The Rag Blog

Christmas is observed December 25 by Christians and others celebrating the spirit of the season while for those of the Eastern Orthodox faith the holiday falls on January 7. It’s to honor the birth of Jesus Christ even though it’s widely acknowledged not to be his birthday. Along with its religious significance, the season is also for other celebratory events like winter festivals, parties, family get-togethers and Kwanzaa from December 26 – January 1 for Africans Americans to reconnect to their cultural and historical heritage. Jews as well celebrate the season with the Hanukkah Festival of Lights. It’s to commemorate their struggle for survival, but for Jewish children it’s their Christmas with gifts from parents like their Christian friends get.

Christmas is also the time when the national obsession to shop and consume reaches its zenith. It traditionally begins the day after Thanksgiving, runs through Christmas eve, and after the holiday continues into January with plenty of extra buying power from holiday gift cards, year-end bonuses and other resources gotten or borrowed. It’s for everything people never knew they wanted until creative advertising wizardry made their lives incomplete without them.

Perhaps this single dominant trait characterizes American culture more than any other. It’s a variant of the kind of consumerism economist/sociologist Thorstein Veblen called “conspicuous” in his 1899 book “The Theory of the Leisure Class.” F. Scott Fitzgerald explained that “the very rich….are different from you and me.” Veblen wrote about their spending habits and coined the phrase “conspicuous consumption.” Today, it’s called “keeping up with the Joneses” or consumerism, and it’s practiced by status-seeking people obsessed with personal gratification. But not just by the rich. Most people, except the poor, do it and to excess.

The term “consumption” originated hundreds of years ago. Then, it referred to infectious tuberculosis or TB. But its original meaning is relevant in today’s acquisitive society where consuming for essentials is worlds apart from gluttonous consumerism. This variant refers to overindulgent shopping and spending for things people buy irrespective of need but not without consequences for themselves and society.

Untreated TB, or consumption, consumes its victims in a slow, painful death. Consumerism mimics it with it’s similarly harmful fallout: ecological destruction; unhealthy and unsafe consumer products; corporate empowerment; profits pursued over people; militarism and foreign wars; health, education and other essential needs neglected; and democratic decay in a corporatist state disdaining the public interest.

People take pride saying “when the going gets tough, the tough go shopping” – but not without consequences. The personal fallout is over-indebtedness millions can’t handle in the wake of unexpected medical emergencies or loss of employment. The toll: since the early 1980s one in seven families forced into bankruptcy, over 2 million in 2005 alone (30% above 2004), and millions more ahead from unchecked borrow and binge-spending made worse by the subprime crisis.

Overindulgent spending is what clinicians call an obsessive-compulsive disorder (OCD). At its worst, it’s pathologically characterized by obsessive, repetitive thoughts that need compulsive tasks and rituals to relieve. For addicted consumers, it’s an obsession to shop and spend and a compulsion to buy and accumulate. In excess, it’s clinically pathological and destructive when it causes bankruptcy.

In America and the West, tens of millions of otherwise normal people shop excessively for what they never knew they wanted until Madison Avenue mind manipulators convinced them. Economist Paul Baran described the process as making us “want what we don’t need (all unessential consumer goods and services) and not….what we do (good health care, education, clean air and water, safe food, and good government providing essential services).”

Future insolvency is risked, but few consider the possibility until it’s too late. It’s worst at Christmas when it becomes a pathological orgy of frenzied spending dismissively called getting into the holiday spirit. Maybe for merchants, but not when bills come due with growing millions unable to pay them or needing more debt to delay for later what they can’t handle now.

Institutionalized consumerism also plays into social control. It’s empowered when people are focused on bread and circus distractions that include the sights and sounds of the season. Media theorist Neil Postman once called Americans the most over-entertained and under-informed people in the world and wrote about it in books like “Amusing Ourselves to Death.” Attracted to self-gratification and its reinforcing images, they’re diverted from what matters most – challenging wars of aggression, loss of civil liberties and human rights, violations of law, gutted social services, environmental harm, and policies benefitting the privileged at the expense of beneficial social change.

Consumerism also lets corporate power prosper and grow. It feeds unfettered capitalism and out-of-control greed. It helps direct our tax dollars to a militarized state instead of going for essential social needs. It diverts the national wealth to an imperial juggernaut that consumers finance through overindulgence. The more we shop, the stronger it gets and is better able to exploit new markets, resources and cheap labor at the expense of the more expensive kind at home whose future consumption is endangered by today’s self-gratifying excesses.

Adam Smith was capitalism’s ideological godfather who was also concerned about concentrated wealth and wrote about it in “The Wealth of Nations.” He explained an “invisible hand” of unseen forces worked best in a free market with many small businesses competing locally against each other. He contrasted them with concentrated mercantilism and wrote about the “merchants and manufacturers” who used their power to wreak “dreadful misfortunes” and grave injustices on the vast majority of people using the British East India Company as a case study example.

Today’s monopoly capitalism would have been unimaginable in his day, but he’d recognize it. He wrote that throughout history we find the wreckage of the “vile maxim of the masters of mankind….All for ourselves and nothing for other people….unless government takes pains to prevent” this outcome. No invisible hand works in manipulated markets where governments sanction Smith’s “vile maxim,” and the greater good is nowhere in sight. Under neoliberal rules, capital wins, people lose, and consumerism makes things worse. It’s most extreme at Christmas when shopping trumps the holiday’s meaning and seasonal sights and sounds drown out everything else.

The toll is tragic. Whatever Christmas was, it no longer is, and our behavior corrupts it and the spirit of the man it honors. He spread it in deeds and teachings from his Sermon on the Mount and message to “turn the other cheek,” love thy neighbor, not kill, and do unto others as you’d want them doing to you. The consumerist ethic glorifies receiving, not giving; condoning predatory capitalism and ignoring its harm; neglecting the greater good; sanctifying overindulgence while forgetting those most in need throughout the year. In the spirit of the season, thoughts should be on helping others and giving thanks. In an unfettered marketplace, it’s impossible.

It’s a sad testimony to a society obsessed with greed and gratification at the expense of beneficial social change. At Christmas, it defiles the holiday spirit and forgets the needy. For them, Christmas is “Bah Humbug,” and Santa Scrooge – all take and no give.

New Year’s Day

New Year’s day is one week after Christmas and concludes the long holiday season. It starts after Thanksgiving, reaches a climax around Christmas, ebbs for a day and builds again for a final celebratory new year’s welcome with more overindulgent eating, drinking, partying, and binge-shopping for nonessentials.

The new year is also a traditional time for resolutions that include some with merit like losing weight, quitting smoking and getting fit. Most are forgotten, and those most important never made: working for peace, good will toward others, loving they neighbor, respecting everyone, and treating people as we want to be treated in a society of caring and sharing with equity and justice for all. Wouldn’t that be a wonderful resolution for the new year. Long ago in simpler times before the old world became America, it was that way. It can be again, but wishing won’t make it so.

Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.

Can Democrats get the votes they need simply because they’re not Republicans? You might think so in this presidential campaign. African-American and urban votes are critical to any Democratic victory. Bill Clinton won two terms without winning the most white votes. His margin was the overwhelming support of black voters. George Bush learned that lesson; that’s why his campaigns spent so much effort suppressing the black vote in key states like Florida in 2000 and Ohio in 2004. His victory margin was the tally of votes suppressed or uncounted.

Yet the Democratic candidates — with the exception of John Edwards, who opened his campaign in New Orleans’ Ninth Ward and has made addressing poverty central to his campaign — have virtually ignored the plight of African Americans in this country. The catastrophic crisis that engulfs the African-American community goes without mention. No urban agenda is given priority. When thousands of African Americans marched in protest in Jena, La., not one candidate showed up.

