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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.
Sunday, August 3, 2008
The Real State of the US Economy
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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.
Israeli Prime Minister Olmert resigns
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By Ann Talbot
Israeli Prime Minister Ehud Olmert has announced that he will resign as leader of the ruling Kadima party in September. His announcement follows mounting allegations of corruption.
Olmert has been dogged by corruption scandals since he came to power in 2006. The Israeli police are currently investigating six separate cases involving him. He has previously said that he would not stand down until charged. His decision to resign reflects new and more damaging allegations that emerged when New York businessman Moshe, or Morris, Talansky was questioned in an Israeli court.
According to the Jerusalem Post, a source close to Olmert told State Comptroller Micha Lindenstrauss about Olmert’s financial dealings with Talansky and provided documentary evidence of the transactions some months ago. The state comptroller’s office, which was already investigating other allegations against Olmert, began its own investigation and alerted the police.
The most serious allegation is that Olmert received hundreds of thousands of dollars in gifts and loans from Talansky. Talansky alleged that he gave $150,000 to Olmert to finance political campaigns. He claimed not to know what the money was used for, but hinted that some of it was used to fund Olmert’s extravagant lifestyle.
Talansky claims to have lent Olmert money on three occasions to pay for personal trips. There was a loan of $25,000, which was never repaid, to pay for a family holiday in Italy and Greece; $4,717.49 to pay for a stay at the Washington Ritz Carlton; and $15,000 expenses for another trip to the United States.
Following information from Talansky, the police then widened their investigation to include allegations that Olmert committed fraud while he was mayor of Jerusalem.
“According to the suspicions,” a police spokesman said, “during his tenure as Jerusalem mayor and trade and industry minister, Olmert would seek duplicate funding for his trips abroad from public bodies, including from the state, with each of them requested to fund the same trip.”
The police are said to be investigating the allegation that “considerable sums” from this double billing remained in a special account, which was then used to fund private travel abroad for Olmert and his family. This case has become known as “Olmert Tours.”
Records kept by Shula Zaken, Olmert’s personal secretary and aide for the last 30 years, are said to refer to Talansky’s financial dealings with Olmert under the name, “The Laundry Man.” Zaken is also under investigation for allegedly abusing her position to influence tax officials.
Talansky was questioned when he visited Israel earlier this year for Passover. The Israeli authorities initially tried to prevent the press reporting Talansky’s name or nationality. But when the New York Times published his name in May it became impossible to keep the lid on the story.
Talansky’s testimony has allowed the Israeli authorities to put pressure on Olmert’s lawyer Uri Messer and Zaken. Olmert has claimed that Messer and Zaken were responsible for handling Talansky’s donations. Messer claims that Zaken alone handled the money, which was kept in envelopes in her office.
Zaken has so far not cooperated with the investigations, but it is expected that both Messer and Zaken will be offered the opportunity to turn state’s evidence against Olmert. The police have now questioned Olmert four times.
In a separate case, the police are investigating appointments Olmert made while he was the minister for trade and industry. It is alleged that he appointed political associates to government bodies, including the Medium and Small Enterprises Authority. It is also alleged that Olmert arranged investment opportunities for friends while he was industry minister and may have granted special funding for a factory with which a former business partner was associated.
Still ongoing is the “Cremieux Street affair.” Olmert is alleged to have paid $325,000 below the market value for a property in Cremieux Street. The National Fraud Unit questioned Zaken for four hours about the purchase of this $1.2 million apartment. It has been suggested that Olmert speeded up the bureaucratic procedure for the developers while he was acting prime minister and received a discount in return.
One investigation has come to an end without charges. It was alleged that when he was finance minister, Olmert had tried to influence the sale of the state’s controlling share in Bank Leumi to the advantage of a friend. The police dropped this case last November, saying that they did not have sufficient evidence to bring charges.
Olmert’s political career goes back to the 1970s. In 1993 he became mayor of Jerusalem. Some of the corruption allegations date back to his decade in this office. He appears to have met Talansky during his campaign to become mayor. He worked closely with Ariel Sharon in the Likud party, and left Likud with Sharon in 2005 to form Kadima. When Sharon suffered a stroke in 2006, Olmert took over as leader.
Olmert has been a lame duck since Israel’s defeat at the hands of Hezbollah in 2006 after the Israeli army invaded Lebanon. An official inquiry criticised him for launching the invasion of Lebanon and his conduct of the war. The recent exchange of prisoners for the bodies of Israeli soldiers was an added humiliation.
Recent polls showed Olmert with an approval rating of only 14 percent and three out of five Israelis thought he should resign. Half of those polled considered him corrupt.
But Olmert is not alone. Israeli political life is notoriously corrupt and few leading politicians could withstand a close scrutiny of their financial affairs. Olmert’s dealings have become a public embarrassment, but they are symptomatic of the practices of the entire ruling elite. The way in which his case has blown up reveals the very sharp tensions that exist among this tiny layer, which is completely isolated from the mass of the population who have long since become alienated from official public life.
Olmert has been able to survive the debacle in Lebanon as long as he has because he had a certain political value both to the Israeli political elite and in Washington.
Like Sharon, he has always had a hawkish attitude toward the Palestinians. It was he who, as Sharon’s spokesman, declared that Israel was prepared to assassinate former PLO Chairman Yasser Arafat. But as prime minister he was associated with the call for a settlement with the Palestinians and Israel’s neighbours, especially Syria.
This suited the interests of Washington very well. It enabled the Bush administration to give the impression that a peace process was under way. This was important for the US’s allies in Europe and in winning support for the US amongst the Arab regimes—especially in the aftermath of the Iraq invasion.
While negotiations proceeded, it was possible to continue the process of creating a greater Israel by extending Jewish settlements, building a wall to isolate the Palestinians and launching military attacks on Palestinian civilians.
Olmert has stressed that he will continue negotiations with Syria as long as he remains prime minister. This has been seen by some in the media as a prospect of peace. Writing in the Guardian, Rachel Shabi suggested that Olmert could now go “hell for leather” for an agreement with the Syrians and the Palestinians. She quoted Haaretz columnist Akiva Eldar stating, “But now he doesn’t have to worry about consolidating his power as prime minister, he has a clear interest to do it, the mandate to do it and nothing to lose.”
“For Olmert,” Shabi concludes, “success would still depend on the willingness of Labour and Kadima allies to stand by him and effectively enable him to leave a legacy that might make Israelis—and Palestinians—forgive the rest. But by this analysis, Palestinian and Syrian partners on these parallel peace tracks should race with Olmert to get final status agreements on paper in the few remaining weeks of his premiership. It’s a small, rickety and bullet-ridden window, but in a few months it might well be replaced by an impenetrable concrete wall.”
Olmert does indeed seem to be racing toward an agreement with the Syrians. According to a Maariv report on Friday, the two sides are close to a deal. Syria and Israel would end the state of war between them, establishing normal diplomatic relations. On its part Israel would demilitarize the Golan Heights, while Syria would reduce the number of its troops stationed between the Golan Heights and Damascus.
However, far from a peace move, implicit in the deal would be a Syrian agreement to end its close relationship with Iran, which Jerusalem and Washington have in their sights. Olmert made it clear to the Syrians that they had to chose between the “Iranian grip” and their partnership in the “axis of evil,” and, as he put it, rejoining the “family of nations” in pursuit of peace and “economic development.”
Syria entered into talks after Israel bombed what they claimed was a nuclear site in Syria. Reaching an agreement with Israel offers the regime of Bashar Assad the opportunity of repairing relations with the US and Europe, especially France. Assad was welcomed to President Nicolas Sarkozy’s Mediterranean Forum meeting in July.
The purpose of the talks is to detach Syria from its alliance with Iran and to isolate Iran diplomatically in advance of a possible assault by Israel with US backing, or at the very least to place maximum pressure on Tehran to accept US hegemony in the region.
There is no doubt, however, that Olmert’s resignation is indicative of and will also herald a further shift to the right in official Israeli politics.
The candidates competing to replace Olmert as leader of Kadima both have strong right-wing credentials. Foreign Minister Tzipi Livni is currently the favourite to succeed Olmert. She is presented as a candidate untainted by corruption and has called on the coalition to “restore the public’s faith in Israeli politics.” A former Mossad agent, she has stressed her role in Olmert’s security cabinet.
On the Monday before Olmert resigned Livni staged a very public row with him in the Knesset in full view of the cameras. She accused him of giving too many concessions to Syria. Her display was necessary to consolidate her position against her main rival for leadership, Transport Minister Shaul Mofaz.
Livni has led the talks with the Palestinians and favours a two-state solution to the Palestinian question. Until her public row with Olmert, she was regarded as backing his negotiations with Syria.
