Swine Flu Is Bad for Victims, But Good for Businesses That Cater to Expanding Market

By DALIA FAHMY

Oct. 14, 2009—

Americans are still debating whether to roll up their sleeves for a swine flu shot, but companies have already figured it out: vaccines are good for business.

Drug companies have sold $1.5 billion worth of swine flu shots, in addition to the $1 billion for seasonal flu they booked earlier this year. These inoculations are part of a much wider and rapidly growing $20 billion global vaccine market.

“The vaccine market is booming,” says Bruce Carlson, spokesperson at market research firm Kalorama, which publishes an annual survey of the vaccine industry. “It’s an enormous growth area for pharmaceuticals at a time when other areas are not doing so well,” he says, noting that the pipeline for more traditional blockbuster drugs such as Lipitor and Nexium has thinned.

As always with pandemic flus, taxpayers are footing the $1.5 billion check for the 250 million swine flu vaccines that the government has ordered so far and will be distributing free to doctors, pharmacies and schools. In addition, Congress has set aside more than $10 billion this year to research flu viruses, monitor H1N1’s progress and educate the public about prevention.

Drugmakers pocket most of the revenues from flu sales, with Sanofi-Pasteur, Glaxo Smith Kline and Novartis cornering most of the market.

But some say it’s not just drugmakers who stand to benefit. Doctors collect copayments for special office visits to inject shots, and there have been assertions that these doctors actually profit handsomely from these vaccinations.

It is a notion that Dr. Lori Heim, president of the American Academy of Family Practitioners, says is simply not true.

“According to most of the physicians I have talked to, the administration of these vaccines is done for the community’s benefit as opposed to anything that helps profit,” she says. Heim adds that even though doctors will not have to shell out for the H1N1 vaccine, they will bear the usual costs associated with storage and administering the shots.

“There is an administration fee, for the costs that you can’t get reimbursed through Medicare or Medicaid,” she says. “This is usually less than, or right at the break-even point.”

Still, pharmacies also charge co-payments or full price of about $25 to those without insurance and often make more money if patients end up shopping for other goods.

“Flu shots present a good opportunity to bring new customers into our stores,” says Cassie Richardson, spokesperson for SUPERVALU, one of the country’s largest supermarket chains. Drawing customers to the back of a store, where pharmacies are often located, offers retailers a chance to pitch products that might otherwise go unnoticed.

Even companies outside of the medical industry are benefiting: the UPS division that delivers vaccines in specially designed containers, for example, has seen a bump in business.

New Entrants in Flu Shot Business

The intensifying competition has irked some doctors.

“Retailers and other non-medical professionals have siphoned off the passive income that once helped to cover medical overhead,” says Dr. Caroline Abruzese, an internist in Atlanta. “The larger retail chains can invest up front in large volumes of vaccine at low prices, and market to customers already in their stores.”

The promise of profits has attracted new players into the business. Some of the world’s largest drugmakers, who in the past avoided the vaccine market because of its limited scope — its not easy to convince healthy adults to get a shot for measles — are now jumping into the fray.

Last month alone saw three large vaccine deals. Abbott Labs bought a Belgian drug business, along with its flu vaccine facilities, for $6.6 billion. Johnson & Johnson invested $444 million in a Dutch biotech firm that makes and develops flu vaccines. Merck, which already makes vaccines for shingles and other diseases, struck a deal to distribute flu shots made by Australian CSL.

Smaller biotechs are also angling for a slice of the action, making vaccines one of the fastest-growing areas of research in the biotech industry.

Large and small drugmakers are drawn to the business largely because of scientific advances that promise to radically expand the range of health problems that vaccines can address. In addition to preventing childhood diseases such as measles and polio, vaccines can now also ward off cervical cancer, and researchers are working on vaccines for HIV and tuberculosis.

Scientists believe they can create therapeutic vaccines than treat diseases such as Alzheimers and diabetes after they have set in. (At least one company is betting on a vaccine that helps cigarette smokers quit.)

“These innovations broaden the market potential for vaccine makers and partly explained the renewed interest by drugmakers,” says Anthony Cox, a professor at Indiana University’s Kelley School of Business who specializes in the marketing of medical products.

But Mark Grayson, a spokesperson for the Pharmaceutical Research and Manufacturers of America, which represents the country’s leading pharmaceutical research and biotechnology companies, says that drugmakers are also compelled by the government to join efforts to ensure that there is enough vaccine to go around.

“Because of national security implications, the government felt that they needed to encourage and ask [vaccine manufacturers] to move much quicker,” he says. Grayson adds that vaccine manufacturers also face significant costs; aside from the expense of fitting a new vaccine into a tight production schedule, drugmakers GlaxoSmithKline and Sanofi Pasteur were forced to acquire new vaccine production facilities in recent years to keep up with demand.

Alternatives to Vaccines Are Few

While this promise of new treatments for painful diseases brings hope to many, vaccines continue to attract critics. The National Vaccine Information Center, a non-profit advocacy group, is at the forefront of a movement demanding that vaccines be tested more thoroughly before hitting the market. Although there has been little evidence to support their claim, detractors — including the comedian Jim Carrey — believe that vaccines are at least partly to blame for the sharp rise in autism in recent decades.

The swine flu vaccine has also attracted its share of critics. Frank Lipman, a New York-based doctor who specializes in a mix of Western and alternative medicine, points out that the swine flu is rarely fatal and that it’s too early to tell if it’s safe because it hasn’t been widely tested.

Others argue that Americans have little choice. The cost of a widespread pandemic, similar to Spanish Flu outbreak in 1918, which killed 675,000 Americans (and 50 million worldwide), would be devastating. The Trust for America’s Health, a Washington-based non-profit organization, estimates that a severe pandemic could push down GDP by more than 5 percent and cost Americans $683 billion.

“We’re not seeing a pandemic that’s this severe,” says Jeff Levi, director of Trust for Americas Health. “We’ve dodged a lot of bullets.”

By Duncan Kennedy
BBC News, Italy

A shipwreck apparently containing toxic waste is being investigated by authorities in Italy amid claims that it was deliberately sunk by the mafia.

An informant from the Calabrian mafia said the ship was one of a number he blew up as part of an illegal operation to bypass laws on toxic waste disposal.

The sunken vessel has been found 30km (18 miles) off the south-west of Italy.

The informant said it contained “nuclear” material. Officials said it would be tested for radioactivity.

Murky pictures taken by a robot camera show the vessel intact and alongside it are a number of yellow barrels.

Labels on them say the contents are toxic.

The informant said the mafia had muscled in on the lucrative business of radioactive waste disposal.

But he said that instead of getting rid of the material safely, he blew up the vessel out at sea, off the Calabrian coast.

He also says he was responsible for sinking two other ships containing toxic waste.

Experts are now examining samples taken from the wreck.

Other vessels

An official said that if the samples proved to be radioactive then a search for up to 30 other sunken vessels believed scuttled by the mafia would begin immediately.

For years there have been rumours that the mafia was sinking ships with nuclear and other waste on board, as part of a money-making racket.

The environmental campaign group Greenpeace and others have compiled lists over the past few decades of ships that have disappeared off the coast of Italy and Greece.

Processing waste is highly specialised and is supposed to be an industry where security is the top priority.

If tests show that there is nuclear material on the seabed it will prove that the mafia has moved into its dirtiest business yet.

By: Steve Benen

It was called “the shot that changed the republic.”

The killing in 1967 of an unarmed demonstrator by a police officer in West Berlin set off a left-wing protest movement and put conservative West Germany on course to evolve into the progressive country it has become today.

Now a discovery in the archives of the East German secret police, known as the Stasi, has upended Germany’s perception of its postwar history. The killer, Karl-Heinz Kurras, though working for the West Berlin police, was at the time also acting as a Stasi spy for East Germany.

It is as if the shooting deaths of four students at Kent State University by the Ohio National Guard had been committed by an undercover K.G.B. officer, though the reverberations in Germany seemed to have run deeper.

“It makes a hell of a difference whether John F. Kennedy was killed by just a loose cannon running around or a Secret Service agent working for the East,” said Stefan Aust, the former editor in chief of the weekly newsmagazine Der Spiegel. “I would never, never, ever have thought that this could be true.”

And yet, the killing that effectively caused the summer of ‘68 uprising and led to the founding of the terrorist Red Army Faction, seems to have actually happened. It’s extraordinary.

This is of particular interest right now because the new issue of the Washington Monthly has a book review from Paul Hockenos on Stefan Aust’s book on the Red Army Faction.

The irony, with these new revelations in mind, is that the shooting helped lead to the creation of the Red Army Faction, but it also triggered a movement of non-violent students. Eventually, the turmoil led to a healthier, stronger, more-democratic West Germany.

Probably not what the Stasi shooter and his/her superiors had in mind.

Paul Craig Roberts, PrisonPlanet.com
September 22, 2009

Americans cannot get any truth out of their government about anything, the economy included. Americans are being driven into the ground economically, with one million school children now homeless, while Federal Reserve chairman Ben Bernanke announces that the recession is over.

The spin that masquerades as news is becoming more delusional. Consumer spending is 70% of the US economy. It is the driving force, and it has been shut down. Except for the super rich, there has been no growth in consumer incomes in the 21st century. Statistician John Williams of shadowstats.com reports that real household income has never recovered its pre-2001 peak.

The US economy has been kept going by substituting growth in consumer debt for growth in consumer income. Federal Reserve chairman Alan Greenspan encouraged consumer debt with low interest rates. The low interest rates pushed up home prices, enabling Americans to refinance their homes and spend the equity. Credit cards were maxed out in expectations of rising real estate and equity values to pay the accumulated debt. The binge was halted when the real estate and equity bubbles burst.

As consumers no longer can expand their indebtedness and their incomes are not rising, there is no basis for a growing consumer economy. Indeed, statistics indicate that consumers are paying down debt in their efforts to survive financially. In an economy in which the consumer is the driving force, that is bad news.

The banks, now investment banks thanks to greed-driven deregulation that repealed the learned lessons of the past, were even more reckless than consumers and took speculative leverage to new heights. At the urging of Larry Summers and Goldman Sachs’ CEO Henry Paulson, the Securities and Exchange Commission and the Bush administration went along with removing restrictions on debt leverage.

When the bubble burst, the extraordinary leverage threatened the financial system with collapse. The US Treasury and the Federal Reserve stepped forward with no one knows how many trillions of dollars to “save the financial system,” which, of course, meant to save the greed-driven financial institutions that had caused the economic crisis that dispossessed ordinary Americans of half of their life savings.

The consumer has been chastened, but not the banks. Refreshed with the TARP $700 billion and the Federal Reserve’s expanded balance sheet, banks are again behaving like hedge funds. Leveraged speculation is producing another bubble with the current stock market rally, which is not a sign of economic recovery but is the final savaging of Americans’ wealth by a few investment banks and their Washington friends. Goldman Sachs, rolling in profits, announced six figure bonuses to employees.

The rest of America is suffering terribly.

The unemployment rate, as reported, is a fiction and has been since the Clinton administration. The unemployment rate does not include jobless Americans who have been unemployed for more than a year and have given up on finding work. The reported 10% unemployment rate is understated by the millions of Americans who are suffering long-term unemployment and are no longer counted as unemployed. As each month passes, unemployed Americans drop off the unemployment role due to nothing except the passing of time.

The inflation rate, especially “core inflation,” is another fiction. “Core inflation” does not include food and energy, two of Americans’ biggest budget items. The Consumer Price Index (CPI) assumes, ever since the Boskin Commission during the Clinton administration, that if prices of items go up consumers substitute cheaper items. This is certainly the case, but this way of measuring inflation means that the CPI is no longer comparable to past years, because the basket of goods in the index is variable.

The Boskin Commission’s CPI, by lowering the measured rate of inflation, raises the real GDP growth rate. The result of the statistical manipulation is an understated inflation rate, thus eroding the real value of Social Security income, and an overstated growth rate. Statistical manipulation cloaks a declining standard of living.

In bygone days of American prosperity, American incomes rose with productivity. It was the real growth in American incomes that propelled the US economy.

In today’s America, the only incomes that rise are in the financial sector that risks the country’s future on excessive leverage and in the corporate world that substitutes foreign for American labor. Under the compensation rules and emphasis on shareholder earnings that hold sway in the US today, corporate executives maximize earnings and their compensation by minimizing the employment of Americans.

Try to find some acknowledgement of this in the “mainstream media,” or among economists, who suck up to the offshoring corporations for grants.

The worst part of the decline is yet to come. Bank failures and home foreclosures are yet to peak. The commercial real estate bust is yet to hit. The dollar crisis is building.

When it hits, interest rates will rise dramatically as the US struggles to finance its massive budget and trade deficits while the rest of the world tries to escape a depreciating dollar.

Since the spring of this year, the value of the US dollar has collapsed against every currency except those pegged to it. The Swiss franc has risen 14% against the dollar. Every hard currency from the Canadian dollar to the Euro and UK pound has risen at least 13 % against the US dollar since April 2009. The Japanese yen is not far behind, and the Brazilian real has risen 25% against the almighty US dollar. Even the Russian ruble has risen 13% against the US dollar.

What sort of recovery is it when the safest investment is to bet against the US dollar?

The American household of my day, in which the husband worked and the wife provided household services and raised the children, scarcely exists today. Most, if not all, members of a household have to work in order to pay the bills. However, the jobs are disappearing, even the part-time ones.

If measured according to the methodology used when I was Assistant Secretary of the Treasury, the unemployment rate today in the US is above 20%. Moreover, there is no obvious way of reducing it. There are no factories, with work forces temporarily laid off by high interest rates, waiting for a lower interest rate policy to call their workforces back into production.

The work has been moved abroad. In the bygone days of American prosperity, CEOs were inculcated with the view that they had equal responsibilities to customers, employees, and shareholders. This view has been exterminated. Pushed by Wall Street and the threat of takeovers promising “enhanced shareholder value,” and incentivized by “performance pay,” CEOs use every means to substitute cheaper foreign employees for Americans [How Well-Educated, Hard-Working Americans are Treated in America, By Rennie Sawade, WashTech News, September 14, 2009 ]. Despite 20% unemployment and cum laude engineering graduates who cannot find jobs or even job interviews, Congress continues to support 65,000 annual H-1B work visas for foreigners.

In the midst of the highest unemployment since the Great Depression what kind of a fool do you need to be to think that there is a shortage of qualified US workers?

by Philip Dru on 9/08/09 • 

WASHINGTON — One year after the near collapse of the global financial system, this much is clear: The financial world as we knew it is over, and something new is rising from its ashes.

Historians will look to September 2008 as a watershed for the U.S. economy.

On Sept. 7 , the government seized mortgage titans Fannie Mae and Freddie Mac . Eight days later, investment bank Lehman Brothers filed for bankruptcy, sparking a global financial panic that threatened to topple blue-chip financial institutions around the world. In the several months that followed, governments from Washington to Beijing responded with unprecedented intervention into financial markets and across their economies, seeking to stop the wreckage and stem the damage.

One year later, the easy-money system that financed the boom era from the 1980s until a year ago is smashed. Once-ravenous U.S. consumers are saving money and paying down debt. Banks are building reserves and hoarding cash. And governments are fashioning a new global financial order.

Congress and the Obama administration have lost faith in self-regulated markets. Together, they’re writing the most sweeping new regulations over finance since the Great Depression. And in this ever-more-connected global economy, Washington is working with its partners through the G-20 group of nations to develop worldwide rules to govern finance.

“Our objective is to design an economic framework where we’re going to have a more balanced pattern of growth globally, less reliant on a buildup of unsustainable borrowing . . . and not just here, but around the world,” said Treasury Secretary Timothy Geithner .

The first faint signs that the U.S. economy may be clawing its way back from the worst recession since the Great Depression are only now starting to appear, a year after the panic began. Similar indications are sprouting in Europe , China and Japan .

Still, economists concur that a quarter-century of economic growth fueled by cheap credit is over. Many analysts also think that an extended period of slow job growth and suppressed wage growth will keep consumers — and the businesses that sell to them — in the dumps for years.

“Those things are likely to be subpar for a long period of time,” said Martin Regalia, the chief economist for the U.S. Chamber of Commerce . “I think it means that we probably see potential rates of growth that are in the 2-2.5 (percent) range, or maybe . . . 1.8-1.9 (percent).” A growth rate of 3 percent to 3.5 percent is considered average.

The unemployment rate rose to 9.7 percent in August and is expected to peak above 10 percent in the months ahead. It’s already there in at least 15 states. Regalia thinks that it could be five years before the U.S. economy generates enough jobs to overcome those lost and to employ the new workers entering the labor force.

All this is likely to keep consumers on the sidelines.

“I think this financial panic and Great Recession is an inflection point for the financial system and the economy,” said Mark Zandi , the chief economist for forecaster Moody’s Economy.com. “It means much less risk-taking, at least for a number of years to come — a decade or two. That will be evident in less credit and more costly credit. If you are a household or a business, it will cost you more, and it will be more difficult to get that credit.”

The numbers bear him out. The Fed’s most recent release of credit data showed that consumer credit decreased at an annual rate of 5.2 percent from April to June, after falling by a 3.6 percent annual rate from January to March. Revolving lines of credit, which include credit cards, fell by an annualized 8.9 percent in the first quarter, followed by an 8.2 percent drop in the second quarter.

That’s a sea change. For much of the past two decades, strong U.S. growth has come largely through expanding credit. The global economy fed off this trend.

China became a manufacturing hub by selling attractively priced exports to U.S. consumers who were living beyond their means. China’s Asian neighbors sent it components for final assembly; Africa and Latin America sold China their raw materials. All fed off U.S. consumers’ bottomless appetite for more, bought on credit.

“That’s over. Consumers can do their part — spend at a rate consistent with their income growth, but not much beyond that,” Zandi said.

If U.S. consumers no longer drive the global economy, then consumers in big emerging economies such as China and Brazil will have to take up some of the slack. Trade among nations will take on greater importance.

In the emerging “new normal,” U.S. companies will have to be more competitive. They must sell into big developing markets; yet as the recent Cash for Clunkers effort underscored, the competitive hurdles are high: Foreign-owned automakers, led by Toyota , reaped the most benefit from the U.S. tax breaks for new car purchases, not GM and Chrysler .

Need a loan? Tough luck: Many U.S. banks are in no condition to lend. Around 416 banks are now on a “problem list” and at risk of insolvency. Regulators already have shuttered 81 banks and thrifts this year.

The Federal Deposit Insurance Corp. reported on Aug. 27 that rising loan losses are depleting bank capital. The ratio of bank reserves to bad loans was 63.5 percent from April to June, the lowest it’s been since the savings-and-loan crisis in 1991.

For all that, the U.S. economy does seem to be rising off its sickbed. The latest manufacturing data for August point to a return to growth, and home sales are rising. Indeed, there are many encouraging signs emerging in the global economy.

It’s all growth from a low starting point, however, and many economists think that there’ll be a lower baseline for U.S. and global growth if the new financial order means less risk-taking by lenders and less indebtedness by companies and consumers.

That seems evident now in the U.S. personal savings rate. It fell steadily from 9.59 percent in the 1970s to 2.68 percent in the easy-money era from 2000 to 2008; from 2005 to 2007, it averaged 1.83 percent.

Today, that trend is in reverse. From April to June, Americans’ personal savings rate was 5 percent, and it could go higher if the unemployment rate keeps rising. Almost 15 million Americans are unemployed — and countless others are underemployed or uncertain about their job security, so they’re spending less and saving more.

A few years ago, banks fell all over themselves to offer cheap home equity loans and lines of consumer credit. No more. Even billions in government bailout dollars to spur lending haven’t changed that.

“The strategy that was stated at the beginning of the year — which is that you would sustain the banking system in order that it would resume lending — hasn’t worked, and it isn’t going to work,” said James K. Galbraith , an economist at the University of Texas at Austin .

Over the course of 2008, the nation’s five largest banks reduced their consumer loans by 79 percent, real estate loans by 66 percent and commercial loans by 19 percent, according to FDIC data. A wide range of credit measures, including recent FDIC data, show that lending remains depressed.

Why? The foundation of U.S. credit expansion for the past 20 years is in ruin. Since the 1980s, banks haven’t kept loans on their balance sheets; instead, they sold them into a secondary market, where they were pooled for sale to investors as securities. The process, called securitization, fueled a rapid expansion of credit to consumers and businesses. By passing their loans on to investors, banks were freed to lend more.

Today, securitization is all but dead. Investors have little appetite for risky securities. Few buyers want a security based on pools of mortgages, car loans, student loans and the like.

“The basis of revival of the system along the line of what previously existed doesn’t exist. The foundation that was supposed to be there for the revival (of the economy) . . . got washed away,” Galbraith said.

Unless and until securitization rebounds, it will be hard for banks to resume robust lending because they’re stuck with loans on their books.

“We’ve just been scared,” said Robert C. Pozen , the chairman of Boston -based MFS Investment Management . He thinks that the freeze in securitization reflects a lack of trust in Wall Street and its products and remains a huge obstacle to the resumption of lending that’s vital to an economic recovery.

Enter the Federal Reserve. It now props up the secondary market for pooled loans that are vital to the functioning of the U.S. financial system. The Fed is lending money to investors who’re willing to buy the safest pools of loans, called asset-backed securities.

Through Sept. 3 , the Fed had funded purchases of $817.6 billion in mortgage-backed securities. These securities were pooled mostly by mortgage finance giants Fannie Mae , Freddie Mac and Ginnie Mae . In recent months, the Fed also has moved aggressively to lend for purchase of pools of other consumer-based loans.

Today, there’s little private-sector demand for new loan-based securities; government is virtually the only game in town. That’s why on Aug. 17 , the Fed announced that it would extend its program to finance the purchase of pools of loans until mid-2010. That suggests there’s still a long way to go before a functioning securitization market — the backbone of consumer lending — returns to a semblance of normalcy.

Konrad Yakabuski, The Globe and Mail
October 24, 2009

The arguments in favour of a separate Canadian currency have been refuted by experience. The time has come for North American monetary union. It is essential for Canadian prosperity.

Every institution has its orthodoxies. These are the mostly unwritten rules that no one from within challenges without risking marginalization or outright ostracism. To be a member of the club is to acquiesce.

At the Bank of Canada, arguably the most important player in the Canadian economy, there is only one orthodoxy more inviolate than inflation targeting – though this has been the central bank’s only official objective since 1991. No, besides keeping the annual inflation rate between 1 per cent and 3 per cent, those who toil in the glass house that is the bank’s Ottawa headquarters accept as holy creed the existence of a separate Canadian currency.

This goes far beyond any desire among bank staff to preserve their own jobs. It is partly the result of a cultural bias, since Canada was the first major country to adopt a floating exchange rate in 1950 and, except for eight years after 1962 when the loonie was pegged to the U.S. dollar, our currency has navigated countless peaks and valleys, to the delight and horror of cross-border shoppers, snowbirds, manufacturers and speculators. Managing monetary policy in a floating-rate regime is what the Bank of Canada knows best.

The Floating Habit

It is also what the bank’s well-regarded research staff believes to be in the best interest of the Canadian economy. By letting its dollar float, the bank reasons, Canada can adjust more quickly and effectively to domestic and global economic shocks than it could if we implemented a fixed exchange rate, embraced a common North American currency or simply adopted the U.S. dollar as this country’s legal tender.

The central bank believes that the Canadian and U.S. economies are just too different to warrant a single currency and monetary policy. We’re net exporters of natural resources; they’re net importers of the Earth’s God-given abundances. Hence, when commodity prices crater – as they did during the 1997-1998 Asian financial crisis or at the outset of the most recent recession – so does the Canadian dollar.

The loonie’s collapse a decade ago was hailed by then Bank of Canada governor Gordon Thiessen as proof of the benefits of a floating rate. The decline buffered the blow delivered to the economy by low resource prices by helping “Canadian manufacturing and other non-commodity sectors to increase their exports to the United States,” he said in a 2000 speech. “In this way, the impact of falling employment and incomes in our primary sector because of lower commodity prices was largely offset by greater expansion in other sectors.”

Political No-No

Mr. Thiessen’s speech did not come out of the blue. At the time, economists here were embroiled in a heated debate about the pros and cons of North American monetary union. NAMU, as it was dubbed, was seen as the next logical step in the continuing integration of the Canadian, U.S. and Mexican economies, after the 1994 ratification of the North American free-trade agreement. Talk of a currency union on this continent was also spurred by its realization in Europe in 1999. If countries as disparate as France, Finland, Italy and Ireland could do it, why couldn’t two countries as economically and culturally integrated as Canada and the U.S?

It soon became clear, however, that NAMU was a political no-no. Canadian economic nationalists equated common currency with a loss of sovereignty, just as they had fought the Canada-U.S. free-trade agreement, saying it would mark the end of public health care here. Besides, it suited the Chrétien government to have a low loonie, to take the edge off its tight fiscal policy and create manufacturing jobs. Hence, as the Canadian dollar dug a historic trough, hitting 61.75 cents (U.S.) in 2002, Ontario was on its way to surpassing Michigan in auto production.

If the past decade has taught us anything, though, it is that Canada enjoys all the inconveniences of a floating exchange rate and independent monetary policy, with precious few of the benefits. The protracted low-dollar period wrought an unprecedented widening of the gap between Canadian and U.S. productivity levels, and has left our economy (outside the resource sector) painfully uncompetitive as our currency nears parity with the U.S. dollar.

Tempted to be Lazy

A decade ago, Mr. Thiessen dismissed the idea that a low loonie would encourage Canadian businesses to get lazy. “If the argument here is that a low exchange rate gives exporting firms easier profits and blunts their motivation to innovate and become more efficient and competitive, I am inclined to say that this suggests a rather serious problem of corporate governance,” he countered. But blaming Canadian businesses for responding to the incentives created by a low dollar is like expecting an apple picker paid by the bushel to ignore the low hanging fruit for the McIntoshes on top. First things first, after all.

When the dollar hovered around 60 cents, then 70 and later 80, everyone agreed that it was undervalued. Now as it approaches parity with the U.S. dollar and threatens to surpass it, as it did in 2007 and 2008 when the price of oil peaked near $150, almost everyone – including the Bank of Canada – insists it’s overvalued.

But though the loonie has been extremely volatile in recent years, big and unjustified currency swings are nothing new. When they argued for Canada-U.S. monetary union in a 1999 C.D. Howe Institute paper, policy experts Thomas Courchene and Richard Harris noted that our floating dollar has been prone to “major and prolonged misalignments.” This leaves the Bank of Canada constantly, and usually unconvincingly, trying to influence our supposedly free-floating exchange rate. This week, Mark Carney, the current Bank of Canada Governor, channelled Pierre Trudeau and dared speculators to question his resolve. “Markets should take seriously our determination to set policy to achieve the inflation target. Markets sometimes lose their focus. We don’t lose our focus.” Such uncharacteristically blunt language from a central banker is a sign of panic. A soaring Canadian dollar can create deflation, depressing the prices of imports and creating a Japan-like spiral into perennial recession.

Instead of easing economic shocks, then, leaving our chronically overshooting loonie to float ends up making adjustments more brutal and counterproductive than they need to be. What’s more, the Bank of Canada’s apparent indifference to where the country’s economic growth comes from – whether from resources or value-added manufacturing and knowledge industries – ignores the fact that not all industries produce the same set of public goods. Some encourage a more innovative and educated work force than others. Some position us more for the future than others.

Already Fed-Following

So, just why do we keep our loonie anyway? Is it to protect the illusion that Canada has a monetary policy truly independent from that of the U.S. Federal Reserve Board? Martin Coiteux, an economist and professor of international business at HEC Montreal, tracked monetary policy in both countries for a prolonged period up to 2004. He found that, though the Fed has a much broader mandate than the Bank of Canada, it had a better record of keeping inflation within the 1 per cent to 3 per cent band than our central bank. The Fed leads, the Bank of Canada follows. “Even if [the bank] says we have a made-in-Canada monetary policy, it mostly tracks that of the Fed,” he says.

Nothing proves his point more than the present. One of the reasons markets had, until this week, been expecting the Bank of Canada to follow Australia’s recent lead and start raising interest rates soon is that the Canadian housing market is looking dangerously bubbly. House prices have risen 14 per cent in the past year. But the bank is standing pat, Mr. Coiteux reckons, because any increase in the spread between Canadian and U.S. interest rates would send the loonie even farther into the stratosphere.

The past 10 years have reinforced Mr. Courchene’s belief that some kind of currency union is essential to this country’s long-term prosperity. If the U.S. dollar is now in secular decline against other global currencies, as many argue, then Canada needs to get with it and start negotiating with Washington. “It’s in decline that we’re really going to get clobbered,” Mr. Courchene warns. “Suppose the U.S. dollar goes so far down that the Canadian dollar goes to $1.30 instead of 95 cents. Is that what we want?” Canada could just adopt the U.S. dollar and be done with it. But we would be better off with a formal currency union that allowed for some Canadian representation, and influence, in the Federal Reserve System.

Naysayers have always said the Americans would never go for it. Mr. Courchene thinks Canada, with the world’s second-largest oil reserves, has a strong argument going for it. “The Americans would like the idea [of Canadian representation] more than they did a decade ago because the entire Canadian commodity world would come entirely within their currency area, so they wouldn’t get anywhere near the oil shocks they’re getting now.”

Aging China

China may have just overtaken Canada as the biggest exporter to the United States. But the title is possibly temporary and any suggestion that this country would do better by reducing its reliance on the U.S. market is based on wishful thinking. No other major country faces better long-term economic or demographic prospects than the U.S. By 2050, the U.S. work force will have grown by 30 per cent; China’s will have contracted by 3 per cent. The median age in China will be 44, up from 33 now. The U.S. will age only marginally. Its median age will rise to 39 from 36. China, the saying goes, will get old before it gets rich.

Canada needs to take heed. Clinging to the loonie’s woeful song is no way to keep our economy humming. Those paper George Washingtons may be an anachronism in our coin-loving culture, but the U.S. dollar is not destined to become one any time soon.

Mexico City, Mexico (CNN) — A reputed Mexican drug lord with a $5 million reward on his head has been named to Forbes magazine’s list of the most powerful people in the world.

Joaquin “El Chapo” Guzman, who authorities say heads the powerful Sinaloa Cartel, is believed to have shipped $6 billion to $19 billion in cocaine to the United States over the past eight years, Forbes says in the listing.

The magazine ranks him No. 41, ahead of Russian President Dmitry Medvedev (No. 43), Israeli Prime Minister Benjamin Netanyahu (46), French President Nicolas Sarkozy (56) and Venezuelan President Hugo Chavez (67). Guzman also bested U.S. Chief Justice John Roberts (49) and entertainer Oprah Winfrey (45) on the list, released Wednesday.

The designation marks the second time Forbes has named Guzman to one of its lists. Forbes classified him in March as one of the wealthiest people in the world, ranking him No. 701 with a net worth of $1 billion.

Guzman was not the first narcotrafficker named to the Forbes most-wealthy list. The magazine placed Colombian cocaine king Pablo Escobar on the list in 1989.

Guzman, known as “El Chapo” or “Shorty,” is under indictment in Illinois on cocaine trafficking charges. U.S. officials have offered a $5 million reward for information leading to his capture.

He was arrested in 1993 on homicide and drug charges but escaped in 2001, reportedly by bribing prison guards to smuggle him out in a laundry truck. A Mexican federal investigation led to the arrest of more than 70 prison officials.

Forbes notes that Guzman’s fortune was self-made. His age is given as 52 or 54.

The Sinaloa Cartel, named after the Mexican Pacific Coast state where the gang was formed, is one of the most powerful drug-trafficking groups in the nation.

Silver hits 13-month high in Asia, tracking gold, copper

Gold GC-FT prices rose back above $1,000 an ounce in Europe on Friday as the dollar index tumbled to one-year lows, fuelling interest in gold as an alternative asset.

Traders are watching to see if gold can sustain its rise back above $1,000 and have expressed concern the metal’s climb to 18-month highs this week was overdone amid weakness in physical demand and rising scrap sales.

Silver hit a 13-month high of $16.93 an ounce, supported by rising gold and copper prices. Spot gold was bid at $1,001.05 an ounce at 1117 GMT against $995.50 late in New York on Thursday, having earlier touched a high of $1,002.70.

Gold’s ability to build on its gains will be reliant on it holding this level to the end of the week, analysts said.

“With the dollar marking a new year low and the magical mark of $1,000 having been taken out, you would have expected more price action,” Commerzbank analyst Eugen Weinberg said. “That it hasn’t happened I interpret as a relative weakness.

“If this mark is not taken out on a weekly basis and should the price stay below $1,000 an ounce, I would not be surprised to see some selling next week.”

Gold was mainly supported by weakness in the dollar, which hit a one-year low against a currency basket after stronger-than-expected Chinese data. Recovery hopes are fuelling interest in currencies seen as higher risk.

The euro reached its highest level this year against the U.S. currency. A decline in the dollar could precipitate substantial gains in gold, analysts said.

“Currency movements will be the principal driver for gold, and the impact of the U.S. dollar seems to have regained its prominence, despite a number of potential obstacles,” Standard Chartered said in a note.

“With the U.S. dollar likely to weaken further, gold should average $1,050 an ounce in Q4.”

U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $6.20 to $1,003 an ounce.

On the wider markets, oil prices steadied, giving up earlier gains that took them above $72 a barrel, while equities rose in Europe and Asia after the Chinese data.

Physical demand for gold was lacklustre as prices rose, traders said. The largest gold exchange-traded fund, the SPDR Gold Trust GLD-N , said its holdings were unchanged on Thursday for a sixth day.

Buyers of physical gold are waiting to see if the precious metal’s recent price rise is sustainable before purchasing the metal. Consumer buying in key markets such as India, Turkey and the Middle East has been slack this year as prices rose.

Among other precious metals, silver SI-FT hit its highest since early August 2008 in Asian trade, tracking a rise in gold and base metals prices. It was later at $16.84 an ounce against $16.68 an ounce.

Though silver is an investment metal like gold, it is also widely used in industry, especially electronics manufacturing, and often tracks moves in base metals such as copper and nickel.

