The Rag Blog

WASHINGTON – When a top U.S. commander in Iraq reported last week that attacks by Shiite militias with links to Iran had risen to 73 percent of all July attacks that had killed or wounded U.S. forces in Baghdad, he claimed it was because of an effort by Iran to oust the United States from Iraq, referring to “intelligence reports” of a “surge” in Iranian assistance.

But the obvious reason for the rise in Shiite-related U.S. casualties, — ignored in U.S. media coverage of Lt. General Raymond Odierno’s charge — is that the Mahdi Army of Moqtada al-Sadr was defending itself against a rising tempo of attacks by U.S. forces at the same time attacks by al-Qaeda forces had fallen.

In his press briefing on Aug. 5, Odierno, the second-ranking U.S. commander in Iraq, blamed the rise in the proportion of U.S. casualties attributable to Shiite militias on Iran “surging their support to these groups based on the September report” — a reference to the much-anticipated report by General David Petraeus on the U.S.’s own surge strategy.

Odierno claimed intelligence reports supported his contention of an Iranian effort to influence public perceptions of the surge strategy. “They’re sending more money in, they’re training more individuals and they’re sending more weapons in.”

He repeated the charge in an interview with Michael R. Gordon of the New York Times published on its front page Aug. 8 under the headline, “U.S. Says Iran-Supplied Bomb Is Killing More Troops in Iraq.” In that interview, he declared of Iran, “I think they want to influence the decision potentially coming up in September.”

What Odierno framed in terms of an Iranian policy, however, can be explained much more simply by the fact that the U.S. military mounted more operations on Moqtada al-Sadr’s Mahdi Army during the spring and summer.

The U.S. command has not provided any statistics on the targets of its operations in recent months, but news reports on those operations reveal a pattern of rising U.S. attacks on Mahdi Army personnel since March 2007.

Between Apr. 26 and Jun. 30, the U.S. command in Baghdad announced dozens of military operations in Baghdad — the vast majority in Sadr City — solely for the purpose of capturing or killing Shiites belonging to what were called “secret cells” — a term used to describe Mahdi Army units alleged to be supported by Iran.

In July the Mahdi Army resisted these raids in many cases. On Jul. 9, for example, U.S. troops cordoned off an area in Sadr City and began searching for members of what the U.S. command called a “criminal militia” accused of planting roadside bombs. According to the official military press release, the U.S. troops were “engaged by rocket-propelled grenades and small arms fire from numerous locations.”

In short, the rise in deaths of U.S. troops in Baghdad in July reflected the increased pace of U.S. operations against the Mahdi Army and the Mahdi Army’s military response.

Odierno conceded as much in the same press conference: “Because of the effect we’ve had on al-Qaeda in Iraq and the success against them and the Sunni insurgency,” he said, “we are focusing very much more on the special groups of the Jaish al-Mahdi [Mahdi Army] here in Baghdad.”

The major briefing by the U.S. command on alleged Iranian support for Iraqi Shiite militias in recent weeks appears to contradict Odierno’s claim that intelligence showed increased Iranian assistance to those militias. Brig. Gen. Kevin Bergner told reporters on Aug. 2 — after a “surge” in Iranian assistance had allegedly taken place — that the rate of training of militia groups in Iran had remained stable for a long time.

The transcript of the briefing also shows that Bergner did not claim any recent increase in financial assistance to the Mahdi Army.

Odierno’s reference to “sending more weapons in” continued the practice of the George W. Bush administration to claim that Iranian officials actually ship weapons to Shiite militias in Iraq, despite the fact that no evidence of such a role has been found after four years of trying.

Odierno told the New York Times that explosively formed penetrators (EFPs) accounted for one-third of combat deaths suffered by “U.S.-led forces” — including Iraqi and British forces — in July. But he said nothing about the proportion of total U.S. troops killed or wounded by them.

The Bush administration continues to assert that EFPs are provided by the Iranian government, despite numerous discoveries by U.S. forces of workshops manufacturing such devices in Iraq.

Odierno’s charges are the latest addition to an ongoing Bush administration narrative about developments in Iraq that treats all Shiite activity outside the Iraqi government as reflecting Iranian policy.

Its central theme of an Iranian policy to drive the U.S. out of Iraq by killing U.S. troops, first introduced in January, has branched out into several sub-themes, one of which is that Sadr has lost control over the Mahdi Army. The U.S. command has been claiming it has broken up into “rogue units” — also called “special groups” or “secret cells”. Those “rogue units” in turn are said to have become instruments of Iranian policy.

Although the Mahdi Army operates on a highly decentralised basis, and some units have been involved in sectarian activities that Sadr did not approve, the U.S. military has never produced evidence that a significant number of units are no longer loyal to Sadr.

The “rogue units” line has been used to suggest that those units that were loyal to Sadr were cooperating with the United States and to justify U.S. attacks on the Mahdi Army both in Baghdad and in Southern Iraq.

Gen. Petraeus claimed publicly that Sadr had agreed in talks with Iraq’s Prime Minister Nouri al-Maliki to the deployment of U.S. troops to Baghdad’s Sadr City district in return for assurances that searches and raids would be conducted in a “respectable manner”.

Sadr’s spokesman in parliament said, however, that the understanding had been that Iraqi forces would conduct searches and that U.S. troops would intervene only if they faced resistance. The spokesman said U.S. troops had violated the understanding.

At first, Sadr’s troops stayed off the streets and did not resist U.S. troops. But in March Sadr’s office denounced the U.S. troop deployment in Sadr City and called on people to take to the streets in protest. And a Shiite cleric loyal to Sadr exhorted followers at Friday prayers not to cooperate with the U.S. occupation of Sadr City.

On Apr. 8, Sadr issued a statement urged the Iraqi army and police to stop cooperating with the United States and told his guerrilla fighters to concentrate on pushing U.S. forces out of the country.

Thus it requires no Iranian hand to explain the escalation of the conflict between the Mahdi Army and the U.S. military that accounts for the changing pattern of U.S. casualties in Baghdad.

WASHINGTON — As President Bush escalates the United States’ confrontation with Iran across a broad front, U.S. allies in Europe and the Middle East are growing worried that the steps will achieve little, but will undercut diplomacy and increase the chances of war.

In the latest step, Bush and Secretary of State Condoleezza Rice are considering designating Iran’s Islamic Revolutionary Guard Corps, the elite military force that serves as the guardian of Iran’s Islamic state, as a foreign terrorist organization.

News of the decision was leaked to newspapers in what a senior State Department official and Washington-based diplomats said was a sign of an intensifying internal struggle within the U.S. government between proponents of military action and opponents, led by Rice.

State Department officials and foreign diplomats see Rice’s push for the declaration against the Revolutionary Guards as an effort to blunt arguments by Vice President Dick Cheney and his allies for air strikes on Iran. By making the declaration, they feel, Rice can strike out at a key Iranian institution without resorting to military action while still pushing for sanctions in the United Nations.

Partisans of military force argue that Rice’s strategy has failed to change Tehran’s behavior.

“It really does seem this is more tied to the internal debate that is going on in the administration on Iran, rather than a serious attempt to influence Iranian behavior,” said an Arab diplomat, who spoke on condition of anonymity because of the issue’s sensitivity.

“How that debate will play out is what’s concerning” Arab and European countries, he said.

Designating the Revolutionary Guard as a terrorist group “is the State Department trying to do something short of war,” said former U.S. diplomat Charles Dunbar, a professor of international relations at Boston University.

“What else can we do?” said Dunbar, who worked for the State Department in Tehran from 1963 to 1967.

The Revolutionary Guard would be the first military unit of a sovereign government ever placed on the department’s list of terrorist organizations. The move would allow the Treasury Department to go after the group’s finances and those of its reputed business network inside and outside Iran.

The Bush administration has been engaging Iran in a increasingly strident war of words since the spring, when the Bush administration demanded tougher U.N. sanctions over Iran’s nuclear energy program. The White House says that Bush remains committed to diplomatic and financial actions to persuade Iran to stop enriching nuclear fuel, which the U.S. says can be made into a bomb but that Iran insists is intended only for electricity generation.

Recently, the administration has stepped up the rhetoric, accusing Iran of providing Shiite Muslim militias in Iraq with particularly deadly roadside bombs that have killed dozens of U.S. service members.

“We are confronting Iranian behavior across a variety of different fronts on a number of different, quote- unquote, battlefields, if you will,” State Department spokesman Sean McCormack said Wednesday.

Earlier this year, the Pentagon temporarily moved an additional aircraft carrier into the Persian Gulf as a warning to Iran. U.S. commanders in Iraq have also highlighted intelligence they say shows that the Revolutionary Guard’s Qods force is shipping sophisticated road-side bombs, known as explosively formed penetrators, into Iraq.

Bush and his aides also have accused Iran of playing an unhelpful role in Afghanistan — although some State Department officials say the reality is much more complicated.

Finally, Rice and Defense Secretary Robert Gates traveled to the Middle East in late July and early August, bearing promises of billions in weapons sales to friendly Arab states and a $30 billlion, 10-year military aid package to Israel. The rationale: Iran.

What remains unclear is what the administration will do if none of those steps has an impact on Iran, whose leaders seem confident as they see Bush unpopular at home and bogged down in Iraq.

“The coercion … undermines diplomacy. And once diplomacy is undermined, it becomes a self-fulfilling prophecy,” said Ray Takeyh, an Iran expert at the Council on Foreign Relations.

By early 2008, “You’re in a position where you have a series of escalatory measures … And then the military option becomes something you can consider,” Takeyh said.

On the nuclear front, since taking office in 2005, Rice has backed a European-led effort to persuade Iran to stop enriching uranium in exchange for economic, political and security benefits.

The U.N. Security Council has passed two resolutions imposing sanctions on Iran for its nuclear work. But negotiations on a third have stalled and a September deadline for enacting new sanctions will likely be missed, say State Department officials and diplomats.

Critics say that designating the Revolutionary Guard as a terrorist group could further undermine the effort, and also scuttle U.S.-Iranian talks in Baghdad on Iraq’s security. Those talks have achieved little.

On Iran’s role in Iraq, U.S. ground commanders in Iraq oppose proposals from Cheney and his allies to counter-attack inside Iran itself, saying they believe they can contain Iran’s growing influence without acting outside Iraq.

Privately, some are hostile to suggestions that the military strike another country, saying they are mired in Iraq.

