Friday, October 10, 2008

U.S. focus on climate could ease financial crisis

Go to Original

If the United States focused on curbing climate change as soon as a new president took office -- or sooner -- it could help pull the world from the financial brink, environmental policy experts told Reuters.

"Skyrocketing energy prices and the financial crisis have been a wake-up call that something's got to change," said Cathy Zoi, chief executive officer of the Alliance for Climate Protection, which is chaired by former Vice President Al Gore.

"My very strong belief is that we need to reorient our investments toward this transition to a clean energy economy, and it will be the engine of growth for getting us out of the doldrums that we've gotten in right now," Zoi told the Reuters Global Environment Summit this week.

The reorientation must include U.S. limits on emissions of climate-warming carbon in the United States, she said: "Unless we take action at home, we're not going to be able to have much influence in the international arena about what gets done."

The Bush administration accepts that human-spurred climate change is a reality but rejects mandatory across-the-board caps on carbon as a disadvantage when competing with fast-growing, big-emitting countries like China and India.

The United States is alone among the major developed countries in staying out of the carbon-capping Kyoto Protocol, but is part of international discussions on new targets to fight climate change by the end of 2009 at a meeting in Copenhagen.

Both major U.S. presidential candidates -- Democrat Barack Obama and Republican John McCain -- favor requiring reductions in greenhouse emissions, and environmental activists have said whoever won the White House in the November 4 elections would be an improvement over President George W. Bush.


"There is an urgent need for whichever party wins the U.S. election to give an early signal (of an intent to do more to combat global warming) or there cannot be a credible reason for 190 nations to come together in Copenhagen," said Achim Steiner, head of the U.N. Development Program.

Rajendra Pachauri, who shared the 2007 Nobel Peace Price with Gore and who chairs the U.N. Intergovernmental Panel on Climate Change, said an Obama presidency would probably be more favorable to the fight against climate change.

But he added: "Even if McCain wins, he has been very committed."

There is little chance of passing a U.S. law to mandate a program to cap and trade carbon emissions before Bush leaves office in January.

However, the first draft of a cap-and-trade bill was released this week by U.S. Democratic Representatives John Dingell of Michigan -- home of the Big Three automakers -- and Rick Boucher of Virginia -- coal-mining country -- that is likely to frame debate next year.

The draft legislation drew measured applause from environmental activists, who noted it contains options that could substantially weaken controls on greenhouse emissions from some sectors.

But the fact that these two lawmakers are crafting legislation aimed at curbing climate change indicates a possible change in tone in Washington.

Despite comments from Sarah Palin, the Alaska governor who is McCain's running-mate, questioning the human causes of global warming, most officials in U.S. government -- including Bush -- acknowledge that people contribute to the problem.

The anthropogenic roots of global warming are clear to Prince Albert of Monaco, who told the Reuters summit he didn't "adhere" to Palin's skeptical view.

"There are obviously cycles, but how can you not consider the graphs that have been shown to us?," Prince Albert said. "Those who can't see the correlation between man-made activities and greenhouse gas emissions, it's going to be hard to convince them; but somehow we will have to do so."

Justice Department scandal almost buried by financial crisis

Go to Original

AT ANY other time, what happened in the U.S. Justice Department last week would have been big news. At any other time, when internal reports by Justice Department call for more investigation into a case of unethical, if not criminal, conduct on the part of lawmakers and the White House, the administration would have a lot of explaining to do.

But the Bush Administration got lucky. As its Treasury and Federal Reserve chiefs warned that the sky was falling and the economic crash and continuing tumult on Wall Street made them seem prophetic, the Justice Department released a nearly 400-page scalding indictment of the administration over the controversial firings of several U.S. attorneys in 2006.

It was an overlooked bombshell in breaking news cycles preoccupied with financial crisis, rescue plans, presidential politics, and a vice presidential debate.

But what the Justice Department’s exhaustive investigation and blistering report concluded about the enormous damage done to the department through improper politicization is far more troubling than even Sarah Palin in disjointed attack mode.

Investigators from both the department’s Office of Inspector General and Office of Professional Responsibility found that political pressure did indeed drive the dismissal action against at least three of the nine federal prosecutors abruptly fired. At the time, then-Attorney General Alberto Gonzales insisted the individuals were all dismissed for inadequate performance, or failure to implement the President’s law enforcement agenda.

But it appears the longtime pal and adviser to President Bush was lying through his teeth. Turns out the real reason some of the top federal lawyers were removed from the job, according to the Justice Department report, was that either the U.S. attorneys had the audacity to prosecute Republicans or because they failed to aggressively prosecute Democrats.

Either way, their behavior ticked off well-connected GOP politicians who had come to expect a politically loyal Justice Department. A couple of calls from powerful New Mexico Republican officeholders helped push former U.S. attorney David Iglesias out of a job. Evidently, the top New Mexico prosecutor was remiss in his duty to produce criminal charges against Democrats in the run-up to the 2006 election.

Another U.S. attorney in Missouri lost his post over a petty complaint from Republican Sen. Christopher Bond, and still another was bumped to make room for a protégé of White House political adviser Karl Rove. There was a pervading culture of partisanship/loyalty-above-all-else in the department, recalled one of the fired attorneys.

“Not only were my colleagues and I not insulated from politics — as we should have been in our jobs as prosecutors — but we were fired for the most partisan reasons,” Mr. Iglesias said.

But it mattered not to the Machiavellian Bush Administration that justice was compromised with appalling political interference. It operates under the premise that the ends always justify the means.

Look at the pattern.

The administration used fear about nonexistent WMDs as a means to justify the ends of invading Iraq. It outed a CIA operative to punish critics, eliminated civil rights under the misnamed Patriot Act to expand executive authority, crafted energy policy with energy companies to benefit the energy industry, and allowed the subprime mortgage mess to perpetuate to generate obscene wealth for a few.

And now there are official findings of fact about the politically charged dismissals of U.S. attorneys conducted to satisfy a White House agenda. Scandal-weary Americans may be inclined to dismiss yet another administration disgrace, but what happened at the Justice Department is too big a deal to ignore.

We’re supposed to be a country that requires “equal justice under the law,” not tainted justice under political consideration. But that’s what we had under shameless administration zealots like Mr. Rove and Mr. Gonzalez.

The former administration officials allowed the most invaluable assets of the Justice Department — its integrity and independence — to be jeopardized for political ends. They permitted wholesale politicization of the department, as one commentary put it, “by subjecting new hires and sitting U.S. attorneys to rigid ideological litmus tests.”

Even though new Attorney General Michael Mukasey has appointed a federal prosecutor to investigate whether criminal laws were violated all the way to the Oval Office, the administration may luck out again. As time runs out on its lamentable tenure, the injustice it perpetrated on a once-venerated institution may go unpunished.

But before the next administration takes over, Americans need firm assurance that the rule of law will be applied fairly by the Justice Department. Never again can there be partisan allegiance required of incoming professionals, or political criteria that outweigh the legal and ethical.

The impartial administration of justice in this nation, its very credibility, was nearly destroyed by the tyrannical ambitions of a few.

How’s that for big news almost buried?

Who Will Look After the Economy Until January?

Go to Original
By Robert Kuttner

Bush, Bernanke, Paulson, and the incoming president would do well to avoid the mistakes of the Hoover-Roosevelt interregnum, a stand-off that made it even more arduous to climb out of the Great Depression once Roosevelt finally took office.

The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.
-Antonio Gramsci, Prison Notebooks

In late 1932, as large numbers of banks began to fail, there was a five month pause between Election Day and the inauguration of the new president, which was then held in March. It was the worst possible time for a long interregnum. Banks were failing, by the hundreds. One American in four was unemployed.

Herbert Hoover, now the lame-duck president, repeatedly tried to enlist Franklin Roosevelt’s support for some form of emergency bank closure proclamation, relying on emergency wartime legislation enacted in World War I. But Roosevelt did not want to be tainted by the failed Hoover, and Hoover would not act on his own authority without Roosevelt’s concurrence.

As late as 1 a.m. on the eve of Roosevelt’s inauguration, top aides to the incoming and outgoing chief executives were sparring over possible plans, and Roosevelt was still resisting Hoover’s pleas that the two issue some kind of joint order. When Roosevelt did act as president, his first week in office, to declare a "bank holiday" while federal officials sorted out the mess and re-opened sound banks, the plan looked much like Hoover’s.

If that Barack Obama is our next president, the interregnum, now "only" two-and-a-half months, will take on many of the morbid characteristics of the winter of 1932. George W. Bush is a spent force -- an irrelevance. On November 5, Barack Obama becomes the chief executive in-waiting, while the legal powers of office still belong to Bush. The Paulson plan, not even a week old, has been adjudged a failure by the world’s financial markets. We are on the verge of a full blown depression, and time is of the essence.

Ideally, the House and Senate leadership, working with Obama’s team, would be developing their strategy for rescuing the economy. A post-election session of the lame duck Congress, Democratic but less so than the incoming one, would be called back to Washington to work on emergency legislation -- to recapitalize banks, refinance mortgages, and pump money into the consumer economy.

