Five Critical Flaws in the Senate Health Care Bill

The Senate bill would:

#1—Deny Americans the choice of a public option. In contrast, the House bill contains a national public option, the key to real competition, greater choice, and lower costs.

#2—Leave insurance unaffordable for some lower income and working people. Both bills require virtually all Americans to buy insurance. But even with the subsidies provided, some families could have to pay up to 20% of their income on health care expenses.

#3—Impose dangerous restrictions on women's reproductive health care. Unfortunately, both bills do this and the House provision is worse. Both versions would be a dangerous step and neither should be in the final bill.

#4—Tax American workers' health coverage to pay for reform. The Senate would pay for part of reform by taxing the hard-won benefits packages of many working Americans. The House, on the other hand, pays for reform with a small surcharge on only the wealthiest Americans—a far better approach.

#5—Allow insurance companies to remain exempt from anti-trust laws. Under current law, insurance companies are actually exempt from laws designed to prevent monopolies and price-gouging. The House bill would fix this, but the Senate bill leaves it in place.
...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

I wonder what Ben Stein would say now

From 2007...

In an excellent piece in the New York Times, entitled It's Time to Take a Deep Breadth, Stein outlines the issues, the stresses, and the realities of the market volatility and corrections underway. He does not run from or white wash the credit disaster and the real estate crash underway, but he brings perspective and calm to his analyses. He is a voice otherwise missing at this time in the markets, in government, and in the media. Let me quote briefly from his article, near the end of his piece and after he says “I get to the point of laughing when I read doom-saying articles in the business sections of newspapers or watch Jim Cramer on CNBC.":

"Yes, there are real problems: housing, mortgage defaults, losses at financial firms, rot in hedge funds. But over all, things will be fine.... This economy is very big and very solid. It cannot be derailed for long by anything we have seen lately.... If I were the editor of the business section for just one day, I would run one immense headline: Everything in Going to Be Fine. Go Back to Work."

http://www.nytimes.com/2007/09/09/business/09every.html?ref=todayspaper

...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Negative stimulus on its way

estimates for budget shortfalls at the state level come to $145 billion to $178 billion in the fiscal year that ends next June. Budget gaps like that, on top of already drastic spending cuts in 2008 and 2009, will produce deep cutbacks in spending on everything from road and school construction to employment of police, firefighters, teachers and state park workers. The same survey that showed 44% of contractors anticipating more layoffs also showed that 76% expect state transportation departments to put less work out for bid in 2010 than in 2009.
...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Look out! We're gonna crash! (again)

Why the Stock Market Should Crash -- Seeking Alpha

I'm not saying the stock market will crash, only that if it had any relation to the real U.S. economy that it should crash, and soon.

The current politics of experience is so warped by misleading statistics and orchestrated propaganda that it feels strange to state the obvious and find it is "that which cannot be spoken" -- the credit-dependent, consumer-dependent U.S. economy is going down, and going down hard, and the trillions of dollars borrowed and spent by the U.S. government and Federal Reserve to crank up a recovery have failed completely, utterly and totally.

The basic idea of Keynesian policy is simple: when the wheels fall off the private, quasi-free enterprise economy the government borrows and spreads mountains of money around like fertilizer which will stimulate "green shoots" of recovery.

The forgotten key to successful Keynesian policy is a government which has not been borrowing and spending trillions of dollars even during an era of so-called "prosperity." When a government like that of the U.S. has been propping up "prosperity" with trillions in borrowed money for a decade, then doubling or tripling the "stimulus" in the hopes that the green shoots will be enduring is truly farcical.

If the economy needed several trillion dollars in deficit spending to eke out the meager jobless growth of 2001-2007, then why does anyone think that doubling or tripling that deficit spending will create an enduring boom?

The truth is the U.S. economy has been dependent on Federal stimulus for years, both the indirect stimulus of artificially low interest rates and unlimited liquidity, and the direct spending of hundreds of billions of borrowed dollars.

Even before the financial crisis, the Federal government was borrowing and spending $400 billion a year to prop up "prosperity." All that spending simply papered over the rot at the core of the economy:

1. The primary support of the U.S. economy is consumer spending which is ultimately based on household income and assets.

Earned income has been flat to down for most Americans for years. The median income has been skewed upward by the top 10% whose earnings have risen significantly. According to the Bureau of Economic Analysis, real disposable personal income-- income adjusted for inflation and taxes--declined 3.4% in the third quarter after increasing 3.8% in the second quarter.

In an economy dependent on consumer spending for 70% of GDP, how can GDP rise by 3.5% while personal income plummeted by 3.4%? Assuming that boost in GDP is real and not just statistical legerdemain, then where did it come from? From borrowed money, of course-- the Federal government borrowed and spent over $1.4 trillion in fiscal 2009.

In the good old days of 2002-2007, households would have borrowed and spent hundreds of billions as well. But the consumer, beset by declining assets ($13 trillion lost in the past two years), declining income (see above), falling housing values and worrisome employment trends (17% unemployment/underemployment, broadly measured), is actually cutting back on borrowing. (Revolving Consumer Credit Drops 13.1% in August.)

Consumer credit decreased at an annual rate of 5-3/4% in August 2009. Revolving credit (credit cards) decreased at an annual rate of 13%, and nonrevolving credit decreased at an annual rate of 1-1/2% --the longest decline in consumer debt since 1991.

So while households are still burdened with almost $2.5 trillion in credit card and nonrevolving debt (auto loans, etc.), they are paying debt down, not adding more.

And let's not forget that homeowners pulled out about $5 trillion in home equity in 2001-2007, and the home equity ATM is closed for good. That brings us to:

2. The primary asset in most U.S. households is a home, and home values are still dropping, foreclosures are still rising and the only force keeping the market from falling faster is the Federal government's de facto nationalization of the entire U.S. mortgage market.

Of the $1.5 trillion mortgage securities issued in 2009, a mere 1% ($15 billion) have been issued by banks; 99% are backed by the government. The government owns over half the nation's $10 trillion in mortgages via its de facto ownership of Fannie Mae (FNM) and Freddie Mac (FRE), and it has guaranteed virtually all the mortgages originated in the past year via FHA or VA.

The residential mortgage market is now effectively owned lock, stock and barrel by the Federal government and its private "central bank," the Federal Reserve.

Should the Fed and Treasury reduce their subsidies (that wonderful $8,000 giveaway tax credit to new home buyers or anyone claiming to be one), guarantees and outright purchases of mortgages ($1.2 trillion this year alone), then the mortgage market would instantly freeze up or start pricing in the very real risk that housing is not "recovering" and that anyone holding a mortgage could suffer huge losses if real estate continues declining in value.

Here are a few charts to ponder:

















3. So how have companies "surprised" with higher profits? By slashing payrolls, R&D and various accounting tricks. Actual revenue growth is missing in action. So how do you keep "surprising to the upside" after you've slashed headcount, burned R&D and turned every accounting trick in the book?

You don't. A stock market rising on the hopes of an actual, real, tangible recovery in household income, home equity and creditworthiness is seeing mirages and hallucinating that the lake just ahead is deep and wonderful and stretches to the horizon.

Only we never reach the "lake," do we? "Stabilization" is a chimera; the reality is the government is propping up the economy via unprecedented borrowing and spending, and there is absolutely no evidence that private capital, credit or spending are rising from the "stabilization."

We are walking through the desert, kept alive by the sugar-water drip of Federal stimulus, guarantees and subsidies. The "so near, yet so far" mirage of "recovery" has been propping up the stock market for nine months, and when a slight breeze blows away the thermal illusion, then the market will crash back to the March lows, or perhaps even lower. That crash will simply reflect the state of the real economy.


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"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Schaeffer's Open Letter to the Republican Traitors

Frank Schaeffer: Open Letter to the Republican Traitors (From a Former Republican)

You Republicans are the arsonists who burned down our national home. You combined the failed ideologies of the Religious Right, so-called free market deregulation and the Neoconservative love of war to light a fire that has consumed America. Now you have the nerve to criticize the "architect" America just hired -- President Obama -- to rebuild from the ashes. You do nothing constructive, just try to hinder the one person willing and able to fix the mess you created.

I used to be one of you. As recently as 2000 I worked to get Senator McCain elected in that year's primary. (McCain and Gen. Tommy Franks wrote glowing endorsements regarding my book about military service, AWOL.). I have a file of handwritten thank you notes from Presidents Ford, Reagan, Bush I and II. In the 1970s and early 80s I hung out with Jack Kemp and bought into his "supply side" myth and even wrote a book he endorsed pushing his ideas.) There's more, but take it from me; my parents (evangelical leaders Francis and Edith Schaeffer) and I were about as tight with -- and useful to -- the Republican Party as anyone. We played a big part creating the Religious Right.

In the mid 1980s I left the Religious Right, after I realized just how very anti-American they are, (the theme I explore in my book Crazy For God). They wanted America to fail in order to prove they were right about America's "moral decline." Soon after McCain lost in 2000 I re-registered as an independent in disgust with W. Bush. But I still respected many Republicans. Not today.

How can anyone who loves our country support the Republicans now? Barry Goldwater, William F. Buckley and Ronald Reagan defined the modern conservatism that used to be what the Republican Party I belonged to was about. Today no actual conservative can be a Republican. Reagan would despise today's wholly negative Republican Party. And can you picture the gentlemanly and always polite Ronald Reagan, endorsing a radio hate-jock slob who crudely mocked a man with Parkinson's and who now says he wants an American president to fail?!

With people like Limbaugh as the loudmouth image of the Republican Party -- you need no enemies. But something far more serious has happened than an image problem: the Republican Party has become the party of obstruction at just the time when all Americans should be pulling together for the good of our country. Instead, Republicans are today's fifth column sabotaging American renewal.

President Obama has been in office barely 45 days and the Republican Party has the nerve to blame him for the economic and military cataclysm he inherited. I say economic and military cataclysm because without the needless war in Iraq you all backed we would not be in the economic mess we're in today. If that money had been spent here at home on renovating our infrastructure, taking us toward a green economy, putting our health-care system in order we'd be a very different situation.

As the father of a Marine who served in George W. Bush's misbegotten wars let me say this: if President Obama's strategy to repair our economy, infrastructure and healthcare fails that will put our troops at far greater risk because the world will become a far more dangerous place. So for all you flag-waving Republicans who are trying to undermine the President at home -- if you succeed more of our troops will be killed abroad.

When your new leader Rush Limbaugh calls for President Obama to fail he's calling for more flag-draped coffins. Limbaugh is the new "Hanoi Jane."

For the party that created our crises of misbegotten war, mismanaged economy, the lack of regulation of our banking industry, handing our country to rich crooks... to obstruct the one person who is trying to repair the damage is obscene.

Just imagine where America would be today if the 14 to 20 million voters -- "the rube base" who slavishly follow the likes of Limbaugh -- had not voted as a block year after year thus empowering the Republican fiasco. We would have a regulated banking industry and would have avoided our current financial crisis; some 4000 of our killed military men and women would be alive; over to 35,000 wounded Americans would be whole; we would have been leaders in the environmental movement; we would be in the middle of a green technology boom fueling a huge expansion of our economy and stopping our dependence on foreign oil, and our health-care system would be reformed.

After Obama was elected, you Republican leaders had a unique last chance to send a patriotic message of unity to the world -- and to all Americans. You could have backed our president's economic recovery plan. Since we all know that half of our problem is one of lost confidence and perception, nothing would have done more to calm the markets and project resolve and confidence than if you had been big enough to take Obama's offered hand and had work with him -- even if you disagreed ideologically. You had the chance to put our country first. You utterly failed to rise to the occasion.

The worsening economic situation is your fault and your fault alone. The Republicans created this mess through 8 years of backing the worst president in our history and now, because you put partisan ideology ahead of the good of our country, you have blown your last chance to redeem yourselves. You deserve the banishment to the political wilderness that awaits all traitors.

The GOP: Party of Nihilists

The GOP Has Become a Party of Nihilists
By Joe Klein Thursday, Aug. 20, 2009

...There have been times when Democrats have run demagogic scare campaigns on issues like Social Security and Medicare. There are more than a few Democrats who believe, in practice, that government should be run for the benefit of government employees' unions. There are Democrats who are so solicitous of civil liberties that they would undermine legitimate covert intelligence collection. There are others who mistrust the use of military power under almost any circumstances. But these are policy differences, matters of substance. The most liberal members of the Democratic caucus — Senator Russ Feingold in the Senate, Representative Dennis Kucinich in the House, to name two — are honorable public servants who make their arguments based on facts. Hyperbole and distortion certainly exist on the left, but they are a minor chord in the Democratic Party. They don't retail outright lies.
It is a very different story among Republicans. ..There are conservatives — Senator Lamar Alexander, Representative Mike Pence, among many others — who make their arguments based on facts. But they have been overwhelmed by nihilists and hypocrites more interested in destroying the opposition and gaining power than in the public weal. The philosophically supple party that existed as recently as George H.W. Bush's presidency has been obliterated. The party's putative intellectuals — people like the Weekly Standard's William Kristol — are prosaic tacticians who make precious few substantive arguments but oppose health-care reform mostly because passage would help Barack Obama's political prospects...A striking example of the prevailing cravenness was Senator Johnny Isakson of Georgia, who has authored end-of-life counseling provisions and told the Washington Post that comparing such counseling to euthanasia was nuts — but then quickly retreated when he realized that he had sided with the reality-based community against his Rush Limbaugh-led party...And when Palin floated the "death panel" canard, the number of prominent Republicans who rose up to call her out could be counted on one hand...
Until recently, the Republican Party contained a strong moderate wing. It was a Republican, the lawyer Joseph Welch, who delivered the coup de grâce to Senator McCarthy when he said, "Have you no sense of decency, sir, at long last?" Where is the Republican who would dare say that to Rush Limbaugh, who has compared the President of the United States to Adolf Hitler? ...This may tell us something about the actual state of play on health care: the nutters are a tiny minority; the Republicans are curling themselves into a tight, white, extremist bubble — but there may be enough of them raising dust to render creative public policy impossible.

http://www.time.com/time/nation/article/0,8599,1917525-2,00.html

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"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Crazy for the Loonie—and Canada --Jubak

Thursday, August 06, 2009
Crazy for the Loonie—and Canada
 

The world’s greatest currency?

Not the yen, or the euro, or the renminbi. Sure as shootin' not the US dollar or the British pound.

Yep, it's the loonie, Canada's dollar with the ghostly-voiced diving bird on it. And not just at the moment, either. This is the currency I most want to own for the next decade.

Right now, all the currencies of global commodity producers are rallying. The Australian and New Zealand dollars, the Norwegian krone, and the Canadian loonie all hit 11-month highs against the greenback this week.

The belief that China has gone on a sustainable commodity-buying spree to support its economic recovery has caused commodity prices to soar—and so too have the stock markets and currencies of countries that have commodity-based economies.

At Wednesday’s close, the iShares MSCI Canada Index (NYSEArca: EWC) ETF was up 80% from its March 9th low (the Standard & Poor's 500 index rose 48% during that period), while the Canadian dollar has gained 21% against the US dollar. (EWC traded above $24 late Thursday—Editor.)

I'd put the loonie and Canadian stocks ahead of currencies and stocks of other commodity-based countries because Canada's commodity basket is the most diversified in the world. (Well, Brazil will give Canada a run for the money if the South Atlantic oil discoveries pan out.) Canada has Norway's oil, Australia's mines and farms, and New Zealand's timber and farms all in one package.

And Canada is better positioned in the interest rate cycle. High domestic interest rates—as long as they're not so high that they signal some major economic dysfunction—make a currency stronger. Canada's loonie is strong even though the Bank of Canada has set its target interest rates at just 0.25%, exactly where they are in the US.

That means there will be plenty of support for the loonie when the Bank of Canada—no sooner than the middle of 2010, it has said—starts raising rates again.

lso, the bank has repeatedly pledged to keep its hands off the currency unless its outlook on growth and inflation materially changes.

But finally, I prefer the loonie to the rest of the world's currencies—and certainly to the US dollar—because Canada’s accumulated national debt has been falling, not climbing, for most of the last decade.

After hitting a high near 80% of the country's GDP in 1995-2000, Canada's accumulated national government deficit has dropped pretty much every year until it stood at just 30% of GDP in 2008. In comparison, the US ended 2008 with an accumulated federal debt of about 70% of GDP, and it’s projected to head higher.


...all aboard!

a bouquet of ironies here-- EPA suppresses GW skeptic

EPA May Have Suppressed Report Skeptical Of Global Warming - Political Hotsheet - CBS News

The Environmental Protection Agency may have suppressed an internal report that was skeptical of claims about global warming, including whether carbon dioxide must be strictly regulated by the federal government, according to a series of newly disclosed e-mail messages.

Less than two weeks before the agency formally submitted its pro-regulation recommendation to the White House, an EPA center director quashed a 98-page report that warned against making hasty "decisions based on a scientific hypothesis that does not appear to explain most of the available data."

The EPA official, Al McGartland, said in an e-mail message to a staff researcher on March 17: "The administrator and the administration has decided to move forward... and your comments do not help the legal or policy case for this decision."

The e-mail correspondence raises questions about political interference in what was supposed to be a independent review process inside a federal agency -- and echoes criticisms of the EPA under the Bush administration, which was accused of suppressing a pro-climate change document.

Alan Carlin, the primary author of the 98-page EPA report, told CBSNews.com in a telephone interview on Friday that his boss, McGartland, was being pressured himself. "It was his view that he either lost his job or he got me working on something else," Carlin said. "That was obviously coming from higher levels."

E-mail messages released this week show that Carlin was ordered not to "have any direct communication" with anyone outside his small group at EPA on the topic of climate change, and was informed that his report would not be shared with the agency group working on the topic.

"I was told for probably the first time in I don't know how many years exactly what I was to work on," said Carlin, a 38-year veteran of the EPA. "And it was not to work on climate change." One e-mail orders him to update a grants database instead.

For its part, the EPA sent CBSNews.com an e-mailed statement saying: "Claims that this individual’s opinions were not considered or studied are entirely false. This Administration and this EPA Administrator are fully committed to openness, transparency and science-based decision making. These principles were reflected throughout the development of the proposed endangerment finding, a process in which a broad array of voices were heard and an inter-agency review was conducted."

Carlin has an undergraduate degree in physics from CalTech and a PhD in economics from MIT. His Web site lists papers about the environment and public policy dating back to 1964, spanning topics from pollution control to environmentally-responsible energy pricing.

After reviewing the scientific literature that the EPA is relying on, Carlin said, he concluded that it was at least three years out of date and did not reflect the latest research. "My personal view is that there is not currently any reason to regulate (carbon dioxide)," he said. "There may be in the future. But global temperatures are roughly where they were in the mid-20th century. They're not going up, and if anything they're going down."

Carlin's report listed a number of recent developments he said the EPA did not consider, including that global temperatures have declined for 11 years; that new research predicts Atlantic hurricanes will be unaffected; that there's "little evidence" that Greenland is shedding ice at expected levels; and that solar radiation has the largest single effect on the earth's temperature.

If there is a need for the government to lower planetary temperatures, Carlin believes, other mechanisms would be cheaper and more effective than regulation of carbon dioxide. One paper he wrote says managing sea level rise or reducing solar radiation reaching the earth would be more cost-effective alternatives.

The EPA's possible suppression of Carlin's report, which lists the EPA's John Davidson as a co-author, could endanger any carbon dioxide regulations if they are eventually challenged in court.

"The big question is: there is this general rule that when an agency puts something out for public evidence and comment, it's supposed to have the evidence supporting it and the evidence the other way," said Sam Kazman, general counsel of the Competitive Enterprise Institute, a non-partisan think tank in Washington, D.C. that has been skeptical of new laws or regulations relating to global warming.

Kazman's group obtained the documents -- both CEI and Carlin say he was not the source -- and released the e-mails on Tuesday and the report on Friday. As a result of the disclosure, CEI has asked the EPA to re-open the comment period on the greenhouse gas regulatory proceeding, which ended on Tuesday.

The EPA also said in its statement: "The individual in question is not a scientist and was not part of the working group dealing with this issue. Nevertheless the document he submitted was reviewed by his peers and agency scientists, and information from that report was submitted by his manager to those responsible for developing the proposed endangerment finding. In fact, some ideas from that document are included and addressed in the endangerment finding."

That appears to conflict with an e-mail from McGartland in March, who said to Carlin, the report's primary author: "I decided not to forward your comments... I can see only one impact of your comments given where we are in the process, and that would be a very negative impact on our office." He also wrote to Carlin: "Please do not have any direct communication with anyone outside of (our group) on endangerment. There should be no meetings, e-mails, written statements, phone calls, etc."

One reason why the process might have been highly charged politically is the unusual speed of the regulatory process. Lisa Jackson, the new EPA administrator, had said that she wanted her agency to reach a decision about regulating carbon dioxide under the Clean Air Act by April 2 -- the second anniversary of a related U.S. Supreme Court decision.

"All this goes back to a decision at a higher level that this was very urgent to get out, if possible yesterday," Carlin said. "In the case of an ordinary regulation, these things normally take a year or two. In this case, it was a few weeks to get it out for public comment." (Carlin said that he and other EPA staff members asked to respond to a draft only had four and a half days to do so.)

In the last few days, Republicans have begun to raise questions about the report and e-mail messages, but it was insufficient to derail the so-called cap and trade bill from being approved by the U.S. House of Representatives.

Rep. Joe Barton, the senior Republican on the Energy and Commerce committee, invoked Carlin's report in a floor speech during the debate on Friday. "The science is not there to back it up," Barton said. "An EPA report that has been suppressed... raises grave doubts about the endangerment finding. If you don't have an endangerment finding, you don't need this bill. We don't need this bill. And for some reason, the EPA saw fit not to include that in its decision." (The endangerment finding is the EPA's decision that carbon dioxide endangers the public health and welfare.)

"I'm sure it was very inconvenient for the EPA to consider a study that contradicted the findings it wanted to reach," Rep. James Sensenbrenner, the senior Republican on the House Select Committee on Energy Independence and Global Warming, said in a statement. "But the EPA is supposed to reach its findings based on evidence, not on political goals. The repression of this important study casts doubts on EPA's finding, and frankly, on other analysis EPA has conducted on climate issues."

The revelations could prove embarrassing to Jackson, the EPA administrator, who said in January: "I will ensure EPA’s efforts to address the environmental crises of today are rooted in three fundamental values: science-based policies and programs, adherence to the rule of law, and overwhelming transparency." Similarly, Mr. Obama claimed that "the days of science taking a back seat to ideology are over... To undermine scientific integrity is to undermine our democracy. It is contrary to our way of life."

"All this talk from the president and (EPA administrator) Lisa Jackson about integrity, transparency, and increased EPA protection for whistleblowers -- you've got a bouquet of ironies here," said Kazman, the CEI attorney.

Larry Kudlow is a moron

 

Sometimes, when I fail to hit mute on my TV, I am blasted by the brainless rantings of CNBC’s Larry Kudlow, whose zeal for tax cuts rivals his earlier addiction to cocaine and alcohol. He believes that returning high-income tax rates to those during the 90’s boom will lead to the destruction of mankind. If rich people are so motivated by tax rates, then why do so many live in NYC and California? Even Kudlow lived in NYC until he was fired from his Wall St. job and went to a drug treatment center in ‘95. NY has a fairly high state tax that is 6.85% max and NYC adds ~3.5% max. There’s also a fairly high property tax and sales tax. Why haven’t the rich left NYC a long time ago? Financial companies can now move anywhere because the markets are mostly electronic. People could commute from upstate NY, CT or NJ to avoid some NYC tax. Some do, but many remain. More importanly, why did Kudlow live in NYC rather than commute from a lower tax area? The boat outside my house takes me to Wall St. in 10 minutes.

Kudlow’s addictive personality and meager education in economics made him susceptible to Arthur Laffer’s simplistic view of the world. And his pompous and pseudo-intellectual manner probably makes him popular on the right-wing cocktail party circuit. Indeed, his conversion to Catholicism is yet another example of his need to belong to a cult. My only hope is that someday Steve Liesman will strangle Kudlow live on-the-air.

Larry Kudlow is a moron « Handwaving

 

In a recent issue of Grant's Interest Rate Observer, Jim Grant charted the stimulus money (both monetary policy and government spending) as a percentage of gross domestic product for this downturn, compared with the previous 13 recessions.

In those earlier recessions, if you added all the percentages, the cumulative monetary stimuli constituted about 6 percentage points, while thus far in this recession, the stimuli have clocked in at 18%. Add in the 11.9% (of GDP) supplied by the government and you get 29.9% for the combined stimuli. That's compared with a total of 39.3 percentage points for the prior 13 recessions combined.

It's also already 4 times the New Deal's percentage of GDP!

Yes, I'd say the gloves are off. By the time the dust settles, you may not recognize the economic landscape.

http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/thank-uncle-sam-for-the-rally.aspx

"GOP: like Trekkies, but paranoid."

BILL MAHER: "It's been a week now, and I still don't know what those "tea bag" protests were about. I saw signs protesting abortion, illegal immigrants, the bank bailout and that gay guy who's going to win "American Idol." But it wasn't tax day that made them crazy; it was election day. Because that's when Republicans became what they fear most: a minority.

The conservative base is absolutely apoplectic because, because ... well, nobody knows.

They're mad as hell, and they're not going to take it anymore. Even though they're not quite sure what "it" is. But they know they're fed up with "it," and that "it" has got to stop.

Here are the big issues for normal people: the war, the economy, the environment, mending fences with our enemies and allies, and the rule of law.

And here's the list of Republican obsessions since President Obama took office: that his birth certificate is supposedly fake, he uses a teleprompter too much, he bowed to a Saudi guy, Europeans like him, he gives inappropriate gifts, his wife shamelessly flaunts her upper arms, and he shook hands with Hugo Chavez and slipped him the nuclear launch codes.

Do these sound like the concerns of a healthy, vibrant political party?

It's sad what's happened to the Republicans. They used to be the party of the big tent; now they're the party of the sideshow attraction, a socially awkward group of mostly white people who speak a language only they understand. Like Trekkies, but paranoid.... "

http://www.alternet.org/story/138354/bill_maher%3A_the_gop_is_acting_like_a_guy_who_got_dumped/

http://sfbay.craigslist.org/forums/?ID=123096601

Bottom? What bottom?

April 15, 2009
© 2009 Decision Economics, Inc. All rights reserved. Reproduction in whole or in part without the written permission of the copyright owner is prohibited.
Page 1 of 1
Industrial Production: No hint of a turn
March industrial production drops a more-than-generally-expected 1.5% (Consensus: -0.9%; Decision Economics: -
1.5%), from a minimally revised February level.
Within the total, manufacturing output dropped 1.7%, mining activity ell 3.2%, and utility output rose 1.8%. The
auto industry was a minimal factor in the manufacturing decline, with factory output excluding motor vehicles and
parts dropping 1.9%, across virtually all industries.
Thus, there was no hint that the process of inventory liquidation is drawing to a close. When it does, production
can be expected to bounce back up to meet the pace of sales--at whatever depressed level that may be. The turn will
not be pre-announced, and might happen at any time--but the strong downward momentum of output, and the
still very uncertain trend of final sales, suggest that the moment is not too near.
Ongoing big output declines expand industrial slack capacity (with the manufacturing utilization rate falling 1.1
points), and can lead to further employment cuts. Those trends generally argue for an increasing downward pull
on goods prices--which may, already, be in outright decline.




https://public.fidelityresearch.com/wsod-lehman/nationalfinancial/resources/server/pdf.asp?feedId=99&docTag=US_Economic_Indicators&versionTag=2fcb0592e7f2b5ea93a0c2b76247b7c2&reportName=US%2520Economic%2520Indicator%2520Insights%2520%2526%2520Analyses&doc

Head fake from financials?

Goldman Sachs (GS) And The Secret Of Bank Earnings - 24/7 Wall Street

Goldman’s results were unexpectedly good. The company said it earned $1.81 billion, or $3.39 a share, in the first quarter as improved trading revenue outweighed asset write-downs, handily beating the $1.64 estimate of 16 analysts surveyed by Bloomberg.

While Goldman’s earnings were good, what was better was that the company said it would raise $5 billion and use that and capital on hand to pay back the $10 billion of TARP funds it got from the federal government. The “payback” is the key sign that the Goldman results are the real deal. Wells Fargo did not offer the government a check. It said it hoped to, someday. That is almost certainly a sign that the bank can’t make the payment now or it needs to keep the cash it has for estimated losses in future quarters.

Goldman set a tone for bank earnings which probably won’t be matched this earnings season. By paying the TARP funds it said that it did not have to worry about the next few quarters. It is not concerned that losses from toxic assets, consumer credit, commercial lending, or leveraged buy-outs will be a problem later this year. Goldman implied that its earnings won’t be undermined by the troubles that may affect other financial firms as the economy continues to stumble and bank loans of almost every sort default with increasing frequency.

None of the other banks are going to be able to pull off what Goldman did.

Lincoln Worship Redux

recounting of the story of Lincoln's leadership, his remarkable ability to persevere through adversity, to use his common sense and uncommon intelligence to chart a road to victory, amazes still, and reminds us yet again of our extraordinary good fortune as a nation to have had that man in that office at that moment. We are reminded, too, of the seeming hopelessness of the task that Lincoln faced as he took office in 1861. He was so loathed he had not even been on the ballot in ten southern states; the secession of seven states took place before he was even inaugurated. By the time nine months of his presidency had elapsed, northern forces had been ignominiously defeated only miles from the Capitol; efforts to liberate Unionist Tennessee had failed; no military commander seemed to have any plan for effective movement against the enemy; and northern popular opinion was impatient for either military success or political compromise. "The bottom is out of the tub," Lincoln proclaimed in despair. "What shall I do?"

In the face of such odds, he managed to create an army, win a war, and save a nation--setting the stage as commander-in-chief for Union military triumph but also, as national strategist and policy maker, tying war aims to larger purposes--creating the new birth of freedom of which he spoke, and which we are still realizing today. Perhaps this is why, in the season of his two-hundredth birthday, this remarkable president continues to mean so much to us. Abraham Lincoln is, quite simply, the greatest argument against despair in dark times that our history provides."  -- Drew Gilpin Faust is president of Harvard University and the author most recently of This Republic of Suffering: Death and the American Civil War

... yes, but -- No matter the purity of his motives, he was stll the co-architect of unimaginable suffering that haunted the nation for a century. I do wonder if he'd known in '61 the depth of horror in store in the next 4 years, would he still have accepted the challenge? No one worshiping at his altar ever seems to raise the question.

My patience is wearing thin.

As one who dared to hope Obama really meant change from the unmitigated disaster of the last 8 years, he and Pelosi and Geithner have been singularly disappointing. The housing collapse was the catalyst for the economic collapse; until house prices stop dropping there can be no sustained recovery, yet nobody in position of authority seems capable of addressing this central fact head on.

Getting banks to lend would certainly be helpful but it can't really happen in a sustained fashion until the recession finds a bottom, and that means housing prices stabilize. Ditto for business hiring. Ditto for creating work for the jobless in the interim....


I want to believe but it requires a leap of more faith than I have left. I take some comfort that it's driving the RW nuts but the pricetag of this schadenfreude I can't afford. It reeks of Old Politics.

"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Key Trends for '09: Inflation & Food

plus solvency. That's critical...

"The hot trends for 2009 are:

* Inflation. Gold has started to move up. The U.S. dollar has started to move down. Overseas investors are cutting back on their purchases of dollar-denominated debt. And the faithful news consumer can see the beginnings of a tidal wave of articles and editorials worrying about the inevitability of inflation now that the Federal Reserve has decided to pay overtime to the crew that prints paper money.

