Thursday, December 4, 2008

US Soldiers Re-enlisting Because of Poor Economy

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Sgt. Ryan Nyhus spent 14 months patrolling the deadly streets of Baghdad, where five members of his platoon were shot and one died. As bad as that was, he would rather go back there than take his chances in this brutal job market.

Nyhus re-enlisted last Wednesday, and in so doing joined the growing ranks of those choosing to stay in the U.S. military because of the bleak economy.

''In the Army, you're always guaranteed a steady paycheck and a job,'' said the 21-year-old Nyhus. ''Deploying's something that's going to happen. That's a fact of life in the Army -- a fact of life in the infantry.''

In 2008, as the stock market cratered and the housing market collapsed, more young members of the Army, Air Force and Navy decided to re-up. While several factors might explain the rise in re-enlistments, including a decline in violence in Iraq, Pentagon officials acknowledge that bad news for the economy is usually good news for the military.

In fact, the Pentagon just completed its strongest recruiting year in four years.

''We do benefit when things look less positive in civil society,'' said David Chu, undersecretary of defense for personnel and readiness. ''What difficult economic times give us, I think, is an opening to make our case to people who we might not otherwise have.''

The retention rate of early-career soldiers in the Army has risen steadily over the past four years and now stands 20 percentage points higher than it was in fiscal 2004. As for the Navy and the Air Force, early- and mid-career sailors and airmen re-enlisted at a higher rate in October than during the same period in 2007. The Marine Corps was not immediately able to provide comparative figures on re-enlistments.

Alex Stewart joined the Army two years ago, when the factory where he worked as a welder started laying off. He was sent to Afghanistan with the 82nd Airborne Division, which suffered 87 deaths last year, the highest total suffered by the 20,000-member unit since the fighting in Iraq and Afghanistan began.

When his hitch was up in earlier this year, the 32-year-old from Grand Rapids, Mich., didn't hesitate to re-up for five more years.

''I want a stable life for my wife in a very shaky economy,'' Stewart said. ''There were no other options.''

Stewart's new assignment will take him to Germany, where he will serve as a truck driver, though it is always possible he could be sent back into combat.

''I figure if I do another five or 10 years in the Army,'' he said, ''the economy will turn around and I can get a truck-driving job.''

Army Spc. Alicia Fauls, 20, of the Woodlands, Texas, had two years to go when she re-enlisted last week at Fort Riley, home of the Army's 1st Infantry Division, which has one brigade in Iraq, one headed home and another preparing to ship out. She has not been sent into the war zone yet but knows an assignment in Iraq or Afghanistan is probably in her future.

''I did have only two years left, but I'm not sure what I would do,'' Fauls said. ''It's harder to find jobs. If I do wait to get out, the economy should be in better shape.''

When Nyhus' tour in Iraq ended last April, he talked to his wife about getting out of the Army and working toward a college degree. But the father of a 2-year-old daughter opted for the job security, even though he is likely to be sent back to Iraq as a member of the 4th Infantry Division, which has shouldered a heavy burden of the fighting.

Marine Staff Sgt. Angela Mink, who was injured in a helicopter accident in Iraq in 2004 and now works in public affairs at the Corps' New River air station in North Carolina, said the thought of taking a civilian job ''without my fellow Marines just didn't appeal to me.'' Moreover, she had little hope of finding a private-sector job that pays as well as the Marines.

''Equivalent pay is nonexistent, once you factor in insurance premiums, housing costs,'' said Mink, 37. ''And we would definitely have had to relocate. I have a child with a disability and what civilian employer is going to take that into consideration when they think of moving you somewhere?''

And so the married mother of five signed up recently for four more years.

Roughly 208,000 men and women left the military in 2007. Some were rank-and-file warriors, while others worked in specialized fields such as satellite communications or computer networking. Only about 30 percent of enlisted soldiers hold a bachelor's degree.

The job market is still fairly good for veterans with technical skills, especially those coveted by defense contractors, said Carl Savino, a retired Army major who runs a company outside Washington that offers employment services to new veterans.

Sgt. Michael Rodriguez, 29, of San Antonio, decided to get out after he landed a job with a defense contractor working on communications systems. ''I feel pretty secure with them,'' said Rodriguez, who will leave the military soon.

But even defense-contractor jobs could dry up as the economic crisis deepens, Savino said.

''Jobs are getting harder to come by for veterans,'' Savino said. ''The farther they deviate from the defense contractors, who are still in reasonably strong shape, the more challenging it is.''

Why diplomacy and sanctions don't mix

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By Trita Parsi

Change often occurs at a faster pace than people can comprehend. That is certainly the case with the quickly shifting political realities in Washington on Iran. In less than 50 days, America will be led by a president who made dialogue with Tehran a campaign promise--and yet he won. Perhaps even more surprising, one of the most powerful lobbies in Washington failed--in the middle of an election year--to convince the US Congress to pass a resolution calling for a naval blockade of Iran, even though the resolution had more than 250 co-sponsors.

The debate in Washington is no longer whether to negotiate with Iran, but how, when and in what sequence such negotiations should take place. This, however, does not mean that talks will occur or that they will succeed. This is partly due to an unchanging feature of the political landscape in Washington--the reliance on economic sanctions to look tough and to gain leverage.

President-elect Barack Obama, who told the American Israel Public Affairs Committee earlier this year that he stood firm on his call for negotiations with Iran and his promise to do away with "self-defeating preconditions", has sought to balance his pro-dialogue position by adopting a strong appetite for additional economic sanctions against Iran.

While a senator, he was the original co-sponsor of the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2008, which would have intensified existing sanctions and paved the way for additional divestment. Obama argued at the time that sanctions were an integral part of any diplomatic strategy. "In addition to an aggressive, direct, and principled diplomatic effort, we must continue to increase economic pressure on Iran," he said in a statement. Some of Obama's advisors have taken this a step further and argued that sticks--meaning sanctions--would have to come first in any carrot-and-stick approach to Iran.

