Arkib: January 2009

Remarks of President Barack Obama Weekly Address (LATEST UPDATE - 31/1/09)

Saturday, January 24th, 2009

We begin this year and this Administration in the midst of an unprecedented crisis that calls for unprecedented action. Just this week, we saw more people file for unemployment than at any time in the last twenty-six years, and experts agree that if nothing is done, the unemployment rate could reach double digits. Our economy could fall $1 trillion short of its full capacity, which translates into more than $12,000 in lost income for a family of four. And we could lose a generation of potential, as more young Americans are forced to forgo college dreams or the chance to train for the jobs of the future.

In short, if we do not act boldly and swiftly, a bad situation could become dramatically worse.

That is why I have proposed an American Recovery and Reinvestment Plan to immediately jumpstart job creation as well as long-term economic growth. I am pleased to say that both parties in Congress are already hard at work on this plan, and I hope to sign it into law in less than a month.

It’s a plan that will save or create three to four million jobs over the next few years, and one that recognizes both the paradox and the promise of this moment - the fact that there are millions of Americans trying to find work even as, all around the country, there’s so much work to be done. That’s why this is not just a short-term program to boost employment. It’s one that will invest in our most important priorities like energy and education; health care and a new infrastructure that are necessary to keep us strong and competitive in the 21st century.

Today I’d like to talk specifically about the progress we expect to make in each of these areas.

To accelerate the creation of a clean energy economy, we will double our capacity to generate alternative sources of energy like wind, solar, and biofuels over the next three years. We’ll begin to build a new electricity grid that lay down more than 3,000 miles of transmission lines to convey this new energy from coast to coast. We’ll save taxpayers $2 billion a year by making 75% of federal buildings more energy efficient, and save the average working family $350 on their energy bills by weatherizing 2.5 million homes.

To lower health care cost, cut medical errors, and improve care, we’ll computerize the nation’s health record in five years, saving billions of dollars in health care costs and countless lives. And we’ll protect health insurance for more than 8 million Americans who are in danger of losing their coverage during this economic downturn.

To ensure our children can compete and succeed in this new economy, we’ll renovate and modernize 10,000 schools, building state-of-the-art classrooms, libraries, and labs to improve learning for over five million students. We’ll invest more in Pell Grants to make college affordable for seven million more students, provide a $2,500 college tax credit to four million students, and triple the number of fellowships in science to help spur the next generation of innovation.

Finally, we will rebuild and retrofit America to meet the demands of the 21st century. That means repairing and modernizing thousands of miles of America’s roadways and providing new mass transit options for millions of Americans. It means protecting America by securing 90 major ports and creating a better communications network for local law enforcement and public safety officials in the event of an emergency. And it means expanding broadband access to millions of Americans, so business can compete on a level-playing field, wherever they’re located.

I know that some are skeptical about the size and scale of this recovery plan. I understand that skepticism, which is why this recovery plan must and will include unprecedented measures that will allow the American people to hold my Administration accountable for these results. We won’t just throw money at our problems - we’ll invest in what works. Instead of politicians doling out money behind a veil of secrecy, decisions about where we invest will be made public, and informed by independent experts whenever possible. We’ll launch an unprecedented effort to root out waste, inefficiency, and unnecessary spending in our government, and every American will be able to see how and where we spend taxpayer dollars by going to a new website called

No one policy or program will solve the challenges we face right now, nor will this crisis recede in a short period of time. But if we act now and act boldly; if we start rewarding hard work and responsibility once more; if we act as citizens and not partisans and begin again the work of remaking America, then I have faith that we will emerge from this trying time even stronger and more prosperous than we were before. Thanks for listening.

The American Reinvestment and Recovery Plan - By the Numbers (LATEST UPDATE - 31/1/09

Saturday, 31 January 2009 18:38

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The World Is Facing The First Truly Global Economic Crisis - By Vladimir Putin (LATEST UPDATE - 31/1/09)

January 29, 2009 World Economic Forum / Global Research

Prime Minister Vladimir Putin’s speech at the opening ceremony of the World Economic Forum Davos, Switzerland January 28, 2009

Good afternoon, colleagues, ladies and gentlemen,

I would like to thank the forum’s organisers for this opportunity to share my thoughts on global economic developments and to share our plans and proposals.

The world is now facing the first truly global economic crisis, which is continuing to develop at an unprecedented pace.

The current situation is often compared to the Great Depression of the late 1920s and the early 1930s. True, there are some similarities. However, there are also some basic differences. The crisis has affected everyone at this time of globalisation. Regardless of their political or economic system, all nations have found themselves in the same boat.

There is a certain concept, called the perfect storm, which denotes a situation when Nature’s forces converge in one point of the ocean and increase their destructive potential many times over. It appears that the present-day crisis resembles such a perfect storm.

Responsible and knowledgeable people must prepare for it. Nevertheless, it always flares up unexpectedly.

The current situation is no exception either. Although the crisis was simply hanging in the air, the majority strove to get their share of the pie, be it one dollar or a billion, and did not want to notice the rising wave.

In the last few months, virtually every speech on this subject started with criticism of the United States. But I will do nothing of the kind.

I just want to remind you that, just a year ago, American delegates speaking from this rostrum emphasised the US economy’s fundamental stability and its cloudless prospects. Today, investment banks, the pride of Wall Street, have virtually ceased to exist. In just 12 months, they have posted losses exceeding the profits they made in the last 25 years. This example alone reflects the real situation better than any criticism.

The time for enlightenment has come. We must calmly, and without gloating, assess the root causes of this situation and try to peek into the future.

In our opinion, the crisis was brought about by a combination of several factors.

The existing financial system has failed. Substandard regulation has contributed to the crisis, failing to duly heed tremendous risks. Add to this colossal disproportions that have accumulated over the last few years. This primarily concerns disproportions between the scale of financial operations and the fundamental value of assets, as well as those between the increased burden on international loans and the sources of their collateral.

The entire economic growth system, where one regional centre prints money without respite and consumes material wealth, while another regional centre manufactures inexpensive goods and saves money printed by other governments, has suffered a major setback.

I would like to add that this system has left entire regions, including Europe, on the outskirts of global economic processes and has prevented them from adopting key economic and financial decisions. Moreover, generated prosperity was distributed extremely unevenly among various population strata. This applies to differences between social strata in certain countries, including highly developed ones. And it equally applies to gaps between countries and regions. A considerable share of the world’s population still cannot afford comfortable housing, education and quality health care. Even a global recovery posted in the last few years has failed to radically change this situation. And, finally, this crisis was brought about by excessive expectations. Corporate appetites with regard to constantly growing demand swelled unjustifiably. The race between stock market indices and capitalisation began to overshadow rising labour productivity and real-life corporate effectiveness.

Unfortunately, excessive expectations were not only typical of the business community. They set the pace for rapidly growing personal consumption standards, primarily in the industrial world. We must openly admit that such growth was not backed by a real potential. This amounted to unearned wealth, a loan that will have to be repaid by future generations.
This pyramid of expectations would have collapsed sooner or later. In fact, this is happening right before our eyes.

Esteemed colleagues,

One is sorely tempted to make simple and popular decisions in times of crisis. However, we could face far greater complications if we merely treat the symptoms of the disease.

Naturally, all national governments and business leaders must take resolute actions. Nevertheless, it is important to avoid making decisions, even in such force majeure circumstances, that we will regret in the future.

This is why I would first like to mention specific measures which should be avoided and which will not be implemented by Russia. We must not revert to isolationism and unrestrained economic egotism. The leaders of the world’s largest economies agreed during the November 2008 G20 summit not to create barriers hindering global trade and capital flows. Russia shares these principles. Although additional protectionism will prove inevitable during the crisis, all of us must display a sense of proportion. Excessive intervention in economic activity and blind faith in the state’s omnipotence is another possible mistake. True, the state’s increased role in times of crisis is a natural reaction to market setbacks. Instead of streamlining market mechanisms, some are tempted to expand state economic intervention to the greatest possible extent. The concentration of surplus assets in the hands of the state is a negative aspect of anti-crisis measures in virtually every nation. In the 20th century, the Soviet Union made the state’s role absolute. In the long run, this made the Soviet economy totally uncompetitive. This lesson cost us dearly. I am sure nobody wants to see it repeated. Nor should we turn a blind eye to the fact that the spirit of free enterprise, including the principle of personal responsibility of businesspeople, investors and shareholders for their decisions, is being eroded in the last few months. There is no reason to believe that we can achieve better results by shifting responsibility onto the state. And one more point: anti-crisis measures should not escalate into financial populism and a refusal to implement responsible macroeconomic policies. The unjustified swelling of the budgetary deficit and the accumulation of public debts are just as destructive as adventurous stock-jobbing.

Ladies and gentlemen,

Unfortunately, we have so far failed to comprehend the true scale of the ongoing crisis. But one thing is obvious: the extent of the recession and its scale will largely depend on specific high-precision measures, due to be charted by governments and business communities and on our coordinated and professional efforts. In our opinion, we must first atone for the past and open our cards, so to speak. This means we must assess the real situation and write off all hopeless debts and “bad” assets. True, this will be an extremely painful and unpleasant process. Far from everyone can accept such measures, fearing for their capitalisation, bonuses or reputation. However, we would “conserve” and prolong the crisis, unless we clean up our balance sheets. I believe financial authorities must work out the required mechanism for writing off debts that corresponds to today’s needs. Second. Apart from cleaning up our balance sheets, it is high time we got rid of virtual money, exaggerated reports and dubious ratings. We must not harbour any illusions while assessing the state of the global economy and the real corporate standing, even if such assessments are made by major auditors and analysts.

In effect, our proposal implies that the audit, accounting and ratings system reform must be based on a reversion to the fundamental asset value concept. In other words, assessments of each individual business must be based on its ability to generate added value, rather than on subjective concepts. In our opinion, the economy of the future must become an economy of real values. How to achieve this is not so clear-cut. Let us think about it together.

Third. Excessive dependence on a single reserve currency is dangerous for the global economy. Consequently, it would be sensible to encourage the objective process of creating several strong reserve currencies in the future. It is high time we launched a detailed discussion of methods to facilitate a smooth and irreversible switchover to the new model.

Fourth. Most nations convert their international reserves into foreign currencies and must therefore be convinced that they are reliable. Those issuing reserve and accounting currencies are objectively interested in their use by other states. This highlights mutual interests and interdependence. Consequently, it is important that reserve currency issuers must implement more open monetary policies. Moreover, these nations must pledge to abide by internationally recognised rules of macroeconomic and financial discipline. In our opinion, this demand is not excessive. At the same time, the global financial system is not the only element in need of reforms. We are facing a much broader range of problems. This means that a system based on cooperation between several major centres must replace the obsolete unipolar world concept. We must strengthen the system of global regulators based on international law and a system of multilateral agreements in order to prevent chaos and unpredictability in such a multipolar world. Consequently, it is very important that we reassess the role of leading international organisations and institutions.

I am convinced that we can build a more equitable and efficient global economic system. But it is impossible to create a detailed plan at this event today.

It is clear, however, that every nation must have guaranteed access to vital resources, new technology and development sources. What we need is guarantees that could minimise risks of recurring crises. Naturally, we must continue to discuss all these issues, including at the G20 meeting in London, which will take place in April.

Our decisions should match the present-day situation and heed the requirements of a new post-crisis world.

The global economy could face trite energy-resource shortages and the threat of thwarted future growth while overcoming the crisis. Three years ago, at a summit of the Group of Eight, we raised the issue of global energy security. We called for the shared responsibility of suppliers, consumers and transit countries. I think it is time to launch truly effective mechanisms ensuring such responsibility.

The only way to ensure truly global energy security is to form interdependence, including a swap of assets, without any discrimination or dual standards. It is such interdependence that generates real mutual responsibility.

Unfortunately, the existing Energy Charter has failed to become a working instrument able to regulate emerging problems.

I propose we start laying down a new international legal framework for energy security. Implementation of our initiative could play a political role comparable to the treaty establishing the European Coal and Steel Community. That is to say, consumers and producers would finally be bound into a real single energy partnership based on clear-cut legal foundations.

Every one of us realises that sharp and unpredictable fluctuations of energy prices are a colossal destabilising factor in the global economy. Today’s landslide fall of prices will lead to a growth in the consumption of resources.

On the one hand, investments in energy saving and alternative sources of energy will be curtailed. On the other, less money will be invested in oil production, which will result in its inevitable downturn. Which, in the final analysis, will escalate into another fit of uncontrolled price growth and a new crisis.

It is necessary to return to a balanced price based on an equilibrium between supply and demand, to strip pricing of a speculative element generated by many derivative financial instruments.

