"We don't hold protests or demonstrations,'' Hersh says. "We do public awareness.''

http://www.sptimes.com/2006/03/18/Floridian/I_spy____a_credible_t.shtml

I spy . . . a credible threat?

The government says it's trying to locate threats before terrorists strike. It has its eye on several groups. But is South Florida's Truth Project really that dangerous?

By SUSAN ASCHOFF, Times Staff Writer

Published March 18, 2006

BOCA RATON

Rich Hersh remembers the day he found out he was a threat to national security.

Hersh belongs to Truth Project Inc., an activist group that visits South Florida high schools to peaceably counter the pitch from military recruiters. Last fall, an NBC News crew came to Florida and informed the group that they were on a Defense Department list of hundreds of individuals and groups that had been under surveillance by the military.

The NBC crew brought some pages they'd obtained from the list. They pointed to a single entry:

13 - Nov - 04. Counter Military Recruitment Planning Meeting, Lake Worth.

Credible threat.

Hersh and his Truth Project colleagues processed what they were reading. Nov. 13, 2004? They'd gathered that day at a Quaker meeting house to talk about passing out fliers to high school students. Now they were being told their government spied on them. And in some vast and secret database, they were listed as a threat to their country.

"Incredible,'' Hersh remembers saying as the group absorbed what was on the page.

"What is the threat?''

* * *
Rich Hersh does not think of himself as a particularly menacing guy.

He has waved a Honk for Peace sign on a Delray Beach street corner. He got gassed in Miami while serving as a monitor for the trade meeting protests. He has never been arrested. He recycles his vegetable peelings into compost.

At 59, he still looks like the English professor he used to be: eyeglasses, silver beard, a house lined with bookshelves. A jammed office alcove is decorated with a framed photo of Jimmy Buffett and a poster of Che Guevara.

He marched for civil rights and an end to the Vietnam War when he was a student, a 20-something immersed in dissonance and Renaissance literature. A doctoral dissertation eluded him. He intended to write about the 19th century Jesuit poet Gerard Manley Hopkins.

I caught this morning morning's minion, kingdom of daylight's dauphin, dapple-dawn-drawn Falcon . . .

Hersh still loves Hopkins.

"I like the way he used words to increase the meaning, to expand and expand,'' he says. "You just can't get to any point where it looks like it's going to stop.''

While Hersh pursued his master's and his doctorate, he taught English classes at the University of Florida and Florida Atlantic University. Eventually he left academia and worked for 20 years at IBM, writing software manuals for insurance companies and manufacturers of plastic film and paper.

Hersh clutches tissues in one hand and a mug of tea in the other, nursing the remnants of bronchitis. The mug reads: God is good all the time. This February morning he is waiting for a friend to pick him up for counter-recruiting at Forest Hill High School. He cannot drive, and he has not worked since being diagnosed four years ago with progressive peripheral neuropathy, a nerve disorder in which his feet, hands, legs and arms tingle, freeze, burn, go numb and unleash excruciating pain. He sometimes uses a wheelchair.

He finds it laughable his government would spy on him. There was nothing clandestine about the Truth Project gathering at the Quaker house.

"We invited the press to the meeting, and they didn't even come,'' he says.

Allan Taylor, the friend who's driving them to the high school, is at the door, grousing about the incessant ringing of the wind chimes on the porch. Taylor maneuvers a hand truck with a plastic milk crate full of fliers from Hersh's crowded living room out to the car. A bumper sticker on his Toyota reads Dissent is Patriotic.

"I gave up privacy when I applied for medical insurance,'' says Taylor, 66.

"The problem today is not privacy,'' Hersh says. ''It's secrecy.''

* * *
The report featuring the Truth Project aired Dec. 13 on NBC Nightly News. More than 1,500 "suspicious incidents'' across the country over a 10-month period were listed on 400 pages obtained by NBC. The Truth Project meeting was among almost 50 antiwar or counter-recruiting events spied on by the U.S. military, their entry sandwiched between one about a protest at a military processing station in Sacramento, Calif., and another on an antiwar demonstration in New York City.

Truth Project member Marie Zwicker says she was "surprised and not surprised" about being surveilled. A Quaker and peace activist for many years, her outrage endures.

"Just because you are exercising your constitutional rights,'' Zwicker says, "doesn't mean you're not being spied on.''

The activist community in Palm Beach County is small. They know one another, Hersh says. But newcomers are welcome - they wouldn't want to interrogate a stranger at a meeting to determine friend or foe. They have nothing to hide.

"I think the reason they surveil us is because it's much easier than finding a terrorist,'' Hersh says.

The revelation about military surveillance is one of a series of disclosures since 9/11 about government agencies spying on Americans in the name of national security. The government says it is applying 9/11's critical lesson: Detect threats before terrorists strike.

The partial list acquired by NBC News was compiled as part of Talon, or Threat and Local Observation Notice, a program authorized in May 2003 by then-deputy defense secretary Paul Wolfowitz.

Less than a week after the Talon story broke, the New York Times reported on warrantless eavesdropping on Americans' overseas phone calls and e-mails by the National Security Agency. The American Civil Liberties Union also obtained documents showing the FBI is monitoring activists, including the environmental group Greenpeace and People for the Ethical Treatment of Animals, or PETA.

The Florida ACLU has filed a Freedom of Information request on behalf of the Truth Project, six other Florida organizations and four individuals. On the national level, the ACLU filed to dislodge information about NSA spying on Americans.

In response to a request for comment from the St. Petersburg Times, the Pentagon e-mailed a statement.

"There is nothing more important to the U.S. military than the trust and goodwill of the American people,'' it reads. Although Talon was intended to uncover threats to military bases and personnel in the United States, "some Talon reporters came to view the system as a means to report information about demonstrations.''

In a March 8 letter to Democratic Sen. Patrick J. Leahy of the Judiciary Committee, Robert W. Rogalski, Defense Department deputy for counterintelligence, said a review had found 186 reports, including the names of 43 individuals, that should not have been put in the database because they were not about potential threats from foreign terrorists. Another 2,821 Talon reports are still under review, the letter said.

* * *
Hersh and Taylor pull into a handicapped space at Forest Hill High and hang Hersh's parking permit on the mirror. Taylor unloads the milk crate of fliers from the trunk, and the two head to the school's office.

"Hi," Hersh says to the woman behind the counter. "We're the Truth Project. We're here to table in the cafeteria."

The woman's face is blank. Hersh tells her they are expected.

Taylor, joined by James Venable, a middle school percussion teacher and Truth Project member, leaves to handle the table in the cafeteria. A reporter with the group is not allowed inside - "We're in FCAT blackout,'' says a district spokeswoman - and Hersh remains behind, sitting on a planter outside to talk.

After courtesy calls to two dozen Palm Beach County high school principals and the superintendent, the 18-month-old Truth Project crafted a truce out of what threatened to be confrontational: If high schools schedule military recruiter visits, then the counter-recruiters visit as well, on a different day.

"We don't hold protests or demonstrations,'' Hersh says. "We do public awareness.''

In school cafeterias and hallways, they wait for students to come to them. Before you sign, take the time, reads one of their fliers.

"We say, 'What are the reasons you'll be going?' They say, 'I'm going to be stationed in Hawaii for four years so I can surf,' '' says Hersh. "They still think they're going to get $70,000 for college; their best buddy is pumping up the military.

"A recruiter tells them they can be a sniper, macho like in the movies, an army of one,'' Hersh says. "Some of them come out with a chin bar, and while the guys, the students, are doing chin-ups, the girls come over ... ooooooh. What the kids like is the camouflage. They'll have an attractive woman and a handsome man. They've gone to marketing school, and they're marketing the military.''

