Wednesday, April 16, 2008

Mosaic News - 4/15/08: World News from the Middle East

Riz Khan - America's legendary intellectual

Dr Cornel West, one of America's best-known intellectuals who has stirred intense debate and controversy with some of his comments Dr Cornel West, one of America's best-known intellectuals who has stirred intense debate and controversy with some of his comments on race and politics, joins the show.

To Create Something from Nothing The Making of a Palestinian State

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By Mats Svensson

Mavivi comes from South Africa and is for the first time in Gaza to speak with women’s organisations, students, civil servants and political fractions. For 18 years she was part of the struggle against apartheid.

There are those who never understand despite having seen everything and having access to all knowledge. And there are those who only need a few hours to understand. Mavivi belongs to the second category.

I saw when Mavivi cried for the first time. Mavivi had then been in Gaza for less than 24 hours. During a day, she had spoken to 30 representatives from several women’s organisations. She stands outside the hotel and looks out over the Mediterranean when she spontaneously exclaims, "South Africa was a picnic compared to the situation here."

24 hours later, she cries openly for the second time. She has spoken with doctors, architects, teachers, everyone who tries to create a tolerable situation for the masses inhabiting the Gaza Strip. Again she compares South Africa with Israel/Palestine--"apartheid was stupidity, but here one has sophisticated the stupidity."

But it is when she cannot keep her tears back for the third time that many should have had the opportunity to listen to her. She stands and leans against the wall in Abu Dis. Presses on it as if she would like to tear it down. The wall that soon will shut out 29,500 people from Jerusalem forever. She says, "Someone has taken the cheese (Palestine) and left the holes (Ramallah, Hebron, Gaza, Nablus, Jenin, Bethlehem, Qalqiliya), but the holes are empty and someone thinks that one can create something out of nothing. Who believes that?"

Mavivi spoke about creating something out of nothing, from a few scattered, empty holes something grand shall be established. Mavivi needed five days to understand and make statements that should touch us all. Mavivi speaks about empty holes, holes that have been enclosed with high walls inside of which one keeps people using the most sophisticated supervision systems. To her, the despised South African "homelands" appeared like small paradises.

Mavivi was on the Gaza Strip three years ago in December. That was before the Israeli settlers had left Gaza, before one had carried out a free and fair election in Palestine. Since then, it has become worse for most people.

* There are today 149 settlements with 450,000 settlers on occupied territory, 30,000 more than when the settlers left Gaza.

* The world has rejected the democratically held election. Palestinians did not understand that one should have voted for the ones that one wanted to get rid of.

* The wall is longer than three years ago and has dug deeper into occupied territory.

And today we are on our way to create something out of nothing.

We work with and support nation building. Each diplomatic actor with self-respect begins work with the same blind enthusiasm. The kind of job that builds on very much belief and some good judgment. As a Nordic diplomat said a little while ago, "I have to believe this, it is my job."

While the international community with the most educated civil servants works to realise the dream of supporting the creation of a state built out of nothing, without borders and people crammed into ghetto-like environments without Palestinian de facto control, territory after territory disappears and ends up on the wrong side of the wall. Ma’ale Adumim, a settlement with 28 000 settlers, may be the most obvious one. It is the settlement that all diplomats in Jerusalem with some interest of the surroundings outside the work place cannot miss.

Each weekend, diplomatic plated cars pass by the gigantic settlement on the way down to the Dead Sea. The wall is being built at a furious speed while we rub our skin with the soft, black mud and let the mud dry in the strong sunlight, the skin stings slightly but pleasantly. I swim together with settlers from Ma’ale Adumim and later tell Muhammed in Abu Dis how it feels to float around in the Dead Sea. It is a long time ago since he was able to be there. When I return a few hours later, the wall has become somewhat longer. Ma’ale Adumim, which previously did not exist in our modern history, is soon completed. People live there with access to water, swimming pools, olive groves outside the window, schools, clinics and perhaps most importantly--access to Jerusalem and Tel Aviv just 60 minutes away. Many live in Ma’ale Adumim and work in Tel Aviv. It is cheaper that way, because the land is free.

If you stand in Ma’ale Adumim and look south, you see Abu Dis which is soon completely enclosed on three sides--a densely populated suburb to Jerusalem with open fields down towards the Dead Sea. Now almost everything is gone, gone forever. The wall will surround Abu Dis on three sides. Ma’ale Adumim and the wall around Abu Dis are establishing new facts on the ground.

Most people who have some insight of these facts seem to think that it is very wrong. The UN, other international as well as Israeli and Palestinian organisations seeking peace, each week take large numbers of visitors into the present Mavivis apartheid. The guides tell engaging stories and the visitor reacts with strong feelings, similar to Notre Dame in Paris or the pyramids in Cairo. Reacting to the grandiose lunacy.

We know it all. We have seen it all. The whole international collective is horrified. We wonder how it is possible. Young and old from different political alignments and religious groupings experience the same thing, feel the same powerlessness before the historical course of events.

Are we all part of a new faith movement. A belief that we can create something out of nothing. Turn water into wine. That one can shut one’s eyes from reality, that one can pass by Ma’ale Adumim as if it never happened and that all of the people in Abu Dis who recently had access to a normal life with basic rights, now shall be satisfied with nothing. As long as one gets a state. Mavivi from South Africa would probably call this religious fanaticism.

A humble question to the international community is in what way the good intention of international development cooperation’s concentration on nation-building will help the people in Abu Dis?

The Most Powerful People in America

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By Joel S. Hirschhorn

They are not the rich and superrich, nor the politically powerful running the two-party plutocracy, nor the greedy heads of banking and finance companies, and certainly not the media moguls and bloviating pundits.

The most powerful people are US, American consumers that account for over 70 percent of the economy. It is exactly now, when the economy is in the toilet, that consumers hold the maximum power. So why are we the people still deluding ourselves that the path to a better future rests on electing a new president?

We are suckers, conditioned by decades of clever marketing and advertising to believe the lies of politicians, and worst of all to believe that elections and our votes provide us with power. Wrong. Our real power can only be manifest through our spending dollars.

The overwhelming majority of Americans have been severely damaged by economic oppression by government policies that have produced historic economic inequality. Yet, despite revolting conditions, Americans seem unwilling to revolt by using their remaining economic power. They have let themselves become economic slaves.

What is amazing and depressing is that there are no national leaders from the worlds of politics, religion, education, media or public interest that are attempting to harness consumer power at this critical time. No one is capturing the public’s attention by making it crystal clear that consumers could obtain any political or economic reform in the public interest by joining together to withhold their discretionary spending.

Where are the anti-Iraq war leaders? Why are they not shouting about forcing an immediate commitment to ending the Iraq war by using the power of a massive consumer boycott that clearly could destroy the whole economy? Tell President Bush that consumers will greatly curb their spending for a month to give him time to implement a plan for withdrawal from Iraq. Make it clear that the coming federal rebates will not be used for spending. Make it clear that Bush inaction will result in continuation of the boycott.

Where is Ralph Nader, the ultimate consumer advocate? Why is he not proclaiming the brilliance of a consumer boycott as the winning tactic to force effective government assistance to the millions of Americans screwed by the sub-prime mortgage fiasco and about the lose their homes?

Where is Barack Obama, who supposedly wants to produce change? Rather than putting all his energy into satisfying his egoistic hunt for the presidency, why is he not talking about harnessing consumer power right now to get political reforms, like .ending trade agreements that are destroying the middle class? Why does he not send a clear message to his million-plus contributors to join a national consumer boycott to obtain immediate concessions from the Bush administration?

Where are the professors who have published books making the case for a second constitutional convention as the way to restore American democracy? Not one has the courage to say that the way to get Congress to obey Article V of the Constitution and convene that the first Article V convention is by American consumers threatening to plunge a dagger into the heart of American business.

Now is the time for all the millions of Americans that make up the 81 percent who see the nation on the wrong track to take action, to think like patriotic revolutionaries and take the power that now only exists with their spending. Sounds simple. All this strategy needs is leadership. Rather than spending so much time and energy on the media-hyped presidential campaign, we the people should demand that someone step forward to inform and mobilize consumers to become powerful citizens by using their spending as the ultimate populist political weapon.

A man-made famine

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By Raj Patel

For anyone who understands the current food crisis, it is hard to listen to the head of the World Bank, Robert Zoellick, without gagging.

Earlier this week, Zoellick waxed apocalyptic about the consequences of the global surge in prices, arguing that free trade had become a humanitarian necessity, to ensure that poor people had enough to eat. The current wave of food riots has already claimed the prime minister of Haiti, and there have been protests around the world, from Mexico, to Egypt, to India.