“Let them put on the uniform and go there then,” said one military official in Baghdad who asked not to be identified because of the sensitivity of the topic.

Lt. Gen. Raymond Odierno, the No. 2 commander in Iraq, said Friday that Shi’ite factions, backed by Iranian groups, are now responsible for nearly half the attacks in Iraq, compared to 30 percent in January.

Odierno said he could deal with the problem inside Iraq, without going over the border into Iran. But he conceded that the military still is learning about how Iranian networks run through Iraq.

AMY GOODMAN: The State Department is coming under criticism this week for refusing to allow a prominent South African social scientist to enter the country. Adam Habib was scheduled to speak at the annual meeting of the American Sociological Association in New York this past weekend, but the government refused to give him a visa.

Ironically, the theme of this year’s sociology conference was “Is Another World Possible?” At the conference, the ASA planned a series of sessions to assess the potential for progressive social change both in the US and in the world and to invite a serious discussion of “economic globalization” and its consequences.

One of the most highly anticipated sessions was to feature Jeffrey Sachs, an internationally known economist and a former special advisor to UN Secretary General Kofi Annan, versus Naomi Klein, the Canadian journalist and author. But shortly before the ASA conference opened, Sachs pulled out. Unclear if it was related to the fact that Naomi Klein takes him on in her forthcoming book, The Shock Doctrine: The Rise of Disaster Capitalism. The theme of her talk was “Lost Worlds.” This is Naomi Klein.

NAOMI KLEIN: As we think about reaching this other possible world, I want to be very clear that I don’t believe the problem is a lack of ideas. I think we’re swimming in ideas: universal healthcare; living wages; cooperatives; participatory democracy; public services that are accountable to the people who use them; food, medicine and shelter as a human right. These aren’t new ideas. They’re enshrined in the UN Charter. And I think most of us still believe in them.

I don’t think our problem is money, lack of resources to act on these basic ideas. Now, at the risk of being accused of economic populism, I would just point out that in this city, the employees of Goldman Sachs received more than $16 billion in Christmas bonuses last year, and ExxonMobil earned $40 billion in annual profits, a world record. It seems to me that there’s clearly enough money sloshing around to pay for our modest dreams. We can tax the polluters and the casino capitalists to pay for alternative energy development and a global social safety net. We don’t lack ideas. Neither are we short on cash.

And unlike Jeffrey Sachs, I actually don’t believe that what is lacking is political will at the highest levels, cooperation between world leaders. I don’t think that if we could just present our elites with the right graphs and PowerPoint presentations — no offense — that we would finally convince them to make poverty history. I don’t believe that. I don’t believe we could do it, even if that PowerPoint presentation was being delivered Angelina Jolie wearing a (Product) Red TM Gap tank top and carrying a (Product) Red cell phone. Even if she had a (Product) Red iPhone, I still don’t think they would listen. That’s because elites don’t make justice because we ask them to nicely and appealingly. They do it when the alternative to justice is worse. And that is what happened all those years ago when the income gap began to close. That was the motivation behind the New Deal and the Marshall Plan. Communism spreading around the world, that was the fear. Capitalism needed to embellish itself. It needed to soften its edges. It was in a competition. So ideas aren’t the problem, and money is not the problem, and I don’t think political will is ever the problem.

The real problem, I want to argue today, is confidence, our confidence, the confidence of people who gather at events like this under the banner of building another world, a kinder more sustainable world. I think we lack the strength of our convictions, the guts to back up our ideas with enough muscle to scare our elites. We are missing movement power. That’s what we’re missing. “The best lacked all convictions,” Yeats wrote, “while the worst are full of passionate intensity.” Think about it. Do you want to tackle climate change as much as Dick Cheney wants Kazakhstan’s oil? Do you? Do you want universal healthcare as much as Paris Hilton wants to be the next new face of Estee Lauder? If not, why not? What is wrong with us? Where is our passionate intensity?

What is at the root of our crisis of confidence? What drains us of our conviction at crucial moments when we are tested? At the root, I think it’s the notion that we have accepted, which is that our ideas have already been tried and found wanting. Part of what keeps us from building the alternatives that we deserve and long for and that the world needs so desperately, like a healthcare system that doesn’t sicken us when we see it portrayed on film, like the ability to rebuild New Orleans without treating a massive human tragedy like an opportunity for rapid profit-making for politically connected contractors, the right to have bridges that don’t collapse and subways that don’t flood when it rains. I think that what lies at the root of that lack of confidence is that we’re told over and over again that progressive ideas have already been tried and failed. We hear it so much that we accepted it. So our alternatives are posed tentatively, almost apologetically. “Is another world possible?” we ask.

This idea of our intellectual and ideological failure is the dominant narrative of our time. It’s embedded in all the catchphrases that we’ve been referring to. “There is no alternative,” said Thatcher. “History has ended,” said Fukuyama. The Washington Consensus: the thinking has already been done, the consensus is there. Now, the premise of all these proclamations was that capitalism, extreme capitalism, was conquering every corner of the globe because all other ideas had proven themselves disastrous. The only thing worse than capitalism, we were told, was the alternative.

Now, it’s worth remembering when these pronouncements were being made that what was failing was not Scandinavian social democracy, which was thriving, or a Canadian-style welfare state, which has produced the highest standard of living by UN measures in the world, or at least it did before my government started embracing some of these ideas. It wasn’t the so-called Asian miracle that had been discredited, which in the ’80s and ’90s built the Asian “tiger” economies in South Korea and Malaysia using a combination of trade protections to nurture and develop national industry, even when that meant keeping American products out and preventing foreign ownership, as well as maintaining government control over key assets, like water and electricity. These policies did not create explosive growth concentrated at the very top, as we see today. But record levels of profit and a rapidly expanding middle class, that is what has been attacked in these past thirty years.

What was failing and collapsing when history was declared over was something very specific in 1989, when Francis Fukyama made that famous declaration, and when the Washington Consensus was declared, also in 1989. What was collapsing was centralized state communism, authoritarian, anti-democratic, repressive. Something very specific was collapsing, and it was a moment of tremendous flux.

And it was in that moment of flux and disorientation that several very savvy people, many of them in this country, seized on that moment to declare victory not only against communism, but against all ideas but their own. Now, this was the Fukuyama chutzpah, when he actually said — and it seems so strange to read it now — in his famous 1989 speech, that the significance of that moment was not that we were reaching an end of ideology, as some were suggesting, or a convergence between capitalism and socialism, as Gorbachev was suggesting, it was not that ideology had ended, but that history as such had ended. He argued that deregulated markets in the economic sphere combined with liberal democracy in the political sphere represented the endpoint of mankind’s ideological evolution and the final form of human government.

Now, what was interesting and never quite stated in this formulation was that you basically had two streams: you had democracy, which you can use to vote for your leaders, and then you had a single economic model. Now, the catch was that you couldn’t use your vote, you couldn’t use your democracy to reshape your economy, because all of the economic decisions had already been decided. There was only — it was the final endpoint of ideological evolution. So you could have democracy, but you couldn’t use it to change the basics of life, you couldn’t use it to change the economy. This moment was held up as a celebration of victory for democracy, but that idea, that democracy cannot affect the economy, is and remains the single most anti-democratic idea of our time.

Now, I was drawn to the slogan that was chosen for this year’s ASA gathering, because I think, as many of you know and have read in the program, it comes from the World Social Forum. And I was at the first World Social Forum six-and-a-half years ago — more than six-and-a-half years ago in January 2001 in Porto Alegre, Brazil. I was one of only a handful of North Americans who attended. And we gathered under that same slogan, but I think it’s significant and interesting that it wasn’t posed as a question back then. There was a proud exclamation mark at the end of the sentence: “Another world is possible!”

I wrote a feature article for The Nation when I came back from Brazil, trying to explain to readers in the US — the event wasn’t covered at all in this country, although it was covered very heavily in the international press — what it felt like to be there with 10,000 other people. And a lot of people were saying that they felt like we were making history. And what I wrote was that what it really felt like was the end of the end of history. That’s what it felt like to be in that room. It was this powerful gust of wind that you could suddenly breathe more deeply. You were free to imagine. Our minds were unleashed.

And it wasn’t just Porto Alegre, because Porto Alegre was the culmination of these types of spontaneous — often spontaneous uprisings that were happening around the world whenever world leaders were gathering to advance the so-called Washington Consensus, whether it was in Seattle at the WTO meeting in 1999, whether it was the IMF/World Bank meetings a few years later in Washington, then in Genoa during the G8. And, of course, the Zapatistas and the MST in Brazil were at the forefront.

And the theme in Porto Alegre was democracy. That was the — it was about redefining democracy to include the economy: deep democracy, participatory democracy. And it was a challenge to this idea that these two streams could not intersect. The right to land as a form of democracy, the right to biodiversity, to independent media. But what was most extraordinary about Porto Alegre was that — you know, certainly there were some politicians there, there were some big NGOs there, but the people who were at the podiums, who were shaping the discussion, were the people who were the casualties of this economic model, who were themselves discarded, made landless, forced to occupy pieces of land, chop down fences and plant food and make decisions democratically.

So, you know, Jeffery Sachs talks about these model villages that he’s building in Africa. And many of them, you know, are making tremendous progress. But I can’t help thinking back to these field trips that we made in Porto Alegre to MST villages, where it was the people themselves, the landless people themselves, who were showing us their own model villages and were asking for our solidarity. And I think as sociologists, you understand this key distinction, that it was the actors who were the protagonists of their history, and that was what was historic. It was breaking the charity model in a very real way.

Now, I look at where we are now, six-and-a-half years later, and it does feel that we have moved backwards in many areas. Talk of fixing the world has become an astonishingly elite affair. Davos — now, Porto Alegre was in rebellion against the Davos Summit every year in January. This was the anti-Davos. Davos has been re-legitimized, and now solving the world’s problems appears to be a matter between CEOs and super-celebrities. And the idea that we don’t need to challenge these mass disparities, what we need is sort of noblesse oblige on a mass scale, that is very different than what we were talking about in Porto Alegre those years ago.