Mofaz, who has taken a much harder line on the Golan Heights and Jerusalem, is a former chief of staff and defence minister. He is reputed to have told West Bank army commanders in 2001 that he wanted “10 slain Palestinians” in each territorial brigade area. According to the book Boomerang by journalists Ofer Shelah and Raviv Drucker, a senior officer pointed out at the time that Mofaz’s directive would amount to 70 Palestinians being killed each day.
On Thursday Mofaz warned the US not to soften its stance towards Iran after US diplomats met with Iranian officials. He met with Vice President Dick Cheney and Secretary of State Condoleezza Rice to protest the meeting. A spokeswoman for Mofaz said that he was “voicing Israel’s strong concerns.”
In June this year Mofaz said it was “inevitable” that Israel would attack a nuclear Iran.
Essentially the competition between Livni and Mofaz is about who can present themselves as the best war leader. But whoever wins the leadership contest, they must put together another coalition. The fragile Kadima party created by Sharon by winning the backing of a section of the Labor Party may not even survive a leadership contest.
Power may pass directly into the hands of Benjamin Netanyahu, leader of Likud. He was prime minister from 1996 to 1999 and served as finance minister under Sharon. He resigned from Sharon’s government in protest over the withdrawal from Gaza. Netanyahu has called for an immediate election. It is even possible that Mofaz might attempt to form a coalition with Netanyahu in return for the defence portfolio.
By Ann Talbot
Israeli Prime Minister Ehud Olmert has announced that he will resign as leader of the ruling Kadima party in September. His announcement follows mounting allegations of corruption.
Olmert has been dogged by corruption scandals since he came to power in 2006. The Israeli police are currently investigating six separate cases involving him. He has previously said that he would not stand down until charged. His decision to resign reflects new and more damaging allegations that emerged when New York businessman Moshe, or Morris, Talansky was questioned in an Israeli court.
According to the Jerusalem Post, a source close to Olmert told State Comptroller Micha Lindenstrauss about Olmert’s financial dealings with Talansky and provided documentary evidence of the transactions some months ago. The state comptroller’s office, which was already investigating other allegations against Olmert, began its own investigation and alerted the police.
The most serious allegation is that Olmert received hundreds of thousands of dollars in gifts and loans from Talansky. Talansky alleged that he gave $150,000 to Olmert to finance political campaigns. He claimed not to know what the money was used for, but hinted that some of it was used to fund Olmert’s extravagant lifestyle.
Talansky claims to have lent Olmert money on three occasions to pay for personal trips. There was a loan of $25,000, which was never repaid, to pay for a family holiday in Italy and Greece; $4,717.49 to pay for a stay at the Washington Ritz Carlton; and $15,000 expenses for another trip to the United States.
Following information from Talansky, the police then widened their investigation to include allegations that Olmert committed fraud while he was mayor of Jerusalem.
“According to the suspicions,” a police spokesman said, “during his tenure as Jerusalem mayor and trade and industry minister, Olmert would seek duplicate funding for his trips abroad from public bodies, including from the state, with each of them requested to fund the same trip.”
The police are said to be investigating the allegation that “considerable sums” from this double billing remained in a special account, which was then used to fund private travel abroad for Olmert and his family. This case has become known as “Olmert Tours.”
Records kept by Shula Zaken, Olmert’s personal secretary and aide for the last 30 years, are said to refer to Talansky’s financial dealings with Olmert under the name, “The Laundry Man.” Zaken is also under investigation for allegedly abusing her position to influence tax officials.
Talansky was questioned when he visited Israel earlier this year for Passover. The Israeli authorities initially tried to prevent the press reporting Talansky’s name or nationality. But when the New York Times published his name in May it became impossible to keep the lid on the story.
Talansky’s testimony has allowed the Israeli authorities to put pressure on Olmert’s lawyer Uri Messer and Zaken. Olmert has claimed that Messer and Zaken were responsible for handling Talansky’s donations. Messer claims that Zaken alone handled the money, which was kept in envelopes in her office.
Zaken has so far not cooperated with the investigations, but it is expected that both Messer and Zaken will be offered the opportunity to turn state’s evidence against Olmert. The police have now questioned Olmert four times.
In a separate case, the police are investigating appointments Olmert made while he was the minister for trade and industry. It is alleged that he appointed political associates to government bodies, including the Medium and Small Enterprises Authority. It is also alleged that Olmert arranged investment opportunities for friends while he was industry minister and may have granted special funding for a factory with which a former business partner was associated.
Still ongoing is the “Cremieux Street affair.” Olmert is alleged to have paid $325,000 below the market value for a property in Cremieux Street. The National Fraud Unit questioned Zaken for four hours about the purchase of this $1.2 million apartment. It has been suggested that Olmert speeded up the bureaucratic procedure for the developers while he was acting prime minister and received a discount in return.
One investigation has come to an end without charges. It was alleged that when he was finance minister, Olmert had tried to influence the sale of the state’s controlling share in Bank Leumi to the advantage of a friend. The police dropped this case last November, saying that they did not have sufficient evidence to bring charges.
Olmert’s political career goes back to the 1970s. In 1993 he became mayor of Jerusalem. Some of the corruption allegations date back to his decade in this office. He appears to have met Talansky during his campaign to become mayor. He worked closely with Ariel Sharon in the Likud party, and left Likud with Sharon in 2005 to form Kadima. When Sharon suffered a stroke in 2006, Olmert took over as leader.
Olmert has been a lame duck since Israel’s defeat at the hands of Hezbollah in 2006 after the Israeli army invaded Lebanon. An official inquiry criticised him for launching the invasion of Lebanon and his conduct of the war. The recent exchange of prisoners for the bodies of Israeli soldiers was an added humiliation.
Recent polls showed Olmert with an approval rating of only 14 percent and three out of five Israelis thought he should resign. Half of those polled considered him corrupt.
But Olmert is not alone. Israeli political life is notoriously corrupt and few leading politicians could withstand a close scrutiny of their financial affairs. Olmert’s dealings have become a public embarrassment, but they are symptomatic of the practices of the entire ruling elite. The way in which his case has blown up reveals the very sharp tensions that exist among this tiny layer, which is completely isolated from the mass of the population who have long since become alienated from official public life.
Olmert has been able to survive the debacle in Lebanon as long as he has because he had a certain political value both to the Israeli political elite and in Washington.
Like Sharon, he has always had a hawkish attitude toward the Palestinians. It was he who, as Sharon’s spokesman, declared that Israel was prepared to assassinate former PLO Chairman Yasser Arafat. But as prime minister he was associated with the call for a settlement with the Palestinians and Israel’s neighbours, especially Syria.
This suited the interests of Washington very well. It enabled the Bush administration to give the impression that a peace process was under way. This was important for the US’s allies in Europe and in winning support for the US amongst the Arab regimes—especially in the aftermath of the Iraq invasion.
While negotiations proceeded, it was possible to continue the process of creating a greater Israel by extending Jewish settlements, building a wall to isolate the Palestinians and launching military attacks on Palestinian civilians.
Olmert has stressed that he will continue negotiations with Syria as long as he remains prime minister. This has been seen by some in the media as a prospect of peace. Writing in the Guardian, Rachel Shabi suggested that Olmert could now go “hell for leather” for an agreement with the Syrians and the Palestinians. She quoted Haaretz columnist Akiva Eldar stating, “But now he doesn’t have to worry about consolidating his power as prime minister, he has a clear interest to do it, the mandate to do it and nothing to lose.”
“For Olmert,” Shabi concludes, “success would still depend on the willingness of Labour and Kadima allies to stand by him and effectively enable him to leave a legacy that might make Israelis—and Palestinians—forgive the rest. But by this analysis, Palestinian and Syrian partners on these parallel peace tracks should race with Olmert to get final status agreements on paper in the few remaining weeks of his premiership. It’s a small, rickety and bullet-ridden window, but in a few months it might well be replaced by an impenetrable concrete wall.”
Olmert does indeed seem to be racing toward an agreement with the Syrians. According to a Maariv report on Friday, the two sides are close to a deal. Syria and Israel would end the state of war between them, establishing normal diplomatic relations. On its part Israel would demilitarize the Golan Heights, while Syria would reduce the number of its troops stationed between the Golan Heights and Damascus.
However, far from a peace move, implicit in the deal would be a Syrian agreement to end its close relationship with Iran, which Jerusalem and Washington have in their sights. Olmert made it clear to the Syrians that they had to chose between the “Iranian grip” and their partnership in the “axis of evil,” and, as he put it, rejoining the “family of nations” in pursuit of peace and “economic development.”
Syria entered into talks after Israel bombed what they claimed was a nuclear site in Syria. Reaching an agreement with Israel offers the regime of Bashar Assad the opportunity of repairing relations with the US and Europe, especially France. Assad was welcomed to President Nicolas Sarkozy’s Mediterranean Forum meeting in July.
The purpose of the talks is to detach Syria from its alliance with Iran and to isolate Iran diplomatically in advance of a possible assault by Israel with US backing, or at the very least to place maximum pressure on Tehran to accept US hegemony in the region.