Obama is of course absolutely right that any successful approach to Iran must include a combination of incentives and disincentives. And sanctions can theoretically provide the US with additional leverage over Iran. The problem with this line of thinking, however, is that it fails to recognize that existing sanctions already provide the US with significant leverage. But this leverage can only be utilized in the context of a negotiation. Sanctions can play a critical function in a US negotiation with Iran if, that is, Washington is willing to do away with them in return for significant Iranian behavioral changes.

That willingness has thus far not existed in Washington. The definition of leverage in the Bush administration was one's ability to get something for nothing. That approach has clearly failed; it does not characterize negotiations, but rather ultimatums and threats. In negotiations, you can only get something by giving something. Indeed, it's not the threat or imposition of new sanctions that will change Iranian behavior, but rather the offer to lift existing sanctions. Herein lies America's as yet untapped reservoir of leverage over Iran.

The crux, of course, is that this leverage only can be actualized if Washington and Tehran find their way to the negotiation table. And that is why the inclination to impose new sanctions prior to the commencement of talks can be so devastating to Obama's agenda: Imposing new sanctions on Iran--whether they be congressional sanctions or executive orders--will only reduce the prospects for diplomacy by poisoning the atmosphere and further increasing mistrust between the two capitals, which in turn defeats America's ability to tap into its reservoir of leverage over Iran in the first place.

The same is of course true for Iran: any effort by Tehran to intensify its efforts to undermine Washington's policies in the region as a means to gain leverage prior to negotiations will only render such talks less likely.

To succeed with his pro-diplomacy agenda, Obama must not only avoid the fallacy that Washington doesn't have leverage over Iran and recognize the value of offering to lift existing sanctions in return for Iranian policy changes. He must also resist the temptation to undermine the path to negotiations by imposing new sanctions before talks have begun--including resisting pressure from domestic constituencies whose motivation for sanctions historically has precisely been to prevent a US-Iranian diplomatic breakthrough to begin with.

The combination of incentives and disincentives that will succeed in advancing US interest vis-a-vis Iran is one in which diplomacy is at the center and sanctions are in the periphery--not the other way around.

Security agreements mean Iraq occupation will continue to 2012 and beyond

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By James Cogan

For more than five-and-a-half years, and at the cost of the lives of at least one million Iraqis and over 4,200 Americans, the US has occupied Iraq and repressed all opposition to its presence. The Iraqi parliament's ratification of a status of forces agreement and "Strategic Framework" with the US on November 27 ensures the ongoing occupation of the country and formalises its status as a US client state.

The status of forces goes into effect on January 1, the same day a United Nations mandate expires, and provides a legal framework for American operations inside Iraq until December 31, 2011. President-elect Barack Obama has put his stamp of approval on the new arrangements.

With the armed resistance largely drowned in blood, US combat troops will pull back to some 400 fortified bases outside the country's population centres by the middle of next year. The Iraqi government, however, can at any time request American military assistance in combat operations against "terrorists", "outlaw groups" and "remnants of the former regime". "Non-combat" components of the US military will provide "training, equipping, supporting, supplying and upgrading logistical systems" for the Iraqi security forces. Iraq can also request "temporary support" from the US for the "surveillance and control of Iraqi air space".

American troops and civilian contractors employed by the US Defense Department will continue to operate with full immunity from Iraqi law, except in the rare cases where they are off duty and off their bases. The US occupation forces can continue to import and export equipment and goods, and move personnel in and out of the country without being subject to any taxes, custom charges or even inspection by Iraqi agencies.

Civilian security companies contracted by foreign embassies, aid agencies and Iraqi politicians will be stripped of immunity. It is therefore expected that most non-Iraqi personnel will leave, forcing large numbers of mercenaries to look for contracts in Afghanistan or other potential war zones.

In the end, the agreements were supported by the two main Shiite fundamentalist parties in Maliki's government—the Islamic Supreme Council of Iraq (ISCI) and Da'wa—as well as by the Kurdish nationalist parties and the Sunni-based Iraqi Accordance Front (IAF). In all, 149 of the 275 legislators in the parliament voted in favour. Of the 35 who voted against, most were loyalists from the Shiite movement of cleric Moqtada al-Sadr. The remaining legislators either abstained or were not present.

The Sunni support for the agreements was won through a range of political concessions by Maliki. A referendum will be held before July to give a popular endorsement to the pacts; amnesty will be offered to many of the estimated 25,000, predominantly Sunni detainees being held in US or Iraqi government prisons; and more of the Sunni Awakening Council militiamen recruited during the US military surge will be offered positions in the Iraqi army or public service.

The IAF's acceptance was sufficient for the agreements to gain the implicit backing of the Shiite religious elite in Iraq, headed by Ayatollah Ali al-Sistani. Sistani had appealed for unity on any pact with the US. The primary concern of the clergy was that Sunni opposition could re-ignite a large-scale insurgency against the Shiite-dominated government.

Two aspects of the agreement also overcame the opposition of the Iranian regime, which is close to both ISCI and Da'wa. US forces are prohibited from storing "weapons of mass destruction" such as nuclear weapons on Iraqi territory, or using its land, air or sea space to attack other states. In another signal that Tehran hopes for better relations with the US after the inauguration of an Obama administration, a senior Iranian leader, Ahmad Jannati, hailed the agreements as "a very good decision by the Iraqi parliament".

Da'wa, ISCI and the Sunni IAF—groupings that have directly collaborated with the US since the 2003 invasion—are all seeking to use the agreement to bolster their electoral fortunes ahead of provincial elections in January. They are presenting their protracted negotiations with the Bush administration as a victory in securing a definite date for the end to the broadly hated foreign occupation.

The agreement does state that "all United States forces shall withdraw from all Iraqi territory" by the end of 2011. The barely disguised intent, however, is that the terms will be renegotiated beforehand to sanction an enduring American presence. The associated "Strategic Framework Agreement," which was signed between the Bush administration and the government of Prime Minister Nouri al-Maliki on November 28, commits both parties to a "long term relationship in economic, diplomatic, cultural and security fields".