Now, we know what closed that window of possibility, that freedom that opened up in 2001, and it was September 11th in this country. And the window didn’t close everywhere, but it did close, at least temporarily, in North America, that sense of possibility, that putting these issues and the people affected by these policies at the center of the political debate. Now, the shock of those attacks, I think we can see with some hindsight, was harnessed by leaders in this country and their allies around the world to abruptly end the discussion of global justice that was exploding around the world. There was a door that had opened, and it was suddenly slammed shut. We heard that phrase again and again: 9/11 changes everything. And one of the first things we were told that it had changed was that trade, privatization, labor rates, all the things we were fighting for just so recently no longer mattered. It was Year Zero. Wipe the slate clean. And it was another one of these rebooting history moments. History was apparently starting all over again from scratch, and nothing we knew before mattered. It was all relegated to pre-9/11 thinking.

Now, the Bush administration justified this by saying that all that mattered was security and the war on terror. And in Canada, we were told that — by the US ambassador — that security trumps trade. That became the new slogan, that before 9/11 it was economic priorities that drove the US administration, but post-9/11 the only thing that mattered was security. So talk of economic justice, corporate greed, the loss of the public sphere, the talk of Porto Alegre, was suddenly retro, so 2001.

Now, the irony that we can now see is that, while denying the importance of this economic project, the Bush administration used the dislocation of 9/11 to pursue the very same pre-9/11 radical capitalist project, now with a furious vengeance, under the cover of war and natural disasters. So forget negotiating trade deals at the World Trade Organization. When the US invaded Iraq, Bush sent in Paul Bremer to seize new markets on the battlefields of his preemptive war. He didn’t have to negotiate with anyone. He just rewrote the country’s entire economic architecture in one swoop. But, of course, if you said that the war had anything to do with economics, you were dismissed as naïve. It was, of course, about security, about liberating Iraqis from Saddam.

Meanwhile, at home the administration quickly moved to exploit the shock that gripped the nation to push through a radical vision of hollow government, in which everything from waging wars to reconstructing from those wars to disaster response became an entirely for-profit venture. This was a bold evolution of market logic. Rather than the ’90s approach of selling off existing public companies, like water and electricity, the Bush team was creating a whole new framework for its actions. That framework was and is the war on terror, which was built to be private, privately managed from the start. The Bush administration played the role of a kind of a venture capitalist for the startup security companies, and they created an economic boom on par with the dotcom boom of the 1990s. But we didn’t talk about it, because we were too busy talking about security.

Now, this feat required a kind of two-stage process, which was using 9/11, of course, to radically increase the surveillance and security powers of the state, concentrated in the executive branch, but at the same time to take those powers and outsource them to a web of private companies, whether Blackwater, Boeing, AT&T, Halliburton, Bechtel, the Carlyle Group. Now, in the ’80s, the goal of privatization — and in the ’90s — was devouring the appendages of the state. But what was happening now is it was the core that was being devoured, because what is more central to the very definition of a state of a government than security and disaster response? Now, this is one of the great ironies of the war on terror, is that it proved such an effective weapon to furthering the corporate agenda precisely because it denied that it has, and continues to deny that it has, a corporate agenda at all.

Now, it had another benefit, too, which was the ability to pay anyone who opposed this system as aligned with potential terrorists and so on. So our movement, which was already facing extreme repression before 9/11, was put on notice as traitorous. Looking back, it’s clear that the shock, the disorientation caused by the attacks, was used to reassert this economic agenda, to reassert that consensus that never really was. The window that was opened at the end of the ’90s in the movement known as the anti-globalization movement, but which was always a pro-democracy movement, was slammed shut, at least in North America. And it was terror that slammed it shut. The alternatives started to disappear.

Now, I want to use the rest of my time just to say that this was not the first time, that this — if we look back at the past thirty-five years, we see this slamming of the door on alternatives just as they are emerging repeating again and again. Many of you were here for the opening address from Ricardo Lagos, the former president of Chile, who talked about another September 11th, which was another one of those moments, a far more significant one, when a very important democratic alternative, the real third way, not Tony Blair’s third way, but the real third way between totalitarian communism and extreme capitalism was being forged in Chile. And that was the great threat.

And we know that now through all of the declassified documents. There’s a really revealing one: a correspondence between Henry Kissinger and Nixon, in which Kissinger says very bluntly that the problem with Allende’s election is not what they were saying publicly, which was that he was aligned with the Soviets, that he was only pretending to be democratic, but that he was really going to impose a totalitarian system in Chile. That was the spin at the time. What he actually wrote was, “The example of a successful elected Marxist government in Chile would surely have an impact on — and even precedent value for — other parts of the world…The imitative spread of similar phenomena elsewhere would in turn significantly affect the world balance and our own position in it.” So that alternative, that other world, had to be blasted out of the way, and extreme violence was used in order to accomplish that.

Now, this kind of preemptive attack on our democratic alternatives, the persistent dream of a third way, of a real third way, has come up again and again. And this is what I discuss at length in the book, but I want to mention a couple of examples — unless I’m totally out of time? OK — examples of moments where there was a similar sense of effervescent possibility of being able to breathe more and dream more fully.

One of them was in Poland in 1989. June 4th was the day of the historic elections in Poland that elected Solidarity as the new government. They hadn’t had elections there in decades. And this was the event that really set off the domino — what’s now referred to as the domino effect in Eastern Bloc countries — and ultimately resulting in the breaking apart of the Soviet Union. But it’s worth remembering what it actually looked like in June of 1989. In Poland, people didn’t think that history was over, because they had just elected Solidarity as their government. They thought that history was just beginning and that they were finally going to be able to implement what the movement, which was a labor movement, had always seen as the third way, the third way not taken. Now, Solidarity’s vision was not a rejection of socialism. They said that they were calling for “real socialism,” as socialists often do, and it was a rejection of the Communist party. They were everything that the party was not: dispersed where it was centralized, democratic where it was authoritarian, participatory where it was bureaucratic. And Solidarity had ten million members, which gave them the power to completely shut down the state.

So when people went to the polls and elected a Solidarity government, what were they voting for? What did they think they were voting for? Did they think that they were voting to become a free market economy on the model that Francis Fukuyama was talking about? No, they didn’t. They thought they were voting for the labor party that they had helped to build.

And I just want to read you a short passage from Solidarity’s economic program, which was passed democratically in 1981. They said, “The socialized enterprise should be the basic organizational unit in the economy. It should be controlled by the workers’ council representing the collective” and should be operated — cooperatively run by a director appointed through competition, recalled by the council, workers’ cooperatives. So the idea was to get the party out of control of the economy, to decentralize it and have the people who were doing the work actually control their workplaces. And they believed that they could make them more sustainable.

Now, did they get the chance to try that, to act on that vision of a worker cooperative economy as the centerpiece of the economy, to have democratic elections but still have socialism? Did they get that chance when they voted for Solidarity? No, they didn’t. What they got was an inherited debt, and they were told that the only way that they would get any relief from that debt and any aid is if they followed a very radical shock therapy program. Now, I would be remiss if I didn’t point out that the person who prescribed that shock therapy program was Jeffery Sachs. And I — no, I say that because I really had hoped that we could debate these different worlds, because there are differences, there are real differences that we must not smooth over.

Now, in 2006, 40% of young workers in Poland were unemployed, 40%, last year. That’s twice the EU average. And Poland is often held up as a great success story of transition. In 1989, 15% of the Poland’s population was living below the poverty line. In 2003, 59% of Poles had fallen below the line. That’s that opening of that gap. That’s what these economic policies do. And then, we can say we’re very, very worried about the people at the bottom, let’s bring them up, but let’s be clear about what we’re talking about. These jarring levels of inequality and economic exclusion are now feeding a resurgence of chauvinism, racism, anti-Semitism, misogyny, rampant homophobia in Poland. And I think we can see, actually, that it’s inevitable that this would be the case, because they tried communism, they tried capitalism, they tried democratic socialism, but they got shock therapy instead. After you’ve tried all that, there really isn’t a whole lot left but fascism. It’s dangerous to suppress democratic alternatives when people invest their dreams in them. It’s risky business.

Another one of these powerful dreams was Tiananmen Square, and it’s a sort of a very sad fluke of history that on the same day that Solidarity won those historic elections and that dream was betrayed, what they voted for was betrayed, tanks rolled in Tiananmen Square, and that was the day of the massacre: June 4, 1989. It was another bloody end to a moment of effervescent possibility.

Now, the way those protests were always reported on in the West was that students in Beijing just wanted to live like in the United States. And they, you know, put a goddess to democracy that looked a lot like the Statue of Liberty. So it was reported on CNN as just kind of pro-American–style democracy protests.

But in recent years, an alternative analysis of those events has emerged. And what we’re starting to hear from what’s being called China’s New Left, and people like Wang Hui, who’s a wonderful academic, is that this was a vast oversimplification of what was driving the pro-democracy movement in 1989 in China. What was driving it was that the government of Deng Xiaoping was radically restructuring the economy along with the lines that had been prescribed by Milton Friedman — economic shock therapy — and people were seeing their quality of life devalued. Workers were losing their rights. And they were taking to the streets and demanding democratic control over the economic transition.

So democracy wasn’t an abstract idea. It wasn’t just “We want to vote.” It was, “We want to control this transition. We want to have a say in it.” It was a direct challenge to the Fukuyama formulation, which, by the way, was made that same year: the idea that you would have these two streams and that they wouldn’t intersect.

I just want to read one other thing, which is another one of these paths not taken, because we know how that one ended in Tiananmen Square: that dream was crushed. Another historic moment of possibility, when we look back on our recent history, was 1994, when the ANC government won landslide elections in South Africa. That was a victory for people power. That was one of the most hopeful days that I can remember.

I think we should remember what South Africans thought they were voting for in those historic elections. You know, it was just portrayed as something very simple: it was an end to apartheid. But what did an end to apartheid mean to South Africans? And we can get an answer from that actually from Nelson Mandela, who wrote a little note two weeks before he was released from prison. And he wrote this note because there was a growing concern that he had been in prison so long that he had forgotten the promise of liberation, which was not just to have elections, but to change the economy of the country and redistribute the wealth. And Mandela was under so much pressure that he had to release this very short statement just to clarify this point. And what he said was, “The nationalization of the mines, banks and monopoly industry is the policy of the ANC and a change or modification of our views in this regard is inconceivable in our situation. State control of certain sectors of the economy is unavoidable.” And this was a reiteration of South Africa’s Freedom Charter, which is the platform of the ANC, which calls for the national wealth of South Africa, the heritage of the country, to be restored for the people, the mineral wealth and so on.

