Tuesday, November 18, 2008

Paulson, Democrats Clash on Bailout for Homeowners

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By Rebecca Christie and Alison Vekshin

Treasury Secretary Henry Paulson rejected using the government’s financial-rescue program as a ``panacea’’ for economic difficulties, clashing with lawmakers who want the funds to help beleaguered homeowners.

``The rescue package was not intended to be an economic stimulus or an economic recovery package,’’ Paulson said in testimony to the House Financial Services Committee in Washington. The Troubled Asset Relief Program was designed to stabilize financial markets and the flow of credit and ``is not a panacea for all our economic difficulties.’’

Representative Barney Frank, who heads the House panel, cut off Paulson during the question-and-answer session, saying ``the bill couldn’t have been clearer’’ in also being aimed at reducing foreclosures. Paulson told lawmakers he has no plans to use the second half of the $700 billion program, indicating it will be up to the incoming Obama administration to resolve the matter.

``We don’t have a lot of time and I don’t usually do this,’’ Frank said in interrupting Paulson during an exchange on how to deploy TARP cash. ``I read sections of the bill that says -- write it down -- give them assistance,’’ Frank, a Massachusetts Democrat, told the Treasury chief.

Representative Carolyn Maloney, a New York Democrat, urged using the funds ``to stabilize housing,’’ and others on the panel emphasized the strain households are under as the economy has weakened.

Bair’s Mortgage Plan

Paulson resisted pressure from lawmakers to commit to implementing a foreclosure-prevention program proposed by Federal Deposit Insurance Corp. Chairman Sheila Bair.

``There is a balance to getting money for those who need it as opposed to those who don’t need it,’’ Paulson told the panel. ``There’s also a balance to not providing a windfall to the banks.’’

Home prices fell in four out of every five U.S. cities in the third quarter, a record spurred by nationwide foreclosure sales, the National Association of Realtors said today. The financial turmoil sparked by the collapse of the U.S. subprime mortgage market has caused $996 billion of losses for banks, lenders and insurers.

Democrats are also pursuing legislation to deploy part of the TARP to prevent General Motors Corp., Ford Motor Co. and Chrysler LLC from collapsing due to a lack of cash.

``I don’t think this is the purpose of the legislation,’’ Paulson said at today’s hearing. ``There are other ways’’ to help automakers.

Restoring Confidence

Federal Reserve Chairman Ben S. Bernanke told lawmakers at the hearing that using the TARP for buying stakes in banks is ``critical for restoring confidence and promoting the return of credit markets to more normal functioning.’’ He warned that lending in the U.S. is ``still far from normal.’’

Paulson said it would be ``extraordinarily unusual’’ if the government didn’t recoup the funds, and he said he expects a new push will attract privately held banks in to the TARP.

``We expect to get applications from a number of community banks, banks that are going to be very vital to this economy,’’ he said. ``We’re expecting regulators to forward many of those applications to us, and we’re expecting to put capital in many of them.’’

Bair, an appointee of President George W. Bush who has been praised by Democrats for her initiatives to help homeowners, pressed the Treasury to use its authority under the financial- rescue package to curb foreclosures.

TARP Authority

``It is essential to utilize this authority to accelerate the pace of loan modifications in order to halt and reverse the rising tide of foreclosures that is imperiling the economy,’’ Bair said today in prepared remarks. She sought support for a mortgage-relief plan using TARP that she said could prevent almost 1.5 million foreclosures by the end of 2009.

Paulson, who has pledged $250 billion of TARP for buying stakes in banks, said capital injections and a ``modest’’ contribution to a Fed program for consumer finance are the best ways to use the bailout money. Paulson has also used $40 billion to help American International Group Inc.

``We have seen that capital purchases are clearly powerful in terms of impact per dollar of investment, which is a major advantage under the current circumstances,’’ Paulson said today in his prepared remarks.

Aiding Homeowners

Frank countered that ``public confidence in what we have done so far is lower than anybody would have wanted to be.’’ He said ``there is an overwhelmingly powerful set of reasons why some of the TARP money must be used’’ for aiding homeowners struggling to keep their homes.

``I have reservations about spending TARP resources to directly subsidize foreclosure mitigation because this is different than the original investment intent,’’ Paulson said in opening remarks. ``We continue to look at good proposals and are dedicated to implementing those that protect the taxpayer and work well.’’

Paulson said the Treasury is also looking at ways to help insurance companies.

``We’re in the process of developing a program there,’’ he said. Still, he reiterated that the Treasury will not roll out another program while it is still working through the bank stakes. ``It is premature to be starting another capital program,’’ he said.

Paulson last week abandoned his original plan for TARP, which was to purchase distressed mortgage-related assets from financial firms to unblock lending. He said today there was not enough ``firepower’’ left in the fund to make a difference buying stakes in banks.


Some lawmakers expressed skepticism about Paulson’s new strategy and questioned whether they had been misguided.

``It appears that you seem to be flying a $700 billion plane by the seat of your pants,’’ Representative Gary Ackerman, a New York Democrat, said to Paulson. ``It seems to be the second-largest bait-and-switch scheme that history has ever seen, second only to the reasons given to us to vote for the invasion of Iraq.’’

Representative Maxine Waters, a California Democrat, reiterated her support for empowering Bair to oversee foreclosure-prevention efforts.

Bair ``has been able to come up with a way by which we could do credible loan modifications and it’s been ignored,’’ Waters told Paulson. ``You should just give her the program and let her run with it because she’s discovered how you can do these loan modifications.’’

Evaluating TARP

Paulson said, ``I have not said no to using TARP for foreclosure mitigation,’’ adding ``we are going to continue to evaluate and look for programs that protect the taxpayer and are effective.’’

Representative Spencer Bachus defended Paulson against criticism. ``I for one, Secretary Paulson, applaud you for being flexible and taking an approach that was clearly authorized by the legislation.’`

Paulson flagged efforts already under way to prevent foreclosures. Officials have made ``substantial progress’` in reducing foreclosures where possible, he said.

He hailed the FDIC’s program with failed mortgage lender IndyMac Financial Corp., as well as new mortgage-servicing guidelines backed by Fannie Mae and Freddie Mac, the home-loan financers now in government-run conservatorship.

Instead of pouring money into mortgages, the Treasury seeks to set aside some of the rescue funds for shoring up the secondary market for consumer loans.

``By investing only a modest share of TARP funds in a Fed liquidity facility, we can improve securitization in this market and have a significant impact on the availability of consumer credit,’` Paulson said.

Citigroup job cull to hit 75,000

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US bank Citigroup has announced plans for about 52,000 new job cuts, on top of 23,000 cuts already made this year.

Citigroup said the 75,000 job cuts represented a reduction of about 20% of its staff, leaving it with 300,000 jobs worldwide "in the near term".

The cuts will come from redundancies, the sale of units and natural wastage, the bank said.

Citigroup has lost more than $20bn (£13.6bn) in the past year because of the global financial crisis.

It has reported four straight quarterly losses and some analysts believe the bank will not make a profit again until 2010.

Of the 52,000 job losses, about half are understood to be accounted for already, with the previously announced sale of Citigroup's German retail banking business and an Indian outsourcing operation.

Citigroup is expected to cut the remaining 25,000 jobs by the first half of 2009. Citigroup declined to comment on the cuts.

Turnaround plan

"Underlying business remains strong and revenues have been stable," the bank said.

Citigroup also said its capital position was "very strong".

The bank expects its expenses to be down 20% from peak levels, to about $50bn in 2009, after the job cuts have taken effect.

"Certainly [the job cuts] will fall particularly heavily on London and New York," Citigroup chairman Win Bischoff said at a business forum in Dubai.

Citigroup's chief executive Vikram Pandit has come under pressure from critics who have doubted his ability to turn around the company and weather the financial crisis.

Shares in Citigroup dropped 6.2%. They are down almost 70% in value this year.

Economy in trouble

Citigroup, one of the largest US banks, is one of nine financial institutions benefiting from the US government's bail-out programme.

The Treasury announced last month that it would be providing cash injections worth $125bn to be shared between Citigroup, JP Morgan Chase, Bank of America, Goldman Sachs, Morgan Stanley, Wells Fargo, Bank of New York Mellon, State Street and Merrill Lynch.

"The news of job cuts is one more indication that the economy is in a very difficult shape right now," said Ernie Ankrim, chief investment strategist for Russell Investment Group.

Portfolio manager Walter Todd at Greenwood Capital Associates said: "If the past is any guide, Wall Street overshoots in terms of hiring and then overshoots when it's time to cut jobs.

"But it's not clear if the past is any guide here. It's a moving target, because the markets and the economy are in flux," he added.

Asian Stocks Drop for Third Day; Banks, Woodside Lead Decline

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By Kyung Bok Cho

Asian stocks fell for a third day, led by financial companies and commodity producers, as Mitsubishi UFJ Financial Group Inc. reported lower profit and oil, gold and aluminum prices dropped.