The reason for the price rise is perfect storm of high oil prices, an increasing demand for meat in developing countries, poor harvests, population growth, financial speculation and biofuels. But prices have fluctuated before. The reason we’re seeing such misery as a result of this particular spike has everything to do with Zoellick and his friends.

Before he replaced Paul Wolfowitz at the World Bank, Zoellick was the US trade representative, their man at the World Trade Organisation. While there, he won a reputation as a tough and guileful negotiator, savvy with details and pushy with the neoconservative economic agenda: a technocrat with a knuckleduster.

His mission was to accelerate two decades of trade liberalisation in key strategic commodities for the United States, among them agriculture. Practically, this meant the removal of developing countries’ ability to stockpile grain (food mountains interfere with the market), to create tariff barriers (ditto), and to support farmers (they ought to be able to compete on their own). This Zoellick did often, and enthusiastically.

Without agricultural support policies, though, there’s no buffer between the price shocks and the bellies of the poorest people on earth. No option to support sustainable smaller-scale farmers, because they’ve been driven off their land by cheap EU and US imports. No option to dip into grain reserves because they’ve been sold off to service debt. No way of increasing the income of the poorest, because social programmes have been cut to the bone.

The reason that today’s price increases hurt the poor so much is that all protection from price shocks has been flayed away, by organisations such as the International Monetary Fund, the World Trade Organisation and the World Bank.

Even the World Bank’s own Independent Evaluation Groupadmits (pdf) that the bank has been doing a poor job in agriculture. Part of the bank’s vision was to clear away the government agricultural clutter so that the private sector could come in to make agriculture efficient. But, as the Independent Evaluation Group delicately puts it, "in most reforming countries, the private sector did not step in to fill the vacuum when the public sector withdrew." After the liberalisation of agriculture, the invisible hand was nowhere to be seen.

But governments weren’t allowed to return to the business of supporting agriculture. Trade liberalisation agreements and World Bank loan conditions, such as those promoted by Zoellick, have made food sovereignty impossible.

This is why, when we see Dominique Strauss-Kahn of the IMF wailing about food prices, or Zoellick using the crisis to argue with breathless urgency for more liberalisation, the only reasonable response is nausea.

Bailout Bonanza

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By Ralph Nader

Is there a larger, more exploited, defenseless group of undifferentiated Americans than the 133 million individual federal income taxpayers? Their dollars are used to subsidize organized corporate interests, giveaway taxpayer assets like minerals under the public lands, and bail out speculative, self-enriching corporations and their crooked bosses.

As large corporations, and their trade associations, complete their takeover of the federal government—a process that President Franklin Delano Roosevelt called fascism in 1938—the corporations become the government.

Just look at the recent headlines in the business press. Article after article features abuses and over-runs by companies contracting with the Department of Defense and other agencies. The enormous volumes of waste, fraud and poor delivery affecting the Iraq war-occupation now only produces ho hum newspaper and television stories.

Recently, the student loan scandals, exorbitant burdens on students graduating from college imposed on them by companies with influence in Washington, like Sallie Mae, whose government guarantees make a mockery of capitalism, have riled members of Congress to some modest action.

Once again this year, the big boys on Wall Street stretched the envelope of risk and greed and ran down to Washington, D.C. to be bailed out by the accommodating Federal Reserve. Chairman Ben Bernanke testified before the Senate that he had no choice but to take on about $30 billion of Bear Stearns obligations or there could be a run on other big banks. Where was the Federal Reserve when this credit, debt and risk spree was building during the past five years?

There is no penalty for failure—whether on Wall Street or in Washington, D.C. for misusing or wasting the taxpayers’ monies.

When the heads of Citigroup and Merrill Lynch were asked to leave their positions recently as CEOs after tanking their companies’ shares, they could barely avoid tripping over the many millions of dollars they were taking with them through the exit door. Among many perverse incentives operating within these Wall Street firms, there are rewards for failure—big bucks rubber-stamped by the look-the-other-way, well paid Boards of Directors.

Back in 1971 and 1980 respectively, the White House proposed a $250 million loan guarantee for Lockheed corp., and a $1.5 billion loan guarantee for Chrysler with the government taking back warrants that it later sold for a profit. There was intense debate and discussion at public hearings in the House and the Senate before they authorized the guarantees.

Now federal agency bailouts of big business, even Mexican oligarchs, rarely seek Congressional approval. Just have the Executive Branch do what it wants. No public hearings. Midnight bailouts without transcripts.

I asked a powerful Senator: “What are the discernable legal limits on the Federal Reserve’s bailout authority and how much total risk can the Federal Reserve heap on the taxpayers?” “Can they go to a trillion dollars?” He did not know.

Shifting deficits, debts and unfair burdens to individual taxpayers while the rich and powerful become either tax escapees or big time welfare recipients keep pushing a limitless envelope on today’s and tomorrow’s taxpayers.

The New York Times’ prize-winning reporter David Cay Johnston, has written two books “Perfectly Legal” and just recently, the best seller “Free Lunch” that document these megatrends of corporate socialism—privatizing corporate profits and socializing corporate losses on the backs of individual taxpayers.

What can be done about these gigantic runaway sprees?

First, pass legislation that broadens individual taxpayers’ right to sue in federal court against waste, fraud and abuse, including those receivers of bailouts—the reckless, avaricious corporations who have Uncle Sam in their back pockets.

Second, have a voluntary checkoff on the 1040 tax return inviting individual taxpayers to join their own taxpayer defense organization. Such a group would have millions of small dues paying members and an on-the-spot skillful watchdog group in our national capital.

Finally, place our public elections off the private auction block and have them funded by well promoted voluntary checkoffs on the tax returns together with a certain amount of free radio and television time for ballot-qualified candidates seeking federal office.

These and other proposals, such as giving shareholders more power to restrain their top executives, will give taxpayers some grip on the wide-open spigot of taxpayer dollars delivered to the misfits of the giant corporate world.

Jewish Liberals to Launch a Counterpoint to AIPAC

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By Michael Abramowitz

Political funds, lobbying to promote Arab-Israeli peace deal.

Some of the country's most prominent Jewish liberals are forming a political action committee and lobbying group aimed at dislodging what they consider the excessive hold of neoconservatives and evangelical Christians on U.S. policy toward Israel.

The group is planning to channel political contributions to favored candidates in perhaps a half-dozen campaigns this fall, the first time an organization focused on Israel has tried to play such a direct role in the political process, according to its organizers.

Organizers said they hope those efforts, coupled with a separate lobbying group that will focus on promoting an Arab-Israeli peace settlement, will fill a void left by the American Israel Public Affairs Committee, or AIPAC, and other Jewish groups that they contend have tilted to the right in recent years.

The lobbying group will be known as J Street and the political action group as JStreetPAC. The executive director for both will be Jeremy Ben-Ami, a former domestic policy adviser in the Clinton White House.

"The definition of what it means to be pro-Israel has come to diverge from pursuing a peace settlement," said Alan Solomont, a prominent Democratic Party fundraiser involved in the initiative. In recent years, he said, "We have heard the voices of neocons, and right-of-center Jewish leaders and Christian evangelicals, and the mainstream views of the American Jewish community have not been heard."

Solomont is a top fundraiser for the presidential campaign of Sen. Barack Obama (D-Ill.), but the organizers include supporters and fundraisers for both Obama and Sen. Hillary Rodham Clinton (D-N.Y.). Many prominent figures in the American Jewish left, former lawmakers and U.S. government officials, and several prominent Israeli figures, as well as activists who have raised money for the Democracy Alliance and, are also involved.

A controversial essay in 2006 by two eminent academics, Harvard's Stephen Walt and the University of Chicago's John Mearsheimer, argued that a powerful pro-Israel lobby that includes Jewish groups, evangelical Christians and others has actively served to steer U.S. policy in a pro-Israel direction, often against the U.S. national interest.

The essay, a precursor to a 2007 book, triggered an angry debate among supporters of Israel and beyond, and even those who have been critical of groups such as AIPAC, the most influential pro-Israel lobbying group in Washington, said the thesis was either wrong or overdrawn.

"The genesis of this is really the frustration on the part of a very substantial portion of the American Jewish community that despite the fact that there is broad support for a peace-oriented policy in the Middle East, there doesn't seem to be the political will to actually carry it out," Ben-Ami said. "We have not been effective at transmitting the message that there is political support for these positions in the American Jewish community and their allies."