Hersh is 5 feet 6 - half that when folded into a wheelchair. He keeps three spiral notebooks stuffed in a shirt pocket and wears seven rubber bracelets on his wrists. Lance Armstrong's yellow band. Wage Peace's blue. A black band sent by his sister that one has to squint to read. I did not vote for Bush.

As the school's lunchtime ends, Taylor and Venable emerge from the building. There are more than 1,600 students here. They've talked to perhaps five. A girl in the Junior ROTC program, a shocked expression on her face, asked, "They let you on campus?''

"We're not against the military,'' Venable says. "We believe you should make informed choices.'' An African-American, he volunteers because there are "a lot of disenfranchised students who are suckered into the military.''

The lengthiest conversation of the lunch hour was with a teacher who called them unpatriotic.

* * *
Hersh has three brothers and a sister-in-law who served many years in the Navy and Coast Guard. They are accustomed to what one calls Hersh's silliness.

His 20-year-old daughter Darcy says her dad is a former hippie who turned "completely earthy'' when he met his fiancee about five years ago.

Darcy lives in Orlando and works at a Wendy's and as a janitor at a car dealership to pay living expenses and for community college. Her dad, she says, doesn't have a lot of money: He had to pay $297 for a cushion for his wheelchair.

"I thought about enlisting. The military gives you a place to live and money to live on,'' she says. "My dad told me that they lie'' about what they will give you.

After the revelations about the Talon program, Hersh went to Washington to tell a panel of House Democrats that government agents have rummaged through the trash and snooped into e-mails of dissidents in South Florida. A dark SUV was parked for hours on his Boca Raton street, the driver at the wheel. When approached, Hersh says, the vehicle took off.

Hersh got 15 minutes at the three-hour hearing on Jan. 20. He sat in his wheelchair. He told them he was outraged.

"There should not be a single American who today remains confident that it couldn't happen to them,'' Rep. Robert Wexler, D-Boca Raton, one of the panelists, said during the hearing.

* * *
Returning home from the high school, Hersh's body protests the day's activity. He coughs and coughs, gripping the back of the sofa for support. Tomorrow his limbs will punish him with pain.

This month a survey found almost three in five Americans can name more than one member of the cartoon family The Simpsons, including the dog and cat. Only one in five can name more than one of the five freedoms guaranteed by the First Amendment.

Freedom of speech, religion, press, assembly and petition for redress.

"I'm not really that afraid of terrorists,'' Hersh says.

Homer, Marge, Lisa, Bart and Maggie.

"Despair will get us.''


Susan Aschoff can be reached at aschoff@sptimes.com or (727) 892-2293.

© Copyright, St. Petersburg Times.

http://www.reason.com/links/links031606.shtml

March 16, 2006

Bush: Sunshine, Go Away

The administration's, and the country's, dangerous obsession with secrecy

Julian Sanchez

On Monday, President George Bush helped inaugurate Sunshine Week —an event first launched in 2005 to promote openness and transparency in government—by warning an audience at George Washington University that the free press was aiding terrorists in Iraq.

That aid had come, said Bush, in the form of a Los Angeles Times article on frustration in the military about the slow, bureaucracy-hobbled deployment of a new vehicle that would destroy roadside improvised explosive devices (IEDs) using powerful directed electrical charges, or "man-made lightning." Though the article said little else about the specifics of how the device, called a Joint IED Neutralizer (JIN), actually worked, Bush said that "Within five days of the publication—using details from that article—the enemy had posted instructions for defeating this new technology on the Internet. We cannot let the enemy know how we're working to defeat him."

Yet, as The American Prospect's Greg Sargent pointed out the following day, the Times article was scarcely the first time the JIN had been publicly described, and none of the officials who spoke to the paper for the story expressed concern that any of the information it contained might constitute a security threat. In fact, an insurgent's best source of information on the technology might well be the JIN's own manufacturer, Ionatron, whose website features a handy roundup of news articles about their products, as well as a collection of technical papers on laser-generated electric charges. And if it's really true that insurgents were able to develop effective countermeasures "within five days" of learning whatever scant information they might have been able to glean from the L.A. Times piece—a claim tech reporter Noah Shachtman says "doesn't pass the laugh test"—it is hard to imagine that they wouldn't have quickly hit upon the same strategies once the Pentagon finally got around to deploying the devices.

That theme—loose links sink ships; chatty blogs make for long, hard slogs —seems to be a favorite for Bush, yet the other occasions on which he's invoked it have been equally dubious. Bush characterized the disclosure last December of a secret (and legally dubious) National Security Agency wiretap program as "a shameful act" sure to help America's enemies. Yet in hearings last month, when pressed on whether al-Qaeda terrorists were really unaware that the U.S. was attempting to intercept their communications, Attorney General Alberto Gonzales could only lamely suggest that "sometimes they forget." Similarly questionable is Bush's claim that media reports about Osama bin Laden's satellite phone, which intelligence agencies had been tracking, prompted the jihadi leader to stop using it. As The Washington Post noted, bin Laden himself had been the source of several prior news reports about his use of the phone—and it was only after he apparently abandoned it that the L.A. Times published a story mentioning U.S. intercepts of his calls.

Bush is scarcely alone: In the March issue of Commentary, Senior Editor Gabriel Schoenfeld penned a lengthy piece calling for the prosecution under the Espionage Act of the New York Times reporters who broke the NSA wiretap story—prompting Slate's Jack Shafer to suggest that we might need a "Gitmo for journos" to house all the pen pushers who'd be at risk. And as the Prospect's Matthew Yglesias and Reason's own Matt Welch have pointed out, the "stab in the back" meme that paints media as a fifth column is a hoary standby of the Iraq War's most vehement supporters. (Interestingly, the argument offered by Jonah Goldberg that the media's release of images from Abu Ghraib was irresponsible because it was bound to inflame Iraqis didn't show up much on the right during the recent intoonfada, when editors who failed to print controversial cartoons of the prophet Muhammad were cast as cowards suppressing highly newsworthy images.)

But Sunshine Week also saw some actual sunshine. A Freedom of Information Act request by the American Civil Liberties Union turned up reports from the FBI's surveillance and apparent infiltration of a Philadelphia anti-war group. And with the help of another FOIA request by the ACLU, the online magazine Salon published a full catalog of the photo and video images from Abu Ghraib prison collected by the Army's Criminal Investigation Command. Both events are reminders that if disclosure is more risky in wartime, it is also more important, because this is when government is most tempted to go too far. And, as illustrated by the farcical attempt to reclassify documents already released into the public domain and this week's report from the National Security Archive at George Washington University on the chaotic hodgepodge of rules for dealing with "sensitive" but unclassified information, when it is most prone to err on the side of keeping too many secrets.

The price and condition of democracy is the risk of openness even in war. If fears about disclosure are typically overblown, there may yet be some real danger in allowing our enemies to know that our intelligence agencies are sweeping up vast numbers of domestic-to-international communications for computer analysis, or that our leaders may have at least tacitly condoned the monstrosities shown in the records from Abu Ghraib. There's more danger in not allowing ourselves to know that we do these things.

Julian Sanchez jsanchez@reason.com is an assistant editor of Reason. He lives in Washington, D.C.

THE WAYNE MADSEN REPORT

http://www.waynemadsenreport.com/

March 16, 2006 -- The tall, lanky man who spawned

George W. Bush may have been standing in front of the Texas School Book Depository on Nov. 22, 1963. ( AUDIO CLIP) George H. W. Bush is one of very few Americans who does not precisely remember where he was and what he was doing on the fateful Friday in November 1963. Of course, he would have had a foggy memory if he was an accessory to the crime. The Bush family are modern Borgias -- cruel "human locusts" who devour and ruin everything in their path.




Bush, upper right, resembles the man looking the opposite way from all the other witnesses to JFK's assassination.


Another view of GHW Bush (second from left) a few months after Nov. 22 murder of President Kennedy. The hairline and pose identical to that of man in front of Dallas school book building.