In three years time, the Iraqi security forces will still be incapable of conducting operations against significant insurgent activity without American support, let alone defending Iraq's borders against potential regional rivals. The US occupation has not provided the Iraqi military with a modern air force, naval assets, modern tanks and artillery. A small number of advanced F-16 jet fighters and helicopters are due for delivery in 2011, but will require US personnel and maintenance systems.

John Nagl, a retired US officer who assisted General David Petraeus draft the counter-insurgency plan applied in Iraq, told the Washington Post last month: "Everyone knows the Iraqi security forces are not going to be self-sufficient by 2011. There are going to be Americans helping Iraqis keep their F-16s in the air for at least a decade." The Iraqi ministry of defence has stated that the earliest it will have an "independent" air force is 2020.

Moreover, in dealing with "external or internal threats," the Strategic Framework sanctions the US to use "diplomatic, economic or military measures, or any other measure, to deter such a threat". Not only does this imply an ongoing presence, the clause could be interpreted as overriding, under certain circumstances, the status of forces' prohibitions on stationing nuclear weapons in Iraq or using the country to launch attacks elsewhere.

For American personnel and the Iraqi people, therefore, US deployments to Iraq are far from coming to an end. Even with no major deterioration in the security situation, and after a substantial withdrawal by 2011 to reinforce the occupation of Afghanistan or conduct other operations, tens of thousands of troops will remain to garrison the major air bases the US has constructed at Balad, Al Asad, Tallil and other locations. While not called "permanent bases," the American military will be using these facilities for years to come.

Auto Executives Face a Hard Sell on Capitol Hill

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The chief executives of America’s foundering automobile manufacturers returned to Capitol Hill on Thursday and found themselves confronting years of pent-up anger, the harsh politics of a recession and the realization that even their strongest supporters might not be able to muster the votes to save them.

Fiscal hawks are worried that taxpayers will lose billions. Pro-labor lawmakers are furious that union workers are being blamed for causing the automakers’ problems, even as tens of thousands face layoffs. Environmentalists like House Speaker Nancy Pelosi are fed up after years of battles over fuel-efficiency rules. And Congress, as a whole, is suffering from acute bailout fatigue.

“I don’t want to raise expectations that that is going to be easy at all given the climate in the country,” Senator Christopher J. Dodd, Democrat of Connecticut, said after Thursday’s hearing before the banking committee, which he leads. “That’s a tall order.”

In a sign of the growing pessimism among the Democratic leadership, Mr. Dodd; Ms. Pelosi; Representative Barney Frank of Massachusetts, the chairman of the House Financial Services Committee; and the Senate majority leader, Harry Reid of Nevada, wrote to President Bush after Thursday’s hearing urging him to rescue the auto industry.

Mr. Dodd supports a taxpayer rescue but called on the Bush administration or the Federal Reserve to save the automakers because Congress might not do so. Mr. Dodd said that he would persist in trying to reach a legislative agreement, even as it continued to be clear that Democrats in Congress, furious over how the administration has handled the $700 billion bailout of the country’s financial system, were reluctant to put more taxpayer money on the line.

There were almost as many reasons as there were lawmakers. Republican fiscal hawks, like Senator Bob Corker of Tennessee, suggested that the companies might be doomed after years of trailing their foreign competitors and might not be worthy of taxpayer expense.

Mr. Corker, whose state is home to Nissan’s North American headquarters, also asked why taxpayers should give Chrysler money when Cerberus, the private equity firm that owns 80 percent of Chrysler, was unwilling to invest any more of its own cash.

Confirming fears that taxpayers could lose out, the economist Mark Zandi, of Moody’s, said that automakers probably needed much more than their requested $34 billion and perhaps as much as $125 billion. He predicted that the automakers would ask for more money by next fall.

Even among lawmakers who have supported government interventions in the past, bailout fatigue is now gripping much of Capitol Hill. Mr. Dodd and Senator Charles E. Schumer, Democrat of New York, said they favored helping the automakers but only with strict oversight by a board or special trustee, perhaps a Cabinet secretary, to be sure the companies used the money as intended.

But that proposal would require writing and passing complicated new legislation that could be difficult to achieve, given the tight calendar.

Senator Richard C. Shelby, the senior Republican on the panel, whose home state, Alabama, has sizable Toyota and Honda operations, has consistently voted against government interventions in private industry, including the Chrysler bailout in the 1970s and the recent rescue. But his criticism of Detroit was merciless. “The firms continue to trail their major competitors in almost every category necessary to compete,” he said.

Senator Bob Casey, Democrat of Pennsylvania, and other pro-labor lawmakers, said they resented that the United Automobile Workers union was being blamed for causing the automakers’ financial problems. “There wasn’t much discussion about the upcoming sacrifice and concessions that labor is making, and I was trying to point out some of the previous concessions they have made,” Mr. Casey said. “They are substantial.”

The White House said it stood ready to aid the auto industry by speeding up access to $25 billion in loans approved as part of a 2007 energy bill, an idea Ms. Pelosi has resisted, and accused the Democrats of trying to pass the buck after failing to win support for their own plan. “They can’t get Congressional support for their idea,” said Tony Fratto, the deputy White House press secretary. “So they want us to do it instead.”

After being sent home to Detroit empty-handed two weeks ago, the chief executives of General Motors, Ford and Chrysler made a show of contrition: driving to the Capitol in some of their most fuel-efficient vehicles to deliver the detailed reorganization plans that Congressional leaders had said were lacking last time. But within moments of the opening gavel it was clear that even a flawless presentation might not be enough.

Mr. Shelby grilled the executives about how they got to Washington, suggesting he regarded driving as a stunt. “Did you drive or did you have a driver? Did you drive a little and ride a little? And secondly, I guess are you going to drive back?”

That prompted Mr. Dodd, laughing, to interject: “Where did you stay? What did you eat?”

“The chairman wants to make light of this,” Mr. Shelby said. He was not smiling. And he got his answers. It was hardly the only uncomfortable moment for the executives, Rick Wagoner of G.M, Alan R. Mulally of Ford, and Robert L. Nardelli of Chrysler.