To guarantee the transit of energy resources remains a challenge. There are two ways of tackling it, and both must be used. The first is to go over to generally recognised market principles of fixing tariffs on transit services. They can be recorded in international legal documents. The second is to develop and diversify the routes of energy transportation. We have been working long and hard along these lines. In the past few years alone, we have implemented such projects as the Yamal-Europe and Blue Stream gas pipelines. Experience has proved their urgency and relevance. I am convinced that such projects as South Stream and North Stream are equally needed for Europe’s energy security. Their total estimated capacity is something like 85 billion cubic meters of gas a year. Gazprom, together with its partners – Shell, Mitsui and Mitsubishi – will soon launch capacities for liquefying and transporting natural gas produced in the Sakhalin area. And that is also Russia’s contribution to global energy security. We are developing the infrastructure of our oil pipelines. The first section of the Baltic Pipeline System (BPS) has already been completed. BPS-1 supplies up to 75 million tonnes of oil a year. It does this direct to consumers – via our ports on the Baltic Sea. Transit risks are completely eliminated in this way. Work is currently under way to design and build BPS-2 (its throughput capacity is 50 million tonnes of oil a year. We intend to build transport infrastructure in all directions. The first stage of the pipeline system Eastern Siberia – Pacific Ocean is in the final stage. Its terminal point will be a new oil port in Kozmina Bay and an oil refinery in the Vladivostok area. In the future a gas pipeline will be laid parallel to the oil pipeline, towards the Pacific and China. Addressing you here today, I cannot but mention the effects of the global crisis on the Russian economy. We have also been seriously affected.

However, unlike many other countries, we have accumulated large reserves. They expand our possibilities for confidently passing through the period of global instability.

The crisis has made the problems we had more evident. They concern the excessive emphasis on raw materials in exports and the economy in general and a weak financial market. The need to develop a number of fundamental market institutions, above all of a competitive environment, has become more acute.

We were aware of these problems and sought to address them gradually. The crisis is only making us move more actively towards the declared priorities, without changing the strategy itself, which is to effect a qualitative renewal of Russia in the next 10 to 12 years.

Our anti-crisis policy is aimed at supporting domestic demand, providing social guarantees for the population, and creating new jobs. Like many countries, we have reduced production taxes, leaving money in the economy. We have optimised state spending.

But, I repeat, along with measures of prompt response, we are also working to create a platform for post-crisis development.

We are convinced that those who will create attractive conditions for global investment already now and will be able to preserve and strengthen sources of strategically meaningful resources will become leaders of the restoration of the global economy.

This is why among our priorities we have the creation of a favourable business environment and development of competition; the establishment of a stable loan system resting on sufficient internal resources; and implementation of transport and other infrastructure projects.

Russia is already one of the major exporters of a number of food commodities. And our contribution to ensuring global food security will only increase.

We are also going to actively develop the innovation sectors of the economy. Above all, those in which Russia has a competitive edge – space, nuclear energy, aviation. In these areas, we are already actively establishing cooperative ties with other countries. A promising area for joint efforts could be the sphere of energy saving.

We see higher energy efficiency as one of the key factors for energy security and future development.

We will continue reforms in our energy industry. Adoption of a new system of internal pricing based on economically justified tariffs.

This is important, including for encouraging energy saving. We will continue our policy of openness to foreign investments.

I believe that the 21st century economy is an economy of people not of factories. The intellectual factor has become increasingly important in the economy. That is why we are planning to focus on providing additional opportunities for people to realise their potential.

We are already a highly educated nation. But we need for Russian citizens to obtain the highest quality and most up-to-date education, and such professional skills that will be widely in demand in today’s world. Therefore, we will be pro-active in promoting educational programmes in leading specialities.

We will expand student exchange programmes, arrange training for our students at the leading foreign colleges and universities and with the most advanced companies. We will also create such conditions that the best researchers and professors – regardless of their citizenship – will want to come and work in Russia.

History has given Russia a unique chance. Events urgently require that we reorganise our economy and update our social sphere. We do not intend to pass up this chance. Our country must emerge from the crisis renewed, stronger and more competitive.

Separately, I would like to comment on problems that go beyond the purely economic agenda, but nevertheless are very topical in present-day conditions. Unfortunately, we are increasingly hearing the argument that the build-up of military spending could solve today’s social and economic problems. The logic is simple enough. Additional military allocations create new jobs. At a glance, this sounds like a good way of fighting the crisis and unemployment. This policy might even be quite effective in the short term. But in the longer run, militarisation won’t solve the problem but will rather quell it temporarily. What it will do is squeeze huge financial and other resources from the economy instead of finding better and wiser uses for them.

My conviction is that reasonable restraint in military spending, especially coupled with efforts to enhance global stability and security, will certainly bring significant economic dividends. I hope that this viewpoint will eventually dominate globally. On our part, we are geared to intensive work on discussing further disarmament.

I would like to draw your attention to the fact that the economic crisis could aggravate the current negative trends in global politics. The world has lately come to face an unheard-of surge of violence and other aggressive actions, such as Georgia’s adventurous sortie in the Caucasus, recent terrorist attacks in India, and escalation of violence in Gaza Strip. Although not apparently linked directly, these developments still have common features.

First of all, I am referring to the existing international organisations’ inability to provide any constructive solutions to regional conflicts, or any effective proposals for interethnic and interstate settlement. Multilateral political mechanisms have proved as ineffective as global financial and economic regulators. Frankly speaking, we all know that provoking military and political instability, regional and other conflicts is a helpful means of distracting the public from growing social and economic problems. Such attempts cannot be ruled out, unfortunately.

To prevent this scenario, we need to improve the system of international relations, making it more effective, safe and stable. There are a lot of important issues on the global agenda in which most countries have shared interests. These include anti-crisis policies, joint efforts to reform international financial institutions, to improve regulatory mechanisms, ensure energy security and mitigate the global food crisis, which is an extremely pressing issue today.

Russia is willing to contribute to dealing with international priority issues. We expect all our partners in Europe, Asia and America, including the new US administration, to show interest in further constructive cooperation in dealing with all these issues and more. We wish the new team success.

Ladies and gentlemen,

The international community is facing a host of extremely complicated problems, which might seem overpowering at times. But, a journey of thousand miles begins with a single step, as the proverb goes. We must seek foothold relying on the moral values that have ensured the progress of our civilisation. Integrity and hard work, responsibility and self-confidence will eventually lead us to success. We should not despair. This crisis can and must be fought, also by pooling our intellectual, moral and material resources.

This kind of consolidation of effort is impossible without mutual trust, not only between business operators, but primarily between nations.

Therefore, finding this mutual trust is a key goal we should concentrate on now.

Trust and solidarity are key to overcoming the current problems and avoiding more shocks, to reaching prosperity and welfare in this new century.

Thank you.

Risk Management or Risk Manipulation - Thomas Tan (LATEST UPDATE - 31/1/09)

January 28, 2009

Value at risk (VaR) financial models are the latest game being played by those on Wall Street who profess to manage risk, a troubling trend detailed superbly by Joe Nocera in a January 2nd New York Times Magazine article, They give bankers a false sense of confidence in their risk control while, in reality, they increase the level of risk for society as a whole.

But Nocera understates the problem. The risk management groups on Wall Street are actually engaging in risk manipulation, risk distortion, and risk amplification - anything but risk management.

Public perception is that Wall Street didn't do much risk management over the past decade, or perhaps longer, resulting in the profound credit crisis that wiped out many financial firms and left others precariously hanging on. But the problem is not that Wall Street didn't have people monitoring risk. Almost every firm hired scores of risk managers during the last several years, with some being paid millions of dollars a year. The problem was that the more people they hired and the more VaR financial models they ran, the worse their understanding and assessment of risk became.

Why so? There are two main reasons. First, the structure of VaR models is not based in reality. They place too much faith in the fantasy of mathematical algorithms to explain the behavior of human beings. They assume human behavior can be modeled as accurately as launching a rocket - that we can predict its path and outcome 100% correctly. It's no coincidence risk managers are often called rocket scientists - they treat people like physical objects. Is human behavior really that predictable? Are risk managers so crazy as to think human beings behave like a mindless, computer predefined rocket? Does human behavior obey math principles or is it the other way around?

Most financial models rely on theories of probability and statistics. In modern physics, quantum mechanics relies heavily on statistics as a way to explain cause and effect. But the financial world is no science experiment; everything is for real. You can never go back to do it "right" and repeat an "experiment." Things might work one time but may not work the next time. When a physics-like approach is applied to financial products whose value is heavily tied to human actions, like mortgage prepayments, it becomes a computer game of garbage in and garbage out.

Or worse, it becomes a self-fulfilling prophecy. As risk managers used financial models to come up with VaR for toxic products, iterating to arrive at what they believed were successively more accurate estimates, they developed a false sense that they were actually in control. They believed they could accurately predict every possible cash flow scenario for a mortgage-backed security, as well as its probability distribution. The CDOs and the credit default swaps created through this process embedded a level of overconfidence which killed the whole industry. You can always fool many people for a long time, especially when you become a fool yourself.

For a time the VaR model seemed to "work," but it failed exactly when it was needed the most. As hedge fund manager David Einhorn said in Nocera's article, VaR is "relatively useless as a risk-management tool and potentially catastrophic." Why so? Because we will never be able to understand and assess the true nature of supposedly rare catastrophic events. Statistically this is the "fat tail," an event which happens a lot more often than we perceive and put into VaR models. Second, when it happens, its consequences are catastrophic, potentially putting everyone out of business. Computer models cannot handle this kind of discontinuity, which is a little like a number divided by zero. As Nicolas Nassim Taleb said in the article, "In the real world, the magnitude of errors is much less known." If you don't know the true probability and potential damage, you might as well throw the whole VaR model into the garbage. To instead use it to manage risk is absurd.

But it is worse than Nocera described. The second reason for the failure of risk management is that financial models were all based on assumptions. It was too easy to twist a few of them to produce the desired outcome. Risk managers felt they were infallible, to the point of feeling like Gods. They justified any rating for their CDOs or predicted any MBS default probability and payment schedule they wanted. If too much risk was calculated by the model, no problem, they just twisted a few assumptions in the Monte-Carlo simulation of the VaR model and then re-ran it. Suddenly the distribution graph showed the exact curve they needed. This transformed a game of false but honest assumptions into much more insidious risk cover-up.

Most of the time common sense dictates whether you are adding or reducing risk, without even running any models. For example, when a former high level executive of Citigroup pushed the firm to get into the exotic derivative areas of MBS, CDOs and CDSs, even naïve observers knew Citigroup was adding risk to its portfolio. But by using some "magic" financial models, the risk management group and their "renowned" consultants were able to show the Board of Directors that Citigroup was not taking any more additional risk and, even if it was, it could be diversified away through their global supermarket portfolio. Risk managers twisted the model to produce the desired future outcome, and they used financial models to justify a huge amount of risk that has since wiped out their shareholder value many times over. In another example, after AIG repeatedly assured investors there was no risk at all from their CDS portfolio, with a risk model to back up their counterintuitive assertion, a very small financial product group ultimately wiped out the financial conglomerate.

The seductive elegance, overconfidence and abuse inherent in financial modeling are at least part of the reason for the current credit crisis. The more risk managers hired on Wall Street in the years running up to the crisis, the riskier the firm proved to be. Just look at Citigroup. How many of its employees and consultants have been, and are still, doing risk management one way or another? When top management relentlessly pursues quick profits by taking on more risk, risk managers become puppies. Eager to please their managers, they use their expertise to cover up risk rather than expose it. Computer models become their prime weapon.

Outside of risk management, financial modeling is also heavily used in portfolio return analysis and forecasting. For most of the last ten years of the Greenspan era, a big myth - or "theory" - was that low cost of capital (which Greenspan achieved by relentlessly driving down interest rates) would lead to improved return on equity (ROE). Many people used financial models to justify or "predict" a value for the Dow of 36,000 or even 100,000, a so-called paradigm shift of ROE. Suddenly companies got all the free capital they wanted, leveraging their ROE (ROE is a leveraged factor in the capital structure). The sky was the limit for the return to shareholders and for their stock prices. And it was supposed to go on forever. No longer human beings living on Earth, investors became in their own minds powerful angels who could do no wrong, led by the maestro Greenspan. When too many people (and their computer models) told the same lie, the lie itself became the truth. How could Greenspan and so many other very smart people suddenly forget the very basic economic rule that low cost of capital will eventually lead to zero return on equity? That is a fundamental principle of capitalism.

Another myth of the last decade was that using financial models in dynamic asset allocations could improve performance. The Yale and Harvard endowment funds used dynamic asset allocation to invest in private equities, hedge funds, real estate and timber. Other endowments followed their lead to "diversify" and "rebalance" their portfolio whenever dictated by their computer models. But they failed to realize that most of those assets are illiquid, and when everyone is dumping them at the same time, it is a downward spiral or worse, and there may be no way out. Computers are notoriously bad at modeling liquidity. This was a critical lesson of the program trading and dynamic hedging that caused the 1987 Black Monday market crash. As Jeremy Grantham of GMO has said, in the long run, human beings learn nothing from history, and 1987 is just two decades ago.

In a certain sense, the liquidity crisis of the last six months was inevitable. Wall Street got complacent with computer models, and nature came back to punish them (and the rest of us) for shrugging off the resistance to modeling of a key factor: liquidity. Computer models depend on the assumption of a continuous market, with a balanced equilibrium between buyers and sellers. A situation where all the liquidity is sucked out of the market destroys the value of all those exotic paper products. We do not need a bunch of highly paid math geeks to run millions of Monte-Carlo simulations to tell us that. A computer can never replace common sense.