* Food. Yes, food commodity stocks collapsed in 2008. And, yes, prices for food commodities went into a retreat that turned into a rout; the prices of major grains are down 50% from their 2008 peaks. But don't count on food getting cheaper still in 2009. All the signs point the other way. The United Nations' Food and Agriculture Organization has warned that because of the global credit crunch, many farmers lack capital to buy seed and fertilizer for the 2009-10 growing season. That's likely to show up in commodity prices, via the futures market, by mid-2009.

* Stability. Companies able to deliver solid revenue and earnings at or maybe even a little above expectations are rare as hens' teeth at this stage of the recession. Companies with those kinds of results are also in a position to use the current global slowdown to attack weaker competitors, buy market share and aggressively develop new products. That's a combination investors particularly prize in the current uncertainty.

I'd give those three trends green lights right now. "

http://articles.moneycentral.msn.com/Investing/JubaksJournal/10-key-trends-for-investors-in-09.aspx?page=all

I just wish I knew a good way to short treasuries.

...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

You want a bailout? Here's my offer

clipped from sfbay.craigslist.org [sfo] Politics World (context) You want a bailout? Here's my offer < RuffJustice > 2008-11-21 08:04:47 If you need a taxpayer bailout, you issue us redeemable convertible preferred shares at the common price paying 1% + the 10-yr T-note rate, redeemable / convertible for 1/5 of a common share at 5x the current share price. The maximum that can be issued is of the number of common shares outstanding. Until the preferred is redeemed: 1. The dividend paid to common and preferred stockholders must be reduced by the percentage of preferred shares issued to us divided by common shares outstanding, and 2. Executive compensation decisions will be turned over to the National Executive Compensation Board chaired by the SEC. Don't count on a bonus. 3. If you miss a payment on our dividend, the Treasury Secretary will appoint a new CEO and board to manage the company. Don't count on a golden parachute. reply

The Gaza 2 Step

1. Kill some Israeli kids
2. Party

clipped from www.humanevents.com On the evening of March 6 in Jerusalem, a heavily armed Palestinian terrorist from nearby east Jerusalem entered the Mercaz Harav yeshiva and opened fire on the unarmed teenage students studying there. Eight died, and 11 were badly wounded before another student and an off-duty soldier shot the terrorist. The atrocity ignited wild celebrations in Gaza. If you thought that the celebrations were anomalous, you might want to know about recent findings just published by the Palestinian Center for Policy and Survey Research, an independent polling organization based on the West Bank. According to its polls, 84 percent of Palestinians approved of this attack. Moreover, 64 percent approve of Hamas randomly firing rockets and mortars from Gaza into Israeli communities, and 75 percent favor ending negotiations between their leaders and the Israeli government. ...so it goes.

Meanwhile, back at the train wreck

formerly known as The Economy, the evidence of the tipping point receding in the rear view mirror continues to mount ...

"The Empire State Manufacturing Index fell to -25.4 (DE: -28.5, Consensus: -26.0) in November from -24.6 in October. The result is the lowest in the Index's brief history (it began in 2001). New orders fell sharply for the second straight month, with the index falling to -22.2 from -20.5. Shipments also fell again, dropping to -13.9 from -8.9 in October. As a result of orders falling more sharply than shipments, unfilled orders fell as well, with the index reading -24.1 from last month's -12.2. This was the 8th straight month of falling unfilled orders.

The story of this report however, was the deterioration of the employment index, which fell to -28.9 from -3.7 last month. The reading was the worst since December 2001.

The average employee workweek also dropped, with the index falling to -25.3 from -9.8. Meanwhile, expectations for employment six months from now turned negative, hitting -4.2 from 1.1 in October. Only once in the history of the series (September 2001) did the expected employment index turn negative. In 2001 however, that result was almost certainly September 11th related, as the expected index read 15.5 in August, and rebounded to 8.0 in October. This time around, it likely reflects a sharp deterioration in the economic outlook."

... In other words, it's not just getting worse, it's getting worse faster and faster. This means it's going to get REALLY BAD before it even starts to get bad more slowly. YOU'VE BEEN WARNED.

...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

You could almost hear the global sigh of relief

CNN 2008-11-05

The Times of London said Obama had revitalized U.S. politics. In Germany, Der Spiegel called Obama's rise "astonishing," while the Times of India called Obama an "advocate of strong partnership with India."

Al Jazeera said Obama had "surfed to power on a wave of voter discontent generated by the failures of President George Bush and the Republican Party" and added that he faces "unique challenges." It continued that his country was "sick of war."

Actually, the whole world pronounced itself sick of what it perceived to be Bush's multipronged military approach. From the start, President Obama will have to tackle the campaign pledge that defined his candidacy: bringing U.S. troops home from Iraq and ending the war there.
At the same time, he has to tackle a Rubik's Cube of America's overstretched and fatigued forces, to figure out how to redeploy more to wrest victory from the jaws of defeat in Afghanistan.
And next door in Pakistan, he must devise a strategy to rescue a failing state, bolster democracy and simultaneously crack down on al Qaeda and Taliban militants there.

And what about Iran? Many believe that's Foreign Policy Challenge Number 1A, if not Number 1, because of Iran's nuclear program.

Iran officially reacted to Obama's victory with cautious optimism, praising the end of what it termed "Bush's defeated policies." It added that Obama "can play an important role in future relations between the U.S. and Asia and the Middle East."

Here in America, many former secretaries of state and other officials also believe in playing that role. They say an Obama administration should explore the possibility of engaging with Iran and even restoring diplomatic relations as a way to help solve challenges such as Iran's nuclear program and its role in regional power politics in Iraq, Afghanistan and the Middle East peace process.

Obama can ride the wave of warm welcome from European and other global allies, but he is already being encouraged to restore an era of cooperation and compromise after the unilateral approach of the Bush administration.
reply...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Why you must NEVER trust a "conservative"

in one simple table...

http://www.skymachines.com/US-National-Debt-Per-Capita-Percent-of-GDP-and-by-Presidental-Term.htm

...Goddammit, pod people stole my party!...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

White Privilege: a rant

For those who still can't grasp the concept of white privilege,
or who are constantly looking for some easy-to-understand
examples of it, perhaps this list will help.

White privilege is when you can get pregnant at seventeen like Bristol
Palin and everyone is quick to insist that your life and that of your
family is a personal matter, and that no one has a right to judge you or
your parents, because "every family has challenges," even as black and
Latino families with similar "challenges" are regularly typified as
irresponsible, pathological and arbiters of social decay.

White privilege is when you can call yourself a "fuckin' redneck,"
like Bristol Palin's boyfriend does, and talk about how if anyone messes
with you, you'll "kick their fuckin' ass," and talk about how you like
to "shoot shit" for fun, and still be viewed as a responsible,
all-American boy (and a great son-in-law to be) rather than a thug.

White privilege is when you can attend four different colleges in six
years like Sarah Palin did (one of which you basically failed out of,
then returned to after making up some coursework at a community
college), and no one questions your intelligence or commitment to
achievement, whereas a person of color who did this would be viewed as
unfit for college, and probably someone who only got in the first
place because of affirmative action.

White privilege is when you can claim that being mayor of a town smaller
than most medium-sized colleges, and then governor of a state with about
the same number of people as the lower fifth of the island of Manhattan,
makes you ready to potentially be president, and people don't all piss
on themselves with laughter, while being a black U.S. Senator, two-term
state Senator, and constitutional law scholar, means you're "untested."

White privilege is being able to say that you support the words "under
God" in the pledge of allegiance because "if it was good enough for the
founding fathers, it's good enough for me," and not be immediately
disqualified from holding office--since, after all, the pledge was
written in the late 1800s and the "under God" part wasn't added until
the 1950s--while believing that reading accused criminals and terrorists
their rights (because, ya know, the Constitution, which you used to
teach at a prestigious law school requires it), is a dangerous and silly
idea only supported by mushy liberals.

White privilege is being able to be a gun enthusiast and not make people
immediately scared of you. White privilege is being able to have a
husband who was a member of an extremist political party that wants your
state to secede from the Union, and whose motto was "Alaska first," and
no one questions your patriotism or that of your family, while if you're
black and your spouse merely fails to come to a 9/11 memorial so she can
be home with her kids on the first day of school, people immediately
think she's being disrespectful.

White privilege is being able to make fun of community organizers and
the work they do--like, among other things, fight for the right of women
to vote, or for civil rights, or the 8-hour workday, or an end to child
labor--and people think you're being pithy and tough, but if you merely
question the experience of a small town mayor and 18-month governor with
no foreign policy expertise beyond a class she took in college--you're
somehow being mean, or even sexist.

White privilege is being able to convince white women who don't even
agree with you on any substantive issue to vote for you and your running
mate anyway, because all of a sudden your presence on the ticket has
inspired confidence in these same white women, and made them give your
party a "second look."

White privilege is being able to fire people who didn't support your
political campaigns and not be accused of abusing your power or being a
typical politician who engages in favoritism, while being black and
merely knowing some folks from the old-line political machines in
Chicago means you must be corrupt.

White privilege is being able to attend churches over the years whose
pastors say that people who voted for John Kerry or merely criticize
George W. Bush are going to hell, and that the U.S. is an explicitly
Christian nation and the job of Christians is to bring Christian
theological principles into government, and who bring in speakers who
say the conflict in the Middle East is God's punishment on Jews for
rejecting Jesus, and everyone can still think you're just a good
church-going Christian, but if you're black and friends with a black
pastor who has noted (as have Colin Powell and the U.S. Department of
Defense) that terrorist attacks are often the result of U.S. foreign
policy and who talks about the history of racism and its effect on black
people, you're an extremist who probably hates America.

White privilege is not knowing what the Bush Doctrine is when asked by a
reporter, and then people get angry at the reporter for asking you such
a "trick question," while being black and merely refusing to give
one-word answers to the queries of Bill O'Reilly means you're dodging
the question, or trying to seem overly intellectual and nuanced.

White privilege is being able to claim your experience as a POW has
anything at all to do with your fitness for president, while being black
and experiencing racism is, as Sarah Palin has referred to it, a "light"
burden.

And finally, white privilege is the only thing that could possibly allow
someone to become president when he has voted with George W.
Bush 90 percent of the time, even as unemployment is skyrocketing,
people are losing their homes, inflation is rising, and the U.S. is
increasingly isolated from world opinion, just because white voters
aren't sure about that whole "change" thing. Ya know, it's just too
vague and ill-defined, unlike, say, four more years of the same, which
is very concrete and certain.

White privilege is, in short, the problem.

...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Market Outlook "Worst Ever"

PIMCO 3Q08 Market Outlook

07/01/2008
http://www.allianzinvestors.com/commentary/frm_PIMCO_mkt07012008.jsp
PIMCO Secular Economic Outlook for 2008 - Market Outlook for 3rd Quarter

PIMCO believes that secular economic, social and political trends exert the most powerful and sustained influences on bond markets. They define “secular” as the next three to five years. PIMCO's secular outlook guides the way they structure portfolios in terms of duration, yield curve positioning, sector exposure, credit quality and other risk measures. The following are the views and findings from the PIMCO Secular Outlook:

Emerging Economies to Lead Global Growth - Global growth will remain robust despite a cyclical downturn in the U.S. and other developed economies. Growth will be driven to a greater extent by emerging markets that are in the midst of a breakout development phase. The global economy is evolving into a multi-polar growth world where countries such as China emphasize more balanced development paths that include enhanced consumption, market-based systems and more flexible exchange rates.
Upward Trend in Inflation - Inflation pressures will spring from several sources. These include: the spillover of global demand into commodities; gradually rising wages as well as policy shifts toward greater employment and social spending in developing economies; and loose U.S. monetary policy that tends to export inflation, especially to emerging economies that align their currencies with the U.S. dollar.
Lower Corporate Profits - Profits are likely to decline from current high levels, both overall and relative to labor, as low wages in emerging markets rise. In addition, as the financial sector works its way through the subprime crisis it will have to raise more capital, reduce leverage and tighten lending standards. While such measures will promote stability over the long run, they will have a depressing effect on profitability over the next several years for financial companies and the corporate sector overall.
Realignment of the Global Financial System - In developed economies, regulatory changes and balance sheet management will drive realignment. Now that the Federal Reserve has opened its discount window to investment banks, these institutions are likely to face greater capital requirements and oversight. The financial sector in the developed world will be driven toward a business model with lower leverage and lower risk. Realignment will take a different form in emerging markets. Local capital markets in emerging economies will continue to develop as consumers and businesses demand a wider range of financial services. The influence of sovereign wealth funds will grow as they diversify risk profiles of their portfolios.


PIMCO Cyclical Economic Outlook

While the Secular Outlook is the foundation for the PIMCO portfolio strategies, they refine this outlook to account for expected developments over a cyclical, or 6- to 12-month time frame. Major aspects of PIMCO's cyclical view are:

Fed Unlikely to Tighten in Near Term – The financial system is highly sensitive to shifts in monetary and fiscal policy amid constrained balance sheet liquidity and asset write-downs that continue to erode banks’ capital. There is also growing evidence that fallout from the subprime debacle has now spread to the U.S. regional banking sector. In this environment, the Fed is unlikely to have the latitude to raise short-term interest rates over the next several months despite growing inflation pressure.
Heightened Volatility for Investment Strategies - PIMCO expects that the vulnerability of the global financial system to policy mistakes will make risk exposures in investment portfolios more volatile. On the positive side, however, this volatility is also likely to create more opportunities for astute investors to add value.


Investment Implications of Secular and Cyclical Outlook

The following is a summary of broad investment themes that flow from the PIMCO Secular Outlook, as well as descriptions of how PIMCO expects to express these themes.

Limit Interest Rate Risk - PIMCO will look to reduce exposure to interest rates in the U.S. and elsewhere in the world, especially on the longer end of yield curves. Longer maturity rates are vulnerable to inflation risk and, in the case of the U.S., the need to finance higher expected fiscal deficits and attract investors already heavily exposed to Treasuries. In the U.S., PIMCO will target duration below the benchmark. With the U.S. yield curve likely to remain steep, they plan to retain our focus on relatively short maturities, a strategy that offers the potential for gains as bonds “roll down,” or mature along the steep yield curve over time.

Outside the U.S., PIMCO plans to retain exposure to the front end of the U.K. yield curve, though at reduced levels. The Bank of England faces the same constraints with respect to raising rates as does the Fed, which means that U.K. short rates are unlikely to rise as much as markets expect.

Seek Out High-quality Assets With Attractive Yields - Debt reduction and balance sheet realignment, and the resulting dearth of liquidity, have contributed to a dramatic widening in risk premiums across a variety of fixed-income assets. PIMCO will be discriminating as it pursues these opportunities. They believe that the best risk-adjusted returns will be found in the senior part of the economy’s capital structure. These securities include top quality corporates, municipals, mortgages and other asset-backed bonds where valuations have cheapened less for reasons of credit weakness than because of system-wide liquidity constraints.

For example, PIMCO plans to retain an overweight to mortgage-backed bonds, especially those arranged by the major mortgage agencies, to capture yield premiums well above historical averages. Municipal bonds trading at yields above Treasuries are another high quality opportunity.

Look for Value in Financials - Realignment of the financial sector could create compelling opportunities for investors. Regulators will look to remove risks of institutional failure from the banking system. The cost of this regulatory reaction will be a lower return on capital that will likely tilt relative value in the direction of bondholders and away from stocks of financial companies. While PIMCO plans to retain an overall underweight to the corporate sector, they will continue to emphasize select, high-grade corporates where the credit crisis has produced attractive valuations, including bonds of banking and finance companies. Some of these financial institutions may well be too big to fail, thus putting them under the “umbrella” of the Fed.
Position for Renewed U.S. Dollar Weakness – The U.S. dollar’s decline is not over, but the currencies that carry the brunt of the appreciation versus the dollar will change. The gainers will no longer be dominated by countries with floating currencies, such as the euro, pound and yen. PIMCO plans to take modest positions that benefit when these currencies lose value versus the U.S. dollar. They will emphasize currencies of emerging market countries (such as China and elsewhere in Asia) with relatively inflexible currency regimes that will be forced to let their currencies rise against the U.S. dollar to combat inflation.


...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

CRAMERAMA

Get more business news from CNBC!

Check the Stock Market Quotes on CNBC.com.

More Fecal Matter Approaching the Rotational Air Circulation Device

End of an Era
By ALAN ABELSON

Prepare for meaner slumps and less exuberant recoveries. The jobs report tells only half the bad news.

WHAT CAN YOU SAY ABOUT JUNE? IN A FAMILY MAGAZINE, THAT IS. Except good riddance.

It was, as Dubya might put it, a heck of a month. But that doesn't quite convey how very distinctive and how awfully bloody it was. Great for ghouls, vampires and short sellers. Bad for just about anyone else with a pulse who happened to own as much as one solitary share of stock.

Of course, if you had invested your dough in a nice little oil well somewhere you probably feel like a million bucks and your net worth must feel even better. Or, if you were one of those dastardly speculators who, sneering all the while at the world's hungry millions, took a flier on wheat, while steering clear of zinc, June was a positively lovely month.

But if you're the diehard equity type, as so many of us innocents are, you suffered the agonies of poor old Job. For the sad truth is, to find an equal to how bad June's stock market was. you need to go all the way back to 1930, when the fall-out from the Great Crash was wrenchingly evident and the bodies were still hitting the pavement on Wall Street.

If it's any consolation, the elite billionaires as well as we poor investment peasants have been roughed up by this year's cruel and vicious market. We can offer you that solace, thanks to the efforts of crack researcher Teresa Vozzo, who secured the data from an interesting Website dubbed GuruFocus.com

As its fairly repellent name may give you a hint, GuruFocus tracks the stock picking performance of 55 mostly famous (and usually rich) investors including the likes of Warren Buffett, George Soros, Dave Williams, Glenn Greenberg, Carl Icahn, Ron Baron, David Dreman, Edward Lampert, Bill Miller, Marty Whitman and Seth Klarman. We know a number of these fine gents and even like a few of them.

According to GuruFocus, in the first half of this year, only four of the 55 bought stocks that collectively scored a gain. This lucky quartet was headed by T. Boone Pickens, the oil maven, whose stock purchases in the first half of the year were up a nifty 23%; Ken Heebner, whose equity buys averaged a 14.5% rise; Steve Mandel, who enjoyed a 10.1% average gain on the shares he bought in the opening six months, and David Winters, who posted a 3.8% appreciation.

The worst losers were Marty Whitman, whose first-half picks were down 43.9%; Mohnish Pabrai, whose buys were down an average of 41.9%; and Bill Miller, whose purchases, on average, lost 38.5%. No need, we hazard, to pass the collection plate.

THE BANK FOR INTERNATIONAL SETTLEMENTS -- BIS, for short, and blessedly less of a mouthful than the official moniker -- has been around four score years and thus seen it all: panics and booms, recession, depression and bountiful prosperity, inflation, disinflation and that particularly ugly hybrid, stagflation. The bank, in the not unlikely case its existence has eluded your ken, is the central banks' central bank, a kind of global nanny keeping an eye cocked on the world's banking system and trying, regrettably not always with success, to persuade its charges to act with some semblance of prudence and reason.

For an institution coping with no fewer than 55 central banks, it somehow has contrived to retain its sanity and, perhaps even more surprisingly, its equilibrium. Indeed, for the most part, it manages to eschew those endearing qualities that conspire to make "smart banker" an oxymoron. Unlike so many vaguely official entities with "international" in their title, the BIS renders its analyses and opinions as guided by facts on the ground rather than revelations from on high.

We're grateful to our friends, Philippa Dunne and Doug Henwood at the Liscio Report, whose latest commentary on the economy prompted this little riff on the BIS. Like the diligent scholars they are, they plowed through the 260 pages of the bank's annual report and distilled some of the salient material it contains. Less scholarly and for sure less diligent, we, in turn, are distilling their distillate.

The BIS, incidentally, is based in Basel (forgive us our alliterations), which, we suppose, doesn't surprise you, for where else would the central bank of the world's central banks be based but in Switzerland? More to the point, its Swiss locale provides a suitably neutral perch from which to survey the global economic and financial scenes. What we found gratifying is that so much of the BIS' view of the way things are and what lies ahead of us is very much akin to what we've been scribbling here for months on end (vanity, thank heavens, is not a mortal sin). Its take on inflation, for example, seems quite on the money. It doesn't much hold with the notion, so firmly held in Wall Street and Washington, that the concoction known as "core" inflation, which eliminates such insignificant stuff as the cost of food and energy, is the proper measure of inflation. Instead, the bank is convinced that in the U.S. and the Eurozone, headline inflation -- which, of course, much to the chagrin of the no-inflation claque, includes prices of food and energy -- has become a much better predictor of inflation.

As to whether the economy is done in by a violent flare-up of inflation in a redux of the 1970s or by the insufferable weight of debt aggravated by the brutal credit crunch, the BIS ventures with admirable impartiality that those on both sides of the argument might in the fullness of time be proved right. Which pretty much echoes our feeling that the current surge of inflation will worsen ponderably and be followed by a painful period of deflation. The bank warns that resorting to "gimmicks and palliatives" to support asset prices and stymie an impulse among consumers to save will only make things worse.

The BIS lays the blame for the current financial mess we find ourselves in squarely on the vast buildup of debt over the years that has instilled in various global economies a dangerous tendency, fed by easy credit, to magnify booms and busts. From here on, in other words, you might as well kiss those comparatively mild recessions and moderate expansions that we've recently had goodbye.

As Philippa and Doug sum up the message in the BIS annual, it increasingly looks "like the evermore freewheeling financial environment that we've taken for granted for the last 25 years is behind us." Or, as the Bank declaims "has run its course."

In sum, better buckle your seat belt; the ride ahead stacks up as pretty darn bumpy.

ANOTHER MONTH, ANOTHER PUNK EMPLOYMENT REPORT.

We're always razzing the poor old consensus for its bum forecasts, often so very much off the mark, of monthly employment numbers. So we figure it's only fair to be nice for a change and commend the consensus for being smack on target. And we'll even refrain from pointing out that once in a very great while, the guy or gal with a blindfold on does pin the tail on the donkey.

Anyway, the going estimate on the Street for June was a loss of 60,000 or so jobs and, by golly, the actual number was 62,000. All you members of the consensus, stand, please, and take a bow (it may be a long time before you get a chance to do it again).

The unemployment rate, meanwhile, which had taken a huge jump in May, the biggest, in fact, in 22 years, held steady at 5.5%. Revisions to April and May swelled the earlier reported totals of pink slips by a combined 52,000.

The private sector lost 91,000 jobs, with, as you might expect, construction and manufacturing the heaviest hit. The good news was on the skimpy side: The biggest gains in hiring were by municipalities and states, and given the increasing financial pinch afflicting city halls and statehouses just about everywhere, that old reliable geyser looks due to dry up in a hurry.

Just for the record, governments of every stripe chipped in 29,000 to the job total. There were some 30,000 fewer temps working at the end of June than at its start, which tells you more about the economy than you'd like to hear. It's also a bit of an evil harbinger for employment.

That insightful pair, Philippa Dunne and Doug Henwood, cited above, are invariably spot-on when it comes to parsing the monthly job numbers and we've passed along their conclusions, many a time and oft. Our only reservation, and a modest one, has been, kindly souls that they are, they were too forgiving of the Bureau of Labor Statistics' birth/death model, which seeks to capture the jobs added and subtracted by, well, the birth and death of new firms. The device invariably strikes us as a fire alarm that works swell -- except when there's a fire. And in the overwhelming majority of months, it perhaps conveniently serves to bloat the total of jobs added.

As it happens, we now have reason to forgive Philippa and Doug for being forgiving. Here's what they say in Friday's review of the latest jobs report: "Although we usually shy away from pointing to mischief coming from the birth/death model, this seems to be one of those moments when we should overcome our shyness: It added 177,000 to June employment."

Duly noting that the birth/death calculation is made without seasonal adjustment, they nonetheless observe that save for it, private employment would have been down a formidable 268,000 or so. Other absurdities: The birth/death model miraculously added 29,000 to rapidly vanishing construction employment, 22,000 to professional business and professional services and -- get this -- a whopping 86,000 to leisure and hospitality.

They comment dryly: "Given the weakness of the economy and the crunchiness of credit, we doubt there are enough start-ups around to match these imputations." Exactly.

http://online.barrons.com/article/SB121512484846628107.html?mod=googlenews_barrons&page=2&page=sp#
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"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

End of an Era

The era of unlimited abundance is ending. Instead of delusioning on windmills and solar power destined to provide only a few percent of our needs for the next 300 years, the world must go immediately to nuclear energy. Instead of going on and on about Chernobyl and Three Mile Island, the truth is that France has gone nearly 80% nuclear since the 1970s, and it's never had an accident. And the choice is not between nuclear and solar, it's between nuclear and all of us shivering in the dark.

Nuclear at least would give the planet enough energy for everybody for the next few centuries. And by then, we might have practical nuclear fusion that would emulate the power of the sun, and just pray some lunatic at that point doesn't use it to destroy the whole planet.

The Pacific Ocean is like a huge lake with a circular current around it, and it's recently been discovered that there's a huge collection of plastic garbage in its centre, twice the size of the United States; everything from old toothbrushes to nets that trap the remaining fish.

Personally, I'll say good riddance to oil so that the air can be clean again, and I can once again see the beauty of the planet in the distance, instead of hazy smog. As my father said, "If you abuse yourself, you'll go blind." And I said, "Hey, Dad, I'm over here."

...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Profiting from the dollar's decline

Commentary: If the dollar continues to fall, don't invest in dollars
By Bill Donoghue, MarketWatch
Last Update: 12:01 AM ET Jun 2, 2008

SEATTLE (MarketWatch) -- Federal Reserve Chairman Ben Bernanke painted himself and the American economy into a corner. Treasury Secretary Henry Paulson is promising help -- but not until after he is likely out of office. At least the paint will be dry by then and Bernanke and Paulson can go home in peace (or disgrace).

There are two factors strongly affecting the value of the dollar; the trend of interest rates, which directly affects the value of the dollar, and the depressing state of our economy. Rates are not likely to fall far any time soon (they're more likely to rise with inflation) and a long painful recession is in the works.


Bernanke's policy to ease financial markets by lowering the ultrashort overnight rates he can set (the discount rate where banks borrow from "the lender of last resort" -- a crowded line this summer -- and the Fed funds rate where mostly country banks lend their excess reserves on deposit at the Federal Reserve to regional and financial center banks who make the largest commercial business and real estate loans) has been slow to stimulate the American economy.

It also undermined the value of the U.S. dollar and made investing in foreign stocks "safer," as non-U.S. dollar-denominated securities offer an added extra currency cushion. That attracts rational security-cautious investors and denies capital to American borrowers trying to reestablish market leadership.

Profit directly from a weakening dollar index

To profit directly from a weakened dollar on a day when the U.S. dollar index (DXY: news) falls 1%, the inverse Falling Dollar U.S. ProFunds (FDPIX: news) should rise 1% and the leveraged Rydex Weakening Dollar 2X strategy fund (RYWBX: news) earns 2%. In a rising dollar day the funds lose 1% and 2%, respectively. These funds can be disturbingly volatile but if you feel the dollar is likely to continue weakening, these are excellent choices.

There is also the PowerShares U.S. Dollar Bearish ETF (UDN: news) that tracks the Deutsche Bank Short U.S. Dollar Index Futures Index. They beat both ProFunds and Rydex to the exchange-traded funds market as their rising dollar index ETFs are still in registration.

Profit from investing in currency funds

CurrencyShares are ETFs distributed by Rydex. They offer eight currency choices; the Australian Dollar (FXA: news), the British Pound Sterling (FXB: news), the Canadian Dollar (FXE: news), the Euro (FXE: news), Japanese Yen (FXY: news), the Mexican Peso (FXM: news), the Swedish Krona (FXS: news) and the Swiss Franc (FXS: news).

Currently, the Australian dollar and euro, along with our neighbors to the north, the Canadian "loonie," and our neighbors to the south, the Mexican peso, represent the best profit opportunities -- although you might choose to build a portfolio of all four. Remember, that will require four times the trading costs as these are ETFs, though using discount brokers like E-Trade or TD Ameritrade should keep your trading costs to $7 to $10 dollars per ETF.

Profit from investing in foreign currency-denominated bank accounts

If you wish a wider choice of currencies, you could open certificates of deposit or money market deposit accounts at Everbank.com and reduce your trading costs to exchanges within 1% of the institutional exchange rates; a low cost you probably couldn't get at most banks or brokers.

Profit from investing in foreign stock funds

Of course, the best way to take advantage of a falling dollar is to invest in foreign-currency denominated stocks where your return is a combination of strong local stock opportunities and currency profits. Brazil (EWZ: news) and Canada (EWC: news) are excellent choices. Brazil has become the "OPEC of sugar ethanol" (we blew it on less efficient corn ethanol), is energy independent and has just found new oil reserves off its coast. Canada is the U.S.' largest supplier of oil (from oil shale) and their currency last year was so strong that simply opening a checking account in Vancouver or Toronto would have bought you 23% more dollars by year end without earning any interest.

Profiting from the falling U.S. dollar is easy; Profiting in the U.S. is hard

Which U.S. sectors will be the hottest (to buy long) or the coldest (to sell short) is always a hard choice, but with a dollar this weak and interest rates so low and a Fed that seems impotent to fight back, makes being a dollar bear an easy bet.

Even if they are successful, it will take a long time to know they succeeded -- and even then, the best investments are likely to be across the border anyway.

Bill Donoghue is editor of The Proactive Fund Investor, a weekly newsletter published by MarketWatch, and chairman of W. E. Donoghue & Co. in Norwood, Mass. donoghue.com

...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

"Greed Kills" Investing Strategy

Albert Meyer, a former accounting professor from South Africa now based in Plano, Texas, brings a healthy dose of skepticism to stock analysis. He picks companies for the fund by starting with two basic rules.

First, Meyer rejects companies where stock-option grants represent more than 5% of the shares outstanding. He says that because of shortcomings in rules on how to account for options, the true cost to shareholders doesn't come through in reported financial numbers. Overly generous grants are so widespread that this rule eliminates more than 75% of the stocks in the Russell 3000 index ($RHK.X), according to Paul Hodgson of The Corporate Library, which tracks grants as part of its corporate-governance rating system.


Next, Meyer avoids companies where execs get too much pay. There's no strict cutoff. But he's unlikely ever to hold a company where the boss makes more than $5 million a year. That's about half of the $9.9 million in average compensation that CEOs at S&P 500 companies made in 2007, according to The Corporate Library.

From there, Meyer looks for qualities such as pristine financials, strong cash flow, good profit margins and reasonable dividends in businesses surrounded by some kind of protective moat. He's also a value investor who favors stocks that look cheap.
First-rate results
But wait a second. Whenever I focus this column on companies with highly paid CEOs, I'm told that these pay levels are necessary to attract the top talent. Doesn't Meyer run the risk of winding up with companies run by a bunch of second-rate leaders?

"It's a total scam to say, 'If we don't pay these salaries, we won't draw the talent,'" Meyer says. "That's not what I find. The companies we own pay modest salaries, and they do extremely well. They are not suffering because of a lack of high salaries."
Video on MSN Money
Say on pay © MedioImages
Aflac shareholders win 'say on pay'
The company's shareholders have become the first investors to have an official say on executive compensation.