Democratic candidates are talking about health care and raising the minimum wage, but they aren’t talking about the separate and stark realities facing African Americans.

The civil rights movement succeeded in ending segregation and providing blacks with the right to vote. But the end of legal apartheid did not end the era of discrimination. And the ending of institutionalized violence did not end institutionalized racism.

Patterns of discrimination are sharply etched. African Americans have, on average, about half of the good things that whites have, and double the bad things. We have about half the average household income and less than half the household wealth. On the other hand, we’re suffering twice the level of unemployment and twice the level of infant mortality (widely accepted as a measure of general health).

African Americans are brutalized by a system of criminal injustice. Young African Americans are more likely to be stopped, more likely to be searched if stopped, more likely to be arrested if searched, more likely to be charged if arrested, more likely to be sentenced to prison if charged, less likely to get early parole if imprisoned. Every study confirms that the discrimination is systemic and ruinous. And yet no candidate speaks to this central reality.

African Americans are more likely to go to overcrowded and underfunded schools, more likely to go without health care, more likely to drop out, less likely to find employment. Those who do work have less access to banks and are more likely to be ripped off by payday lenders, more likely to be stuck with high-interest auto and business loans, and far more likely to be steered to risky mortgages — even when adjusting for income. And yet, no candidate speaks to this central reality.

The result is visiting a catastrophe on the urban black community. I and many others campaign for young people to stay in school, to graduate and not to make babies until they are prepared to be parents. My son and I write and teach about personal financial responsibility. Personal responsibility is critical. But personal responsibility alone cannot overcome the effects of a discriminatory criminal justice and economic system in generating broken families and broken dreams.

The Rev. Martin Luther King saw the movement to end segregation and gain voting rights as the first stage of the civil rights movement. The second stage — to gain economic justice and equal opportunity in fact — he knew would be more difficult. Now, 40 years later, it is no longer acceptable for candidates to turn a blind eye and a deaf ear to entrenched discrimination and still expect to reap our votes.

BAGHDAD — More than four years after the United States invaded Iraq, the country’s children continue to face a litany of problems from disrupted educations to unsafe drinking water, detentions and violence, UNICEF reported Friday.

Violence and displacement often kept Iraqi children out of school this year. The organization estimates that 2 million educations were interrupted, especially among primary-school students.

The report says that only 28 percent of 17-year-olds in Iraq took final exams this summer, and fewer than half passed. However, UNICEF-supported programs to distribute classroom materials, rebuild schools and provide more learning opportunities benefited 4.7 million children, the agency reported.

Health took a hit, too, as children living in remote areas were faced with poor nutrition and diseases such as cholera. Those living in remote areas were often cut off from health services, although a door-to-door immunization campaign protected 4 million from polio and 3 million from measles, mumps and rubella.

The full report, based on statistics from UNICEF, Iraq’s government and the U.S. military, will be released in early 2008.

UNICEF spokeswoman Claire Hajaj said the United Nations children’s agency is better poised to help next year, thanks to security improvements, better organization among aid groups and more awareness of the issues facing Iraqi children.

“Improved security does not equal secure, but it has lifted people’s spirits here,” Hajaj said. “Humanitarian agencies are working in Iraq now, capitalizing on the ability to work together. There’s a renewed will and recognition of humanitarian needs in Iraq.”

Among the preliminary report’s findings:

* Twenty-eight percent of Iraq’s 17-year-olds took final exams this summer; 40 percent in south and central Iraq passed.

* Eighty percent of children outside Baghdad don’t have working sewers in their communities, limiting access to safe water.

* An average of 25,000 children per month were displaced within Iraq by violence or intimidation.

* An estimated 760,000 children were out of primary school in 2006, and 220,000 more displaced children had their educations interrupted in 2007.

* By the end of 2007, about 75,000 children were living in camps or temporary shelter.

* About 1,350 children were detained by military and police, “many for alleged security violations.”

In past financial crises… the Fed has been able to wave its magic wand and make market turmoil disappear. But this time the magic isn’t working. Why not? Because the problem with the markets isn’t just a lack of liquidity — there’s also a fundamental problem of solvency.” – Paul Krugman

Stocks fell sharply last week on news of accelerating inflation which will limit the Federal Reserves ability to continue cutting interest rates. On Tuesday the Dow Jones Industrials tumbled 294 points following the Fed’s announcement of a quarter point cut to the Fed Funds rate. On Friday, the Dow dipped another 178 points when government figures showed consumer prices had risen 0.8% last month after a 0.3% gain in October. The stock market is now lurching downward into a “primary bear market”. There has been a steady deterioration in retail sales, commercial real estate, and the transports. The financial industry is going through a major retrenchment, losing more than 25% in aggregate capitalization since July. The real estate market is collapsing. California Gov. Arnold Schwarzenegger announced on Friday that he will declare a “fiscal emergency” in January and ask for more power to deal with the $14 billion budget shortfall from the meltdown in subprime lending. Economists are beginning to publicly acknowledge what many market analysts have suspected for months; the nation’s economy is going into a tailspin which will inevitably end in a hard landing.

Morgan Stanley’s Asia Chairman, Stephen Roach, made this observation in a New York Times op-ed on Sunday:

This recession will be deeper than the shallow contraction earlier in this decade. The dot-com-led downturn was set off by a collapse in business capital spending, which at its peak in 2000 accounted for only 13 percent of the country’s gross domestic product. The current recession is all about the coming capitulation of the American consumer — whose spending now accounts for a record 72 percent of G.D.P.

Most people have no idea how grave the present situation is or the disaster the country will face if trillions of dollars of over-leveraged bonds and equities begin to unwind. There’s a widespread belief that the stewards of the system—Bernanke and Paulson—can somehow steer the economy through this “rough patch” into calm waters. But they cannot, and the presumption shows a basic misunderstanding of how markets work. The Fed has no magical powers and will it allow itself to be crushed by standing in the path of a market-avalanche. As foreclosures and bankruptcies increase; stocks will crash and the fed will step aside to safety. That much is certain.

In the last few weeks, Bernanke and Paulson have tried a number of strategies that have failed miserably. Paulson concocted a plan to help the major investment banks consolidate and repackage their nonperforming mortgage-backed junk into a “Super SIV” to give them another chance to unload their bad investments on the public. The plan was nothing more than a public relations ploy which has already been abandoned by most of the key participants. Paulson’s involvement is a real black eye for the Dept of the Treasury. It makes it look like he’s willing to dupe investors as long as it helps his well-heeled Wall Street buddies.

Paulson also put together an “industry friendly” rate freeze that is supposed to help struggling homeowners avoid foreclosure. But the plan falls well short of providing any meaningful aid to the estimated 3.5 million homeowners who are facing the prospect of defaulting on their loans if they don’t get government assistance. Recent estimates by industry experts say that Paulson’s plan will only help a meager 140,000 mortgage holders, leaving millions of others to fend for themselves. Paulson has proved over and over that he is just not up to the task of confronting an economic challenge of this magnitude head-on.

Fed chief Bernanke hasn’t done much better than Paulson. His three-quarter point cut to the Fed’s Funds rate hasn’t lowered interest rates on mortgages, stimulated greater home sales, stabilized the stock market or helped banks deal with their massive debt-load. It’s been a flop from start to finish. All its done is weaken the dollar and trigger a wave of inflation. In fact, government figures now show energy prices are rising at a whopping 18.1% annually. Bernanke is apparently following Lenin’s injunction that “The best way to destroy the Capitalist System is to debauch the currency.”

