The Rag Blog

Which is closer to your vision of North America?

Vision A: Three interdependent countries with vibrant social movements, respect for labor rights, and environmentally sustainable economies anchored in provision of social needs and respect for cultural autonomy?

Or Vision B: An unequal alliance dominated by the United States, complete with pumped up oil and gas production, increasing militarization, corporate transnational planning groups, and guest worker programs to ensure cheap, vulnerable labor?

If your answer is Vision A, there’s good news and bad news. The good news is that this past August at a summit of the leaders of the United States, Canada, and Mexico in Montebello, Quebec, labor, environmental and globalization activists braved riot police and tear gas to demand democratic input into North American decision-making. The bad news is that the summit was about the Security and Prosperity Partnership of North America (SPP) — the real-world name of Vision B.

While left activists and researchers in Canada and Mexico have been spreading the word about the SPP for several years, so far in the United States the SPP, which was officially launched in March 2005, has mainly caught the attention of the right wing, which sees it as a stealth plan to impose a European Union-style government on the continent.

The SPP is not a North American version of the European Union. But it is a stealth plan — one aimed at bypassing the kind of international solidarity that halted the Free Trade Agreement of the Americas and the Multilateral Agreement on Investment. The European Union emerged after years of public debate and a treaty ratified by member states. By contrast, the SPP is not a treaty and will never be submitted to the U.S., Mexican, or Canadian legislatures. Instead it attempts to reshape the North American political economy by direct use of executive authority. And while the European Union maintains an explicit role for government in addressing inequality within and between countries, the SPP’s foundation is an unequal alliance where the United States retains the political and economic trump cards.

Designed to shore up the United States’ weakening position as a global hegemon, the SPP’s primary goals are to link economic integration of the three countries to U.S. security needs; deepen U.S. access to oil, gas, electricity, and water resources throughout the continent; and to provide a privileged — and institutionalized — role for transnational corporations in continental deregulation. The stakes for labor, the environment, and civil liberties in all three countries couldn’t be higher. Yet because of the SPP’s reliance on executive authority to push the agenda, many of the SPP’s initiatives remain virtually invisible, even to many activists.

SPP Basics

The North American Free Trade Agreement (NAFTA), which went into effect in 1994, was designed to enhance the access of transnational capital from the United States to cheap Mexican labor and Canadian natural resources. The SPP deepens these relations and harnesses the so-called war on terror to an expanded U.S.-Mexican-Canadian trade agenda and a lopsided energy grab to secure U.S. access to dwindling continental oil and gas reserves.

As its name implies, the SPP has two basic parts: the Security Agenda and the Prosperity Agenda. Both are rooted in the United States’ deteriorating global position, particularly its increased competition for access to global oil and gas reserves and worsening trade balance with China.

With the explicit aim of securing North America from “internal” as well as external threats, the Security Agenda coordinates intelligence activities among the three countries and streamlines the movement of “low risk” goods and people (especially so-called “NAFTA professionals”) across borders. It also involves extensive military coordination, much of it focused on protecting energy and transportation infrastructure. (Consolidating a North American military structure no doubt also serves as an offensive hedge against Venezuela’s attempt to shape an independent South American energy policy.)

The Prosperity Agenda continues the Security Agenda’s focus on energy. World demand is growing as traditional sources from the Middle East, Russia, and South America are becoming less secure; and the resulting price increases and realignment of power threaten a redistribution of wealth and power in favor of the oil and gas producers, many of them in the Global South. The Prosperity Agenda aims first and foremost at consolidating U.S. control over North American energy supplies, first by expanding production in Canada and Mexico, and second by increasing U.S. access to that production by deregulating energy markets. In addition to expanding energy production, Prosperity Agenda activities include a tri-national framework for “minimizing” regulatory “barriers”; special committees on the auto and steel industries; removal of constraints on movement of capital and financial services; and expanded and streamlined cross-border transportation networks — networks that will facilitate not only trade within the continent, but more outsourcing to Asia.

The official SPP website posts official documents, but ongoing discussions are shrouded within tightly controlled annual summits, ministerial level meetings, and working groups that exclude civil society participation. Corporations, however, have a privileged view of the road ahead and provide guidance and direction through a specially-created North American Competitiveness Council. U.S. members of the NACC include Wal-Mart, Merck, GE, UPS, FedEx, and Kansas City Southern. The U.S. Chamber of Commerce and the Council of the Americas — whose website brags that its blue-chip members represent the majority of private U.S. investment in Latin America — serve as the U.S. secretariat.

NACC advice is taken seriously. In February 2007, the NACC issued detailed recommendations for energy integration, streamlining regulatory processes, and the speedy resumption of trade after emergencies. Six months later at their August 2007 summit, the countries announced an energy cooperation agreement, an avian flu preparedness plan with emergency border-management procedures, and a regulatory cooperation framework. The regulatory framework — complete with goals and action plan — specifically incorporates NACC recommendations to increase reliance on voluntary standards and to analyze regulations for their cost to trade. Although the framework doesn’t say exactly how principles would be applied to different industries, the NACC’s 2007 report gives several telling examples, including regulations harmonizing “hours of service” for truck drivers that would expand permissible weekly driving hours, which safety advocates are already challenging in court. Canadian plans to “harmonize” pesticide use to U.S. levels — an action that will raise exposure levels for most regulated pesticides — also provide a glimpse at the kinds of regulatory changes we can expect from the SPP.

“Community” from the Top

In the United States, the best-known proponent of the SPP is Robert Pastor, director of the Center for North American Studies at American University. NAFTA broke new ground by linking Mexico (a developing economy) with the United States and Canada (two major industrialized nations) in a pact to increase trade and investment. Predictably, NAFTA increased rather than decreased inequality. But for Pastor, NAFTA’s real problem was its failure to build continent-wide institutions to push integration even further. He sees the SPP as a means of building those institutions, and envisions it as a new model for global governance — by and for elites — that could be used to link other developed and developing countries.

Building a North American Community, a 2005 independent task force report of the Council on Foreign Relations on which Pastor served, reveals the breadth of SPP’s ambitions. The report called for a security perimeter around the three countries by 2010, so that goods and people would be checked once on entry and then move freely — while being tracked — within the continent, greatly diminishing the costs of trade. There would be a common tariff for goods from outside North America. Currently, NAFTA rules of origin require checking goods to ensure they contain sufficient North American content to qualify for duty-free treatment under NAFTA. A common external tariff would save money by eliminating the need to check for North American content. It would also facilitate expanded supply chains and outsourcing.

“Full labor mobility” would be preceded by greatly expanded guest worker programs tying immigration status to employment. “Development” funds for Mexico would translate into transportation and energy infrastructure to help foreign investment push past the maquila zone on the border into central and southern Mexico where poverty is greatest and wages lowest.

Intelligence sharing and joint military exercises would increase “interoperability” and protect strategic energy and transportation infrastructure. Mexican reticence to accept U.S. troops on its soil — the result of eight U.S. invasions since its independence — would be overcome in small steps such as joint disaster coordination and plans for fighting organized crime.

Academic and political exchange programs and North American Studies centers would help build a North American identity. Policy areas not touched by NAFTA or never implemented would be revisited. As one SPP participant put it, during NAFTA negotiations, the Canadians wouldn’t talk about exporting water, the Mexican’s wouldn’t talk about privatizing oil, and the United States wouldn’t talk about immigration. Barriers to maximizing energy production and cross border trade in oil, gas, and electricity would be eliminated and pressure put on Mexico’s state-owned energy company, Pemex, to dramatically open itself to private investment. Air, rail, and trucking companies would be given unlimited access to all three countries.

Meanwhile, a common regulatory scheme would make “harmonized” (read: lower) North American standards the default approach to new regulations, and countries would have to justify more stringent requirements. A seamless North American market would create economies of scale for the largest corporations. Delays and costs of checking goods for compliance at the borders would be minimized. A rule of “tested once” would eliminate “duplicative” reviews of product safety and — according to the council — substantially raise profits for biotechnology and pharmaceutical firms.

The Perils of Being Close

U.S. corporations and elites that dominate continental production chains clearly stand to gain the most from the SPP. But in fact, the SPP’s earliest roots lie in proposals by Canadian businesses and think tanks for what Canadians call “deep integration.” Essentially a strategy for bypassing U.S. protectionism, deep integration seeks to leverage Canada’s geographic proximity for greater access to U.S. markets. The idea received a serious boost in the days after 9/11. The United States buys 80% of Canada’s exports, and so when the United States closed its borders following the attacks, Canadian businesses lost millions of dollars every hour. Canadian elites promptly concluded — correctly — that the price of continued access to U.S. markets was deeper cooperation on security matters.

Canada, like Mexico, quickly signed a “smart-border” agreement and began conforming its security practices to the needs of the Bush administration’s war on terror. In 2002 Canadian officials provided information that helped the U.S. deport a Canadian citizen, Maher Arar, to Syria, where he was tortured. The Canadian government has since apologized, and Arar, a software engineer whose wife stood as a candidate for the New Democratic Party in 2004, has signed on to a public demand that SPP provisions be submitted to Canadians for a vote.

But the SPP’s dangers for Canadians go beyond threats to civil liberties. Like NAFTA and the Canadian U.S. Free Trade Agreement (CUFTA) before it, the SPP is a Trojan horse aimed at trapping Canadian workers into a downward spiral of global competition and neoliberal policies.

Both NAFTA and CUFTA were sold to Canadians on the grounds that increasing trade would boost employment and productivity; that would in turn solidify the economic base for Canadian social spending, including the deeply popular single-payer health insurance program. Instead, elites used the logic of competition to tighten first monetary and then fiscal policy — much as Reagan did in the United States in the 1980s. As in the United States, recession followed. Canadian exports, particularly of raw materials, increased, but overall competitiveness came largely from pushing up unemployment and driving down wages. Meanwhile, budget politics were used to squeeze rather than support social spending. The resulting deterioration in services became the pretext for experiments in private health care provision that could jeopardize the entire single-payer system. In many cases, it is Canadian divisions of U.S. transnationals that are profiting.

Not surprisingly, Canadian activists began arguing for abrogating NAFTA and reversing cutbacks in health care funding and other public services. With its security trump card and stratagem of rule by executive order, the SPP helps sidestep popular opposition to belt-tightening and the more expansive deep integration agenda.