Officials with AIPAC declined to comment on the formation of the new competitor. But the organizers' behind-the-scenes efforts in the past two years have been generating buzz, and some consternation, in some quarters of the politically active Jewish community. Malcolm I. Hoenlein, executive vice chairman of the Conference of Presidents of Major American Jewish Organizations, raised questions about the viability of the new group. "I believe that AIPAC has very broad support and will continue to enjoy it," he said.

Even supporters said the new groups will be hard-pressed to match AIPAC's influence in Washington. AIPAC has more than 100,000 members, 18 offices around the country and an endowment of more than $100 million-dwarfing what organizers say will be a first-year budget for J Street of about $1.5 million.

AIPAC has cultivated alliances across the political aisle, especially in recent years with President Bush, who has worked hard to build good relations with leading Jewish groups. But AIPAC also works closely with congressional Democrats and the leading Democratic presidential candidates, and it sees itself as representing a broad cross section of Jews with an interest in fostering strong ties between Israel and the United States.

Some veteran Middle East experts said the new group faces the political reality that many American Jews have become disillusioned over the years with the peace process and what they consider to be the intransigence, hostility and-in some cases-terrorism of would-be Palestinian partners. While Bush early on in his administration grew skeptical of the peacemaking efforts of President Clinton, he received very little push-back from organized American Jewry.

Martin Indyk, a former U.S. ambassador to Israel and the director of the Saban Center for Middle East Policy at the Brookings Institution, said the group "has a very steep hill to climb because peacemaking has acquired a bad reputation over the years in the Jewish community, and there is a widespread fear that U.S. intervention on behalf of peace will lead to pressure on Israel."

Perhaps the biggest difference between the new effort and the operations of existing Jewish or pro-Israel groups is the formation of a political action committee that endorses candidates and channels donations into political races - something AIPAC does not do.

The initial efforts will be relatively modest: Ben-Ami said the group aims to try to raise at least $50,000 or more for a handful of campaigns this fall as a "test case." But the group intends to raise its profile in future campaign cycles, and some major liberal fundraisers have already committed to the venture, including Solomont, high-tech entrepreneur Davidi Gilo and former New York City corporation counsel Victor Kovner, a supporter of Clinton's presidential bid.

GMO Will Not Save the Planet From Hunger

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By Anne Bauer

With no offense to certain parliamentarians piqued after the tumultuous vote in the National Assembly, GMO will not save the planet from famine. It’s not Secretary of State for Ecology Nathalie Kosciusko-Morizet who says so. Nor even José Bové. But a group of 400 experts who met last week in Johannesburg, under the leadership of UN agencies and the World Bank. How to feed 9.2 billion people in 2050 without causing irreversible environmental damage and without accentuating the gap between the starving and the obese still further? That’s the question which intergovernmental work groups brought together by Professor Robert Watson, former chair of the Intergovernmental Panel on Climate Change, have been trying to answer the past four years.

Tomorrow, they will publish their final report on "The International Evaluation of Agricultural Sciences and Technology in the Service of Development." Lovers of recent miracles will be in for shock. As will be notably those agro-chemists, unhappy with the conclusions, who have practiced various blocking tactics to exert pressure. Thus, at the very moment when the minister lost her temper in Paris after several days of punishing debate in the National Assembly, the president of the United Nations Program for the Environment, Achim Steiner, shattered the customary diplomatic purring of UN meetings in Johannesburg. "Those who slam the door are wrong; we need everyone’s perspective, since there is no simple answer to the challenges of twenty-first century agriculture," he declared immediately in his opening speech, addressing Monsanto, Syngenta and BASF’s agro-chemists most particularly.

GMOs are controversial not only in France. To develop twenty-first century agriculture, the experts emphasize, we must first guarantee small farmers access to land, better organize local and export markets, open access to credit, find equitable mechanisms for conflict resolution, invest in research on local plants such as millet, promote training, etc. In short, engage in an unprecedented effort for better governance. Important productivity reserves exist everywhere, restricted by war, corruption, ignorance, the absence of financing, equipment, or infrastructure.... Although important, technology alone is inadequate. So why, twelve years after their commercialization, do GMOs still represent the path of the future for the resolution of hunger in the world to some people?

Largely because GMOs inspire people’s dreams. They represent the simple, scientific, ideal solution. The miracle GMO is like an AIDS vaccine: an objective, a hope, but still not a reality. Today, no genetic manipulation allows wheat to grow in the Sahara. Research on plants more resistant to salt or drought continues, but at the moment, only herbicide or pesticide plants are commercialized for four major crops: soy, corn, colza, and cotton - 95 percent of the patents for which are held by one company, Monsanto.

One main actor, four crops: the balance sheet should be easy to draw up, the record transparent. Yet, in spite of a decade of development, there exists no reliable international review that allows a realistic balance sheet to be drawn up with respect to the advances promised by transgenic crops. "The data collected for certain years and certain genetically modified plants indicate gains in yield of 10-13 percent in some regions and drops in yields in others," highlights the international report (1). Some farmers have adopted them and grown wealthy; others have tried them and become impoverished.... The International Convention on Biosafety lauded the establishment of some kind of international review body, but none of the big GMO-producing countries, starting with the United States, has ratified that convention.

The experts assembled by Professor Watson also prove highly suspicious with respect to patents for transgenic varieties. "It is to be feared that the instruments in place concerning intellectual property rights will in the end strangle seed conservation, as well as the exchange, sale, and access to patented material needed by independent researchers to effect their analysis and experiments with respect to the impacts of those materials." Finally, the scientists are worried about future problems between neighboring pro- and anti-GMO producers in case of contamination. Which is precisely the issue in play in the proposed French GMO law, charged with organizing the rules of a possible coexistence between GMO, conventional and organic crops. According to whether the obligations and new rules of responsibility between the "contaminating" and the "contaminated" will be more or less strict, GMO crops could develop more or less easily in the Hexagon. That’s why the text of the law, supposed to be nothing but the technical transposition of a European directive on the cohabitation of crops, arouses so many passions. It will be considered on second reading in the Senate this week, with each of the pro- and anti- lobbies determined to do battle to the end.

For or against, as Achim Steiner reminded us, even though prices are soaring (soy up 87 percent in a year, corn up 31 percent, and wheat, 130 percent) and even though hunger riots are breaking out one after the other, we must not lose sight of the fact that agricultural production is, at present, adequate to feed the planet. If we strictly divide the number of calories by inhabitant, it would even feed close to 10 billion people. "The good news is that we have enough food, technology, techniques, and science. The bad news is the horrible ecological footprint industrial agriculture causes," he prompted, while emphasizing that there will not be a single solution in the future, organic agriculture or transgenic agriculture, but different models and diversified ecosystems. All of which will require a great deal more effort than a simple slogan about GMO, humanity’s future.

  • Quotations are from the advance-proposal synthesis report before the final meeting which took place in Johannesburg from April 7 to 12, the conclusions of which will be published April 15.
  • Retailing Chains Caught in a Wave of Bankruptcies

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    By Michael Barbaro

    The consumer spending slump and tightening credit markets are unleashing a widening wave of bankruptcies in American retailing, prompting thousands of store closings that are expected to remake suburban malls and downtown shopping districts across the country.

    Since last fall, eight mostly midsize chains — as diverse as the furniture store Levitz and the electronics seller Sharper Image — have filed for bankruptcy protection as they staggered under mounting debt and declining sales.

    But the troubles are quickly spreading to bigger national companies, like Linens 'n Things, the bedding and furniture retailer with 500 stores in 47 states. It may file for bankruptcy as early as this week, according to people briefed on the matter.

    Even retailers that can avoid bankruptcy are shutting down stores to preserve cash through what could be a long economic downturn. Over the next year, Foot Locker said it would close 140 stores, Ann Taylor will start to shutter 117, and the jeweler Zales will close 100.

    The surging cost of necessities has led to a national belt-tightening among consumers. Figures released on Monday showed that spending on food and gasoline is crowding out other purchases, leaving people with less to spend on furniture, clothing and electronics. Consequently, chains specializing in those goods are proving vulnerable.

    Retailing is a business with big ups and downs during the year, and retailers rely heavily on borrowed money to finance their purchases of merchandise and even to meet payrolls during slow periods. Yet the nation's banks, struggling with the growing mortgage crisis, have started to balk at extending new loans, effectively cutting up the retail industry's collective credit cards.

    "You have the makings of a wave of significant bankruptcies," said Al Koch, who helped bring Kmart out of bankruptcy in 2003 as the company's interim chief financial officer and works at a corporate turnaround firm called AlixPartners.