“Further upside resistance is expected, with the industrial precious metal reliant on fresh upside momentum in gold to clear the large volume of chart lines in the $16.90-18.30 area,” said James Moore, an analyst at TheBullionDesk.com.

Platinum was at $1,292 an ounce against $1,284, while palladium was at $290.50 against $288.50.

ETF Securities’ London palladium ETF holdings edged up just over 1,000 ounces on Thursday to a record 478,952 ounces.

Facebook has 59 million users - and 2 million new ones join each week. But you won’t catch Tom Hodgkinson volunteering his personal information - not now that he knows the politics of the people behind the social networking site

The following correction was printed in the Guardian’s Corrections and clarifications column, Wednesday January 16 2008

The US intelligence community’s enthusiasm for hi-tech innovation after 9/11 and the creation of In-Q-Tel, its venture capital fund, in 1999 were anachronistically linked in the article below. Since 9/11 happened in 2001 it could not have led to the setting up of In-Q-Tel two years earlier.

Facebook appeals to a kind of vanity and self-importance in us, too. If I put up a flattering picture of myself with a list of my favourite things, I can construct an artificial representation of who I am in order to get sex or approval. (”I like Facebook,” said another friend. “I got a shag out of it.”) It also encourages a disturbing competitivness around friendship: it seems that with friends today, quality counts for nothing and quantity is king. The more friends you have, the better you are. You are “popular”, in the sense much loved in American high schools. Witness the cover line on Dennis Publishing’s new Facebook magazine: “How To Double Your Friends List.”

It seems, though, that I am very much alone in my hostility. At the time of writing Facebook claims 59 million active users, including 7 million in the UK, Facebook’s third-biggest customer after the US and Canada. That’s 59 million suckers, all of whom have volunteered their ID card information and consumer preferences to an American business they know nothing about. Right now, 2 million new people join each week. At the present rate of growth, Facebook will have more than 200 million active users by this time next year. And I would predict that, if anything, its rate of growth will accelerate over the coming months. As its spokesman Chris Hughes says: “It’s embedded itself to an extent where it’s hard to get rid of.”

All of the above would have been enough to make me reject Facebook for ever. But there are more reasons to hate it. Many more.

Facebook is a well-funded project, and the people behind the funding, a group of Silicon Valley venture capitalists, have a clearly thought out ideology that they are hoping to spread around the world. Facebook is one manifestation of this ideology. Like PayPal before it, it is a social experiment, an expression of a particular kind of neoconservative libertarianism. On Facebook, you can be free to be who you want to be, as long as you don’t mind being bombarded by adverts for the world’s biggest brands. As with PayPal, national boundaries are a thing of the past.

Although the project was initially conceived by media cover star Mark Zuckerberg, the real face behind Facebook is the 40-year-old Silicon Valley venture capitalist and futurist philosopher Peter Thiel. There are only three board members on Facebook, and they are Thiel, Zuckerberg and a third investor called Jim Breyer from a venture capital firm called Accel Partners (more on him later). Thiel invested $500,000 in Facebook when Harvard students Zuckerberg, Chris Hughes and Dustin Moskowitz went to meet him in San Francisco in June 2004, soon after they had launched the site. Thiel now reportedly owns 7% of Facebook, which, at Facebook’s current valuation of $15bn, would be worth more than $1bn. There is much debate on who exactly were the original co-founders of Facebook, but whoever they were, Zuckerberg is the only one left on the board, although Hughes and Moskowitz still work for the company.

Thiel is widely regarded in Silicon Valley and in the US venture capital scene as a libertarian genius. He is the co-founder and CEO of the virtual banking system PayPal, which he sold to Ebay for $1.5bn, taking $55m for himself. He also runs a £3bn hedge fund called Clarium Capital Management and a venture capital fund called Founders Fund. Bloomberg Markets magazine recently called him “one of the most successful hedge fund managers in the country”. He has made money by betting on rising oil prices and by correctly predicting that the dollar would weaken. He and his absurdly wealthy Silicon Valley mates have recently been labelled “The PayPal Mafia” by Fortune magazine, whose reporter also observed that Thiel has a uniformed butler and a $500,000 McLaren supercar. Thiel is also a chess master and intensely competitive. He has been known to sweep the chessmen off the table in a fury when losing. And he does not apologise for this hyper-competitveness, saying: “Show me a good loser and I’ll show you a loser.”

But Thiel is more than just a clever and avaricious capitalist. He is a futurist philosopher and neocon activist. A philosophy graduate from Stanford, in 1998 he co-wrote a book called The Diversity Myth, which is a detailed attack on liberalism and the multiculturalist ideology that dominated Stanford. He claimed that the “multiculture” led to a lessening of individual freedoms. While a student at Stanford, Thiel founded a rightwing journal, still up and running, called The Stanford Review - motto: Fiat Lux (”Let there be light”). Thiel is a member of TheVanguard.Org, an internet-based neoconservative pressure group that was set up to attack MoveOn.org, a liberal pressure group that works on the web. Thiel calls himself “way libertarian”.

TheVanguard is run by one Rod D Martin, a philosopher-capitalist whom Thiel greatly admires. On the site, Thiel says: “Rod is one of our nation’s leading minds in the creation of new and needed ideas for public policy. He possesses a more complete understanding of America than most executives have of their own businesses.”

This little taster from their website will give you an idea of their vision for the world: “TheVanguard.Org is an online community of Americans who believe in conservative values, the free market and limited government as the best means to bring hope and ever-increasing opportunity to everyone, especially the poorest among us.” Their aim is to promote policies that will “reshape America and the globe”. TheVanguard describes its politics as “Reaganite/Thatcherite”. The chairman’s message says: “Today we’ll teach MoveOn [the liberal website], Hillary and the leftwing media some lessons they never imagined.”

So, Thiel’s politics are not in doubt. What about his philosophy? I listened to a podcast of an address Thiel gave about his ideas for the future. His philosophy, briefly, is this: since the 17th century, certain enlightened thinkers have been taking the world away from the old-fashioned nature-bound life, and here he quotes Thomas Hobbes’ famous characterisation of life as “nasty, brutish and short”, and towards a new virtual world where we have conquered nature. Value now exists in imaginary things. Thiel says that PayPal was motivated by this belief: that you can find value not in real manufactured objects, but in the relations between human beings. PayPal was a way of moving money around the world with no restriction. Bloomberg Markets puts it like this: “For Thiel, PayPal was all about freedom: it would enable people to skirt currency controls and move money around the globe.”

Clearly, Facebook is another uber-capitalist experiment: can you make money out of friendship? Can you create communities free of national boundaries - and then sell Coca-Cola to them? Facebook is profoundly uncreative. It makes nothing at all. It simply mediates in relationships that were happening anyway.

Photo: Tim Boyle/Getty

Thiel’s philosophical mentor is one René Girard of Stanford University, proponent of a theory of human behaviour called mimetic desire. Girard reckons that people are essentially sheep-like and will copy one another without much reflection. The theory would also seem to be proved correct in the case of Thiel’s virtual worlds: the desired object is irrelevant; all you need to know is that human beings will tend to move in flocks. Hence financial bubbles. Hence the enormous popularity of Facebook. Girard is a regular at Thiel’s intellectual soirees. What you don’t hear about in Thiel’s philosophy, by the way, are old-fashioned real-world concepts such as art, beauty, love, pleasure and truth.

The internet is immensely appealing to neocons such as Thiel because it promises a certain sort of freedom in human relations and in business, freedom from pesky national laws, national boundaries and suchlike. The internet opens up a world of free trade and laissez-faire expansion. Thiel also seems to approve of offshore tax havens, and claims that 40% of the world’s wealth resides in places such as Vanuatu, the Cayman Islands, Monaco and Barbados. I think it’s fair to say that Thiel, like Rupert Murdoch, is against tax. He also likes the globalisation of digital culture because it makes the banking overlords hard to attack: “You can’t have a workers’ revolution to take over a bank if the bank is in Vanuatu,” he says.

If life in the past was nasty, brutish and short, then in the future Thiel wants to make it much longer, and to this end he has also invested in a firm that is exploring life-extension technologies. He has pledged £3.5m to a Cambridge-based gerontologist called Aubrey de Grey, who is searching for the key to immortality. Thiel is also on the board of advisers of something called the Singularity Institute for Artificial Intelligence. From its fantastical website, the following: “The Singularity is the technological creation of smarter-than-human intelligence. There are several technologies … heading in this direction … Artificial Intelligence … direct brain-computer interfaces … genetic engineering … different technologies which, if they reached a threshold level of sophistication, would enable the creation of smarter-than-human intelligence.”

So by his own admission, Thiel is trying to destroy the real world, which he also calls “nature”, and install a virtual world in its place, and it is in this context that we must view the rise of Facebook. Facebook is a deliberate experiment in global manipulation, and Thiel is a bright young thing in the neoconservative pantheon, with a penchant for far-out techno-utopian fantasies. Not someone I want to help get any richer.

The third board member of Facebook is Jim Breyer. He is a partner in the venture capital firm Accel Partners, who put $12.7m into Facebook in April 2005. On the board of such US giants as Wal-Mart and Marvel Entertainment, he is also a former chairman of the National Venture Capital Association (NVCA). Now these are the people who are really making things happen in America, because they invest in the new young talent, the Zuckerbergs and the like. Facebook’s most recent round of funding was led by a company called Greylock Venture Capital, who put in the sum of $27.5m. One of Greylock’s senior partners is called Howard Cox, another former chairman of the NVCA, who is also on the board of In-Q-Tel. What’s In-Q-Tel? Well, believe it or not (and check out their website), this is the venture-capital wing of the CIA. After 9/11, the US intelligence community became so excited by the possibilities of new technology and the innovations being made in the private sector, that in 1999 they set up their own venture capital fund, In-Q-Tel, which “identifies and partners with companies developing cutting-edge technologies to help deliver these solutions to the Central Intelligence Agency and the broader US Intelligence Community (IC) to further their missions”.

The US defence department and the CIA love technology because it makes spying easier. “We need to find new ways to deter new adversaries,” defence secretary Donald Rumsfeld said in 2003. “We need to make the leap into the information age, which is the critical foundation of our transformation efforts.” In-Q-Tel’s first chairman was Gilman Louie, who served on the board of the NVCA with Breyer. Another key figure in the In-Q-Tel team is Anita K Jones, former director of defence research and engineering for the US department of defence, and - with Breyer - board member of BBN Technologies. When she left the US department of defence, Senator Chuck Robb paid her the following tribute: “She brought the technology and operational military communities together to design detailed plans to sustain US dominance on the battlefield into the next century.”

Now even if you don’t buy the idea that Facebook is some kind of extension of the American imperialist programme crossed with a massive information-gathering tool, there is no way of denying that as a business, it is pure mega-genius. Some net nerds have suggsted that its $15bn valuation is excessive, but I would argue that if anything that is too modest. Its scale really is dizzying, and the potential for growth is virtually limitless. “We want everyone to be able to use Facebook,” says the impersonal voice of Big Brother on the website. I’ll bet they do. It is Facebook’s enormous potential that led Microsoft to buy 1.6% for $240m. A recent rumour says that Asian investor Lee Ka-Shing, said to be the ninth richest man in the world, has bought 0.4% of Facebook for $60m.

The creators of the site need do very little bar fiddle with the programme. In the main, they simply sit back and watch as millions of Facebook addicts voluntarily upload their ID details, photographs and lists of their favourite consumer objects. Once in receipt of this vast database of human beings, Facebook then simply has to sell the information back to advertisers, or, as Zuckerberg puts it in a recent blog post, “to try to help people share information with their friends about things they do on the web”. And indeed, this is precisely what’s happening. On November 6 last year, Facebook announced that 12 global brands had climbed on board. They included Coca-Cola, Blockbuster, Verizon, Sony Pictures and Condé Nast. All trained in marketing bullshit of the highest order, their representatives made excited comments along the following lines:

“With Facebook Ads, our brands can become a part of the way users communicate and interact on Facebook,” said Carol Kruse, vice president, global interactive marketing, the Coca-Cola Company.

“We view this as an innovative way to cultivate relationships with millions of Facebook users by enabling them to interact with Blockbuster in convenient, relevant and entertaining ways,” said Jim Keyes, Blockbuster chairman and CEO. “This is beyond creating advertising impressions. This is about Blockbuster participating in the community of the consumer so that, in return, consumers feel motivated to share the benefits of our brand with their friends.”

“Share” is Facebookspeak for “advertise”. Sign up to Facebook and you become a free walking, talking advert for Blockbuster or Coke, extolling the virtues of these brands to your friends. We are seeing the commodification of human relationships, the extraction of capitalistic value from friendships.

Now, by comparision with Facebook, newspapers, for example, begin to look hopelessly outdated as a business model. A newspaper sells advertising space to businesses looking to sell stuff to their readers. But the system is far less sophisticated than Facebook for two reasons. One is that newspapers have to put up with the irksome expense of paying journalists to provide the content. Facebook gets its content for free. The other is that Facebook can target advertising with far greater precision than a newspaper. Admit on Facebook that your favourite film is This Is Spinal Tap, and when a Spinal Tap-esque movie comes out, you can be sure that they’ll be sending ads your way.

Facebook founder Mark Zuckerberg (Photo: Paul Sakuma/AP)

It’s true that Facebook recently got into hot water with its Beacon advertising programme. Users were notified that one of their friends had made a purchase at certain online shops; 46,000 users felt that this level of advertising was intrusive, and signed a petition called “Facebook! Stop invading my privacy!” to say so. Zuckerberg apologised on his company blog. He has written that they have now changed the system from “opt-out” to “opt-in”. But I suspect that this little rebellion about being so ruthlessly commodified will soon be forgotten: after all, there was a national outcry by the civil liberties movement when the idea of a police force was mooted in the UK in the mid 19th century.

Futhermore, have you Facebook users ever actually read the privacy policy? It tells you that you don’t have much privacy. Facebook pretends to be about freedom, but isn’t it really more like an ideologically motivated virtual totalitarian regime with a population that will very soon exceed the UK’s? Thiel and the rest have created their own country, a country of consumers.

Now, you may, like Thiel and the other new masters of the cyberverse, find this social experiment tremendously exciting. Here at last is the Enlightenment state longed for since the Puritans of the 17th century sailed away to North America, a world where everyone is free to express themselves as they please, according to who is watching. National boundaries are a thing of the past and everyone cavorts together in freewheeling virtual space. Nature has been conquered through man’s boundless ingenuity. Yes, and you may decide to send genius investor Thiel all your money, and certainly you’ll be waiting impatiently for the public flotation of the unstoppable Facebook.

Or you might reflect that you don’t really want to be part of this heavily-funded programme to create an arid global virtual republic, where your own self and your relationships with your friends are converted into commodites on sale to giant global brands. You may decide that you don’t want to be part of this takeover bid for the world.

For my own part, I am going to retreat from the whole thing, remain as unplugged as possible, and spend the time I save by not going on Facebook doing something useful, such as reading books. Why would I want to waste my time on Facebook when I still haven’t read Keats’ Endymion? And when there are seeds to be sown in my own back yard? I don’t want to retreat from nature, I want to reconnect with it. Damn air-conditioning! And if I want to connect with the people around me, I will revert to an old piece of technology. It’s free, it’s easy and it delivers a uniquely individual experience in sharing information: it’s called talking.

Facebook’s privacy policy

Just for fun, try substituting the words ‘Big Brother’ whenever you read the word ‘Facebook’

1 We will advertise at you

“When you use Facebook, you may set up your personal profile, form relationships, send messages, perform searches and queries, form groups, set up events, add applications, and transmit information through various channels. We collect this information so that we can provide you the service and offer personalised features.”

2 You can’t delete anything

“When you update information, we usually keep a backup copy of the prior version for a reasonable period of time to enable reversion to the prior version of that information.”

3 Anyone can glance at your intimate confessions

“… we cannot and do not guarantee that user content you post on the site will not be viewed by unauthorised persons. We are not responsible for circumvention of any privacy settings or security measures contained on the site. You understand and acknowledge that, even after removal, copies of user content may remain viewable in cached and archived pages or if other users have copied or stored your user content.”

4 Our marketing profile of you will be unbeatable

“Facebook may also collect information about you from other sources, such as newspapers, blogs, instant messaging services, and other users of the Facebook service through the operation of the service (eg, photo tags) in order to provide you with more useful information and a more personalised experience.”

5 Opting out doesn’t mean opting out

“Facebook reserves the right to send you notices about your account even if you opt out of all voluntary email notifications.”

6 The CIA may look at the stuff when they feel like it

“By using Facebook, you are consenting to have your personal data transferred to and processed in the United States … We may be required to disclose user information pursuant to lawful requests, such as subpoenas or court orders, or in compliance with applicable laws. We do not reveal information until we have a good faith belief that an information request by law enforcement or private litigants meets applicable legal standards. Additionally, we may share account or other information when we believe it is necessary to comply with law, to protect our interests or property, to prevent fraud or other illegal activity perpetrated through the Facebook service or using the Facebook name, or to prevent imminent bodily harm. This may include sharing information with other companies, lawyers, agents or government agencies.”

Eerie coincidence or coded Wall Street tribute?

Aaron Dykes
Infowars
September 12, 2009

FDR famously said, “In politics, nothing happens by accident. If it happens, you can bet it was planned that way.”

Whether or not that mantra extends to business, everyday life or the ‘free’ market is up for debate, and perhaps subject to one’s personal convictions.

At any rate, the stock market, at the center of today’s economic crisis, closed on the eighth anniversary of 9/11 at nearly the exact same level the Dow Jones industrial average was at the day of that tragedy. Was this an eerie coincidence or some kind of coded Wall Street tribute?

As the AP, Forbes and others reported, Friday’s market closed within a tenth of a point of the closing figure on September 10, 2001:

“The Dow Jones industrial average is down 22 at 9,605.41. That is nearly identical to the Dow’s finish of 9,605.51 eight years ago, the day before the Sept. 11, 2001 terror attacks.”

[efoods]As CNN Money points out, the market never opened on 9/11, or for the next four trading days, so that figure was technically in place on that fateful and tragic day:

“Financial markets never opened on Sept. 11, 2001, and remained closed for the next four trading sessions. When stocks began trading again on Sept. 17, the results were predictably gloomy. The Dow Jones industrial average plunged 684.71 points, its biggest one-day point loss in history.”

It may also be interesting to note that the one year anniversary of Lehman Brother’s collapse, signpost of the financial meltdown, also occurs this weekend.

Not being one for cosmic coincidences or Jungian synchronicities, I’d sooner hedge my bets on backroom, manmade manipulation (though I could hardly say for sure).

After all, this kind of thing is possible: With the arrest of Sergei Aleynikov came the revelations that Goldman Sachs possessed software whose complex algorithm is capable of massive, real time market manipulation. As The Agonist reported:

“A case of financial espionage raises questions about Wall Street’s proprietary trading practices and exactly what role they play in the market. The perpetrator of the espionage, Sergei Aleynikov, is a former computer programmer and equity specialist at Goldman Sachs. He is alleged to have downloaded secret software at Goldman that is used to direct large volume, rapid-fire trades to exchanges and commodity markets, often just before the close of regular trading.”

Besides, these kind of eerie coincidences are nothing new.

Two extremely strange and unlikely events occurred right around 9/11’s first anniversary. One day before September 11, 2002, The S&P 500 futures contract closed at 911.00. The very next day, on 9/11/02, defying all odds, the New York lotto drew 9-1-1 as the winning numbers.

“It was bizarre, it was strange, but it wasn’t manufactured,” said Richard Canlione, vice president of institutional financial futures at Salomon Smith Barney, the AP reported about the uncanny S&P closing.

The AP also reported, “The numbers were picked in the standard random fashion using all the same protocols,” said lottery spokeswoman Carolyn Hapeman. “It’s just the way the numbers came up.”

Attribute it to numerology or whatever else you like, but these occurrences are certainly unusual.

A fast-growing FBI data-mining system billed as a tool for hunting terrorists is being used in hacker and domestic criminal investigations, and now contains tens of thousands of records from private corporate databases, including car-rental companies, large hotel chains and at least one national department store, declassified documents obtained by Wired.com show.

Headquartered in Crystal City, Virginia, just outside Washington, the FBI’s National Security Branch Analysis Center (NSAC) maintains a hodgepodge of data sets packed with more than 1.5 billion government and private-sector records about citizens and foreigners, the documents show, bringing the government closer than ever to implementing the “Total Information Awareness” system first dreamed up by the Pentagon in the days following the Sept. 11 attacks.

Such a system, if successful, would correlate data from scores of different sources to automatically identify terrorists and other threats before they could strike. The FBI is seeking to quadruple the known staff of the program.

But the proposal has long been criticized by privacy groups as ineffective and invasive. Critics say the new documents show that the government is proceeding with the plan in private, and without sufficient oversight.

“We have a situation where the government is spending fairly large sums of money to use an unproven technology that has a possibility of false positives that would subject innocent Americans to unnecessary scrutiny and impinge on their freedom,” said Kurt Opsahl, a lawyer with the Electronic Frontier Foundation. “Before the NSAC expands its mission, there must be strict oversight from Congress and the public.”

The FBI declined to comment on the program.

Among the data in its archive, the NSAC houses more than 55,000 entries on customers of the Cendant Hotel chain, now known as Wyndham Worldwide, which includes Ramada Inn, Days Inn, Super 8, Howard Johnson and Hawthorn Suites. The entries are for hotel customers whose names matched those on a long list the FBI provided to the company.

Another 730 records come from the rental car company Avis, which used to be owned by Cendant. Those records were derived from a one-time search of Avis’s database against the State Department’s old terrorist watch list. An additional 165 entries are credit card transaction histories from the Sears department store chain. Like much of the data used by NSAC, the records were likely retained at the conclusion of an investigation, and added to NSAC for future data mining.

It’s unclear how the FBI got the records. In the past, companies have been known to voluntarily hand over customer data to government data-mining experiments — notably, in 2002, JetBlue secretly provided a Pentagon contractor with 5 million passenger itineraries, for which it later apologized.  But the FBI also has  broad authority to demand records under the Patriot Act, using so-called “national security letters” — a kind of self-issued subpoena that’s led to repeated abuses being uncovered by the Justice Department’s inspector general.

Wyndham Worldwide did not respond to repeated requests for comment. Sears declined comment.

Wired.com’s analysis of more than 800 pages of documents obtained under our Freedom of Information Act request show the FBI has been continuously expanding the NSAC system and its goals since 2004. By 2008, NSAC comprised 103 full-time employees and contractors, and the FBI was seeking budget approval for another 71 employees, plus more than $8 million for outside contractors to help analyze its growing pool of private and public data.

A long-term planning document from the same year shows the bureau ultimately wants to expand the center to 439 people.

As described in the documents, the system is both a meta-search engine — querying many data sources at once — and a tool that performs pattern and link analysis. The NSAC is an analytic Swiss army knife.

The FBI used the system to locate a suspected Al Qaeda operative with expertise in biological agents who was hiding out in Houston. And when law enforcement officials got information suggesting members of a Pakistani terrorist group had obtained jobs as Philadelphia taxi drivers, the NSAC was tapped to help the city’s police force run background checks on Philadelphia cabbies.

(A Jordanian-born Philly cab driver was convicted in 2008 for his part in a plot to attack the Fort Dix army base in New Jersey, but there’s no evidence of a connection between the investigations.)

And when the FBI lost track of terrorism suspects swept in the evacuation from Hurricane Katrina in 2005, it created a standing order in the system to flag any activity by the missing targets.

Additionally, the FBI shared NSAC data with the Pentagon’s controversial Counter-Intelligence Field Activity office, a secretive domestic-spying unit which collected data on peace groups, including the Quakers, until it was shut down in 2008. But the FBI told lawmakers it would be careful in its interactions with that group.

Conventional criminal cases have also benefited. In a 2004 case against a telemarketing company called Gecko Communications, NSAC used its batch-searching capability to provide prosecutors with detailed information on 192,000 alleged victims of a credit scam.

The feds suspected that Gecko had promised to help the victims improve their credit scores, and then failed to produce results. NSAC automatically analyzed the victims’ credit records to prove their scores hadn’t improved, a task that took two days instead of the four-and-a-half years that the U.S. Attorney’s Office had expected to sink into the job. In December 2006, the owners and seven office managers at the company were sentenced to prison.

The NSAC was born as two separate systems designed to improve information-sharing between government agencies following the Sept. 11 attacks. The Foreign Terrorist Tracking Task Force database has been used to screen flight-school candidates and assist anti-terror investigations. The Investigative Data Warehouse is the more general system, and is the principal element now under expansion.

“The IDW objective was to create a data warehouse that uses certain data elements to provide a single-access repository for information related to issues beyond counterterrorism to include counterintelligence, criminal and cyber investigations,” stated a formerly secret fiscal year 2008 budget request document.  “These missions will be refined and expanded as these capabilities are folded into the NSAC.”

When the bureau unified the systems under the NSAC banner in 2007, the move set off alarm bells with lawmakers, who thought it sounded a lot like the Pentagon’s widely-criticized Total Information Awareness project, which had sought to identify terrorist sleeper cells by linking up and searching through U.S. credit card, health and communication databases. The TIA program had moved into the shadows of the intelligence world after Congress voted to revoke most of its funding.

In 2007, Republican congressman James Sensenbrenner asked the Government Accountability Office to look into the NSAC. No report has been made public yet. But the documents obtained by Wired.com show that the FBI has repeatedly downplayed the databases’s capabilities when addressing critics in Congress, while simultaneously talking up — in budget documents — the system’s power to spit out the names of newly suspicious persons.

The FBI deflected criticism from a House committee on June 29, 2007, by pointing out a major difference between the NSAC and the shuttered TIA program: The NSAC, the bureau said, is not as open-ended. “A mission is usually begun with a list of names or personal identifiers that have arisen during a threat assessment, preliminary or full investigation,” the unsigned response read. “Those people under investigation are then assessed to determine if they have any association with terrorism or foreign espionage.”

But a formerly secret 2008 funding justification document among the newly released documents suggests the FBI’s pre-crime intentions are much wider that the bureau acknowledged.

The NSAC will also pursue “pattern analysis” as part of its service to the [National Security Branch]. Pattern analysis queries take a predictive model or pattern of behavior and search for that pattern in data sets. The FBI’s efforts to define predictive models … should improve efforts to identify “sleeper cells.”

As an example, the FBI said its sophisticated data queries allowed it to identify 165 licensed helicopter pilots who came from countries of interest, and found that six of those had “derogatory” information about them in the NSAC computers. It sent the leads to FBI field agents in Los Angeles.

The FBI also has ambitious plans to expand its data set, the budget request shows. Among the items on its wish list is the database of the Airlines Reporting Corporation — a company that runs a backend system for travel agencies and airlines. A complete database would include billions of American’s itineraries, including all the information found on the front of a ticket and their method of a payment.*

So far, the company has given the FBI nearly 17,000 records, which are now part of NSAC.  Spokesman Allan Mutén said the company gives the FBI records only when presented with a subpoena or a national security letter — which, he adds, has happened quite a bit. “Nine-eleven was a time and event that piqued the interest of the authorities in airline passenger data,” Mutén said.

The ever-growing size of the database concerns EFF’s Opsahl, who has pieced together the best picture of the FBI’s data mining system through other government FOIA requests.

Opsahl cites a October 2008 National Research Council paper that concluded that data mining is a dangerous and ineffective way to identify potential terrorists, which will inevitably generate false positives that subject innocent citizens to invasive scrutiny by their government.

At the same time, Opsahl admits the NSAC is not at the moment the Orwellian system that TIA would have been.

“This is too massive to be based on a particular query, but too narrow to reflect a policy that they are going to out and collect this kind of data systematically,” Opsahl said.

That could change if the FBI gets it hands on the data sources on its 2008 wish list. That list includes airline manifests sent to the Department of Homeland Security, the national Social Security number database, and the Postal Service’s change-of-address database. There are also 24 additional databases the FBI is seeking, but those names were blacked out in the released data.

Graphic: Wired.com/Dennis Crothers

* Correction: This story reported that ARC’s database included information such as date of birth, credit card numbers, names of friends and family, e-mail addresses, meal preferences and health information. ARC does not have access to the data, which lives in the Passenger Name Record, which is handled by other entities. ARC only has the data that appears on an airline ticket, and payment method, in order to facilitate payment. Wired.com regrets the error.

By Bart Funnekotter

The late prince Bernhard of the Netherlands, husband of former queen Juliana, was party to an attempted coup against the government of the young Indonesian republic in 1950, a book published this Monday asserts.

The Dutch writers, historian Harry Veenendaal and journalist Jort Kelder, base their conclusions on evidence that has been available to other researchers: archived diaries of a court secretary and military police reports describing the attempted coup d’état which mention the prince’s name in relation to the coup.

Prince Bernhard, the father of the reigning queen Beatrix, has always been a source of controversy. In 1976, after being accused of accepting bribes from the American aeroplane manufacturer Lockheed, he was stripped of his military titles. He also fathered two children with women other than his wife during their marriage.

The charges now levelled at Bernhard are the latest in a string of more and less substantiated claims concerning his supposedly unprincely conduct. By 1950, Indonesia had gained its independence from Dutch rule and normalised relations with its former colonial power. That a rag-tag crew of former Dutch and Moluccan soldiers nevertheless tried to oust the leadership of the young republic in a failed coup attempt on the Indonesian island of Java is a given. But whether the prince was involved remains open to debate.

While Kelder and Veenendaal claim the matter has been subject of a cover-up conducted by the royal family, historian Cees Fasseur came to very different conclusions drawing on mostly the same evidence. Fasseur published a biography of prince Bernhard and queen Juliana last year. According to Fasseur “There is no evidence implying the prince was complicit” in the attempted coup. Veenendaal in turn has accused his colleague of behaving as if he were “prince’ Bernhard’s lawyer,” and his conclusions “ridiculous”.

Global elite spoke of agenda to create Euro nearly 40 years before it was first codified in the 1992 Maastricht Treaty

Paul Joseph Watson
Friday, May 8, 2009

Leaked documents from the 1955 Bilderberg Group conference held in Germany discuss the agenda to create a European Union and a single EU currency, decades before they were introduced, disproving once again debunkers who claim that Bilderberg has no influence over world events.

Leaked papers from the meeting which took place from September 23-25 1955 at the Grand Hotel Sonnenbichl in Garmisch-Partenkirchen, West Germany, were released by the Wikileaks website yesterday.

The full document can be read here (the password is ‘dynbase’).

As we first reported in 2003, a BBC investigative team were allowed to access Bilderberg files which confirmed that the EU and the Euro were the brainchild of Bilderberg. They were probably reading from the same documents that were released by Wikileaks.

It was only last month that Belgian viscount and current Bilderberg-chairman Étienne Davignon bragged that Bilderberg helped create the Euro by first introducing the policy agenda for a single currency in the early 1990’s.

However, the documents show that the agenda to create a European common market and a single currency go back decades earlier.

The summary report of the 1955 meeting talks of the “Pressing need to bring the German people, together with the other peoples of Europe, into a common market.”

The document also outlines the plan, “To arrive in the shortest possible time at the highest degree of integration, beginning with a common European market.”

Just two years later, in 1957, the first incarnation of the European Economic Community (EEC) was born, which comprised of a single market between Belgium, France, Germany, Italy, Luxembourg and the Netherlands. The EEC gradually enlarged over the next few decades until it became the European Community, one of the three pillars of the European Union, which was officially created in 1993.

The 1955 Bilderberg summary outlines a consensus that, “It might be better to proceed through the development of a common market by treaty rather than by the creation of new high authorities.” The EEC was duly created via the Treaty of Rome, which was signed on 25 March 1957.

The same process is still being followed to this day with the Lisbon Treaty, which hands over vast swathes of national sovereignty to the EU by means of the consent of Presidents and Prime Ministers of European countries, rather than by the arbitrary creation of new authorities, a method that would more obviously lay bare the fact that the creation of a federal EU superstate is totalitarian by its very nature.

Even so, debunkers will probably still try and claim that the idea of a common European market was floating around in the early 1950’s and that Bilderberg were merely debating contemporary political ideas.

However, the same cannot be said for the single European currency, which wasn’t even introduced in the form of notes and coins until January 2002, having been first codified in the 1992 Maastricht Treaty. The documents prove that Bilderberg members were pushing for its introduction nearly 40 years earlier.

“A European speaker expressed concern about the need to achieve a common currency, and indicated that in his view this necessarily implied the creation of a central political authority,” states the summary document.

True to form, the single European currency, the Euro, was not introduced until after the creation of a central political authority – the EU itself.

The document also stresses, “The necessity to bring the German people into a common European market as quickly as possible,” adding that the future was in danger without a “United Europe”.

We also learn that, “A United States participant confirmed that the United States had not weakened in its enthusiastic support for the idea of integration, although there was considerable diffidence in America as to how this enthusiasm should be manifested. Another United States participant urged his European friends to go ahead with the unification of Europe with less emphasis on ideological considerations and, above all, to be practical and work fast.”

Despite the plethora of manifestly provable examples of where Bilderberg’s agenda has later played out in actual policies and geopolitical developments on the world stage, establishment media debunkers still scoff and sneer at independent researchers who dare claim that 150 of the world’s most influential powerbrokers meeting in secret to discuss the future of the planet might equate to something more than an informal talking shop, calling such assertions “conspiracy theories”.

Indeed, the sheer stupidity of debunkers to suggest that an event that attracts the titans of government, industry, banking, business and academia, at which the most pressing global issues of the day are vigorously discussed under the cloak of a mutually agreed media blackout, has no bearing on future world events, is the most laughable “conspiracy theory” ever uttered.

Bilderberg’s 2009 agenda has already been leaked before their May 14-17 meeting in Vouliagmeni, Greece. According to investigative journalist Daniel Estulin, one of Bilderberg’s aims is to smear anti-Lisbon Treaty activists and politicians by planting derogatory stories in the media, enabling them to silence opposition to an EU federal superstate that Bilderberg has been carefully cultivating since their very first meetings in the 1950’s – a fact, not a conspiracy theory, proven by Bilderberg’s own internal documents.

By Philip Dru

The biggest decision of the economic recovery will be made in the next six months, and Barack Obama will have almost nothing to do with it.