Now we have another Fed Chairman who only knows how to print more money, then print some more, and expand the Fed's balance sheet ever-wider. Bernanke drops the money at only one location, Wall Street. Being an economist and renowned monetarist, he must know that excessive printing will eventually lead to zero value of the fiat currency, the US dollar, just as low cost of capital eventually leads to zero ROE. If that is the inevitable outcome, the government should drop money to the middle class and the poor, not the super-rich bankers on Wall Street. Since ten times zero is still zero, what difference does it make? In addition to being a politically popular move, this might even avoid a few incidents of social unrest.

So-called "extreme" events with "low" probability happen more often than people perceive in risk management. When they occur, an unforeseen tsunami of incalculable magnitude results, destroying wealth on a scale from which it may take a generation or two for the economy to fully recover. Meanwhile, you can pretty much throw risk management models out the window. It does more harm than good.

Cynthia McKinney - Statement on Obama's Actions Thus Far re Gaza (LATEST UPDATE - 31/1/09)

January 26, 2009

"Mr. President: Give Us a Clean Break from War"

In a message to President Obama today, former Congresswoman Cynthia McKinney wrote:

"It is time that the United States negotiate in good faith with Hamas, the legitimate representative of the Palestinian people.  It is also time that the U.S. government tell Israel to release the Hamas Parliamentarians it illegally arrested.  President Obama, please say something about Gaza.  You have been roundly condemned for your continued silence in the face of war crimes and crimes against humanity committed by Israel in Gaza.  Silence is complicity. Not one more bomb for Israel."

Israeli action in Gaza has outraged the world.  Starting with Israel's inhumane blockade of Gaza when it didn't like the 2006 election results that put Hamas officially into power.  In September 2007, Israel declared Gaza an "enemy entity."  Of course, Israeli efforts to isolate the Gaza Strip can be traced back to Ariel Sharon as early as 2005.  In carrying out its military Operation Cast Lead, Israel not only committed war crimes and crimes against humanity, it also carried out a long-standing goal of Gaza isolation.  The President's continued silence on Gaza and the Palestinian right of self-determination is unacceptable.

I would like to commend President Obama for recognizing that peace is the imperative and that the United States can play a constructive role in its attainment.  However, placing a phone call to an irrelevant "leader" in an attempt to revive his political standing is not a route to peace:  it is a journey down the same road that we're already on, that is massacres, genocide, war crimes, crimes against humanity, torture--all with U.S. weapons, paid for by U.S. taxpayers.

The President must call the elected representatives of the Palestinian people and that means dealing with Hamas.

President Obama has already spoken with Israeli Prime Minister Ehud Olmert.  George Mitchell, the President's Middle East Envoy, is reportedly scheduled to visit the region, but is expected to meet only with Egyptian, Israeli, Saudi, and Jordanian leaders, and the West Bank's Abbas.  Unfortunately, despite worldwide revulsion and United Nations outrage at Israeli actions in Gaza, Gaza has not been reported to be one of the Presidential Envoy's destinations.

Even worse, one of the first officials that Obama called on his first day in office was Palestinian Mahmood Abbas.  Abbas, however, is no longer President, heading a government that has no opportunity to govern, from a state that exists only as a construct not made by the Palestinian people.  For the United States to embark upon the path of peace, it must recognize and act on the fact that Mahmood Abbas is now irrelevant.

I believe that the call to Abbas occurred because of pressure on President Obama from outraged activists around the country and around the world calling for him to do something.  But Abbas is irrelevant if the goal is peace.

If the goal, however, is to appear to be doing something while all the time doing nothing but allowing the violence of U.S.-sponsored military action to spread including saber rattling against Syria and Iran, then the President is on the right path.

The American people voted for change and peace.  President Obama's current path will produce neither.

I have implored President Obama to say something about Gaza.  He has been roundly condemned for his continued silence in the face of war crimes and crimes against humanity committed by Israel in Gaza.  Silence in the face of such criminal behavior is complicity.

President Obama must urgently place a call to the elected government of the Palestinian people.

President Obama can send a strong message to the warmongers inside his own party and present them "a clean break" from war.  I encourage him to do so.  We will not be fooled by actions that have the appearance of putting us on a path for peace, but that are public relations projects that buy time for more war.

To activists and human rights lawyers around the world I say:  Now is not the time to let up.  We must be unrelenting in our pressure for justice and recognition of the rights of all peoples embodied in the Universal Declaration of Human Rights.  Those rights include the right not to be occupied.  And the right to resist occupation.  This is the embodiment of self-determination.  And the Palestinian people are holders of these rights.

It is time that the United States negotiate in good faith with Hamas, because it is the legitimate representative of the Palestinian people.  It is also time that the U.S. government tell Israel to release the Hamas Parliamentarians it illegally arrested.

While the United States Government spends precious resources to imprison Palestinians in the United States who attempted to ameliorate the humanitarian disaster in Gaza, I will attempt another trip to Gaza to assess the depth of the worsened humanitarian catastrophe now there.

I have repeatedly called on the President to ask for and the Congress to vote not one more bomb, not one more dime for the Israeli war machine.

The Economony The Titanic & The life Rafts of Gold & Silver - By Darryl Robert Schoon (LATEST UPDATE - 31/1/09)

Darryl Robert Schoon   
Saturday, 31 January 2009 18:33

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OCC's Quarterly Report on Bank Trading and Derivatives Activities Third Quarter 2008 (LATEST UPDATE - 31/1/09)

Comptroller of the Currency Administrator of National Banks   
Saturday, 31 January 2009 18:00

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The financial services rust belt - By Martin Hutchinson (LATEST UPDATE - 31/1/09)

26 January  2009,

Those who have visited Michigan recently or the Mahoning Valley of Ohio in the 1980s can recognize the symptoms of a rust belt. A hitherto prosperous industry, paying high wages to its employees, has been overtaken by market changes and is forced into harsh downsizing or even bankruptcy. As a result, the lives of many inhabitants degenerate into alcoholism, home foreclosures and welfare.

This time around, the decaying industry is finance, and the rust belt cities are London and New York.

The parallels with the U.S. automobile industry are closer than they look. In the early years of the auto industry, it included both large companies and small specialty manufacturers, the latter being remembered now as producers of “vintage” cars of very high quality. Then the Great Depression wiped out most of the specialty producers, which could not compete with the mass producers’ costs. For the next several decades, the business was dominated by a heavily-capitalized oligopoly with extremely highly paid employees, quite high profitability but deteriorating product quality. Finally, it became clear that the oligopoly was uncompetitive and the industry began to shed workers and close plants.

In finance, the early specialty producers were the London merchant banks; for Duisenberg, Packard and Stutz you can substitute Hambros, Warburgs and Hill Samuel. They, too, had superb product quality and are remembered with great fondness by their former customers, but were driven out of the business by heavily capitalized competitors, in this case running behemoth high-risk trading desks rather than mass production assembly-line factories. The employees of the well-capitalized behemoths were even better paid than the UAW work force in the 1950s. Then gradually product quality began to deteriorate, and bad practices such as “liar loan” securitized mortgages, accounting “mark-ups” of assets that had not been sold and self-deluding risk management crept in.

The main difference between the two cases is that the collapse of the finance sector has taken the form of a sudden Gotterdammerung rather than the steady but inexorable decline characteristic of the U.S. automobile industry. The bottom line is the same: Detroit needs to downsize radically, but so does Wall Street.

As I have written previously, in and after the 1980s, the central activity of the financial sector became not service but rent-seeking. Finance doubled its share of Gross Domestic Product (GDP) in the 30 years to 2006, but very little of the addition represented products and services that provided true value to the economy as a whole. Securitization was mostly a complex and expensive means of getting assets off banks’ balance sheets. Derivatives helped manage risks, but only a tiny percentage of the multitrillion dollar outstandings in the derivatives markets represented risk amelioration; the rest was just trading noise or outright speculation. Hedge funds and private equity funds were mostly a means of multiplying excessively the fees charged for investment management; they almost drove out of business the true venture capital funds, which had a genuine economic value. Principal trading, the most exciting activity of all in the glory years for greedy investment bank partners, was simply a means of using large amounts of outside shareholders’ capital to trade on insider information about the market’s deal flow. All of these activities were legal; none of them added value to anybody but their immediate practitioners, while they represented additional costs and lower returns for everybody else. In other words, they fulfilled the dictionary definition of rent seeking.

Given the aggression, greed and high intelligence of the average investment banker, rent seeking can never be eliminated completely. Nevertheless, the conditions that made it flourish have already changed, and good policy will ensure that they do not recur in the future. In particular:

•  Financial complexity is mostly an additional source of risk, and provides little or no added value to the economy as a whole. A Madoff-style Ponzi scheme could only grow to the monstrous size it did in an environment in which even institutional investors were ignorant and incurious about the way in which their investment returns were derived.

•      More than a decade of easy money after 1995 increased asset prices, thereby providing returns to those who bought assets on a leveraged basis, while making leverage itself very easy to obtain.

•     The move from thinly capitalized “Duisenberg” investment/merchant banks, providing advice to companies and arranging their financing to behemoth “General Motors” financial conglomerates taking principal positions in the securities of companies they advised produced an immense interconnecting web of conflicts of interest and insider trading opportunities.

•      Risk management methodologies, which achieved acceptance so great that under the Basel II regulations “sophisticated” banks were allowed to select their own, were fundamentally flawed. They rested on an academic theory of efficient markets that in practice is easily disprovable and represents a very poor approximation to reality. The prolonged period of easy money and bullish markets appeared to validate them; we now know better.

•      Remuneration practices in the industry became far more generous than their historical norms, more also than that necessary to attract staff of the right intellectual caliber and other qualities. This was a product of the almost uninterrupted bull market in bonds and stocks from 1982 to 2007, a large part of the returns from which was scooped off by financial sector employees who added far less value than they extracted.

If rent seeking is to a large extent eliminated, it is likely that the financial services sector will approximately halve in size, returning to around its 1970s share of GDP. Its usage of capital will decline only modestly, since the excessive leverage built up in the last decade will need to be corrected. Conversely, the sector’s human resource usage needs to decline by much more than half – after all, we have a multitude of tools today that allow the relatively simple functions of traditional finance to be performed much more efficiently, and with less human input. In addition, with modern telecommunications technology, many of the routine tasks of finance (including almost all the non-mechanizable parts of the back office, but also much research and document preparation) can be performed by well-educated but lower-paid employees in India or elsewhere. Thus, while the sector’s overall value added will halve, the portion of value added attributable to capital will significantly increase, that attributable to labor will decline.

For the financial practitioners of New York and London, the future is thus bleak. Rewards will be greatly reduced, as the market operates ferociously both on the income side and the employee costs side of their employers. Headcount will also be greatly reduced, as functions are eliminated, work is outsourced to the Third World and the weaker entities go bankrupt or are merged into competitors. The decline in practitioners’ incomes might be as much as 80%, even after a modest market recovery, though the number of practitioners should reduce by only 50% to 60%.

That also promises a weak future for the local beneficiaries from financial services incomes in New York or London. Such losers would include local housing markets and those of the smarter resorts, together with the army of real estate agents, decorators, construction companies and lawyers that have benefited so egregiously during the bubble. It would also include local restaurants, clothing retailers, jewelers and other high-end products and services. The tourism business will find far fewer takers for the kind of “short break” luxury sybaritic packages in which it has recently specialized. Thus the short-term knock-on effect on the overall economy of poorer bankers will be severe, even though the long-term economic benefits of eliminating the dead-weight costs of the bloated banking community will be even greater.

The two centers most adversely affected by these changes will be London and New York. Asian financial centers will continue to benefit from the faster regional rates of overall economic growth, while as in the 1980s, the problems of Dubai will spread far beyond finance.

In New York, the “rust belt” effect will be severe but not overwhelming – it will be 1970s Cleveland rather than 1980s Youngstown. Many of the skyscrapers of the financial district and the luxury residential areas will become ghost buildings, as their predecessor buildings did in the 1930s, but they are unlikely to descend to the chain-round-the facility-guarded-by-a-Rottweiler-and-a-tattooed-thug state symptomatic of the worst industrial blight.

However, the resemblance to 1970s Cleveland (which defaulted in 1978) will probably be increased by a municipal bankruptcy. Mayor Michael Bloomberg has pursued the policy of former New York Mayor (1965-73) John Lindsay. He has increased municipal spending by 52% over six years while prices rose 20%, and has relied on hefty increases in property taxes to fund the increase. Those funding sources have disappeared, but we are still only at the stage of cosmetic cuts and financing gimmicks. As the downturn continues, New York’s fiscal state will become rapidly worse, and default is inevitable in a year or two. Bloomberg has altered the rules to allow himself to run for mayor again this November; he would be mad to do so, since the fiscal deterioration would make his third term a very unpleasant experience.

London will be the Youngstown of this downturn, an excellent market for Rottweilers, wire mesh and tattooed thugs. Docklands in particular will revert to its 1970s squalor, albeit with some very expensive buildings scattered around. Few of the financial institutions that have prospered so lavishly in the London of the past couple of decades are British owned, and those that are were excessively involved in the British mortgage market – an even bigger disaster than the U.S. market because home values were even more outrageous at the peak. Given that the financial sector will be downsizing anyway, will top management in Frankfurt, New York or Tokyo want to keep its stable of expensive London whiz-kids, in order to continue participating in a market that was never central to their overall strategy and is now unprofitable? I doubt it. Even the Russian mafia may leave, though probably to Cyprus rather than Moscow. Whereas New York’s downturn may produce municipal bankruptcy, London’s downturn has a fair chance of producing national bankruptcy. Going forward, British youth will have to find a new way to make a living – single-malt Scotch and tourism cannot support a nation of 60 million people.