Mitsubishi UFJ, Japan’s biggest bank, declined 5.5 percent after posting its lowest quarterly profit in at least four years. Babcock & Brown Ltd., the worst performing stock on the MSCI Pacific Index this year, plunged 21 percent in Sydney after saying it will accelerate jobs cuts to avoid defaulting on debt. The cheapest crude since January 2007 drove Woodside Petroleum Ltd. 5.3 percent lower, while BHP Billiton Ltd. slid 2.5 percent.

The MSCI Asia Pacific Index fell 0.6 percent to 79.39 at 10:50 a.m. in Tokyo, erasing an earlier gain of 0.6 percent. Financial stocks were the biggest contributor to the measure’s retreat. About two stocks dropped for each that rose.

Shares on the MSCI gauge are valued at 9.7 times trailing earnings and fell to 8.2 times last month, the lowest level since at least 1995, Bloomberg data shows. The index has halved in value this year as global financial institutions lost almost $1 trillion and cut about 166,000 jobs since the subprime-mortgage market collapse last year.

Japan’s Nikkei 225 Stock Average lost 1.3 percent to 8,224.50, extending a two-day 4.7 percent drop. All other Asian benchmark indexes retreated, apart from the Philippines and China.

Futures on the U.S. Standard & Poor’s 500 Index slipped 1.2 percent. The S&P 500 advanced 1 percent yesterday, gaining in the last hour of trading as energy and technology shares rallied.

Mitsubishi UFJ, Japan’s largest bank, dropped 5.5 percent to 516 yen. The company yesterday posted a 61 percent decline in quarterly profit on mounting losses from stockholdings and rising costs to get rid of bad loans.

Babcock, Woolworths

Mizuho Financial Group Inc., Japan’s second-biggest bank, slid 5.3 percent to 217,600 yen. Sumitomo Mitsui Financial Group Inc., the third largest, lost 5 percent to 324,000 yen. Sumitomo Mitsui is considering raising as much as 400 billion yen ($4.1 billion) by selling preferred securities this year, the Nikkei newspaper reported.

Woodside declined 5.3 percent to A$33.12. BHP, the world’s biggest mining company and Australia’s largest oil producer, slipped 2.5 percent to A$23.59, its lowest level since March 2006. Mitsubishi Corp., a Japanese trading company that gets half its profit from commodities, retreated 7.1 percent to 1,144 yen.

Crude oil lost 1 percent to $54.39 a barrel yesterday in New York. Gold fell for the second day, losing 1.3 percent to $732.70 an ounce, while aluminum slid to a three-year low in London.

Babcock, which has tumbled 99 percent this year, dropped 21 percent to 24.5 Australian cents. The company said it will reduce headcount by almost two-thirds while it renegotiates debt agreements with bankers.

Woolworths Ltd., Australia’s biggest retailer, declined 4.1 percent to A$25.17. The nation’s leading economic index fell in September, signaling it may slip into a recession, Westpac Banking Corp. and the Melbourne Institute said in Sydney today. That would end 17 straight years of economic expansion.

Financial Crisis Tab Already In The Trillions

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Given the speed at which the federal government is throwing money at the financial crisis, the average taxpayer, never mind member of Congress, might not be faulted for losing track.

CNBC, however, has been paying very close attention and keeping a running tally of actual spending as well as the commitments involved.

Try $4.28 trillion dollars. That's $4,284,500,000,000 and more than what was spent on WW II, if adjusted for inflation, based on our computations from a variety of estimates and sources*.

Not only is it a astronomical amount of money, its’ a complicated cocktail of budgeted dollars, actual spending, guarantees, loans, swaps and other market mechanisms by the Federal Reserve, the Treasury and other offices of government taken over roughly the last year, based on government data and news releases. Strictly speaking, not every cent is a direct result of what’s called the financial crisis, but it is arguably related to it.

Some 68-percent of the sum falls under the Federal Reserve’s umbrella, while another 16 percent is the under the Troubled Asset Relief Program, TARP, as defined under the Emergency Economic Stabilization Act, signed into law in early October. (The TARP alone is bigger than virtually any other US government endeavor dating back to the Louisiana Purchase. See slideshow.)

*References includ US National Archive, US Dept of Defense, US Bureau of Reclamation, Library of Congress, NASA, Panama Canal Authority, FDIC, Brittanica, WSJ, Time, CNN.com, and a number of other websites.

US Bin-Ladin Hunt Phoney

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By Juan Cole

November 17, 2008 "Juan Cole" -- - The USG Open Source Center translates an article from the Persian Afghan press alleging that French troops were at one point close to capturing Usamah Bin Ladin in Afghanistan, but that American forces stopped them from doing so. It says that a forthcoming French documentary containing interviews with the French soldiers provides proof for the allegation. The argument is that the Bush administration needed Bin Ladin to be at large in order to justify its military expansionism.

Afghan article says US Bin-Ladin hunt phoney

Friday, October 3, 2008
Document Type: OSC Translated Text

Afghan article says US Bin-Ladin hunt phoney

Text of article, "Bin-Ladin on the run? The rumour which was fact", by Afghan independent secular daily newspaper Hasht-e Sobh on 29 September

So, the rumour was right: French soldiers trapped Usamah Bin-Ladin, but were not allowed by the Americans to arrest the apparent fugitive leader of Al-Qa`idah. A Bin-Ladin documentary just released by French documentary cinema examines this issue, an issue which has led to heated debate in the French media.

This French documentary shows how the Americans are interested in continuing the game, a bloody and expensive game whose victims are only the unprotected and local people of our dry and dusty country. It was last year that rumours spread about this report in Kabul, but it has not been taken seriously by the media. But watching this revealing French documentary changes the rumours into disturbing facts. "Bin Laden, the failings of a manhunt", produced by Emmanuel Razavi and Eric de Lavarene, two French filmmakers and reporters, assesses and confirms the claims of French soldiers that they could have killed Usamah within two operations, but the American forces prevented them. This film has not been broadcast publicly yet and is to be broadcast by Planet, a French network.

Even though French soldiers have insisted on this in the battlefield many times, the Elysees Palace in Paris and the White House in America have rejected this, and the Afghan leadership does not have any information about it yet!

The main question that arises is the extent to which the "Bin Laden on the run" project is a problem for America and Afghanistan. Seven years of suicide bombing and explosions, blood and violence, unmanned fighter planes, and old vehicles full of explosives, all to catch a long-bearded Arab whom America apparently hates? And an Arab who worked for the CIA in the name of Allah, and who now, also in the name of that same Allah, has conducted a jihad against that same CIA?

Facing the facts in this Usamah film is a bitter and disturbing experience and will make you nervous and wish that what it is that you are watching is just a baseless rumour, or a figment of Hollywood's imagination. But it is not. The pictures are real and you are facing a debate in documentary form. The only justification for the bloody presence of America in Afghanistan is the ambiguous existence of Usamah Bin-Ladin and the Al-Qa'idah terrorist network.

George Bush, with his "war on terror" project, has transformed the middle east and Afghanistan into an inflamed bomb ready to explode, but has not found out anything about his beloved lost Usamah Bin-Ladin so far.

What is seen, and the film also emphases this, is that all these slogans, this fighting and killing are a game, a painful and prolonged game whose end even the players do not know and which is running out of control. Apparently, it is a game of cat and mouse, just like "Tom and Jerry", the famous cartoon. But it is a reality that the stubborn one from Texas does not want to catch the mouse - unlike credulous Tom - and that the long-bearded Wahhabi Arab does not want to hide - unlike the intelligent and roaming Jerry. Their prolonged game has made not only the audiences tired but has also transformed the playground into a big pool of blood.

There have always been questions that neither the politicians have been willing to answer, nor the independent western media to raise. If Usamah is not the lost one of the Americans, then who is? What are the Americans searching for in Afghanistan and who are they looking for? The main media in the West remained silent before the report of the Usamah Bin-Ladin arrest by French soldiers. And, through a news boycott, they reduced a certain fact to a rumour.

Certainly, they will do the same before this film, too. But instead they will try to complicate the scenario. More painful than anything else is the political fair in Kabul, a poor fair where everyone offers his despicable commodity - a combination of generous western customers and thankful sellers of the country. Everyone knows the fact, like "an obvious secret", but no one wants to irritate the delicate minds of their nervous guests, guests who will be staying at home until the new year.
Politicians try to forget such news in Kabul, and this is the advice they give to the people. Forgetting and ignoring such facts is possible, but how can we forget and ignore the bombs exploding next to our houses every day?

Bombs which sometimes rise from the ground and sometimes descend from the air.

Stripping Paulson of His Remaining Power & Money

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By David Sirota

U.S. Sen. Jim Inhofe said Saturday that Congress was not told the truth about the bailout of the nation's financial system and should take back what is left of the $700 billion "blank check'' it gave the Bush administration.

"It is just outrageous that the American people don't know that Congress doesn't know how much money he (Treasury Secretary Henry Paulson) has given away to anyone,'' the Oklahoma Republican told the Tulsa World.

"It could be to his friends. It could be to anybody else. We don't know. There is no way of knowing.''

