Sunday, April 6, 2008

If Americans Knew

It’s not a coincidence that Pro-Israel Jewish Americans, like Eliot Abrams, Dennis Ross, and Martin Indyk, are usually appointed in charge of Middle East policy, especially the Israeli Palestinian conflict.

Frontline USA - Lobbying for Israel

Avi Lewis examines the powerful Israeli lobby and its affects on Capitol Hill.

Iran joined militias in battle for Basra

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By Sarah Baxter and Marie Colvin

IRANIAN forces were involved in the recent battle for Basra, General David Petraeus, the US commander in Iraq, is expected to tell Congress this week.

Military and intelligence sources believe Iranians were operating at a tactical command level with the Shi’ite militias fighting Iraqi security forces; some were directing operations on the ground, they think.

Petraeus intends to use the evidence of Iranian involvement to argue against any reductions in US forces.

Dr Daniel Goure, a defence analyst at the Lexington Institute in Virginia, said: “There is no question that Petraeus will be tough on Iran. It is one thing to withdraw troops when there is purely sectarian fighting but it is another thing if it leaves the Iranians to move in.”

US defence chiefs are concerned that the troop surge has overstretched the military. Admiral Mike McMullen, chairman of the joint chiefs of staff, warned that the army and marines were at risk of crossing an “invisible red line” if the burden on forces remained. He said deployments of 15 months had to be reduced to a year “as fast as possible”.

Petraeus is likely to announce that combat tours will be reduced from 15 months to 12 months.

The number of US troops in Iraq is set to fall from 160,000 to 140,000 by July, but Petraeus is expected to recommend an indefinite pause in further troop cuts.

Moqtada al-Sadr, the radical Shi’ite cleric, has called for 1m people to march on Baghdad on Wednesday – the fifth anniversary of the fall of the capital – when Petraeus and Ryan Crocker, the US ambassador to Iraq, will be briefing Congress.

A senior Iraqi official who met Petraeus last week said, “It will be difficult to show that the situation is improving.” Another Iraqi source described the US general as “furious” that al-Maliki moved against the militias into Basra without consultation and had to rely on US forces to bail him out.

Abu Ahmed, a senior military commander with the Awakening, the Sunni tribal movement cooperating with US forces, said progress was largely the result of al-Sadr’s Mahdi Army ceasefire.

“When the Mahdi Army decides to resume its activities, neither the American troops nor the Iraqi government will be able to stop it,” he said.

British fear US commander is beating the drum for Iran strikes

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By Damien McElroy

British officials gave warning yesterday that America's commander in Iraq will declare that Iran is waging war against the US-backed Baghdad government.

A strong statement from General David Petraeus about Iran's intervention in Iraq could set the stage for a US attack on Iranian military facilities, according to a Whitehall assessment. In closely watched testimony in Washington next week, Gen Petraeus will state that the Iranian threat has risen as Tehran has supplied and directed attacks by militia fighters against the Iraqi state and its US allies.

The outbreak of Iraq's worst violence in 18 months last week with fighting in Basra and the daily bombardment of the Green Zone diplomatic enclave, demonstrated that although the Sunni Muslim insurgency is dramatically diminished, Shia forces remain in a strong position to destabilise the country.

"Petraeus is going to go very hard on Iran as the source of attacks on the American effort in Iraq," a British official said. "Iran is waging a war in Iraq. The idea that America can't fight a war on two fronts is wrong, there can be airstrikes and other moves," he said.

"Petraeus has put emphasis on America having to fight the battle on behalf of Iraq. In his report he can frame it in terms of our soldiers killed and diplomats dead in attacks on the Green Zone."

Tension between Washington and Tehran is already high over Iran's covert nuclear programme. The Bush administration has not ruled out military strikes.

In remarks interpreted as signalling a change in his approach to Iran, Gen Petraeus last week hit out at the Iranian leadership. "The rockets that were launched at the Green Zone were Iranian-provided, Iranian-made rockets," he said. "All of this in complete violation of promises made by President Ahmadinejad and the other most senior Iranian leaders to their Iraqi counterparts."

The humiliation of the Iraqi prime minister Nouri al-Maliki by the Iranian-backed cleric Moqtada al-Sadr in fighting in Basra last week triggered top-level warnings over Iran's strength in Iraq.

Gen Petraeus and Ryan Crocker, the US ambassador to Baghdad, will answer questions from American political leaders at the US Congress on Tuesday and Wednesday before travelling to London to brief Gordon Brown.

The Wall Street Journal said last week that the US war effort in Iraq must have a double goal.

"The US must recognise that Iran is engaged in a full-up proxy war against it in Iraq," wrote the military analyst Kimberly Kagan.

There are signs that targeting Iran would unite American politicians across the bitter divide on Iraq. "Iran is the bull in the china shop," said Ike Skelton, the Democrat chairman of the Armed Services Committee. "In all of this, they seem to have links to all of the Shi'ite groups, whether they be political or military."

Permissible Assaults Cited in Graphic Detail

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By Dan Eggen

Drugging Detainees Is Among Techniques

Thirty pages into a memorandum discussing the legal boundaries of military interrogations in 2003, senior Justice Department lawyer John C. Yoo tackled a question not often asked by American policymakers: Could the president, if he desired, have a prisoner's eyes poked out?

Or, for that matter, could he have "scalding water, corrosive acid or caustic substance" thrown on a prisoner? How about slitting an ear, nose or lip, or disabling a tongue or limb? What about biting?

These assaults are all mentioned in a U.S. law prohibiting maiming, which Yoo parsed as he clarified the legal outer limits of what could be done to terrorism suspects as detained by U.S. authorities. The specific prohibitions, he said, depended on the circumstances or which "body part the statute specifies."

But none of that matters in a time of war, Yoo also said, because federal laws prohibiting assault, maiming and other crimes by military interrogators are trumped by the president's ultimate authority as commander in chief.

The dry discussion of U.S. maiming statutes is just one in a series of graphic, extraordinary passages in Yoo's 81-page memo, which was declassified this past week. No maiming is known to have occurred in U.S. interrogations, and the Justice Department disavowed the document without public notice nine months after it was written.

In the sober language of footnotes, case citations and judicial rulings, the memo explores a wide range of unsavory topics, from the use of mind-altering drugs on captives to the legality of forcing prisoners to squat on their toes in a "frog crouch." It repeats an assertion in another controversial Yoo memo that an interrogation tactic cannot be considered torture unless it would result in "death, organ failure or serious impairment of bodily functions."

Yoo, who is now a law professor at the University of California at Berkeley, also uses footnotes to effectively dismiss the Fourth and Fifth amendments to the Constitution, arguing that protections against unreasonable search and seizure and guarantees of due process either do not apply or are irrelevant in a time of war. He frequently cites his previous legal opinions to bolster his case.

Written opinions by the Office of Legal Counsel have the force of law within the government because its staff is assigned to interpret the meaning of statutory or constitutional language. Yoo's 2003 memo has evoked strong criticism from legal academics, human rights advocates and military-law experts, who say that he was wrong on basic matters of constitutional law and went too far in authorizing harsh and coercive interrogation tactics by the Defense Department.

"Having 81 pages of legal analysis with its footnotes and respectable-sounding language makes the reader lose sight of what this is all about," said Dawn Johnsen, an OLC chief during the Clinton administration who is now a law professor at Indiana University. "He is saying that poking people's eyes out and pouring acid on them is beyond Congress's ability to limit a president. It is an unconscionable document."

Yoo defends the memo as a "near boilerplate" argument in favor of presidential prerogatives, and says its fundamental assertions differ little from those made by previous presidents of both parties. In comments to The Washington Post and other news organizations, Yoo has also criticized the Justice Department for issuing new legal opinions that do not include detailed discussions of specific interrogation tactics, which he views as crucial to defining the boundaries of what is lawful.

"You have to draw the line," Yoo said in an Esquire magazine interview posted online this past week. "What the government is doing is unpleasant. It's the use of violence. I don't disagree with that. But I also think part of the job unfortunately of being a lawyer sometimes is you have to draw those lines. I think I could have written it in a much more -- we could have written it in a much more palatable way, but it would have been vague."

The 2003 memo includes long discussions of the relative illegality of a wide variety of coercive interrogation tactics, including a British technique in which prisoners are forced to stand in a spread-eagle position against a wall and an Israeli technique, called the Shabach, in which a suspect is hooded, strapped to a chair and subjected to powerfully loud music.

Various courts had declared both tactics to be inhumane, but not torture, Yoo noted. This meant that they were illegal under a provision of the Geneva Conventions that the administration said had no relevance to unlawful combatants in its custody.

In another passage, discussing the bounds of Eighth Amendment protections involving confinement conditions, Yoo concluded that "the clothing of a detainee could also be taken away for a period of time without necessarily depriving him of a basic human need." Yoo cited the need to prove "malice or sadism" on the part of an interrogator before he or she could be prosecuted.