However, my round of reporting this week suggests that Obama and the congressional leadership are not there yet. The leaders on Capitol Hill are literally exhausted after nearly two weeks of twenty-hour days brokering the Paulson plan, and stunned that their efforts have not borne fruit. The Obama people are looking to January to launch an emergency program rather than November. And to the extent that their eyes are on November, the focus is November 4, not November 5. "First, we have to get him elected," one senior economic aide told me. Yet, as Obama himself said, in one of his most elegant put-downs of McCain, a president needs to be able to more than one thing at a time.

The general belief is that Treasury Secretary Paulson has been granted sufficient powers by the legislation to take an equity share of banks, and to refinance a lot of mortgages -- if he chooses to use it. But the powers are vague, and they depend on Paulson’s disposition to behave more like Roosevelt rather than like the private investment banker that he was -- and continues to resemble.

"Between the Fannie and Freddie rescue and the Paulson plan," one official told me, "we probably own two-thirds of the mortgages in America." But "we" in this case is the Treasury Department, peopled by former officials of Goldman Sachs, who demonstrate far less concern for the distressed homeowners than for the bondholders.

The Treasury Department simply does not have the staff or the competence, and may not have the political will, to lead a mass refinancing of mortgages. This morning’s Wall Street Journal reports that fully one mortgage in six now carries more debt than the underlying value of the home. Even John McCain has called for something bolder and more direct than the Paulson plan.

The one federal agency with something close to the competence and experience to take the lead on large-scale refinancings is the Federal Deposit Insurance Corporation, a far more aggressive and interventionist agency than Paulson’s Treasury Department. But in the jousting over the details of the bill, Paulson made sure that the FDIC was excluded from the inter-agency panel that oversees Treasury’s actions. That cannot bode well.

Assuming Obama wins, there will be a Democratic successor to Paulson and that Treasury will doubtless use the powers granted Paulson far more aggressively. But that will be after January 20. And at the rate that the financial system is collapsing, even three months is an eternity.

The two other key players in this morbid interregnum are Fed Chairman Ben Bernanke, whose tenure will continue into the Obama administration, and House Speaker Nancy Pelosi. Bernanke continues to expand the emergency powers of the Fed, now venturing into uncharted waters by having the central bank go into markets and buy unsecured short term commercial loans, a power not even granted Paulson by the recent legislation. It would be far better if Bernanke worked in concert with an overall strategy devised by the incoming administration.

Pelosi is on board for an emergency second stimulus package, to be enacted right after the election, this time in the range of $250 billion. At the rate the economy is cratering, she will get little of the usual resistance from Democratic blue-dogs and Republican foes of big government. Even "earmark" will become a good word again, since the whole country will be earmarked for help. But if the banking system goes down the drain, and housing foreclosures intensify, a fiscal stimulus will not be sufficient.

Obama, Bush, Bernanke, and Paulson would do well to avoid the mistakes of the Hoover-Roosevelt interregnum, a stand-off that made it even more arduous to climb out of the Great Depression once Roosevelt finally took office. As difficult as it may be, they need to negotiate a much bolder emergency program that Obama can carry out. And they should move right after Election Day, and begin the planning right now.

Bush, you will recall, took office promising to be "a uniter, not a divider." Obama has promised to bridge differences, beyond ideology and party. Both candidates have pledged, ad nauseam, to put country above politics because of the emergency. This would be a good moment to actually act on those pledges. For Bush, it would be the one grace note of a failed presidency. For Obama, it would allow a beginning on a bipartisan high. And it might even spare 300 million Americans the worst.

County Officials Seeking Ohio Voters' Records

Go to Original

Law enforcement officials in a southwest Ohio county populated with Democrat-leaning college students are seeking information on hundreds of people who registered to vote and cast ballots during the state's weeklong same-day voting window.

The window was the subject of an unsuccessful legal challenge by the Ohio Republican Party.

Greene County Sheriff Gene Fischer, a Republican, requested registration cards and address change forms Thursday for all 302 people who took advantage of the window. He told elections officials he had been flooded with telephone calls from people concerned about possible fraud.

Representing Fischer is County Prosecutor Stephen Haller, a former law partner of Mike DeWine. DeWine, a former U.S. senator, chairs the Ohio campaign of Republican presidential nominee John McCain.

McCain's rival, Democrat Barack Obama, launched a major push to attract new voters during the window.

Haller said the records request was not politically motivated.

The county is home to five colleges or universities: Wright State, Central State, Wilberforce and Cedarville universities and Antioch College. Cedarville is a Christian college.

Lyn McCoy, the county's deputy elections director, said Thursday that the records request was being processed. Names, telephone numbers and Social Security numbers will be blackened out before the documents are release, she said.

Tom Miller, chief of the prosecutor's civil division, said Fischer is seeking information so that he can prevent voter fraud. He made it clear to prosecutors that his concerns were not partisan, Miller said, even noting during their discussion that students at one college, Cedarville, tend to vote Republican.

Among concerns presented to county officials were that college students who voted during the window would be able to vote again in their home counties on Election Day, and that early voters might simultaneously register and vote in Ohio and in another state, Miller said.

''There's certain information that the sheriff was hoping to appear on that voter registration that might enable him to track backward and determine whether there was any voter fraud or not,'' Miller said.

He said Fischer had been careful to express questions raised only as concerns, not allegations.

''No one was alleging that voting fraud was occurring,'' he said. ''It seemed to be of concern whether safeguards were in place to prevent those things from occurring.''

McCoy said she assured the sheriff and prosecutor's office that county and state election officials have practices in place to catch duplicate registrations and to prevent multiple votes by the same voter. They also will send a notice to the election board for the voter's old address indicating their registration there should be canceled.

Miller said voter registration forms are public records and the sheriff -- and any other member of the public -- is entitled to the information. He said Fischer wanted to submit his request at least 21 days before the election, because Ohio law gives election boards a reprieve from filling records request during the three weeks prior to an election.

U.S. to Buy Stakes in Banks to Help Free Credit

Go to Original

The Treasury secretary Henry M. Paulson Jr. said Friday that the government would move ahead with a plan to take equity stakes in financial institutions as it tried to restore confidence in the financial system.

Mr. Paulson’s comments came shortly after the finance heads of the world’s major economies promised to work together to ease the global financial crisis that had roiled the markets for the last week.

“We are developing strategies to use the authority to purchase and insure mortgage assets and to purchase equity in financial institutions, as deemed necessary to promote financial market stability,” Mr. Paulson said in a news conference.

The administration had floated the idea of taking the bank stakes earlier this week after having tried without success to unlock frozen credit markets. The hopes is that taking ownership stakes in many United States banks would help restore confidence in the financial system.

Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks’ balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.

“Consistent with the legislation,” Mr. Paulson said, “any equity the government purchases through a broadly available equity program would be on a non-voting basis, except with respect to the market standard terms to protect our rights as investors.”

Before Mr. Paulson’s comments, finance officials from the world’s top economic powers endorsed a plan that called for urgent action to solve the credit crisis. Under the plan, the countries vowed to protect major banks and to prevent their failure. They also committed to working to get credit flowing more freely again, support efforts by banks to raise money, bolster deposit insurance and revive the battered mortgage financing market.

Specifically, the group said that it wanted to “ensure that our banks and other major financial intermediaries, as needed, can raise capital from public as well as private sources, in sufficient amounts to re-establish confidence and permit them to continue lending to households and businesses.”

The statement said that the actions “should be taken in ways that protect taxpayers and avoid potentially damaging effects on other countries,” and added that it strongly support the crucial role of the International Monetary Fund in “assisting countries affected by this turmoil.”

In the statement, the finance leader they would use all of the tools available to prevent systemically important institutions from failure and ensuring that banks can raise capital.

The frozen credit markets have been cited as a major source of the current economic problems, as banks have become reluctant to lend and the commercial paper market, which businesses rely upon to finance day-to-day operations have dried.

The actions came on a day that the Dow closed down about 100 points, its eighth consecutive decline.

Between the start and the finish was a day in which the Dow Jones industrial average swung 1,000 points and a final hour in which the market moved from almost 400 points down to 300 points higher, only to close down 128 points, or 1.4 percent, to 8,451.19. Friday’s close was the Dow’s lowest since April 25, 2003.

Another day, another series of violent swings. The Dow has lost 1,874.19 points, or 18.2 percent, in the last week, more than the 17 percent drop in the week that ended July 22, 1933.

The broader Standard & Poor’s 500-stock index fell 10.70 points or 1.1 percent, to 899.22 on Friday. The technology heavy Nasdaq managed to finish slightly higher, adding 4.39 points, to 1,649.51.

In the oil markets, crude for November delivery closed down $8.98, to $77.61 a barrel, the lowest since October 2007.

“People are scared,” Howard Silverblatt, senior index analyst at Standard & Poor’s, said. “Nobody believes what is coming out of the mouths of politicians, chief executives.”

The volatility came amid unrelenting pessimism about the health of the global economy and world governments’ ability to solve the global financial crisis.

President Bush sought to reassure the American people, and by extension the markets. “My fellow citizens, we can solve this crisis, and we will,” Mr. Bush said. .

So far, efforts and reassurances by the various governments to help restore confidence in the financial system have failed to open the credit markets, the short-term financing that businesses depend on to finance their daily operations.

“We are fighting really dire fundamentals,” said Gerhard Schwarz, an equity strategist at UniCredit in Munich. “It will require restoring trust and confidence before a sustained rebound will be possible.”