Forget the debate over TARP, and never mind the questions about a second stimulus. This decision is about when to pull out $1 trillion that’s propping up the U.S. banking system. And it will be Federal Reserve Chairman Ben Bernanke and his Fed colleagues who make the call.

That’s hard enough for a White House that knows its political fortunes rise and fall with the economy.

What’s worse is that Bernanke and Obama – like many presidents and Fed chairmen past – won’t necessarily have the same goals for this trillion-dollar decision.

Fed chiefs worry about inflation. Bernanke wants to take the money out quickly enough to prevent the economy from overheating and causing a jump in prices that strangles growth. But move too fast, and the economic recovery runs out of fuel.

Presidents worry about jobs. Obama probably wouldn’t mind a little overheating, say, next summer – when voters are starting to make up their minds about the 2010 congressional elections, and he hopes the economy can shake the 10-percent unemployment rate doldrums.

“Any chairman of the Fed will do what’s right for the country, not what’s right for the administration,” said Ernest Patrikis, a partner at the law firm White & Case who spent 30 years at the New York Fed. “That’s his job – that’s why he’s apolitical.”

“The exit will be so difficult,” said economist Joseph Brusuelas of Moody’s Economy.com. “Bernanke wants to engineer a recovery that does not include inflation. Obama wants a more robust recovery and like many political actors may be willing to forgo a little inflation for a little more employment.”

The White House is already worried that jobs won’t be coming back fast enough next year, Fed or no Fed.

Obama economic adviser Christina Romer warned a congressional panel Thursday that the jobs picture will remain “painfully weak” through 2010, with a seriously elevated unemployment rate for another year.

So all the White House can do is watch and wait, and hope it doesn’t pay a political price for any missteps by Fed officials they can’t control.

“It’s a dicey thing to do, and they know it,” said Sen. Richard Shelby (R-Ala.), the ranking member on the Senate Banking Committee. “They have to be careful.”

The Fed’s moves are shrouded in secrecy, their prerogative to move the levers of the economy closely guarded – so much so that there’s been a recent a rise in populist anger about this all-powerful agency that exists largely outside the democratic process.

But because the Fed is an independent agency, it’s even considered bad form for a president to talk much about it – and indeed, the White House refused to comment for this story.

Last fall, the Fed injected $ 1 trillion-plus into the nation’s banking system – at times, by providing financial institutions with cash to cover their losses as the global meltdown spread. Now Fed officials are already talking about the need to withdraw the funds injected into the economy during the darkest days of the crisis, moves that are credited with largely saving the United States from plummeting into an economic depression.

“Given the highly unusual economic and financial circumstances, judging when the time is appropriate to remove policy accommodation, and then calibrating that removal, will be challenging,” said Federal Reserve Vice Chairman Donald Kohn in a speech to the Cato Institute on Sept. 30. “Still, we need to be ready to take the necessary actions when the time comes, and we will be.”

Translation: “policy accommodation” is the cash, and “the necessary actions” are the decision to ease it out of the economy.”

And is the Fed prepared to the pull the trigger? “We will be” seems to cover it.

Already, the Fed is already showing some signs of restlessness. On Monday, the New York Fed tested its “reverse-repo” process — one tool the Fed could use to use to pull the money out when the time comes. The test run was widely interpreted as a sign the Fed is getting ready to act – but when, nobody knows.

The Fed can also tap on the brakes at the first sign of inflation by raising interest rates, now near zero. The Fed has said it will keep the rock-bottom rates for an extended period, but it won’t be more specific when they could go up – a decision that is bound to be controversial when it comes.

Patrikis thinks the Fed will make a decision on withdrawing liquidity either during the second quarter of 2010, or after the November elections that year – but that it won’t make any dramatic moves in the run-up to Election Day.

Still, he said, it is too early to predict what the Fed might do. And Patrikis points out that Obama will have indirect input into the decision, because there are two vacancies on the Fed’s board now that Obama will fill in the coming months. The president will surely select board members whose economic judgment he trusts.

Between the two vacancies, a member who Obama appointed earlier this year and Bernanke himself, the president will likely have named four of the seven members of the Fed’s Board of Governors by the time they make the call.

But the Fed knows actions like that can have political consequences. “There are few politicians who like higher interest rates,” said one former Fed official. “And President Obama is a politician.” That said, the official continued, “I suspect they will be broadly on the same page.”

That’s because Obama, too, has a longer-term time frame in mind: 2012, when he will be running for reelection. It’s in Obama’s interest for the Fed to take inflation prevention measures now so that he doesn’t have to run a tricky reelection campaign in a high-inflation environment.

Tensions between Presidents and Fed chairmen are nothing new.

In the 1980s, Fed Chairman Paul Volcker declared war on inflation. His strategy: raising interest rates. Volcker jacked the Fed funds rate to 20 percent, which contributed to the deep early 1980s recession that caused howls of protest from the White House and incumbent Republicans on Capitol Hill. The Fed, grumbled then-Senate Majority Leader Howard Baker (R-Tenn.), should “get its boot off the neck of the economy.”

Nonetheless, Volcker’s strategy worked, and the Fed broke the back of the inflation cycle. Ironically, Volcker is a top economic adviser to Obama today.

In the 1990s, President George H.W. Bush blamed Fed Chairman Alan Greenspan for his election loss to Bill Clinton. Bush didn’t believe Greenspan was lowering interest rates fast enough to pull the nation out of a recession – which gave Clinton, with his famous “it’s the economy, stupid” campaign, an opening to trounce the elder Bush.

Mark Gertler, a professor of economics at New York University, says the lesson of history is that politicians should not interfere with the central bank. “If the Fed doesn’t act independently, the economy is endangered,” said Gertler. “It would be dangerous if the administration appeared to be interfering with the Fed.”

Financial Services Committee Chairman Barney Frank (D-Mass.) doubts they’ll be any daylight between Obama and Bernanke – who Obama just reappointed over the summer at a time when Wall Street needed a signal that there would be continuity at the Fed.

He argues that Bernanke and Obama will have the same agenda in 2010: fixing the economy.

“I think they are very much in sync,” said Frank. Asked about potential divergence between the Fed and the White House, he said, “That reflects a journalist’s hope that there will be friction. Obama and Bernanke have both argued that at some point they’re going to unwind this.”

Three Polish doctors and six nurses are facing criminal prosecution after a number of homeless people died following medical trials for a vaccine to the H5N1 bird-flu virus.

By Matthew Day in Warsaw

Published: 4:37PM BST 02 Jul 2008

The medical staff, from the northern town of Grudziadz, are being investigated over medical trials on as many as 350 homeless and poor people last year, which prosecutors say involved an untried vaccine to the highly-contagious virus.

Authorities claim that the alleged victims received £1-2 to be tested with what they thought was a conventional flu vaccine but, according to investigators, was actually an anti bird-flu drug.

The director of a Grudziadz homeless centre, Mieczyslaw Waclawski, told a Polish newspaper that last year, 21 people from his centre died, a figure well above the average of about eight.

Although authorities have yet to prove a direct link between the deaths and the activities of the medical staff, Poland’s health minister, Ewa Kopacz, has said that the doctors and nurses involved should not return to their profession.

“It is in the interests of all doctors that those who are responsible for this are punished,” the minister added.

Investigators are also probing the possibility that the medical staff may have also have deceived the pharmaceutical companies that commissioned the trials.

The suspects said that the all those involved knew that the trial involved an anti-H5N1 drug and willingly participated.

The news of the investigation will come as another blow to the reputation of Poland’s beleaguered and poverty-stricken national health service. In 2002, a number of ambulance medics were found guilty of killing their patients for commissions from funeral companies

By Hadley Leggett

Although plastic has long been considered indestructible, some scientists say toxic chemicals from decomposing plastics may be leaching into the sea and harming marine ecosystems.

Contrary to the commonly held belief that plastic takes 500 to 1,000 years to decompose, researchers now report that some types of plastic begin to break down in the ocean within one year, releasing potentially toxic bisphenol A (BPA) and other chemicals into the water.

“Plastics in daily use are generally assumed to be quite stable,” chemist Katsuhiko Saido of Nihon University in Japan said in a press release. “We found that plastic in the ocean actually decomposes as it is exposed to the rain and sun and other environmental conditions, giving rise to yet another source of global contamination that will continue into the future.” Saido presented the work Wednesday at the American Chemical Society meeting in Washington, D.C.

Several noxious plastic byproducts, including BPA and a substance called styrene trimer, have been detected in small quantities in the ocean, but Saido says this is the first time anyone has shown a direct connection between decomposing plastic and the hazardous chemicals. Both BPA and components of styrene trimer have been shown to disrupt hormone function and cause reproductive problems in animals.

The Japanese researchers devised a method to simulate the breakdown of a hard plastic called polystyrene at 30 degrees Celsius (86 degrees Fahrenheit) in the lab, and they compared the chemical byproducts from their experiment with what they found in water and sand from the Pacific Ocean. Based on the speed of plastic decomposition and the amount of drift plastic found along the coasts of Japan, the scientists concluded that noxious chemicals in the water are probably coming from the breakdown of polystyrene, which is used to make Styrofoam.

But not all researchers are convinced the lab experiment accurately reflects what’s going on in the ocean. “Polystyrene is actually heavier than seawater, so before it ever chemically breaks down or degrades, it may be sinking to the bottom,” said ocean researcher Charles Moore of the Algalita Marine Research Foundation, who was not involved in the study. Because temperatures are much lower at the bottom of the ocean and there’s very little light to cause photodegredation, Moore said it’s unlikely that the plastic would break down once it sunk.

“Food doesn’t even biodegrade at the bottom of the ocean,” he said. “There is so little activity going on down there.” In addition, Moore said ocean temperatures across most of the world are much lower than the 30 degrees Celsius the researchers used in their lab simulation.

Even if polystyrene breaks down in some regions of the ocean, pollution expert Joel Baker of the University of Washington questions whether the amount of chemicals released would be significant compared to the vast size of the ocean itself. “There’s a little bit of hyperbole going on here,” Baker said. “There’s no question that there’s too much plastic in the ocean, and we should try to reduce that. But whether it’s an important source of chemicals for the ocean is much less clear.”

But regardless of whether its chemicals leach into the water, the sheer volume of plastic floating in the sea makes it a major polluter, Moore said. Discarded plastic junk makes its way from gutters and storm drains into rivers and streams, and eventually flows into the ocean, where it gets trapped by currents and creates vast regions of plastic soup. On a voyage back from Hawaii in 1997, Moore discovered a floating island of garbage larger than the state of Texas, which has since been dubbed “The Great Garbage Patch.”

Plastic poses the biggest threat to marine animals that confuse garbage with dinner and end up digesting large quantities of polystyrene. Even if polystyrene isn’t decomposing in the water, Moore said it could be breaking down in the digestive tracts of fish and marine mammals. “Every size of organism,” he said, “every creature in the food web in the ocean, from the smallest filter feeders to the largest whales, is consuming plastic.”

Wayne Madsen, Online Journal
September 11, 2009

A source with close ties to the highest echelons of the Defense Intelligence Agency (DIA) told WMR that personnel who worked for the DIA on the classified counter-terrorism data mining operation known as Able Danger were aware of the planned attacks on the World Trade Center, the Pentagon, and other major facilities in Washington, DC, on 9/11 but their information was permitted, on purpose, to languish in the intelligence and law enforcement bureaucracies without any proactive measures being taken.

Able Danger began during the Clinton administration but was sidelined by order to DIA from the Bush White House, the FBI, and the CIA.

In fact, Able Danger personnel were able to pinpoint the planned time and date of the terrorist attacks on New York and Washington and that some journalists working for ABC News were aware of the information from DIA sources but failed to report on the story. In 2006, a year after the Able Danger details first came to public light, ABC aired a docudrama called “Path to 9/11,” which echoed the 9/11 Commission Report’s shallow findings and absolved the Bush administration of any intelligence bungling in failing to prevent the attacks. President Obama’s Middle East special envoy, George Mitchell, served as the chairman of ABC’s parent corporation, Disney, at the time of the docudrama’s airing in September 2005.

On October 3, 2002, PBS’s “Frontline” series ran a program titled “The Man Whio Knew.” The program concentrated on the FBI’s top counter-terrorism special agent, John O’Neill, who was hamstrung in his investigation of “Al Qaeda” and was eventually forced to retire from the FBI. O’Neill was only a few days on the job as the head of security for the World Trade Center when he told New York ABC News producer Chris Isham, “I’m head of security at the World Trade Center.” Isham said in the PBS interview, “And I joked with him and said, ‘Well, that will be an easy job. They’re not going to bomb that place again.’ And he said, ‘Well actually — he immediately came back and he said, ‘actually they’ve always wanted to finish that job. I think they’re going to try again.’”

On the night before 9/11, O’Neill told some of his friends over drinks, “We’re due for something big.” The next morning, O’Neill died in the World Trade Center collapse.

ABC News reporter John Miller, who had an interview with Osama Bin Laden in May 1998 in Afghanistan, was also close to O’Neill. Miller eventually became an assistant director of the FBI. Miller covered the 9/11 role of the Israeli Urban Moving Systems “movers,” all of whom reported to Mossad agent Dominic Suter, for ABC News 20/20 program. The “movers,” some of whom showed up in a joint CIA/FBI database of known Mossad agents, were allowed to return to Israel after being arrested and jailed by the FBI for taking pictures of the World Trade Center from Liberty State Park in Jersey City and from a parking garage tier in Union City, both in New Jersey, before the first plane hit the North Tower. Suter was also permitted to flee abroad after being interviewed by FBI agents and told to stick around for follow-on interviews. Miller’s investigation for ABC News concluded the Israelis had nothing to do with the attacks, which was cheerfully echoed by anchorwoman Barbara Walters.

WMR also learned from the DIA source that links between lead hijacker Mohammed Atta and some of his hijacking team members, on one hand, and CIA and Israeli intelligence assets and agents, on the other, were also discovered by the Able Danger operation in 2000.

Able Danger began to suffer pressure from the Clinton administration in 2000 and, according to Army Major Eric Kleinsmith, LIWA’s intelligence head, during May and June of 2000 some 2.5 terabytes of data, equivalent to all the holdings in the Library of Congress, collected on the “al Qaeda” cell was ordered destroyed by the general counsel for the U.S. Army Intelligence and Security Command. U.S. Army Lt. Col. Anthony Shaffer, the DIA’s liaison to the Able Danger effort at the U.S. Army’s Land Information Warfare Activity (LIWA) at Fort Belvoir, Virginia, was later retaliated against when he publicly stated that Able Danger was completely terminated by the Bush administration some four months before the 9/11 attacks.

Another highly classified DIA program that was monitoring “Al Qaeda” operatives and was shut down in the months prior to 9/11 was code-named Dorhawk Galley. Dorhawk Galley may have involved surveillance of U.S. and Israeli intelligence operatives who were coordinating their efforts with the lead hijackers and their cells in the United States and abroad.

Shaffer’s job, as the head of the DIA’s Stratus Ivy program, was to provide Able Danger with top secret, code word intelligence derived from DIA’s Integrated Database (IDB) on intelligence from foreign military organizations around the world and the National Security Agency’s signals intelligence (SIGINT) and geo-spatial databases, including Anchory, Oilstock, and Texta.

In an August 12, 2005 press statement, then-Representative Curt Weldon (R-PA) wrote, “Able Danger was about linkages and associations of individuals identified with direct links to Al-Qaeda and not about dates and times. To clarify, Able Danger was a Department of Defense planning effort, tasked to Special Operations Command (SOCOM) by the Chairman of the Joint Chiefs of Staff (JCS). The task assigned to Able Danger was to identify and target Al-Qaeda on a global basis and, through the use of cutting edge technology (data-mining, massive parallel processing, neural networking and human factors analysis) and enhanced visualization and display tools, present options for leaders (national command authority) to manipulate, degrade or destroy the global Al-Qaeda infrastructure.

“The 9/11 Commission has released multiple statements over the past week, each of which has significantly changed — from initially denying ever being briefed to acknowledging being briefed on both operation Able Danger and Mohammed Atta. The information was omitted primarily because they found it to be suspect despite having been briefed on it two times by two different military officers on active duty. Additionally, the 9/11 Commission also received documents from the Department of Defense on Able Danger. Despite their varied statements, two critical questions remain unanswered.

“1) Why did the Department of Defense fail to pass critical information obtained through Able Danger to the FBI between the summer and fall of 2000?

“2) Why did the 9/11 Commission staff fail to properly follow-up on the three separate occasions when they received information on Able Danger and Mohammed Atta?

“I will continue to push for a full accounting of the historical record so that we may preclude these types of failures from happening again.”

A relatively obscure news report by Emrah Ulker from New York in the Bulgarian Turkish newspaper Sofia Zaman on August 22, 2005, stated that “Lt. Col. Anthony Shaffer, military intelligence officer from the ‘Able Danger’ unit, claimed that in mid 2000 his unit had uncovered information about Mohammad Atta and three other terrorists who took part in the 9/11 attacks in the United States. Shaffer reportedly said that the unit he worked for wanted to share the information with the FBI but all three scheduled meetings with FBI agents were cancelled by Pentagon lawyers. According to the report, Shaffer believed ‘the military lawyers cancelled the meetings because they were concerned the Pentagon might face allegations of collecting data by illegal means.’ Shaffer also reportedly said that he disclosed this information to the 9/11 Commission ‘but it was not taken seriously enough.’”

In August 2005, the Pentagon, in an official statement, said that Able Danger had no information identifying Mohammed Atta or any other of the accused hijackers as “Al Qaeda” cell members prior to the 9/11 attacks. The DIA then moved to deny Shaffer access to classified information and deny him his security clearance.

On February 16, 2006, at a joint hearing of the House Armed Service subcommittees on Strategic Forces and Terrorism, Unconventional Threats, and Capabilities, Weldon stated, “We just heard the witnesses state that they destroyed 99 percent of the data, yet we now understand there are libraries of data against which runs were just held as recently as six months ago. The data runs that I’m talking about which were done by a professional employee were done within the last two months and they were done on data that was collected prior to 9/11 but after the attack on the Cole. And in that data set, the name Atta, prior to 9/11, came up over 800 times. The name Mohamed Atta with an O came up five times. The name Muhamed Atta with a U came up three times. The name Mohamed Atif (ph) came up five times.” Weldon added that Able Danger had identified five “Al Qaeda” “hot spots” — Malaysia, Mauritania, Hamburg, Germany, New York [including Brooklyn] and Aden, Yemen — prior to 9/11.

At the same hearing, Representative Cynthia McKinney asked Stephen Cambone, the Undersecretary of Defense for Intelligence, “does Able Danger have anything to do with Larry Franklin or the passing of classified information to foreign nationals?” Cambone, answering the question about Franklin, who was convicted of passing classified information to two American Israel Public Affairs Committee (AIPAC) employees and the chief Mossad agent at the Israeli embassy in Washington, responded with a contradictory answer, “I don’t know. I don’t know. It doesn’t have anything to do with Mr. Franklin’s case.”

Although the Pentagon downplayed the effectiveness of Able Danger, Weldon told UPI in 2000 that the program was effective enough to discover a businessman in Vienna who had close business links to Serbian President Slobodan Milosevic during the Kosovo war.

The DIA source, who was present in the Pentagon on the morning of 9/11, said that senior officials in the Donald Rumsfeld Pentagon were well aware of the planned attack on the building but made no effort to evacuate it beforehand.

After 9/11, the Bush administration moved to conduct exactly the type of deep data mining operations conducted by Able Danger prior to the attacks. The controversial program, known as the Terrorist Surveillance Program by the Justice Department and Stellar Wind by the National Security Agency (NSA), conducted wireless surveillance of phone calls, faxes, and e-mails of millions of Americans, without the issue of privacy ever raised by senior White House officials as they had apparently done with Able Danger prior to 9/11.

There were also reports that after scuttling Able Danger in the months prior to 9/11, the Pentagon moved to restore the same program under the code name Able Providence under Director of National Intelligence John Negroponte.

By JOHN MARKOFF and DAVID BARBOZA

Published: February 18, 2010

SAN FRANCISCO — A series of online attacks on Google and dozens of other American corporations have been traced to computers at two educational institutions in China, including one with close ties to the Chinese military, say people involved in the investigation.

They also said the attacks, aimed at stealing trade secrets and computer codes and capturing e-mail of Chinese human rights activists, may have begun as early as April, months earlier than previously believed. Google announced on Jan. 12 that it and other companies had been subjected to sophisticated attacks that probably came from China.

Computer security experts, including investigators from the National Security Agency, have been working since then to pinpoint the source of the attacks. Until recently, the trail had led only to servers in Taiwan.

If supported by further investigation, the findings raise as many questions as they answer, including the possibility that some of the attacks came from China but not necessarily from the Chinese government, or even from Chinese sources.

Tracing the attacks further back, to an elite Chinese university and a vocational school, is a breakthrough in a difficult task. Evidence acquired by a United States military contractor that faced the same attacks as Google has even led investigators to suspect a link to a specific computer science class, taught by a Ukrainian professor at the vocational school.

The revelations were shared by the contractor at a meeting of computer security specialists.

The Chinese schools involved are Shanghai Jiaotong University and the Lanxiang Vocational School, according to several people with knowledge of the investigation who asked for anonymity because they were not authorized to discuss the inquiry.

Jiaotong has one of China’s top computer science programs. Just a few weeks ago its students won an international computer programming competition sponsored by I.B.M. — the “Battle of the Brains” — beating out Stanford and other top-flight universities.

Lanxiang, in east China’s Shandong Province, is a huge vocational school that was established with military support and trains some computer scientists for the military. The school’s computer network is operated by a company with close ties to Baidu, the dominant search engine in China and a competitor of Google.

Within the computer security industry and the Obama administration, analysts differ over how to interpret the finding that the intrusions appear to come from schools instead of Chinese military installations or government agencies. Some analysts have privately circulated a document asserting that the vocational school is being used as camouflage for government operations. But other computer industry executives and former government officials said it was possible that the schools were cover for a “false flag” intelligence operation being run by a third country. Some have also speculated that the hacking could be a giant example of criminal industrial espionage, aimed at stealing intellectual property from American technology firms.

Independent researchers who monitor Chinese information warfare caution that the Chinese have adopted a highly distributed approach to online espionage, making it almost impossible to prove where an attack originated.

“We have to understand that they have a different model for computer network exploit operations,” said James C. Mulvenon, a Chinese military specialist and a director at the Center for Intelligence Research and Analysis in Washington. Rather than tightly compartmentalizing online espionage within agencies as the United States does, he said, the Chinese government often involves volunteer “patriotic hackers” to support its policies.

Spokesmen for the Chinese schools said they had not heard that American investigators had traced the Google attacks to their campuses.

If it is true, “We’ll alert related departments and start our own investigation,” said Liu Yuxiang, head of the propaganda department of the party committee at Jiaotong University in Shanghai.

But when asked about the possibility, a leading professor in Jiaotong’s School of Information Security Engineering said in a telephone interview: “I’m not surprised. Actually students hacking into foreign Web sites is quite normal.” The professor, who teaches Web security, asked not to be named for fear of reprisal.

“I believe there’s two kinds of situations,” the professor continued. “One is it’s a completely individual act of wrongdoing, done by one or two geek students in the school who are just keen on experimenting with their hacking skills learned from the school, since the sources in the school and network are so limited. Or it could be that one of the university’s I.P. addresses was hijacked by others, which frequently happens.”

At Lanxiang Vocational, officials said they had not heard about any possible link to the school and declined to say if a Ukrainian professor taught computer science there.

A man named Mr. Shao, who said he was dean of the computer science department at Lanxiang but refused to give his first name, said, “I think it’s impossible for our students to hack Google or other U.S. companies because they are just high school graduates and not at an advanced level. Also, because our school adopts close management, outsiders cannot easily come into our school.”

Mr. Shao acknowledged that every year four or five students from his computer science department were recruited into the military.

Google’s decision to step forward and challenge China over the intrusions has created a highly sensitive issue for the United States government. Shortly after the company went public with its accusations, Secretary of State Hillary Rodham Clinton challenged the Chinese in a speech on Internet censors, suggesting that the country’s efforts to control open access to the Internet were in effect an information-age Berlin Wall.

A report on Chinese online warfare prepared for the U.S.-China Economic Security Review Commission in October 2009 by Northrop Grumman identified six regions in China with military efforts to engage in such attacks. Jinan, site of the vocational school, was one of the regions.

Executives at Google have said little about the intrusions and would not comment for this article. But the company has contacted computer security specialists to confirm what has been reported by other targeted companies: access to the companies’ servers was gained by exploiting a previously unknown flaw in Microsoft’s Internet Explorer Web browser.

Forensic analysis is yielding new details of how the intruders took advantage of the flaw to gain access to internal corporate servers. They did this by using a clever technique — called man-in-the-mailbox — to exploit the natural trust shared by people who work together in organizations.

After taking over one computer, intruders insert into an e-mail conversation a message containing a digital attachment carrying malware that is highly likely to be opened by the second victim. The attached malware makes it possible for the intruders to take over the target computer.

John Markoff reported from San Francisco and David Barboza from Shanghai. Bao Beibei and Chen Xiaoduan in Shanghai contributed research.

This article has been revised to reflect the following correction:

Correction: March 4, 2010
An article on Feb. 19 about the tracing of a series of online attacks on Google and other American corporations to computers at two educational institutions in China misstated I.B.M.’s relationship to an international computer programming competition recently won by students at one of the institutions, Shanghai Jiaotong University. The competition, known as the “Battle of the Brains,” has been sponsored by I.B.M. since 1997, but its history dates back to 1970. It was not “organized” by I.B.M.

Many people don’t get as much sleep as they should. And their brains are paying the price.

April 1, 2009

By Allison Ford

Nothing feels worse than hearing your alarm clock ring in the morning when your body is screaming for a few extra hours of rest. Given the opportunity, who wouldn’t get more sleep? If I had a choice between a year of unlimited Easter candy and a year of unlimited sleep, I’d say “Bye-bye Cadbury” and “Hello, bed!”

Many people don’t get as much sleep as they should. Since the invention of the light bulb, people sleep about 500 hours per year less than they used to. Whether we’re kept awake by our partner’s snoring or we stay up too late watching TV, we wake up tired, groggy, and cranky. No wonder the coffee industry does so well. Unfortunately, sleep deprivation has some side effects and they can’t all be remedied with a little extra caffeine.

This Is Your Brain on Sleep

While the mechanism of sleep isn’t fully understood yet, doctors and scientists do know that it’s one of our body’s most important processes. Studies show that sleep is important for cellular renewal, helping to replace muscle tissue and dead cells throughout the body. Studies have also shown that sleep is a key time for the brain to process and archive information, including memories. Deep, restorative REM sleep, the kind associated with dreaming, seems to stimulate regions of the brain used in learning.

Every night without adequate rest is like adding to a sleep debt—eventually it will have to be repaid. Even after one sleepless night, we can feel the first effects of sleep deprivation—irritability, memory loss, and drowsiness. Continued sleep deprivation can result in trouble concentrating, blurry vision, impaired judgment, and even more severe mental effects. After just a few days without any sleep, people can begin to experience hallucinations, mania, and nausea. Luckily, if you repay your sleep debt right away, those effects vanish immediately.

Short-Term Side Effects

Sleep deprivation doesn’t just cause mental deficits; our physical abilities are diminished too. Studies have demonstrated that not sleeping can reduce glucose metabolism by as much as 40 percent. We use stored glucose for energy and sleep deprivation can interfere with how the body stores and processes it. Sleep-deprived athletes also experience high levels of cortisol, a stress hormone, as well as lower levels of human growth hormone, which is important for muscle repair. The immune system is also thought to be maintained while asleep; people who don’t get enough sleep tend to be more susceptible to infections and have slower healing times.

Sleep deprivation also has an effect on how the brain stores information. A study at the University of Pennsylvania showed that mice who were taught a task and allowed to sleep afterward remembered what they had learned better than mice that didn’t sleep. Among school-aged children, those who get even one less hour of sleep than their peers have shown to perform more poorly on tests of memory and attention.

By Kevin Lewis  |  December 27, 2009

Among those who carried out the 9/11 attacks, eight were engineers. Among Islamic extremists worldwide, engineers are significantly over-represented, relative to their prevalence in the general population or the population of those with a university education. Why? A recent analysis argues that the combination of an engineering “mindset” and the socioeconomic status of engineers in Islamic countries is to blame rather than any recruiting strategy. The engineering mindset tends to seek definitive solutions to problems, an approach that happens to dovetail with the extremists’ black-and-white worldview. At the same time, engineers in the Islamic world have had limited employment opportunities, especially relative to peers in the West. Many engineers in Islamic extremist groups attended university and were radicalized during the 1980s and 1990s, when oil prices and growth in the Middle East had receded. The one exception has been Saudi Arabia, where engineers have had relatively good job opportunities; only one of the 15 Saudis who carried out the 9/11 attacks was an engineer.

Gambetta, D. & Hertog, S., “Why Are There So Many Engineers among Islamic Radicals?” European Journal of Sociology (August 2009).

The ceiling that doesn’t kill you makes you stronger

Women may face a glass ceiling, but the women who manage to break through may be more formidable for it. That’s the conclusion of a recent study on women in politics. Congressional districts represented by women garner significantly more federal spending - on the order of $50 million annually. Congresswomen also sponsor more legislation - and receive more support for their own legislation - than men. Interestingly, the advantage disappears for widows who take the place of their husbands in office but is larger for women from more conservative districts - both of which suggest that overcoming a more demanding threshold selects for higher talent. The authors note that a similar minority advantage may be mitigated by minority-conscious gerrymandering, which can make it easier for minorities to get elected; however, this caveat doesn’t apply to statewide and national politicians (e.g., Barack Obama).Anzia, S. & Berry, C., “The Jackie (and Jill) Robinson Effect: Why Do Congresswomen Outperform Congressmen?” Stanford University (August 2009).

Violence and the big game

A pair of economists has found a significant spike in police reports of at-home male-on-female domestic violence in the hours following an upset loss by the local NFL team. This effect is comparable to the effect of a hot day, but not as bad as a holiday. The effect was amplified after upset losses for games against longstanding rivals, when the home team was in contention for the playoffs, or when the home team made many mistakes. Upset losses also caused a significant spike in reported violence against “friends.” The authors conclude that a large fraction of domestic violence is simply the result of people losing their temper.Card, D. & Dahl, G., “Family Violence and Football: The Effect of Unexpected Emotional Cues on Violent Behavior,” National Bureau of Economic Research (November 2009).

Maybe “Gourmet” needed a swimsuit issue

Even the least cynical among us know that self-serving justifications are part of everyday life. Whether you’re talking politics, work, or family, the self-serving justification is practically an art form. But it can also be a science. Researchers at Harvard Business School asked 23 men to evaluate two hypothetical sports magazines. The magazines were similar, except that one covered a greater number of sports, while the other had more feature articles. More importantly, one of the magazines was randomly assigned to have a swimsuit issue, while the other had a “Year’s Top 10 Athletes” issue. When the magazine with more articles also had a swimsuit issue, 92 percent of the men selected that magazine. However, when the other magazine had the swimsuit issue, only 46 percent selected the magazine with more articles. The men’s explanations shifted, along with their choices. When the magazine with more articles had swimsuits, 83 percent of the men said the number of articles was an important metric; when the magazine with fewer articles had the swimsuits, only 36 percent said the number of articles was important.Chance, Z. & Norton, M., “ ‘I Read Playboy for the Articles’: Justifying and Rationalizing Questionable Preferences,” Harvard University (September 2009).

I like it because it’s there

I think, therefore I am. But also, according to psychologists: It is, therefore I think it should be. In other words, we tend to think that mere existence implies superiority. In experiments, when asked to consider relocating a company’s headquarters or changing college degree requirements, people preferred the (randomly assigned) status quo. Likewise, asking people in 2007 to imagine either Hillary Clinton or Barack Obama winning the Democratic nomination made that particular outcome seem more likely and desirable. This phenomenon even extends to basic perceptions. People judged a (fictitious) diagram of a galaxy to be more aesthetically appealing in proportion to how ubiquitous they were told it was in the universe. And soda - whether it was sweet or bitter - was judged to taste better if people were told that it had been around as a product for 100 years compared to just 5 years.Eidelman, S. et al., “The Existence Bias,” Journal of Personality and Social Psychology (November 2009).

Kevin Lewis is an Ideas columnist. He can be reached at kevin.lewis.ideas@gmail.com.  

By Terrence McNally, AlterNet
Posted on August 24, 2009, Printed on March 12, 2010

The world suffers global recession, enormous inequity, hunger, deforestation, pollution, climate change, nuclear weapons, terrorism, etc. To those who say we’re not really making progress, many might point to the fact that at least we’ve eliminated slavery.

But sadly that is not the truth.

One hundred forty-three years after passage of the 13th Amendment to the U.S. Constitution and 60 years after Article 4 of the U.N.’s Universal Declaration of Human Rights banned slavery and the slave trade worldwide, there are more slaves than at any time in human history — 27 million.

Today’s slavery focuses on big profits and cheap lives. It is not about owning people like before, but about using them as completely disposable tools for making money.

During the four years that Benjamin Skinner researched modern-day slavery, he posed as a buyer at illegal brothels on several continents, interviewed convicted human traffickers in a Romanian prison and endured giardia, malaria, dengue and a bad motorcycle accident.

But Skinner is most haunted by his experience in a brothel in Bucharest, Romania, where he was offered a young woman with Down syndrome in exchange for a used car.

Currently a fellow at the Carr Center for Human Rights Policy at Harvard Kennedy School of Government, and previously a special assistant to Ambassador Richard Holbrooke, Skinner has written for Newsweek, the Los Angeles Times, Foreign Policy and others. He was named one of National Geographic’s Adventurers of the Year 2008. His first book, now in paperback, is A Crime So Monstrous: Face to Face with Modern-Day Slavery.

Terrence McNally: What first got you interested in slavery?

Benjamin Skinner: The fuel began before I was born. The abolitionism in my blood began at least as early as the 18th century, when my Quaker ancestors stood on soapboxes in Connecticut and railed against slavery. I had other relatives that weren’t Quaker, but had the same beliefs. My great-great-great-grandfather fought with the Connecticut artillery, believing that slavery was an abomination that could only be overturned through bloodshed.