The interrogation memo was considered a binding opinion for nine months until December 2003, when OLC chief Jack Goldsmith told the Defense Department to ignore the document's analysis.

In his 2007 book "The Terror Presidency," Goldsmith, who now teaches law at Harvard University, said that some of the memos written by Yoo and his colleagues from 2001 to 2003 were "deeply flawed: sloppily reasoned, overbroad, and incautious in asserting extraordinary constitutional authorities on behalf of the President."

Douglas W. Kmiec, a Pepperdine University law professor who served as constitutional legal counsel for Presidents Ronald Reagan and George H.W. Bush, said Yoo can be faulted "for not writing more narrowly." It is often better to "brush in hazy gray" rather than "spray paint in black and white," Kmiec said.

Evidence Grows of U.S. Use Of Drug On Prisoners

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There can be little doubt now that the government has used drugs on terrorist suspects that are designed to weaken their resistance to interrogation. All that’s missing is the syringes and videotapes.

Another window opened on the practice last week with the declassification of John Yoo’s instantly infamous 2003 memo approving harsh interrogation techniques on terrorism suspects.

Yoo advised top Bush administration officials that interrogators could employ mind-altering drugs if they did not produce “an extreme effect” calculated to “cause a profound disruption of the senses or personality.”

Yoo had first rationalized the use of drugs in a 2002 memo for top Bush administration officials.

But this latest revelation shows Yoo reiterating conditions on the use of drugs a year later, despite the rising resistance to harsh interrogation techniques by military lawyers and the FBI.

“The new Yoo memo, along with other White House legal memoranda, shows clearly that the policy foundation for the use of interrogational drugs was being laid,” says Stephen Miles, a University of Minnesota bioethicist and author of “Oath Betrayed: Torture, Medical Complicity, and the War on Terror.” “The recent memo on mood-altering drugs does not extend previous work on this area,” he said. “The use of these drugs was anticipated and discussed in the memos of January and February 2002 by DoD, DoJ, and White House counsel using the same language and rationale. The executive branch memos laid a comprehensive and reiterated policy foundation for the use of interrogational drugs.”

“Yes, I believe they have been used,” Jeffrey S. Kaye, a clinical psychologist who works with torture victims at Survivors International in San Francisco, told me.

“I came across some evidence that they were using mind-altering drugs, to regress the prisoners, to ascertain if they were using deception techniques, to break them down,” said Kaye.

Yet the situation remains unclear.

No ‘Truth Serums’

The Pentagon’s use of sedatives to help calm shackled and hooded prisoners during long “rendition” flights from the Middle East to Guantanamo has been widely reported,

But hard evidence that U.S. interrogators today are employing hallucinogens, like the LSD the CIA tested on unwitting subjects for at least 20 years beginning in the 1940s, has yet to surface.

Michael Caruso, the chief federal defender appointed to represent al Qaeda suspect Jose Padilla, asserted in a motion last year that his client “was given drugs against his will, believed to be some form of lysergic acid diethylamide (LSD) or phencyclidine (PCP), to act as a sort of truth serum during his interrogations.”

Fed Up: Bernanke joins G-7 to Stem Global Financial Meltdown

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By Mike Whitney

In a recent interview with the New York Times, former Secretary of the Treasury Paul O' Neill, was asked how the problems with subprime mortgages could lead to a financial crisis of global proportions. O' Neill said,

“If you have 10 bottles of water, and one bottle has poison in it, and you don't know which one, you probably won’t drink out of any of the 10 bottles; that’s basically what we’ve got here.”

Bulls-eye. O' Neill's answer is the best yet for explaining a complex situation in simple terms. The term “subprime” is a red herring; it is used by the media to minimize what is really going on. The meltdown in financing extends across the entire range of mortgage-security products. No loan-type has been spared. The wholesale market for anything connected to mortgages is frozen and the details are being intentionally withheld from the public. Two years ago, more than 65 percent of all mortgages were converted into securities and sold off to Wall Street. No more. That scam unraveled in July when two Bear Stearns hedge funds blew up and their were no takers for billions of dollars of mortgage-backed junk. Since then, bankers and hedge fund managers have been scrambling to conceal the facts about what mortgage-backed securities (MBS) are really worth; nothing. The fear is that when the public finds out what is really going on, they'll draw the logical conclusion that the banking system is bankrupt, which it probably is. Just look at these eye-popping losses which appeared in Bloomberg News on April 1 The financial ship is listing, and the mainstream media is doing its best to keep the public in the dark.

So for the last eight months, a simple matter of “price discovery” on publicly traded securities has been a nonstop game of hide-n-seek. That's no way to run a free market. The recent collapses of Bear Stearns and Carlye Capital are just the latest additions to this ongoing farce. Carlyle was a $22 billion hedge fund that couldn't scrape together a measly $400 billion to meet a margin call. Why? Every analyst who wrote on the topic noted that the fund was loaded up with high-quality Triple-A and GSE (Fannie Mae) bonds. So what were they offered for their MBS? That question was never answered because Fed chief Ben Bernanke rode to the rescue and created a new $200 billion auction facility and –Whoosh---Carlyle's mortgage-backed junk disappeared down a black hole. How convenient; another Fed bailout to hide the damning evidence that trillions of dollars of MBSs are utterly worthless and devouring the financial system from the inside.

Bernanke's myriad auction facilities (four, so far) are ostensibly designed to remove these mortgage-backed stinkers from the banks' balance sheets so they can start lending again. But there's another reason, too. The Fed thinks they can simply put these MBSs in cold-storage for a while and then re-thaw them when the market bounces back. But the market for MBSs won't bounce back. This is biggest housing bust in US history and prices have a long way to go. Who is going to invest in mortgage-backed bonds when the underlying asset is losing value every day? Besides, as Paul O' Neill points out; one of the bottles contains poison and investors don't like poison. So, Bernanke is stuck trying to treat with the symptoms rather than the disease. As a scholar of the Great Depression, he's been rifling through his bag o' tricks to mitigate the damage, but without success. The rate-cuts and auction facilities have been a complete flop. The situation is worse now than it was in July; much worse. In fact, the develeraging of financial institutions is accelerating at a pace that no one expected threatening some of Wall Streets' biggest players and putting $500 trillion in counterparty agreements at risk. And it all began with eliminating the basic standards for issuing loans to credit-worthy applicants; the straw that broke the camel's back. Now the whole system is crumbling and an ominous sense of doom pervades trading floors across the planet. Everyone is just waiting for the next shoe drop.

Pimco's Bill Gross said, “What we are seeing is the collapse of the modern day banking system”. American-style capitalism is in crisis-mode and the outcome is far from certain. The Fed's interventions show that the long held belief that markets are self-correcting has vanished. Laissez-faire is out; regulation is in.

Bloomberg News summed it up like this:

“It is no coincidence that the crisis of 2007 and 2008 had its origin in unregulated financial products traded in unregulated markets. Ever since the Great Depression, the government has tried to limit the leverage available to the public in the American stock market. But regulators, led by Alan Greenspan, the former chairman of the Federal Reserve, thought it would hamper innovation, and drive financial activity overseas, if there were any attempts to impose limits on leverage in the unregulated markets.

To avoid a super-bubble in the future, (the) banks must control their own borrowing. They must also curtail lending to clients such as hedge funds by demanding greater collateral and margin requirements on loans.” (Bloomberg News)

In Henry Liu's latest article in Asia Times, “A Panic-stricken Federal Reserve”, Liu makes this observation on the Fed's auction facilities which provide hundreds of billions of dollars in 28 day loans in exchange for dubious mortgage-backed collateral:

"Since the Fed cannot retire loans made via TAF and its repo program without adding to those 'elevated pressures', the loans should be considered an equity infusion, because they’ll be repaid at the convenience of the borrower rather than on a schedule agreed with the lender." What Waldman did not say was that the Fed had ventured into a broad nationalization of the prime dealers on Wall Street by being an equity investor. (Quote,Steve Randy Waldman of Interfluidity; Henry Liu, “A Panic-stricken Federal Reserve”)
Does the Fed realize that it is effectively monetizing the debt by issuing loans that may not be repaid or is this just a clever way to trick foreign investors into believing that the Fed won't print its way out of a crisis? The bottom line is, whether the nation is headed into a deflationary spiral or not; all of the Fed's tools are inflationary. Rate cuts, auction facilities or covert monetization all weaken the currency and levee an unfair tax on savers and people on fixed incomes. Unfortunately, these people have no voice in government, so we can't expect their interests to be fairly represented.