There is no doubt, however, that Olmert’s resignation is indicative of and will also herald a further shift to the right in official Israeli politics.
The candidates competing to replace Olmert as leader of Kadima both have strong right-wing credentials. Foreign Minister Tzipi Livni is currently the favourite to succeed Olmert. She is presented as a candidate untainted by corruption and has called on the coalition to “restore the public’s faith in Israeli politics.” A former Mossad agent, she has stressed her role in Olmert’s security cabinet.
On the Monday before Olmert resigned Livni staged a very public row with him in the Knesset in full view of the cameras. She accused him of giving too many concessions to Syria. Her display was necessary to consolidate her position against her main rival for leadership, Transport Minister Shaul Mofaz.
Livni has led the talks with the Palestinians and favours a two-state solution to the Palestinian question. Until her public row with Olmert, she was regarded as backing his negotiations with Syria.
Mofaz, who has taken a much harder line on the Golan Heights and Jerusalem, is a former chief of staff and defence minister. He is reputed to have told West Bank army commanders in 2001 that he wanted “10 slain Palestinians” in each territorial brigade area. According to the book Boomerang by journalists Ofer Shelah and Raviv Drucker, a senior officer pointed out at the time that Mofaz’s directive would amount to 70 Palestinians being killed each day.
On Thursday Mofaz warned the US not to soften its stance towards Iran after US diplomats met with Iranian officials. He met with Vice President Dick Cheney and Secretary of State Condoleezza Rice to protest the meeting. A spokeswoman for Mofaz said that he was “voicing Israel’s strong concerns.”
In June this year Mofaz said it was “inevitable” that Israel would attack a nuclear Iran.
Essentially the competition between Livni and Mofaz is about who can present themselves as the best war leader. But whoever wins the leadership contest, they must put together another coalition. The fragile Kadima party created by Sharon by winning the backing of a section of the Labor Party may not even survive a leadership contest.
Power may pass directly into the hands of Benjamin Netanyahu, leader of Likud. He was prime minister from 1996 to 1999 and served as finance minister under Sharon. He resigned from Sharon’s government in protest over the withdrawal from Gaza. Netanyahu has called for an immediate election. It is even possible that Mofaz might attempt to form a coalition with Netanyahu in return for the defence portfolio.
US unemployment rate rises to four-year high
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By Alex Lantier
The US unemployment rate rose to a seasonally adjusted, four-year high of 5.7 percent in July, according to August 1 figures released by the US Bureau of Labor Statistics (BLS). The number of officially unemployed people reached 8.8 million, up 1.6 million (1 percent) over the last year.
The official jobless rate does not include so-called “discouraged” workers who report having given up looking for work, or those who have been forced to work part-time for economic reasons. Unemployed and “discouraged” workers rose from 5.7 to 7 percent of the workforce in the last 12 months. Adding in workers forced to take part-time work, 10.8 percent of the US workforce was unemployed or underemployed in July, up 2.2 percent over the last year.
US non-farm payroll employment fell by 51,000 jobs in July, and has fallen by 463,000 in 2008. The declines are broad-based, affecting virtually all sectors of the economy.
Temporary employment, considered an indicator of future economic conditions, fell 29,000 in June; the sector has lost 185,000 jobs since January 2008. Retail trade continued to shed jobs, having lost 211,000 positions since its peak in March 2007.
Construction, heavily hit by rising housing inventories and the mortgage crisis, lost 22,000 jobs in July, bringing the total job losses since the peak employment level in September 2006 to 557,000. According to Commerce Department figures, construction spending fell 0.4 percent in July, after a similar 0.4 percent fall in June, to a seasonally adjusted annual rate of $1.0872 trillion.
Manufacturing employment fell by 35,000 in July and by 383,000 over the last 12 months, with notable declines in transportation equipment (8,000 job losses), wood products (4,000 job losses), and textile mills (3,000 job losses). The Institute for Supply Management (ISM) reported factory activity as showing no increase in July 2008, but noted that the July new orders index stood at 45.0, on a scale where a number under 50 indicates contraction. ISM survey director Norbert Ore told the Wall Street Journal, “We expect the third quarter to be quite slow.”
The only sectors that saw increased employment were health care (up 33,000 in July) and mining (up 10,000 in July), mostly in oil- and gas-related industries benefiting from high energy prices.
Restaurants have been particularly hard hit as consumers reduce leisure spending. Plano, Texas-based Metromedia Restaurant Group abruptly shut down hundreds of Bennigan’s and Steak and Ale restaurants nationwide on July 29, eliminating 9,200 jobs as part of Chapter 7 bankruptcy proceedings. The restaurants apparently required infusions of $100 million from parent company Metromedia to meet payroll and debt obligations over the last year. In March Forbes gave the net worth of Metromedia’s owner John Kluge as $9.5 billion.
Other restaurant chains filing for bankruptcy in 2008 include Bakers Square, Village Inn, and Old Country Buffet. Starbucks announced this week plans to cut 1,000 office jobs. This follows last month’s news that the global coffee retailer would close 600 store locations in the US after posting a net loss of $6.7 million during the second quarter of 2008. It also announced the closure of 61 of its 84 locations in Australia.
Airlines also are planning layoffs as they face massive increases in fuel prices and reductions in the number of travelers and flight routes. On July 22 United Airlines announced it would lay off 7,000 of its 52,500 workers by the end of 2009, amid plans to reduce 16 percent of United’s domestic capacity and cut 100 aircraft from its fleet.
On July 17 American Airlines announced it would furlough 900 flight attendants and 200 pilots, and lay off 1,300 of its 13,000 aircraft mechanics—even after the emergency grounding of its entire MD-80 aircraft fleet for wiring risks in March revealed serious problems in its maintenance operations.
Automakers GM and Ford are also preparing further layoffs, as they announced gigantic losses for the second quarter of 2008—$8.7 billion for Ford and $15.5 billion for GM, amid falls in monthly sales volume of 15 and 26 percent, respectively. They attributed these losses to falling demand for their larger, less fuel-efficient vehicles amid high gas prices, restructuring costs, and the effects of the credit crisis on their financing arms, which are scaling back leasing deals due to higher risks of consumer default.
Neither Ford nor GM has publicly announced restructuring plans, but on July 30 the press reported that GM planned to lay off at least 5,000 workers. GM has announced plans to cut its North American production capacity by 300,000 vehicles by next year, and is cutting shifts at plants in Moraine, Ohio and Shreveport, Louisiana.
Other carmakers are announcing substantial decreases in US sales and planned layoffs. Toyota’s July sales figures dropped 18.7 percent, and Nissan announced it would offer buyout packages to 6,000 employees at plants at Smyrna and Decherd, in Tennessee.
The effects of unemployment will be even more difficult on laid-off workers, as unemployment insurance covers fewer and fewer workers. According to Labor Department statistics quoted in a July 29 Wall Street Journal report, only 37 percent of US unemployed workers receive unemployment benefits, down from 55 percent in 1958 and 44 percent in 2001.
The Journal noted: “Those who don’t qualify include many part-time workers, people who quit or were fired, and workers who didn’t earn enough money in a one-year ‘base period’ that often excludes the most recent three to six months. Worker advocates say the New Deal-era system hasn’t been updated enough to reflect an age of more-frequent job changes, more part-time work and falling union membership.”
Fewer than 15 percent of low-wage workers get unemployment benefits, according to the Government Accountability Office.
By Alex Lantier
The US unemployment rate rose to a seasonally adjusted, four-year high of 5.7 percent in July, according to August 1 figures released by the US Bureau of Labor Statistics (BLS). The number of officially unemployed people reached 8.8 million, up 1.6 million (1 percent) over the last year.
The official jobless rate does not include so-called “discouraged” workers who report having given up looking for work, or those who have been forced to work part-time for economic reasons. Unemployed and “discouraged” workers rose from 5.7 to 7 percent of the workforce in the last 12 months. Adding in workers forced to take part-time work, 10.8 percent of the US workforce was unemployed or underemployed in July, up 2.2 percent over the last year.
US non-farm payroll employment fell by 51,000 jobs in July, and has fallen by 463,000 in 2008. The declines are broad-based, affecting virtually all sectors of the economy.
Temporary employment, considered an indicator of future economic conditions, fell 29,000 in June; the sector has lost 185,000 jobs since January 2008. Retail trade continued to shed jobs, having lost 211,000 positions since its peak in March 2007.
Construction, heavily hit by rising housing inventories and the mortgage crisis, lost 22,000 jobs in July, bringing the total job losses since the peak employment level in September 2006 to 557,000. According to Commerce Department figures, construction spending fell 0.4 percent in July, after a similar 0.4 percent fall in June, to a seasonally adjusted annual rate of $1.0872 trillion.