Yet today, after the deaths of 360,000 Union soldiers, after over a dozen conventions and 300 international treaties, there are more slaves than at any point in human history.

TM: Is that raw numbers or as a percentage of the population?

BS: I want to be very clear what I mean when I say the word slavery. If you look it up in Webster’s dictionary, the first definition is “drudgery or toil.” It’s become a metaphor for undue hardship, because we assume that once you legally abolish something, it no longer exists. But as a matter of reality for up to 27 million people in the world, slaves are those forced to work, held through fraud, under threat of violence, for no pay beyond subsistence. It’s a very spare definition.

TM: Whose definition is that?

BS: Kevin Bales’s. [His Disposable People: New Slavery in the Global Economy was nominated for the 1999 Pulitzer Prize, and he is the president of Free the Slaves ] I’m glad you asked because he’s not given enough credit. He originally came up with the number 27 million, and it’s subsequently been buttressed by international labor organization studies. Governments will acknowledge estimates of some 12.3 million slaves in the world, but NGOs in those same countries say the numbers are more than twice as high.

Kevin did a lot of the academic work that underpinned my work. I wanted to go out and get beyond the numbers, to show what one person’s slavery meant. In the process of doing that, I met hundreds of slaves and survivors.

TM: As an investigative reporter rather than an academic, you take us where the trades are made, the suffering takes place and the survivors eke out their existences.

BS: In an underground brothel in Bucharest, I was offered a young woman with the visible effect of Down syndrome. One of her arms was covered in slashes, where I can only assume she was trying to escape daily rape the only way she knew how. That young woman was offered to me in trade for a used car.

TM: This was a Romanian used car?

BS: Yes, and I knew that I could get that car for about 1,500 euros. While that may sound like a very low price for human life, consider that five hours from where I live in New York — a three-hour flight down to Port au Prince, Haiti, and an hour from the airport — I was able to negotiate for a 10-year-old girl for cleaning and cooking, permanent possession and sexual favors. What do you think the asking price was?

TM: I don’t know … $7,500?

BS: They asked for $100, and I talked them down to $50. Now to put that in context: Going back to the time when my abolitionist ancestors were on their soapbox, in 1850, you could buy a healthy grown male for the equivalent of about $40,000.

TM: When I first read such big numbers, I was shocked.

BS: This is not to diminish the horrors that those workers would face, nor to diminish their dehumanization one bit. It was an abomination then as it is today. But in the mid-19th century, masters viewed their slaves as an investment.

But here’s the thing: When a slave costs $50 on the street in broad daylight in Port au Prince — by the way, this was in a decent neighborhood, everybody knew where these men were and what they did — such people are, to go back to Kevin’s term, eminently disposable in the eyes of their masters.

TM: If my reading is correct, the biggest concentrations of the slave trade are in Southeast Asia and portions of Latin America?

BS: If you were to plot slaves on the map, you’d stick the biggest number of pins in India, followed by Pakistan, Nepal, Bhutan. There are arguably more slaves In India than the rest of the world combined.

And yet, if you look at international efforts or American pressure, India is largely let off the hook because Indian federal officials claim, “We have no slaves. These are just poor people. And these exploitive labor practices,” — if you’re lucky enough to get that term out of them — “are a byproduct of poverty.”

Let me be clear, the end of slavery cannot wait for the end of poverty. Slavery in India is primarily generational debt bondage, people whose grandparents took a debt.

TM: To go back to the definition: Forced to work against their will with no escape.

BS: Held through fraud under threat of violence for no pay beyond subsistence. These are people that cannot walk away.

I stumbled upon a fellow in a quarry in Northern India who’d been enslaved his entire life. He had assumed that slavery at birth. His grandfather had taken a debt of 62 cents, and three generations and three slave masters later, the principal had not been paid off one bit. The family was illiterate and innumerate. This fellow, who I call Gonoo — he asked me to protect his identity — was still forced to work, held through fraud under threat of violence for no pay beyond subsistence.

Since he was a child, he and his family and his children, along with the rest of the enslaved villagers, took huge rocks out of the earth. They pummeled those rocks into gravel for the subgrade of India’s infrastructure, which is the gleaming pride of the Indian elites.

They further pulverized that gravel into silica sand for glass. There’s only one way that you turn a profit off handmade sand, and that’s through slavery.

TM: Another method you describe: Someone shows up in a poverty-stricken village saying they need workers for the mines hundreds of miles away.

BS: It’s a massive problem in the north of Brazil. What’s tricky about this, in many cases these workers want to work. But they don’t want to be forced to work under threat of violence, beaten regularly, having the women in their lives raped as a means of humiliating them, and then not being paid anything.

TM: They are transported to the mines, and when they arrive, they have a debt for that transportation, which is greater than anything they will ever be able to repay.

BS: And if they try to leave, there are men with guns. That’s slavery. In the Western Hemisphere, child slavery, as we spoke of before, is most rampant in Haiti. According to UNICEF, there are 300,000 child slaves in Haiti.

TM: Does that mean in Haiti or originating in Haiti?

BS: That means within Haitian borders.

TM: So with all the poverty in Haiti, there are still people who can afford 300,000 slaves?

BS: Well if they’re paying $50 …

I went back last summer with Dan Harris of ABC Nightline. He was pretty incredulous of my claim. In fact, it ended up taking him 10 hours from ABC’s offices in Manhattan, but by the end of those 10 hours, he’d negotiated with not one, but three traffickers who’d offered him three separate girls.

As he put it, the remarkable thing is not that you can get a child for $50, but that you can get a child for free. When you go up into these villages, you see such desperation on the parts of the parents.

I want to make clear, I never paid for human life; I never would pay for human life. I talked to too many individuals who run trafficking shelters and help slaves become survivors. They implored me, “Do not pay for human life. You will be giving rise to a trade in human misery, and as a journalist, you’ll be projecting to the world that this is the way that you own the problem.” If you were to buy all 300,000 child slaves in Haiti, next year, you’d have 600,000.

TM: If you were to buy the 300,000 slaves in Haiti in one fell swoop, you would be telling traders, “Hey, business is good,” and so they’d grab more slaves.

BS: You’re talking about introducing hard currency into a transaction that in many cases hasn’t involved hard currency in the past. You’re massively incentivizing a trade in human lives.

TM: These are those who practice what they call redemptions, buying slaves their freedom. Who’s doing it, and what’s your analysis of it?

BS: On the basis of three months spent in southern and northern Sudan, two months in southern Sudan in particular. … There was one particular evangelical group based in Switzerland, organized and run by an American who raised cash around the States. They’d go to a Sunday School or a second-grade class in Colorado, talk about slavery, and say, “Bring us your lunch money. If you can get us $50, we will buy a slave’s freedom.”

It was a very effective sales pitch. They managed to raise over $3 million dollars by my calculations over the course of the 1990s.

In theory, they were giving money to “retrievers” who would go into northern Sudan, and through whatever means necessary, secure the slaves’ freedom and bring them back down into the south.

In the context of the Sudanese civil war, slavery is used as a weapon of war by the north. Northern militias raid southern villages, and in many cases, kill the men and take the women and children as slaves and as a weapon of genocide. That much is not questioned. There is no question that these slave raids were going on.

I found that redemption on the ground was enormously problematic. There was scant oversight. They were literally giving duffel bags full of cash to factions within the rebels that were at that point resisting an ongoing peace process.

What they risked doing, whether through recklessness or through intent, was to become essentially angels of destruction at a time when a negotiated peace was just beginning to take hold. Thankfully, at this point they’ve scaled back the redemptions.

TM: So they were collecting money in the States to free slaves, and then funding a rebel movement in a war, and …

BS: Potentially prolonging the war.

Thankfully, in the end, the death of rebel leader John Gurang meant that a different faction came to be more powerful. From my perspective, however, what was going on there was largely fraudulent.

I went back and asked the rebel officials, “What do you do with this money?” and they said, “We use it for the benefit of the people.” Which begs the question, “But I thought this was being used to buy back slaves. I don’t get it.”

And they said, “Well you know, there’s clothes, uniforms …” They didn’t actually say arms, but they said all sorts of things that they needed hard currency for, and this was their way of getting the cash.

I don’t blame the rebels. If I were in a similar situation, I’d probably do the same thing. The most important point is this: By the merest estimates there are still some 12,000 slaves held in brutal bondage in the north of Sudan, and the government has not arrested or prosecuted one slave raider, one slave trader, one slave master. And as long as that continues to be the situation, the government of Sudan is in gross violation of international law.

TM: How does the distinction between sexual slavery and other sorts of labor show up, and how does it matter?

BS: When we’re defining slavery, fundamentally at its core it’s the same in each and every circumstance. We’re talking about people forced to work held through fraud, under threat of violence, for no pay beyond subsistence. If we’re talking about forced commercial sexual slavery, forced prostitution, there’s an added element of humiliation or shame, because we’re talking about rape.

In many parts of the world and in many traditional societies, if a woman is raped it’s her fault. If a woman is liberated and tries to go back to the village she comes from, she will never again lead a normal life.

I think it’s safe to say even in the United States, which we assume is a much more welcoming, tolerant society, women who’ve been in prostitution, regardless if it’s forced or not, have a difficult time leading a normal life afterward.

There is a school of thought that sexual slavery is somehow worse than other forms of slavery. I actually don’t buy that. I think that all slavery is monstrous, and no one slave’s emancipation should wait for that of another. At the same time, if some people are moved to fight sexual slavery and sexual trafficking at the exclusion of other forms of slavery, God bless them, as long as they’re fighting slavery at the end of the day.

TM: Briefly, what is the situation in America?

BS: On average, in the past half-hour, one more person will have been trafficked to the United States into slavery. About 14,000-17,000 are trafficked into the U.S. each year and forced to work within U.S. borders under threat of violence for no pay beyond subsistence.

TM: What can people do?

BS: On a personal basis, they can support CAST (Coalition to Abolish Slavery and Trafficking) in Los Angeles. CAST has the oldest shelter in the country for trafficked women and has terrific programs that help victims of all forms of trafficking. It’s a solid, mature organization.

They can also get involved with Free the Slaves. And they can talk about the issue more. Barack Obama is still setting his foreign policy agenda. He needs to hear from all of us that the true abolition of slavery needs to be a part of his legacy.

A quarter of Skinner’s publishing royalties go to Free the Slaves.

Jamil Anderlini, Charles Clover, Financial Times
June 5, 2009

China is “actively considering” buying up to $50bn of International Monetary Fund bonds, the country’s State Administration of Foreign Exchange has said.

John Lipsky, IMF first deputy managing director, confirmed the Chinese proposal, which follows one by Russia to buy $10bn (€7.1bn, £6.2bn) in IMF bonds.

Friday’s statement by China said any investment would be made according to its usual criteria of “safety and reasonable returns”, but made no mention of Beijing’s wish for more power in IMF decision-making, in return for financial support.

Safe, which controls almost $2,000bn of China’s foreign exchange reserves, added it was ready to help the IMF explore more ways to raise finance.

Mr Lipsky said the Chinese and Russian proposals were part of a commitment made during the London G20 summit in April to augment IMF resources by $500bn, and that the IMF “absolutely welcomes” the commitments.

The IMF expects to submit a proposal in the next few weeks that would allow it to raise money through issuing notes or bonds.

The pledges by both countries seem to have some political motivations – both China and Russia make no secret of their desire to have a greater say in how the IMF commits money.

Vladimir Putin, Russia’s prime minister, proposed the money from Russia, for example, should be earmarked to help Ukraine pay for Russian gas, avoiding a stand-off with Kiev over the issue of gas payments which crippled supplies to Europe in January.

Mr Lipsky said it would be against IMF guidelines to get involved. “The ongoing disputes between Ukraine and Russia are commercial issues,” he said.

“We wouldn’t enter directly into a commercial arrangement but of course our programme contemplates the external funding needs of Ukraine. Our programme is always predicated on helping our member countries meet balance of payments needs. But we would not be involved directly in a commercial transaction.”

Asked if the programme to Ukraine could be increased at all he said: “Never say never, but it would depend on the evolution of events.”

Meanwhile, earlier this year, China’s central bank governor caused a stir in global currency markets when he proposed replacing the US dollar as the world’s reserve currency with Special Drawing Rights, the IMF’s unit of account.

Zhou Xiaochuan also said SDRs should be based on a basket of currencies, including China’s renminbi.

Chinese officials have indicated that at least some of the IMF bonds it will buy will be in SDRs, which would help to diversify its US dollar-dominated foreign exchange reserves.

Jay Yarow

Apparently it’s not enough for China to own all the world’s resources — it needs to own other stuff too, like real estate in the U.S.

After sitting out most of 2008, China’s sovereign wealth fund is looking to dive in to real estate once again, says The Wall Street Journal. The China Investment Corp. is in talks with private equity groups and wants to snap up distressed assets in the U.S. taking advantage of certain government programs, like the PPIP.

Taking advantage of such programs will whip up an American backlash, so it’s treading carefully:

WSJ: To be sure, CIC and other sovereign-wealth funds face considerable obstacles to investing in U.S. real estate.

Economic distress has resulted in growing protectionism on Capitol Hill, with some lawmakers blaming China for helping create a credit bubble in the U.S. by investing heavily in U.S. government bonds.

Any large-scale foreign acquisitions of U.S. property could lead to a political backlash reminiscent of the 1980s, when Japanese companies invested about $77 billion in the U.S. property markets and bought assets such as Rockefeller Center and the Pebble Beach golf course.

CIC is unlikely to replicate those showy investments.

It consistently has taken minority stakes, often below 10%, as CIC executives recognize the fund’s lack of management expertise and the potential political ramifications of buying control. To minimize political risk, CIC’s “debut in the U.S. property market likely will be double arm’s-length investments,” meaning through U.S. fund managers and then with a minority stake in the fund, as opposed to direct stakes in properties, says Michael McCormack, an executive director at Z-Ben Advisors, a consulting firm in Shanghai.

Daniel Kovalik, Counterpunch
January 27, 2010

This past summer, President Obama announced that he had signed an agreement with Colombia to grant the U.S. military access to 7 military bases in Colombia. As the UK’s Guardian newspaper announced at the time, “[t]he proposed 10-year lease will give the US access to at least seven Colombian bases – three air force, two naval and two army – stretching from the Pacific to the Caribbean.” And, these bases would accommodate up to 800 military and 600 civilian contractors of the United States. As the Guardian explained, this announcement caused outrage in neighboring Latin American nations and “damaged Barack Obama’s attempt to mend relations with the region.”

This announcement also angered human and labor rights advocates in both the U.S. and Colombia as the U.S. was now solidifying a cozier military alliance with by far the worst labor and human rights abuser in the Western Hemisphere. The human rights nightmare in Colombia, fueled by billions of dollars of U.S. military assistance, includes the forced internal displacement of nearly 4 million civilians – the second largest internally displaced population in the world (Sudan holding the number one position); the extraordinary killing of over 2700 union members since 1986 (by far the greatest number in the world), with 35 being killed in 2009 alone; and the extrajudicial killing of around 2,000 civilians by the Colombian military since President Uribe took office in 2002.

As for the extra-judicial killings by the Colombian military, these were carried out as part of the “false positive” scandal – a controversy involving the military murdering civilians and then dressing them up to look like guerillas in order to increase their body count numbers, thereby guaranteeing further U.S. aid. That scandal deepened earlier this month when 31 Colombian soldiers awaiting trial for their role in the killings were released from prison because of the Colombian government’s failure to indict them in a timely fashion.

While the U.S. has claimed for years that it is fighting a drug war in Colombia, though having to sheepishly admit year after year that its ostensible efforts have not yielded any decrease whatsoever in the amount of coca grown in Colombia or cocaine exported to the U.S., the real reason for the war has always been the control of Colombia’s rich oil resources. Indeed, at a Congressional hearing in 2000, entitled “Drugs and Social Policy in Colombia” – a hearing to debate the relative merits of Clinton’s new Plan Colombia, pursuant to which the U.S. has sent billions of dollars of military assistance to Colombia – one of the key witnesses invited to testify in support of this policy was none other than Lawrence Meriage, the Vice-President of Occidental Petroleum. Not surprisingly, Mr. Meriage had nothing to say about drugs or social policy in Colombia, but a lot to say about the need for military assistance to protect his oil pipelines.

Now, according to a January 19, 2010 Bloomberg article, “The Export-Import Bank of the United States [a U.S. government agency] announced Jan. 19 its approval of a $1 billion preliminary commitment to help finance the sale of goods and services from various U.S. exporters to Ecopetrol S.A., Colombia’s national oil company.” It should be noted that Ecopetrol is a business partner with L.A.-based Occidental Petroleum.

Citing an industry expert, the Bloomberg article goes on to explain that “Ecopetrol is being aggressive in exploration and production,” and that, with the help of the financing from the Export-Import Bank, “Ecopetrol will almost double to 1 million barrels daily by 2015 as the company drills more wells in Colombia and neighboring South American nations.”

As a November 12, 2009 press release from the human rights group Amazon Watch explained, Ecopetrol is currently engaged in oil exploration on the sacred land of the U’wa indigenous peoples and against their wishes. A spokesperson for the U’Wa explained that, as is invariably the case, with Ecopetrol’s exploration and drilling comes the Colombian military, as well as paramilitaries, to protect Ecopetrol’s operations.

As Ecopetrol’s own website indicates, it is also involved in oil exploration in Peru and Brazil. As for Peru, Survival International, a UK-based human rights group advocating for the rights of threatened indigenous tribes, warned last year that Ecopetrol’s exploration of the Peruvian Amazon jungle threatens hitherto uncontacted indigenous tribes whose very existence will be jeopardized by these operations. As Survival International explained, these uncontacted tribes are “exceedingly vulnerable to any contact with outsiders because of their lack of immunity to disease.” Prior contacts between companies and uncontacted tribes have resulted in the mortality of 50% of the tribe.

While the current U.S. Administration seems bent on deepening its fatal ties to Colombia in the interest of oil, there is still an opportunity to derail this policy. Pursuant to the statute which created and regulates the U.S. Export-Import Bank, the President of the U.S. (who, by a 1979 Executive Order, delegated such authority to the Secretary of State) may, after consultation with the House and Senate Committees on Banking, determine that an application for credit should be denied by the Bank if the extension of credit “clearly and importantly” impacts U.S. “policy in such areas as international terrorism, nuclear proliferation, environmental protection and human rights.” 12 U.S.C. Sec. 635(2)(b)(1)(B).

Clearly, the prelimimary decision to extend credit to Ecopetrol adversely impacts human rights and the environment and should be overturned as a result. A movement to halt this extension of credit on these grounds would be a worthy effort for the U.S. peace and solidarity groups. Similarly, there is still a chance to impede the U.S.’s decision to access 7 new military bases in Colombia. With the Administration reeling from the election results in Massachusetts last week, now is the time to try to shame it into reversing course on its predictably devastating policy in Colombia and the rest of Latin America.

by Eustace MullinsPT Barnum said it for all time, “There’s a sucker born every minute.” For more than four decades, the American people have been terrorized, not by a foreign threat, but by their own govern­ment. In order for the Federal Reserve System central bankers to continue to loot the nation after the successful conclusion of the I Second World War, they had to invent a new threat. The only candidate was our erstwhile gallant ally, the Soviet Union. The central bank conspirators faced the task of continuing to mobilize the people against a terrible threat, taxing them heavily in order to save them from destruction.

Today, we are burdened by a $5 trillion national debt. Coincidentally, that is the sum we have spent on “national defense” since 1945. The World Order billionaires launched a complex, long-term plan to demonize Soviet Russia. Overnight, they would undergo a sea change, from the darlings of the American political Establishment to a dangerous and possibly overwhelming enemy. la my researches of more than fifty years, I finally located the smoking gun which exposed this conspiracy, a little known article in the August 1977 issue of American Heritage magazine, “Who Started the Cold War?” by historian Charles L. Mee Jr., editor of Horizon magazine, and author of one of the first cold war books, Meeting at Potsdam.

“SCARE THE HELL OUT QF THE COUNTRY”

In this article, Mee writes that on Feb. 27, 1947, “President Truman met with Congressional leaders in the White House. Undersecretary of State Dean Acheson was present at the meeting, and Truman had him tell the Congressmen what was at stake. Acheson spoke for ten minutes, informing the legislators that nothing less than the survival of the whole of Western civilization was in the balance at that moment; he worked in references to ancient Athens, Rome, and the course of Western civilization and freedom since those times. The Congressmen were silent for a few moments, and then, at last. Senator Arthur Vandenberg of Michigan, a prominent Republican who had come to support an active foreign policy, spoke up. All this might be true, Vandenberg said, but, if the President wishes to sell his program to the American people, he would have to ’scare hell out of the country’. It was at that moment that the Cold War began in earnest for the United States.”

This is one of the most revealing statements in American history. This is the smoking gun which proves that the federal government used a terror campaign to frighten the American people into supporting four decades of Cold War spending on armaments. The initial campaign was the “atom bomb scare”, which raged for some years; it finally lost its effectiveness, and was replaced by the ogre, based solely on falsified and invented CIA statistics, that Soviet Russia was the most terrifying military power, with the fastest growing economy, in the world. These two CIA claims were mutually exclusive; no nation could have the world’s greatest military machine and at the same time support the world’s fastest growing economy, but the statisticians successfully sold this scare story for years.

CHURCHILL LAUNCHES COLD  WAR

The Cold War, the Hegelian invention of Soviet Russia and the United States at each other’s throats, the “free world” vs. the “slave empire”, Capitalism vs. Communism, was the final triumph of dialectical ma­terialism, also invented by the German philosopher, Hegel. He laid down the dictum that to rule the world, you create a problem; you find an antidote to that problem; and you throw the two conflicting theses against each other, to result in a consensus or resolution. This diabolical and cynical formula reached its apogee in the Cold War.   Hopefully, we will not see another such travesty of history.

Hard on the conclusion of the Second World War, the Colossus of the United States stood astride the entire world. With the world’s largest economy, never touched by a single bomb or artillery shell throughout the war, the largest army, and a proud and victorious people, it was incredible that the United States could for a moment seriously regard the war-devastated Soviet Union as a threat. Stalin lost forty million people during the war; his nation was in rains. He desperately needed a breathing space in which to recover. Miraculously, the World Order invention of the Cold War came to his rescue.   None other than Stalin’s co-conspirator, Winston Churchill, was chosen to launch this new “problem”.. Now unemployed, Churchill was desperate to get back into the limelight. At the invitation of President Truman, Churchill was brought to the United States to deliver a speech at little Fulton College, in Truman’s home state of Missouri.

On March 5, 1946, at Fulton, Churchill made his famous “Iron Curtain” speech. He warned that an “Iron Curtain” had descended upon Europe, the Communist enslavement of the Eastern European countries. He failed to mention that he and Franklin Delano Roosevelt had joined at Yalta to deliver Eastern Europe to Stalin, with Alger Hiss, the originator of the plan, beaming in the background. Not a single journalist, anywhere in the world, mentioned Churchill’s overwhelming personal complicity in creating and maintaining the dire situation which he now publicly deplored.

THE CONVERSION OF SENATOR ARTHUR VANDENBERG

One of Washington’s leading political strategists, Senator Arthur Vandenberg had warned his co-con­spirators at the Feb. 27, 1947 White House meeting that to sell the prospective Cold War program, they would have to “scare hell out of the country”. He had an interesting background. A millionaire newspaper publisher in Grand Rapids, Michigan (later to become famous as the home of President Gerald Ford), Vandenberg had been elected to the Senate in 192S. A rock-ribbed Republican, he voted against New Deal measures such as the Social Security Act. He was Republican minority leader, and Capitol Hill’s leading isolationist. When the United Nations proposal came to Congress, no one in Washington doubted that Vandenberg would shoot it down.

All of Washington was amazed when Senator Vandenberg rose on the Senate floor, on January 10, 194S, and called for the establishment of the United Nations. As George Stimpson, founder of the National Press Club, later explained to me, America’s leading isolationist had become a rabid internationalist in a single night. A beautiful blonde agent from British Secret Intelligence Service had been sent to his room. After an all night political discussion, Senator Vandenberg awakened to become the new champion of the United Nations. Although a little known story, it epitomizes how things are accomplished in Washington, today as yesterday.

This is the Senator who is described in the Dictionary of National Biography as “a jingoist and chauvinist who supported the aggressive foreign policies of Theodore Roosevelt and Taft.” Franklin D. Roosevelt rewarded Vandenberg for his treachery by sending him as a special delegate to San Francisco with Alger Hiss to draft the United Nations Charter. The White House continued to shower gifts on Vandenberg, even going so far as to make his favourite nephew. General Hoyt Vandenberg, Commanding General of the United States Air Force.

THE FLOOZIES OF WASHINGTON

During our discussions at the National Press Club in 1948, the subject of Senator Arthur Vandenberg’s overnight conversion to the congressional champion of the United Nations was examined in detail. We recalled a fellow agent of the blonde British Secret Service agent who accomplished this mission, one Kaye Summersby, who had been chosen to mollify General Eisenhower, Commanding General of the entire European Theater during the Second World War. Summersby’s intelligence training included the arts of the ancient Byzantine hetairae, who were skilled in the arts of “unendurable pleasure, indefinitely prolonged”. With Summersby as his chauffeur, Eisenhower was delivered to small country hotels in England, while his adviser, the political commissar Capt. Edward M. M. Warburg, of the banking family, ran the war from London. The enraptured general notified his superior, George Marshall, that he was divorcing Mamie Eisenhower to marry the princess of endless delights, which of course was never in the cards. Marshall promptly reported this development to President Truman, who was furious, notifying Ike that it was out of the question (Plain Speaking, by Merle Miller). Kaye ended her days as a permanent house guest on a Rothschild estate on Long Island.

Another British agent, Pamela Digby Churchill, married to Winston Churchill’s son, later married Averill Harriman, the unofficial foreign minister of the United States. Harriman’s exploits in travelling the world, instructing the heads of nations in how to conduct their affairs, was legendary. He became the subject of a series of novels by Upton Sinclair, chronicling the feats of one Lanny Budd (Harriman) throughout the world. Harriman spent the last two years of World War II at Stalin’s Kremlin headquarters, dictating to Stalin how he should conduct the war. After his death, Pamela Churchill Harriman took over the Democratic National Committee. She is now our Ambassador to Paris, the most desired appointment in our foreign service, presiding over 1100 employees.

HARRIMAN’S REPLY

When Charles T. Mee Jr.’s historic article appeared in American Heritage magazine in August of 1977, the editors notified Averill Harriman and gave him the chance to reply in the same issue. Harriman’s response was headlined “We Can’t Do Business with Stalin”. The Communist dictator who had been Harriman’s lackey throughout the war was now dismissed as uncooperative! Harriman recounts in great detail the repressive policies of Stalin towards the captive nations in Eastern Europe (policies which Harriman himself had initiated), and goes on to denounce Mee’s astounding report as “revisionist”. “Mr. Mee has made his own sketchy revision of standard revisionist doctrine,” quoting Mee’s statement that “the Cold War served everybody’s purpose.” Truman needed an excuse for deficit spending, because without it he could not have kept the American economy busy and productive. Thus he waged a Cold War, after the hot war was won, to justify continued deficit spending. With the Truman Doctrine and the Marshall Plan, the encouragement of American multinational companies, and a set of defense treaties that came finally to encom­pass the world, he institutionalized it.”

As Charles T. Mee Jr. points out in his article, Stalin was a principal beneficiary of the Cold War. ” Stalin needed the Cold War, not to venture out into the world again after an exhausting war, but to discipline his restless people at home. He had need of that ancient stratagem of monarchs—the threat of an implacable external enemy to be used to unite his own people in Russia.” Mee also names Winston Churchill as a prime suspect in the Cold War conspiracy. He states that Churchill “emerged from World War II with a ruined empire, irretrievably in debt, an empire losing its colonies and headed inevitably toward bankruptcy. Churchill’s scheme for saving Great Britain was to arrange to have America and Russia quarrel, while America and Russia quarrelled, England would—as American diplomats delicately put it—’lead’ Europe”. As had been the case for some three hundred years, “leading” Europe and the United States meant that Great Britain would make frequent use of its secret weapon, the Secret Intelligence Service. Its powers included, as we have seen, reversing the entire foreign policy of the United States overnight, from isolation­ism to an abject embracing of the United Nations; making the most prominent American general and future President a “love slave” of a ruthless intelligence agent, and much, much more, most of which we shall never know.

THE  FIRST VICTIMS OF  THE  COLD WAR

The first victims of the Cold War were not soldiers, they were American politicians who were reluctant to embrace the new campaign. The first casualty was elder statesman Henry Stimson, who wrote a memo to President Truman in the autumn of 1945, cited by Mee as the cause of Stimson’s disappearance from Washington. Stimson’s memo denounced the projected Cold War as a serious error, and called for “satisfactory relations” with Russia. Henry Wallace, Secretary of Commerce, also protested against the Cold War, he was allowed to resign. Mee identifies the “comers” in Washington as those who were quick to latch onto the Cold War as “the wave of the future”. Those who tended to believe in an aggressive attitude toward Russia, were spotted, and promoted—young men such as John Foster Dulles and Dean Rusk. George Kennan, then in the American Embassy in Moscow, was discovered after he sent a perfervid 8,000 word telegram back to Washington. “We have here a political force committed fanatically to the belief that with U.S. there can be no permanent modus vivendi, that it is desirable and necessary that the internal harmony of our society be disrupted, our traditional way of life be destroyed, the international authority of our state be broken.” Mee mentions that, in his memoirs, Kennan says that he now looks back on his cable ‘with horrified amusement’. “At the time, however, he was ideal for Truman’s use, and he was recalled from Moscow and made chairman of the State Department’s Policy Planning Committee, or as the New York Times called him, ‘America’s global planner’.”

THE  EGGHEADS

Critics of the new Cold War foreign policy quickly found a nickname for its architects, “the eggheads”. Like George Kennan, they were liberal intellectuals, often prematurely bald, and unanimous in their dislike of the American people, whom they hated and feared, and their Constitution. Their goal, which they now seem to have achieved, was to liberate the federal government, which Thomas Jefferson and the other Founding Fathers had written to “bind down the government with the chains of the Constitution”. While ostensibly following an “anti-Communist” policy, the eggheads never forswore their dedication to Marxism, and its monolithic state.

During the four decades of the Cold War, Hollywood, which never failed to bolster the goals of the Cold War architects, reserved its bitter scorn for “red-blooded Americans” who stood for flag and country. While forbearing from ever presenting lifelong Communists in a deprecating way, Hollywood made films deriding “anti-Communists” as flagwaving American Legion boobs, a stance which it continues to this day. If any one of the eggheads and their Hollywood lackeys were to be called a “patriot”, they would be overcome with shame.

A PHONY WAR

During most of its history, the Cold War was a propaganda war, in which the opponents hurled invec­tives at each other. However, the military-industrial complex cannot make billions of dollars from propa­ganda; there had to be occasions of real shooting. We endured the Korean War and the Vietnam War, with hundreds of thousands of casualties, while Soviet Rus­sia did not lose a man in either war. Both Russia and the United States were careful to have the scenes of battle take place thousands of miles from their own lands, in poverty-stricken countries such as Korea and Vietnam. We had the Cuban missile crisis, a soap opera in which the media convinced Americans that they had been on the brink of atomic destruction, being saved just before the bombs were launched by the “incredible diplomatic skills” of John F. Kennedy and Khrushchev, neither of whom before or after this crisis had ever shown the slightest skill at diplomacy. The Berlin Wall was built, to prevent all of its population from fleeing the desolation of Communist East Germany. The egg­heads greeted the Berlin Wall with praise. President John F. Kennedy made a special trip to Germany to put his seal of approval on the Berlin Wall, and to reassure the Communists that the United States would not re­move it. And we never did. It was the Germans themselves, driven beyond endurance, who ripped it down, much to the consternation of our eggheads in Washington.

A  METEORIC  CAREER

Although few Americans recognize the name of George Kennan, he not only was the source of the nickname “egghead”, he also was the bureaucrat entrusted with the maintenance of the Gold War in Washington for many years. He was named after his uncle. George Kennan, who spent many years travelling in Czarist Russia on “missionary work” for the world Communist movement. He was entrusted with many millions of dollars by Jacob Schiff, known as “A Prince in Israel”, who was born in the Rothschild house in Frankfurt, and who, according to his grandson, John Schiff, had spent twenty-two-million dollars of his, personal funds to bring about the Bolshevik Revolution in Russia. Most of this money was spent on revolutionary propaganda, which Kennan, with journalistic cre­dentials, distributed throughout Russia. Some historians credit George Kennan as the pivotal force in the Bolshevik Revolution, pointing out that it was his distributing of thousands of revolutionary leaflets to officers in the Czar’s Army which turned them against the regime and led to the downfall of the Czar.

George Kennan also worked with Jacob Schiff in financing Japan in the Russo-Japanese War of 1905. The Japanese government decorated Kennan with the Gold War Medal, and the Order of the Sacred Treasure. (The World Order, by Eustace Mullins, p. 64). Schiff instigated this war to strike a blow against the alleged oppression of Jews in Russia, and to create a govern­mental crisis by which the Communists could seize power. The “1905 Revolution” failed miserably; the Communists had to wait twelve more years, with Schiff’s continued support, before they could seize power.

REMARKABLE HERITAGE

To those who have studied the history of the twentieth century, it is not at all paradoxical that the American government should have entrusted its foreign policy towards Russia to someone named after the man who is credited with bringing about the Bolshevik Revolution. When Franklin D. Roosevelt, repaying Communist support which gave him victory in his presidential race against Herbert Hoover, promptly extended diplomatic recognition to Stalin, it was George Kennan who was chosen to accompany Ambassador William Bullitt to Moscow to reopen the American Embassy. It was George Kennan who wrote the notorious 8,000-word “long telegram” sent from Moscow to Washington on Dec. 22, 1946, where, as he points out, it caused a sensation, and led to his being summoned back to Washington to head the newly cre­ated post of head of Policy Planning.

Kennan states in his memoirs that he had the only office directly adjoining the office of Secretary of State General George Marshall, and that it was lie, Kennan, who actually drafted the text of the Marshall Plan.