Meyer's track record bears this out. Investments for managed accounts at his Bastiat Capital -- where he also shuns companies with greedy execs -- were up 43.4% from April 30, 2006, through the end of April this year. The S&P 500 was up 5.72% in the same time frame.

http://articles.moneycentral.msn.com/Investing/CompanyFocus/MakeABuckByShunningFatCats.aspx?page=2
...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Four Mega-Dangers International Financial Markets Face

By Dennis J. Snower
01 May 2008 at 10:06 AM GMT-04:00


BOSTON (voxEU.org) -- Day after day new, alarming news emerges from the world’s financial markets, and day after day the public is surprised by how bad it is. But instead of wringing our hands, let’s ask ourselves an important, unconventional question: What is more surprising: that financial markets have turned from bad to worse, or that we continue to be surprised by each successive piece of adverse news?

I suggest that our repeated surprise should be more surprising. This issue is important, because if we were better at recognising the financial risks we face, we could do more to avoid them. If banks, investment houses, and American homeowners had done a better job in recognising the risks in the subprime mortgage market, we could have spared ourselves the current crisis.




Why does the public repeatedly underestimate the repercussions of the present financial crisis? The answer is simple: most of us are short-sighted; we can’t imagine a future that is radically different from the present. In particular, most of us don’t understand that economic events often unfold gradually due to the operation of important lagged adjustment processes embedded in the economy. The public, the media and politicians would do well to give them close attention. Lagged adjustment processes. After the Titanic’s hull was punctured, it took hours for its hull to fill with water; thus the passengers couldn’t imagine that it would sink.

In my judgment, there are currently four major dangers facing the world economy, and all of them are currently obscured by the fact they play themselves out slowly.

Four dangers

The first danger we have witnessed since August 2007: The subprime mortgage crisis gave rise to a liquidity crisis in the international banking system, due to uncertainty about who holds the losses. This is leading to reduced lending to firms and households. But that is not the end of the story, because the reduced lending will lead to reduced consumption and investment. With a lag, reduced sales of goods and services will reduce stock market valuations. And, with another lag, the lower stock market prices will – in the absence of any favourable fortuitous events – intensify the banks’ liquidity crisis.

The second danger lies in the dynamics of U.S. house prices. As more and more U.S. households find themselves unable to repay their mortgages, foreclosures are on the rise, more houses are put on the market, the price of houses falls further – with further lags – this leads to more foreclosures and declines in housing wealth. This dynamic process plays itself out only gradually, as households face progressively more stringent credit conditions and house sales gradually lead to lower house prices.

The third danger results from the interaction between wealth, spending and employment. As U.S. households’ wealth – in the housing market and the stock market – falls, their consumption is beginning to fall and will continue to do so, again with a lag. This decline in consumption is leading to a decline in profits, of which more is on the way, which in turn will lead to a decline in investment. The combined decline in consumption and investment spending will eventually lead to a decline in employment, as firms begin to recognise that their labour is insufficiently utilised. The decline in employment, in turn, means a drop in labour income, which, with a lag, leads to a further drop in consumption.

And that leaves the fourth (and possibly the nastiest) of the dangers, one that concerns the latitude for monetary policy intervention. As the Fed reduces interest rates to combat the crisis, the dollar is falling. This is leading to higher import prices and oil prices in the United States, putting upward pressure on inflation. The greater this inflationary pressure – which is currently in excess of 4 percent – the more difficult it will be for the Fed to reduce interest rates in the future, without running a serious risk of inflaming inflationary expectations and starting a wage-price spiral. U.S. firms and households will gradually recognise this dilemma and the bleak prospect of little future interest rate relief will further dampen consumption and investment spending.

Eventually, of course, the decline in spending will lead to a decline in inflation, but this will only happen with a lag. The longer the lag turns out to be, the longer the period over which the U.S. economy will endure stagflation, that is, a cruel combination of rising prices and falling aggregate demand. Much hinges on how persistent U.S. inflation is. More persistent inflation will inevitably give rise to higher inflationary expectations, leading gradually to higher inflation, and so on. It took central banks over a decade, in the 1980s and early 1990s, to get inflationary expectations under control, and the fruits of this battle are now in danger of being lost.

Global implications

The international financial crisis and the decline in the U.S. economy will inevitably have an adverse effect on the growth of the world economy. Europe and the emerging markets of Latin America and the Far East cannot fill the gap that the U.S. economy leaves. There exists no economic mechanism whereby a drop in the U.S. aggregate demand will be matched by a correspondingly large increase in aggregate demand elsewhere. Germany and other European economies highly exposed to the vagaries of international trade will certainly feel the pinch.

In the longer run, the prospects for the world economy look much brighter. Eventually U.S. house prices will stabilise, rising exports will help the U.S. economy recover, the fall in world demand for goods and services will reduce the price of raw materials, U.S. households will learn the importance of saving, and global imbalances will correct themselves. These rosy prospects lie in the mists of the future. Meanwhile, however, we are well advised to stay focused on the four dangers."

http://www.resourceinvestor.com/pebble.asp?relid=42413

... let's just say the housing bubble affected the overall economy on the way up; it is sure to do so on the way down.
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"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Social Security Inconvenient Truths

When Social Security (FICA) was introduced it was promised:

* Participation in the program would be completely voluntary.

* Participants would only have to pay 1% of the first $1,400 of their annual incomes into the program.

* The money the participants elected to put into the program would be deductible from their income for tax purposes each year.

* The money the participants put into the independent trust fund rather than into the general operating fund, would be used only to fund Social Security, and no other government program.

* Payments to the retirees would never be taxed as income.

The millions who have paid into FICA for years and are now receiving a Social Security check every month -- and who then find they are getting taxed on 85% of the money they gave to the federal government to save for them -- may be interested in the following:

* Social Security money has been removed from the trust fund and put it into the general fund so that Congress could spend it.

* The income tax deduction for Social Securitjavascript:void(0)
Save Nowy withholding has been eliminated.

* Social Security annuities are now taxed.

Now contrast this with the fact that Congress passed a 100% retirement benefit for members who have served at least one term.

http://articles.moneycentral.msn.com/Investing/StrategyLab/Rnd17/P1/HighIQjournal20080524.aspx

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"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Good luck with that zero carbon footprint, bubba

Carbon Output Must Near Zero To Avert Danger, New Studies Say
By Juliet Eilperin
Washington Post Staff Writer
Monday, March 10, 2008; Page A01

"The task of cutting greenhouse gas emissions enough to avert a dangerous rise in global temperatures may be far more difficult than previous research suggested, say scientists who have just published studies indicating that it would require the world to cease carbon emissions altogether within a matter of decades.

Their findings, published in separate journals over the past few weeks, suggest that both industrialized and developing nations must wean themselves off fossil fuels by as early as mid-century in order to prevent warming that could change precipitation patterns and dry up sources of water worldwide.

Using advanced computer models to factor in deep-sea warming and other aspects of the carbon cycle that naturally creates and removes carbon dioxide (CO2), the scientists, from countries including the United States, Canada and Germany, are delivering a simple message: The world must bring carbon emissions down to near zero to keep temperatures from rising further.

"The question is, what if we don't want the Earth to warm anymore?" asked Carnegie Institution senior scientist Ken Caldeira, co-author of a paper published last week in the journal Geophysical Research Letters. "The answer implies a much more radical change to our energy system than people are thinking about."

http://www.washingtonpost.com/wp-dyn/content/article/2008/03/09/AR2008030901867.html
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"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Resignation of top GAO official

"Facing indifference on the Hill and unrealistic spending promises, Walker is resigning with five years still remaining in his term to head the newly formed Peter G. Peterson Foundation. Peterson, senior chairman of The Blackstone Group and Commerce secretary in the Nixon administration, has pledged an astounding startup budget for the foundation of $1 billion.

That money will attack what the foundation considers "the most substantial economic, fiscal and other sustainability challenges of our current age" -- including federal entitlement programs, health care, unprecedented trade and budget deficits, low savings rates, mounting foreign debt, soaring energy consumption, an uncompetitive educational system, and the proliferation of nuclear warfare materials. Maybe Congress will listen this time.

"I have been around a very long time, and I have never seen so many simultaneous challenges that I would describe as undeniable, unsustainable and virtually untouchable politically," Peterson said in a prepared statement.

...
http://custom.marketwatch.com/custom/myway-com/news-story.asp?guid={D566230C-F9D9-4384-B64E-E9B480D2B23F}


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Yet Another Shoe About to Drop

How many feet does the damn thing have, anyway? ...

In many cases, munis are sold as part of "tender option bond," or "put bond," derivatives. In these programs, which became very popular among hedge funds in this decade because their low risk profiles permitted a lot of leveraging, a bond could be tendered back to the issuer if any of a variety of troublesome events triggered, ranging in severity from a default to a ratings downgrade. The programs required the issuer to buy the bonds back at par, or face value.

If the monoline insurers that guarantee the bonds lose even one notch of their high ratings, then every one of the hundreds of thousands of munis they have underwritten over the years likewise loses its high rating. And that would be an event that could lead bondholders to attempt to tender the bonds back to issuers. Only cities and states don't have anywhere near the tens of billions of dollars it would cost to buy them back. They would need to issue more debt at higher interest rates, and, well, you can see this can spiral way out of control.

Continued: A worst-case scenarios

It's one thing for corporate bonds to run into trouble, because they are typically backed by hefty amounts of assets that can be sold, even if that must happen at rock-bottom prices. And besides, there just aren't that many corporate bonds in the country: If they were all listed in a telephone book, it would be around three-quarters of an inch thick. But there are hundreds of thousands of U.S. muni bonds -- at least enough to fill a 9-inch-thick telephone book -- and cities can't just sell a bridge or sewer line or school building to raise money to pay them off in a crisis.

Let me give you an idea of the magnitude of the worst-case scenario: When ratings agency Moody's put the rating of monoline insurers Ambac and MBIA on downgrade alert last month, it was obligated to, in turn, put about 1,000 structured finance issues -- those CDOs and the like -- on "negative watch," which is a way of telling holders to beware of downgrades of their own. This is exactly what led in turn to banks' headlong efforts to get in front of the crisis by writing down the value of those issues and take multibillion-dollar losses, putting their shares in free falls.

What got less publicity was the fact that Moody's put 60,000 munis on negative watch at the same time for each monoline insurer. And when another ratings agency, Fitch, downgraded a much smaller privately held monoline called Financial Guaranty Insurance, it was forced to put 114,560 municipal bonds on negative watch.


http://articles.moneycentral.msn.com/Investing/SuperModels/TheBigThreatOfMuniDebt.aspx?page=all

Sep 07, we were warned

SuperModels9/20/2007 12:01 AM ET
Are we headed for an epic bear market?

The credit bubble is just starting to unwind, a credit-derivative insider says. And while U.S. borrowers are being blamed for the mess, they were really just pawns in a global game.
By Jon Markman

Satyajit Das is laughing. It appears I have said something very funny, but I have no idea what it was. My only clue is that the laugh sounds somewhat pitying.

One of the world's leading experts on credit derivatives, Das is the author of a 4,200-page reference work on the subject, among a half-dozen other tomes. As a developer and marketer of the exotic instruments himself over the past 30 years, he seemed like the ideal industry insider to help us get to the bottom of the recent debt crunch -- and I expected him to defend and explain the practice.

I started by asking the Calcutta-born Australian whether the credit crisis was in what Americans would call the "third inning." This was pretty amusing, it seemed, judging from the laughter. So I tried again. "Second inning?" More laughter. "First?"

Still too optimistic. Das, who knows as much about global money flows as anyone in the world, stopped chuckling long enough to suggest that we're actually still in the middle of the national anthem before a game destined to go into extra innings. And it won't end well for the global economy.
An epic bear market
Das is pretty droll for a math whiz, but his message is dead serious. He thinks we're on the verge of a bear market of epic proportions.

The cause: Massive levels of debt underlying the world economy system are about to unwind in a profound and persistent way.

He's not sure if it will play out like the 13-year decline of 90% in Japan from 1990 to 2003 that followed the bursting of a credit bubble there, or like the 15-year flat spot in the U.S. market from 1960 to 1975. But either way, he foresees hard times as an optimistic era of too much liquidity, too much leverage and too much financial engineering slowly and inevitably deflates.

Like an ex-mobster turning state's witness, Das has turned his back on his old pals in the derivatives biz to warn anyone who will listen -- mostly banks and hedge funds that pay him consulting fees -- that the jig is up.

Rather than joining the crowd that blames the mess on American slobs who took on more mortgage debt than they could afford and have endangered the world by stiffing lenders, he points a finger at three parties: regulators who stood by as U.S. banks developed ingenious but dangerous ways of shifting trillions of dollars of credit risk off their balance sheets and into the hands of unsophisticated foreign investors; hedge and pension fund managers who gorged on high-yield debt instruments they didn't understand; and financial engineers who built towers of "securitized" debt with math models that were fundamentally flawed.

Jim Jubak
What the Fed can’t do
Investors are abuzz over the Fed’s interest-rate decision, but the Federal Reserve can’t fix everything, cautions MSN Money’s Jim Jubak. Lower interest rates alone won’t boost confidence in the debt market.

"Defaulting middle-class U.S. homeowners are blamed, but they are merely a pawn in the game," he says. "Those loans were invented so that hedge funds would have high-yield debt to buy."
The liquidity factory
Das' view sounds cynical, but it makes sense if you stop thinking about mortgages as a way for people to finance houses and think about them instead as a way for lenders to generate cash flow and create collateral during an era of a flat interest-rate curve.Although subprime U.S. loans seem like small change in the context of the multitrillion-dollar debt market, it turns out these high-yield instruments were an important part of the machine that Das calls the global "liquidity factory." Just like a small amount of gasoline can power an entire truck given the right combination of spark plugs, pistons and transmission, subprime loans became the fuel that underlays derivative securities many, many times their size.

Continued: How it worked

Here's how it worked: In olden days, like 10 years ago, banks wrote and funded their own loans. In the new game, Das points out, banks "originate" loans, "warehouse" them on their balance sheet for a brief time, then "distribute" them to investors by packaging them into derivatives called collateralized debt obligations, or CDOs, and similar instruments. In this scheme, banks don't need to tie up as much capital, so they can put more money out on loan.

The more loans that were sold, the more they could use as collateral for more loans, so credit standards were lowered to get more paper out the door -- a task that was accelerated in recent years via fly-by-night brokers now accused of predatory lending practices.

Buyers of these credit risks in CDO form were insurance companies, pension funds and hedge-fund managers from Bonn to Beijing. Because money was readily available at low interest rates in Japan and the United States, these managers leveraged up their bets by buying the CDOs with borrowed funds.


So if you follow the bouncing ball, borrowed money bought borrowed money. And then because they had the blessing of credit-ratings agencies relying on mathematical models suggesting that they would rarely default, these CDOs were in turn used as collateral to do more borrowing.

In this way, Das points out, credit risk moved from banks, where it was regulated and observable, to places where it was less regulated and difficult to identify.
Turning $1 into $20
The liquidity factory was self-perpetuating and seemingly unstoppable. As assets bought with borrowed money rose in value, players could borrow more money against them, and it thus seemed logical to borrow even more to increase returns. Bankers figured out how to strip money out of existing assets to do so, much as a homeowner might strip equity from his house to buy another house.

These triple-borrowed assets were then in turn increasingly used as collateral for commercial paper -- the short-term borrowings of banks and corporations -- which was purchased by supposedly low-risk money market funds.

According to Das' figures, up to 53% of the $2.2 trillion commercial paper in the U.S. market is now asset-backed, with about 50% of that in mortgages.

When you add it all up, according to Das' research, a single dollar of "real" capital supports $20 to $30 of loans. This spiral of borrowing on an increasingly thin base of real assets, writ large and in nearly infinite variety, ultimately created a world in which derivatives outstanding earlier this year stood at $485 trillion -- or eight times total global gross domestic product of $60 trillion.

Without a central governmental authority keeping tabs on these cross-border flows and ensuring a standard of record-keeping and quality, investors increasingly didn't know what they were buying or what any given security was really worth.
A painful unwinding
Now here is where the U.S. mortgage holder shows up again. As subprime loan default rates doubled, in contravention of what the models forecast, the CDOs those mortgages backed began to collapse. Because they were so hard to value, banks and funds started looking at all CDOs and other paper backed by mortgages with suspicion, and refused to accept them as collateral for the sort of short-term borrowing that underpins today's money markets.

Through late last month, according to Das, as much as $300 billion in leveraged finance loans had been "orphaned," which means that they can't be sold off or used as collateral.

... How's that working for ya?

definitely far more serious than anyone would have thought

I'll say it again, it's the ACCELERATION, stupid!...

A scramble to understand Greenland's melting ice sheets
By Andrew C. Revkin
Monday, January 7, 2008

The ancient frozen dome cloaking Greenland is so vast that pilots have crashed into what they thought was a cloud bank spanning the horizon. Flying over it, one can scarcely imagine that this ice could erode fast enough to raise sea levels dangerously any time soon.

Along the flanks in spring and summer, however, the picture is very different. For a lengthening string of warm years, a lacework of blue lakes and rivulets of meltwater have been spreading ever higher on the ice cap. The melting surface darkens, absorbing up to four times as much energy from the sun as unmelted snow, which reflects sunlight. Natural drainpipes, called moulins, carry water from the surface into the depths, in some places reaching bedrock. The process slightly, but measurably, lubricates and accelerates the grinding passage of ice toward the sea.

Most important, many glaciologists say, is the breakup of huge semi-submerged clots of ice where some large Greenland glaciers, particularly along the west coast, squeeze through fjords as they meet the warming ocean. As these passages have cleared, this has sharply accelerated the flow of many of these creeping, corrugated, frozen rivers.

All of these changes have many glaciologists "a little nervous these days - shell-shocked," said Ted Scambos, the lead scientist at the National Snow and Ice Data Center in Boulder, Colorado, and a veteran of both Greenland and Antarctic studies.

Some say they fear that the rise in seas in a warming world could be much greater than the upper estimate of about two feet in this century made last year by the Intergovernmental Panel on Climate Change. (Seas rose less than a foot, or 30 centimeters, in the 20th century.) The panel's assessment did not include factors known to contribute to ice flows but not understood well enough to estimate with confidence. All the panel could say was, "Larger values cannot be excluded."

A scientific scramble is under way to clarify whether the erosion of the world's most vulnerable ice sheets, in Greenland and West Antarctica, can continue to accelerate. The effort involves field and satellite analyses and sifting for clues from past warm periods, including the last warm span between ice ages, which peaked about 125,000 years ago and had sea levels 12 to 16 feet higher than today's.

The Arctic Council, representing countries with Arctic territory, has commissioned a report on Greenland's ice trends, to be completed before the 2009 round of climate-treaty talks in Copenhagen, at which the world's nations have pledged to settle on a long-term plan for limiting human-caused global warming.

Konrad Steffen, a University of Colorado glaciologist who has camped on the shoulders of Greenland's ice sheet each year since 1990, is a United States author working on that study. Last August, he and a team focusing on the ways meltwater might affect ice movement dropped a camera 330 feet, or 100 meters, down a water-filled moulin to explore whether the plumbing system can be mapped.

Research on alpine glaciers shows that as more water flows through such apertures, ice can shift more quickly. But eventually large sewer-like conduits form, limiting the lubrication effect. The camera drop was only an initial test.

Alberto Behar, a NASA engineer who designed the camera, said some unconventional methods were being considered to chart the flow of such water. "We had ideas to send rubber ducks down and see if they pop out in the ocean," he said. "They'd have a little note saying, 'Please call this number if you find me.' "

The changes seen in Greenland may turn out to be self-limiting in the short run; surging glaciers can flatten out and slow, for instance. Or they may be a sign that the island's ice - holding about the same volume of water as the Gulf of Mexico - is poised for a rapid discharge. Scientists are divided on that question, and also on whether there is a near-term risk from a Texas-size portion of West Antarctica's ice sheet that is also showing signs of instability. This split divides those foreseeing a rise in the sea level of a couple of feet this century from water added by Greenland, West Antarctica and fast-vanishing mountain glaciers, and a few experts who speak of a couple of meters in that time.

Those holding a more conservative view of Greenland's near-term fate include Richard Alley of Pennsylvania State University, who noted that ice cores and tests of organic material from beneath the ice imply that the main core of the Greenland ice sheet clearly endured thousands of years of warming in the past without vanishing.

"It's basically a big lump of ice sitting on this bedrock," Alley said in describing Greenland's behavior in warm conditions. "What it tries to do is snow more in the middle and melt more on the edges. If it pulls its edges back, then there's less area to melt, and that helps it survive. That's why you can have a stable ice sheet in a warmer climate."

But there is no significant debate on the long-term picture any more: Should greenhouse-gas emissions follow anything close to a "business as usual" rise, the resulting warming and ice loss at both ends of the earth would cause coasts to retreat for centuries to come. While it was circumspect about near-term changes, the intergovernmental panel was confident about that long view.

The prospect of having no "normal" coastline for the foreseeable future has many scientists deeply concerned.

"What is at stake is the stability we have always taken for granted" both for coasts and climate itself, said Jason Box, an associate professor of geography at Ohio State University. Box presented fresh findings at the American Geophysical Union meeting last month showing that several Greenland glaciers accelerated sharply in direct response to warming, both in a warm spell starting in the 1920s and now.

Eric Rignot, a longtime student of ice sheets at both poles for NASA's Jet Propulsion Laboratory, said he hoped that the public and policymakers did not interpret the uncertainty in the 21st-century forecast as reason for complacency on the need to limit risks by cutting emissions.

Rignot recently proposed that unabated warming could result in three feet of global sea rise just from water flowing off Greenland, three feet from Antarctica and 18 inches, or 46 centimeters, as the remaining alpine glaciers shrivel away.

This is similar to projections by the most prominent NASA climate scientist, James Hansen, but more than twice the three-foot rise that many glaciologists seem to agree on as an outer bound for what is possible by century's end.

"It is too early to reassure that all will stabilize, and similarly there is no way to predict a catastrophic collapse," Rignot said. "But things are definitely far more serious than anyone would have thought five years ago."

http://www.iht.com/bin/printfriendly.php?id=9063550


...Houston, YOU have a problem.

Follow the Heebner

"Everything in this market has been poisoned by the Federal Reserve," said Cramer, adding the only sectors worth investing in are oil, infrastructure, agriculture, aerospace/defense, health care cost-containment and gold. "We may have lost the tech stocks," warned Cramer adding he would only trust a company like Microsoft which makes its numbers. Out of the 4,000 or more stocks Cramer keeps his eye on, he would only pick 40 or 70, including PEP, MO, KO and MHS.

Follow the Heebner: Posco (PKX), Arcelor (MT), Vimpel (VIP), Mobile Telesystems (MBT), Research In Motion (RIMM), Canadian Natural Resources (CNQ), Suncor (SU), Petroleo Brasileiro (PBR), Cnooc (CEO), CVRD (RIO), Rio Tinto (RTP), BHP Billiton (BHP), Freeport McMoRan (FCX), McDermott (MDR), Foster Wheeler (FWLT), and Fluor (FLR)


In tough times, Cramer recommends piggybacking off successful investors like Ken Heebner of the CGM Focus fund which is ranked third and increased 79.9% in 2007. Cramer noted Heebner recently sold HANs, MA and RIG, and thinks he should have held onto RIG. Cramer noted recent buys include PKX, MT, VIP, MBT, RIMM, CNQ, SU, PBr, CEO, RIO, RTP, BHP, FCX, MDR, FWLT and FLR, and concluded these moves confirm that infrastructure, oil, mining are bull markets.

How to live forever (or a real long time anyway)

Abolishing ageing
How to live forever
Jan 3rd 2008From The Economist print edition
It looks unlikely that medical science will abolish the process of ageing. But it no longer looks impossible
Stephen Jeffrey
“IN THE long run,” as John Maynard Keynes observed, “we are all dead.” True. But can the short run be elongated in a way that makes the long run longer? And if so, how, and at what cost? People have dreamt of immortality since time immemorial. They have sought it since the first alchemist put an elixir of life on the same shopping list as a way to turn lead into gold. They have written about it in fiction, from Rider Haggard's “She” to Frank Herbert's “Dune”. And now, with the growth of biological knowledge that has marked the past few decades, a few researchers believe it might be within reach.
To think about the question, it is important to understand why organisms—people included—age in the first place. People are like machines: they wear out. That much is obvious. However a machine can always be repaired. A good mechanic with a stock of spare parts can keep it going indefinitely. Eventually, no part of the original may remain, but it still carries on, like Lincoln's famous axe that had had three new handles and two new blades.

The question, of course, is whether the machine is worth repairing. It is here that people and nature disagree. Or, to put it slightly differently, two bits of nature disagree with each other. From the individual's point of view, survival is an imperative. You cannot reproduce unless you are alive. A fear of death is a sensible evolved response and, since ageing is a sure way of dying, it is no surprise that people want to stop it in its tracks. Moreover, even the appearance of ageing can be harmful. It reduces the range of potential sexual partners who find you attractive—since it is a sign that you are not going to be around all that long to help bring up baby—and thus, again, curbs your reproduction.

The paradox is that the individual's evolved desire not to age is opposed by another evolutionary force: the disposable soma. The soma (the ancient Greek word for body) is all of a body's cells apart from the sex cells. The soma's role is to get those sex cells, and thus the organism's genes, into the next generation. If the soma is a chicken, then it really is just an egg's way of making another egg. And if evolutionary logic requires the soma to age and die in order for this to happen, so be it. Which is a pity, for evolutionary logic does, indeed, seem to require that.
The argument is this. All organisms are going to die of something eventually. That something may be an accident, a fight, a disease or an encounter with a hungry predator. There is thus a premium on reproducing early rather than conserving resources for a future that may never come. The reason why repairs are not perfect is that they are costly and resources invested in them might be used for reproduction instead. Often, therefore, the body's mechanics prefer lash-ups to complete rebuilds—or simply do not bother with the job at all. And if that is so, the place to start looking for longer life is in the repair shop.


Seven deadly things
One man who has done just that is Aubrey de Grey. Dr de Grey, who is an independent researcher working in Cambridge, England, is a man who provokes strong opinions. He is undoubtedly a visionary, but many biologists think that his visions are not so much insights as mischievous mirages, for he believes that anti-ageing technology could come about in a future that many now alive might live to see.
Vision or mirage, Dr de Grey has defined the problem precisely. Unlike most workers in the field, he has an engineering background, and is thus ideally placed to look into the biological repair shop. As he sees things, ageing has seven components; deal with all seven, and you stop the process in its tracks. He refers to this approach as strategies for engineered negligible senescence (SENS).
The seven sisters that Dr de Grey wishes to slaughter with SENS are cell loss, apoptosis-resistance (the tendency of cells to refuse to die when they are supposed to), gene mutations in the cell nucleus, gene mutations in the mitochondria (the cell's power-packs), the accumulation of junk inside cells, the accumulation of junk outside cells and the accumulation of inappropriate chemical links in the material that supports cells.
It is quite a shopping list. But it does, at least, break the problem into manageable parts. It also suggests that multiple approaches to the question may be needed. Broadly, these are of two sorts: to manage the process of wear and tear to slow it down and mask its consequences, or to accept its inevitability and bring the body in for servicing at regular intervals to replace the worn-out parts.
Eat up your greens
Managing wear and tear may not be as complicated as it looks, for the last five items on Dr de Grey's list seem to be linked by a single word: oxidation. Regular visitors to the “health and beauty” sections of high-street pharmacies will, no doubt, have come across creams, pills and potions bearing the word antioxidant on their labels and hinting—though never, of course, explicitly saying—that they might possibly have rejuvenating effects. These products are the bastard children of a respectable idea about one of the chief causes of ageing: that one big source of bodily wear and tear, at least at the chemical level, is the activity of the mitochondria.
Mitochondria are the places where sugar is broken down and reacted with oxygen to release the energy needed to power a cell. In a warm-blooded creature such as man, a lot of oxygen is involved in this process, and some of it goes absent without leave. Instead of reacting with carbon from the sugar to form carbon dioxide, it forms highly reactive molecules called free radicals. These go around oxidising—and thus damaging—other molecules, such as DNA and proteins, which causes all sorts of trouble. Clear up free radicals and their kin, and you will slow down the process of ageing. And the chemicals you use to do that are antioxidants.
This idea goes back to one of the founders of scientific gerontology, Bruce Ames of the University of California, Berkeley. Dr Ames began his career studying cancer. He found that damage to certain genes was a cause of cancer. These genes evolved to keep tumours at bay by stopping cells dividing too readily, and the damage was often done by oxidation. Gradually, his focus shifted to the more general damage that oxidation can do—and what might, in turn, be done about it.
Some vitamins, such as vitamin C, are antioxidants in their own right. This is the basis of the high-street propaganda, though there is no evidence that consuming such antioxidants in large quantities brings any benefit. A few years ago, however, Dr Ames found he could pep up the activity of the mitochondria of elderly rats—with positive effects on the animals' memories and general vigour—by feeding them two other molecules: acetyl carnitine and lipoic acid. These help a mitochondrial enzyme called carnitine acetyltransferase to do its job. Boosting their levels seems to compensate for oxidative damage to this enzyme. He also reviewed the work of other people and found about 50 genetic diseases caused by the failure of one enzyme or another to link up with an appropriate helper molecule. Such helpers are often B vitamins, and the diseases were often treatable with large doses of the appropriate vitamin.
The enzyme damage in these diseases is similar to that induced by oxidation, so Dr Ames suspects that its effects, too, can be ameliorated by high doses of vitamins. He has gathered evidence from mice to support this idea, but whether it is the case in people has yet to be tested. Nor is it easy to believe it ever will be. The necessary clinical trials would be long-winded. They would also be expensive—and there is no reason for vitamin companies to pay for them since sales are already buoyant and the products could not be patented. Nor is Dr Ames claiming vitamins will make you live longer than a natural human lifespan, even if he thinks they might prolong many individual lives. For that, other technologies will need to be invoked.
Stemming time's tide
One way that might let people outlive the limit imposed by disposable somas is to accept the machine analogy literally. When you take your car to be serviced or repaired, you expect the mechanic to replace any worn or damaged parts with new ones. That, roughly, is what those proposing an idea called partial immortalisation are suggesting. And they will make the new parts with stem cells.
The world has heard much of stem cells recently. They come in several varieties, from those found in embryos, which can turn into any sort of body cell, to those whose destiny is constrained to becoming just one or a few sorts of cell. The thing about stem cells of all types, which makes them different from ordinary body cells, is that they have special permission to multiply indefinitely.
For a soma to work, most of its component cells have to accept they are the end of the line—which, given that that line in question stretches back unbroken to the first living organisms more than 3 billion years ago, is a hard thing to do. There are, therefore, all sorts of genetic locks on such cells to stop them reproducing once they have arrived at their physiological destination. If these locks are picked (for example by oxidative damage to the genes that control them, as discovered by Dr Ames), the result is unconstrained growth—in other words, cancer. One lock is called the Hayflick limit after its discoverer, Leonard Hayflick. This mechanism counts the number of times a cell divides and when a particular value (which differs from species to species) is reached, it stops any further division. Unless the cell is a stem cell. Every time a stem cell divides, at least one daughter remains a stem cell, even though the other may set off on a Hayflick-limited path of specialisation.
Some partial immortalisers seek to abolish the Hayflick limit altogether in the hope that tissue that has become senescent will start to renew itself once more. (The clock that controls it is understood, so this is possible in principle.) Most, though, fear that this would simply open the door to cancer. Instead, they propose what is known as regenerative medicine—using stem cells to grow replacements for tissues and organs that have worn out. The most visionary of them contemplate the routine renewal of the body's organs in a Lincoln's axish sort of way.
In theory, only the brain could not plausibly be replaced this way (any replacement would have to replicate the pattern of its nerve cells precisely in order to preserve an individual's memory and personality). Even here, though, stem-cell therapists talk openly of treating brain diseases such as Parkinson's with specially grown nerve cells, so some form of partial immortalisation might be on the cards. But it is a long way away—further, certainly, than Dr Ames's vitamin therapy, if that is shown to work.
Neither prevention, nor repair, is truly ready to roll out. But there is one other approach, and this is based on the one way of living longer that has been shown, again and again, in animal experiments, to be effective. That is to eat less.
From threadworms to mice, putting an animal on a diet that is near, but not quite at, starvation point prolongs life—sometimes dramatically. No one has done the experiment on people, and no one knows for sure why it works. But it does provide a way of studying the problem with the reasonable hope of finding an answer.
Gluttons for punishment
You would, of course, have to wish a lot for a long life to choose to starve yourself to achieve it. Extrapolating from the mouse data, you would need to keep your calorie intake to three-quarters of the amount recommended by dieticians. That means about 1,800 for sedentary men and 1,500 for sedentary women. But several people are trying to understand the underlying biology, in order to develop short cuts.
One such is David Sinclair of Harvard University. Unlike those trying to fight the causes of ageing or to repair the damage done, Dr Sinclair thinks he has found, in caloric restriction as the technique is known, a specifically evolved natural anti-ageing mechanism that is quite compatible with disposable-soma theory.
The reason for believing that prolonged life is an evolutionary response to starvation rather than just a weird accident is that when an animal is starving the evolutionary calculus changes. An individual that has starved to death is not one that can reproduce. Even if it does not die, the chance of it giving birth to healthy offspring is low. In this case, prolongation of life should trump reproduction. And that is what happens, even among people. Women who are starving stop ovulating. The billion-dollar trick would be to persuade the body it is starving when it is not. That way people could live longer while eating normally. They might even, if the mechanism can truly be understood, be able to reproduce, as well.
In Dr Sinclair's view, the way caloric restriction prolongs life revolves around genes for proteins called sirtuins. Certainly, these genes are involved in life extension in simple species such as threadworms and yeast. Add extra copies of them to these organisms' chromosomes, or force the existing copies to produce more protein than normal, and life is prolonged. This seems to be because sirtuins control the abundance of a regulatory molecule called nicotinamide adenine diphosphate which, in turn, controls the release of energy in the mitochondria.
The most intriguing connection in this story is with the French paradox. This is the fact that the French tend to eat fatty diets rich in red meat but to have the survival characteristics of those whose diets are lean and vegetarian. Some researchers link this with their consumption of red wine—and, in particular, of a molecule called resveratrol that is found in such wine. Resveratrol activates sirtuins, and some similar molecules activate them much more. It is these sirtuin super-stimulators that interest Dr Sinclair.
Not everyone is convinced, but Dr Sinclair has done experiments on mice that look promising, and has started a company called Sirtris Pharmaceuticals to follow it up. The fact that he is (at least in his own eyes) working with nature rather than against it argues that this is the most promising approach of all.
That said, the logic of the disposable-soma theory is profound. Even working with its grain may do no more than buy a few extra years of healthy living. Dr de Grey's reason for thinking that some people now alive may see their lives extended indefinitely is based on the hope that those few extra years will see further discoveries and improved life-extension technologies based on them—a process he describes as achieving “longevity escape velocity”.
The chances are that it will not work. But hope springs eternal. To end with another quote, this time from Woody Allen, “I don't want to achieve immortality through my work. I want to achieve immortality through not dying.” If any researcher manages to beat evolutionary history and achieve his goal, he might get to do both.