Since housing peaked in 2005, 240 independently-owned mortgage lenders have filed for bankruptcy. Wholesale funding sources have dried up and foreclosures are on the rise. Now, more than 75 percent of mortgages are funded by Fannie Mae or Freddie Mac while another 10 percent are underwritten by FHA. The real estate industry has been nationalized; another knock-on effect of Greenspan's low interest monetary policy. Presently, the Fed and the Secretary of the Treasury, Henry Paulson, are pushing to expand Fannie's and Freddie's balance sheets so they can absorb bigger and riskier mortgages. This is lunacy. Fannie Mae is already perilously under-capitalized and, if it defaults, taxpayers will be on the hook for $2.2 trillion. That doesn't seem to bother Paulson who is determined to reflate the equity bubble so the profits keep rolling in to Wall Street's coffers. Still, even if the plan goes forward, it's unlikely that Paulson and Bernanke will be able to re-energize the real estate market or ignite another housing boom. Public attitudes have changed dramatically in the last few months. The myth that “housing prices never going down” has been dispelled and high levels of personal debt have forced many to reassess their spending priorities. The American consumer has never been so over-extended.

According to Bloomberg:

Consumers fell behind on car, credit-card and home-equity loans at the highest level in 15 years, another sign the U.S. economy is slowing, according to the American Bankers Association's quarterly survey. Payments at least 30 days past due increased across all eight categories of loans tracked during the fourth quarter, the Washington-based group said today in a statement. Late loans in the quarter climbed 21 basis points to 2.65 percent of all accounts in a consumer-loan index created by the group.

The American consumer is tapped-out. What he needs is a raise, not another loan. Bush's $500 per person Stimulus Package will do nothing to reverse the effects of 30 years of anti-labor legislation and class-oriented monetary policy.

Another indication that attitudes towards spending have changed, showed up in a survey conducted two weeks ago by USA Today/Gallup. The poll released showed that 76 percent of Americans believe that the country is now in recession and 59 percent think the US will slide into a depression that will last for several years. Despite the media's attempts to convince us that these are “the best of times”; the public knows otherwise. Their pessimism is expressing itself through curtailed spending. There's nothing the Fed can do to change the prevailing mood of the country. Working people are hurting. The spending spree is over.

The housing market will be dead for a generation. That means the MBS market will falter and the multi-trillion dollar derivatives monolith will continue to unwind. It will take emergency measures to address the credit avalanche which is just now hitting the broader economy.

The Bear Stearns bailout is a prime example of the extent to which the Fed is willing to go to stop a meltdown. By approving the $30 billion dollar deal with JP Morgan, the Fed arbitrarily went beyond its mandate of providing liquidity to the markets and usurped Congress' authority to appropriate funds. It was a power-grab engineered under shaky pretenses. The Fed isn't authorized to prevent privately-owned businesses that are recklessly leveraged at 30 to 1 from defaulting. More importantly, the Federal Reserve is not Congress, although they have now assumed those constitutional duties. Speaker of the House Pelosi has said nothing so far.

Paulson has used the Bear fiasco as a platform for his blueprint for “broad market reforms”; a 200-plus page document that removes Congress from its role of overseeing the financial markets. According to the New York Times:

“President Bush was preparing to issue an executive order soon to expand the membership and reach of an interagency committee called the President’s Working Group on Financial Markets. (aka; The Plunge Protection Team) The group was created after the stock market plummeted in 1987. The group is also expected to consider ways to broaden the authority of the Federal Reserve to lend money to nonbanks as needs arise. (Ed. note: To authorize more Bear Stearns type bailouts with consulting Congress).....Elements of the plan are clearly deregulatory. The plan proposes, for instance, to reduce the enforcement authority of the S.E.C. in a variety of ways and hand that authority instead to industry groups. The plan recommends that investment advisers no longer be directly regulated by the commission, but instead be supervised by an industry regulatory organization.

The Treasury Department’s blueprint is designed to boost Wall Street’s competitiveness, not Main Street investor protection,” said Karen Tyler, president of the North American Securities Administrators Association and the securities commissioner of North Dakota.” (New York Times)

Congress is being muscled out of financial market supervision by a troop of venal banksters and corporate picaroons who are threatening to finish-off the already-defanged SEC. That will put the Fed in the driver's seat for good. Paulson wants to police the world's most complex markets on the “honor system”. It's crazy. His blueprint is an obvious attempt to consolidate market-related functions under a central authority that is accountable to private industry alone. That way, the Fed can bailout whomever it chooses without congressional approval. Paulson's press conference was just a polite way of informing the American people that the seat of power has shifted from Washington to Wall Street. It's a banker's coup.
So, where do we go from here? Pimco's Bill Gross gives us some indication in this recent quote:

"In my opinion, the private credit markets have forfeited their privileged right to operate relatively autonomously because of incompetence, excessive greed, and in minor instances, fraudulent activities. As a result, the deflating private market’s balance sheet is being re-nationalized in some cases with increased regulation, in others with outright guarantees and agency lending. Ultimately government programs which support private credit market assets may be required in order to prevent an asset deflation of significant proportions. Authorities must act quickly, with a shot of adrenalin straight to the heart of the problem: home prices. Since homes are the most highly levered and monetarily significant asset that American consumers own, if they decline much further they will drag the rest of the economy with them."
“Re-nationalized”; is that what it is? No one authorized the Fed or Paulson to re-nationalize anything. These over-leveraged banking behemoths need to fail. Let the market work. 28 million Americans are on food stamps, tent cities are sprouting up across the country, discretionary spending is down, food and energy prices are skyrocketing, and wages have been frozen for a generation. Where's the bailout for the working man? Instead, the government's largess is showered on a throng of unctuous fat-cat banksters so they can keep the larder on Martha's Vineyard topped off with Godiva truffles and Cuban cigars. Paulson has to go. Bernanke too.

An article in last week's New York Times, “Leveraged Planet”, provides a great description of the Fed's activities during the weekend of the Bear Stearns fiasco. Journalist Andrew Sorkin recreates the frantic phone calls and panicky deal-making that went on behind the scenes while the stock market was preparing for a Monday morning blow-out:

“JUST before JP Morgan-Chase announced its initial $2-a-share deal to buy Bear Stearns, Ben Bernanke, the chairman of the Federal Reserve, held an extraordinary impromptu conference call. The participants on the Sunday night call, who got a preview of the deal, were Wall Street’s biggest power brokers: Lloyd Blankfein of Goldman Sachs dialed in from home. John Mack of Morgan Stanley rushed to the office to listen on speakerphone. Richard Fuld of Lehmann Brothers, who had been directed to return home from a business trip in New Delhi by none other than Henry Paulson, the Treasury secretary, was patched in, too, among others.

The half-hour call was a rallying cry for support of Bear Stearns — and more broadly, the financial markets, which, as it was described on the call, were on the verge of a major meltdown if not for the pre-emptive steps that the Fed and JPMorgan took. “It was much worse than anyone realized; the markets were on the precipice of a real crisis,” said one participant. Given that Bear held trading contracts with an outstanding value of $2.5 trillion with firms around the world, “we were talking about the possibility of a global run on the bank.” ( Andrew Sorkin, “Leveraged Planet” New York Times)

Typical of the Times, the reader is left feeling that the wild and destabilizing activities of one unregulated market participant, like Bear, is as natural as a spring rain. There's not the slightest hint that Bears' transgressions may have emerged from years of kicking down regulatory doors and feeding campaign contributions into a corrupt political system. That's way beyond the Times' range of analysis. Instead, the heroes of this financial kabuki are none other than the ashen-faced palatines at Fed and the Treasury who deftly donned their Haz-mat suits long enough to battle the flames of the banking inferno with a stream of taxpayer money. So much for moral hazard.

If Bear had been properly policed; it would have been better capitalized with considerably less leverage. Its $2.5 trillion of derivatives contracts would have been regulated by government officials to make sure that they posed no threat to the broader system. Sorkin's recap just proves that the present stewards of the system are bunglers who are out of their depth. After years of serial bubble-making, they are finally begin to realize that their neoliberal Golden Calf was built on a foundation of pure quicksand. In fact, the sirens are already wailing as the yields on 3 month Treasuries continue to plummet, which is the bond market's way of perching itself atop the highest building in downtown Manhattan and screaming, “FIRE!” There's no telling when the stock market will get the message, but it shouldn't be too long.

CODE RED; Emergency planning now underway

So, what is to be done? New York Fed chief Timothy Geithner says that capital markets are still “substantially impaired” and policy makers and financial industry leaders must “act forcefully” to stem the crisis.

“What we were observing in U.S. and global financial markets was similar to the classic pattern in financial crises,'' Geithner said in his prepared testimony to the Senate Banking Committee. He cited ``a self-reinforcing downward spiral'' of asset sales, ``higher volatility, and still lower prices.” (Bloomberg News)

If Geithner's predictions of “a self-reinforcing downward spiral'' sound scary; so do the remedies. The Financial Times outlined the radical strategies that are now under consideration by the G-7 powers for dealing with challenges of the rapidly-expanding credit crisis. These include “the temporary suspension of capital requirements, taxpayer-funded recapitalisation of banks and outright public purchase of mortgage-backed securities.” Everything is on the table.