    "For years, no deal was too ugly to finance," he said. "But now, nobody will throw money at these companies."

    Because retailers rely on a broad network of suppliers, their bankruptcies are rippling across the economy. The cash-short chains are leaving behind tens of millions of dollars in unpaid bills to shipping companies, furniture manufacturers, mall owners and advertising agencies. Many are unlikely to be paid in full, spreading the economic pain.

    When it filed for bankruptcy, Sharper Image owed $6.6 million to United Parcel Service. The furniture chain Levitz owed Sealy $1.4 million.

    And it is not just large companies that are absorbing the losses. When Domain, the furniture retailer, filed for bankruptcy, it owed On Time Express, a 90-employee transportation and logistics company in Tempe, Ariz., about $30,000.

    "We'll be lucky to see pennies on the dollar, if we see anything," said Ross Musil, the chief financial officer of On Time Express. "It's a big loss."

    Most of the ailing companies have filed for reorganization, not liquidation, under the bankruptcy laws, including the furniture chain Wickes, the housewares seller Fortunoff, Harvey Electronics and the catalog retailer Lillian Vernon. But, in a contrast with previous recessions, many are unlikely to emerge from bankruptcy, lawyers and industry experts said.

    Changes in the federal bankruptcy code in 2005 significantly tightened deadlines for ailing companies to restructure their businesses, offering them less leeway.

    And the changes may force companies to pay suppliers before paying wages or honoring obligations to customers, like redeeming gift cards, said Sally Henry, a partner in the bankruptcy law practice at Skadden, Arps, Slate, Meagher & Flom and the author of several books on bankruptcy.

    As a result, she said, "it's no longer reorganization or even liquidation for these companies. In many cases, it's evaporation."

    Several of the retailers that filed for Chapter 11 bankruptcy protection over the last eight months, like the furniture sellers Bombay, Levitz and Domain, have begun to wind down — closing stores, laying off workers and liquidating merchandise.

    In most cases, the collapses stemmed from a combination of factors: flawed business strategies, a souring economy and banks' unwillingness to issue cheap loans.

    Bombay, a chain with 360 stores, was considered a success in the furniture world, after its sales surged from $393 million in 1999 to $596 million in 2003.

    Then the chain decided to move most of its stores out of enclosed malls into open-air shopping centers. It started a children's furniture business, called BombayKids. And it started carrying bigger items, like beds and upholstered couches, with higher prices than its regular furniture.

    Consumers balked at the changes, hurting Bombay's sales and profits at the same time that its expenses for the ambitious new strategies began to grow. The timing was unenviable: By early 2007, the housing market began to falter, so purchases of furniture slowed to a trickle.

    The company was running out of money, but banks refused to lend more. "They did not want to take the chance that we might not repay the loans," Elaine D. Crowley, the chief financial officer, said in an interview.

    In September 2007, Bombay filed for bankruptcy protection. The highest bid for the company came from liquidation firms, who quickly dismembered the 33-year-old chain. Bombay, which once employed 3,608, now has 20 employees left. "It is very difficult and sad," Ms. Crowley said.

    The bankruptcies are putting a spotlight on a little-discussed facet of retailing: heavy debt.

    Stores may appear to mint money by paying $2 for a T-shirt and charging $10 for it. But because shopping is based on weather patterns and fashion trends, retailers must pay for merchandise that may sit, unsold, on shelves for long periods.

    So chains regularly borrow large sums to cover routine expenses, like wages and electricity bills. When sales are strong, as they typically are during the holiday season, the debts are repaid.

    Fortunoff, a jewelry and home furnishing chain in the Northeast, relied on $90 million in loans to help operate its 23 stores, using merchandise as collateral.

    But by early 2008, as the housing market struggled, the chain's profits dropped, meaning its collateral was losing value and the amount it could borrow fell.

    In better economic times, the banks might have granted Fortunoff a reprieve. But with a recession looming, they refused, forcing it to file for bankruptcy in February. In filings, the chain said it was "facing a liquidity crisis." (Fortunoff was later sold to the owner of Lord & Taylor.)

    Plenty of retailers remain on strong footing. Arnold H. Aronson, the former chief executive of Saks Fifth Avenue and a managing director at Kurt Salmon Associates, a retail consulting firm, said the credit tightness and consumer spending slowdown have only wiped out the "bottom tier" companies in retailing.

    "This recession dealt the final blow to these chains," he said. But several big-name chains are looking vulnerable. Linens 'n Things, which is owned by Apollo Management, a private equity firm, is considering a bankruptcy filing after years of poor performance and mounting debts, though it has additional options, people involved in the discussions said Monday.

    Whether more chains file for bankruptcy or not, it will be hard to miss the impact of the industry's troubles in the nation's malls.

    J. C. Penney, Lowe's and Office Depot are scaling back or delaying expansion. Office Depot had planned to open 150 stores this year; now it will open 75.

    The International Council of Shopping Centers, a trade group, estimates there will be 5,770 store closings in 2008, up 25 percent from 2007, when there were 4,603.

    Charming Shoppes, which owns the women's clothing retailers Lane Bryant and Fashion Bug, is closing at least 150 stores. Wilsons the Leather Experts will close 158. And Pacific Sunwear is shutting a 153-store chain called Demo.

    Those decisions were made months ago, when it was unclear how long the downturn in consumer spending might last. If March was any indication, it is nowhere near over. Sales at stores open at least a year fell 0.5 percent, the worst performance in 13 years, according to the shopping council.

    Iran should be "Set Up for an Attack"

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    By Muriel Mirak-Weissbach

    The Agenda Behind The Anti-Sadr Agenda

    When Gen. David Petraeus along with U.S. Ambassador to Iraq Ryan Crocker gave their testimony to the Senate on April 9, they did nothing more than to confirm in spades what had been being mooted and duly leaked by the Washington-based press: that the Bush-Cheney Administration had officially endorsed the line that Iran should be set up for attack, on grounds that it--and not any indigenous resistance--were responsible for the mounting death toll among American troops in Iraq.

    While claiming security had improved, Petraeus said the violence involving the Mahdi Army of Moqtadar al Sadr "highlighted the destructive role Iran has played in funding, training, arming and directing the so-called ’special groups’" which, he added, "pose the greatest long-term threat to the viability of a democratic Iraq." (See Washington Post, April 9, 2008). Petraeus even granted that Syria had cut the alleged flow of fighters into Iraq, only to stress by con trast, that "Iran has fuelled the violence in a particularly damaging way, through its lethal support to the special groups." Finally, Petraeus specified that the "special groups" were run by Iran’s Qods force, the Revolutionary Guards recently placed in the category of terrorists..

    There was nothing new about the line: Dick Cheney had dispatched Maj. Gen. Kevin Bergner last year to Iraq, with the task of finding a smoking gun, or, better, a couple of improvised explosive devices (IEDs) with "made in Iran" stamped on them. What was new in the testimony of the top U.S. military and diplomatic officials in the war zone, were the categorical statements, uttered with an air of certainty usually backed up by courtroom evidence, that Iran was the culprit, and the implicit conclusion that Iran must be the target of U.S. aggression. In order to make sure that (as Nixon would have said), the point be perfectly clear, National Security Advisor Stephen Hadley was trotted out to tell an enthusiastic Fox News reporter on April 13, that indeed Iran was the casus belli; Iran is "training Iraqis in Iran who come into Iraq and attack our forces, Iraqi forces, Iraqi civilians." And, therefore, Hadley went on, "We will go after their surrogate operations in Iraq that are killing our forces, killing Iraqi forces." ( Although Defense Secretary Robert Gates was saying almost simultaneously that he thought "the chances of us stumbling into a confrontation with Iran are very low," he, too, repeated the mantra that the Iranians were sending weapons into the south of Iraq, etc. etc. President George W. Bush could not be left out of the dramatic build-up, and blessed Petraeus’s testimony with an order for a halt in the troop reductions.

    Pat Buchanon performed an important service in immediately blowing the whistle on this fraud, and his piece, "General Petraeus Points to War with Iran," has fortunately received wide coverage. (, 11.04.2008,, 12.04.2008) One would hope that Seymous Hersh would come forth with further ammunition in the fight to prevent an all-too-likely attack against Iran. They are at it again, they are serious, and must be stopped.