Investors and banks remained reluctant on Friday to lend money to one another for more than one day at a time. Commercial paper, a short-term i.o.u. used by corporations, was 4.7 percent for three-month loans, little changed from Thursday. The rates on overnight loans, however, fell to 1.8 percent, from 2.4 percent.

The amount of commercial paper outstanding fell 3.5 percent, to $1.55 trillion, for the week ended on Wednesday, according to the Federal Reserve. Since August, the amount of that debt has declined almost 14 percent.

At the same time, investors sought safety in Treasury bills, driving down the yield on one-month and three-month government debt to nearly zero, meaning that investor were willing to accept no return for the assurance of buying debt backed by the federal government.

But the price of longer-term Treasuries fell and yields, which move in the opposite direction of prices, shot up. The 10-year Treasury note yielded 3.87 percent in the early afternoon, up from 3.79 percent on Thursday. The move may reflect an announcement earlier in the week that the Treasury would issue more debt in the coming weeks.

In his statement, Mr. Bush said the federal government had “immense resources and a wide range of tools” to combat the crisis, and would use them aggressively.

He reiterated his belief in the recently enacted $700 billion financial rescue program and said that government officials were working with their counterparts in other nations to ease a crisis that is truly global.

“We’re in this together, and we’ll come through this together,” Mr. Bush said, addressing the people of the world as well as those of the United States. Speaking to Americans, the president said they “can be confident in our economic future” because they, like the nation’s economy, are “innovative, industrious and resilient.”

Although the president said nothing new in terms of policies or proposals, his remarks in the White House Rose Garden were nevertheless remarkable, reflecting how rapidly financial events have moved on and the extent to which worries in the United States reverberate around the world, and vice versa.

In Canada, the Toronto Stock Exchange index, which is heavily weighted with energy and commodity stocks, fell below 9,000 points for the first time since January 2005 on heavy trading. Although as the market closed it crept up to 9,065.2. That nevertheless reflected a 534.98-point drop.

Markets across Latin America were also lower, and the Mexican central bank was forced to auction off $6.4 billion in foreign reserves to push up the peso.

The major exchanges in Europe and Asia also declined Friday, adding new urgency to efforts to find a solution to the global financial problems and restore confidence in the markets.

European markets fell more than 10 percent at the opening, and stayed lower. In London, the FTSE 100 index was down 8.8 percent. In Paris, the CAC-40 was about 7.7 percent lower, and the DAX in Frankfurt was down about 7 percent.

Shares in Asia also declined. The Nikkei 225 stock index in Japan — already reeling from a nearly 10 percent drop Wednesday — slumped 9.6 percent on Friday, closing at 8,276.43.

Shares of the investment bank Morgan Stanley were down another 22.25 percent Friday after closing down 25.8 percent at $12.45 on Thursday. The bank has been fighting off speculation that its deal to raise $9 billion from Mitsubishi UFJ of Japan had run into trouble. But executives for both banks have said the deal was set to close Tuesday.

In Asia, the Japanese benchmark index has given up more than 25 percent of its value this month. The Hang Seng index in Hong Kong fell 7.2 percent on Friday, while the ASX/200 index in Sydney closed 8.3 percent lower.

“The fear indexes are dramatically high,” Mr. Schwarz noted, pointing to measures of volatility in the markets that were near record highs. “We are seeing intraday volatility this week of 7 percent to 9 percent in Europe.”

Ex-president Carter slams Bush on market crisis

Go to Original

Former President Jimmy Carter said on Friday the "atrocious economic policies" of the Bush administration had caused the worst global financial crisis since the Great Depression of the 1930s.

Carter told reporters on a stopover in Brussels that "profligate spending," massive borrowing and dramatic tax cuts since President George W. Bush took office in 2001 were behind the market turmoil and economic crisis.

"I think it's because of the atrocious economic policies of the Bush administration," said the 84-year-old Democrat, who served in the White House from 1977-1981 during a period of high inflation and energy crisis.

Whoever wins next month's U.S. presidential election would inherit economic problems that would force them to postpone implementing some of their proposed reforms, he said.

"The economic situation is an entrenched problem. It is going to take years to correct what has been done economically," Carter said, adding he hoped Democrat Barrack Obama would win and immediately improve Washington's image in the world.

Eight years ago, the United States had a budget surplus, low inflation and a stable, strong economy, he said.

Carter said he was astonished that the United States now owed China "in the neighborhood of $1 trillion."

Deregulation and what he called a withdrawal of supervision of Wall Street had encouraged irresponsible elements in the U.S. financial system, enabling banks to borrow 30 times their value.

Carter was on his way back from a private peace mission to Cyprus with fellow elder statesmen Lakhdar Brahimi of Algeria and Archbishop Desmond Tutu of South Africa, intended to give a push to talks between the Greek Cypriot and Turkish Cypriot leaders on a settlement to reunite the divided island.

The End Of American Capitalism?

Go to Original
By Anthony Faiola

The worst financial crisis since the Great Depression is claiming another casualty: American-style capitalism.

Since the 1930s, U.S. banks were the flagships of American economic might, and emulation by other nations of the fiercely free-market financial system in the United States was expected and encouraged. But the market turmoil that is draining the nation's wealth and has upended Wall Street now threatens to put the banks at the heart of the U.S. financial system at least partly in the hands of the government.

The Bush administration is considering a partial nationalization of some banks, buying up a portion of their shares to shore them up and restore confidence as part of the $700 billion government bailout. The notion of government ownership in the financial sector, even as a minority stakeholder, goes against what market purists say they see as the foundation of the American system.

Yet the administration may feel it has no choice. Credit, the lifeblood of capitalism, ceased to flow. An economy based on the free market cannot function that way.

The government's about-face goes beyond the banking industry. It is reasserting itself in the lives of citizens in ways that were unthinkable in the era of market-knows-best thinking. With the recent takeovers of major lenders Fannie Mae and Freddie Mac and the bailout of AIG, the U.S. government is now effectively responsible for providing home mortgages and life insurance to tens of millions of Americans. Many economists are asking whether it remains a free market if the government is so deeply enmeshed in the financial system.

Given that the United States has held itself up as a global economic model, the change could shift the balance of how governments around the globe conduct free enterprise. Over the past three decades, the United States led the crusade to persuade much of the world, especially developing countries, to lift the heavy hand of government from finance and industry.

But the hands-off brand of capitalism in the United States is now being blamed for the easy credit that sickened the housing market and allowed a freewheeling Wall Street to create a pool of toxic investments that has infected the global financial system. Heavy intervention by the government, critics say, is further robbing Washington of the moral authority to spread the gospel of laissez-faire capitalism.

The government could launch a targeted program in which it takes a minority stake in troubled banks, or a broader program aimed at the larger banking system. In either case, however, the move could be seen as evidence that Washington remains a slave to Wall Street. The plan, for instance, may not compel participating firms to give their chief executives the salary haircuts that some in Congress intended. But if the plan didn't work, the government might have to take bigger stakes.

"People around the world once admired us for our economy, and we told them if you wanted to be like us, here's what you have to do -- hand over power to the market," said Joseph Stiglitz, the Nobel Prize-winning economist at Columbia University. "The point now is that no one has respect for that kind of model anymore given this crisis. And of course it raises questions about our credibility. Everyone feels they are suffering now because of us."

In Seoul, many see American excess as a warning. At the same time, anger is mounting over the global spillover effect of the U.S. crisis. The Korean currency, the won, has fallen sharply in recent days as corporations there struggle to find dollars in the heat of a global credit crunch.

"Derivatives and hedge funds are like casino gambling," said South Korean Finance Minister Kang Man-soo. "A lot of Koreans are asking, how can the United States be so weak?"

Other than a few fringe heads of state and quixotic headlines, no one is talking about the death of capitalism. The embrace of free-market theories, particularly in Asia, has helped lift hundreds of millions out of poverty in recent decades. But resentment is growing over America's brand of capitalism, which in contrast to, say, Germany's, spurns regulations and venerates risk.

In South Korea, rising criticism that the government is sticking too close to the U.S. model has roused opposition to privatizing the massive, state-owned Korea Development Bank. South Korea is among those countries that have benefited the most from adopting free-market principles, emerging from the ashes of the Korean War to become one of the world's biggest economies. It has distinguished itself from North Korea, an impoverished country hobbled by an outdated communist system and authoritarian leadership.

But the repercussions of crisis that began in the United States are global. In Britain, where Prime Minister Margaret Thatcher joined with President Ronald Reagan in the 1980s to herald capitalism's promise, the government this week moved to partly nationalize the ailing banking system. Across the English Channel, European leaders who are no strangers to regulation are piling on Washington for gradually pulling the government watchdogs off the world's largest financial sector. Led by French President Nicolas Sarkozy, they are calling for broad new international codes to impose scrutiny on global finance.

To some degree, those calls are even being echoed by the International Monetary Fund, an institution charged with the promotion of free markets overseas and that preached that less government was good government during the economic crises in Asia and Latin America in the 1990s. Now, it is talking about the need for regulation and oversight.

"Obviously the crisis comes from an important regulatory and supervisory failure in advanced countries . . . and a failure in market discipline mechanisms," Dominique Strauss-Kahn, the IMF's managing director, said yesterday before the fund's annual meeting in Washington.