G.M., in particular, is in dire straits with some predicting that the company might be forced into bankruptcy. From the start, the executives took an apologetic tone in making their cases for the government-financed bailout: G.M. asked for $12 billion in loans and a $6 billion line of credit; Ford for a $9 billion line of credit that it can draw on if needed; and Chrysler for an immediate $7 billion loan.

“We’re here today because we made mistakes, which we are learning from, and because some forces beyond our control have pushed us to the brink,” said Mr. Wagoner. “Most importantly, we’re here because saving General Motors, and all this company represents, is a job worth doing.”

Ford is not seeking loans for now. But its chief executive, Mr. Mulally, echoed the comments of his counterparts at G.M. and Chrysler that an automobile company could not survive a bankruptcy filing.

“Any threat of a company going into bankruptcy would really, really hurt sales,” Mr. Mulally said. “Sales would fall off so fast that you couldn’t restructure fast enough.”

Much of the questioning from senators zeroed in on whether the companies were simply seeking loans to forestall inevitable failure. But over the course of nearly six hours of questions, some lawmakers belittled or dismissed aspects of the companies’ plans. In a reminder that the automakers are seeking help after a long line of banks before them received taxpayer funds, many with few strings attached, a large chart stood just to the side of the dais titled, “Taxpayer-Funded Bailouts.”

With large blue bars, it showed $300 billion for Citigroup; $200 billion for the mortgage giants, Fannie Mae and Freddie Mac; $150 billion for the insurance conglomerate, American International Group; $29 billion for the failed investment bank, Bear Stearns.

At the bottom of the chart were three more blue bars, each with a red question mark after them: $18 billion for General Motors; $13 billion for Ford; $7 billion for Chrysler.

Perhaps the only consensus at the hearing was that the automakers, particularly G.M., were in grave trouble and that the government might have no good options at this point. Mr. Zandi, of Moody’s, said allowing one or more of the companies to fail would be disastrous. “Bankruptcy at this point in time would be cataclysmic for the economy,” he said. “So I think you need to help them now.”

But some conservative lawmakers have called for letting one or more of the Big Three fail. Senator Mike Crapo, Republican of Idaho, repeatedly pressed the question about bankruptcy as an option during Thursday’s hearing.

Senator Robert Bennett, Republican of Utah, raised a new idea that would call on financial firms receiving assistance under the Treasury’s $700 billion program to convert any auto company debt that they hold into equity stakes, easing the cash liquidity problems of the Big Three, and potentially allowing additional infusions of government cash into the financial firms.

Mr. Casey said that Congress must act. “For me, this debate is pretty simple: as complex as the financing, as complex as the challenges are, it’s about jobs,” he said. “The atmosphere in America today is frankly pretty negative for any kind of assistance,” he said. “We have some work to do to get the votes that we need.”

“Nothing concentrates the mind like a death sentence,” Mr. Dodd said. “And we’re looking at a death sentence here if we don’t respond.”

Layoffs soar as US plunges deeper into recession

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By Barry Grey

New economic reports show that the severity of the US recession and the speed with which it is developing are greater than anticipated by economists and business forecasters. Data released Wednesday reveal a sharp rise in layoffs in virtually every sector of the economy, continuing distress in credit markets, financial instability and slumping consumer demand. The indices portend a recession more severe and protracted than any since the Great Depression of the 1930s.

Two separate surveys published Wednesday show that layoffs are mounting at record or near-record rates. The job placement firm Challenger, Gray & Christmas reported that job cuts announced by American employers in November more than doubled from a year earlier, led by a surge in layoffs by financial firms.

Layoff announcements last month rose 148 percent to 181,671, the most since January 2002, as compared to 73,140 job cuts announced in November of 2007. The number of planned job cuts increased 61 percent in November from the 112,884 announced in October, Challenger said.

The November total was the second highest on record, behind the 248,475 planned layoffs announced in January 2002, in the aftermath of 9/11.

Financial companies led industries in announced job cuts with 91,356 last month after Citigroup said it would cut 52,000 workers from its payroll. Retail employers followed with 11,073 firings, while computer and electronics firms combined for 15,350 cuts.

For the year to date, Challenger said the financial industry has slashed 220,506 jobs, compared to 147,395 jobs cut at this time last year.

The Challenger report showed companies have announced a total of 1,057,645 cuts so far this year, up 46 percent from the same period in 2007.

In a separate report, ADP Employer Services, which tracks private sector employment in the US, said companies slashed 250,000 jobs in November, the highest monthly total since November 2001. The figure was larger than forecast and followed an upwardly-revised figure of 179,000 for October.

"The report shows a broad and deep contraction in all nooks and crannies of the economy," said Joel Prakken, chairman of Macroeconomic Advisers LLC in St. Louis. "We're teetering over the edge of a hill and we're going to be rolling down it for a while." Macroeconomic Advisers produces the report jointly with ADP.

The median forecast of economists for the November ADP report had been 200,000.

Wednesday's survey showed a decline of 118,000 jobs in manufacturing, which has lost jobs in the US for 27 straight months. Employment in construction fell 44,000, the 24th straight month of job cuts in that industry. Construction firms have laid off 521,000 workers since August 2006. Service providers cut 92,000 jobs in November.

Also on Wednesday, the Institute for Supply Management (ISM) said its November index of non-manufacturing businesses dropped to the lowest level in its 11-year history, with a record low in its employment gauge.

The ISM said its non-manufacturing index registered 37.3, below October's already weak 44.4. Anything below 50 signifies a business contraction. The November index was much worse than the median forecast of 42.0 in a Reuters poll of 71 economists.

The ISM employment index fell to another record of 31.3, signaling heavy layoffs, from 41.5 in October. New orders hit a new low at 35.4, from 44 the prior month.

"This is consistent with payrolls falling by about 500,000. Let's hope it is very wrong," said Ian Shepherdson, chief US economist at High Frequency Economics in Valhalla, New York.

The service sector includes businesses such as banks, airlines, hotels and restaurants. In the US, 80 percent of the economy is driven by the service sector.

"The severe damage to the service industry is another indication of the extraordinary force of this recession," said Pierre Ellis, senior economist at Decision Economics in New York.