Manufacturing employment fell by 35,000 in July and by 383,000 over the last 12 months, with notable declines in transportation equipment (8,000 job losses), wood products (4,000 job losses), and textile mills (3,000 job losses). The Institute for Supply Management (ISM) reported factory activity as showing no increase in July 2008, but noted that the July new orders index stood at 45.0, on a scale where a number under 50 indicates contraction. ISM survey director Norbert Ore told the Wall Street Journal, “We expect the third quarter to be quite slow.”
The only sectors that saw increased employment were health care (up 33,000 in July) and mining (up 10,000 in July), mostly in oil- and gas-related industries benefiting from high energy prices.
Restaurants have been particularly hard hit as consumers reduce leisure spending. Plano, Texas-based Metromedia Restaurant Group abruptly shut down hundreds of Bennigan’s and Steak and Ale restaurants nationwide on July 29, eliminating 9,200 jobs as part of Chapter 7 bankruptcy proceedings. The restaurants apparently required infusions of $100 million from parent company Metromedia to meet payroll and debt obligations over the last year. In March Forbes gave the net worth of Metromedia’s owner John Kluge as $9.5 billion.
Other restaurant chains filing for bankruptcy in 2008 include Bakers Square, Village Inn, and Old Country Buffet. Starbucks announced this week plans to cut 1,000 office jobs. This follows last month’s news that the global coffee retailer would close 600 store locations in the US after posting a net loss of $6.7 million during the second quarter of 2008. It also announced the closure of 61 of its 84 locations in Australia.
Airlines also are planning layoffs as they face massive increases in fuel prices and reductions in the number of travelers and flight routes. On July 22 United Airlines announced it would lay off 7,000 of its 52,500 workers by the end of 2009, amid plans to reduce 16 percent of United’s domestic capacity and cut 100 aircraft from its fleet.
On July 17 American Airlines announced it would furlough 900 flight attendants and 200 pilots, and lay off 1,300 of its 13,000 aircraft mechanics—even after the emergency grounding of its entire MD-80 aircraft fleet for wiring risks in March revealed serious problems in its maintenance operations.
Automakers GM and Ford are also preparing further layoffs, as they announced gigantic losses for the second quarter of 2008—$8.7 billion for Ford and $15.5 billion for GM, amid falls in monthly sales volume of 15 and 26 percent, respectively. They attributed these losses to falling demand for their larger, less fuel-efficient vehicles amid high gas prices, restructuring costs, and the effects of the credit crisis on their financing arms, which are scaling back leasing deals due to higher risks of consumer default.
Neither Ford nor GM has publicly announced restructuring plans, but on July 30 the press reported that GM planned to lay off at least 5,000 workers. GM has announced plans to cut its North American production capacity by 300,000 vehicles by next year, and is cutting shifts at plants in Moraine, Ohio and Shreveport, Louisiana.
Other carmakers are announcing substantial decreases in US sales and planned layoffs. Toyota’s July sales figures dropped 18.7 percent, and Nissan announced it would offer buyout packages to 6,000 employees at plants at Smyrna and Decherd, in Tennessee.
The effects of unemployment will be even more difficult on laid-off workers, as unemployment insurance covers fewer and fewer workers. According to Labor Department statistics quoted in a July 29 Wall Street Journal report, only 37 percent of US unemployed workers receive unemployment benefits, down from 55 percent in 1958 and 44 percent in 2001.
The Journal noted: “Those who don’t qualify include many part-time workers, people who quit or were fired, and workers who didn’t earn enough money in a one-year ‘base period’ that often excludes the most recent three to six months. Worker advocates say the New Deal-era system hasn’t been updated enough to reflect an age of more-frequent job changes, more part-time work and falling union membership.”
Fewer than 15 percent of low-wage workers get unemployment benefits, according to the Government Accountability Office.
US telecommunications giant Verizon demands job and benefit cuts
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By a Verizon worker
Contracts covering 65,000 workers at the US telecommunications giant Verizon expire Saturday at midnight. Verizon executives are demanding that current and retired union workers accept massive health and pension concessions as well as greater flexibility to cut jobs and move workers.
Verizon has made extensive plans to continue operations in the event of a strike. Management employees from throughout the company will be relocated to work in areas affected by a possible strike. The company has also recruited retired supervisors to work during a strike. Contractors and non-union vendors have been hired and are being trained to do work normally performed by union employees.
Verizon employs 230,000 workers. It is one of two major telecommunications companies in the US providing landline, wireless, broadband and long distance service. The company is currently undertaking a massive upgrade to its network that will allow it to enter into the cable TV market.
The contract covers workers in Verizon’s landline division in the northeastern states and Washington, DC.
For their part, the Communications Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW) have made it clear that they are willing to sacrifice the jobs and benefits of their members. The chief concern of the union bureaucracies is to maintain a minimum number of dues-paying members, regardless of their wages, benefits and working conditions. The CWA and IBEW are also reluctant to take any action that might interfere with their promotion of Democratic candidates in the November elections.
The unions have not informed their members of any specific bargaining demands. Instead, they have spoken in generalities about defending jobs and maintaining benefits.
Nor have they set a strike deadline. In the past, both the CWA and IBEW have allowed contract deadlines to come and go without calling a strike. They have put forward the absurd claim that by doing so they are hurting the company by forcing it to cover the costs of an anticipated strike.
If the union bureaucracy does call a strike, it will seek to use it to pressure management into allowing unionization of Verizon wireless and business divisions. To achieve this, the union leadership would be willing to agree to wage and benefit concessions for its current members and sub-standard pay and benefits for workers in newly unionized divisions.
The CWA signed a deal with AT&T, which accepted concessions in exchange for allowing workers in its wireless division to join the union. Since 2005, the CWA has been able to sign up 19,000 additional members.
Verizon is aiming to make its employees pay the cost of creating its new network by gutting health and pension benefits and holding down wages. In 2005, Verizon ended pension benefits for more than 50,000 management employees. At the same time, the company eliminated retiree health benefits for those managers with fewer than 15 years. The company is now seeking to impose similar cutbacks on its unionized work force.
By a Verizon worker
Contracts covering 65,000 workers at the US telecommunications giant Verizon expire Saturday at midnight. Verizon executives are demanding that current and retired union workers accept massive health and pension concessions as well as greater flexibility to cut jobs and move workers.
Verizon has made extensive plans to continue operations in the event of a strike. Management employees from throughout the company will be relocated to work in areas affected by a possible strike. The company has also recruited retired supervisors to work during a strike. Contractors and non-union vendors have been hired and are being trained to do work normally performed by union employees.
Verizon employs 230,000 workers. It is one of two major telecommunications companies in the US providing landline, wireless, broadband and long distance service. The company is currently undertaking a massive upgrade to its network that will allow it to enter into the cable TV market.
The contract covers workers in Verizon’s landline division in the northeastern states and Washington, DC.
For their part, the Communications Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW) have made it clear that they are willing to sacrifice the jobs and benefits of their members. The chief concern of the union bureaucracies is to maintain a minimum number of dues-paying members, regardless of their wages, benefits and working conditions. The CWA and IBEW are also reluctant to take any action that might interfere with their promotion of Democratic candidates in the November elections.
The unions have not informed their members of any specific bargaining demands. Instead, they have spoken in generalities about defending jobs and maintaining benefits.
Nor have they set a strike deadline. In the past, both the CWA and IBEW have allowed contract deadlines to come and go without calling a strike. They have put forward the absurd claim that by doing so they are hurting the company by forcing it to cover the costs of an anticipated strike.
If the union bureaucracy does call a strike, it will seek to use it to pressure management into allowing unionization of Verizon wireless and business divisions. To achieve this, the union leadership would be willing to agree to wage and benefit concessions for its current members and sub-standard pay and benefits for workers in newly unionized divisions.
The CWA signed a deal with AT&T, which accepted concessions in exchange for allowing workers in its wireless division to join the union. Since 2005, the CWA has been able to sign up 19,000 additional members.
Verizon is aiming to make its employees pay the cost of creating its new network by gutting health and pension benefits and holding down wages. In 2005, Verizon ended pension benefits for more than 50,000 management employees. At the same time, the company eliminated retiree health benefits for those managers with fewer than 15 years. The company is now seeking to impose similar cutbacks on its unionized work force.
Government report shows sharp fall in US economic growth
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By Andre Damon
The US economy grew at a less-than-expected rate of 1.9 percent in the second quarter of this year, according to figures released Thursday by the Commerce Department. The department also announced revisions to its previous growth estimates, concluding that the US economy contracted for the first time since 1990 in the fourth quarter of 2007.
“We’re in a recession,” Allen Sinai, chief economist at Decision Economics Inc., told Bloomberg News. “It’s going to widen, it’s going to deepen.” The second-quarter growth figures were lower than the 2.3 percent predicted by a Bloomberg survey of economists.