    The Anti-Shi’ite Surge

    But, if war is indeed on the agenda, as Global Research has documented over months, one question to be raised, is: how does the recent "surge" in military actions against the Moqtadar al-Sadr forces, in Basra, Baghdad and numerous other Iraqi cities, fold into the current military-political gameplan? The massive joint U.S.-Iraqi operations at the end of March, against the Mahdi Army, were, militarily speaking, a fiasco. The news reported by AFP on April 14 that the Iraqi government has sacked 1,300 Iraqi troops for not having performed as expected (i.e., for having deserted or joined the enemy) is a not-so-eloquent acknowledgement of this embarrassing fact. And, as has been generally acknowledged by now, it was only due to the diplomatic intervention of Iranian authorities, that the conflict was ended, leading to the decision of al-Sadr to cease hostilities.

    Now, however, that ill-conceived offensive has been relaunched in the wake of the performances by the Petraeus-Crocker-Hadley trio, and with a vengeance. Prime Minister Nuri al-Maliki told CNN on April 7, that the offensive against al-Mahdi would continue "until a decisive victory is achieved .. a victory that will not allow these people to attack the Green Zone or other areas." To signal the renewed thrust, Riyad al-Nuri, the director of al Sadr’s Najaf office, and his brother-in-law, was brutally murdered in the holy city on April 11. Joint U.S.-Iraqi military incursions have continued in Sadr City. Where will this lead? To victory? If so, how does one define victory? If the joint U.S.-Iraqi military operations physically eliminate al-Sadr’s forces, it will only be as a result of the deployment of massive brute force as has not yet been used. In this tragic case, the political effect would likely not be the decimation of that political force, but its enhancement. It should not be forgotten that Moqtadar al-Sadr himself comes from a family of martyrs.

    One consideration in the minds of the U.S. strategists of the anti-Sadr war, is that they must wipe his organization off the Iraqi political map well before elections take place next October, elections in which his followers could make significant gains, expanding their current 30-seat presence in parliament to a considerable power. The Al-Sadr phenomenon in Iraq is, in this sense, not so different from the Hamas phenomenon in Palestine; both are militant (and military) formations fighting against foreign occupation, while also providing crucial social services to their people, be it schools, clinics, hospitals or the like. It is in this light that one must read the decision by the Iraqi cabinet on April 14 to exclude militias from that vote, i.e. to exclude any political parties that have armed militias. Clearly, this is aimed at al-Sadr. If one were to ask: What about the Badr Brigade, which is the militia of the Shi’ite party, the Islamic Supreme Council of Iraq (ISCI), le d by Abdel-Aziz al-Hakim? one might get the answer: that is no longer to be considered a separate militia, but works as part of the Iraqi military forces.

    Intra-Shi’ite Conflict Targets Iran

    But there is more to the story. The usual assumption made by U.S. military and political leaders, and shared by too many press outlets, is that the conflict inside Iraq should now be reduced to a fight among rival Shi’ite factions: that the ISCI and al-Sadr group are competing for control over Basra, an oil-rich and strategically situated province; that al-Maliki, whose own Shi’ite party Al Dawa, depends on the support of al-Hakim’s faction to survive; that, in sum, the name of the game is intra-Shi’ite conflict.(1)

    Yes, the political rivalries among the three main Shi’ite factions in Iraq do exist. To be sure, neither al-Maliki nor al-Hakim would welcome the emergence of a majority force in parliament led by the al-Sadr group. But this is not the salient feature of the situation. Rather, as was shown in the recent, short-lived halt to the operations against al-Sadr, it was Iran which was decisive. The most important factor to be considered, in understanding the current crisis, at least from the inside, is this: Iran has excellent relations with {all three} major Shi’ite factions in Iraq, despite their internal differences. The ISCI, it will be remembered, was given hospitality in Iran, during its years-long exile under the Saddam Hussein regime. Moqtadar al-Sadr enjoys support from Iran. And the greatest foreign support that the al-Maliki government has, is from Tehran.

    So, who can be expected to gain from exacerbating the intra-Shi’ite conflict? Most obviously, the U.S. as the occupying power. As qualified Iranian sources have stressed to this author, Iran’s power lies in its ability to promote and mediate cooperation among all these factions, as dramatically demonstrated in its mediating the end to the first anti-Sadr offensive at the end of March. The occupying power is seen as intent on utilizing intra-Shi’ite conflict to damage each of these factions, and to hurt Iran.

    One generally ignored, but important factor noted by the same Iranian sources, is the factionalized situation {within} the al-Sadr movement. Moqtadar al-Sadr is seen by these sources as a fervently committed fighter, who, however, views the situation from a somewhat narrowly defined local standpoint: he wants to style himself as the leader of the Shia in Iraq, indeed as the national leader--even more national than al-Maliki. His ambitions, according to some, go beyond this; he sees himself as a future leader of the Muslims overall. At the same time, there is a faction within the al-Sadr movement, considered a "sub-group," which is controlled by outside forces, in Saudi Arabia, the Emirates and also the U.S. This sub-group is seen as responsible for provocative actions designed to destabilize Iraq, and therefore welcoming any U.S.-Iraqi joint offensive against al-Sadr. The main reason for this, is that the foreign sponsors of this sub-group, whether Saudi or Emirate or America n, are intent on weakening, discrediting and ultimately replacing al-Maliki as Prime Minister of Iraq, while at the same time undermining the role of al-Hakim. A slaughter against al Sadr’s forces could doom the al-Maliki government. To put it simply: these outside influences, who are thinking strategically, are hoping to pit al-Sadr against both al-Hakim and al-Maliki; the al-Sadr forces, who are thinking on a more limited, local level, see themselves as competitors to the other two groupings, for future political leadership in Iraq, and miss the point about the broader strategic picture.

    In short, the U.S.’s enthusiastic order to al-Maliki to launch his anti-al-Sadr purge, is actually a ploy to discredit and destroy al-Maliki himself, and prepare for permanent occupation. Vice President Dick Cheney has made no secret of the fact that he would like to replace al-Maliki, whom he has always accused of being too close to the Iranians, with one of his own, like Iyad Allawi, and that might be what is in the offing. Another benefit to discrediting al-Maliki is that the Cheney-Bush crew can further argue that, since al-Maliki and. co. have proven unable to deal with the al-Sadr threat alone, U.S. occupying forces should remain for a longer priod of time, if not for the one-hundred years that John McCain is fantasizing about.

    Enter Condi Rice

    To complete the picture, a couple of other developments should be mentioned. First, Condi Rice’s trip to the region. She follows in the footsteps of Cheney, who toured the region to whip up Arab support for, or at least acquiescence to, a military assault on Iran. This had been Cheney’s aim during his late 2006 visit, and now he has returned with the same agenda. Rice, then as now, will be following the same script. She will be meeting with the foreign ministers of the Gulf Cooperation Council, plus Egypt and Jordan, the famous "GCC + 2" that she and Cheney have been forging as a Sunni bloc against Iran. Her message will be: prepare for the repercussions of a new assault on Iran. In parallel, the Israelis have been working overtime to heat up tensions in the region, not only against Syria, Hezbollah and Hamas, but also Iran. While National Infrastructures Minister Binyamin Ben-Eliezer threatened to "detsroy the Iranian nation," if it attacked Israel, Israeli Foreign Minister Tzipi Livni told Arab conference attendees in Qatar that their real enemy was not Israel, but Iran.

    At the same time, an ominous event occurred on April 12 in Shiraz, when an explosion rocked a mosque during prayers, killing 12 and wounding more than 200. Although initial Iranian reports ruled out sabotage, the causes of the blast were not immediately identified, and, according to latest press reports, Iranian authorities are still "uncertain" about the affair. If, in the end, it turns out to have been a terror attack, the most likely suspects would be found among the Mujahedeen e Qalk (MKO/MEK) terrorist organization that still enjoys U.S. refuge in Iraq, and the Kurdish terrorists in the PKK-allied Pejak. The PKK also enjoys the protection of the U.S. occupying forces in northern Iraq. Perhaps not coincidentally, the Pejak (Party of Free Life of Kurdistan) warned on April 13, that it would "carry out bombings against Iranian forces" inside the country. Perhaps this is what President Bush has in mind, when he makes his periodic appeals to the "Iranian people" to rise up ag ainst their government.


    1. See Robert Dreyfuss, in "The Lessons of Basra,", April 3, and also Ramzy Baroud, in "Basra battles: Barely half the story,", April 13.

    Treasury Outlines Toothless Hedge Fund Rules

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    By Kevin G. Hall

    Washington - With an eye toward shoring up shaky financial markets, Treasury Department officials unveiled a plan Tuesday to provide greater transparency and management of risk in hedge funds.

    However, the Bush administration's "best practices" proposal is voluntary, and less than two dozen of the more than 8,000 registered hedge funds signed onto the plan.