The dire situation outlined by these private reports was underscored by the national economic survey released by the Federal Reserve Board on Wednesday in its so-called beige book snap shot of the US economy. Covering the period since the middle of October, the Fed reported that economic activity had weakened substantially in all of the country's twelve Federal Reserve districts.

"Districts generally reported decreases in retail sales, and vehicle sales were down significantly in most districts," said the beige book. The report noted that tourism spending was down and reports on the service sector were "generally negative." The report also found that manufacturing activity had declined in most districts, that nearly all reported weak housing markets, that commercial real estate markets had generally declined and that lending standards had tightened. The Fed added that one positive sector in its mid-October beige book report, energy and mining, had turned downward as a result of sharply falling commodity prices.

The New York Fed said its regional economy "deteriorated substantially" since the last report in mid-October. The San Francisco Fed said business "weakened decidedly," while the Chicago Fed said contacts "expressed concern over the potential length of this downturn."

Among the few "bright spots" noted by the Fed, where businesses were able to profit from the prevailing weakness, was a "growing demand for bankruptcy services" reported by the Minneapolis and Dallas districts.

In the wake of these reports, Goldman Sachs and Morgan Stanley analysts forecast a contraction in the US economy this quarter of about 5 percent.

"We are looking at an economy that is not only in recession, but a recession that is deepening rapidly," former Fed Governor Lyle Gramley, now senior economic adviser at Stanford Group Co., said in an interview on Bloomberg Television.

These calamitous figures come in advance of Friday's Labor Department report on US unemployment for November. It is certain that the report will show a net decline in payrolls for the 11th consecutive month. Payrolls last month fell by 325,000 after declining by 240,000 in October. According to government figures, total job losses in the US have risen to 1.2 million so far this year.

Prior to Wednesday's reports, most economists were forecasting a net job loss of 325,000 to 350,000 for November and a rise in the official jobless rate from 6.5 percent to 6.8 percent. However, in light of the latest economic surveys, some economists are now predicting the Labor Department report will show a net loss of 400,000 to 500,000 jobs.

This week alone major job cuts and downsizing plans have been announced by companies that span virtually all economic sectors.

* United States Steel Corp. said late Tuesday it will temporarily idle its Great Lakes Works plan in Ecorse, Michigan and two other facilities due to falling demand for steel products. The action will affect about 3,500 workers at the three plants. In addition to the Great Lakes plant, the company is idling Keetac, an iron ore mining and palletizing facility in Keewatin, Minnesota and the Granite City Works near St. Louis.

The layoffs affect more than 13 percent of US Steel's North American workforce of 26,000. No date has been set for reopening the facilities. The new layoffs follow the announced layoff in mid-November of 675 workers in the US and Canada.

* Delta Airlines announced Tuesday it will cut its capacity by 6 to 8 percent and offer buyout packages to slash its workforce. Delta acquired Northwest Airlines in October and employs 75,000 workers. This year Delta cut 4,000 jobs, or about 7.3 percent of its total workforce. Northwest eliminated 2,500 jobs, or 8.1 percent of its payroll.

* Sears Holdings said Tuesday it may close more stores after a steeper-than-expected quarterly loss. The company, the product of a merger of Sears and Kmart carried out three years ago, posted a net loss of $146 million, more than twice the loss analysts had predicted. It recently confirmed 22 store closings and now says it may close other Sears and Kmart stores.

* Palm, the US-based maker of PDAs and the Treo smartphone, reported that its sales in the latest quarter had almost halved and said it would cut costs by 20 percent by slashing its workforce and downsizing its European operations.

Fueling the surge in layoffs is a sharp contraction of economic activity not only in the US, but globally. Auto sales in the US plummeted by 37 percent in November to a 26-year monthly low, but they also fell 18 percent in Germany, Europe's biggest car market.

The downward spiral in production and sales, intensified by a continuing near-freeze in credit markets, is reflected in falling commodity prices that portend global deflation. Oil prices on Tuesday sank to their lowest levels in three-and-a-half years, falling to $46.82 a barrel from July's record of $147.27.

The price of key industrial metals has fallen further over the last four months than occurred during the worst years of the Great Depression between 1929 and 1933, according to research by Barclays Capital. Prices for copper, lead and zinc have fallen roughly 60 percent since the peak last July.

The intensifying slump is being utilized by companies to drive down the wages of workers in the US and around the world. In the third quarter, hourly compensation in the US rose 4.1 percent. But real compensation, adjusted for inflation, fell 2.4 percent.

Who Are the Taliban?

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By Anand Gopal

The Afghan War Deciphered

If there is an exact location marking the West’s failures in Afghanistan, it is the modest police checkpoint that sits on the main highway 20 minutes south of Kabul. The post signals the edge of the capital, a city of spectacular tension, blast walls, and standstill traffic. Beyond this point, Kabul’s gritty, low-slung buildings and narrow streets give way to a vast plain of serene farmland hemmed in by sandy mountains. In this valley in Logar province, the American-backed government of Afghanistan no longer exists.

Instead of government officials, men in muddied black turbans with assault rifles slung over their shoulders patrol the highway, checking for thieves and "spies." The charred carcass of a tanker, meant to deliver fuel to international forces further south, sits belly up on the roadside.

The police say they don’t dare enter these districts, especially at night when the guerrillas rule the roads. In some parts of the country’s south and east, these insurgents have even set up their own government, which they call the Islamic Emirate of Afghanistan (the name of the former Taliban government). They mete out justice in makeshift Sharia courts. They settle land disputes between villagers. They dictate the curricula in schools.

Just three years ago, the central government still controlled the provinces near Kabul. But years of mismanagement, rampant criminality, and mounting civilian casualties have led to a spectacular resurgence of the Taliban and other related groups. Today, the Islamic Emirate enjoys de facto control in large parts of the country’s south and east. According to ACBAR, an umbrella organization representing more than 100 aid agencies, insurgent attacks have increased by 50% over the past year. Foreign soldiers are now dying at a higher rate here than in Iraq.