Representatives from the main western central banks are also discussing whether to force a number of the larger banks to disclose their financial positions so they can objectively determine the weaknesses on their balance sheets.

Other recommendations include boosting capital requirements, “conserving financial resources”, and utilizing public funds. The group is also deciding whether to “suspend capital and reporting rules that tie prudential requirements to market values of securities.” That way the banks can avoid letting shareholders know the true downgraded value of their assets. This is clearly an attempt to deceive the public about the real financial condition of the banks.

“Emergency liquidity support”, reductions in capital requirements, concealing the true value of collateral, relaxing regulations, suspending accounting rules for assets; it sounds a lot like panic. These are the signs of a system so dilapidated that the pilings shake and the scaffolding wobbles with the slightest breeze. A system that's held together with the frayed strands of collective fear; bankers angst. Strike a match and the whole thing will go up like a Roman candle.

Petraeus Testimony Next Week Will Signal Iran Attack

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By Paul Craig Roberts

Today the London Telegraph reported that “British officials gave warning yesterday that America’s commander in Iraq will declare that Iran is waging war against the US-backed Baghdad government. A strong statement from General David Petraeus about Iran’s intervention in Iraq could set the stage for a US attack on Iranian militiary facilities, according to a Whitehall assessment.”

The neocon lacky Petraeus has had his script written for him by Cheney, and Petraeus together with neocon warmonger Ryan Crocker, the US governor of the Green Zone in Baghdad, will present Congress next Tuesday and Wednesday with the lies, for which the road has been well paved by neocon propagandists such as Kimberly Kagan, that “the US must recognize that Iran is engaged in a full-up proxy war against it in Iraq.”

Don’t expect Congress to do anything except to egg on the attack. On April 3 the International Herald Tribune reported that senators and representatives have made millions of dollars from their investments in defense companies totaling $196 million. Rep. Ike Skelton, the Democrat chairman of the House Armed Services Committee, is already on board with the attack on Iran. The London Telegraph quotes Skelton: “Iran is the bull in the china shop. In all of this, they seem to have links to all of the Shi’ite groups, whether they be political or military.”

All Skelton knows is what the war criminal Bush regime tells him. If Iran really does have all these connections, then it behooves Washington to cease threatening Iran and to make nice with Iran in order to stabilize Iraq and extract the US from the nightmare.

Reporting from Tehran on April 4, Reuters quotes Mohsen Hakim, whose father, Abdul Aziz al-Hakim, leads the Supreme Islamic Iraqi Council, an ally of the Maliki US puppetgovernment in Iraq: “Tehran, by using its positive influence on the Iraqi nation, paved the way for the return of peace to Iraq and the new situation is the result of Iran’s efforts.”

Instead of thanking Iran and working with Iran diplomatically to restore stability to Iraq, the Bush regime intends to expand the nightmare with a military attack on Iran. Ryan Crocker was quick to dispute Hakim’s report that Iran had used its influence to end the fighting in Basra. Crocker alleged that Iran had started the fighting. The absurdity of Crocker’s claim is obvious as even the neocon US media reported that the fighting in Basra was started by the US and Maliki in an effort to clear out the Shi’ite al-Sadr militias. Most experts saw the attack on al-Sadr for what it was: an effort to remove a potential threat to the US supply line from Kuwait in the event of a US attack on Iran.

Crocker alleges that the rockets dropping on the Green Zone during the Basra fighting were made in 2007 in Iran. As should be obvious even to disengaged Americans, if Iran were to arm the Iraqi insurgency, the insurgents would have modern weapons to counter US helicopter gunships and heavy tanks. The insurgents have no such weapons. The neocon lie that Iran is the cause of the Iraqi insurgency is just another Bush regime lie like the lie that Saddam Hussein had weapons of mass destruction and connections to al Qaeda and the lie that the Taliban in Afghanistan attacked the US.

The Bush regime will tell any lie and orchestrate any event in order to “finish the job” in the Middle East.

“Finishing the job” means to destroy the ability of Iraq, Iran, and Syria to provide support for the Palestinians and for Hezbollah in southern Lebanon against Israeli aggression. With Iraq and Iran in turmoil, Syria might simply give up and become another American client state. With Iraq and Iran in turmoil, Israel can steal the rest of the West Bank along with the water resources in southern Lebanon. That is what “the war on terror” is really about.

The entire world knows this. Consequently, the US and Israel are essentially isolated. The US can only count on the support that it can bribe and pay for.

At the NATO-Russian summit in Bucharest, Romania, on April 4, Russian President Putin said: “No one can seriously think that Iran would dare attack the U.S. Instead of pushing Iran into a corner, it would be far more sensible to think together how to help Iran become more predictable and transparent.”

Of course it would, but that is not what the warmonger Bush regime wants.

Perhaps the British government has derailed the plot to attack Iran by leaking in advance to the London Telegraph the disinformation Cheney has prepared for Petraeus and Crocker to deliver to the complicit US Congress next Tuesday and Wednesday. On the other hand, the US puppet media is likely to bury the real story and to trumpet Petraeus claims that Iran has, in effect, already declared war on the US by sending weapons to kill US troops in Iraq.

By next Thursday we will know from how the Petraeus-Crocker dog and pony show plays in the US Congress and media whether the Bush Regime will commit yet another war crime by attacking Iran.

Huge Job Losses Set Off Recession Alarms

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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 on Friday 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 heath-care 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.

Some groups are feeling more of the strains from the economy's current woes. The unemployment rate for Hispanics, for instance, jumped to 6.9 percent in March, the highest in over four years. The rate for blacks climbed to 9 percent, a two-month high.

With the public on edge, Congress, the White House and presidential contenders are scrambling to come up with their own relief plans to stem record-high home foreclosures and stabilize housing - even as they engage in a political blame game.

Democrats want more economic assistance, including extending unemployment benefits. The Bush administration has resisted, saying the government's $168 billion stimulus package of tax rebates for people and tax breaks for businesses will be sufficient once it kicks in.

"We don't like to see one job lost, let alone 80,000," Commerce Secretary Carlos Gutierrez said in an interview with The Associated Press. "These are challenging times," he said. Gutierrez was hopeful the economy would turn around in the second half of this year, given the relief efforts by the government and the Federal Reserve. "We'll get through this."

Democrats were skeptical of the administration's efforts.

"Our economy is spiraling downward," said presidential contender Hillary Rodham Clinton. "It is time for this administration to put ideology aside and get serious about stemming this crisis."

Barack 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."

Republican John McCain said the unemployment news "underlines the need to focus on innovation, which grows the economy and creates an urgent need for effective worker retraining."

Given the worsening employment situation, the Federal Reserve probably will lower a key interest rate, now at 2.25 percent, later this month.

The Fed has taken a number of extraordinary actions recently - slashing interest rates, providing financial backing to JP Morgan's takeover of troubled Bear Stearns and opening an emergency lending program for big investment houses. All the actions were aimed at limiting damage to the national economy.

With the pace of hiring slowing, the number of unemployed people increased to 7.8 million in March.

Workers with jobs saw modest wage gains. Average hourly earnings for jobholders rose to $17.86 in March and are up 3.6 percent over the past 12 months. With lofty energy and food prices, workers may feel like their paychecks are shrinking. If the job market continues to falter, wage growth probably will slow, too, making consumers even less inclined to spend, which would further hurt the economy.

Many analysts believe the economy shrank in the first three months of this year and could still be ebbing now. The government will release its estimate of first-quarter economic growth later this month. Under one rough rule, if the economy contracts for six straight months it is considered in a recession. When a determination is made by a panel of experts about when a recession has started and ended - it is usually done well after the fact.

Bernanke and the Bush administration are hopeful the economy will improve in the second half of this year. Even so, Bernanke predicted this week that the unemployment rate would rise further. Some analysts say it could climb to 5.75 percent or higher this year.

Advises Hoffman: "If you've got a job, hang on to it the best you can."

Microsoft Sets Deadline for Yahoo to Make Deal

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By Miguel Helft

Microsoft warned the board of Yahoo on Saturday that if a merger agreement was not completed in the next three weeks, Microsoft would make its offer directly to Yahoo shareholders, probably at a lower price.

The warning was made by Microsoft's chief executive, Steven A. Ballmer, in a letter sent by e-mail. It expressed dismay at Yahoo's refusal to enter into formal negotiations over Microsoft's Jan. 31 takeover bid and warned that without an agreement by the deadline, Microsoft would seek to oust Yahoo's board.

"If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo board," Mr. Ballmer wrote. "If we are forced to take an offer directly to your shareholders, that action will have an undesirable impact on the value of your company from our perspective, which will be reflected in the terms of our proposal."

Yahoo declined to comment.

Microsoft's offer, in cash and stock, was initially valued at $44.6 billion, or $31 a share. After a decline in Microsoft's shares, it is now worth about $42 billion.