Inhofe, who on issues like global warming is something of a know-nothing, is nonetheless absolutely correct on this one. Bailoutsleuth.com has been reporting how Paulson has tried to shroud bailout expenditures in secrecy, while Bloomberg News recently reported that Federal Reserve Chairman Ben Bernanke is refusing to release the names of the recipients of about $2 trillion in taxpayer-funded loans.

Inhofe will likely find an ally in Sen. Bernie Sanders (I-VT), who issued this press release this morning:

WASHINGTON, November 17 - Senator Bernie Sanders (I-Vt.) said today he will introduce legislation to stop the release of a $350-billion second round of the Wall Street bailout.

Sanders, who voted against the $700-billion package Congress approved in October, said he has serious concerns about how the Bush administration and Treasury Secretary Henry Paulson are spending the bailout money that was already released. He also said it was unacceptable that the oversight provisions in the bill were ignored.

When the bailout originally passed over bipartisan objections, many voices began demanding Paulson refrain from buying bad mortgages, and instead buy voting stock in banks on terms that force banks to make loans off the new capital, restrict bank salaries/dividends and protect taxpayers' investment. Paulson partially buckled to that pressure, first a few weeks ago, then again late last week. Indeed, he discarded his original proposal (which would have been a straight-up giveaway) and began buying stakes in banks. The problem is he opted to buy non-voting stock on bad terms that do not protect taxpayers and allow bank executives to continue paying bonuses.

Now, with bipartisan congressional anger mounting, we may see a forceful legislative campaign to take back what remaining money Paulson wants to give away to his friends on Wall Street. The guy is working overtime to shovel out as much taxpayer money - our money - to his buddies before January 20th comes and he's out of a job. It's time to stop the kleptocracy, take back the money and spend it on a major economic stimulus to bolster the real economy here in "real America" where real people work real jobs - not simply give it away to a few financial industry fat cats in Manhattan.

UPDATE: Check this out from the Financial Times:

A senior Republican senator is seeking an investigation into potential conflicts of interest among former Goldman Sachs executives serving at the US Treasury and whether any officials exceeded their authority by implementing a controversial tax change without the approval of Congress.

Chuck Grassley, the most senior Republican on the Senate finance committee, asked Eric Thorson, inspector-general of the Treasury, to investigate the "independence" of several Treasury officials who formerly worked at Goldman Sachs and serve as advisers to Treasury secretary Hank Paulson, the former chief executive of the Wall Street bank.

The Irresponsibility of Appointing Hillary Clinton Secretary of State

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In 2005 Hillary Clinton stood in Palestine and praised the apartheid wall that the government of Israel was building with large amounts of U.S. aid in furtherance of the Zionist goal of destroying one of the world’s peoples -- the Palestinians. This is the wall that the United Nations’ World Court has declared contrary to international law. And this is just one example of Hillary Clinton’s total support for all of Israel’s policies to oppress and eventually expel whatever elements of the Palestinian population remain west of the Jordan River.

On the evening of November 14, 2008, we sent a message to Barack Obama’s transition website urging him not to name Mrs. Clinton as his secretary of state. The text of our message said:

“Appointing Hillary Clinton secretary of state would be utterly disastrous. Combined with the earlier appointment of Rahm Emanuel, it would be seen by all Palestinians, all Arabs, all Muslims, and many others around the world as the ultimate insult, eliminating any hope of a just resolution of the Palestinian situation during the presidency of Barack Obama. It would reduce any good will toward Obama that has built up among Muslims in recent months and would spell finis to hopes for an end of the global hatred that continues to grow against America and its allies. More and more, the “War on Terror” would become a never-ending part of our existence and over time would introduce further limitations of our domestic liberties and of living standards everywhere in the world.

“In desperation, we beg you PLEASE STOP THESE ABOMINATIONS NOW.


“Bill and Kathleen Christison”

We hope others will join us in this effort to bring about the beginning of real change, rather than meaningless promises of change, in U.S. foreign policies. You can do this by going to http://www.change.gov, then clicking on “about,” then on “contact” and, when asked in what category your message should be put, choose “agenda.” Say anything in your message that you yourself want to say.

Clinton to accept offer of secretary of state job

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By Ewen MacAskill

Hillary Clinton plans to accept the job of secretary of state offered by Barack Obama, who is reaching out to former rivals to build a broad coalition administration, the Guardian has learned.

Obama's advisers have begun looking into Bill Clinton's foundation, which distributes millions of dollars to Africa to help with development, to ensure there is no conflict of interest. But Democrats believe the vetting will be straightforward.

Clinton would be well placed to become the country's dominant voice in foreign affairs, replacing Condoleezza Rice. Since being elected senator for New York, she has specialised in foreign affairs and defence. Although she supported the war in Iraq, she and Obama basically agree on a withdrawal of American troops.

Clinton, who still harbours hopes of a future presidential run, had to weigh up whether she would be better placed by staying in the Senate, which offers a platform for life, or making the more uncertain career move to the state department.

As part of the coalition-building, Obama yesterday also reached out to his defeated Republican rival, John McCain, to discuss how they could work together to roll back some of the most controversial policies of the Bush years. Putting aside the bitter words thrown about with abandon by both sides during the election campaign, McCain flew to meet Obama at his headquarters in the Kluczynski Federal Building, in downtown Chicago.

Obama, speaking before the meeting, said: "We're going to have a good conversation about how we can work together to fix up the country." Asked by a reporter whether he would work with Obama, McCain, who favours a bipartisan approach to politics, replied: "Obviously".

Sources on both sides said Obama did not offer McCain a cabinet job, but focused on how the senator for Arizona could help to guide legislation that they both strongly favour through Congress.

Given Obama's status as president-in-waiting, the two met in a formal setting, a room decked out with a US flag, and were accompanied by senior advisers. Although the two clashed during the election campaign over tax policy and withdrawal from Iraq, they have more in common than they have differences. They both favour the closure of the Guantánamo Bay detention centre, an increase in US troops to Afghanistan, immigration reform, stem cell research and measures to tackle climate change, and oppose torture and the widespread use of wire-tapping.

After the meeting, they issued a joint statement saying: "At this defining moment in history, we believe that Americans of all parties want and need their leaders to come together and change the bad habits of Washington so that we can solve the common and urgent challenges of our time. We hope to work together in the days and months ahead on critical challenges like solving our financial crisis, creating a new energy economy and protecting our nation's security."

Although Democrats made gains in the Senate in the November 4 elections, they fell short of the 60 seats that would have allowed them to override Republican blocking tactics and will need Republican allies to get Obama's plans through. This was highlighted yesterday when the Democratic leadership in Congress announced that a broad economic stimulus package Obama sought was not likely to be passed because of Republican opposition.

Obama confirmed at the weekend that he would offer jobs to some Republicans. One of the names that crops up most often is Chuck Hagel, the former Republican senator who is a specialist in foreign affairs and a critic of the Iraq war.

Will The Slaughter Of Iraqis By The US Military Ever Be Reported?

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By Michael Schwartz

Will The US Government And Media Finally Report The Slaughter Of Iraqis By The US Military?

I recently received a set of questions from Le Monde Diplomatique reporter Kim Bredesen about the 2007 Project Censored story about 1,000,000 Iraqi deaths due to the U.S. invasion and occupation of Iraq. The questions and answers are, I think, useful in framing both the untold story of the slaughter in Iraq and the failure of the U.S. media to report on its extent or on U.S. culpability for the deaths of 4% of the Iraqi population.

Bredeson : I observed recently that your story on Iraqi deaths caused by US occupation became story no. 1 in this year's listing by Project Censored. I wondered if I could ask you a few questions on e-mail regarding this issue?

Kim Bredesen, Le Monde diplomatiqe (Norway)

These are my questions.

1.Do you expect that the new administration under Barack Obama will acknowledge the validity of the statistics concerning Iraqi deaths caused by the US occupation force?

It is always difficult to predict the political future, but even if the Obama administration pursues a very different policy in Iraq and the Middle East, I doubt it will acknowledge the amount of violence caused by the war during its first six years. Historically, the U.S. government has a poor record of acknowledging its responsibility for death and/or destruction of other peoples, beginning with the genocide against Native Americans (never officially acknowledged), continuing through two hundred years of the slave trade and slavery (there has actually been a limp official apology), and culminating in the ongoing refusal to acknowledge one to three million deaths in Vietnam caused by the U.S. attempt to conquer that country.
2.You mention in your update to Censored 2009 that there is a media blackout about the dramatic statistics in US mass media. Do you think this will change?

I think that the U.S. mainstream media has a poor record of acknowledging the many instances in which it has (collectively) failed to maintain its constitutionally mandated independence from government policy, and instead has ignored or written false reports supporting government malfeasance and tyranny. It was refreshing that the New York Times and Washington Post acknowledged their failure to report the contrary evidence to the US government claims about WMDs in Iraq, but this is a rare moment that has not led to more independent reporting on other U.S. government action in the Middle East.