The burgeoning disaster is prompting the Afghan government of President Hamid Karzai and international players to speak openly of negotiations with sections of the insurgency.

The New Nationalist Taliban

Who exactly are the Afghan insurgents? Every suicide attack and kidnapping is usually attributed to "the Taliban." In reality, however, the insurgency is far from monolithic. There are the shadowy, kohl-eyed mullahs and head-bobbing religious students, of course, but there are also erudite university students, poor, illiterate farmers, and veteran anti-Soviet commanders. The movement is a mélange of nationalists, Islamists, and bandits that fall uneasily into three or four main factions. The factions themselves are made up of competing commanders with differing ideologies and strategies, who nonetheless agree on one essential goal: kicking out the foreigners.

It wasn’t always this way. When U.S.-led forces toppled the Taliban government in November 2001, Afghans celebrated the downfall of a reviled and discredited regime. "We felt like dancing in the streets," one Kabuli told me. As U.S.-backed forces marched into Kabul, the Afghan capital, remnants of the old Taliban regime split into three groups. The first, including many Kabul-based bureaucrats and functionaries, simply surrendered to the Americans; some even joined the Karzai government. The second, comprised of the movement’s senior leadership, including its leader Mullah Omar, fled across the border into Pakistan, where they remain to this day. The third and largest group -- foot soldiers, local commanders, and provincial officials -- quietly melted into the landscape, returning to their farms and villages to wait and see which way the wind blew.

Meanwhile, the country was being carved up by warlords and criminals. On the brand-new highway connecting Kabul to Kandahar and Herat, built with millions of Washington’s dollars, well-organized groups of bandits would regularly terrorize travelers. "[Once], thirty, maybe fifty criminals, some in police uniforms, stopped our bus and shot [out] our windows," Muhammadullah, the owner of a bus company that regularly uses the route, told me. "They searched our vehicle and stole everything from everyone." Criminal syndicates, often with government connections, organized kidnapping sprees in urban centers like the former Taliban stronghold of Kandahar city. Often, those few who were caught would simply be released after the right palms were greased.

Onto this landscape of violence and criminality rode the Taliban again, promising law and order. The exiled leadership, based in Quetta, Pakistan, began reactivating its networks of fighters who had blended into the country’s villages. They resurrected relationships with Pashtun tribes. (The insurgents, historically a predominantly Pashtun movement, still have very little influence among other Afghan minority ethnic groups like the Tajiks and Hezaras.) With funds from wealthy Arab donors and training from the ISI, the Pakistani intelligence apparatus, they were able to bring weapons and expertise into Pashtun villages.

In one village after another, they drove out the remaining minority of government sympathizers through intimidation and assassination. Then they won over the majority with promises of security and efficiency. The guerrillas implemented a harsh version of Sharia law, cutting off the hands of thieves and shooting adulterers. They were brutal, but they were also incorruptible. Justice no longer went to the highest bidder. "There’s no crime any more, unlike before," said Abdul Halim, who lives in a district under Taliban control.

The insurgents conscripted fighters from the villages they operated in, often paying them $200 a month -- more than double the typical police salary. They adjudicated disputes between tribes and between landowners. They protected poppy fields from the eradication attempts of the central government and foreign armies -- a move that won them the support of poor farmers whose only stable income came from poppy cultivation. Areas under insurgent control were consigned to having neither reconstruction nor social services, but for rural villagers who had seen much foreign intervention and little economic progress under the Karzai government, this was hardly new.

At the same time, the Taliban’s ideology began to undergo a transformation. "We are fighting to free our country from foreign domination," Taliban spokesman Qari Yousef Ahmadi told me over the phone. "The Indians fought for their independence against the British. Even the Americans once waged an insurgency to free their own country." This emerging nationalistic streak appealed to Pashtun villagers growing weary of the American and NATO presence.

The insurgents are also fighting to install a version of Sharia law in the country. Nonetheless, the famously puritanical guerrillas have moderated some of their most extreme doctrines, at least in principle. Last year, for instance, Mullah Omar issued an edict declaring music and parties -- banned in the Taliban’s previous incarnation -- permissible. Some Taliban commanders have even started accepting the idea of girls’ education. Certain hard-line leaders like the one-legged Mullah Daddullah, a man of legendary brutality (whose beheading binges at times reportedly proved too much even for Mullah Omar) were killed by international forces.

Meanwhile, a more pragmatic leadership started taking the reins. U.S. intelligence officers believe that day-to-day leadership of the movement is now actually in the hands of the politically savvy Mullah Brehadar, while Mullah Omar retains a largely figurehead position. Brehadar may be behind the push to moderate the movement’s message in order to win greater support.

Even at the local level, some provincial Taliban officials are tempering older-style Taliban policies in order to win local hearts and minds. Three months ago in a district in Ghazni province, for instance, the insurgents ordered all schools closed. When tribal elders appealed to the Taliban’s ruling religious council in the area, the religious judges reversed the decision and reopened the schools.

However, not all field commanders follow the injunctions against banning music and parties. In many Taliban-controlled districts such amusements are still outlawed, which points to the movement’s decentralized nature. Local commanders often set their own policies and initiate attacks without direct orders from the Taliban leadership.

The result is a slippery movement that morphs from district to district. In some Taliban-controlled districts of Ghazni province, an Afghan caught working for a non-governmental organization (NGO) would meet certain death. In parts of neighboring Wardak province, however, where the insurgents are said to be more educated and understand the need for development, local NGOs can function with the guerrillas’ permission.

The "Other" Talibans

Never short of guns and guerrillas, Afghanistan has proven fertile ground for a whole host of insurgent groups in addition to the Taliban.

Naqibullah, a university student with a sparse beard who spoke in soft, measured tones, was not quite 30 when we met. We were in the backseat of a parked dusty Corolla on a pockmarked road near Kabul University, where he studied medicine. Naqibullah (his nom de guerre) and his friends at the university are members of Hizb-i-Islami, an insurgent group led by warlord Gulbuddin Hekmatyar and allied to the Taliban. His circle of friends meet regularly in the university’s dorm rooms, discussing politics and watching DVD videos of recent attacks.