    Hedge funds are large pools of investment capital owned by the wealthy. They are largely unregulated.

    The plan, presented by Treasury Secretary Henry Paulson, doesn't introduce new regulation. It depends instead on self-policing and good behavior by hedge fund managers - two qualities missing in action in recent years as Wall Street excesses have led to what former Federal Reserve Chairman Alan Greenspan recently called the worst global financial crisis since World War II.

    A former CEO of investment bank Goldman Sachs & Co., Paulson didn't rule out the possibility of future regulation.

    "Both market and regulatory practices will evolve from here, but this is certainly a logical step at this time," Paulson said. "We must implement best practices and continually seek to strengthen our market and regulatory practices."

    Critics of the plan, such as Connecticut Attorney General Richard Blumenthal, think it gives hedge fund managers, who helped devise the "best practices," a free pass.

    "This plan is one small step when giant strides are needed. The Treasury Department's proposals for greater transparency and risk disclosure must be mandatory or they are meaningless," Blumenthal said in a statement. "Non-binding best practices or voluntary guidelines are an imaginary fence and virtual farce: They stop nothing."

    Many economists have warned that loosely regulated hedge funds pose a system-wide risk to financial markets, but so far they've emerged from the current credit crisis in good shape. Instead it has been the investment banks - their business partners - whose losses now pose risks to global finance.

    Hedge funds require investors to have a minimum net worth of more than $1 million and prior-year income above $200,000. Upon meeting that qualification, investors are required to have a minimum investment, matched by a small pool of partners, that can range from $250,000 to as high as $10 million.

    These hedge funds are closed to small investors under the premise that only the rich can afford the risk of high hedge fund losses. The funds also offer far greater rewards to investors than is generally available through safer mutual funds and 401(k) retirement plans.

    Although an average American cannot invest in hedge funds, which now boast more than $2 trillion in assets under management worldwide, state pension funds can and increasingly do.

    This has raised concerns about accounting practices, fees, transparency and risk-management practices, particularly after the spectacular September 2006 collapse of Amaranth Advisors LLC. It had such a large concentration of investment in contracts for future delivery of natural gas that it was later charged by federal regulators with price manipulation.

    Eric Mindich, founder of giant hedge fund Eton Park Capital Management and co-drafter of the "best practices" plan, told reporters Tuesday that "a bunch of warning flags would have been triggered (about Amaranth) if this had been in place at the time."

    The state employee pension plans of California, Pennsylvania, Massachusetts and New Jersey were among those that lost money during Amaranth's collapse. Employees of San Diego County in California also lost big.

    The chief investment officer of California's state pension fund, Russell Read, led one of two working groups that together came up with Treasury's "best practices" plan. He acknowledged that there was nothing to compel compliance and that there would be no public record of which companies are adopting "best practices."

    There will be a "fair amount of missionary work" to convince companies it is in their interest to adopt these proposed standards, Read said.

    Big Tax Breaks for Businesses in Housing Bill

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    By Stephen Labaton and David M. Herszenhorn

    Washington - The Senate proclaimed a fierce bipartisan resolve two weeks ago to help American homeowners in danger of foreclosure. But while a bill that senators approved last week would take modest steps toward that goal, it would also provide billions of dollars in tax breaks - for automakers, airlines, alternative energy producers and other struggling industries, as well as home builders.

    The tax provisions of the Foreclosure Prevention Act, which consumer groups and labor leaders say amount to government handouts to big business, show how the credit crisis, while rattling the housing and financial markets, has created beneficiaries in the power corridors of Washington.

    It also shows how legislation with a populist imperative offers a chance for lobbyists to press their clients' interests.

    This has proved especially true on the housing legislation, which many lawmakers and lobbyists view as one of the last opportunities before Congress grinds to a halt amid election-year politics.

    In the Senate bill, the nation's biggest home builders, some now on the verge of bankruptcy, won a provision that would let them claim millions in tax refunds by charging their current losses against the huge profits they made three or four years ago. Other struggling industries would benefit from this provision.

    "This is our biggest legislative effort since the Tax Reform Act of 1986," said Jerry M. Howard, chief executive of the National Association of Home Builders. Hundreds of the association's members flooded the district offices of representatives and senators while they were home for the spring recess last month.

    Supporters of the bill, including Senator Max Baucus, Democrat of Montana and the chairman of the Senate Finance Committee, say it represents sound tax policy carefully focused to help stimulate the lagging economy. But the White House opposes the Senate bill, and Democratic leaders in the House not only have promised to provide more relief for individual homeowners, but have also dropped the corporate tax provisions from their version.

    Downtrodden automakers - Ford and General Motors - were especially dogged in securing a tax break that would let them collect alternative minimum tax credits, also known as the A.M.T., that would otherwise be out of reach because they did not pay enough taxes in recent years to claim a rebate.

    If the provision becomes law, it could mean checks up to $40 million for the car manufacturers, as long as the companies had made investments in plant or equipment in that amount.

    A Ford spokesman, Mike Moran, said he was aware that Ford would benefit from the tax credit in the bill passed by the Senate. But Mr. Moran said that the credit applied to a range of industries, not just automakers. A General Motors spokesman could not be reached.

    Domestic airlines and manufacturers other than automakers would be eligible to claim the A.M.T. break as well. One lobbyist said that the companies that had sought the tax breaks in meetings with lawmakers included Ford, General Motors, American Airlines, Northwest Airlines and Goodyear Tire and Rubber.

    Companies could claim only one of the new tax breaks, which in all, are expected to cost $6 billion through 2018. The jockeying among industry groups, including Realtors, home builders and bankers, is certain to intensify in coming weeks as lawmakers move to reconcile the Senate bill with a more ambitious package of housing legislation now under way in the House.

    Lawmakers on the tax-writing House Ways and Means Committee have omitted the corporate tax cuts from their version of the bill in favor of tax breaks for first-time home buyers and developers of low-income rental housing, and more aid for owners facing foreclosure.

    Congressional Democrats are also hearing from consumer advocates and other groups who say that the Senate bill does little to help Americans in danger of losing their homes to foreclosure.

    "The Senate legislation gave corporations and Wall Street billions in tax breaks," Terence M. O'Sullivan, the president of the Laborers International Union of North America, said at a news conference on Tuesday to denounce the bill.

    "Tax breaks for corporate home builders won't help stabilize the housing market, won't create jobs and won't prevent a single foreclosure," he continued. "If anything, this multibillion-dollar windfall will make things worse."

    Even Senator Christopher J. Dodd, Democrat of Connecticut and the main author of the Senate bill, said the measure did not live up to its name and that he wanted changes. But other lawmakers, and the lobbyists who seek to influence them, also recognize a golden opportunity when they sense that the political winds virtually guarantee a bill's passage, and the housing crisis is just such a time.

    In a sign of how such legislation allows lawmakers to advance many other goals, the Senate bill also includes tax provisions to encourage alternative energy production at a cost of roughly $6 billion over 10 years.

    That provision was sponsored by Senator Maria Cantwell, Democrat of Washington, and Senator John Ensign, Republican of Nevada. A similar measure was dropped from a major energy bill last year and again from the economic stimulus bill in February.

    But without quick action to extend expiring tax incentives, Ms. Cantwell said, many companies would simply drop projects. The housing bill was the easiest and fastest way to get things moving.

    Other industries facing financial difficulties, like retailers, may realize that the tax provisions in the bill offer help for them, too.

    Over the next few weeks, industry groups that fought to secure tax provisions in the Senate bill are expected to argue that providing help for important industries offers the best chance of helping to reverse the economic downturn.

    To press their case on Capitol Hill, 15 of the biggest residential construction companies, including KB Homes and Toll Brothers, formed a coalition and hired a lobbying firm, the C2 Group, apart from the larger National Association of Home Builders.

    Tom Crawford, a founder of the C2 Group, met with staff members of the Senate Finance Committee, several of whose members had already begun expressing concern about the effect of the slowing economy on home builders and other businesses.

    The home builders were hardly the only industry that lawmakers heard from as the Senate housing legislation took shape and it became clear that the bill would provide more in the way of tax breaks aimed at stimulating the economy than direct assistance for distressed homeowners.

    The cause of the automobile manufacturers was taken up by Senator George Voinovich, Republican of Ohio, and Senator Debbie Stabenow, Democrat of Michigan, who pushed to allow them access to up to $40 million each in alternative minimum tax credits.

    Automakers and other companies that have lost money in recent years have accumulated billions of dollars in such credits, which are based on cumulative payments of the corporate alternative minimum tax. Companies, however, can claim a refund of such credits only in years when they pay regular corporate income taxes in amounts that exceed what they would owe under the alternative tax method.