Now, I say this because this was one of those worlds that wasn’t chosen, one of those paths that wasn’t chosen. And I spent the past four years pulling these stolen and betrayed alternatives out of the dustbin of our recent history, because I think it matters. I think it matters that we had ideas all along, that there were always alternatives to the free market. And we need to retell our own history and understand that history, and we have to have all the shocks and all the losses, the loss of lives, in that story, because history didn’t end. There were alternatives. They were chosen, and then they were stolen. They were stolen by military coups. They were stolen by massacres. They stolen by trickery, by deception. They were stolen by terror.

We who say we believe in this other world need to know that we are not losers. We did not lose the battle of ideas. We were not outsmarted, and we were not out-argued. We lost because we were crushed. Sometimes we were crushed by army tanks, and sometimes we were crushed by think tanks. And by think tanks, I mean the people who are paid to think by the makers of tanks. Now, most effective we have seen is when the army tanks and the think tanks team up. The quest to impose a single world market has casualties now in the millions, from Chile then to Iraq today. These blueprints for another world were crushed and disappeared because they are popular and because, when tried, they work. They’re popular because they have the power to give millions of people lives with dignity, with the basics guaranteed. They are dangerous because they put real limits on the rich, who respond accordingly. Understanding this history, understanding that we never lost the battle of ideas, that we only lost a series of dirty wars, is key to building the confidence that we lack, to igniting the passionate intensity that we need.

In late June, as parliamentarians were packing up for the summer, Stephen Harper seemed to suggest a potential shift in his minority government’s approach to the war in Afghanistan. In a departure from months of rhetoric by government and military leaders about an open-ended or even decades-long extension of the military role, the Prime Minister stated that extending Canada’s mission in Kandahar beyond February 2009 would require “consensus” from all four parties in the House of Commons.

Globe and Mail columnist Lawrence Martin was among those who interpreted Harper’s statement as a veiled admission that a major concession would be coming on this most important foreign policy file, and that Harper would not seek to extend the counter-insurgency operation beyond the current 2009 end date. “Make no mistake,” Martin wrote, “these were code words for the end of our war mission. He was essentially saying that in a year and a half, other North Atlantic Treaty Organization partners can take their turn at the combat role.” (1)

As Martin pointed out, such an about-face would be a concession to public opinion, and it would certainly seem difficult to imagine a “consensus” in the House that would please the Conservatives. But was Harper’s statement really a preview of a change in course, or merely a hint of a new PR campaign to prolong Canada’s involvement in the war in Afghanistan. The Prime Minister may well only be signaling a new strategy of co-opting the language of mushy “opposition” to the Afghan debacle coming from the bulk of his parliamentary opponents.

Both the Liberals and Bloc Quebecois have said that they want the current mission to end in 2009, though they have made it clear to varying degrees that they would continue to support the occupation of Afghanistan in other ways, perhaps with a deployment to a less volatile region. The Liberals, of course, are hypocrites of the highest order when they try to position themselves as being in favour of peace. It was under Paul Martin, in 2005, that Canadian troops were sent to Kandahar without any debate. And it was only with the help of the votes of high profile Liberal MPs like Michael Ignatieff that Harper was able to push the 2009 extension through parliament. (Almost five years too late, Ignatieff recently expressed regret for his support of the U.S. invasion of Iraq, but there is no sign of such a mea culpa on the Afghanistan vote). The New Democratic Party’s policy, meanwhile, does call for an immediate withdrawal of all troops from Afghanistan.

A recent Strategic Counsel poll indicates that a clear majority is now opposed to Canada’s role in that Central Asian country (2). Conducted July 12-16, the results found 59% opposed to the mission compared to only 36% in favour. For those with intense feelings on the matter the margin was even wider, with 27% strongly opposed compared to a mere 7% strongly supporting. In Quebec, a staggering 75% said they were opposed. This sampling of public opinion, notably, comes on the heels of a sustained and costly publicity push by the government. It seems that all the military ads and boosterism – the Stanley Cup’s trip to Kandahar for a ball hockey game featuring Rick Hillier and Dave “Tiger” Williams stands out as a memorable example of this disturbing trend – have been unable to overcome the grim reality of the war. Canadian troop fatalities now stand at 66, while Afghan civilian casualties (never reported as dramatically, when they are covered at all) are taken in the dozens by air strikes on a regular basis.

While we all ponder what strategy Harper will try to push when parliament reconvenes, a certain George W. Bush is coming to Canada next week, in what will surely be the last official visit by the deeply unpopular war president. Bush last visited in November 2004 and, despite riding an election win high, sparked anti-war protests across Canada. (You might remember Bush’s joke about thanking those who waved at his motorcade with “all five fingers”). This time, Bush will meet with Harper and their Mexican partner Felipe Calderon. They will gather under a heavy police and military presence just outside of Ottawa in Montabello, Quebec, to discuss implementation of the Orwellian-named Security and Prosperity Partnership (SPP), a framework for initiating what has been called a ‘NAFTA Homeland Security model’.

Bush’s fondness for “Steve” Harper is well established. White House spokesperson Tony Snow reported that a July 31 phone call between the two discussed the August summit, and that Bush thanked the Prime Minister for Canada’s ongoing role in Afghanistan. The war is bound to be a major topic of discussion behind the closed doors, security fences, and riot police at Montebello. Outside the perimetre, and in cities across the country, protesters will be condemning both the domestic implications of the SPP and the wars in Iraq and Afghanistan. In Vancouver, a Monday August 20 rally by No One Is Illegal gets underway at 3p.m outside Canada Place (Waterfront Station), meeting up later with a 5:30pm protest at the Vancouver Art Gallery organized by StopWar, the Council of Canadians and the Vancouver & District Labour Council.

The anti-war movement, for its part, won’t be changing course until the troops are brought home from Afghanistan. Harper, in the past, has said that he would not change course on the war even if that meant losing power in Ottawa. Bush’s visit can only further weaken support for the Prime Minister’s handling of the war. It’s a safe bet that Harper’s PR flacks and handlers are working overtime this summer in order to “nuance” the “messaging” of the Afghanistan operation, but not in order to really change the nature of Canada’s involvement in the occupation. Rather, the PM is looking for a new spin, in order to prolong the war and the better to overcome a population in Canada that now seems stubbornly averse to warmongering.

-Derrick O’Keefe is co-chair of the Vancouver StopWar Coalition, and a member of the Canadian Peace Alliance steering committee.

Notes

(1) “It’s about time Mr. Harper listened to the people,” Lawrence Martin, Globe and Mail, June 25, 2007.

In a Democracy Now! national broadcast exclusive, forensic psychiatrist Dr. Angela Hegarty speaks for the first time about her experience interviewing Jose Padilla for 22 hours to determine the state of his mental health.

AMY GOODMAN: Did you conclude he had been tortured?

MIAMI (Aug. 16) – Jose Padilla, a U.S. citizen held for 3 1/2 years as an enemy combatant, was convicted Thursday of helping Islamic extremists and plotting overseas attacks in a case that came to symbolize the Bush administration’s zeal to clamp down on terrorism.

Padilla, wearing a dark suit and wire-rimmed glasses, showed no emotion and started straight ahead as he heard the verdict that could bring him a life sentence in prison. One person in the family section started to sob.

But it was hardly a resounding victory for the government. When Padilla was arrested in the months following the 2001 terrorist attacks, authorities touted him as an al-Qaida terrorist who planned to detonate a radioactive “dirty bomb” in a U.S. city. That allegation never made it to court.

Instead, after a three-month trial and only a day and a half of deliberations, the 36-year-old Padilla and his foreign-born co-defendants were convicted of conspiracy to murder, kidnap and maim people overseas and two counts of providing material support to terrorists.

U.S. District Judge Marcia Cooke set a Dec. 5 sentencing date.

The three were accused of being part of a North American support cell that provided supplies, money and recruits to groups of Islamic extremists. The defense contended they were trying to help persecuted Muslims in war zones with relief and humanitarian aid.

Two weeks after the presiding judge upbraided prosecutors for being “light on facts” in its conspiracy allegations,[23] one of the three charges against Padilla was dismissed and another was dismissed in part.

The first of the three counts Padilla was charged with, conspiracy to murder (punishable by life imprisonment), was dismissed on August 16, 2006, on the grounds that it was duplicative of the other two counts pending against him. The second count was conspiracy to materially aid terrorists under 18 U.S.C. § 371 (punishable by five years in prison) and the third was 18 U.S.C. § 2339A (punishable by 15 years in prison). The trial court ordered that the government elect only a single criminal statute in its second count of the indictment. However, on January 30, 2007, the Court of Appeals for the 11th Circuit reversed the ruling and reinstated a charge of conspiracy to “murder, kidnap, and maim.”[24]

Allegation of torture during imprisonment

In the criminal case, legal brief filed on behalf of Padilla alleges that during his imprisonment he has been subjected to torture, including sensory deprivation, sleep deprivation, and enforced stress positions.[25]

George Monbiot, writing in The Guardian, reports that Padilla’s mental faculties have been so impaired by the conditions of incarceration and interrogation that:[26]

…he appears to have lost his mind. I don’t mean this metaphorically. I mean that his mind is no longer there.

The forensic psychiatrist who examined him says that he “does not appreciate the nature and consequences of the proceedings against him, is unable to render assistance to counsel, and has impairments in reasoning as the result of a mental illness, ie, post-traumatic stress disorder, complicated by the neuropsychiatric effects of prolonged isolation”.

Over the course of more than 10,000 years, the rich biodiversity of the Andes-Amazon region has created a culture that is closely interlocked with Pachamama (Mother Nature). This culture is marked by deep knowledge of nature and is highly agricultural. Ours is one of the seven zones of the world to have originated agriculture. It has yielded the greatest variety of domesticated species. This has given rise to a cosmic vision different from the Western outlook that views the creator as a superior immaterial spirit who created man in his image and likeness and created nature to serve him. For the indigenous cosmic vision, humanity is a daughter of and part of Mother Earth. We must live in her bosom in harmony with her. Each hill or peak, each river, each vegetable or animal species has a spirit.

Indigenous, collectivist mentality is strong enough to have endured solidly through 500 years of invasion and the dictatorship of individualism.

The Quechua and Aymara name for the campesino community is ayllu. It is bound by strong ties, many expressed in work (ayni, mink’a, faena) and in all aspects of life. The community is not restricted to persons. It entails a close communal relationship with cultivated species, with medicinal species, with animals and plants that tell cultivators about seasonal variations, and, more broadly, with all animal and vegetable species, with rain, and with the land.