I think that we can expect the U.S. mainstream media to continue to compromise its journalistic integrity in reporting on Iraq, and this will mean failing to report its own suppression of the Lancet studies and continuing to misreport the U.S. role in the Iraq war. This expectation is, of course, speculation, but the best evidence for this speculation is the fact that the major media have been withdrawing their personnel from Iraq, instead of taking advantage of more favorable security conditions to send reporters to locations that were previously inaccessible and therefore more thoroughly report the impact of the war on Iraqi life.

3.How have you experienced the coverage about the issue in other Western or international media, have they taken the situation in Iraq more seriously?

I find the reporting in Al Jazeera, the British national press, other international media, and independent U.S. media far more comprehensive in their coverage of the Iraq war. I would not say that they take the situation more "seriously," -- there has never been a problem with the U.S. media taking the war seriously. The differences are in very specific parts of the coverage: reporting on U.S. involvement in deaths and destruction, reporting on Iraqi resistance to the U.S. presence; reporting on the economic and social chaos caused by U.S. military, political, and economic policies in Iraq; reporting on who is fighting against the U.S.; reporting on the actual reality of life under U.S. occupation; and reporting on the day-to-day antagonism of Iraqis to the U.S. presence.

I should add, however, that these failures are not so much failures of U.S. mainstream reporters, but of the editors and publishers who assign reporters to particular stories and not to others. There are many reporters who fit information about all these issues into assignments that are aimed at other subjects. One small example will illustrate what I mean. In reporting about the U.S. offensive in Haifa Street in January 2007, mainstream reporters (for McClatchy and the Washington Post, if memory serves me) whose assignment was to report on the successful capture by U.S. troops of an insurgent stronghold also described the destructiveness of the U.S. attack and mentioned that U.S. soldiers stood idly by while Shia death squads cleansed the neighborhood of Sunnis. This information appeared toward the end of published reports, but it was published nevertheless. In contrast, a CBS report on the overarching destructiveness of the offensive and of the anger of residents at U.S. military actions was not broadcast and was only made public because of the protests of the censored reporter.

4.The journalist Joshua Holland compared the mass killings in Iraq with Pol Pot's genocide in Cambodia. Is this an accurate comparison in your opinion?

Holland's purpose in this comparison is the same as my purpose in comparing the deaths in Iraq to those in Darfur: we are trying to give people a sense of the scale of the violence wrought in Iraq by the U.S. military. The mass murders in Cambodia under Pol Pot and the displacements and genocide in Darfur -- as well as so many other recent and more distant instances of such violence -- all have different sources, intentions, and outcomes from the Iraq violence and from each other. The point of making these comparisons is to point out the magnitude of the slaughter in Iraq, not to make analytic comments about the dynamics of the war.
5. Do you believe it is appropriate that the Bush administration should face trial for their actions?

In The Fog of War, former U.S. Secretary of Defense McNamara said to the camera that if the U.S. had lost World War II, then he and other American leaders would have stood trial as war criminals for the terrorist fire bombings of Japanese and German cities by the U.S. air force. Certainly the actions of U.S. political leaders and military commanders in ordering their troops to attack civilian targets in Iraq (for example the destruction of the city of Falluja -- well publicized everywhere in the world except in the United States) fall under the same definition of war crimes that McNamara was considering in making this statement, and so it would be perfectly appropriate for Bush, Cheney, Rumsfeld, Powell, and the various commanding generals to stand trial for these actions.

But take note that McNamara said that trials would have taken place if the U.S. had "lost." This statement has actually turned out to be a kind of half truth. In World War II, the Japanese and Germans certainly lost, but only a relative handful of those responsible for their war crimes stood trial (the Japanese Emperor, for example, was actually restored to his throne). In the Vietnam War, most observers say that the U.S. "lost" the war, but no U.S. leaders stood trial for the many war crimes they committed during that long conflict. There is no predicting the future, but I expect that, no matter how the Iraq war ends--with either McCain's "victory" or with the "defeat" that President Bush has repeatedly warned the U.S. citizens about--there will be no war crimes trials of U.S. political and military leadership.

2011 US Iraq withdrawal depends on conditions on the ground, says Admiral Mullen

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US military leaders are comfortable with a 2011 deadline for the withdrawal of all US forces from Iraq but it should depend on conditions on the ground, the US military chief has said.

"I do think it is important that this be conditions-based," Admiral Michael Mullen, the chairman of the Joint Chiefs of Staff, told reporters.

A US-Iraqi agreement approved over the weekend by the Iraqi cabinet calls for all 150,000 US troops to be out of the country by the end of 2001 regardless of the conditions on the ground.

President-Elect Barack Obama set an even tighter deadline of 16 months during the campaign.

In a television interview on Sunday, Mr Obama said he would call in the Joint Chiefs after his inauguration and "start executing a plan that draws down our troops".

Adml Mullen said he would offer his advice to the new president, who takes office on January 20, and then follow his orders.

"Should president-elect Obama give me direction, I would carry that out. I mean, that's what I do as a senior member of the military."

Referring to the 2011 deadline contained in the so-called Status of Forces Agreement reached with Baghdad, Mullen said, "I certainly understand the boundaries."

But he suggested the deal might be revisited at some point between now and then.

"And so three years is a long time. Conditions could change in that period of time," said Adml Mullen, adding the United States will continue to talk with Baghdad "as conditions continue to evolve."

Asked if the agreement could be changed, he said "that's theoretically possible".

Adml Mullen said he had discussed the agreement with General David Petraeus, the commander of US forces in Middle East and southwest Asia, and General Raymond Odierno, the US commander in Iraq.

"We're all very comfortable that we have what we need. Conditions continue to improve," he said.

"Clearly, moving forward in a measured way, tied to conditions as they continue to evolve over time is important," he added.

Adml Mullen said it would take two to three years to safely withdraw all US forces from Iraq.

"It is very doable, but it's not the kind of thing that we could do overnight," he said.

"To remove the entire force would be, you know, two to three years, as opposed to something we could do in a very short period of time, as we've looked at it thus far.

"Clearly, we'd want to be able to do it safely. So when I talk about that kind of range of time, it really is conditioned by what's going on," he said.

Naomi Klein: The Borderline Illegal Deals Behind the $700 Billion Bailout

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By Amy Goodman

Amy Goodman: World leaders from nearly two dozen countries met in Washington over the weekend to discuss plans to increase regulation of international financial activity. They acknowledged that a failure of market oversight in countries like the United States had precipitated the financial crisis.

Meanwhile, here at home, it’s been a month into the Bush administration’s more than $700 billion bank bailout. Last week, Treasury Secretary Henry Paulson outlined a new bailout strategy intended to boost consumer borrowing and promote financing for companies that give out loans. President-elect Obama’s transition team is reportedly working on improving the management of the bailout come January 20th.

But that’s two months away and according to the Washington Post, with $290 billion already committed, the Bush administration has taken no action to fill congressionally-mandated independent positions to oversee how the bailout is used.

According to Naomi Klein’s latest article in The Nation, "The more details emerge, the clearer it becomes that Washington’s handling of the Wall Street bailout is not merely incompetent. It is borderline criminal." The article is called "In Praise of a Rocky Transition." ... "Criminal"? Explain.

Naomi Klein: Well, there’s a few elements now that are being described as illegal that we’re finding out. First of all, the equity deals that were negotiated with the largest banks and also some smaller banks, representing $250 billion worth of the bailout money, this is the deal to inject capital into the banks in exchange for equity. The idea was to address the so-called credit crunch to get banks lending again. The legislation that enabled this was quite explicit that it had to encourage lending. Barney Frank, who was one of the architects of that legislation, has said that it violates the act if the money is not going to that purpose and is instead going to bonuses, is instead going to dividends, going to salaries, going to mergers. He said that violates the acts, i.e. it’s illegal. But what we know is that it’s going precisely to those purposes. It is going to bonuses. It is going to shareholders. And it is not going to lending. The banks have been quite explicit about this. Citibank has talked about using the money to buy other banks.

Then there’s other aspects of this that are borderline illegal. We found out that in the midst of the crisis, the Bush Treasury Department pushed through a tax windfall for the banks, a piece of legislation that allows the banks to save a huge amount of money when they merge with each other. And the estimate is that this represents a loss of $140 billion worth of tax revenue for the US government. Many tax attorneys who were interviewed by the Washington Post said that they felt that the way in which the Treasury Department went about this by unilaterally changing the tax code was illegal, that this had to include Congress. Congress only found out about it after the fact.

There’s another piece of this puzzle that is also borderline illegal, which is that in addition to the $700 billion that we are discussing, the $700 billion bailout, there’s another $2 trillion that’s been handed out by the Federal Reserve in emergency loans to financial institutions, to banks, that actually we don’t really know who they’re handing the money out to, because, apparently, it’s a secret. They could be handing it out to a range of other corporations -- I think they are -- but they’re saying that they won’t disclose who has received these taxpayer loans, because it could cause a run on the banks, it could cause the market to lose confidence in the institutions that have taken these loans. Once again, that represents an additional $2 trillion.