Deep Integration and Natural Resources

Energy provides the strategic example of how SPP and deep integration would merge the interests of Canadian and U.S. elites at the expense of ordinary Canadians.

The United States is the world’s largest energy consumer, and by 2025 it will be importing one third of its supply. Canada is the largest supplier of crude oil and natural gas to the United States, and has been deregulating its energy sector since the 1980s to increase access to U.S. markets. Now that rising oil prices have increased the financial feasibility of oil production from the vast Alberta oil sands, total Canadian oil reserves are second only to Saudi Arabia’s. Canadian oil concerns are more eager than ever to increase sales to the United States.

In a fully integrated, privatized North American energy market, U.S. users would buy the lion’s share of energy resources; at the same time, demand would increase for Canadian production, and so would prices. Not surprisingly, fully integrating North American energy markets figures prominently in the hopes of both U.S. and Canadian elites.

But the same mechanism would make energy more expensive for Canadian consumers, who will be in direct competition with U.S. buyers. In addition, easily-tapped Canadian conventional reserves are dwindling rapidly. Raising oil production accelerates their depletion and risks Canadian energy and environmental security. The huge quantities of gas and water needed for production from the oil sands increase environmental risks even more, and also make economic feasibility dependent on continued high oil prices.

Finally, Canada is home to a quarter of the earth’s fresh water. Although it is not mentioned in official SPP documents, Canadian activists believe that SPP includes discussions of bulk water exports to the United States, threatening Canadian water security just as the world enters a period of anticipated severe water shortages.

From NAFTA to the SPP

If Canada’s path to the SPP can be described as a voluntary regression from developed welfare state to exporter of natural resources, Mexico’s reveals the combination of coercion and repression running through the SPP and NAFTA.

Mexico bought into NAFTA and neoliberalism as a result of the 1980s debt crisis. U.S. banks made huge low-interest loans to developing countries and then ratcheted up interest rates. When Mexico defaulted, the United States and the International Monetary Fund renegotiated Mexico’s loans and saddled Mexico with free-market reforms that opened the country to foreign investment. Wages and living standards plummeted. Mexico abandoned what remained of its development plans and turned to neoliberalism, free trade, and the promise of increased foreign direct investment to pay its bills.

Foreign investment never materialized on the level expected. Meanwhile, Mexico enthusiastically reduced agricultural tariffs under NAFTA even as the United States flooded it with subsidized corn. Two million small farmers were driven from their land, increasing unemployment and driving down wages. Today half of all Mexicans live in poverty, with 15 million in extreme poverty. Half of new labor-market entrants can’t find employment in Mexico, and remittances from migrants to the United States outstrip foreign direct investment. The situation will become even more dire when all remaining agricultural tariffs under NAFTA expire later in 2008.

Any economic plan actually centered on the needs of the Mexican people would include renegotiating NAFTA’s agricultural provisions. Instead, agriculture is off the table, and immigration has taken center stage. Rebuffed by the anti-immigrant backlash in the U.S., Mexico is turning to Canada for an expanded guest-worker program, and the two countries have set up an SPP working group to discuss labor mobility.

Meanwhile, SPP negotiators are discussing funds to address “uneven development.” In practice this means connecting Central and Southeastern Mexico — regions which have some of Mexico’s highest poverty rates and lowest wages, but also some of its richest gas reserves — to U.S. markets. The region is also the target of former president Vicente Fox’s 2001 Plan Puebla Panama, an $8 billion infrastructure program aimed at integrating southern Mexico with the CAFTA countries. The overall vision: stepped-up development of energy and gas reserves, an even lower-wage workforce for maquila production than on the U.S. border, and transportation and energy networks needed to produce and carry finished goods to U.S. consumers.

Of course, appropriating land for highways and other projects requires massive dispossession of farmers and indigenous peoples. Since many of the peasants NAFTA has displaced have already crossed the border to the United States, stepped-up immigration control and labor repression are both in the offing. So far, the two countries appear poised to limit migration from the CAFTA countries into southern Mexico, regulate the flow of Mexican immigrants to the United States in the north, and seal a captive, repressed workforce in between.

Mexico’s participation in the SPP’s security perimeter will greatly stiffen security along its southern border, where several hundred thousand migrants annually try to cross into Mexico from Central America to get to the United States. And the United States has already tightened security along Mexico’s northern border, where 500,000 cross annually.

Bush’s $1.4 billion request to the U.S. Congress for a “Plan Mexico,” which he hopes eventually to extend to Central America, is linked to this plan. Billed as a “new paradigm” for security cooperation and fighting drug crime, in reality it’s another step toward a U.S.-led continental military and security structure. It won’t position U.S. soldiers on Mexican ground, but it will deepen coordination and provide intelligence, training, and equipment to Mexican military and police. The resources are certain to be used to against Mexico’s growing social movements. Mexico’s anti-terrorism law has already made it easier to criminalize protest. In 2002, the People’s Front for Defense of the Land managed to halt construction of an airport that was part of Plan Pueblo Panama, and the Front also participated in the Zapatista campaign to boycott the last presidential election. In April 2006 the group came to the aid of flower growers and vendors in a confrontation with police in nearby San Salvador Atenco. Thirty five hundred police beat 200 of the town’s 300 inhabitants; arrested 150; sexually assaulted 30 women; and killed two youths. For his part in the resistance, the movement’s leader was sentenced to 67 years in prison — the first prosecution under Mexico’s post-9/11 anti-terrorism law.

Mexico’s Energy Matters Too

As with Canada, Mexican energy is where the largest stakes are being played. Mexico is currently the third largest supplier of oil to the United States, yet estimates are that Mexican oil and natural gas reserves could be exhausted in as little as ten years. The SPP’s plan to step up Mexican oil production by completely privatizing gas production and increasing private investment in its oil sector will strip Mexico of crucial resources for development at a time when world oil prices make them most valuable.

The main barrier to the SPP’s privatization strategy is the Mexican constitution, which guarantees the benefits of the energy sector to the Mexican people and places management of oil and gas in the hands of state-owned Pemex. Pemex is a symbol of national sovereignty, and Mexico refused to commit to privatizing Pemex during NAFTA negotiations. But legislation in the ’90s chipped away at Pemex’s jurisdiction while expanding the scope for private sector contracts. More importantly, Pemex was severely undermined during the 1980s debt crisis, when oil and gas revenues were chained to foreign debt repayment.

As a result, Pemex has been chronically starved for funds for exploration and development. The shortage is routinely used as an argument for privatization. The SPP has plans to release a report this year highlighting Pemex’s purported inefficiencies and need for private capital. Sixty percent of Pemex’s revenues go to supplying nearly 40% of Mexico’s national budget; no private firm could survive under similar constraints. Ironically, the 1970s loans that led to the 1980s debt crisis were made so Mexico could develop newly discovered oil during a period of record prices. Those record prices were the result of the 1973 OPEC oil boycott. OPEC deposited the profits from those price hikes in U.S. banks, and those funds in turn became the capital U.S. banks used to lend to Mexico. Chaining Pemex’s revenues to debt repayment in the 1980s meant Mexico was forced to increase output and add to what by then was a glut of world energy supplies — thereby contributing to lower world prices and weakening its own revenues. In effect, Mexico went into debt slavery to help undermine OPEC and cheapen the cost of energy for U.S. corporations. SPP’s agenda brings the cycle full circle, with the United States willing to accelerate exhaustion of Mexico’s remaining reserves to bolster its own increasingly precarious international energy position.

Upping the Ante

The SPP ups the ante for activists. Until now, labor and progressives — at least in the United States — have tended to focus on specific targets such as trade agreements or demands for debt relief. And when we analyzed NAFTA, we analyzed it in class terms, not in geopolitical terms. But the SPP’s goals are broader and deeper even than NAFTA’s goals. They aim at nothing short of remaking the political and economic governance structure of North America.

The wishes of Canadian and Mexican elites notwithstanding, the SPP’s primary purpose is to buoy U.S. capitalism’s flagging international position, from its trade deficit to its energy deficit. U.S. security, energy and transportation needs are the touchstones, and the draft agreement aligns the policies of Canada and Mexico — and appropriates natural resources — to meet those needs. Economic integration is conditioned on military integration, which in turn aims at consolidating the U.S. position in the hemisphere.

While the United States maintains most of the economic leverage in the triad, most hot-button issues are in Mexico and Canada. For U.S. activists in particular, bringing these issues alive will first require a much deeper understanding of our neighbors, and an ability to link their issues to domestic U.S. concerns.

Chief among the dangers for ordinary people in all three countries are the environmental consequences. Increasing rates of fossil fuel extraction in North America may feed the U.S. energy habit, but the solution is short term. The contributions to global warming for North America and the world, however, will not be.

The SPP’s bundling of security with economic concerns also fuels Bush’s war on terror, the accelerating militarization of U.S. foreign policy, and continued U.S. leadership of neoliberal globalization. Canada’s commitments of troops in Afghanistan, increased military spending, and willingness to find common ground with the United States on Latin America and the Caribbean are one product of the noxious mix. Another is Mexico’s willingness to serve as a counter-weight to Venezuelan attempts to harness its oil wealth to alternative regional and global development strategies.

In terms of daily governance, the SPP privatizes the regulatory functions of government on an international scale not seen before in industrialized democracies. NAFTA and other WTO agreements limit the legislative and regulatory powers of member states by imposing global standards such as “market access” and “national treatment” on how countries treat foreign investors. These standards create “one way roads” to privatization once countries begin liberalizing a sector. Applied to Canadian experiments in private health care, they could end up forcing Canada first to open its doors to for-profit foreign providers and insurance companies, and then to pay them the same subsidies given to Canadian public and nonprofit operators. In the United States (where health insurance is already private), they could be used to prevent the United States from putting its own single-payer system in place.

By contrast, the SPP bypasses national authority to create formal, tri-national structures for corporate regulatory input prior to involvement by legislatures or citizens. Many SPP goals are thus hidden at their inception; even after they emerge, most will be buried in the daily workings of executive agencies who have been directed to give maximum attention to corporate needs and trade. In the United States, a short list of agencies already involved in the SPP includes the Department of Justice, the Department of State, the Federal Trade Commission, the Federal Communications Commission, the Departments of Agriculture and Energy, and the Department of Homeland Security.