The development of agriculture and tending of livestock, which in other latitudes led to slavery and feudalism, led in Abya Yala (the Americas) to new forms of collectivism. In the Andes zone it led to a state that extended over the territories of six present-day countries ­ Tawantinsuyo (called “empire” by the invaders out of the same ignorance that led them to call the llama “big sheep.”)

It’s true that the new forms of collectivism gave rise to privileged castes and wars of conquest. But in no part of the continent was production based on slave labor or the feudal system.

For more than 10,000 years our culture domesticated 182 plant species, including around 3,500 potato varieties.

Our people know 4,500 medicinal plants.

Tawantinsuyos planned agriculture based on a system of watersheds and micro watersheds or basins.

They built long aqueducts, taking care to avoid land erosion.

Terracing was practiced on the slopes and “waru-waru” in the altiplano (highlands).

Special technologies were used from zone to zone.

Across the entire Tawantinsuyo territory they created storage buildings (qolqa) to supply food to the population whenever some climatic shift undermined agriculture.

Although there were privileged castes, hunger and misery did not exist. Orphans, persons with disabilities, and the elderly were cared for by the community.

The invasion

The backbone of this social organization, of the agricultural infrastructure and food reserves, was crushed by the invasion.

Europe was then passing from feudalism to capitalism. The invasion was a capitalist action. They came looking for spices, believing they had reached India. They found none, but did find gold and silver.

Mining had existed as a marginal activity, but it now became the center of the economy. To exploit the mines they used a system worse than slavery. The slave owner is concerned about the health of his slave just as he’s interested in the health of his donkey. The mine owner in Peru received annually a certain quantity of indigenous people in order to “indoctrinate” them. Regardless of how many of them died, the next year he would receive the same number. Hence, youth and adults were sent into the mines and never left until they died. Because of this, young indigenous people committed suicide and mothers killed their children to free them from torment. This practice diminished following the Tupac Amaru rebellion.

Agricultural work took place through a feudal system. The Europeans took the best lands from the community and converted them into latifundios
(huge estates or latifundia). Community inhabitants became serfs on their own lands. They had to work freely for the feudal lord in exchange for permission to cultivate a small plot for their own needs.

For many reasons a huge decline in agriculture took place:

Canals, terracing, and waru-warus were destroyed because of ignorance and lack of care.

Until this day no planning in terms of watersheds and micro watersheds has been carried out. Chaos took hold and persists.

With the importation of foreign domestic animals to the zone, the environment deteriorated. The auquenidos (camelid) cut pasture grass with their teeth, but cows, horses, and sheep uproot it.

The invaders vented their superstitions on our crops. Our agricultural mentality didn’t suit their cultured ways. So the “exterminators of idolaters” went after plants like the papa, also known as Santa Padre (Holy Father). They renamed it patata, the word used in Spain. This passed into English and other languages as “potato.” They also damned kiwicha or amaranto (amaranth).The coca plant, which the famous doctor Hipólito Unanue called the “supertonic of the vegetable kingdom,” is to this day the target of superstition and excessively harmful prejudice in “refined” circles.

The invaders pillaged the food stockpiles located across the territory to cope with times of hunger brought on by climatic irregularities.

Taking their behavior as a whole, we find that European imposition of hunger and misery — their cultural contribution — was even more deadly than their massacres and the smallpox they spread among us.

Rebellions and republic

From the beginning, our people rebelled against the invaders. Numerous insurrections took place, beginning with Tupac Amaru II’s rebellion. It spread all the way to Bolivia and lasted even after his cruel torture and assassination.

Later the so-called Revolución de la Independencía took place. It did not signify any noticeable change for the indigenous population.

The generals of “independence” were awarded “haciendas” (the new name for the feudal latifundia), “Indians” and all.

The hacienda system consisted basically of the free labor of the colono (serf) for the hacienda. There were other aspects to this serfdom.

The colono had to turn over some of his animals that grazed on natural pastures to the master. He made long treks with pack mules burdened with hacienda produce. They lasted days and he had to sleep out in the open. The owner mistreated him physically and morally. He could jail him and rape the women. The serf’s children did not go to school either because they had to work, or there were no schools, or the master forbade it.

Our land struggle in the 1960s

The hacienda feudal system lasted until the second half of the last century.

The spread of capitalism to the countryside weakened it in many ways:

New large-scale mining absorbed labor from the haciendas.

New mechanized latifundia expelled the serfs and employed an agricultural proletariat.

New high-priced crops required more labor time, pressing the hacienda owner to demand more work from his serfs and to expel them in order to take over their plots. The serfs, on the other hand, needed more time for their own labors and resisted the theft of their plots.

We organized ourselves to struggle against the new outrages. Given the intransigence of the landlords, the struggle became a fight for possession of the land.

Our defensive action not only set us against the landlords but also against the government which defended the feudal system.

In over 100 haciendas we refused to work for the landlords. But we continued to work our own plots. This was in practice an agrarian reform. The government repressed us with arms and we defended ourselves with arms. The military government of the day crushed the armed self-defense; but it took note that it would be impossible to re-implant feudal serfdom. It opted to pass an agrarian reform law – only in this zone – legalizing campesino possession of the land. But indigenous campesinos in other zones of the country rebelled and took over haciendas. This was violently repressed, but could not be effectively contained. Hence, a subsequent reformist military government felt obliged to decree an agrarian reform at the national level.

In this way, we took advantage of capitalism’s weakening of the feudal system to take over the land. In this same epoch the Brazilian campesino movement was shattered. Capitalism triumphed there. Its victims are now struggling courageously in the “Landless Workers’ Movement.”

For this reason Peru is, with the likely exception of Cuba, the country of the continent with the greatest proportion of landowners, either of communal or private plots.

Some campesinos from the epoch of struggle for the land feel the qualitative change. “Now we are free,” they say. They consider that breaking down feudal servitude also broke them free from the yoke that had gripped them.

Following the rupture they worked for education, building schools and paying men and women teachers. Later they fought to get the state to pay them. They built health centres and fought to get the state to pay for health services.

They got the vote and elected their own mayors. They fought against mining pollution. They struggled to assume in a collective manner police and judicial functions, to replace corrupt cops and judges. They fought against corrupt authorities of any stripe – and for many other things.

They feel that breaking from feudal servitude freed them to spread wings and carry the struggle forward.

Current struggles

Most current struggles of indigenous campesinos are against the killing of Pachamama, Mother Earth; against depredations by the large companies, mainly mining, but also petroleum and gas. Previous Peruvian governments were servants of feudal lords; today they serve the great multinationals. They act against the Peruvian people and against nature.

Living conditions are another cause of struggle. There is more and more unemployment, and the standard of living is falling. In the countryside this is due to excessively low prices for farm products. This is linked to the struggle against the Free Trade Agreement with the United States that will demolish our agriculture for the benefit of large, subsidized imperial firms.

The indigenous movement, together with the rest of the Peruvian population, is fighting against corruption and to get their own representatives into local governments. People often suffer betrayals because there is no system for authentic democratic control.

Our allies

The indigenous movement is not alone. Although it is the most vigorous and persevering, it is not unique. The rest of the people are struggling together with us.

Intellectuals called indigenistas, whether indigenous or not, merit special mention. Ever since the oppression of the original peoples of our continent began there have been individuals who have struggled against it and to defend our culture.

The work of Father Bartolomé de las Casas is known.

In Peru there were notable political figures like González Prada and Mariátegui. Writers like Clorinda Matto, Ciro Alegría, José María Arguedas. Painters like José Sabogal. Musicians like Alomía Robles, Baltasar Zegarra, Roberto Ojeda, Leandro Alviña, and so on.

The meaning of our struggle

We are defending our culture in its diverse aspects: our cosmic vision, social organization, our rituals and agricultural know-how, medicine, music, language, and many others.

We do not claim that our culture is superior to others. We are struggling to stop it from being considered inferior.

We want to be respected as equals.

We have been educated to harmonize equality and diversity. Peru is a mega-diverse country, both geographically and demographically. We have 82% of the world’s 103 natural life zones. Our inhabitants speak 45 different languages. The great Inca Sun God celebration was not exclusive. It had a procession of different peoples with diverse gods. The notion of “one God” did not exist. We are for the equality of the diverse; we are against homogenization (igualitarismo).

On the one hand we respect diverse individualities and particularities. On the other, we oppose individualism. Ours is a culture of solidarity.

We don’t seek a return to the past. We know we must make the best in general of advances in human culture.

That does not contradict our resolve to go back to our own roots. Our past will be vividly present in our future.

We love and care for Pachamama. We fervently yearn to return to basing our economy on our rich biodiversity, through agriculture and natural medicine, along with any modern advances that do no harm.

We don’t want our social system to be based on the deep-seated, antisocial individualism that the invaders brought here. We intend to recover and strengthen at all levels the vigorous, collectivist solidarity and fraternity of the ayllu, making use, as well, of universal knowledge that is not harmful.

We dream that the past 500 years of crushing blows are just a passing nightmare in the ten thousand years of building our culture.

Hugo Blanco was leader of the Quechua peasant uprising in the Cuzco region of Peru in the early 1960s. He was captured by the military and sentenced to 25 years in El Fronton Island prison for his activities. While in prison, he wrote Land or Death: The Peasant Struggle in Peru. It was published in English by Pathfinder Press in 1972(*) and is must-reading for anyone who wishes to understand the liberation struggles of peasants and indigenous people in that region.

An international defence campaign that gained the support of such figures as Ernesto Che Guevara, Jean-Paul Sartre, Simone de Beauvoir, and Bertrand Russell succeeded in winning his freedom. After a period in exile in Mexico, Chile, and Sweden, Blanco returned to Peru where he won election to the national parliament on a united left slate. He has continued to play an active role in Peru’s indigenous, campesino, and environmental movements, and writes on Peruvian, indigenous, and Latin American issues.

The article was translated Phil Cournoyer. In the 1960s Cournoyer participated in the worldwide defence campaign to win Blanco’s freedom and a decade later coordinated a cross-Canada speaking tour of the Peruvian indigenous leader.