Jubak's Journal1/4/2008 12:01 AM ET
Is '70s-style stagflation returning?
Inflation is rising and the economy is decelerating, but those problems don't add up to that nasty combination of stagnant growth and out-of-control price increases. Yet.
By Jim Jubak
Stagflation is coming. Lock up your portfolio. We could be on our way to a replay of the 1970s.
That's the worry among an increasing number of investors as we head into 2008. It's certainly possible for the year ahead, but it's unlikely. In this column, I'll look at what would have to go wrong for stagflation to return and how to position a portfolio if you think stagflation is more of a danger than I do.
The '70s have a lot to answer for:
"Airport," "Airport 1975," "Airport '77" and "Airport '79."
The Village People and "YMCA."
The breakup of the Beatles.
President Jimmy Carter and the killer rabbit.
Sonny Bono's bell bottoms.
And stagflation, that lethal brew of stagnant growth and high inflation.
In the United States, headline inflation started off the decade at 5.5% in 1970, peaked at 12.2% in 1974 and again at 13.3% in 1979, and didn't drop below 4% until 1982. For the '70s as a whole, inflation averaged 7.4% annually. In comparison, inflation in the 1960s averaged 2.5% annually.
Real economic growth tumbled. Subtracting for inflation, the economy grew by just 3.27% on average from 1970 to 1979, quite a drop from the 4.44% average annual growth in real gross domestic product recorded from 1960 to 1969. And in two years during the 1970s, after subtracting for inflation, the economy actually declined in size -- by 0.5% in 1974 and 0.2% in 1975.
As you might expect, the 1970s weren't a great time for investors. The Standard & Poor's 500 Index ($INX) returned a compound annual 5.9% from 1970 to 1979. With inflation running at an annual 7.4%, an investor in the stock market was losing ground every year to inflation. Bond investors had it even worse: The compound annual return on a long-term U.S. Treasury bond for the decade was just 4.8%, 2.6 percentage points lower than the inflation rate.
So you can understand why the prospect of stagflation in 2008 would send shivers up investors' spines. How likely is that scenario? Let me break down stagflation into its two parts, the "stag" and the "flation." I'll deal with "flation" first.
The 'flation' part of the equationIs high inflation coming back? Yes.
The Federal Reserve and the European Central Bank, the two most important inflation fighters in the world, are worried that inflation is too high. Headline inflation, the number the European Central Bank watches, was 3.1% in November in Europe, way above the bank's 2% limit. In the United States, headline inflation was 4.3% in November.
The Fed's preferred measure of core inflation -- headline inflation minus any increases in volatile food and energy prices -- was a lower 2.3%. (Energy prices were up 21% in the month, so leaving them out of the inflation calculation helped.) But even that was above the Fed's comfort zone.
For the "flation" part of stagflation to set in, those rates have to go higher and create the expectation that inflation is headed out of control.
Video on MSN Money

Jubak’s Journal: A turnaround for the dollar?The US dollar could turn out to be the big comeback surprise of 2008. One reason: As foreign investors put big money into US companies, those foreign countries are less likely to dump the dollar, MSN Money's Jim Jubak says.
Unfortunately, higher inflation is coming from every direction you care to look. Normally, the Federal Reserve and the European Central Bank would move to stomp out inflation by raising interest rates. Now, thanks to a weakening U.S. economy and turmoil in the debt markets, the Fed is lowering interest rates instead, and both banks are flooding the financial markets with short-term cash.
China, Russia and other emerging-market economies determined to keep their currencies from gaining against the dollar are creating money to buy dollars, inflating their own currencies, and that money is fueling booms in stock and real-estate markets. Inflation hit 6.9% in China in November, for example. And these countries are exporting some of their inflation in the form of higher prices for developed-world customers such as Wal-Mart Stores (WMT, news, msgs). Demand from these fast-growing economies for raw materials is driving up the price of coal, iron ore, corn, wheat, oil -- just about every commodity you can name. A falling U.S. dollar is driving up the cost of everything the country imports, from oil to children's toys.
Normally, the Federal Reserve could count on a slowing economy to take a bit of wind out of inflation's sails. But many of the current causes of inflation aren't linked to the U.S. economy. We could get inflation and slower growth -- the definition of stagflation.
Continued: How we get to 'stag'
How we get to 'stag'So what's the "stag" part of stagflation look like as we begin 2008?
The economy seems to be decelerating rapidly:
According to the latest data, released Dec. 27 but dating to the end of October, home prices are falling at a record rate. The S&P/Case-Shiller index of home prices in 10 major metropolitan areas dropped 6.7% from October 2006. That's a record year-to-year decline, beating the old record of 6.3%, set in April 1991.
That decline is feeding into a whopping increase in credit card delinquencies. The dollar amount of credit card debt at least 30 days late jumped 26%, to $17.3 billion, in October 2007 from the same month of 2006, according to an Associated Press study of 325 million individual accounts held by the 17 largest credit card trusts.
Retail sales in the just-concluded Christmas shopping season appeared weaker than projected, with growth in same-store sales running below estimates of 2.5%, according to the International Council of Shopping Centers. All this is starting to hit the real economy where it counts: in the unemployment numbers. Initial claims for unemployment, a good gauge for what's going on in the job market, rose to 350,000 in the week that ended Dec. 22. That left the four-week moving average for initial claims at 343,000. That's getting worryingly close to the 360,000 level in the four-week moving average that has accompanied recessions in 1990 (362,000) and 2001 (373,000).
But as bad as this news is, it doesn't add up to the "stag" in "stagflation."
What was so excruciating about the stagflation of the 1970s was the duration of the "stag." Slow or negative growth went on for quarter after quarter. After growing at a 4.7% real rate in the second quarter of 1973, real economic growth turned negative, dropping by 2.1% in the third quarter. The economy then rebounded to a 3.9% real growth rate in the fourth quarter of 1973 before heading into the Dumpster. The economy showed negative 3.4% real growth in the first quarter of 1974, a minor revival to a positive 1.2% growth rate in the second quarter and then three straight negative quarters of 3.8%, 1.6% and 4.7%.
No wonder the bear market in stocks of 1973 and 1974 was so painful. Stocks fell 14.7% in 1973 and then 26.5% in 1974.
Right now, no one on Wall Street is looking for a repeat of that extended slump. Growth is supposed to slow in the first half of 2008 and then pick up, leaving growth for 2008 at 2.3%, according to the Federal Reserve. I think that forecast is too optimistic. The slump in 2008 is likely to last for more than just the two quarters Wall Street expects.
Video on MSN Money

Jubak’s Journal: A turnaround for the dollar?The US dollar could turn out to be the big comeback surprise of 2008. One reason: As foreign investors put big money into US companies, those foreign countries are less likely to dump the dollar, MSN Money's Jim Jubak says.
But I still don't expect a recession in 2008 (see "Why the Fed is running scared") and certainly not anything like the negative growth in five out of seven quarters that the economy turned in from mid-1973 to early 1975. (Officially a recession is two consecutive quarters of negative economic growth.)
Not over yetWhat could tip us from slow growth -- either the two quarters that Wall Street expects or the three to four that I think is likely (see "Don't count on a 'normal' recession") -- into 1970s-style stagnation?
An expansion of the credit crunch from its current victims -- home buyers who can't find a mortgage and homeowners who can't refinance a mortgage -- to corporate borrowers with decent credit ratings. If companies can't raise capital on decent terms, they'll cut spending on new equipment and construction, then eliminate plans for hiring, then cut back on buying anything that's not essential and, finally, fire workers. And then we'll be on the road to something worse than a couple of slow quarters.
Continued: Portfolio suggestions
So far, the credit crunch and the rise in effective interest rates has been enough to produce a slowdown, but not a recession and not stagnation. However, we're not done with this crisis. On Dec. 27, Goldman Sachs (GS, news, msgs) said Citigroup (C, news, msgs), Merrill Lynch (MER, news, msgs) and JPMorgan Chase (JPM, news, msgs) would announce write-downs of $18.7 billion, $11.5 billion and $3.4 billion, respectively, on their mortgage-related portfolios when they report fourth-quarter results in January.
Of course, that's not likely to be the last of the bad news because the banks and other financial companies with big exposure to the mortgage market are not exactly rushing to embrace their losses. We're looking at more quarters when bad news will come dribbling out of the big banks. Enough dribbles, and banks could cut lending to all customers even further.
Portfolio suggestionsSo how do you position a portfolio as we go into 2008?
Remember that stagflation is possible but not certain. Investors who pay attention to the financial news out of the big banks should be able to keep their portfolios a step ahead of any shifts in the economy's direction.
Fortunately, many of the investments you'd make to combat stagflation should work pretty well in 2008 even if all we get is a slowdown spread over a few quarters and a step up in inflation. Commodities and energy. Gold, of course. Growth stocks in sectors of the economy that will grow even if the economy slows. And any defensive growth stock with enough pricing power to raise its prices fast enough to stay ahead of inflation.
Some suggestions?
The oil drilling and services area, especially companies with big international operations. Worldwide exploration and production spending is set to rise 11% in 2008, according to Lehman Bros.' annual oil-industry capital-spending survey. Take a look at Schlumberger (SLB, news, msgs), Weatherford International (WFT, news, msgs) and FMC Technology (FTI, news, msgs).
Iron-ore and natural-gas stocks. Iron-ore demand is up, and supply hasn't kept pace. Natural gas is still near a low, and the stocks are just starting to move. Iron-ore plays include Fortescue Metals Group (FSUMF, news, msgs) and Companhia Vale do Rio Doce (RIO, news, msgs), both in Jubak's Picks.
Jubak's Picks Kinross Gold (KGC, news, msgs) and GoldCorp (GG, news, msgs) will give you good exposure to the classic hedge against rising inflation and a falling dollar.
Video on MSN Money

Jubak’s Journal: A turnaround for the dollar?The US dollar could turn out to be the big comeback surprise of 2008. One reason: As foreign investors put big money into US companies, those foreign countries are less likely to dump the dollar, MSN Money's Jim Jubak says.
Take a look at the growth stocks I picked in my Dec. 7 column, "5 stocks to profit from a weak dollar," for companies that will be able to outrun stagflation.
And don't forget a dose of pricing powerhouses such as PepsiCo (PEP, news, msgs) and Johnson & Johnson (JNJ, news, msgs). Picks from that group should help you play defense with your portfolio.
I know my end-of-the-year columns have been a bit gloomy -- a longer slowdown than Wall Street expects and the possibility of stagflation. A little yule hemlock, anyone?
Enough of the doom and gloom, however. In my next column, I'm going to take a cheery look at how to make money out of the deeply stupid energy bill Congress passed and President Bush signed Dec. 19.
Continued: My fourth-quarter performance
Fourth-quarter performance for Jubak's Picks Sometimes I'm happy playing good defense, and that's the story for the fourth quarter of 2007. For the period, Jubak's Picks eked out a tiny 0.87% return. But that's a good result when the stock market as a whole is in retreat. For the quarter, the Dow Jones Industrial Average ($INDU) fell 3.4%, the S&P 500 was down 3.3%, and the Nasdaq Composite Index ($COMPX) retreated 1.8%.
The key for the quarter, as it was for all of 2007, was staying away from the financial and consumer discretionary sectors and overweighting energy. The Select Sector SPDR-Financial (XLF, news, msgs) and the Select Sector SPDR Consumer Discretionary (XLY, news, msgs) exchange-traded funds (ETFs) finished a dismal year by falling an additional 18.5% and 14%, respectively, in the fourth quarter.
By contrast, the Select Sector SPDR-Energy (XLE, news, msgs) ETF was up 36.9% for the year and 7.1% for the fourth quarter. But there were few places to hide in the quarter, as even sectors such as Select Sector SPDR-Materials (XLB, news, msgs) and Select Sector SPDR-Industrials (XLI, news, msgs), which were up 22.2% and 13.5%, respectively, for the year fell in the fourth quarter by 0.05% and 4.2%. The biggest disappointment for the quarter was the technology sector: Select Sector SPDR-Technology (XLK, news, msgs) dropped 0.7% in a quarter when it usually rallies. The sector still gained 14.4% on the year.
It's great when you get the sector right and back the right stock in the sector, too. That's what I did with Devon Energy (DVN, news, msgs), up 9.9% in the fourth quarter; Ultra Petroleum (UPL, news, msgs), up 13.1% in the period; Yara International (YARIY, news, msgs), up 43.9%; Jacobs Engineering Group (JEC, news, msgs), up 10.7% since I added it to the portfolio Oct. 30; and Joy Global (JOYG, news, msgs), up 13.2% since my Oct. 30 addition to the portfolio.
And it's really aggravating when you get the sector right but the stock wrong, as I did with technology picks Maxwell Technologies (MXWL, news, msgs), down 27.8% for the quarter, and Nvidia (NVDA, news, msgs), down 7.8% for the period; and energy pick CGG Veritas (CGV, news, msgs), down 13.3% since I added it to the portfolio Oct. 26.
And of course, no quarter would be complete without the boneheaded, "what was I thinking" moves. The number of picks in this category rises when a difficult and shifting quarter leads me to try to zig and zag my way out of danger and into profits. I'd put in this category my picks of Marriott International (MAR, news, msgs), down 17.5% since my Nov. 2 buy, and Quintana Maritime (QMAR, news, msgs) down 17.7% since Oct. 16 -- so far, anyway.
Playing successful defense in the fourth quarter let me hold on to my market gains for the year. For the full year, I had a 25.2% total return versus an 8.8% return for the Dow industrials, 5.5% for the S&P 500 and 9.8% for the Nasdaq Composite.
I've got my doubts about the stock market in 2008, especially in the first half of the year. I think there's a good chance that investors who now expect the economic slowdown and troubles in the financial sector to be over by mid-2008 will be disappointed. That could create some good bargains around midyear for patient investors with cash. I've slowly raised cash in Jubak's Picks to 13%, up from 12% in the third quarter and 11% in the second quarter, and I'll continue to look for ways to raise my cash position as we move deeper into 2008.
Jubak's Picks versus major averages:
Index
Q4 2007
12 months
Jubak's Picks
0.9%
25.2%
Nasdaq Composite ($COMPX)
-1.8%
9.8%
S&P 500 ($INX)
-3.3%
5.5%
Dow Jones industrials ($INDU)
-3.9%
8.8%
Longer-term performance:
Index
3-year return*
5-year return**
From inception***
Jubak's Picks
90.5%
258.0%
375.9%
Nasdaq Composite
21.8%
98.5%
98.4%
S&P 500
43.5%
82.6%
78.9%
Dow Jones industrials
32.0%
77.8%
86.4%
*Close on Dec. 30, 2004, through close on Dec. 31, 2007. **Dec. 31, 2002, through Dec 31, 2007. ***May 7, 1997, through Dec. 31, 2007.
All returns for Jubak's Picks deduct costs of commissions. Returns for Jubak's Picks and the indexes all include dividends.
Meet Jubak at The Money Show MSN Money's Jim Jubak will be among more than 120 investment and finance experts sharing buy and sell advice at The World Money Show in Orlando, Fla., Feb. 6-9. Invest four days dedicated to planning and refining your portfolio by attending the event's more than 320 workshops and panel presentations.
Admission is free for MSN Money readers. To sign up, call 1-800-970-4355 and mention priority code No. 009554, or register online.
Video on MSN Money

Jubak’s Journal: A turnaround for the dollar?The US dollar could turn out to be the big comeback surprise of 2008. One reason: As foreign investors put big money into US companies, those foreign countries are less likely to dump the dollar, MSN Money's Jim Jubak says.
Editor's note: Jim Jubak, the Web's most-read investing writer, normally posts a new Jubak's Journal every Tuesday and Friday. Please note that recommendations in Jubak's Picks are for a 12- to 18-month time horizon. For suggestions to help navigate the treacherous interest-rate environment, see Jubak's portfolio of Dividend Stocks for Income Investors. For picks with a truly long-term perspective, see Jubak's 50 Best Stocks in the World or Future Fantastic 50 Portfolio. E-mail Jubak at jjmail@microsoft.com.
At the time of publication, Jim Jubak owned or controlled shares in the following equities mentioned in this column: Devon Energy, Companhia Vale do Rio Doce, Fortescue Metals Group, GoldCorp, Jacobs Engineering, Joy Global, Kinross Gold, Maxwell Technologies, Schlumberger, Ultra Petroleum and Yara International. He did not own short positions in any stock mentioned in this column.

... How's that working for ya?

More unexplained acceleration

Nature And Man Blamed For Thawing Arctic
WASHINGTON, Jan. 2, 2008

(AP) There's more to the recent dramatic and alarming thawing of the Arctic region than can be explained by man-made global warming alone, a new study found. Nature is pushing the Arctic to the edge, too. There's a natural cause that may account for much of the Arctic warming, which has melted sea ice, ice sheets and glaciers, according to a study published Thursday in the journal Nature. New research points a finger at a natural and cyclical increase in the amount of energy in the atmosphere that moves from south to north around the Arctic Circle. But that energy transfer, which comes with storms that head north because of ocean currents, is not acting alone either, scientists say. Another upcoming study concludes that the combination of both that natural energy transfer increase and man-made global warming serve as a one-two punch that is pushing the Arctic over the edge. Scientists are trying to figure out why the Arctic is warming and melting faster than computer models predict. The summer of 2007, like the summer of 2005, smashed all records for loss of summer sea ice in the Arctic Ocean and ice sheet in Greenland. In September, the Arctic Ocean had 23 percent less sea ice than the previous record low. Greenland's ice sheet melted 19 billion tons more than its previous record. The Nature study suggests there's more behind it than global warming because the air a couple miles above the ground is warming more than calculated by the climate models. Climate change theory concentrates on warming of surface temperatures and explains an Arctic that is warming faster than the rest of the world as mostly because reduced sea ice and ice sheets means less reflecting solar rays. Rune Graversen, the Nature study co-author and a meteorology researcher at Stockholm University in Sweden, said a shift in energy transfer explains the thawing more, including what's happening in the atmosphere, but does not contradict consensus global warming science. Oceanographer James Overland, who reviewed Graversen's study for Nature, said the research dovetails with an upcoming article of his which concludes that the Arctic thawing is a combination of the two. "If we didn't have the little extra kick from global warming then we wouldn't have gone past the threshold for the change in sea ice," said Overland, of the National Oceanic and Atmospheric Administration's lab in Seattle. Other researchers said Graversen's study underestimates the effect of global warming because it relied on older data that stopped at 2001 and wasn't the most accurate. Overland and scientist Mark Serreze disagree over which effect - man-made or natural - was the big shove that pushed the Arctic over the edge, but they agreed that overall it's a combined effort. "Think of it as a boxer that's almost going down for the count ... and that one blow to the noggin comes and he's down for the count," said Serreze, a senior scientist at the government's snow and ice data center in Boulder, Colo.

http://apnews.myway.com//article/20080103/D8TUKJ500.html

US Educational Train Wreck In Progress...

Achieve, Inc., a bipartisan, nonprofit education organization formed by governors and prominent business leaders, found that math and English tests for high school diplomas require only middle school knowledge, and found those math graduation tests measure only what students in other countries learn in the seventh grade

http://www.stateline.org/stateline/?pa=story&sa=showStoryInfo&id=377921)

(... and if that doesn't scare you, maybe this will...)


U.S. 15 year olds ranked 29th in Science - U.S.A rank # 29
Here's a partial listing of examination rankings in the Science series.
Finland was the highest-performing country on the PISA 2006 science scale. Six other high-scoring countries were: Canada, Japan and New Zealand and the partner countries/economies Hong Kong-China, Chinese Taipei and Estonia. Australia, the Netherlands, Korea, Germany, the United Kingdom, the Czech Republic, Switzerland, Austria, Belgium and Ireland, and the partner countries/economies Liechtenstein,Slovenia and Macao-China also scored above the OECD average.
Rankings first 30 nations in the Science series > Finland, Hong Kong-China, Canada, Chinese-Taipei, Estonia, Japan, New Zealand, Australia, Netherlands, Liechenstein, Korea, Slovenia, Germany, England, Czech Republic, Switzerland, Macao-China, Austria, Belgium, Ireland, Hungary, Sweden, Poland, Denmark, France, Crotia, Iceland, Latvia, U.S.A., Slovak Republic.
U.S.A. scored below avearage in the Science series, at ranking position #29.
U.S. 15 year olds ranked 35th in Mathematics - U.S.A. rank #35
Mathematics Performance > Finland and Korea, and the partners Chinese Taipei and Hong Kong-China, outperformed all other countries/economies in PISA 2006. Other countries with mean performances significantly above the OECD average were the Netherlands, Switzerland, Canada, Japan, New Zealand, Belgium, Australia, Denmark, the Czech Republic, Iceland and Austria, as well as the partner countries/economies Macao-China, Liechtenstein, Estonia and Slovenia.

http://mwhodges.home.att.net/new_96_report.htm

... How's that working for ya?

Feds' budget tricks hide trillions in debt

Feds' budget tricks hide trillions in debt
Every year, tens or even hundreds of billions of dollars are quietly added to the national debt -- on top of the deficits that we hear about. What's going on here?

When it comes to financial magic, the government of the United States takes the prize. Sleights of hand and clever distractions by purveyors of line-of-credit mortgages, living-benefit variable annuities and equity-indexed life insurance are clumsy parlor tricks compared with the Big Magic of American politicians.
Consider the proud trumpeting that came from Washington at the close of fiscal 2007. The deficit for the unified budget was, politicians crowed, down to a mere $162.8 billion.

In fact, our government is overspending at a far greater rate. The total federal debt actually increased by $497.1 billion over the same period.
But politicians of both parties use happy numbers to distract us. Democrats routinely criticize the Republican administration for crippling deficits, but they politely use the least-damaging figure, the $162.8 billion. Why? Because references to more-realistic accounting would reveal vastly greater numbers and implicate both parties.

You can understand how this is done by taking a close look at a single statement on federal finance from the president's Council of Economic Advisers. The September statement shows that the "on-budget" numbers produced a deficit of $344.3 billion in fiscal 2007. The "off-budget" numbers had a surplus of $181.5 billion. (The off-budget figures are dominated by Social Security, Medicare and other programs with trust funds.)
Combine those two figures and you get the unified budget, that $162.8 billion. In the past eight years we've had two years of reported surpluses and six years of reported deficits. Altogether, the total reported deficit has run $1.3 trillion.
Some numbers don't add up But if you examine another figure, the gross federal debt, you'll see something strange. First, the debt has increased in each of the past eight years, even in the two years when surpluses were reported. Second, the gross federal debt, which includes the obligations held by the Social Security and Medicare trust funds, has increased much faster than the deficits -- about $3.3 trillion over the same eight years.
That's $2 trillion more than the reported $1.3 trillion in deficits over the period. Can you spell "Enron"?

In other words, while our reported deficits averaged $164 billion over the past eight years, government debt increased an average of $418 billion a year. That's a lot more than twice as much.
How could this happen?
Easy. The Treasury Department simply credits the Social Security, Medicare and other trust funds with interest payments in the form of new Treasury obligations. No cash is actually paid. The trust funds magically increase in value with a bookkeeping entry. It represents money the government owes itself.
So what happens if we take out the funny money?
When the imaginary interest payments are included, Social Security and Medicare are running at a tranquilizing surplus (that $181.5 billion mentioned earlier). But measure actual cash, and the surplus disappears.

How to control deficit spendingU.S. Rep. Tom Tancredo, R-Colo., says Social Security and Medicare are the keys to cutting federal budget deficits.
In 2005, for instance, the Social Security Disability Income program started to run at a cash loss. 2007 is the first year that Medicare Part A (the hospital insurance program) benefits exceeded income.
The same thing will happen to the Social Security retirement-income program in six to nine years, depending on which of the trustees' estimates you use. During the same period, the expenses of Medicare Part B and Part D, which are paid out of general tax revenue, will rise rapidly.
Despite this, the Social Security Administration writes workers every year advising them that the program will have a problem 34 years from now, not six or nine years. In fact, the real problem is already here. It will be a big-time problem in less than a decade.
Count on it.


Federal deficits versus increases in the federal debt
Fiscal year
Reported surplus/deficit
Debt increase
Debt at start of year
Debt at year's end
2000
$236.2 billion surplus
$23.2 billion
$5.606 trillion
$5.629 trillion
2001
$128.2 billion surplus
$141.2 billion
$5.629 trillion
$5.770 trillion
2002
$157.8 billion deficit
$428.5 billion
$5.770 trillion
$6.198 trillion
2003
$377.6 billion deficit
$561.6 billion
$6.198 trillion
$6.760 trillion
2004
$412.7 billion deficit
$594.7 billion
$6.760 trillion
$7.355 trillion
2005
$318.3 billion deficit
$550.6 billion
$7.355 trillion
$7.905 trillion
2006
$248.2 billion deficit
$546.1 billion
$7.905 trillion
$8.451 trillion
2007
$162.8 billion deficit
$497.1 billion
$8.451 trillion
$8.949 trillion


How's that working for ya?

Idiot Corporate Looters Strike Retirement Gold

The 5 richest payoffs for fired CEOs
Many axed CEOs depart their troubled companies with millions of dollars in cash, stock and options -- like Merrill Lynch's Stanley O'Neal did last month. Here are five who stand atop this golden goodbye club.
The sweetest sound on Wall Street these days? "You're fired."
Regular folks may get a modest pension or maybe just a box for their personal items. But for Wall Street CEOs, the exit sign needs at least eight digits.
The latest example is the $161.5 million retirement package collected by former Merrill Lynch (MER, news, msgs) chief Stanley O'Neal on his way out the doors of the troubled brokerage last month.
On O'Neal's watch, Merrill cranked out risky debt instruments backed by dodgy subprime mortgages. Then last month, O'Neal left the brokerage amid revelations of Merrill's heavy exposure to the imploding mortgage market.


Despite all the problems that developed while he was at the helm, he will benefit nicely if his successors can clean up the mess. Most of the value of O'Neal's golden goodbye comes in the form of restricted stock and stock options. But astonishingly, unlike options or stock grants that are wiped out or expire quickly for regular employees when they leave to "spend more time with the family," O'Neal's awards will continue to vest for years to come under a timetable set years ago.