On Wednesday, the Federal Reserve initiated a “coordinated effort” with the Bank of Canada, the Bank of England, the European Central Bank, the and the Swiss National Bank to address the “elevated pressures in short-term funding of the markets.” The Fed issued a statement that “it will make up to $24 billion available to the European Central Bank (ECB) and Swiss National Bank to increase the supply of dollars in Europe.” (Bloomberg) The Fed will also add as much as $40 billion, via auctions, to increase cash in the U.S. Bernanke is trying to loosen the knot that has tightened Libor rates in England and reduced lending between banks. The slowdown is hobbling growth and could send the world into a recessionary spiral. Bernanke’s “master plan” is little more than a cash giveaway to sinking banks. It has no chance of succeeding. The Fed is offering $.85 on the dollar for mortgage-backed securities (MBSs) and collateralized debt obligations (CDOs) that sold last week in the E*Trade liquidation for $.27 on the dollar. At the same time, the Fed has promised to keep the identities of the banks that are borrowing these emergency funds secret from the public. Thus, accountability and transparency have been both been shattered by one shortsighted action. The Fed is conducting its business like a bookie.

Unfortunately, the Fed bailout has achieved nothing. Libor rates–which are presently at seven-year highs–have not come down at all. This is causing growing concern among the leaders of the Central Banks around the world, but there’s really nothing they can do about it. The banks are hoarding cash to meet their capital requirements. They are trying to compensate for the loss of value to their (mortgage-backed) assets by increasing their reserves. At the same time, the system is clogged with trillions of dollars of bad paper which has brought lending to a grinding halt. The massive injections of liquidity from the Fed have done nothing to improve lending or lower interbank rates. It’s been a complete flop. Bernanke has lost control of the system. The market is driving interest rates now. If the situation persists, the stock market will crash.

STARING INTO THE ABYSS

One of Britain’s leading economists, Peter Spencer, issued a warning on Saturday: “The Government must suspend a set of key banking regulations at the heart of the current financial crisis or risk seeing the economy spiral towards a future that could make 1929 look like a walk in the park”.

Spencer is right. The banks don’t have the money to loan to businesses or consumers because they’re desperately trying to raise more cash to meet their capital requirements on assets that continue to be downgraded. (The Fed may pay $.85 on the dollar, but investors are unwilling to pay anything at all.) Spencer correctly assumes that the reason the banks have stopped lending is not because they “distrust” other banks, but because they are capital-strapped from all their “off balance” sheets shenanigans. If the Basel regulations aren’t modified, money markets will remain frozen, GDP will shrink, and there’ll be a wave of bank closings.

Spencer said:

“The Bank is staring into the abyss. The Financial Services Authority must go round and check that all banks are solvent, and then it should cut the Basel capital requirement level from 8pc to about 6pc.” (”Call to Relax Basel Banking Rules,” UK Telegraph)

Spencer confirms what we already knew; the banks are seriously under-capitalized and will come under growing pressure as hundreds of billions of dollars of mortgage-backed securities (MBSs) and collateralized debt obligations (CDOs) continue to lose value and have to be propped up with additional capital. The banks simply don’t have the resources and there’s going to be a day of reckoning.

Pimco’s Bill Gross put it like this: “What we are witnessing is essentially the breakdown of our modern day banking system.” Gross is right, but he only covers a small portion of the problem.

Economist Ludwig von Mises is more succinct in his analysis: “There is no means of avoiding the final collapse of a boom brought on by credit expansion. The question is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

The basic problem originated with the Federal Reserve when former Fed chief Alan Greenspan lowered interest rates below the rate of inflation for 31 months straight which pumped trillions of dollars of low interest credit into the financial system and ignited a speculative frenzy in real estate. Greenspan has spent a great deal of time lately trying to avoid any blame for the catastrophe he created. He is a first-rate “buck passer”. In Wednesday’s Wall Street Journal, Greenspan scribbled out a 1,500-word defense of his actions as head of the Federal Reserve pointing the finger at everything from China’s “low cost workforce” to “the fall of the Berlin Wall”. The essay was typical Greenspan gibberish. In his trademark opaque language, Greenspan tiptoes through the well-documented facts of his tenure as Fed chief to absolve himself of any personal responsibility for the ensuing disaster.

Greenspan’s polemic is a masterpiece of circuitous logic, deliberate evasion, and utter denial of reality. He says:

I do not doubt that a low U.S. federal-funds rate in response to the dot-com crash, and especially the 1% rate set in mid-2003 to counter potential deflation, lowered interest rates on adjustable-rate mortgages (ARMs) and may have contributed to the rise in U.S. home prices. In my judgment, however, the impact on demand for homes financed with ARMs was not major.

“Not major”? 3.5 million potential foreclosures, 11 month inventory backlog, plummeting home prices, an entire industry in terminal distress pulling down the global economy is not major?

But Greenspan is partially correct. The troubles in housing cannot be entirely attributed to the Fed’s “cheap credit” monetary policies. They were also nursed along by a Doctrine of Deregulation which has permeated US capital markets since the Reagan era. Greenspan’s views on how markets should function were–to great extent–shaped by this non-interventionist/ non-supervisory ideology which has created enormous equity bubbles and horrendous imbalances. The former-Fed chief’s support for adjustable-rate mortgages (ARMs) and subprime lending; shows that Greenspan thought of himself as more as a cheerleader for the big market-players than an impartial referee whose job was to monitor reckless or unethical behavior.

Greenspan also adds this revealing bit of information in his article:

The value of equities traded on the world’s major stock exchanges has risen to more than $50 trillion, double what it was in 2002. Sharply rising home prices erupted into major housing bubbles world-wide, Japan and Germany (for differing reasons) being the only principal exceptions. (“The Roots of the Mortgage Crisis”, Alan Greenspan, WS Journal)

This admission proves Greenspan’s culpability. If he knew that stock prices had doubled their value in just 3 years, then he also knew that equities had not risen due to increases in productivity or demand.(market forces) The only reasonable explanation for the asset inflation, therefore, was monetary policy. As his own mentor, Milton Friedman famously stated, “Inflation is always and everywhere a monetary phenomenon”. Any capable economist would have known that the explosion in housing and equities prices was a sign of uneven inflation. Now that the bubble has popped, inflation is spreading like mad through the entire economy.

Greenspan is a very sharp man. It is crazy to think he didn’t know what was going on. This is basic economic theory. Of course he knew why stocks and housing prices were skyrocketing. He was the one who put the dominoes in motion with the help of his well-oiled printing press.

But Greenspan’s low interest credit is only part of the equation. The other part has to do with way that the markets have been transformed by “structured finance”.

What’s so destructive about structured finance is that it allows the banks to create credit “out of thin air”, stripping the Fed of its role as controller of the money supply. Author David Roache explains how this works in an excerpt from his book New Monetarism which appeared in the Wall Street Journal:

The reason for the exponential growth in credit, but not in broad money, WAS SIMPLY THAT BANKS DIDN’T KEEP THEIR LOANS ON THEIR BOOKS ANY MORE—AND ONLY LOANS ON BANK BALANCE SHEETS GET COUNTED AS MONEY. Now, as soon as banks made a loan, they “securitized” it and moved it off their balance sheet.

There were two ways of doing this. One was to sell the securitized loan as a bond. The other was “synthetic” securitization: for example, using derivatives to get rid of the default risk (with credit default swaps) and lock in the interest rate due on the loan (with interest-rate swaps). Both forms of securitization meant that the lending bank was free to make new loans without using up any of its lending capacity once its existing loans had been “securitized.”

So, to redefine liquidity under what I call New Monetarism, one must add, to the traditional definition of broad money, all the credit being created and moved off banks’ balance sheets and onto the balance sheets of nonbank financial intermediaries. This new form of liquidity changed the very nature of the credit beast. What now determined credit growth was risk appetite: the readiness of companies and individuals to run their businesses with higher levels of debt. (Wall Street Journal)

This is truly mind-boggling.

