Go to Original
By George Monbiot
By failing to disarm and breaking the rules when it suits, nuclear states are driving proliferation as much as Ahmadinejad
What is the Iranian government up to? For once the imperial coalition, overstretched in Iraq and unpopular at home, is proposing jaw, not war. The UN security council's offer was a good one: if Iran suspended its uranium enrichment programme, it would be entitled to legally guaranteed supplies of fuel for nuclear power, assistance in building a light water reactor, foreign aid, technology transfer and the beginning of the end of economic sanctions. The US seems prepared, for the first time since the revolution, to open a diplomatic office in Tehran. But in Geneva, 10 days ago, the Iranians filibustered until the negotiations ended. On Saturday President Ahmadinejad announced that Iran has now doubled the number of centrifuges it uses to enrich uranium. A fourth round of sanctions looks inevitable.
The unequivocal statements Barack Obama and Gordon Brown made in Israel last week about Iran's nuclear weapons programme cannot yet be justified. Nor can the unequivocal statements by some anti-war campaigners that Iran does not intend to build the bomb. Why would a country with such reserves of natural gas and so great a potential for solar power suffer sanctions and the threat of bombing to make fuel it could buy from other states, if it accepted the UN's terms?
Those who maintain that Iran's purposes are peaceful clutch at the National Intelligence Estimate published by the US government in November. While it judged that Iran had halted its nuclear weapons programme in 2003, it saw the country's civilian uranium programme as a means of developing "technical capabilities that could be applied to producing nuclear weapons, if a decision is made to do so". The latest report from the International Atomic Energy Agency notes that no fissile material has been diverted from Iran's stocks, but raises grave questions about some of the documents it has found, which suggest research into bomb-making (Iran says the papers are forgeries). Those of us who oppose an attack on Iran are under no obligation to accept Ahmadinejad's claims of peaceful intent.
Nor do we have to accept the fictions of our own representatives. The security council's offer to Iran claimed that resolving this enrichment issue would help to bring about a "Middle East free of weapons of mass destruction". But like every other such document, it made no mention of the principal owner of weapons in the region: Israel. According to a leaked briefing by the US Defence Intelligence Agency, Israel possesses between 60 and 80 nuclear bombs. But none of the countries demanding that Iran scraps the weapons it doesn't yet possess are demanding that Israel destroys the weapons it does possess.
This subject is the great political taboo. Neither Brown nor Obama mentioned it last week. The US intelligence agencies provide a biannual report to Congress on the weapons of mass destruction developed by foreign states, which covers Iran, North Korea, India, Pakistan and others, but not Israel. During a parliamentary debate in March the British defence minister Bob Ainsworth was asked whether he thought that Israel's nuclear weapons are "a destabilising factor" in the Middle East. "My understanding," he replied, "is that Israel does not acknowledge that it has nuclear weapons." Does Mr Ainsworth really buy this nonsense? If so, can we have a new minister? If Iran builds a bomb, it will do so for one reason: that there is already a nuclear-armed state in the Middle East, by which it feels threatened.
But we make the rules and we break them. The non-proliferation treaty (NPT) obliges the five official nuclear states, of which the UK is one, to work towards "general and complete disarmament". On Friday, the Guardian published the notes for a speech made last year by a senior civil servant, which suggested that the decision to replace the UK's nuclear missiles had already been made, in secret and without parliamentary scrutiny. Since then defence ministers have told the Commons on five occasions that the decision has not yet been made. They appear to have misled the House.
At the Geneva conference on disarmament in February, one delegate pointed out that the "chances of eliminating nuclear weapons will be enhanced immeasurably" if non-nuclear states can see "planning, commitment and action toward multilateral nuclear disarmament by nuclear weapon states" like the UK. If the nuclear states "are failing to fulfil their disarmament obligations", other nations would use this as an excuse for maintaining their weapons. Who was this firebrand? Des Browne, the secretary of state for defence. A man of the same name is failing to fulfil our disarmament obligations.
Browne claims that Britain must maintain its arsenal because of proliferation elsewhere, just as those proliferating elsewhere say that they must develop their arsenals because the official nuclear nations aren't disarming. With the exception of France, none of the other European states feels the need to deploy nukes. But the UK keeps preparing for the last war. Of course, no one is refusing to disarm; it's just that the task keeps getting pushed into the indefinite future. Opponents of British nuclear weapons maintain that a new generation of warheads would survive until 2055.
The permanent members of the UN security council draw a distinction between their "responsible" ownership of nuclear weapons and that of the aspirant powers. But over the past six years, the UK, US, France and Russia have all announced that they are prepared to use their nukes pre-emptively against a presumed threat, even from states that do not possess nuclear weapons. In some ways the current nuclear stand-off is more dangerous than the tetchy detente of the cold war.
The danger has been heightened by the US government's current offensive. Condoleezza Rice, the secretary of state, is demanding that other countries accept her plans to destroy the last remaining incentive for states to abide by the NPT. The treaty grants countries which conform to it materials for nuclear power on favourable terms. It's a flawed incentive - as the spread of civil nuclear programmes makes the proliferation of military material more likely - but an incentive nonetheless. Now Rice insists that India should have special access to US nuclear materials despite the fact that it has not signed the NPT and has illegally developed nuclear weapons.
If she is successful, this effort - and the concomitant US demand that India is recognised as an official nuclear power - will blow the NPT to kingdom come. The treaty which survived the cold war, and which remains the most important of the wilting guarantees against global annihilation, is being nuked for the sake of a few billion dollars of export orders.
Here's where it gets really depressing. The Bush administration's proposal has been supported by both John McCain and Barack Obama. The contrast between Obama's position on India and his statements on Iran could not be greater, or more destructive of the inflated hopes now vested in him.
Mahmoud Ahmadinejad's insistence that Iran enriches its own fissile material, and the guessing game he is playing with Israel, the atomic energy agency and the UN security council is irresponsible and staggeringly dangerous. But if I were in his position I might be tempted to do the same.
Monday, August 4, 2008
Bush must be stopped before starting war with Iran
Go to Original
By JOE PARKO
The Bush administration, in rhetoric that is eerily similar to that used to build the case for a war against Iraq, asserts that the Iranian Quds Force is arming anti-U.S. groups in Iraq and providing them with high-tech roadside bombs and sophisticated rockets.
It dismisses the National Intelligence Estimate conclusion that Iran suspended its nuclear weapons program.
The White House has not provided evidence to back up its claims. I suspect it never will. And when Israel's Deputy Prime Minister Shaul Mofaz tells the Israeli newspaper Yedioth Ahronoth an attack on Iran is "unavoidable" if Tehran does not halt its alleged nuclear weapons program, what he is really telling us is we should prepare for war.
An attack on Iran by either the U.S. or Israel and the ensuing regional war will propel us into the Armageddon-type scenario in the Middle East relished by the lunatic fringes of the radical Christian right. And so, we barrel mindlessly toward a Dr. Strangelove self-immolation. No one will be able to say we did not go out with a spectacular show of firepower, gore and death. Our European and Middle Eastern allies, who are numb with consternation over our death spiral, are frantically trying to reach out to Tehran diplomatically.
The instant we attack Iran, oil prices will double, perhaps triple. This price increase will devastate the U.S. economy. The ensuing retaliatory strikes by Iran on Israel, as well as on U.S. military installations in Iraq, will leave hundreds, maybe thousands, dead. The Shiites in the region, from Saudi Arabia to Pakistan, will see an attack on Iran as a war against Shiism. They will turn with rage and violence on us and our allies. Hezbollah will renew attacks on northern Israel, while Hamas increases its attacks in southern Israel. And the localized war in Iraq will become a long, messy and protracted regional war that, by the time it is done, will most likely end the American empire and leave in its wake mounds of corpses and smoldering ruins.
The Israeli leadership, like the Bush White House, is increasingly bellicose and threatening. The Israeli prime minister, after a recent 90-minute meeting with Bush in the White House, said the two leaders were of one mind. "We reached agreement on the need to take care of the Iranian threat," Ehud Olmert said. "I left with a lot less questions marks (than) I had entered with regarding the means, the timetable restrictions and American resoluteness to deal with the problem. George Bush understands the severity of the Iranian threat and the need to vanquish it and intends to act on the matter before the end of his term in the White House."
This time around, unlike the war with Iraq, the Washington bureaucracy, loathed by the Bush White House, did not remain silent and complicit. The NIE on Iran's nuclear program released Dec. 3 distinguished Iran's enrichment of uranium at Natanz and Arak from its formal nuclear weapons program, which it said had halted in 2003 after the U.S. invasion of Iraq.
Adm. Fallon, who put his country and his integrity before his career, spoke out against a war with Iran, tried to stop it, and lost his job as the head of Central Command. He has been replaced with Gen. David Petraeus, whose devotion to his career admits no such moral impediments.
The American people must act to stop this madness. We must raise our voices in protest. We must demand that Congress exercise its constitutional authority and block a war on Iran. We cannot allow the Bush neocons to act out their final bloody fantasy and destroy all hopes for peace in the Middle East.
By JOE PARKO
The Bush administration, in rhetoric that is eerily similar to that used to build the case for a war against Iraq, asserts that the Iranian Quds Force is arming anti-U.S. groups in Iraq and providing them with high-tech roadside bombs and sophisticated rockets.
It dismisses the National Intelligence Estimate conclusion that Iran suspended its nuclear weapons program.
The White House has not provided evidence to back up its claims. I suspect it never will. And when Israel's Deputy Prime Minister Shaul Mofaz tells the Israeli newspaper Yedioth Ahronoth an attack on Iran is "unavoidable" if Tehran does not halt its alleged nuclear weapons program, what he is really telling us is we should prepare for war.
An attack on Iran by either the U.S. or Israel and the ensuing regional war will propel us into the Armageddon-type scenario in the Middle East relished by the lunatic fringes of the radical Christian right. And so, we barrel mindlessly toward a Dr. Strangelove self-immolation. No one will be able to say we did not go out with a spectacular show of firepower, gore and death. Our European and Middle Eastern allies, who are numb with consternation over our death spiral, are frantically trying to reach out to Tehran diplomatically.
The instant we attack Iran, oil prices will double, perhaps triple. This price increase will devastate the U.S. economy. The ensuing retaliatory strikes by Iran on Israel, as well as on U.S. military installations in Iraq, will leave hundreds, maybe thousands, dead. The Shiites in the region, from Saudi Arabia to Pakistan, will see an attack on Iran as a war against Shiism. They will turn with rage and violence on us and our allies. Hezbollah will renew attacks on northern Israel, while Hamas increases its attacks in southern Israel. And the localized war in Iraq will become a long, messy and protracted regional war that, by the time it is done, will most likely end the American empire and leave in its wake mounds of corpses and smoldering ruins.
The Israeli leadership, like the Bush White House, is increasingly bellicose and threatening. The Israeli prime minister, after a recent 90-minute meeting with Bush in the White House, said the two leaders were of one mind. "We reached agreement on the need to take care of the Iranian threat," Ehud Olmert said. "I left with a lot less questions marks (than) I had entered with regarding the means, the timetable restrictions and American resoluteness to deal with the problem. George Bush understands the severity of the Iranian threat and the need to vanquish it and intends to act on the matter before the end of his term in the White House."
This time around, unlike the war with Iraq, the Washington bureaucracy, loathed by the Bush White House, did not remain silent and complicit. The NIE on Iran's nuclear program released Dec. 3 distinguished Iran's enrichment of uranium at Natanz and Arak from its formal nuclear weapons program, which it said had halted in 2003 after the U.S. invasion of Iraq.
Adm. Fallon, who put his country and his integrity before his career, spoke out against a war with Iran, tried to stop it, and lost his job as the head of Central Command. He has been replaced with Gen. David Petraeus, whose devotion to his career admits no such moral impediments.
The American people must act to stop this madness. We must raise our voices in protest. We must demand that Congress exercise its constitutional authority and block a war on Iran. We cannot allow the Bush neocons to act out their final bloody fantasy and destroy all hopes for peace in the Middle East.
Mounting questions over US anthrax probe and scientist’s alleged suicide
Go to Original
By Patrick Martin
One week after an Army germ warfare scientist apparently committed suicide, there are mounting questions over the government’s handling of the investigation into the 2001 anthrax attacks and expressions of skepticism regarding the sensationalized media coverage of the past four days.
Colleagues and friends of Dr. Bruce Ivins, who died Tuesday from an overdose of prescription Tylenol he had taken two days earlier, have cast doubt on the claims by the FBI and Justice Department that Ivins perpetrated the anthrax attacks. They have also debunked many of the claims made in initial news reports about Ivins’ death.
Ivins’ lawyer, Paul Kemp, sent an email to news organizations Saturday denouncing reports that his client was considering a plea bargain to avoid a death sentence for the anthrax mailings, calling such reports “entirely spurious.” Kemp had been contacted by federal investigators—the FBI interviewed Ivins several times over the past year as well as searching his home—but there was no discussion of a possible plea.
Initial press accounts suggested that Ivins had committed suicide because he faced imminent indictment on five capital murder charges, with prosecutors determined to seek the death penalty. National Public Radio reported Sunday, however, that government investigators said they “still were several major legal steps away from indicting” Ivins, and that the Department of Justice leadership had not yet approved bringing charges. The process of obtaining executive approval, presenting the case to the grand jury and obtaining an indictment “could have taken weeks.”
There were conflicting reports about whether Ivins had the skills necessary to create the finely ground powder form of anthrax used in the 2001 mailings. Some germ warfare experts said that the job was not that difficult from a technical standpoint. But Dr. Alan P. Zelicoff, a physician formerly consulted by the FBI investigation, told the New York Times, “I don’t think a vaccine specialist could do it. This is aerosol physics, not biology. There are very few people who have their feet in both camps.”
Several current and former officials at the US Army Medical Research Institute for Infectious Diseases (USAMRIID), where Ivins worked, said they would not believe the charges against Ivins without convincing evidence that the FBI has yet to produce. Jeffrey J. Adamovicz, former director of the bacteriology division at USAMRIID, told the Washington Post, “I really don’t think he’s the guy. I say to the FBI, ‘Show me your evidence’.” He added, referring to the intense investigative pressure on Ivins, “A lot of the tactics they used were designed to isolate him from his support. The FBI just continued to push his buttons.”
Many of Ivins’ co-workers blamed his evident psychological disintegration on the constant harassment by the FBI, and said his suicide should not be viewed as an admission of guilt. Local police have refused to reveal whether Ivins left a suicide note.
The official statement issued by USAMRIID said the agency “mourns the loss of Dr. Bruce Ivins, who served the institute for more than 35 years as a civilian microbiologist.” Time magazine commented: “That seems like an unusual thing to say if you believe one of your employees had something to do with an anthrax attack.”
The magazine continued, “It now remains incumbent on the FBI to reveal what information it had linking Ivins to the attacks. Given the federal government’s record on the anthrax investigation, and the national security interests involved, Ivins’ death should not be used as an excuse for the case to be closed without a full, public airing.”
The Los Angeles Times reported similar sentiments expressed by the lawyer for the family of Bob Stevens, the photo editor for the Sun tabloid who died in the first anthrax mailing. “The family definitely wants to be able to see the evidence that the FBI has accumulated, that they’re not just trying to make this guy a scapegoat,” Schuler said.
Several press accounts cited FBI officials and government scientists who could not be quoted by name, claiming that Ivins was identified as the anthrax mailer through the use of sophisticated new DNA testing techniques that were not available at the time of the attacks, which killed five people and sickened 17 more between late September and early November 2001.