THE POLICY OF “CONTAINMENT”

However, it is as “X”, the anonymous author of an article which appeared in the July, 1947 issue of Foreign Affairs, the official publication of the Council on Foreign Relations, titled “The Sources of Soviet Conduct”, that George Kennan continues to be remembered in Washington. This article laid down the principle of “containment” which was to be official U.S. policy towards Russia for the remainder of the Cold War. No wonder the New York Times called Kennan “America’s global planner”. Henry Kissinger, who inherited the Kennan policy of the Cold War, wrote in White House Years, p. 135, that “George Kennan came as close to authoring the diplomatic doctrine of his era as any diplomat in our history.”

Paul Kennedy, in The Rise and Fall of the Great Powers, defined the “policy of containment” as follows: “The view from Washington was that a master plan for world Communist domination was unfolding and needed to be ‘contained’.” Walter Lippmann, who was a one-man think tank in Washington for fifty years, and an adviser to many Presidents, adopted Kennan’s policy in his influential The Cold War; a Study in United States Foreign Policy, as America’s senior elder statesman.

Kennan’s “containment” policy was just that; that the Soviet Union and world Communism would be contained, but never openly challenged or fought against. It was a permanent guarantee that the captive nations of Eastern Europe, which had been delivered to Stalin by Roosevelt, Churchill and Alger Hiss at Yalta, would never be liberated from Communism. An orga­nization championing the captive nations was for many years the most hated and derided group in Washington, Composed of a few Congressmen from Chicago and Cleveland who had strong ethnic backing from Poles, Czechs and other Eastern  Europe countries, it was a political embarrassment for many years to the oligarchs of the Cold War.

THE MEN BEHIND CONTAINMENT

In his memoirs, Kennan mentions that one of the principal sponsors of his containment policy was then Secretary of the Navy James Forrestal, who later, as Secretary of Defense, became one of a long list of “Washington suicides”, a special category a la Vince Foster. Although published in Foreign Affairs, a magazine read only by the Elite, it was quickly taken up by Arthur Krock of the New York Times, the most influential journalist in Washington. He reprinted the article in the New York Times, describing it as the “most important foreign relations document of the century”. A shorter version of the containment article was then published in Life magazine. It had now inundated the country.

Kennan states in his memoirs, “I emphatically deny the paternity of any efforts to invoke the doctrine of containment today.” He downplays both the “long telegram” and the article by “X”, claiming that they have been “misunderstood”. He modestly ignores the fact that he laid down the policy which our government has followed for forty years. His reward was a post as professor at the elite think tank in Princeton, the Institute for Advanced Study, where he has worked since 1950, with interim appointments as Ambassador to Russia and to Yugoslavia. He also was awarded the Albert Einstein Peace Prize, presumably for avoiding a Third World War by his policy of containment (my studies have shown that a Third World War between Russia and the United States was never seriously con­sidered by anyone in authority). It was only a “War Game”.

TECHNIQUES OF THE  COLD WAR

The government propaganda techniques by which the American people were terrorized for some forty years began with the dire threat of nuclear annihilation. School children went through daily drills of falling to the floor in terror of the atomic bomb which would destroy their school. Their parents built backyard “bomb shelters” stocked with food and water. Because “scientific studies” showed that the radiation peril would last for at least five hundred years, the survivors apparently expected to spend that much time in their shelters. Nationwide philosophical debates ensued as to whether the survivors, huddled in their shelters after the blast, should open the door to neighbours or to “minorities” who had neglected to build bomb shelters, or whether they should shoot those who battered down the doors to get food. Hollywood loyally produced many movies about the coming atomic de­bacle, such as Dr. Strangelove, in which insane fascists were determined to use the bomb to destroy the civi­lized world; War Games, in which a mad computer tried to trick the United States and Russia into destroying each other; and a steady stream of films depicting “Bette Davises” as little old librarians who were deter­mined that students should be allowed to read the works of Karl Marx.

THE CIA RIDES TO THE  RESCUE

After years of exposure to the imminent threat of being vaporized in an atomic blast, Americans began to ignore the threat; many of them bulldozed their bomb shelters into swimming pools. It was obvious to our masters that new techniques of terror had to be developed. The Central Intelligence Agency now became the vehicle of mass terrorism. It became known as “the Company” under the leadership of stock promoter Bill Casey. He became highly skilled at peddling alarming statistics about the threat of Communism to Congress, who hastily voted vast increases in the “defense” budget. The oligarchs abandoned the now worn out doctrine of nuclear annihilation. There would be no need to spend two-hundred-and-fifty-billion dollars a year on tanks, guns and airplanes if they were all to be vaporized by a single bomb. The defense budget had been brought from a low of $13 billion in 1947 to a continuous budget in the hundreds of billions. With its top secret budget of hundreds of millions of dollars a year, never to be examined by anyone, the CIA sent its own James Bonds all over the world usually to attack and overthrow “anti-Communist” governments and “dictators” such as Ferdinand Marcos, who had been indiscreet in their denunciations of Communism. The CIA hired hundreds of journalists to write books and articles promoting its version of the Cold War, always at the highest prevailing rates.

EFFECTS OF THE COLD WAR

The effect on both Russia and the United States of the Cold War conspirators has been devastating. Russia’s economy is in a state of collapse, with no improvement in sight. The United States has been looted; its infrastructure, its roads, bridges and other assets need many billions in immediate repair. We have the $5 trillion Cold War debt; but the most destructive effect on our nation is the Cold War’s effect on our morality.

The years of being terrorized by the atomic threat had a very destructive effect on morality. If we were to be vaporized at any time, it seemed worthwhile to seize the moment, to take pleasure, money and any other rewards while they were available, without (bought for the consequences, since there would be no consequences. We have now endured the effects of this poisonous doctrine for several generations.

The effect of the CIA propaganda lies about the “great Soviet Union” which might take over the world at any moment has been equally destructive. When conservative economist Paul Craig Roberts landed in Moscow during the height of the CIA propaganda campaign, he was stunned to find that Soviet Russia had “a Third World economy”. I had proved in my writings that the United States taxpayer had been subsidizing the Soviet Union since 1917. In fact, Americans have been living a lie for four decades, the lie that we were in dire peril from “the Communist threat”. This lie has been demoralizing; it has placed us on the brink of bankruptcy; and it poses the challenge to us: When are we going to get rid of our Cold War conspirators? They must pay the price for the destruction they have wrought on our nation. We must drive them out of every office; bring them to trial for their high treason; and restore the Republic which our Founding Fathers bequeathed to us. It is this task—not sad jokes about “balancing the budget”—which will determine whether this nation will survive to the twenty-first century.

Tidjane Thiam: Davos viewpoint

The theme of this year’s World Economic Forum meeting in Davos is undeniably ambitious: “Improve the State of the World: Rethink, Redesign, Rebuild.” Such aspirations reflect the timing of this year’s event, as economies around the world look to rebuild confidence after the global financial crisis. I look forward to the Davos sessions, but, whatever the outcomes, it is clear that the rebalancing of global leadership towards the East will be a key trend.

In the 1960s, even the most optimistic would have found it hard to imagine Asia’s achievements of recent years. In his book Asian Drama, Gunner Myrdal, the Nobel Prize-winner, could find no cause to be positive about Asia’s prospects.

The transformation since then has been nothing short of extraordinary. I do not recognise the countries I visited during my first trip to Asia, in 1984. With average annual growth rate of nearly 6 per cent in the past ten years, Asia’s share of the global economy has risen to a third. The strength of Asia’s economies has helped them to weather the global financial crisis, as both governments and households avoided the excessive leverage prevalent in the Western economies. The IMF expects Asia to grow by nearly 6 per cent next year — almost double the rate forecast for the global economy.

“A changed world order is upon us,” Lee Kuan Yew, Singapore’s Minister Mentor, said in Washington last year. It is time for Asia to use its stronger voice to take a more prominent role in this new world order. The progression from the Western-dominated G8 to a more inclusive G20, with meaningful positions for leading Asian economies, rightly reflects the shift to a new equilibrium in which Asia has much greater weight.

In recognising Asia’s changing and increasing role, business and government leaders need to keep in mind that the region is extremely large, diverse and complex. Economic growth rates, demographics and political systems vary greatly across countries.

I view Asia as consisting of four distinct groups:

First, there are the mature, OECD economies of Japan, South Korea and Taiwan, which are very similar to those in the West.

Second, the new economic powerhouses of China and India. They both logically attract the most attention, given their size and growth, yet understandably, both of them, because of that very size and conscious of their attractiveness, are cautious in the way they grant access to their domestic markets.

Third, the city-states of Hong Kong and Singapore, which have unique dynamics and continue to see strong economic growth.

Last, but not least, the emerging economies, such as Indonesia, Vietnam, Malaysia and Thailand. They have been experiencing rapid growth and should continue to do so, given the open nature of their economies, low government borrowing and consumer debt, and their young, growing populations.

The debate of only two years ago about whether Asia is decoupled from the rest of the global economy is now academic. Without doubt, Asian and Western economies are linked in complex ways. Trends across the region will strengthen Asia and benefit the global economy. China and India will continue to grow and offer more opportunities to international companies. Across the region, reliance on export-led growth is likely to decrease and, in the long term, currencies are unlikely to stay pegged to the dollar.

Asia’s changing role represents a clear opportunity. With unemployment in the West growing, it is understandable that some may see Asia’s increasing role more as a risk than an opportunity and look for safety in protectionist measures. That would be a short-sighted answer with damaging effects for the long-term growth prospects of the world economy as a whole.

We must work together to contain the protectionist threat. The UK is well positioned to influence this. It can also benefit from Asia’s growth and increasing wealth, given its historic ties with the region, its language, its location and its long commitment to free trade.

Today, every company with international ambitions knows that it needs a meaningful presence in Asia. This requires allocation of capital and senior management time to the region, determined investment in local talent and linking with local universities and business schools.

Prudential is an example of the benefits of looking East for a British household name. We have had thriving operations in Asia for well over 80 years. More than half our new business profits come from Asia and we expect this to continue to grow. Like the UK as a whole, our future prosperity will be determined by continuing to approach this exciting part of the world with determination, patience and creativity.

? Tidjane Thiam is Group Chief Executive of Prudential

by Pluto,
January 31, 2010 - 12:13am

This we know.

It has been speculated upon in open-source intelligence circles for years. So, there is little surprise for the rest of the world when it hears of China’s first major foray in its new role as a Superpower.

Although Americans might be surprised. That is, if they even hear about it before the Juarez, Mexico base goes live.

China mulls setting up military base in Pakistan

BEIJING: China has signaled it wants to go the US way and set up military bases in overseas locations that would possibly include Pakistan. The obvious purpose would be to exert pressure on India as well as counter US influence in Pakistan and Afghanistan.

Well, why not?

China already pays for our military imperialism by loaning us the money to play soldier. So, why shouldn’t the world’s new Superpower just cut to the chase and open their own bases?

“It is baseless to say that we will not set up any military bases in future because we have never sent troops abroad,” an article published on Thursday at a Chinese government website said. “It is our right,” the article said and went on to suggest that it would be done in the neighborhood, possibly Pakistan.

“As for the military aspect, we should be able to conduct the retaliatory attack within the country or at the neighboring area of our potential enemies. We should also be able to put pressure on the potential enemies’ overseas interests,” it said.

A military base in Pakistan will also help China keep a check on Muslim Uighur separatists fighting for an independent nation in its western region of Xingjian, which borders the North West Frontier Province of Pakistan. Beijing recently signed an agreement with the local government of NWFP in order to keep a close watch on the movement of Uighur ultras.

But don’t let me put words into China’s mouth. The Chinese are quite capable of speaking for themselves:

Setting up overseas military bases is not an idea we have to shun; on the contrary, it is our right. Bases established by other countries appear to be used to protect their overseas rights and interests. As long as the bases are set up in line with international laws and regulations, they are legal ones. But if the bases are established to harm other countries, their existence becomes illegal and they are likely to be opposed by other countries.

China develops its military force with a theme of peace in mind. Therefore, we can either develop military forces domestically to maintain peace, or place the forces abroad as long as we take world peace as the ultimate goal. In the 1950s, the Korean War enflamed the border of China. China had no option but to call up volunteer soldiers to fight against the overseas intervention in its northern neighbor. Many of the volunteer soldiers remained in North Korea for years after the end of the Korean war to safeguard the peace of the two countries. Finally, the troops withdrew from the peninsular where the stability was regained.

After the founding of the People’s Republic of China in 1949, China dispatched troops abroad under the invitation of the foreign countries as long as their requests are in line with our security interests, good to resume regional stability and benefit for the world peace process. So it is baseless to say that we will not set up any military bases in future because we have never sent troops abroad.

We need to know the military bases are not set up in view of the previous practices but are established in accordance with China’s interests as well as world peace. We can speak the point clearly even though to set up overseas military bases is not yet on agenda. It is wrong for us to believe we have no rights to set up the bases abroad.

So, how does the rest of the world view it? Generally, it is seen as healthy for the relationships between the world’s most powerful nations. While the idea of Chinese troop bases may be sensitive to countries like the US, which have already set up military bases abroad, there’s always room for more.

Pakistan, of course, is already triangulating the inherent geopolitical anxiety about the situation. Here’s what our nuclear-capable ally in the region has to say:

Islamabad — China has signaled that it wants to establish military bases overseas, following US steps to portray India as a regional super power.

An article posted on a Chinese government website said that China should be capable of counter attacking its enemy countries from the country as well as from neighboring countries. “We should also be able to put pressure on the potential enemies’ overseas interests.”

Defence analysts say China is concerned over the massive arms build up by India with the help of the United States. The Chinese move, which rarely reacts to foreign threats will certainly send a clear message to forces in the region that China will not remain unconcerned over the threats being posed by India.

China which has strategic military and economic partnership with Pakistan has always come to Pakistan’s aid and helped it to maintain a balance of power in the region.

China has helped Pakistan in modernization of its armed forces by supplying latest fighter planes and frigates besides forging close partnership between the armies of the two countries.

Needless to say, The Cato Institute is having a cow over this “revolting development:”

The lay reader should be clear that the United States does not look favorably on China’s developing the ability to guarantee its own smooth trading; we like having the leverage to determine, ultimately,whether we will allow foreign countries to trade.

The Chinese do not need to do anything to… prevent a foreign invasion of China. So what’s left is protecting Chinese people and money overseas; wresting control of China’s sea lines of communication from the United States; and preventing U.S. intervention in ways that would “harm the unity of the country.”

The piece really goes out of its way to make clear that this is all about countering American military power.

You go, China.

There’s a new kid on the block, folks.

One of the most common weed killers in the world, atrazine, can chemically castrate male frogs, turning them into females that lay eggs, say U.S. researchers.

Atrazine continues to be used on cornfields in Canada, although it is no longer approved for use in Europe. The U.S. Environmental Protection Agency announced last year it would launch a new scientific evaluation of atrazine’s effect on humans.

The gender change occurred at a concentration of atrazine half of the Health Canada guideline for drinking water.

Prof. Tyrone Hayes of the University of California, Berkeley, and colleagues reported their findings in this week’s Proceedings of the National Academy of Sciences.

“Atrazine-exposed males were both demasculinized [chemically castrated] and completely feminized as adults,” said Hayes.

Atrazine is widely used by farmers around the world as a herbicide, particularly in production of corn, sorghum and sugar cane.

Earlier studies have found that the chemical feminized zebra fish and leopard frogs, and caused a significant decline in sperm production in male salmon and caiman lizards.

“Atrazine exposure is highly correlated with low sperm count, poor semen quality and impaired fertility in humans,” said Hayes and colleagues.

While previous studies have shown atrazine adversely affects amphibian larval development, this latest study of African clawed frogs shows the process can go even further, said Hayes.

“Before, we knew we got fewer males than we should have, and we got hermaphrodites. Now, we have clearly shown that many of these animals are sex-reversed males,” said Hayes.

Genetic males become functioning females

Hayes and colleagues compared 40 male control frogs with 40 male frogs reared from hatchlings until full sexual maturity, in atrazine concentrations similar to those experienced year-round in areas where the chemical is found.

Of the male frogs exposed to atrazine, 90 per cent had low testosterone levels, decreased breeding gland size, feminized laryngeal development, suppressed mating behaviour, reduced sperm production and decreased fertility.

The remaining atrazine-exposed male frogs developed into functional females.

“Ten per cent of the exposed genetic males developed into functional females that copulated with unexposed males and produced viable eggs,” the researchers wrote.

The larvae that developed from those eggs were all male.

“Atrazine has caused a hormonal imbalance that has made them develop into the wrong sex, in terms of their genetic constitution,” said Hayes.

Atrazine level restricted in drinking water

The Health Canada maximum acceptable concentration for atrazine in drinking water is 0.005 milligrams per litre of water, or five parts per billion.

Hayes and colleagues exposed frogs to water contaminated with 2.5 parts per billion of atrazine.

Health Canada concluded an environmental assessment of atrazine in 2007. Its Pest Management Regulatory Agency “determined that the use of atrazine on corn for weed control does not entail an unacceptable risk to the environment.”

In Australia, environmental groups have been concerned about the adequacy of testing of Australian waterways for chemicals such as atrazine.

The National Health and Medical Research Council recently released revised guidelines that restrict the level of atrazine in drinking water to 20 parts per billion.

Whether the effects found in frogs translate to humans is far from clear.

Frogs have thin skin that can absorb chemicals easily and they literally bathe in the polluted water.

Google has decided to stop censoring search results in China, after discovering that someone based in that country had attempted to hack into the e-mail accounts of human rights activists. The company disclosed the move in a startling announcement posted to its blog late Tuesday.

Google said it was prepared to pull its business out of China, if issues around the surveillance and its decision to stop censoring results could not be resolved with the Chinese government.

Although the company did not accuse the Chinese government of being behind the hack attacks, Google said that the attacks, combined with attempts by China over the last year to “further limit free speech on the web” led it to conclude that it needed to “review the feasibility of our business operations in China.”

The company decided it will no longer censor search results on Google.cn, which it had been doing as a concession to the Chinese government since 2006 in order to be able to operate in China. The company didn’t say when it would stop censoring material but stated that it would be discussing with Chinese authorities how it might continue to operate legally in China, if at all, with an unfiltered search engine.

“We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China,” wrote David Drummond, Google’s chief legal officer and senior vice president for corporate development.

A source knowledgeable about the issue told Threat Level that the company is concerned about the repercussions of its decision on its employees in China. The source said the company timed its announcement for late Tuesday in the United States to come after the close of the stock market but also to coincide with early morning in China so that employees there would learn about what was happening before they arrived to work.

Google is “really concerned about their safety and feels that there is a very real possibility that they will be interrogated,” the source said. “They have been [interrogated] numerous times before, and this time they could be arrested and imprisoned.”

The search and advertising giant discovered in December that it was the target of a “highly sophisticated” cyberattack on its corporate infrastructure, which resulted in the theft of intellectual property. However, in investigating the incident, the company wrote on its blog, it soon realized the attack was something more than a simple security breach.

At least 20 other large companies were targeted as well, including other internet and technology companies as well as businesses in the financial, media and chemical sectors.

Google concluded that the primary goal of the attackers who targeted its network was to hack into the Gmail accounts of Chinese human rights activists. The attackers appeared, however, to succeed at obtaining access to only two accounts. That access was limited to basic account information, such as the date the account was created and the subject lines of e-mail, not the content of the correspondence. Google spokesman Gabriel Stricker told Threat Level that the company has already notified the owners of those accounts.

Stricker also told Threat Level that the company went public with the information as quickly as it could.

“We have been working hard to secure our systems, confirm the facts, and notify the relevant authorities,” he said.

The source who is knowledgeable about the investigation, however, told Threat Level that Google’s decision to disclose the attack on Tuesday was also partly due to a decision made by the other targeted companies to keep the attack under wraps.

“They made a specific decision not to go public,” the source said. “You can either go out [with the information] or not, and for whatever reason, they’ve decided not to [disclose].”

He said Google felt it was important to alert the people who are potentially affected by the attack — the activist community.

Shortly after Google disclosed the hack, Adobe posted its own announcement, disclosing that it became aware Jan. 2 that it had been targeted in a “sophisticated, coordinated attack against corporate network systems managed by Adobe and other companies.”

Adobe wrote that it currently had no evidence to indicate that any sensitive information — belonging to customers or the company — had been compromised.

The source familiar with the investigation told Threat Level that the intellectual property the hackers obtained from Google was not data that would give them a business advantage over the company, but data that would help the hackers gain access to the activist accounts.

The source said that Google was able to determine definitively that the attack originated in China, and that the attack was sophisticated in a way that Google does not generally experience.

Google is “under attack all the time, primarily via unsophisticated channels,” the source said. “I can’t go into detail to demonstrate the level of sophistication, but [the company] doesn’t use that term lightly, and it is quite deliberate.”

The source added that the implications of the attack are “extremely dark and extremely disturbing.”

“This is truly, truly beyond the pale,” he said. “The political nature of this and the attempt to monitor activists, not only in China but out of it, is chilling.”

In a separate investigation, the company said it discovered that the Gmail accounts of dozens of human rights advocates in the United States, China and Europe were accessed by third parties. These breaches, however, appeared to be the result of phishing attacks targeted at the users with the aim of stealing their account login credentials.

The company said it’s made changes to its architecture to enhance the security of accounts, but also advised users to take precautions to protect themselves, such as being cautious when clicking on links in e-mails and instant messages.

Google launched its Chinese-language search engine, Google.cn, in January 2006. The company said at the time that it did so in the belief that a search engine would help open access to information for Chinese residents. To obtain permission to operate in China, however, the company had agreed to censor search results that the Chinese government deemed objectionable. Google was harshly criticized by civil liberties groups for its concession to Chinese authorities.

The company now appears to be regretting that decision.

“We have taken the unusual step of sharing information about these attacks with a broad audience not just because of the security and human rights implications of what we have unearthed, but also because this information goes to the heart of a much bigger global debate about freedom of speech,” Drummond wrote Tuesday about the company’s reversal of its position in China. “The decision to review our business operations in China has been incredibly hard, and we know that it will have potentially far-reaching consequences.”

The Center for Democracy and Technology expressed strong support for Google’s move.

“Google has taken a bold and difficult step for internet freedom in support of fundamental human rights,” CDT president Leslie Harris said in a statement. “Google has done the right thing in bringing to light the human rights risks it faces, and leaving its door open to discussing with China whether there is a basis for operating in an uncensored manner. ”

By Nicholas Thompson

Valery Yarynich glances nervously over his shoulder. Clad in a brown leather jacket, the 72-year-old former Soviet colonel is hunkered in the back of the dimly lit Iron Gate restaurant in Washington, DC. It’s March 2009—the Berlin Wall came down two decades ago—but the lean and fit Yarynich is as jumpy as an informant dodging the KGB. He begins to whisper, quietly but firmly.

“The Perimeter system is very, very nice,” he says. “We remove unique responsibility from high politicians and the military.” He looks around again.

Yarynich is talking about Russia’s doomsday machine. That’s right, an actual doomsday device—a real, functioning version of the ultimate weapon, always presumed to exist only as a fantasy of apocalypse-obsessed science fiction writers and paranoid über-hawks. The thing that historian Lewis Mumford called “the central symbol of this scientifically organized nightmare of mass extermination.” Turns out Yarynich, a 30-year veteran of the Soviet Strategic Rocket Forces and Soviet General Staff, helped build one.

The point of the system, he explains, was to guarantee an automatic Soviet response to an American nuclear strike. Even if the US crippled the USSR with a surprise attack, the Soviets could still hit back. It wouldn’t matter if the US blew up the Kremlin, took out the defense ministry, severed the communications network, and killed everyone with stars on their shoulders. Ground-based sensors would detect that a devastating blow had been struck and a counterattack would be launched.

The technical name was Perimeter, but some called it Mertvaya Ruka, or Dead Hand. It was built 25 years ago and remained a closely guarded secret. With the demise of the USSR, word of the system did leak out, but few people seemed to notice. In fact, though Yarynich and a former Minuteman launch officer named Bruce Blair have been writing about Perimeter since 1993 in numerous books and newspaper articles, its existence has not penetrated the public mind or the corridors of power. The Russians still won’t discuss it, and Americans at the highest levels—including former top officials at the State Department and White House—say they’ve never heard of it. When I recently told former CIA director James Woolsey that the USSR had built a doomsday device, his eyes grew cold. “I hope to God the Soviets were more sensible than that.” They weren’t.

The system remains so shrouded that Yarynich worries his continued openness puts him in danger. He might have a point: One Soviet official who spoke with Americans about the system died in a mysterious fall down a staircase. But Yarynich takes the risk. He believes the world needs to know about Dead Hand. Because, after all, it is still in place.

The system that Yarynich helped build came online in 1985, after some of the most dangerous years of the Cold War. Throughout the ’70s, the USSR had steadily narrowed the long US lead in nuclear firepower. At the same time, post-Vietnam, recession-era America seemed weak and confused. Then in strode Ronald Reagan, promising that the days of retreat were over. It was morning in America, he said, and twilight in the Soviet Union.

Part of the new president’s hard-line approach was to make the Soviets believe that the US was unafraid of nuclear war. Many of his advisers had long advocated modeling and actively planning for nuclear combat. These were the progeny of Herman Kahn, author of On Thermonuclear War and Thinking About the Unthinkable. They believed that the side with the largest arsenal and an expressed readiness to use it would gain leverage during every crisis.

The new administration began expanding the US nuclear arsenal and priming the silos. And it backed up the bombs with bluster. In his 1981 Senate confirmation hearings, Eugene Rostow, incoming head of the Arms Control and Disarmament Agency, signaled that the US just might be crazy enough to use its weapons, declaring that Japan “not only survived but flourished after the nuclear attack” of 1945. Speaking of a possible US-Soviet exchange, he said, “Some estimates predict that there would be 10 million casualties on one side and 100 million on another. But that is not the whole of the population.”

Meanwhile, in ways both small and large, US behavior toward the Soviets took on a harsher edge. Soviet ambassador Anatoly Dobrynin lost his reserved parking pass at the State Department. US troops swooped into tiny Grenada to defeat communism in Operation Urgent Fury. US naval exercises pushed ever closer to Soviet waters.

The strategy worked. Moscow soon believed the new US leadership really was ready to fight a nuclear war. But the Soviets also became convinced that the US was now willing to start a nuclear war. “The policy of the Reagan administration has to be seen as adventurous and serving the goal of world domination,” Soviet marshal Nikolai Ogarkov told a gathering of the Warsaw Pact chiefs of staff in September 1982. “In 1941, too, there were many among us who warned against war and many who did not believe a war was coming,” Ogarkov said, referring to the German invasion of his country. “Thus, the situation is not only very serious but also very dangerous.”

A few months later, Reagan made one of the most provocative moves of the Cold War. He announced that the US was going to develop a shield of lasers and nuclear weapons in space to defend against Soviet warheads. He called it missile defense; critics mocked it as “Star Wars.”

To Moscow it was the Death Star—and it confirmed that the US was planning an attack. It would be impossible for the system to stop thousands of incoming Soviet missiles at once, so missile defense made sense only as a way of mopping up after an initial US strike. The US would first fire its thousands of weapons at Soviet cities and missile silos. Some Soviet weapons would survive for a retaliatory launch, but Reagan’s shield could block many of those. Thus, Star Wars would nullify the long-standing doctrine of mutually assured destruction, the principle that neither side would ever start a nuclear war since neither could survive a counterattack.

As we know now, Reagan was not planning a first strike. According to his private diaries and personal letters, he genuinely believed he was bringing about lasting peace. (He once told Gorbachev he might be a reincarnation of the human who invented the first shield.) The system, Reagan insisted, was purely defensive. But as the Soviets knew, if the Americans were mobilizing for attack, that’s exactly what you’d expect them to say. And according to Cold War logic, if you think the other side is about to launch, you should do one of two things: Either launch first or convince the enemy that you can strike back even if you’re dead.

Perimeter ensures the ability to strike back, but it’s no hair-trigger device. It was designed to lie semi-dormant until switched on by a high official in a crisis. Then it would begin monitoring a network of seismic, radiation, and air pressure sensors for signs of nuclear explosions. Before launching any retaliatory strike, the system had to check off four if/then propositions: If it was turned on, then it would try to determine that a nuclear weapon had hit Soviet soil. If it seemed that one had, the system would check to see if any communication links to the war room of the Soviet General Staff remained. If they did, and if some amount of time—likely ranging from 15 minutes to an hour—passed without further indications of attack, the machine would assume officials were still living who could order the counterattack and shut down. But if the line to the General Staff went dead, then Perimeter would infer that apocalypse had arrived. It would immediately transfer launch authority to whoever was manning the system at that moment deep inside a protected bunker—bypassing layers and layers of normal command authority. At that point, the ability to destroy the world would fall to whoever was on duty: maybe a high minister sent in during the crisis, maybe a 25-year-old junior officer fresh out of military academy. And if that person decided to press the button … If/then. If/then. If/then. If/then.

Once initiated, the counterattack would be controlled by so-called command missiles. Hidden in hardened silos designed to withstand the massive blast and electromagnetic pulses of a nuclear explosion, these missiles would launch first and then radio down coded orders to whatever Soviet weapons had survived the first strike. At that point, the machines will have taken over the war. Soaring over the smoldering, radioactive ruins of the motherland, and with all ground communications destroyed, the command missiles would lead the destruction of the US.

The US did build versions of these technologies, deploying command missiles in what was called the Emergency Rocket Communications System. It also developed seismic and radiation sensors to monitor for nuclear tests or explosions the world over. But the US never combined it all into a system of zombie retaliation. It feared accidents and the one mistake that could end it all.

Instead, airborne American crews with the capacity and authority to launch retaliatory strikes were kept aloft throughout the Cold War. Their mission was similar to Perimeter’s, but the system relied more on people and less on machines.

And in keeping with the principles of Cold War game theory, the US told the Soviets all about it.

Great Moments in Nuclear Game Theory

The first mention of a doomsday machine, according to P. D. Smith, author of Doomsday Men, was on an NBC radio broadcast in February 1950, when the atomic scientist Leo Szilard described a hypothetical system of hydrogen bombs that could cover the world in radioactive dust and end all human life. “Who would want to kill everybody on earth?” he asked rhetorically. Someone who wanted to deter an attacker. If Moscow were on the brink of military defeat, for example, it could halt an invasion by declaring, “We will detonate our H-bombs.”

A decade and a half later, Stanley Kubrick’s satirical masterpiece Dr. Strangelove permanently embedded the idea in the public imagination. In the movie, a rogue US general sends his bomber wing to preemptively strike the USSR. The Soviet ambassador then reveals that his country has just deployed a device that will automatically respond to any nuclear attack by cloaking the planet in deadly “cobalt-thorium-G.”

“The whole point of the doomsday machine is lost if you keep it a secret!” cries Dr. Strangelove. “Why didn’t you tell the world?” After all, such a device works as a deterrent only if the enemy is aware of its existence. In the movie, the Soviet ambassador can only lamely respond, “It was to be announced at the party congress on Monday.”

In real life, however, many Mondays and many party congresses passed after Perimeter was created. So why didn’t the Soviets tell the world, or at least the White House, about it? No evidence exists that top Reagan administration officials knew anything about a Soviet doomsday plan. George Shultz, secretary of state for most of Reagan’s presidency, told me that he had never heard of it.

In fact, the Soviet military didn’t even inform its own civilian arms negotiators. “I was never told about Perimeter,” says Yuli Kvitsinsky, lead Soviet negotiator at the time the device was created. And the brass still won’t talk about it today. In addition to Yarynich, a few other people confirmed the existence of the system to me—notably former Soviet space official Alexander Zheleznyakov and defense adviser Vitali Tsygichko—but most questions about it are still met with scowls and sharp nyets. At an interview in Moscow this February with Vladimir Dvorkin, another former official in the Strategic Rocket Forces, I was ushered out of the room almost as soon as I brought up the topic.

So why was the US not informed about Perimeter? Kremlinologists have long noted the Soviet military’s extreme penchant for secrecy, but surely that couldn’t fully explain what appears to be a self-defeating strategic error of extraordinary magnitude.

The silence can be attributed partly to fears that the US would figure out how to disable the system. But the principal reason is more complicated and surprising. According to both Yarynich and Zheleznyakov, Perimeter was never meant as a traditional doomsday machine. The Soviets had taken game theory one step further than Kubrick, Szilard, and everyone else: They built a system to deter themselves.

By guaranteeing that Moscow could hit back, Perimeter was actually designed to keep an overeager Soviet military or civilian leader from launching prematurely during a crisis. The point, Zheleznyakov says, was “to cool down all these hotheads and extremists. No matter what was going to happen, there still would be revenge. Those who attack us will be punished.”

And Perimeter bought the Soviets time. After the US installed deadly accurate Pershing II missiles on German bases in December 1983, Kremlin military planners assumed they would have only 10 to 15 minutes from the moment radar picked up an attack until impact. Given the paranoia of the era, it is not unimaginable that a malfunctioning radar, a flock of geese that looked like an incoming warhead, or a misinterpreted American war exercise could have triggered a catastrophe. Indeed, all these events actually occurred at some point. If they had happened at the same time, Armageddon might have ensued.

Perimeter solved that problem. If Soviet radar picked up an ominous but ambiguous signal, the leaders could turn on Perimeter and wait. If it turned out to be geese, they could relax and Perimeter would stand down. Confirming actual detonations on Soviet soil is far easier than confirming distant launches. “That is why we have the system,” Yarynich says. “To avoid a tragic mistake. ”

The mistake that both Yarynich and his counterpart in the United States, Bruce Blair, want to avoid now is silence. It’s long past time for the world to come to grips with Perimeter, they argue. The system may no longer be a central element of Russian strategy—US-based Russian arms expert Pavel Podvig calls it now “just another cog in the machine”—but Dead Hand is still armed.

To Blair, who today runs a think tank in Washington called the World Security Institute, such dismissals are unacceptable. Though neither he nor anyone in the US has up-to-the-minute information on Perimeter, he sees the Russians’ refusal to retire it as yet another example of the insufficient reduction of forces on both sides. There is no reason, he says, to have thousands of armed missiles on something close to hair-trigger alert. Despite how far the world has come, there’s still plenty of opportunity for colossal mistakes. When I talked to him recently, he spoke both in sorrow and in anger: “The Cold War is over. But we act the same way that we used to.”