The banks have been creating trillions of dollars of credit (by originating mortgage-backed securities, collateralized debt obligations and asset-backed commercial paper) without maintaining the proportional capital reserves to back them up. That explains why the banks were so eager to provide mortgages to millions of loan applicants who had no documentation, no income, no collateral and a bad credit history. They believed their was no risk, because they were making enormous profits without tying up any of their capital. It was, quite literally, money for nothing.

Now, unfortunately, the mechanism for generating new loans (and fees) has broken down. The main sources of bank revenue have either been seriously curtailed or dried up entirely. (Mortgage-backed) Commercial paper (ABCP) one such source of revenue, has decreased by a full-third (or $400 billion) in just 17 weeks. Also, the securitization of mortgage-backed securities is DOA. The market for MBSs and CDOs and other complex bonds has followed the Pterodactyl into the history books. The same is true of structured investment vehicles (SIVs) and other “off balance-sheet” swindles which have either gone under entirely or are presently withering with every savage downgrade in mortgage-backed bonds. The mighty gear that was grinding out the hefty profits (“structured investments”) has suddenly reversed and—like a millstone that breaks free from its support-axle–is crushing everything in its path.

The banks don’t have the reserves to cover their downgraded assets and the Federal Reserve cannot simply “monetize” their bad bets. There’s no way out. There are bound to be bankruptcies and bank runs. “Structured finance” has usurped the Fed’s authority to create new credit and handed it over to the banks. Now everyone will pay the price.

Wary investors have lost their appetite for risk and are steering-clear of anything connected to real estate or mortgage-backed bonds. That means that an estimated $3 trillion of securitized debt (CDOs, MBSs and ASCP) will come crashing to earth delivering a withering blow to the economy.

And it’s not just the banks that will take a beating either. As Professor Nouriel Roubini points out, the broker dealers, the investment banks, money market funds, hedge funds and mortgage lenders are in the crosshairs as well.

Nouriel Roubini:

Non-bank institutions do not have direct access to the Fed and other central banks liquidity support and they ARE NOW AT RISK OF A LIQUIDITY RUN as their liabilities are short term while many of their assets are longer term and illiquid; so the risk of something equivalent to a bank run for non-bank financial institutions is now rising. And there is no chance that depository institutions will re-lend to these to these non-banks the funds borrowed by central banks as these banks have severe liquidity problems themselves and they do not trust their non-bank counterparties. SO NOW MONETARY POLICY IS TOTALLY IMPOTENT IN DEALING WITH THE LIQUIDITY PROBLEMS AND THE RISKS OF RUNS ON LIQUID LIABILITIES OF A LARGE FRACTION OF THE FINANCIAL SYSTEM. (Nouriel Roubini’s Global EconoMonitor)

Advocates of a U.S. nuclear weapons buildup received a significant setback on December 16, when Congressional negotiators agreed on an omnibus spending bill that omitted funding for development of a new nuclear weapon championed by the Bush administration: the Reliable Replacement Warhead (RRW). Coming on the heels of Congressional action in recent years that stymied administration schemes for the nuclear “bunker buster” and the “mini-nuke,” it was the third–and perhaps final–defeat of George W. Bush and his hawkish allies in their attempt to upgrade the U.S. nuclear weapons arsenal.

The administration’s case for building the RRW–a newly-designed hydrogen bomb–pivoted around the contention that the current U.S. nuclear stockpile is deteriorating and needs to be replaced by new weaponry.

But studies by scientific experts revealed that this stockpile would remain reliable for at least another fifty years. In addition, critics of the RRW scheme pointed to the fact that building new nuclear weapons violates the U.S. commitment under the nuclear Non-Proliferation Treaty (NPT) to pursue nuclear disarmament and that such a violation would encourage other nations to flout their NPT commitments.

Naturally, peace and disarmament organizations were among the fiercest opponents of the RRW, arguing that it was both unnecessary and provocative. Groups like the Council for a Livable World, Friends Committee on National Legislation, Peace Action, and Physicians for Social Responsibility published critiques of the administration plan, mobilized their members against it, and lobbied in Congress to secure its defeat. Activists staged anti-RRW demonstrations and, despite the nation’s focus on the war in Iraq, managed to draw headlines with protests at the University of California and elsewhere.

Members of Congress also were skeptical of the value of the RRW, particularly its utility in safeguarding U.S. security in today’s world, where the Soviet Union–once the major nuclear competitor to the United States–no longer exists. “Moving forward on a new nuclear weapon is not something this nation should do without great consideration,” noted U.S. Representative Peter Visclosky (D-IN), chair of the House subcommittee handling nuclear weapons appropriations. With the end of the Cold War and the rise of terrorism, the U.S. government needed “a revised stockpile plan to guide the transformation and downsizing of the [nuclear weapons] complex . . . to reflect the new realities of the world.”

But is the defeat of the RRW a momentous victory for nuclear disarmers? After all, the U.S. government still possesses some 10,000 nuclear weapons, with thousands of them on launch-ready alert. Moreover, the Bush administration is promoting a plan to rebuild the entire U.S. nuclear weapons complex. Called Complex 2030 and intended to provide for U.S. nuclear arsenals well into the future, this administration scheme is supposed to cost $150 billion, although the Government Accountability Office maintains that this figure is a significant underestimate.

Also, the RRW development plan might be revived in the future. Brooding over the Congressional decision to block funding for the new nuclear weapon, U.S. Senator Pete Domenici (R-NM) — a keen supporter of the venture–remarked hopefully that he expected the RRW or something like it to re-emerge “sooner rather than later.”

This situation, of course, falls short of the 1968 pledge by the United States and other nuclear powers, under article VI of the NPT, “to pursue negotiations in good faith on effective measures relating to . . . nuclear disarmament.” It falls even farther short of their subsequent pledge, made at the NPT review conference of 2000, to “an unequivocal undertaking . . . to accomplish the total elimination of their nuclear arsenals.”

Thus, this December’s Congressional decision to zero out funding for the RRW is only a small, symbolic step in the direction of honoring U.S. commitments and fostering nuclear sanity. If the United States and other nations are serious about confronting the menace of nuclear annihilation that has hung over the planet since 1945, it will require not only the scrapping of plans for new nuclear weapons, but the abolition of the 27,000 nuclear weapons that already exist in government arsenals, ready to destroy the world. Until that action occurs, we will continue to default on past promises and to live on the brink of catastrophe.

12/20/07 “ZNet” — — The findings of the US National Intelligence Estimate (NIE) which state “with high confidence” that Iran halted its nuclear weapons programme in 2003 clearly represent a major set-back to those arguing for military intervention against Iran in the coming months. However, if unchallenged, it is possible that the report might strengthen the case for military action against Iran in the coming years. By recognising that Iran has no current nuclear weapons programme the findings undermine the central argument of those arguing for tougher sanctions and precipitant military strikes. But the claim that Iran had a nuclear weapons programme in the past not only allows that Iran has breached its obligations under the nuclear Non-Proliferation Treaty, but also that it could restart its weaponisation programme at any moment. To welcome this intelligence as wholly accurate is to concede the much disputed question of whether Iran has ever had a nuclear weapons programme.