Yahoo's board formally rejected Microsoft's offer, saying it "substantially undervalues" Yahoo. Microsoft described the offer, at a 62 percent premium over Yahoo's closing price on Jan. 31, as generous and has been steadfast in its refusal to raise it.

Mr. Ballmer also noted that in the two months since the company made its offer, the overall stock market has deteriorated and Yahoo's business has appeared to weaken.

"By any fair measure, the large premium we offered in January is even more significant today," Mr. Ballmer wrote. "We believe that the majority of your shareholders share this assessment, even after reviewing your public disclosures relating to your future prospects."

Mr. Ballmer acknowledged that Yahoo has been exploring alternatives to Microsoft's offer. In recent months, Yahoo has discussed possible partnerships or combinations with Google, AOL and the News Corporation in attempts to fend off Microsoft. Some of those conversations are continuing, according to people familiar with the matter.

But Mr. Ballmer said that Microsoft's offer was the "only alternative put forward that offers your shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers and consumers."

Drug Makers Near an Old Goal: A Legal Shield

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By Gardiner Harris and Alex Berenson

For years, Johnson & Johnson obscured evidence that its popular Ortho Evra birth control patch delivered much more estrogen than standard birth control pills, potentially increasing the risk of blood clots and strokes, according to internal company documents.

But because the Food and Drug Administration approved the patch, the company is arguing in court that it cannot be sued by women who claim that they were injured by the product - even though its old label inaccurately described the amount of estrogen it released.

This legal argument is called pre-emption. After decades of being dismissed by courts, the tactic now appears to be on the verge of success, lawyers for plaintiffs and drug companies say.

The Bush administration has argued strongly in favor of the doctrine, which holds that the F.D.A. is the only agency with enough expertise to regulate drug makers and that its decisions should not be second-guessed by courts. The Supreme Court is to rule on a case next term that could make pre-emption a legal standard for drug cases. The court already ruled in February that many suits against the makers of medical devices like pacemakers are pre-empted.

More than 3,000 women and their families have sued Johnson & Johnson, asserting that users of the Ortho Evra patch suffered heart attacks, strokes and, in 40 cases, death. From 2002 to 2006, the food and drug agency received reports of at least 50 deaths associated with the drug.

Documents and e-mail messages from Johnson & Johnson, made public as part of the lawsuits against the company, show that even before the drug agency approved the product in 2001, the company's own researchers found that the patch delivered far more estrogen each day than low-dose pills. When it reported the results publicly, the company reduced the numbers by 40 percent.

The F.D.A. did not warn the public of the potential risks until November 2005 - six years after the company's own study showed the high estrogen releases. At that point, the product's label was changed, and prescriptions fell 80 percent, to 187,000 by last February from 900,000 in March 2004.

Gloria Vanderham, a Johnson & Johnson spokeswoman, said the company acted responsibly.

"We have regularly disclosed data to the F.D.A., the medical community and the public in a timely manner," Ms. Vanderham said. "Ortho Evra is a safe and effective birth control option for women when used according to the labeling."

But Janet Abaray, a plaintiff's lawyer from Cincinnati, said that Johnson & Johnson took advantage of an agency overwhelmed by its many responsibilities.

"Johnson & Johnson knew that F.D.A. does not have the funding or the manpower to police drug companies," Ms. Abaray said.

A series of independent assessments have concluded that the agency is poorly organized, scientifically deficient and short of money. In February, its commissioner, Andrew C. von Eschenbach, acknowledged that the agency faces a crisis and may not be "adequate to regulate the food and drugs of the 21st century."

The F.D.A. does not test experimental medicines but relies on drug makers to report the results of their own tests completely and honestly. Even when companies fail to follow agency rules, officials rarely seek to penalize them. "These are scientists, not cops," said David Vladeck, a professor at Georgetown Law School.

Last month, at a trial over the schizophrenia drug Zyprexa, Dr. John Gueriguian, a scientist who worked at the F.D.A. for two decades, testified that the agency did not always ask for strong warnings even if it believed a drug was risky. Companies typically oppose warnings, and the agency knows it must compromise on its requests or face years of delay, Dr. Gueriguian said.

"We at the F.D.A. know what we can obtain and we cannot obtain," Dr. Gueriguian said. "We have many, many problems, and we have a management system - what we can't obtain we will not ask."

For years, top officials at the agency acknowledged that lawsuits could aid the agency's oversight of safety issues. In the last decade, suits over Zyprexa, the withdrawn pain pill Vioxx, the withdrawn diabetes medicine Rezulin, the withdrawn heartburn medicine Propulsid and several antidepressants have shown that companies played down the risks of their medicines and failed to disclose clinical trials to the public even as they have aggressively marketed their drugs.

But now, the agency says a proliferation of lawsuits could lead to an overlapping patchwork of rules that would burden companies and might discourage patients from taking useful medicines.

The Ortho case, however, suggests that Johnson & Johnson, like other drug makers, is not always quick to tell the F.D.A. about potential problems with its medicines.

In 1996, the company told the agency it planned to develop the Ortho Evra patch in part because it would be likely to expose women to less estrogen than pills. The company suggested that the body would not break down hormones delivered via the patch as readily as the pill, so lower doses could be used to achieve contraception. And unlike the pill, which must be taken daily, the patch is changed weekly.

High doses of estrogen are known to raise the risk for blood clots that can cause heart attacks and strokes.

But a crucial trial completed in 1999 showed that the patch delivered 30 to 38 micrograms of estrogen into the bloodstream each day, according to company documents.

Because up to half of the estrogen in pills is lost in the digestive tract before it reaches the blood, the study suggested that the patch delivered an amount of estrogen that could be as high as a pill containing 76 micrograms of estrogen. In 1988, the F.D.A. banned birth control pills with more than 50 micrograms of estrogen.

But the study's author, Dr. Larry Abrams, who has since retired from Johnson & Johnson, decided to apply a "correction factor" to the results of the 1999 trial, according to documents. He claimed that the patch actually delivered about 40 percent less estrogen than the trial results showed - about 20 micrograms a day.

Dr. Abrams made the change, according to his deposition, to adjust for the different ways the body metabolizes hormones from pills and patches. This adjustment was never part of the study protocol, a plan filed with the F.D.A..

"The judgment was made by the pharmacokeneticists at the time that in doing the calculation, it was probably appropriate to make that correction," Bob Tucker, a lawyer representing Johnson & Johnson, said in an interview Thursday. "Later on when people looked at it in a different time frame, they concluded that probably the correction shouldn't be applied." The company mentioned its decision to use the "correction factor" only once in a 435-page report filed with the F.D.A., and then only in a complex mathematical formula. When the study was published in 2002, there was no reference to the alteration.

Mr. Tucker said that the F.D.A. was aware of the "correction factor."

Clinical trials conducted before the patch was approved raised other red flags, as patients complained of breast soreness and nausea. "The side effects seem related" to high estrogen doses, one company scientist wrote in an e-mail message.

Two other studies, one conducted in 1999 and another in 2003, confirmed that the patch released more estrogen than the pill. Still, Johnson & Johnson delayed reporting those results to the food and drug agency, according to documents that have been made public in lawsuits.

After the patch was approved, the company marketed it as releasing 20 micrograms of estrogen to the blood every 24 hours, a figure it now acknowledges was inaccurate. It also acknowledges that the patch releases more estrogen than the pill but says that the estrogen released under the two methods cannot be directly compared.

The New York Times provided the drug agency with a copy of a court brief and asked whether agency medical reviewers were aware of the "correction factor."

Rita Chappelle, an F.D.A. spokeswoman, replied, "At present, we are reviewing the allegations and cannot comment further at this time."

Prescriptions for the patch grew rapidly after its introduction, reaching more than 900,000 by March 2004, according to data from Wolters Kluwer, a company that tracks prescription trends. But as the use of the patch rose, so did reports of side effects.

By 2004, after the death of Zakiya Kennedy, an 18-year-old college freshman in New York, food and drug officials had become concerned.

In November 2005, the agency announced that it had placed a warning that the patch "exposes women to higher levels of estrogen than most birth control pills."

Since then, an epidemiological study has shown that women on the patch can have as much as double the risk of blood clots than those taking pills. And prescriptions for the patch have fallen 80 percent.

Still, lawyers for Johnson & Johnson say that patients should not be allowed to sue the company because the F.D.A. approved the patch and its label.

"F.D.A. is responsible for making those decisions," said John Winter, a lawyer for the company.

Judge David A. Katz of Federal District Court for the Northern District of Ohio is expected to rule soon on whether any of the lawsuits against Johnson & Johnson can go forward.

In the fall, the Supreme Court will hear a separate pre-emption case involving Wyeth, another drug company. Chris Seeger, a plaintiffs' lawyer who has about 125 Ortho Evra cases, said he expected the court to rule in Wyeth's favor.