Jerusalem Post


US monitoring Israel's Iran options

Nathan Guttman, THE JERUSALEM POST Mar. 13, 2006

The Pentagon is looking into the possibility of Israel launching a strike against Iran's nuclear facilities. In the past months there were several working-level discussions trying to map out the possible scenarios for such an attack, according to administration sources who were briefed on these meetings.

The discussions, which were describes as intelligence-oriented and not policy-oriented, examined the likelihood of an Israeli pre-emptive attack against Iran and the method in which such an attack could be carried out. One of the main questions presented in these discussions was whether Israel would inform the US in advance in case such an attack is to take place and when would such an advance notice be given.

The sources pointed out that it is clear that Israel would have to coordinate with the US forces air control any attempt to fly over Iraq on the way to Iran, if Israel chooses to attack using the shortest route.

Last week, former Israeli Chief of Staff Moshe Ya'alon said in Washington that the West does have a military option against Iran and that a joint US-NATO-Israeli air strike against dozens of nuclear facilities in Iran could set back Teheran's nuclear programs for several years.

The sources stresses that Ya'alon's remarks were not the trigger for the Pentagon consultations about a possible Israeli attack but added that there is a sense in the administration that the Iranian issue is gaining urgency.

The Washington Post reported Monday that the Bush administration has made Iran a top priority issue and that the president and his team had several meetings on the issue to discuss Iran's nuclear plans.

The Pentagon discussions, according to the sources, did not lead to any conclusion regarding the plausibility of an Israeli attack against Iran, nor did it recommend any action by the US.

Israeli and US sources have said in the past weeks that the US did not convey any message to Israel in which it asked to refrain from an attack and has not raised the issue in bilateral discussions with the Israelis. Both countries share intelligence on the situation in Iran and the advance of the nuclear program, but do not discuss - according to sources who took part in bilateral talks - the possibility of using military force to stop Iran from acquiring nuclear weapons.

The American assumption, according to the administration sources, is that an Israeli decision on attacking Iran is not imminent and that in any case it would not be taken before the Israeli elections, scheduled for March 28.

One of the questions Pentagon analysts are grappling with is how an Israeli attack - if launched - would affect the US and its forces in the region and whether it would force the US to follow with further strikes in order to complete the mission. The US is also discussing what could be the possible avenues of retaliation Iran would take against US's forces and interests in the region.

US Vice President Dick Cheney said last week that all options are "on the table" regarding Iran and on Sunday leading senators pointed out in TV interviews that the US can stop Iran's nuclear program. Senator George Allen (R-VA) said, relating to the question of using military force against Iran, that it is not the preferable route, but "if necessary, it is an option", and Senator Joseph Biden (D-DE) stressed that he believed that Iran's nuclear program can be stopped "short of war".

The UN Security Council is expected to take on the Iranian issue this week. During the weekend consultations continued between the US and European representatives and those from Russia and China in attempt to reach an agreement on the language of a Security Council presidential declaration regarding Iran.

The Americans would like to include a clause that would give Iran a 14 day ultimatum to accept the international community's conditions, before moving ahead with sanctions. Western diplomats said Monday that it is not clear if Russia and China would agree to such an ultimatum and speculated that they might insist on a month's period instead of the proposed 14 days.


MORE...


"The Bush administration has no proof that Iran has violated the terms of its treaty.

The IAEA has no proof that Iran has violated the terms of its treaty.

The UN Security Council has no proof that Iran has violated the terms of its treaty.

The whole fiasco has been orchestrated to deceive the public and pave the way for war."

http://onlinejournal.com/artman/publish/article_590.shtml

Bush’s roadblock at the Security Council

By Mike Whitney

Online Journal Contributing Writer

Mar 14, 2006, 00:51

Surveys conducted months before the war on Iraq showed that the American people would only support the conflict if there were a danger that Saddam was developing nuclear weapons. Other questions in the poll addressed the issues of humanitarian intervention, Saddam’s abysmal human rights record, and the prospect that Iraq had stockpiles of chemical and biological weapons.

None of these other potential threats mattered to the American people. The only issue that gained majority support for war was whether Saddam had nukes. It’s obvious now that the findings of that poll became the cornerstone of the administration’s public relations strategy.

Bottom line: The Bush-Cheney plans for shaping public opinion will continue to depend on bogus claims about nuclear weapons programs. This explains why the administration and their agents in the corporate media are intentionally misleading the public about the true nature of Iran’s nuclear program; it is the only way to elicit support for another war of aggression.

This also explains the furor over the Niger uranium fabrication which discredited the administration and resulted in the “outing” of Valerie Plame and the “swift-boating” of Joe Wilson. Cheney knew that the nuclear-link was crucial to hoodwinking the American people and could not allow Wilson to expose his lies.

The very same strategy is being used to demonize Iran. The IAEA has repeatedly said that there is “no evidence of a nuclear weapons program,” and yet, the administration continues to mislead public without a shred of proof to the contrary.

In the last week, the United States has had at least two opportunities to resolve the standoff through peaceful means. Instead, they torpedoed both deals and intensified the belligerence.

Why?

It was astonishing to watch Condi Rice hit the panic-button as soon as Iran’s foreign-minister offered to give up “industrial enrichment” of uranium if the IAEA would refrain from bringing the case before the Security Council. This was a “huge” concession on the part of Iran. They were giving up their legal rights under the treaty (NPT) and asking for nothing in return.

Condi’s reaction?

She called IAEA chief ElBaradei straight away insisting that,” The US cannot support this!”

Cannot support what? Negotiation? Deliberation? Peace?

The State Department made no attempt to explore the Iranian offer or see whether it would lead to greater concessions. It was simply dismissed outright.

It’s not hard to figure out what that means as far as the chances for peace.

The State Department reacted the same way earlier in the week when Russia and Iran were working out the details for enriching uranium outside of the country as a “confidence building” measure. Once again, State Dept. officials immediately rejected the “good faith” offer without pursuing further negotiations.

The obvious implication is that Washington wants another war and will subvert any attempt at negotiation or diplomacy.

What else could it mean?

Today’s headlines are reiterating the same hogwash: “Iran Spurns Russian Proposal” (SF Chronicle) or “Iran Ruling out Russia in Nuclear Plan” (CNN) or “Iran Rejects Russian offer to Diffuse Nuclear Dispute” (NY Times). This is how the media uses the corporate-bullhorn to create the impression that Iran is being “defiant.”

Baloney.

True, Iran has consistently maintained that it would not concede its rights under the treaty (NPT) but they have limited their demands to small amounts of uranium in a research and development program to be overseen by the IAEA inspection team.

Who could object to that?

The media have deliberately misled the public about the Russian negotiations as well as who was responsible for their ultimate failure. The New York Times admits this in their March 13 article by Nazila Fathi:

“Russia had offered to enrich uranium for Iran for use for energy purposes if Iran would refrain from doing so. It made a last minute face-saving offer to allow Iran to continue some enrichment for research purposes but withdrew the offer under Western pressure.”

“Western pressure?”

What the Times means is that Russia “withdrew the offer under United States pressure,” because Bush and company have no intention of allowing ANY settlement to take place no matter how conciliatory or personally-compromising.

But didn’t Iran’s foreign minister say, “The Russian deal is no longer on the agenda”?

Yes and no.

Iran said that it wants to see what the Security Council does before they make any more decisions. As for the precise statement by Iran’s foreign minister:

“As for the Russian proposal, if it considers Iran’s right to conduct research in Iran on its own soil, it can be a topic of negotiation, because the right to conduct research in Iran is the Islamic Republic’s right that we neither want to give up nor will give up.”