The big 5

O'Neal, of course, is not the sole member of the exclusive corner office golden goodbye club. Paul Hodgson, a CEO pay expert at The Corporate Library, estimates that getting rid of the CEOs at 16 investment banks and financial institutions that potentially have the biggest exposure to the subprime mess would cost an astonishing $1 billion, including O'Neal's take. Angelo Mozilo, who as co-founder and chief of mortgage lender Countrywide Financial (CFC, news, msgs) bears a good bit of the blame for the current subprime mess, would collect more than $73 million, according to Hodgson.
As big as O'Neal's $161.5 million "retirement package" was, he ranks only fifth in the golden goodbye club so far this millennium. Below are the other CEOs who got even more loot than him on the way out the door, with numbers courtesy of an Oct. 31 Corporate Library research note on this problem called "Too Little, Too Late."
No. 4: Ex-Gillette chief James Kilts. Total retirement take: $165 million.
It's been more than two years since Procter & Gamble (PG, news, msgs) took over Gillette, putting Gillette CEO James Kilts out of a job. A lot of CEOs have left their corner offices since then, but Kilts' golden goodbye was so huge it still takes the No. 4 slot for the all-time biggest retirement payouts this millennium. His take: $165 million, including a $13 million "gross-up" payment to help cover taxes triggered by a golden parachute. In response to criticism in the local press for this huge retirement cash-out, Kilts described himself as "Boston's piñata" and argued that he earned the pay by creating billions of dollars in shareholder wealth.
Continued: Home Depot's former CEO
No. 3: Former Home Depot CEO Robert Nardelli. Total retirement take: $210 million.
The sheer size of former Home Depot (HD, news, msgs) CEO Robert Nardelli's golden goodbye sparked outrage on many fronts when he left the company in early 2007. First, Home Depot stock declined nearly 8% under his six-year watch. Next, he got all the loot even though he had already collected huge sums in annual pay -- including $219.7 million in the two years before leaving the company, according to The Corporate Library.
Finally, $84 million of his golden goodbye came in the form of accelerated vesting of deferred stock awards and grants of unvested options, according to the AFL-CIO Office of Investment. So just like Merrill's O'Neal -- but unlike most rank-and-file employees -- Nardelli got to keep his restricted stock and options and will gain if his successor, Frank Blake, manages to turn Home Depot around and make its stock go up.
No. 2: Former Pfizer boss Henry McKinnell. Total retirement take: $213 million.
Under Henry McKinnell's watch from early 2001 through 2006, the shares of Pfizer (PFE, news, msgs) declined 40%. That cost shareholders $140 billion. No matter. He still left the CEO slot in July 2006 with a $213 million golden goodbye, thanks to an extremely generous board.
While private-sector pensions typically replace 20% to 35% of salary, the value of McKinnell's pension worked out to about $6.5 million a year, or 100% of his annual salary and bonus before leaving, according to the AFL-CIO. He actually took it in the form of an $82 million lump sum, part of that $213 million total.
No. 1: Former ExxonMobil boss Lee Raymond. Total retirement take: $351 million.
Given the strength in energy stocks since 2000, it probably comes as no surprise that the richest golden goodbye this millennium went to Lee Raymond, who retired as CEO of ExxonMobil (XOM, news, msgs) in 2006. He got $351 million. That's a lot for a guy who earned $70 million in his last year of work, or $34,457 an hour, according to The Corporate Library. His cash-out included a $98.4 million lump-sum pension payment.
ExxonMobil stock advanced nearly fourfold during the 13 years he served as CEO, so supporters argued he earned the money. However, much of that advance was linked to a broad rise in energy stocks as oil prices advanced sharply in the past several years. Should Raymond really get credit for that?
What you can do If any of this ticks you off, there are a couple of things you can do. First, if you own stock, watch closely for proxy votes during the shareholder meeting season. Two of the most popular shareholder resolutions these days call for limits on severance pay and "say on pay," in which shareholders vote thumbs up or thumbs down on company compensation reports. These votes aren't binding, but they send a message.

Next, if you have a political bent, you can ask your representatives to support legislators like Rep. Barney Frank, D-Mass., who are working on bills that would require public companies to have these votes on severance pay and "say on pay" votes.

Finally, contact the Securities and Exchange Commission and support changes in rules that would allow shareholders to have more proxy access to change company bylaws. This kind of leeway could allow shareholder activists to change the way board members are voted on -- so it's easier to boot out the ones who consistently buckle to executive demands for higher pay.


http://articles.moneycentral.msn.com/Investing/CompanyFocus/The5RichestPayoffsForFiredCEOs.aspx?page=all

The Economic Consequences of Mr. Bush

The Economic Consequences of Mr. Bush

The next president will have to deal with yet another crippling legacy of George W. Bush: the economy. A Nobel laureate, Joseph E. Stiglitz, sees a generation-long struggle to recoup.
by Joseph E. Stiglitz December 2007

When we look back someday at the catastrophe that was the Bush administration, we will think of many things: the tragedy of the Iraq war, the shame of Guantánamo and Abu Ghraib, the erosion of civil liberties. The damage done to the American economy does not make front-page headlines every day, but the repercussions will be felt beyond the lifetime of anyone reading this page.
I can hear an irritated counterthrust already. The president has not driven the United States into a recession during his almost seven years in office. Unemployment stands at a respectable 4.6 percent. Well, fine. But the other side of the ledger groans with distress: a tax code that has become hideously biased in favor of the rich; a national debt that will probably have grown 70 percent by the time this president leaves Washington; a swelling cascade of mortgage defaults; a record near-$850 billion trade deficit; oil prices that are higher than they have ever been; and a dollar so weak that for an American to buy a cup of coffee in London or Paris—or even the Yukon—becomes a venture in high finance.
And it gets worse. After almost seven years of this president, the United States is less prepared than ever to face the future. We have not been educating enough engineers and scientists, people with the skills we will need to compete with China and India. We have not been investing in the kinds of basic research that made us the technological powerhouse of the late 20th century. And although the president now understands—or so he says—that we must begin to wean ourselves from oil and coal, we have on his watch become more deeply dependent on both.
Up to now, the conventional wisdom has been that Herbert Hoover, whose policies aggravated the Great Depression, is the odds-on claimant for the mantle "worst president" when it comes to stewardship of the American economy. Once Franklin Roosevelt assumed office and reversed Hoover’s policies, the country began to recover. The economic effects of Bush’s presidency are more insidious than those of Hoover, harder to reverse, and likely to be longer-lasting. There is no threat of America’s being displaced from its position as the world’s richest economy. But our grandchildren will still be living with, and struggling with, the economic consequences of Mr. Bush.
Remember the Surplus?
The world was a very different place, economically speaking, when George W. Bush took office, in January 2001. During the Roaring 90s, many had believed that the Internet would transform everything. Productivity gains, which had averaged about 1.5 percent a year from the early 1970s through the early 90s, now approached 3 percent. During Bill Clinton’s second term, gains in manufacturing productivity sometimes even surpassed 6 percent. The Federal Reserve chairman, Alan Greenspan, spoke of a New Economy marked by continued productivity gains as the Internet buried the old ways of doing business. Others went so far as to predict an end to the business cycle. Greenspan worried aloud about how he’d ever be able to manage monetary policy once the nation’s debt was fully paid off.
This tremendous confidence took the Dow Jones index higher and higher. The rich did well, but so did the not-so-rich and even the downright poor. The Clinton years were not an economic Nirvana; as chairman of the president’s Council of Economic Advisers during part of this time, I’m all too aware of mistakes and lost opportunities. The global-trade agreements we pushed through were often unfair to developing countries. We should have invested more in infrastructure, tightened regulation of the securities markets, and taken additional steps to promote energy conservation. We fell short because of politics and lack of money—and also, frankly, because special interests sometimes shaped the agenda more than they should have. But these boom years were the first time since Jimmy Carter that the deficit was under control. And they were the first time since the 1970s that incomes at the bottom grew faster than those at the top—a benchmark worth celebrating.
By the time George W. Bush was sworn in, parts of this bright picture had begun to dim. The tech boom was over. The nasdaq fell 15 percent in the single month of April 2000, and no one knew for sure what effect the collapse of the Internet bubble would have on the real economy. It was a moment ripe for Keynesian economics, a time to prime the pump by spending more money on education, technology, and infrastructure—all of which America desperately needed, and still does, but which the Clinton administration had postponed in its relentless drive to eliminate the deficit. Bill Clinton had left President Bush in an ideal position to pursue such policies. Remember the presidential debates in 2000 between Al Gore and George Bush, and how the two men argued over how to spend America’s anticipated $2.2 trillion budget surplus? The country could well have afforded to ramp up domestic investment in key areas. In fact, doing so would have staved off recession in the short run while spurring growth in the long run.
But the Bush administration had its own ideas. The first major economic initiative pursued by the president was a massive tax cut for the rich, enacted in June of 2001. Those with incomes over a million got a tax cut of $18,000—more than 30 times larger than the cut received by the average American. The inequities were compounded by a second tax cut, in 2003, this one skewed even more heavily toward the rich. Together these tax cuts, when fully implemented and if made permanent, mean that in 2012 the average reduction for an American in the bottom 20 percent will be a scant $45, while those with incomes of more than $1 million will see their tax bills reduced by an average of $162,000.
The administration crows that the economy grew—by some 16 percent—during its first six years, but the growth helped mainly people who had no need of any help, and failed to help those who need plenty. A rising tide lifted all yachts. Inequality is now widening in America, and at a rate not seen in three-quarters of a century. A young male in his 30s today has an income, adjusted for inflation, that is 12 percent less than what his father was making 30 years ago. Some 5.3 million more Americans are living in poverty now than were living in poverty when Bush became president. America’s class structure may not have arrived there yet, but it’s heading in the direction of Brazil’s and Mexico’s.
The Bankruptcy Boom
In breathtaking disregard for the most basic rules of fiscal propriety, the administration continued to cut taxes even as it undertook expensive new spending programs and embarked on a financially ruinous "war of choice" in Iraq. A budget surplus of 2.4 percent of gross domestic product (G.D.P.), which greeted Bush as he took office, turned into a deficit of 3.6 percent in the space of four years. The United States had not experienced a turnaround of this magnitude since the global crisis of World War II.
Agricultural subsidies were doubled between 2002 and 2005. Tax expenditures—the vast system of subsidies and preferences hidden in the tax code—increased more than a quarter. Tax breaks for the president’s friends in the oil-and-gas industry increased by billions and billions of dollars. Yes, in the five years after 9/11, defense expenditures did increase (by some 70 percent), though much of the growth wasn’t helping to fight the War on Terror at all, but was being lost or outsourced in failed missions in Iraq. Meanwhile, other funds continued to be spent on the usual high-tech gimcrackery—weapons that don’t work, for enemies we don’t have. In a nutshell, money was being spent everyplace except where it was needed. During these past seven years the percentage of G.D.P. spent on research and development outside defense and health has fallen. Little has been done about our decaying infrastructure—be it levees in New Orleans or bridges in Minneapolis. Coping with most of the damage will fall to the next occupant of the White House.
Although it railed against entitlement programs for the needy, the administration enacted the largest increase in entitlements in four decades—the poorly designed Medicare prescription-drug benefit, intended as both an election-season bribe and a sop to the pharmaceutical industry. As internal documents later revealed, the true cost of the measure was hidden from Congress. Meanwhile, the pharmaceutical companies received special favors. To access the new benefits, elderly patients couldn’t opt to buy cheaper medications from Canada or other countries. The law also prohibited the U.S. government, the largest single buyer of prescription drugs, from negotiating with drug manufacturers to keep costs down. As a result, American consumers pay far more for medications than people elsewhere in the developed world.
You’ll still hear some—and, loudly, the president himself—argue that the administration’s tax cuts were meant to stimulate the economy, but this was never true. The bang for the buck—the amount of stimulus per dollar of deficit—was astonishingly low. Therefore, the job of economic stimulation fell to the Federal Reserve Board, which stepped on the accelerator in a historically unprecedented way, driving interest rates down to 1 percent. In real terms, taking inflation into account, interest rates actually dropped to negative 2 percent. The predictable result was a consumer spending spree. Looked at another way, Bush’s own fiscal irresponsibility fostered irresponsibility in everyone else. Credit was shoveled out the door, and subprime mortgages were made available to anyone this side of life support. Credit-card debt mounted to a whopping $900 billion by the summer of 2007. "Qualified at birth" became the drunken slogan of the Bush era. American households took advantage of the low interest rates, signed up for new mortgages with "teaser" initial rates, and went to town on the proceeds.
All of this spending made the economy look better for a while; the president could (and did) boast about the economic statistics. But the consequences for many families would become apparent within a few years, when interest rates rose and mortgages proved impossible to repay. The president undoubtedly hoped the reckoning would come sometime after 2008. It arrived 18 months early. As many as 1.7 million Americans are expected to lose their homes in the months ahead. For many, this will mean the beginning of a downward spiral into poverty.
Between March 2006 and March 2007 personal-bankruptcy rates soared more than 60 percent. As families went into bankruptcy, more and more of them came to understand who had won and who had lost as a result of the president’s 2005 bankruptcy bill, which made it harder for individuals to discharge their debts in a reasonable way. The lenders that had pressed for "reform" had been the clear winners, gaining added leverage and protections for themselves; people facing financial distress got the shaft.
And Then There’s Iraq
The war in Iraq (along with, to a lesser extent, the war in Afghanistan) has cost the country dearly in blood and treasure. The loss in lives can never be quantified. As for the treasure, it’s worth calling to mind that the administration, in the run-up to the invasion of Iraq, was reluctant to venture an estimate of what the war would cost (and publicly humiliated a White House aide who suggested that it might run as much as $200 billion). When pressed to give a number, the administration suggested $50 billion—what the United States is actually spending every few months. Today, government figures officially acknowledge that more than half a trillion dollars total has been spent by the U.S. "in theater." But in fact the overall cost of the conflict could be quadruple that amount—as a study I did with Linda Bilmes of Harvard has pointed out—even as the Congressional Budget Office now concedes that total expenditures are likely to be more than double the spending on operations. The official numbers do not include, for instance, other relevant expenditures hidden in the defense budget, such as the soaring costs of recruitment, with re-enlistment bonuses of as much as $100,000. They do not include the lifetime of disability and health-care benefits that will be required by tens of thousands of wounded veterans, as many as 20 percent of whom have suffered devastating brain and spinal injuries. Astonishingly, they do not include much of the cost of the equipment that has been used in the war, and that will have to be replaced. If you also take into account the costs to the economy from higher oil prices and the knock-on effects of the war—for instance, the depressing domino effect that war-fueled uncertainty has on investment, and the difficulties U.S. firms face overseas because America is the most disliked country in the world—the total costs of the Iraq war mount, even by a conservative estimate, to at least $2 trillion. To which one needs to add these words: so far.
It is natural to wonder, What would this money have bought if we had spent it on other things? U.S. aid to all of Africa has been hovering around $5 billion a year, the equivalent of less than two weeks of direct Iraq-war expenditures. The president made a big deal out of the financial problems facing Social Security, but the system could have been repaired for a century with what we have bled into the sands of Iraq. Had even a fraction of that $2 trillion been spent on investments in education and technology, or improving our infrastructure, the country would be in a far better position economically to meet the challenges it faces in the future, including threats from abroad. For a sliver of that $2 trillion we could have provided guaranteed access to higher education for all qualified Americans.
The soaring price of oil is clearly related to the Iraq war. The issue is not whether to blame the war for this but simply how much to blame it. It seems unbelievable now to recall that Bush-administration officials before the invasion suggested not only that Iraq’s oil revenues would pay for the war in its entirety—hadn’t we actually turned a tidy profit from the 1991 Gulf War?—but also that war was the best way to ensure low oil prices. In retrospect, the only big winners from the war have been the oil companies, the defense contractors, and al-Qaeda. Before the war, the oil markets anticipated that the then price range of $20 to $25 a barrel would continue for the next three years or so. Market players expected to see more demand from China and India, sure, but they also anticipated that this greater demand would be met mostly by increased production in the Middle East. The war upset that calculation, not so much by curtailing oil production in Iraq, which it did, but rather by heightening the sense of insecurity everywhere in the region, suppressing future investment.
The continuing reliance on oil, regardless of price, points to one more administration legacy: the failure to diversify America’s energy resources. Leave aside the environmental reasons for weaning the world from hydrocarbons—the president has never convincingly embraced them, anyway. The economic and national-security arguments ought to have been powerful enough. Instead, the administration has pursued a policy of "drain America first"—that is, take as much oil out of America as possible, and as quickly as possible, with as little regard for the environment as one can get away with, leaving the country even more dependent on foreign oil in the future, and hope against hope that nuclear fusion or some other miracle will come to the rescue. So many gifts to the oil industry were included in the president’s 2003 energy bill that John McCain referred to it as the "No Lobbyist Left Behind" bill.
Contempt for the World
America’s budget and trade deficits have grown to record highs under President Bush. To be sure, deficits don’t have to be crippling in and of themselves. If a business borrows to buy a machine, it’s a good thing, not a bad thing. During the past six years, America—its government, its families, the country as a whole—has been borrowing to sustain its consumption. Meanwhile, investment in fixed assets—the plants and equipment that help increase our wealth—has been declining.
What’s the impact of all this down the road? The growth rate in America’s standard of living will almost certainly slow, and there could even be a decline. The American economy can take a lot of abuse, but no economy is invincible, and our vulnerabilities are plain for all to see. As confidence in the American economy has plummeted, so has the value of the dollar—by 40 percent against the euro since 2001.
The disarray in our economic policies at home has parallels in our economic policies abroad. President Bush blamed the Chinese for our huge trade deficit, but an increase in the value of the yuan, which he has pushed, would simply make us buy more textiles and apparel from Bangladesh and Cambodia instead of China; our deficit would remain unchanged. The president claimed to believe in free trade but instituted measures aimed at protecting the American steel industry. The United States pushed hard for a series of bilateral trade agreements and bullied smaller countries into accepting all sorts of bitter conditions, such as extending patent protection on drugs that were desperately needed to fight aids. We pressed for open markets around the world but prevented China from buying Unocal, a small American oil company, most of whose assets lie outside the United States.
Not surprisingly, protests over U.S. trade practices erupted in places such as Thailand and Morocco. But America has refused to compromise—refused, for instance, to take any decisive action to do away with our huge agricultural subsidies, which distort international markets and hurt poor farmers in developing countries. This intransigence led to the collapse of talks designed to open up international markets. As in so many other areas, President Bush worked to undermine multilateralism—the notion that countries around the world need to cooperate—and to replace it with an America-dominated system. In the end, he failed to impose American dominance—but did succeed in weakening cooperation.
The administration’s basic contempt for global institutions was underscored in 2005 when it named Paul Wolfowitz, the former deputy secretary of defense and a chief architect of the Iraq war, as president of the World Bank. Widely distrusted from the outset, and soon caught up in personal controversy, Wolfowitz became an international embarrassment and was forced to resign his position after less than two years on the job.
Globalization means that America’s economy and the rest of the world have become increasingly interwoven. Consider those bad American mortgages. As families default, the owners of the mortgages find themselves holding worthless pieces of paper. The originators of these problem mortgages had already sold them to others, who packaged them, in a non-transparent way, with other assets, and passed them on once again to unidentified others. When the problems became apparent, global financial markets faced real tremors: it was discovered that billions in bad mortgages were hidden in portfolios in Europe, China, and Australia, and even in star American investment banks such as Goldman Sachs and Bear Stearns. Indonesia and other developing countries—innocent bystanders, really—suffered as global risk premiums soared, and investors pulled money out of these emerging markets, looking for safer havens. It will take years to sort out this mess.
Meanwhile, we have become dependent on other nations for the financing of our own debt. Today, China alone holds more than $1 trillion in public and private American I.O.U.’s. Cumulative borrowing from abroad during the six years of the Bush administration amounts to some $5 trillion. Most likely these creditors will not call in their loans—if they ever did, there would be a global financial crisis. But there is something bizarre and troubling about the richest country in the world not being able to live even remotely within its means. Just as Guantánamo and Abu Ghraib have eroded America’s moral authority, so the Bush administration’s fiscal housekeeping has eroded our economic authority.
The Way Forward
Whoever moves into the White House in January 2009 will face an unenviable set of economic circumstances. Extricating the country from Iraq will be the bloodier task, but putting America’s economic house in order will be wrenching and take years.
The most immediate challenge will be simply to get the economy’s metabolism back into the normal range. That will mean moving from a savings rate of zero (or less) to a more typical savings rate of, say, 4 percent. While such an increase would be good for the long-term health of America’s economy, the short-term consequences would be painful. Money saved is money not spent. If people don’t spend money, the economic engine stalls. If households curtail their spending quickly—as they may be forced to do as a result of the meltdown in the mortgage market—this could mean a recession; if done in a more measured way, it would still mean a protracted slowdown. The problems of foreclosure and bankruptcy posed by excessive household debt are likely to get worse before they get better. And the federal government is in a bind: any quick restoration of fiscal sanity will only aggravate both problems.
And in any case there’s more to be done. What is required is in some ways simple to describe: it amounts to ceasing our current behavior and doing exactly the opposite. It means not spending money that we don’t have, increasing taxes on the rich, reducing corporate welfare, strengthening the safety net for the less well off, and making greater investment in education, technology, and infrastructure.
When it comes to taxes, we should be trying to shift the burden away from things we view as good, such as labor and savings, to things we view as bad, such as pollution. With respect to the safety net, we need to remember that the more the government does to help workers improve their skills and get affordable health care the more we free up American businesses to compete in the global economy. Finally, we’ll be a lot better off if we work with other countries to create fair and efficient global trade and financial systems. We’ll have a better chance of getting others to open up their markets if we ourselves act less hypocritically—that is, if we open our own markets to their goods and stop subsidizing American agriculture.
Some portion of the damage done by the Bush administration could be rectified quickly. A large portion will take decades to fix—and that’s assuming the political will to do so exists both in the White House and in Congress. Think of the interest we are paying, year after year, on the almost $4 trillion of increased debt burden—even at 5 percent, that’s an annual payment of $200 billion, two Iraq wars a year forever. Think of the taxes that future governments will have to levy to repay even a fraction of the debt we have accumulated. And think of the widening divide between rich and poor in America, a phenomenon that goes beyond economics and speaks to the very future of the American Dream.
In short, there’s a momentum here that will require a generation to reverse. Decades hence we should take stock, and revisit the conventional wisdom. Will Herbert Hoover still deserve his dubious mantle? I’m guessing that George W. Bush will have earned one more grim superlative.

Joseph Stiglitz, a leading economic educator, is a professor at Columbia.

http://www.vanityfair.com/politics/features/2007/12/bush200712?printable=true&currentPage=all

... Hoover v. Bush? No brainer. It all kinda reminds me of an obscure 70's song, The Needle and the Damage Done.

It's the ACCELERATION, stupid!

Once again, MSM misses the underlying truth

ANCHORAGE, Alaska (AP) - A Coast Guard reconnaissance team is heading to
the far north this week to scope out a new frontier that the warming Arctic
climate is opening to ship traffic.
The Coast Guard could set up an
operations base in Barrow as early as next spring to monitor waters that are now
free of ice for longer periods of the year. Weather permitting, a scouting crew
will fly 1,183 miles Thursday from Barrow, the northernmost U.S. town, to the
North Pole.
"This is a new area for us to do surveillance," said Rear Adm.
Arthur E. Brooks, commander of the Coast Guard's Alaska district. "We're going
primarily to see what's there, what ships, if any, are up there."
Thinning
ice has made travel along the northern coast increasingly attractive, said
Brooks, who plans to accompany the crew in the C-130 flight. Tankers and even
cruise ships are beginning to venture into the domain once traveled only by
indigenous hunters and research vessels, such as the Coast Guard ice-cutter
Healy.
The ice cap is believed to be warming faster than the rest of the
world, and recent studies suggest shipping routes could open in the Arctic in as
little as a decade. Just a few years ago, scientists predicted it would
take a century for the ice to melt.

... see, again the Big Deal here is not that warming is happening, it's that it continues to accelerate, thereby reaching predicted levels much faster than our predictions.

Gore's epitaph will be "He was an optimist."

Wait, here's another...

Carbon Dioxide in Atmosphere Increasing
Oct 22, 9:39 PM
(ET)

WASHINGTON (AP) - Just days after the Nobel prize was awarded
for global warming work, an alarming new study finds that carbon dioxide in the
atmosphere is increasing faster than expected.
Carbon dioxide emissions were
35 percent higher in 2006 than in 1990, a much faster growth rate than
anticipated, researchers led by Josep G. Canadell, of Australia's Commonwealth
Scientific and Industrial Research Organization, report in Tuesday's edition of
Proceedings of the National Academy of Sciences.
Increased industrial use of
fossil fuels coupled with a decline in the gas absorbed by the oceans and land
were listed as causes of the increase.
"In addition to the growth of global
population and wealth, we now know that significant contributions to the growth
of atmospheric CO2 arise from the slowdown" of nature's ability to take the
chemical out of the air, said Canadell, director of the Global Carbon Project at
the research organization.
The changes "characterize a carbon cycle that is generating stronger-than-expected and sooner-than-expected climate forcing," the researchers report.
http://apnews.myway.com//article/20071023/D8SEL2M80.html

... The headline says "increasing" but it's the ACCELERATION, stupid!
And the acceleration was not only unexpected, accelerating phenomena are by nature virtually impossible to forecast accurately.



.... and another:

SYDNEY, Australia (AP) - Worldwide economic growth has accelerated the level of
greenhouse gas emissions to a dangerous threshold scientists had not expected
for another decade, according to a leading Australian climate change
expert.
Tim Flannery told Australian Broadcasting Corp. that an upcoming
report by the U.N. Intergovernmental Panel on Climate Change will contain new
data showing that the level of climate-changing gases in the atmosphere has
already reached critical levels.
...
"What the report establishes is that
the amount of greenhouse gas in the atmosphere is already above the threshold
that can potentially cause dangerous climate change," Flannery told the
broadcaster late Monday. "We are already at great risk of dangerous climate
change, that's what these figures say. It's not next year or next decade, it's
now."

.... more:



2007-09-17 10:18:

36
(AP) - Arctic ice has shrunk to the lowest level on record, new satellite
images show, raising the possibility that the Northwest Passage that eluded
famous explorers will become an open shipping lane.
The European Space Agency
said nearly 200 satellite photos this month taken together showed an ice-free
passage along northern Canada, Alaska and Greenland, and ice retreating to its
lowest level since such images were first taken in 1978.
The waters are
exposing unexplored resources, and vessels could trim thousands of miles from
Europe to Asia by bypassing the Panama Canal. The seasonal ebb and flow of ice
levels has already opened up a slim summer window for ships.
Leif Toudal
Pedersen, of the Danish National Space Center, said that Arctic ice has shrunk
to some 1 million square miles. The previous low was 1.5 million square miles,
in 2005.
"The strong reduction in just one year certainly raises flags that
the ice (in summer) may disappear much sooner than expected," Pedersen said in
an ESA statement posted on its Web site Friday.
Pedersen said the extreme
retreat this year suggested the passage could fully open sooner than expected -
but ESA did not say when that might be. "
... ESA didn't say because they
COULDN'T say -- it's not just the continuing decline, it's the accelerating rate
of decline that should have you worried.

...STILL more:

2007-08-17 13:10:41
WASHINGTON (AP) - There was less sea ice in the
Arctic on Friday than ever before on record, and the melting is continuing, the
National Snow and Ice Data Center reported.
"Today is a historic day," said Mark Serreze, a senior research scientist at the center. "This is the least sea ice we've ever seen in the satellite record and we have another month left to go in the melt season this year."

Analysis of NOAA CO2 concentration measurements since '59: From 1960 to 1997, the net acceleration was a total of .25 ppm/yr^2. Since '97 it has more than doubled:

http://www.esrl.noaa.gov/gmd/ccgg/trends/

I infer that not only is the warming rate accelerating, the ACCELERATION rate is itself ACCELERATING. I won't bother adding exclamation points -- either you get the implication or you don't.
If we're past recovery, then it's time to put some focus on amelioration of the consequences of the train wreck, even if you still try to slow the train.

... Nature says "don't start something I'm going to have to finish":

"Up to now it has been generally assumed that global warming will be a linear
process. However evidence from the geological past linked with climate modelling
that takes into account the global warming that is already locked into the
system indicates that there may not be a linear response to rising CO2 levels.
There is a danger that at some point we will cross a threshhold when global
warming accelerates. By continuing to increase the amount of CO2 in the
atmosphere we are getting closer to that point.

From the analysis of the
bubbles of air trapped in ice cores taken from the Greenland icecap that are up
to 500,000 years old it has been shown that the temperature of the Earth's
atmosphere and the CO2 content has followed a regular 100,000 year cycle of
change with the CO2 content and temperature closely linked and following the
same graph line. Within this regular cycle there are some recently discovered
very short periods of approximately only a few hundred years duration when
temperatures rise dramatically by 8 degrees centigrade above the slower rises of
up to 7 degrees centigrade. This gives a total range of 15 degrees centigrade
[27°F]
...only now are models being constructed that incorporate a feed-back
into the model of the effects of changes in world climate due to the changes in
temperature that are predicted by the model as the model programme runs. One of
the most important effects of climate change is the release of carbon dioxide
from natural processes as atmospheric temperature rises... The climate change
models show that rising sea temperatures in the Pacific Ocean result in less
rainfall and a longer dry season in the Amazon Basin...If the Amazon rainforest
burns and releases billions of tons of CO2 into the atmosphere in a short period
then this will be a further boost to global warming that will result in
significantly higher end of century temperatures.

The climate change model with climate change induced feedbacks indicates that on present trends the date for the change from CO2 sink to source for the Amazon rainforest is about 2050.

http://www.hydrogen.co.uk/h2_now/journal/articles/1_global_warming.htm

...
Here's another "based on projected climate change" study...
ROME (AP) - Climate change could drive many wild

relatives of plants such as the potato and the peanut into extinction,
threatening a valuable source of genes necessary to help these food crops fight
pests and drought, an international research group reported.
During the next
50 years, more than 60 percent of 51 wild peanut species analyzed and 12 percent
of 108 wild potato species analyzed could become extinct because of climate
change, according to a study released Tuesday by the Consultative Group on
International Agricultural Research.
Surviving species would be confined to
much smaller areas, further eroding their capacity to survive, the report
said.
The study looked at the distribution of various species and predicted
their ability to survive based on current and projected climate data for 2055."

... Estimating is easy. ACCURATE estimating is the challenge. And when all the models are based on straight line extrapolation and the real world is showing rapid ACCELERATION, the only thing for sure is WE DON'T KNOW HOW BAD it's gonna get or HOW FAST.

Chickens come home to roost

The bigger the chicken, the longer it takes ...

"Not very many people are talking about what do we do to live with the consequences of what's happening," said James Brock, a longtime industry consultant in the Beijing office of Cambridge Energy Research Associates. "The polar bears are doomed - they're going to museums. At the end of this century the Arctic ice cap will be gone. That means a lot of water rising, not by inches but meters."

---
Burned since ancient times, coal dramatically increased in use during the Industrial Revolution, when it became fuel for the new steam engines, gas lamps and electrical generators. Worldwide demand for coal dipped at the end of the 20th century, but is now back up and projected to rise 60 percent by 2030 to 6.9 billion tons a year, according to the International Energy Agency.


In America, about 150 new coal-fired electrical plants are proposed over the next decade. In China, there are plans for a coal-fired power plant to go on line nearly every week. Emissions from these plants alone could nullify the cuts made by Europe, Japan and other rich nations under the Kyoto Protocol "



GW & wildfires, part II

More things I bet you didn't know ...
http://www.cbsnews.com/stories/2007/10/18/60minutes/printable3380176.shtml

... like "The fire season in the last 15 years or so has increased more than two months over the whole Western U.S. So actually 78 days of average longer fire season in the last 15 years compared to the previous 15 or 20 years"

... and: "in 2006, the feds spent $2 billion on fire fighting, seven times more than just ten years ago. "

Seems that Nature is just throwing bigger and bigger tantrums at us.


"Perfect storm overwhelms well prepared CA" said the headline...

LOS ANGELES, Oct 25 (Reuters) - California's fire-fighting strategy has made big
strides since deadly infernos in 2003 but little could have prepared it for the
perfect storm of drought, high winds and triple-digit temperatures behind
massive blazes this week, officials said on Thursday.

... but it wasn't a perfect storm. We'd had a very dry year in SoCal so there was actually much less build up of fuel to dry out than in a wet year. On the other hand it's the lengthening of the fire season by 78 days over the last decade that really makes more of these inevitable.


... How's that working for ya?

... How's that working for ya?