The other thing that the Fed won’t disclose is what they have accepted as collateral in exchange for these loans. This is a really key point, because, of course, at the heart of the financial crisis is -- are these so- called distressed assets. The value of these assets is enormously controversial. They may be worth very little. So if the Fed has accepted distressed assets as collateral in exchange for these loans, there’s a very good chance the taxpayers aren’t going to be getting this money back. So Bloomberg News has launched a lawsuit in federal court to find out who has received the loans and what has been accepted as collateral, because they believe that this lack of transparency is illegal. So that’s why we’re calling this the "trillion-dollar crime scene" or the "multi-trillion-dollar crime scene." And they’re really challenging lawmakers to call them out, the Treasury is.

And I think, you know, Amy, the last time I was on Democracy Now!, we were talking about Henry Paulson’s original three-page proposal, the $700 trillion stickup, where he basically said, "Give me $700 trillion. Don’t ask any questions. I can never be challenged by any arm of government or any court of law." Now, that aspect of the bailout was supposedly dealt with, and we were all reassured that there was going to be transparency, accountability, legality. But now we’re finding out that, in fact, Henry Paulson has achieved his original goal by stealth, because there is no accountability, and lawmakers are very hesitant to challenge this, because they’re afraid of causing a run on the banks, of causing more market instability. So, essentially, what the Bush administration has done is said, you know, "We dare you to challenge us and be responsible for the great depression." And the Democrats, not known for their firm spines, have so far failed to challenge them in anything other than rhetoric.

Goodman: And what’s very interesting about this, of course, as I talked to you before the election, but now the election is over, and the Democrats are not in a weaker position, but in a far more powerful position, and they are meeting this week.

Klein: Right. They have a lot of leeway in which to act on this. You know, if Barney Frank means what he says, that this violates the act, then of course they can challenge the deals that have already been signed, these terrible equity deals that are so much worse than what Gordon Brown negotiated in Britain. I mean, let’s remember, Gordon Brown got voting rights at the banks that they bailed out, seats on the boards, 12 percent dividends for UK taxpayers, as opposed to the five percent negotiated in the US and no voting rights and no seats on the board. Other thing Gordon Brown did is he got it in writing that the banks had to start lending, as opposed to Henry Paulson, who didn’t get it in writing, and the banks are not lending.

So, there is room to move, but, you know, the logic that has really gripped lawmakers is that they can’t rock the boat. And we hear this across the board, really, in the talk of, you know, who to appoint as Treasury Secretary, how to approach economic policy in this period. We hear all these phrases -- you know, continuity, smooth transition. And really, that’s code for more of the same, because what the market wants is for there not to be tough regulation, is for the free money to keep flowing. What will upset the market, what will create a rocky transition, is if it’s clear that there’s a new sheriff in town, that they’re going to have to follow the law, that they’re going to cut off all of this corporate welfare, there’s going to be real accountability, real conditions attached to the money. You know what? The market really doesn’t want that.

Unfortunately for the market, voters have just voted for change. They voted for a candidate who really turned the election into a referendum on this economic policy of rampant deregulation. So you’ve really got a problem here. How do you reconcile the market’s desire for status quo with the voters’ demand for real change? There is no way to do that without a few bumps along the way. And I’m quite concerned that what we’re seeing from Obama’s team is an accepting of this logic that they need to give the market what it wants, which is continuity, smooth transition, which is really just code for more of the same. And when you hear names like Larry Summers being bandied about for Treasury Secretary, that’s feeding the market exactly what it wants, which is more of the same.

Goodman: I wanted to go more to these -- what you’re calling "borderline criminal" deals, the Washington Post revealing as part of the bailout, lawmakers changed Tax Code Section 382, which limits the kinds of tax shelters companies can use to -- during corporate mergers, created to stop companies who avoid paying taxes by acquiring shell companies valued by the losses on their stocks. And then, going on in the piece, it says congressional aides admitted lawmakers agreed to keep the change hidden to avoid public outrage. Staffers with Senate Finance Committee chair, Max Baucus, a Democrat, reportedly asked that an administration briefing on the tax code change be kept secret. One congressional aide said, "We’re all nervous about saying this was illegal because of our fears about the marketplace. To the extent we want to try to publicly stop this, we’re going to be gumming up some important deals."

Klein: Right. I mean, this is -- that’s an incredible statement, Amy, because really what they’re saying is, we can’t afford to enforce the law, because there is an economic crisis, that somehow, because there’s an economic prices, legality is a luxury that Congress can’t afford. That is a very scary statement. But this is what I mean by this logic that you have to -- you know, the market, particularly a bear market, has the temperament of an ill-tempered two-year-old. I mean, it throws temper tantrums whenever it doesn’t get what it wants, whenever it is frightened. So it is really dangerous to pander to the tastes of the market in this period. It needs a little bit of tough love. That’s what people have voted for. But there will be a temper tantrum if there is a clear message that the law is going to be followed.

So, we find out that there has been this backdoor, illegal tax break handed over to the banks. And, by the way, Amy, this is an example, a classic example, of what I call disaster capitalism or the shock doctrine -- right? -- where the banks had been pushing for this tax break for many, many years, they weren’t able to get it through during normal circumstances, but in a crisis they push it through the back door when everybody is focused on -- well, at the point that they pushed this through, which was September 30th, this was the worst of the economic crisis and people were focused on the collapse of Lehman, and they were focused on the fact that they couldn’t get the bailout legislation through. So nobody even noticed this until it was too late.

And so, this is what I mean by the strategy of the Bush administration, is now they are saying to Congress, "We dare you to stand in the way of these bank mergers, because if you do that" -- because the tax break that they handed out is what encouraged a wave of bank mergers. And I really do think it is worth pausing to question this idea that what Treasury should be doing at this point is encouraging very large bank mergers, because one of the other problems that, you know, is at the root of this crisis, and certainly at the root of this unprecedented bailout, is that you have so many banks that are considered too big to fail, right? So why is it that we are not questioning this solution, the so-called solution to the crisis, which is creating even bigger banks, banks that will, once again, be too big to fail?

We’re really heading to a future where there will be, you know, three or four large banks, all of them too big to fail, which means that if they take more -- they take more and more risks, which nobody is asking them not to. It’s important to understand that in exchange for the bailout money, the banks are not being told that they can’t carry the incredible leverage rates that we saw, for instance, at Bear Stearns, thirty-three to one. They aren’t being told that they can’t invest in these high-risk, complex financial instruments. They can still do whatever they want, but now they’re even bigger, which means that if they get themselves into trouble again, they will be bailed out again. So why is it that the government is cutting their taxes to encourage these mergers? The Democrats are saying, "Well, we can’t do anything now, because if we do, we will gum up these deals." So I think we should question all of it. Across the board, I think the assumptions are faulty.

Goodman: ... I also want to talk to you about your piece in the Rolling Stone, "The Bailout Profiteers."

Klein: Well, what I do in the Rolling Stone piece is talk about the really uncomfortable parallels between what we saw in Iraq in the Green Zone and what we’re seeing in the US Treasury. It’s sort of the Green Zoning of the US Treasury. If we think about the way the Bush administration handled the occupation of Iraq, the working assumption was that everything that could be privatized, everything that could be outsourced, would be outsourced. And it has been very much a corporate war, as you well know. But at the same time, the handing out of the contracts in the early days was done very, very quickly, because, of course, there was this manufactured emergency that we all know was based on lies, in retrospect. But that was used, that state of emergency was used to justify no-bid contracts, to justify the fact that there was very little oversight of the contractors.

And we’re seeing all of this repeat now, but just on such a massive scale, such a larger scale. First of all, when Henry Paulson and Neel Kashkari, his deputy, announced the $700 billion bailout, they also announced that they would be outsourcing all of the work. They have handed out the work to many of the banks and Wall Street law firms that really created the crisis in the first place. But in the same way, there’s also been very little competition for these contracts. They were handed out very quickly. And at the same time, as we were discussing earlier, there is very little oversight over the process.

So, just to give you one example that I discuss in the Rolling Stone piece, there’s the general contractor, the really big contracting -- it’s kind of the Halliburton of Treasury contracts -- went to the bank, Bank of New York Mellon. Bank of New York Mellon, by the way, is one of the nine banks that got the equity deals, the cash injections in exchange for equity. And they are also very deep in this derivatives mess themselves, but they have been hired to handle a huge part of the bailout. So what I argue in the piece is that we actually have it backwards. It’s not the banks that have been partially nationalized; it’s Treasury that has been partially privatized by the very banks that created the crisis in the first place.

One of the things that’s really extraordinary about the Bank of New York Mellon contract is that, unlike the Halliburton contract or the Bechtel contract or the Blackwater contract, we actually don’t know how much it’s worth. It’s quite extraordinary. It’s redacted. The part of the contract that would tell taxpayers how much of their money is being given to this bank and how they’re calculating the payment for Bank of New York Mellon is all blacked out. I was reassured by Treasury three weeks ago that they would be disclosing that information within days. They still haven’t disclosed it.