Hamid Reza Asefi’s statement is a straightforward defense of the basic terms of the treaty (NPT) a treaty to which the United States is also a signatory and has clear obligations. Should Asefi simply toss the “internationally-approved” treaty on the burn-pile because it no longer fits within the Bush administration’s foreign policy strategy?

Yes, according to Bush.

The media’s role in demonizing Iran cannot be overstated, nor can we really appreciate the extent of US recalcitrance without following the minutia of daily statements and demands. The United States has elevated the issue of Iran’s imaginary nuclear weapons program to crisis level. We must assume that its part of the broader scheme to incite violence and spread the Iraq war throughout the region.

Total war?

Isn’t that where all this bluster and harassment is headed?

But will the Bush administration be able to win UN Security Council approval for their war plans? Will there be sanctions?

No! No sanctions and no resolution condemning Iran’s program.

The New York Times reported on Friday that, “A draft document, which the Council members have indicated they hope to issue next week as a nonbinding presidential statement, says the Council continues to hope for a negotiated solution ‘that guarantees Iran’s nuclear program is for exclusively peaceful purposes.”

“A nonbinding presidential statement”?

This is what we have been saying here for months and now the NY Times is reluctantly confirming it. There are no grounds for “punitive action” because Iran is not in “noncompliance.” The entire matter has only reached this level of attention because the inordinate amount of raw power and arm-twisting the US can bring to bear in foreign affairs.

“A nonbinding presidential statement” is the equivalent of saying, “We have no proof that you are doing anything illegal, but we will scold you anyway.”

It is an empty statement which has no legal precedent or authority and infers nothing about violations to the NPT. It is strictly a gratuitous proclamation designed to placate the war-mongering occupants of the Bush White House.

The Bush administration has no proof that Iran has violated the terms of its treaty.

The IAEA has no proof that Iran has violated the terms of its treaty.

The UN Security Council has no proof that Iran has violated the terms of its treaty.

The whole fiasco has been orchestrated to deceive the public and pave the way for war.

Mike Whitney lives in Washington state. He can be reached at: fergiewhitney@msn.com.

Copyright © 1998-2006 Online Journal


RELATED...


TheStar.com

China, Russia reject U.S. proposal on Iran

Mar. 13, 2006. 09:33 PM

UNITED NATIONS (AP) — Russia and China have rejected proposals from the United States and other veto-wielding members of the UN Security Council for a statement demanding that Iran clear up suspicions about its nuclear program, diplomats said Monday.

The dispute raises the threat of an impasse in the Security Council and means that the U.S., Britain and France may not get their wish for strong action by the powerful UN body.

They believe such a text could further isolate Iran and help compel it to abandon uranium enrichment, a process that can produce fuel for a civilian nuclear reactor or fissile material for an atomic bomb.

Iran, meanwhile, sent more mixed signals about its intentions. Its president said Iran's very existence depended on nuclear development, but Russia reported that Iranian diplomats had asked for more consultations.

Only a day earlier, talks on Russia's western-backed offer to host Iran's uranium enrichment program collapsed when Tehran rejected Moscow's demand to suspend enrichment activities at home.

"Contradictory signals are coming from Tehran," Russian Foreign Minister Sergey Lavrov told reporters Monday of Iran's response to the proposal. "One day they reject it, the other day they don't."

The board of the UN nuclear watchdog, the International Atomic Energy Agency, voted last month to report Iran to the Security Council, saying it lacked confidence in Tehran's nuclear intentions and accusing Iran of violating the Nuclear Nonproliferation Treaty. Iran responded by ending voluntary co-operation with the IAEA and announcing it would start uranium enrichment and bar surprise inspections of its facilities.

IAEA chief Mohamed ElBaradei accused Iran of withholding information about its nuclear program, possessing plans linked to nuclear weapons, and refusing to freeze uranium enrichment.

In the last week, council diplomats have weighed how to respond. Ambassadors from the five veto-wielding countries all said publicly that discussions continued on several proposals, including one from the British and French that would urge Iran to stop enriching uranium.

But a UN diplomat, speaking on condition of anonymity, said Russia and China want the council to do one thing only: acknowledge the primary role of the IAEA in handling the Iran issue.

The diplomat said that after three meetings, the Russians and Chinese showed little indication they would change their positions. At the heart of the dispute is a difference in approach toward Iran, which insists its nuclear program is meant only for peaceful purposes such as energy.

Russia and China, allies of Iran, believe council action — such as a challenging statement or economic sanctions — risks angering Tehran further, possibly causing the regime to withdraw from the NPT and kick out IAEA inspectors.


ALSO READ...


“This is where we the people have failed yet again because when you take a poll of the American people, 80 percent believe that Iran has a nuclear weapons program. Why?” He asked. “Because they have failed their responsibility in citizenship. They accept at face value everything they hear from Fox News, from CNN, from The New York Times. And they still don’t engage that little brain matter between their earlobes to think for themselves. It’s the mistake we made in Iraq.”

http://www.informationclearinghouse.info/article12306.htm

Think Beyond Impeachment, Says Former U.N. Weapons Inspector

By Nathan Diebenow

Associate Editor

03/09/06 ''Lone Star Iconoclast" AUSTIN — Scott Ritter, the former United Nations weapons inspector who served during President Bill Clinton’s administration, had some strong words for people who call for President Bush’s impeachment.

Ritter explained that more people should be held accountable for supporting the current war in Iraq than the Bush Administration, including members of the Clinton administration, congressmen, senators, the U.S. media, and the American people.

“The Bush administration has committed felony after felony after felony by going into Iraq. There’s no doubt about that,” Ritter said, while describing a meeting he had with Democrats on Capitol Hill on the issue of impeachment. “But I say, ‘Timeout, guys.... We’re culpable.’”

Guidepost

At a recent activism workshop in Austin, Ritter said that the American people should use the U.S. Constitution as a guidepost for making decisions with regard to U.S. foreign policy.

“When we say, ‘Bush administration, do it yourself. Clinton administration, do it yourself,’ I say, ‘No. America, do it yourself,’” said Ritter. “We the people of the United States of America need to reflect on the preamble to that constitution. It’s our constitution. It’s our country. This is our problem. The only way we are going to resolve it is to infuse ourselves with a sense of citizenship that has sadly not been in this country today.”

Ritter said that the American people seem to behave more like consumers than citizens: “We want the easy fix. We want the government to solve the problem for us. That’s not how democracy works. Democracy is a tough, dirty business. And it takes a lot of work. It requires citizens to invest themselves. And we the people have failed egregiously.”

Sponsored by Tour of Duty, Ritter’s talk was moderated by talk radio host Jack Blood before a packed sanctuary at St. Andrew’s Presbyterian Church in Austin. Earlier in the day, a conference was held on the church grounds devoted to linking spirituality and activism.

Iran War Looming

Ritter noted that after the three-year U.S.-led occupation of Iraq, the next challenge to the American people is finding the truth about Iran’s nuclear energy program.

Though he is skeptical of Iran’s claim that its civilian energy program is peaceful, Ritter said that no one has yet to supply hard evidence to the public that shows Iran has a nuclear weapons program. Still, he said he supports a presence of viable, capable U.N. weapons inspectors as an alternative to rushing “hell nell” toward armed conflict with Iran.

However, Ritter said he fears that the Bush administration has already gained the support of the American people who follow him to a new war without question.

“This is where we the people have failed yet again because when you take a poll of the American people, 80 percent believe that Iran has a nuclear weapons program. Why?” He asked. “Because they have failed their responsibility in citizenship. They accept at face value everything they hear from Fox News, from CNN, from The New York Times. And they still don’t engage that little brain matter between their earlobes to think for themselves. It’s the mistake we made in Iraq.”

Signs of War

Ritter went on to say that the United States military is already gearing up for armed conflict with Iran as Secretary of Defense Donald Rumsfeld drums up the support from countries that have airbases surrounding Iran. Another sign of war, Ritter noted, is that U.S. aircraft are being used to scout future missions for U.S. troops.