Bush knew Saddam had no weapons of mass destruction

http://www.salon.com/opinion/blumenthal/2007/09/06/bush_wmd/index_np.html?source=whitelist Salon exclusive: Two former CIA officers say the president squelched top-secret intelligence, and a briefing by George Tenet, months before invading Iraq. By Sidney Blumenthal (Clockwise from top left) Naji Sabri, George W. Bush, Colin Powell and George Tenet. On Sept. 18, 2002, CIA director George Tenet briefed President Bush in the Oval Office on top-secret intelligence that Saddam Hussein did not have weapons of mass destruction, according to two former senior CIA officers. Bush dismissed as worthless this information from the Iraqi foreign minister, a member of Saddam's inner circle, although it turned out to be accurate in every detail. Tenet never brought it up again. Nor was the intelligence included in the National Intelligence Estimate of October 2002, which stated categorically that Iraq possessed WMD. No one in Congress was aware of the secret intelligence that Saddam had no WMD as the House of Representatives and the Senate voted, a week after the submission of the NIE, on the Authorization for Use of Military Force in Iraq. The information, moreover, was not circulated within the CIA among those agents involved in operations to prove whether Saddam had WMD. On April 23, 2006, CBS's "60 Minutes" interviewed Tyler Drumheller, the former CIA chief of clandestine operations for Europe, who disclosed that the agency had received documentary intelligence from Naji Sabri, Saddam's foreign minister, that Saddam did not have WMD. "We continued to validate him the whole way through," said Drumheller. "The policy was set. The war in Iraq was coming, and they were looking for intelligence to fit into the policy, to justify the policy." http://forums.craigslist.org/?ID=71636196

Gonzo Avoids Implicating Bush (Barely)

Comey’s Evidence of a Crime Returns
On May 18th, “Scoop” reported that the testimony of James Comey, former Deputy Attorney General under John Ashcroft, provided evidence of a crime in which Bush, Gonzales, and Card” were clearly implicated. It was apparent that Bush had ordered his then counsel Alberto Gonzales and adviser, Andrew Card, to the sick bed of an ailing and sedated John Ashcroft. Their mission was to obtain Ashcroft’s signature authorizing warrant-less surveillance of Americans.
Ashcroft had stepped down temporarily due to his pending hospital stay. His deputy, James Comey, became acting Attorney General. Comey had refused to sign the authorization since he, Ashcroft and senior Justice Department lawyers found it highly objectionable. Over the objection of Ashcroft’s wife, the two entered the hospital room and made their case. Ashcroft rose from his sick bed to refuse. Gonzales and card failed in their mission.
Today’s testimony by still U.S. Attorney General Alberto Gonzales before the Senate Committee on the Judiciary provides a major clue as to the direction future impeachment charges might take, should they be brought.
First a brief recap of the May 18th article.
Tuesday was a remarkable day at the U.S. Senate Judiciary Committee hearings. The exchange between Sen. Charles Schumer, R, NY and former Deputy Attorney General James Comey provides clear evidence pointing to criminal activity by the president, U.S Attorney General Alberto Gonzales, and former presidential advisor, Andrew Card. If Comey’s testimony is supported by other reliable witnesses, the Bush, Gonzales, and Card crew have some serious questions to answer.The article went on to describe questions that might be very troubling.
There are at least two major problems facing the participants in this affair.First, the White House attempted to obtain approval for a program that they knew the acting Attorney General would not approve. Second, they sought this approval from someone without authority, Ashcroft. He stepped down due to his illness and passed authority to Comey. Of great significance, however, is the fact that the program was implemented. It doesn’t matter if it was for an hour, a day or a week. Comey tells us warrantless surveillance on U.S. citizens was implemented without the required DOJ approval due to Comey’s unwillingness to attest “as to its legality.”Seeking approval from someone without authority while that someone, John Ashcroft, was heavily sedated is certainly a crime. Having that enterprise end in failure and then implementing the program anyway is further evidence of a crime.
The program was implemented without authorization as indicated by this exchange between Comey and Schumer:
Schumer: Right. And you stated that the next day, Thursday, was the deadline for reauthorization of the program, is that right?
Comey: Yes, sir.
Schumer: OK. Can you tell us what happened the next day?
Comey: The program was reauthorized without us and without a signature from the Department of Justice attesting as to its legality. And I prepared a letter of resignation, intending to resign the next day, Friday, March the 12th
*********
Both Sides Tip Their Hands: Look at Today’s Testimony in Light of the Above
Transcript compiled from recording: Senator Charles Schumer (D-NY) questions U.S. Attorney General Alberto Gonzales at the Justice Department Over site Hearings, Senate Committee on the Judiciary. July 24, 2007.
*********

Schumer: Let me ask you this. Who sent you to the hospital?
Gonzales: Senator what I can say is we had a very important meeting at the White House over one of the most important…
Schumer: I didn’t ask you that.
Gonzales: I’m answering your question senator if I could?
Schumer: Who sent you? Did anyone tell you to go?
Gonzales: It was one of the most important programs for the United States. It had been authorized by the president. I’ll just say that the chief of staff to the President of the United States, the counsel for the President of the United States went to the hospital on behalf of the President of the United States.
Schumer: Did the president ask you to go?
This is the key question. Sen. Schumer’s sole purpose is to get Gonzales to admit, to confirm what everyone knows. Bush told Gonzales and Card to go to Ashcroft’s hospital bed and get his signature.
Gonzales: We were there in behalf of the President of the United States.
The colloquy begins. Gonzales is not going to say that the president asked him to go. He begins his first of several uses of on “behalf of the president” as a diversion. “Behalf” leaves open the possibility that Card and Gonzales went just because they thought it was a good idea (“Let’s surprise the boss and get Ashcroft to sign this thing.”) This leaves the opening that Bush didn’t order the trip with its clear criminal implications (See Comey article, 18 May 2007)
Schumer: I didn’t ask you that. Did the president ask you to go?
Gonzales: Senator we were there on behalf of the President of the United States
Schumer: Why can’t you answer that question?
Schumer knows what is going on with “behalf” and he won’t tolerate it. He makes clear that Gonzales is not answering.
Gonzales: That’s the answer I can give you Senator
“…the answer I can give you…” Why is this all he “can” give. Because Gonzales was counsel to the president at this time, the president’s lawyer. Obviously Gonzales does not have his former client’s permission to answer this question. Privilege applies and this is the answer he gives as the former lawyer for the president.
Schumer: Well can you explain to me why you can’t answer it directly?
Gonzales: Senator, again we were there on an important program for this president on behalf of the President of the United States.
This “important program” is said to be the NSA civilian phone monitoring program; the one that Comey and Ashcroft wouldn’t approve in the form it was presented. The form of the program was so offensive, there was a mass resignation about to occur at the Department of Justice..
Schumer: Did you talk to the president about it beforehand?
Schumer broadens the time frame for a presidential request for the visit.
Gonzales: Senator, obviously there were a lot of discussions that happened during that period of time. This involved one of the president’s premier programs.
It seems as thought Gonzales is saying that there was a request or order by the president prior to the meeting but this is not specific.
Schumer: But sir you’re before this committee. You are before this committee. You are supposed to answer questions. You’ve not claimed any privilege. I don’t think there is any here, and I asked you to answer and you refuse to answer it. Why?.
Gonzales: Senator … if I can answer the question I will answer the question.
Schumer: But could you tell me why can’t you answer that question?
Gonzales: Senator because again this relates to activities that existed when I was with in White House and because of that, with respect to your specific question, I will go back, I will go back and see whether or not I can answer the question.
This is more on Gonzales excuse for not answering the question – attorney-client privilege. In his view, privilege applies unless his client at that time, the President of the United States, waives privilege.
Schumer: Did the Vice President send you?
For the record, Sen. Schumer takes one last shot..
Gonzales: Senator, we were there on behalf of the president
Schumer: Did you talk to the Vice President about it?
Gonzales: We were there on behalf of the president.
Schumer: You will not answer that question as well. Is that correct?
Gonzales: We were there on behalf …if I can … I’d be would be happy to take back your question if we can respond to it we well.
Clearly, Gonzales will not answer any question that implicates Bush as ordering the visit, thus participating in a conspiracy to commit illegal acts, as outlined in Comey’s May 18, 2007 testimony before Sen. Schumer.
*********
Sen. Schumer On Point
Senator Schumer was amazingly on point during this line of questioning; even more so than when his questioning of Comey established the probability of crimes committed by Bush, Card, and Gonzales. When Schumer clearly became aware that he would get no answer, he only gave Gonzales one chance to bring up attorney-client privilege. Schumer asked, “Well can you explain to me why you can’t answer it directly?”
Schumer also stayed tightly focused, to his great advantage, when Gonzales tried on several occasions to bring national security into the testimony as an excuse for the act he won’t acknowledge Bush committing (ordering the visit). At the very beginning, Gonzales tries to divert the discussion to national security by referring to a “very important meeting …one of the most important…” Schumer responded quickly with “I didn’t ask you that” to put Gonzales back on task, Schumer’s task. A bit later, Gonzales refers to one of the “premier programs” and “an important program.” Had Schumer taken the bait, Gonzales would have raised the terrorist threat that was the excuse for the domestic surveillance program they were trying to legitimize (after the fact, perhaps). Schumer stayed on task, focused on who ordered the visit.
Gonzales was damned if he answered and damned if he didn’t. Had he said “Well attorney client privilege applies,” Schumer might have responded: “So the president told you not to answer any questions about his ordering you and Card to the hospital to Ashcroft’s sick bet in order to obtain a signature from a highly sedated man who was not in a position to sign legally in the first place.”
By not explicating the attorney-client privilege excuse, Gonzales looks like a fool to the public. “Why won’t he answer those questions,” the typical viewer asks. At this point, Americans are well beyond a willingness to decipher the hidden meanings between the lines. It simply looks like Gonzales is a slippery character, one they don’t particularly trust in the first place.

Here’s Why Gonzales Won’t Answer
Obviously Bush ordered the visit to get the signature. Card and Gonzales would have broken the first rule of the Bush White House, disloyalty to the boss. Is there anyone in America who has been awake for any of the past seven years who thinks that they would free lance, cross the boss?
Since Bush did order the visit, he’s part of a group action, also known as a conspiracy, to commit illegal acts. Those are outlined above and in the May 18th article. Participation in such an activity is clearly defined in federal code:
Section 371. Conspiracy to commit offense or to defraud United States If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both. 18USC371 U.S. Code as of: 01/19/04
Senator Charles Schumer’s questioning of Gonzales lays the groundwork for impeachment of the president based on the most odious crime imaginable, trying to take advantage of a sick man, a man recovering from surgery, a man whose wife has insisted that there be no visitors. It’s not only a “high crime,” it’s a heinous one as well.

http://www.scoop.co.nz/stories/HL0707/S00356.htm

... But this is the Anything Goes administration. Didn't you get that memo?

The Man Who Would Be King

Nov 2005, Republican Congressional leaders filed into the Oval Office to meet with President George W. Bush and talk about renewing the controversial USA Patriot Act. Several provisions of the act, passed in the shell shocked period immediately following the 9/11 terrorist attacks, caused enough anger that liberal groups like the American Civil Liberties Union had joined forces with prominent conservatives like Phyllis Schlafly and Bob Barr to oppose renewal. GOP leaders told Bush that his hardcore push to renew the more onerous provisions of the act could further alienate conservatives still mad at the President from his botched attempt to nominate White House Counsel Harriet Miers to the Supreme Court.

“I don’t give a goddamn,” Bush retorted. “I’m the President and the Commander-in-Chief. Do it my way.”

“Mr. President,” one aide in the meeting said. “There is a valid case that the provisions in this law undermine the Constitution.”

“Stop throwing the Constitution in my face!” Bush screamed back. “It’s just a goddamned piece of paper!”

... Of course the real issue here is NOT that Dubya was so scornful of the document he'd sworn (on a BIBLE no less!) to protect, it's that his supporters don't give a tinker's dam WHAT the Cretin in Chief says, ANYTHING goes!

... How's that working for ya?

The Ideological Animal
We think our political stance is the product of reason, but we're easily manipulated and surprisingly malleable. Our essential political self is more a stew of childhood temperament, education, and fear of death. Call it the 9/11 effect.

By:Jay Dixit

...

We tend to believe our political views have evolved by a process of rational thought, as we consider arguments, weigh evidence, and draw conclusions. But the truth is more complicated. Our political preferences are equally the result of factors we're not aware of—such as how educated we are, how scary the world seems at a given moment, and personality traits that are first apparent in early childhood. Among the most potent motivators, it turns out, is fear. How the United States should confront the threat of terrorism remains a subject of endless political debate. But Americans' response to threats of attack is now more clear-cut than ever. The fear of death alone is surprisingly effective in shaping our political decisions—more powerful, often, than thought itself.

Abstract Art vs. Talk Radio: The Political Personality Standoff

Most people are surprised to learn that there are real, stable differences in personality between conservatives and liberals—not just different views or values, but underlying differences in temperament.

Psychologists John Jost of New York University, Dana Carney of Harvard, and Sam Gosling of the University of Texas have demonstrated that conservatives and liberals boast markedly different home and office decor. Liberals are messier than conservatives, their rooms have more clutter and more color, and they tend to have more travel documents, maps of other countries, and flags from around the world. Conservatives are neater, and their rooms are cleaner, better organized, more brightly lit, and more conventional. Liberals have more books, and their books cover a greater variety of topics. And that's just a start. Multiple studies find that liberals are more optimistic. Conservatives are more likely to be religious. Liberals are more likely to like classical music and jazz, conservatives, country music. Liberals are more likely to enjoy abstract art. Conservative men are more likely than liberal men to prefer conventional forms of entertainment like TV and talk radio. Liberal men like romantic comedies more than conservative men. Liberal women are more likely than conservative women to enjoy books, poetry, writing in a diary, acting, and playing musical instruments.

"All people are born alike—except Republicans and Democrats," quipped Groucho Marx, and in fact it turns out that personality differences between liberals and conservatives are evident in early childhood. In 1969, Berkeley professors Jack and Jeanne Block embarked on a study of childhood personality, asking nursery school teachers to rate children's temperaments. They weren't even thinking about political orientation.

Twenty years later, they decided to compare the subjects' childhood personalities with their political preferences as adults. They found arresting patterns. As kids, liberals had developed close relationships with peers and were rated by their teachers as self-reliant, energetic, impulsive, and resilient. People who were conservative at age 23 had been described by their teachers as easily victimized, easily offended, indecisive, fearful, rigid, inhibited, and vulnerable at age 3. The reason for the difference, the Blocks hypothesized, was that insecure kids most needed the reassurance of tradition and authority, and they found it in conservative politics.

The most comprehensive review of personality and political orientation to date is a 2003 meta-analysis of 88 prior studies involving 22,000 participants. The researchers—John Jost of NYU, Arie Kruglanski of the University of Maryland, and Jack Glaser and Frank Sulloway of Berkeley—found that conservatives have a greater desire to reach a decision quickly and stick to it, and are higher on conscientiousness, which includes neatness, orderliness, duty, and rule-following. Liberals are higher on openness, which includes intellectual curiosity, excitement-seeking, novelty, creativity for its own sake, and a craving for stimulation like travel, color, art, music, and literature.

The study's authors also concluded that conservatives have less tolerance for ambiguity, a trait they say is exemplified when George Bush says things like, "Look, my job isn't to try to nuance. My job is to tell people what I think," and "I'm the decider." Those who think the world is highly dangerous and those with the greatest fear of death are the most likely to be conservative.

Liberals, on the other hand, are "more likely to see gray areas and reconcile seemingly conflicting information," says Jost. As a result, liberals like John Kerry, who see many sides to every issue, are portrayed as flip-floppers. "Whatever the cause, Bush and Kerry exemplify the cognitive styles we see in the research," says Jack Glaser, one of the study's authors, "Bush in appearing more rigid in his thinking and intolerant of uncertainty and ambiguity, and Kerry in appearing more open to ambiguity and to considering alternative positions."

Jost's meta-analysis sparked furious controversy. The House Republican Study Committee complained that the study's authors had received federal funds. George Will satirized it in his Washington Post column, and The National Review called it the "Conservatives Are Crazy" study. Jost and his colleagues point to the study's rigorous methodology. The study used political orientation as a dependent variable, meaning that where subjects fall on the political scale is computed from their own answers about whether they're liberal or conservative. Psychologists then compare factors such as fear of death and openness to new experiences, and seek statistically significant correlations. The findings are quintessentially empirical and difficult to dismiss as false.

Yet critics retort that the research draws negative conclusions about conservatives while the researchers themselves are liberal. And it's true that over the decades, a disproportionate amount of the research has focused on figuring out what's behind conservative behavior. Right shift is likewise more studied than left shift, largely because most of that research has been since 9/11, and aimed at trying to explain the conservative conversions of people like Cinnamon Stillwell.

Even with impeccable methodology, bias may creep into the choice of which phenomena to study. "There is a bias among social scientists," admits Glaser. "They look for the variables that are unflattering. There probably are other nice personality traits associated with conservatism, but they haven't shown up in the research because it's not as well studied."

"There are differences between liberals and conservatives, and people can value them however they like," Jost points out. "There is nothing inherently good or bad about being high or low on the need for closure or structure. Some may see religiosity as a positive, whereas others may see it more neutrally, and so on."

Red Shift

By 2004, as the presidential election drew near, researchers saw a chance to study the Jost results against the backdrop of unfolding events. Psychologists Mark Landau of the University of Arizona and Sheldon Solomon of Skidmore sought to explain how President Bush's approval rating went from around 51 percent before 9/11 to 90 percent immediately afterward. In one study, they exposed some participants to the letters WTC or the numbers 9/11 in an image flashed too quickly to register at the conscious level. They exposed other participants to familiar but random combinations of letters and numbers, such as area codes. Then they gave them words like coff__, sk_ll, and gr_ve, and asked them to fill in the blanks. People who'd seen random combinations were more likely to fill in coffee, skill, and grove. But people exposed to subliminal terrorism primes more often filled in coffin, skull, and grave. "The mere mention of September 11 or WTC is the same as reminding Americans of death," explains Solomon.

As a follow-up, Solomon primed one group of subjects to think about death, a state of mind called "mortality salience." A second group was primed to think about 9/11. And a third was induced to think about pain—something unpleasant but non-deadly. When people were in a benign state of mind, they tended to oppose Bush and his policies in Iraq. But after thinking about either death or 9/11, they tended to favor him. Such findings were further corroborated by Cornell sociologist Robert Willer, who found that whenever the color-coded terror alert level was raised, support for Bush increased significantly, not only on domestic security but also in unrelated domains, such as the economy.

University of Arizona psychologist Jeff Greenberg argues that some ideological shifts can be explained by terror management theory (TMT), which holds that heightened fear of death motivates people to defend their world views. TMT predicts that images like the destruction of the World Trade Center should make liberals more liberal and conservatives more conservative. "In the United States, political conservatism does seem to be the preferred ideology when people are feeling insecure," concedes Greenberg. "But in China or another communist country, reminding people of their own mortality would lead them to cling more tightly to communism."

Jost believes it's more complex. After all, Cinnamon Stillwell and others in the 911 Neocons didn't become more liberal. Like so many other Democrats after 9/11, they made a hard right turn. The reason thoughts of death make people more conservative, Jost says, is that they awaken a deep desire to see the world as fair and just, to believe that people get what they deserve, and to accept the existing social order as valid, rather than in need of change. When these natural desires are primed by thoughts of death and a barrage of mortal fear, people gravitate toward conservatism because it's more certain about the answers it provides—right vs. wrong, good vs. evil, us vs. them—and because conservative leaders are more likely to advocate a return to traditional values, allowing people to stick with what's familiar and known. "Conservatism is a more black and white ideology than liberalism," explains Jost. "It emphasizes tradition and authority, which are reassuring during periods of threat."

To test the theory, Jost prompted people to think about either pain—by looking at things like an ambulance, a dentist's chair, and a bee sting—or death, by looking at things like a funeral hearse, the grim reaper, and a dead-end sign. Across the political spectrum, people who had been primed to think about death were more conservative on issues like immigration, affirmative action, and same-sex marriage than those who had merely thought about pain, although the effect size was relatively small. The implication is clear: For liberals, conservatives, and independents alike, thinking about death actually makes people more conservative—at least temporarily.

Fear and Voting In America

Campaign strategists in both parties have never hesitated to use scare tactics. In 1964, a Lyndon Johnson commercial called "Daisy" juxtaposed footage of a little girl plucking a flower with footage of an atomic blast. In 1984, Ronald Reagan ran a spot that played on Cold War panic, in which the Soviet threat was symbolized by a grizzly lumbering across a stark landscape as a human heart pounds faster and faster and an off-screen voice warns, "There is a bear in the woods!" In 2004, Bush sparked furor for running a fear-mongering ad that used wolves gathering in the woods as symbols for terrorists plotting against America. And last fall, Congressional Republicans drew fire with an ad that featured bin Laden and other terrorists threatening Americans; over the sound of a ticking clock, a voice warned, "These are the stakes."

"At least some of the President's support is the result of constant and relentless reminders of death, some of which is just what's happening in the world, but much of which is carefully cultivated and calculated as an electoral strategy," says Solomon. "In politics these days, there's a dose of reason, and there's a dose of irrationality driven by psychological terror that may very well be swinging elections."

Solomon demonstrated that thinking about 9/11 made people go from preferring Kerry to preferring Bush. "Very subtle manipulations of psychological conditions profoundly affect political preferences," Solomon concludes. "In difficult moments, people don't want complex, nuanced, John Kerry-like waffling or sophisticated cogitation. They want somebody charismatic to step up and say, 'I know where our problem is and God has given me the clout to kick those people's asses.'"

Into The Blue

Studies show that people who study abroad become more liberal than those who stay home.

People who venture from the strictures of their limited social class are less likely to stereotype and more likely to embrace other cultures. Education goes hand-in-hand with tolerance, and often, the more the better:

Professors at major universities are more liberal than their counterparts at less acclaimed institutions. What travel and education have in common is that they make the differences between people seem less threatening. "You become less bothered by the idea that there is uncertainty in the world," explains Jost.

That's why the more educated people are, the more liberal they become—but only to a point. Once people begin pursuing certain types of graduate degrees, the curve flattens. Business students, for instance, become more conservative in their views toward minorities. As they become more established, doctors and lawyers tend to protect their economic interests by moving to the right. The findings demonstrate that conservative conversions are fueled not only by fear, but by other factors as well. And if the November election was any indicator, the pendulum that swung so forcefully to the right after 9/11 may be swinging back.

Tipping The Balance

Political conversions that are emotionally induced can be very subtle: A shift in support for a given issue or politician is not the same as a radical conversion or deep philosophical change. While views may be manipulated, the impact may or may not translate in the voting booth. Following 9/11, most lifelong liberals did not go through outright conversion or shift their preferred candidate. Yet many liberals who didn't become all-out conservatives found themselves nonetheless sympathizing more with conservative positions, craving the comfort of a strong leader, or feeling the need to punish or avenge. Many in the political center moved to the right, too. In aggregate, over an electorate of millions—a large proportion of whom were swing voters waiting to be swayed one way or the other—even a subtle shift was enough to tip the balance of the Presidential election, and the direction the country took for years. "Without 9/11 we would have a different president," says Solomon. "I would even say that the Osama bin Laden tape that was released the Thursday before the election was sufficient to swing the election. It was basically a giant mortality salience induction."

If we are so suggestible that thoughts of death make us uncomfortable defaming the American flag and cause us to sit farther away from foreigners, is there any way we can overcome our easily manipulated fears and become the informed and rational thinkers democracy demands?

To test this, Solomon and his colleagues prompted two groups to think about death and then give opinions about a pro-American author and an anti-American one. As expected, the group that thought about death was more pro-American than the other. But the second time, one group was asked to make gut-level decisions about the two authors, while the other group was asked to consider carefully and be as rational as possible. The results were astonishing. In the rational group, the effects of mortality salience were entirely eliminated. Asking people to be rational was enough to neutralize the effects of reminders of death. Preliminary research shows that reminding people that as human beings, the things we have in common eclipse our differences—what psychologists call a "common humanity prime"—has the same effect.

"People have two modes of thought," concludes Solomon. "There's the intuitive gut-level mode, which is what most of us are in most of the time. And then there's a rational analytic mode, which takes effort and attention."

The solution, then, is remarkably simple. The effects of psychological terror on political decision making can be eliminated just by asking people to think rationally. Simply reminding us to use our heads, it turns out, can be enough to make us do it.

This content is Copyright Sussex Publishers, LLC. 2006. This content is intended for personal use and may not be distributed or reproduced without the consent of Sussex Publishers, LLC. Please contact http://us.f606.mail.yahoo.com/ym/Compose?To=licensing@psychologytoday.com for more information.

Publication: Psychology Today Magazine
Publication Date: Jan/Feb 2007

... How's that working for ya?

politically charged Injustice Dept

Officials describe politically charged Justice Dept.

Why am I not a bit surprised?

(05-12) 04:00 PDT Washington -- Two years ago, Robin Ashton, a seasoned criminal prosecutor at the Department of Justice, learned from her boss that a promised promotion was no longer hers.
"You have a Monica problem," Ashton was told, according to several Justice Department officials. Referring to Monica Goodling, a 31-year-old, relatively inexperienced lawyer who had only recently arrived in the office, the boss added, "She believes you're a Democrat and doesn't feel you can be trusted."
Ashton's ouster -- she left the Executive Office for U.S. Attorneys for another Justice Department post two weeks later -- was a critical early step in a plan that would later culminate in the ouster of nine U.S. attorneys last year.
Goodling would soon be quizzing applicants for civil service jobs at Justice Department headquarters with questions that several U.S. attorneys said were inappropriate, such as who was their favorite president and Supreme Court justice. One department official said an applicant was even asked, "Have you ever cheated on your wife?"
Goodling also moved to block the hiring of prosecutors with resumes that suggested they might be Democrats, even though they were seeking posts that were supposed to be nonpartisan, according to two Justice officials.
And she helped maintain lists of all the U.S. attorneys that graded their loyalty to the Bush administration, including work on prior political campaigns, and noted if they were members of the Federalist Society, a conservative legal group.
By the time Goodling resigned in April -- after her role in the firing of the federal prosecutors became public and she had been promoted to the role of White House liaison -- she and other senior Justice officials had revamped personnel practices affecting employees from the top of the agency to the bottom.
The people who spoke about Goodling's role at the department, including eight current Justice Department lawyers and staff members, did so only on condition of anonymity for fear of retribution. Several of them added that they found her activities objectionable and damaging to the integrity of the department.
Goodling, who is under investigation by the agency's inspector general and ethics office, as well as by Congress, has declined to testify before a House panel, citing her Fifth Amendment privilege to avoid making self-incriminating statements. Her lawyer, John Dowd, declined on Friday to comment.
But a judge in U.S. District Court in Washington signed an order Friday to grant her limited immunity, which will allow House investigators to compel her to answer questions.
Justice Department officials declined to respond to questions about Goodling's actions and refused to allow some agency employees to speak with a reporter about them.
"Whether or not Ms. Goodling engaged in prohibited personnel practices is the subject of an ongoing investigation," a written statement said. "Given the ongoing nature of the investigation, we are unable to comment on the allegations."
Goodling, now 33, arrived at the agency at the start of the Bush administration after working as an opposition researcher for the Republican National Committee during the 2000 presidential campaign.
Her legal experience was limited; she had graduated in 1999 from Regent University School of Law, which was founded by the religious broadcaster Pat Robertson.
Deeply religious and politically conservative, Goodling seemed to believe that part of her job was to bring people with similar values into the Justice Department, several former colleagues said.
Goodling first worked in the Justice Department's press office and then for less than a year in the executive office, which oversees budgets, management and performance evaluations of U.S. attorneys. She then moved to the Attorney General's Office, where she became the White House liaison and collected a $133,000 annual salary, according to federal records.
Goodling's mandate over hiring expanded significantly in March 2006, when Attorney General Alberto Gonzales signed a confidential memorandum delegating to her and Kyle Sampson, his former chief of staff, the power to appoint or fire all department political appointees other than the U.S. attorneys. That included interim U.S. attorneys and heads of the divisions that handle civil rights, public corruption, environmental crimes and other matters.
At the same time, Goodling, Sampson and John Nowacki, another Regent University graduate, were helping prepare the final list of U.S. attorneys to be dismissed, according to e-mail messages released to congressional investigators. Goodling was also calling around the country trying to identify up-and-coming lawyers -- and good Republicans -- who could replace them, said one Justice Department official who received such a call.

Eric Lipton, New York TimesSaturday, May 12, 2007

7 French Lessons

Seven reasons to pay attention to the French election.
1. A woman running for president. Socialist standard-bearer Sigolene Royal made a plea to women voters to support her out of gender solidarity. They didn't. 52 percent of female voters cast their ballots for Mr. Sarkozy, compared with 48 percent for Ms. Royal. Hillary, are you paying attention?
2. The husband issue. Royal's long-time life-partner and father of her four children is the head of the French Socialist party. He's a hugely powerful politician. During the campaign, the couple publicly clashed on a number of important issues, undercutting her persona of being independent and self-directed. Bill, are you listening?
3. The return of the moderates. In the first round of elections, self-described centralist candidate Francois Bayrou came out of nowhere, almost winning a spot in the final round of voting. His hugely popular political campaign advocated a new era of politics based on unity and the middle-way: not too conservative, and not too socialist. In short, the politics of political consensus. Do American voters desire the same? John Edwards and Mike Huckabee are betting they do.
4. Wedge politics. After taking a thumping in the first round of elections, far-right ideologue Jean-Marie Le Pen called for his supporters to boycott the second round. The result? Voter turnout in the all-important second round was over 84%, the highest in decades. Does this signify an end to wedge politics? If so, goodbye Newt.
5. Immigration. This is a hot-button issue in France, maybe even bigger than it is in our country. Yet the most outspoken advocate of clamping down on immigration, Jean-Marie Le Pen, pulled down less than 10% of first round votes. Nicholas Sarkozy, an advocate of 'tough but fair' immigration reform, is now the elected president. Come 2008, where will the American people stand on this issue? Exile 12 million people or figure out a way to allow a reasonable level of immigration?
6. Social programs. The French have hugely generous and comprehensive social programs. They have a liberal welfare system, a compassionate retirement program and a fantastic socialized medical system. It's all very amazing. In fact, it's too good to be true. The costs of maintaining these programs is generating massive national debt. The French seem to be turning slightly away from Socialist-flavored, collectivist solutions and considering the benefits of more Anglo-Saxon type economic liberalism. In what direction will we choose to turn in 2008?
7. Foreign affairs. Immediately after winning the election, Nicholas Sarkozy had a special message for France's American friends. "I want to tell them that France will always be by their side when they need her, but that friendship is also accepting the fact that friends can think differently."
Does this mean we expect an earthshaking change in French-American relations? Sarkozy went on to criticize the United States for obstructing the fight against global warming which he said would be a high priority for his new government. That's not likely to play well in the Bush White House. And Sarkozy's position on Iraq? Don't bother to ask. Le plus ca change le plus ca le meme chose.

... How's that working for ya?

Useful Idiot

Like Powell & Gonzo...

(CNN) -- In a letter written Saturday to former CIA Director George Tenet, six former CIA officers described their former boss as "the Alberto Gonzales of the intelligence community," and called his book "an admission of failed leadership."

The writers said Tenet has "a moral obligation" to return the Medal of Freedom he received from President Bush.

They also called on him to give more than half the royalties he gets from book, "At the Center of the Storm," to U.S. soldiers wounded in Iraq and families of the dead. (Watch Sec. of State Condoleezza Rice talk about Tenet's book)

The letter, signed by Phil Giraldi, Ray McGovern, Larry Johnson, Jim Marcinkowski, Vince Cannistraro and David MacMichael, said Tenet should have resigned in protest rather than take part in the administration's buildup to the war. (Read the full letter)

Johnson is a former CIA intelligence official and registered Republican who voted for Bush in 2000. McGovern is a former CIA analyst.

Cannistraro is former head of the CIA's counterterrorism division and was head of intelligence for the National Security Council in the late 1980s.