Aug. 20-27, 2007 issue – In one of history’s more absurd acts of totalitarianism, China has banned Buddhist monks in Tibet from reincarnating without government permission. According to a statement issued by the State Administration for Religious Affairs, the law, which goes into effect next month and strictly stipulates the procedures by which one is to reincarnate, is “an important move to institutionalize management of reincarnation.” But beyond the irony lies China’s true motive: to cut off the influence of the Dalai Lama, Tibet’s exiled spiritual and political leader, and to quell the region’s Buddhist religious establishment more than 50 years after China invaded the small Himalayan country. By barring any Buddhist monk living outside China from seeking reincarnation, the law effectively gives Chinese authorities the power to choose the next Dalai Lama, whose soul, by tradition, is reborn as a new human to continue the work of relieving suffering.

At 72, the Dalai Lama, who has lived in India since 1959, is beginning to plan his succession, saying that he refuses to be reborn in Tibet so long as it’s under Chinese control. Assuming he’s able to master the feat of controlling his rebirth, as Dalai Lamas supposedly have for the last 600 years, the situation is shaping up in which there could be two Dalai Lamas: one picked by the Chinese government, the other by Buddhist monks. “It will be a very hot issue,” says Paul Harrison, a Buddhism scholar at Stanford. “The Dalai Lama has been the prime symbol of unity and national identity in Tibet, and so it’s quite likely the battle for his incarnation will be a lot more important than the others.”

The man who ran CNN’s news operation during the invasion of Iraq is now doing damage control in response to a new documentary’s evidence that he kowtowed to the Pentagon on behalf of the cable network. His current denial says a lot about how “liberal media” outlets remain deeply embedded in the mindsets of pro-military conformity.

Days ago, the former CNN executive publicly defended himself against a portion of the “War Made Easy” film (based on my book of the same name) that has drawn much comment from viewers since the documentary’s release earlier this summer. As Inter Press Service reported, the movie shows “a news clip of Eason Jordan, a CNN News chief executive who, in an interview with CNN, boasts of the network’s cadre of professional military experts.’ In fact, CNN’s retired military generals turned war analysts were so good, Eason said, that they had all been vetted and approved by the U.S. government.”

Inter Press called the vetting-and-approval process “shocking” — and added that “in a country revered for its freedom of speech and unfettered press, Eason’s comments would infuriate any veteran reporter who upholds the most basic and important tenet of the journalistic profession: independence.”

But Eason Jordan doesn’t want us to see it that way. And he has now fired back via an article in IraqSlogger, which calls itself “the world’s premier Iraq-focused Web site.” Jordan runs that Web site.

The journalist who wrote the Aug. 14 article, Christina Davidson, was in an awkward spot: “War Made Easy” directly criticizes her boss, and it was the subject of the article.

Davidson’s only assessment of the film that wasn’t favorable had to do with its criticisms of Jordan. “While there’s no doubt that journalistic laziness contributed to the uncritical re-broadcasting of the Bush administration’s official line,” she wrote, “Solomon takes it a little too far in trying to make the case that all of the cable networks were actively complicit in promoting the war. Solomon bases his reasoning primarily on one choice quote from Eason Jordan, former CNN news chief and current CEO of IraqSlogger’s parent company, Praedict.”

In fact, the film provides a wide range of evidence that “all of the cable networks were actively complicit in promoting the war” — the result of chronic biases rather than “journalistic laziness.” And CNN, like the rest of the cable news operations, comes in for plenty of tough scrutiny in the documentary. As the magazine Variety noted in a review of “War Made Easy” a few days ago, “Fox News is predictably bashed here, but supposedly neutral CNN gets it even harder.”

CNN is among the news outlets at the core of the myth of “the liberal media” — perpetuated, in part, by the fact that people are often overly impressed by the significance of rhetorical attacks on some media organizations by more conservative outlets. (Before his resignation from CNN in 2005, Eason Jordan was himself subjected to denunciations from the right — for allegedly skewing news coverage to curry favor with the Baghdad government during Saddam’s rule and, after the invasion, for reportedly stating that U.S. troops had targeted some journalists in Iraq.) But antipathy from right-wing pundits is hardly an indication of journalistic independence.

Stretching to defend Jordan’s CNN record, IraqSlogger complains that the CEO of its parent company is unfairly characterized in the film: “Solomon assumes that Jordan was seeking the blessing of Pentagon officials on the propriety of his choices, when in fact he was just doing a boss’s duty.”

The article then provides a quote from Jordan, supplying his explanation to set the record straight: “Employers routinely vet prospective employees with their previous employers. In these cases, we vetted retired generals to ensure they were experts in specific military and geographic areas. The generals were not vetted for political views.”

The explanation can only flunk the laugh test.

Eason Jordan was CNN’s chief news executive when, on April 20, 2003 (a month after U.S. troops invaded Iraq), he appeared on CNN and revealed that he’d gotten the Defense Department’s approval of which retired high-ranking officers to put on the network’s payroll. “I went to the Pentagon myself several times before the war started and met with important people there and said, for instance — At CNN, here are the generals we’re thinking of retaining to advise us on the air and off about the war’ — and we got a big thumbs-up on all of them. That was important.”

With war euphoria riding high, Jordan was eager to shore up his — and CNN’s — image as cooperative pals of the nation’s military commanders. Now, Jordan is trying some backspin with the claim that he was merely checking job references.

“Often journalists blame the government for the failure of the journalists themselves to do independent reporting,” I note in the documentary. “But nobody forced the major networks like CNN to do so much commentary from retired generals and admirals and all the rest of it.” What Jordan did on behalf of CNN “wasn’t even something to hide, ultimately. It was something to say to the American people on his own network, See, we’re team players. We may be the news media, but we’re on the same side and the same page as the Pentagon.’ And that really runs directly counter to the idea of an independent press. And that suggests that we have some deep patterns of media avoidance when the U.S. is involved in a war based on lies.”

The FDA’s latest campaign to protect the profits of a drug company over the safety of Americans is unprecedented, and the organizers include a gang of current and former FDA officials largely credited with turning the nation’s regulatory beagle into a lapdog for Big Pharma under the Bush Administration.

FDA spokesman Douglas Arbesfeld, apparently the industry’s new inside guy, kicked off the campaign by sending an e-mail to journalists which was intended to discredit Dr Steven Nissen and the Cleveland Clinic. Dr Nissen’s study appeared online on May 21, 2007, in the New England Journal of Medicine and warned that GlaxoSmithKline’s diabetes drug Avandia increased the risk of heart attacks by 43% and death from cardiovascular events by possibly 64%.

The talking points for the media appear to have been formulated and agreed upon ahead of time between Arbesfeld and others (see below) because more than one story from ostensibly different sources later appeared in the media and on the internet referring to Dr Nissen with such names as “St Steven”, “Patron Saint of Drug Safety” and “Saint Steven the Pure.”

In his email to journalists, Mr Arbesfeld pasted portions of an article which appeared on the Heartwire website, containing umpteen critical comments about Dr Nissen and the Avandia study, as well as comments made by an anonymous blogger on the internet who said that business at the Cleveland Clinic is run similar to a Mafia TV series. The full bog states:

“Wake up pharmaceutical companies, this is a call from Dr. Nissen, if you don’t hire the Cleveland Clinic for your big trials then you face the firing squad from Nissen and Company.”

“The Cleveland Clinic was one of the most respected names in medicine, now they are positioning themselves as candidates to take over for a new series on HBO to replace the Soprano’s ” the Clinico’s ‘next week who should we wack ……’ ” Bata bing bata boon. Comment by Brian A – May 22, 2007.”

However, it could just as easily be inferred that Mr Arbesfeld authored the slanderous blog and supplied it to Heartwire with the intention of quoting it later from a “reputable web site. For its part, Heartwire has since removed what it says are “unsubstantiated remarks about Dr Nissen and the Cleveland Clinic,” and states: “In retrospect we regret that we published those sentences, as they do not meet the highest standards of journalistic or scientific integrity or credibility.”

The smear campaign has federal lawmakers up in arms. At a June 6, 2007 hearing before the House Oversight and Government Reform Committee, in response to questions about Mr Arbesfeld sending the e-mail under his official title of FDA spokesman, FDA Commissioner Andrew von Eschenbach told the lawmakers, “It was an inappropriate and unfortunate act on the part of an individual which has been addressed through disciplinary procedures.”

Dr Nissen is none too happy about the stunt either. “I’m a pretty tough guy,” he told ABC News on May 30, 2007, “but I’ll tell you, having this kind of an e-mail that questions my motives, broadcast to the major journalists with whom I work and have established a reputation, is — it’s an outrage.”

As for his part, Mr Arbesfeld told the Boston Globe that the email reflected his own personal views and not the FDA’s. Any assertion that the email reflected his own personal views is not quite credible considering that his previous employment was always promoting the views of the industry.

A few articles in the media mentioned that Mr Arbesfeld worked for Johnson & Johnson, but his employment with public relations firm Manning Selvage & Lee was not noted. On December 16, 1999, the Healthcare Marketing & Communications Council reported that Mr Arbesfeld had joined Manning as Senior Vice President in New York.

On January 5, 2001, the firm issued a press release to announce the promotion of Mr Arbesfeld and others and referred to Manning as “one of the largest healthcare practices worldwide and has a broad array of clients including Allergan, Amgen, Eli Lilly and Company, Genentech, Hoffmann La-Roche, Kaiser Permanente, Novartis, Pharmacia and Procter & Gamble.”

In reading the press release, Mr Arbesfeld’s expertise with using the Internet is apparently a bi-product of his work for Manning. “In this role,” it said, “Arbesfeld will help healthcare clients maximize internet-relations in the marketing and communications mix, and will expand the Practice’s strategic e-product offerings.”

On August 5, 2002, Arbesfeld identified himself in a Reuters article as representing none other than Glaxo, along with six other drug giants including Bristol-Myers, Aventis, J&J, AstraZeneca, Abbott Labs and Novartis, in a campaign to promote the “Together Rx” prescription drug card program for senior citizens. In 2005, the Reporters Handbook listed him as the contact person for J&J subsidiaries, Janssen Pharmaceutica, Ortho-McNeil Pharmaceutical and Ortho Biotech Products.

Less than a week after Mr Arbesfeld’s hatchet job on Dr Nissen, ex-FDA Deputy Commissioner Dr Scott Gottlieb planted an editorial in the May 29, 2007, Wall Street Journal entitled, “Journalist Malpractice,” accusing the New England Medical Journal of intentionally publishing the Nissen study to make the FDA look impotent. “The publication was timed,” he wrote, “to get ahead of the Food and Drug Administration’s more careful evaluation of the same issues.”