Finally, the SPP is a frontal assault on labor and civil liberties. Plan Mexico should be seen as a threat to human rights throughout the continent. The North American labor movement desperately needs a democratic Mexico where independent organizing and labor rights can be exercised without threat of violence. Instead, the SPP will intensify exploitation of Mexican labor and deepen the low wage neoliberal model in both the United States and Canada, as well.

What It Will Take

Currently, Bush is politically weakened by the Iraq war, Mexico’s president Felipe Calderón by his election scandal, and Canadian prime minister Stephen Harper by his lack of a parliamentary majority, raising the question of whether the SPP will survive the leaders’ terms in office.

But even if it were stopped in its current form, much of the SPP would continue. A Framework for Regulatory Cooperation has been signed, complete with goals for action and annual work plans. The North American Energy Working Group — now integrated into the SPP — was actually established in 2001. Plan Mexico, once funded, will take on its own life, and the push to privatize Pemex will continue.

Opposition to Plan Pueblo Panama gives some indication of the depth and breadth of the activism that will be needed to be effective with the SPP’s agenda. Calderón recently revived Plan Puebla Panama, with an added military component — no doubt inspired by the SPP. Yet it was stalled for many years by protests against displacement of farmers and destruction of the environment, and a vibrant cross-border network of activists has grown up around it. The breadth of the Plan Puebla Panama led activists to conclude that opposing environmentally destructive infrastructure projects wasn’t sufficient: what is necessary is a deeper understanding of the economic and political vision behind Plan Pueblo Panama, and development of an alternative analysis.

An effective response to the SPP agenda will require the same kind of expanded cross-border contacts and focused study of the North American and global political economies. This is the very work the left needs to do to begin creating economic and political alternatives that reflect its values.

The challenge is particularly difficult for activists in the United States. Unlike the left in countries where domestic agendas have been affected by U.S. actions for many years, most in the United States think of domestic issues as controlled by domestic politics. But as rising oil prices combine with a falling dollar, and U.S. economic autonomy begins to be more constrained, more people in the U.S. may understand the need for different allies.

U.S. activists need a democratic Mexico with strong labor rights and a Canadian welfare state that survives the ravages of neoliberal globalization. We need to build an environmental agenda based on conservation and renewable resources and an economic agenda based on diversity and human rights. We need a progressive voice that can drown out right wing cries that the problem of globalization is the loss of U.S. dominance and power. Most of all, we need an international, powerful, and organized response from the left, and popular forces to challenge the more deeply coordinated and increasingly militarized forces of international capital. Reasoned opposition is no longer enough.

This article is from the January/February 2008 issue of Dollars & Sense: The Magazine of Economic Justice.

Katherine Sciacchitano is a former labor lawyer and organizer. She currently teaches at the National Labor College in Silver Spring, Maryland.

“If we choose to enjoy the advantages of a system of leveraged financial intermediaries, the burden of managing the risk in the financial system will not lie with the private sector alone. Leveraging always carries with it the remote possibility of a chain reaction, a cascading sequence of defaults that will culminate in financial implosion if it proceeds unchecked. Only a central bank, with its unlimited power to create money, can with a high probability thwart such a process before it becomes destructive. Hence, central banks have, of necessity, been drawn into becoming lenders of last resort. But implicit in such a role is the assumption that the burden of risk arising from extreme outcomes will in some way be allocated between the public and private sectors. Thus, central banks are led to provide what essentially amounts to catastrophic financial insurance coverage.”

That statement was made by Alan Greenspan, then the chairman of the Federal Reserve, to a meeting of the Council on Foreign Relations on Nov. 19, 2002. Even through his turgid prose, Greenspan’s message was clear: Trouble is coming, and when it arrives, the public is going to foot the bill.

Two days later, in an address to the National Economists Club in Washington, Ben Bernanke, then a governor of the Fed, gave a speech on preventing “violent financial crises which lead to ‘fire sales’ of assets and falling asset prices,” in which he touted that, “the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

These two speeches signalled the intent of the Federal Reserve, acting on behalf of the international financier oligarchy, to bail out the banking system when the global financial system collapsed, as they had to know it would. What they feared then, has now come to pass, and Bernanke and Treasury Secretary Henry Paulson are carrying out the plan.

Bailout Schemes

Paulson and Bernanke, and the bankers behind them, would have you believe that their actions are aimed at protecting the American people, because that is the only way they can sell their bailout plan to the public. Instead of calling it a banking crisis, they call it a housing crisis; rather than admitting they are trying to save the value of their mortgage debt—and the piles of leveraged bets related to those mortgages—they claim they are trying to protect the homeowners from foreclosure. They are, to put it politely, lying through their teeth.

Indicative is the so-called “stimulus plan” passed by the House and the Senate. Most of the publicity around the stimulus centers on the tax rebates of $600 per person, but the bill also contains measures that would raise the maximum size of a mortgage that Fannie Mae and Freddie Mac can purchase, from the current $417,000 to $729,750, a move which will effectively allow significant numbers of mortgages—and the securities they nominally back—to qualify for Fannie’s and Freddie’s implicit government guarantee. The real beneficiaries here are the financial institutions and investors holding these mortgages and their mortgage-related securities—it is the value of the paper, and the solvency of the institutions which hold it, which is being protected.

As a further example, take the scheme outlined by New York banker and real estate magnate Howard P. Milstein in an op-ed in the Feb. 6 New York Times, in which he calls for the Federal government to “guarantee” all subprime mortgages. “As these mortgages would be guaranteed by Treasury,” Milstein writes, “they would suddenly be assessed, on bank balance sheets, at their original value—and a significant amount of the banks’ lost capital would be restored.” That, in turn, would allow the banks to “buy back the subprime debt now being held by foreign banks and other financial institutions.” Milstein offers this plan, he says, “out of concern for the health of the global financial system.”

What both of these schemes have in common is that they would transfer huge costs to the public, which is precisely what Greenspan said some five years ago would be done. The idea that these moves are a response to a “subprime housing” crisis is merely a marketing gimmick, a way to sell a bailout of the big banks and other major players to a credulous public, a claim with no more substance than a toothpaste commercial.

Underlying all the bailout talk is the idea that the valuations of financial assets must be protected, and that it is in the interests of the public to do so. That, too, is a lie.

The U.S. economy is drowning in debt, and the measures being proposed by the bankers all involve, in one way or another, the creation of yet more debt. That, in itself, is nothing new, but these plans would add a dangerous new element, by turning trillions of dollars of financial market debt into obligations guaranteed by the United States government, and the population. The essence of all these plans is to dump a significant portion of the losses in the financial markets onto the public, all in the name of helping the “little guys.”

These plans are lunacy, and any attempt to use the government to bail out a significant portion of the worthless financial paper will backfire spectacularly, setting off a hyperinflationary storm. That the bankers would consider such schemes, shows them to be bankrupt both financially and intellectually. They would actually be better off admitting that they are bankrupt, and seeking government protection under the principles outlined in LaRouche’s Homeowners and Bank Protection Act. Being sane is always better than the alternative.

Privateers

Sanity, however, appears in short supply among financier circles, which is why we find the growing push to “help” the public by charging them for the use of taxpayer-funded infrastructure. This scam, which is marketed under the name of public-private partnerships, or PPPs, involves selling or leasing public property to corporations, and then charging the public an arm and a leg to use it.

The rationale for this is the claim that the private sector can manage such projects more efficiently than can the government, thus providing the public better service at a cheaper cost. It is a variation on the argument Enron made to the State of California to push energy deregulation, but what California got instead was outrageous electricity prices and blackouts. Just, we should add, as Lyndon LaRouche and EIR warned.

The premise for these claims has repeatedly been proven false, with private projects generally costing far more than government projects. This should be a rather obvious point, particularly when the project is financed by private equity companies which are in the business of making money, not building infrastructure.

For comparison, take the state-built and state-run Dulles Toll Road and the private Dulles Greenway in Northern Virginia. The 12-mile Dulles Toll Road has had one rate hike since it opened in 1984, raising the toll at its main plaza from 50 cents to 75 cents in 2005, with the increase slated to help cover the cost of a planned commuter-rail project along its route. In contrast, the 14-mile Dulles Greenway, built by private firms as an extension of the Dulles Toll Road, has seen a steady series of rate increases, with the basic fare now standing at $3.50.

‘Lexus Lanes’

There are also many projects underway to create special fee-based lanes (“Lexus lanes”) on public highways under the guise of dealing with congestion, and even discussions of tracking all cars, and charging drivers by the mile driven on all “public” roads. Add to this, the growing number of schemes to privatize water and sewer systems, bridges, tunnels, airports, and other infrastructure projects, turning them into profit centers.

The pressure for governments to agree to such deals is rising, as the effects of the economic collapse are felt. Falling real estate values, for example, are beginning to devastate county tax receipts, and the breakdown of the securities markets is making it increasingly difficult for state and local governments to raise money for infrastructure projects through the sales of bonds. Under such circumstances, the lure of money from private equity funds to buy or lease government assets is increasingly powerful. But governments which accept such bids are basically selling their populations down the river.

The treating of infrastructure as a profit center to be judged in its effectiveness by the amount of revenue it produces, is a sign of a society gone insane. The purpose of infrastructure is to raise the productive power of the people in the area it serves, as a way of making the economy more productive. Selling it off to the highest bidder, who will charge as much as possible to maximize income, is actually counterproductive to economic growth.

16/02/08 “ICH” — – Even veteran Fed-watchers were caught off-guard by Chairman Bernanke’s performance before the Senate Banking Committee on Thursday. Bernanke was expected to make routine comments on the state of the economy but, instead, delivered a 45 minute sermon detailing the afflictions of the foundering financial system. The Senate chamber was stone-silent throughout. The gravity of the situation is finally beginning to sink in.

For the most part, the pedantic Bernanke looked uneasy; alternately biting his lower lip or staring ahead blankly like a man who just watched his poodle get run over by a Mack truck. As it turns out, Bernanke has plenty to worry about, too. Consumer confidence has dropped to levels not seen since the 1970s recession, real estate has gone off a cliff, credit-brushfires are breaking out everywhere, and the stock market continues to gyrate erratically. No wonder the Fed-chief looked more like a deck-hand on the Lusitania than the monetary-czar of the most powerful country on earth.

Bernanke’s prepared remarks were delivered with the solemnity of a priest performing Vespers. But he was clear, unlike his predecessor, Greenspan, who loved speaking in hieroglyphics.