The anemic second-quarter growth estimate is particularly ominous since it covers the period when US taxpayers received hundreds of dollars in rebate checks as a result of a $170 billion stimulus package submitted by the Bush administration and passed by Congress last February. The bounce in consumer spending turned out to be far less than expected, and the impetus to the growth rate for April through June resulting from the rebates will likely be followed by an even deeper slump in the coming months, as consumer spending retreats even further.
Personal consumption, which accounts for two-thirds of total spending, increased by 1.5 percent, slightly higher than the 0.9 percent increase in the first quarter. “The increase in real consumer spending was quite minimal, despite the massive fiscal stimulus,” John Lonski, chief economist at Moody’s Investor Service, told the New York Times. The economy would have contracted by 0.5 percent were it not for a surge in exports, largely the result of the slumping US dollar, which makes US exports relatively cheaper. Exports increased by 9.2 percent, even faster than the 5.1 increase in the first quarter. Imports dropped by 6.6 percent, compared with a 0.8 percent fall in the second quarter. This narrowed the trade deficit to its smallest level in seven years. The growth in exports added some 2.4 percentage points to the growth rate.
The housing sector continued to contract rapidly, with revenues falling by 15.6 percent after a drop of 25 percent in the first quarter.
While the Commerce Department initially estimated the growth rate for the fourth quarter of 2007 at 0.6 percent, in its latest report it revised the estimate downward to minus 0.2 percent, marking the first quarterly contraction of the US economy since 2000. The Commerce Department also announced a small reduction in first quarter 2008 growth estimate, from 1.0 percent to 0.9 percent.
Meanwhile, the financial crisis has only intensified. Merrill Lynch announced Tuesday that it plans to sell $30 billion in mortgage-backed securities at 22 percent of their original value, resulting in a $5.7 billion write-down. The deep discount at which Merrill Lynch was obliged to sell off these assets will place further pressure on the balance sheets of other financial institutions, resulting in tens of billions in additional debt writ-downs and losses.
The sale came only ten days after Merrill reported $9.4 billion in second quarter write-downs and a $4.6 billion loss for the quarter. To compensate for the latest bout of write-offs, the firm has announced an $8.5 billion share offering, bringing the total capital it has been forced to raise to $26 billion.
Deutsche Bank announced a $2.3 billion dollar write-down on Thursday, bringing its total write-downs for this year to over $5 billion. Moody’s, the investment rating agency, warned Thursday that the coming months will bring an intensification of write-downs as housing prices continue to fall and the economy deteriorates. Home prices are down by over 15 percent in the past year, according to the S&P/Case-Schiller index. Former Federal Reserve chairman Alan Greenspan said yesterday that the fall in home values was “nowhere near the bottom.”
In the same speech, Greenspan noted the precarious position of Fannie Mae and Freddie Mac, the giant mortgage finance companies, saying, “I think the ultimate solution is a nationalization of both Fannie and Freddie.”
The Labor Department said Thursday that claims for unemployment insurance jumped by 44,000 to 448,000 this week, the highest level in five years. The department is expected to announce a payroll decline of some 75,000 jobs for July, according to Bloomberg. This would bring total net payroll losses this year to over 500,000.
The number of US workers classified by the government as involuntarily employed part-time has reached 5.3 million, up by one million from a year ago. This figure includes both those who are looking for full-time work but cannot find it and those who have had their hours cut from full-time to part-time. The number of people who have had their hours reduced from full- to part-time at their current job has reached over 3.7 million, the highest figure on record.
“The change in working hours is the canary in the coal mine,” Susan J. Lambert, a professor at the University of Chicago, told the New York Times. “First you see hours get short, and eventually more people will get laid off.” If current layoff rates continue, 2008 will see a net jobs loss of over one million.
By Andre Damon
The US economy grew at a less-than-expected rate of 1.9 percent in the second quarter of this year, according to figures released Thursday by the Commerce Department. The department also announced revisions to its previous growth estimates, concluding that the US economy contracted for the first time since 1990 in the fourth quarter of 2007.
“We’re in a recession,” Allen Sinai, chief economist at Decision Economics Inc., told Bloomberg News. “It’s going to widen, it’s going to deepen.” The second-quarter growth figures were lower than the 2.3 percent predicted by a Bloomberg survey of economists.
The anemic second-quarter growth estimate is particularly ominous since it covers the period when US taxpayers received hundreds of dollars in rebate checks as a result of a $170 billion stimulus package submitted by the Bush administration and passed by Congress last February. The bounce in consumer spending turned out to be far less than expected, and the impetus to the growth rate for April through June resulting from the rebates will likely be followed by an even deeper slump in the coming months, as consumer spending retreats even further.
Personal consumption, which accounts for two-thirds of total spending, increased by 1.5 percent, slightly higher than the 0.9 percent increase in the first quarter. “The increase in real consumer spending was quite minimal, despite the massive fiscal stimulus,” John Lonski, chief economist at Moody’s Investor Service, told the New York Times. The economy would have contracted by 0.5 percent were it not for a surge in exports, largely the result of the slumping US dollar, which makes US exports relatively cheaper. Exports increased by 9.2 percent, even faster than the 5.1 increase in the first quarter. Imports dropped by 6.6 percent, compared with a 0.8 percent fall in the second quarter. This narrowed the trade deficit to its smallest level in seven years. The growth in exports added some 2.4 percentage points to the growth rate.
The housing sector continued to contract rapidly, with revenues falling by 15.6 percent after a drop of 25 percent in the first quarter.
While the Commerce Department initially estimated the growth rate for the fourth quarter of 2007 at 0.6 percent, in its latest report it revised the estimate downward to minus 0.2 percent, marking the first quarterly contraction of the US economy since 2000. The Commerce Department also announced a small reduction in first quarter 2008 growth estimate, from 1.0 percent to 0.9 percent.
Meanwhile, the financial crisis has only intensified. Merrill Lynch announced Tuesday that it plans to sell $30 billion in mortgage-backed securities at 22 percent of their original value, resulting in a $5.7 billion write-down. The deep discount at which Merrill Lynch was obliged to sell off these assets will place further pressure on the balance sheets of other financial institutions, resulting in tens of billions in additional debt writ-downs and losses.
The sale came only ten days after Merrill reported $9.4 billion in second quarter write-downs and a $4.6 billion loss for the quarter. To compensate for the latest bout of write-offs, the firm has announced an $8.5 billion share offering, bringing the total capital it has been forced to raise to $26 billion.
Deutsche Bank announced a $2.3 billion dollar write-down on Thursday, bringing its total write-downs for this year to over $5 billion. Moody’s, the investment rating agency, warned Thursday that the coming months will bring an intensification of write-downs as housing prices continue to fall and the economy deteriorates. Home prices are down by over 15 percent in the past year, according to the S&P/Case-Schiller index. Former Federal Reserve chairman Alan Greenspan said yesterday that the fall in home values was “nowhere near the bottom.”
In the same speech, Greenspan noted the precarious position of Fannie Mae and Freddie Mac, the giant mortgage finance companies, saying, “I think the ultimate solution is a nationalization of both Fannie and Freddie.”
The Labor Department said Thursday that claims for unemployment insurance jumped by 44,000 to 448,000 this week, the highest level in five years. The department is expected to announce a payroll decline of some 75,000 jobs for July, according to Bloomberg. This would bring total net payroll losses this year to over 500,000.
The number of US workers classified by the government as involuntarily employed part-time has reached 5.3 million, up by one million from a year ago. This figure includes both those who are looking for full-time work but cannot find it and those who have had their hours cut from full-time to part-time. The number of people who have had their hours reduced from full- to part-time at their current job has reached over 3.7 million, the highest figure on record.
“The change in working hours is the canary in the coal mine,” Susan J. Lambert, a professor at the University of Chicago, told the New York Times. “First you see hours get short, and eventually more people will get laid off.” If current layoff rates continue, 2008 will see a net jobs loss of over one million.
Thursday, July 31, 2008
Federal judge rules Bush's aides can be subpoenaed
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By MATT APUZZO
A federal judge on Thursday rejected President Bush's contention that senior White House advisers are immune from subpoenas, siding with Congress' power to investigate the executive branch and handing a victory to Democrats probing the dismissal of nine federal prosecutors.
The unprecedented ruling undercut three presidential confidants who have defied congressional subpoenas for information that Bush says is protected by executive privilege. Democrats swiftly announced they would schedule hearings in September, at the height of election season.
House Speaker Nancy Pelosi said the House could soon vote on a contempt citation against one of the three officials, Karl Rove, formerly Bush's top adviser.
"It certainly strengthens our hand," she said of the ruling. "This decision should send a clear signal to the Bush administration that it must cooperate fully with Congress and that former administration officials Harriet Miers and Karl Rove must testify before Congress."