“The journal seemed bent on beating the FDA to the punch,” Dr Gottlieb claimed.

“The goal?” he said, “Painting the FDA as impotent, in order to argue for legislation winding through Congress that would increase regulatory hurdles for drug approvals.”

The only problem with the Nissen-NEJM conspiracy theory is that the issue under investigation in Congress right now is why the FDA did not warn the public about Avandia heart risks six months before the Nissen study was ever published.

In the end, when it comes to “Journalistic Malpractice,” the larger question would seem to be how was it that so many industry shills were able to get the major media outlets and medical journals to immediately publish commentaries and editorials attacking the NEJM and the Nissen research with headlines splashing all over the internet.

In his editorial, Dr Gottlieb notes that there are “questions” whether Avandia is associated with heart risks, but says they are “so far unsupported by more rigorous, randomized studies and extensive review by the FDA and other authorities around the world.”

“When it comes to the issue du jour, drug safety,” he wrote, “no description of medical research in a medical journal comes close to the detail level or scrutiny imposed by the FDA on study results before approval.”

Assuming this is true, the problem is that the industry insiders running the FDA refuse to act on the advice of the agency’s top scientists with first hand access to the underlying data. In a July 26, 2007 speech on the Senate floor, Senator Charles Grassley (R-Iowa), of the Senate Finance Committee, said that, in the case of Avandia, “Not only did the FDA disregard the concerns and recommendations from the office responsible for post-marketing surveillance, but I have found that it also attempted to suppress scientific dissent.”

In the past two months, he told his fellow senators, “I’ve had to write to the FDA regarding the suppression of dissent from not one but two FDA officials involved in the review of Avandia.”

The Heartwire website conveniently echoed Dr Gottlieb’s sentiments by featuring portions of a May 23, 2007, unsigned editorial from the medical journal The Lancet, which claimed that the verdict on Avandia should await the results of a Glaxo sponsored trial called RECORD, not due out until 2009.

“Taken together,” the editorial said of Dr Nissen’s findings, “these results, although based on very small numbers of events, certainly raise a signal of concern and indicate the need for more reliable information about rosiglitazone’s safety.”

“But the FDA, physicians, and patients can reasonably await the results of RECORD, a phase 3 trial designed specifically to study cardiovascular outcomes,” it said.

“Until the results of RECORD are in,” the Lancet noted, “it would be premature to overinterpret a meta-analysis that the authors and NEJM editorialists all acknowledge contains important weaknesses.”

The problem with waiting two years for the results of the RECORD trial is that FDA scientist Dr David Graham reviewed the results of this study thus far and told an FDA advisory panel that the study design is so flawed that the results should not be considered in any risk benefit analysis of Avandia now, or in 2009.

In fact, Dr Graham says the RECORD study is so useless that it is probably unethical to allow it to continue because no possible benefit can be achieved by allowing it to go on and that Avandia should be pulled off the market now because thousands of patients are being injured each month by using the drug.

At the end of his editorial, Dr Gottlieb lists himself as a physician and a resident fellow at the American Enterprise Institute, as well as former Deputy Commissioner of the FDA from 2005 to 2007. However, back on August 24, 2005, the Seattle Times provided a much better picture of his background and highlighted the oddity of the FDA hiring him in the first place in light of his solid alliance with the industry. “Only a month ago,” the article states, “Dr Scott Gottlieb was a Wall Street insider, promoting hot biotech stocks to investors.”

At the time, the Times noted, “Now Gottlieb holds the No. 2 job at the federal agency that approves new drugs, oversees their safety and affects the fortunes of companies he once touted.”

“Now, as one of three deputy commissioners,” the article said, “Gottlieb will help oversee such major policies as the FDA’s fast-track approval process for drug and biotech products, a priority for many Wall Street funds and the pharmaceutical industry.”

The Times also noted that a half-dozen current and former FDA officials said they did not know of anyone else from Wall Street ever moving directly into such a high-level job at the agency.

A couple months later, the November 12, 2005, Boston Globe reported that Dr Gottlieb could not participate in formulating the nation’s defense plan against the avian flu due to conflicts of interest. He “was recused from key parts of the planning effort because his past consulting work for Manning Selvage & Lee involved companies whose products would be used to combat a flu pandemic,” it said. Yes, the very same Manning Selvage & Lee at which Arbesfeld held the Senior Vice President position. Does anyone smell a rat (or several)?

The article pointed out that Dr Gottlieb’s former clients included Roche, the manufacturer of Tamiflu, and Sanofi-Aventis, the parent company of the nation’s sole flu vaccine maker.

According to the Globe, Manning paid Gottlieb a $12,500 monthly retainer for nine months for projects that included eight companies, and he was also paid $9,000 for private consulting work for VanGen Inc, a firm that won a $878-million contract to supply the US government with 75 million doses of anthrax vaccine.

These days, financial/market punditry seems to follow two opposite lines of thinking. It ranges from the predominant view that world economies are growing and sound, problems in them minor and fixable, and current volatility (aka turmoil) is corrective, normal and a healthy reassessing and repricing of risk. Contrarians, on the other hand, believe the sky is falling. Most often, extreme views like these turn out wrong and are best avoided. Things are never that simple and hindsight usually proves only Cassandra was good at forecasting although calling market tops and bottoms wasn’t her specialty.

Amidst all the commentary and sorting out of market Strang und Durm these days, some financial world figures stand head and shoulders above the rest for their wisdom, level-headednessness and believability. One in particular is Jeremy Grantham, called by some the philosopher king of Wall Street even though he’s based to the northeast in Boston. In 1977, he co-founded Grantham, Mayo and Van Otterloo, now known as GMO. In his Quarterly Letters to clients, he assesses current market conditions and usually takes a longer view as well. His commentaries are detailed, scholarly, sober and clear.

The Vanguard Group of mutual funds founder John Bogle calls Grantham “one of the top two or three individuals in this business (and) If there’s anybody in this whole business who calls a spade a spade (that person is) Jeremy Grantham.” A metaphor for his wisdom, attitude and investing style sits aside his office desk. It’s a huge 9th century stone Buddha signifying “everything in moderation” and one of Grantham’s core beliefs that all markets eventually revert to their mean values from their highs and lows.

Based on his company’s exhaustive research, there are “no exceptions ever.” Bubbles come and go, but, in time, they all settle back in same place. As Grantham puts it: “We know one principal truth at GMO and that is that we live in a mean-reverting world in investing. (Our research) has shown….that all bubbles….eventually break (and our definition of a bubble is a) 2 standard deviation event – the kind of moves that occur about every 40 years.” Grantham mentions four stock market ones in particular that stand out – the US in 1929, US again in 1965 – 72, 1989 in Japan (in land and stocks) and the still ongoing greatest ever US 2000 bubble yet to come back to its mean.

Grantham is known in the trade as a value investor. That means buying financial assets at less than their intrinsic value or what famed investor/Columbia University professor Benjamin Graham (1894 – 1976) called a “margin of safety.” Warren Buffett today calls it “finding an outstanding company (or any financial asset) at a sensible price” as opposed to a bargain that may turn out bogus or a booby trap. Grantham correctly called the equity bubble in the late 1990s and believes the 2000 – 2003 bear market is secular, long-term, and unlikely to end before 2010 despite a continuing four year cyclical bullrun reprieve from 2003 to the present. Only in the fullness of time will he, and the rest of us, know if he’s right.

Earlier in the year, Grantham toured the world for six weeks, returned worried, and wrote about it in his April Quarterly Letter titled “It’s Everywhere, In Everything: The First Truly Global Bubble.” It’s “bubble time,” he observed “from Indian antiquities to modern Chinese art; from land in Panama to Mayfair; from forestry, infrastructure, and the junkiest bonds to mundane blue chips.” All the necessary conditions are in place – “fundamental economic conditions” look excellent; central bank supplied liquidity is plentiful and cheap; and there’s so much around, it’s easy to leverage. Since around mid-July or so, the latter condition no longer is true or perceived to be by investors turned cautious and in some cases even panicky.

Grantham explains human behavior causes bubbles when positive market conditions unleash “animal spirits” to capitalize on opportunities that get carried to extremes when there’s enough cheap credit around as fuel. Even in the best of times, that’s a recipe for trouble with success feeding on itself. It signals by leveraging up, the better investors can do until the music stops as it always does, and the longer and louder it’s been playing, the severer the subsequent headache.

No one knows for sure when big trouble’s coming next or how bad it’ll be when it arrives. Up to early summer, it was smooth sailing and easy profits, but Grantham says what he sees today is unprecedented: “everyone, everywhere (in all asset classes) is reinforcing one another.” Across the world you hear it confirmed that “they don’t make any more land (and) with these growth rates and low interest rates, equity markets must keep rising (and) private equity (plus merger mania, huge stock buy-backs and plenty of central bank supplied fuel) will continue to drive the markets.”

It’s become self-reinforcing and the results are “predictable and consistent.” The three major asset classes – real estate, stocks and bonds – are “expensive compared with (their) replacement cost where it can be calculated.” Equally worrisome, risk premiums “reached a historic low everywhere” until just weeks ago.

Grantham’s conclusion is these are all warning signs spelling eventual trouble because as noted above “Every bubble has always burst (with no exceptions, ever).” When the 2000 bubble deflation resumes, “it will be across all countries and all assets, with the probable exception of high grade bonds.” In addition, risk premiums will widen (and now are) forcing companies to pay higher financing costs for borrowed funds that will depress investor confidence and reduce economic activity.

No one knows how deep or protracted a decline will be, but Grantham stresses it’s coming because the current global bubble is unprecedented. “No similar global event (of this magnitude ever) occurred before.” Now that’s pretty scary stuff to chew on because economic troubles bite everyone and most of all those most vulnerable and least able to weather the storm. That includes ordinary working people with little or nothing invested.

During the current bull run, Grantham was troubled as early as January, 2004 when he advised clients that “The outlook for 2004 is not bad, but the (stock) market is very overpriced and all predictors look bad for the next year and the year after.” As things turned out, he was wrong, or perhaps with future hindsight just way early in his judgment. He was troubled again at year end 2005 when he told investors to “prepare for a decline in the performance of equities and other risk assets in 2006.” Once more, his call was either early or wrong as the past 18 months saw considerable strength until just recently.