In a slideshow presentation, Strauss-Kahn illustrated the global impact of the financial crisis. Countries in Africa, including many of those with some of the lowest levels of market and financial integration and openness, are now set to weather the crisis with the least amount of turbulence.

Shortly afterward, World Bank President Robert Zoellick was questioned by reporters about the "confusion" in the developing world over whether to continue embracing the free-market model. He replied, "I think people have been confused not only in developing countries, but in developed countries, by these shocking events."

In much of the developing world, financial systems still remain far more governed by the state, despite pressure from the United States for those countries to shift power to the private sector and create freer financial markets. They may stay that way for some time.

China had been resisting calls from Washington and Wall Street to introduce a broad range of exotic investments, including many of the once-red-hot derivatives now being blamed for magnifying the crisis in the West. In recent weeks, Beijing has made that position more clear, saying it would not permit an expansion of complex financial instruments.

With the U.S. government's current push toward intervention and the soul-searching over the role of deregulation in the crisis, the stage appears to be at least temporarily set for a more restrained model of free enterprise, particularly in financial markets.

"If you look around the world, China is doing pretty good right now, and the U.S. isn't," said C. Fred Bergsten, director of the Peterson Institute for International Economics. "You may see a push back from globalization in the financial markets."

Vote Rigging and Suppression Ahead of the 2008 Election

Go to Original
By Democracy Now!

ROBERT F. KENNEDY, JR. "A lot of Europeans wonder, why are Americans so crazy? They keep reelecting this guy. Well, the answer is, we don’t. You know, they keep stealing these elections. And they stole it in 2000, they stole it in 2004, and they’re all set up to steal it again."

Real Video Stream - Real Audio Stream - MP3 Download

JUAN GONZALEZ: Election Day is less than a month away, and a record-breaking voter turnout is expected in the 2008 race. But voting rights groups are warning that tens of thousands of registered voters might not be able to cast a ballot come November 4th.

Beyond the documented problems of electronic voting machines, thousands of names have been purged from the rolls in several states, including at least six swing states. In some states, voters have been deemed ineligible because of voter registration laws that require photo identification or due to state officials checking voter names against Social Security databases.

Democrats and Republicans are locked in court battles over these in a number of states across the country. While Democrats say they’re trying to prevent attempts to block votes, Republicans say they are trying to prevent voter fraud.

AMY GOODMAN: Today, we spend the hour looking at voting rights and the political manipulation of the voting process. We begin with a report filed by BBC investigative journalist Greg Palast on how both parties are accusing each other of trying to steal the election.

    GREG PALAST: There’s a war on for that White House over there. Both political parties say the other is trying to take it, not by winning the vote, but by stealing it. In fact, the Democrats say the Republicans have done it before.

    ROBERT F. KENNEDY, JR.: You know, a lot of Europeans wonder, why are Americans so crazy? They keep reelecting this guy. Well, the answer is, we don’t. You know, they keep stealing these elections. And they stole it in 2000, they stole it in 2004, and they’re all set up to steal it again.

    GREG PALAST: Now, the Republicans accuse the Democrats of voter fraud on a massive scale. Republicans charge that Democrats have registered as many as five million illegal aliens, fakes, felons and fraudulent voters.

    So, the question is, are the Democrats stuffing the rolls with millions of bogus voters, or are the Republicans blocking millions of genuine voters?

    The answer is buried somewhere out here. This is no country for old men—or young ones, for that matter. It’s economic ghost town. This is the desert town of Las Vegas—the other one, Las Vegas, New Mexico—where they made the movie No Country for Old Men. For many people, work as extras on the film was the only work they had all year. Even the candidates for office are back on horseback to save gas. Odd thing, in elections earlier this year in New Mexico, one in nine people who turned up at the polls found their names had simply vanished from the voter rolls.

    LAS VEGAS RESIDENT: I wasn’t on the list, and I had to do one of those—



    VOTER REGISTRAR CLERK: OK, let me tell you. Those lists came from the Secretary of State’s office. We—the local clerk did not have anything to do with that.

    GREG PALAST: What’s going on here? We asked this man, County Elections Supervisor “Pecos” Paul Maez.

    So, people are losing their vote?

    “PECOS” PAUL MAEZ: Yes, because they’re not on the voter rolls, you know.

    GREG PALAST: Even the supervisor had his own surprise.

    I understand you had a problem.

    “PECOS” PAUL MAEZ: I had a problem during the caucus, yes.

    GREG PALAST: What happened? Your name was missing?

    “PECOS” PAUL MAEZ: It was—yes.

    GREG PALAST: And it didn’t say “Pecos Paul” on the voter roll?

    “PECOS” PAUL MAEZ: It didn’t say “Pecos Paul.” It actually—

    GREG PALAST: Wait, you’re the elections—you’re the elections supervisor. It didn’t have your name on the voter roll?

    “PECOS” PAUL MAEZ: Yeah.

    GREG PALAST: The presidency could be decided right here. Republicans won New Mexico last time by barely 5,000 votes. Which voters have gone missing?

    A lot of poor folk on this street—officially, they don’t exist. In fact, this whole street doesn’t exist.

    Low-income voters, especially, have been purged from voter rolls under new US law. Republicans claim these purge laws are needed to prevent voter fraud. We caught up with one of the party’s top anti-fraud crusaders at a Republican celebration. Lawyer Pat Rogers singled out ACORN, a Democratic Party-linked group.

    Are the Democrats using fraudulent means to stuff the voter rolls and steal the election?

    PAT ROGERS: My experience in Albuquerque with the ACORN group is that they were involved in serious registration fraud. My experience in Albuquerque with the elections over the last few years have indicated that there have been isolated instances of voter fraud.

    GREG PALAST: It’s true that several ACORN workers were convicted of making up fake names for the voter rolls, because they were paid for each name they collected. But there’s no evidence that any fictional voter actually cast a ballot. Rogers still fears they’ll appear in November.

    PAT ROGERS: If you’re going to go to this effort and this expense of having fraudulent people register, why would you do that? People say that there is no fraud here, but there is.

    GREG PALAST: I drove into Detroit to investigate whether Republican plans to stop fraudulent voters might also capture innocent victims of the economic crisis. In Michigan, 62,000 families now face losing their homes to foreclosure on their mortgages. In neighborhoods like this, half the houses have been repossessed.

    ROBERT PRATT: This house here is vacant. I mean, they’re nice houses. Look at this house. This is a nice house right here.

    GREG PALAST: This is Robert Pratt. He’s next on the list.

    ROBERT PRATT: This house here is vacant. Yeah, it’s empty. This house is empty.

    GREG PALAST: That makes it impossible for you to sell your house.

    ROBERT PRATT: To sell any house. This house is vacant. Then you look across the street over there, those houses are vacant.

    I work straight with no overtime, no off-days. I’m talking seven days a week, eight hours a day. Yes.

    GREG PALAST: So you’re trying to get these built [inaudible].

    ROBERT PRATT: Yes, yes, yes. I want to build. I want—I mean, look at our neighborhood. Our neighborhoods are starting to look like a battle zone.

    GREG PALAST: As the neighborhood spun down into poverty and violence, his son, just twelve years old, playing in the backyard, was shot dead by a stray bullet.

    ROBERT PRATT: This is my son. This is my son here. This is Robert.

    GREG PALAST: He’s lost his son, his home, and now he could lose his vote. A reporter for the Michigan Messenger wrote that the local Republican chairman told the journalist that his party would challenge residents right at the polling station to stop them from voting if their names are on a foreclosure list. The Republicans now deny this. But the Michigan Messenger sticks by its story.

    There’s another issue. If you lose this house, there is an allegation that the Republican Party is—

    ROBERT PRATT: Don’t want us to vote. And that’s not—I mean, that’s like saying we’re not a United States citizen anymore. You know, we lose our house, we lose our right to vote. That’s not right. That’s not fair.

    GREG PALAST: This is the second time this family has faced foreclosure. Last time, they were thrown out by a company called Trott & Trott, a firm that evicts more than a hundred Michigan homeowners every day.

    ROBERT PRATT: Trott & Trott—I mean, come on. That’s a mortgage company that’s here in Michigan that then got a lot of peoples and put a lot of peoples out on the street. I mean, to a lot of homeowners, that’s like an enemy.

    GREG PALAST: Home after home after home, foreclosed, boarded up, abandoned.

    But in an exclusive enclave nearby, there are no boards over the windows. These go for $10 million apiece.

    Wow! No foreclosure sign on this house. This is the home of David Trott. He is Michigan’s foreclosure king. No one has evicted more families in this state.

    What’s this below the Stars and Stripes? The Jolly Roger? It’s Mr. Trott’s flag. And this is Mr. Trott’s office. And it’s also Mr. McCain’s office.

    The Republicans are renting their local headquarters from Mr. Trott’s eviction operation.

    Greg Palast, BBC Television.

    The Republicans wouldn’t speak with us, but they deny they are going to use foreclosure lists to challenge voters. So, we went upstairs.

    And right upstairs from McCain headquarters, Mr. Trott.

    David Trott not only houses the Republican Party, he’s also one of their biggest Michigan contributors. He and his wife have given hundreds of thousands to the party.