Inhabitants of London and New York have spent the last couple of decades sneering at their provincial cousins, particularly those involved in the grubby world of manufacturing. Now the Rust Belt has reached them also.

Martin Hutchinson is the author of "Great Conservatives" (Academica Press, 2005). Details can be found on the Web site

Robert Lucas's Strange Faith in Bernanke - By Robert P. Murphy (LATEST UPDATE - 31/1/09)

26 January  2009, Mises Institute

Lately the Mises Daily may have given the impression that we just bash Paul Krugman. In the interest of balance, today I will cast aspersions on another Nobel laureate, the Chicago School economist Robert Lucas. As is typical among many "promarket" economists, the undeniably sharp Lucas inexplicably sees no problem with government price fixing when it comes to interest rates.

In his recent Wall Street Journal op-ed, Lucas writes,

The Federal Reserve's lowering of interest rates last Tuesday was welcome, but it was also received with skepticism. Once the federal-funds rate is reduced to zero, or near zero, doesn't this mean that monetary policy has gone as far as it can go? This widely held view was appealed to in the 1930s to rationalize the Fed's passive role as the U.S. economy slid into deep depression.

The present article is hardly the place to go into the debate over the Great Depression, but suffice it to say, Herbert Hoover's (and then FDR's) very conscious efforts to "maintain purchasing power" by preventing wage cuts was one major factor in turning the stock-market crash into a decade-long slump. (The fact that Hoover slapped on major tariff and income tax hikes didn't help, either.)

Lucas's view — namely, that the 1929 downturn would have been a run-of-the-mill depression, but the Fed's timidity turned it into the Great one — was popularized by Milton Friedman. It resonates well with free-market types, because after all, it blames the Depression not on laissez-faire capitalism, but instead on regulatory blunders.

However, as Matt Machaj argued in a previous Mises Daily, such rhetoric is difficult for a proponent of truly market-based money and banking to accept. Is it really government "intervention" if the Fed refrains from flooding the economy with more paper money?

Let me put it this way: if Lucas is right, and the Fed's "passive role" helps explain the genesis of the Great Depression, then what about all the little-d depressions that occurred in US history before the Fed was founded in 1913? Was the Fed even more passive in the 1930s than during its nonexistence the previous century?
But let us return to Lucas's article:

Fed Chairman Ben Bernanke's statement last Tuesday made it clear that he does not share this view and intends to continue to take actions to stimulate spending.

There should be no mystery about what he has in mind. Over the past four months the Fed has put more than $600 billion of new reserves into the private sector, using them to discount — lend against — a wide variety of securities held by a variety of financial institutions….

This action has been the boldest exercise of the Fed's lender-of-last-resort function in the history of the Federal Reserve System. Mr. Bernanke said that he is prepared to continue or expand this discounting activity as long as the situation dictates.

Before analyzing this statement, let's make sure we see just how bold this Fed exercise has been. Below is a chart of total bank borrowings from the Fed, from 1919 to the present. (If you squint your eyes, you can see the slight uptick to which Lucas refers.)
Now people have rightly focused on the dangers such a massive infusion poses to the strength of the dollar. These fears are entirely justified. But I want to focus on the political aspects of the recent Fed behavior.

Let us parse Lucas's description: the infusion of some $600 billion in just a few months has come from Fed loans to banks, based upon collateral that no one in the market would accept at face value (literally). Lucas himself says,
Could the $600 billion in new reserves be called a bailout? In a sense, yes: The Fed is lending on terms that private banks are not willing to offer. They are not searching for underpriced "bargains" on behalf of the public, nor is it their mission to do so. Their mission is to provide liquidity to the system by acting as lender-of-last-resort. We don't care about the quality of the assets the Fed acquires in doing this. We care about the quantity of its liabilities.

What's this "we," Ke-mo Sah-bee? It is amazing how flippant Lucas is concerning these new developments. He can barely bring himself to admit that a $600 billion infusion of new money — which no private investor would be foolish enough to make — constitutes a bailout. Moreover, Bernanke's pledge to continue this pattern as "long as the situation dictates" sounds an awful lot like a blank check.

Lucas's touching innocence is illustrated even more so with his endorsement of Bernanke's policy:

It entails no new government enterprises, no government equity positions in private enterprises, no price fixing or other controls on the operation of individual businesses, and no government role in the allocation of capital across different activities.

That last phrase in particular amused me. I confess I didn't actually try this, but I'm betting that if I emailed Mr. Bernanke and explained that my business was desperate for liquidity, he would inform me that I wasn't eligible for any of his generous loans.

I am not accusing Ben Bernanke of being anything more than a misguided academic. I believe his policies have been terrible during this crisis, but I am willing to attribute them to intellectual error. Be that as it may, he has opened Pandora's box. The precedent is now set for the Federal Reserve to make injections of hundreds of billions of dollars as it sees fit. In October, Barney Frank suddenly realized the awesome power that the Fed has held all of these years, according to this account:

"He [Bernanke] can make any loan he wants under any terms to any entity or individual in America that he thinks is economically justified. I asked the chairman if he had $85 billion to bestow in this way. He said, 'I have $800 billion.'"

Clearly unnerved after his exchange with Fed Chairman Ben Bernanke, Massachusetts Congressman Barney Frank, the chairman of the House Financial Services Committee, concluded that no one should have that kind of money to dispense as he sees fit.

Unfortunately, this realization will not lead to a return of the gold standard or (better yet) a complete return of money and banking to the market.

Rather, what will surely happen is that Congress will move to bring the Fed more closely under its control:

"He can't debase the currency at will! That's our job!"

The next few years are going to be very interesting. It is clichéd to say such things, but our country truly is moving through a revolutionary period. But I liked the Beatles song a lot better than Paulson and Bernanke's rendition.

Mahathir Mohamad: People Are Laughing at Western Banks’ Collapse

RIYADH — Sitting a few time zones away from the Davos gathering, former Malaysian Prime Minister Mahathir Mohamad spares a dry chuckle at the fall of the once mighty Western financial giants and masters of the universe.
“They were doing everything that [multilateral agencies] were counseling developing countries not to do to stay out of crisis,” he said about the parade of Western banks that have crumbled over the last six years due to heavy leveraging and bad assets. “They were greedy … and now people are having a big laugh.”
Malaysia’s elder statesman has delivered real zingers to the assembled luminaries at Davos conferences past, notably the view during the 2003 get together that the Bush administration was responsible for starting World War III.
This year, Mr. Mahathir isn’t attending Davos. But that hasn’t kept him from delivering a sermon from afar on one of his well-tread topics: cracks in the foundation of the Western-dominated international financial system need to be urgently fixed.
Mr. Mahathir has worked on for years lobbying to increase the weight of the developing world needs in international settings. And he had a stark message to the G-8 central banks and multilateral agencies, including the International Monetary Fund, which dictated terms of the economic bailout packages to Asian nations during the economic crisis there 10 years ago: those so-called financial wizards should have following their own prescription for economic health.
“They told us … there was a bubble [in asset and currency prices]. They told us not to increase borrowing. They told us to cut back government spending. Its advice they ignored in [their] own economies,” he said to an appreciative audience of Arab businessmen who have their own gripes about what they see as American and European hypocrisy, especially when it comes to foreign policy in the Middle East.
Mr. Mahathir counseled his listeners to heed Asian values over Western values as governments in the Middle East work to keep their growth rates positive.
“Our values are similar. Asia values the country over the individual. In the West, their capitalism is structured … so that there is always one winner and always one loser,” he said. “The system in the West has many holes. It is painfully obvious now.” - Meg cooker

Robert Fisk’s World: When did we stop caring about civilian deaths during wartime?

The mere monitoring of bloody conflict assumes precedence over human suffering

Saturday, 31 January 2009

I wonder if we are "normalising" war. It's not just that Israel has yet again got away with the killing of hundreds of children in Gaza.

And after its own foreign minister said that Israel's army had been allowed to "go wild" there, it seems to bear out my own contention that the Israeli "Defence Force" is as much a rabble as all the other armies in the region. But we seem to have lost the sense of immorality that should accompany conflict and violence. The BBC's refusal to handle an advertisement for Palestinian aid was highly instructive. It was the BBC's "impartiality" that might be called into question. In other words, the protection of an institution was more important than the lives of children. War was a spectator sport whose careful monitoring – rather like a football match, even though the Middle East is a bloody tragedy – assumed precedence over human suffering.

I'm not sure where all this started. No one doubts that the Second World War was a bloodbath of titanic proportions, but after that conflict we put in place all kinds of laws to protect human beings. The International Red Cross protocols, the United Nations – along with the all-powerful Security Council and the much ridiculed General Assembly – and the European Union were created to end large-scale conflict. And yes, I know there was Korea (under a UN flag!) and then there was Vietnam, but after the US withdrawal from Saigon, there was a sense that "we" didn't do wars any more. Foreigners could commit atrocities en masse – Cambodia comes to mind – but we superior Westerners were exempt. We didn't behave like that. Low-intensity warfare in Northern Ireland, perhaps. And the Israeli-Arab conflict would grind away. But there was a feeling that My Lai had been put behind us. Civilians were once again sacred in the West.

I'm not sure when the change came. Was it Israel's disastrous invasion of Lebanon in 1982 and the Sabra and Chatila massacre by Israel's allies of 1,700 Palestinian civilians? (Gaza just missed that record.) Israel claimed (as usual) to be fighting "our" "war against terror" but the Israeli army is not what it's cracked up to be and massacres (Qana comes to mind in 1996 and the children of Marwahine in 2006) seem to come attached to it. And of course, there's the little matter of the Iran-Iraq war between 1980 and 1988 which we enthusiastically supported with weapons to both sides, and the Syrian slaughter of thousands of civilians at Hama and...

No, I rather think it was the 1991 Gulf War. Our television lads and lasses played it for all it was worth – it was the first war that had "theme" music to go with the pictures – and when US troops simply smothered alive thousands of Iraqi troops in their trenches, we learned about it later and didn't care much, and even when the Americans ignored Red Cross rules to mark mass graves, they got away with it. There were women in some of these graves – I saw British soldiers burying them. And I remember driving up to Mutla ridge to show a Red Cross delegate where I had seen a mass grave dug by the Americans, and he looked at the plastic poppy an American had presumably left there and said: "Something has happened."

He meant that something had happened to international law, to the rules of war. They had been flouted. Then came Kosovo – where our dear Lord Blair first exercised his talents for warmaking – and another ream of slaughter. Of course, Milosevic was the bad guy (even though most of the Kosovars were still in their homes when the war began – their return home after their brutal expulsion by the Serbs then became the war aim). But here again, we broke some extra rules and got away with it. Remember the passenger train we bombed on the Surdulica bridge – and the famous speeding up of the film by Jamie Shea to show that the bomber had no time to hold his fire? (Actually, the pilot came back for another bombing run on the train when it was already burning, but that was excluded from the film.) Then the attack on the Belgrade radio station. And the civilian roads. Then the attack on a large country hospital. "Military target," said Jamie. And he was right. There were soldiers hiding in the hospital along with the patients. The soldiers all survived. The patients all died.

Then there was Afghanistan and all that "collateral damage" and whole villages wiped out and then there was Iraq in 2003 and the tens of thousands – or half a million or a million – Iraqi civilians killed. Once more, at the very start, we were back to our old tricks, bombing bridges and radio stations and at least one civilian estate in Baghdad where "we" believed Saddam was hiding. We knew it was packed with civilians (Christians, by chance) but the Americans called it a "high risk" operation – meaning that they risked not hitting Saddam – and 22 civilians were killed. I saw the last body, that of a baby, dug from the rubble.

And we don't seem to care. We fight in Iraq and now we're going back to fight in Afghanistan again and all the human rights and protections appear to have vanished once more. We will destroy villages and we will find that the Afghans hate us and we will form more criminal militias – as we did in Iraq – to fight for us. The Israelis organised a similar militia in their occupation zone in southern Lebanon, run by a crackpot Lebanese army major. But now their own troops "go wild". And the BBC is worried about its "impartiality"?


Badawi Will Not Retire in March 2009 - Mischievous Rumours Or A Devious Political Gambit? - By Matthias Chang (LATEST UPDATE - 31/1/09)

Many people have asked me whether I have heard that Badawi has indicated that he would not retire as Prime Minister of Malaysia as agreed, when Najib takes over as President of UMNO in March 2009.

My reaction has always been that Badawi cannot be trusted as he has done so many flip-flops before.

Badawi is first and foremost a politician and his Muslim faith would not be a hindrance should he decide to do another flip-flop.

However, my Muslim friends tell me that it is inconceivable that as a Muslim leader, Badawi would dare commit such an irresponsible flip-flop! They are adamant that it would be an insult and a betrayal of all the Muslims in Malaysia for Badawi to renege on his public commitment to ensure a smooth handover to his hand-picked successor in March 2009!

But the rumours continued unabated.

There is now an interesting twist to the rumours. Pakatan Rakyat through its unofficial mouthpiece Malaysia Today has been conducting a so-called opinion poll to determine whether Badawi should in fact hand over power to Najib.