Yarynich, likewise, is committed to the principle that knowledge about nuclear command and control means safety. But he also believes that Perimeter can still serve a useful purpose. Yes, it was designed as a self-deterrent, and it filled that role well during the hottest days of the Cold War. But, he wonders, couldn’t it now also play the traditional role of a doomsday device? Couldn’t it deter future enemies if publicized?

The waters of international conflict never stay calm for long. A recent case in point was the heated exchange between the Bush administration and Russian president Vladimir Putin over Georgia. “It’s nonsense not to talk about Perimeter,” Yarynich says. If the existence of the device isn’t made public, he adds, “we have more risk in future crises. And crisis is inevitable.”

As Yarynich describes Perimeter with pride, I challenge him with the classic critique of such systems: What if they fail? What if something goes wrong? What if a computer virus, earthquake, reactor meltdown, and power outage conspire to convince the system that war has begun?

Yarynich sips his beer and dismisses my concerns. Even given an unthinkable series of accidents, he reminds me, there would still be at least one human hand to prevent Perimeter from ending the world. Prior to 1985, he says, the Soviets designed several automatic systems that could launch counterattacks without any human involvement whatsoever. But all these devices were rejected by the high command. Perimeter, he points out, was never a truly autonomous doomsday device. “If there are explosions and all communications are broken,” he says, “then the people in this facility can—I would like to underline can—launch.”

Yes, I agree, a human could decide in the end not to press the button. But that person is a soldier, isolated in an underground bunker, surrounded by evidence that the enemy has just destroyed his homeland and everyone he knows. Sensors have gone off; timers are ticking. There’s a checklist, and soldiers are trained to follow checklists.

Wouldn’t any officer just launch? I ask Yarynich what he would do if he were alone in the bunker. He shakes his head. “I cannot say if I would push the button.”

It might not actually be a button, he then explains. It could now be some kind of a key or other secure form of switch. He’s not absolutely sure. After all, he says, Dead Hand is continuously being upgraded.

Senior editor Nicholas Thompson (nicholas_thompson@wired.com) is the author of The Hawk and the Dove: Paul Nitze, George Kennan, and the History of the Cold War.

As government agencies and corporations scramble to cut expenses, one idea gaining widespread attention involves cutting something most employees wouldn’t mind losing: work on Fridays. Regular three-day weekends, without a decrease in the actual hours worked per week, could not only save money, but also ease pressures on the environment and public health, advocates say. In fact, several states, cities and companies across the country are considering, or have already implemented on a trial basis, the condensed schedule for their employees.

The economic downturn started the trend, as companies looked to avoid laying off employees, notes John Langmaid, organizer of an upcoming symposium on the issue for the Connecticut Law Review. Firms soon realized that when they closed on Fridays they could save money without having to reduce weekly hours. Indeed, Langmaid remarks, the idea of a four-day, 40-hour workweek “has been out there for quite some time as a response to environmental issues, commuting pressures, as well as work-family balance.”

Local governments in particular have had their eyes on Utah over the last year; the state redefined the workday for more than 17,000 of its employees last August. For those workplaces, there’s no longer a need to turn on the lights, elevators or computers on Fridays—nor do janitors need to clean vacant buildings. Electric bills have dropped even further during the summer, thanks to less air-conditioning: Friday’s midday hours have been replaced by cooler mornings and evenings on Monday through Thursday. As of May, the state had saved $1.8 million.

Perhaps as important, workers seem all too ready to replace “TGIF” with “TGIT”. “People just love it,” says Lori Wadsworth, a professor of public management at Brigham Young University in Provo. She helped survey those on the new Working 4 Utah schedule this May and found 82 percent would prefer to stick with it.

The environment seems to like it, too. “If employees are on the road 20 percent less, and office buildings are only powered four days a week,” Langmaid says, “the energy savings and congestion savings would be enormous.” Plus, the hour shift for the Monday through Thursday workers means fewer commuters during the traditional rush hours, speeding travel for all. It also means less time spent idling in traffic and therefore less spewing of greenhouse gases and other pollutants. The 9-to-5 crowd also gets the benefit of extended hours at the DMV and other state agencies that adopt the four-day schedule.

An interim report released by the Utah state government in February projected a drop of at least 6,000 metric tons of carbon dioxide emissions annually from Friday building shutdowns. If reductions in greenhouse gases from commuting are included, the state would check the generation of at least 12,000 metric tons of CO2—the equivalent of taking about 2,300 cars off the road for one year.

Still, not everyone thinks a four-day workweek is good news. Some voice concerns that longer days in the office might lead to increased exhaustion and sickness, less time for working out as well as more frequent stops at fast food restaurants. So far, however, surveys suggest otherwise. “Utah employees actually show decreased health complaints, less stress and fewer sick days,” Wadsworth says, noting previous research finding that fatigue is typically triggered by workdays over 12 hours. Early results from another multicity survey indicate that just 20 percent of respondents said they felt they ate more fast food and only 30 percent said they worked out less. In fact, 30 percent said they exercised more. Anecdotal evidence from Utah also points to an unexpected benefit: increased volunteerism.

As the yearlong experiment with this new model nears its end next month, employees of the cities of El Paso, Tex., and Melbourne Beach, Fla., among others, are following Utah’s lead with their own TGIT trials. Struggling automakers have also spotted the potential savings. Starting August 10, General Motor’s plant workers in Lordstown, Ohio, will work four 10-hour days a week. (It was the car industry—Henry Ford, in particular—that made the five-day 40-hour workweek standard back in the 1920s and 1930s. Organized labor also helped drive federal legislation that in 1940 locked in a 40-hour week from what had commonly been more than 50 hours, and also banned child labor.)

New York, a state with higher energy costs and a workforce approximately 10 times larger than Utah’s, might especially benefit from a four-day workweek, according to Michael N. Gianaris, a Democratic member of the New York State Assembly. Dealing with a “massive budget deficit,” the state continues to look for “innovative ways to save money without causing pain to existing programs and raising taxes,” says Gianaris, who introduced legislation to test the schedule among state employees. He sees growing momentum for the idea, which boasts “very little downside and a whole lot of upside.”

“As we move further into the 21st century, governments need to look for ways to become more efficient. Moving to a four-day workweek should be at the top of the list,” Gianaris says. “It helps the environment. People like it. It’s a no-brainer.”

Merck was in trouble. In 2002, the pharmaceutical giant was falling behind its rivals in sales. Even worse, patents on five blockbuster drugs were about to expire, which would allow cheaper generics to flood the market. The company hadn’t introduced a truly new product in three years, and its stock price was plummeting. In interviews with the press, Edward Scolnick, Merck’s research director, laid out his battle plan to restore the firm to preeminence. Key to his strategy was expanding the company’s reach into the antidepressant market, where Merck had lagged while competitors like Pfizer and GlaxoSmithKline created some of the best-selling drugs in the world. “To remain dominant in the future,” he told Forbes, “we need to dominate the central nervous system.” His plan hinged on the success of an experimental antidepressant codenamed MK-869. Still in clinical trials, it looked like every pharma executive’s dream: a new kind of medication that exploited brain chemistry in innovative ways to promote feelings of well-being. The drug tested brilliantly early on, with minimal side effects, and Merck touted its game-changing potential at a meeting of 300 securities analysts. Behind the scenes, however, MK-869 was starting to unravel. True, many test subjects treated with the medication felt their hopelessness and anxiety lift. But so did nearly the same number who took a placebo, a look-alike pill made of milk sugar or another inert substance given to groups of volunteers in clinical trials to gauge how much more effective the real drug is by comparison. The fact that taking a faux drug can powerfully improve some people’s health—the so-called placebo effect—has long been considered an embarrassment to the serious practice of pharmacology. Ultimately, Merck’s foray into the antidepressant market failed. In subsequent tests, MK-869 turned out to be no more effective than a placebo. In the jargon of the industry, the trials crossed the futility boundary. MK-869 wasn’t the only highly anticipated medical breakthrough to be undone in recent years by the placebo effect. From 2001 to 2006, the percentage of new products cut from development after Phase II clinical trials, when drugs are first tested against placebo, rose by 20 percent. The failure rate in more extensive Phase III trials increased by 11 percent, mainly due to surprisingly poor showings against placebo. Despite historic levels of industry investment in R&D, the US Food and Drug Administration approved only 19 first-of-their-kind remedies in 2007—the fewest since 1983—and just 24 in 2008. Half of all drugs that fail in late-stage trials drop out of the pipeline due to their inability to beat sugar pills. The upshot is fewer new medicines available to ailing patients and more financial woes for the beleaguered pharmaceutical industry. Last November, a new type of gene therapy for Parkinson’s disease, championed by the Michael J. Fox Foundation, was abruptly withdrawn from Phase II trials after unexpectedly tanking against placebo. A stem-cell startup called Osiris Therapeutics got a drubbing on Wall Street in March, when it suspended trials of its pill for Crohn’s disease, an intestinal ailment, citing an “unusually high” response to placebo. Two days later, Eli Lilly broke off testing of a much-touted new drug for schizophrenia when volunteers showed double the expected level of placebo response. It’s not only trials of new drugs that are crossing the futility boundary. Some products that have been on the market for decades, like Prozac, are faltering in more recent follow-up tests. In many cases, these are the compounds that, in the late ’90s, made Big Pharma more profitable than Big Oil. But if these same drugs were vetted now, the FDA might not approve some of them. Two comprehensive analyses of antidepressant trials have uncovered a dramatic increase in placebo response since the 1980s. One estimated that the so-called effect size (a measure of statistical significance) in placebo groups had nearly doubled over that time. It’s not that the old meds are getting weaker, drug developers say. It’s as if the placebo effect is somehow getting stronger. The fact that an increasing number of medications are unable to beat sugar pills has thrown the industry into crisis. The stakes could hardly be higher. In today’s economy, the fate of a long-established company can hang on the outcome of a handful of tests. Why are inert pills suddenly overwhelming promising new drugs and established medicines alike? The reasons are only just beginning to be understood. A network of independent researchers is doggedly uncovering the inner workings—and potential therapeutic applications—of the placebo effect. At the same time, drugmakers are realizing they need to fully understand the mechanisms behind it so they can design trials that differentiate more clearly between the beneficial effects of their products and the body’s innate ability to heal itself. A special task force of the Foundation for the National Institutes of Health is seeking to stem the crisis by quietly undertaking one of the most ambitious data-sharing efforts in the history of the drug industry. After decades in the jungles of fringe science, the placebo effect has become the elephant in the boardroom. The roots of the placebo problem can be traced to a lie told by an Army nurse during World War II as Allied forces stormed the beaches of southern Italy. The nurse was assisting an anesthetist named Henry Beecher, who was tending to US troops under heavy German bombardment. When the morphine supply ran low, the nurse assured a wounded soldier that he was getting a shot of potent painkiller, though her syringe contained only salt water. Amazingly, the bogus injection relieved the soldier’s agony and prevented the onset of shock. Returning to his post at Harvard after the war, Beecher became one of the nation’s leading medical reformers. Inspired by the nurse’s healing act of deception, he launched a crusade to promote a method of testing new medicines to find out whether they were truly effective. At the time, the process for vetting drugs was sloppy at best: Pharmaceutical companies would simply dose volunteers with an experimental agent until the side effects swamped the presumed benefits. Beecher proposed that if test subjects could be compared to a group that received a placebo, health officials would finally have an impartial way to determine whether a medicine was actually responsible for making a patient better.

The Journal analyzed the fortunes of CEOs from 2003 to 2007 based on executive compensation and stock sale data. Fifteen of these CEOs took home more than $100 million in cash during this period. At the high end was Charles Schwab, who made over $816 million from his self-named accounting firm, almost all of it from stock sales.

Of the 120 publicly traded firms the Journal analyzed, CEOs cashed out a total of more than $21 billion. However, data was gathered only from publicly traded companies, and thus does not include similar fortunes that have been made by “hedge fund chiefs, Wall Street traders, and executives who sold their companies outright.” Nor did it include data related to exit packages, the multimillion-dollar “golden parachutes” awarded to retiring or fired executives.

The Journal’s findings underscore the parasitism and criminality of the US financial elite. Defenders have long justified extravagant CEO pay by claiming that these were the talented “risk-takers” who generated enormous wealth for investors. But the Journal’s data shows that there is no correlation between compensation and a firm’s success. On the contrary, many CEOs rewarded themselves just as their corporations approached ruin.

These included Richard Fuld, the CEO of Lehman Brothers, who transformed his firm’s stock into well over $100 million in cash. When added to his salary and bonuses, Fuld pocketed nearly $185 million in the five years before 2008, even as he guided his 150-year-old investment bank to ruin. James Cayne of Bear Stearns did nearly as well at his investment bank, collecting over $163.2 million, the vast majority of which was garnered from selling stock that would soon be scarcely worth the paper upon which it was printed.

Maurice Greenberg of American International Group (AIG) made $132.8 million between 2003 and 2005, when he was forced to resign. Well over $100 million of this came from windfall stock sales of the giant insurer. AIG collapsed in September, but was determined to be “too big to fail” by the federal government, and was bailed out twice in less than one month to the tune of some $120 billion.

In August, the sub-prime mortgage giant Countrywide Financial Group collapsed spectacularly, and was absorbed by Bank of America. In the previous five years, however, Countrywide’s CEO, Angelo Mozilo, took home $471 million, over $400 million of which came from sales of the company’s soon-to-be-worthless stock.

A look at the sectors of the economy where these richly remunerated executives worked, moreover, demonstrates the advanced rot of the US economy as a whole. Without exception, they represented corporations that engaged in financial speculation—“industries closely tied to the financial crisis,” as the Journal puts it—and that produced no real value. These until recently “vibrant” parts of the economy functioned only to siphon off enormous social wealth and deposit it in the bank accounts of the CEOs and big investors.

One example the Journal considered is the private student loan sector, which made Daniel Meyers, the CEO of a firm called First Marblehead, a very wealthy man. Marblehead specialized in servicing loans to students who had “exhausted the cheaper government-backed variety,” and then repackaging and selling the debt to big banks such as Bank of America. Meyers earned nearly $100 million, almost all of it in the sale of company stock; together with other Marblehead insiders, $660 million was taken. The Journal notes that Meyers used $10.3 million of his fortune to buy an ocean-front property in Rhode Island—the state with the highest unemployment rate. Meyers tore down the villa that was there and has put up a 38,000-square-foot mansion he named, befitting a pirate, “Seaward.”

Another sector of the economy that has proved highly lucrative for CEOs is that of home mortgages. In addition to the aforementioned case of Angelo Mozilo and Countrywide, the Journal highlights the case of New Century Financial, the nation’s second largest subprime lender. While the lender is now bankrupt, over a period of four years its three leading executives took home a combined $74 million. The Journal also mentions the case of Herbert and Marion Sandler, who made $2 billion off selling their mortgage firm, Golden West Financial Corp., to Wachovia in 2005. This purchase likely contributed to the demise of Wachovia, which collapsed in October and was bought out by Wells Fargo.

In the field of “credit-default swaps,” Michael Gooch made $82.5 million through his firm GTI Group. Over $77 million of this came from a remarkably well-timed sale in May of 2006. Since then, GTI’s stock has lost over 90 percent of its value. Gooch owns three mansions, and boasted to the Journal that he could pay off his only debt, a $1 million mortgage, “with the spare change in my bank account.”

The Journal notes with some surprise that one of the most highly remunerative fields was that of “home-building.” The wealth accumulated by CEOs in this sector is a clear byproduct of the speculative real estate bubble that emerged over the last decade. Toll Brothers, specializing in building suburban mansions, made Robert and Bruce Toll three quarters of a billion in cash, largely in stock sales. The company has lost 74 percent of its value in the past year.

Chad Dreier, CEO of Ryland Group, made $181 million building homes in “hot markets” such as Las Vegas that have now gone bust, exposing thousands of families to foreclosure. Dwight Schar, the CEO of a building firm called NVR, took home $626 million in 2003-2007, almost all from the sale of stock. Schar spent about $86 million of this fortune in 2005 to buy the Palm Beach, Florida estate of billionaire Ronald Perelman. The Journal notes that the 11-acre oceanfront complex includes two swimming pools and a tennis court.

It is perhaps a sign of the times that the Wall Street Journal, long a mouthpiece of US finance capital, would run a prominent article that questions the enormous personal fortunes built up by CEOs through dubious means even as their corporations sailed toward disaster. Running such an article aims in part, no doubt, to appease the rage of thousands of middling investors who have lost their shirts in the economic crisis.

In any event, the criminal methods of these CEOs, who have led their companies and American capitalism as a whole to the brink of ruin, do not derive from personal greed alone. In their criminality and nearsightedness the CEOs reflect, instead, the narrowing horizon and historical decline of US capitalism, in which the accumulation of extreme wealth long ago lost whatever connection it had to the creation of real value.

Microchips as small as this one could be implanted into Aids sufferers
Legislators in the archipelago’s remote province of Papua said they supported a bill requiring some patients to be fitted with chips to monitor the disease.
Health workers and Aids activists called the plan “abhorrent”.
People with Aids aren’t animals - we have to respect their rights.
Tahi Ganyang Butarbutar, a prominent Papuan activist
But lawmaker John Manangsang defended implanting small chips beneath the skin of “sexually aggressive” patients.
He said it would help authorities identify, track and ultimately punish those who deliberately infect others with up to six months in jail or a $5,000 fine.
The technical and practical details still need to be decided but, if the proposed law gets a majority vote as expected, it will be enacted next month, Mr Manangsang said.
Indonesia is the world’s fourth most populous country and has one of Asia’s fastest growing HIV rates.
There are up to 290,000 infections out of 235 million people, fuelled mainly by intravenous drug users and prostitution.
But Papua, the country’s easternmost and poorest province with a population of about 2 million, has been hardest hit.
Its case rate of almost 61 per 100,000 is 15 times the national average, according to internationally-funded research, which blames lack of knowledge about sexually transmitted diseases.
The health situation is extraordinary, so we have to take extraordinary action.
Lawmaker Weynand Watari
Read: Aids Sufferers’ Faith In Rhino Juice
Another lawmaker, Weynand Watari, envisions radio frequency identification tags like those used to track everything from cattle to luggage.
A committee would be created to decide who should be fitted with chips and to monitor patients’ behaviour.
But it remains unclear who would be on it and how they would carry out their work, lawmakers said.

On Friday November 21, the world came within a hair’s breadth of the most colossal financial collapse in history according to bankers on the inside of events with whom we have contact. The trigger was the bank which only two years ago was America’s largest, Citigroup. The size of the US Government de facto nationalization of the $2 trillion banking institution is an indication of shocks yet to come in other major US and perhaps European banks thought to be ‘too big to fail.’

The clumsy way in which US Treasury Secretary Henry Paulson, himself not a banker but a Wall Street ‘investment banker’, whose experience has been in the quite different world of buying and selling stocks or bonds or underwriting and selling same, has handled the unfolding crisis has been worse than incompetent. It has made a grave situation into a globally alarming one.

‘Spitting into the wind’

A case in point is the secretive manner in which Paulson has used the $700 billion in taxpayer funds voted him by a labile Congress in September. Early on, Paulson put $125 billion in the nine largest banks, including $10 billion for his old firm, Goldman Sachs. However, if we compare the value of the equity share that $125 billion bought with the market price of those banks’ stock, US taxpayers have paid $125 billion for bank stock that a private investor could have bought for $62.5 billion, according to a detailed analysis from Ron W. Bloom, economist with the US United Steelworkers union, whose members as well as pension fund face devastating losses were GM to fail.

That means half of the public’s money was a gift to Paulson’s Wall Street cronies. Now, only weeks later, the Treasury is forced to intervene to de facto nationalize Citigroup. It won’t be the last.

Paulson demanded, and got from a labile US Congress, Democrat as well as Republican, sole discretion over how and where he can invest the $700 billion, to date with no effective oversight. It amounts to the Treasury Secretary in effect ‘spitting into the wind’ in terms of resolving the fundamental crisis.

It should be clear to any serious analyst by now that the September decision by Paulson to defer to rigid financial ideology and let the fourth largest US investment bank, Lehman Brothers fail, was the proximate trigger for the present global crisis. Lehman Bros.’ surprise collapse triggered the current global crisis of confidence. It was simply not clear to the rest of the banking world which US financial institution bank might be saved and which not, after the Government had earlier saved the far smaller Bear Stearns, while letting the larger, far more strategic Lehman Bros. fail.

Some Citigroup details

The most alarming aspect of the crisis is the fact that we are in an inter-regnum period when the next President has been elected but cannot act on the situation until after January 20, 2009 when he is sworn in.

Consider the details of the latest Citigroup government de facto nationalization (for ideological reasons Paulson and the Bush Administration hysterically avoid admitting they are in the process of nationalizing key banks). Citigroup has more than $2 trillion of assets, dwarfing companies such as American International Group Inc. that got some $150 billion in US taxpayer funds in the past two months. Ironically, only eight weeks before, the Government had designated Citigroup to take over the failing Wachovia Bank. Normally authorities have an ailing bank absorbed by a stronger one. In this instance the opposite seems to have been the case. Now it is clear that the Citigroup was in deeper trouble than Wachovia. In a matter of hours in the week before the US Government nationalization was announced, the stock value of Citibank plunged to $3.77 in New York, giving the company a market value of about $21 billion. The market value of Citigroup stock in December 2006 had been $247 billion. Two days before the bank nationalization the CEO, Vikram Pandit had announced a huge 52,000 job slashing plan. It did nothing to stop the slide.

The scale of the hidden losses of perhaps the twenty largest US banks is so enormous that if not before, the first Presidential decree of President Barack Obama will likely have to be declaration of a US ‘Bank Holiday’ and the full nationalization of the major banks, taking on the toxic assets and losses until the economy can again function with credit flowing to industry once more.

Citigroup and the government have identified a pool of about $306 billion in troubled assets. Citigroup will absorb the first $29 billion in losses. After that, remaining losses will be split between Citigroup and the government, with the bank absorbing 10% and the government absorbing 90%. The US Treasury Department will use its $700 billion TARP or Troubled Asset Recovery Program bailout fund, to assume up to $5 billion of losses. If necessary, the Government’s Federal Deposit Insurance Corporation (FDIC) will bear the next $10 billion of losses. Beyond that, the Federal Reserve will guarantee any additional losses. The measures are without precedent in US financial history. It’s by no means certain they will salvage the dollar system.

The situation is so intertwined, with six US major banks holding the vast bulk of worldwide financial derivatives exposure, that the failure of a single major US financial institution could result in losses to the OTC derivatives market of $300-$400 billion, a new IMF working paper finds. What’s more, since such a failure would likely cause cascading failures of other institutions. Total global financial system losses could exceed another $1,500 billion according to an IMF study by Singh and Segoviano.

The madness over a Detroit GM rescue deal

The health of Citigroup is not the only gripping crisis that must be dealt with. At this point, political and ideological bickering in the US Congress has so far prevented a simple emergency $25 billion loan extension to General Motors and other of the US Big Three automakers—Ford and Chrysler. The absurd spectacle of US Congressmen attacking the chairmen of the Big Three for flying to the emergency Congressional hearings on a rescue loan in their private company jets while largely ignoring the issue of consequences to the economy of a GM failure underscores the utter lack of touch with reality that has overwhelmed Washington in recent years.

For GM to go into bankruptcy risks a disaster of colossal proportions. Although Lehman Bros., the biggest bankruptcy in US history, appears to have had an orderly settlement of its credit defaults swaps, the disruption occurred before-hand, as protection writers had to post additional collateral prior to settlement. That was a major factor in the dramatic global market selloff in October. GM is bigger by far, meaning bigger collateral damage, and this would take place when the financial system is even weaker than when Lehman failed.

In addition, a second, and potentially far more damaging issue, has been largely ignored. The advocates of letting GM go bankrupt argue that it can go into Chapter 11 just like other big companies that get themselves in trouble. That may not happen however, and a Chapter 7 or liquidation of GM that would then result would be a tectonic event.

The problem is that under Chapter 11 US law, it takes time for the company to get the protection of a bankruptcy court. Until that time, which may be weeks or months, the company would need urgently ‘bridge financing’ to continue operating. This is known as ‘Debtor-in-Possession or DIP financing. DIP is essential for most Chapter 11 bankruptcies, as it takes time to get the plan of reorganization approved by creditors and the courts. Most companies, like GM today, go to bankruptcy court when they are at the end of their liquidity.

DIP is specifically for companies in, or on the verge of bankruptcy, and the debt is generally senior to other outstanding creditor claims. So it is actually very low risk, as the amount spent is usually not large, relatively speaking. But DIP lending is being severely curtailed right now, just when it is most needed, as healthier banks drastically cut loans in the severe credit crunch situation.

Without access to DIP bridge financing, GM would be forced into a partial, or even a full liquidation. The ramifications are horrendous. Aside from loss of 100,000 jobs at GM itself, GM is critical to keep many US auto suppliers in business. If GM failed soon most, possibly even all of the US and even foreign auto suppliers will go under. Those parts suppliers are important to other auto makers. Many foreign car factories would be forced to close due to loss of suppliers. Some analysts put 2009 job losses from a GM failure as high as 2.5 million jobs due to the follow-on effects. If the impact of that 2.5 million job loss is seen in terms of the overall losses to the economy of non-auto jobs such as services, home foreclosures caused and such, some estimate total impact would be more than 15 million jobs.

So far in the face of this staggering prospect, the members of the US Congress have chosen to focus on the fact the GM chief, Rick Wagoner, flew in his private company jet to Washington. The Congressional charade conjures up the image of Nero playing his fiddle as Rome goes up in flames. It should not be surprising that at the recent EU-Asian Summit in Beijing, Chinese officials mooted the idea of trading between the EU and Asian nations such as China in Euro, Renminbi, Yen or other national currencies other than the dollar. The Citigroup bailout and GM debacle has confirmed the death of the post-1944 Bretton Woods Dollar System.

The real truth behind Citigroup bailout

What neither Paulson nor anyone in Washington is willing to reveal is the real truth behind the Citigroup bailout. By his and the Republican Bush Administration’s adamant earlier refusal to take an initial resolute action to immediately nationalize the nine or so largest troubled banks, he has created the present debacle. By refusing on ideological grounds to instead reorganize the banks’ assets into some form of ‘good bank’ and ‘bad bank,’ similar to what the Government of Sweden did with what it called Securum, during its banking crisis in the early 1990’s, Paulson and company have created a global financial structure on the brink.

A Securum or similar temporary nationalization would have allowed the healthy banks to continue lending to the real economy so the economy could continue operating, while the State merely sat on the undervalued real estate assets of the Swedish banks for some months until the recovering economy made the assets again marketable to the private sector. Instead, Paulson and his ‘crony capitalists’ in Washington have turned a bad situation into a globally catastrophic one.

His apparent realization of the error of his initial refusal to nationalize came too late. When Paulson reversed policy on September 19 and presented the nine largest banks with an ultimatum to accept partial Government equity ownership, abandoning his original bizarre plan to merely buy up the toxic waste asset-backed securities of the banks with his $700 billion TARP taxpayer money, he never revealed why.

Under the original Paulson Plan, as Dimitri B. Papadimitriou and L. Randall Wray of the Jerome Levy Institute at Bard College in New York point out, Paulson sought to create a situation in which the US ‘Treasury would become an owner of troubled financial institutions in exchange for a capital injection—but without exercising any ownership rights, such as replacing the management that created the mess. The bailout would be used as an opportunity to consolidate control of the nation’s financial system in the hands of a few large (Wall Street) banks, with government funds subsidizing purchases of troubled banks by “healthy” ones.’

Paulson soon realized the scale of crisis, largely triggered by his inept handling of the Lehman Brothers case, had created an impossible situation. Were Paulson to use the $700 billion to buy up toxic waste ABS assets from the select banks at today’s market price, the $700 billion would be far too little to take an estimated $2 trillion ($2,000 billion) in Asset Backed Securities off the books of the banks.

The Levy Economics Institute economists state, ‘It is probable that many and perhaps most financial institutions are insolvent today — with a black hole of negative net worth that would swallow Paulson’s entire $700 billion in one gulp.’

That reality is the real reason Paulson was forced to abandon his original ‘crony bailout’ TARP plan and opt to use some of his money to buy equity shares in the nine largest banks.

That scheme as well is ‘dead on arrival’ as the latest Citigroup nationalization scheme underscores. The dilemma Paulson has created with his inept handling of the crisis is simple: If the US Government paid the true value for these nearly worthless assets, the banks would have to write down huge losses, and, as Levy economists put it, ‘announce to the world that they are insolvent.’ On the other hand, if Paulson raised the toxic waste purchase price high enough to protect the banks from losses, $700 billion ‘will buy only a tiny fraction of the ‘troubled’ assets.’ That is what the latest nationalization of Citigroup is about.

It is only the beginning. The 2009 year will be one of titanic shocks and changes to the global order of a scale perhaps not experienced in the past five centuries. This is why we should speak of the end of the American Century and its Dollar System.

How destructive that process will be to the citizens of the United States who are the prime victims of Paulson’s crony capitalists, as well as to the rest of the world depends now on the urgency and resoluteness with which heads of national Governments in Germany, the EU, China, Russia and the rest of the non-US world react. It is no time for ideological sentimentality and nostalgia of the postwar old order. That collapsed this past September along with Lehman Brothers and the Republican Presidency. Waiting for a ‘miracle’ from an Obama Presidency is no longer an option for the rest of the world.

Paul Joseph Watson
[1] Prison Planet.com
Monday, November 24, 2008

German intelligence agents have been caught staging a false flag terror attack against an EU building in Kosovo, apparently in an attempt to create a pretext for EU police to be deployed in Kosovo after government leaders rejected the UN-mandated proposal.

“Germany declined to comment on on Saturday on reports that three Germans arrested on suspicion of throwing explosives at an EU office in Kosovo were intelligence officers,” [2] reports Reuters.

“The explosive charge was thrown on Nov. 14 at the International Civilian Office (ICO), the office of EU Special Representative Pieter Feith, who oversees Kosovo’s governance.”

A police source in Kosovo told Reuters: “They are members of the BND”, but gave no further details.

German news outlet Der Spiegel named the men as BND intelligence officers.

Most reports claimed that the officers had thrown dynamite at the building, while others reported that a bomb was placed near the building.

(ARTICLE CONTINUES BELOW)

The bombing attempt happened just days after Kosovan leaders rejected a plan by U.N. Secretary General Ban Ki-moon’s for the deployment of a 2000 strong EU police and justice mission, EULEX.

A Kosovan judge has ordered that the men be detained for a further 30 days as prosecution lawyers seek terrorism charges that carry a maximum 20-year sentence.

The three men were not in Kosovo under official auspices but were working on behalf of a contractor, named by German media as Logistic Assessments.

“The alleged presence of covert intelligence operatives has led to a deterioration in the cordial relations between Germany and the newly independent Kosovo. The German foreign ministry confirmed that three German citizens had been detained in Kosovo. The BND had no comment,” reports the [3] European Voice.

The German secret service, the BND, is notorious for infiltrating extremist groups and using them for their own political ends.

In March 2003 amidst a highly publicized attempt to ban the activities of a German Neo-Nazi political party, the trial collapsed in court after it emerged that the far-right National Democratic Party (NPD) [4] was full of German intelligence officers occupying top ranking positions, including the publisher of the party’s newspaper, who were all secretly on the government’s payroll for decades.

“The case has been stalled for more than a year after it emerged that the government’s case rested, at least partly, on a network of informants in the National Democratic Party. This raised the question of whether any acted as provocateurs,” reported the Scotsman.

As many as 30 leading figures in the party were exposed as paid agents and informers for the BND.

THE french fry was “almost sacrosanct for me,” Ray Kroc, one of the founders of McDonald’s, wrote in his autobiography, “its preparation a ritual to be followed religiously.” During the chain’s early years french fries were made from scratch every day. Russet Burbank potatoes were peeled, cut into shoestrings, and fried in McDonald’s kitchens. As the chain expanded nationwide, in the mid-1960s, it sought to cut labor costs, reduce the number of suppliers, and ensure that its fries tasted the same at every restaurant. McDonald’s began switching to frozen french fries in 1966 — and few customers noticed the difference. Nevertheless, the change had a profound effect on the nation’s agriculture and diet. A familiar food had been transformed into a highly processed industrial commodity. McDonald’s fries now come from huge manufacturing plants that can peel, slice, cook, and freeze two million pounds of potatoes a day. The rapid expansion of McDonald’s and the popularity of its low-cost, mass-produced fries changed the way Americans eat. In 1960 Americans consumed an average of about eighty-one pounds of fresh potatoes and four pounds of frozen french fries. In 2000 they consumed an average of about fifty pounds of fresh potatoes and thirty pounds of frozen fries. Today McDonald’s is the largest buyer of potatoes in the United States.

The world has never been overpopulated with humans in any meaningful sense. It seems, though, that it is overpopulated with theoretical fears of overpopulation.

The appeal of the overpopulation myth is obvious—who doesn’t love a simple, easily graspable idea that seems to explain a great deal? One such idea is the central biological insight that all animals aim to turn food into offspring. When a species’ food increases, then its population grows as well; and when the food supply declines, so too do its numbers. This applies to everything from paramecia to parakeets.

Since humans are also animals that reproduce, biologists have extended that insight to us as well. This is the source of the overpopulation fears that have haunted learned experts from Thomas Robert Malthus 200 years ago to Paul Ehrlich today.

An extensive literature critiques the concept of human overpopulation. But it’s apparently an idea whose time comes again, and again, and again, in all sorts of strange places. For instance, the 1990s saw a bad novelization of the concept in Ishmael, in which a telepathic gorilla recycles Malthusianism.

The latest iteration of this two-century-old idea comes from Duke University consultant Russell Hopfenberg, in an article called “Human Carrying Capacity Is Determined by Food Availability”, in the November 2003 issue of the journal Population and Environment. Hopfenberg writes, “[T]he problem of human population growth can be feasibly addressed only if it is recognized that increases in the population of the human species, like increases in the population of all other species, is a function of increases in food availability.”