Another contract that I look into in the Rolling Stone piece is for the first law firm that received a contract to advise Treasury on the equity deals, on those key equity deals that we’ve now found out are such bad deals, the ones that didn’t get it in writing that the banks were supposed to start lending, the ones that only got five percent dividends for US taxpayers when Britain got 12 percent. Well, the law firm that got the contract to advise Treasury is called Simpson Thacher Bartlett. This is a Wall Street heavy-hitter firm. They’ve negotiated some of the largest bank mergers in recent years. And what we discovered in researching this piece is that Simpson Thacher had represented seven of the nine banks that received the equity deals that they were advising Treasury on. And, you know, what’s important to understand is that these banks that Simpson Thacher represents on other matters represent far more of their revenue than US Treasury. So what I am arguing is that they are in a very large conflict of interest, because they really are a bankers’ law firm, not a public interest law firm.

Goodman: Can you talk about what is happening right now in Washington, what took place over the weekend, the meeting of the G20?

Klein: Well, you know, this was an epic lost opportunity because I think a lot of people assume, certainly assumed originally, that what would come out of this catastrophe, what would come out of this crisis, would be a re-examination of some of the thinking that has underpinned so much of economic policy in the past thirty years. And, as I said earlier, Barack Obama turned his election campaign into a referendum on the mania for deregulation and free trade and really less trickle-down economics. He said the idea of giving more and more to the people at the top and waiting for it to trickle down to the people below, and that really resonated with voters, and they elected him on that platform. And let’s remember, Amy, because this really is about democracy, that his campaign turned around when the economic crisis really hit Wall Street. He was losing ground to McCain when the crisis hit Wall Street, and Obama started using this language of really putting the ideology of deregulation on trial. That’s when his numbers turned around. That’s when he went on his winning streak that took him all the way to Election Day. And so, I think that there has been this assumption that, OK, now we’re going to fix it.

But if we look at what just came out of the G20 summit, it’s really been a reassertion of the very -- this very ideology of deregulation. On the one hand, you have the statement that you started the program with, where the world leaders said that this crisis was born of the shadow banking industry, not enough oversight, not enough regulation, too much complexity. At the same time, when they talk about solutions, they’re calling for resurrecting the failed World Trade Organization talks that collapsed this summer. And we heard, if you recall, this summer, when the Doha talks collapsed, that globalization and the Washington Consensus were dead, because developing countries had rejected it.

The other thing that they’re calling for is a greater role for the International Monetary Fund. And it’s important to understand that the reason why the International Monetary Fund and the World Trade Organization and the whole free trade agenda, generally, has been in collapse in recent years is because countries around the world are no longer willing to accept the conditions attached to joining this club, the conditions attached to an International Monetary Fund loan. In reasserting a greater role for the International Monetary Fund, in calling for the World Trade Organization talks to get back on track, these world leaders are actually calling for more financial market deregulation, more of the same.

I’ll give you one example: the Doha talks. Although much of the focus has been on agricultural subsidies, part of the Doha talks is about financial sector deregulation and the push, particularly from Britain and the United States, for countries like China and India to open up their financial services markets to US and British and European companies who want into these markets. And what’s really striking is that you hear this language of anti-protectionism, you know, that we can’t turn away from free trade. What this really means, Amy, is that Citibank and Barclays want to go into China, want to go into India, and they want to buy up Chinese and Indian banks, they want to get into these markets. But what’s so incredible in this moment is the hypocrisy, just the rampant hypocrisy, because Barclays and Citibank and all of the other banks that would benefit from this type of free trade are of course the very banks that are receiving massive state protection from their own governments in the form of the bailouts that we’ve just been discussing. So these sort of corporate welfare bums now want to use the language of anti-protectionism to go into other countries and buy up their assets, but, of course, they are being subsidized so heavily by their own taxpayers. So it’s a moment of high hypocrisy.

It’s also a moment of, as I said at the beginning, lost opportunities, because -- just to give you one example, think about what these leaders could do if they really wanted to, in terms of collaborating to harmonize regulation, so that banks were no longer able to pit governments against each other for who could offer the lowest taxes, who could give them the best tax havens, who could offer the lowest regulation. There was just a hearing on Friday about hedge funds that Henry Waxman convened. And before those hearings, we heard from one of the wealthiest hedge fund owners in the country, Ken Griffin, who’s actually an Obama supporter. Ken Griffin, a billionaire hedge fund owner -- he owns Citadel Investment -- was asked by the committee whether he believed that hedge funds were sufficiently regulated and whether they should be more highly taxed. What Ken Griffin said was that if that happened, there would be even more jobs in the financial industry in the United States lost to Britain. And he talked about how his heart breaks when he goes to Canary Wharf in London and sees how many good jobs have been lost to Britain, which has, in many ways, lower -- less regulation of hedge funds.

But what’s so striking about that, Amy, is that it would be so easy in this moment for the US government and the British government to actually harmonize their regulations so that they could -- so that companies like Citadel Investment and other hedge funds would really have nowhere to run. And when you have a crisis like this, which so clearly shows the need for those types of regulations, when you have an election like there just was in the United States, where people have said clearly that this is a priority, the leaders have an opportunity to act and to close down these tax havens, to prevent this ability of governments to be pitted against one another, and have a race to the top as opposed to a race to the bottom. But they blew that opportunity, and they actually called for less regulation.

Goodman: Just underscoring what you wrote on the whole issue of the difference in the bailouts, the British Prime Minister Gordon Brown extracting meaningful guarantees for taxpayers, voting rights on banks, seats on their boards, 12 percent in annual dividend payments to the government, a suspension of dividend payments to shareholders, restrictions on executive bonuses, a legal requirement banks lend money to homeowners and small businesses. Here in the United States, Washington Post reporting major US banks are on pace to spend more than half their bailout money on rewarding their shareholders. The thirty-three banks are set to receive some $163 billion in government bailouts; half of that sum will go to paying off shareholders over the next three years.

Klein: Yeah, this bailout is really not a bailout at all; it’s a parting gift to the people that the Bush -- that George Bush once referred to jokingly as "my base." You know, in one of my columns recently, I likened it to what European colonial rulers used to do when they finally realized they had to hand over power; they would loot the treasury on the way out the door.

And the reason why there has been this dramatic change in policy just in recent days, where Henry Paulson has said, "OK, well, we’re not going to do what we originally had said at all," which is use the bailout money to buy distressed assets, to buy bad debts, "Now we’re going to go from these equity deals with the banks to bailing out credit card companies" -- the reason for that is that that first $250 billion was essentially money down the drain. They are admitting that it didn’t do what it was supposed to do, which was increase lending. So, now they’re making it up as they go along. It’s take three, take four, take five. But we’re supposed to somehow not notice that $250 billion, an astronomical sum, was just wasted, going to bonuses, going to shareholder payouts, going to CEO salaries. And now they’re trying another method to get lending going. But it really was the parting gift.

And if we think about what this money means, and this is -- you know, this crisis isn’t over, and the same people who justified this bailout, who clamored for this bailout, are the very people who are going to turn around and say to Barack Obama, "We can’t afford for you to make good on your election promises. We can’t afford universal healthcare. In fact, we can’t afford what meager services Americans get in exchange for their tax dollars, like Social Security payments." We’re already hearing this lowering of expectations now in the national discourse. So, the money -- this really is, you know, reverse Robin Hood gone mad. The money has been given to the people who needed it least, and it’s going to be used to justify austerity measures imposed against those who need it most. It’s going to be used to justify cuts to food stamps. It’s going to be used to justify cuts to Social Security, to healthcare, let alone being used to justify why more ambitious plans for a national healthcare program, for green energy are not affordable. So people have to be ready for this. You know, the next shock is yet to come.

Goodman: Your final thought, this, on the bailing out of the auto industry, the Big Three in Detroit, starting with General Motors?

Klein: Well, obviously, it shouldn’t be a blank check. You know, I always think about what the International Monetary Fund does when developing countries come and ask for a loan. Think about what they’re doing right now. The International Monetary Fund says, "You want a loan? Well, here’s our list of conditions." They used to call it structural adjustment. The same thing could be done to the auto industry. If they’re coming for a bailout, they should be structurally adjusted, and taxpayers should be playing IMF to the auto industry and insisting that they change the way they work, that they build green automobiles, that they protect jobs. It can’t simply be a blank check.

That said, what’s really disturbing is the way the Bush administration appears to be using the desire among Democrats to bail out the auto industry to horse trade the free trade deal with Colombia. You know, what we’re really seeing, Amy, is a resurrection of the entire free trade -- discredited free trade agenda. This crisis being used -- the shock of this crisis being used to resurrect all of these discredited deals. The Colombia free trade deal, the International Monetary Fund, the Doha round, they’re all coming back from the dead at precisely the moment that we should be actually burying, for good, this whole agenda of deregulation.