Whilst the culminative findings of 16 intelligence agencies cannot be ignored, it is difficult to treat the findings with full confidence after the failings of these same agencies that preceded the invasion of Iraq. The report is also compromised by the fact that the 2005 NIE found “with high confidence” that Iran was intent on developing nuclear weapons. A more reliable source of intelligence would surely be the International Atomic Energy Association (IAEA), the only international authority qualified to study Iran’s nuclear dossier. The IAEA were accurate in their assessment of Iraq’s WDM capacity in 2003 and they are continuing to conduct exhaustive inspections on all of Iran’s nuclear enrichment sites. Despite nearly 3,000 person-hours of inspections, the IAEA have found no evidence, past or present, that Iran has diverted its nuclear programme to military purposes.

Whilst we should be glad that this intelligence on the absence of WMDs in Iran has surfaced now rather than being discovering it in the aftermath of a military attack as was the case with Iraq, we should not think that this alone will stall those intent on military intervention against Iran. Although weakened, the neo-Conservative case for military strikes on Iran is not dependent on the existence of a nuclear weapons programme. The concept that Iran might develop weapons at some point in the future, combined with accusations that Tehran is supporting terrorists in Iraq, Syria and Lebanon, and has threatened Israel could yet be used to establish a causis belli.

Iran’s Revolutionary Guard has recently been put on the US list of “terrorist organisations” and Iran has been accused repeatedly of supplying weapons and intelligence to terrorists in Iran. Despite these accusations, no evidence has been produced to demonstrate a definite link between the Iranian government and insurgent or terrorist groups. Indeed General Peter Pace, chairman of the Joint Chiefs of Staff, admitted at a Pentagon news conference this year that he had no evidence of the Iranian government sending any military equipment into Iraq and US commanders in Iraq suggest Iran is now limiting the flow of weapons to Shia militias.

The claim that Iran has threatened “to wipe Israel off the face of the map” has been repeated so often that it has almost become received wisdom. However the much mistranslated Farsi phrase used by President Amadinejad was “Imam ghoft een rezhim-e ishghalgar-e qods bayad az safheh-ye ruzgar mahv shavad.” This translates directly as “The Imam said this regime occupying Jerusalem must vanish from the page of time. This statement is very wise”. Whatever the interpretation of this translation, “a regime vanishing from the page of time” is very different from a threat to wipe a nation off the map.

Much of the debate is now centering on how long it might take for Iran to produce a nuclear weapon should she be intent to do so. The NIE suggests if she were to ‘restart’ her weaponisation programme, Iran might be able to produce warheads by 2010 or 2015. There is little dispute that Iran’s current low-level uranium enrichment is barely adequate for reactor fuel, let alone the highly enriched uranium necessary for a nuclear weapon. It is also agreed that Iran’s 3,000 centrifuges are running far below capacity and there are problems with contaminated feedstock. But arguments about the possible timeline for Iran to acquire a nuclear weapons capacity become academic if we ensure the continued Iranian cooperation with the IAEA and their inspections regime. Novembers’ report by the IAEA states that all of the enriched uranium produced to date “remains under Agency containment and surveillance” and there is no suggestion of a covert weaponisation programme.

Whilst the NIE report does not fit neatly into the Bush/Cheney plan for building a case for military intervention against Iran, it might still be used to their advantage. A consensus of opinion that Iran had a secret nuclear weaponisation programme in the past which could be restarted at any time, combined with predictions that Iran could manufacture a nuclear warhead within the space of 2 years could be used to justify attacks. The NIE reports suggestions that Iran had a nuclear weapons programme should be treated with a degree of scepticism and debates around hypothetical timelines should not be allowed to distract us from the important task of diffusing this dangerous standoff between those intent on military intervention and an Iranian government determined not to back down from its legitimate enrichment activities.

12/21/07 “ICH” — — Every four years the country is swept up in the pomp and pageantry of presidential elections. And every four years loyal Americans flock to the voting booths to select the candidate of their choice. Elections–we are told—are supposed to be the true expression of democratic government. But they aren’t. They’re a sham and most people know it. The balloting creates the illusion of choice where there is none. It’s become a meaningless ritual that has nothing to do with representative government.

The 2008 elections have already been marred by a number of controversies, the worst of which is the report that was published last Friday by Ohio’s top election official, Secretary of State Jennifer Brunner. The report proves that the voting systems that decided the 2004 election in Ohio were rife with “critical security failures”. The election was rigged; pure and simple–stolen by the Bush team and their friends in the establishment media who refuse to report the news. It’s actually funny, in a cynical kind of way. The perpetrators were so cocksure they could pull it off that—according to Democracy Now— “the servers for the computation of the Ohio vote count were in the same basement in Chattanooga, Tennessee that houses servers for the Republican National Committee. The programmers who (worked) for Ken Blackwell, the Republican Secretary of State, were Republicans who did websites for the Bush administration.” (Democracy Now)

What gall. Blackwell’s thugs didn’t even try conceal what they were up to. Why should they care? It’s not like there’s an independent media that’s going to report the details of a stolen election. No way. Blackwell ripped off the election and then thumbed his nose at the public. No investigation. No accountability. No nothing. Just like a banana republic only bigger.

So why do we keep throwing billions of dollars down a black hole just to maintain this pathetic charade that fools no one? Why not just load up the boxcars with pallets of crisp-new hundred dollar bills and ship them off to Crawford where they end up anyway. Let Bush worry about how to distribute the loot. Besides, with Congress’ public approval dithering at 11%; we’d be better off paying them to stay at home and turn the House of Representatives into condos.

This year every one of the leading candidates is a member of the Council on Foreign Relations. Every one of them is a “dual loyalist” with a globalist agenda. Every one of them accepts the new regime of curtailed civil liberties, endless war, and free trade. There’s not a nationalist or a patriot among them. None. They’re all part of the same corporate effluent that washed into Washington on a wave of special interest payola drowning all visible symbols of a once-vital Republic. Romney pontificates about expanding Guantanamo while Clinton boasts about an attack on Iran. Blah, blah, blah. How can anyone listen to this gibberish? There’s not a dime’s worth of difference between any of them. They’re all lacquer-hair phonies who’ve never had an original thought in their lives. Everything they think or say comes off a cue-card or teleprompter that flashes poll-tested, focus-group mumbo-jumbo which they reiterate roboticly. It’s all rubbish.

If a prospective candidate hasn’t sworn his undying allegiance to the cabal of transnational corporations, or taken a blood-oath to defend the doctrine of unfettered self-aggrandizement, or pledged to carry out a bloodthirsty “economy-busting” global crusade; he is quickly banished to the wilderness.

Just look at Ron Paul, who collected $6 million in donations in a matter of hours but still can’t even get his picture in the papers. Why is that?

It’s because he hasn’t sold his soul to the carpetbagging freebooters who run the system. Apart from Kucinich, he’s the only red-blooded, Constitution-toting American in the race. The rest are just bunko-artists and Pharisees.

Everyone knows what’s going on. The whole campaign extravaganza is a pointless farce. Why continue the deception?

We all watched in 2000 while the five loonies on the Supreme Court suspended the hand counting of ballots, overturned the ruling of the Florida Supreme Court, and awarded the election to their own Party’s candidate. How is that any different than Blackwell’s manipulations in Ohio? It’s all the same. In fact, the 5 justices had so little regard for the intelligence of the American people they invoked the 14th amendment—the “equal protection” clause—which had never been used except in cases of racial discrimination. They didn’t care. Who was going to stop them?

Can you imagine, dear reader, the peals of laughter that must have gone up at the right-wing think tanks after that ruling? Hooray for the oligarchy of racketeers! Pass the brandy.

That was a turning point in American history. It showed that the ruling class really doesn’t care what the people think anymore. This is THEIR country and they’ll run it whatever way they want. To hell with democracy.