Bernanke: “As you know, financial markets in the United States and in a number of other industrialized countries have been under considerable strain since late last summer. Heightened investor concerns about the credit quality of mortgages, especially subprime mortgages with adjustable interest rates, triggered the financial turmoil. However, other factors, including a broader retrenchment in the willingness of investors to bear risk, difficulties in valuing complex or illiquid financial products, uncertainties about the exposures of major financial institutions to credit losses, and concerns about the weaker outlook for the economy, have also roiled the financial markets in recent months.”

Yes, of course. The banks are ailing from their subprime investments while Europe is sinking fast from $500 billion in unsellable asset-backed garbage. The whole system is clogged with crappy paper and deteriorating collateral. Now there are problems popping up in auction rate sales and the normally-safe municipal bonds. The whole financial Tower of Babel is cracking at the foundation.

Bernanke continues: “Money center banks and other large financial institutions have come under significant pressure to take onto their own balance sheets the assets of some of the off-balance-sheet investment vehicles that they had sponsored. Bank balance sheets have swollen further as a consequence of the sharp reduction in investor willingness to buy securitized credits, which has forced banks to retain a substantially higher share of previously committed and new loans in their own portfolios. Banks have also reported large losses, reflecting marked declines in the market prices of mortgages and other assets that they hold. Recently, deterioration in the financial condition of some bond insurers has led some commercial and investment banks to take further markdowns and has added to strains in the financial markets.”

Bernanke sounds more like an Old Testament prophet reading passages from the Book of Revelations than a Central Banker. But what he says is true; even without the hair-shirt. The humongous losses at the investment banks have forced them to go trolling for capital in Asia and the Middle East just to stay afloat. And, when they succeed, they’re forced to pay excessively high rates of interest. The true cost of capital is skyrocketing. That’s why the banks are protecting their liquidity and cutting back on new loans. Most of the banks have also tightened lending standards which is slowing down the issuance of credit and threatens to push the economy into a deep recession. When banks cramp-up; the overall economy shrinks. It’s just that simple; no credit, no growth. Credit is the lubricant that keeps the capitalist locomotive chugging-along. When it dwindles, the system screeches to a halt.

“DOWNSIDE RISKS TO GROWTH HAVE INCREASED”

Bernanke again: “In part as the result of the developments in financial markets, the outlook for the economy has worsened in recent months, and the downside risks to growth have increased. To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so. The virtual shutdown of the subprime mortgage market and a widening of spreads on jumbo mortgage loans have further reduced the demand for housing, while foreclosures are adding to the already-elevated inventory of unsold homes. Further cuts in homebuilding and in related activities are likely…..Conditions in the labor market have also softened. Payroll employment, after increasing about 95,000 per month on average in the fourth quarter, declined by an estimated 17,000 jobs in January. Employment in the construction and manufacturing sectors has continued to fall, while the pace of job gains in the services industries has slowed. The softer labor market, together with factors including higher energy prices, lower equity prices, and declining home values, seem likely to weigh on consumer spending in the near term.”

So, let’s summarize. The banks are battered by their massive subprime liabilities. Housing is in the tank. Manufacturing is down. Food and energy are up. Unemployment is rising. And consumer spending has shriveled to the size of an acorn. All that’s missing is a trumpet blast and the arrival of the Four Horseman.

How is it that Bernanke’s economic post-mortem never made its way into the major media? Is there some reason the real state of the economy is being concealed from ‘we the people’?

Bernanke continues: “On the inflation front, a key development over the past year has been the steep run-up in the price of oil. Last year, food prices also increased exceptionally rapidly by recent standards, and the foreign exchange value of the dollar weakened. …(If) inflation expectations to become unmoored or for the Fed’s inflation-fighting credibility to be eroded could greatly complicate the task of sustaining price stability and reduce the central bank’s policy flexibility to counter shortfalls in growth in the future.”

Right. So, if the Fed’s rate-cutting strategy doesn’t work and the economic troubles persist (and prices continue to go through the roof) then we’re S.O.L. (sh** out of luck) because the Fed has no more arrows in its quiver. It’s rate cuts or death. Great. So, we can expect Bernanke to hack away at rates until they’re down to 1% or lower (duplicating the downturn in Japan) hoping that the economy shows some sign of life before it takes two full wheelbarrows of greenbacks to buy a quart of milk and a few seed-potatoes.

Sounds like a plan!

We don’t blame Bernanke. He’s been remarkably straightforward from the very beginning and deserves credit. He’s simply left with the thankless task of mopping up the ocean of red ink left behind by Greenspan. It’s not his fault. He should be applauded for dispelling the decades-long illusion that a nation can borrow its way to prosperity or that chronic indebtedness is the same as real wealth. It’s not; and the bill has finally come due.

Of course, now that the low-interest speculative orgy is over; there’s bound to be a painful unwind of hyper-inflated assets, falling home prices, tumbling stock markets, increased unemployment, and a generalized credit-contraction throughout the real economy. Ouch. Who said it was going to be easy?

Bernanke’s summation:

“At present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt….It is important to recognize that downside risks to growth remain, including the possibilities that the housing market or the labor market may deteriorate to an extent beyond that currently anticipated, or that credit conditions may tighten substantially further.”

(Editor’s translation) “Discount everything I’ve said here today if the economy blows up — as I fully-expect it will — from decades of regulatory neglect and the myriad multi-trillion dollar Ponzi-schemes which have put the entire financial system at risk of a major heart attack”.

Bernanke’s candor is admirable, but it is little relief for the people who will have to soldier-on through the hard times ahead. Perhaps, next time he could spare us all the lengthy oratory and just forward a brief cablegram to Congress saying something like this:

“We are deeply sorry, but we have totally fu**ed up your economy with our monetary hanky-panky. You are all in very deep Doo-doo. Prepare for the worst.”

Last week, the Court of Appeal ruled that Lotfi Raissi could claim compensation for his arrest and imprisonment after being wrongly accused of training 9/11 pilots. Here, in his first interview since the landmark decision, he tells of his prison hell, nervous collapse and the terrible toll his ordeal has had on his personal and professional life

17/02/08 “The Observer” — – Lotfi Raissi seemed destined to become one of the most reviled men in history. A pilot who had trained in the US before moving to England, he was the first person to be accused in connection with the 11 September attacks. He was alleged to be one of its chief ringleaders, teaching the 9/11 terrorists how to fly and crash planes into buildings. It’s hard to think of a more damaging accusation. Harder still when Raissi, whose chubby face and small, smiling eyes makes him seem younger than his 33 years, was wholly innocent.

But this did not stop him spending almost five months in Belmarsh high-security prison in south-east London after the American authorities told their British counterparts of Raissi’s ‘involvement’ in the worst terrorist attack in US history. ‘It was appalling,’ Raissi said yesterday as he tried to live a normal family life, meeting his brother for a family lunch followed by watching the Manchester United-Arsenal FA Cup tie. ‘I was guilty until I proved my innocence.’

Last week, three judges at the Court of Appeal ruled he should be allowed to renew his bid for compensation from the government, overturning a decision by the High Court last year. ‘I had faith in the judiciary system,’ Raissi said. ‘Thank God justice is what I got.’

However, it is clear that his wounds are still open. He says he is suffering from post-traumatic stress disorder and his general health is not good. He has been seeing a doctor for the past two weeks because of high blood pressure. ‘I haven’t slept properly for the past seven years,’ he said.

To understand how damaging the accusations were against Raissi, it is necessary to understand his background. ‘My family back home in Algeria have been fighting terrorism for the past 15 years,’ he said. ‘My uncle is chief of an anti-terrorist branch. We abhor terrorism in any shape or form in our family. This is very damaging for us.’

The reference to ‘us’ is a telling one. Raissi is angry not for what happened to him but because of the shame it brought on his family. Their dignity, he says, has been taken away.

He recalls the day he was arrested by British police: 21 September 2001. He was dragged out of his house naked at three o’clock in the morning. There was banging, shouting, swarms of police. His wife, Sonia, and his brother, Mohammed, were also arrested but released four days later.

‘It was a kidnapping; they could have just sent me some questions and I would have been glad to answer all the questions at a police station,’ he said. ‘I didn’t even have the chance to read the warrant. There were guns everywhere.’

But his nightmare was only just beginning. He was taken to Paddington Green high security police station, which is used to house terrorist suspects. There was evidence – a great deal of evidence, the authorities implied – that would prove his guilt.

‘It was very confusing,’ Raissi said with a gentle understatement that is characteristic of how he views the tortuous events of the past six years. ‘They were saying I was involved in 9/11; they were blaming me for everything to do with 9/11. They said, “You prepared those hijackers”. I love football, I love dancing, I love going out – my life is so different from those who flew the planes. I just didn’t understand what they were talking about.’

It didn’t take long before the ‘evidence’ – false claims that he was linked to five of the hijackers – to drip through into the media. Even before he was arrested, journalists had mysteriously turned up outside his door asking questions.

From Paddington Green he was moved to Belmarsh, his nadir. The notorious London prison is used to house some of the most dangerous criminals in Britain. Raissi, with his gentle manners and humble persona, did not stand much of a chance in the febrile atmosphere that followed 9/11. Society wanted vengeance. The feeling permeated through the prison’s walls.

‘I feared for my life in court and inside prison,’ he said. ‘They moved me from the high security unit after three or four days and sent me to the normal wing, where I wasn’t safe. I suffered racism and discrimination. I got stabbed twice by other prisoners and no one investigated.’

Why was he stabbed? ‘Everyone had become a judge and a jury,’ he says with the sort of resignation which suggests he knows he will never be reconciled with what happened behind the prison walls. The psychological pressures of being accused of one of the most reviled crimes in history soon took their toll: ‘I had two nervous breakdowns. One in prison, one when I came out. My brother has been suffering, too.’

In bringing his claim for compensation, Raissi argues that he was arrested chiefly because he was Algerian, Muslim and Arab, an airline pilot – someone who effectively ticked the boxes of an identikit terrorist.

‘I was arrested because of my profile,’ he said. ‘Why didn’t they arrest the instructors who actually trained the terrorists?’

The Court of Appeal’s judgment on Raissi’s arrest, and the refusal to grant him bail, was damning. ‘Viewed objectively, it appears to us to be likely that the extradition proceedings were used for an ulterior purpose, namely to secure the appellant’s detention in custody in order to allow time for the US authorities to provide evidence of a terrorist offence,’ the three judges hearing his case concluded.