That wasn't clear at all to the White House or Rove's attorney. Bush administration lawyers were reviewing the ruling and were widely expected to appeal. They also could seek a stay that would suspend any further congressional proceedings.
"We disagree with the district court's decision," White House spokeswoman Dana Perino said.
With only a few months left in Bush's presidency, there appeared to be no sense of urgency to make the next move.
"I have not yet talked with anyone at the White House ... and don't expect that this matter will be finally resolved in the very near future," Rove attorney Robert Luskin said in an e-mail.
The case marked the first time Congress ever has gone to court to demand the testimony of White House aides.
In his ruling, U.S. District Judge John Bates said there's no legal basis for Bush's argument that his former legal counsel, Miers, must appear before Congress. If she wants to refuse to testify, he said, she must do so in person. The committee also has sought to force White House chief of staff Joshua Bolten to release documents on any role the White House may have played in the prosecutor firings.
"Harriet Miers is not immune from compelled congressional process; she is legally required to testify pursuant to a duly issued congressional subpoena," Bates wrote. He said that both Bolten and Miers must give Congress all nonprivileged documents related to the firings.
Bates, who was appointed to the bench by Bush, issued a 93-page opinion that strongly rejected the administration's legal arguments. He said the executive branch could not point to a single case in which courts held that White House aides were immune from congressional subpoenas.
"That simple yet critical fact bears repeating: The asserted absolute immunity claim here is entirely unsupported by existing case law," Bates wrote.
The ruling is a blow to the Bush administration's efforts to bolster the power of the executive branch at the expense of the legislative branch. Disputes over congressional subpoenas are normally resolved through political compromise, not through the court system. Had Bush prevailed, it would have dramatically weakened congressional authority in oversight investigations.
That remains a risk, one Republican said.
"Unfortunately, today's victory may be short-lived," said Rep. Lamar Smith, the ranking Republican on the House Judiciary Committee. "If the administration appeals the ruling, our congressional prerogatives will once again be put at risk."
Congressional Democrats called the ruling a ringing endorsement of the principle that nobody is above the law. Shortly after the ruling, the chairmen of the House and Senate Judiciary Committees quickly demanded that the White House officials subpoenaed appear before their panels.
Rep. John Conyers, D-Mich., chairman of the House panel, signaled that hearings would commence in September on the controversy that scandalized the Justice Department and led to the resignation of a longtime presidential confidant, Attorney General Alberto Gonzales.
"We look forward to the White House complying with this ruling and to scheduling future hearings with Ms. Miers and other witnesses who have relied on such claims," Conyers said in a statement. "We hope that the defendants will accept this decision and expect that we will receive relevant documents and call Ms. Miers to testify in September."
Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., said, "I look forward to working with the White House and the Justice Department to coordinate the long overdue appearances."
Between now and September, Congress will recess for five weeks of summer vacation. Bates scheduled a conference between the litigants on Aug. 27 to take stock of whether negotiations had moved forward, as he urged in his ruling. Congress then returns to a brief, three-week session before scattering to the campaign trail. All 435 House seats and a third of the Senate are up for grabs, as well as the presidency.
Republicans said there was little reason to rush to an accommodation, noting that subpoenas will expire at the end of the 110th Congress in January.
"I'm sure it will be appealed and it will go on into next year, and it will become a moot issue," said House GOP Leader John Boehner of Ohio.
Several Democratic officials said they expected the subpoenas to be reissued in January if their party retains control of Congress in the November elections.
Associated Press writers Matt Apuzzo and Ben Evans contributed to this story.
By MATT APUZZO
A federal judge on Thursday rejected President Bush's contention that senior White House advisers are immune from subpoenas, siding with Congress' power to investigate the executive branch and handing a victory to Democrats probing the dismissal of nine federal prosecutors.
The unprecedented ruling undercut three presidential confidants who have defied congressional subpoenas for information that Bush says is protected by executive privilege. Democrats swiftly announced they would schedule hearings in September, at the height of election season.
House Speaker Nancy Pelosi said the House could soon vote on a contempt citation against one of the three officials, Karl Rove, formerly Bush's top adviser.
"It certainly strengthens our hand," she said of the ruling. "This decision should send a clear signal to the Bush administration that it must cooperate fully with Congress and that former administration officials Harriet Miers and Karl Rove must testify before Congress."
That wasn't clear at all to the White House or Rove's attorney. Bush administration lawyers were reviewing the ruling and were widely expected to appeal. They also could seek a stay that would suspend any further congressional proceedings.
"We disagree with the district court's decision," White House spokeswoman Dana Perino said.
With only a few months left in Bush's presidency, there appeared to be no sense of urgency to make the next move.
"I have not yet talked with anyone at the White House ... and don't expect that this matter will be finally resolved in the very near future," Rove attorney Robert Luskin said in an e-mail.
The case marked the first time Congress ever has gone to court to demand the testimony of White House aides.
In his ruling, U.S. District Judge John Bates said there's no legal basis for Bush's argument that his former legal counsel, Miers, must appear before Congress. If she wants to refuse to testify, he said, she must do so in person. The committee also has sought to force White House chief of staff Joshua Bolten to release documents on any role the White House may have played in the prosecutor firings.
"Harriet Miers is not immune from compelled congressional process; she is legally required to testify pursuant to a duly issued congressional subpoena," Bates wrote. He said that both Bolten and Miers must give Congress all nonprivileged documents related to the firings.
Bates, who was appointed to the bench by Bush, issued a 93-page opinion that strongly rejected the administration's legal arguments. He said the executive branch could not point to a single case in which courts held that White House aides were immune from congressional subpoenas.
"That simple yet critical fact bears repeating: The asserted absolute immunity claim here is entirely unsupported by existing case law," Bates wrote.
The ruling is a blow to the Bush administration's efforts to bolster the power of the executive branch at the expense of the legislative branch. Disputes over congressional subpoenas are normally resolved through political compromise, not through the court system. Had Bush prevailed, it would have dramatically weakened congressional authority in oversight investigations.
That remains a risk, one Republican said.
"Unfortunately, today's victory may be short-lived," said Rep. Lamar Smith, the ranking Republican on the House Judiciary Committee. "If the administration appeals the ruling, our congressional prerogatives will once again be put at risk."
Congressional Democrats called the ruling a ringing endorsement of the principle that nobody is above the law. Shortly after the ruling, the chairmen of the House and Senate Judiciary Committees quickly demanded that the White House officials subpoenaed appear before their panels.
Rep. John Conyers, D-Mich., chairman of the House panel, signaled that hearings would commence in September on the controversy that scandalized the Justice Department and led to the resignation of a longtime presidential confidant, Attorney General Alberto Gonzales.
"We look forward to the White House complying with this ruling and to scheduling future hearings with Ms. Miers and other witnesses who have relied on such claims," Conyers said in a statement. "We hope that the defendants will accept this decision and expect that we will receive relevant documents and call Ms. Miers to testify in September."
Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., said, "I look forward to working with the White House and the Justice Department to coordinate the long overdue appearances."
Between now and September, Congress will recess for five weeks of summer vacation. Bates scheduled a conference between the litigants on Aug. 27 to take stock of whether negotiations had moved forward, as he urged in his ruling. Congress then returns to a brief, three-week session before scattering to the campaign trail. All 435 House seats and a third of the Senate are up for grabs, as well as the presidency.
Republicans said there was little reason to rush to an accommodation, noting that subpoenas will expire at the end of the 110th Congress in January.
"I'm sure it will be appealed and it will go on into next year, and it will become a moot issue," said House GOP Leader John Boehner of Ohio.
Several Democratic officials said they expected the subpoenas to be reissued in January if their party retains control of Congress in the November elections.
Associated Press writers Matt Apuzzo and Ben Evans contributed to this story.
The Corrupting Influence Of Oil Money
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By Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Benjamin Armbruster, Ali Frick, Ryan Powers, and Brad Johnson
The world has never looked better for the Big Five oil companies. This morning, Exxon Mobil, the world’s largest oil company, announced its "second-quarter profit rose 14 percent, to $11.68 billion, the highest-ever profit by an American company. Exxon broke its own record." Joining Exxon Mobil as the only oil companies to "earn more than $10 billion in a single quarter, Royal Dutch Shell said its profit rose to $11.56 billion." ConocoPhillips and BP last week reported their "massive second-quarter profits." The fifth oil major, Chevron, will release its earnings report tomorrow. Yesterday, Interior Secretary Dirk Kempthorne announced "a new five-year leasing plan for offshore oil drilling" to give oil companies a "head start" on attacking protected waters, should the Congress follows President Bush, who recently lifted the presidential moratorium on offshore drilling "first issued by his father in 1990." Rep. Ed Markey (D-MA) described Kempthorne’s announcement as a "Going Out of Business Sale" on behalf of Big Oil. The unprecedented profits for Big Oil come at the expense of practically everyone else in the form of a collapsing economy, international instability, rampant commodity inflation, and deadly climate change. However, Big Oil’s windfall has also meant largesse -- and criminal levels of corruption -- for some in Washington.