His January, 2007 Quarterly Letter assessed what happened saying “Against all odds, Goldilocks tiptoed through the perils of the first (2005) and second (2006) year of the Presidential Cycle….it (2006) was the rarest of rare birds – a perfect year.” As a result, “risk taking also prospered” because of low global inflation, no financial crises anywhere, low interest rates, and “very very” available credit. As things turned out, “this was almost certainly the best year in the entire history of finance for the selling of high credit risks at low premiums.”

One extreme measure of it was the quadrupling of so-called securitized Collateralized Debt Obligation (CDO) instruments (packages of risky and other debt) to around $2.5 trillion facilitated by the so-called “expanded ‘carry trade’ of borrowing in cheap (low interest) Japanese and Swiss currencies.”

Downsides often accompany opportunities, and Grantham explained conditions going into 2007 in breathtaking terms. “Goldilocks global conditions, especially cheap and easy credit, have caused the broadest overpricing of financial assets – equities, real estate, and fixed income – ever recorded.” However, he stressed, “Just because risk taking is off the charts does not mean it can’t keep going for another year” or longer.

The end of a Goldilocks economy was clearly on the minds of people Grantham met on his world tour. Everywhere he traveled he was asked “What is the catalyst for a (market) break” when none was then visible or imminent? He answered citing these vulnerabilities: rising inflation (that’s greater than reported) constraining central bank support for a weakening economy, pointing to the US as an example. This, in turn, will slow economic activity and reduce profit margins that are still way above global norms but will come down.

Then there’s the housing decline a Center for Economic Policy Research (CEPR) report shows is the result of overbuilding and home prices rocketing 70% in value since 1995 adjusted for inflation. It “created $8 trillion in housing bubble wealth” and an unprecedented oversupply of unsold homes and “vacant ownership units.” CEPR believes the coming housing bubble correction “is likely to throw the economy into a recession and quite possibly a very severe (one).”

It notes housing construction has to decline, and revaluing $8 trillion in housing wealth excess will reduce consumption and bring saving rates “back to more normal levels.” Consumers need all they can get because, at today’s elevated prices, the average potential home buyer can’t afford one, and, as one analyst observed, lenders are relearning how to say “no.”

Current economic conditions worry PIMCO’s Bill Gross as well. PIMCO is a 36 year old firm and “one of the largest specialty fixed income managers in the world.” Gross is one its founders and serves as managing director and chief investment officer. In his July Investment Outlook, he said people are “looking for contagion in all the wrong places.” The Bear Stearns and other hedge fund losses are “now primarily history (and) can be papered over with 100 cents on the dollar marks.” The real problem lies in “those millions and millions of homes….not going anywhere….except for their mortgages….going up, up, and up….and so are delinquencies and defaults.”

He cites a recent Bank of America estimate that about $500 billion of adjustable rate mortgages (ARMs) will be reset in 2007, another $700 billion in 2008, and a large proportion of them are subprimes. He noted 7% of these loans are now in default, and the “percentage will grow and grow like a weed in your backyard tomato patch.” This will affect real money in the hundreds of billions of dollars of “toxic waste” that will spill over into reduced consumption, less new home construction, and even AAA-asset backed commercial paper “feel(ing) the cooling Arctic winds of a liquidity constriction.”

In Gross’ view, the sky isn’t falling, and “there is no hint yet of a true ‘crisis’ – these developments” may, in fact, have a salutary effect with “easy credit becoming less easy (and) excessive liquidity returning to more rational levels.” Gross still sees strong global growth ahead, but as a bond fund manager, he’s paid to worry.

In his report, Grantham is worried, too, and notes the housing decline affects prices, credit growth and consumption when subprime and other loan rates are reset higher with a considerable amount coming this year and even more ahead as just noted. In addition, and most significantly, he says rising inflation and widening risk premiums lower “the feasible leverage in private equity deals and place many deals that can be done today (meaning last spring) out of reach, which, in turn, has dire effects on the current stock market (and economy).”

In his current July client Letter, Grantham conceded “no areas of this unprecedented global bubble had yet gone hyperbolic like the internet and tech stocks did in 1999 (until now):” The “candidate” is “the growth rate of leveraged loans. At (a hugely speculative) $545 billion for the first half of this year, it is running 60% up on last year” that’s about the same size gain dot.com and tech stocks made year over year in 1999 with painful consequences not far behind for investors owning them.

Grantham’s July commentary mentioned one other likely market headwind after the 2008 election. It’s the expected fallout from “piling on” moves of “more wealth to the wealthy by shifting more of the tax load to sales and income taxes of average taxpayers and away from the capital gains and dividend taxes of the wealthy.” It means “ordinary working stiffs are not doing particularly well….and are getting antsy” enough to worry politicians to raise taxes on the most well-off.

Grantham expects them to come in higher taxes on capital gains, dividends and top-end ordinary income rates as well as redefining what income is. That will mean more of it will be taxed to reduce the gross disparity between what rich and ordinary folks now pay, and not a moment too soon for those championing fairness, not special privilege. If this happens, however, it “will not be good for the animal spirits of investors” who represent the most important bubble-sustaining input.

Grantham sums up his current thinking with what he calls a “torture(d) analogy.” He compares the global financial system to a giant suspension bridge. “Thousands of bolts hold it together. Today a few of them have fractures and one or two seem to have failed completely. The bridge, however, with typical redundancy built in (unlike the Minnesota one that collapsed), can (easily) take a few failed bolts, perhaps quite a few….This global financial structure is far too large and has far too many interlocking pieces for weakening US house prices and a few subprime issues to bring it down.”

What is worrisome is whether or when we reach a “broad-based level of financial metal fatigue” causing simultaneous multiple bolt failures “with ultimately disastrous consequences.” What’s also scary is the global financial structure is heavily “faith based, held together by unprecedented amounts of animal spirits” moving in the same positive direction. If the faith wanes, it’s then “every man for himself” and look out below.

Also worrisome, but so far contained, is growing subprime mortgage trouble. Until a month ago, equity markets were totally unaffected and may bounce back from their current sell-off. Grantham isn’t panicking but shows concern about flat to declining home prices, a high inventory of unsold homes likely moving higher, and mortgage “honeymoon rate” reset increases up to 2.5 points coming soon for holders “already stretched.” We’re told, he says, that even the subprime market is “contained,” but we have to wonder if “the container, in this case, will turn out to be Pandora’s.”

Then there’s a slowing economy, inflation concerns, high oil and other industrial commodity prices and now agricultural ones as well “boosted by ethanol production” pressuring consumers. “So two of the three great asset classes (now all three) are having the wobblies in some of their components” – real estate and low grade debt (and since mid-July equities and other type debt instruments as well), “especially real-estate related but increasingly including corporate loans and private equity funding….”

Grantham may have written this commentary before the the July-mid-August equity market sell-off. However, based on his prior (and long-standing) comments, his current analysis probably still holds true: “stocks (will likely) make it through this third (and traditionally strongest) year of the Presidential (four year market) Cycle.” The third year in the Cycle “has never declined materially and should be considered the bane of short sellers (and equity market naysayers) everywhere.”

In sum, Grantham says, “a few more bolts in the bridge may fail, but in the end you have to bet the bridge will hold, supported by amazing animal spirits.” At least that’s true up to October when the fourth year of the Cycle begins. Then, the “odds of failure rise” but won’t likely become high until October, 2008 with a new administration and Congress soon to take power. Grantham then gets blunt stating “based on history” (and tax increases he expects), that’s the most likely time for a bear market, and he’s betting on one that could be nasty.

He concludes saying he’s been trying to come up with a simple way to explain “how serious the situation is for the overstretched, overleveraged financial system.” He does it this way: “In 5 years I expect….at least one major bank (broadly defined) to have failed and up to half the hedge funds and a substantial percentage of the private equity firms in existence today (to have) simply ceased to exist.”

WASHINGTON (Aug. 16) – Army soldiers committed suicide last year at the highest rate in 26 years, and more than a quarter did so while serving in Iraq and Afghanistan , according to a new military report.

The report, obtained by The Associated Press ahead of its scheduled release Thursday, found there were 99 confirmed suicides among active duty soldiers during 2006, up from 88 the previous year and the highest number since the 102 suicides in 1991 at the time of the Persian Gulf War.

The suicide rate for the Army has fluctuated over the past 26 years, from last year’s high of 17.3 per 100,000 to a low of 9.1 per 100,000 in 2001.

Last year, “Iraq was the most common deployment location for both (suicides) and attempts,” the report said.

The 99 suicides included 28 soldiers deployed to the two wars and 71 who weren’t. About twice as many women serving in Iraq and Afghanistan committed suicide as did women not sent to war, the report said.

Preliminary numbers for the first half of this year indicate the number of suicides could decline across the service in 2007 but increase among troops serving in the wars, officials said.

The increases for 2006 came as Army officials worked to set up a number of new and stronger programs for providing mental health care to a force strained by the longer-than-expected war in Iraq and the global counterterrorism war entering its sixth year.

Failed personal relationships, legal and financial problems and the stress of their jobs were factors motivating the soldiers to commit suicide, according to the report.

“In addition, there was a significant relationship between suicide attempts and number of days deployed” in Iraq, Afghanistan or nearby countries where troops are participating in the war effort, it said. The same pattern seemed to hold true for those who not only attempted, but succeeded in killing themselves.

There also “was limited evidence to support the view that multiple … deployments are a risk factor for suicide behaviors,” it said.

About a quarter of those who killed themselves had a history of at least one psychiatric disorder. Of those, about 20 percent had been diagnosed with a mood disorder such as bipolar disorder and/or depression; and 8 percent had been diagnosed with an anxiety disorder, including post traumatic stress disorder – one of the signature injuries of the conflict in Iraq.

Firearms were the most common method of suicide. Those who attempted suicide but didn’t succeed tended more often to take overdoses and cut themselves.

In a service of more than a half million troop, the 99 suicides amounted to a rate of 17.3 per 100,000 – the highest in the past 26 years, the report said. The average rate over those years has been 12.3 per 100,000.

The rate for those serving in the wars stayed about the same, 19.4 per 100,000 in 2006, compared with 19.9 in 2005.

The Army said the information was compiled from reports collected as part of its suicide prevention program – reports required for all “suicide-related behaviors that result in death, hospitalization or evacuation” of the soldier. It can take considerable time to investigate a suicide and, in fact, the Army said that in addition to the 99 confirmed suicides last year, there are two other deaths suspected as suicides in which investigations were pending.