“We’re over flying in Iran and we’re taking photographs. Is this peaceful?” asked Ritter. “If the Cubans were flying over our nation with reconnaissance aircraft taking photographs of facilities they were getting their troops ready to target, we’d shoot their planes down, and we’d say we have to right to protect our national defense.”

To drive his point home, he added: “If the Cubans were taking Cuban Americans in the United States and forming them into operational groups to go around blowing up bridges and assassinating politicians, we’d call it an act of terror. Not only would we hunt down the perpetrators, but we’d probably blow Cuba off the face of the earth in the process because they’re attacking us. But we’re doing the same thing (to Iran).”

Ritter suggested that to stop a war with Iran, Democrats must be elected to take control of at least the House of Representatives in the 2006 election. This way, said the self-described registered Republican, a healthier amount of skepticism will check and balance the executive and legislative branches of the U.S. government.

No Surprise

Ritter explained that none of the sectarian violence currently going on in Iraq should have taken anybody by surprise because the only thing holding the three infighting ethnic and religious groups (Kurds, Shi’a, and Sunnis) together since the end of the Ottoman Empire after World War I was Saddam Hussein’s Baathist Party.

“People say, ‘Why was Saddam Hussein so brutal against the Shi’a?’ Because if he wasn’t, you’d have the same problem you’d see in the streets today. ‘Why was Saddam Hussein so brutal against the tribes?’ If he wasn’t, you’d have the same problem you’d have today. ‘Why did Saddam Hussein repress Kurdish independence?’ Because if he didn’t, you’d see the same problems you’d see in Iraq today. It’s all predictable,” said Ritter.

He told the audience that the United States used Saddam only when it was convenient, such as during the Iraq/Iran war in order to keep Iran’s Islamic fundamentalist government at bay. The Gulf War, Ritter said, however, was the result of poor communication between the United States and her ally Iraq due to the first Bush administration’s heavy, narrow focus on the Soviet Union during the Cold War.

In March 1990, then-President George H. W. Bush sent a delegation to Iraq led by Sen. Bob Dole (R-Kansas) that embraced Hussein’s government during a spat between Iraq and Israel, but by October 1990, Saddam invaded and occupied its southern oil-rich neighbor Kuwait, Ritter explained. That summer, Hussein had asked Washington three times whether or not he had the green light to take land away from Kuwait over a border dispute. All three times, Washington told Hussein, “America has no position,” according to Ritter.

Kuwait Invasion

The initial response inside the U.S. government toward the Iraqi invasion was “good” because “[e]verybody understood that Kuwait was doing some bad things in terms of slant drilling and holding Iraq’s feet to the fire on financial issues,” Ritter explained. “And the feeling was that if Iraq had limited its incursion by simply taking over the Ramadi oil fields, controlling the Emir’s palace, and occupying the (nearby) islands — there wouldn’t have been a problem.”

Instead, Hussein moved into Kuwait City and threatened Saudi Arabia’s oil fields, which forced President H.W. Bush to raise his rhetoric even harsher by comparing Hussein to the former leader of Nazi Germany Adolph Hitler, said Ritter, adding that in doing so, the president covered up the complicated nature of the situation from the American people to wage war against Iraq.

“We knew there were nuclear weapons and biological weapons, but while we had our chemical protective gear, we had our little magic pills, [and] we had our inoculations, there wasn’t a big fear factor,” said Ritter, who served during the Gulf War as a Marine. “There seemed to be more fear about Iraq’s nuclear weapons capabilities in 2003 when they didn’t have them than in 1991 when they did have them.”

Life Or Death

To further the case for the Gulf War, there were charges that the Iraqi leader was a “personification of evil” who gassed his own people, namely the Iraqi Kurds.

As Ritter explained, during the Iran-Iraq war in the 1980s, the Iraqi Kurds switched allegiance to Iran and fought against Iraq. At a battle over a dam where electricity was created to power Baghdad, Iraq used a mustard agent to repel Iranian soldiers from a hill top. When the Iranians counterattacked with a cyanide-based blood agent, the Kurdish rebels were killed in the middle.

As a preventative measure in “a life or death struggle,” as Ritter termed it, Hussein gassed at least three Kurdish villages, which is not the same as a systematic extermination of defenseless people such as the six million Jews in Europe who died under Hitler’s reign, Ritter noted.

This weaponized blood agent may have resulted in the deaths of 7,000 Kurds, he explained, during a war in which about a million people died from conventional weapons like artillery and machine guns used by Iran, a country of 60 million people, and Iraq, a country of 23 million people.

“I’m not condoning the Iraqi actions, but we need to put it in perspective,” said Ritter, adding: “With the exception of nuclear weapons, a Marine corps rifle company with an unlimited supply of ammunition will kill far more people than chemical weapons, biological weapons, or long-range ballistic missiles. I mean, but we don’t call a Marine corps rifle company ‘a weapon of mass destruction.’ Maybe we should.”

Deal With Saddam

At the same time in the 1980s, Ritter noted, Donald Rumsfeld delivered assurances from the United States to Hussein to make it clear that the U.S. government sided with Iraq, but all the while members of Congress condemned the Iraqi leader’s use of chemical weapons on the Kurds, even as the U.S. government was secretly supplying Iran with ballistic missiles for use against Iraq’s army.

“So we did condemn Saddam from using chemical weapons but said, ‘No problem, you keep doing it.’ Why? Because it’s good for us. It helps America contain Iran. The problem is ... we now have to deal with the reality of Saddam,” Ritter noted.

The tactics with which to “deal with Saddam” after the Gulf War meant political trouble for President H.W. Bush because the American leader left “the new Hitler” in power for the security of the region instead of ousting him like he had promised at the outset to the American people, according to Ritter.

“We needed Saddam Hussein to die, so that [President H.W. Bush] wouldn’t be opened up to political criticism here at home. But the war is over. The troops are home. How are we going to get rid of this guy?” explained Ritter.

The answer was a policy of containment through which a series of economic sanctions was arranged to continue as long as Hussein stayed in power, despite a U.N. Security Council resolution that called for the sanctions to be lifted once Iraq disarmed itself of weapons of mass destruction.

Enter Scott Ritter

Enter Scott Ritter and his frustration with the U.S. government during the implementation of Security Council Resolution 287 to inspect and disarm Iraq’s weapons.

“A successful inspection regime would be the enemy of American policy. That is something that I as an inspector found since day one,” said Ritter. “When I showed up, it was obvious that the United States did not want the weapons inspections program to succeed. They were afraid.

“When I reported to the CIA in 1992 that we could account for all the Iraqi nuclear capability, that was a finding they did not want because we could account for missiles, but right now, there was a possibility we could account for chemicals. If we could account for chemicals, then we can account for biologicals, and then we can account for nuclear for Iraq to disarm.

Ritter told his audience in Austin that the fact that the U.S. government rejected the inspectors’ findings, instead of saying, “Hoorray! Good job inspectors,” meant it didn’t want them to succeed in any step of the disarming process. Then, the director of the CIA said before the U.S. Congress that 200 missiles were still in Iraq, a number the CIA head made up, according to Ritter.

“Two hundred missiles that physically can’t exist in Iraq. Where did you get that number? You made it up. Ladies and gentlemen, it should be clear to everybody,” he said. “This isn’t about Bush bashing. Have you noticed the time frame I’m talking about? The majority of my life with the U.S. government took place between 1992 to 1998 during the Clinton presidency. This isn’t about Republicans. This isn’t about Democrats. It’s about America, about American politics, about going down the wrong path.”

Act Like Saddam

Ritter said that the last three presidential administrations deliberately misled the American people about the reality of Iraq.