The reason there’s more coverage of the campaigns this year is simply because the boardroom Mandarins want to restore the illusion that we actually have a choice. We don’t. They pick the candidates and we pull the lever and go home. End of story. The debates are nothing more than a public relations gambit designed to lend a bit of credibility to a system that is rotten to the core. What part of the body-politic has been spared the cancerous ravages of corporate corruption. The Congress? The Executive? The High Court? The media?

Don’t make me laugh. The entire system is marinated in a culture of violence and dishonesty. Nothing is salvageable. It all stinks.

The real difference between the parties is minuscule but significant. The Democrats have become the party of traditional imperialism spearheaded by Brzezinski, Holbrooke, Albright and the other guardians of Empire. These are the master-puppeteers who operate behind the scenes for their well-heeled benefactors. Their focus is mainly on Central Asia; controlling resources from the Caspian Basin, “pacifying” Afghanistan, rallying the EU to a greater role in NATO, and continuing the apocryphal “war on terror” into infinity. It’s the Great Game redux.

The Republican Party has become the party of neoconservatives. Their operational plan is “A Clean Break: A New Strategy for Securing the Realm”. It aligns the US with the foreign policy objectives of Israel’s Likud Party. The focus is balkanizing the Middle East, undermining Arab nationalism, installing US-Israeli client regimes, and controlling the regions prodigious natural resources. It is a straightforward strategy for regional hegemony.

This is the REAL split between the parties, not the meaningless Democrat-Republican labels. Presently, the traditional imperialists have regained the upper-hand as the Bush bandwagon lurches into the ditch. Of course, there is some cross-pollenizing between the two parties; the differences are not absolute. There’s plenty of gray-area and incestuous intermingling, but this is a pretty accurate overview. What’s important is that neither party has any intention of restoring the Bill of Rights, slowing the outsourcing of jobs, or abandoning the war on terror. No way. That is not in their collective interests at all.

When civil liberties are stripped away; elections become pointless. Freedom has nothing to do with pushing a colored-nob on a touch-screen computer every 4 years. Its about containing the power of the state. Doesn’t anyone grasp that? Freedom has become hollow buzzword that’s sprinkled through presidential speeches or used to defend the latest bloody intervention in some foreign country. It’s lost whatever meaning it had. We’ve forgotten that the Bill of Rights doesn’t give us special, superhuman powers. It was designed to be a straitjacket that would restrict the actions of power-hungry politicians and confine them within the law. That’s all it is; a shackle on government. Now, all that’s been lost. The basic rules of the game have changed; the social contract has been repealed. Even the flag, which once embodied the hopes and aspirations of the nation; has been raised over Guantanamo, Abu Ghraib and countless other black sites spread across the planet like grains of sand. What does the world see when they look at that flag now? Do they see a symbol of liberty and justice or the butcher’s apron flapping lazily above some far-flung torture chamber.

NOLA CITY COUNCIL INCITES BRUTAL POLICE ATTACKS AND TEAR GASING OF PUBLIC HOUSING TENANTS AND THEIR ALLIES

EMERGENCY NATIONAL CALL TO STAND WITH NOLA PUBLIC HOUSING TENANTS TO STOP DEMOLITIONS OF THEIR HOMES

ASSEMBLE FOR CANDLELIGHT VIGIL AT HUD’S OFFICES, 26 FEDERAL PLAZA, NYC (WORTH ST BETWEEN LAFAYETTE & BROADWAY ENTRANCE) THURSDAY, DECEMBER 20, 2007 AT 6:30 PM

Today in the city council chambers in New Orleans, public housing tenants and their allies gathered to exercise their democratic right to speak against the vote to demolish their homes.

The city councils response was to call in the city council security, the NOLA swat teams and police force that began to forcible remove, arrest, beat, drag, brutalize and tear gas those who wanted the to express their opposition to the loss of stable housing stock.

Elderly women with canes were seen dragged across the city council parking lot, media persons, tenants and community supporters were tear gassed by an over zealous NOLA woman cop who tear gassed at rapid fire, as if she was on the battle fields of Iraq.

A temporary restraining order, was issued that prohibited the NOLA city council from moving forward with the bulldozing of over 4500 public housing units until they voted TO AUTHORIZE THE DEMOLITIONS FOR LAFITTE, ST BERNARD, COOPER, PEETE.

RAISE YOUR VOICE AND STATE YOUR OPPOSITION TO THE DEMOLITION OF THE PUBLIC HOUSING IN NOLA. SAVE THE HOMES OF THE POOREST VICTIMS OF THE BREECHING OF THE LEVEES

CALL:

ALPHONSO JACKSON HUD SECY, 202-708-0417

CHRISTOPHER DOBBS, BANKING COMMITTEE CHAIR, 202-224-7391; FAX: 202-224-5137; 212-688-626

JOIN US FOR A CANDLE LIGHT VIGIL AT 26 FEDERAL PLAZA, NYC – BRING YOUR BANNERS, CULTURAL INSTRUMENTS, CANDLES AND FLASH LIGHTS.

DALLAS, Texas (Dec. 20) — If you turn to the Bible — Isaiah Chapter 35, Verse 8 — you will see a passage that in part says, “A highway shall be there, and a road, and it shall be called the Highway of Holiness.”

Now, is it possible that this “highway” mentioned in Chapter 35 is actually Interstate 35 that runs through six U.S. states, from southern Texas to northern Minnesota? Some Christians have faith that is indeed the case.

It was with that interesting belief in mind that we decided to head to Texas, the southernmost state in the I-35 corridor, to do a story about a prayer campaign called “Light the Highway.”

Churchgoers in all six states recently finished 35 days of praying alongside Interstate 35, but the prayers are still continuing.

Some of the faithful believe that in order to fulfill the prophecy of I-35 being the “holy” highway, it needs some intensive prayer first. So we watched as about 25 fervent and enthusiastic Christians prayed on the the interstate’s shoulder in Dallas.

They chanted loudly and vibrantly, making many people in the neighborhood wonder what was going on. They prayed that adult businesses along the corridor would “see the light” and perhaps close down.

They prayed for safety and freedom from crime for people who lived along the interstate. They prayed that all Americans would accept Jesus into their lives.

The woman who came up with the concept of “Light the Highway” is a Texas minister named Cindy Jacobs.

She says she can’t be sure Interstate 35 really is what is mentioned in the Bible but says she received a revelation to start this campaign after “once again reading Isaiah, Chapter 35.”

Jacobs also points out that perhaps there is a link between the area near this highway and tragedies that have happened in history, such as the bridge collapse on I-35 in Minneapolis last August and the assassination of JFK 44 years ago near I-35 in Dallas. That’s why prayer certainly can’t hurt, she adds.

Now, it’s only fair to say most people, the religious and the non-religious alike, don’t buy any of this, but none more than the owners of some of the adult businesses along I-35.

At an adult go-go club, the owner tells us he resents people trying to impose their will on others. And he says his club holds fundraisers, food drives and toy drives to help the community.

Every hour, Mexico imports $1.5 million dollars worth of agricultural and food products, almost all from the United States.

In that same hour, 30 people-men, women, and children-leave their homes in the Mexican countryside to take up the most dangerous journey of their lives-as migrants to the United States.

No matter what one’s stance on these two fundamental phenomena of our age-economic integration and immigration-one thing is absolutely clear: they are related.

As the final phase of implementation of the North American Free Trade Agreement (NAFTA) approaches, the debate remains disappointingly stuck in ideologically defined terms. Proponents of the free trade model point, not surprisingly, to increased trade as proof of its success. Opponents cite negative impacts from the point of view of their respective sectors, issues, and interests.

In January 2008 NAFTA enters its last stage of implementation in which all remaining tariffs on corn, beans, and other sensitive agricultural products will be eliminated. With severely negative impacts predicted for Mexican farmers and an accumulation of social problems in all three countries, this phase obliges policymakers to finally take NAFTA to task for how it has affected the daily lives of North American citizens.