But the judges were most scathing about the role of the British authorities. ‘We consider that there is a considerable body of evidence to suggest that the police and the CPS [Crown Prosecution Service] were responsible for serious defaults.’ It is difficult to imagine a more damning assessment.

The ruling also shone an uncomfortable spotlight on the way Britain and the United States trade intelligence and raised troubling questions about the two countries’ relationship when it comes to fighting terrorism. Why did Britain listen to the US? Why was it so eager to arrest Raissi, when even the American authorities had urged Britain only to make ‘discreet’ inquiries into his background.

The justification for Raissi’s arrest was at best spurious, even accepting – as the Court of Appeal did last week – that the weeks following 9/ 11 were turbulent ones.

Even the US, it seems, soon realised that Raissi was unlikely to be the man they were looking for. A couple of months after he was arrested, intelligence sources told the Washington Post that ‘we put him in the category of maybe or maybe not, leaning towards probably not. Our goal is to get him back here and talk to him to find out more.’ Raissi was still held for almost three further months after this statement was made.

What triggered the Americans’ original interest in him is equally bewildering. He had spent a period at a flight school in Phoenix, Arizona and when his student visa had expired he returned to Algeria before moving to London.

Travel records appeared to show that in June 2001 he was in Las Vegas when Ziad Jarrah – one of the hijackers of Flight 93, the plane that crashed after passengers stormed the cockpit – was also in the gambling city.

It was suggested that the FBI had discovered Raissi’s name in a rental vehicle hired by Salem al Hazmi, one of the five terrorists who hijacked Flight 77 which crashed into the Pentagon. It was also claimed that a video existed of Raissi celebrating with Hani Hanjour, another of the Flight 77 hijackers. Telephone records apparently corroborated claims he had called four of the hijackers.

But none of the claims was true and the US authorities and the CPS were unable to produce any evidence to back up their allegations.

‘It was media propaganda,’ Raissi said. ‘They said I was in a videotape with one of the hijackers that flew the aeroplane. The reality was the person in the video was my cousin and doesn’t have anything to do with terrorism.’

Ultimately, American officials were forced to make a provisional request for his extradition on the grounds that he had lied on his pilot’s licence by not revealing he had undergone knee surgery, an allegation that in itself was later proved false.

In April 2003 Raissi was formally released on all charges. Six months later he announced he was suing the FBI and the US Department of Justice for $10m for ruining his life. He was forced to drop the civil action after a recent change in the law barred individuals from suing sovereign states.

But it is the British, rather than the US authorities, who Raissi really wants to pursue through the courts. ‘Where is the sovereignty of the UK government? They have to come up with evidence. There was no evidence. They didn’t provide anything to the judge. That’s why there was no case to answer – it was a serious default by the police and the CPS. I’m shocked.’

His claim for compensation against the UK government was dismissed in the High Court last year. But he was determined to continue his legal fight, not for money, he says, but to clear his name.

‘People talk about the compensation. It’s nothing to do with it. I lost my life, I lost my career. There was a stage when I lost my dignity – that is unacceptable when we live in the civilised world. It’s a matter of principle. I want my life back; I want to clear my name and that of my family and to have a normal life.

‘I was 27 when I got arrested, now I’m 33. I was going in and out of court for seven years fighting this case – I didn’t have a life. If they don’t give me an apology it will be the same fight over the next three or four years.’

Home Secretary Jacqui Smith has 14 days to decide whether she will fight Raissi’s case to go for compensation. ‘The government should fix this problem,’ he said, his voice rising slightly to express his bewilderment at the idea the authorities could countenance such an idea. ‘I am completely exonerated. The only thing I expect is a widely publicised apology. If they appeal the decision it will be a sham. They will be wasting taxpayers’ money.’

Raissi is not the only one to have suffered as a result of his ordeal. His wife lost her job at Air France. His brother’s wife lost her job at Heathrow, too. The strain has damaged his relationship with his wife. ‘Even with my marriage I struggle very much. Every part of my life I struggled with. It is an agony.’

Today, Raissi relies on the financial support of friends and family to get by. Initially when he came out of prison and had no work he refused all benefits. ‘I’m not working, I’m blacklisted from all airline jobs. I’m framed as a terrorist.’

Even now, despite being completely exonerated, he is banned from flying anywhere but Algeria because his American extradition warrant is still outstanding.

‘We hope Raissi’s complete exoneration will mean the US authorities will withdraw the warrant as a matter of urgency,’ said Jules Carey, his lawyer from Tuckers solicitors.

Carey also wants to see urgent action from the British authorities. ‘Last week’s judgment should not only cause the Home Secretary to review the use of

provisional extradition warrants but also prompt the police and the Crown Prosecution Service to overhaul their systems to avoid miscarriage of justice in the future,’ Carey said.

Given everything he has been through, it would seem natural if Raissi had become a bitter man, consumed with enmity towards those who locked him away without any credible evidence. But the truth is more complicated, even cathartic.

‘I learnt to forgive, I learnt patience,’ he said. ‘But it has been damaging to my life and my dignity – that is something I will never forgive.’

During the six years he fought to clear his name, he would be approached by strangers at the coffee shop near his home in Chiswick, west London.

‘They had heard about my case and would come up and say to me: “Hopefully this miscarriage of justice will be overturned.” I am very grateful for their support. My life in London is something I cherish very much. I love England.’ By way of emphasising his anglicisation he adds with evident pride: ‘I’m a big fan of Man United.’

But then Raissi says something else, something that should serve as much as a warning as an observation. ‘I always say Britain is a civilised country with beautiful people. I really cherish the customs, the way of life here. But after 9/11 things changed.’

Innocent Men

2 June 2006 Police arrested 23-year-old Mohammed Abdul Kahar and 20-year-old Abul Koyair after raiding their home in Forest Gate, east London. Mr Kahar was shot in the shoulder during the raid. Both were later released without charge. On the brothers’ request the police issued an apology for the hurt they had caused, but insisted that, based on intelligence received, they had ‘no choice but to mount a robust operation, which required a fast armed response’.

26 July 2007 Five students, Irfan Raja, Awaab Iqbal, Aitzaz Zafar, Akbar Butt and Usman Malik, were jailed for downloading and sharing extremist literature. The convictions were quashed in the Court of Appeal last week, with the judge concluding there was no proof of terrorist intent.

21 January 2008 Six Pakistani men were arrested at Gatwick on suspicion of terrorist activity. They were later released after it emerged that they were all relatives or supporters of Chaudhry Shujat Hussain, a Musharraf lieutenant. A statement was swiftly released, apologising for the incident and ‘any personal distress that was caused to the individuals concerned’.

17/02/08 “ICH” — — Do not be fooled! Barak Obama’s call for National Infrastructure Reinvestment Bank (NIRB) does not signal the return of the Democratic Party to the values of FDR and a revival of the Constitutional prerogative to ‘promote the general welfare’, but would rather provide more welfare for Wall Street and worse. Obama’s plan is nothing more than the direct means of instituting the Rohatyn-Rudman National Investment Corporation (NIC) plan called for in 2005, which in essence is a revival of Mussolini’s methods of corporatist control of the state in a politically correct post modern fashion..

When Senator Obama states that his National Investment Reinvestment Bank will magically turn $60 billion into trillions of dollars as he did in his Feb 13th Jamesville, WI speech, one can easily realize that the only way that this can happen is through the perverse magic of Wall Street. What would happen is that bonds floated by the NIRB will be bought on the open market, to then be speculated upon, securitized as derivatives, traded and ultimately used as collateral on the newly built infrastructure. What we will see is the emergence of an infrastructure bubble to replace the mortgage bubble, propped up by initial government expenditures towards infrastructure. This is just the start as Obama will fund the feel good ‘carbon credit’ swap to be the next blast of hot air to make Wall Street giddy. This is a key insight to a true understanding of what is going on. Bailout the financial powers with a clever plan that will raise money to then buy up hard assets, in other words the remaining wealth of our nation, as the meltdown crisis of over a quadrillion in derivatives losses grows and grows..

Besides artificially propping up the markets, Obama’s NIRB, as an initiation of the Rohatyn/Rudman infrastructure investment model, opens the door to the privatization of public assets. International predators and asset-strippers want to buy up public highways and impose cutthroat tolls, as they are already doing in many states. Then they run the turnpikes into the ground as cash cows while they mercilessly bilk the users. Privatization is a key goal of the Anglo-American financiers behind this scheme. Both the NIC and NIRB rely on the new darling of the markets, PPPs, known as public private partnerships. PPPs are the means by which market forces will dictate, and that is the word, the implementation of these projects. The argument is that the PPP will keep costs down, but in reality only because the private corporations, now controlling the public sector, will own the assets of what is being constructed. The PPP model is none other than the model implemented by Mussolini in his fascist corporate state. The creation of NIRB funds hark back to Hjalmar Schact’s ‘MEFO’ bills that created the speculative bubble of money so that the National Socialists could rearm Germany and fight World War II..

Since 9/11 America has certainly turned into a top-down police state, but true post-modern fascism requires a popular movement to usher it into power. Bush has created a dictatorship out of the Presidency, now the next step towards fascism is being marketed to exploit the desire for change. The depressed national mood, due to the war and economic recession/depression has compromised sane reasoning and courageous opposition needed now more than ever. This has created the conditions for a newcomer to magically appear with a message of hope, using the mantra ‘Change’, wrapped in a swooning fever that has infected the young and left liberal excuse machines, such as ‘Move On’ who were never serious about stopping Bush/ Cheney and the war.

Since he passed his audition at the Democratic convention in 2004, Senator Obama has been taken over by George Soros and other hedge fund millionaires to launch a campaign out of nowhere, based on nothing but rhetoric and Wall Street millions. As darling of the rich elitist Kennedy/Kerry/Dean wing of the Democratic Party, Obama’s pseudo-Camelot will deliver Wall Street and the Anglo-American financiers the goods while disguised in a patina of racial teflon and faux populism from the upper crust. For substance ask, where is the bill in the Senate by Kennedy/Kerry/Obama calling for a freeze on all foreclosures? Where’s their filibuster against the war? Where is a real minimumn wage in the form of a living wage? Where is impeachment of Bush-Cheney? Why did Senator Obama move against raising heating oil assistance to the poor in the recent spending bill?