“When people say we didn’t find any weapons in Iraq in 2003, I’m here to tell you that, no, it wasn’t a mistake,” said the former U.N. weapons inspector. “The CIA knew in 1993 that there were no nuclear weapons programs in Iraq. The CIA knew in 1994 that there were not chemical weapons in Iraq. The CIA knew in 1995 that there were no biological weapons in Iraq.

“The CIA knew that Iraq had been disarmed, but that’s not the CIA’s job,” he added. “The CIA’s job is not to disarm Iraq but to create the conditions for the removal of Saddam Hussein. This is important because that same pattern of deception that you saw in Iraq is taking place today when it comes to the issue of Iran.”

Until 2000, the United State waited for someone like a Sunni general who could be like Saddam Hussein without being Saddam Hussein and be called to assassinate Hussein and take over control the Baathist Party and Iraqi government, Ritter said. “Then we’d be happy.”

Baathists Ousted

But then, on March 19, 2003, the U.S.-led invasion force went into Iraq and threw the baby with the bath water, so to speak, by removing the Baathist Party along with Saddam Hussein, a move that caused widespread civil unrest in Iraq soon after.

“As soon as we invaded, someone said, ‘What do you think?’ I said, ‘America has lost the war.’ He said, ‘How can you say that?’ The second we crossed the line, we lost the war because we embarked on a mission that was going to undo that which held Iraq together, and there was no way America could sustain a long-term presence in Iraq that would devolve into chaos and anarchy,” said Ritter.

Addicted To War

Ritter stressed that U.S. presidents are in essence forced to lie to the American people about going to war in the Middle East (by using the excuse that the nation in question poses a threat) because the United States is addicted to its lifestyle based on cheap oil.

“We consume far more than we produce as a nation. Therefore, this lifestyle that we are all addicted to requires our government to gain access to resources we need to sustain this lifestyle, and to gain access to these resources on terms that are economically beneficial to America, so we have to have a foreign policy in place that guarantees we have this access,” explained Ritter.

He added, “A president can’t flat-out say, ‘I have to feed your addiction to oil, so I’m going to gain total 100 percent control of the Middle East. I’m going to get rid of every government in the Middle East ... that doesn’t march to our tune.’ What president is going to be honest enough to say that? Not a single one of them.

“So they are going to come up with excuses: ‘Saddam Hussein is a threat to our security because he has weapons of mass destruction. We need to get rid of Saddam. Iran is a threat because of a nuclear weapons program. We need to get rid of the Iranians. The Saudi Arabians are a threat because they finance global terror.’ That might actually be a true statement, but we’re not marching on Riyadh anytime soon.”

More Active Citizens

The bottom line, Ritter said, is that citizens of the United States should take the responsibility for the deployment of their armed forces more seriously, as they are empowered to do so by the U.S. Constitution, for the sake of their country and “those men and women who honor us by the uniform of the armed services of the United States [who] took an oath to protect the Constitution of the United States.”

“The military doesn’t get to engage in this constitutional debate. Why? Because they expect the people of the United States to do it,” explained Ritter, who as a Marine, served as a ballistic missile advisor to Gen. Norman Schwartzkopf during the first Gulf War. “That was another great lesson I learned. When the boss says, ‘Take the hill,’ you don’t go, ‘But there’s machine gun up there!’ You take the hill ... Tough luck. Get the job done.”

Ritter added that the only reason why the military should be asked to fight in the name of the United States is when “there is a threat that puts our nation at risk.”

Marine’s POV

When asked about the dangers of depleted uranium radiation from U.S. weapons, Ritter, a U.S. Marine who served 12 years, unapologetically answered that he looked at the issue from the standpoint of a Marine in the heat of battle.

“You put me in charge of a couple hundred Marines, and we’re dug in and a T80 Battle Tank comes over. I don’t want to fight an equal fight. I don’t want him anywhere close to me. I’m going to open up a 120 millimeter Battle Tank gun with continued depleted uranium rounds that will carve up that tank like a hot knife through butter and kill everyone inside before they can even come close to me,” said Ritter, who served as a ballistic missile advisor to Gen. Norman Schwartzkopf during the first Gulf War.

“I love DU!” he added. “I want to be able to use it on my 20 millimeter Bushmaster, on my LAB25, so it’ll cut through T62 tanks. Why? I don’t want an equal fight, ladies and gentlemen. You send me to war, and I’ll kill the enemy. I’m going to slaughter them! I’m going to eviscerate them! I’m going to annihilate them! And I’m going to do it in a way that brings all my Marines home or at least as many of them as I can. THAT’S—MY—JOB! My job is to wage war, not make the world lovey dovey. You click on the “on” switch on, it’s going on, and I’m going to them, and you better give me the weapons to do the job.

“And you better understand that when you give me those weapons, and I use those weapons, there are repercussions. When I pull that trigger on a DU weapon I’m creating conditions that are harmful to American service members. I’m creating conditions that are harmful to innocent civilians that have to live in that area. If you don’t want that, don’t send me to war.”

© 2006, The Lone Star Iconoclast

http://www.safehaven.com/article-4759.htm

March 12, 2006

The Fed Officially Kicks Off the Next Recession

by Robert McHugh

It is official. A recession is coming. How do I know? Because this week new Fed Chairman Ben Bernanke gave an official warning to bankers about commercial real estate loans. That is always the kickoff to a recession. It is the starter's gun, the national anthem before a ballgame, the opening hymn at a church service. Here is how it works. The Fed has three official tools to control the money supply: Setting reserve requirements (telling banks how much of their deposits they cannot lend. The higher the reserve requirements, the less loans, the less money creation by the economy). The second tool is open market operations. Here they set the amount of money in the system by buying or selling securities. Third is setting the discount rate, the rate of interest banks must pay to borrow money at the Fed. Theoretically, the higher the rate, the less money banks will borrow, the less they have to lend, and the less money that is created by the banking system.

However, there is a fourth tool, a stealth tool, which has more power and impact than the other three. It is called the Federal Reserve Bank examiner. He/she is the person who goes into a bank about once a year and decides which loans are good and which are bad. Based upon their holy edict, a loan is classified in one of several categories which determines how much money the banks must set aside from earnings to reserve for possible losses. It is completely an estimation game. So the rules can and do change, based upon the whims of the examiner, taking his marching orders from the Fed Chairman. If the Fed wants the money supply to expand, then Fed examiners come in with reasonable standards for review of loans, and classify those loans with a general leaning that they will be repaid according to terms. Thus banks do not have to reserve as much for possible estimated losses and are in effect not discouraged from making more loans. When the Fed wants money supply to grow, aggressive lending standards often get passing grades. That's when you business people will see your friendly bank commercial lender more often, jawing you into that expansion project you've been thinking about, inviting you to golf outings and ball games. They want more loans. They need your expansion project.

However, once the Fed Chair sounds the alarm about commercial real estate loans, it starts an entire chain of events that ultimately and unequivocally leads to economic recession. Here's what happens. Out of the blue (that seems to be a favorite modus operandi for all Fed operations) those friendly back-slapping Federal Reserve examiners (not really, they are never overly nice -- okay I've met two or three out of a pool of three hundred -- Mike, Eddie, Eric, you know who you are and I know you read my stuff) show up with a scowl that droops like the golden arch. They ask for the files, a table, an outlet, a coffee pot, and the key to the little boys and girls room. About two days after they arrive, the banker knows something has changed, something serious, and he gets this knot in the pit of his stomach that will last for about three years. Examiner Margo asks for a meeting with banker Joe. She brings her supervisor to raise the fear level of the meeting. The Bank's President, Joe, brings his top commercial lender for protection of his fanny, and that lender brings his junior lender who will ultimately be the sacrificial lamb and get the ax should things blow up.