The Associated Press (AP) reported that DNA testing had conclusively linked the strain of anthrax used in the mailing to the biological weapons laboratory at Fort Detrick, near Frederick, Maryland, where Ivins worked, and to his work area within the lab. “It had to do with the very specific characteristics in the DNA of the letters and what was in Bruce’s labs,” an unidentified scientist told AP. “They were cultures he was personally responsible for.”
The AP report noted, however: “Dozens of other researchers in Ivins’ lab also had access to the type of Ames strain used in the attacks, the scientist said, meaning the DNA alone is not enough to prove his guilt.”
FBI and Justice Department officials have so far refused to release any evidence that would conclusively link Ivins to the anthrax mailings, citing the secrecy of grand jury proceedings. The next step could be an official decision to shut down the investigation and dissolve the grand jury, on the supposition that Ivins was a lone attacker and cannot now be prosecuted.
The downside to such an action—from the standpoint of these agencies—is that they could then be compelled to release the files of the case, either through congressional hearings or Freedom of Information Act suits brought by the press or the families of the victims.
It is not possible to determine at this point, given the lack of evidence, whether Dr. Bruce Ivins was responsible for the anthrax attacks. What can be said with certainty, however, is that the FBI, the Justice Department and the Bush White House are all proceeding as though they have something to hide.
The Bush administration has refused all congressional requests for information on the investigation for nearly seven years. Even the two Democratic officials whose offices were targets of the anthrax mailings, Tom Daschle, the former Senate majority leader, and Patrick Leahy, still the chairman of the Senate Judiciary Committee, have been denied any significant briefing on the progress of the case.
Daschle, who was defeated for reelection in 2004 and is now a top adviser to the presidential campaign of Senator Barack Obama, issued a statement saying that “the FBI owes it to the country to provide some accounting of their investigation and their expectations for a successful conclusion.” But most of Daschle’s former Senate and House colleagues have been remarkably silent on what must be considered the attempted assassination of the Democratic Senate leadership.
One of the few criticisms of the FBI’s handling of the anthrax case came from a Republican, Senator Charles Grassley of Iowa, who declared, “It’s been frustrating that the FBI has essentially shut out Congress throughout its seven-year investigation. Now seems to be the opportune time for the bureau to brief Congress about whether the case is to be closed and justice will be served ... In the meantime, we should remember that a rush to judgment can be dangerous and expensive for everyone. The last person the FBI had in its sights in this case suffered for six years and just collected a $6 million settlement.”
This was a reference to the FBI pursuit of Steven Hatfill, a former bioweapons scientist at Fort Detrick who was publicly named a “person of interest” in the anthrax case by then-Attorney-General John Ashcroft in 2002. The Justice Department agreed in June to pay Hatfill $5.8 million to drop his civil suit against government harassment.
The American media has consistently downplayed the evident right-wing political motivation of the anthrax attacks. One incident, reported by the Brad Blog web site, captures this deliberate political censorship. When the site contacted Tom Ivins, brother of the deceased scientist, and asked him what Bruce Ivins’s political views were, “He was surprised by the question, and although he said he’d been speaking with reporters all day ... none of the other reporters, not one of them, had asked him about his brother’s political affiliations, leanings, or beliefs.”
What these views are remains unclear, beyond his professed support to the most socially conservative tenets of Roman Catholicism. But the indifference to the question shows the determination, on the part of the media and political elite, to attribute terrorism exclusively to Islamic fundamentalists while ignoring the violent activities of the ultra-right.
By Patrick Martin
One week after an Army germ warfare scientist apparently committed suicide, there are mounting questions over the government’s handling of the investigation into the 2001 anthrax attacks and expressions of skepticism regarding the sensationalized media coverage of the past four days.
Colleagues and friends of Dr. Bruce Ivins, who died Tuesday from an overdose of prescription Tylenol he had taken two days earlier, have cast doubt on the claims by the FBI and Justice Department that Ivins perpetrated the anthrax attacks. They have also debunked many of the claims made in initial news reports about Ivins’ death.
Ivins’ lawyer, Paul Kemp, sent an email to news organizations Saturday denouncing reports that his client was considering a plea bargain to avoid a death sentence for the anthrax mailings, calling such reports “entirely spurious.” Kemp had been contacted by federal investigators—the FBI interviewed Ivins several times over the past year as well as searching his home—but there was no discussion of a possible plea.
Initial press accounts suggested that Ivins had committed suicide because he faced imminent indictment on five capital murder charges, with prosecutors determined to seek the death penalty. National Public Radio reported Sunday, however, that government investigators said they “still were several major legal steps away from indicting” Ivins, and that the Department of Justice leadership had not yet approved bringing charges. The process of obtaining executive approval, presenting the case to the grand jury and obtaining an indictment “could have taken weeks.”
There were conflicting reports about whether Ivins had the skills necessary to create the finely ground powder form of anthrax used in the 2001 mailings. Some germ warfare experts said that the job was not that difficult from a technical standpoint. But Dr. Alan P. Zelicoff, a physician formerly consulted by the FBI investigation, told the New York Times, “I don’t think a vaccine specialist could do it. This is aerosol physics, not biology. There are very few people who have their feet in both camps.”
Several current and former officials at the US Army Medical Research Institute for Infectious Diseases (USAMRIID), where Ivins worked, said they would not believe the charges against Ivins without convincing evidence that the FBI has yet to produce. Jeffrey J. Adamovicz, former director of the bacteriology division at USAMRIID, told the Washington Post, “I really don’t think he’s the guy. I say to the FBI, ‘Show me your evidence’.” He added, referring to the intense investigative pressure on Ivins, “A lot of the tactics they used were designed to isolate him from his support. The FBI just continued to push his buttons.”
Many of Ivins’ co-workers blamed his evident psychological disintegration on the constant harassment by the FBI, and said his suicide should not be viewed as an admission of guilt. Local police have refused to reveal whether Ivins left a suicide note.
The official statement issued by USAMRIID said the agency “mourns the loss of Dr. Bruce Ivins, who served the institute for more than 35 years as a civilian microbiologist.” Time magazine commented: “That seems like an unusual thing to say if you believe one of your employees had something to do with an anthrax attack.”
The magazine continued, “It now remains incumbent on the FBI to reveal what information it had linking Ivins to the attacks. Given the federal government’s record on the anthrax investigation, and the national security interests involved, Ivins’ death should not be used as an excuse for the case to be closed without a full, public airing.”
The Los Angeles Times reported similar sentiments expressed by the lawyer for the family of Bob Stevens, the photo editor for the Sun tabloid who died in the first anthrax mailing. “The family definitely wants to be able to see the evidence that the FBI has accumulated, that they’re not just trying to make this guy a scapegoat,” Schuler said.
Several press accounts cited FBI officials and government scientists who could not be quoted by name, claiming that Ivins was identified as the anthrax mailer through the use of sophisticated new DNA testing techniques that were not available at the time of the attacks, which killed five people and sickened 17 more between late September and early November 2001.
The Associated Press (AP) reported that DNA testing had conclusively linked the strain of anthrax used in the mailing to the biological weapons laboratory at Fort Detrick, near Frederick, Maryland, where Ivins worked, and to his work area within the lab. “It had to do with the very specific characteristics in the DNA of the letters and what was in Bruce’s labs,” an unidentified scientist told AP. “They were cultures he was personally responsible for.”
The AP report noted, however: “Dozens of other researchers in Ivins’ lab also had access to the type of Ames strain used in the attacks, the scientist said, meaning the DNA alone is not enough to prove his guilt.”
FBI and Justice Department officials have so far refused to release any evidence that would conclusively link Ivins to the anthrax mailings, citing the secrecy of grand jury proceedings. The next step could be an official decision to shut down the investigation and dissolve the grand jury, on the supposition that Ivins was a lone attacker and cannot now be prosecuted.
The downside to such an action—from the standpoint of these agencies—is that they could then be compelled to release the files of the case, either through congressional hearings or Freedom of Information Act suits brought by the press or the families of the victims.
It is not possible to determine at this point, given the lack of evidence, whether Dr. Bruce Ivins was responsible for the anthrax attacks. What can be said with certainty, however, is that the FBI, the Justice Department and the Bush White House are all proceeding as though they have something to hide.
The Bush administration has refused all congressional requests for information on the investigation for nearly seven years. Even the two Democratic officials whose offices were targets of the anthrax mailings, Tom Daschle, the former Senate majority leader, and Patrick Leahy, still the chairman of the Senate Judiciary Committee, have been denied any significant briefing on the progress of the case.
Daschle, who was defeated for reelection in 2004 and is now a top adviser to the presidential campaign of Senator Barack Obama, issued a statement saying that “the FBI owes it to the country to provide some accounting of their investigation and their expectations for a successful conclusion.” But most of Daschle’s former Senate and House colleagues have been remarkably silent on what must be considered the attempted assassination of the Democratic Senate leadership.
One of the few criticisms of the FBI’s handling of the anthrax case came from a Republican, Senator Charles Grassley of Iowa, who declared, “It’s been frustrating that the FBI has essentially shut out Congress throughout its seven-year investigation. Now seems to be the opportune time for the bureau to brief Congress about whether the case is to be closed and justice will be served ... In the meantime, we should remember that a rush to judgment can be dangerous and expensive for everyone. The last person the FBI had in its sights in this case suffered for six years and just collected a $6 million settlement.”
This was a reference to the FBI pursuit of Steven Hatfill, a former bioweapons scientist at Fort Detrick who was publicly named a “person of interest” in the anthrax case by then-Attorney-General John Ashcroft in 2002. The Justice Department agreed in June to pay Hatfill $5.8 million to drop his civil suit against government harassment.
The American media has consistently downplayed the evident right-wing political motivation of the anthrax attacks. One incident, reported by the Brad Blog web site, captures this deliberate political censorship. When the site contacted Tom Ivins, brother of the deceased scientist, and asked him what Bruce Ivins’s political views were, “He was surprised by the question, and although he said he’d been speaking with reporters all day ... none of the other reporters, not one of them, had asked him about his brother’s political affiliations, leanings, or beliefs.”
What these views are remains unclear, beyond his professed support to the most socially conservative tenets of Roman Catholicism. But the indifference to the question shows the determination, on the part of the media and political elite, to attribute terrorism exclusively to Islamic fundamentalists while ignoring the violent activities of the ultra-right.
PsyOp: Is Washington Intent on Sabotaging the Beijing Olympics?
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By Michel Chossudovsky
By Michel Chossudovsky
In the weeks leading up to the Beijing Olympics, an atmosphere of fear and insecurity is unfolding.
China has not only been targeted for its human rights violations, a China based Islamic terrorist organization has announced that it is planning to "create havoc" at the outset of the Olympics.
According to media reports, the Turkestan Islamic Party (TIP) has claimed responsibility for several pre-Olympic terror attacks including the July 21 bombing of three buses in Kunming, capital of Yunnan , which killed two and left 13 injured, as well as a similar Shanghai bus bombing in May. The TIP also claimed responsibility for an attack in Wenzhou on July 17 using an explosives-laden tractor and the bombing of a Guangzhou plastics factory on July 17 (Sydney Morning Herald, 27 July 2008).
The leader of the Turkestan Islamic Party (TIP) Commander Seyfullah in a mysterious video broadcast warned both athletes and spectators that it is planning to carry out simultaneous attacks in several highly populated urban areas, with a view to ultimately sabotaging the Olympic games:
"Through this blessed jihad in Yunnan this time, the Turkestan Islamic Party warns China one more time. Our aim is to target the most critical points related to the Olympics.
We will try to attack Chinese central cities severely using the tactics that have never been employed. We warn China and the international community for the last time that those spectators, athletes, particularly the Muslims, who are planning to attend the Olympics, please change your intention from going to China. Please do not stand together with the faithless people. The Turkistan Islamic Party volunteers will conduct violent military actions against individuals, departments, venues, and activities that are related to the Olympics in China." (Transcript of alleged Statement of Commander Seyfullah, released to the media by IntelCenter, Washington, 23 July 2008 http://www.intelcenter.com/)
To view the TIP VIDEO (YouTube) click here
Still photo of the TIP Video
The authenticity of the video is dubious, the timing of its release following the Kunming bombings barely two weeks prior to the Olympics is suspicious. The mystery video was made available to the Western and Chinese media by IntelCenter, a private Washington based Intel company on contract to US intelligence and the Pentagon. How, from whom and when it was obtained has not been revealed.
The video contains a carefully crafted narrative. It sends a clear-cut message with evocative images. Keep away from the Olympic games. It starts with the Beijing’s Olympic logo going up in flames as a rocket hits an Olympic venue. (See Toronto Star, August 1, 2008)
To view the TIP VIDEO click here
According to Stratfor, a US based think tank on intelligence issues, the Turkestan Islamic Party (TIP) which claimed responsibility for the pre-Olympic terror attacks belongs to the broader East Turkestan Islamic Movement (ETIM), based in the Xinjiang-Uygur autonomous region.
The ETIM is known to be covertly supported by Pakistan Inter Services Intelligence (ISI), acting in close coordination with the CIA. The role of Pakistan’s ISI in supporting the Islamist Uygur insurgencies goes back to the mid-1990s. According to Yossef Bodansky in a 2000 Defense & Foreign Affairs’ Strategic Policy report:
"The Pakistani terrorism-sponsoring activities along the Silk Road were the primary instrument of Islamabad’s regional strategy. The ISI -sponsored insurgency and terrorism along the western gateways to the PRC were strategic developments with grave ramifications."
The historical relationship between Pakistan’s military intelligence (ISI) and the CIA is amply documented. In the course of the 1980s, the Covert Action Division of the ISI was used by the CIA to recruit and train the Mujahideen, who were sent to Afghanistan to fight Soviet troops.
In the post Cold war era, this CIA-ISI relationship remained largely intact. The ISI continued to be used by Washington to channel covert support to various Islamic fundamentalist movements, including Al Qaeda, involved in false flag terror attacks. (Michel Chossudovsky, America’s War on Terrorism, Global Research, Montreal, 2005). The ISI as an intelligence body has played a key covert role in America’s "war on terrorism", by sustaining an abetting these terrorist organizations and by sustaining the illusion of an outside enemy.
In China, covert support to the Uygur insurgency largely served the purpose of creating political instability. In Xinjiang-Uigur, Pakistani intelligence (ISI), acting in liaison with the CIA, supports several Islamist organizations including the Islamic Reformist Party, the East Turkestan National Unity Alliance, the Uigur Liberation Organization and the Central Asian Uigur Jihad Party. Several of these Islamic organizations have received support and training from Al Qaeda, which is a US sponsored intelligence asset. The declared objective of these Chinese-based Islamic organizations is the "establishment of an Islamic caliphate in the region" (Michel Chossudovsky, op cit, Chapter 2).
The "caliphate project" which is supported covertly by US-Pakistani intelligence encroaches upon Chinese territorial sovereignty. Supported by various Wahabi "foundations" from the Gulf States, secessionism on China’s Western frontier is consistent with U.S. strategic interests in Central Asia.
By tacitly promoting the secession of the Xinjiang-Uigur region (using Pakistan’s ISI as a "go-between"), Washington is attempting to trigger a broader process of political destabilization and fracturing of the People’s Republic of China.
"China reportedly said that East Turkestan (Uyghur) Islamic terrorists [are] operating on Pakistan’s soil and trained in special camps in its territory. This is the first time Beijing administration charged Pakistan for harboring anti-China elements in its soil. The revelation came in a court document in the trial of jailed Canadian [Celil] in which it was mentioned that Celil joined the East Turkistan Liberation Organisation (ETLO) way back in 1997 and acted as a senior instructor in Kyrgyzstan. As per the document, Celil allegedly recruited people and sent them to various training camps on the Pamir Plateau in Pakistan territory. ETLO’s prime objective is to carve an independent East Turkestan by uniting parts of China and Kyrgyzstan." (B. Raman, US & Terrorism in Xinjiang, South Asian Analysis, 2002 http://www.southasiaanalysis.org/papers5/paper499.html )
Xinjiang Uygur autonomous region, Pamir Plateau on the Pakistan-China border
The TIP which has claimed responsibility for several pre-Olympic terror attacks belongs to the broader ETIM which is supported covertly by Pakistan’s ISI.