The writers said they agree that Bush administration officials took the nation to war "for flimsy reasons," and that it has proved "ill-advised and wrong-headed."

But, they added, "your lament that you are a victim in a process you helped direct is self-serving, misleading and, as head of the intelligence community, an admission of failed leadership.


http://www.cnn.com/2007/US/04/29/tenet.letter/index.html
... How's that working for ya?

http://apnews.myway.com//article/20070426/D8OOC9OO0.html

[lax] Politics - World (context) Of course we're making a difference, but listen 2007-04-26 14:28:18 to the troop's commander: WASHINGTON (AP) - Gen. David Petraeus, the top U.S. commander in Iraq, said, "there is vastly more work to be done across the board. ... We are just getting started with the new effort." ... Asked how many troops he thought would have to remain in Iraq - and for how long - to finish the job, Petraeus said, "I wouldn't try to truly anticipate what level might be some years down the road." However, he noted historical precedents to long U.S. peacekeeping missions. "It is an endeavor that clearly is going to require enormous commitment and commitment over time, but beyond that time I don't want to get into try to postulate how many brigades or when we would start to do something," he said. "It is not a government of national unity. Rather, it is one comprised of political leaders from different parties that often default to narrow agendas and a zero-sum approach to legislation," the general said. ... Don't say you weren't warned.

[nyc] Politics - World (context) I love sentences that start with everyone should 2007-04-26 14:22:14 Remember: You can fool some of the people all of the time; You can fool all of the people some of the time; But you can't fool all the people all of the time. However, with sufficient help from the power elites, you CAN fool enough of the people enough of the time.

[sfo] Politics - World (context) Note the "we're just getting started" part 2007-04-26 12:54:17 after half a trillion dollars and 4 years of "mission accomplished", at last we're getting started. Finally! Whew! I thought this day would NEVER come!

[sfo] Politics - World (context) We might just win this war yet 2007-04-26 12:50:55 but God knows at what cost... WASHINGTON (AP) - Gen. David Petraeus, the top U.S. commander in Iraq, said Thursday that conditions in Iraq may get harder before they get easier and will require "an enormous commitment" over time by the United States. Speaking as the Senate debated veto-threatened legislation to start bringing home U.S. forces in October, Petraeus called the war there "the most complex and challenging I have ever seen." The four-star general, named by President Bush to oversee the recent buildup of American forces, cited some progress in the two months since the troop increase began. Still, he said, "there is vastly more work to be done across the board. ... We are just getting started with the new effort." ...his comments made it clear that his war plan did not include a significant reduction of U.S. forces anytime soon. "This effort may get harder before it gets easier," Petraeus told reporters at a Pentagon briefing, depicting the situation as "exceedingly complex and very tough." ... Asked how many troops he thought would have to remain in Iraq - and for how long - to finish the job, Petraeus said, "I wouldn't try to truly anticipate what level might be some years down the road." However, he noted historical precedents to long U.S. peacekeeping missions. "It is an endeavor that clearly is going to require enormous commitment and commitment over time, but beyond that time I don't want to get into try to postulate how many brigades or when we would start to do something," he said. Petraeus said matters were made worse by "exceedingly unhelpful activities by Iran and Syria, especially those by Iran." Petraeus also said that, while the fledgling Iraqi government is often billed as a unity government among Shiites, Sunnis and Kurds, it actually is not. "It is not a government of national unity. Rather, it is one comprised of political leaders from different parties that often default to narrow agendas and a zero-sum approach to legislation," the general said.

... How's that Stay & Pray strategy working for ya?

As Ohio goes, so goes the nation

The Cuyahoga County Board of Elections (BOE) third-ranking employee and an assistant manager were each convicted of a felony count of negligent misconduct and a misdemeanor count of failing to perform their duties during the 2004 recount. The convictions stemmed from the secret pre-counting of precincts prior to the lawfully required open recount. The convicted election workers only allowed the pre-counted precincts that matched the official results to be used in the recount. This caused the special prosecutor to tell the jury that the election recount was "rigged" in Cuyahoga.


Throughout the rest of the state, under the direction of Republican Secretary of State J. Kenneth Blackwell, mandatory random sampling was not done, as prescribed by law. Instead, poll workers illegally chose sample precincts for recounting where they knew there would be no problems, and then routinely recounted the rest of the ballots by machine, rendering the recount meaningless.

. ... and that's how the whole shebang came to such a sad end, chillun. Now off to bed!

http://www.freepress.org/departments/display/19/2007/2379
http://www.freepress.org/departments/display/19/2007/2462

Debt-market bomb : tick, tick, tick, baby.

Debt-market bomb could hurt us all

The greatest economic threat today isn't deflation in the housing market. A bigger worry is that a meltdown in the debt markets could force the global economy into a credit squeeze and recession.

By Jim Jubak

File this under strange but true: Insurance encourages risk-taking behavior, and ultimately, it increases the size of a disaster when it finally strikes.

That is bad news, really bad news, for the debt markets. So bad, in fact, that if you're worried about a financial-market meltdown, you should be watching the debt markets and not the stock market.

The problem is what I call the insurance effect. Make it possible for homeowners to get flood insurance, and more people will build in flood-prone areas. Sell hurricane insurance, and more people build in areas at risk of getting hit by a hurricane.

The result is logical, if perverse. The insurance policies haven't reduced the risk of floods or hurricanes, but they have shifted part of the risk from the homeowner to the insurance company. The homeowner with insurance, as a result, has less financial motivation to avoid the risk of floods or hurricanes.

Increasingly risky business

Investors aren't any different. For example, look at the buyers of mortgages, securities based on pools of mortgages, corporate loans, and corporate and government bonds. If you offer them insurance against the risk that a borrower will default on paying what's owed, those investors will be more comfortable buying riskier debt from borrowers more likely to default. Why not? Part of the risk has been passed along to those who sell the insurance. In the debt market that insurance goes by names such as "credit default swaps" and "collateralized debt obligation."

When the inevitable flood or storm or debt-market meltdown does finally take place, of course, since there are more homes in the flood plain, more buildings in the hurricane zone, more shaky credits in portfolios, the size and cost of the disaster is much larger. In fact, if the flood, hurricane or market meltdown is big enough, the costs of the disaster can overwhelm the ability of insurance providers to pay. The availability of insurance has created a feeling of safety that has encouraged so much risk-taking behavior that the insurance safety net itself can fail, leaving homeowners or investors fully exposed to the risks of their behavior.

I think that's where we are in the debt markets right now. The financial engineers of Wall Street have promised that the sophisticated financial instruments they've invented make it safe to buy riskier types of debt. The result has been a predictably large increase in risk-taking behavior.

Certainty and vulnerability

All this has left the debt markets vulnerable to a storm -- an economic slowdown -- big enough to test Wall Street's promise. I think it's almost certain that these insurance instruments will fail the test. The biggest risk in the financial markets today isn't that a deflating housing market will trigger a stock-market bust but that the huge expansion of risk-taking -- of which the problems in the market for the riskiest of home mortgages is just one part -- will overwhelm the debt markets, creating a quick reduction in the amount of money available to borrow and forcing the global economy into a credit squeeze and recession.

You can better grasp how the financial markets have gotten themselves -- and us -- into this fix by understanding exactly why investors in the various shapes and sizes of debt were so eager to believe Wall Street's promises. Interest rates around the globe are low, extremely low, in historical terms. That's great for borrowers and has fueled economic booms that stretch from Beijing to New York City to Bangalore to Ho Chi Minh City. But it's not so great for investors in debt. When 10-year U.S. Treasury bonds are yielding just 4.7% -- that's about 2% to 2.5% after inflation -- investors are constantly scouring the globe for better returns.

Piling on the risk

Traditional wisdom says that there's no free lunch, however. To get higher yields, you have to take on more risk. For example:

• Buying bundles of mortgages held by homeowners with shaky credit ratings will net you an extra 2 to 3 percentage points over the yield of mortgages for the most creditworthy homebuyers.

• Buying the newly issued bonds of financially challenged telecom Level 3 Communications (LVLT, news, msgs) yield 8.75% versus the yield of 5.57% you'll get by buying the AAA-rated bonds of the GE Capital, the financial arm of General Electric (GE, news, msgs).

• Buying 10-year Peruvian government bonds, yielding 5.88%, will give you a small edge over 10-year German bonds yielding 4.07%.
  

Each of these attempts to get a higher yield or to leverage the return on your investment carries enough risk to make a debt investor hesitate before pulling the trigger. About 10% of subprime mortgages are now delinquent by 90 days, according to investment bank Friedman, Billings, Ramsey (FBR, news, msgs).

That's above the peak in the 2000-01 economic downturn. Level 3 has narrowly skirted bankruptcy in the past. And Peru, well, it's not exactly a model of economic stability.

Packaging to appeal to investors

This is where Wall Street steps in to whisper, "Have I got a deal for you." By bundling risky credits together, Wall Street can create a pool of debt that is more diversified and therefore less likely to go into default than the debt of any single issuer. Then, by slicing that bundle into different pieces, called tranches, Wall Street can spread the risk around, so that investors less inclined to take on risk can get still receive a higher yield but without taking on the full risk of the total bundle of debt.

According to Satyajit Das' book "Traders, Guns & Money," it might work like this: A bank makes $1 billion in loans and then sells the risk -- but not the loans -- in the form of a derivative, a synthetic asset derived from the original loans, to what's called a "special-purpose vehicle," a kind of minibank. That minibank, in return for a fee, guarantees to insure the bank from any losses on those loans. The special-purpose vehicle then sells senior bonds, mezzanine bonds and stock -- backed by the synthetic asset purchased from the bank -- to investors who receive both interest and risk.

In the original pool of loans, risk and reward were spread evenly throughout the pool, but the derivative slices and dices risk and reward. Senior bond investors get paid first, for example, while the stock investors take the first losses, and mezzanine investors get hit if the losses exceed the investment by stock investors. Returns are allocated in proportion to risk with stock investors getting a higher return for their higher exposure and senior bondholders getting a lower return because they own a safer "investment."

Investors flock to the market

This structure allows Wall Street to manufacture a steady supply of AAA-rated credits at a time when few countries or companies earn this top rating for safety. Because the senior bonds have been shielded from risk by the equity and mezzanine tranches, these bonds have a good chance of earning the AAA rating -- the highest ranking -- even if the original loans were to much less creditworthy individuals, companies or countries.

Yield-hungry but risk-averse investors have flocked to the market encouraged by financial engineering like this. Total issuance of collateralized debt obligations, or CDOs, a major type of derivative used in the kind of risk reduction that I've described above, came to $503 billion globally in 2006, up $64 billion in 2005, according to JPMorgan Chase. Add in private CDO deals and CDOs based on one index or another, and the figure climbs to $2.8 trillion in 2006, estimates the Financial Times, three times the issuance in 2005.

Fallout in debt markets

Two peculiar things have happened to the debt markets as the amount of money flowing into risk-controlled synthetic debt has zoomed.

First, the credit rating on actual debt has continued to decline. Almost 16% of the junk bonds on the U.S. market were rated CCC -- that's the grade reserved for bonds with the highest risk of default -- at the end of 2006, up from 13.5% at the end of 2005, according to Merrill Lynch. But, of course, since you can manufacture an AAA rating out of a CCC by pooling and then slicing the risk, it really doesn't matter right?

Second, the premium for taking on more risk has shrunk. Consider this telling example: Level 3 Communications, which still has a junk-bond rating, was able to raise money recently at 8.75% to refinance its previous generation of junk bonds, which had paid a coupon yield of 11% to 12.875%.

Much of the decline in risk premium is a result of confidence that this new generation of synthetic debt instruments has reduced risk in the debt markets, especially for the riskiest credits. There is good reason to believe that confidence is misplaced.

Setting up for a major bust

We've been here before. Every time the economy has turned in a long run of good times, defaults on mortgages and loans drop to exceedingly low levels. Lenders almost always become convinced that this isn't a result of the business and credit cycle -- good times -- but of some improvement in the way that lenders manage risk. The belief that it's different this time always leads to an expansion of lending and a relaxation of lending standards that sets up the debt markets for a major bust when the economy turns. As it always does.

For example, when the economy went into a slump in 2000-01, the CDO market hit the wall, generating huge losses. Defaults wiped out equity and mezzanine tranches, and then, because the senior bonds were now exposed to losses, they received credit-rating downgrades that sent the price of these bonds tumbling.

Worse shape this time around

But because of the insurance effect -- remember, an ability to buy insurance, even if it's ineffective, increases risking-taking behavior -- we're in much worse shape this time. Going into the 1990 recession, most-likely-to-fail CCC-rated companies made up just 2% of the junk-bond market, says Martin Fridson, the publisher of Leverage World and formerly Merrill Lynch's junk-bond guru. In February 2007, the figure is 17%.

On these numbers, the debt markets are just one recession away from disaster. So much, it seems, hinges on the Federal Reserve's ability to get the economy just right.

http://articles.moneycentral.msn.com/Investing/JubaksJournal/DebtMarketBombCouldHurtUsAll.aspx

... How's that working for ya?

"Only you, Mr. President"

Bush's legacy: The president who cried wolf
Olbermann: Bush's strategy fails because it depends on his credibility
SPECIAL COMMENT
By Keith Olbermann
Anchor, 'Countdown'
Updated: 7:05 p.m. PT Jan 11, 2007

Only this president, only in this time, only with this dangerous, even messianic certitude, could answer a country demanding an exit strategy from Iraq, by offering an entrance strategy for Iran.

Only this president could look out over a vista of 3,008 dead and 22,834 wounded in Iraq, and finally say, “Where mistakes have been made, the responsibility rests with me” — only to follow that by proposing to repeat the identical mistake ... in Iran.

Only this president could extol the “thoughtful recommendations of the Iraq Study Group,” and then take its most far-sighted recommendation — “engage Syria and Iran” — and transform it into “threaten Syria and Iran” — when al-Qaida would like nothing better than for us to threaten Syria, and when Iranian President Mahmoud Ahmadinejad would like nothing better than to be threatened by us.

This is diplomacy by skimming; it is internationalism by drawing pictures of Superman in the margins of the text books; it is a presidency of Cliff Notes.

And to Iran and Syria — and, yes, also to the insurgents in Iraq — we must look like a country run by the equivalent of the drunken pest who gets battered to the floor of the saloon by one punch, then staggers to his feet, and shouts at the other guy’s friends, “Ok, which one of you is next?”


Mr. Bush, the question is no longer “what are you thinking?,” but rather “are you thinking at all?”

“I have made it clear to the prime minister and Iraq’s other leaders that America’s commitment is not open-ended,” you said last night.

And yet — without any authorization from the public, which spoke so loudly and clearly to you in November’s elections — without any consultation with a Congress (in which key members of your own party, including Sens. Sam Brownback, Norm Coleman and Chuck Hagel, are fleeing for higher ground) — without any awareness that you are doing exactly the opposite of what Baker-Hamilton urged you to do — you seem to be ready to make an open-ended commitment (on America’s behalf) to do whatever you want, in Iran.

Our military, Mr. Bush, is already stretched so thin by this bogus adventure in Iraq that even a majority of serving personnel are willing to tell pollsters that they are dissatisfied with your prosecution of the war.

It is so weary that many of the troops you have just consigned to Iraq will be on their second tours or their third tours or their fourth tours — and now you’re going to make them take on Iran and Syria as well?



Who is left to go and fight, sir?

Who are you going to send to “interrupt the flow of support from Iran and Syria”?

Laura and Barney?

The line is from the movie “Chinatown” and I quote it often: “Middle of a drought,” the mortician chuckles, “and the water commissioner drowns. Only in L.A.!”

Middle of a debate over the lives and deaths of another 21,500 of our citizens in Iraq, and the president wants to saddle up against Iran and Syria.

Maybe that’s the point — to shift the attention away from just how absurd and childish this latest war strategy is, (strategy, that is, for the war already under way, and not the one on deck).

We are going to put 17,500 more troops into Baghdad and 4,000 more into Anbar Province to give the Iraqi government “breathing space.”

In and of itself that is an awful and insulting term.

The lives of 21,500 more Americans endangered, to give “breathing space” to a government that just turned the first and perhaps the most sober act of any democracy — the capital punishment of an ousted dictator — into a vengeance lynching so barbaric and so lacking in the solemnities necessary for credible authority, that it might have offended the Ku Klux Klan of the 19th century.

And what will our men and women in Iraq do?

The ones who will truly live — and die — during what Mr. Bush said last night will be a “year ahead” that “will demand more patience, sacrifice, and resolve”?

They will try to seal Sadr City and other parts of Baghdad where the civil war is worst.

Mr. Bush did not mention that while our people are trying to do that, the factions in the civil war will no longer have to focus on killing each other, but rather they can focus anew on killing our people.

Because last night the president foolishly all but announced that we will be sending these 21,500 poor souls, but no more after that, and if the whole thing fizzles out, we’re going home.


The plan fails militarily.

The plan fails symbolically.

The plan fails politically.

Most importantly, perhaps, Mr. Bush, the plan fails because it still depends on your credibility.

You speak of mistakes and of the responsibility “resting” with you.

But you do not admit to making those mistakes.

And you offer us nothing to justify this clenched fist toward Iran and Syria.

In fact, when you briefed news correspondents off-the-record before the speech, they were told, once again, “if you knew what we knew … if you saw what we saw … ”

“If you knew what we knew” was how we got into this morass in Iraq in the first place.

The problem arose when it turned out that the question wasn’t whether we knew what you knew, but whether you knew what you knew.

You, sir, have become the president who cried wolf.

All that you say about Iraq now could be gospel.

All that you say about Iran and Syria now could be prescient and essential.

We no longer have a clue, sir.

We have heard too many stories.

Many of us are as inclined to believe you just shuffled the director of national intelligence over to the State Department because he thought you were wrong about Iran.

Many of us are as inclined to believe you just put a pilot in charge of ground wars in Iraq and Afghanistan because he would be truly useful in an air war next door in Iran.

Your assurances, sir, and your demands that we trust you, have lost all shape and texture.

They are now merely fertilizer for conspiracy theories.

They are now fertilizer, indeed.

The pile has been built slowly and with seeming care.

I read this list last night, before the president’s speech, and it bears repeating because its shape and texture are perceptible only in such a context.

Before Mr. Bush was elected, he said nation-building was wrong for America.

Now he says it is vital.

He said he would never put U.S. troops under foreign control.

Last night he promised to embed them in Iraqi units.

He told us about WMD.

Mobile labs.

Secret sources.

Aluminum tubes.

Yellow-cake.


He has told us the war is necessary:

Because Saddam was a material threat.

Because of 9/11.

Because of Osama Bin Laden. Al-Qaida. Terrorism in general.

To liberate Iraq. To spread freedom. To spread Democracy. To prevent terrorism by gas price increases.

Because this was a guy who tried to kill his dad.

Because — 439 words in to the speech last night — he trotted out 9/11 again.

In advocating and prosecuting this war he passed on a chance to get Abu Musab Al-Zarqawi.

To get Muqtada Al-Sadr. To get Bin Laden.

He sent in fewer troops than the generals told him to. He ordered the Iraqi army disbanded and the Iraqi government “de-Baathified.”

He short-changed Iraqi training. He neglected to plan for widespread looting. He did not anticipate sectarian violence.

He sent in troops without life-saving equipment. He gave jobs to foreign contractors, and not Iraqis. He staffed U.S. positions there, based on partisanship, not professionalism.

He and his government told us: America had prevailed, mission accomplished, the resistance was in its last throes.

He has insisted more troops were not necessary. He has now insisted more troops are necessary.

He has insisted it’s up to the generals, and then removed some of the generals who said more troops would not be necessary.

He has trumpeted the turning points:

The fall of Baghdad, the death of Uday and Qusay, the capture of Saddam. A provisional government, a charter, a constitution, the trial of Saddam. Elections, purple fingers, another government, the death of Saddam.

He has assured us: We would be greeted as liberators — with flowers;

As they stood up, we would stand down. We would stay the course; we were never about “stay the course.”

We would never have to go door-to-door in Baghdad. And, last night, that to gain Iraqis’ trust, we would go door-to-door in Baghdad.

He told us the enemy was al-Qaida, foreign fighters, terrorists, Baathists, and now Iran and Syria.

He told us the war would pay for itself. It would cost $1.7 billion. $100 billion. $400 billion. Half a trillion. Last night’s speech alone cost another $6 billion.

And after all of that, now it is his credibility versus that of generals, diplomats, allies, Democrats, Republicans, the Iraq Study Group, past presidents, voters last November and the majority of the American people.

Oh, and one more to add, tonight: Oceania has always been at war with East Asia.

Mr. Bush, this is madness.

You have lost the military. You have lost the Congress to the Democrats. You have lost most of the Iraqis. You have lost many of the Republicans. You have lost our allies.

You are losing the credibility, not just of your presidency, but more importantly of the office itself.

And most imperatively, you are guaranteeing that more American troops will be losing their lives, and more families their loved ones. You are guaranteeing it!

This becomes your legacy, sir: How many of those you addressed last night as your “fellow citizens” you just sent to their deaths.

And for what, Mr. Bush?

So the next president has to pull the survivors out of Iraq instead of you?

© 2007 MSNBC Interactive
URL: http://www.msnbc.msn.com/id/16583889/



... How's that working for ya?

Islamophobia isn't pretty

WASHINGTON - A Muslim group is asking Virginia Republican Rep. Virgil Goode Jr. to apologize after he told hundreds of his constituents that more Muslims will follow Rep.-elect Keith Ellison, D-Minn., to Congress if strict immigration laws aren't passed.

"The Muslim representative from Minnesota was elected by the voters of that district and if American citizens don't wake up and adopt the Virgil Goode position on immigration there will likely be many more Muslims elected to office and demanding the use of the Koran," Goode wrote.

The letter was written to constituents who contacted Goode after Ellison said he planned to bring his Quran, the Muslim holy book, with him when he takes the oath of office on Jan. 4.

In his letter, Goode said: "When I raise my hand to take the oath on Swearing In Day, I will have the Bible in my other hand. I do not subscribe to using the Koran in any way."

Goode, an attorney and former state senator who was first elected to Congress in 1996, said he wants to "stop illegal immigration totally and reduce legal immigration and end the diversity visas policy pushed hard by President Clinton and allowing many persons from the Middle East to come to this country."

"I fear that in the next century we will have many more Muslims in the United States if we do not adopt the strict immigration policies that I believe are necessary to preserve the values and beliefs traditional to the United States of America and to prevent our resources from being swamped," Goode wrote.

Newsweek-WorldTop100Univ-2006

We evaluated schools on some of the measures used in well-known rankings published by Shanghai Jiaotong University and the Times of London Higher Education Survey. Fifty percent of the score came from equal parts of three measures used by Shanghai Jiatong: the number of highly-cited researchers in various academic fields, the number of articles published in Nature and Science, and the number of articles listed in the ISI Social Sciences and Arts & Humanities indices. Another 40 percent of the score came from equal parts of four measures used by the Times: the percentage of international faculty, the percentage of international students, citations per faculty member (using ISI data), and the ratio of faculty to students. The final 10 percent came from library holdings (number of volumes).

Here is our ranking:

1. Harvard University
2. Stanford University
3. Yale University
4. California Institute of Technology
5. University of California at Berkeley
6. University of Cambridge
7. Massachusetts Institute Technology
8. Oxford University
9. University of California at San Francisco
10. Columbia University
11. University of Michigan at Ann Arbor
12. University of California at Los Angeles
13. University of Pennsylvania
14. Duke University
15. Princeton Universitty
16. Tokyo University
17. Imperial College London
18. University of Toronto
19. Cornell University
20. University of Chicago
21. Swiss Federal Institute of Technology in Zurich
22. University of Washington at Seattle
23. University of California at San Diego
24. Johns Hopkins University
25. University College London
26. Swiss Federal Institute of Technology in Lausanne
27. University Texas at Austin
28. University of Wisconsin at Madison
29. Kyoto University
30. University of Minnesota Twin Cities
31. University of British Columbia
32. University of Geneva
33. Washington University in St. Louis
34. London School of Economics
35. Northwestern University
36. National University of Singapore
37. University of Pittsburgh
38. Australian National University
39. New York University
40. Pennsylvania State University
41. University of North Carolina at Chapel Hill
42. McGill University
43. Ecole Polytechnique
44. University of Basel
45. University of Maryland
46. University of Zurich
47. University of Edinburgh
48. University of Illinois at Urbana Champaign
49. University of Bristol
50. University of Sydney
51. University of Colorado at Boulder
52. Utrecht University
53. University of Melbourne
54. University of Southern California
55. University of Alberta
56. Brown University
57. Osaka University
58. University of Manchester
59. University of California at Santa Barbara
60. Hong Kong University of Science and Technology
61. Wageningen University
62. Michigan State University
63. University of Munich
64. University of New South Wales
65. Boston University
66. Vanderbilt University
67. University of Rochester
68. Tohoku University
69. University of Hong Kong
70. University of Sheffield
71. Nanyang Technological University
72. University of Vienna
73. Monash University
74. University of Nottingham
75. Carnegie Mellon University
76. Lund University
77. Texas A&M University
78. University of Western Australia
79. Ecole Normale Super Paris
80. University of Virginia
81. Technical University of Munich
82. Hebrew University of Jerusalem
83. Leiden University
84. University of Waterloo
85. King's College London
86. Purdue University
87. University of Birmingham
88. Uppsala University
89. University of Amsterdam
90. University of Heidelberg
91. University of Queensland
92. University of Leuven
93. Emory University
94. Nagoya University
95. Case Western Reserve University
96. Chinese University of Hong Kong
97. University of Newcastle
98. Innsbruck University
99. University of Massachusetts at Amherst
100. Sussex University


http://www.msnbc.msn.com/id/14321230/site/newsweek/

Liberal Pledge

To:  Conservatives and Republicans

I, and my fellow signatories, hereby make these promises to you:



1. We will always respect you for your conservative beliefs. We will never,
ever, call you "unpatriotic" simply because you disagree with us. In fact,
we encourage you to dissent and disagree with us.



2. We will let you marry whomever you want, even when some of us consider
your behavior to be "different" or "immoral." Who you marry is none of our
business. Love and be in love -- it's a wonderful gift.



3. We will not spend your grandchildren's money on our personal whims or to
enrich our friends. It's your checkbook, too, and we will balance it for
you.



4. When we soon bring our sons and daughters home from Iraq, we will bring
your sons and daughters home, too. They deserve to live. We promise
never to send your kids off to war based on either a mistake or a lie.



5. When we make America the last Western democracy to have universal health
coverage, and all Americans are able to get help when they fall ill, we
promise that you, too, will be able to see a doctor, regardless of your
ability to pay. And when stem cell research delivers treatments and cures
for diseases that affect you and your loved ones, we'll make sure those
advances are available to you and your family, too.



6. Even though you have opposed environmental regulation, when we clean up
our air and water, we, the Democratic majority, will let you, too, breathe
the cleaner air and drink the purer water.



7. Should a mass murderer ever kill 3,000 people on our soil, we will devote
every single resource to tracking him down and bringing him to justice.
Immediately. We will protect you.



8. We will never stick our nose in your bedroom or your womb. What you do
there as consenting adults is your business. We will continue to count your
age from the moment you were born, not the moment you were conceived.



9. We will not take away your hunting guns. If you need an automatic weapon
or a handgun to kill a bird or a deer, then you really aren't much of a
hunter and you should, perhaps, pick up another sport. We will make our
streets and schools as free as we can from these weapons and we will protect
your children just as we would protect ours.



10. When we raise the minimum wage, we will pay you -- and your employees --
that new wage, too. When women are finally paid what men make, we will pay
conservative women that wage, too.



11. We will respect your religious beliefs, even when you don't put those
beliefs into practice. In fact, we will actively seek to promote your most
radical religious beliefs ("Blessed are the poor," "Blessed are the
peacemakers," "Love your enemies," "It is easier for a camel to go through
the eye of a needle than for a rich man to enter the kingdom of God," and
"Whatever you did for one of the least of these brothers of mine, you did
for me."). We will let people in other countries know that God doesn't just
bless America, he blesses everyone. We will discourage religious intolerance
and fanaticism -- starting with the fanaticism here at home, thus setting a
good example for the rest of the world.



12. We will not tolerate politicians who are corrupt and who are bought and
paid for by the rich. We will go after any elected leader who puts him or
herself ahead of the people. And we promise you we will go after the corrupt
politicians on our side FIRST. If we fail to do this, we need you to call us
on it. Simply because we are in power does not give us the right to turn our
heads the other way when our party goes astray. Please perform this
important duty as the loyal opposition.



I promise all of the above to you because this is your country, too. You are
every bit as American as we are. We are all in this together. We sink or
swim as one. Thank you for your years of service to this country and for
giving us the opportunity to see if we can make things a bit better for our
300 million fellow Americans -- and for the rest of the world.

Financial Times Business News: Harvard study paints bleak picture of ethnic diversity - MSN Money

Financial Times Business News: Harvard study paints bleak picture of ethnic diversity - MSN Money: "Harvard study paints bleak picture of ethnic diversity

A bleak picture of the corrosive effects of ethnic diversity has been revealed in research by Harvard University's Robert Putnam, one of the world's most influential political scientists.
His research shows that the more diverse a community is, the less likely its inhabitants are to trust anyone -- from their next-door neighbour to the mayor.

This is a contentious finding in the current climate of concern about the benefits of immigration. Professor Putnam told the Financial Times he had delayed publishing his research until he could develop proposals to compensate for the negative effects of diversity, saying it 'would have been irresponsible to publish without that'.

The core message of the research was that, 'in the presence of diversity, we hunker down', he said. 'We act like turtles. The effect of diversity is worse than had been imagined. And it's not just that we don't trust people who are not like us. In diverse communities, we don't trust people who do look like us.'

Prof Putnam found trust was lowest in Los Angeles, 'the most diverse human habitation in human history', but his findings also held for rural South Dakota, where "diversity means inviting Swedes to a Norwegians' picnic".

When the data were adjusted for class, income and other factors, they showed that the more people of different races lived in the same community, the greater the loss of trust. "They don't trust the local mayor, they don't trust the local paper, they don't trust other people and they don't trust institutions," said Prof Putnam. "The only thing there's more of is protest marches and TV watching."

British Home Office research has pointed in the same direction and Prof Putnam, now working with social scientists at Manchester University, said other European countries would be likely to have similar trends.

His 2000 book, Bowling Alone, on the increasing atomisation of contemporary society, made him an academic celebrity. Though some scholars questioned how well its findings applied outside the US, policymakers were impressed and he was invited to speak at Camp David, Downing Street and Buckingham Palace.

Prof Putnam stressed, however, that immigration materially benefited both the "importing" and "exporting" societies, and that trends "have been socially constructed, and can be socially reconstructed".

In an oblique criticism of Jack Straw, leader of the House of Commons, who revealed last week he prefers Muslim women not to wear a full veil, Prof Putnam said: "What we shouldn't do is to say that they [immigrants] should be more like us. We should construct a new us."

Copyright 2006 Financial Times

Sam Harris Blasts Head-in-the-Sand Liberals

http://www.latimes.com/news/opinion/la-oe-harris18sep18,0,1897169.story?coll=la-opinion-rightrail

Head-in-the-Sand Liberals
Western civilization really is at risk from Muslim extremists.
By Sam Harris
SAM HARRIS is the author of "The End of Faith: Religion, Terror and the Future of Reason." His next book, "Letter to a Christian Nation," will be published this week by Knopf. samharris.org.