Why conduct such a poll if there is no substance to the rumours? There are opinion polls and opinion polls and many such polls can be manipulated to fit a desired result. It was thought by some political analysts that such an opinion poll conducted by the opposition would lend some credibility to the findings.

It is no secret that the opposition leaders have more than once expressed the wish that Badawi stay on as Prime Minister, not because they genuinely desire his leadership but with the inept Badawi in charge of the Barisan Nasional, they surmised that it would be a cake walk for the Opposition in the next General Elections. Other vested interests have their reasons for wanting Badawi to remain as Prime Minister, if only for their own survival.

It is also apparent that such an opinion poll conducted by the Opposition serves another purpose – to ensure a slug-fest between Badawi and Najib which would weaken further the present leadership of UMNO.

No doubt this is a brilliant political gambit by the Opposition, but would Badawi take the bait? Your guess is as good as mine.

But as far as I am concerned, this wayang kulit is getting tiresome and a total distraction from the urgent task of ensuring that Malaysia survives the global financial tsunami. Already the President of the Federation of Malaysian Manufacturers (FMM) has warned, “pressures have started to build up within the sector, and many companies are beginning to face difficulty to stay afloat. It is imperative that the RM7 billion package is implemented quickly, efficiently and effectively to help keep businesses in operations.” But our politicians are too engrossed in power grabs to pay any attention to the welfare of the people.

Many still hold on to the illusion that Anwar Ibrahim will be the saviour of Malaysia and that he will usher a new era of transformation.

It is an exercise in futility to counter such stupidity.

Anwar Ibrahim and Badawi are essentially spin doctors and come from the same political stock, and as they weave their political intrigues to ensure their political survival in the midst of the worst global financial crisis in a hundred years, the people will soon see the ugly and devious side of these two leaders.

When 800,000 or more unemployed roam the streets for economic justice, be assured that these two leaders will be the first to be lynched for their neglect and mismanagement of the national economy.

Whether Badawi reneges on his public commitment to step down in March 2009 is a rumour or a calculated political ploy, the fact of the matter is that the country is heading towards financial mess and the people will not take too kindly to such political intrigues.

And should Pakatan Rakyat continue to focus on grabbing power from Barisan Nasional instead of addressing urgent issues of growing retrenchments, business closures and inevitable foreclosures of homes when families struggle to pay their debts, I will expose their dastardly deeds and hunt them down one by one!

My advice to Anwar and Badawi – stop dreaming and do the country a favour,  go back to your shit hole in Penang and leave the country alone so that we can clean your bloody mess and move on! Persist and we shall come after you with a vengeance and you will have to pay dearly for your misdeeds.

From Bubble Watch to Bust Watch - By Bill Bonner (LATEST UPDATE - 29/1/09)

23 January 2009, The Daily Reckoning

We've been on Bubble Watch for the last ten years.
Now, we're on Bust Watch...

Tim Geithner, Obama's choice for Treasury Secretary, may not have seen the bust on Wall Street coming... but he promises action on a "dramatic scale" to fix it. That is probably what goosed-up the Dow yesterday - up 279 points. Oil rose to $43. Both gold and the dollar went down. The dollar fell to $1.29 per euro... while gold sellers got $5 less per ounce. The price of gold is $850.

"The End of the Reagan Era," is how the French newspaper, The Liberation, described the handover of power to Barack Obama's team.

The Liberation has it right. What we are witnessing is the end of an era. But it's not exactly the era most people think. The voters made a big symbolic change when they elected Obama. But politically, Obama is not so different from Reagan, Bush I, Clinton or Bush II.

A much bigger change has just occurred - and gone almost unnoticed. This one was wrought not by the voters, but by Mr. Market. He has brought an end to the world financial system that arose during the Reagan years.
For the last ten years, these Daily Reckonings have been on Bubble Watch... watching... wondering... marveling... sometimes appalled... sometimes amused...

...what we were watching was the blow up of a crazy system of imperial finance, in which the world's hegemony appeared to live at the expense of its rivals... and the imperial citizens - those in the homeland of the United States of America - drove themselves into bankruptcy so competitors could continue to sell their products at a profit.

It was strange. It was preposterous. But it wasn't dull. We thought it was coming to an end in 2001... when the bubble in dotcoms blew up. Then, well, you know what happened... the feds got to work... and pumped up more bubbles. Now, the Bubble Epoque is nearly over. But Mr. Obama is jumping the gun...

"Starting today, we must pick ourselves up, dust ourselves off and begin again the work of remaking America," he says.

Hold on... there are some huge busts that have to happen first... We're watching for busts in U.S. government debt (U.S. Treasury paper)... the dollar... and finally, after a big run-up, gold. Then, Americans can rebuild on a more solid foundation.

The gist of the world economy for the past quarter century was a division of delusion, which led to huge bubbles. Americans pretended to have good money. Asians pretended to have a good customer. Bankers pretended to have good credits. And Wall Street pretended that toxic assets were good ones.

Asians made; Americans took. Asians saved; Americans borrowed. Americans provided the demand. Asians provided the supply. Asians built a real economy, with real money, and real factories and real skills. America's economy was mostly a conceit, in which people became accustomed to a standard of living that very few of them could afford.
But now it has come to an end. And whom do you think will suffer most?

Our guess: the Chinese!

Eighty years ago, America was in China's position. It was the world's young, growing, dynamic economy. Manhattan soared then as Shanghai soars now. But when the collapse came in the '30s, the demand for American goods shriveled. Foreign and domestic purchasers pulled in their belts and cancelled their orders. For a while, America was out of business. It was only at the onset of WWII that the orders started coming in again in massive quantities.

This time, it's China that's going out of business.

Yes, dear reader, China is going to suffer even more than the United States. At least in the short run. America will lose its position in the world. The dollar will lose its status as the world's reserve currency. Americans will be beaten up - first by deflation, then by inflation. When it is over, they will be poorer, wiser, and probably better people... With a little luck and good leadership, maybe they can sink into a graceful post-imperial poverty... followed by genuine prosperity.

That is the story we'll be covering in The Daily Reckoning going forward. It is the story of BUSTS. Companies will go bust. Governments will go bust (Ireland and Iceland are already effectively broke.) Households will go broke by the millions. And, eventually, even the U.S. government itself will go bust. (A bankruptcy that will most likely be disguised by inflation...)
But China! There, the story will be even more dramatic... even more dangerous... even more explosive!

*** "Time to mobilize for all-out war," says a headline in the Financial Times, speaking of saving Britain's banks from themselves. But this could just as well refer to President Obama's attack on the correction. Nobody wants a correction. And Team Obama has pledged to fight it to the death.

Which is why we will stick with our "Trade of the Decade". Buy gold on dips; sell stocks on rallies. This trade - announced 9 years ago - has been good to us. Gold has closed every single year ahead of where it started. From under $300 an ounce it went up over $1,000 - briefly. Now, it trades in the $800 range.

What do you think, dear reader? Is the gold bull market over? Are the troubles in the world financial system all taken care of? Is it time for another bust in the gold market - the only market (aside from U.S. Treasuries) to resist last year's sell-off?
"My one recommendation for the longer term," says Felix Zulauf in Barron's, "is physical gold. Consider the basic set-up: World economies are so weak that we are seeing government stimulation of historic proportions. At first this is deflationary, but it will become inflationary. Gold is the only currency that won't get devalued. It will be revalued.

"If the Fed's liabilities had to be covered in gold, it would sell for more than $6,000 an ounce. We aren't going back to the gold standard, but the markets won't trust the central banks anymore. Gold is a very slow bull market... the gold market could have a shakeout in the next 6 months, and the price could fall back to $700 an ounce or below from today's $850. But two years from now it will be a lot higher. It is one of the few commodities that held up during the forced liquidation of almost everything else. "

*** If the United States catches the flu... the rest of the world throws up.

And now, with markets retching all over the planet, finance ministers are getting together to come up with a global solution. Somehow, demand must be stimulated in Asia. Supply must be coaxed out of the United States. Balance must be restored, they say.

But don't hold your breath. Any global bailout plan is bound to be a bad one. Because what the world really needs is a correction. And no country wants one. Instead, each nation does its best to push the correction onto its neighbors. An old friend, Lord Rees-Mogg, adds further comment:

"Between the mid nineteenth and mid twentieth century, there had been a vigorous debate about the causes of the trade cycle, and of the crises which had upset the growth of the world economy.

"That debate had, however, never reached a conclusion. Among economists there was no consensus on what caused the crises to occur or on what measures would help to stabilise another depression...

"...there are at least five different alleged causes, which are still arguable. If the Central Bankers and Treasury Ministers do not agree on the cause of the present crisis they are not likely to agree on the remedy. One needs to keep theory in mind because it influences decision-making.

"However, we are beginning to see that there is a consensus developing on the policy that is needed. Economists and politicians are concentrating on the need to restore confidence. The Inaugural Address of President Barack Obama repeated the theme of Franklin Roosevelt's Address in March, 1933: 'We have nothing to fear, but fear itself.' He also attacked the greed and irresponsibility of the bankers, who had behaved just as badly as they did in the early 1930s. The practical action of Governments around the world is to increase the money supply until businesses will borrow and banks will lend. Everyone recognises that this makes a risk of excessive inflation of the money supply, but it is a risk which Governments feel they have no choice but to take. They are not trying to rebalance the world economy; they are desperate to relight the boiler. In the end they will succeed."

Inflation is what they want; inflation is what they will get.

Bill Bonner

Bersatu teguh demi menjana ekonomi ummah

Para remaja wajar berasa terpanggil untuk menguatkan semangat memajukan ekonomi umat Islam

DR. Yusuf al-Qaradawi dalam karyanya Aina al-Khalal pernah berkata: "Kekuatan ekonomi kita terbengkalai. Kita hidup di bumi Allah yang paling strategik, paling baik dan subur. Bumi yang paling banyak galian yang tersimpan dalam perutnya dan kekayaan yang bertebaran di atasnya. Malangnya kita tidak menggerakkan kekayaan kita, tidak bertani di bumi kita, tidak menghasilkan keluaran daripada galian sedangkan bahan mentahnya dikeluarkan dari bumi kita…jadilah kita dalam banyak keadaan pengguna bukan pengeluar, pengimpot bukan pengilang. Kadang kala kita menghasilkan produk yang kita tidak memerlukannya dan kita abai menghasilkan barangan yang sangat kita perlukan. Kita berbangga dengan memiliki kereta-kereta mewah antarabangsa, sedang kita tidak tahu untuk membuat basikal sekalipun."

Bunyinya pahit, tetapi ada benarnya. Apatah lagi dalam keadaan kita yang sudah lama terluka melihat penderitaan dan penghinaan yang dilakukan terhadap umat Islam di seluruh dunia. Krisis ekonomi yang melanda dunia kini menambah buruk keadaan ekonomi negara-negara Islam yang rata-ratanya menjadi pengguna daripada barangan hasilan tangan-tangan pengeluar bukan Islam.

Tidak dapat dinafikan bahawa kemakmuran sesebuah negara bergantung kepada kemajuan ekonomi, dan kekuatan ekonomi sangat bergantung kepada hasil usaha rakyat negara itu sendiri. Justeru, dalam kita menangisi keperitan saudara-saudara kita, sewajarnya kita terutamanya remaja bermuhasabah dengan kekuatan dan kelemahan yang kita ada dan seterusnya merencana strategi untuk memartabatkan ekonomi umat Islam supaya tidak terlalu bergantung kepada negara Barat.

Rasa tanggungjawab

Pada dasarnya, banyak kelebihan yang dapat dinikmati sekiranya umat Islam bersatu padu dalam menjana ekonomi umat sendiri, antara lainnya mereka akan mempunyai kuasa membeli yang tinggi kerana kapasiti jumlah umat Islam yang tinggi menjadikan keperluan barangan dan makanan juga tinggi.

Jika kuasa membeli ini dialirkan kepada membeli barangan yang dihasilkan oleh umat Islam sendiri, akan berlakulah kitaran ekonomi yang kuat di kalangan masyarakat Islam. Selain itu, umat Islam mempunyai ruang dan potensi yang luas untuk memajukan ekonomi sendiri dalam bidang makanan, minuman dan ubat-ubatan berdasarkan kewajipan untuk menggunakan produk-produk yang halal dan suci pembuatannya.

Sudah tiba masanya umat Islam menghasilkan produk dan barangan sendiri. Dalam menjayakannya, modal, idea dan tenaga sangat diperlukan dalam memajukan bidang ini. Para remaja wajar berasa terpanggil untuk menguatkan semangat untuk memajukan ekonomi umat Islam. Semangat untuk memajukan ekonomi umat Islam harus ditunjangi dengan kekuatan akidah yang kukuh dan rasa tanggungjawab untuk membangunkan umat.

Apabila rasa tanggungjawab untuk membantu umat mewarnai sikap seseorang remaja, maka secara tidak langsung ia akan membuatkan seseorang menjadi komited dan cekal dalam sesuatu bidang yang diceburi. Amat menyedihkan apabila hasil bumi negara sendiri dikaut oleh orang luar, dan tenaga muda yang ramai dan segar tidak dilatih untuk mengusahakan hasil bumi mereka dan hanya bergantung kepada kepakaran luar.