The role of Pakistan’s ISI in Xinjiang-Uygur is known to Chinese intelligence. According to a 2002 report, Beijing accused Islamabad of training East Turkestan Islamic operatives on the Pamir plateau inside Pakistan, bordering on the Southern tip of Xinjiang-Uygur region (see map).
For political reasons, however, the issue of ISI-CIA involvement has been carefully avoided. In the weeks leading up to the Olympics, the Chinese authorities are anxious to avoid controversy. The issue of foreign support to the East Turkestan Islamic Movement is unmentionable.
Sabotage or Disruption of the Olympics?
Both the Western and Chinese media in chorus, quoting the mystery video, are asserting that Muslim terrorists will attack the Olympics.
The message in the videotape released by IntelCenter is unequivocal: Turkestan Islamic Party (TIP) Commander Seyfullah, "warned athletes and spectators ’particularly the Muslims’ to stay away from the Olympics." (quoted by Associated Press, August 1, 2008)
An atmosphere of fear and insecurity has been created, quite deliberately, which could potentially undermine the Olympic Games.
Are these terror warnings and attacks, not to mention to the mysterious video, part of a US sponsored PsyOp which is being applied to discredit the Chinese leadership and/or sabotage the Olympics?
How reliable is the videotape? What is the credibility of IntelCenter? Neither the Western nor the Chinese media have investigated the matter.
IntelCenter, the private Intel company on contract to US intelligence happens to be the same Washington outfit which released, also in a timely fashion, several mysterious Al Qaeda related videotapes including the 11 September 2007 video of Osama bin Laden as well as an April 2006 video featuring Al Qaeda’s Number Two Man Ayman al-Zawahiri.
IntelCenter describes "the collection, exploitation, analysis and dissemination of terrorist and rebel group video materials" as one of its "core competencies". InteCenter’ "primary client base is comprised of military, law enforcement and intelligence agencies in the US and other allied countries around the world." (http://www.intelcenter.com/aboutus.html)
How IntelCenter actually obtained these various videotapes including the latest pre-Olympic Seyfullah Turkestan Islamic Party (TIP) video, remains to be established.
At an August 1st press briefing, Sen. Colonel Tian Yixiang of the Olympics security command told reporters that the biggest threat to security comes from "the East Turkestan terrorist organization" meaning the ETIM based in the Xinjiang-Uygur autonomous region.
What the Chinese official failed to mention is that there is evidence that these terrorist organizations have over the years been covertly supported by Pakistani intelligence, operating on behalf of Washington.
Sunday, August 3, 2008
Sexual Assault in the Military: A DoD Cover-Up?
Go to Original
By Col. Ann Wright
There was quite a struggle in Congress this week. The Department of Defense refused to allow the senior civilian in charge of its Sexual Assault Prevention and Response Office (SAPRO) to testify in Thursday’s hearing on sexual assault in the military. Rep. John Tierney, chair of the House Subcommittee on National Security and Foreign Affairs, angrily dismissed Principal Deputy Undersecretary of Defense Michael Dominguez from the hearing when Dominguez said that he, the DoD chief of legislative affairs and the chief of public affairs, had ordered Dr. Kaye Whitley, chief of SAPRO, to refuse to honor the subpoena issued by the subcommittee for her appearance.
Full committee Chairman Henry Waxman called the DoD’s decision to prevent Whitley from testifying “ridiculous and indicating DoD is covering something up.” It could also place Whitley in contempt of Congress. Rep. Christopher Shays said the DoD’s decision was “foolish.”
One of the questions that would have been put to Whitley was why DoD had taken three years to name a 15-person civilian task force to look into allegations of sexual assault of military personnel. The panel was finally named early in 2008 but has yet to meet. She would have also been queried on the SAPRO program’s failure to require key information from the military in order to evaluate the effectiveness of sexual assault prevention and response programs.
I spoke with Dr. Whitley in April 2007 and had asked for an appointment to bring to her office four military women who had been sexually assaulted and wanted to tell her in what ways the DoD programs to prevent sexual assault were not working. Whitley declined, saying she worked at the policy level, and steered me to the chief of the Army sexual assault program. I called the Army program’s chief, who initially said she would talk to our group. However, when I mentioned that the mother of Army Spc. Suzanne Swift, who had been raped in Iraq, would be with us, she said she could not meet with anyone involved with an ongoing case. I replied that Swift’s case was closed as far as the Army was concerned. Her rapist had not been prosecuted, and Swift ended up with a court-martial and 30 days of jail time because she had gone AWOL for her own protection when the Army would not move her out of the unit to which both she and her rapist were still assigned. In view of the fact that the Army chief of prevention of sexual assault refused to meet with any of the four women who had suggestions on how to improve prevention and reporting of sexual assault and rape, I’m not surprised that the DoD snubbed Congress over the same issue.
Rep. Elijah Cummings joined Rep. Waxman in speaking of cover-ups. Cummings raised the cases of military women who had been sexually assaulted before dying in “non-combat incidents.” He spoke specifically about Army Pfc. LaVena Johnson, who was found beaten and dead of a gunshot wound at Balad Air Base, Iraq, in a burning tent owned by the contractor KBR. Her parents suspected that Johnson had been murdered and that the homicide was being covered up by the Army, which deemed the death a suicide. Cummings also spoke of Army Pfc. Tina Priest, who was raped at Taji, Iraq, and found dead 10 days later of a gunshot wound. After her family had measurements taken of her arms and of the angle of the bullet and found that she could not have pulled the trigger of her M-16 with her finger, the Army said she had pulled the trigger by using her toe. Cummings asked Lt. Gen. Michael Rochelle, chief of U.S. Army personnel, for assistance in getting all the documents the Army had on Johnson’s death. Additionally, four House members have asked for congressional hearings on the deaths of military personnel who have been classified as suicides, among them LaVena Johnson.
The fireworks with DoD followed the dramatic testimony of Mary Lauterbach, the mother of murdered pregnant Marine Lance Cpl. Maria Lauterbach, who had been raped in May 2007 at Camp Lejeune, N.C. Accused in the case is Marine Cpl. Cesar Laurean. After the rape, several protective orders were issued to keep Laurean away from his victim. The burned body of Lauterbach and her unborn baby were found in a shallow grave in the backyard of Laurean’s home in January 2008. Laurean fled to Mexico, where he was subsequently apprehended, and he now is awaiting extradition to the United States to stand trial. Lauterbach’s mother explained in great detail the warning signs that Laurean was a danger to her daughter and claimed that all these signs were ignored by the Marine Corps.
Two other military women have been murdered near military bases in North Carolina in the past two months.
Red Cross employee Ingrid Torres told the subcommittee of being raped at Kunsan Air Base in South Korea by an Air Force flight doctor. She spoke of the difficulty she had obtaining medical and emotional treatment from the facility where the doctor still worked, and later from military facilities in other parts of the world where she was assigned.
Rep. Jane Harman cited Veterans Administration statistics that one in three women in the military has been sexually assaulted. She said the prosecution rate of those accused of raping fellow military service members is abysmally low. Of the 2,212 reported rapes in the military in 2007, only 8 percent of the cases ended in court-martial of the perpetrator, while the rate of prosecution in civilian courts is 40 percent.
Lt. Gen. Rochelle, the Army chief of personnel, reported the little known statistic that 12 percent of reported rapes in the military are of male military personnel.
Rep. Shays said he had no confidence in DoD or the military services and their policies of prevention of sexual assault, and asked how recruiting will fare when young women learn that one in three women is sexually assaulted and when young men find out that one in 10 men is raped while in the military.
Brenda Farrell, director of the Government Accountability Office, said that getting data on rape from the military services is difficult because there are no common definitions of terms for the services to use in such cases.
Farrell said the GAO believes rates of sexual assault currently used by DoD are low because many military personnel do not want to report what happened and suffer the gossip, harassment and stigma prevalent in units when confidential reporting is compromised. In a survey of 3,757 persons on 14 military installations, 103 said they had been sexually assaulted in the past year and had reported it, while 52 others said they did not report the sexual assault.
Several Congress members spoke of lack of leadership and accountability in stopping sexual assault. The same day as the sexual assault hearing, the Navy relieved two senior officers of the USS George Washington because of the injury to 23 sailors and $70 million in damage to the ship caused by a smoking violation. Imagine if commanders in units where rape occurred were relieved of command for the harmful actions of their subordinates. That would send a signal of zero tolerance of sexual assault, whereas in the current climate victims are intimidated and alleged perpetrators are given administrative punishment instead of court-martial.
Sexual violence against both female and male military personnel must stop. Let Congress know of your concern about sexual assault in our military. Call or e-mail members of the House and Senate Armed Services committees and members of the Oversight and Government Reform committees.
By Col. Ann Wright
There was quite a struggle in Congress this week. The Department of Defense refused to allow the senior civilian in charge of its Sexual Assault Prevention and Response Office (SAPRO) to testify in Thursday’s hearing on sexual assault in the military. Rep. John Tierney, chair of the House Subcommittee on National Security and Foreign Affairs, angrily dismissed Principal Deputy Undersecretary of Defense Michael Dominguez from the hearing when Dominguez said that he, the DoD chief of legislative affairs and the chief of public affairs, had ordered Dr. Kaye Whitley, chief of SAPRO, to refuse to honor the subpoena issued by the subcommittee for her appearance.
Full committee Chairman Henry Waxman called the DoD’s decision to prevent Whitley from testifying “ridiculous and indicating DoD is covering something up.” It could also place Whitley in contempt of Congress. Rep. Christopher Shays said the DoD’s decision was “foolish.”
One of the questions that would have been put to Whitley was why DoD had taken three years to name a 15-person civilian task force to look into allegations of sexual assault of military personnel. The panel was finally named early in 2008 but has yet to meet. She would have also been queried on the SAPRO program’s failure to require key information from the military in order to evaluate the effectiveness of sexual assault prevention and response programs.
I spoke with Dr. Whitley in April 2007 and had asked for an appointment to bring to her office four military women who had been sexually assaulted and wanted to tell her in what ways the DoD programs to prevent sexual assault were not working. Whitley declined, saying she worked at the policy level, and steered me to the chief of the Army sexual assault program. I called the Army program’s chief, who initially said she would talk to our group. However, when I mentioned that the mother of Army Spc. Suzanne Swift, who had been raped in Iraq, would be with us, she said she could not meet with anyone involved with an ongoing case. I replied that Swift’s case was closed as far as the Army was concerned. Her rapist had not been prosecuted, and Swift ended up with a court-martial and 30 days of jail time because she had gone AWOL for her own protection when the Army would not move her out of the unit to which both she and her rapist were still assigned. In view of the fact that the Army chief of prevention of sexual assault refused to meet with any of the four women who had suggestions on how to improve prevention and reporting of sexual assault and rape, I’m not surprised that the DoD snubbed Congress over the same issue.
Rep. Elijah Cummings joined Rep. Waxman in speaking of cover-ups. Cummings raised the cases of military women who had been sexually assaulted before dying in “non-combat incidents.” He spoke specifically about Army Pfc. LaVena Johnson, who was found beaten and dead of a gunshot wound at Balad Air Base, Iraq, in a burning tent owned by the contractor KBR. Her parents suspected that Johnson had been murdered and that the homicide was being covered up by the Army, which deemed the death a suicide. Cummings also spoke of Army Pfc. Tina Priest, who was raped at Taji, Iraq, and found dead 10 days later of a gunshot wound. After her family had measurements taken of her arms and of the angle of the bullet and found that she could not have pulled the trigger of her M-16 with her finger, the Army said she had pulled the trigger by using her toe. Cummings asked Lt. Gen. Michael Rochelle, chief of U.S. Army personnel, for assistance in getting all the documents the Army had on Johnson’s death. Additionally, four House members have asked for congressional hearings on the deaths of military personnel who have been classified as suicides, among them LaVena Johnson.
The fireworks with DoD followed the dramatic testimony of Mary Lauterbach, the mother of murdered pregnant Marine Lance Cpl. Maria Lauterbach, who had been raped in May 2007 at Camp Lejeune, N.C. Accused in the case is Marine Cpl. Cesar Laurean. After the rape, several protective orders were issued to keep Laurean away from his victim. The burned body of Lauterbach and her unborn baby were found in a shallow grave in the backyard of Laurean’s home in January 2008. Laurean fled to Mexico, where he was subsequently apprehended, and he now is awaiting extradition to the United States to stand trial. Lauterbach’s mother explained in great detail the warning signs that Laurean was a danger to her daughter and claimed that all these signs were ignored by the Marine Corps.
Two other military women have been murdered near military bases in North Carolina in the past two months.
Red Cross employee Ingrid Torres told the subcommittee of being raped at Kunsan Air Base in South Korea by an Air Force flight doctor. She spoke of the difficulty she had obtaining medical and emotional treatment from the facility where the doctor still worked, and later from military facilities in other parts of the world where she was assigned.
Rep. Jane Harman cited Veterans Administration statistics that one in three women in the military has been sexually assaulted. She said the prosecution rate of those accused of raping fellow military service members is abysmally low. Of the 2,212 reported rapes in the military in 2007, only 8 percent of the cases ended in court-martial of the perpetrator, while the rate of prosecution in civilian courts is 40 percent.
Lt. Gen. Rochelle, the Army chief of personnel, reported the little known statistic that 12 percent of reported rapes in the military are of male military personnel.
Rep. Shays said he had no confidence in DoD or the military services and their policies of prevention of sexual assault, and asked how recruiting will fare when young women learn that one in three women is sexually assaulted and when young men find out that one in 10 men is raped while in the military.
Brenda Farrell, director of the Government Accountability Office, said that getting data on rape from the military services is difficult because there are no common definitions of terms for the services to use in such cases.
Farrell said the GAO believes rates of sexual assault currently used by DoD are low because many military personnel do not want to report what happened and suffer the gossip, harassment and stigma prevalent in units when confidential reporting is compromised. In a survey of 3,757 persons on 14 military installations, 103 said they had been sexually assaulted in the past year and had reported it, while 52 others said they did not report the sexual assault.
Several Congress members spoke of lack of leadership and accountability in stopping sexual assault. The same day as the sexual assault hearing, the Navy relieved two senior officers of the USS George Washington because of the injury to 23 sailors and $70 million in damage to the ship caused by a smoking violation. Imagine if commanders in units where rape occurred were relieved of command for the harmful actions of their subordinates. That would send a signal of zero tolerance of sexual assault, whereas in the current climate victims are intimidated and alleged perpetrators are given administrative punishment instead of court-martial.
Sexual violence against both female and male military personnel must stop. Let Congress know of your concern about sexual assault in our military. Call or e-mail members of the House and Senate Armed Services committees and members of the Oversight and Government Reform committees.
To Provoke War, Cheney Considered Proposal To Dress Up Navy Seals As Iranians And Shoot At Them
Go to Original
Speaking at the Campus Progress journalism conference earlier this month, Seymour Hersh — a Pulitzer-Prize winning journalist for The New Yorker — revealed that Bush administration officials held a meeting recently in the Vice President’s office to discuss ways to provoke a war with Iran.