Applying the NAFTA model elsewhere in the world, U.S. negotiators have hammered through “free trade agreements” (FTAs) bent on prying open new markets for U.S. products and guaranteeing favorable conditions for investors. These are laudable objectives, but for too long they have ignored the fact that this narrow focus has high social costs in our country and in the partner countries.

There comes a time when we have to determine whether those social costs are worth the benefits and consider a change in course.

To do this, we need comprehensive studies that look at the macroeconomic data and statistics, but also at livelihoods, communities, and families.

Two Towns

The reality reflected in carefully selected numbers too often hides the devastation in human lives. Two towns-El Paso, Texas and Nochixtlan, Oaxaca-illustrate some of the real costs of NAFTA.

Shortly after NAFTA went into effect, companies located in El Paso began an exodus over the border. The textile industry was the hardest hit. The community organization Mujer Obrera reports that between 1994 and 2007 some 50,000 apparel workers lost their jobs. Two-thirds of them were women, mostly of Mexican descent. As companies closed shop, women workers lost their jobs and the county of El Paso, now tied for the third poorest county in the nation, never found a way to compensate.

As a result, poverty has increased by over 30% since 1999 and today nearly one of every three El Paso residents lives in poverty, 57% of them women. Federal money under NAFTA for retraining programs has been insufficient and misdirected, as former workers are either poorly trained or trained for jobs that do not exist in the community. Year after year, El Paso drops down in average income.

What has happened is no longer due primarily to job loss. Most of the poor are working poor, according to the 2005 census. They have lost income because employers are paying less and more people are employed in the informal sector. Under this post-NAFTA scenario, women and children bear the brunt-a full 45% of women-headed households live below the poverty level.

Nochixtlan, Oaxaca also suffered under NAFTA, but in a very different way. In the small Mixteco Indian community of southern Mexico, corn farming supported nearly all the inhabitants in one way or another.

After centuries of misuse, the land suffered from one of the worst erosion rates in the world and chemical farming had depleted the soil. Then, lower yields were combined with the impact of increased imports under NAFTA that drove the domestic price of corn down 59% between 1991 and 2006. Nochixtlan farmers began to abandon their farms, and today the Mixteca region of Oaxaca has one the country’s highest rates of out-migration. Here, too, no government programs came to the rescue or even attempted to soften the blow.

But El Paso and Nochixtlan have something else in common besides tragedy-the tremendous will of the community to pick itself up and move on. In El Paso, the seamstresses have created a community development plan that includes food gardens, a restaurant, an import business, and a daycare service. All are small scale but they are serious attempts to create sustainable jobs that fulfill human needs.

In Nochixtlan, a farmers’ organization has built trenches to stop erosion, started a reforestation program that has planted three million native variety trees to date, and instituted sustainable farming techniques. As they attempt to save their village, they are also contributing to the global battle against global warming and environmental decline.

The efforts of both are slowly reviving their communities. But they need help.

U.S. trade policy sent these communities into deep crises. A new trade policy can help pull them out, and avoid a similar fate for other communities.

The terms of NAFTA must be modified to permit government regulation of basic food production and supply, and provide policy instruments so poor Mexican farmers are not forced to compete with subsidized large companies for their own markets. The petition to withdraw corn and beans from the free trade agreement and support small farmers and food sovereignty is not a blow against free trade precepts but a common-sense demand for public policy that places lives and livelihoods first.

There must be mechanisms of flexibility when the terms of trade threaten livelihoods, food security, or health. This flexibility has been lacking in NAFTA and other FTAs. Negotiations have been inflexible, with developing countries finally giving in to terms they know will harm part of their population. The pound of flesh exacted from poor countries in exchange for access to the U.S. market in the end hurts both partner countries and the United States , since the terms of the agreements exacerbate inequality and close off opportunities, leading to increased immigration.

U.S. negotiators call this success but the long-term price in international relations will be high and the immediate price is the rejection of U.S. trade policy we see in many Latin American countries, accompanied by resentment of the United States for the terms of imposition.

There is a false dichotomy presented to us that divides protectionism-seen as an evil of the past-and free trade as the only path to the future. Free trade has even been presented as synonymous with freedom in the political realm and the Western Hemisphere portrayed as divided between the democratic open-market supporters and nations searching to mitigate the polarizing effects of trade and investment liberalization. Until we reject ideological posturing and analyze the real impact of FTAs we will never arrive at more just and viable trade policies for all our countries and a more prosperous and stable hemisphere.

To develop a sustainable and fair trade policy this debate must become less dogmatic and more pragmatic. It’s time to take a close look at what really is happening under these agreements and be open to corrections or creative changes in course. Communities have already begun to do that and a new trade policy can find many pointers in these local experiences.

1) Trade policy should be accompanied by aid for sustainable development:

U.S. aid to Mexico should be used to encourage efforts like Nochixtlan and compensate for damage done by NAFTA by funding new economic initiatives. NAFTA’s extension, the Security and Prosperity Partnership (SPP) has gone off in the complete opposite direction. Instead of directing aid and programs to regions negatively affected by the agreement, it has facilitated terms for transnational corporations-the only sector of society directly represented in its negotiations. Most recently, the SPP process has led to Plan Mexico and a tenfold leap in proposed U.S. aid to Mexico-but for enforcement, intelligence, and military equipment. This creates a grave danger of militarizing a politically polarized Mexico and increasing the possibility of conflict. Creating healthy employment in the United States and Mexico would have a far greater impact on reducing the illegal drug trade than surveillance planes.

2) We need comprehensive studies:

For too long we have ignored or sought to patch over the serious problems generated in the United States and Mexico by NAFTA. We have abundant information on trade flows from the USTR, but little on the real consequence on real human lives. It’s past time to call for studies that assess the economic data but also report on changing social indices even when direct cause and effect with NAFTA is difficult to ascertain.

The results then should be heeded. One of the very few studies of NAFTA in Mexico by the General Accounting Office concluded years ago that there was a pressing need for rural compensation funds. Nothing was done. Since then many of the predicted negative impacts have occurred, and there has been no policy response whatsoever.

3) A moratorium should be called on all new FTAs, including the three remaining before the U.S. Congress: South Korea, Panama, and Colombia.

The moratorium should last until new studies of the immediate and long-term impact of FTAs have been thoroughly evaluated so as to determine whether this model works. The three FTAs before congress should be rejected not just for the particular circumstances of each case but because the FTA model is seriously flawed as an instrument of a constructive trade and foreign policy.

What we already know about NAFTA-style Free Trade Agreements is that along with increasing trade, they generate inequality. Adopting a trade policy that widens the gap between rich and poor here and abroad does nobody a service in the long term. Unless we change course, the social costs of our current trade policy will grow over the years and what we already see-unemployment and underemployment in our communities and abroad, environmental degradation, natural resource depletion, and growing gaps between those who benefit and those who are harmed-could develop into more serious problems of instability and widespread poverty.

A new policy would assure predictability and stable markets for U.S. producers, guarantees-not privileges-for U.S. investors, and basic rights for workers everywhere. It will imply a more active role of governments in balancing a competitive open-market system with protection of weaker sectors and the common good.

It will also mean denying some of the demands large corporations make in the name of competitiveness. But that’s healthy. If there is one thing we’ve learned from the growth of inequality under NAFTA, it’s that trickle down doesn’t work unless you squeeze from the top. Companies must recognize responsibility for the communities whose labor and resources go to make the products they sell and the profits they reap.

Powerful interests will complain, but greater fairness for all-between employers and employees, the United States, and its partner nations-will build a more peaceful and stable world for the future.