The answer to this last question, besides Rohatyn, is Obama’s top economics controller, Austan Goolsbee, a sinister Skull & Bones, Friedmanite Chicago School free trade/free market economist who has delivered the real answer to the question of the difference between Senator Obama and Senator Clinton. Goolsbee stated on CNBC that Obama is more market friendly ­ more in the pocket of Wall Street. This is precisely the establishment’s secret fear of Hillary Clinton that she might act as her heroine Eleanor Roosevelt, to implement a post modern New Deal that would oppose austerity measures against programs that help the poor. That she would fund essential public services, like hospitals and schools, and provide universal health care available to all. The greatest fear is that she might act like FDR to now start regulating the markets starting with a 1% Tobin tax which could eliminate the income tax burden for everyone earning less than $125,000 year with plenty of money to fund the basic social programs of a civilized and truly decent society.

Now Obama, with economic advisers such as David Cutler, who believes that rising health care prices are good for the economy, and Jeffrey Liebman, who wants to partially privatize social security, you see that Obama’s MBAs will be quite good at implementing the vision of the Democratic godfather Felix Rohatyn (ex-Lazard Freres) and Republican Warren Rudman, an proponent of savage austerity and the wrecking of entitlements.. Their obsession with balanced budgets, privatization, and asset stripping will be given new cover as the United States is dissolved into one great corporatist PPP.

Yes, we do need infrastructure, but the reason we have an infrastructure crisis is because people like Rudman and Rohatyn have influenced thinking against infrastructure projects because it would get in the way of their balanced budget mania and plans to loot the economy. Now they have a new solution and salesman. Watch out!

Remember it was Rudman who was a key figure in the conservative revolution around Gingrich. The nefarious interest of Rohatyn is even more sinister considering that this is the fellow who was part of the international team supporting fascist dictator Augusto Pinochet, where Rohatyn’s social security privatization scheme was first tried. Soon a limited revised version of social security privatization will be introduced by Obama when an alarm is pulled by Wall Street during a Obama Presidency. In the 1970’s Rohatyn became the actual dictator of New York City under Big Mac (the 1975 Municipal Assistance Corporation), trumping the city government, as a financial czar who cared more about the city’s bond rating than lives, cutting essential services, including many inner-city hospitals in a mad example of a PPP. Rohatyn, who is also recognized as the money bags behind the pro-Obama Democratic Leadership Council, is also a big proponent of military privatization which is another step towards feudal fascism. No wonder the Democrats have not stopped the war; it is good for their business arrangements too.

While Senator Obama says that he will stop the war and use that money to initially finance the NIRB and his green initiatives, this will do nothing to stop the speculative forces that are causing the present hyperinflationary bubble. Will Obama stand up to the speculators whose gambling is responsible for up to 40% of the price of every gallon of gasoline? Not likely.

Sure the NIRB will create some low-wage jobs, but the PPP arrangement will make certain that organized labor does not get assertive about living wages and benefits, all the while private companies welcome a work force of illegal immigrants who will do much of the work for virtual slave wages as is already the case.

17/02/08 “Antiwar” — — The recent spectacle of Congressional hearings on the alleged use of steroids and/or Human Growth Hormone (HGH) by Roger Clemons, a professional baseball player nicknamed “the Rocket,” throws into question the viability and functionality of a Congress controlled by the Democratic Party. The House Government Reform Committee, chaired by Representative Henry Waxman (D-California), carried out its own made-for-television version of Court TV, grilling the All Star pitcher and his former trainer over their contradictory statements as to whether or not Clemons actually was injected with a banned performance enhancing substance. While this hearing was underway, thousands of miles away, in Iraq , American service members continued the ugly business of occupying Iraq . That Waxman would abuse his position by pursuing such trivia while Americans continued to fight and die in a war built exclusively on a framework of lies is disturbing.

True, Henry Waxman has chaired numerous hearings, and issued even more statements, which have resulted in several embarrassing questions being asked by the Government Reform Committee of a recalcitrant White House. But none of Henry Waxman’s efforts have produced the high drama of the Clemons hearings, where every word was wrestled with, every context explored. Forensic data was introduced. Reputations were (and are) on the line. The consequences are potentially grave: perjury charges could be brought forward against Clemons and others. What was the source of this commotion? Simply put, a few syringes and a game. Baseball might be the national pastime, perhaps, but it remains a game nonetheless. War is all-too real, and the war in Iraq has cost nearly 4,000 Americans their lives, while wounding tens of thousands more, while killing and wounding hundreds of thousands of Iraqis.

At the same time Henry Waxman’s committee was grilling the Cy Young award-winning pitcher, the House Foreign Affairs Committee was holding hearings of its own, on the issue of Iraq. Another Democrat, Representative Robert Wexler (D-Florida), raised the matter of findings from a report issued by the Center for Public Integrity, issued last month, that document some 935 allegations of false statements made by the Bush administration in the lead up to the 2003 invasion of Iraq. Of particular interest to Wexler were 56 of those allegedly false statements attributed to the witness seated before the committee, Secretary of State Condoleezza Rice, who had served as the National Security Advisor in the period of time when the alleged false statements were made.

To his credit, Representative Wexler pressed home his point, namely that Condi Rice had lied when she helped make the case for war against Iraq by selectively citing certain intelligence information while suppressing others. Secretary Rice, of course, denied any wrongdoing, leaving America with a curt point-counterpoint exchange which served little purpose when it comes to the matter of the search for truth and accountability through oversight. When Roger Clemons denied the charges leveled at him, the robust overseers of Congressional Constitutional mandate who populate the Government Reform Committee subjected him to a withering round of cross-examination full of recrimination and doubt. Following Wexler’s brief moment of inquiry, Condi Rice was let off without further reproach.

Clearly there are discrepancies between the charges leveled by Wexler and the responses offered by Rice. That the compendium of alleged false statements comes from an independent, non-governmental entity (the Center for Public Integrity) should not serve as a roadblock to further investigation and hearings into the matter: the Government Reform Committee was acting in response to an independent investigation, the Mitchell Report, authorized not by Congress, but rather the Commissioner of Baseball. Unlike the Mitchell Report, however, the matter of Bush administration prevarication concerning the false case made for war in Iraq delves not into the lives of private citizens, where the consequences get no bigger than inflated sports statistics, but rather the words and actions of elected officials which influenced public opinion and the will of Congress in a manner which has cost hundreds of billions of dollars and several thousand American lives.

Congress shouldn’t have to wait for a private organization like the Center for Public Integrity to do its job for it. The misrepresentation of fact, fabrication of falsehoods, and outright lies the Center for Public Integrity documents are all a matter of public record, most of which were derived from statements made before Congress itself.

That Congress puts the so-called integrity of a game ahead of its own Constitutional mandate of oversight of legitimate governance is a travesty. That this travesty is carried out in the face of a pledge by a Democratic-controlled Congress to effectively and responsibly carry out its duty to investigate how and why our nation went to war with Iraq is not only incomprehensible, but reprehensible.

Perhaps if Saddam Hussein had been accused of injecting HGH instead of hiding WMD, Congress would have stepped up to the plate, so to speak, and dug deep into the truth of the matter. Henry Waxman, as well meaning as he is, sits at the head of a legislative process which has lost touch with reality and purpose. Pandering to the no-risk approach of non-governance by pursuing “The Rocket” and allegations of HGH abuse, while ignoring the high-risk demands of legitimate government by pursuing matters pertaining to how the Bush administration manufactured evidence of illusory Iraqi rockets tipped with imagined WMD, represents the ultimate indictment of a Congress, and legislative process, that long ago lost touch with its ultimate purpose of being: the pursuit of the best interests of the American people through the defense of the rule of law as set forth by the United States Constitution.

As we know well in this country, elections are a time for reflection. They are a time to consider who we are as a nation and what we want to become. Sometimes it is appropriate to stop and think about how lucky we are to have the freedom to make these kinds of choices. We should also think about the fact that there is no guarantee these freedoms will remain forever.

Take Pakistan, for example. Having endured a U.S.-backed military coup, martial law, and the assassination of their most visible opposition leader, Pakistanis will head to the polls on Monday to select members of their National Assembly in elections already plagued by widespread allegations of illegitimacy. Observers across the political spectrum have noted persisting restrictions on the press, politicized election administration at both the local and federal level, and the conspicuous lack of an independent judiciary to resolve electoral disputes.

Sadly, the United States is doing very little to help the situation in Pakistan and may well be making it worse. The Bush administration has consistently pressed for these elections to proceed despite security concerns and various allegations of unfairness. Not surprisingly, from an administration installed by a controversial Supreme Court ruling, its view appears to be that elections confer legitimacy on whichever regime emerges victorious, regardless of complaints about how the votes were tallied.

Even worse, these electoral similarities are only the tip of an iceberg reflecting deep connections between the agenda of the Bush administration and the Musharraf regime. While criticism has abounded of Musharraf’s various abuses of the rule of law, observers have generally overlooked the means Musharraf has taken to squelch dissent of his administration, and how they resemble some of the tactics Americans have seen domestically. As one prominent anchor of a major Pakistani television news program suggested when discussing the threats to democracy in his country, “Musharraf’s playbook is the same as the Bush administration’s.”

This is especially disturbing to me, as I have written recently about how the Bush administration seems to be following the playbook of twentieth century leaders, such as Stalin and Mussolini, who shut down democracies in their own countries. It is painful to think that the Bush administration is filling a similar role, making the United States of America an example for would-be tyrants.

At a broad level, both Bush and Musharraf have consistently magnified real threats to security in their public communications in order to promote fear and intimidate political opponents. In America, fear of another catastrophic attack in the wake of 9/11 was used to justify the round-ups of material witnesses, domestic spying and the PATRIOT Act. Meanwhile, in Pakistan, the threat of armed fundamentalists was cited as the reason to sack the Supreme Court and restrict the press.

In carrying out this governance by fear, both administrations have claimed that domestic checks on their agendas have given comfort to the enemy, effectively (if not literally) saying that “You’re either with us, or against us.” Nor have these accusations been confined to civil society.