In Hersh’s most recent article, he reports that this meeting occurred in the wake of the overblown incident in the Strait of Hormuz, when a U.S. carrier almost shot at a few small Iranian speedboats. The “meeting took place in the Vice-President’s office. ‘The subject was how to create a casus belli between Tehran and Washington,’” according to one of Hersh’s sources.
During the journalism conference event, I asked Hersh specifically about this meeting and if he could elaborate on what occurred. Hersh explained that, during the meeting in Cheney’s office, an idea was considered to dress up Navy Seals as Iranians, put them on fake Iranian speedboats, and shoot at them. This idea, intended to provoke an Iran war, was ultimately rejected:
HERSH: There was a dozen ideas proffered about how to trigger a war. The one that interested me the most was why don’t we build — we in our shipyard — build four or five boats that look like Iranian PT boats. Put Navy seals on them with a lot of arms. And next time one of our boats goes to the Straits of Hormuz, start a shoot-up.
Might cost some lives. And it was rejected because you can’t have Americans killing Americans. That’s the kind of — that’s the level of stuff we’re talking about. Provocation. But that was rejected.
Watch it:
Hersh argued that one of the things the Bush administration learned during the encounter in the Strait of Hormuz was that, “if you get the right incident, the American public will support” it.
“Look, is it high school? Yeah,” Hersh said. “Are we playing high school with you know 5,000 nuclear warheads in our arsenal? Yeah we are. We’re playing, you know, who’s the first guy to run off the highway with us and Iran.”
Transcript:
HERSH: There was a meeting. Among the items considered and rejected — which is why the New Yorker did not publish it, on grounds that it wasn’t accepted — one of the items was why not…
There was a dozen ideas proffered about how to trigger a war. The one that interested me the most was why don’t we build — we in our shipyard — build four or five boats that look like Iranian PT boats. Put Navy seals on them with a lot of arms. And next time one of our boats goes to the Straits of Hormuz, start a shoot-up. Might cost some lives.
And it was rejected because you can’t have Americans killing Americans. That’s the kind of — that’s the level of stuff we’re talking about. Provocation. But that was rejected.
So I can understand the argument for not writing something that was rejected — uh maybe. My attitude always towards editors is they’re mice training to be rats.
But the point is jejune, if you know what that means. Silly? Maybe. But potentially very lethal. Because one of the things they learned in the incident was the American public, if you get the right incident, the American public will support bang-bang-kiss-kiss. You know, we’re into it.
…What happened in the Gulf was, in the Straits, in early January, the President was just about to go to the Middle East for a visit. So that was one reason they wanted to gin it up. Get it going.
Look, is it high school? Yeah. Are we playing high school with you know 5,000 nuclear warheads in our arsenal? Yeah we are. We’re playing, you know, who’s the first guy to run off the highway with us and Iran.
Shipping Costs Start to Crimp Globalization
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By LARRY ROHTER
When Tesla Motors, a pioneer in electric-powered cars, set out to make a luxury roadster for the American market, it had the global supply chain in mind. Tesla planned to manufacture 1,000-pound battery packs in Thailand, ship them to Britain for installation, then bring the mostly assembled cars back to the United States.
But when it began production this spring, the company decided to make the batteries and assemble the cars near its home base in California, cutting more than 5,000 miles from the shipping bill for each vehicle.
“It was kind of a no-brain decision for us,” said Darryl Siry, the company’s senior vice president of global sales, marketing and service. “A major reason was to avoid the transportation costs, which are terrible.”
The world economy has become so integrated that shoppers find relatively few T-shirts and sneakers in Wal-Mart and Target carrying a “Made in the U.S.A.” label. But globalization may be losing some of the inexorable economic power it had for much of the past quarter-century, even as it faces fresh challenges as a political ideology.
Cheap oil, the lubricant of quick, inexpensive transportation links across the world, may not return anytime soon, upsetting the logic of diffuse global supply chains that treat geography as a footnote in the pursuit of lower wages. Rising concern about global warming, the reaction against lost jobs in rich countries, worries about food safety and security, and the collapse of world trade talks in Geneva last week also signal that political and environmental concerns may make the calculus of globalization far more complex.
“If we think about the Wal-Mart model, it is incredibly fuel-intensive at every stage, and at every one of those stages we are now seeing an inflation of the costs for boats, trucks, cars,” said Naomi Klein, the author of “The Shock Doctrine: The Rise of Disaster Capitalism.”
“That is necessarily leading to a rethinking of this emissions-intensive model, whether the increased interest in growing foods locally, producing locally or shopping locally, and I think that’s great.”
Many economists argue that globalization will not shift into reverse even if oil prices continue their rising trend. But many see evidence that companies looking to keep prices low will have to move some production closer to consumers. Globe-spanning supply chains — Brazilian iron ore turned into Chinese steel used to make washing machines shipped to Long Beach, Calif., and then trucked to appliance stores in Chicago — make less sense today than they did a few years ago.
To avoid having to ship all its products from abroad, the Swedish furniture manufacturer Ikea opened its first factory in the United States in May. Some electronics companies that left Mexico in recent years for the lower wages in China are now returning to Mexico, because they can lower costs by trucking their output overland to American consumers.
Neighborhood Effect
Decisions like those suggest that what some economists call a neighborhood effect — putting factories closer to components suppliers and to consumers, to reduce transportation costs — could grow in importance if oil remains expensive. A barrel sold for $125 on Friday, compared with lows of $10 a decade ago.
“If prices stay at these levels, that could lead to some significant rearrangement of production, among sectors and countries,” said C. Fred Bergsten, author of “The United States and the World Economy” and director of the Peter G. Peterson Institute for International Economics, in Washington. “You could have a very significant shock to traditional consumption patterns and also some important growth effects.”
The cost of shipping a 40-foot container from Shanghai to the United States has risen to $8,000, compared with $3,000 early in the decade, according to a recent study of transportation costs. Big container ships, the pack mules of the 21st-century economy, have shaved their top speed by nearly 20 percent to save on fuel costs, substantially slowing shipping times.
The study, published in May by the Canadian investment bank CIBC World Markets, calculates that the recent surge in shipping costs is on average the equivalent of a 9 percent tariff on trade. “The cost of moving goods, not the cost of tariffs, is the largest barrier to global trade today,” the report concluded, and as a result “has effectively offset all the trade liberalization efforts of the last three decades.”
The spike in shipping costs comes at a moment when concern about the environmental impact of globalization is also growing. Many companies have in recent years shifted production from countries with greater energy efficiency and more rigorous standards on carbon emissions, especially in Europe, to those that are more lax, like China and India.
But if the international community fulfills its pledge to negotiate a successor to the Kyoto Protocol to combat climate change, even China and India would have to reduce the growth of their emissions, and the relative costs of production in countries that use energy inefficiently could grow.
The political landscape may also be changing. Dissatisfaction with globalization has led to the election of governments in Latin America hostile to the process. A somewhat similar reaction can be seen in the United States, where both Senators Barack Obama and Hillary Rodham Clinton promised during the Democratic primary season to “re-evaluate” the nation’s existing free trade agreements.
Last week, efforts to complete what is known as the Doha round of trade talks collapsed in acrimony, dealing a serious blow to tariff reduction. The negotiations, begun in 2001, failed after China and India battled the United States over agricultural tariffs, with the two developing countries insisting on broad rights to protect themselves against surges of food imports that could hurt their farmers.
Some critics of globalization are encouraged by those developments, which they see as a welcome check on the process. On environmentalist blogs, some are even gleefully promoting a “globalization death watch.”
Many leading economists say such predictions are probably overblown. “It would be a mistake, a misinterpretation, to think that a huge rollback or reversal of fundamental trends is under way,” said Jeffrey D. Sachs, director of the Earth Institute at Columbia University. “Distance and trade costs do matter, but we are still in a globalized era.”
As economists and business executives well know, shipping costs are only one factor in determining the flow of international trade. When companies decide where to invest in a new factory or from whom to buy a product, they also take into account exchange rates, consumer confidence, labor costs, government regulations and the availability of skilled managers.
‘People Were Profligate’
What may be coming to an end are price-driven oddities like chicken and fish crossing the ocean from the Western Hemisphere to be filleted and packaged in Asia not to be consumed there, but to be shipped back across the Pacific again. “Because of low costs, people were profligate,” said Nayan Chanda, author of “Bound Together,” a history of globalization.
The industries most likely to be affected by the sharp rise in transportation costs are those producing heavy or bulky goods that are particularly expensive to ship relative to their sale price. Steel is an example. China’s steel exports to the United States are now tumbling by more than 20 percent on a year-over-year basis, their worst performance in a decade, while American steel production has been rising after years of decline. Motors and machinery of all types, car parts, industrial presses, refrigerators, television sets and other home appliances could also be affected.
Plants in industries that require relatively less investment in infrastructure, like furniture, footwear and toys, are already showing signs of mobility as shipping costs rise.
Until recently, standard practice in the furniture industry was to ship American timber from ports like Norfolk, Baltimore and Charleston to China, where oak and cherry would be milled into sofas, beds, tables, cabinets and chairs, which were then shipped back to the United States.
But with transportation costs rising, more wood is now going to traditional domestic furniture-making centers in North Carolina and Virginia, where the industry had all but been wiped out. While the opening of the American Ikea plant, in Danville, Va., a traditional furniture-producing center hit hard by the outsourcing of production to Asia, is perhaps most emblematic of such changes, other manufacturers are also shifting some production back to the United States.
Among them is Craftmaster Furniture, a company founded in North Carolina but now Chinese-owned. And at an industry fair in April, La-Z-Boy announced a new line that will begin production in North Carolina this month.
“There’s just a handful of us left, but it has become easier for us domestic folks to compete,” said Steven Kincaid of Kincaid Furniture in Hudson, N.C., a division of La-Z-Boy.
Avocado Salad in January
Soaring transportation costs also have an impact on food, from bananas to salmon. Higher shipping rates could eventually transform some items now found in the typical middle-class pantry into luxuries and further promote the so-called local food movement popular in many American and European cities.
“This is not just about steel, but also maple syrup and avocados and blueberries at the grocery store,” shipped from places like Chile and South Africa, said Jeff Rubin, chief economist at CIBC World Markets and co-author of its recent study on transport costs and globalization. “Avocado salad in Minneapolis in January is just not going to work in this new world, because flying it in is going to make it cost as much as a rib eye.”
Global companies like General Electric, DuPont, Alcoa and Procter & Gamble are beginning to respond to the simultaneous increases in shipping and environmental costs with green policies meant to reduce both fuel consumption and carbon emissions. That pressure is likely to increase as both manufacturers and retailers seek ways to tighten the global supply chain.
“Being green is in their best interests not so much in making money as saving money,” said Gary Yohe, an environmental economist at Wesleyan University. “Green companies are likely to be a permanent trend, as these vulnerabilities continue, but it’s going to take a long time for all this to settle down.”
In addition, the sharp increase in transportation costs has implications for the “just-in-time” system pioneered in Japan and later adopted the world over. It is a highly profitable business strategy aimed at reducing warehousing and inventory costs by arranging for raw materials and other supplies to arrive only when needed, and not before.
Jeffrey E. Garten, the author of “World View: Global Strategies for the New Economy” and a former dean of the Yale School of Management, said that companies “cannot take a risk that the just-in-time system won’t function, because the whole global trading system is based on that notion.” As a result, he said, “they are going to have to have redundancies in the supply chain, like more warehousing and multiple sources of supply and even production.”
One likely outcome if transportation rates stay high, economists said, would be a strengthening of the neighborhood effect. Instead of seeking supplies wherever they can be bought most cheaply, regardless of location, and outsourcing the assembly of products all over the world, manufacturers would instead concentrate on performing those activities as close to home as possible.
In a more regionalized trading world, economists say, China would probably end up buying more of the iron ore it needs from Australia and less from Brazil, and farming out an even greater proportion of its manufacturing work to places like Vietnam and Thailand. Similarly, Mexico’s maquiladora sector, the assembly plants concentrated near its border with the United States, would become more attractive to manufacturers with an eye on the American market.
But a trend toward regionalization would not necessarily benefit the United States, economists caution. Not only has it lost some of its manufacturing base and skills over the past quarter-century, and experienced a decline in consumer confidence as part of the current slowdown, but it is also far from the economies that have become the most dynamic in the world, those of Asia.
“Despite everything, the American economy is still the biggest Rottweiler on the block,” said Jagdish N. Bhagwati, the author of “In Defense of Globalization” and a professor of economics at Columbia. “But if it’s expensive to get products from there to here, it’s also expensive to get them from here to there.”
By LARRY ROHTER
When Tesla Motors, a pioneer in electric-powered cars, set out to make a luxury roadster for the American market, it had the global supply chain in mind. Tesla planned to manufacture 1,000-pound battery packs in Thailand, ship them to Britain for installation, then bring the mostly assembled cars back to the United States.
But when it began production this spring, the company decided to make the batteries and assemble the cars near its home base in California, cutting more than 5,000 miles from the shipping bill for each vehicle.
“It was kind of a no-brain decision for us,” said Darryl Siry, the company’s senior vice president of global sales, marketing and service. “A major reason was to avoid the transportation costs, which are terrible.”
The world economy has become so integrated that shoppers find relatively few T-shirts and sneakers in Wal-Mart and Target carrying a “Made in the U.S.A.” label. But globalization may be losing some of the inexorable economic power it had for much of the past quarter-century, even as it faces fresh challenges as a political ideology.
Cheap oil, the lubricant of quick, inexpensive transportation links across the world, may not return anytime soon, upsetting the logic of diffuse global supply chains that treat geography as a footnote in the pursuit of lower wages. Rising concern about global warming, the reaction against lost jobs in rich countries, worries about food safety and security, and the collapse of world trade talks in Geneva last week also signal that political and environmental concerns may make the calculus of globalization far more complex.
“If we think about the Wal-Mart model, it is incredibly fuel-intensive at every stage, and at every one of those stages we are now seeing an inflation of the costs for boats, trucks, cars,” said Naomi Klein, the author of “The Shock Doctrine: The Rise of Disaster Capitalism.”
“That is necessarily leading to a rethinking of this emissions-intensive model, whether the increased interest in growing foods locally, producing locally or shopping locally, and I think that’s great.”
Many economists argue that globalization will not shift into reverse even if oil prices continue their rising trend. But many see evidence that companies looking to keep prices low will have to move some production closer to consumers. Globe-spanning supply chains — Brazilian iron ore turned into Chinese steel used to make washing machines shipped to Long Beach, Calif., and then trucked to appliance stores in Chicago — make less sense today than they did a few years ago.
To avoid having to ship all its products from abroad, the Swedish furniture manufacturer Ikea opened its first factory in the United States in May. Some electronics companies that left Mexico in recent years for the lower wages in China are now returning to Mexico, because they can lower costs by trucking their output overland to American consumers.
Neighborhood Effect
Decisions like those suggest that what some economists call a neighborhood effect — putting factories closer to components suppliers and to consumers, to reduce transportation costs — could grow in importance if oil remains expensive. A barrel sold for $125 on Friday, compared with lows of $10 a decade ago.
“If prices stay at these levels, that could lead to some significant rearrangement of production, among sectors and countries,” said C. Fred Bergsten, author of “The United States and the World Economy” and director of the Peter G. Peterson Institute for International Economics, in Washington. “You could have a very significant shock to traditional consumption patterns and also some important growth effects.”
The cost of shipping a 40-foot container from Shanghai to the United States has risen to $8,000, compared with $3,000 early in the decade, according to a recent study of transportation costs. Big container ships, the pack mules of the 21st-century economy, have shaved their top speed by nearly 20 percent to save on fuel costs, substantially slowing shipping times.