Over the past year, his circle has shrunk: Sadiq was arrested while attempting a suicide bombing. Wasim was killed when he tried to assemble a bomb at home. Fouad killed himself in a successful suicide attack on a U.S. base. "The Americans have their B-52s," Naqibullah explained. "Suicide attacks are our versions of B-52s." Like his friends, Naqibullah, too, had considered the possibility of becoming a "B-52." "But it would kill too many civilians," he told me. Besides, he had plans to use his education. He said, "I want to teach the uneducated Taliban."

For years Hizb-i-Islami fighters have had a reputation for being more educated and worldly than their Taliban counterparts, who are often illiterate farmers. Their leader, Hekmatyar, studied engineering at Kabul University in the 1970s, where he made a name of a sort for himself by hurling acid in the faces of unveiled women.

He established Hizb-i-Islami to counter growing Soviet influence in the country and, in the 1980s, his organization became one of the most extreme fundamentalist parties as well as the leading group fighting the Soviet occupation. Ruthless, powerful, and anti-communist, Hekmatyar proved a capable ally for Washington, which funneled millions of dollars and tons of weapons through the Pakistani ISI to his forces.

After the Soviet withdrawal, Hekmatyar and the other mujahedeen commanders turned their guns on each other, unleashing a devastating civil war from which Kabul, in particular, has yet to recover. One-legged Afghans, crippled by Hekmatyar’s rockets, still roam the city’s streets. However, he was unable to capture the capital and his Pakistani backers eventually abandoned him for a new, even more extreme Islamist force rising in the south: the Taliban.

Most Hizb-i-Islami commanders defected to the Taliban and Hekmatyar fled in disgrace to Iran, losing much of his support in the process. He remained in such low standing that he was among the few warlords not offered a place in the U.S.-backed government that formed after 2001.

This, after a fashion, was his good luck. When that government faltered, he found himself thrust back into the role of insurgent leader, where, playing on local frustrations in Pashtun communities just as the Taliban has, he slowly resurrected Hizb-i-Islami.

Today, the group is one of the fastest growing insurgent outfits in the country, according to Antonio Giustozzi, Afghan insurgency expert at the London School of Economics. Hizb-i-Islami maintains a strong presence in the provinces near Kabul and Pashtun pockets in the country’s north and northeast. It assisted in a complex assassination attempt on President Karzai last spring and was behind a high-profile ambush that killed ten NATO soldiers this summer. Its guerrillas fight under the Taliban banner, although independently and with a separate command structure. Like the Taliban, its leaders see their task as restoring Afghan sovereignty as well as establishing an Islamic state in Afghanistan. Naqibullah explained, "The U.S. installed a puppet regime here. It was an affront to Islam, an injustice that all Afghans should rise up against."

The independent Islamic state that Hizb-i-Islami is fighting for would undoubtedly have Hekmatyar, not Mullah Omar, in command. But as during the anti-Soviet jihad, the settling of scores is largely being left to the future.

The Pakistani Nexus

Blowback abounds in Afghanistan. Erstwhile CIA hand Jalaluddin Haqqani heads yet a third insurgent network, this one based in Afghanistan’s eastern border regions. During the anti-Soviet war, the U.S. gave Haqqani, now considered by many to be Washington’s most redoubtable foe, millions of dollars, anti-aircraft missiles, and even tanks. Officials in Washington were so enamored with him that former congressman Charlie Wilson once called him "goodness personified."

Haqqani was an early advocate of the "Afghan Arabs," who, in the 1980s, flocked to Pakistan to join the jihad against the Soviet Union. He ran training camps for them and later developed close ties to al-Qaeda, which developed out of Afghan-Arab networks towards the end of the anti-Soviet war. After the attacks of September 11, 2001, the U.S. tried desperately to bring him over to its side. However, Haqqani claimed that he couldn’t countenance a foreign presence on Afghan soil and once again took up arms, aided by his longtime benefactors in Pakistan’s ISI. He is said to have introduced suicide bombing to Afghanistan, a tactic unheard of there before 2001. Western intelligence officials pin the blame for most of the spectacular attacks in recent memory -- a massive car bomb that ripped apart the Indian embassy in July, for example -- on the Haqqani network, not the Taliban.

The Haqqanis command the lion’s share of foreign fighters operating in the country and tend to be even more extreme than their Taliban counterparts. Unlike most of the Taliban and Hizb-i-Islami, elements of the Haqqani network work closely with al-Qaeda. The network’s leadership is most likely based in Waziristan, in the Pakistani tribal areas, where it enjoys ISI protection.

Pakistan extends support to the Haqqanis on the understanding that the network will keep its holy war within Afghanistan’s borders. Such agreements are necessary because, in recent years, Pakistan’s longstanding policy of aiding Islamic militant groups has plunged the country into a devastating war within its own borders.

As Taliban and al-Qaeda remnants trickled into Pakistan after the fall of the Taliban government in 2001, Islamabad signed on to the Bush administration’s Global War on Terror. It was a profitable venture: Washington delivered billions of dollars in aid and advanced weaponry to Pakistan’s military government, all the while looking the other way as dictator Pervez Musharraf increased his vise-like grip on the country. In return, Islamabad targeted al-Qaeda militants, every few months parading a captured "high-ranking" leader before the news cameras, while leaving the Taliban leadership on its territory untouched.

While the Pakistani military establishment never completely eradicated al-Qaeda -- doing so might have stanched the flow of aid -- it kept up just enough pressure so that the Arab militants declared war on the government. By 2004, the Pakistani army had entered the Federally Administered Tribal Areas, a semi-autonomous region populated by Pashtun tribes (where al-Qaeda fighters had taken refuge), in force for the first time in an attempt to root out the foreign militants.

Over the next few years, repeated Pakistani army incursions, along with a growing number of U.S. missile strikes (which sometimes killed civilians), enraged the local tribal populations. Small, tribal-based groups calling themselves "the Taliban" began to emerge; by 2007, there were at least 27 such groups active in the Pakistani borderlands. The guerrillas soon won control of areas in such tribal districts as North and South Waziristan, and began to act like a version of the 1990s Taliban redux: they banned music, beat liquor store owners, and prevented girls from attending school. While remaining independent of the Afghan Taliban, they also wholeheartedly supported them.