Remaja Islam harus bercita-cita tinggi untuk menjayakan matlamat ini dengan bersikap berani untuk meneroka bidang dan pasaran baru. Bidang perniagaan dan keusahawanan adalah bidang penuh dengan risiko dan cabaran, tetapi mendatangkan punca rezeki yang lumayan jika berhasil.

Setinggi nama Islam

Namun begitu, barangan yang dihasilkan mesti mempunyai kualiti yang tinggi seperti kerana ia bukan sahaja mencerminkan sesebuah jenama, tetapi juga menampilkan imej pengeluar. Apabila sesebuah produk mendapat kepercayaan pembeli, maka secara tidak langsung ia mengangkat imej pembuatnya.

Bayangkan jika barangan yang dihasilkan seseorang atau sebuah syarikat itu tidak bermutu dan berkualiti, agak sukar untuk mendapat kepercayaan pembeli untuk membeli barangan tersebut. Lebih malang lagi jika semua barangannya akan dilabel sedemikian rupa. Usahkan hendak bersaing di pasaran antarabangsa, di tempat sendiri pun tidak diterima.

Tidak dapat dinafikan bahawa penghasilan barangan yang berkualiti dikuatkan daripada penyelidikan dan program pembangunan yang konsisten dan bermutu. Melalui bidang penyelidikan, kualiti sesuatu barangan boleh sentiasa ditingkatkan, bukan sahaja untuk keuntungan perniagaan, malah untuk disebarkan untuk kebaikan ramai.

Oleh itu, remaja Islam wajar meneladani sikap para saintis dan cendekiawan terdahulu dalam menghasilkan sesuatu barangan dan penemuan yang bermutu. Tradisi penyelidikan Islam yang sangat mementingkan ketelitian dan komitmen yang tinggi telah berupaya membangunkan tamadun Islam yang maju suatu ketika dahulu. Dalam pada kita mengagumi ciptaan Barat, kita juga seharusnya berupaya untuk mencetuskan idea-idea dalam acuan kita sendiri.

Di negara kita, banyak peluang yang telah diteroka untuk membangunkan ekonomi umat Islam. Banyak organisasi yang ditubuhkan untuk membantu meningkatkan pendapatan dan merencana langkah-langkah strategik untuk menjana ekonomi umat Islam. Festival Ekonomi Islam yang berlangsung baru-baru ini telah membuka banyak peluang kepada usahawan tempatan untuk menampilkan produk mereka. Melalui pendedahan sebegini, ruang lingkup perniagaan dapat diluaskan.

Malah, remaja juga boleh didedahkan kepada selok-belok perniagaan supaya suatu hari mereka bakal menghasilkan suatu empayar perniagaan sendiri dan dapat membantu menjana ekonomi umat. Ia juga memberi peluang kepada usahawan-usahawan baru untuk menonjolkan bakat kepimpinan mereka. Idea-idea yang segar dan strategi yang bijaksana boleh ditampilkan daripada remaja agar barangan atau produk tidak hanya terhad kepada pasaran tempatan, tetapi juga terpasar di luar negara.


Cinta terhadap Islam bukan sahaja sekadar ritual dan pengucapan, tetapi juga keazaman yang tinggi untuk menjadikan umat Islam umat yang dipandang tinggi dan mulia dan tidak mudah dipijak dan dihina.

Dalam pada kita mengambil langkah untuk memulaukan jenama daripada Barat, kita mestilah bersedia dengan barangan keluaran kita sendiri agar langkah pemulauan tidak hanya bermusim.

Sesuatu produk keluaran, baik dalam bentuk barangan mahupun perkhidmatan sewajarnya diberikan dalam bentuk yang terbaik supaya tertampil dengan jenama dan kualiti tersendiri seperti tingginya nilai agama Islam itu sendiri.


Masjid Cina milik

Masjid yang berada di Xi'an, China ini dikatakan telah berusia lebih 800 tahun dan menjadi destinasi pelancong dari seluruh dunia.

HARI ini imej Islam menjadi tercalar disebabkan oleh persepsi orang bukan Islam terhadap Islam amat sempit. Gambaran mereka terhadap Islam hanya berkisar isu-isu orang Melayu, Arab, keganasan dan pelbagai label negatif.

Hal ini sedikit sebanyak turut mempengaruhi pola perkembangan dakwah Islamiah di kalangan bukan Islam, terutamanya orang Cina di negara ini yang ketara amat perlahan berbanding negara-negara lain di dunia.

Sungguhpun Malaysia sudah merdeka lebih 50 tahun, namun orang Cina yang memeluk Islam tidak sampai satu peratus. Hari ini penduduk Cina di Malaysia berjumlah 6.5 juta - ini bermakna orang Cina yang memeluk Islam hanya sekitar 60,000 orang.

Berbeza di negeri bukan Islam, agama Islam mendapat sambutan yang begitu hebat. Tetapi kenapa dalam negara Islam sendiri, agama Islam seolah-olah kelihatan tidak mendapat tempat dan perkembangannya amat perlahan. Di manakah silap dan salahnya? Kajian yang serius perlu dilakukan.

Timbalan Presiden Persatuan Cina Muslim Malaysia (Macma), Dr. Mohd. Ridhuan Tee Abdullah yang telah lama berkecimpung dalam dunia dakwah terutama kepada kaum Cina bukan Islam, menegaskan bahawa cara kita 'menjual' Islam hari ini amat bersifat etnik atau kemelayuan atau kearaban.

Lantaran itu, saran beliau, sudah sampai masanya untuk dipecahkan tembok ini dengan membukakan minda kita agar dapat menjual Islam dalam konteks yang lebih luas dan global.

"Caranya tidak lain dan tidak bukan, marilah kita mulakannya dengan membina sebuah masjid berseni bina Cina di tengah-tengah ibu kota Kuala Lumpur. Saya yakin kita semua akan dapat lihat banyak perubahan, terutamanya perkembangan syiar Islam.

"Penubuhan masjid Cina Muslim ini membolehkan usaha mendekatkan golongan bukan Islam ini terhadap Islam. Selain menyelesaikan kes-kes lain yang membabitkan golongan Cina Muslim seperti kes murtad yang berpunca daripada ketiadaan pemantauan serta penjagaan kebajikan daripada pihak bertanggungjawab.

"Kewujudan masjid berseni bina Cina yang turut berfungsi sebagai pusat aktiviti dakwah, sudah tentu dapat menyelesaikan banyak permasalahan dalam usaha merealisasikan dakwah Islamiah, terutama di kawasan bandar yang majoritinya dihuni oleh masyarakat Cina," kata Dr. Mohd. Ridhuan akan kepentingan disegerakan pembinaan masjid Cina ini dan kebaikan yang bakal diperoleh.

Menurutnya lagi, idea penubuhan masjid berseni bina Cina ini telah diutarakan sejak Macma ditubuhkan pada 1994. Namun, hasrat ini mula disuarakan pada 1996 dan menjadi semakin berkumandang pada 2000 hingga sekarang.

"Kami telah menemui menteri-menteri yang menjaga hal-ehwal Islam untuk merealisasikan hasrat tersebut sejak sekian lama," katanya semasa diminta mengulas usaha pihaknya merealisasikan pembinaan masjid Cina di negara ini.

Mohd. Ridhuan bersyukur usaha berterusan itu akhirnya mendapat respons positif serta sokongan penuh daripada Menteri di Jabatan Perdana Menteri, Datuk Zahid Hamidi.

Ini kerana kata Mohd. Ridhuan, menteri itu bukan sekadar memahami tetapi melihat hasrat persatuan yang mewakili komuniti Cina Muslim Malaysia dari perspektif yang luas serta demi perkembangan dakwah, waima beliau bukan berlatar belakangkan pengajian agama sepenuhnya.

Ditambah pula sokongan daripada Perdana Menteri, Datuk Seri Abdullah Ahmad Badawi agar usaha ini disegerakan. Respons positif diperoleh rentetan daripada surat yang telah diajukan kepada Abdullah pada 14 Ogos lalu. Seterusnya diikuti dengan beberapa perbincangan dan pertemuan yang masih berterusan sehingga kini.

Lantaran itu, Mohd. Ridhuan menyakini kesungguhan yang ditunjukkan oleh pemimpin negara itu bakal menamatkan penantian yang selama ini diharapkan komuniti Cina Muslim khasnya dan umat Islam di Malaysia.

"Setakat ini perbincangan tentang tapak pembinaan di Kuala Lumpur sedang diadakan. Sudah tentu kami mahukan tempat yang strategik di kawasan majoriti orang Cina. Contohnya, di tapak bekas Penjara Pudu.

"Saya fikir tapak ini amat strategik. Jika berjaya direalisasikan, saya yakin perkembangan Islam akan menjadi semakin hebat, selain ia akan menjadi tumpuan pelancong dalam dan luar negara. Yang pastinya, kawasan itu strategik untuk perkembangan dakwah.

"Lagipun, kawasan bekas tapak penjara ini, tidak sesuai untuk dibangunkan sebagai pusat komersial. Keadaan di sana hari ini penuh sesak. Sekiranya kawasan tersebut dijadikan sebuah masjid berseni bina Cina, ia mampu menjana ekonomi negara dari sudut pelancongan," katanya.

Beliau juga menepis anggapan segelintir pihak yang mengatakan pembinaan masjid Cina akan memecahbelahkan masyarakat, merosakkan keharmonian dan perpaduan kaum di negara ini.

Jelas Mohd. Ridhuan, pandangan golongan ini menunjukkan kedangkalan pemikiran dan kegagalan mereka untuk melihat Islam sebagai agama yang bersifat sejagat atau universal.

"Mereka hanya melihat agama adalah untuk etnik tertentu sahaja. Sedangkan Islam adalah agama untuk semua manusia yang ada di muka bumi ini. Persoalan saya, adakah masjid yang berseni bina kubah adalah seni bina Islam atau seni bina Melayu. Sebenarnya, kubah adalah berasal daripada seni bina Moorish Indian, tidak ada kaitan langsung dengan seni bina Melayu atau Islam.

"Kenapa kita boleh menerima seni bina Moorish Indian, tetapi tidak seni bina Cina atau bangsa lain? Apakah selama ini kewujudan masjid India dan masjid Pakistan telah memecahbelahkan masyarakat hari ini? Perlu diingatkan bahawa seni bina atau reka bentuk yang wujud hari ini adalah ilham yang diberikan oleh Allah SWT kepada manusia.

"Maknanya, seni adalah hak Allah SWT. Cuma jangan sampai kesenian itu mempunyai unsur yang bercanggah dengan hukum Allah seperti mempunyai unsur-unsur patung dan sebagainya," tambah Mohd. Ridhuan yang hanya mahu memecahkan tembok stereotaip yang telah lama terpahat dalam pemikiran orang bukan Islam bahawa Islam itu agama orang Melayu atau orang Arab.

Menjawab persoalan kekangan yang dihadapi dalam merealisasikan hasrat murni ini, menurut Mohd. Ridhuan halangan yang paling ketara ialah untuk memecahkan tembok pemikiran lama masyarakat Malaysia termasuk orang agama.

"Jika orang agama pun tidak boleh faham, cuba bayangkan bagaimana dengan orang biasa. Bagi kami, fungsi masjid adalah sama seperti masjid-masjid lain. Tertakluk kepada undang-undang dan peraturan-peraturan Majlis Agama Islam Negeri-Negeri. Ini bermakna, tidak timbul isu, masjid ini khusus untuk orang Cina sahaja.

"Apa yang kami mahukan ialah seni binanya sahaja yang berbentuk Cina atau berbentuk pagoda seperti mana masjid-masjid yang terdapat di negeri China. Ia bertujuan untuk mengalihkan pandangan masyarakat Cina bahawa kewujudan mereka di muka bumi ini adalah dengan ciptaan Allah.

"Malah ada pula yang berpandangan masjid ini nanti akan dibolot oleh orang Cina sahaja, bermula daripada ahli jawatankuasanya sehinggalah penggunaan bahasa syarahan dan khutbah. Ini adalah kekeliruan yang sengaja dibuat-buat," katanya apa yang matlamat untuk mengalihkan perhatian bukan Islam Cina supaya melihat Islam dalam perspektif yang luas.

Hakikatnya, ujarnya lagi, masalah pentadbiran dan pengurusan masjid Cina tersebut adalah isu kecil dan terpinggir. Apa yang dimahukan setakat ini hanyalah masjid yang berseni bina Cina.

Saran Mohd. Ridhuan, umat Islam perlu sedar bahawa kejadian bangsa-bangsa ini adalah ciptaan Allah SWT sebagaimana firman-Nya dalam surah al-Hujurat ayat 13 yang bermaksud: Hai manusia, sesungguhnya Kami menciptakan kamu dari seorang lelaki dan seorang perempuan dan menjadikan kami berbangsa-bangsa dan bersuku-suku supaya kamu saling kenal mengenal.

"Ini bermakna seni bina juga adalah anugerah Allah hasil kreativiti manusia ciptaan-Nya. Justeru, ia perlu saling diraikan antara satu sama lain selagi mana ia tidak bercanggah dengan syariat. Inilah keindahan Islam. Lagipun, ia adalah alat dakwah yang membawa makna yang cukup besar," jelas beliau.