Why Obama's Futurama Can Wait

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By Mike Davis

Schools and Hospitals Should Come First in Any Stimulus Package

America’s "Futurama" is defunct. The famous walk-through diorama of a car-and-suburb world, imagineered by Norman Bel Geddes for General Motors at the 1939 New York World’s Fair, has weathered into a dreary emblem of our national backwardness. While GM bleeds to death on a Detroit street corner, the steel-and-concrete Interstate landscape built in the 1950s and 1960s is rapidly decaying into this century’s equivalent of Victorian rubble.

As we wait in potholed gridlock for the next highway bridge to collapse, the French, the Japanese, and now the Spanish blissfully speed by us on their sci-fi trains. Within the next year or two, Spain’s high-speed rail network will become the world’s largest, with plans to cap construction in 2020 at an incredible 6,000 miles of fast track. Meanwhile China has launched its first 200 mile-per-hour prototype, and Saudi Arabia and Argentina are proceeding with the construction of their own state-of-the-art systems. Of the larger rich, industrial countries, only the United States has yet to build a single mile of what constitutes the new global standard of transportation.

From day one, Barack Obama campaigned to redress this infrastructure deficit through an ambitious program of public investment: "For our economy, our safety, and our workers, we have to rebuild America." Originally he proposed to finance this spending by ending the war in Iraq. Although his present commitments to a larger military and an expanded war in Afghanistan seem to foreclose any reconversion of the Pentagon budget, he continues to emphasize the urgency of an Apollo-style program to modernize highways, ports, rail transit, and power grids.

Public works, he also promises, can put the public back to work. His "Economic Rescue Plan for the Middle Class" vows to "create 5 million new, high-wage jobs by investing in the renewable sources of energy that will eliminate the oil we currently import from the Middle East in 10 years, and we’ll create 2 million jobs by rebuilding our crumbling roads, schools, and bridges."

Of course, Bill Clinton entered the White House with a similarly ambitious plan to rebuild the derelict national infrastructure, but it was abandoned after Treasury Secretary Robert Rubin convinced the new president that deficit reduction was the true national priority. This time around, a much more powerful and desperate coalition of interests is aligned to support the Keynesian shock-and-awe of major public works.

Rolling Out the Dozers

Since the Paulson bailout plan has become so much expensive spit in the wind, and with bond spreads now premised on the possibility of double-digit unemployment over the next 18 months, massive new federal spending has become a matter of sheer economic survival. As innumerable influentials -- from New York Times columnist David Brooks to House Majority Leader Nancy Pelosi -- have argued, a crash program of infrastructure repair and construction, likely to include some investment in the new power grids required to bring more solar and wind energy online, is the "win-win" approach that will garner the quickest bipartisan support.

It has also been portrayed as the only lifeboat in the water for the ordinary steerage passengers in our sinking economy. The emergent Washington consensus seems to be that those five million green jobs can actually come later (after we save GM’s shareholders), but that infrastructure spending -- if resolutely pushed through the lame-duck Congress or adopted in Obama’s first 100 days -- can begin to pump money into the crucial construction and manufacturing sectors of the economy before the end of next winter.

Unlike Comrade Bush’s "socialist" efforts to save Wall Street, a public-works strategy for national recovery has had broad ideological respectability from the days of Alexander Hamilton and Abraham Lincoln to those of Franklin D. Roosevelt and John F. Kennedy. If Democrats can brag about the proud heritage of the Works Progress Administration and the Public Works Administration from the era of the Great Depression (ah, those magnificent post offices and parkways), there are still a few Republicans who remember the Golden Age of interstate highway construction that commenced in the 1950s with President Dwight D. Eisenhower. Indeed since the national shame of Hurricane Katrina, Americans have become outspokenly nostalgic about competent federal governments and magnificent public achievements.

If one accepts the reasonable principle of supporting the new president whenever he makes policy from the left or addresses basic social needs, shouldn’t progressives be cheering the White House as it rolls out the dozers, Cats, and big cranes? Aren’t high-speed mass transit and clean energy the kind of noble priorities that best reconcile big-bang stimulus with long-term public value?

The answer is: no, not at this stage of our national emergency. I’m not an infrastructure-crisis denialist, but first things first. We are now at a crash site, and our priority should be to save the victims, not change the tires or repair the fender, much less build a new car. In the triage situation that now confronts the president-elect, keeping local schools and hospitals open should be the first concern, rebuilding bridges and expanding ports would come next, and rescuing bank shareholders at the very end of the line.

Inexorably, the budgets of schools, cities, and states are sinking into insolvency on a scale comparable to the early 1930s. The public-sector fiscal crisis -- a vicious chain reaction of falling property values, incomes, and sales -- has been magnified by the unexpectedly large exposure of local governments and transit agencies to the Wall Street meltdown via complex capital lease-back arrangements. Meanwhile on the demand side, the need for public services explodes as even prudent burghers face foreclosure, not to speak of the loss of pensions and medical coverage. Although the public mega-deficits of California and New York may dominate headlines, the essence of the crisis -- from the suburbs of Anchorage to the neighborhoods of West Philly -- is its potential universality.

Certainly, in such a rich country, wind farms and schools should never become a Sophie’s choice, but the criminal negligence of Congress over the past months should alert us to the likelihood that such a choice will be made -- with disastrous results for both human services and economic recovery.

Saving Schools and Hospitals

Congress naturally loves infrastructure because it rewards manufacturers, shippers, and contractors who give large campaign contributions, and because construction sites can be handsomely bill-boarded with the names of proud sponsors. Powerful business lobbies like the National Industrial Transportation League and the Coalition for America’s Gateways and Trade Corridors stand ready to grease the wheels of their political allies. In addition, if the past century of congressional pork-barrel methods is any precedent, infrastructural spending typically resists coherent national planning or larger cost-benefit analyses.

Yet saving (and expanding) core public employment is, hands-down, the best Keynesian stimulus around. Federal investment in education and healthcare gets incomparably more bang for the buck, if jobs are the principal criterion, than expenditures on transportation equipment or road repair.

For example, $50 million in federal aid during the Clinton administration allowed Michigan schools to hire nearly 1,300 new teachers. It is also the current operating budget of a Tennessee school district made up of eight elementary schools, three middle schools, and two high schools.

On the other hand, $50 million on the order book of a niche public transit manufacturer generates only 200 jobs (plus, of course, capital costs and profits). Road construction and bridge repair, also very capital intensive, produce about the same modest, direct employment effect.

One of the most likely targets for a Congressional stimulus plan is light-rail construction. Street-car systems are enormously popular with local governments, redevelopment agencies, and middle-class commuters, but generally they operate less efficiently (per dollar per passenger) than bus systems, and at least 40% of the capital investment leaks overseas to German streetcar builders and Korean steel companies.

Personally, I would love to commute via a sleek Euro-style bullet train from my home in San Diego to my job in Riverside, 100 grueling freeway miles away, but I’ll take gridlock if the cost of rationing federal expenditure is tolerating the closure of my kids’ school or increasing the wait in the local emergency room from two to ten hours.

Obama, unlike his predecessor, has a bold vision, shared with his powerful supporters in high-tech industries, of catching up with the Spanish and Japanese, while redeeming America as the synonym for modernity. Lots of new infrastructure will, however, become so many bridges to nowhere (especially for our children) unless he and Congress first save human-needs budgets and public-sector jobs.

A good start for progressive agitation on Obama’s left flank would be to demand that his health-care reform and aid-to-education proposals be brought front and center as preferential vehicles for immediate macro-economic stimulus. Democrats should not forget that the most brilliant and enduring accomplishment of the Kennedy-Johnson era was Head Start, not the Apollo Program.

If, after saving kindergartens and county hospitals, we someday hope to ride the fast train, then we need to rebuild the antiwar movement on broader foundations. The president-elect’s original proposal for funding domestic social investment through downsizing the empire offers a brilliant starting point for basing economic growth on an economic bill of rights (as advocated by Franklin Roosevelt in 1944) instead of imperial over-reach and Pharaonic levels of military waste.

Obama Advisers: No Charges Likely Versus Interrogators

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By Lara Jakes Jordan

Barack Obama's incoming administration is unlikely to bring criminal charges against government officials who authorized or engaged in harsh interrogations of suspected terrorists during the George W. Bush presidency. Obama, who has criticized the use of torture, is being urged by some constitutional scholars and human rights groups to investigate possible war crimes by the Bush administration.

Two Obama advisers said there's little - if any - chance that the incoming president's Justice Department will go after anyone involved in authorizing or carrying out interrogations that provoked worldwide outrage.

The advisers spoke on condition of anonymity because the plans are still tentative. A spokesman for Obama's transition team did not respond to requests for comment Monday.

Additionally, the question of whether to prosecute may never become an issue if Bush issues pre-emptive pardons to protect those involved.

Obama has committed to reviewing interrogations on al-Qaida and other terror suspects. After he takes office in January, Obama is expected to create a panel modeled after the 9/11 Commission to study interrogations, including those using waterboarding and other tactics that critics call torture. The panel's findings would be used to ensure that future interrogations are undisputedly legal.

"I have said repeatedly that America doesn't torture, and I'm going to make sure that we don't torture," Obama said Sunday on CBS' "60 Minutes." "Those are part and parcel of an effort to regain America's moral stature in the world."