    McCain has just given up on Michigan, yet the foreclosure controversy remains key to swing states Nevada and Florida.

    And now, to the critical swing state of Colorado, where SUVs have replaced the buffalos that used to roam the plains. According to this report, Colorado voters are going the way of the buffalo: they’re disappearing. This government report says that nearly one in five voters, 19.4 percent, were taken off the rolls in an unparalleled, massive purge. Democrats accuse Republican Secretary of State Donetta Davidson of orchestrating the purge. But she says local officials have the final say over voter rolls.

    She ended up here, in Washington, when George Bush appointed her head of the United States Elections Assistance Commission, where her job is to tell the rest of the nation how to run unbiased elections. She commissioned a report on election fixing. The report came in like this, but came out like this. It was written by Republican and Democratic experts. They concluded that Republican fears of widespread voter fraud were unfounded. This is the report’s author, Tova Wang.

    TOVA WANG: This idea of massive in-person polling place fraud on Election Day is just an absolute myth.

    GREG PALAST: The bipartisan team found Democrats were right to worry that legitimate voters were being excluded, but by the time Bush’s chairwoman published the report, the experts’ conclusions were turned upside-down.

    TOVA WANG: They left out a lot of the information that we provided regarding voter intimidation and vote suppression. They left out—edited out a number of things that could be perceived as critical of the Department of Justice’s handling of voter intimidation cases.

    GREG PALAST: US law permits political party workers to go right into the polling stations and challenge voters when they show up to vote. Experts fear this could lead to intimidation of legitimate voters. Despite the election experts’ views, Republicans demanded new grounds for challenge, they said, to stop Democrats cheating.

    UNIDENTIFIED: We know that, and we know—your party rests on the base of electoral fraud.

    GREG PALAST: The answer came from the man known as Bush’s brain, Karl Rove, who demanded new ID voting laws.

    KARL ROVE: I go to the grocery store, and I want to cash a check to pay for my groceries, I’ve got to show a little bit of ID. Why should it not be reasonable and responsible to say that when people show up at the voting place, they ought to be able to prove who they are by showing some form of ID?

    GREG PALAST: New ID laws will hit black voters hardest, says Robert F. Kennedy, Jr., son of the late attorney general, and voting rights lawyer.

    You know, Karl Rove said he goes to the grocery store, he has to show an ID to cash a check. So, why can’t you be required to show a photo ID when you vote for president of the United States?

    That seems sensible. However, in America, it raises a racial issue.

    ROBERT F. KENNEDY, JR.: I have an ID, and most Americans have an ID. But one out of every ten Americans don’t have a government-issued ID, because they don’t travel abroad, so they don’t have passports, and they don’t drive a car, so they don’t have driver’s licenses. The number rises to one in five when you’re dealing with the African American community.

    GREG PALAST: Altogether, an estimated 100,000 black voters in just one swing state, Indiana, will lose their vote to the new law.

    But when I stopped by the Native American pueblos of New Mexico, I discovered that when it comes to voter suppression, Democrats don’t have clean hands, either. Local politicians wanted to reopen a uranium mine on the pueblos’ sacred mountain. The pueblos were not happy.

    NATIVE AMERICAN MAN: See, that’s a very sacred mountain that we have. There is a place, special place, that we pray for—to have a nice summer, have good rain.

    GREG PALAST: The officials gave the pueblos ballots without envelopes. Then these same politicians threw out their votes, because they didn’t come in the right envelopes. The Democrats were charged with cheating the pueblos by this man, David Iglesias, a rising Republican star appointed US prosecutor by George Bush. But the Bush administration wanted him to go after individual Democrat voters. Republicans bombarded Iglesias with allegations of fraud by Democrats.

    DAVID IGLESIAS: Over 100 complaints we investigated for almost two years. I didn’t find one prosecutable voter fraud case in the entire state of New Mexico.

    GREG PALAST: So the Bush administration fired him.

    Not prosecuting innocent people led to your removal?

    DAVID IGLESIAS: Yeah. I mean, they wanted some splashy pre-election indictments that would scare these other—these alleged hordes of illegal voters away. They were looking for politicized—for improperly politicized US attorneys to file bogus voter fraud cases.

    GREG PALAST: In the last presidential election, officially, three million votes were cast and never counted. This time, it could go a lot higher.

    And then, there is the chronic shortage of voting machines. In Ohio last time, voters in prosperous white neighborhoods waited only fifteen minutes to vote, while voters in poor black areas waited in line four hours. It all adds up, and it can change the outcome.

    TOVA WANG: If you combine people who are disenfranchised by voter ID, people who are disenfranchised by other things, such as there not being enough voting machines, combined with people who will be shut out because they have been left off the voter registration list, that’s enough to swing the election.

    GREG PALAST: If the final count is as close as the polls indicate, the next man in that house won’t be chosen by counting the votes, but by blocking the voters.

AMY GOODMAN: A report on voting rights filed by investigative journalist Greg Palast for BBC Newsnight. When we come back from break, he joins us live. Then we’ll be talking to the Secretary of State of Ohio and find out about a new report on voter purging around the country. Stay with us.


AMY GOODMAN: Greg Palast, BBC investigative reporter, joins us here in our firehouse studio, author of Armed Madhouse, as well as The Best Democracy Money Can Buy and Democracy and Regulation. Right now, he has teamed up with Robert F. Kennedy, Jr. to investigate this year’s election. They’ve just released a voting guide comic book called Steal Back Your Vote.

Welcome to Democracy Now!, Greg Palast.

GREG PALAST: Glad to be here. Let’s see how many we can steal back.

AMY GOODMAN: And your piece is coming out in Rolling Stone next week. Just summarize what we just watched, what you found as you traveled the country, the most egregious problems of people taken off the voting rolls.

GREG PALAST: Well, that’s the problem, is that we have millions and millions and millions of people being purged off the voter rolls, like in the state of Colorado, it was stunning to find out that one in five voters had their names simply erased by the Republican secretary of state. And then George Bush found—picked her out and made her the head of the US Elections Assistance Commission, as—you know, our joke in the comic book is that Bush wanted to name her “purgin’ general,” but Rove said it was a bit too much. So, this is one of the big problems.

You’re going to have millions of people walk into the voting booth, if you’re in Colorado, especially in New Mexico, Nevada, Ohio, Michigan—if you have any foreclosure problems, anything, they’re going to tell you you can’t vote, and they’re going to try to either get you out of the voting booth or give you a provisional ballot. And what we’re trying to tell you is how you can, in effect, steal it back.

So, look, Kennedy and I are coming out with an exposé in Rolling Stone next week on the massive theft of the vote in November. And we were kind of shaken up about it, because—so, Jesse Jackson recommended to us, said, “Look, that’s so grim. You’re going to discourage people from voting. They’re going to say there’s no chance. So you’ve got to do something.” So what we did is we—you know, facing a democracy crisis in America, we did what you have to do, which is to create a comic book. And it’s twenty-four pages of full color with the idea that it tells you—it gives you the Rolling Stone story, with Ted Rall and other great comics laying it out, but then also telling you how you—you know, how you steal it back. And so, we have six ways that they’re stealing the election, but then seven ways you can steal it back.

JUAN GONZALEZ: Well, one of the things that we were talking as the film was playing, the—you’re not often getting Democratic leaders in some of these states really raising a ruckus about this issue.

GREG PALAST: Oh, yeah.

JUAN GONZALEZ: And why is that? In terms of your investigations, for instance, in New Mexico, you mentioned that some of the Democratic leaders were willing to go along with these kinds of purges.

GREG PALAST: Well, as—you know, why don’t Democrats stand up? For the same reason as jellyfish. They don’t—you know, invertebrates, but—or as my co-author, Kennedy, said, they’re cowards. But, you know, he’s true blue. I’m not a Democrat. And, by the way, the guide is totally nonpartisan, so you—which means you can take it into the booth with you, by the way, to protect yourself, the Steal Back Your Vote comic.

And why don’t the Democrats protect voters? Because they’re in on the game. As you saw in New Mexico, you had Democratic Party officials knocking off the Native American vote, which is huge in New Mexico. It’s a swing vote in New Mexico. And they’re all Democrats—Native Americans—almost to a one. But they wanted to stop a uranium mine locally, and so the local policy want their baksheesh from the uranium mine are knocking off Native American votes. We see this in Colorado, we see this in Florida, where local Democratic officials are in on the purge, in on the game, trying to block the low-income minority voters. There are so many dangers now for the new voter, for the minority voter, for the elderly voter. There are so many tricks that they’re using now. It’s not one thing.

You know, I think a lot of people remember me from busting open the Florida purge of 2000 when Katherine Harris said that thousands of black folk were felons, when their only crime was voting while black. You know, that was kind of the magic bullet they gave in Florida. Kennedy, my co-author of the comic book and Rolling Stone article, showed how they stole Ohio.

Now what we see is a nationwide kind of Floridation of the nation, under something called the Help America Vote Act, because, you know, Bush is now trying to help us vote. It’s under the Help America Vote Act, where it’s like a whole series of things. So we have the mass purges. We have new ID laws.