Hopfenberg backs his argument by showing that global food supplies and human numbers both rise from 1960 to 2000. In 2001, Hopfenberg, writing with Cornell University ecologist David Pimentel in Environment, Development and Sustainability, further asserts that “if food production continues to increase, the world population is projected to increase to 12 billion in the next 50 years (based on current growth rates).” Hopfenberg’s solution to skyrocketing human numbers is simple: “Cap the increases in food production and thereby halt the increases in population by means of a reduced birth rate.”

So has the Malthusian case finally been proven? No. Hopfenberg’s analysis makes the mistake of considering only global numbers. This hides a great deal of information. If we look on the regional level we see a very different picture than one of a relentlessly rising tide of human babies. Fertility does not correlate with food availability.

The countries with greatest access to food are, in fact, the countries with the lowest fertility rates. As the United Nations reports, 14 developed countries have fertility rates lower than 1.3 children per woman. (Replacement fertility is 2.1 children per woman.) The fertility rates in practically all developed countries are below the replacement rate. Clearly, food availability does not mean more children. More generally, as food security has increased around the world, instead of increasing as Hopfenberg’s theory would suggest, global average fertility rates have dropped from 6 children per woman in 1960 to 2.6 today. And the rates continue to plummet. Sadly, in Africa, which has the highest current fertility rates, food production per capita has been declining for nearly 30 years.

If food availability really determined human reproductive capacity, Illinois farmers should have the highest fertility rate in the world. Instead, they have one of the lowest. Hopfenberg would reply that excess food produced in North America and Europe fuels population growth in the rest of the world. In some sense that is trivially true, but the strictly biological model that he says applies to people does not account for such phenomena. For example, deer in Virginia don’t sacrifice their chances to produce fawns and ship their food to deer in Arkansas, nor do sparrows in New York forego nesting in order to supply food to Floridian sparrows. Individuals, not populations, reproduce.

The notion that capping food supplies will halt population growth is also trivially true, but not by the gentle means which Hopfenberg and Pimentel suggest, e.g., reducing human birth rates. Food shortages no doubt reduce fertility, but they also shrink population much more quickly by simple starvation.

Finally, Hopfenberg and Pimentel’s projection that world population will reach 12 billion by 2050 is off. They simply extrapolate current levels of fertility, yet as we’ve seen, fertility rates are rapidly declining. The 2002 revision of the United Nations’ World Population Prospects’ median variant trend projects a world population of 8.9 billion by 2050. Given the rapidly falling global fertility rates, the low variant trend is more likely—and that projects a world population topping out at 7.5 billion by 2040, then beginning to decline. Perhaps Malthusianism will finally decline along with fertility rates.

The recent meeting between Russian Prime Minister Vladimir Putin and his Chinese counterpart, Wen Jiabao, created a financial sensation. Wen said that the two nations could withstand the global financial crisis if they joined forces; Putin urged him to go farther and stop using U.S. dollars in Russian-Chinese settlements.

This idea is nothing new. Russia and China reached a “framework” agreement in November 2007, which was followed by China’s similar agreement with Belarus.

Earlier this year, Iranian President Mahmoud Ahmadinejad and Venezuelan leader Hugo Chavez turned against the dollar as well when they asked their OPEC partners to stop using the dollar for oil settlements. They argued that the “green” currency was no longer reliable and it was high time they look for a more stable and predictable alternative.

Curiously, unlike the Ahmadinejad and Chavez appeal, Putin’s proposal came as the dollar was on the rebound and even began pushing the euro. Economists even started talking in terms of a reversal of the global currency trends, rather than the temporary appreciation of the dollar.

Analysts predict that the dollar will regain its value in the next few months. They do not see anything which could hinder its steady growth.

Yet, Putin proposed that Russia and China stop using it as a settlement instrument. What is it - lack of confidence in the dollar’s prospects or a political move?

Experts differ on this count. Igor Nikolayev, chief strategic analyst at FBK private auditing firm, sounded skeptical: “I think it was a political statement rather than an economic decision. There is a dominant public sentiment that the United States is the source of all evil, so let’s stop using the dollar,” he explained.

One has to bear in mind, though, that some other currency will need to be found to replace the dollar for international settlements. China is unlikely to use the ruble, and Russia would be equally reluctant to accept the yuan.

“They could opt for the euro, but its future is uncertain, especially considering current developments on global financial markets. It is also unclear whether China would be happy to start using the euro while most of its international reserves are held in dollars,” he added.

There are more questions than answers here, Nikolayev concluded.

To be objective, one has to admit that other analysts are not as skeptical about the possibility of using other currency units between Russian and Chinese companies.

Andrei Marinchenko, director general of the Kalita-Finance company, said the idea was quite realistic. Moreover, he thinks that the ruble stands a good chance of being selected as a reserve currency, primarily because the Chinese are disappointed in the dollar but aren’t yet accustomed to the euro.

Only time will show who is right. But to stop using the dollar in Russian-Chinese settlements is too important a decision to make for purely political reasons - that much is obvious.

Suppose we do it; what will be the implications for Russian businesses, how will the new financial and political reality affect their incomes and savings?

Marinchenko is convinced of a beneficial impact. According to Marinchenko, once the ruble is recognized as a settlement unit, it will enjoy growing demand with Chinese companies and individuals. The Russian currency will consequently grow stronger and more influential globally.

Russia will also become immune to many shocks from stock market meltdowns and won’t have to fear future devaluation or revaluation of the ruble. It will happen because the role of the U.S. dollar, which has earned a reputation as an unstable and unreliable currency lately, will be much less important.

The opinions expressed in this article are the author’s and do not necessarily represent those of RIA Novosti.

By Rupert Wright

Global Research, November 8, 2008

The National (UAE)

Nobleman: Baron David de Rothschild, the head of the Rothschild bank. The Rothschilds have helped the British government since financing Wellington’s army to fight the French in 1815. Galen Clarke / The National

Among the captains of industry, spin doctors and financial advisers accompanying British prime minister Gordon Brown on his fund-raising visit to the Gulf this week, one name was surprisingly absent. This may have had something to do with the fact that the tour kicked off in Saudi Arabia. But by the time the group reached Qatar, Baron David de Rothschild was there, too, and he was also in Dubai and Abu Dhabi.

Although his office denies that he was part of the official party, it is probably no coincidence that he happened to be in the same part of the world at the right time. That is how the Rothschilds have worked for centuries: quietly, without fuss, behind the scenes.

“We have had 250 years or so of family involvement in the finance business,” says Baron Rothschild. “We provide advice on both sides of the balance sheet, and we do it globally.”

The Rothschilds have been helping the British government – and many others – out of a financial hole ever since they financed Wellington’s army and thus victory against the French at Waterloo in 1815. According to a long-standing legend, the Rothschild family owed the first millions of their fortune to Nathan Rothschild’s successful speculation about the effect of the outcome of the battle on the price of British bonds. By the 19th century, they ran a financial institution with the power and influence of a combined Merrill Lynch, JP Morgan, Morgan Stanley and perhaps even Goldman Sachs and the Bank of China today.

In the 1820s, the Rothschilds supplied enough money to the Bank of England to avert a liquidity crisis. There is not one institution that can save the system in the same way today; not even the US Federal Reserve. However, even though the Rothschilds may have lost some of that power – just as other financial institutions on that list have been emasculated in the last few months – the Rothschild dynasty has lost none of its lustre or influence. So it was no surprise to meet Baron Rothschild at the Dubai International Financial Centre. Rothschild’s opened in Dubai in 2006 with ambitious plans to build an advisory business to complement its European operations. What took so long?

The answer, as many things connected with Rothschilds, has a lot to do with history. When Baron Rothschild began his career, he joined his father’s firm in Paris. In 1982 President Francois Mitterrand nationalised all the banks, leaving him without a bank. With just US$1 million (Dh3.67m) in capital, and five employees, he built up the business, before merging the French operations with the rest of the family’s business in the 1990s.

Gradually the firm has started expanding throughout the world, including the Gulf. “There is no debate that Rothschild is a Jewish family, but we are proud to be in this region. However, it takes time to develop a global footprint,” he says.

An urbane man in his mid-60s, he says there is no single reason why the Rothschilds have been able to keep their financial business together, but offers a couple of suggestions for their longevity. “For a family business to survive, every generation needs a leader,” he says. “Then somebody has to keep the peace. Building a global firm before globalisation meant a mindset of sharing risk and responsibility. If you look at the DNA of our family, that is perhaps an element that runs through our history. Finally, don’t be complacent about giving the family jobs.”

He stresses that the Rothschild ascent has not been linear – at times, as he did in Paris, they have had to rebuild. While he was restarting their business in France, his cousin Sir Evelyn was building a British franchise. When Sir Evelyn retired, the decision was taken to merge the businesses. They are now strong in Europe, Asia especially China, India, as well as Brazil. They also get involved in bankruptcy restructurings in the US, a franchise that will no doubt see a lot more activity in the months ahead.

Does he expect governments to play a larger role in financial markets in future? “There is a huge difference in the Soviet-style mentality that occurred in Paris in 1982, and the extraordinary achievements that politicians, led by Gordon Brown and Nicolas Sarkozy, have made to save the global banking system from systemic collapse,” he says. “They moved to protect the world from billions of unemployment. In five to 10 years those banking stakes will be sold – and sold at a profit.”

Baron Rothschild shares most people’s view that there is a new world order. In his opinion, banks will deleverage and there will be a new form of global governance. “But you have to be careful of caricatures: we don’t want to go from ultra liberalism to protectionism.”

So how did the Rothschilds manage to emerge relatively unscathed from the financial meltdown? “You could say that we may have more insights than others, or you may look at the structure of our business,” he says. “As a family business, we want to limit risk. There is a natural pride in being a trusted adviser.”

It is that role as trusted adviser to both governments and companies that Rothschilds is hoping to build on in the region. “In today’s world we have a strong offering of debt and equity,” he says. “They are two arms of the same body looking for money.”

The firm has entrusted the growth of its financing advisory business in the Middle East to Paul Reynolds, a veteran of many complex corporate finance deals. “Our principal business franchise is large and mid-size companies,” says Mr Reynolds. “I have already been working in this region for two years and we offer a pretty unique proposition.

“We work in a purely advisory capacity. We don’t lend or underwrite, because that creates conflicts. We are sensitive to banking relationships. But we look to ensure financial flexibility for our clients.”

He was unwilling to discuss specific deals or clients, but says that he offers them “trusted, impartial financing advice any time day or night”. Baron Rothschilds tends to do more deals than their competitors, mainly because they are prepared to take on smaller mandates. “It’s not transactions were are interested in, it’s relationships. We are looking for good businesses and good people,” says Mr Reynolds. “Our ambition is for every company here to have a debt adviser.”

Baron Rothschild is reluctant to comment on his nephew Nat Rothschild’s public outburst against George Osborne, the British shadow Chancellor of the Exchequer. Nat Rothschild castigated Mr Osborne for revealing certain confidences gleaned during a holiday in the summer in Corfu.

In what the British press are calling “Yachtgate”, the tale involved Russia’s richest man, Oleg Deripaska, Lord Mandelson, a controversial British politician who has just returned to government, Mr Osborne and a Rothschild. Classic tabloid fodder, but one senses that Baron Rothschild frowns on such publicity. “If you are an adviser, that imposes a certain style and culture,” he says. “You should never forget that clients want to hear more about themselves than their bankers. It demands an element of being sober.”

Even when not at work, Baron Rothschild’s tastes are sober. He lives between Paris and London, is a keen family man – he has one son who is joining the business next September and three daughters – an enthusiastic golfer, and enjoys the “odd concert”. He is also involved in various charity activities, including funding research into brain disease and bone marrow disorders.

It is part of Rothschild lore that its founder sent his sons throughout Europe to set up their own interlinked offices. So where would Baron Rothschild send his children today?

“I would send one to Asia, one to Europe and one to the United States,” he said. “And if I had more children, I would send one to the UAE.”

Britain is considering joining the eurozone as a direct consequence of global financial turmoil, European Commission President Jose Manuel Barroso said Sunday.

“We are now closer than ever before. I’m not going to break the confidentiality of certain conversations, but some British politicians have already told me: ‘If we had the euro, we would have been better off’,” Barroso told a weekly French news programme, referring to the fall in the pound’s value since markets and liquidity meltdown earlier this year.

“The British have an enormous quality, one of many, that is they are pragmatic,” he said on the panel of a joint RTL-LCI radio and television broadcast. “This crisis has emphasised the importance of the euro, and also of Britain,” he added.

“I don’t mean this will happen tomorrow, I know that the majority (of British people) are still opposed, but there is a period of consideration underway and the people which matter in Britain are currently thinking about it,” the former Portuguese prime minister said.

Barroso pointed to the case of Denmark, another EU state which has so far refused to accept the euro but is now planning another referendum on the single currency. The Danish voted against joining in 2000.

AFP | Sunday, November 30, 2008

The U.S. military expects to have 20,000 uniformed troops inside the United States by 2011 trained to help state and local officials respond to a nuclear terrorist attack or other domestic catastrophe, according to Pentagon officials.

The long-planned shift in the Defense Department’s role in homeland security was recently backed with funding and troop commitments after years of prodding by Congress and outside experts, defense analysts said.

There are critics of the change, in the military and among civil liberties groups and libertarians who express concern that the new homeland emphasis threatens to strain the military and possibly undermine the Posse Comitatus Act, a 130-year-old federal law restricting the military’s role in domestic law enforcement.

But the Bush administration and some in Congress have pushed for a heightened homeland military role since the middle of this decade, saying the greatest domestic threat is terrorists exploiting the proliferation of weapons of mass destruction.

Before the terrorist attacks of Sept. 11, 2001, dedicating 20,000 troops to domestic response — a nearly sevenfold increase in five years — “would have been extraordinary to the point of unbelievable,” Paul McHale, assistant defense secretary for homeland defense, said in remarks last month at the Center for Strategic and International Studies. But the realization that civilian authorities may be overwhelmed in a catastrophe prompted “a fundamental change in military culture,” he said.

The Pentagon’s plan calls for three rapid-reaction forces to be ready for emergency response by September 2011. The first 4,700-person unit, built around an active-duty combat brigade based at Fort Stewart, Ga., was available as of Oct. 1, said Gen. Victor E. Renuart Jr., commander of the U.S. Northern Command.

If funding continues, two additional teams will join nearly 80 smaller National Guard and reserve units made up of about 6,000 troops in supporting local and state officials nationwide. All would be trained to respond to a domestic chemical, biological, radiological, nuclear, or high-yield explosive attack, or CBRNE event, as the military calls it.

Military preparations for a domestic weapon-of-mass-destruction attack have been underway since at least 1996, when the Marine Corps activated a 350-member chemical and biological incident response force and later based it in Indian Head, Md., a Washington suburb. Such efforts accelerated after the Sept. 11 attacks, and at the time Iraq was invaded in 2003, a Pentagon joint task force drew on 3,000 civil support personnel across the United States.

In 2005, a new Pentagon homeland defense strategy emphasized “preparing for multiple, simultaneous mass casualty incidents.” National security threats were not limited to adversaries who seek to grind down U.S. combat forces abroad, McHale said, but also include those who “want to inflict such brutality on our society that we give up the fight,” such as by detonating a nuclear bomb in a U.S. city.

In late 2007, Deputy Defense Secretary Gordon England signed a directive approving more than $556 million over five years to set up the three response teams, known as CBRNE Consequence Management Response Forces. Planners assume an incident could lead to thousands of casualties, more than 1 million evacuees and contamination of as many as 3,000 square miles, about the scope of damage Hurricane Katrina caused in 2005.

Last month, McHale said, authorities agreed to begin a $1.8 million pilot project funded by the Federal Emergency Management Agency through which civilian authorities in five states could tap military planners to develop disaster response plans. Hawaii, Massachusetts, South Carolina, Washington and West Virginia will each focus on a particular threat — pandemic flu, a terrorist attack, hurricane, earthquake and catastrophic chemical release, respectively — speeding up federal and state emergency planning begun in 2003.

Last Monday, Defense Secretary Robert M. Gates ordered defense officials to review whether the military, Guard and reserves can respond adequately to domestic disasters.

Gates gave commanders 25 days to propose changes and cost estimates. He cited the work of a congressionally chartered commission, which concluded in January that the Guard and reserve forces are not ready and that they lack equipment and training.

Bert B. Tussing, director of homeland defense and security issues at the U.S. Army War College’s Center for Strategic Leadership, said the new Pentagon approach “breaks the mold” by assigning an active-duty combat brigade to the Northern Command for the first time. Until now, the military required the command to rely on troops requested from other sources.

“This is a genuine recognition that this [job] isn’t something that you want to have a pickup team responsible for,” said Tussing, who has assessed the military’s homeland security strategies.

The American Civil Liberties Union and the libertarian Cato Institute are troubled by what they consider an expansion of executive authority.

Domestic emergency deployment may be “just the first example of a series of expansions in presidential and military authority,” or even an increase in domestic surveillance, said Anna Christensen of the ACLU’s National Security Project. And Cato Vice President Gene Healy warned of “a creeping militarization” of homeland security.

“There’s a notion that whenever there’s an important problem, that the thing to do is to call in the boys in green,” Healy said, “and that’s at odds with our long-standing tradition of being wary of the use of standing armies to keep the peace.”

McHale stressed that the response units will be subject to the act, that only 8 percent of their personnel will be responsible for security and that their duties will be to protect the force, not other law enforcement. For decades, the military has assigned larger units to respond to civil disturbances, such as during the Los Angeles riot in 1992.

U.S. forces are already under heavy strain, however. The first reaction force is built around the Army’s 3rd Infantry Division’s 1st Brigade Combat Team, which returned in April after 15 months in Iraq. The team includes operations, aviation and medical task forces that are to be ready to deploy at home or overseas within 48 hours, with units specializing in chemical decontamination, bomb disposal, emergency care and logistics.

The one-year domestic mission, however, does not replace the brigade’s next scheduled combat deployment in 2010. The brigade may get additional time in the United States to rest and regroup, compared with other combat units, but it may also face more training and operational requirements depending on its homeland security assignments.

Renuart said the Pentagon is accounting for the strain of fighting two wars, and the need for troops to spend time with their families. “We want to make sure the parameters are right for Iraq and Afghanistan,” he said. The 1st Brigade’s soldiers “will have some very aggressive training, but will also be home for much of that.”

Although some Pentagon leaders initially expected to build the next two response units around combat teams, they are likely to be drawn mainly from reserves and the National Guard, such as the 218th Maneuver Enhancement Brigade from South Carolina, which returned in May after more than a year in Afghanistan.

Now that Pentagon strategy gives new priority to homeland security and calls for heavier reliance on the Guard and reserves, McHale said, Washington has to figure out how to pay for it.

“It’s one thing to decide upon a course of action, and it’s something else to make it happen,” he said. “It’s time to put our money where our mouth is.”

By Joseph Winter
BBC News website

How can you hope to battle organised, rich and ruthless international drugs gangs when there is not even a proper prison in the country? This is the problem faced by the authorities in Guinea-Bissau, which some fear could be on its way to becoming Africa’s first “narco-state”.

Guinea-Bissau is the most glaring example of the increasing use of West Africa by Latin American cocaine traffickers to get their wares into Europe.

The country is wracked by poverty, coups, political unrest and has a coastline full of uninhabited islands, creeks and swamps, providing the perfect cover for smugglers.

The problems are illustrated by three incidents which would be hilarious, if they did not reveal how vulnerable poor states are to the quick hit of drug money.

‘Heroes’

In April, an estimated 2.5 metric tons of cocaine was flown into a military air-strip in Guinea-Bissau.

Two soldiers were arrested in cars packed with 635kg of the drug but the rest of the shipment got through, officials from the UN Office on Drugs and Crime (UNODC) believe, because the police did not have enough petrol in their cars to pursue the other traffickers.

Nevertheless, UNODC West Africa head Antonio Mazzitelli says the police officers involved were “heroes”.

“They risked their lives, even though they had not been paid for three months at the time,” he told the BBC News website.

Some senior officials, especially in the military, however, seem to have become involved in trafficking drugs.

In the second of Guinea-Bissau’s comedy of errors, 674kg of cocaine, worth about $39m, or 13% of the country’s total annual income, was found in the capital, Bissau, after a gun battle last year.

See map of West African cocaine seizures

For safe-keeping, it was put in the treasury vaults, where it “disappeared”.

The then Prime Minister Aristides Gomes recently sought to allay fears it had returned to drugs gangs, by saying that he had ordered it to be burnt.

But Mr Mazzitelli points out that there is no evidence that it was actually destroyed.

The third incident took place in 2005.

If Africa is not allowed to export legitimate produce, it will export drugs, prostitutes and illegal migrants Amoroso, Nairobi Send your comments

Local fishermen in Quinhamel, 30km west of Bissau, discovered strange packets of white powder floating in the sea.

With no idea of what the powder was, some used it to provide more flavour to their daily diet of rice and fish, while others thought it might help their crops grow and used it as fertiliser.

Eventually, word got out to the traffickers, who turned up in the village to buy back what was left of their cargo after their boat had sunk.

Still searching

In the past two weeks, almost 2.5 tons of cocaine has been found in neighbouring Senegal - half on board a deserted sailing boat, along with plane tickets from Brazil to Bissau.

Officials battling to stem the flow of drugs from Latin America to Europe say they have managed to reduce both direct shipments and smuggling via the Caribbean, which had been one of the main routes.

Half the Senegal haul was hidden under a villa, half on a boat

So now the smugglers have switched their operations to West Africa.

Interpol estimates that more than a third of the cocaine arriving in Europe is trafficked through West Africa.

“We’ve been fighting the drugs war for 30 years - now a new front has opened up,” a veteran international police official says.

He warns, however, that a successful way of reducing supply has not yet been found, while there is such strong demand in the West

Interpol will this week discuss doing more to help African authorities battle drug smugglers - but they are playing catch-up, while the trafficking networks are already well entrenched.

Portugal also says it will raise the issue during its six-month presidency of the European Union, which has just begun.

‘Impunity’

Large shipments - 2.5 tons seems to be a common amount - are either flown or shipped across the Atlantic Ocean.

Bags are sometimes dropped from the air onto some of Guinea-Bissau’s 70-odd uninhabited islands, where they are picked up by local smugglers on speed boats.

We have been lucky in the past six months Antonio Mazzitelli UNODC

The large shipments are then either broken into smaller quantities and taken to Europe by plane or boat, or sailed in bulk straight up the coast to Portugal and Spain.

The boat found in Senegal contained 1.2 tons of cocaine, divided into 50 bags, each containing 24kg.

After years of chronic instability and extreme poverty, some West African states hardly function.

Judges in Guinea-Bissau complain that even if a drugs smuggler is captured, taken to court and convicted - already three rare events - they are often walking the streets again within days.

After the only prison was destroyed in a civil war, there is nowhere to hold convicts.

If a cell is found somewhere, top military officials often turn up and insist they are freed, judges say.

“There is total impunity,” Nelson Moreira, head of Guinea-Bissau’s inter-ministerial commission to fight drugs, told the BBC’s Portuguese for Africa service.

Accidents

Mr Mazzitelli says that the profit on trafficking a single 600kg shipment of cocaine from Africa to Europe was about $15m in 2005.

He notes that this is about 20% of all foreign aid to the country in 2006, 14% of annual export revenues and three times the amount of foreign investment.

“This shows how vulnerable African states are,” he says.

Although there has been a dramatic increase in cocaine seizures in the region, Mr Mazzitelli points out most have been “accidents” - mostly after a plane or boat has broken down and its cargo has then been discovered.

“We have been lucky in the past six months,” he says.

The UK has tried to take preventative action by stationing anti-drugs officers and equipment in the main airport in Ghana’s capital, Accra.

Eight would-be smugglers were caught within the first six weeks of the operation at the end of last year.

As they were arrested and imprisoned in Ghana, rather than the UK, where prison care is far more expensive, the equipment paid for itself in that time, UK customs officials say.

Mr Mazzitelli says most West African countries are still reacting to events, rather than taking any pro-active measures.

But he points out that most cocaine is shipped to Africa for re-export, not for local consumption.

“Drugs are not a priority for Africa - and never will be - unless the international community makes it one,” he says.

He warns, however, that the inflow of the drugs money has a hugely corrupting influence on already weak states, which could end up as empty shells - cover for officials seeking to become rich.

He says if European countries want to stop cocaine reaching their streets via Africa, they must provide more funds to the police and judiciary - so police officers and judges are paid, they have enough petrol in their cars and prisons to lock up those convicted.

“Otherwise it is a lost battle,” he warns.

September 22, 2008 by Philip Dru

BEIJING (Reuters) - Threatened by a “financial tsunami,” the world must consider building a financial order no longer dependent on the United States, a leading Chinese state newspaper said on Wednesday.

The commentary in the overseas edition of the People’s Daily said the collapse of Lehman Brothers Holdings Inc (LEH.P: Quote, Profile, Research, Stock Buzz) “may augur an even larger impending global ‘financial tsunami’.”

The People’s Daily is the official newspaper of China’s ruling Communist Party, and the overseas edition is a smaller circulation offshoot of the main paper.

Its pronouncements do not necessarily directly reflect leadership views, but this commentary by a professor at Shanghai’s Tongji University suggested considerable official alarm at the strains buckling world financial markets.

China’s central bank earlier this week cut its lending rate for the first time in six years, a move analysts said was aimed at bolstering the economy and the battered stock market.

“The eruption of the U.S. sub-prime crisis has exposed massive loopholes in the United States’ financial oversight and supervision,” writes the commentator, Shi Jianxun.

“The world urgently needs to create a diversified currency and financial system and fair and just financial order that is not dependent on the United States.”

But Vice Premier Wang Qishan, on a visit to the United States, told U.S. trade officials in a meeting on Tuesday that China and the United States needed to maintain close economic ties with global markets going through such turbulence.

“The Chinese government is well aware of the fact that the United States, which is the world’s largest developed country, and China, which is the world’s largest developing country, should have constructive and cooperative economic and trade relations,” he said.

China is a major buyer of U.S. Treasury bonds, and through its sovereign wealth fund it has taken stakes in two large U.S. financial institutions.

In July 2005, China revalued the yuan and freed it from a dollar peg to float within managed bands. But the yuan and China’s trade remains tightly linked to the fortunes of the dollar.

The commentary suggested China must brace for grave economic fallout and look to alternatives, saying the crisis brings to mind the Great Depression of the 1930s.

“Lehman Brothers announced bankruptcy will not only have a domino effect on the global financial world, it will bring a shock to the world economy,” the front-page comment stated.

(Reporting by Chris Buckley; Editing by Ken Wills)

Reuters | Wednesday, September 17, 2008

September 23, 2008 by Philip Dru

A banking system in crisis after the collapse of a housing bubble. An economy hemorrhaging jobs. A market-oriented government struggling to stem the panic. Sound familiar?

It does to Sweden, which was so far in the hole in 1992 - after years of imprudent regulation, shortsighted macroeconomic policy and the end of its property boom - that its banking system was, for all practical purposes, insolvent.

But unlike the United States, whose Treasury has made a proposal to deal with a similar situation, Sweden did not just bail out its financial institutions by having the government take over the bad debts. It also clawed its way back by pugnaciously extracting equity from bank shareholders before the state started writing checks.

That strategy kept banks on the hook while returning profits to taxpayers from the sale of distressed assets by granting warrants that turned the government into an owner. Even the chairman of Sweden’s largest bank got a stern answer to the question of whether the state would really nationalize his bank: Yes, we will.

“If I go into a bank,” Bo Lundgren, Sweden’s finance minister at the time, said, “I’d rather get equity so that there is some upside for the taxpayer.”

The tumultuous events of the last few weeks have produced a lot of tight-lipped nods in Stockholm. And for all the differences between Sweden and the United States, Swedish officials say there are lessons to be learned from their own nightmare that Washington may be missing. Lundgren even made the rounds in New York in early September, explaining what the country did in the early 1990s.

A few American commentators have proposed that the U.S. government extract equity from banks as a price for the bailout they are likely to receive, as Sweden did. But it does not seem to be under serious consideration yet in the Bush administration or in Congress.

That’s despite the fact that the U.S. government has already swapped its sovereign guarantee for equity in Fannie Mae and Freddie Mac, the mortgage finance institutions, and American International Group, the insurance giant.

Putting taxpayers on the hook without offering anything in return could be a mistake, said Urban Backstrom, a senior Swedish Finance Ministry official at the time. “The public will not support a plan,” he said, “if you leave the former shareholders with anything.”

The Swedish crisis had strikingly similar origins to the American one. Norway and Finland went through related experiences, and they also turned to a government bailout to escape the morass that bad policy had created.

Financial deregulation in the 1980s fed a frenzy of real estate lending by Swedish banks, which spent too little time worrying whether the value of collateral might evaporate in tougher times. Property prices exploded.

The bubble deflated fast in 1991 and 1992. A vain effort to defend Sweden’s currency, the krona, resulted in an incredible spike in overnight interest rates at one point to 500 percent. The Swedish economy contracted for two years straight after a long expansion, and unemployment, at 3 percent in 1990, quadrupled in three years.

After a series of bank failures led to ad hoc solutions, the moment of truth arrived in September 1992, when the government of Prime Minister Carl Bildt opted for a clear-the-decks solution.

With the full support of the opposition center-left, Bildt’s conservative government announced that the Swedish state would guarantee all bank deposits and creditors of the nation’s 114 banks. Sweden formed an agency to supervise institutions that needed recapitalization, and another that sold off the assets, mainly real estate, that the banks held as collateral.

Sweden told its banks to write down their losses promptly before coming to the state for recapitalization. In a similar situation later in the decade, Japan made the mistake of dragging the process out, officials in Sweden and elsewhere note, delaying a solution for years.

Then came the imperative to bleed shareholders first.

Lundgren, the former finance minister, recalls a conversation with Peter Wallenberg, at the time chairman of SEB, Sweden’s largest bank. Wallenberg, the scion of the country’s most famous family and steward of large chunks of its economy, heard from the finance minister that there would be no sacred cows.

The Wallenbergs turned around and arranged a private recapitalization, obviating the need for a bailout at all. SEB turned a profit the next year, 1993.

“For every krona we put into the bank, we wanted the same influence,” Lundgren said. “That ensured that we did not have to go into certain banks at all.”

By the end of the crisis, the Swedish government had seized vast swaths of the banking sector, and the agency had mostly fulfilled its tough mandate to drain share capital before injecting cash. When markets stabilized, the Swedish state then reaped the benefits by taking the banks public again.

Indeed, more money may come into official coffers. The government still owns 19.9 percent of Nordea, a Stockholm bank that was fully nationalized and is now a highly regarded giant in Scandinavia and the Baltic Sea region.

The politics of Sweden’s crisis management were similarly tough-minded, though much quieter.

Soon after the plan was announced, the Swedish government found that international confidence returned more quickly than expected, easing pressure on its currency and bringing money back into the country. A serious credit crunch was avoided. So the center-left opposition, though wary that the government might yet let the banks off the hook, made its points about penalizing shareholders privately.

“The only thing that held back an avalanche was the hope that the system was holding,” said Leif Pagrotzky, a senior member of the opposition at the time. “In public we stuck together 100 percent but we fought behind the scenes.”

Sweden eventually shelled out 4 percent of its gross domestic product, 65 billion krona, or $10 billion, to rescue ailing banks. That is slightly less, in terms of the national economy, than the minimum of $700 billion, or about 5 percent of GDP, that the Bush administration estimates a similar move would cost in the United States.

But enough was recouped through sales of distressed assets and bank shares that were sold later, that the cost ended up being less than 2 percent of GDP. Some officials believe it was closer to zero, depending on how certain rates of return are calculated.

Looking back, Swedish official say the tough approach toward the banks paved the way for success. It eliminated “moral hazard,” the problem of relieving investors of bad decisions. And, much as it might be a shock in the United States, the demise of shareholders also underpinned the political consensus that help restore stability to financial markets even before the bailout was truly under way.

While government ownership of banks goes against the American grain, Lundgren worries that if the U.S. bailout rests on a thin reed, politically speaking, then it could fail.

The U.S. Treasury is now planning to purchase the distressed assets outright, without demanding equity. If it wants to restore the banking system’s creditworthiness, it would have to err on the side of paying too much money to the banks that caused the crisis, Lundgren said.

“If the valuation is bad, from the taxpayer’s point of view, you lose,” he said. “And that decreases the legitimacy of the plan.”

IHT | Carter Dougherty | Monday, September 22, 2008

By LARA JAKES JORDAN
Associated Press Writer

The FBI is investigating four major U.S. financial institutions whose collapse helped trigger a $700 billion bailout plan by the Bush administration, The Associated Press has learned.

Two law enforcement officials said Tuesday the FBI is looking at potential fraud by mortgage finance giants Fannie Mae and Freddie Mac, and insurer American International Group Inc. Additionally, a senior law enforcement official said Lehman Brothers Holdings Inc. also is under investigation.

The inquiries will focus on the financial institutions and the individuals that ran them, the senior law enforcement official said.

The law enforcement officials spoke on condition of anonymity because the investigations are ongoing and are in the very early stages.

Officials said the new inquiries bring to 26 the number of corporate lenders under investigation over the past year.

Spokesmen for AIG, Fannie Mae and Freddie Mac did not immediately return calls for comment Tuesday evening. A Lehman spokesman did not have an immediate comment.

Just last week, FBI Director Robert Mueller put the number of large financial firms under investigation at 24. He did not name any of the companies under investigation but said the FBI also was looking at whether any of them have misrepresented their assets.

Over the past year as the housing market cratered, the FBI has opened a wide-ranging probe of companies across the financial services industry, from mortgage lenders to investment banks that bundle home loans into securities sold to investors. Mueller has previously said the FBI’s hunt for culprits in the nation’s subprime mortgage crisis focused on accounting fraud, insider trading, and failure to disclose the value of mortgage-related securities and other investments.

The investigations revealed Tuesday come as lawmakers began considering whether to approve emergency legislation that would give the government broad power to buy up devalued assets from troubled financial firms.