The study, published in May by the Canadian investment bank CIBC World Markets, calculates that the recent surge in shipping costs is on average the equivalent of a 9 percent tariff on trade. “The cost of moving goods, not the cost of tariffs, is the largest barrier to global trade today,” the report concluded, and as a result “has effectively offset all the trade liberalization efforts of the last three decades.”
The spike in shipping costs comes at a moment when concern about the environmental impact of globalization is also growing. Many companies have in recent years shifted production from countries with greater energy efficiency and more rigorous standards on carbon emissions, especially in Europe, to those that are more lax, like China and India.
But if the international community fulfills its pledge to negotiate a successor to the Kyoto Protocol to combat climate change, even China and India would have to reduce the growth of their emissions, and the relative costs of production in countries that use energy inefficiently could grow.
The political landscape may also be changing. Dissatisfaction with globalization has led to the election of governments in Latin America hostile to the process. A somewhat similar reaction can be seen in the United States, where both Senators Barack Obama and Hillary Rodham Clinton promised during the Democratic primary season to “re-evaluate” the nation’s existing free trade agreements.
Last week, efforts to complete what is known as the Doha round of trade talks collapsed in acrimony, dealing a serious blow to tariff reduction. The negotiations, begun in 2001, failed after China and India battled the United States over agricultural tariffs, with the two developing countries insisting on broad rights to protect themselves against surges of food imports that could hurt their farmers.
Some critics of globalization are encouraged by those developments, which they see as a welcome check on the process. On environmentalist blogs, some are even gleefully promoting a “globalization death watch.”
Many leading economists say such predictions are probably overblown. “It would be a mistake, a misinterpretation, to think that a huge rollback or reversal of fundamental trends is under way,” said Jeffrey D. Sachs, director of the Earth Institute at Columbia University. “Distance and trade costs do matter, but we are still in a globalized era.”
As economists and business executives well know, shipping costs are only one factor in determining the flow of international trade. When companies decide where to invest in a new factory or from whom to buy a product, they also take into account exchange rates, consumer confidence, labor costs, government regulations and the availability of skilled managers.
‘People Were Profligate’
What may be coming to an end are price-driven oddities like chicken and fish crossing the ocean from the Western Hemisphere to be filleted and packaged in Asia not to be consumed there, but to be shipped back across the Pacific again. “Because of low costs, people were profligate,” said Nayan Chanda, author of “Bound Together,” a history of globalization.
The industries most likely to be affected by the sharp rise in transportation costs are those producing heavy or bulky goods that are particularly expensive to ship relative to their sale price. Steel is an example. China’s steel exports to the United States are now tumbling by more than 20 percent on a year-over-year basis, their worst performance in a decade, while American steel production has been rising after years of decline. Motors and machinery of all types, car parts, industrial presses, refrigerators, television sets and other home appliances could also be affected.
Plants in industries that require relatively less investment in infrastructure, like furniture, footwear and toys, are already showing signs of mobility as shipping costs rise.
Until recently, standard practice in the furniture industry was to ship American timber from ports like Norfolk, Baltimore and Charleston to China, where oak and cherry would be milled into sofas, beds, tables, cabinets and chairs, which were then shipped back to the United States.
But with transportation costs rising, more wood is now going to traditional domestic furniture-making centers in North Carolina and Virginia, where the industry had all but been wiped out. While the opening of the American Ikea plant, in Danville, Va., a traditional furniture-producing center hit hard by the outsourcing of production to Asia, is perhaps most emblematic of such changes, other manufacturers are also shifting some production back to the United States.
Among them is Craftmaster Furniture, a company founded in North Carolina but now Chinese-owned. And at an industry fair in April, La-Z-Boy announced a new line that will begin production in North Carolina this month.
“There’s just a handful of us left, but it has become easier for us domestic folks to compete,” said Steven Kincaid of Kincaid Furniture in Hudson, N.C., a division of La-Z-Boy.
Avocado Salad in January
Soaring transportation costs also have an impact on food, from bananas to salmon. Higher shipping rates could eventually transform some items now found in the typical middle-class pantry into luxuries and further promote the so-called local food movement popular in many American and European cities.
“This is not just about steel, but also maple syrup and avocados and blueberries at the grocery store,” shipped from places like Chile and South Africa, said Jeff Rubin, chief economist at CIBC World Markets and co-author of its recent study on transport costs and globalization. “Avocado salad in Minneapolis in January is just not going to work in this new world, because flying it in is going to make it cost as much as a rib eye.”
Global companies like General Electric, DuPont, Alcoa and Procter & Gamble are beginning to respond to the simultaneous increases in shipping and environmental costs with green policies meant to reduce both fuel consumption and carbon emissions. That pressure is likely to increase as both manufacturers and retailers seek ways to tighten the global supply chain.
“Being green is in their best interests not so much in making money as saving money,” said Gary Yohe, an environmental economist at Wesleyan University. “Green companies are likely to be a permanent trend, as these vulnerabilities continue, but it’s going to take a long time for all this to settle down.”
In addition, the sharp increase in transportation costs has implications for the “just-in-time” system pioneered in Japan and later adopted the world over. It is a highly profitable business strategy aimed at reducing warehousing and inventory costs by arranging for raw materials and other supplies to arrive only when needed, and not before.
Jeffrey E. Garten, the author of “World View: Global Strategies for the New Economy” and a former dean of the Yale School of Management, said that companies “cannot take a risk that the just-in-time system won’t function, because the whole global trading system is based on that notion.” As a result, he said, “they are going to have to have redundancies in the supply chain, like more warehousing and multiple sources of supply and even production.”
One likely outcome if transportation rates stay high, economists said, would be a strengthening of the neighborhood effect. Instead of seeking supplies wherever they can be bought most cheaply, regardless of location, and outsourcing the assembly of products all over the world, manufacturers would instead concentrate on performing those activities as close to home as possible.
In a more regionalized trading world, economists say, China would probably end up buying more of the iron ore it needs from Australia and less from Brazil, and farming out an even greater proportion of its manufacturing work to places like Vietnam and Thailand. Similarly, Mexico’s maquiladora sector, the assembly plants concentrated near its border with the United States, would become more attractive to manufacturers with an eye on the American market.
But a trend toward regionalization would not necessarily benefit the United States, economists caution. Not only has it lost some of its manufacturing base and skills over the past quarter-century, and experienced a decline in consumer confidence as part of the current slowdown, but it is also far from the economies that have become the most dynamic in the world, those of Asia.
“Despite everything, the American economy is still the biggest Rottweiler on the block,” said Jagdish N. Bhagwati, the author of “In Defense of Globalization” and a professor of economics at Columbia. “But if it’s expensive to get products from there to here, it’s also expensive to get them from here to there.”
Mounting job losses point to more economic troubles
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By Kevin G. Hall
Employers shed jobs in July for the seventh consecutive month and the national unemployment rate rose to 5.7 percent, the Labor Department reported Friday. The losses weren't of the size that signals recession, but analysts think that continued sluggish economic growth lies ahead.
The nation's employers trimmed 51,000 jobs from nonfarm payrolls during the month of July and more than 463,000 jobs cumulatively this year, according to the Bureau of Labor Statistics. The jobless rate bumped up two-tenths of a percentage point during the month, from 5.5 percent, leaving more Americans without jobs.
"Though the decline wasn't huge, it was very broadly based, with only health-care and mining showing anything that could be described as strength. Hours worked per week declined, which is a bad sign for future hiring," Nigel Gault, chief U.S. economist for forecaster Global Insight, observed in a note to investors.
As of the latest reading by the Labor Department, 8.8 million Americans were unemployed, a number that's grown by 1.6 million over the past 12 months, and the unemployment rate has risen a full percentage point over that period.
A deeper dig into Friday's numbers paints an even more troubling view of the national employment picture. The number of people working part time for economic reasons rose by 308,000 to 5.7 million. It's risen by 1.4 million over the past 12 months. This measure includes people who said they'd like to work full time but that their hours had been cut back or they were unable to find full-time jobs.
Also, the number of marginally attached workers — those who want to work but aren't counted as unemployed because they didn't look for work in the prior four weeks — has risen by 1.6 million over the past 12 months.
Many economists expect a protracted period of sluggish economic growth below the potential of the U.S. economy, but not recession.
"If we look at the job losses we had during the time people are calling a mild recession — which was 2001 — we were losing about 180,000 jobs a month at that time. So clearly this is a different degree," Commerce Secretary Carlos Gutierrez said in an interview with McClatchy. He added, "We don't like to see job losses. Obviously 51,000 is disappointing."
The stimulus package passed by Congress and signed by President Bush earlier this year, which included tax rebates for more than 100 million Americans, has pushed the economy forward despite strong headwinds, Gutierrez said. The Commerce Department reported Thursday that the U.S. economy grew 1.9 percent from April through June, double the rate of the previous three months.
The commerce chief said the stimulus package bought time for the economy, but some economists think that it simply delayed a further weakening rooted in the housing crisis and the banks' credit crunch.
"What we're seeing is a mild recession interrupted here by a rebate program," said David Wyss, chief economist for the rating agency Standard & Poor's in New York. "Once they (consumers) finish spending these checks, we'll head down again."
Thursday's growth data suggested that business spending is likely to pick up later this year, and Wyss thinks that might help make growth during the July through September period stronger than in the second quarter.
But by the fourth quarter, he thinks, growth could turn negative, as it did in the last three months of 2007.
Congress already is debating a second stimulus plan. House Financial Services Committee Chairman Rep. Barney Frank, D-Mass., issued a statement Friday calling for one, noting sarcastically that it's "a sign of how troubled our economy is that some analysts are greeting the seventh straight month of job losses and an increase in the unemployment rate to 5.7 percent as relatively good news."
Federal and state spending can help spark growth, he said.
"This stimulus should include increases in the federal share of Medicaid, significantly increase funding for home energy assistance and food stamps, and other measures which will provide badly needed stimulus for our economy and help state and local governments and individuals improve the quality of their lives," Frank said. He also called for aid to state and local governments to improve infrastructure, such as bridges.
The Bush administration hasn't signed on to any call for a second stimulus plan, saying that the effects of the first one are still playing out.
The wild card in all economic forecasts is oil prices. Their rise slowed the U.S. and global economies and sparked inflation. Their recent partial retreat has eased pressure on the Federal Reserve and foreign central banks to raise interest rates to curb inflation. The Fed is widely expected to stand pat when it meets Tuesday to weigh rates.
"The Fed is stuck on hold, trapped between a weak economy on one side and high headline inflation on the other," said Gault, of Global Insight.
If oil prices slide back to the $100 a barrel range, it would certainly ease inflation pressures and probably would boost consumer confidence. That's no small matter, because consumption drives about 70 percent of U.S. economic activity.
"What could rescue us is oil prices getting back down under $100," said Wyss, who thought that unlikely but not impossible.
By Kevin G. Hall
Employers shed jobs in July for the seventh consecutive month and the national unemployment rate rose to 5.7 percent, the Labor Department reported Friday. The losses weren't of the size that signals recession, but analysts think that continued sluggish economic growth lies ahead.
The nation's employers trimmed 51,000 jobs from nonfarm payrolls during the month of July and more than 463,000 jobs cumulatively this year, according to the Bureau of Labor Statistics. The jobless rate bumped up two-tenths of a percentage point during the month, from 5.5 percent, leaving more Americans without jobs.
"Though the decline wasn't huge, it was very broadly based, with only health-care and mining showing anything that could be described as strength. Hours worked per week declined, which is a bad sign for future hiring," Nigel Gault, chief U.S. economist for forecaster Global Insight, observed in a note to investors.
As of the latest reading by the Labor Department, 8.8 million Americans were unemployed, a number that's grown by 1.6 million over the past 12 months, and the unemployment rate has risen a full percentage point over that period.
A deeper dig into Friday's numbers paints an even more troubling view of the national employment picture. The number of people working part time for economic reasons rose by 308,000 to 5.7 million. It's risen by 1.4 million over the past 12 months. This measure includes people who said they'd like to work full time but that their hours had been cut back or they were unable to find full-time jobs.
Also, the number of marginally attached workers — those who want to work but aren't counted as unemployed because they didn't look for work in the prior four weeks — has risen by 1.6 million over the past 12 months.
Many economists expect a protracted period of sluggish economic growth below the potential of the U.S. economy, but not recession.
"If we look at the job losses we had during the time people are calling a mild recession — which was 2001 — we were losing about 180,000 jobs a month at that time. So clearly this is a different degree," Commerce Secretary Carlos Gutierrez said in an interview with McClatchy. He added, "We don't like to see job losses. Obviously 51,000 is disappointing."
The stimulus package passed by Congress and signed by President Bush earlier this year, which included tax rebates for more than 100 million Americans, has pushed the economy forward despite strong headwinds, Gutierrez said. The Commerce Department reported Thursday that the U.S. economy grew 1.9 percent from April through June, double the rate of the previous three months.
The commerce chief said the stimulus package bought time for the economy, but some economists think that it simply delayed a further weakening rooted in the housing crisis and the banks' credit crunch.
"What we're seeing is a mild recession interrupted here by a rebate program," said David Wyss, chief economist for the rating agency Standard & Poor's in New York. "Once they (consumers) finish spending these checks, we'll head down again."
Thursday's growth data suggested that business spending is likely to pick up later this year, and Wyss thinks that might help make growth during the July through September period stronger than in the second quarter.
But by the fourth quarter, he thinks, growth could turn negative, as it did in the last three months of 2007.
Congress already is debating a second stimulus plan. House Financial Services Committee Chairman Rep. Barney Frank, D-Mass., issued a statement Friday calling for one, noting sarcastically that it's "a sign of how troubled our economy is that some analysts are greeting the seventh straight month of job losses and an increase in the unemployment rate to 5.7 percent as relatively good news."
Federal and state spending can help spark growth, he said.
"This stimulus should include increases in the federal share of Medicaid, significantly increase funding for home energy assistance and food stamps, and other measures which will provide badly needed stimulus for our economy and help state and local governments and individuals improve the quality of their lives," Frank said. He also called for aid to state and local governments to improve infrastructure, such as bridges.
The Bush administration hasn't signed on to any call for a second stimulus plan, saying that the effects of the first one are still playing out.
The wild card in all economic forecasts is oil prices. Their rise slowed the U.S. and global economies and sparked inflation. Their recent partial retreat has eased pressure on the Federal Reserve and foreign central banks to raise interest rates to curb inflation. The Fed is widely expected to stand pat when it meets Tuesday to weigh rates.
"The Fed is stuck on hold, trapped between a weak economy on one side and high headline inflation on the other," said Gault, of Global Insight.
If oil prices slide back to the $100 a barrel range, it would certainly ease inflation pressures and probably would boost consumer confidence. That's no small matter, because consumption drives about 70 percent of U.S. economic activity.
"What could rescue us is oil prices getting back down under $100," said Wyss, who thought that unlikely but not impossible.
The Real State of the US Economy
Go to Original
By William F. Engdahl
Henry Paulson has lost the control over US finance
By William F. Engdahl
Henry Paulson has lost the control over US finance
When Henry Paulson agreed to leave his job as chairman of the powerful Wall Street investment bank, Goldman Sachs to go to Washington as Treasury Secretary in 2006 he demanded extraordinary powers as de facto economic czar. He got it. Paulson is also head of the President’s Working Group on Financial Markets -- the secretary of the treasury and the chairmen of the Federal Reserve Board, the Securities and Exchange Commission and the Commodity Futures Trading Commission. The Working Group is the financial world’s equivalent of the Pentagon war room. Paulson, not Fed chairman Bernanke, is the person running the Administration’s crisis management. And his recent actions indicate he has lost control as the snowballing problems from the semi-government mortgage companies Freddie Mac and Fannie Mae to the collapse of the multi-trillion dollar market in Asset Backed Securities (ABS) to the real economy are compounding into the worst crisis since the 1930’s Great Depression.