"Our lawsuits are the ultimate check against the mistake made by the government, or fraud made by the companies against the government, or just an underfunded bureaucracy stretched thin," he said.

The U.S. establishment media in a nutshell

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By Glenn Greenwald

In the past two weeks, the following events transpired. A Department of Justice memo, authored by John Yoo, was released which authorized torture and presidential lawbreaking. It was revealed that the Bush administration declared the Fourth Amendment of the Bill of Rights to be inapplicable to "domestic military operations" within the U.S. The U.S. Attorney General appears to have fabricated a key event leading to the 9/11 attacks and made patently false statements about surveillance laws and related lawsuits. Barack Obama went bowling in Pennsylvania and had a low score.

Here are the number of times, according to NEXIS, that various topics have been mentioned in the media over the past thirty days:

"Yoo and torture" - 102

"Mukasey and 9/11" -- 73

"Yoo and Fourth Amendment" -- 16

"Obama and bowling" -- 1,043

"Obama and Wright" -- More than 3,000 (too many to be counted)

"Obama and patriotism" - 1,607

"Clinton and Lewinsky" -- 1,079

And as Eric Boehlert documents, even Iraq -- that little five-year U.S. occupation with no end in sight -- has been virtually written out of the media narrative in favor of mindless, stupid, vapid chatter of the type referenced above. "The Clintons are Rich!!!!" will undoubtedly soon be at the top of this heap within a matter of a day or two.

"Media critic" Howie Kurtz in the Washington Post today devoted pages of his column to Obama’s bowling and eating habits and how that shows he’s not a regular guy but an Arrogant Elitist, compiling an endless string of similar chatter about this from Karl Rove, Maureen Dowd, Walter Shapiro and Ann Althouse. Bloomberg’s Margaret Carlson devoted her whole column this week to arguing that, along with Wright, Obama’s bowling was his biggest mistake, a "real doozy."

Obama’s bowling has provided almost a full week of programming on MSNBC. Gail Collins, in The New York Times, today observed that Obama went bowling "with disastrous consequences." And, as always, they take their personality-based fixations from the Right, who have been promoting the Obama is an Arrogant, Exotic, Elitist Freak narrative for some time. In a typically cliched and slimy article, Time’s Joe Klein this week explored what the headline called Obama’s "Patriotism Problem," where we learn that "this is a chronic disease among Democrats, who tend to talk more about what’s wrong with America than what’s right." He trotted it all out -- the bowling, the lapel pin, Obama’s angry, America-hating wife, "his Islamic-sounding name."

Needless to say, these serious and accomplished political journalists are only focusing on these stupid and trivial matters because this is what the Regular Folk care about. They speak for the Regular People, and what the Regular People care about is not Iraq or the looming recession or health care or lobbyist control of our government or anything that would strain the brain of these reporters. What those nice little Regular Folk care about is whether Obama is Regular Folk just like them, whether he can bowl and wants to gorge himself with junk food.

Our nation’s coddled, insulated journalist class reaches these conclusions about what Regular Folk think using the most self-referential, self-absorbed thought process imaginable. The proof that the Regular People are interested in these things is that . . . the journalists themselves chatter about it endlessly. In Great American Hypocrites, I described the process as follows in the context of examining the three-week-long media obsession with John Edwards’ haircut (to the exclusion of a whole array of revelations about what the government was doing or planning to do) and how they justified that coverage:

Most certainly, the press will pretend to be above it all ("this is not something that we, the sophisticated political journalists, care about, of course"). But they yammer about Drudge-promoted gossip endlessly, and then insist that their own chattering is proof that it is an important story that people care about. And because they conclude that "people" (i.e., them) are concerned with the story, they keep chirping about it, which in turn fuels their belief that the story is important. It is an endless loop of self-referential narcissism -- whatever they endlessly sputter is what "the people" care about, and therefore they must keep harping on it, because their chatter is proof of its importance.
They don’t need Drudge to rule their world any longer because they are Matt Drudge now.

Every day, it becomes more difficult to blame George Bush, Dick Cheney and comrades for their seven years (and counting) of crimes, corruption and destruction of our political values. Think about it this way: if you were a high government official and watched as -- all in a couple of weeks time -- it is revealed, right out in the open, that you suspended the Fourth Amendment, authorized torture, proclaimed yourself empowered to break the law, and sent the nation’s top law enforcement officer to lie blatantly about how and why the 9/11 attacks happened so that you could acquire still more unchecked spying power and get rid of lawsuits that would expose what you did, and the political press in this country basically ignored all of that and blathered on about Obama’s bowling score and how he eats chocolate, wouldn’t you also conclude that you could do anything you want, without limits, and know there will be no consequences? What would be the incentive to stop doing all of that?

UPDATE: One other point to note about all of this is that these fixations are as skewed as they are vapid. Barack Obama is an exotic elitist freak because he went to Harvard Law School and made $1 million from his book. Hillary Clinton can’t possibly have any connection to the Regular Folk because her husband, who grew up dirt poor, became quite wealthy after being President. John Kerry was completely removed from the concerns of the Regular People because his second wife was rich.

By contrast, George W. Bush was a down-home, salt-of-the-earth Man of the People despite being the grandson of a U.S. Senator, the son of a President (who greatly magnified his riches in his post-presidency), and the by-product of an extremely wealthy, coddled life. Ronald Reagan was pure Americana despite spending most of his adult life as a very wealthy Hollywood actor (and converting his post-presidency into far greater riches still). And John McCain is as Regular a Guy as it gets, even though he dumped his first wife (the mother of his three children) after she was disfigured and disabled by a near-fatal car accident so that he could marry his much younger, much prettier, and extremely wealthy heiress-mistress, whose family riches then launched his political career and sustained a life of luxury for almost three decades (that’s how McCain’s rustic "Sedona cabin" -- i.e., his sprawling compound -- came to be).

It would be bad enough if our political press were obsessed with such trivialities. The fact that they do so in such a Republican-leader-worshiping manner makes it only that much worse, particularly given that it’s this dynamic, more than anything else, that determines the outcome of our elections.

UPDATE II: More of the same, and much worse, here.

Yoo's Memo Hints at Bush's Secrets

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By Jason Leopold

The Pentagon’s declassification of a five-year-old memo authorizing military interrogators to use brutal methods to extract information from prisoners at Guantanamo Bay sheds new light into the dark corners of the Bush administration’s legal theories that put the President and his subordinates beyond domestic and international law.

In the March 14, 2003, memo – which was released this past week – administration lawyer John Yoo cited the principle of national “self-defense” in combating terrorism as grounds for justifying harsh treatment of detainees up to and including death.

Yet, as Yoo advanced his argument for virtually unfettered presidential war-time powers regarding the treatment of prisoners, the memo also pointed to other still-secret documents suggesting the administration was prepared to take its authority even further, into domestic military operations that would brush aside constitutional protections.

Yoo footnoted one of his earlier memos, dated Oct. 23, 2001, entitled "Authority for Use of Military Force to Combat Terrorist Activities Within the United States.” According to the footnote, that memo “concluded that the Fourth Amendment had no application to domestic military operations.”

The memo – with its provocative title – has remained a closely held administration secret, kept even from the House Judiciary Committee which renewed its request for the document on Thursday.

It’s now clear, however, that from inside the Justice Department’s Office of Legal Counsel, Yoo and his colleagues were churning out a series of memos that fit with President George W. Bush’s desire to be “forward-leaning” – or extremely aggressive – in the wake of the 9/11 attacks.

Though the Oct. 23, 2001, memo is still secret, some of Yoo’s thinking on domestic military operations was revealed in an even earlier memo, written 10 days after the 9/11 attacks, on Sept. 21, 2001.

In that memo, Yoo cited hypothetical cases in which U.S. military action against suspected terrorists on U.S. territory – such as a raid against a hideout or use of military checkpoints – might endanger Americans or intrude on their constitutional rights.

Yoo argued that President Bush would “be justified in taking measures which in less troubled conditions could be seen as infringements of individual liberties. … We think that the Fourth Amendment should be no more relevant than it would be in cases of invasion or insurrection."

The Fourth Amendment to the U.S. Constitution states that “the right of the people to be secure in their persons, houses, papers and effects, against unreasonable searches and seizures, shall not be violated.”

But Yoo’s Sept. 21, 2001, memo argued that the “war on terror” could justify domestic surveillance activities, such as monitoring telephone calls without a court warrant, that otherwise might violate the Fourth Amendment. [NYT, Oct. 24, 2004]

In his 2006 book, War by Other Means: An Insider’s Account of the War on Terror, Yoo cites various arguments for local and federal law enforcement agencies, as well as a sitting U.S. President, to ignore the Fourth Amendment, especially regarding domestic surveillance.

“If al-Qaeda organizes missions within the United States, our surveillance simply cannot be limited to law enforcement,” Yoo wrote. “The Fourth Amendment’s warrant requirement should not apply, because it is concerned with regulating searches, not with military attacks.”