Musharraf has framed Pakistan’s former Supreme Court — which he sacked with U.S. support in November for the second time last year — as having interfered in his counter-terrorism efforts. Similarly, in addition to accusing opponents of the War in Iraq of undermining “our troops,” officials in the Bush administration have derogated other branches of the federal government in order to aggrandize the executive branch. For instance, the White House has refused to provide Congress with documents necessary to understand the legal basis of the administration’s torture policy, and when faced by challenges brought by detainees, sought to evade the jurisdiction of appellate courts such as the U.S. Court of Appeals for the Fourth Circuit, from which a prominent conservative judge resigned in alleged protest.

The detainee cases are especially poignant. Both Musharraf and Bush have assaulted civil liberties, arguing against habeas corpus rights for detainees and resisting judicial efforts to ensure impartial trials. Student activists from Balochistan were imprisoned and even “disappeared” by Pakistani agents, while hundreds of detainees were imprisoned without trials for years at Guantanamo Bay. Recently, the Bush administration announced that six of these detainees would be tried in military court for their alleged involvement in 9/11, despite the fact that much of the evidence to be used against them was obtained as the result of torture and abuse.

While Musharraf’s attack on judicial independence took the form of sacking the Supreme Court, removing the majority of its justices and jailing several of them, Bush has also compromised judicial independence, though in a more subtle fashion. When vacancies emerged on the U.S. Supreme Court, Bush nominated a pair of Justices whose principal qualification was prior service in the Reagan-era Department of Justice, where they championed aggressive theories aggrandizing executive power. Chief Justice Roberts even violated ethical rules by interviewing with the White House for his Supreme Court appointment at the same as he sat in judgment on White House detainee policy in the Hamdan case, in which he cast a deciding vote for the administration — before the Supreme Court later reversed the decision.

Both Bush and Musharraf have largely ignored the real security threats they use to promote fear. Bush started a war in Afghanistan only to then grow distracted by an Iraq conflict whose only relation to terrorism was to encourage more of it. Musharraf has ignored his regime’s ongoing support for militants despite the threat they pose to his own government, instead spending U.S. money on high-tech force structure (such as F-16s) for a hypothetical war with India.

Both presidents practice belligerence in their foreign policy decisions. Musharraf launched a war in the Himalayas before seizing power in 1999, for which he derived massive public support. The invasion of Iraq was similarly used by the Bush administration to rally support behind its other agendas.

And, perhaps most significantly, both Presidents have taken strong measures to intimidate the press. Musharraf removed entire channels from the air, while banning certain personalities from appearing and censoring what little content remained. Those journalists who challenge the media blackout — at least in Urdu-language outlets most watched by Pakistanis — are subject to intimidation and personal threats. In the U.S., journalists who have exposed state secrets (such as the domestic spying program revealed by The New York Times) have been threatened with prosecution.

President Bush once promised that his administration would spread freedom around the world. Instead, he is apparently teaching other world leaders how to promote fear and diminish freedoms in order to assume and maintain power. He has nothing to share, but fear itself.

Shahid Buttar is a civil rights lawyer, hip-hop MC, grassroots community organizer, and independent journalist. His commentary has appeared in various print and broadcast outlets, including The Washington Post; The New York Times; Bloomberg; Hannity & Colmes on FOX News; The Laura Flanders Show on Air America; TomPaine.com; Alternet; Common Dreams; and Democracy Now! on NPR, which named one of his public addresses among “The Best of 2004.”

Naomi Wolf is the author of The New York Times bestseller “The End of America” (Chelsea Green) and is the co-founder of the American Freedom Campaign.

If you can’t give me your word of honor, will you give me your promise? – Samuel Goldwyn, The Great Goldwyn

The man can’t keep his word even though the words are always the same. Having mouthed them so often you’d think he could remember them. What’s surprising now is that the forgotten beneficiaries of his words are the people he sent to Iraq to get killed or wounded who now wish to be remembered by the man who sent them there to gratify his own ego. They shouldn’t be surprised. They should have learned from Katrina.

Mr. Bush visited New Orleans shortly after Katrina had paid its respects. Standing in the Rose Garden on September 3 of that sad year, Mr. Bush said: “I know that those of you who have been hit hard by Katrina are suffering. . . The tasks before us are enormous, but so is the heart of America. In America, we do not abandon our fellow citizens in their hour of need. And the federal government will do its part . . . . We have a responsibility to our brothers and sisters all along the Gulf Coast and we will not rest until we get this right and the job is done.” Mr. Bush is well rested. Anyone reading about New Orleans knows he didn’t get it right and the job isn’t done. Those living in New Orleans suffered because of nature’s tragedy and were forgotten by the man who promised them help. Now it’s the veterans’ turn.

In his recent State of the Union message, Mr. Bush received great applause when he said: “Our military families also sacrifice for America. . . . We have a responsibility to provide for them. So I ask you to join me in expanding their access to child care. . . and allowing our troops to transfer their unused education benefits to their spouses or children. Our military families serve our nation, they inspire our nation, and tonight our nation honors them.” One week later he submitted his 2009 budget and dissed the veterans. No funds were included for transferring education benefits.

In submitting his $1.3 trillion budget he forgot to include the benefit that would cost between $1 and $2 billion dollars. That was not the end of ignoring the needs of veterans. According to a release from the Brain Injury Association of America in a press release commenting on the budget, for the third year in a row, Mr. Bush has proposed the complete elimination of the Federal traumatic Brain Injury Program. The program “provides grants to state agencies and [other organizations] to improve access to health and other services for individuals with traumatic brain injury and their families.” Susan Connors, president and CEO of the Brain Injury Association of America described the omission as “deeply disappointing” and went on to say that “President Bush just doesn’t get it.” Those two examples are not the only ones in which veterans who have withstood the onslaught from the enemy in Iraq have to defend themselves from the onslaught of the wolf in the White House parading in sheep’s clothing.

According to a report on National Public Radio, during a visit by representatives of the Army Surgeon General’s staff at Fort Drum Army base, officials from the Department of Veterans’ Affairs were told they should stop helping injured soldiers complete paperwork related to their injuries. The forms completed forms determine what level of care and disability benefits the soldiers receive.

Rep. John McHugh who represents the area that includes Ft. Drum, the military base at which the instructions were given, responded that: “The Surgeon General of the Army told me very flatly that it was not the Army that told the VA to stop this help.” That would have been the end of the matter but for one thing. A summary of the meeting prepared by one of the attendees surfaced and it contradicted the Surgeon General who had contradicted NPR.

Kevin Esslinger, a legal administration specialist at Ft. Drum , prepared the memorandum. It says that Col. Becky Baker of the office of the Surgeon General said the “Veterans Benefits Administration should discontinue counseling Medical Evaluation Board (MED) soldiers on the appropriateness of the Department of Defense MEB/OEB (Physical evaluation board) ratings and findings. There exists a conflict of interest.” Responding to that comment Mr. Esslinger wrote in his summary that “a recent Department of the Army Inspector General inspection had noted the practice and had found it to be a useful service to the soldier.” He went on to say the practice would be discontinued.

NPR’s requests for interviews with Col. Baker and Surgeon General Eric Schoomaker were turned down. It is hard to understand why. But here is something that is not hard to understand-why Mr. Bush’s 2009 budget proposed a reduction in the budget for the Corporation for Public Broadcasting from $400 million to $200 million.

Long notorious for its checkered history of voter suppression, Waller County, Texas’s degree of racial division approaches the level of myth.

In Waller County, for example, a person calling a funeral parlor is asked: what color is the body? There are black and white funeral homes, says Christina Sanders, who directs the Black Youth Vote! effort in Texas, and the two don’t ever mix.

With the Texas primary approaching, tensions flared again this month over one of the county’s sorest racial issues–the color of the vote.

For decades, Waller County has repressed the vote of the local historically black college, Prairie View A&M. In 1979, the Supreme Court stepped in to intercede, upholding A&M students’ right to vote where they declare residency. Yet since then, the county has gone so far as to indict A&M students that vote, and in the 2004 case of one attorney general, even threaten such students with jail and $10,000 in fines.

But this election cycle, when the county eliminated the temporary early voting location adjacent to A&M, students rebelled. The county’s only other early voting site was over 7 miles away from campus in the town of Hempstead–with no bus route connecting the two. And at a time when youth turnout is at record highs, says Sanders, A&M students were outraged. “This being a historically black university, and a presidential election when we’re hearing things that we can relate to–I just [couldn’t] believe it,” Sanders said.

On Jan. 25, the Lawyers Committee on Civil Rights sent a letter to the Department of Justice calling the move “motivated, at least in part, by a discriminatory purpose.”

Students won their victory this week when, under pressure from the Department of Justice, election commissioners convened an emergency meeting to re-establish A&M’s early polling site.

When on Jan. 22 a federal court judge sentenced Jose Padilla to 17 years in prison for conspiracy to commit terrorism, it was a one-day story. But, in fact, the Padilla case goes on.

Padilla, a U.S. citizen and former Chicago gang member, alleges that he was tortured during the more than three and a half years he spent behind bars at a Navy brig in South Carolina. He is now suing John Yoo, the former Justice Department lawyer who reportedly devised the legal theories to justify the interrogation techniques used against him.

While Padilla’s suit raises a number of constitutional claims—including that the military violated his rights to counsel and to exercise his Muslim religion—the heart of his argument is that Yoo gave legal advice to justify his torture, in violation of due process of law as guaranteed by the Fifth Amendment to the Constitution.

Padilla, who is separately appealing his recent conviction, asks the court to rule that his treatment violated the Constitution, and to order Yoo, now a law professor at the University of California at Berkeley, to pay him $1 in damages.

The suit raises important questions of law and fact. Are lawyers liable for giving bad legal advice to federal officials?

In August 2002, Yoo, then an attorney in the Justice Department’s Office of Legal Counsel, wrote a formal opinion letter advising that interrogation techniques are not torture unless they inflict pain equivalent to “organ failure, impairment of bodily function or even death.” The new head of the Office of Legal Counsel, Jack Goldsmith, later withdrew Yoo’s opinion.

Goldsmith, now a Harvard law professor, explains in his book, The Terror Presidency, that Yoo’s reasoning was “legally flawed” and “tendentious.” It seemed “more an exercise of sheer power than reasoned analysis.” Even so, was it the proximate cause of any mistreatment of Padilla?

However such questions are resolved, Padilla’s allegations of his treatment, if true, ought to shame a civilized society.