How many new voters in America that have just signed up and all of those Obamaniacs realize that if you mail in your ballot on a first-time vote, almost every state requires you to also include a photocopy of your government ID? Obama is going to lose a million votes from absentee ballots which are mailed in without ID. It’s a new requirement. They don’t tell you that. In some cases, like Kentucky, you’ve got to serve—you have to notarize it. I mean, it’s completely out of control, the mass purging.

But there are things—I don’t want—again, I got to go back to Jesse Jackson’s admonition: don’t be discouraged. In fact, you should be encouraged. You should have the courage to now protect your vote.

JUAN GONZALEZ: And what are some of the ways you can fight back?

GREG PALAST: Yeah. Well, in Steal Back Your Vote, we actually—besides the wonderful comic book, we have a pullout page, which you can get at, that we have print copies. Download copies. Download them right now,

But some of the things you can do is, first of all, don’t mail in your ballot. There’s just too many ways that they can throw it out: you didn’t have your ID, you didn’t have your—you know, you’re not—you’re on some type of purge list, you don’t know it.

Vote early. Today, right now in Ohio, what are you doing after this program? You’re voting. That’s what you’re doing. In Ohio, in Indiana, you can vote right now. In Florida, you can vote right now, in many states, because if you are on a purge list, Amy and Juan, then you have time to correct it, to scream.

We also have the 800 number from Election Protection, so that—bring this in with you, by the way, please. Don’t leave the voting booth. And then we say things like—that’s number four.

AMY GOODMAN: Just go one, two, three, four, five, six, seven.

GREG PALAST: One, don’t mail in your ballot. Don’t go postal.

Second, vote early, vote now.

Three, register and register. What we mean by that is check your registration. We give you a place to go from our sponsor Voto Latino. We also have this in Spanish, Voto Latino.

AMY GOODMAN: You mean, you go online.

GREG PALAST: Go online to, and then you can check your registration and see if you’re valid, how you’re registered, because you better know how it’s spelled. You know, if you’re Robert F. Kennedy, Jr., you better have ID that says “Jr.” on it.

The fourth thing is vote unconditionally, not provisionally. Three million people were handed provisional ballots. Now, if you’re a white listener to this program, you may not know what a provisional ballot is. If you’re Hispanic or you’re black, you sure know what it is, because they gave out three million in almost all minority areas. Provisional ballots are what you get if there’s a dispute on your ballot or your ID. They challenge you. Some guy with a Blackberry from the Republican Party is challenging you. And I’m not being partisan. It’s just the Republicans that are doing this, challenging you. You get a provisional ballot, and then they throw it out. Don’t accept a provisional ballot. Demand adjudication. Go to for the steps on how you do it.

The fifth one is—I call it “occupy Ohio, invade Nevada.” What that means is you should be working, you should be working on Election Day. You should vote early now, and on Election Day help people get out the word, get out the comic book, get out—you know, get out the protection. You can’t win anymore by 51 percent. You’ve got to win by 56. I’m not an Obama supporter, but I do believe that every single vote should count.

Six, we call it date a voter. As our sponsor Jesse Jackson said, arrive with five. But, you know—and what we say is, like bowling and love, don’t vote alone. The reason is, you have to protect each other. And when you go in in a group, it’s a lot easier to have the courage to stand up to the vote thieves when they’re challenging you.

And then, of course, last one is, make the democracy demand, which is that if there is games with the vote, the election doesn’t end then on November 4th. It’s Wednesday that counts as much as Tuesday. We have to change the culture of America, where we stop shrugging our shoulders, like after 2000, 2004, and say we’re going to count the votes right now.

How to Save the U.S. Economy

Go to Original
By Richard C. Cook

The crashing stock market has given its verdict. The financial rescue plan currently being implemented by the U.S. Treasury Department and the Federal Reserve System will fail to revitalize the producing economy, even with continued interest rate cuts. This is because the banking system is essentially a supply-side, trickle-down mechanism with a currency based on a pyramid of bank lending and debt. All the current plans being suggested by economists and others to save the financial system by varying degrees of tinkering are useless. Similarly useless is the pumping in of credit or liquidity by Treasury or the Federal Reserve because it is no more than new debt to roll over old debt.

The cause of the financial failure is that the producing and consumer economy is “maxed out” and is unable to repay existing loans much less new ones. This is because purchasing power in the U.S. has collapsed.

Purchasing power has collapsed not only because we have outsourced our industry abroad and allowed our infrastructure to crumble, but also because of structural defects identified decades ago by C.H. Douglas and John Maynard Keynes. These defects occur due to the need for retained earnings (i.e. savings) to overcome the Law of Diminishing Returns. This leads to insufficient aggregate demand; i.e., the gap between prices and purchasing power that is endemic in an industrial economy.

The problem is not the collapse of the stock market which simply reflects the deflation of the bubble economy. The problem is the oncoming recession/depression caused by the absence of an economic engine to generate new producing power.

Keynesian plans for top-down creation of jobs by government deficit spending has never worked and has always ended in an attempt by the government to inflate its way out of debt. Everything being suggested by the Obama/McCain campaigns is based on the failed Keynesian formula.

An entirely new paradigm is needed. This can be provided through dividend-based economics like the Alaska Permanent Fund, the 2008 tax rebate stimulus, and the basic income guarantee (negative income tax) discussed during the 1960s and 1970s.

Following is the “Cook Plan”:

  1. Non-taxable vouchers should be issued at the rate of $1,000 per month per adult and $500 per month per child which may be used for food, housing, fuel, communications media, utilities, and educational services provided at outlets within the U.S. Distribution of vouchers may be delegated to state and local governments.
  2. Vouchers will be deposited by service providers and vendors only in a new network of local chartered savings banks—one for each county in the U.S. Deposits will be made to the bank in the county of the local point-of-sale.
  3. Banks will lend locally at zero-percent interest using voucher deposits as capitalization. The banks may create loans at a 1:10 reserve ratio with borrowers paying administrative fees only. Borrowers must provide a 20% down payment as collateral or purchase default insurance at 2% of the loan principal.
  4. Lending will be made only to business entities, including family or commercial farms, operating from an established location within the county.

This system will create a grassroots “bottom-up” economic infrastructure to parallel the “top-down” Federal Reserve System which is collapsing. Transfers between local savings banks and the banks of the Federal Reserve System will be denominated in U.S. dollars with vouchers redeemed within the banking system.

The system could be implemented within a matter of weeks through seed-money provided by the federal government. It could be replicated by any other nation.

It is requested that readers give this plan the widest possible distribution.

Voter Purges Could Cause Florida-like Presidential Recounts

Go to Original
By Steven Rosenfeld

With less than four weeks to go before the 2008 presidential vote, new practices in key swing states to update voter rolls are coming under fire for mistakes that could involve rejecting tens of thousands of legitimate voters, suggesting that close vote counts in these states could lead to legal fights echoing Florida’s presidential recount in 2000.

According to a New York Times report on Oct. 9, key swing states -- including Nevada, Ohio, Pennsylvania, Indiana and Missouri -- have been using federal Social Security data to verify voter registration information from established and potential voters. The Social Security data, which is used to authenticate voters’ identity but is known to be error-prone, has been used to purge "tens of thousands" of voters already on voter rolls, the Times reported, as well as to reject numerous new voter registration applications.

Of 7.7 million inquiries by states to the Social Security Administration to verify voter applications in 2008, nearly 2.4 million resulted in "non matches," according to the agency, which Monday issued a statement urging election officials in six states -- Alabama, Georgia, Indiana, Nevada, North Carolina and Ohio -- to "review their procedures."

This past summer, AlterNet reported that Michigan, Kansas and Louisiana were using drivers’ license databases in a similar manner to purge voters. In both instances, whether using Social Security or motor vehicle data, it is difficult to fully know how voter rolls will be affected because different states and counties have differing procedures on purging and removing voters, and because this process is often secretive.

What’s clear to leading voting rights attorneys, however, is that this "name-matching" process not only violates the guiding federal law on removing voters, the National Voter Registration Act, and violates the guiding federal law on accepting vote registrations, the National Voting Rights Act, but also creates a new basis to challenge presidential results if the vote count is close on November 4.

Unless there is litigation to force states to follow these federal laws before Election Day and restore purged voters and accept registrations from new voters, a close vote count in swing states could see post-Election Day legal fights over provisional ballots. These are ballots issued to voters whose names are not on voter lists and are later validated before they are counted. Thus, a fight over provisional ballots in 2008 could echo the fight over hanging chads -- or punches in paper ballots -- in Florida in 2000.

"I think it is a real risk," said Brenda Wright, legal director of The National Voting Rights Institute at Demos, a public interest law firm. "If you have a situation where people are showing up who think they are registered to vote, that is where provisional ballots come in. The question is will those ballots be counted. If there are thousands of provisional ballots in a number of states, there’s a danger that they may not all be counted."

"There will be an effort by the civil rights community to figure out what to do," said Jon Greenbaum, Voting Rights Program director at the Lawyers Committee for Civil Rights Under Law.

"There is the potential the perfect storm is developing," said Gerry Hebert, executive director of the Campaign Legal Center, another public-interest law firm. "New voters should be added to the rolls immediately, and then vetted and sent letters if there are problems."