Bottom line: Margo feels that a good commercial real estate loan, paying on time, plenty of collateral, doesn't quite throw off enough cashflow on its financial statements in file, and is now suddenly rated below satisfactory. Not quite doubtful. What this means is the banker now has to set aside 20 percent of the loan in reserves for possible losses. That reduces income, and he has a big one-time hit coming to earnings this quarter. The banker defends the loan with dexterity -- he has to fight back, but cannot tick them off too much as they hold all the cards -- but the discussion is going nowhere. Finally Margo's supervisor, Lead Examiner Harry, whose head hasn't moved an inch -- just his eyes, rolling back and forth from speaker to speaker -- drones out, "This loan is less than satisfactory," then gets up and goes back to his room full of tables, laptops, and loan files. This goes on for days. Toward the end of the examination, about a month later, they bring out the heavy artillery. More senior examiners from the regional office arrive and the meetings get larger and longer as satisfactory loans have now been declared doubtful, and doubtful loans are now downgraded to total loss. They especially target commercial real estate loans. First ones to go. Again, nothing regarding the loan itself has changed, the game is one of judging the subjective quality of the loans, and for no apparent reason, the subjective quality of myriad loans has remarkably deteriorated. The banker is left with a list of suddenly crappy loans in his portfolio, and a required loan loss reserve that is about 80 percent higher than he has on the books. He is then told in a wrap-up meeting that because of this "loan quality problem" in his bank, his bank's overall rating has been dropped from a 1 to a 2 or a 2 to a 3 (banks are rated 1 to 5 with 1 being the best. Ratings below "2" get bank presidents fired. Ratings below 3 get the Chairman of the Board of Directors removed, with lots of fearful warnings to the Board of Directors of the bank about Director liability and civil money penalties). This rating is confidential, with criminal prosecution should the banker reveal it. In fact everything in the examination report is confidential, with criminal penalties should he reveal its contents. There is no appeals process.

Needless to say, after the examiners pack up their newspapers, laptops, and locked suitcases, the banker and his crew of commercial real estate lenders are left in shock. The Board of Directors gets a visit about a month later from the Head examiner and the top Regulatory folks at the regional Fed office. If they bring someone from "Washington D.C.," then the bank President and Senior Lender are toast. The Board of Directors politely listen as the Head Examiner and his boss cite every blemish and foul found in the place with smiles intermittently flashed with icy stares, a game of intimidation. Warnings are given, then the Fed folks get up, make sure they shake everybody's hand in the room as if its "business, not personal," and leave.

At the end of the day, a junior lender gets canned, the Board steps up the heat on the President to do something about this, and banker Joe and his senior lender immediately decide to stop making commercial real estate loans.

For the economy, this means a credit crunch has started. Expansion stops. Willing buyers can no longer obtain financing to buy properties. This reduces demand for properties at the exact same time bankers are encouraging these suddenly classified borrowers on their books to sell their properties and pay back the loans. This increases the supply of properties for sale at the exact wrong time, lowering prices.

But the black hole is just getting started -- just beginning to suck the economy into the abyss. What I outlined above is merely round one.

About six month later, property values have dropped from this excess of supply and lack of demand due to the curtailing of bank commercial real estate loans. This means the collateral values of the loans on the bank's books have declined.

Another Fed examination is scheduled, they are back in, and with the battle well under way, it is time for these public servants to start shooting the wounded. They are fully aware that property values have dropped, and -- ignoring the fact that they caused them to drop -- they march to the file room, grab their favorite previously classified loans, and get to work. They assign the most experienced examiners to review the classified loans while they send the rookies to find potential problems among the previously good loans. But the action is with the classified bad boys.

That loan they rated less than satisfactory because of cashflow problems the last time they were in has now deteriorated to doubtful because of the compounded affect of collateral undervaluation. That means instead of setting aside 20 percent of the loan amount into the reserve for possible losses, banker Joe must now set aside 50 percent, another big hit to earnings. He had promised the Board of Directors that last year's one-time hit for potential loan losses would be a one-time occurrence. He realizes that is not the case, and begins to wish he had become a UPS delivery man.

At the end of the day, the bank's rating has dropped, the Board is scared about Director liability, and Joe is pulling out every political favor he's accumulated among a majority of the Board to keep him around for one more year. He agrees to sacrifice the bank's Senior Lending officer, who has served as a shield the past year, not making loans, but sitting in his office, ready to be ejected for the good of banker Joe's considerable stock options portfolio and other bennies that come with holding on to a bank presidency for a decade or so. The senior lender is replaced by a credit hack, someone with no people skills, adept at strong-arming bank borrowers into paying back the money. The goal is to shrink the loan portfolio by not making new ones, using the normal cashflow from payments to reduce outstandings, and to sell at a discount or coerce partial payments from existing loan customers who were rated unsatisfactory by the Federal Reserve's finest. This means lawyers get involved, lots of lawyers, skilled at scaring borrowers into "working out" loan repayments with this new nasty bank lender. This means less money is available for potential buyers of property in the economy, more distressed sale supply hits the market, and real estate values fall even further.

It is about now that everyone recognizes a recession is well underway, led by a real estate collapse. The truth of the matter is, the rules were changed by the Fed and nobody was told until it was too late, and the economy plunges. Voters scream, a few politicians get tossed, and the phrase "credit crunch" becomes a darling of the media. It takes action by the President of the United States to haul in the Federal Reserve Chairman, and explain to him the reality of the reappointment process every four years. Suddenly, at the next bank exam, a new friendlier, examination teams shows up, drinks more coffee, has a few extra newspapers tucked next to their laptops, are asking for fewer files, complain they have to rush to another job in two weeks so won't be there as long as the last time, and leave with little fanfare. The bankers are told in the wrap-up meeting, that they've improved their loan quality, the bank's rating is boosted one grade, and all is well with the world -- end of recession.

On March 8th, 2006, Federal Reserve Chairman Ben Bernanke announced at the Independent Community Bankers of America conference, "The rapid growth in commercial real estate exposures relative to capital and assets raises the possibility that risk-management practices in community banks may not have kept pace with growing concentrations and may be due for upgrades." Fed examiners are warming up their laptops. The barbarians are headed for the gates.

The Fed announced again on March 9th, with no palatable explanation, that they will no longer publish M-3 as of March 23rd. While they claim that M-3 is useless, in the blurb on their website, the fact is banks are still reporting all the data on their Call Reports used to calculate M-3. The Fed has not eliminated the unique M-3 components from the Bank Call Reports.

Why don't they want to be transparent with the most important statistic, the very measure of why they were established by a minority of Congress during a late night session back in 1913? Because they cannot wait to pump money to high heaven like some sort of fiat tower of Babel.

M-3 was increased by $28.3 billion last week, a 14.2 percent annualized rate of growth. Over the past 2 weeks, M-3 was boosted an amazing $81.9 billion, for an annualized rate of growth of 20.7 percent! Over the past 8 weeks, M-3 is up 129.6 billion, an 8.2 percent rate of growth, and is up a whopping $249.7 billion over the past 12 weeks, a 10.7 percent annualized rate of growth, a $1.0 trillion annual expansion.

What is happening here? How does this reconcile with the Bernanke announcement that bank commercial real estate lending will be curtailed?

There are two ways for the money supply to grow. First is through the bank lending function. The more lending, the more spending, the more bank deposits, which is at the core of the money supply definition. The Fed has apparently decided to slow the velocity of money creation by slowing or shutting down lending. However, the Fed knows it needs money to buy financial markets and monetize our debt. The lending function is too much out of the direct control of the Fed. In other words, money is created that way, however the Fed doesn't get to decide where that money goes. It is going to businesses for expansion and jobs, etc... No, the Fed wants to decide where money goes. So it will replace money created through the lending function with money created from thin air by the Fed itself. The way for that electronic money to enter the economy will be from the Fed directly buying something, or lending money to someone. In effect, the Master Planners will decide where fresh money goes. They will control more of the spending. But they cannot let us know this. Because it would be too easy to prove they are doing this if M-3 remains transparent. You would simply compare commercial and consumer loan data to the M-3 figures. If we saw debt declining but M-3 rising, voila, we would clearly see the Fed is directly pumping and funneling that money someplace, which would beg the tough question, where? You can bet most honest, patriotic, free-market Americans would not appreciate the answer.