Jameel Jaffer, director of the ACLU’s National Security Project, said the Bush administration has never argued publicly that the Fourth Amendment did not apply to military operations within the United States.

Though Yoo’s hypothetical domestic military actions, as described in his Sept. 21, 2001, memo, have not come to pass, his position that the “war on terror” justifies setting aside the Fourth Amendment’s protection against warrantless searches did survive.

Starting in the months after the 9/11 attacks, Bush chose to override the Foreign Intelligence Surveillance Act and authorize warrantless wiretaps of international communications to and from the United States.

Bush acknowledged the existence of these warrantless wiretaps in December 2005, after they were disclosed by the New York Times.

White House spokesman Tony Fratto said Thursday that the administration hasn’t relied on Yoo’s Oct. 23, 2001, memo for more than five years, but Congress still has spent a great deal of effort trying to pry it loose from the Justice Department.

Rep. John Conyers, D-Michigan, House Judiciary Committee chairman, renewed that effort on Thursday in a letter to Attorney General Michael Mukasey, saying the committee was rebuffed on two previous occasions – Feb. 12 and Feb. 20 – when requesting a copy of the memo.

“Based on the title of the Oct. 23, 2001, memorandum, and based on what has been disclosed and the contents of similar memoranda issued at roughly the same time, it is clear that a substantial portion of this memorandum provides a legal analysis and conclusions as to the nature and scope of the Presidential Commander in Chief power to accomplish specific acts within the United States,” Conyers wrote.

“The people of the United States are entitled to know the Justice Department’s interpretation of the President’s constitutional powers to wage war in the United States,” Conyers added.

“There can be no actual basis in national security for keeping secret the remainder of a legal memorandum that addresses this issue of constitutional interpretation. The notion that the President can claim to operate under ‘secret’ powers known only to the President and a select few subordinates is antithetical to the core principles of this democracy.”

John Yoo left the Justice Department in 2003 and some of his memos were later rescinded. However, the administration continues to assert broad powers for Bush as Commander in Chief during the “war on terror.”

Yoo is now a law professor at the University of California at Berkeley.

[For more on this topic, see’s “Building a Legal Framework for Torture.”]

Ira Chernus, The General and the Trap

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That, in short form, is the story of the Iraqi government "offensive" in Basra (and Baghdad). It took a few days, but the headlines on stories out of Iraq ("Can Iraq’s Soldiers Fight?") are now telling a grim tale and the information in them is worse yet. Stephen Farrell and James Glanz of the New York Times estimate that at least 1,000 Iraqi soldiers and policemen, or more than 4% of the force sent into Basra, "abandoned their posts" during the fighting, including "dozens of officers" and "at least two senior field commanders."

Other pieces offer even more devastating numbers. For instance, Sudarsan Raghavan and Ernesto Londoño of the Washington Post suggest that perhaps 30% of government troops had "abandoned the fight before a cease-fire was reached." Tina Susman of the Los Angeles Times offers 50% as an estimate for police desertions in the midst of battle in Baghdad’s vast Sadr City slum, a stronghold of cleric Muqtada al-Sadr’s Mahdi Army militia.

In other words, after years of intensive training by American advisors and an investment of $22 billion dollars, U.S. military spokesmen are once again left trying to put the best face on a strategic disaster (from which they were rescued thanks to negotiations between Muqtada al-Sadr and advisors to Prime Minister Nouri al-Maliki, brokered in Iran by General Qassem Suleimani, a man on the U.S. Treasury Department’s terrorist watch list). Think irony. "From what we understand," goes the lame American explanation, "the bulk of these [deserters] were from fairly fresh troops who had only just gotten out of basic training and were probably pushed into the fight too soon."

This week, with surge commander General David Petraeus back from Baghdad’s ever redder, ever more dangerous "Green Zone," here are a few realities to keep in mind as he testifies before Congress:

1. The situation in Iraq is getting worse: Don’t believe anyone who says otherwise. The surge-ified, "less violent" Iraq that the general has presided over so confidently is, in fact, a chaotic, violent tinderbox of city states, proliferating militias armed to the teeth, competing regions armed to the teeth, and competing religious factions armed to the teeth. Worse yet, under Petraeus and Ambassador Ryan Crocker, the U.S. has been the great proliferator. It has armed and funded close to 100,000 Sunnis organized into militias reportedly intent on someday destroying "the Iranians" (i.e. the Maliki government). It has also supported Shiite militias (aka the Iraqi army). In the recent offensive, it took sides in a churning Shiite civil war. As Nir Rosen recently summed matters up in a typically brilliant piece in the Nation magazine, Baghdad today is but a set of "fiefdoms run by warlords and militiamen," a pattern the rest of the country reflects as well. "The Bush administration," he adds, "and the U.S. military have stopped talking of Iraq as a grand project of nation-building, and the U.S. media have dutifully done the same." Meanwhile, in the little noticed north of the country, an Arab/Kurdish civil war over the oil-rich city of Kirkuk and possibly Mosul as well is brewing. This, reports Pepe Escobar of Asia Times, could be explosive. Think nightmare.

2. The Bush administration has no learning curve. Its top officials, military and civilian, are unable to absorb the realities of Iraq (or the region) and so, like the generals of World War I, simply send their soldiers surging "over the top" again and again, with minor changes in tactics, to the same dismal end.’s Tony Karon, at his Rootless Cosmopolitan blog, caught this phenomenon strikingly, writing that Maliki’s failed offensive "shared the fate of pretty much every similar initiative by the Bush Administration and its allies and proxies since the onset of the ’war on terror.’"

3. The "success" of the surge was always an expensive illusion for which payment will someday come due. To buy time for its war at home, the Bush administration put out IOUs in Iraq to be paid in future chaos and violence. It now hopes to slip out of office before these fully come due.

4. A second hidden surge, not likely to be discussed in the hearings this week, is now under way. U.S. air reinforcements, sent into Iraq over the last year, are increasingly being brought to bear. There will be hell to pay for this, too, in the future.

5. A reasonably undertaken but speedy total withdrawal from Iraq is the only way out of this morass (and, at this late date, it won’t be pretty); yet such a proposal isn’t on the table in Washington at the moment. In fact, as McClatchy’s Warren Strobel and Nancy Youssef report, disaster in Basra has actually "silenced talk at the Pentagon of further U.S. troop withdrawals any time soon."

Since April 2003, each Bush administration misstep in Iraq has only led to ever worse missteps. Unfortunately, little of this is likely to be apparent in the shadowboxing about to take place among Washington’s "best and brightest," who will again plunge into a "debate" filled with coded words, peppered with absurd fantasies, and rife with American mythology and symbolism of a sort only an expert like professor of religion and Tomdispatch regular Ira Chernus is likely to be able to decipher. Tom

General Entrap-Us or General Entrapped?

Democrats Should Treat Petraeus and His Surge as Irrelevant
By Ira Chernus

It was supposed to be a "cakewalk." General Petraeus would come to Congress, armed with his favorite charts showing that the "surge" had dramatically reduced violence in Iraq. He would earn universal acclaim for his plan to "pause" troop reductions from July until after the election in November -- the same plan that John McCain counts on to help him win that election.

When it comes to Iraq, though, the Bush administration’s cakewalks never seem to turn out as planned. The renewed violence of these last weeks in Iraq, and the prospect of more to come, gives war critics ample ammunition for a counterattack. The Democrats, including Senators Hillary Clinton and Barack Obama, may find it irresistible to assault the general, and the President, with every argument they can muster in the hearings this week. However, a recent report suggests they may resist that impulse and treat the impact of the surge as an irrelevant issue.

Let’s hope that report is right, because a debate focused on military success or failure is a trap, with Petraeus’s testimony as the bait. After all, no debate in Congress will really be about the level of violence in Iraq. "Has the surge worked?" is just a symbolic way of asking: "Would you rather believe that America is a winner or a loser?" And in any battle over patriotic symbolism, the Republicans always seem to have the bigger guns.

So the Democrats would be smart to refuse the bait and insist that this is not an old-fashioned World War II- style conflict, where force can produce a clear-cut winner. Then they could refocus the debate on two crucial truths: We have no right to be in Iraq; the sooner we get out, the sooner we can begin to heal the terrible damage the war has done to us here at home.

Decoding the Battle over Iraq

It should have been obvious all along that the Republicans do not mean it literally when they claim that reducing violence in Iraq is their highest priority. It’s not likely that too many of them care a whole lot about the killing and maiming of Iraqis. So when they speak so urgently about lower levels of violence, it’s a coded way of saying something else; in fact, a lot of things.

For starters, "reduced violence" is a way to conjure up an image of American "success" in a war in which no real success (forget about "victory") is possible. The level of violence is the only concrete yardstick the administration has come up with to gauge the success of the surge-- no small matter when a successful surge has become the prime symbol of achievement for U.S. troops and so for the President’s (and John McCain’s) war policies. Because the Bush administration still hopes to sell its failing war to the public by turning it into a gripping story of winners and losers, "violence" has been its currency, its coin of the realm.