The scenario of post-Election Day litigation is not speculation. Across the country, GOP partisans already have filed lawsuits over voter registration issues or said they planned to pursue polling place challenges of individual voter registrations in states such as Ohio, Wisconsin and Michigan. In federal court in Ohio, a hearing was held Thursday on a GOP suit seeking to force the state to use the Social Security data to vet new voters.

"It does add a whole other dimension to the potential debates on what is the vote," said Kimball Brace, director of Election Data Services, a Washington consulting firm. "I was Al Gore’s expert in Florida on this. ... In 2000, we were concerned with the voting equipment, and what happened with under- and over-votes. Now, if you are a lawyer looking at challenges, you don’t only look at that but at the voter side as well."

Roots of the Problem

The name-matching issue has its roots in the federal legislation that was passed after the 2000 presidential election debacle in Florida -- the Help America Vote Act of 2002. Under that law, states were instructed to compile statewide voter lists in contrast to lists that previously were maintained at the local level. States also were allowed to use Social Security data to verify registrations, but only as a last resort after other forms of voter ID could not be corroborated.

The problems that have arisen since the law took effect are multiple, but they seem to have one common factor: The practices now at issue evolved with little or no guidance from federal election officials, such as the Election Assistance Commission, or without any comment from the Justice Department, which enforces federal voting rights law.

The Help America Vote Act told states to create statewide voter registration databases, said Tova Wang, vice president for research at Common Cause, but did not tell states how to use them. Similarly, states were not told how to use provisional ballots.

Thus, states began using Social Security and motor vehicle databases to screen voter lists and purge voters instead of following the National Voter Registration Act, which requires states to contact a voter over a four-year period before removing them and to conduct no purges closer than 90 days before an election. Indeed, the Lawyers Committee for Civil Rights’ Greenbaum said his organization was filing a lawsuit on Thursday in Georgia over that state’s use of motor vehicle databases to purge voters outside of the National Voter Registration Act process.

On the issue of screening new voter registration applications, the states are overlooking the Voting Rights Act, which tells them to accept voter registration forms that might be missing some voter information, a staff attorney at the Senate Rules and Administration Committee said, citing 42 USC 1971. But this staffer and other voting rights attorneys said the Justice Department’s selective enforcement of civil rights laws during George W. Bush’s presidency allowed states to maintain voter rolls under their own standards.

Moreover, because the voter purging process and new voter registration vetting process is so secretive -- and states are not required to remove or reject voters due to non matches with these databases, Wang said it was hard to know what lays in store for voters on Election Day.

"HAVA had all the best intentions," said Wang, who, when pressed, said she was tempted to characterize the current situation as "anarchy" because of an absence of clear rules and procedures.

"You do have to ask, where is the Justice Department," Wright said.

The Name Matching Problem

The biggest problem with using Social Security or motor vehicle data to update voter rolls is government agencies often have different data for the same individual.

"It is a problem we are very worried about because this database matching so often produces false non-matches," said Wright. "It could be something as simple as you have a hyphenated name, or an apostrophe is missing for O’Leary. There are so many ways to be a non-match when there is no real world discrepancy."

Kimball Brace, whose firm parses election data, cited himself as an example. "I figured I could be eight different people if I wanted to," he said, saying he could appear as Kim, Kimball and so on.

These distinctions are hardly academic, but instead, are at the heart of current litigation that will affect who gets to vote and which votes will count in November. In Ohio, the Secretary of State Jennifer Brunner, a Democrat, and state Republican Party, had a federal court hearing on this very issue on Thursday.

"Ohio Republicans sued the secretary of state to use database matching," Wright said. "Brunner pointed out that she is being accused of violating the law for not taking names off the rolls and the Social Security Administration just sent out a notice that Ohio is overusing Social Security Association matching to take people off."

The best practice, said the Campaign Legal Center’s Hebert, who used to be Voting Section Chief at the Justice Department, would be to add people’s names to voter rolls and then subsequently seek to contact them to clear up discrepancies, which is what the NVRA prescribes.

The reason the name matching issue is so politically explosive is the number of potentially affected voters could be many times the size of the president’s margin of victory against Democrat John Kerry in 2004. According to the Social Security Administration, the number of "non-matches" for voter registrations, from January through September 2008, was: 265,691 in Georgia; 39,489 in Missouri; 716,252 in Nevada; 74,797 in North Carolina; 289,603 in Ohio; 72,137 in Pennsylvania; and 57,887 in Florida.

In the meantime, as election officials across the country continue to process voter registrations with an eye to election day, the Social Security Administration this weekend is proceeding with a planned three-day shutdown of its computer systems for maintenance purposes -- despite requests by the Senate Rules and Administration Committee to postpone that maintenance until after Election Day.

Iceland faces national bankruptcy

Go to Original
By Jordan Shilton

Iceland’s entire banking system is in danger of collapse.

On Wednesday Kaupthing Bank, Iceland’s largest bank, became the third financial institution to be taken over by the government, joining Landsbanki and Glitnir, Iceland’s second and third largest banks.

Iceland’s Financial Supervisory Authority said the move was made to safeguard its domestic banking system. But later that day trading was suspended on the OMX Nordic Exchange Iceland for two days. It will not reopen until next Monday. The move was taken to prevent panic spreading throughout the country’s financial markets.

On Monday of this week the government rushed emergency powers through parliament to give it increased power over the financial system. Amongst other things, the adopted provisions permitted a suspension of competition laws, allowed the government to force ailing banks into mergers, and ensured that the government could make credit available to the country’s financial institutions.

Also on Monday, in a televised address to the nation, Prime Minister Geir Haarde made clear that the government was close to losing control of the situation. “As recently as last night it looked like the banks could continue operations for a while,” he said. “This morning and today, things have totally changed for the worse.”

He went on to spell out the potential fate of the Icelandic economy as a whole. Stating that the failure of the banking system would bring “chaos” to the country, Haarde declared, “There is a very real danger, fellow citizens, that the Icelandic economy, in the worst case, could be sucked with the banks into the whirlpool and the result could be national bankruptcy.”

Trading on banking shares had already been suspended Monday as they fell dramatically. The Icelandic Krona (ISK) fell by 30 percent against the euro. Over the course of the previous week, the currency had lost ten percent against the euro and its value has declined by half against the dollar this year.

The collapse of the ISK has made the position even worse for many of the country’s financial institutions. The institutions have large foreign debts and are struggling to raise funds. Half of Glitnir’s debt of €15 billion was due for repayment in the coming two years.

The plummeting currency will also accelerate inflation, already running at 14 percent. The central bank has been compelled to increase interest rates over the past year to try and bring inflation under control, with interest rates now at 15.5 percent. But the exceptionally high interest rates over the past year have had the effect of attracting currency speculators to the Krona who are keen to profit from the high returns on their investments. The result was a financial bubble with banks holding assets 12 times greater than Iceland’s GDP. It is a bubble that has now burst, raising the distinct possibility of Iceland becoming a failed state in the fullest sense of the term.

As the economy became more unstable throughout the first half of 2008, with investors increasingly worried that the country would be unable to meet its debts, credit default swaps on Iceland grew dramatically. With the country on the verge of financial meltdown, Haarde and his government have been forced to seek funds from elsewhere.

But their appeal fell on deaf ears in Europe, with the leaders of the European Union, led by Germany and Britain, rejecting a coordinated European approach in favour of national financial rescue packages. Iceland is not a member of the EU.

On Tuesday morning negotiations were advanced between Iceland and Russia on the terms for a loan of €4 billion to stabilise government finances. Haarde expressed his bitterness towards Europe openly. “We have not received the kind of support that we were requesting from our friends. So in a situation like that one has to look for new friends,” he said.

Haarde would not say which countries had refused to help, but added, “In a situation like this it’s turning out that it’s every man for himself, every country for itself, everybody’s taking care of their best interest and that’s what we are doing.”

The Financial Times noted that Haarde was forced to deny that his economic arrangements with Moscow also extended to military co-operation, “refuting the suggestion that Russia might be given access to an airbase vacated by the US air force in 2006.”

While Haarde maintained the loan was merely a precautionary step to increase Iceland’s foreign currency reserves, without significant assistance the country faces financial collapse. In emergency measures, the Krona was pegged at 131 against the euro in a bid to stabilise the currency. Barely 24 hours afterwards, the central bank reversed its decision and stated it was no longer going to prop up the ISK, citing lack of support for the currency.

Tuesday also saw the government announce that it was taking control of Landsbanki. It appointed an entirely new executive board to run the bank’s operations amid rumours of Landsbanki being declared bankrupt. By Wednesday, the bank had been placed in receivership. As with Glitnir, Landsbanki has significant involvement in foreign markets, particularly Scandinavia and the UK, meaning that the bank’s collapse would have severe consequences.

As these events unfolded, the government revealed it was scrapping its planned takeover of Glitnir. Stating that the full extent of the bank’s problems had not been appreciated, it instead placed the institution in receivership under the control of the financial supervisory authority.

Kaupthing Bank had been offered a loan of €500 million from the central bank in a bid to allow it to continue its operations.

There were also reports of a loan from Sweden’s Riksbank of €500 million to allow it to keep its Swedish operations running. Stefan Ingves, governor of the Riksbank had stated that Kaupthing Sverige had been granted “liquidity assistance” to “safeguard financial stability in Sweden and ensure the smooth functioning of the financial markets.” But immediately following this declaration, it was announced that Kaupthing’s Swedish operations would be put up for sale. This made Kaupthing’s takeover in Iceland inevitable.