‘The US banking system is sound…’
In an eerie echo of President Herbert Hoover in 1930, during a Presidential campaign against Roosevelt, following the stock market crash and collapse of numerous smaller banks, Paulson recently appeared on national TV to declare "our banking system is a safe and sound one." He added that the list of "troubled" banks "is a very manageable situation." In fact what he did not say was that the US bank deposit insurance fund, the Federal Deposit Insurance Corporation (FDIC) has a list of problem banks that numbers 90. Not included on that list are banks such as Citigroup, until recently the largest bank in the world.
The statement is hardly reassuring. The California savings bank, IndyMac Bank which was declared insolvent a month ago was not on the FDIC list a week before it collapsed. The reality is the crisis created by "securitizing" millions of home mortgages into new financial instruments and selling the packages to pension funds and investors is unfolding like a snowball rolling down the Swiss Alps.
Indication of the lack of control is the statement just weeks ago by Paulson that "financial institutions must be allowed to fail." That was two weeks before Paulson went to Congress to ask for "Congressional authority to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac." As I noted in my recent piece, Financial Tsunami: The Next Big Wave is Breaking: Fannie Mae Freddie Mac and US Mortgage Debt , those two private companies insured some $6 trillion worth of home mortgages, half the entire US mortgage debt. Paulson defended the request by calling Freddie Mac and Fannie Mae "the only functioning part of the home loan market."
That comes back to the statement about a "sound banking system". Can we have a sound banking system where the only functioning part is literally insolvent—its debts greater than its assets?
It is well known on Wall Street that some of the largest financial institutions have huge undeclared problems with Asset Backed Securities they have valued far above their worth to make their books look better than they are. The names Citigroup, Lehman Bros., Morgan Stanley, even Paulson’s old firm, Goldman Sachs and of course the inventor of sub-prime mortgage securitization, Merrill Lynch, all hold a huge percentage of what are called Level Three assets, these being assets where no one is willing to buy but the bank declares their worth based on "fantasy." In short the value of those core financial institutions of the US financial system is massively overvalued compared with their value were they forced to sell into the open market today. In a sobering aside, readers should not expect any serious economic remedies for the crisis from a President Barack Obama. Obama’s National Campaign Finance Chairman is Chicago real estate billionaire, Penny Pritzker, who is heir to among other things the Hyatt Hotels. It was Pritzker together with Merrill Lynch ten years ago who first developed the model for securitizing "sub-prime" real estate, the trigger for the current Financial Tsunami crisis.
Already Citigroup has been forced to go to Dubai hat in hand and ask for billions in cash. After it announced it would not need more capital. Now Citigroup just announced plans to sell some $500 billion more assets to raise funds. Is Citigroup really solvent is the question sober investors are asking. Similarly Merrill Lynch raised $6.6 billion from Kuwait Mizuho, stated it was fine and weeks later had to raise still more capital. Morgan Stanley sold a 10% share of the company to China International Corp.
The real economy contracting rapidly
Behind the reassuring statements from Paulson and others that the "worst is over" the reality of the credit collapse since August 2007 is a deepening economic contraction which I have said several times in this space will surpass the Great Depression of the 1929-1938 period. A good friend who is an unemployed homebuilder in a prosperous part of Arizona just sent me the following list of US department retail store closures. It is worth noting that over 70% of the US GDP is consumer spending and that the entire Federal Reserve strategy of Alan Greenspan after the March 2000 collapse of the stock market bubble, was to bring US interest rates to their lowest levels since the 1930’s in order to stimulate consumer spending on credit, i.e. debt, to avoid "recession." Note the scale of the following store closings across America in recent weeks:
closing 117 stores nationwide.Ann Taylor
Eddie Bauer to close more stores after closing 27 stores in the first quarter.
Cache, a women’s retailer is closing 20 to 23 stores this year.
Lane Bryant, Fashion Bug, Catherines closing 150 stores nationwide
Talbots, J. Jill closing stores. Talbots will close all 78 of its kids and men’s stores plus another 22 underperforming stores. The 22 stores will be a mix of Talbots women’s and J. Jill.
Gap Inc. closing 85 stores
Foot Locker to close 140 stores
Wickes Furniture is going out of business and closing all of its stores. The 37-year-old retailer that targets middle-income customers, filed for bankruptcy protection last month.
Levitz - the furniture retailer, announced it was going out of business and closing all 76 of its stores in December. The retailer dates back to 1910.
Zales, Piercing Pagoda plans to close 82 stores by July 31 followed by closing another 23 underperforming stores.
Disney Store owner has the right to close 98 stores.
Home Depot store closings 15 of them amid a slumping US economy and housing market. The move will affect 1,300 employees. It is the first time the world’s largest home improvement store chain has ever closed a flagship store.
CompUSA (CLOSED).
Macy’s - 9 stores closed
Movie Gallery – video rental company plans to close 400 of 3,500 Movie Gallery
and Hollywood Video stores in addition to the 520 locations the video rental
chain closed last fall as part of bankruptcy.
Pacific Sunwear - 153 Demo stores closing
Pep Boys - 33 stores of auto parts supplier closing
Sprint Nextel - 125 retail locations to close with 4,000 employees following 5,000 layoffs last year.
J. C. Penney, Lowe’s and Office Depot are all scaling back
Ethan Allen Interiors: plans to close 12 of 300 stores to cut costs.
Wilsons the Leather Experts – closing 158 stores
Bombay Company: to close all 384 U.S.-based Bombay Company stores.
KB Toys closing 356 stores around the United States as part of its bankruptcy reorganization.
Dillard’s Inc. will close another six stores this year.
For anyone familiar with American shopping malls and retailing, this represents a staggering part of the daily economic life of the nation, from furniture stores to clothing to video rentals to leather. The process has only begun and neither major party Presidential candidate has dared to mention this on the ground economic reality, because they evidently have no solutions to offer that would not jeopardize their campaign finances. Obama is tied to not only Pritzker but also to Omaha billionaire, Warren Buffett and George Soros. McCain depends on the traditional money contributions of the Republican Party which demand permanent tax reform for highest income earners and a pro-bank laissez faire treatment of millions of homeowners facing home foreclosure and asset seizure by banks.
Banks across the country have severely cut back on loans, fearful of bad debts. That has aggravated the consumer collapse documented above. Hundreds of thousands of real estate brokers, small and large bankers, furniture workers and salespeople, and construction workers are unable to find work. Jobs are being cut wholesale and those working are often on reduced hours. Car sales in June plunged by 28% for Ford, 18% for General Motors and even 21% for Toyota which will mean more layoffs in coming weeks. This will be the next wave of unemployment.
The economic reality is not reflected in official US Commerce Department or Labor Department statistics. There the data is constantly being "revised" to hide the grim reality in an election year.
My good friend, economist John Williams of California, has meticulously tracked such "data revisions" for more than 25 years and found the manipulation of reality so alarming that he founded an independent subscriber service titled "Shadow Government Statistics" (http://www.shadowstats.com/ ), where he makes best estimate calculations of the reality not the official mythology.
By Williams’ calculations the US economy first entered recession, defined as two consecutive quarters of negative GDP growth, at the end of 2006. Ever since, the recession has deepened, dramatically so in the past 12 months. Little known is the fact that the Labor Department also publishes six different unemployment statistics from U1, U2 through to U6 being the most comprehensive. The reported "official unemployment" is the very narrowly defined U3 which stands at 5.5%. However, as Williams notes, U6 is the real measure and that officially shows 9.7% unemployed. His calculations put the figure at 13.7% actually unemployed and seeking work.
A personal account
The unemployed homebuilder from Arizona I mentioned above recently sent me the following personal note on the situation:
"Here is how it looks to people like me: Real estate dealings fuelled the economy in most areas of the country for the past decade or more. We’ve been in a market downturn for three years. We have seen the cost of doing business increase for builders, along with a big drop in buyers as everyone tightens their belts, or can’t sell existing homes. Many employers have gone under ending thousands of jobs. If they have a job people are worried about losing it. Driving long distances to work is not possible with gasoline costs double that of 2006. There has been a 40% drop in most peoples’ home equity worth. Many people are "underwater" on their homes, meaning they owe more than the market price is worth today. So many under-employed don’t show up in government unemployed statistics. Self employed like me never get counted."
The Arizona homebuilder continued, "Today nobody is building. Unsold home inventories are triple that of 2003. Banks no longer give easy credit for home buyers. Many realtors I know have gone two years without selling a home. Empty storefronts are becoming common. In many areas unemployment among construction trades people is 50% or more. Tens of thousands of illegal Mexicans who did most of the manual labor have returned to Mexico to find work. What now? Well, I do handyman projects of all sorts, big or small and make about 70-90% of what it takes to survive with a family of a wife and three young children. My savings make up the rest. That can’t go on for too much longer. We went from affluent and comfortable to nervous and broke with diminished opportunities in just three years. We used to be the middle class."
To be continued…
Why is Habeas Corpus Such a Threat to those in Power?
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By Maher Osseiran
Why is the Supreme Court's decision to uphold habeas corpus rights for the Guantanamo detainees so scary that Senator Lindsey Graham, with the support of McCain, will "explore the possibility, if necessary, of a constitutional amendment to blunt the effect of this decision"?
What is so fundamentally wrong with the Supreme Court's decision, whose members are conservative or Bush appointees, to warrant amending our constitution? Have Senators Graham and McCain lost their minds?
I just finished reading a lengthy "friend-of-the-court" brief to the Supreme Court in support of petitioner Boumediene v. responder Bush, et al., a case resulting in a decision that reinstate habeas corpus rights, not just for the detainees, but for all Americans.
As a brief to the Supreme Court, the argument and the conclusion were primarily based in constitutional law and precedent.
A similar brief to a habeas corpus court that would review the legality of detaining the Guantanamo prisoners would undoubtedly take a different form or approach
what the writ of habeas corpus has always ensured: that an independent court can inquire into the legal and factual bases for the Executive's assertion of its power to imprison. This guarantee has always included a meaningful judicial evaluation of the law and facts that underlie the Executive's asserted basis to detain.
Other than the meaningful judicial evaluation of the law and facts, a non-military tribunal would make it easier for a detainee to produce exculpatory evidence, evidence that would exonerate him or her; actually, anyone can produce such evidence and anyone can inject it into the court proceedings simply by providing it to any party.
Such exculpatory evidence is abundant and has been in the hands of U.S. Attorney Patrick Fitzgerald, governors, members of congress such as Conyers and Graham, the judiciary committees to the House and Senate, and a variety of law authorities that have jurisdiction as early as 2005; I know that for fact since I placed it there but no investigations resulted.
In February of 2007, Dr. James Zogby of the Arab American Institute, after familiarizing himself with my work, found it imperative to contact Conyers directly and received assurances, conveyed to me by email, that an investigation would proceed in due course; Conyers is still missing in inaction.
The evidence was uncovered when I decided to authenticate the videotape released by the Pentagon on Dec. 13, 2001, a videotape in which bin Laden was confessing to 9/11. My suspicions about the tape quickly materialized but it took close to a year to distill the information in to a format that would stand in a court of law.
The authentication work, the only work of its kind put forth in the public domain, unveiled the most heinous crime ever committed by a sitting president whose victims not only include the detainees in Guantanamo except for a handful, but the untold number of dead and maimed Afghanis, Iraqis, American citizens and soldiers who have died in this fake "war on terror".
The authentication work revealed that the taping of the bin Laden confession was the result of a sophisticated sting operation run by U.S. intelligence with the help of Saudi intelligence and was taped on September 26, 2001, barely two weeks after 9/11 and ten days before the invasion of Afghanistan.
According to the UN charter, "All Members shall settle their international disputes by peaceful means in such a manner that international peace and security, and justice, are not endangered."
Even though the Bush administration had the evidence that bin Laden was responsible for the 9/11 attacks as early as September 26, 2001, such evidence was only shared with those who were important for the execution of their war, such as NATO and Pakistan, and kept away from those sane entities who were looking for a just and peaceful outcome as the UN Charter dictates.
The Bush administration, with premeditation, ignored its international obligations in deference to war. If the Bush administration had supplied the evidence to the world and specifically the Taliban who were requesting such evidence in exchange for bin Laden, the war might not have taken place and bin Laden would very likely be in custody.
Not pursuing that route makes the Afghanistan war an illegal war under the UN Charter and The Geneva Convention; thereby, the majority of the Guantanamo detainees can no longer be classified as enemy combatants but victims of war crimes.
These findings, which were shared with various authorities, were summarized in the "The Crime Behind the Criminal Wars!".
The authentication work also shows that the Bush administration, with premeditation, aided and abetted bin Laden after 9/11 far beyond any aid your average Guantanamo detainee could have ever provided to Al-Qaeda or bin Laden. There are also very strong indications, worthy of serious investigation, that the Bush administration was very aware of the 9/11 operations beforehand and allowed them to happen or even helped in making them happen. This argument was summarized in "Is Bin Laden Responsible for the 9/11 attacks?"
As a consequence of these findings, those handful of detainees who are charged with the more serious crimes, after review and a proper fact finding by a habeas corpus court, would have those charges against them dismissed only to be re-arrested and appropriately charged with less serious offenses; the rest of the detainees would have to be released.
The same court, and the public at large, will reserve the more serious offenses to high-ranking officials in the Bush administration, including the president.
By not acting in 2005 on the information received, Conyers and congress dug themselves a hole that kept getting deeper as time went by. The implications of the findings are very serious and the remedies go beyond those implemented after Water Gate and might prove to be the remedies that would help us reclaim our democracy.
The fundamental and positive change in how our democracy functions is what Senator Lindsey Graham, John McCain, and others in power are afraid of; a fear worthy of a constitutional amendment.
Their fear is genuine because, unlike other evidence in the public discourse of the Bush administration's abuse of power, which the administration and its supporters have been able to duck, this evidence is solid, all in the public domain, the majority of which the administration mistakenly placed there, it cannot be taken back, it cannot be spun, it is intact and most importantly, will remain so.
I am told that proper investigations would start after Bush leaves office. I do think though that no one should be above the law and no criminal should be given special consideration, especially those who hold public office, otherwise we are simply a nation of outlaws.
By Maher Osseiran
Why is the Supreme Court's decision to uphold habeas corpus rights for the Guantanamo detainees so scary that Senator Lindsey Graham, with the support of McCain, will "explore the possibility, if necessary, of a constitutional amendment to blunt the effect of this decision"?
What is so fundamentally wrong with the Supreme Court's decision, whose members are conservative or Bush appointees, to warrant amending our constitution? Have Senators Graham and McCain lost their minds?
I just finished reading a lengthy "friend-of-the-court" brief to the Supreme Court in support of petitioner Boumediene v. responder Bush, et al., a case resulting in a decision that reinstate habeas corpus rights, not just for the detainees, but for all Americans.
As a brief to the Supreme Court, the argument and the conclusion were primarily based in constitutional law and precedent.
A similar brief to a habeas corpus court that would review the legality of detaining the Guantanamo prisoners would undoubtedly take a different form or approach
what the writ of habeas corpus has always ensured: that an independent court can inquire into the legal and factual bases for the Executive's assertion of its power to imprison. This guarantee has always included a meaningful judicial evaluation of the law and facts that underlie the Executive's asserted basis to detain.
Other than the meaningful judicial evaluation of the law and facts, a non-military tribunal would make it easier for a detainee to produce exculpatory evidence, evidence that would exonerate him or her; actually, anyone can produce such evidence and anyone can inject it into the court proceedings simply by providing it to any party.