Since that story took hold, supporters of Bush’s Iraq policy have insisted that violence there really has been subsiding, hence that his surge strategy has worked. When Democrats and other war critics rejected that claim, they sparked a battle over who has the right, and the proper criteria, to evaluate the surge and its post-surge effects. So violence-lowering success in Iraq also became a symbolic measure of the President’s political success here at home.

In fact, the home front is key -- as it has been for years. George W. Bush came into office as the hero of the right, not because he had sworn to defeat terrorism (that didn’t start until September 11, 2001), but because he had sworn to defeat 1960s-style liberalism and "secular humanism." For conservatives the war in Iraq, the war on terrorism, and the political and cultural wars at home have all been symbols of the same long-term struggle against trends they see undermining the fabric of American society.

By choosing John McCain to lead their troops in presidential battle, Republicans have voted with their feet. In effect, they have decided to make all their cherished battles hinge on the battle over Iraq policy and the surge.

When McCain talks about Iraq, his words always point up the symbolic nature of the battle there. He offers no reasonable idea of who we are fighting or why. In fact, on the occasions when he brings the matter up, he seems remarkably confused about the actual cast of characters in that country. As a result, he can offer no sensible outline of what "victory" in Iraq might mean.

Since McCain’s talk about the war is really a code, it makes perfect sense to feature that Bush-era bogeyman, al-Qaeda, as our main enemy in Iraq. Al-Qaeda, after all, is "the terrorists," and we are always fighting "the terrorists." It makes no less sense, in his symbolic universe, to insist that al-Qaeda terrorists are being trained in Iran, a country whose leadership is deeply hostile to that organization. All enemies are interchangeable, because all are merely symbols of a vaguely defined sense of uncontrolled evil, which is said to threaten America’s security and moral virtue at home and abroad.

George W. Bush was supposed to defeat that evil. He has obviously failed. Now, conservatives pin their hopes on a new champion whose mantra is: "no surrender."

American "Stability"

In addition to "reduced violence," the "surge," and "no surrender," the Republicans wield another symbol of America as a righteous winner: the goal of achieving "stability" in Iraq. It may be the most seductive image of all, because it exerts a strong appeal across the political spectrum.

Five years ago, when American forces quickly dismantled Iraqi society, liberal as well as conservative pundits announced that it was up to our forces to restore "stability" -- as if the Iraqis themselves had wrought the chaos from which we were to rescue them. Though the American military did most of the destabilizing in Iraq, this historical fact was set aside in favor of the hoary myth that America is invariably a force for good, uniquely dedicated and qualified to bring order out of chaos around the world.

War -- righteous, courageous, and ultimately victorious -- has always been a central theme in the American myth of stability. Pollsters still take that myth for granted, and reinforce it, when they ask pointed questions like: "How would you say things are going for the U.S. in its efforts to bring stability and order to Iraq?" or "Should the U.S. maintain its current troop level in Iraq to help secure peace and stability, or reduce its number of troops?"

Vietnam dealt this mythology a near-fatal blow. Nearly four decades later, at a time when conservatives, moderates, and even many liberals worry about all sorts of forces that seem to threaten the nation’s cohesion and moral fiber, reviving a cherished national myth holds broad appeal across the political spectrum. Millions debate the question of military success because they want to know whether they should, or can, still believe that America is the champion of order and stability in a dangerously unstable world. Asking "Did the surge work?" is a symbolic way of asking not only "Can America be a winner?" but "Can the stories of the America we once knew and loved still work?"

When the charismatic general, known to colleagues as "King David" Petraeus, comes before the cameras with his charts and statistics to "prove" that violence levels are lower, and so that the surge has worked, he will once again dangle the sweet smell of success before Congress. As soon as the pundits and the public get a whiff of that bait, it’s not just conservatives who will be sorely tempted to swallow it, regardless of what they know is happening in Iraq. If Petraeus can offer anything that might look like plausible evidence of "progress toward stability," or even the possibility of progress, the whole web of patriotic myth and symbolism will automatically kick in and the usual spell will be woven.

If Democrats and war critics go on the counterattack against the surge success story, they will keep that mythic drama on center stage in the theater of political battle. No matter how logically persuasive their arguments may be, they will ensnare themselves in the general’s -- and so the President’s -- trap, because they will make America and its cherished myths look like losers. And that may very well end up making the Democrats losers.

Just check the latest polls on the presidential race. McCain is basing his campaign on unstinting support for Bush’s war and his economic policies, both of which are resounding failures, especially among moderate and independent voters. Yet he is running roughly even with both Clinton and Obama, and some polls even show him ahead.

How could this be? The polls show that most voters do indeed oppose the war and think that the decision to invade Iraq was a mistake. Yet they also reveal that more Americans trust McCain than either Clinton or Obama to make the right choices on Iraq (and on national security in general). McCain scores particularly well on these issues among independents.

As the mainstream media touted "reduced violence" in Iraq in the second half of 2007 and early 2008, the level of support for McCain’s "no surrender" policy rose steadily. McCain’s campaign survives, and thrives, only by ignoring reality and relying on its mastery of a language of American identity centered on the symbolism of an American "good war." Any debate about military success in Iraq, however contentious, keeps his strong suit in the spotlight.

Escaping the General and the Trap

Yes, the Democrats might win by making military success or failure in Iraq the central issue of the coming election -- if Iraqi violence continues to rise. But that violence would have to go on rising until Election Day (or the McCain-boosting "success" image would once again kick in). It’s a big gamble that depends on factors utterly beyond their control and it threatens to leave them trapped in a narrow corner.

Of course, General Petraeus has trapped himself in a corner too -- and Bush and McCain are there with him. They must also wait for events largely beyond their control to unfold, helplessly bobbing like corks on the tides of Iraqi violence.

The Democrats, however, can turn General Entrap-Us into General Entrapped by refusing to treat the issue of military success or failure as the central question of the moment. The fact is: the competing sides in Iraq have always been ill-defined and constantly shifting. Once the Sunni insurgency started there in 2003, no one has ever been able to say what an American victory might really mean. It’s no small truth that "success," in an Iraq where even General Petraeus can’t imagine "victory," might well prove more damaging than any failure.

Wise Democrats would heed the words of media critic Norman Solomon: "Arguments over whether U.S. forces can prevail in Iraq bypass a truth that no amount of media spin can change: The U.S. war effort in Iraq has always been illegitimate and fundamentally wrong." The longer we stay in Iraq, the longer we perpetuate the wrongs we have done, regardless of whether we achieve military success by anyone’s measure.

We are uninvited intruders in Iraq. We invaded the country on false pretenses. It’s long past time for us to admit that truth and leave. The longer we stay, the longer we tell the world that invasion and occupation are okay with us, and the longer we leave America’s moral reputation around the world in tatters. When our troops leave, we will set an example for countries that have occupied, or might be tempted to occupy, other lands. And we can begin to heal from our moral bankruptcy, not to mention our impending financial one.

If Democrats take that approach, they will shift the terms of the debate. Then they can speak truths about the war that the American people might be prepared to understand. They can pose hard questions -- and not ones of military strategy either -- that the administration simply cannot answer. That would push war supporters deeper into their self-made trap whose tripwire is the irrelevance of their quest for military success.

But neither Democratic candidate for president is likely to take such an approach. Both argue that the U.S. should remove some substantial number of troops from Iraq (though not all), and cut back military expenditures in Iraq, so that we can spend more and fight more on other fronts. Their arguments are all about the most "effective" ways to protect what are always termed "American interests" around the world. Some dare call it empire, though in any presidential campaign that word will be politely avoided.

Criticism of the U.S. military is politely avoided, too. The candidates compete with each other to see who can offer the most fulsome praise of "our troops," while heaping all the blame on the feeble Iraqi government of Prime Minister Nouri al-Maliki.

As long as the Democrats are committed to sustaining a neoliberal imperial project, they have to try as hard as the Republicans to revive the myth of American troops as a force for global stability. The bipartisan guardians of empire need that myth to mask their economic and political goals -- if only to keep the public paying the exorbitant bills.

The Democrats have already demonstrated that they value a myth of American stability even above winning the presidency. Think Florida in the weeks following Election Day 2000. In the months preceding Election Day 2008, they may very well make the same choice again, and that would be tragic.

With the polls showing that many Americans may consider voting for the war-makers even while opposing the war itself, this year’s election offers a rare opportunity to confront the difference between symbol and reality. It’s time to insist that war should be seen not through the lens of myth and symbol, but as the brutal, self-defeating reality it is.

Ira Chernus is Professor of Religious Studies at the University of Colorado at Boulder and author of Monsters To Destroy: The Neoconservative War on Terror and Sin. He can be contacted at