Credit rating firm Standard & Poor’s has downgraded Iceland’s credit rating by three notches to “BBB.” It warned that Iceland now faces a deep recession.

In Britain approximately 300,000 savers hold deposits in the online bank IceSave which is controlled by Landsbanki. Following the announced takeover of Landsbanki by the Icelandic government, access to IceSave accounts was frozen. It now appears customers will have to claim compensation from the British and Icelandic governments.

Following the announcement that Landsbanki had been taken over, the Brown government in London stated that it would sue Icelandic authorities over the losses savers had incurred. While Icelandic Prime Minister Haarde issued conciliatory statements that both countries should work together to safeguard the deposits, this is yet another expression of the growing tensions between nations in the current climate.

Alongside the impact on individual savers, the banking failures in Iceland could have a major knock-on effect on the UK economy. Many local Authorities in the UK have invested millions in council taxes in Icelandic banks. According to a detailed report in the Independent, London public authorities have investments totalling around £200 million, with at least eight borough councils affected. These include Barnet Council in north London with £27 million, Hillingdon Council in west London with £20 million and Westminster Council with £17 million. Kent County Council has deposited £50 million and Transport for London has a £40 million deposit with Kaupthing Singer & Friedlander, which is now in administration.

Erik Pickles, the opposition Conservative Party’s Shadow local government secretary, told the BBC that the sums involved could exceed £1 billion.

The Local Government Authority has sought a guarantee against losses from central government like that extended to private investors, but Chancellor Alistair Darling did not do so-describing local authorities as being “more of an informed investor.”

Major problems could also hit the retail sector in Britain, with House of Fraser, Debenhams, Woolworths, Moss Bros., French Connection and the supermarket chain Iceland all enjoying substantial backing through Icelandic banks. Many jobs in the financial district in London would be lost in the event of the collapse of the Icelandic banks.

The government in Iceland is also attempting to encourage foreign investments to be sold off and brought home. Some of the pension funds have agreed to sell up to 200 billion ISK (€1.2 billion) of their assets and transfer them to the state. This means that vast sums of ordinary people’s savings will be put at risk in attempting to stabilise the financial system.

There are reports of queues at banks across Iceland, with savers keen to withdraw their money before it is lost. Rumours that a shortage in petrol would result from the massive drop in the Krona’s value on Monday prompted a rush to petrol stations. The cost of loans have jumped by nearly 50 percent and with prices for everyday goods set to rocket, many Icelanders face the prospect of losing their jobs as companies cut costs or go bankrupt.

In his speech on Monday, Haarde sought to appeal to nationalist sentiments to encourage all Icelanders to “stand together” against the economic catastrophe the country faces. The unions have been happy to oblige in this campaign, working together with the government to secure the repatriation of the country’s pension funds.

World financial crisis leads to auto industry layoffs across Europe

Go to Original
By Dietmar Henning

While governments across the globe are pumping billions into the tills of banks in order to limit their speculative losses, millions of workers whose jobs and incomes are threatened will be left stranded. Worldwide, all of the major auto companies have announced a drastic slump in sales and have introduced reduced production or direct dismissals.

Much of the current crisis in the auto industry is bound up with the fuel price increases at the beginning of the year. The consequences of the current financial crisis are only just beginning to take effect and will undoubtedly be much more pronounced in coming weeks.

The markets for luxury cars and massed-produced ordinary autos have both been hit. Until now the expensive sports cars and luxury autos produced by German companies Porsche and BMW were especially favoured by those who were able to reap huge fortunes on speculative financial transactions and could easily lay out several tens of thousands of euros for a new vehicle. Many in this layer are now jobless and can no longer afford a new car.

The Süddeutsche Zeitung reports on the sports-car producer Porsche: “So far Russia was regarded as a guaranteed customer for the small sports car manufacturer. If a market gave way somewhere, Russia was easily able to adjust the balance. The Porsche family was always able to find enough wealthy people ready to buy up their annual production of 100,000 cross-country and sports cars. This now seems to be in the past.”

The BMW company, which like Porsche specializes in high-priced cars, announced a 14 percent decrease in sales worldwide for September. BMW sales in the US have decreased by as much as a quarter in the same month. Porsche registered a decrease of 44 percent in the US and an average loss worldwide of 27 percent.

Sales are also slumping for ordinary cars. Toyota, the world’s largest carmaker, also suffered a 32 percent drop in sales in the US in September. Many potential customers are fearful of the consequences of the crisis and are not prepared to invest in a new car. Others are unable to obtain the necessary credit from their bank. According to the Ifo Institute for Economic Research at the University of Munich, the expectations of German auto salesmen have slumped to a 20-year low.

A spokesman for Opel (General Motors) at Rüsselsheim commented: “The financial crisis has led many people in Europe to hold back from purchasing an auto.” This applies particularly to Spain, Germany and Great Britain.

Auto sales in Spain, which is particularly hard hit by the real estate crisis, are 44 percent lower than a year ago. According to the calculations of the CAR research institute in Gelsenkirchen, Germany, sales in the Italian market will drop at least 14 percent this year, the US market 13 percent, the UK market 5 to 6 percent, and the German market up to 2 percent.

Phased-out production and job losses

Although the effects of the crisis are only beginning to be felt, auto companies have immediately reacted with production shutdowns and layoffs. For some time the automobile industry has complained about overcapacity. It is now utilizing the crisis to carry out plans it had been unable to implement up to now due to workforce opposition.

Swedish car producer Volvo (belonging to the Ford company) has already announced the dismissal of an additional 3,000 workers, bringing its total current level of layoffs to 6,000. Company boss, Stephen Odell, declared the job losses were necessary because of the “rapidly disintegrating market situation of the worldwide automobile industry.”

In Germany, the Ford factory in Saarlouis is dismissing approximately 200 temporary workers two months earlier than planned. The factory in Saarland has a total workforce of 6,500 and produces mainly for export.

Bavarian auto producer BMW is introducing production stops at its Leipzig factory and further temporary shutdowns are planned at other plants. BMW plans to produce 20,000 to 25,000 fewer cars this year compared to 2007.

Daimler already announced this summer that it planned to cut output this year by around 45,000 vehicles.

While Volkswagen has so far declined to slash production, it is delaying the opening of new factories. Announcing this decision, VW finance chief Hans Dieter Poetsch, blamed the “considerable deterioration” of market conditions.

Skoda, the Czech Volkswagen offshoot, is planning to limit production by 13,000 vehicles fewer than last year. The company halted production for one day this past Friday.

The most radical plans have been announced by Opel, the European subsidiary of General Motors, which plans to cut production by approximately 40,000 vehicles by the end of the year. The Opel factory in Eisenach, with a workforce of 1,800, is to close for three weeks starting next Monday.

In Bochum, the Opel factory with 5,000 workers had already closed for two weeks at the end of September in line with a deal worked out between company management and the factory council. A further shutdown of the factory is planned for the end of October. Opel has declared that it will cease production October 20-31, at its entire European works, with the exception of Rüsselsheim. This will affect the Opel factories in Kaiserslautern, Germany; Gliwice, Poland; Ellesmere Port and Luton, England; as well as Saragossa, Spain.

Opel spokesman Andreas Krömer justified these measures, commenting, “People are worried and keeping their hands in their pockets. Demand has hit rock bottom. We must react with an adjustment. We cannot build cars on a waste dump.”

In fact, Opel has been preparing job cuts and attacks on working conditions for some time. According to the works council at the Bochum Opel factory, 900 jobs are at risk there due to the slump in sales. Company management has estimated that tighter work schedules and new automation could reduce production time for a car from 27 to 15 hours.

Mass unemployment

The crisis in the automobile industry will lead to a veritable avalanche of dismissals. A total of 2.1 million workers are directly involved in the European automobile industry. This figure rises to 12 million when all auto-related industries are included.

The throttling back of production directly affects the auto supply industry, which often consists of middle-sized companies operating with narrow profit margins. Auto distribution, sales outlets and other services will also be hit. In Germany alone, an estimated 468,000 are employed in these sectors. Such companies employ an average of 12 workers, and many of these businesses are already highly indebted.

Like the banks, the major auto companies are now also demanding money from the state. In the US, the House of Representatives agreed to a draft on Wednesday making $25 billion available to automakers in the form of low interest credits.

German manufacturers have criticized this move. “This leads to a distortion in international competition,” was the comment by German Automobile Federation (VDA) head, Matthias Wissmann.

Such criticism of the US has not prevented the European automobile industry from demanding similar support from the European Union. Manufacturers are demanding various support measures, including a low interest credit package of over €40 billion for the development of more economical vehicles, plus incentives for customers to exchange their cars for newer ones.

The major companies and their shareholders stand to profit from such measures. The workers who lose their jobs cannot bank on support. In Germany the government decided just this week to cut contributions for unemployment insurance beginning next year by around 0.5 percent. This measure was aimed at decreasing subsidiary wage costs for the employers.

The immediate consequence of this decision will be decreased funding for the Federal Labour Agency, which will have even less money at its disposal for the tens of thousands of autoworkers who are likely to lose their jobs in the near future.