September 18, 2006

TWO YEARS AGO I published a book highly critical of religion, "The End of Faith." In it, I argued that the world's major religions are genuinely incompatible, inevitably cause conflict and now prevent the emergence of a viable, global civilization. In response, I have received many thousands of letters and e-mails from priests, journalists, scientists, politicians, soldiers, rabbis, actors, aid workers, students — from people young and old who occupy every point on the spectrum of belief and nonbelief.

This has offered me a special opportunity to see how people of all creeds and political persuasions react when religion is criticized. I am here to report that liberals and conservatives respond very differently to the notion that religion can be a direct cause of human conflict.

This difference does not bode well for the future of liberalism.

Perhaps I should establish my liberal bone fides at the outset. I'd like to see taxes raised on the wealthy, drugs decriminalized and homosexuals free to marry. I also think that the Bush administration deserves most of the criticism it has received in the last six years — especially with respect to its waging of the war in Iraq, its scuttling of science and its fiscal irresponsibility.

But my correspondence with liberals has convinced me that liberalism has grown dangerously out of touch with the realities of our world — specifically with what devout Muslims actually believe about the West, about paradise and about the ultimate ascendance of their faith.

On questions of national security, I am now as wary of my fellow liberals as I am of the religious demagogues on the Christian right.

This may seem like frank acquiescence to the charge that "liberals are soft on terrorism." It is, and they are.

A cult of death is forming in the Muslim world — for reasons that are perfectly explicable in terms of the Islamic doctrines of martyrdom and jihad. The truth is that we are not fighting a "war on terror." We are fighting a pestilential theology and a longing for paradise.

This is not to say that we are at war with all Muslims. But we are absolutely at war with those who believe that death in defense of the faith is the highest possible good, that cartoonists should be killed for caricaturing the prophet and that any Muslim who loses his faith should be butchered for apostasy.

Unfortunately, such religious extremism is not as fringe a phenomenon as we might hope. Numerous studies have found that the most radicalized Muslims tend to have better-than-average educations and economic opportunities.

Given the degree to which religious ideas are still sheltered from criticism in every society, it is actually possible for a person to have the economic and intellectual resources to build a nuclear bomb — and to believe that he will get 72 virgins in paradise. And yet, despite abundant evidence to the contrary, liberals continue to imagine that Muslim terrorism springs from economic despair, lack of education and American militarism.

At its most extreme, liberal denial has found expression in a growing subculture of conspiracy theorists who believe that the atrocities of 9/11 were orchestrated by our own government. A nationwide poll conducted by the Scripps Survey Research Center at Ohio University found that more than a third of Americans suspect that the federal government "assisted in the 9/11 terrorist attacks or took no action to stop them so the United States could go to war in the Middle East;" 16% believe that the twin towers collapsed not because fully-fueled passenger jets smashed into them but because agents of the Bush administration had secretly rigged them to explode.

Such an astonishing eruption of masochistic unreason could well mark the decline of liberalism, if not the decline of Western civilization. There are books, films and conferences organized around this phantasmagoria, and they offer an unusually clear view of the debilitating dogma that lurks at the heart of liberalism: Western power is utterly malevolent, while the powerless people of the Earth can be counted on to embrace reason and tolerance, if only given sufficient economic opportunities.

I don't know how many more engineers and architects need to blow themselves up, fly planes into buildings or saw the heads off of journalists before this fantasy will dissipate. The truth is that there is every reason to believe that a terrifying number of the world's Muslims now view all political and moral questions in terms of their affiliation with Islam. This leads them to rally to the cause of other Muslims no matter how sociopathic their behavior. This benighted religious solidarity may be the greatest problem facing civilization and yet it is regularly misconstrued, ignored or obfuscated by liberals.

Given the mendacity and shocking incompetence of the Bush administration — especially its mishandling of the war in Iraq — liberals can find much to lament in the conservative approach to fighting the war on terror. Unfortunately, liberals hate the current administration with such fury that they regularly fail to acknowledge just how dangerous and depraved our enemies in the Muslim world are.

Recent condemnations of the Bush administration's use of the phrase "Islamic fascism" are a case in point. There is no question that the phrase is imprecise — Islamists are not technically fascists, and the term ignores a variety of schisms that exist even among Islamists — but it is by no means an example of wartime propaganda, as has been repeatedly alleged by liberals.

In their analyses of U.S. and Israeli foreign policy, liberals can be relied on to overlook the most basic moral distinctions. For instance, they ignore the fact that Muslims intentionally murder noncombatants, while we and the Israelis (as a rule) seek to avoid doing so. Muslims routinely use human shields, and this accounts for much of the collateral damage we and the Israelis cause; the political discourse throughout much of the Muslim world, especially with respect to Jews, is explicitly and unabashedly genocidal.

Given these distinctions, there is no question that the Israelis now hold the moral high ground in their conflict with Hamas and Hezbollah. And yet liberals in the United States and Europe often speak as though the truth were otherwise.

We are entering an age of unchecked nuclear proliferation and, it seems likely, nuclear terrorism. There is, therefore, no future in which aspiring martyrs will make good neighbors for us. Unless liberals realize that there are tens of millions of people in the Muslim world who are far scarier than Dick Cheney, they will be unable to protect civilization from its genuine enemies.

Increasingly, Americans will come to believe that the only people hard-headed enough to fight the religious lunatics of the Muslim world are the religious lunatics of the West. Indeed, it is telling that the people who speak with the greatest moral clarity about the current wars in the Middle East are members of the Christian right, whose infatuation with biblical prophecy is nearly as troubling as the ideology of our enemies. Religious dogmatism is now playing both sides of the board in a very dangerous game.

While liberals should be the ones pointing the way beyond this Iron Age madness, they are rendering themselves increasingly irrelevant. Being generally reasonable and tolerant of diversity, liberals should be especially sensitive to the dangers of religious literalism. But they aren't.

The same failure of liberalism is evident in Western Europe, where the dogma of multiculturalism has left a secular Europe very slow to address the looming problem of religious extremism among its immigrants. The people who speak most sensibly about the threat that Islam poses to Europe are actually fascists.

To say that this does not bode well for liberalism is an understatement: It does not bode well for the future of civilization.

Amazing how subsequent events have colored their view of history...



OTTAWA -- Half of Canadians blame American foreign policy for the Sept. 11, 2001, terrorist attacks, showing a hardening of opinions since the one-year anniversary of the disaster, when people in this country were less inclined to attribute the bombings to U.S. meddling in certain parts of the world.

A poll conducted for Canwest News Service indicates that 53 per cent of Canadians believe the attacks were "a very specific violent reaction to foreign policies of the U.S. government."

Only 36 per cent reported that the terrorist bombings signalled an attack against "all western-style, affluent democracies because they hate their ideas and values, symbolized most by the United States."

The telephone survey of 887 adults, conducted by the polling firm Ipsos-Reid on Sept. 6 and 7, is considered accurate within 3.5 percentage points, 19 times in 20.

The results show that Canadians are more firm in their blame since the first anniversary of Sept. 11, in 2002, when only 15 per cent said that U.S. foreign policy was responsible for the attacks and another 69 per cent suspected it was somewhat responsible, said John Wright, Ipsos-Reid's senior vice-president.

"People have defined their views. They've looked at not just 9/11, but what's happened since then. They're looking at Iraq. And they're saying the foreign policy of the United States has become -- or is, or was -- the root cause of this issue," Wright said.

Young Canadians under 35 were most likely to blame U.S. foreign policy (58 per cent).

The five-year anniversary poll indicates that a significant number of Canadians continue to be affected by the attacks.

More than one in four people -- 28 per cent -- reported that in comparison to everything else that has taken place in their lives, the attacks were "life-altering" and they've "never been the same since."

One in four are afraid to fly outside Canada because of fears of terrorism. One in three say they are "personally more suspicious of people who are from the Middle East or Southeast Asia."

Almost one in five people -- 17 per cent -- said they can't watch television or movie recounts of the event because "the recall has a traumatizing effect on me."

Despite the lasting effect on many, the survey also reveals that 77 per cent of Canadians have moved on since the attacks, reporting that while they were affected at the time, their "outlook and activities are now almost exactly the way they were before the attacks took place."

In a bizarre finding, the polling firm reported that 22 per cent of Canadians believe in a conspiracy theory in which the terrorist attacks were orchestrated by a "group of highly influential Americans and others" rather than by supporters of Osama bin Laden and his al-Qaeda terrorist network.
The theory that the U.S. pulled off an inside job to ultimately justify going to war for Iraqi oil persists in Canada and in the United States, fuelled by a few books and a compelling Internet documentary called Loose Change, created by two young Americans, which has been viewed by millions and is particularly popular on university campuses and in Internet chat rooms. One of its assertions is that the Pentagon was hit by a cruise missile fired by the military as an excuse to go to war.

"It does have resonance," said Wright. "I call them neighbourhood rumours. There are a good number of people who believe it could have been perpetrated by people in the United States."

The poll shows young adults aged 18 to 34 are most likely to believe in the conspiracy theory (26 per cent).

Another key finding was that only 18 per cent of those polled believe that the Canadian government and police have gone too far in fighting terrorism at the expense of civil liberties. Another 43 per cent believe that a proper balance has been struck, while 33 per cent believe police and government should give themselves more powers.

All questions in the poll, with the exception of the one dealing with U.S. blame, were asked of 1,000 adults on Aug. 29 to 31. The results have a margin of error of plus or minus 3.1 percentage points.

© Times Colonist (Victoria) 2006

http://www.canada.com/victoriatimescolonist/news/story.html?id=1853b27d-781d-41c4-807e-3c662c401039&k=24965&p=2

Webb Storms for Senate in Va

If this guy doesn't win, just throw in the towel ...

Fight to the Finish
Bring It On: Can the Dems exploit public worry about the war and retake Capitol Hill? A case study in Virginia.
By Jonathan Darman and Evan Thomas
Newsweek
Sept. 18, 2006 issue - Candidates for the November elections usually campaign flat-out in the week after Labor Day. Jim Webb, Democratic nominee for the U.S. Senate from Virginia, took off to hang out with a bunch of 20-year-olds on a Marine base in North Carolina, to drink beer, make small talk and wait. He was not on holiday: one of the young men was Webb's son, Jimmy, 24, a lance corporal in the Marines who was about to ship out to Iraq. "I had to clear my schedule and clear my head," says Webb. "I just wanted to be with my son."

Webb is not a normal politician. He is a warrior, with the medals (a Navy Cross, a Silver Star, two Bronze Stars) and the wounds (shrapnel in his head, back, left arm, kidney and left leg) to show for it. He comes from a family that has fought in America's wars back to the Revolution. An ancestor rode with Nathan Bedford Forrest in the Civil War; Webb's father was an Air Force pilot in World War II. Webb has been preparing his own son for war since childhood. The two have walked battlefields from Antietam to Shiloh to Verdun to Webb's own "fields of fire" in Vietnam. Webb hates the Iraq war and is now running against it, but he taught his son the family code: soldiers do their duty, regardless of whether the politicians who lead them into wars are right or wrong. Jimmy understands, says Webb, "because he's part of a continuum. My family has always done this."

Webb's decision to become a politician could be an answered prayer for the Democratic Party. Ever since Vietnam, Democrats have been bedeviled by charges that they are "soft" on national security. GOP operatives now jeer at the Democrats as "Defeatocrats." And last week, as President George W. Bush delivered a flurry of speeches staking out security as the centerpiece of the fall campaign, the Republican National Committee launched a Web site called America Weakly, aimed at undermining voters' confidence in the opposition party. But with polls showing some of the highest levels of antiwar sentiment since Vietnam—with roughly three out of five Americans saying that they disapprove of President Bush's handling of the Iraq war—the Democrats have a chance to recapture Congress, if only they can overcome the perception that they are somehow weak. The war may dominate the 2008 election as well: voters overwhelmingly cite Iraq over the economy as the No. 1 priority for the next president.


John Kerry was a genuine war hero, but in 2004 he was pilloried for growing his hair long and attending peace rallies with the likes of Jane Fonda. No one is going to "Swift Boat" Jim Webb. During Vietnam, he scorned antiwar protesters with the same contempt he shows today for so-called chicken hawks, the neocons who never served in the military but were all for invading Iraq. Webb refuses to speak of sending "forces" into combat. To Webb, they are soldiers who have lives and families to live for. Webb's opponent, incumbent GOP Sen. George Allen Jr., plays the good-ole-boy superpatriot. With his cowboy boots and swagger, he is a reasonable facsimile of George W. Bush. But next to a hardened combat veteran like Webb, he can seem like a tough-guy wanna-be.


Webb's electoral chances went from long shot to medium shot a month ago after his opponent blundered by referring to one of Webb's supporters, an Indian-American college student, as a "macaca," a racially offensive term that refers to a genus of monkey. But Webb must contend with some serious liabilities. As with most other Democratic candidates, he has yet to find a way to express his opposition to the Iraq war that does not sound as if he is either (a) advocating a policy of "cut and run," or (b) complaining and criticizing but offering no clear way out. Stiffly refusing to pander on the stump, Webb tends to ramble on, describing nuances and complexities. "He's never run for office before, and you can tell," says Larry Sabato, director of the Center for Politics at the University of Virginia. "He doesn't know how to give a speech. He seems incapable of comparison campaigning, much less negative campaigning." Way behind Allen in fund-raising, Webb lacks Allen's common touch. Walking around a street fair in Salem, Va., last Saturday, Webb had to be formally introduced to each voter.

In his brooding intensity, he can seem haunted. In Vietnam, 56 members of the platoon Webb commanded were killed or wounded. Webb threw himself in front of a grenade to save one soldier (his badly infected wound finally forced him to resign from the Marines). Webb seethed when he returned to civilian life, and never forgot those veterans who had turned against the war. In 1984, Webb was working with a group involved in building the Vietnam Veterans Memorial. Webb met with sculptor Frederick Hart, who had been an antiwar protester. As Hart walked into what was supposed to be a friendly session, Webb sneered, "Welcome to the other side of the picket line, motherf---er." (Webb says he was joking with Hart, a close friend, about a conflict over the design of the memorial.) Webb has mellowed, sort of. He won't overtly criticize men, like Allen, who didn't serve in Vietnam. (Allen had a student deferment.)

But it was Allen's obtuseness about the Iraq war that drew Webb into politics. Webb was an early opponent of invading Iraq. He had opposed the 1991 gulf war because, he said at the time, he was worried that American troops could get bogged down in a long occupation if they pushed on to Baghdad. In a speech at a Naval Institute conference in 2002, he warned that invading Iraq would be a "strategic blunder," a distraction from the war on terror and a potential quagmire for U.S. soldiers. At about that time, Webb met with Allen to press his senator to oppose an invasion. According to Webb, Allen responded, "I feel like you're asking me to be disloyal to my president." (Allen's office confirmed the meeting but declined to comment on a private conversation.)

Webb began thinking about opposing Allen's 2006 re-election bid. At the time, he was writing a book about the warrior tradition of his kinsmen, the Scots-Irish who settled Appalachia and have been disproportionately represented in America's bloodiest battles. Their hero was Andrew Jackson, and Webb regarded Old Hickory as a soldier-statesman role model.

Webb had been a Democrat until, as he puts it, "Jimmy Carter made me a Republican" by appearing weak on foreign policy. Webb went back into government service in the Reagan administration, first as an assistant secretary of Defense for reserve affairs, then as secretary of the Navy. Among his causes was stripping away combat decorations from veterans who had not demonstrably earned them. He quit the Pentagon after two years rather than going along with a diminution in the size of the 600-ship Navy.


Webb was already a cult figure at his alma mater, the U.S. Naval Academy. He charged that academy officials were promoting academics over physical toughness and wrote a defiant Washingtonian magazine article, "Women Can't Fight," after the Academy went coed in the late 1970s. Friends say Webb can seem a little defensive when he launches into a long explanation of why he lost the Academy boxing championship to a fellow midshipman, a mauler named Oliver North, back in 1967.

Webb is something of a literary figure as well as a Hollywood screenwriter. His Vietnam roman ? clef, "Fields of Fire," was widely praised; among his books is a brilliant historical novel, "The Emperor's General," about Gen. Douglas MacArthur's running of postwar Japan. Now Allen is trying to portray Webb as a dilettante. "Are we going to choose someone who's spent the last 20 years in service to the state of Virginia as governor and senator? Or do we choose someone whose priority has been writing novels and hanging around Hollywood?" Allen asks.

The GOP's overall strategy to preserve its majorities in the House and Senate is to morph all Democratic candidates into the mold of Senate Minority Leader Harry Reid and House Minority Leader Nancy Pelosi. But the Democrats have had unusual success at fielding candidates like Webb who hardly fit the "San Francisco Democrat" template. Tammy Duckworth, a female helicopter pilot who lost both legs in combat in Iraq in 2004, is running a close race to win an open House seat long held by the GOP in Illinois, and Vice Adm. Joe Sestak, who oversaw combat operations in Afghanistan and Iraq, has a shot at unseating veteran Republican Rep. Curt Weldon in Pennsylvania. GOP candidates like Weldon are showing signs of nervousness. The No. 2 member of the House Armed Services Committee, Weldon is introducing a resolution to give ground commanders more say in deciding troop levels in Iraq. "I'm not trying to undermine the president," protests Weldon. "I am just asking for a clear plan."

A clear plan is not what voters will hear from Jim Webb, however. Webb takes his cue from another soldier-politician, Dwight Eisenhower, whose approach to the Korean stalemate in 1952 was to argue, somewhat vaguely, that America's foreign policy was in shambles and that voters needed a different set of eyes on the problem. Webb avoids any timetables for getting out of Iraq, preferring to rely on "American ingenuity."


Webb does not strongly stir voters. Last Friday night, at a rally of some 200 people in western Virginia, the ex-Marine did take a shot at Allen. He explained that he had driven that day 300 miles from Camp Lejeune, N.C. "I was thinking that if I was George Allen, I'd have been in a helicopter. But then if I was George Allen I'd have $20 to $30 million and I'd be bought and paid for." Biting words, but Webb spoke in a harsh monotone, like a drill sergeant. He seemed weary. He had arisen at 3 a.m. to see off his son, Jimmy, whose Marine battalion left for Iraq that morning at 5.

With Andrew Romano, Lee Hudson Teslik, Holly Bailey and Richard Wolffe

URL: http://www.msnbc.msn.com/id/14757418/site/newsweek/from/ET/


--------------------------------------------------------------------------------

© 2006 MSNBC.com

Some facts about the insurgency in Iraq...

Some facts about the insurgency in Iraq...
from Rep. Murtha:

"FACT: Since the last week in February 2006, sectarian violence and death has reached new heights. In the past few weeks alone, over a thousand Iraqi civilians have been killed in the violence.

FACT: Electricity production remains below pre-war levels. Baghdad received an average of 6.4 hours of electricity per day. Oil production was at 1.77 million barrels per day, some 30% below pre-war production rates. [Iraq Weekly Status Report of March 1, 2006 from the U.S. State Department]

FACT: The number of incidents per week have tripled since one year ago [summary of classified information provided by the Central Intelligence Agency]

FACT: Unemployment ranges from 30-60% nation-wide. In Anbar Province -- the epicenter of the insurgency -- unemployment reaches 90%. [summary of estimates by the State Department and U.S. intelligence agencies]"

http://www.huffingtonpost.com/rep-john-murtha/claims-and-facts-the-war_b_17311.html



... How's that working for ya?

In 2003, U.S. Spurned Iran's Offer of Dialogue
Some Officials Lament Lost Opportunity

By Glenn Kessler
Washington Post Staff Writer
Sunday, June 18, 2006; A16



Just after the lightning takeover of Baghdad by U.S. forces three years ago, an unusual two-page document spewed out of a fax machine at the Near East bureau of the State Department. It was a proposal from Iran for a broad dialogue with the United States, and the fax suggested everything was on the table -- including full cooperation on nuclear programs, acceptance of Israel and the termination of Iranian support for Palestinian militant groups.

But top Bush administration officials, convinced the Iranian government was on the verge of collapse, belittled the initiative. Instead, they formally complained to the Swiss ambassador who had sent the fax with a cover letter certifying it as a genuine proposal supported by key power centers in Iran, former administration officials said.

Last month, the Bush administration abruptly shifted policy and agreed to join talks previously led by European countries over Iran's nuclear program. But several former administration officials say the United States missed an opportunity in 2003 at a time when American strength seemed at its height -- and Iran did not have a functioning nuclear program or a gusher of oil revenue from soaring energy demand.

"At the time, the Iranians were not spinning centrifuges, they were not enriching uranium," said Flynt Leverett, who was a senior director on the National Security Council staff then and saw the Iranian proposal. He described it as "a serious effort, a respectable effort to lay out a comprehensive agenda for U.S.-Iranian rapprochement."

While the Iranian approach has been previously reported, the actual document making the offer has surfaced only in recent weeks. Trita Parsi, a Middle East expert at the Carnegie Endowment for International Peace, said he obtained it from Iranian sources. The Washington Post confirmed its authenticity with Iranian and former U.S. officials.

Parsi said the U.S. victory in Iraq frightened the Iranians because U.S. forces had routed in three weeks an army that Iran had failed to defeat during a bloody eight-year war.

The document lists a series of Iranian aims for the talks, such as ending sanctions, full access to peaceful nuclear technology and a recognition of its "legitimate security interests." Iran agreed to put a series of U.S. aims on the agenda, including full cooperation on nuclear safeguards, "decisive action" against terrorists, coordination in Iraq, ending "material support" for Palestinian militias and accepting the Saudi initiative for a two-state solution in the Israeli-Palestinian conflict. The document also laid out an agenda for negotiations, with possible steps to be achieved at a first meeting and the development of negotiating road maps on disarmament, terrorism and economic cooperation.
Newsday has previously reported that the document was primarily the work of Sadegh Kharazi, Iran's ambassador to France and nephew of Iranian Foreign Minister Kamal Kharazi and passed on by the Swiss ambassador to Tehran, Tim Guldimann. The Swiss government is a diplomatic channel for communications between Tehran and Washington because the two countries broke off relations after the 1979 seizure of U.S. embassy personnel.

Leverett said Guldimann included a cover letter that it was an authoritative initiative that had the support of then-President Mohammad Khatami and supreme religious leader Ali Khamenei.

Secretary of State Condoleezza Rice has stressed that the U.S. decision to join the nuclear talks was not an effort to strike a "grand bargain" with Iran. Earlier this month, she made the first official confirmation of the Iranian proposal in an interview with National Public Radio.

"What the Iranians wanted earlier was to be one-on-one with the United States so that this could be about the United States and Iran," said Rice, who was Bush's national security adviser when the fax was received. "Now it is Iran and the international community, and Iran has to answer to the international community. I think that's the strongest possible position to be in."

Current White House and State Department officials declined to comment further on the Iranian offer.

Paul R. Pillar, former national intelligence officer for the Near East and South Asia, said that it is true "there is less daylight between the United States and Europe, thanks in part to Rice's energetic diplomacy." But he said that only partially offsets the fact that the U.S. position is "inherently weaker now" because of Iraq. He described the Iranian approach as part of a series of efforts by Iran to engage with the Bush administration. "I think there have been a lot of lost opportunities," he said, citing as one example a failure to build on the useful cooperation Iran provided in Afghanistan.

Richard N. Haass, head of policy planning at the State Department at the time and now president of the Council on Foreign Relations, said the Iranian approach was swiftly rejected because in the administration "the bias was toward a policy of regime change." He said it is difficult to know whether the proposal was fully supported by the "multiple governments" that run Iran, but he felt it was worth exploring.

"To use an oil analogy, we could have drilled a dry hole," he said. "But I didn't see what we had to lose. I did not share the assessment of many in the administration that the Iranian regime was on the brink."

Parsi said that based on his conversations with the Iranian officials, he believes the failure of the United States to even respond to the offer had an impact on the government. Parsi, who is writing a book on Iran-Israeli relations, said he believes the Iranians were ready to dramatically soften their stance on Israel, essentially taking the position of other Islamic countries such as Malaysia. Instead, Iranian officials decided that the United States cared not about Iranian policies but about Iranian power.

The incident "strengthened the hands of those in Iran who believe the only way to compel the United States to talk or deal with Iran is not by sending peace offers but by being a nuisance," Parsi said.

© 2006 The Washington Post Company









... How's that working for ya?

Christians Fleeing Lebanon Denounce Hezbollah

Christians Fleeing Lebanon Denounce Hezbollah

Well, they're pretty pissed at Israel too...

Christians Fleeing Lebanon Denounce Hezbollah
By SABRINA TAVERNISE
TYRE, Lebanon, July 27 — The refugees from southern Lebanon spilled out of packed cars into the dark street here Thursday evening, gulping bottles of water and squinting in the glare of the headlights to find family members and friends. Many had not eaten in days. Most had not had clean drinking water for some time. There were wounded swathed in makeshift dressings, and a baby just 16 days old.

But for some of the Christians who had made it out in this convoy, it was not just privations they wanted to talk about, but their ordeal at the hands of Hezbollah — a contrast to the Shiites, who make up a vast majority of the population in southern Lebanon and broadly support the militia.

“Hezbollah came to Ain Ebel to shoot its rockets,” said Fayad Hanna Amar, a young Christian man, referring to his village. “They are shooting from between our houses.”

“Please,’’ he added, “write that in your newspaper.”

The evacuation — more than 100 cars that followed an International Committee for the Red Cross rescue convoy to Tyre — included Lebanese from several Christian villages. In past wars, Christian militias were close to Israelis, and animosity between Christians and Shiites lingers.

Throngs of refugees are now common in this southern coastal town, the gateway to the war that is booming just miles away. The United Nations has estimated that 700,000 Lebanese, mostly from the southern third of the country, have been displaced by the war.

But thousands of people have been left behind, residents and the Red Cross say.

What has prevented many from fleeing is a critical shortage of fuel. Roland Huguenin-Benjamin, a spokesman for the Red Cross who accompanied the convoy to Tyre, said Red Cross officials had offered to lead out any people who wanted to drive behind, but many did not have enough gasoline for the trip.

Those who did get out were visibly upset. Some carried sick children. A number broke down it tears when they emerged from their cars here.

“People are dying under bombs and crushed under houses,” Nahab Aman said, sobbing and hugging her young son. “We’re not dogs! Why aren’t they taking the people out?”

Many Christians from Ramesh and Ain Ebel considered Hezbollah’s fighting methods as much of an outrage as the Israeli strikes. Mr. Amar said Hezbollah fighters in groups of two and three had come into Ain Ebel, less than a mile from Bint Jbail, where most of the fighting has occurred. They were using it as a base to shoot rockets, he said, and the Israelis fired back.

One woman, who would not give her name because she had a government job and feared retribution, said Hezbollah fighters had killed a man who was trying to leave Bint Jbail.

“This is what’s happening, but no one wants to say it” for fear of Hezbollah, she said.

American citizens remain in some southern villages. Mohamed Elreda, a father of three from New Jersey, was visiting relatives in Yaroun with his family when two missiles narrowly missed his car, while he was parking it in front of his family’s house. His 16-year-old son was sprayed with shrapnel and is now in a hospital in Tyre.

“I have never seen anything like this in my life,” said Mr. Elreda, who arrived here on Thursday morning. “They see civilians, they bomb them,” he said, referring to the Israelis.

“We had to move underground like raccoons.”

He said a person affiliated with the United States Embassy arrived in Yaroun and shouted for everyone to join a convoy that the Israelis had promised safe passage.

He left in such haste, he said, that he had pulled on his wife’s sweatpants (they had a pink stripe running down the length of each leg). His son’s blood still stained his shoes.

He said Yaroun had been without electricity and clean water for more than a week, and he had stirred dirty clothes in a pail of water and bleach to make bandages for his son’s wounds.

The village is largely Christian, but has Muslim pockets, and Mr. Elreda said he walked at night among houses to the Christian section, where a friend risked his life to drive his son to Tyre, while Mr. Elreda stayed with the rest of the family.

On Thursday he joined his son at the hospital.

“He’s my son,” he said, standing at the foot of the boy’s bed. “I just can’t see him like this.”





Copyright 2006 The New York Times Company

Armchair's Links (in need of weeding)

s.f. bayarea forums - craigslist: "Even Ted Kennedy-hatin' conservatives agree.
2006-07-21 16:09:33

Bushsheep are fascist scum.

http://www.opednews.com/articles/opedne_thepen_051112_senator_graham_pulls.htm

http://www.commondreams.org/views05/1114-22.htm

http://www.smirkingchimp.com/article.php?sid=23494

http://www.buzzflash.com/hartmann/05/11/har05011.html

http://www.capitolhillblue.com/artman/publish/article_7624.shtml

http://www.opendemocracy.net/globalization-village/torture_2938.jsp

http://www.informationclearinghouse.info/article10710.htm

http://www.smirkingchimp.com/article.php?sid=23363

http://kos.dailykos.com/story/2005/10/21/15231/469

http://www.wsws.org/articles/2005/oct2005/flu-o07.shtml

http://www.commondreams.org/views05/1015-23.htm

http://onlineathens.com/stories/101505/opi_20051015032.shtml

http://dissidentvoice.org/Oct05/Goldsmith1010.htm

http://www.commondreams.org/views05/1017-28.htm

http://www.antiwar.com/roberts/?articleid=7556

http://www.smirkingchimp.com/article.php?sid=23061

http://www.smirkingchimp.com/article.php?sid=23062

http://tabletalk.salon.com/webx?7@@.6853034b/5658

http://www.commondreams.org/views05/0930-25.htm

http://fairuse.100webcustomers.com/fairenough/latimes023.html

http://www.lewrockwell.com/gregory/gregory108.html


Even Ted Kennedy-hating conservatives (at least the smart ones) agree.
http://www.lewrock"

Another Day in the Empire

Another Day in the Empire: " Alexandrovna to task on AlterNet?s forums, accusing her of sedition for simply reporting the story.
Meanwhile, the Associated Press reports this morning that Sen. Robert Menendez and Sen. Charles Schumer are using the hyped story of distant and untrained terrorists to ?offer legislative proposals to increase funding for mass transit security? in New York. ?The proposals would add $200 million to the $150 million already in the bill for subway and bus system security measures across the country; add $50 million for research and development of protective and warning systems; and add another $50 million to help local governments pay overtime to law enforcement agencies during terrorist threat-related emergencies.?
In short, the senators are exploiting the story to get more Ministry of Homeland Security largess for their district, thus demonstrating terrorism?or vastly overstated threats of terrorism, as the supposed perpetrator in the New York transit case was slapped in a Lebanese jail three months ago?may serve as a way to get cuts in the gravy train line.
Of course, with baseless and hyped terrorism stories making the rounds in the corporate media on a regular basis, ?terrorist threat-related emergencies? will become a regular and mundane occurrence, thus conditioning the public to accept more police state intrusions. Never mind the government is unable to apprehend real ?al-Qaeda? terrorists and instead depends on the FBI to entrap and frame patsies.
?One year and countless searches later, the practice [of random searches of New York subway commuters] once thought of as a temporary imposition with potential to trample civil rights remains firmly in place while barely causing a stir. The city?s top law enforcement official still insists the measure helps deter terrorism?and has no plans to halt it,? reports the Bu"

Pierre Rehov's Middle East Documentaries

Pierre Rehov's Middle East Documentaries: "The Counterterrorism Blog Interview with Pierre Rehov, documentary filmmaker, on psychology behind suicide bombings.


On July 15, I appeared on MSNBC's 'Connected' program to discuss the 7/7 London attacks (you can see video of the segment on the linked page). One of my fellow guests was Pierre Rehov, a French filmmaker who has filmed six documentaries on the intifada by goin