Thanks to 'Shadow' at GodlikeProductions.com for the lead on the above article. ~ EOTS


MORE...

http://www.sploid.com/news/2006/03/feds_using_pens.php

March 08, 2006 at 12:35 PM

Feds using pensions to stay out of default

Back in 2004 the federal government was approaching its debt limit. Without quick action, the country would be in default.

Rather than the federal government increasing revenue (raise taxes) or reducing costs (cut spending), Congress decided to simply legislate the debt ceiling upwards by $800 billion. Problem solved.

But the problem was merely put off until January 24 of this year when the Treasury Department website declared it was in technical default to the tune of $1 billion.

What to do? Go back to Congress and beg for another boost in the legal debt limit imposed on the government.

In the meantime, however, there are bills to pay, so Treasury Secretary John Snow has dipped into the Civil Service Retirement and Disability Fund.

None of this is any cause for concern, of course, because as Vice President Dick Cheney has asserted, "Deficits don't matter."

Here's hoping the Chinese understand this terrifying lesson.


ALSO SEE...


http://www.antiwar.com/henderson/?articleid=8662

March 6, 2006

War Is Good for the Economy – Isn't It?

By David R. Henderson

A common theme that has emerged in critiques of my "Wartime Economist" columns on Antiwar.com is that war is good for an economy. One respondent wrote:

"Why did [Franklin D.] Roosevelt want the war [World War II] so badly? He wanted it for the same reason every American president since that time has wanted a war, and that is to prevent the US economy from slipping deeper and deeper into economic depression. Counting the Cold War, the United States has been in a continual state of war for the past 60 years, and there is no end in sight. Without war, I do not believe our economy can survive."

The people who write me to this effect seem to hate that "fact." They would prefer that war not be a plus for an economy – but, nevertheless, they think it is. This belief has led many of these people to feel hopeless because they think that, on top of all the other difficulties of opposing war, they are opposing something that makes Americans better off. If I thought that, I would feel hopeless too. Fortunately, it's not true. The actual fact is that any war, even a war that is justified, has substantial costs.

Imagine an economy whose government spends 2 percent of its GDP on its military. (On average, the world's governments spend just under 2 percent of their countries' GDP [PDF] on the military, and the U.S. government spends about 4 percent.) Then, imagine that the government suddenly gets into a war and raises military spending to 7 percent of national income. How does that affect people in that country? Whether the government finances the war effort with taxes or debt or by printing money is not very important. What matters much more is that the government now takes an additional 5 percent of the real output of that economy to wage its war. The government buys tanks, trucks, fuel, clothing, parachutes, bullets, guns, airplanes, and all the other paraphernalia of war. In addition, the government hires laborers away from other uses, or it drafts them. All of the capital and labor that go to produce the "outputs" of war is capital and labor that cannot be used in their previous uses. Thus, there is a cost of all these resources used in war – what economists call the "opportunity cost." "Opportunity cost" means the value of the highest-valued opportunity foregone. The opportunity cost of resources spent on war is the value of these resources in what they would have been used for had the government not gone to war.

Take World War II. The government spent a good deal more than 7 percent of GDP on the war, and, in fact, in 1944, the peak of the U.S. government's World War II spending (as a percent of gross national product), the government spent about 45 percent of gross national product on the war. (Gross national product, not gross domestic product, was the widely used measure back then. For the U.S. economy, the difference between the two measures is close to rounding error.) Where did the resources come from to make the hundreds of thousands of trucks and jeeps and the tens of thousands of tanks and airplanes? Much of the capital and labor would have been producing cars and trucks for the domestic economy. In fact, the assembly lines in Detroit, which had churned out 3.6 million cars in 1941, were retooled to produce the vehicles of war. By 1942, auto production was down to under 1 million. For the years 1943 to 1945, auto production was so low that Wikipedia does not even report it. During the period from late 1942 to the 1945, in other words, almost the whole of U.S. participation in the war, production of civilian cars was essentially shut down.

Consider fuel. Because the government wanted to buy fuel at an artificially low price, it imposed price controls on gasoline and put itself first in line. Then it issued ration cards to Americans, dramatically reducing the amount that normal Americans could buy at the controlled prices. In his autobiography, the late David Brinkley tells how he was unable to continue a serious romance during World War II because he couldn't legally buy gasoline to drive to the city where his lady friend lived. Even railroad seats were rationed, writes Brinkley, with priority given to military personnel. In the government's eyes, letting congressmen and other high-level government officials have all the gasoline they wanted, with the rare "X" stickers, was so important to the war effort that the amount available to them was not rationed at all. A young congressman named Lyndon B. Johnson took advantage of this, driving home to his district in Texas from Washington almost every weekend.

In short, the resources used for the war effort were not available to the typical American and his or her previous normal pursuits.

So imagine that somehow the United States had avoided entering World War II. I don't want to talk about the consequences for the world – that is controversial and, more important, completely separable from the issue of the war's effect on the U.S. economy. Millions of cars would have been produced; people would have been able to travel much more widely; and there would have been no rationing of meat, tires, nylons, eggs, butter, and sugar. In short, by the standard measures of prosperity, Americans would have been much more prosperous. And David Brinkley would have been able to pursue his true love. I mention this last consequence not to emphasize the trivia, but, in fact, to do the opposite – to emphasize one of millions of stories of the large human cost that befell even Americans whom the U.S. government did not put at risk of dying.

But I certainly shouldn't leave the issue of human cost without mentioning the ultimate cost – the 407,000 Americans who lost their lives because of the war. As one of my students, a U.S. military officer, put it in a classroom discussion, the war was not good for their economy, to put it mildly.

To many of you, what I wrote above may sound strange. Isn't World War II, in fact, the big counterexample to all that I'm saying? Didn't World War II bring us out of the Great Depression, as the vast majority of Americans and a simple majority of economists, appear to believe? If we go merely with labels and definitions and forget what they're supposed to stand for, then yes. The Great Depression is typically defined as the period from 1929 to 1941, and America entered the war in 1941. But if we go with the idea that depressions are supposed to measure something about the real amount of goods and services available to people, then no. A complete exposition of this is the topic of my next column on Antiwar.com. Stay tuned.

Copyright © 2006 by David R. Henderson.

David R. Henderson is a research fellow with the Hoover Institution and an associate professor of economics in the Graduate School of Business and Public Policy at the Naval Postgraduate School. He is author of The Joy of Freedom: An Economist’s Odyssey and editor of The Concise Encyclopedia of Economics, available online. His latest book, co-authored with Charles L. Hooper, is Making Great Decisions in Business and Life (Chicago Park Press.)

He has appeared on The O’Reilly Factor, the Jim Lehrer Newshour, CNN, and C-SPAN. He has had over 100 articles published in Fortune, the Wall Street Journal, Red Herring, Barron’s, National Review, Reason, the Los Angeles Times, USA Today, and the Christian Science Monitor. He has also testified before the House Ways and Means Committee, the Senate Armed Services Committee, and the Senate Committee on Labor and Human Resources. Visit his website: http://www.davidrhenderson.com


AND, AS POSTED HERE EARLIER...


HOW THE ECONOMIC NEWS IS SPUN: WHEN YOU CAN'T OBSCURE THE NEWS - BUY IT

BUSH BANKRUPTS AMERICA: 'YOU JUST MIGHT WANT TO TELL THAT SONOFABUSH IN DC WHAT YOU THINK OF HIM'