have been destructive. The dollar is collapsing not only against foreign currencies -- we're now at par with the Canadian dollar and rocketing toward a 2-1 deficit against the Euro -- but also against commodities. Gold was passing the $1,000-an-ounce landmark, silver $20. Even industrial metals like copper and zinc are fetching record prices.

Now, a spike in a particular commodity -- say, for instance, $100-per-barrel oil -- can be attributed to a shortage. But when they all move dramatically and simultaneously, it's the purchasing power of our money that has gone down.

In fact, the increasing cost of even the base metals recently prompted Edmund Moy, director of the United States Mint, to propose further debasing the copper and nickel-plated, zinc slugs we call coins by substituting color-coated steel.

"Never before in our nation's history has the government spent more money to mint and issue a coin than the coin's legal tender value," he claimed in testimony at a recent hearing before the House Financial Services Committee's panel on monetary policy. But the U.S. mint continues to issue 1-ounce Gold Eagle coins currently worth about 18 times their $50 legal tender value.

The beginning of the end for money "as sound as a dollar" was the creation of the Federal Reserve less than a century ago. The final blow came during the Nixon administration when our money's last tie to anything of intrinsic worth was severed with the decree that even Silver Certificate currency would no long be redeemable in specie.

Why would Bernanke, Moy, et al., want to degrade our money? Who benefits?

The answer is: those who are at the head of the line. Creating an additional $270 million in U.S. currency to give JP Morgan Chase provided that company the means to acquire Bear Stearns. Then the owners of Bear Stearns spend the money on something else, albeit at slightly reduced purchasing-power value.

The effects will continue to ripple outward, gradually diminishing. The amount of goods and services that can be bought with that $270 million must inevitably decline until the nominal value of the currency reaches equilibrium with the actual wealth available in the economy to purchase.

And who will pay? You will -- in the future when you go to draw out the money you put into your 401(k) in today's dollars. Your investment won't be worth as much as it should.

What is amazing is that the public has acquiesced in this money-debasing. It ought to be self-evident that it is impossible to create wealth by making entries in a computer.

One Nevada businessman may have found a way to bring the system crashing down -- he has begun paying employees in those $50 Gold Eagle coins, making their annual salaries well below the threshold for even having to file tax returns. So far, the IRS is helpless to stop it.

Ahmadinejad: Nations to establish independent new world order

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Stressing that era for the US Government to consider itself the owner of the entire world is over, Iran's President Mahmoud Ahmadinejad said here, "Resorting to countless capabilities, world nations would establish an independent new world order, if hegemonic powers would keep on exerting pressure over them." President Ahmadinejad made the comment in an interview with Japan's Kyodo news agency, adding, "Today is beginning of an era for the domineering of the world nations who will soon impose their will, like many governments that are fed up with the status quo of the unjust international relations and willing to alter them, and this is an event that would definitely take place."

The President of the Islamic Republic of Iran pointed out that the oppressive powers of the world had assumed they could isolate the Iranian nation, but the reverse has happened today, since Iran enjoys excellent and friendly ties with most world nations based on mutual respect.

President Ahmadinejad further reiterated, "On the contrary, the US government is suffering from having achieved the worst international status today. They had assumed if they would sit at the UN Security Council and decide over a matter it would be done for sure, while they had better realize if such decisions remain unheeded it means that they need to harmonize with world nations."

He added, "It is to their own benefit to do so, since otherwise they would be fully isolated in the long run."

Ahmadinejad added, "Today no nation, including the Japanese nation, likes the politicians of the oppressive powers, such as the US president, and I can assure you that even the Americans do not like their own president."

IRI HAS APPROPRIATE SOLUTIONS FOR CURRENT WORLD PROBLEMS President Ahmadinejad said that Iran is a big power standing by the side of the world nations today, stressing, "The Islamic Republic of Iran has appropriate solutions based on justice and respecting the nobility of human beings and nations for the current world problems."

He announced Tehran's readiness for sharing viewpoints aimed at solving acute world problems, stressing, "Global security and economy, discrimination, occupation, massacre of world nations and broad violation of human rights in Western countries are important issues that can be put to discussion."

The IRI President pointed out that keeping in mind that the International Atomic Energy Agency's (IAEA) last report on Iran proved that the entire ambiguities on Iran's nuclear program have been resolved, negotiation over the matter is absolutely meaningless today.
He added, "We are interested in holding dialogues over issues of mutual interest, within certain frameworks and at effective level so that results could be achieved of the invested time, energy and money, and of course we have good proposals for holding such dialogue, too." Ahmadinejad referred to the point that the Islamic Republic of Iran has mastered the nuclear technology for peaceful purposes today, adding, "In order to hold a new round of talks, the level of negotiations, their framework, and their subject needs to be defined in advance, in accordance with the new conditions."