By the end of 2007, the various Pakistani Taliban groups had merged into a single outfit, the Tehrik-i-Taliban, under the command of an enigmatic 30-something guerrilla -- Baitullah Mehsud. Pakistani authorities blame Mehsud’s group, usually referred to simply as the "Pakistani Taliban," for a string of major attacks, including the assassination of Benazir Bhutto. Mehsud and his allies have strong links to al-Qaeda and continue to wage an on-again, off-again war against the Pakistani military. At the same time, some members of the Pakistani Taliban have filtered across the border to join their Afghan counterparts in the fight against the Americans.

Tehrik-i-Taliban proved surprisingly powerful, regularly routing Pakistani army units whose foot soldiers were loathe to fight their fellow countrymen. But almost as soon as Tehrik had emerged, fissures appeared. Not all Pakistani Taliban commanders were convinced of the efficacy of fighting a two-front war. Part of the movement, calling itself the "Local Taliban," adopted a different strategy, avoiding battles with the Pakistani military. In addition, a significant number of other Pakistani militant groups -- including many trained by the ISI to fight in Indian Kashmir -- now operate in the Pakistani borderlands, where they abstain from fighting the Pakistani government and focus their fire on the Americans in, or American supply lines into, Afghanistan.

The result of all this is a twisted skein of alliances and ceasefires in which Pakistan is fighting a war against al-Qaeda and one section of the Pakistani Taliban, while leaving another section, as well as other independent militant groups, free to go about their business. That business includes crossing the border into Afghanistan, where the Pakistani Taliban, al-Qaeda, and independent fighters from the tribal regions and elsewhere add to the mix that has produced what one Western intelligence official terms a "rainbow coalition" arrayed against U.S. troops.

Living in a World of War

Despite such foreign connections, the Afghan rebellion remains mostly a homegrown affair. Foreign fighters -- especially al-Qaeda -- have little ideological influence on most of the insurgency, and most Afghans keep their distance from such outsiders. "Sometimes groups of foreigners speaking different languages walk past," Ghazni resident Fazel Wali recalls. "We never talk to them and they don’t talk to us."

Al-Qaeda’s vision of global jihad doesn’t resonate in the rugged highlands and windswept deserts of southern Afghanistan. Instead, the major concern throughout much of the country is intensely local: personal safety.

In a world of endless war, with a predatory government, roving bandits, and Hellfire missiles, support goes to those who can bring security. In recent months, one of the most dangerous activities in Afghanistan has also been one of its most celebratory: the large, festive wedding parties that Afghans love so much. U.S. forces bombed such a party in July, killing 47. Then, in November, warplanes hit another wedding party, killing around 40. A couple of weeks later they hit an engagement party, killing three.

"We are starting to think that we shouldn’t go out in large numbers or have public weddings," Abdullah Wali told me. Wali lives in a district of Ghazni Province where the insurgents have outlawed music and dance at such wedding parties. It’s an austere life, but that doesn’t stop Wali from wanting them back in power. Bland weddings, it seems, are better than no weddings at all.

Protect Student Loan Borrowers, Not Just Lenders

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By Danny K. Davis and Yvette D. Clarke

As members of Congress who are active in education policy, we write to strongly urge the Treasury and Federal Reserve to include consumer protections in their plan to use taxpayer dollars to buy student loan securities. We strongly support ensuring that students have the money they need to attend institutions of higher education. However, we must make certain that any such plan aids students and doesn't simply line the pockets of for-profit lenders.

Most students and families use federal loans to pay for college. Thanks to recent actions by Congress and the Department of Education, federal student loans are readily available. However, certain groups of students require private student loans to attend school, such as students who need to borrow more than is available federally, students who attend schools that do not participate in the federal loan program, and international students. The Project on Student Debt estimates that only about 8 percent of undergraduates used private loans last year. Unlike federal student loans, private student loans typically lack any form of consumer protection (e.g., fixed interest rates, income-contingent and income-based repayment options, and debt discharge in the case of disability or death). For these reasons, lenders and financial aid experts generally agree that students should exhaust federal financial aid prior to using private loans.

Although the Treasury recently released some details about the new Term Asset-Backed Securities Loan Facility, the nature of the program related to student loans remains unclear. We have serious concerns about using taxpayer money to subsidize for-profit lenders of non-federal student loans. A number of higher education groups representing students, consumers and colleges share our concerns. The Treasury-Fed plan seems to equate credit card, auto and student loans. However, these debts are not equal. Private student loan lenders enjoy federal protections from bankruptcy that other consumer creditors do not. Specifically, unlike other types of consumer debt, private student loans are protected from discharge during bankruptcy except under extreme circumstances. Thus, an individual who accumulates thousands of dollars in debt for purchases of cars or luxury goods can obtain relief via bankruptcy; however, a teacher with private student loans cannot.

Given these circumstances, we hope the Treasury and Federal Reserve will construct their student loan plan carefully to mitigate against adverse consequences for private student loan borrowers, especially in light of current economic conditions. Should taxpayer money be used to support private student lenders of non-federal loans, we strongly urge that the Treasury and Federal Reserve require consumer protections similar to those afforded to federal student loans as a condition of receipt of federal rescue funds. Federal student loans have consumer protections; private student loans subsidized by the Treasury-Fed plan should have such protections as well. Further, we recommend instituting steps to assess the underwriting standards of lenders who seek federal relief to determine if the lenders extended credit to particularly vulnerable consumers and whether credit was extended with onerous terms or conditions. Similar to the executive compensation restrictions of the Treasury-Fed plan, these restrictions would help focus federal dollars on stimulating lending while protecting taxpayers and borrowers.

We commend the effort to ensure that students with financial needs can access higher education during this economic crisis. We urge the Treasury and Federal Reserve to proceed cautiously when using taxpayer funds for the student loan industry, ensuring that both financial and consumer protections are considered.