Mohd. Ridhuan menambah, tidak perlu syarat 40 jemaah untuk membina masjid Cina Muslim seperti yang digembar-gemburkan. Masjid Cina Muslim tidak semestinya dipunyai oleh masyarakat Cina Muslim sahaja.

Katanya, prinsip asas masjid mesti difahami dengan jelas. Ia adalah kepunyaan semua orang Islam dan dalam konteks undang-undang, ia mesti diletakkan di bawah pengawasan Jabatan Agama Negeri-Negeri.

"Kita boleh namakan apa sahaja nama pada masjid tersebut. Apa yang dipinta ialah sebuah masjid yang mempunyai seni bina Cina yang dapat menarik perhatian orang Cina bukan Islam untuk melawati masjid tersebut bagi mendapatkan penerangan mengenai Islam, menjadi pusat pelancongan dan pusat pemudah cara.

"Ini dapat memudahkan kita menerangkan kepada mereka tentang keindahan agama Islam sebenar yang bersifat universal dan tidak hanya dilihat hanya anutan kaum tertentu sahaja," katanya.

Masjid Cina dan sejarahnya

DALAM kita bertelingkah berkaitan isu pembinaan masjid Cina Muslim, seorang penulis dari negara China, Yusuf Liu Bao Jun menegaskan tidak ada apa yang perlu dikhuatiri serta berkeyakinan bahawa usaha ini adalah satu langkah positif sekiranya masjid berkonsep Cina direalisasikan di Malaysia.

Penegasan penulis bebas kelahiran daerah berautonomi Muslim di Zhang Jiachuan Hui, Wilayah Gansu, China ini bersandarkan penyelidikan terbaru beliau tentang kewujudan masjid-masjid berkonsep Cina di seluruh dunia.

Kata beliau, sebenarnya ramai mungkin tidak tahu bahawa sebuah masjid tertua di Malaysia yang diberi nama Masjid Besar (Big Mosque) telah dibina oleh seorang lelaki yang berasal dari negara China iaitu Song Shilin pada 1877, sebaik beliau memeluk agama Islam dengan menggunakan nama Shamusudin Song.

Legenda mengatakan Shamusudin terdampar di Melaka setelah kapalnya karam di Selat Melaka sebelum dia diselamatkan oleh orang Melayu. Sejak itu, dia menetap di Kampung Ulu dan kemudiannya berkahwin dengan perempuan tempatan Melayu selepas mengucap syahadah.

"Pada 1880, dia menjadi kaya hasil daripada perniagaan yang diusahakan dan berhasrat membina sebuah masjid. Dikatakan juga, sebahagian daripada bahan mentah untuk pembinaan masjid itu diimport dari China dan seni reka binaan masjid itu benar-benar dipengaruhi seni bina tradisi China.

"Fenomena seni bina berciri Cina inilah yang akhirnya tersebar ke banyak masjid di Melaka," kata Yusuf Liu yang telah menghasilkan sembilan buku dalam tiga bahasa iaitu bahasa Inggeris, Melayu dan Cina.

Penulisan beliau banyak menyentuh perihal masyarakat Cina Muslim dan kebudayaan mereka.


Malah kata Yusuf Liu lagi, negara tetangga Malaysia seperti di Indonesia turut mempunyai beberapa masjid yang dibina oleh golongan Cina Muslim yang menetap di situ sejak pelayaran Laksamana Cheng Ho pada 1405.

Dikatakan sumbangan orang Cina Muslim Indonesia juga agak menonjol dalam pembinaan masjid-masjid di beberapa bandar raya besar di negara itu. Menurut buku yang berjudul, Real Motherland tulisan Dardina Dardoxi, seorang ilmuwan Indonesia mengatakan terdapat tiga buah masjid yang dibina oleh orang Cina Muslim pada abad ke- 18 iaitu Masjid Juziyuam, Masjid Danparla dan Masjid Gelougute. Masjid Juziyuam dibina oleh seorang Cina Muslim bernama Tan Jin Wu dan Masjid Gelougute dibina oleh Tamien DosoSeeng pada 1785.

"Apa yang saya ketahui di Jakarta sahaja terdapat empat masjid, antaranya Masjid Kebon Jeruk dan Masjid Lautze. Sementara di Surabaya terdapat sebuah masjid yang diberi nama Masjid Cheng Ho," jelasnya.

Malah katanya, merujuk buku Indonesia Daily (20 Mac 1990) menjelaskan Masjid Sumenapu yang terletak di Pulau Madla terbina pada 1763 oleh Liew Ping Er, seorang Cina Muslim sewaktu pemerintahan Dinasti Sumenapu.

"Terdapat pagar agam yang bercat warna merah di Masjid Sumenapu di mana diketahui umum bahawa warna merah adalah warna kegemaran masyarakat Cina sebelum ditukar kepada warna putih dan kuning. Pun begitu, seni bina Cina masjid itu masih kekal hingga ke hari ini," kata Yusuf Liu.


Di samping dua negara ini, beliau turut membuat penyelidikan di Rusia. Menariknya di negara blok komunis ini terdapat 40 buah masjid yang dibina oleh masyarakat Cina Muslim yang telah bermastautin di negara tersebut. Masjid-masjid ini terdapat di Uzbekistan, Kyrgyzstan, Turkmenistan dan Tajikistan.

Begitu juga lawatannya ke Thailand, Aceh, Arab Saudi, Hong Kong, Brunei, Laos dan Amerika Syarikat.

Oleh itu, Yusuf Liu berkeyakinan usaha mendirikan sebuah masjid berseni bina Cina Muslim di tapak cadangan di Kuala Lumpur akan membawa banyak manfaat. Baginya, selain menjadi pusat penyebaran dakwah, ia sekali gus berperanan sebagai tarikan pelancong ke Malaysia.


Bersatu syarat Islam gemilang

Dari Sauban ia berkata: Telah bersabda Rasulullah SAW: “Hampir seluruh umat manusia bersatu menghancurkan kamu seperti orang yang sedang lapar mengerumuni makanan. Mereka bertanya: Apakah kita sedikit pada masa itu wahai Rasulullah? Jawab Baginda: Malah kamu ramai, tetapi kamu laksana buih air bah. Dalam pada itu hati mereka tidak ada rasa segan terhadap kamu dan dalam hati kamu sendiri tumbuh penyakit wahan. Apa yang dimaksudkan dengan penyakit watan itu wahai Rasulullah? Maksudnya ialah di dalam hati kamu bertakhta perasaan cinta dunia dan takut mati”. (riwayat Abu Daud).

Demikianlah gambaran yang berlaku pada umat Islam hari ini. Bilangan Muslim di seluruh dunia yang melebihi 1 bilion ternyata tidak menggentarkan musuh waima Israel yang kecil itu.

Contoh terbaru adalah kekejaman Israel ke atas penduduk Palestin di Genting Gaza. Walaupun, rejim zionis itu dikelilingi oleh negara-negara Islam Arab, rakyat Palestin terus dizalimi tanpa pembelaan.

Wartawan MOHD. RADZI MOHD. ZIN dan jurufoto, SAHARUDIN ABDULLAH menemu bual Pensyarah Institut Kefahaman dan Pemikiran Islam (CITU), Universiti Teknologi Mara Shah Alam, Prof. Madya Dr. Nik Mohd. Rosdi Nik Ahmad bagi mengupas isu ini.

Apakah hikmah Nabi Muhammad SAW diutus di kalangan umat Arab?

NIK ROSDI: Rasulullah adalah keturunan Nabi Ibrahim iaitu antara nabi yang bukan dalam kalangan Bani Israel. Memanglah kebanyakan nabi yang diutuskan Allah adalah dari kalangan Bani Israel.

Semasa baginda diutuskan ke muka bumi, masyarakat Arab dari segi tamadunnya adalah lebih menonjol berbanding Bani Israel. Akhirnya, mereka seolah-olah dikongkong oleh bangsa lain. Bani Israel juga hidup nomad.

Mereka juga adalah digelar bangsa kibti Firaun yang dianggap hamba atau buruh kasar. Sebab itu Firaun mengejar Nabi Musa dan Bani Israel yang keluar dari Mesir ke Laut Merah yang akhirnya menyaksikan kematian Firaun ditelan air laut.

Sebab utamanya, kerana Firaun bimbang kerja-kerja membangunkan Mesir akan terbantut jika Bani Israel tidak ada.

Pada masa yang sama, ada banyak masalah yang melanda bangsa Arab semasa zaman jahiliah. Mereka terkenal sebagai bangsa yang amat taksub kepada perkauman atau assabiah. Mereka juga suka bergaduh sesama sendiri. Pendek kata, apa yang berlaku pada Bani Israel seolah-olah ada pada bangsa Arab.

Dengan itulah, Allah mengutuskan baginda untuk menyelesaikan segala masalah. Perutusan Rasulullah SAW ke muka bumi ini seperti kita semua sedia maklum adalah sebagai rahmat ke atas sekelian alam. Ini dijelaskan menerusi firman Allah, Dan tidak kami (Allah) utuskan kamu (wahai Muhammad) melainkan untuk menjadi rahmat bagi sekelian alam. (al-Anbiya’: 107)

Bangsa Arab ini selain mempunyai kiblat dan kitab yang satu juga berbahasa yang sama. Yang peliknya, mereka tidak juga boleh bersatu menentang zionis. Di mana silapnya?

NIK ROSDI: Orang Arab ini dulunya memang suka bergaduh. Sehinggakan nabi pun dibunuh. Contohnya, Nabi Zakaria yang disembelih oleh mereka.

Nabi Muhammad SAW telah diingatkan tentang hal itu semasa baginda diutus oleh Allah. Sebab itu antara tindakan awal baginda selepas berhijrah adalah mempersaudarakan puak Muhajirin dan Ansar. Kemudian menghubungkan puak yang bertelagah di Madinah iaitu suku Bani Nadhir, Qainuqa’ dan Khuraizah.

Selepas itu, baginda membentuk Sahifah Madinah (Perlembagaan Madinah) sebagai undang-undang yang diterima pakai di kalangan penduduk di sana.

Membentuk perpaduan ini amat penting dalam sesebuah masyarakat dan negara. Ia adalah kunci kepada kekuatan sesebuah bangsa dan negara.

Ini dijelaskan oleh Allah menerusi firman-Nya yang bermaksud: Dan berpegang teguhlah kamu dengan tali Allah (Islam), janganlah kamu berpecah belah dan kenanglah nikmat Allah kepada kamu ketika kamu bermusuh-musuhan (semasa jahiliah dulu), lalu Allah menyatukan di antara hati kamu sehingga kamu bersatu padu dengan nikmat Islam) maka menjadilah kamu dengan nikmat Allah itu orang-orang Islam yang bersaudara. Dan kamu dahulu telah berada di tepi jurang neraka (disebabkan kekufuran semasa jahiliah) lalu Allah selamatkan kamu dari neraka itu...(ali-‘Imran: 103)

Sepatutnya orang Arab lebih memahami hal ini. Namun mereka nampaknya tidak membaca al-Quran dan tidak ambil manfaat daripada kitab suci itu. Ini juga menunjukkan kesan penjajahan Barat yang sangat mendalam kepada orang Arab.

Dalam kes di Palestin, difahamkan ada di kalangan anggota Fatah yang memberi maklumat lokasi pejuang Hamas kepada puak zionis. Apakah jenis orang Islam begini?

NIK ROSDI: Dalam Islam ada golongan yang munafik. Mereka ini tidak senang hati dengan Islam. Sentiasa mencari jalan memusnahkan orang Islam.

Di Palestin, Hamas adalah lebih dekat dengan Islam manakala Fatah pula bersekongkol dengan Amerika Syarikat (AS). Jadi musuh menggunakan Fatah untuk menjatuhkan Palestin.

Pertelingkahan Fatah dan Hamas adalah punca krisis di Palestin. Barangkali mereka lupa kepada firman Allah yang bermaksud: Dan taatlah kepada Allah dan Rasulnya dan janganlah kamu berbantah-bantahan, yang menyebabkan kamu menjadi gentar dan hilang kekuatanmu dan bersabarlah. Sesungguhnya Allah beserta orang-orang yang sabar. (al-Anfaal: 46)

Inilah yang berlaku di kebanyakan negara kuasa besar. Mereka gunakan golongan munafik untuk menjatuhkan Islam. Contohnya, di Afghanistan. Apabila menghadapi serangan Rusia, puak Islam yang bertelagah bersatu tetapi apabila Rusia balik mereka bergaduh semula.

Kemudiannya, muncul kumpulan Taliban yang menghadapi saingan daripada Pakatan Utara. Akhirnya, AS gunakan Pakatan Utara untuk menjatuhkan Afghanistan.

Islam menetapkan ketaatan kepada Allah dan rasul itu sebagai mutlak. Walhal ketaatan kepad a pemimpin itu selagi mana mereka mentaati Allah dan rasul-Nya.

Janji Israel memang tidak boleh dipercayai. Justeru apakah persiapan yang perlu ada di kalangan negara Islam bagi menghadapi puak zionis ini?

NIK ROSDI: Sifat orang Yahudi ini telah dijelaskan oleh Allah menerusi firman-Nya yang bermaksud: Orang-orang Yahudi dan Nasrani tidak sekali-kali akan bersetuju atau suka kepadamu (wahai Muhammad) sehingga engkau menurut ugama mereka (yang telah terpesong itu). Katakanlah (kepada mereka): “Sesungguhnya petunjuk Allah (agama Islam) itulah petunjuk yang benar”...(al-Baqarah: 120)

Apa yang malangnya, itulah tabiat umat Islam. Mereka suka menjadikan Yahudi dan Nasrani sebagai kawan sebaliknya Muslim itu sebagai lawan.