‘Measurably abnormal’

Padilla charges he was imprisoned in a seven-foot by nine-foot cell in the Navy brig in Charleston, S.C., for nearly four years. For the first 21 months, he says he was denied all contact with anyone outside the brig, including family and lawyers, leaving him with interrogators and guards as his only human contact.

He alleges he was allowed no watch or clock, nor any news about the outside world. The only window in his cell was blacked out. When he was allowed out of his cell, his eyes and ears were covered.

Periodically, he says, he was subjected to absolute light or darkness for periods in excess of 24 hours. He was subjected to extreme temperature variations in his cell, where his bed consisted of a cold steel slab with no mattress, pillow or blanket. He says brig guards and others deliberately banged on his walls and bars at all hours of the night. For hours at a time, he says guards kept him shackled and manacled, or forced him to sit or stand in uncomfortable and painful positions.

Worse, his interrogators allegedly threatened to cut him with a knife and pour alcohol in the wounds. He says they also threatened to kill him, or send him to a country where they said he would receive far worse treatment. Against his will, they allegedly administered chemicals, which Padilla believes were psychotropic drugs.

When his lawyers were finally allowed access to him, he was not permitted to tell them about prison conditions.

If Padilla’s allegations are true, they qualify as torture under international law: the intentional infliction of severe physical or mental pain for purposes such as interrogation. The U.N. Committee on Torture and the Inter-American Court of Human Rights have held that incommunicado detention—even for periods far shorter than Padilla endured—is torture. They have also ruled that combinations of sensory deprivation techniques amount to torture, as well.

According to Padilla’s complaint, a “substantial body of clinical literature and expert opinion … holds that restriction of environmental and social stimulation has a profoundly deleterious effect on mental functioning, and that even a few days of solitary confinement predictably causes brain patterns to become measurably abnormal.”

It would drive anyone mad.

Waging ‘lawfare’

Yoo has castigated Padilla and his lawyers at the Yale Law School clinic for waging “lawfare,” which Yoo calls “another dimension” of the terrorist war against the United States.

In a Jan. 16 op-ed in the Philadelphia Inquirer, Yoo complained that terrorists use cases like Padilla’s to press “novel theories that have failed at the ballot box.”

If their legal theories are novel, Yoo can thank himself: Never before has the Justice Department sanctioned prolonged, mind-altering brutality on a U.S. citizen.

Still, suing a government lawyer for rendering legal advice, no matter how injudicious, ought to give pause. Such lawsuits could deter creative thinking by attorneys trying to protect the public. If allowed at all, they should be confined to rare and extreme cases, such as Yoo’s torture memo.

There are limits on what advice lawyers may give. After World War II, German government lawyers who wrote memos and orders depriving Russian prisoners of war of their Geneva Conventions protections, and authorizing the forced disappearances of political prisoners, were convicted at Nuremberg. Would authorizing torture of prisoners have made them any less guilty?

Although the suit against Yoo does not seek to convict him of a crime, it does aim to hold him civilly liable—for a symbolic $1 in damages—not only for the torture, but also for his legal advice that allegedly led to violations of Padilla’s constitutional rights. Those include the rights to counsel, access to court, due process of law, freedom of religion, rights to information and association, and his rights to be free from inhumane conditions of confinement, cruel and unusual punishment, coercive interrogations and improper military detention.

In pressing these wide-ranging claims, Padilla’s lawyers face daunting legal obstacles. Unlike most damages suits for violations of basic rights, civil rights law does not authorize their lawsuit. By necessity, Padilla’s suit rests directly on the Constitution. While the Supreme Court has authorized suits for damages based solely on violations of the Constitution, it does so sparingly—when the violations would not otherwise be subject to judicial or effective oversight and, even then, only if no special factors weigh against the wisdom of creating a new cause of action.

Only one of Padilla’s claims—under the Eighth Amendment—has arguable Supreme Court precedent. Some claims may fail on the ground that they are subject to judicial oversight in the criminal proceedings against him. Others may be rejected because they deal with gray areas of national security law, where legal mistakes should not result in damages suits.

But Padilla should probably be allowed to try at least his core claims—that the torturous confinement and interrogation techniques violated his Fifth Amendment right to due process, and possibly his Eighth Amendment right not to be subjected to cruel and unusual punishment. To the extent the prosecution in his criminal trial did not rely on any coerced confession by Padilla, these alleged violations have not been subject to judicial oversight.

Curbing an imperial presidency

If Padilla overcomes this hurdle, others remain. Yoo may contend that he is entitled to absolute immunity, as are prosecutors when presenting their cases to a court. But Yoo more likely will be granted only the “qualified immunity” afforded to prosecutors when they advise police on interrogation techniques, or to the attorney general when he authorizes national security wiretaps without a judicial warrant.

If Yoo is granted qualified immunity, he can be held liable for his erroneous legal advice only if it violated “clearly established statutory or constitutional rights of which a reasonable person would have known.” In this case, his legal advice plainly did: Yoo’s memo legally authorized torture.

But the issue is not so simple.

Yoo’s overriding legal rationale is that the president’s powers give him constitutional license to override any law—including laws against torture—if he deems it necessary to wage a war. The courts may thus need to consider whether any reasonable lawyer could advise that the Constitution allows the president to disregard all law during wartime.

Finally, the government might decide to assert the “state secrets” privilege to quash Padilla’s claims, on the ground that the claims cannot fairly be adjudicated without probing secret intelligence methods and communications.

Unless barred by the state secrets privilege, Padilla’s suit will likely break new ground. Far from a case of “lawfare,” it promises to strengthen the rule of law by clarifying whether and when government lawyers can be held accountable for ill-considered legal advice.

Behind all the blather and bullshit about the Federal Reserve’s rescue gambits and the machinations of the ratings agencies, and the wiles of foreign sovereign wealth, and the incomprehensible mysteries of markets, and the various weather forecasts of a gathering “recession” is the simple fact that the USA is a way poorer nation than we imagined ourselves to be six months ago. The American economy has been running on the fumes of “creatively engineered” finance (i.e. new-and-improved swindling) for years, and now these swindles are unraveling. In their aftermath, they leave empty wallets, drained bank accounts, plundered retirements funds, boiled away capital reserves, worthless stocks, bankrupt companies, vandalized housing tracts, ruined families, and Wall Street executives who are still pulling down multimillion-dollar pay packages despite running their companies into the ground.

We’re burning down the house and kidding ourselves that there is a remedy for it. All the rate cuts and loans to big banks and bank-like corporate organisms, and “monoline” bond insurers, and mortgage mills amount to little more than a final desperate shell game to conceal the radioactive pea of aggregate loss. The losses are everywhere, and when you add up seven billion here and eleven billion there they probably amount to something like a trillion dollars in sheer capital evaporation — not counting the abstract “positions” that the capital was leveraged onto by the playerz and boyz who mistook algorithms for productive activity.

The shell game may run a few more weeks but personally I believe the timbers are burning. The losses are no longer “contained” or concealable. A consensus has now formed that we’re in for a “recession.” The idea is that, yes, this seems to be the low arc of the business cycle. Fewer Hamptons villas will be redecorated in the interim. We’ll gird our loins and get through the bad weather and when the sun shines again, we’ll be ready with new algorithms for new sport-with-capital.

Uh-uh. Think again. This is not so much financial bad weather as financial climate change. Something is happenin’ Mr Jones, and you don’t know what it is, do ya? There has been too much misbehavior and it can no longer be mitigated. We’re not heading into a recession but a major depression, worse than the fabled trauma of the 1930s. That one occurred against the background of a society that had plenty of everything except money. Back then, we had plenty of mineral resources, lots of trained-and-regimented manpower, millions of productive family farms, factories that were practically new, and more than 90 percent left of the greatest petroleum reserve anywhere in the world. It took a world war to get all that stuff humming cooperatively again, and once it did, we devoted its productive capacity to building an empire of happy motoring leisure. (Tragic choice there.)

This new depression, which I call The Long Emergency, will play out against the background of a society that has pissed away its oil endowment, bulldozed its factories, arbitraged its productive labor, destroyed both family farms and the commercial infrastructure of main street, and trained its population to become overfed diabetic TV zombie “consumers” of other peoples’ productivity, paid for by “money” they haven’t earned.

There is a theory (see Nouriel Roubini’s blog) that a reform process will now ensue in the financial realm, new regulation and oversight of the same old familiar activities. This too, I’m afraid, will prove to be wishful thinking. The financial system will not be reformed until it lies in smoking wreckage, and when that “re-form” happens the armature of the re-organizing society will barely resemble the one that the previous burnt-down-house was designed to dwell in. Among other things, it will not support capital enterprise at anything like the scale that we became accustomed to lately. Globalism will be over. The great nations of the world will be scrambling desperately for the world’s remaining oil supplies. It will not be a friendly contest, and anyone who thinks that current trade relations and capital flows will continue despite that is liable to be disappointed. (Are you reading this Tom Friedman?)

Long before the mathematical projections of oil depletion play out, the oil markets themselves — and all the complex operations that they comprise, such as drilling and exploration, and the movement of tankers around the planet — will destabilize and seize up. We will no longer be any oil exporter’s “favored customer.” Many of the exporters will enjoy watching us suffer. Contrary to the political platitude-du-jour, the USA will never become “energy independent” in the way we currently imagine. Rather we’ll become energy independent by being deprived of imported oil, and we’ll be thrown back on our own dwindling supplies — which means that we’re not going to run our system of daily life the way it has been set up to run. When Americans can no longer run their cars on a whim, they will simply go apeshit and you can kiss normal politics goodbye.

The financial system that emerges from this cataclysm, and the economy it serves (which is supposed to be the master of its capital deployment “arm,” not its servant) will likely be modest to a degree that will shock and embarrass everyone currently connected with what we have lately called finance. If it even trades in paper, that paper will have to stand for something based in reality, either a productive activity or a genuine asset. It may take decades for this society to even regain the confidence necessary to operate such an elementary system — or it may not come back at all, at least as far as the horizon lies before us. That’s how bad the mischief and the damage has been.

It’s not hard to understand why the Bernankes, Paulsons, Lawrence Kudlows and other public representatives of capital keep pretending that everything is under control. On the other side of their pretenses lies disorder and hardship. One wonders, of course, what they really see in their private minds’ eyes. Do they actually believe that the statistics issued by their serveling agencies amount to a plausible picture of reality? Are they so lost in their fantasies of “management” that they think they’re controlling events?