Such exculpatory evidence is abundant and has been in the hands of U.S. Attorney Patrick Fitzgerald, governors, members of congress such as Conyers and Graham, the judiciary committees to the House and Senate, and a variety of law authorities that have jurisdiction as early as 2005; I know that for fact since I placed it there but no investigations resulted.
In February of 2007, Dr. James Zogby of the Arab American Institute, after familiarizing himself with my work, found it imperative to contact Conyers directly and received assurances, conveyed to me by email, that an investigation would proceed in due course; Conyers is still missing in inaction.
The evidence was uncovered when I decided to authenticate the videotape released by the Pentagon on Dec. 13, 2001, a videotape in which bin Laden was confessing to 9/11. My suspicions about the tape quickly materialized but it took close to a year to distill the information in to a format that would stand in a court of law.
The authentication work, the only work of its kind put forth in the public domain, unveiled the most heinous crime ever committed by a sitting president whose victims not only include the detainees in Guantanamo except for a handful, but the untold number of dead and maimed Afghanis, Iraqis, American citizens and soldiers who have died in this fake "war on terror".
The authentication work revealed that the taping of the bin Laden confession was the result of a sophisticated sting operation run by U.S. intelligence with the help of Saudi intelligence and was taped on September 26, 2001, barely two weeks after 9/11 and ten days before the invasion of Afghanistan.
According to the UN charter, "All Members shall settle their international disputes by peaceful means in such a manner that international peace and security, and justice, are not endangered."
Even though the Bush administration had the evidence that bin Laden was responsible for the 9/11 attacks as early as September 26, 2001, such evidence was only shared with those who were important for the execution of their war, such as NATO and Pakistan, and kept away from those sane entities who were looking for a just and peaceful outcome as the UN Charter dictates.
The Bush administration, with premeditation, ignored its international obligations in deference to war. If the Bush administration had supplied the evidence to the world and specifically the Taliban who were requesting such evidence in exchange for bin Laden, the war might not have taken place and bin Laden would very likely be in custody.
Not pursuing that route makes the Afghanistan war an illegal war under the UN Charter and The Geneva Convention; thereby, the majority of the Guantanamo detainees can no longer be classified as enemy combatants but victims of war crimes.
These findings, which were shared with various authorities, were summarized in the "The Crime Behind the Criminal Wars!".
The authentication work also shows that the Bush administration, with premeditation, aided and abetted bin Laden after 9/11 far beyond any aid your average Guantanamo detainee could have ever provided to Al-Qaeda or bin Laden. There are also very strong indications, worthy of serious investigation, that the Bush administration was very aware of the 9/11 operations beforehand and allowed them to happen or even helped in making them happen. This argument was summarized in "Is Bin Laden Responsible for the 9/11 attacks?"
As a consequence of these findings, those handful of detainees who are charged with the more serious crimes, after review and a proper fact finding by a habeas corpus court, would have those charges against them dismissed only to be re-arrested and appropriately charged with less serious offenses; the rest of the detainees would have to be released.
The same court, and the public at large, will reserve the more serious offenses to high-ranking officials in the Bush administration, including the president.
By not acting in 2005 on the information received, Conyers and congress dug themselves a hole that kept getting deeper as time went by. The implications of the findings are very serious and the remedies go beyond those implemented after Water Gate and might prove to be the remedies that would help us reclaim our democracy.
The fundamental and positive change in how our democracy functions is what Senator Lindsey Graham, John McCain, and others in power are afraid of; a fear worthy of a constitutional amendment.
Their fear is genuine because, unlike other evidence in the public discourse of the Bush administration's abuse of power, which the administration and its supporters have been able to duck, this evidence is solid, all in the public domain, the majority of which the administration mistakenly placed there, it cannot be taken back, it cannot be spun, it is intact and most importantly, will remain so.
I am told that proper investigations would start after Bush leaves office. I do think though that no one should be above the law and no criminal should be given special consideration, especially those who hold public office, otherwise we are simply a nation of outlaws.
Crisis Looms as Corporations Seize Control of Commodities
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By Barbara L. Minton
The global food crisis won’t go away any time soon. Capitalism has the average consumer by the belly. Amid growing signs of famine and outrage, the entire chain of commodities and resources of the world are now being cornered by giant corporations. Farmland, water, fertilizer, seed, energy, and most of the basic necessities of life are falling under corporate control, providing increased wealth and power to the ruling elite while the rest of humanity struggles.
Commodity scarcity in India was recently reflected in the need to distribute fertilizer from the police station in Hingoli. Now police have to control the lines that form outside of dealer outlets, because the dealers won’t open for business otherwise. Without this intervention there would be no fertilizer for the planting that must take place before the rain comes. In Akola and Nanded, police involvement is also needed. Agriculture officers have fled their work places to escape angry farmers. In Karnataka, a farmer was shot dead during protests, while farmers stormed meetings and set up road blocks in other districts.
Despite the success of the genetically engineered Bt cotton crops, the trend in India is now back to soybeans because they cost less to grow and need less fertilizer than cotton.
And it’s not just fertilizer that is scarce. Seeds are also in short supply which is being blamed on agitation that has interfered with freight train traffic. However, the shortfall in seeds is 60 percent, a level more indicative of corporate intervention to drive up prices than the actions of powerless farmers.
As farmers fume, the Wall Street Journal heralds the whopping 42 percent jump in the fiscal third quarter profits of huge agriculture giant Archer-Daniels Midland. This increase includes a sevenfold rise in new income in units that store, transport and grade grains such as wheat, corn and soybeans.
The soaring profits of fertilizer maker Potash Corporation of Saskatchewan are reflected in the parabolic movement of its stock price from a yearly low of $70.35 to its current price of $238.22 per share. Shares of fertilizer and animal feed producer Mosaic Corp. have risen from a yearly low of $32.50 to a current price of $159.38.
Similar windfall profits are reported by GMO seed and herbicide king Monsanto whose last quarterly earnings surged by 45%.
Some onlookers blame the financial speculators for driving up the prices of commodities related to agriculture as wealthy investors have piled on looking to cash in on the rising stock prices. And in many ways, today’s commodity market resembles the dot.com boom seen at the turn of the century, as well as the housing boom now in the throws of its bust.
The Commodity Futures Trading Commission recently held a hearing to investigate the role that index funds and hedge funds are playing in driving up the prices of agricultural commodities. Total public fund investment in corn, soybean, wheat, cattle and hogs has risen by 37 billion dollars since 2006. This figure does not include the huge investments of hedge funds which don’t have to make such disclosure. It also doesn’t include the massive world wide investments in farmland made by the wealthy.
The corporate spin is that these investments are helpful to humanity because they will ultimately result in increased food production at a time of rising world demand. They cite the need for increased corporate profits to invest in and develop new technologies that will help farmers improve productivity. This is how GMO seeds are being driven down the throats of farmers, who are told that the modified seeds can squeeze even more yield from each acre of planting.
India has joined other developing countries in the decision to invest less in agriculture as advised by the World Bank-IMF, whose agenda has been to discourage crops for domestic consumption while encouraging production to spur export driven growth. This advice coupled with corporate sponsored deregulation has paved the way for corporate control of the farming process from seed to market. Research and development that was once the domain of universities has also fallen into corporate control.
Farmers in India are caught in a credit crunch. Even if they are able to get the needed fertilizer, they will not have the credit to pay for it. With no increase in farmer income, larger loans are not advanced. The outlook for the small farmer there is much the same as it was in the U.S. thirty years ago, during the height of the small farms falling to big agribusiness.
Corporations blame food shortages and rising prices on the people of China and India whose burgeoning income from manufacturing has allowed the average worker to increase both the amount and quality of his food consumption. But for the corporations, the increased demand for food is a guarantee of super profits to come.
Of course the other commodity you can’t get along without is water, which is now the focus of huge multinational companies seeking to privatize water world wide, perhaps even patent it as Monsanto did with seeds. The fight over water may bring chaos, conflict and misery on a scale never seen before as corporations and governments go so far as to grab the wells from under people’s houses.
And then there’s oil. To produce chemical fertilizer you must make use of fossil fuel. So rising oil prices and rising food prices are joined at the hip. The behavior of corporations in the oil business has been so egregious that there is talk of a windfall profits tax here and abroad.
No, the food crisis will not go away anytime soon. North Korea, Burma and Western Sudan are currently feeling a real threat of starvation while western governments manipulated by corporations continue to promote the diversion of food into biofuels to further exacerbate the upward movement in food prices. Almost all U.S. corn production between 2004 and 2007 has gone into the production of ethanol. European production of ethanol has more than tripled during the same period. This has led to a fall off in grains relative to overall demand which is not a market phenomenon but is the direct result of the government sponsored, corporate backed programs. This comes at the expense of people looking for something to eat, particularly the world’s poor who are now effectively priced out of the food market.
Barbara is a school psychologist, a published author in the area of personal finance, a breast cancer survivor using “alternative” treatments, a born existentialist, and a student of nature and all things natural.
By Barbara L. Minton
The global food crisis won’t go away any time soon. Capitalism has the average consumer by the belly. Amid growing signs of famine and outrage, the entire chain of commodities and resources of the world are now being cornered by giant corporations. Farmland, water, fertilizer, seed, energy, and most of the basic necessities of life are falling under corporate control, providing increased wealth and power to the ruling elite while the rest of humanity struggles.
Commodity scarcity in India was recently reflected in the need to distribute fertilizer from the police station in Hingoli. Now police have to control the lines that form outside of dealer outlets, because the dealers won’t open for business otherwise. Without this intervention there would be no fertilizer for the planting that must take place before the rain comes. In Akola and Nanded, police involvement is also needed. Agriculture officers have fled their work places to escape angry farmers. In Karnataka, a farmer was shot dead during protests, while farmers stormed meetings and set up road blocks in other districts.
Despite the success of the genetically engineered Bt cotton crops, the trend in India is now back to soybeans because they cost less to grow and need less fertilizer than cotton.
And it’s not just fertilizer that is scarce. Seeds are also in short supply which is being blamed on agitation that has interfered with freight train traffic. However, the shortfall in seeds is 60 percent, a level more indicative of corporate intervention to drive up prices than the actions of powerless farmers.
As farmers fume, the Wall Street Journal heralds the whopping 42 percent jump in the fiscal third quarter profits of huge agriculture giant Archer-Daniels Midland. This increase includes a sevenfold rise in new income in units that store, transport and grade grains such as wheat, corn and soybeans.
The soaring profits of fertilizer maker Potash Corporation of Saskatchewan are reflected in the parabolic movement of its stock price from a yearly low of $70.35 to its current price of $238.22 per share. Shares of fertilizer and animal feed producer Mosaic Corp. have risen from a yearly low of $32.50 to a current price of $159.38.
Similar windfall profits are reported by GMO seed and herbicide king Monsanto whose last quarterly earnings surged by 45%.
Some onlookers blame the financial speculators for driving up the prices of commodities related to agriculture as wealthy investors have piled on looking to cash in on the rising stock prices. And in many ways, today’s commodity market resembles the dot.com boom seen at the turn of the century, as well as the housing boom now in the throws of its bust.
The Commodity Futures Trading Commission recently held a hearing to investigate the role that index funds and hedge funds are playing in driving up the prices of agricultural commodities. Total public fund investment in corn, soybean, wheat, cattle and hogs has risen by 37 billion dollars since 2006. This figure does not include the huge investments of hedge funds which don’t have to make such disclosure. It also doesn’t include the massive world wide investments in farmland made by the wealthy.
The corporate spin is that these investments are helpful to humanity because they will ultimately result in increased food production at a time of rising world demand. They cite the need for increased corporate profits to invest in and develop new technologies that will help farmers improve productivity. This is how GMO seeds are being driven down the throats of farmers, who are told that the modified seeds can squeeze even more yield from each acre of planting.
India has joined other developing countries in the decision to invest less in agriculture as advised by the World Bank-IMF, whose agenda has been to discourage crops for domestic consumption while encouraging production to spur export driven growth. This advice coupled with corporate sponsored deregulation has paved the way for corporate control of the farming process from seed to market. Research and development that was once the domain of universities has also fallen into corporate control.
Farmers in India are caught in a credit crunch. Even if they are able to get the needed fertilizer, they will not have the credit to pay for it. With no increase in farmer income, larger loans are not advanced. The outlook for the small farmer there is much the same as it was in the U.S. thirty years ago, during the height of the small farms falling to big agribusiness.
Corporations blame food shortages and rising prices on the people of China and India whose burgeoning income from manufacturing has allowed the average worker to increase both the amount and quality of his food consumption. But for the corporations, the increased demand for food is a guarantee of super profits to come.
Of course the other commodity you can’t get along without is water, which is now the focus of huge multinational companies seeking to privatize water world wide, perhaps even patent it as Monsanto did with seeds. The fight over water may bring chaos, conflict and misery on a scale never seen before as corporations and governments go so far as to grab the wells from under people’s houses.
And then there’s oil. To produce chemical fertilizer you must make use of fossil fuel. So rising oil prices and rising food prices are joined at the hip. The behavior of corporations in the oil business has been so egregious that there is talk of a windfall profits tax here and abroad.
No, the food crisis will not go away anytime soon. North Korea, Burma and Western Sudan are currently feeling a real threat of starvation while western governments manipulated by corporations continue to promote the diversion of food into biofuels to further exacerbate the upward movement in food prices. Almost all U.S. corn production between 2004 and 2007 has gone into the production of ethanol. European production of ethanol has more than tripled during the same period. This has led to a fall off in grains relative to overall demand which is not a market phenomenon but is the direct result of the government sponsored, corporate backed programs. This comes at the expense of people looking for something to eat, particularly the world’s poor who are now effectively priced out of the food market.
Barbara is a school psychologist, a published author in the area of personal finance, a breast cancer survivor using “alternative” treatments, a born existentialist, and a student of nature and all things natural.
Saturday, August 2, 2008
Rising oil prices power enormous Exxon profits
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By Tom Bergin and Michael Erman
Exxon Mobil Corp. broke its own record for the highest quarterly profit for a U.S. company on Thursday, joining other major oil companies in posting stronger earnings on the back of sky-high oil prices.
The average price of a barrel of oil was slightly less than $125 US during the quarter, nearly double last year, which also increased earnings at Royal Dutch Shell, Eni and Repsol, three of Europe's largest oil companies.
Exxon's second-quarter net income rose 14 per cent to $11.68 billion US, or $2.22 a share, in the quarter. Excluding one-time items, Exxon earned $2.27 a share, more than a quarter below analysts' expectations.
The enormous profits drew criticism from politicians because of the high gasoline prices being paid by consumers.
U.S. presidential candidate Barack Obama termed Exxon's earnings "outrageous" and called for an end to the "tyranny of oil."
"We are making very large profits, I know that," Shell chief executive Jeroen van der Veer told reporters on a conference call. "But we are making very large investments," he said, referring to investments in exploration and production.
Shell, the world's second-largest non-government controlled oil company by market value, reported a five-per-cent rise in second-quarter earnings to $7.9 billion, and said that excluding one-time items, it beat analysts' forecasts.
Despite billions of dollars in capital spending in the quarter, oil and gas production were sluggish.
That, along with weak profit margins from refining, restrained the companies' earnings somewhat.
Western oil companies' output has fallen in recent years and oil producing countries now prefer to award their richest fields to their own national oil companies.
"The problem is that all these companies have no place to go to drill and no place to put their money," said Oppenheimer & Co analyst Fadel Gheit. "Access to resources is closing very, very fast."
Still, the companies' oil and gas exploration and production units were the main profit divers because of high oil prices.
Exxon's oil and gas production fell eight per cent from a year earlier, mostly because of the loss of assets taken over by Venezuela and a labour strike in Nigeria.