RECORD PRICES, RECORD PROFITS: Since 2001, gasoline prices have more than doubled, and oil companies have made more than half a trillion dollars in profits. The price of oil has surged from below $30 a barrel to over $125, a fourfold increase. The Big Five oil companies could make a "projected $168 billion in profits" this year alone. The United States has only two percent of the world’s oil reserves but consumes 25 percent of the world’s oil. "At current oil prices," conservative oil man T. Boone Pickens argued, "we will send $700 billion dollars out of the country this year alone." If we continue on the same path for the next ten years, "the cost will be $10 trillion -- it will be the greatest transfer of wealth in the history of mankind," he added. The surging price of oil is due in part to demand growing faster than supply, but also to factors such as "the war in Iraq and the value of the dollar" and unregulated, Enron-like speculation. Instead of investing in 21st century energy, the oil companies are plowing most of their profits into stock buybacks, a windfall for their rich investors.
OIL’S GIFTS: In a "state-shattering tremor in an earthquake of change in Alaska politics," Sen. Ted Stevens (R-AK) "was charged on Tuesday with concealing more than $250,000 worth of gifts, including home renovations, that he received from an Alaska oil services company," VECO Corp, "the top Alaska-based contributor to federal politics for at least five election cycles." The federal indictment "accuses Stevens, a former chairman of the powerful Appropriations Committee and the longest-serving Republican senator ever, of using his position and office in the Senate on behalf of VECO between 2001 and 2006." Uncle Ted’s indictment represents the culmination of a multiyear oil corruption scandal of Alaska’s "bullying, nepotistic political culture": five state legislators (including Stevens’s son Ben), four other officials, and Alaska’s congressman Don Young (R) have also been implicated for their involvement with VECO CEO Bill Allen (Allen once told a state lawmaker, "I own your ass"). Over his career, Stevens has funneled over ten million dollars from his oil-funded war chest to other conservative politicians. Politicians who benefited from the $340,000 in campaign contributions from Ted Stevens’s Northern Lights PAC this year alone are being pressured to return the money. Senate conservatives met yesterday to fill the positions vacated by Stevens, whose indictment forced him to give up "his plum committee posts."
MCCAIN’S EMBRACE: On June 13, 2008, Sen. John McCain (R-AZ) declared, "I am very angry, frankly, at the oil companies not only because of the obscene profits they’ve made but at their failure to invest in alternate energy to help us eliminate our dependence on foreign oil." Since then, McCain’s tenor on Big Oil has completely changed, now championing the views of "oil executives." "My friends, we have to drill offshore. We have to do it. ... The oil executives say within a couple of years we could be seeing results from it. So why not do it?" he said recently. McCain’s reversal took place on June 16, when he headed to Texas for oil-sponsored fundraisers and "declared support for offshore drilling." In the following month, his campaign’s embrace of a Big Oil agenda has grown tighter. The campaign arranged an oil-field photo shoot after McCain had to cancel a planned visit to an oil platform in the Gulf of Mexico because of a hurricane and an "untimely" oil spill. And Big Oil has embraced McCain, now that he has climbed aboard the Big Oil express. The day after his speech, "McCain raised $1.3 million at a closed-door luncheon and reception at the San Antonio Country Club." The Washington Post reported recently, "Campaign contributions from oil industry executives to Sen. John McCain rose dramatically in the last half of June. ... Oil and gas industry executives and employees donated $1.1 million to McCain last month -- three-quarters of which came after his June 16 speech calling for an end to the ban -- compared with $116,000 in March, $283,000 in April and $208,000 in May."
By Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Benjamin Armbruster, Ali Frick, Ryan Powers, and Brad Johnson
The world has never looked better for the Big Five oil companies. This morning, Exxon Mobil, the world’s largest oil company, announced its "second-quarter profit rose 14 percent, to $11.68 billion, the highest-ever profit by an American company. Exxon broke its own record." Joining Exxon Mobil as the only oil companies to "earn more than $10 billion in a single quarter, Royal Dutch Shell said its profit rose to $11.56 billion." ConocoPhillips and BP last week reported their "massive second-quarter profits." The fifth oil major, Chevron, will release its earnings report tomorrow. Yesterday, Interior Secretary Dirk Kempthorne announced "a new five-year leasing plan for offshore oil drilling" to give oil companies a "head start" on attacking protected waters, should the Congress follows President Bush, who recently lifted the presidential moratorium on offshore drilling "first issued by his father in 1990." Rep. Ed Markey (D-MA) described Kempthorne’s announcement as a "Going Out of Business Sale" on behalf of Big Oil. The unprecedented profits for Big Oil come at the expense of practically everyone else in the form of a collapsing economy, international instability, rampant commodity inflation, and deadly climate change. However, Big Oil’s windfall has also meant largesse -- and criminal levels of corruption -- for some in Washington.
RECORD PRICES, RECORD PROFITS: Since 2001, gasoline prices have more than doubled, and oil companies have made more than half a trillion dollars in profits. The price of oil has surged from below $30 a barrel to over $125, a fourfold increase. The Big Five oil companies could make a "projected $168 billion in profits" this year alone. The United States has only two percent of the world’s oil reserves but consumes 25 percent of the world’s oil. "At current oil prices," conservative oil man T. Boone Pickens argued, "we will send $700 billion dollars out of the country this year alone." If we continue on the same path for the next ten years, "the cost will be $10 trillion -- it will be the greatest transfer of wealth in the history of mankind," he added. The surging price of oil is due in part to demand growing faster than supply, but also to factors such as "the war in Iraq and the value of the dollar" and unregulated, Enron-like speculation. Instead of investing in 21st century energy, the oil companies are plowing most of their profits into stock buybacks, a windfall for their rich investors.
OIL’S GIFTS: In a "state-shattering tremor in an earthquake of change in Alaska politics," Sen. Ted Stevens (R-AK) "was charged on Tuesday with concealing more than $250,000 worth of gifts, including home renovations, that he received from an Alaska oil services company," VECO Corp, "the top Alaska-based contributor to federal politics for at least five election cycles." The federal indictment "accuses Stevens, a former chairman of the powerful Appropriations Committee and the longest-serving Republican senator ever, of using his position and office in the Senate on behalf of VECO between 2001 and 2006." Uncle Ted’s indictment represents the culmination of a multiyear oil corruption scandal of Alaska’s "bullying, nepotistic political culture": five state legislators (including Stevens’s son Ben), four other officials, and Alaska’s congressman Don Young (R) have also been implicated for their involvement with VECO CEO Bill Allen (Allen once told a state lawmaker, "I own your ass"). Over his career, Stevens has funneled over ten million dollars from his oil-funded war chest to other conservative politicians. Politicians who benefited from the $340,000 in campaign contributions from Ted Stevens’s Northern Lights PAC this year alone are being pressured to return the money. Senate conservatives met yesterday to fill the positions vacated by Stevens, whose indictment forced him to give up "his plum committee posts."
MCCAIN’S EMBRACE: On June 13, 2008, Sen. John McCain (R-AZ) declared, "I am very angry, frankly, at the oil companies not only because of the obscene profits they’ve made but at their failure to invest in alternate energy to help us eliminate our dependence on foreign oil." Since then, McCain’s tenor on Big Oil has completely changed, now championing the views of "oil executives." "My friends, we have to drill offshore. We have to do it. ... The oil executives say within a couple of years we could be seeing results from it. So why not do it?" he said recently. McCain’s reversal took place on June 16, when he headed to Texas for oil-sponsored fundraisers and "declared support for offshore drilling." In the following month, his campaign’s embrace of a Big Oil agenda has grown tighter. The campaign arranged an oil-field photo shoot after McCain had to cancel a planned visit to an oil platform in the Gulf of Mexico because of a hurricane and an "untimely" oil spill. And Big Oil has embraced McCain, now that he has climbed aboard the Big Oil express. The day after his speech, "McCain raised $1.3 million at a closed-door luncheon and reception at the San Antonio Country Club." The Washington Post reported recently, "Campaign contributions from oil industry executives to Sen. John McCain rose dramatically in the last half of June. ... Oil and gas industry executives and employees donated $1.1 million to McCain last month -- three-quarters of which came after his June 16 speech calling for an end to the ban -- compared with $116,000 in March, $283,000 in April and $208,000 in May."