The bailout proposed by the Bush administration is aimed at helping unlock credit and stabilize badly shaken markets in the United States and around the globe.

In the past two weeks, the government has taken over Fannie Mae and Freddie Mac, the country’s two biggest mortgage companies, with a bailout plan that could require the Treasury Department to put up as much as $100 billion for each of them over time if needed to keep them afloat as mortgage losses mount.

Last week, the Federal Reserve provided an emergency $85 billion loan to AIG, which teetered on the brink of bankruptcy. Lehman Brothers was forced to file for bankruptcy after attempts to engineer a private rescue fell apart. All the companies were laid low from bad bets on complex mortgage-related securities.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke made the joint decision last week that the only way to stop the carnage was to deal with the root cause of all the troubles, billions of dollars of bad mortgage debt sitting on the books of major financial companies. This debt has triggered the worst credit crisis in decades, causing credit markets to essentially freeze up despite the fact that the Fed joined with major central banks around the world to pump billions of dollars of reserves into the financial system.

Additionally, the FBI is investigating failed bank IndyMac Bancorp Inc. for possible fraud. Countrywide Financial Corp., formerly the nation’s largest mortgage lender and now owned by Bank of America Corp., is also under scrutiny.

Sunday, September 21, 2008
By Ansar Abbasi

ISLAMABAD: Was there a top secret and mysterious operation of the US Marines going on inside the Marriott when it was attacked on Saturday evening? No one will confirm it but circumstantial evidence is in abundance.

Witnessed by many, including a PPP MNA and his friends, a US embassy truckload of steel boxes was unloaded and shifted inside the Marriott Hotel on the same night when Admiral Mike Mullen met Prime Minister Yousuf Raza Gilani and others in Islamabad.

Both the main gates (the entrance and the exit) of the hotel were closed while no one except the US Marines were either allowed to go near the truck or get the steel boxes unloaded or shift them inside the hotel. These steel boxes were not passed through the scanners installed at the entrance of the hotel lobby and were reportedly shifted to the fourth and fifth floors of the Marriott.

Besides several others, PPP MNA Mumtaz Alam Gilani and his two friends, Sajjad Chaudhry, a PPP leader, and one Bashir Nadeem, witnessed this mysterious activity to which no one other than the PPP MNA objected and protested.

A source present there told The News that after entertaining them with refreshments at the Nadia restaurant at midnight when Mumtaz Alam, along with his friends, was to leave the hotel, he found a white US embassy truck standing right in front of the hotel’s main entrance.

Both the In-gate and the Out-gate of the hotel were closed while almost a dozen well-built US Marines in their usual fatigues were unloading the steel boxes from the truck. No one, including the hotel security men, was either allowed to go near the truck or touch the steel boxes, which were being shifted inside the hotel but without passing through the scanners.

Upon inquiry, one of the three PPP friends who was waiting for the main gates of the hotel to open to get his car in, was informed that the suspicious boxes were shifted to the fourth and fifth floors of the hotel. Mumtaz Alam was furious both at the US Marines and the hotel security not only for the delay caused to them but also for the security lapse he was witnessing.

On his protest, there was absolutely no response from the Marines and the security men he approached were found helpless. Mumtaz Alam told the hotel security official that they were going to endanger the hotel and its security. He was also heard telling his friends that he would never visit the hotel again. He also threatened to raise the issue in parliament.

One does not know whether the PPP MNA revisited the hotel after that mysterious midnight but his brother Imtiaz Alam, who is a senior journalist, was in the same hotel when the truck exploded at the main gate of the hotel. Imtiaz Alam had a lucky escape and found his way out of the hotel with great difficulty in pitch darkness.

One of the lifts he was using fell to the ground floor just after he forced the door open on the 4th floor and got out of it.

Mystery snoop-tech used in wave of assassinations

By Lewis Page

Posted in Government, 15th September 2008 14:20 GMT

A long-running background mutter has now become a loud buzz of speculation, following cryptic comments by a famous US journalist regarding a top secret new surveillance-tech “Manhattan Project” targeting terrorist and insurgent leaders in Iraq.

Bob Woodward of the Washington Post - famous for his reporting of leaks by a senior FBI official regarding the Watergate scandals of the 1970s - makes the claims in a new book, which he is currently engaged in trailing. He says that the current reduction in violence being seen in Iraq is partly, as everyone assumes, a result of visible factors - the Sunni “awakening” against al-Qaeda in Iraq, the ceasefire by important Shi’ite militias, and the US troop “surge” in which many more American soldiers have been operating on the ground outside their secure bases.

But Woodward says there has also been an unseen special-ops surveillance and assassination campaign against terrorist and insurgent leaders, large numbers of whom have been eliminated in the past year - a campaign heavily reliant on mysterious, top-secret new intelligence technology of some kind.

“It is a wonderful example of American ingenuity solving a problem in war, as we often have,” said Woodward in a recent TV interview.

“I would somewhat compare it to the Manhattan Project in World War II.”

Woodward refuses to reveal exactly what the new wonder-tech is, that has let US and allied forces track down (and then, typically, kill) so many insurgent/terrorist commanders lately. Most analysts on the death-tech beat have thus offered suggestions of their own. There are some, whose access to classified programs is perhaps even better than Woodward’s but who must cooperate even more closely with their sources, who say that in fact there is nothing new (http://www.aviationweek.com/aw/blogs/defense/index.jsp?plckController=Blog&plckScript=blogScript&plckElementId=blogDest&plckBlogPage=BlogViewPost&plckPostId=Blog%3a27ec4a53-dcc8-42d0-bd3a-01329aef79a7Post%3a4f690db0-b07f-4569-825f-e23596dbfa9e) under the sun - just old tricks being tied together more effectively.

Many others are leading with our old friend the Predator/Reaper unmanned aircraft, whose abilities as an eye in the sky are well known. It’s certain that a lot of the actual killings have been done by Predators, usually using laser-guided Hellfire missiles. Often the aerial death machines are guided in by their victims’ cell or satellite phone signatures - the phones perhaps having been meddled with in cunning ways by spooks and/or special-ops electronic warfare (EW) “knob-turners”. Generally the EW capabilities have been installed in separate aircraft rather than aboard the actual Predator weapons/camera/radar drone itself, though this is set to change.

But in fact the Predator - in the end, it’s just an aircraft - isn’t a game-changing piece of kit. Nor is the ability to track or even remotely activate phone handsets: there are credible reports - for instance in this book (http://www.amazon.co.uk/Killer-Elite-Americas-Special-Operations/dp/0297846396/sr=1-1/qid=1171365449?ie=UTF8&s=books), by respected UK defence hack and former British Army intelligence-corps operator Mick Smith - that quite amazing mobe trickery was in use by US spec-ops elements as long ago as the 1980s. It’s now common advice even among biz security types to remove mobile phone batteries during sensitive meetings, and serious criminals or terrorists would nowadays completely discard any phone that might have come to the notice of the authorities.

Credible rumours suggest that the capabilities Woodward alludes to may allow individual people (rather than items of equipment) to be tracked from afar; even inside buildings, even if the most draconian mobile-handset security protocols have been followed.

Wired magazine speculates (http://blog.wired.com/defense/2008/09/whats-the-milit.html) that what’s going on here may be an effort known to the US defence department as Continuous Clandestine Tagging, Tracking, and Locating (CTTL). Under CTTL, a variety of different techniques might be used to follow a specific person from long distances. A person might have a tiny RFID-esque device or transponder implanted in their body without their knowledge - perhaps while being held prisoner by Coalition forces. The teeny gizmo might need no battery, conceivably harvesting its power needs from body heat or ambient radio transmissions - or it might work more in the way that the radar-cavity tags in skiing jackets do, reflecting a radar pulse in a distinctive way.

Alternatively, according to a powerpoint presentation unearthed by Wired, it may be possible to distinguish a unique thermal signature for each person, as distinctive as a fingerprint or DNA signature but visible to an airborne sensor from afar.

Having remotely tracked the released Mansoor to a Taliban base across the border at Quetta in Pakistan, the US knob-turners then reportedly became interested in a particular satellite phone - the one belonging to Mullah Dadullah himself. Dadullah apparently thought this phone to be clean, but it seems that merely carrying it to a meeting with his newly freed brother was enough to flag it up. As soon as Dadullah went back across the border into Afghanistan, he could be attacked - and was. A squadron of Britain’s Special Boat Service (SBS) special forces, accompanied by Afghan troops, assaulted Dadullah’s compound at Bahram Chah in the south of Helmand province during May 2007. Dadullah was shot dead - receiving two bullets to the body (a classic special forces “double-tap”) and one to the head, hinting perhaps that nobody was especially interested in taking prisoners.

Mick Smith, telling (http://www.timesonline.co.uk/tol/news/world/asia/article1845387.ece) the story for the Times (the gaff was originally blown by the Afghan government, apparently) merely said that TF-Orange had used “sophisticated signals technology to monitor Mansoor’s movements”.

However, the website specialboatservice.co.uk - which has connections with a former SBS covert operator, mercenary and novelist who writes under the name Duncan Falconer - says (http://www.specialboatservice.co.uk/mullah-dadullah.htm):

It is speculated that the [released] Taliban had somehow been tagged with trackers, perhaps in their bodies.

This tends to suggest the more-feasible sounding miniature implant theory on the new kit, rather than unique body heat-signatures or whatever - which in any case would seem unlikely to work through walls. Teeny-tiny tracker technology has certainly been in use for some time by British secret forces, though usually placed inside cached weapons and suchlike (the slang term in Northern Ireland for this was “jarking” - with the weapons usually being sabotaged as well). Of course, it may be that the men’s clothes or other personal items were bugged rather than they themselves.

Just people-tracking might seem a little basic to be referred to as a “Manhattan Project”, unless it had some other special sauce as well. It’s surely also true that there have been new developments in mobile phone trickery, airborne surveillance and - probably even more importantly - in bringing together information from many different sources in a timely fashion. But following individuals remotely, en masse, relatively inexpensively and without needing to put large teams of followers on the ground - that might be a real game changer.

It might also be something to worry about in a civil-liberties context, if it really does operate as described.

However the new stuff works, it would seem that terrorists or other malcontents on the run from sinister US government agencies in future may soon need to don their trusty tinfoil hats, garments etc. not so much to keep out federal/alien mindcontrol rays as to keep in the transmissions from possible implanted bugs.

A case of enemies within the enemy within, as it were. Or it might just be a lot of hype.

Published on Tuesday, February 15, 2000 in the Chicago Tribune
by David Morgan 

PHILADELPHIA (Reuters) - U.S. doctors who once believed that sterilization could help rid society of mental illness and crime launched a 20th century eugenics movement that in some ways paralleled the policies of Nazi Germany, researchers said on Monday.

A Yale study tracing a once-popular movement aimed at improving society through selective breeding, indicates that state-authorized sterilizations were carried out longer and on a larger scale in the United States than previously believed, beginning with the first state eugenics law in Indiana in 1907.

Despite modern assumptions that American interest in eugenics waned during the 1920s, researchers said sterilization laws had authorized the neutering of more than 40,000 people classed as insane or “feebleminded” in 30 states by 1944.

Another 22,000 underwent sterilization from the mid-1940s to 1963, despite weakening public support and revelations of Nazi atrocities, according to the study, funded by the United States Holocaust Memorial Museum and the Merck Co. Foundation.

Forced sterilization was legal in 18 U.S. states, and most states with eugenics laws allowed people to be sterilized without their consent by leaving the decision to a third party.

“The comparative histories of the eugenical sterilization campaigns in the United States and Nazi Germany reveal important similarities of motivation, intent and strategy,” the study’s authors wrote in the Annals of Internal Medicine, a journal published by the American College of Physicians-American Society of Internal Medicine.

Eugenics sprang from the philosophy of social Darwinism, which envisioned human society in terms of natural selection and suggested that science could engineer progress by attacking supposedly hereditary problems including moral decadence, crime, venereal disease, tuberculosis and alcoholism.

“The eugenics laws in the United States were virulent, just as they were in Sweden, France and Australia,” said Art Caplan, head of the University of Pennsylvania’s Center for Bioethics.

The U.S. practice ended in the 1960s after being overwhelmed by court challenges and the civil rights movement.

German and American eugenics advocates both believed science could solve social problems, tended to measure the worth of the individual in economic terms and felt mental illness a threat to society grave enough to warrant compulsive sterilization.

And while Nazi claims of Aryan superiority are well known, researchers said U.S. advocates of sterilization worried that the survival of old-stock America was being threatened by the influx of “lower races” from southern and eastern Europe.

There was also mutual admiration, with early U.S. policies drawing glowing reviews from authorities in pre-Nazi Germany.

“Germany is perhaps the most progressive nation in restricting fecundity among the unfit,” editors of the New England Journal of Medicine wrote in 1934, a year after Hitler became chancellor.

U.S. Eugenics Movement Waned

But the study, based partly on old editorials from the New England journal and the Journal of the American Medical Association, also demonstrated how the U.S. eugenics movement gradually waned while its Nazi counterpart carried out 360,000 to 375,000 sterilizations during the 1930s and grew to encompass so-called “mercy” killings.

“In the United States, a combination of public unease, Roman Catholic opposition, federal democracy, judicial review and critical scrutiny by the medical profession reversed the momentum,” the article said.

The U.S. practice of neutering “mentally defective” individuals was backed by most leading geneticists and often justified on grounds that it would relieve the public of the cost of caring for future generations of the mentally ill.

Sterilizations also took place mainly in public mental institutions, where the poor and ethnic or racial minorities were housed in disproportionately high numbers.

“It is better for all the world, if instead of waiting to execute degenerate offspring for crime, or to let them starve for their imbecility, society can prevent those who are manifestly unfit from continuing their kind,” Supreme Court Justice Oliver Wendell Holmes wrote in the majority opinion of a landmark eugenics case in 1926.

Thu Sep 18, 2008 5:26pm EDT
By Christopher Doering

WASHINGTON (Reuters) - Genetically engineered animals moved closer to the dinner table on Thursday as the U.S. Food and Drug Administration made the process it will use to review new proposals public.

The FDA published proposed detailed guidelines that producers of genetically engineered animals would have to follow to determine whether there are any risks to humans, the environment and the animals themselves.

The guidelines bring the decades-old technology of genetic engineering for animals one step closer to the market.

Genetically modified cattle, pigs, fish and goats are being produced for a variety of uses. Some produce pharmaceuticals in their milk or blood. Others are resistant to diseases such as mad cow or produce healthier meat or milk.

“Many kinds of genetically engineered animals are in development, although none has yet been approved by the agency for marketing,” FDA Deputy Commissioner Randall Lutter said.

It was important to formalize procedures the FDA uses to regulate genetically engineered animals, Lutter said, “because the technology has evolved to a point where commercialization of these animals is no longer over the horizon.”

The agency is inviting public comment on its proposals until November 18 and could modify them before they become final.

SEVERAL QUESTIONS

Consumer groups called the FDA’s action a good first step, but said the guidelines fail to answer several important questions.

One concern is the approval process, which would be secretive to protect companies’ proprietary interests.

“It’s unclear whether FDA has the authority and expertise to address the full range of risks,” said Gregory Jaffe of the Center for Science in the Public Interest.

Foods produced from some bioengineered animals will not have to be labeled, the FDA said, also drawing some ire.

“It is incomprehensible to us that FDA does not view these animals as different from their conventional counterparts,” said Jean Halloran, director of food policy initiatives at Consumers Union.

“Consumers have a right to know if the ham, bacon or pork chops they are buying come from pigs that have been engineered with mouse genes.”

But the FDA said labeling would be required if there is a significant change in the food. For example, pork from pigs engineered to produce meat with higher levels of omega-3 fatty acids would need a label.

Producers will be required to describe what DNA they have inserted into the animal, and how it behaves in the animal, the impact on the animal’s health, and show the product is not different from traditional food.

Companies also would have to tell the FDA how they would track the animals and dispose of them when they die. If there is a high risk, the FDA might require the animals to be sterilized.

The FDA said it has the authority to regulate genetically engineered animals through the Federal Food, Drug and Cosmetic Act. The measure identifies a drug as anything that changes the “structure or function” of the person or animal.

(Reporting by Christopher Doering; Editing by Patricia Zengerle)

by Dina Temple-Raston

NPR Morning Edition, September 1, 2008 · Confidential informants are the lifeblood of law enforcement’s effort to fight crime.

But the best informants are generally very bad people — ruthless criminals — and while their information helps the FBI crack cases, the practice of using these informants is fraught with risk.

A single case in Boston changed the way agents work with these criminals.

Corrupted Agents

If you asked the FBI about their worst nightmare, it would be crooked agents being in league with a mob boss. So their nightmare came true in Boston during the 1970s.

That’s when the godfather of the city’s Irish mob, Whitey Bulger, became a confidential informant for the FBI and, in the process, he managed to corrupt two agents — John Connolly and his boss, John Morris.

Former FBI supervisor Jim Ring says that the idea that an agent could be turned shocked everyone when it was revealed. To this day, it still astounds him.

“I was asked a question at a civil trial. They asked me what my first reactions was when I heard that [supervisor] John Morris admitted taking money from them,” Ring says. “My answer was: I started to throw up.”

FBI’s Unholy Alliance

FBI agent John Connolly’s unholy alliance with Whitey Bulger all started with a “meet” at Wollaston Beach just outside of Boston. It was 1975, and he had asked Bulger to come to the beach parking lot for a chat.

It was not far from the housing projects in Southie where the two men had grown up. They had known each other as kids. It was late at night. No one was around. All that could be heard were waves slapping on the shore.

Connolly had driven there determined to convince Bulger that he should become a top echelon informant — someone who provides the FBI with firsthand information about high-level organized crime figures. Bulger had been an informant in the past, Connolly was determined to reopen him as a snitch.

Connolly didn’t expect to convince Bulger to rat out the Irish mob that he was a part of, but he did think he could get him to provide information on Italian organized-crime rivals. Eventually, Bulger agreed to do just that.

An Unspoken Agreement

That meeting at Wollaston Beach was the beginning of a relationship that would end up fundamentally changing the FBI’s confidential informant program.

From the moment Jim Ring came into the Boston field office and heard Connolly was working Bulger as an informant, he had an uncomfortable feeling. He called Connolly into his office to make sure there was no misunderstanding about how informants should be handled.

“I told him information goes one way,” Ring said. “Informants are not consultants. They are not friends, they are informants. And the agent remembers that and treats them accordingly.”

But, as he was to discover later, the information didn’t go one way. For almost 30 years, Connolly and Bulger forged an unholy alliance. Bulger provided tips that helped the FBI tackle its top priority — dismantling the Italian mob — and Connolly protected Bulger from investigations by the FBI and other agencies.

It was an unspoken agreement, apparently, but an agreement all the same. Bulger knew that Connolly wanted to keep him out of jail so that he could keep providing intelligence about the Italian mob.

Repercussions From The Bulger Case

Valerie Caproni is the current general counsel at the FBI. She says the fallout from the Whitey Bulger case still haunts the Bureau.

“I think what the Whitey Bulger case did was it really shined a light on the relationship between the Bureau and informants,” Caproni says. “They are killers, they are liars, they’re cheaters and those are the people who are informants. So I think in part the problem with the Whitey Bulger case was people looked at the relationship and were appalled.”

What is certain is that the case rocked the FBI to its core. The wave of negative publicity forced the Justice Department to take a hard look at the use of informants and how agents deal with them. That review eventually produced a set of guidelines that agents say are so strict that they practically gut the program.

“The unfortunate thing is that when you have something like this, there tends to be an overreaction,” says former FBI assistant director Barry Mawn.

Detailed FBI Guidelines

Mawn arrived in the Boston field office when a federal judge started looking into the FBI’s relationship with Bulger in 1997. The guidelines grew out of that investigation. He said the guidelines concerned him as soon as they came out.

“When you start to put a lot of guidelines and a lot more rules and make it very difficult, then the agents for that reason and some other reasons tend to shy away,” Mawn says.

The guidelines are 28 single-spaced pages of rules and regulations for FBI agents working with informants. They cover everything from monetary payments to general provisions for deactivating a confidential informant.

Jim Ring flips through the guidelines, pointing out sections he says agents find particularly onerous. Consider the FBI’s requirement that they authorize any crimes informants commit while working as a confidential informants.

Ring says the rule makes sense if you have a drug informant who needs to sell a nickel bag as part of a case. But for top echelon informants, he says, the rule seems naive.

“So if am going to have a capo as an informant in La Cosa Nostra, am I to assume he is going to say, ‘Okay I won’t commit crime?’” Ring laughs.

The whole reason top echelon informants are so valuable is precisely because they are in the middle of a criminal enterprise — crime is all around them. In most cases, they are violating racketeering statutes just for being a member of the mob. He flips to another section.

He reads a section from the guidelines:

“The United States government will strive to protect your identity but cannot promise or guarantee either that your identity will not be divulged or you will not be called to testify in a proceeding as a witness …”

Ring throws up his hands and rolls his eyes.

“Now if you were considering doing business with me — as a member of al-Qaida or a capo in La Cosa Nostra — would you want to do business with me after I told you that?”

Agents: Rules Impede FBI’s Work

More than a dozen current FBI agents echoed Ring’s remarks. They say developing confidential informants is almost impossible if they can’t protect their identities. In some cases, asking them to testify would be tantamount to giving them a death sentence. Their criminal organizations would have them killed.

The FBI’s Caproni says the complaints are just agents grousing.

“Agents sometimes like to complain, and this is something they can complain about,” Caproni says. “That the rules have changed a little bit, it is laid out much more clearly when they have to reveal a sources identity. But I think as a general rule we have a very good track record with maintaining the confidentiality of the identities of human sources.”

Ring says the guidelines are hamstringing agents. If the FBI wants to get insiders from al-Qaida or the mob to help fight crime, they need to put what happened in Boston in the past and allow agents to use their own judgment.

“They have tried by legislation to make what Morris and Connolly did impossible,” Ring says. “And I think that is impossible to do because corruption is a matter of the heart.”

New attorney general guidelines on a variety of FBI procedures are expected to be released in the next couple of weeks. In spite of agents’ complaints, Caproni says the confidential informant guidelines won’t change.

None of suspects charged with headline-grabbing plan to blow up airlines, alleged ringleader completely acquitted

Paul Joseph Watson
Prison Planet
Tuesday, September 9, 2008

The much vaunted liquid bomb “terror plot” that provoked paranoid airport security measures, an overnight change in baggage procedures, and at one point led to mothers having to drink their own breast milk, completely collapsed yesterday in court after the alleged ringleader was completely acquitted and none of the other suspects were charged with conspiracy to blow up an airliner.

“Seven men admitted plotting to cause a public nuisance. An eighth man was cleared at Woolwich Crown Court,” reports the BBC.

“But after more than 50 hours of deliberations, the jury did not find any of the defendants guilty of conspiring to target aircraft.”

“Mohammad Gulzar, 27, who Scotland Yard accused of being a ringleader in the plot, was cleared of all offenses,” adds the Register.

Despite the fact that all the suspects were cleared of charges of targeting aircraft, some quarters of the media are still bizarrely citing the verdicts as a reason to continue the inane and pointless restrictions on liquids in carry-on luggage.

Numerous airliners as well as Britain’s largest airport owner are now calling on the government to repeal the measures.

“We would expect the government to review its security regulations following the outcome of this case,” said Roger Wiltshire, chief executive of the British Air Transport Association, whose members include BA and Virgin, reports the Guardian.

BAA, the owner of Britain’s top three airports, including Heathrow, said: “Today’s verdict seems like a good opportunity for the government to consider the security measures currently in place at British airports.”

Whether the government will cave in to pressure and reverse their much cherished behavior compliance airport security measures remains to be seen, but the fact that the “liquid terror plot” was a complete fabrication became apparent from the very start.

In every single major terror bust or terror alert we have proven the evidence to be flawed and the charges to be cooked up nonsense aimed at prolonging the illusion that terror cells are lurking around every corner waiting to cause mayhem. The geopolitical agenda of the U.S., Britain and Israel depends on the proliferation phony terror threats in order to continue the farcical war on terror and take more of our innate freedoms at home to stifle dissent against the plot for worldwide hegemony.

In a series of reports following the August 10th scare, we traced the source of the alleged attack plot to Pakistani and British intelligence and were rapidly able to confirm that the story was nothing more than a manufactured ploy to frighten travelers at the height of the holiday season.

The reason being cited for the failure to convict the suspects of being behind a plot to blow up airliners is that the U.S. government wanted the men apprehended before MI5 were able to collect all the evidence against them.

In reality, as we reported at the time, an MI5 spy had infiltrated the group at an early stage which is often the case when agent provocateurs are attempting to radicalize a group and provoke them into committing acts of violence.

The announcement of the foiled plot was made on August 10th, but officials stated that they wanted to wait at least another week before busting the group, meaning August 17th or thereafter. According to the very timescale of the plot put forward by authorities, the attack was scheduled for August 16th, meaning authorities only wanted to bust the group after the attack had taken place.

Evidence that the suspects identified were mere patsies in a wider conspiracy became clear when it emerged that they didn’t even have passports and could not have boarded a transatlantic plane.

Echoing the activities of the 7/7 bombers, some of the main suspects in the case exhibited behavior that in no way suggested they were preparing to launch mid-air suicide attacks on jumbo jets. Far from preparing his last will and testament, psyching himself up for his imminent death or acquiring the necessary materials to conduct the operation, Tayib Rauf was caught on CCTV hours before the launch of the plot doing something far more mundane - he was buying cakes for his father’s confectionary business.

Former British Ambassador to Uzbekistan Craig Murray slammed the so-called foiled plot story as “propaganda” on behalf of Bush and Blair who yearn for a “new 9/11? to reinvigorate their flagging support base.

“None of the alleged terrorists had made a bomb. None had bought a plane ticket. Many did not even have passports, which given the efficiency of the UK Passport Agency would mean they couldn’t be a plane bomber for quite some time,” said Murray.

The embarrassing collapse of another government-concocted terror fairytale should immediately mandate the repeal of ridiculous measures in airports that do nothing to stop would-be terrorists and everything to hassle and inconvenience innocent travelers - but don’t expect the authorities to give up a key aspect of their prototype police state without a fight.

November 30, 2005
The Onion

LANGLEY, VA—A report released Tuesday by the CIA’s Office of the Inspector General revealed that the CIA has mistakenly obscured hundreds of thousands of pages of critical intelligence information with black highlighters.

CIA Director Porter Goss.

According to the report, sections of the documents— “almost invariably the most crucial passages”—are marred by an indelible black ink that renders the lines impossible to read, due to a top-secret highlighting policy that began at the agency’s inception in 1947.

CIA Director Porter Goss has ordered further internal investigation.

“Why did it go on for this long, and this far?” said Goss in a press conference called shortly after the report’s release. “I’m as frustrated as anyone. You can’t read a single thing that’s been highlighted. Had I been there to advise [former CIA director] Allen Dulles, I would have suggested the traditional yellow color—or pink.”

Goss added: “There was probably some really, really important information in these documents.”

When asked by a reporter if the black ink was meant to intentionally obscure, Goss countered, “Good God, why?”

Goss lamented the fact that the public will probably never know the particulars of such historic events as the Cold War, the civil-rights movement, or the growth of the international drug trade.

“I’m sure the CIA played major roles in all these things,” Goss said. “But now we’ll never know for sure.”

In addition to clouding the historical record, the use of the black highlighters, also known as “permanent markers,” may have encumbered or even prevented critical operations. CIA scholar Matthew Franks was forced to abandon work on a book about the Bay Of Pigs invasion after declassified documents proved nearly impossible to read.

“With all the highlighting in the documents I unearthed in the National Archives, it’s really no wonder that the invasion failed,” Franks said. “I don’t see how the field operatives and commandos were expected to decipher their orders.”

The inspector general’s report cited in particular the damage black highlighting did to documents concerning the assassination of John F. Kennedy, thousands of pages of which “are completely highlighted, from top to bottom margin.”

“It is unclear exactly why CIA bureaucrats sometimes chose to emphasize entire documents,” the report read. “Perhaps the documents were extremely important in every detail, or the agents, not unlike college freshmen, were overwhelmed by the reading material and got a little carried away.”

Also unclear is why black highlighters were chosen in the first place. Some blame it on the closed, elite culture of the CIA itself. A former CIA officer speaking on the condition of anonymity said highlighting documents with black pens was a common and universal practice.

“It seemed counterintuitive, but the higher-ups didn’t know what they were doing,” the ex-officer said. “I was once ordered to feed documents into a copying machine in order to make backups of some very important top-secret records, but it turned out to be some sort of device that cut the paper to shreds.”

AP | August 9, 2008

Former President Ford secretly advised the FBI that two of his fellow members on the Warren Commission doubted the FBI’s conclusion that John F. Kennedy was shot from the sixth floor of the Texas Book Depository in Dallas, according to newly released records from Ford’s FBI files.

Ford, still a congressman at the time, also told a senior FBI official about internal panel disputes over hiring staff, Chief Justice Earl Warren’s timetable for completing the final report on the assassination and what panel members said about the FBI.

In turn, Assistant FBI Director Cartha “Deke” DeLoach confidentially advised Ford of FBI Director J. Edgar Hoover’s position on panel disputes; discussed where leaks were coming from; and, with Hoover’s personal approval, loaned him a bureau briefcase with a lock so he could securely take the FBI report on the 1963 assassination with him on a ski trip.

The new details were included in 500 pages of the FBI’s large file on Ford, released in part this past week in response to requests under the Freedom of Information Act that The Associated Press and others made on the day Ford died in December 2006. The FBI intends to release additional documents about Ford in several batches, all with parts censored for law enforcement and privacy reasons.

That Ford served as the FBI’s eyes and ears inside the commission has been known for years. Long ago, the government released a 1963 FBI memo that said Ford, then a Republican congressman from Michigan, had volunteered to keep the FBI informed about the panel’s private deliberations, but only if that relationship remained confidential. The bureau agreed.

It was also well-known Ford was an outspoken proponent of the bureau’s conclusion that Lee Harvey Oswald killed Kennedy acting alone.

A newly released memorandum provides more details about Ford’s role as the FBI’s informant. DeLoach wrote on Dec. 17, 1963, to outline what Ford told him in the congressman’s office about the commission meeting the day before.

“Two members of the commission brought up the fact that they still were not convinced that the President had been shot from the sixth floor window of the Texas Book Depository,” DeLoach wrote. “These members failed to understand the trajectory of the slugs that killed the President. He stated he felt this point would be discussed further but, of course, would represent no problem.”

There was no explanation of what Ford meant by “no problem.”

Warren Commission records released in 1997 revealed that in the final report Ford changed the staff’s original description of one of Kennedy’s wounds. Ford said then he only made the description more precise. Skeptics said Ford’s wording falsely made the wound seem higher on the body to make the panel’s conclusion that one bullet hit both Kennedy and Texas Gov. John Connally more plausible.

DeLoach also wrote that Ford wanted to take the FBI’s confidential assassination report on a ski vacation but had no way to do so “in complete safety.” DeLoach recommended lending Ford a bureau briefcase with a lock. The bottom of the memo contains a handwritten “OK” over Hoover’s distinctive initial “H,” which he regularly used in commenting on memos.

Most of the newly disclosed documents describe the relationship between the FBI under Hoover and influential members of Congress or the judiciary once Hoover was convinced that they were allies.

Hoover rewarded Ford with personal notes that congratulated him on re-election and on awards, thanked Ford for publicly defending the bureau and expressed sympathy over the death of Ford’s mother. In turn, Ford responded with private and public praise for Hoover and the FBI.

Like other friendly officials, Ford was granted favors. Some Ford sought: a photo of Hoover, background checks on a maid the Fords wanted to hire and on a man with a Swedish accent seeking public office in Ford’s district but who had not answered all his neighbors’ questions about his personal background. Others were surprise gifts, such as a signed copy of Hoover’s book on communism.

Ford was elected to Congress in 1948. Hoover first congratulated him on his re-election in 1952 and thereafter. An internal FBI memo in 1965 said that, “though we did experience some difficulty with all the members of the Warren Commission, Ford was of considerable help to the Bureau.”

Many of the newly released records describe the bureau’s controversial surveillance of anti-war and civil rights protesters as the FBI reported on plans for protest demonstrations at Ford’s public appearances as a congressman, vice president and president.

Two documents provide a rare glimpse of the depth of security fears during the Cold War:

-A memo from Nov. 9, 1965, said the FBI performed a security check at Ford’s request of telephones at his home in Virginia, his line at the phone company’s central office and all points between. The FBI found no bugs, but a foreman said installation of new touch-tone dialing equipment in the area may have caused “some inadvertent noise on Mr. Ford’s line.”

-A memo from Dec. 2, 1959, showed the Navy was considering inviting Ford to a strategy conference at the Naval War College and asked the FBI - fully 11 years after Ford was first elected to Congress - whether Ford had any “subversive nature.” The famously tightlipped FBI had amassed a large file on Ford, but replied only that when Ford had applied to work for the FBI in 1942 its background investigation “revealed no pertinent derogatory information.”

PDF Links for documents:

1959 Memo Regarding Ford’s ‘Subversive Nature’

1965 Memo on Security Check on Ford’s Phone

1963 Memo: 2 Warren Commission Members Doubted FBI’s Conclusions in Kennedy Assassination

September 13, 2008 by Philip Dru

Russia’s Prime Minister Vladimir Putin said he was surprised by the power manifested by western propaganda after Georgia’s assault on South Ossetia, RIA Novosti reported from Sochi.
A foreign participant of Valdai International Debating Club asked the RF prime minister, why Russia’s troops that moved to South Ossetia acted in such a way towards Georgia.

“Your question doesn’t surprise me. I’m surprised by quite another thing - how powerful the propaganda machine of the West actually is. It is stunning, astonishing. This is out of all notch, but it is in it nevertheless,” Putin answered.

Putin reiterated that Russia’s response to Georgia’s assault on South Ossetia was adequate, as Georgia used heavy artillery against peaceful civilians.

“You’d like us to swing a penknife there? What’s the adequate application of force when the tanks and heavy artillery are used against us? Should we have catapulted? The thing to be expected was they would get the snout smashed good and proper,” the prime minister was explicitly emphatic.

Kommersant | Friday, September 12, 2008