EARNING THE BIG BUCKS
Exxon Mobil Corp. pulled in $11.68 billion in profits in the second quarter, the highest quarterly income ever recorded by a U.S. company.
HERE ARE A FEW FACTS ABOUT THE COMPANY'S RECORD HAUL:
- Exxon earned more than $128 million a day, or nearly $1,500 every second during the quarter. The company said that was after it paid $4,100 a second in taxes and $14,700 a second in expenses to run the business.
- Exxon's quarterly earnings were slightly larger than the annual gross domestic product of Afghanistan, which was $11.63 billion in 2007, according to the World Bank.
- With Exxon's quarterly profit, one could potentially buy Gap Inc., Ford or Starbucks, which have market capitalizations of $11.67 billion, $10.76 billion and $10.69 billion, respectively, according to Reuters data.
- $11.68 billion could buy roughly 179,692 new Cadillac Escalades, or 15.57 billion individual Snickers chocolate bars.
ONLINE: Do big oil companies like ExxonMobil deserve criticism for making multibillion-dollar profits?
By Tom Bergin and Michael Erman
Exxon Mobil Corp. broke its own record for the highest quarterly profit for a U.S. company on Thursday, joining other major oil companies in posting stronger earnings on the back of sky-high oil prices.
The average price of a barrel of oil was slightly less than $125 US during the quarter, nearly double last year, which also increased earnings at Royal Dutch Shell, Eni and Repsol, three of Europe's largest oil companies.
Exxon's second-quarter net income rose 14 per cent to $11.68 billion US, or $2.22 a share, in the quarter. Excluding one-time items, Exxon earned $2.27 a share, more than a quarter below analysts' expectations.
The enormous profits drew criticism from politicians because of the high gasoline prices being paid by consumers.
U.S. presidential candidate Barack Obama termed Exxon's earnings "outrageous" and called for an end to the "tyranny of oil."
"We are making very large profits, I know that," Shell chief executive Jeroen van der Veer told reporters on a conference call. "But we are making very large investments," he said, referring to investments in exploration and production.
Shell, the world's second-largest non-government controlled oil company by market value, reported a five-per-cent rise in second-quarter earnings to $7.9 billion, and said that excluding one-time items, it beat analysts' forecasts.
Despite billions of dollars in capital spending in the quarter, oil and gas production were sluggish.
That, along with weak profit margins from refining, restrained the companies' earnings somewhat.
Western oil companies' output has fallen in recent years and oil producing countries now prefer to award their richest fields to their own national oil companies.
"The problem is that all these companies have no place to go to drill and no place to put their money," said Oppenheimer & Co analyst Fadel Gheit. "Access to resources is closing very, very fast."
Still, the companies' oil and gas exploration and production units were the main profit divers because of high oil prices.
Exxon's oil and gas production fell eight per cent from a year earlier, mostly because of the loss of assets taken over by Venezuela and a labour strike in Nigeria.
EARNING THE BIG BUCKS
Exxon Mobil Corp. pulled in $11.68 billion in profits in the second quarter, the highest quarterly income ever recorded by a U.S. company.
HERE ARE A FEW FACTS ABOUT THE COMPANY'S RECORD HAUL:
- Exxon earned more than $128 million a day, or nearly $1,500 every second during the quarter. The company said that was after it paid $4,100 a second in taxes and $14,700 a second in expenses to run the business.
- Exxon's quarterly earnings were slightly larger than the annual gross domestic product of Afghanistan, which was $11.63 billion in 2007, according to the World Bank.
- With Exxon's quarterly profit, one could potentially buy Gap Inc., Ford or Starbucks, which have market capitalizations of $11.67 billion, $10.76 billion and $10.69 billion, respectively, according to Reuters data.
- $11.68 billion could buy roughly 179,692 new Cadillac Escalades, or 15.57 billion individual Snickers chocolate bars.
ONLINE: Do big oil companies like ExxonMobil deserve criticism for making multibillion-dollar profits?
Pakistanis Aided Attack in Kabul, U.S. Officials Say
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By MARK MAZZETTI and ERIC SCHMITT
American intelligence agencies have concluded that members of Pakistan’s powerful spy service helped plan the deadly July 7 bombing of India’s embassy in Kabul, Afghanistan, according to United States government officials.
The conclusion was based on intercepted communications between Pakistani intelligence officers and militants who carried out the attack, the officials said, providing the clearest evidence to date that Pakistani intelligence officers are actively undermining American efforts to combat militants in the region.
The American officials also said there was new information showing that members of the Pakistani intelligence service were increasingly providing militants with details about the American campaign against them, in some cases allowing militants to avoid American missile strikes in Pakistan’s tribal areas.
Concerns about the role played by Pakistani intelligence not only has strained relations between the United States and Pakistan, a longtime ally, but also has fanned tensions between Pakistan and its archrival, India. Within days of the bombings, Indian officials accused the Directorate of Inter-Services Intelligence, or ISI, of helping to orchestrate the attack in Kabul, which killed 54, including an Indian defense attaché.
This week, Pakistani troops clashed with Indian forces in the contested region of Kashmir, threatening to fray an uneasy cease-fire that has held since November 2003.
The New York Times reported this week that a top Central Intelligence Agency official traveled to Pakistan this month to confront senior Pakistani officials with information about support provided by members of the ISI to militant groups. It had not been known that American intelligence agencies concluded that elements of Pakistani intelligence provided direct support for the attack in Kabul.
American officials said that the communications were intercepted before the July 7 bombing, and that the C.I.A. emissary, Stephen R. Kappes, the agency’s deputy director, had been ordered to Islamabad, Pakistan’s capital, even before the attack. The intercepts were not detailed enough to warn of any specific attack.
The government officials were guarded in describing the new evidence and would not say specifically what kind of assistance the ISI officers provided to the militants. They said that the ISI officers had not been renegades, indicating that their actions might have been authorized by superiors.
“It confirmed some suspicions that I think were widely held,” one State Department official with knowledge of Afghanistan issues said of the intercepted communications. “It was sort of this ‘aha’ moment. There was a sense that there was finally direct proof.”
The information linking the ISI to the bombing of the Indian Embassy was described in interviews by several American officials with knowledge of the intelligence. Some of the officials expressed anger that elements of Pakistan’s government seemed to be directly aiding violence in Afghanistan that had included attacks on American troops.
Some American officials have begun to suggest that Pakistan is no longer a fully reliable American partner and to advocate some unilateral American action against militants based in the tribal areas.
The ISI has long maintained ties to militant groups in the tribal areas, in part to court allies it can use to contain Afghanistan’s power. In recent years, Pakistan’s government has also been concerned about India’s growing influence inside Afghanistan, including New Delhi’s close ties to the government of Hamid Karzai, the Afghan president.
American officials say they believe that the embassy attack was probably carried out by members of a network led by Maulavi Jalaluddin Haqqani, whose alliance with Al Qaeda and its affiliates has allowed the terrorist network to rebuild in the tribal areas.
American and Pakistani officials have now acknowledged that President Bush on Monday confronted Pakistan’s prime minister, Yousaf Raza Gilani, about the divided loyalties of the ISI.
Pakistan’s defense minister, Chaudhry Ahmed Mukhtar, told a Pakistani television network on Wednesday that Mr. Bush asked senior Pakistani officials this week, “ ‘Who is in control of ISI?’ ” and asked about leaked information that tipped militants to surveillance efforts by Western intelligence services.
Pakistan’s new civilian government is wrestling with these very issues, and there is concern in Washington that the civilian leaders will be unable to end a longstanding relationship between members of the ISI and militants associated with Al Qaeda.
Spokesmen for the White House and the C.I.A. declined to comment for this article. Pakistan’s ambassador to the United States, Husain Haqqani, did not return a call seeking comment.
Further underscoring the tension between Pakistan and its Western allies, Britain’s senior military officer said in Washington on Thursday that an American and British program to help train Pakistan’s Frontier Corps in the tribal areas had been delayed while Pakistan’s military and civilian officials sorted out details about the program’s goals.
Britain and the United States had each offered to send about two dozen military trainers to Pakistan later this summer to train Pakistani Army officers who in turn would instruct the Frontier Corps paramilitary forces.
But the British officer, Air Chief Marshal Sir Jock Stirrup, said the program had been temporarily delayed. “We don’t yet have a firm start date,” he told a small group of reporters. “We’re ready to go.”
The bombing of the Indian Embassy helped to set off a new deterioration in relations between India and Pakistan.
This week, Indian and Pakistani soldiers fired at each other across the Kashmir frontier for more than 12 hours overnight Monday, in what the Indian Army called the most serious violation of a five-year-old cease-fire agreement. The nightlong battle came after one Indian soldier and four Pakistanis were killed along the border between sections of Kashmir that are controlled by India and by Pakistan.
Indian officials say they are equally worried about what is happening on the Pakistan-Afghanistan border because they say the insurgents who are facing off with India in Kashmir and those who target Afghanistan are related and can keep both borders burning at the same time.
India and Afghanistan share close political, cultural and economic ties, and India maintains an active intelligence network in Afghanistan, all of which has drawn suspicion from Pakistani officials.
When asked Thursday about whether the ISI and Pakistani military remained loyal to the country’s civilian government, Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, sidestepped the question. “That’s probably something the government of Pakistan ought to speak to,” Admiral Mullen told reporters at the Pentagon.
Jalaluddin Haqqani, the militia commander, battled Soviet troops during the 1980s and has had a long and complicated relationship with the C.I.A. He was among a group of fighters who received arms and millions of dollars from the C.I.A. during that period, but his allegiance with Osama bin Laden and Al Qaeda during the following decade led the United States to sever the relationship.
Mr. Haqqani and his sons now run a network that Western intelligence services say they believe is responsible for a campaign of violence throughout Afghanistan, including the Indian Embassy bombing and an attack on the Serena Hotel in Kabul earlier this year.
By MARK MAZZETTI and ERIC SCHMITT
American intelligence agencies have concluded that members of Pakistan’s powerful spy service helped plan the deadly July 7 bombing of India’s embassy in Kabul, Afghanistan, according to United States government officials.
The conclusion was based on intercepted communications between Pakistani intelligence officers and militants who carried out the attack, the officials said, providing the clearest evidence to date that Pakistani intelligence officers are actively undermining American efforts to combat militants in the region.
The American officials also said there was new information showing that members of the Pakistani intelligence service were increasingly providing militants with details about the American campaign against them, in some cases allowing militants to avoid American missile strikes in Pakistan’s tribal areas.
Concerns about the role played by Pakistani intelligence not only has strained relations between the United States and Pakistan, a longtime ally, but also has fanned tensions between Pakistan and its archrival, India. Within days of the bombings, Indian officials accused the Directorate of Inter-Services Intelligence, or ISI, of helping to orchestrate the attack in Kabul, which killed 54, including an Indian defense attaché.
This week, Pakistani troops clashed with Indian forces in the contested region of Kashmir, threatening to fray an uneasy cease-fire that has held since November 2003.
The New York Times reported this week that a top Central Intelligence Agency official traveled to Pakistan this month to confront senior Pakistani officials with information about support provided by members of the ISI to militant groups. It had not been known that American intelligence agencies concluded that elements of Pakistani intelligence provided direct support for the attack in Kabul.
American officials said that the communications were intercepted before the July 7 bombing, and that the C.I.A. emissary, Stephen R. Kappes, the agency’s deputy director, had been ordered to Islamabad, Pakistan’s capital, even before the attack. The intercepts were not detailed enough to warn of any specific attack.
The government officials were guarded in describing the new evidence and would not say specifically what kind of assistance the ISI officers provided to the militants. They said that the ISI officers had not been renegades, indicating that their actions might have been authorized by superiors.
“It confirmed some suspicions that I think were widely held,” one State Department official with knowledge of Afghanistan issues said of the intercepted communications. “It was sort of this ‘aha’ moment. There was a sense that there was finally direct proof.”
The information linking the ISI to the bombing of the Indian Embassy was described in interviews by several American officials with knowledge of the intelligence. Some of the officials expressed anger that elements of Pakistan’s government seemed to be directly aiding violence in Afghanistan that had included attacks on American troops.
Some American officials have begun to suggest that Pakistan is no longer a fully reliable American partner and to advocate some unilateral American action against militants based in the tribal areas.
The ISI has long maintained ties to militant groups in the tribal areas, in part to court allies it can use to contain Afghanistan’s power. In recent years, Pakistan’s government has also been concerned about India’s growing influence inside Afghanistan, including New Delhi’s close ties to the government of Hamid Karzai, the Afghan president.
American officials say they believe that the embassy attack was probably carried out by members of a network led by Maulavi Jalaluddin Haqqani, whose alliance with Al Qaeda and its affiliates has allowed the terrorist network to rebuild in the tribal areas.
American and Pakistani officials have now acknowledged that President Bush on Monday confronted Pakistan’s prime minister, Yousaf Raza Gilani, about the divided loyalties of the ISI.
Pakistan’s defense minister, Chaudhry Ahmed Mukhtar, told a Pakistani television network on Wednesday that Mr. Bush asked senior Pakistani officials this week, “ ‘Who is in control of ISI?’ ” and asked about leaked information that tipped militants to surveillance efforts by Western intelligence services.
Pakistan’s new civilian government is wrestling with these very issues, and there is concern in Washington that the civilian leaders will be unable to end a longstanding relationship between members of the ISI and militants associated with Al Qaeda.
Spokesmen for the White House and the C.I.A. declined to comment for this article. Pakistan’s ambassador to the United States, Husain Haqqani, did not return a call seeking comment.
Further underscoring the tension between Pakistan and its Western allies, Britain’s senior military officer said in Washington on Thursday that an American and British program to help train Pakistan’s Frontier Corps in the tribal areas had been delayed while Pakistan’s military and civilian officials sorted out details about the program’s goals.
Britain and the United States had each offered to send about two dozen military trainers to Pakistan later this summer to train Pakistani Army officers who in turn would instruct the Frontier Corps paramilitary forces.
But the British officer, Air Chief Marshal Sir Jock Stirrup, said the program had been temporarily delayed. “We don’t yet have a firm start date,” he told a small group of reporters. “We’re ready to go.”
The bombing of the Indian Embassy helped to set off a new deterioration in relations between India and Pakistan.
This week, Indian and Pakistani soldiers fired at each other across the Kashmir frontier for more than 12 hours overnight Monday, in what the Indian Army called the most serious violation of a five-year-old cease-fire agreement. The nightlong battle came after one Indian soldier and four Pakistanis were killed along the border between sections of Kashmir that are controlled by India and by Pakistan.
Indian officials say they are equally worried about what is happening on the Pakistan-Afghanistan border because they say the insurgents who are facing off with India in Kashmir and those who target Afghanistan are related and can keep both borders burning at the same time.
India and Afghanistan share close political, cultural and economic ties, and India maintains an active intelligence network in Afghanistan, all of which has drawn suspicion from Pakistani officials.
When asked Thursday about whether the ISI and Pakistani military remained loyal to the country’s civilian government, Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, sidestepped the question. “That’s probably something the government of Pakistan ought to speak to,” Admiral Mullen told reporters at the Pentagon.
Jalaluddin Haqqani, the militia commander, battled Soviet troops during the 1980s and has had a long and complicated relationship with the C.I.A. He was among a group of fighters who received arms and millions of dollars from the C.I.A. during that period, but his allegiance with Osama bin Laden and Al Qaeda during the following decade led the United States to sever the relationship.
Mr. Haqqani and his sons now run a network that Western intelligence services say they believe is responsible for a campaign of violence throughout Afghanistan, including the Indian Embassy bombing and an attack on the Serena Hotel in Kabul earlier this year.
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