    The provision benefiting home builders and other struggling businesses would allow operating losses to be carried back over four years rather than the two years in current law. It is a strategy that Congress has used as a way of stimulating the economy in previous recessions, most recently in 2002 with the support of the Bush administration.

    But the White House opposed the idea when members of Congress proposed it as part of the economic stimulus package earlier this year. And some House Democrats suggest that home builders and their lobbyists will face an uphill battle in trying to keep the provision when the Senate bill is reconciled with a rival tax package that was approved last week by the House Ways and Means Committee.

    These Democrats said that the Ways and Means chairman, Representative Charles B. Rangel, Democrat of New York, and other leaders, including Nancy Pelosi, the House speaker, would oppose the provision as benefiting builders at a time when Congress should be helping homeowners.

    "This ship largely sailed when Congressional Republicans left it out of the stimulus package," said one House Democratic aide, who spoke on condition of anonymity so as not to interfere with negotiations.

    Unlike the Senate bill, which includes a tax credit of up to $7,500 for purchasers of foreclosed properties, Mr. Rangel's bill provides a credit for all first-time home buyers - a move that drew strong support from the National Association of Realtors.

    "This is a meaningful incentive that should draw into the market many purchasers who, to date, have remained on the sidelines," the president of the group, Richard F. Gaylord, wrote. "We believe this credit can convert 'lookers' into first-time home buyers."

    Other industry groups were also eager to sign on as supporters of Mr. Rangel's bill, even as many of them hope to push him to endorse a more expansive menu of tax breaks that will benefit them.

    Among them were the National Association of Home Builders, the Mortgage Bankers Association, the Securities Industry and Financial Markets Association, the Council of Federal Home Loan Banks and the American Hospital Association.

    Change in Farming Can Feed World - Report

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    By John Vidal

    Ample resources wasted, global study warns. Biofuels exacerbating shortage of food crops.

    Sixty countries backed by the World Bank and most UN bodies yesterday called for radical changes in world farming to avert increasing regional food shortages, escalating prices and growing environmental problems.

    But in a move that has led to the US, UK, Australia and Canada not yet endorsing the report, the authors said GM technology was not a quick fix to feed the world’s poor and argued that growing biofuel crops for automobiles threatened to increase worldwide malnutrition.

    The report was issued as the UN’s World Food Programme called for rich countries to contribute $500m (£255m) to immediately address a growing global food crisis which has seen staple food price rises of up to 80% in some countries, and food riots in many cities. According to the World Bank, 33 countries are now in danger of political destabilisation and internal conflict following food price inflation.

    The authors of the 2,500-page International Assessment of Agricultural Science and Technology for Development [IAASTD] say the world produces enough food for everyone, yet more than 800 million people go hungry. "Food is cheaper and diets are better than 40 years ago, but malnutrition and food insecurity threaten millions," they write. "Rising populations and incomes will intensify food demand, especially for meat and milk which will compete for land with crops, as will biofuels. The unequal distribution of food and conflict over control of the world’s dwindling natural resources presents a major political and social challenge to governments, likely to reach crisis status as climate change advances and world population expands from 6.7 billion to 9.2 billion by 2050."

    Robert Watson, director of IAASTD and chief scientist at the UK Department for Environment, Food and Rural Affairs, said: "Business as usual will hurt the poor. It will not work. We have to applaud global increases in food production but not everyone has benefited. We have not succeeded globally. In some parts of India 50% of children are still malnourished. That is not success."

    Watson said governments and industry focused too narrowly on increasing food production, with little regard for natural resources or food security. "Continuing with current trends would mean the earth’s haves and have-nots splitting further apart," he said." It would leave us facing a world nobody would want to inhabit. We have to make food more affordable and nutritious without degrading the land."

    The report - the first significant attempt to involve governments, NGOs and industries from rich and poor countries - took 400 scientists four years to complete. The present system of food production and the way food is traded around the world, the authors concluded, has led to a highly unequal distribution of benefits and serious adverse ecological effects and was now contributing to climate change.

    The authors say science and technology should be targeted towards raising yields but also protecting soils, water and forests. "Investment in agricultural science has decreased yet we urgently need sustainable ways to produce food. Incentives for science to address the issues that matter to the poor are weak," said Watson.

    The GM industry, which helped fund the report, together with the UN’s Food and Agriculture Organisation, the World Health Organisation and the British and US governments, abandoned talks last year after heated debate.

    The scientists said they saw little role for GM, as it is currently practised, in feeding the poor on a large scale. "Assessment of the technology lags behind its development, information is anecdotal and contradictory, and uncertainty about possible benefits and damage is unavoidable," said the report.

    "The short answer to whether transgenic crops can feed the world is ’no’. But they could contribute. We must understand their costs and benefits," said Watson yesterday.

    The authors also warned that the global rush to biofuels was not sustainable. "The diversion of crops to fuel can raise food prices and reduce our ability to alleviate hunger. The negative social effects risk being exacerbated in cases where small-scale farmers are marginalised or displaced form their land," they said.

    Responding to the report, a group of eight international environment and consumer groups, including Third World Network, Practical Action, Greenpeace and Friends of the Earth, said in a statement: "This is a sobering account of the failure of industrial farming. Small-scale farmers and ecological methods provide the way forward to avert the current food crisis and meet the needs of communities."

    Lim Li Chung, of Third World Network in Malaysia, said: "It clearly shows that small-scale farmers and the environment lose under trade liberalisation. Developing countries must exercise their right to stop the flood of cheap subsidised products from the north."

    Guilhem Calvo, an adviser with the ecological and earth sciences division of Unesco, one of the report’s sponsors, said at a news conference in Paris: "We must develop agriculture that is less dependent on fossil fuels, favours the use of locally available resources and explores the use of natural processes such as crop rotation and use of organic fertilisers."

    At a Glance


    The report says biofuels compete for land and water with food crops and are inefficient. They can cause deforestation and damage soils and water.


    The use of GM crops, where the technology is not contained, is contentious, the UN says. Data on some crops indicate highly variable yield gains in some places and declines in others.

    Climate Change

    While modest temperature rises may increase food yields in some areas, a general warming risks damaging all regions of the globe. There will be serious potential for conflict over habitable land.

    Trade and Markets

    Subsidies distort the use of resources and benefit industrialised nations at the expense of developing countries.

    Foreclosure glut further depresses housing prices

    Go to Original
    By Peter Y. Hong

    With homes in or facing foreclosure accounting for more than one-third of sales, activity in Southern California inches up in March while the median price falls.

    The traditional spring home-buying season is off to its worst start in 20 years, data released Tuesday show, with sales so weak that foreclosures now account for more than one-third of all market activity.

    Nearly 38% of Southern California homes sold in March had been foreclosed at some point in the prior year, up from 8% in March 2007, DataQuick Information Systems said.

    In Riverside County, more than half of all sales were foreclosures.

    That's helping to drive prices even lower, DataQuick said, because foreclosures typically sell at a 15% discount to surrounding properties.

    The median price for a Southern California home fell below $400,000, to $385,000. Homes are now typically selling for what they fetched in April 2004, with the median price 20% below the market peak of $505,000 last year.

    If there is a silver lining to that cloud, it may be the astonishing rate at which prices are plunging, said UCLA economist Edward E. Leamer. That might get the market to hit bottom sooner, he reasons, so a recovery can begin.

    "Lower prices are part of the adjustment that has to be made," he said.

    Home sales typically pick up in spring, when the weather gets warmer and parents of school-age children look to buy so that any move can be made over the summer.

    This year was no exception: March sales in Los Angeles, Orange, Ventura, San Bernardino, Riverside and San Diego counties were up 18.8% from February.

    But that increase, while welcomed by the real estate industry, pales in comparison to previous seasons. For the last 20 years, March home sales have on average been 38% higher than February sales, DataQuick said.

    "We continue to believe a lot of people who could be buying or selling right now are opting to sit tight until they sense we've hit bottom," DataQuick President Marshall Prentice said. "Often what we're left with, especially in inland areas, are sales driven by foreclosure or the threat of it."

    Homeowners who aren't facing foreclosure, meanwhile, often cling to outdated notions of what their properties are worth, real estate agents say.

    David Emerson, a Lakewood real estate broker, said he was still able to quickly sell houses when owners priced them realistically.

    A broker for 25 years, Emerson said much of his work now involved telling sellers what they might not want to hear.

    "You go from being like a doctor who delivers babies," in a booming real estate market, he said, "to being an oncologist, just giving people bad news all day long."