And that will benefit all of us.

Clinton’s position on Iraq is almost indistinguishable from Bush’s.

Public opinion polls have consistently shown that the majority of Americans — and even a larger majority of Democrats — believe that Iraq is the most important issue of the day, that it was wrong for the United States to have invaded that country, and the United States should completely withdraw its forces in short order. Despite this, the clear front-runner for the Democratic Party nomination for president is Senator Hillary Clinton, a strident backer of the invasion who only recently and opportunistically began to criticize the war and call for a partial withdrawal of American forces.

As a result, it is important to review Senator Clinton’s past and current positions regarding the Iraq War. Indeed, despite her efforts in response to public opinion polls to come across as an opponent of the war, Hillary Clinton has proven to be one of the most hard-line Democratic senators in support of a military response to the challenges posed by Iraq. She has also been less than honest in justifying her militaristic policies, raising concerns that she might support military interventions elsewhere.

Pre-War Militarism

Senator Clinton’s militaristic stance on Iraq predated her support for Bush’s 2003 invasion. For example, in defending the brutal four-day U.S. bombing campaign against Iraq in December 1998 — known as Operation Desert Fox — she claimed that “[T]he so-called presidential palaces … in reality were huge compounds well suited to hold weapons labs, stocks, and records which Saddam Hussein was required by UN resolution to turn over. When Saddam blocked the inspection process, the inspectors left.” In reality, as became apparent when UN inspectors returned in 2002 as well as in the aftermath of the invasion and occupation, there were no weapons labs, stocks of weapons or missing records in these presidential palaces. In addition, Saddam was still allowing for virtually all inspections to go forward at the time of the 1998 U.S. attacks. The inspectors were withdrawn for their own safety at the encouragement of President Clinton in anticipation of the imminent U.S.-led assault.

Senator Clinton also took credit for strengthening U.S. ties with Ahmad Chalabi, the convicted embezzler who played a major role in convincing key segments of the administration, Congress, the CIA, and the American public that Iraq still had proscribed weapons, weapons systems, and weapons labs. She has expressed pride that her husband’s administration changed underlying U.S. policy toward Iraq from “containment” — which had been quite successful in defending Iraq’s neighbors and protecting its Kurdish minority — to “regime change,” which has resulted in tragic warfare, chaos, dislocation, and instability.

Prior to the 2003 invasion, Clinton insisted that Iraq still had a nuclear program, despite a detailed 1998 report by the International Atomic Energy Agency (IAEA), subsequent studies that indicated that Iraq’s nuclear program appeared to have been completely dismantled a full decade earlier, and a 2002 U.S. National Intelligence Estimate that made no mention of any reconstituted nuclear development effort. Similarly, even though Iraq’s chemical and biological weapons programs had been dismantled years earlier, she also insisted that Iraq had rebuilt its biological and chemical weapons stockpiles. And, even though the limited shelf life of such chemical and biological agents and the strict embargo against imports of any additional banned materials that had been in place since 1990 made it physically impossible for Iraq to have reconstituted such weapons, she insisted that “It is clear … that if left unchecked, Saddam Hussein will continue to increase his capacity to wage biological and chemical warfare, and will keep trying to develop nuclear weapons.”

In the fall of 2002, Senator Clinton sought to discredit those questioning Secretary of Defense Donald Rumsfeld, Vice-President Dick Cheney, and others who were making hyperbolic statements about Iraq’s supposed military prowess by insisting that Iraq’s possession of such weapons “are not in doubt” and was “undisputed.” Similarly, Clinton insisted that Secretary of State Colin Powell’s February 2005 speech at the UN was “compelling” although UN officials and arms control experts roundly denounced its false claims that Iraq had reconstituted these proscribed weapons, weapons programs, and delivery systems. In addition, although top strategic analysts correctly informed her that there were no links between Saddam Hussein’s secular nationalist regime and the radical Islamist al-Qaeda, Senator Clinton insisted that Saddam “has also given aid, comfort, and sanctuary to terrorists, including al Qaeda members.”

The Lead-Up to War

Though the 2003 National Intelligence Estimate (NIE) on Iraq was inaccurate in a number of respects, it did challenge the notion of any operational ties between the Iraqi government and Al-Qaeda and questioned some of the more categorical claims by President Bush about Iraq’s weapons of mass destruction (WMD). However, Senator Clinton didn’t even bother to read it. She now claims that it wasn’t necessary for her to have actually read the 92-page document herself because she was briefed on the contents of the report. However, since no one on her staff was authorized to read the report, it’s unclear who could have actually briefed her.

During the floor debate over the resolution authorizing the invasion of Iraq, Clinton was the only Democratic senator to have categorically accepted the Bush administration’s claims regarding Iraq’s alleged chemical, biological and nuclear weapons programs, Iraq’s alleged long-range missile capabilities, and alleged ties to al-Qaeda. (Some Democratic senators accepted some of those claims, but not all of them.)

In the months leading up the war, Senator Clinton chose to ignore the pleas of the hundreds of thousands of people demonstrating in her state and across the country against the war and similarly brushed off calls by religious leaders, scholars, community activists, and others to oppose it. Perhaps most significant was her refusal to consider the anti-war appeals by leaders of the Catholic Church and virtually every mainline Protestant denomination, which noted that it did not meet the traditional criteria in the Christian tradition for a just war. Instead, Senator Clinton embraced the arguments of the right-wing fundamentalist leadership who supported the war. This categorical rejection of the perspective of the mainstream Christian community raises concerns about her theological perspectives on issues of war and peace.

In March 2003, well after UN weapons inspectors had been allowed to return and engage in unfettered inspections and were not finding any WMDs, Senator Clinton made clear that the United States should invade that Iraq anyway. Indeed, she asserted that the only way to avoid war would be for Saddam Hussein to abide by President Bush’s ultimatum to resign as president and leave the country, in the apparent belief that the United States had the right to unilaterally make such demands of foreign leaders and to invade and occupy their countries if they refused. Said Senator Clinton, “The president gave Saddam Hussein one last chance to avoid war and the world hopes that Saddam Hussein will finally hear this ultimatum, understand the severity of those words, and act accordingly.”

When President Bush launched the invasion soon thereafter and spontaneous protests broke out across the country, Senator Clinton voted in favor of a Republican-sponsored resolution that “commends and supports the efforts and leadership of the President . . . in the conflict against Iraq.”

Aftermath of invasion

Even after the U.S. forces invaded and occupied Iraq and confirmed that — contrary to Senator Clinton’s initial justification for the war — Iraq did not have WMDs, WMD programs, offensive delivery systems, or ties to al-Qaeda, she defended her vote to authorize the invasion anyway. Speaking at the Council on Foreign Relations in New York that December, she declared, “I was one who supported giving President Bush the authority, if necessary, to use force against Saddam Hussein. I believe that that was the right vote” and was one that “I stand by.”

In the face of growing doubts about American forces involved in a deepening counter-insurgency war, she urged “patience” and expressed her concern about the lack of will “to stay the course” among some Americans. “Failure is not an option” in Iraq, she insisted. “We have no option but to stay involved and committed.” Indeed, long before President Bush announced his “surge,” Senator Clinton called for the United States to send more troops.

During a trip to Iraq in February 2005, she insisted that the U.S. occupation was “functioning quite well,” although the security situation had deteriorated so badly that the four-lane divided highway on flat open terrain connecting the airport with the capital could not be secured at the time of her arrival and a helicopter had to transport her to the Green Zone. Though 55 Iraqis and one American soldier were killed during her brief visit, she insisted — in a manner remarkably similar to Vice President Cheney — that the rise in suicide bombings was evidence that the insurgency was failing.