Under The Radar
ENVIRONMENT -- STATES AND ENVIRONMENTAL GROUPS TO SUE EPA TO GET EMISSIONS RULES: A coalition of states and environmental groups intends to sue the Environmental Protection Agency (EPA) "if it does not act soon to reduce pollution from ships, aircraft and off-road vehicles." California Attorney General Jerry Brown is set to send a letter to the EPA in which he will "accuse the Bush administration of ignoring their requests to set restrictions" on greenhouse gas emissions. The EPA will have 180 days to respond. Under the Clean Air Act, "a
JUSTICE -- WHITE HOUSE DIRECTED AGENCIES TO HIRE 108 PEOPLE WHO ’LOYALLY SERVED THE PRESIDENT’: A "little-noticed" passage in Monday’s Department of Justice Inspector General (IG) report on the politicization of the department revealed an e-mail from the White House political affairs office clearly urging federal agencies to hire Bush loyalists. The May 2005 e-mail directs agencies to find jobs for 108 people on a list of "priority candidates" who "loyally served the president." "We simply want to place as many of our Bush loyalists as possible," the e-mail said. The New York Times notes that the message "urged administration officials to ’get creative’ in finding the patronage positions." Two days later, the White House’s liaison to the Justice Department replied exuberantly, "We pledge 7 slots within 40 days and 40 nights. Let the games begin!" Yesterday, IG Glenn Fine testified before the Senate Judiciary Committee and said that former Attorney General Alberto Gonzales "said he wasn’t aware of what was going on" in his agency. White House spokeswoman Dana Perino refused to say whether President Bush is "disappointed" in Gonzales.
Think Fast
Exxon Mobil broke its own record for "the highest-ever profit by a U.S. company," as second-quarter profits rose 14 percent. "Net income in the quarter rose to $11.68 billion, or $2.22 a share, from $10.26 billion, or $1.83 a share, last year."
Citing reductions in violence in Iraq, President Bush said this morning that "combat tour lengths for U.S. troops will be reduced to 12 months from 15 months." While 147,000 U.S. troops remain in Iraq, Bush said troop reductions might be possible because the "terrorists are ’are on the run.’"
Senate conservatives debated yesterday whether to threaten a government shutdown as a way to force a vote on offshore drilling. Congress would have to pass a continuing resolution in September to keep the government functioning, and conservatives are mulling a filibuster.
The Department of Health and Human Services is "reviewing a draft regulation that would deny federal funding to any hospital, clinic, health plan or other entity" that does not allow employees to opt out of providing birth-control pills, IUDs, and the Plan B contraceptive. The draft considers certain contraceptives as destroying "the life of a human being."
Iraq and the U.S. "are close to a deal on a sensitive security agreement" that satisfies Iraq’s "desire to be treated as sovereign and independent." The agreement "guarantee[s] that there would no longer be foreign troops visible on their land -- and leaves room for them to discreetly ask for an extended American presence should security deteriorate."
11: The number of U.S. troops killed in Iraq this month. That is "the lowest monthly toll since the 2003 invasion, according Pentagon figures, highlighting what US commanders say is a marked drop in overall violence."
More than 3.7 million Americans have had their full-time jobs cut to part time because of weak business, which is "the largest figure since the government began tracking such data more than half a century ago." The loss of pay has reinforced "the downturn gripping the economy" for millions of American families because "paychecks are shrinking just as home prices plunge and gas prices soar."
And finally: Grassley prescribes a legislative laxative. Yesterday, Sen. Chuck Grassley (R-IA) complained about "Democratic leaders stymieing his tax-extenders legislation" by using "a metaphor to which many of his silver-haired colleagues could relate." "Issues are building up," said Grassley. "The Senate is constipated. This body needs a...laxative."
America's leaders violated one of the Commandments
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By ANDREW GREELEY
T.S. Elliot summarized the issue, "When good does evil in its struggle against evil, it becomes indistinguishable from its enemy."
A current example is the sick morality that sees America's program of torture during the war that "they" had done it to us and would do so again. Therefore we were not evil. The Sept. 11 attack persuaded the leaders of the country that murder, kidnapping and torture were appropriate in the war on terror. June Mayer's carefully documented book The Dark Side demonstrates beyond doubt that the president, the vice president, the director of the CIA and their closest aides are war criminals. They violated international law, they violated American law, and they violated natural law.
Their excuse was that the president has the power to dispense from all laws in virtue of his role as commander in chief when the country is in grave danger. They have argued in their defense that the "enhanced interrogation" of prisoners has saved American lives. But they refuse to cite any cases or brutal, presidential-approved torture that saved anyone's lives.
The president, someone argues in The Dark Side, had the right, on the grounds of national security, to order the assassination of anyone who might seem to be a terrorist in Lafayette Park across from the White House.
Many Americans -- solid, patriotic Americans -- seem to enjoy the prospect of treating prisoners the way the Nazis did just to show how tough we can be when we have to be tough. In fact, it shows how stupid we are. All the research on the subject shows that torture does not in fact work and that the enemy understands that our "tough" interrogators will believe any wild story that prisoners will tell to protect themselves and deceive the dumb "cowboys."
As the next president tries to restore the reputation of America around the world, will he not have to authorize war crimes trials for torturers, especially the men and women who are responsible for snatching suspects off the streets of European cities by mistake? They tortured their victims, refused to release them, and then let them die by simply denying their existence. What difference does it make if you kill one more Arab? To paraphrase the inestimable Kit Carson: The only good Arab is a dead one.
There will certainly be blanket pardons for all the guilty cowboys before the president leaves office. A few minor figures will be left unpardoned -- like all such sacrificial lambs, they will be low-level operatives. What would happen, however, if, let us say, Spain or the Netherlands or Italy or Costa Rica should indict the vice president? Would a Democratic president turn him over to some such foreign tribunal? Especially if the president were a man who was trying to draw the country together? Under the principle of our country, our heroes, right or wrong, would we tell these foreigners that they had no jurisdiction to accuse a vice president who had been pardoned in advance? After all, the president's power in time of war is without limit of space or time. He had the right to pardon someone before he began his "enhanced interrogations."
That is a challenge to international law unacceptable to a country that tells the world that it is "The Light" of freedom. A new president or judicial prosecutor in another country could easily find a list of suspects in The Dark Side.
The CIA kept a collection of video disks of American torturers at work. They were ordered not to release those records. With no one's permission but the president's, they were all secretly destroyed for "national security reasons."
We learn from The Dark Side to understand that these words mean the government is once again preparing to violate one of the Ten Commandments.
By ANDREW GREELEY
T.S. Elliot summarized the issue, "When good does evil in its struggle against evil, it becomes indistinguishable from its enemy."
A current example is the sick morality that sees America's program of torture during the war that "they" had done it to us and would do so again. Therefore we were not evil. The Sept. 11 attack persuaded the leaders of the country that murder, kidnapping and torture were appropriate in the war on terror. June Mayer's carefully documented book The Dark Side demonstrates beyond doubt that the president, the vice president, the director of the CIA and their closest aides are war criminals. They violated international law, they violated American law, and they violated natural law.
Their excuse was that the president has the power to dispense from all laws in virtue of his role as commander in chief when the country is in grave danger. They have argued in their defense that the "enhanced interrogation" of prisoners has saved American lives. But they refuse to cite any cases or brutal, presidential-approved torture that saved anyone's lives.
The president, someone argues in The Dark Side, had the right, on the grounds of national security, to order the assassination of anyone who might seem to be a terrorist in Lafayette Park across from the White House.
Many Americans -- solid, patriotic Americans -- seem to enjoy the prospect of treating prisoners the way the Nazis did just to show how tough we can be when we have to be tough. In fact, it shows how stupid we are. All the research on the subject shows that torture does not in fact work and that the enemy understands that our "tough" interrogators will believe any wild story that prisoners will tell to protect themselves and deceive the dumb "cowboys."
As the next president tries to restore the reputation of America around the world, will he not have to authorize war crimes trials for torturers, especially the men and women who are responsible for snatching suspects off the streets of European cities by mistake? They tortured their victims, refused to release them, and then let them die by simply denying their existence. What difference does it make if you kill one more Arab? To paraphrase the inestimable Kit Carson: The only good Arab is a dead one.
There will certainly be blanket pardons for all the guilty cowboys before the president leaves office. A few minor figures will be left unpardoned -- like all such sacrificial lambs, they will be low-level operatives. What would happen, however, if, let us say, Spain or the Netherlands or Italy or Costa Rica should indict the vice president? Would a Democratic president turn him over to some such foreign tribunal? Especially if the president were a man who was trying to draw the country together? Under the principle of our country, our heroes, right or wrong, would we tell these foreigners that they had no jurisdiction to accuse a vice president who had been pardoned in advance? After all, the president's power in time of war is without limit of space or time. He had the right to pardon someone before he began his "enhanced interrogations."
That is a challenge to international law unacceptable to a country that tells the world that it is "The Light" of freedom. A new president or judicial prosecutor in another country could easily find a list of suspects in The Dark Side.
The CIA kept a collection of video disks of American torturers at work. They were ordered not to release those records. With no one's permission but the president's, they were all secretly destroyed for "national security reasons."
We learn from The Dark Side to understand that these words mean the government is once again preparing to violate one of the Ten Commandments.
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