Obama's most ardent supporters are split on whether he should prosecute Bush officials.

Asked this weekend during a Vermont Public Radio interview if Bush administration officials would face war crimes, Senate Judiciary Chairman Patrick Leahy flatly said, "In the United States, no."

"These things are not going to happen," said Leahy, D-Vt.

Robert Litt, a former top Clinton administration Justice Department prosecutor, said Obama should focus on moving forward with anti-torture policy instead of looking back.

"Both for policy and political reasons, it would not be beneficial to spend a lot of time hauling people up before Congress or before grand juries and going over what went on," Litt said at a Brookings Institution discussion about Obama's legal policy. "To as great of an extent we can say, the last eight years are over, now we can move forward - that would be beneficial both to the country and the president, politically."

But Michael Ratner, a professor at Columbia Law School and president of the Center for Constitutional Rights, said prosecuting Bush officials is necessary to set future anti-torture policy.

"The only way to prevent this from happening again is to make sure that those who were responsible for the torture program pay the price for it," Ratner said. "I don't see how we regain our moral stature by allowing those who were intimately involved in the torture programs to simply walk off the stage and lead lives where they are not held accountable."

In the years after the Sept. 11, 2001, terror attacks, the White House authorized U.S. interrogators to use harsh tactics on captured al-Qaida and Taliban suspects. Bush officials relied on a 2002 Justice Department legal memo to assert that its interrogations did not amount to torture - and therefore did not violate U.S. or international laws. That memo has since been rescinded.

At least three top al-Qaida operatives - including 9/11 mastermind Khalid Sheik Mohammed - were waterboarded in 2002 and 2003 because of intelligence officials' belief that more attacks were imminent. Waterboarding creates the sensation of drowning, and has been traced back hundreds of years and is condemned by nations worldwide.

Bush could take the issue of criminal charges off the table with one stroke of his pardons pen.

Whether Bush will protect his top aides and interrogators with a pre-emptive pardon - before they are ever charged - has become a hot topic of discussion in legal and political circles in the administration's waning days. White House deputy press secretary Tony Fratto declined to comment on the issue.

Under the Constitution, the president's power to issue pardons is absolute and cannot be overruled.

Pre-emptive pardons would be highly controversial, but former White House counsel Arthur B. Culvahouse Jr. said it would protect those who were following orders or otherwise trying to protect the nation.

"I know of no one who acted in reckless disregard of U.S. law or international law," said Culvahouse, who served under President Ronald Reagan. "It's just not good for the intelligence community and the defense community to have people in the field, under exigent circumstances, being told these are the rules, to be exposed months and years after the fact to criminal prosecution."

The Federalist Papers discourage presidents from pardoning themselves. It took former President Gerald Ford to clear former President Richard Nixon of wrongdoing in the 1972 Watergate break-in.

Experts: Half World Faces Water Shortage by 2080

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By Eileen Ng

Half the world's population could face a shortage of clean water by 2080 because of climate change, experts warned Tuesday.

Wong Poh Poh, a professor at the National University of Singapore, told a regional conference that global warming was disrupting water flow patterns and increasing the severity of floods, droughts and storms _ all of which reduce the availability of drinking water.

Wong said the U.N. Intergovernmental Panel on Climate Change found that as many as 2 billion people won't have sufficient access to clean water by 2050. That figure is expected to rise to 3.2 billion by 2080 _ nearly tripling the number who now do without it.

Reduced access to clean water _ which refers to water that can be used for drinking, bathing or cooking _ forces many villagers in poor countries to walk miles to reach supplies. Others, including those living in urban shanties, suffer from diseases caused by drinking from unclean sources.

At the beginning of the decade, the World Health Organization estimated that 1.1 billion people did not have sufficient access to clean water.

Asia, home to more than 4 billion people, is the most vulnerable region, especially India and China, where booming populations have placed tremendous stress on water sources, said Wong, a member of the U.N. panel.

"In Asia, water distribution is uneven and large areas are under water stress. Climate change is going to exacerbate this scarcity," he told the two-day Asia Pacific Regional Water Conference attended by policy makers, government officials, academics, businessmen and consumer group representatives.

Scientists have said global climate change takes many forms, causing droughts in some areas while increasing flooding and the severity of cyclones in others. Droughts reduce water supply, and floods destroy the quality of water. Rising sea levels, for instance, increase the salt content at the mouths of many rivers, from which many Asians draw their drinking water.

"As human civilization develops, the environment is increasingly affected in negative ways. Floods, drought, changing rainfall patterns and rising temperatures are signs of our misdeeds to nature," said Rozali Ismail, head of a state water association in Malaysia.

Wong and others at the conference called on governments to embrace the Kyoto Protocol climate treaty to fight global warming and protect water resources, as a short-term solution.

But eventually governments must build infrastructure to protect coastal areas, improve management of water basins and adopt new technologies to enhance availability and reliability of water resources, Wong said.

The United Nations is currently campaigning to replace the 1997 Kyoto Protocol _ which regulates the emissions of 37 industrial countries _ with another accord at a meeting in Copenhagen in December 2009.

The Kyoto Protocol was signed by 183 nations in 1997. But the United States _ long the world's biggest emitter, though it is now rivaled by China _ rejected the plan over concerns it would harm the American economy.

Developing countries such as China and India also refused to accept a binding arrangement that they said would limit their development.

Top judge: US and UK acted as 'vigilantes' in Iraq invasion

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By Richard Norton-Taylor

Former senior law lord condemns 'serious violation of international law'

One of Britain's most authoritative judicial figures last night delivered a blistering attack on the invasion of Iraq, describing it as a serious violation of international law, and accusing Britain and the US of acting like a "world vigilante".

Lord Bingham, in his first major speech since retiring as the senior law lord, rejected the then attorney general's defence of the 2003 invasion as fundamentally flawed.

Contradicting head-on Lord Goldsmith's advice that the invasion was lawful, Bingham stated: "It was not plain that Iraq had failed to comply in a manner justifying resort to force and there were no strong factual grounds or hard evidence to show that it had." Adding his weight to the body of international legal opinion opposed to the invasion, Bingham said that to argue, as the British government had done, that Britain and the US could unilaterally decide that Iraq had broken UN resolutions "passes belief".

Governments were bound by international law as much as by their domestic laws, he said. "The current ministerial code," he added "binding on British ministers, requires them as an overarching duty to 'comply with the law, including international law and treaty obligations'."

The Conservatives and Liberal Democrats continue to press for an independent inquiry into the circumstances around the invasion. The government says an inquiry would be harmful while British troops are in Iraq. Ministers say most of the remaining 4,000 will leave by mid-2009.

Addressing the British Institute of International and Comparative Law last night, Bingham said: "If I am right that the invasion of Iraq by the US, the UK, and some other states was unauthorised by the security council there was, of course, a serious violation of international law and the rule of law.

"For the effect of acting unilaterally was to undermine the foundation on which the post-1945 consensus had been constructed: the prohibition of force (save in self-defence, or perhaps, to avert an impending humanitarian catastrophe) unless formally authorised by the nations of the world empowered to make collective decisions in the security council ..."

The moment a state treated the rules of international law as binding on others but not on itself, the compact on which the law rested was broken, Bingham argued. Quoting a comment made by a leading academic lawyer, he added: "It is, as has been said, 'the difference between the role of world policeman and world vigilante'."

Bingham said he had very recently provided an advance copy of his speech to Goldsmith and to Jack Straw, foreign secretary at the time of the invasion of Iraq. He told his audience he should make it plain they challenged his conclusions.

Both men emphasised that point last night by intervening to defend their views as consistent with those held at the time of the invasion. Goldsmith said in a statement: "I stand by my advice of March 2003 that it was legal for Britain to take military action in Iraq. I would not have given that advice if it were not genuinely my view. Lord Bingham is entitled to his own legal perspective five years after the event." Goldsmith defended what is known as the "revival argument" - namely that Saddam Hussein had failed to comply with previous UN resolutions which could now take effect. Goldsmith added that Tony Blair had told him it was his "unequivocal view" that Iraq was in breach of its UN obligations to give up weapons of mass destruction.

Straw said last night that he shared Goldsmith's view. He continued: "However controversial the view that military action was justified in international law it was our attorney general's view that it was lawful and that view was widely shared across the world."

Bingham also criticised the post-invasion record of Britain as "an occupying power in Iraq". It is "sullied by a number of incidents, most notably the shameful beating to death of Mr Baha Mousa [a hotel receptionist] in Basra [in 2003]", he said.

Such breaches of the law, however, were not the result of deliberate government policy and the rights of victims had been recognised, Bingham observed.

He contrasted that with the "unilateral decisions of the US government" on issues such as the detention conditions in Guantánamo Bay, Cuba.

After referring to mistreatment of Iraqi detainees in Abu Ghraib, Bingham added: "Particularly disturbing to proponents of the rule of law is the cynical lack of concern for international legality among some top officials in the Bush administration."