    Emerson also believes the worst is yet to come. "There are just too many foreclosures coming down the pike," Emerson said.

    Natalie Neith, a Beverly Hills real estate agent, has also seen a modest pickup in open-house traffic and sales recently, but like Emerson she sees more foreclosures coming.

    Neith credited a recent sale of a house in the West Adams area of Los Angeles to the seller's pricing it below others in the area. The four-bedroom Craftsman house could have been listed for $850,000 a few years ago, Neith said, but the owner priced it at $725,000 and sold it in a month for close to full price.

    "When I talk to sellers now, I say you need to reduce your price. You have the prospect of thousands of foreclosures coming. That's going to be your competition," Neith said.

    Nationwide, foreclosure-related filings -- including notices of loans in default -- were up 57% in March, according to RealtyTrac, an Irvine firm that sells default data. These filings include notices of loans in default, in which borrowers may be able to avoid foreclosure if they strike deals with their lenders.

    California foreclosure filings were up 106% in March from a year ago, RealtyTrac reported Tuesday.

    Christopher Thornberg, principal of Beacon Economics, said that so far the housing downturn had defied historical norms by occurring while the overall economy remained healthy. That's about to change, Thornberg said.

    "On top of everything else, we're tipping into recession," he said. With unemployment rising and income growth slowing, "we've got the typical drivers [of a real estate slump] again."

    Builders of new homes say a spring turnaround does not look likely.

    "With the traditional home-buying season now well underway, we have not seen the sales activity we normally would," National Assn. of Homebuilders President Sandy Dunn said in a statement Tuesday.

    A monthly NAHB survey found builders rate the condition of the housing market as poor for April.

    The builders group uses an index on a 100-point scale to measure their members' sentiment. A score of 50 or above indicates that builders see home sales conditions as positive. The April index number was 20; it had last been higher than 50 in early 2006.

    A Chapman University study also released Tuesday forecast further double-digit declines in Southern California home prices. The study by the university's Anderson Center for Economic Research contends that even with the steep price declines so far, area home prices remain higher than income levels justify.

    A typical Los Angeles County family would have to spend 48.6% of its annual income on mortgage payments and property taxes to afford a median-priced home, the Chapman study concluded. Historically, the mean expenditure for a home in L.A. County has been 35.7% of income.

    For affordability to return to that historic mean, home prices in Los Angeles County would have to fall more than 20% further, said Anderson Center director Esmael Adibi. The affordability gap is a bit less severe in Orange County, where incomes are higher, and the Inland Empire, where home prices have fallen more severely, Adibi said. "In the Inland Empire, we're seeing it get closer to the bottom," Adibi said.

    New Lobby Seeks to Redefine 'Pro-Israel'

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    By Jim Lobe

    A new group of prominent U.S. Jews who believe that the so-called "Israel Lobby" has been dominated for too long by neoconservatives and other Likud-oriented hawks has launched a new organization to help fund political candidates who favor a two-state solution to the Israeli-Palestinian conflict and a stronger U.S. role in achieving it.

    Almost two years in the making, the J Street project plans to spend some $1.5 million – about half of which has been pledged to date – in its first year of operation, a portion of which will go to supporting half a dozen congressional campaigns for candidates who share its pro-peace and pro-Israel views.

    "For too long, the loudest American voices on Israel have come from the far Right," noted Jeremy Ben-Ami, a founder and director of both J Street and its political-action affiliate, JStreetPac.

    "Those voices have claimed that the only way to be pro-Israel is to support military responses to political problems, to refuse to engage one's adversaries in dialogue and to put off the day of reckoning when hard compromises will be required to achieve a peaceful and secure future for Israel and the entire Middle East," he told reporters via teleconference Tuesday.

    "These are not the kind of smart, tough views that serve the long-term interests of the state of Israel, of the United States – or frankly, the American Jewish community," he added.

    The new project has been endorsed by some two dozen prominent Israelis, including three former directors of Israel's foreign ministry, a former chief of the Israel Defense Forces (IDF) General Staff, a former commander of the Israeli air force, and several other top former top military and intelligence officers.

    "Now more than ever, true friendship requires strong American leadership and engagement to move the sides toward a comprehensive two-state solution," the Israeli leaders wrote in a letter to J Street's founders. "With time running out, business-as-usual will not do."

    The launch of the new group, which will be led by an advisory council of 100 prominent U.S. Jewish leaders and philanthropists, is aimed primarily at challenging the long-standing dominance of several major Jewish lobby organizations, particularly the powerful American Israel Public Affairs Committee (AIPAC), whose leadership has generally opposed substantial Israeli concessions in negotiations with Palestinians and Israel's other Arab neighbors.

    AIPAC, which is widely seen as Washington's most powerful foreign policy lobby, has forged strong ties with both Democrats and Republicans on Capitol Hill where it has long claimed to represent the foreign policy views of the vast majority of U.S. Jews.

    Although Jews make up only about 2 percent of the U.S. population, they provide up to 40 percent of total campaign contributions for Democratic candidates and up to 20 percent for Republican candidates.

    AIPAC has also cultivated alliances with prominent right-wing Christian Zionists, such as John Hagee, the Texas televangelist who keynoted AIPAC's annual convention last year. Among other positions, Hagee has repeatedly denounced any consideration by the Israeli government to giving up parts of Jerusalem as part of any peace settlement with the Palestinians. He has also urged President George W. Bush to attack Iran.

    Those alliances have created growing discomfort within the larger U.S. Jewish community, which, in any event, tends to hold less hawkish views about Israel and its relations with its neighbors than those urged by AIPAC and other more right-wing national Jewish institutions, according to recent surveys of Jewish opinion by the American Jewish Committee.

    Indeed, earlier this month, Eric Yoffie, the president of the influential Union of Reform Judaism, called on Jews to disassociate themselves from Hagee and his organization, Christians United for Israel (CUFI). Several days later, seven past chairmen of the Conference of Presidents of Major American Jewish Organizations, another major national group whose leadership has moved increasingly to the right, defended Hagee as a "true friend of Israel" and CUFI as "among the strongest supporters of Israel in the United States" in a letter to the New York Times.

    Founders of J Street, however, clearly question the notion that AIPAC, CUFI, and other organizations that oppose substantial territorial or other concessions by Israel as part of any peace process are indeed strong supporters of Israel, particularly at a time when most experts say the chances for a two-state solution that would preserve Israel as a Jewish and democratic state are diminishing.

    "For the sake of Israel, the United States, and the world, it is time for American political discourse to re-engage with reality," wrote Ben-Ami, whose grandparents were among the founders of Tel Aviv and whose father was a militant in the right-wing Revisionist Movement, in a column published Tuesday by the Jewish national daily The Forward.

    "Voices of reason need to reclaim what it means to be pro-Israel and to establish in American political discourse that Israel's core security interest is to achieve a negotiated two-state solution and to define once and for all permanent, internationally recognized borders."

    "We need to have a much more robust discussion in this country about what it means to be pro-Israel," said Victor Kovner, a former Corporation Counsel of New York City and a member of the group's advisory council.

    "Many of us have been frustrated to say the least at the presumption held by so many … that, because we are active in the Jewish community, we are somehow supportive of AIPAC and those who have pursued right-wing agendas. I don't support AIPAC; I support a different vision of the Middle East, and, in creating J Street, I think we will make that position clear."

    In its policy positions, J Street calls for territorial compromises with the Palestinians based largely on the 1967 borders with reciprocal land swaps and the division of Jerusalem. The group also favors strong U.S. support for Israeli-Syrian peace negotiations and direct, high-level U.S. talks with Iran to address all issues of mutual concern, including ending Iranian opposition to Arab-Israeli peace efforts and its support for armed anti-Israel groups in Palestine and Lebanon.

    "There is no way that Israel as a Sparta is going to be in the interests of the Israeli or American people," noted Sam Lewis, a former U.S. ambassador to Israel who helped negotiate the 1978 Camp David Accords with Egypt under the Jimmy Carter administration.

    "The threats to Israel are real, but the way to go after those threats is to bring about different kinds of dialogue and negotiation than we've seen recently," said Lewis, who also serves on the J Street's advisory council.

    While the group's goal of $1.5 million in the first year is a fraction of AIPAC's $50 million annual budget, supporters stressed that this is just the beginning.

    "Most Americans and most Jewish Americans support the two-state solution and are tired of having a Likud-oriented lobby speaking in their name," said M.J. Rosenberg, an analyst at the Israel Policy Forum. "Let's see what happens, but I think this could be big."