Dalam hal ini, Rasulullah SAW bersabda: Sesungguhnya kamu pasti akan mengikut jejak langkah orang-orang yang sebelum kamu – sejengkal demi sejengkal, sehasta demi sehasta, sehinggakan jika mereka memasuki ke dalam lubang dhab (sejenis biawak di padang pasir), pasti kamu akan mengikut mereka. Kami (para sahabat) bertanya: Wahai Rasulullah! Adakah Yahudi dan Nasrani (yang engkau maksudkan)? Jawab baginda SAW: Maka siapakah lagi (kalau bukan mereka)? (riwayat Bukhari dan Muslim)

Untuk itu, kita tidak ada jalan lain selain kembali bersatu mengukuhkan perpaduan. Pertubuhan Persidangan Islam (OIC) perlu memainkan peranan penting dalam dalam hal ini.

Kita perlu mencontohi tindakan yang dilakukan oleh Rasulullah SAW selepas hijrah baginda ke Madinah.

Seterusnya, golongan ulama dan umarak (pemerintah) perlu digabung jalinkan. Sebabnya kedua-dua pihak mempunyai pengaruh dalam masyarakat.

Membiarkan perpecahan antara kedua-duanya adalah antara faktor kejatuhan tamadun Yunani Greek. Ia berlaku apabila pemerintah memberi keutamaan kepada golongan Solon dan mengabaikan golongan Socrates (ahli falsafah). Akhirnya puak Socrates bangun memberontak dan membawa kepada tamatnya era kegemilangan tamadun Yunani.

Amir Syakib Arsalan dalam bukunya Mengapa Bukan Islam alami kemajuan dan kenapa Umat Islam alami kemunduran antara lain menjelaskan umat Islam tidak pandai membangunkan potensi yang ada seperti minyak untuk kemajuan umat.

Yang kedua, umat Islam cintakan permusuhan. Apabila hadapi musuh (bukan Islam) mereka bersatu tetapi selepas itu mereka kembali bertelagah.


Kewangan Islam kalis krisis

SISTEM perbankan Islam yang mula diperkenalkan pada awal tahun 1980-an terbukti mendapat sambutan daripada masyarakat. Walaupun bermula dengan Bank Islam Malaysia Berhad (BIMB), permintaan masyarakat terhadap perbankan Islam membuatkan bank-bank konvensional turut menawarkan perkhidmatan perbankan Islam.

Berdasarkan pertambahan peratusan pemilihan ekuiti umat Islam yang secara konsisten melebihi 16 peratus hanya selepas 1985 iaitu dua tahun selepas penubuhan BIMB, Industri Perkhidmatan Kewangan Islam (IFSI) berhak mendapat penghargaan sebagai salah satu pemangkin kepada trend yang menggalakkan itu.

Sememangnya, hidup dipenuhi kekayaan dan kedudukan tinggi dalam masyarakat memang dihajati oleh kita semua. Islam pun tidak melarang umatnya berusaha dengan jalan yang betul mencari rezeki dan kekayaan untuk keselesaan hidup di dunia.

Namun, pemilikan kekayaan adalah satu bentuk ujian Allah terhadap hamba-Nya. Ini bertepatan dengan tugas kita sebagai hamba-Nya iaitu pemegang amanah yang mesti cuba sebaik mungkin mengelakkan diri daripada sebarang penyalahgunaan.

Dalam hal ini, Imam al-Ghazali menyebut, "Kekayaan itu umpama ular yang membawa bersamanya bisa dan penawar, bahaya dan manfaat". Justeru, sebagai umat Islam yang beriman kita seharusnya memastikan bahawa segala bentuk kekayaan itu tidak melalaikan daripada menyembah Allah.

Ini selaras dengan firman Allah yang bermaksud: Tidak Aku jadikan jin dan manusia melainkan supaya mereka menyembah kepada-Ku. (az-Zariyaat: 56)

Salah satu instrumen penting dalam kekayaan adalah sistem kewangan. Ia berfungsi sebagai medium memindahkan dana daripada unit ekonomi yang mempunyai lebihan tabungan yang kemudiannya disalurkan semula ke unit ekonomi yang mempunyai defisit tabungan.

Pengarah Urusan BIMB, Datuk Zukri Samat berkata, selain itu, sistem kewangan Islam juga adalah sebagai konduit dalam pembentukan, pemeliharaan dan pengagihan kekayaan.

Katanya, meskipun IFSI tidak kebal sepenuhnya daripada kemerosotan atau krisis kewangan tetapi terbukti ia lebih berdaya tahan semasa krisis.

"Malahan, kewangan Islam yang mengikut prinsip dan peraturan syariah diperkukuh dengan penstabil intrinsik dan mekanisme penyerap kejutan terbina dalaman yang membantu meningkatkan kekukuhan dan kestabilan sistem kewangan secara keseluruhan," katanya

Beliau berkata demikian semasa membentangkan kertas kerja 'Peranan Institusi Kewangan Islam Dalam Meningkatkan Pemilikan Kekayaan Ummah: Satu Gagasan dan Cabaran Pelaksanaan' pada Kongres Ekonomi Islam Ketiga di Pusat Dagangan Dunia Putra, Kuala Lumpur, baru-baru ini.

Kongres selama empat hari bermula 12 Januari itu adalah anjuran Yayasan Pembangunan Ekonomi Islam Malaysia (Yapeim) dan Majlis Perundingan Islam, Jabatan Kemajuan Islam Malaysia, Jabatan Perdana Menteri.

Menurut Zukri, empat nilai utama iaitu rakan kongsi, etika, hubungan terus dengan ekonomi sebenar dan tadbir urus melindungi sistem kewangan Islam daripada pendedahan berlebihan terhadap risiko.

Rakan kongsi adalah perkongsian risiko dan ganjaran atau kontrak berdasar ekuiti. Etika pula adalah pengharaman maisir (judi dan spekulias), riba dan zulm (penindasan) serta amalan yang tidak beretika seperti menyorok barang dan monopoli.

Hubungan terus dengan ekonomi sebenar di mana semua transaksi berdasarkan aktiviti ekonomi sebenar, larangan gharar (kesamaran atau penipuan). Tadbir urus pula adalah ketelusan dan pendedahan yang lebih jelas serta akauntabiliti yang lebih mantap.

Zukri menambah, bagi membolehkan rakyat Malaysia khususnya umat Islam menjana dan mengumpul kekayaan, menjadi kemestian untuk memastikan mereka mempunyai apa yang diperlukan untuk hidup dengan selesa terlebih dahulu.

Lebih tepat lagi, katanya, untuk mendapatkan pendapatan yang mencukupi bagi keperluan asas yang minimum untuk isi rumah termasuk makanan, pakaian, tempat tinggal dan pendidikan.

"Untuk itu adalah penting bagi kita semua mengkaji semua struktur gaji dan pampasan ke arah sistem saraan yang menitikberatkan prestasi dan ditanda aras mengikut amalan industri.

"Ia mestilah dalam lingkungan rangka kerja merealisasikan matlamat sosial negara dan memastikan pengagihan kemakmuran ekonomi negara yang lebih adil," jelasnya.

Seorang lagi pembentang kertas kerja, Prof. Madya Dr. Zuriah Abdul Rahman pula berkata, falsafah dan etika Islam dalam setiap hal adalah bertunjangkan konsep tauhid.

Katanya, ini bermakna semua aset yang terkandung di muka bumi ini adalah kepunyaan Allah. Justeru tidak ada ruang untuk melakukan kerosakan, tingkah laku yang merosakkan atau perkara yang bertentangan dengan Islam.

"Jangan kita berputus harap dengan bantuan Allah dan jangan lupa bahawa Allah itu Amat Mengetahui segala yang kita buat sama ada secara terang-terangan atau tersembunyi," jelas Timbalan Pengarah Siswazah, Sekolah Perniagaan Fakulti Pengurusan Peniagaan Universiti Teknologi Mara, Shah Alam di Selangor ini.

Dalam bab perlindungan kekayaan pula, Dr. Zuriah berkata, Islam menggariskan konsep tawakal iaitu selepas berusaha dan berikhtiar, ia diserahkan kepada Allah.


Usaha itu, katanya, perlu melibatkan dua kategori iaitu kawalan risiko seperti pengurangan risiko pendapatan dan harta.

Risiko kewangan pula adalah individu atau syarikat menyediakan dana untuk membayar kerugian atau pampasan kepada mereka yang hilang pendapatan atau harta disebabkan sebarang bahaya seperti bencana alam atau memindahkan risiko keada pihak lain yang boleh membiayai kerugian tersebut.

Bagi tujuan itu, Islam menyediakan sistem takaful sebagai instrumen membantu muslim menjaga harta semasa hidup atau pun untuk kegunaan ahli keluarga selepas pendeposit meninggal dunia.

"Skim takaful menggalakkan penyimpannya melabur dengan harapan mendapat keuntungan di mana pada masa yang sama menyumbang kepada tabung khas berasaskan konsep tabarru'," jelasnya.

Sementara itu, Dekan Institut Kewangan dan Perbankan Islam Universiti Islam Antarabangsa Malaysia (UIAM), Prof. Madya Dr. Ahamed Kameel Mydin Meera berkata, institusi kewangan Islam tidak terhad kepada bank sahaja.

Katanya, ada beberapa institusi kewangan lain seperti agensi pertubuhan zakat, wakaf dan Baitulmal yang amat perlu dikembangkan terutama dalam keadaan ekonomi yang gawat waktu ini.

"Institusi zakat misalnya dapat diperbaiki dengan beberapa kaedah seperti menggalakkan orang ramai membayar zakat, ketelusan dalam pengagihan wang zakat dan mempelbagaikan cara agihan contohnya melalui tajaan pendidikan rakyat miskin di sekolah-sekolah," katanya.

Menurut Dr. Ahamed Kameel lagi, institusi wakaf yang seperti diabaikan perlu dikaji semula bagi membiayai misalnya sistem persekolahan, universiti, hospital dan sebagainya.

"Wangnya juga boleh dimanfaatkan bagi membiayai pendidikan golongan miskin, kajian dan sebagainya," tambah beliau.

Dr. Ahamed Kameel berkata, Baitulmal juga berperanan besar dalam mengurus sistem kewangan Islam. Dalam ekonomi dinar ia boleh memainkan peranan sebagai minter atau gold custodian. Dinar emas akan menjaga serta mempertahankan kekayaan ummah.

"Pada saat ini, kita seharusnya mengakui gagasan mantan Perdana Menteri, Tun Dr. Mahathir Mohamad yang cadangkan penggunaan dinar emas khususnya bagi urusan perniagaan antarabangsa.

"Malaysia seharusnya menjual hasil minyak dan petroleum serta lain-lain barangan eksportnya dengan tukaran nilai emas," jelasnya.


Gaza Violence Complicates Mitchell Mission

Published: January 29, 2009

JERUSALEM — A day after President Obama’s special Middle East envoy called for a consolidation of the fragile Gaza cease-fire, the truce came under new strain Thursday when the Israeli military said Palestinians fired a rocket into Israel at dawn and Israel launched an air attack into southern Gaza.

On his first visit to the region in his new role, the envoy, George J. Mitchell, traveled to the West Bank to meet with Palestinian leaders on Thursday after discussions with Israel’s prime minister, Ehud Olmert on Wednesday. In those talks, Mr. Mitchell said, he spoke of “the critical importance” of consolidating the cease-fire that ended Israel’s three-week offensive against Hamas.

As Mr. Mitchell prepared to travel to Ramallah, Israel said it launched an air attack in the southern Gaza town of Khan Younis against a “known terrorist” accused by an Israeli military spokesman of being part of a squad responsible for a roadside bombing on Tuesday that killed an Israeli soldier on the Israeli side of the border.

News reports from Gaza described the target of the attack as a Hamas policeman on a motorcycle who was injured along with several civilians, including schoolchildren.

But the Israeli military spokesman, who spoke in return for customary anonymity, said the man was a member of a group called Global Jihad. The spokesman said the man had once been a supporter of Hamas, the Palestinian militant group which controls Gaza, and which Israel holds responsible for all attacks from the coastal strip.

“As the sole authority in the Gaza Strip, Hamas bears full responsibility for all terrorist activity originating from Gaza,” an Israeli military statement said on Thursday.

Global Jihad, a small and shadowy group that broke from Hamas, took responsibility for Tuesday’s roadside bombing. Israel retaliated with an air strike that wounded a militant and a raid that killed a man whose family said he was a farmer.

On Wednesday, the Israeli military said a rocket, the first since the fighting ended on Jan. 18, was fired from Gaza hours after Mr. Mitchell arrived in Israel from Cairo. It landed in an open area in Israel, causing no injuries. Israel carried out a retaliatory air strike against what the military said was a weapons manufacturing plant in southern Gaza. There were no immediate reports of casualties.

Mr. Mitchell told reporters after the meeting with Mr. Olmert that a broadening of the truce should include a cessation of hostilities, an end to weapons smuggling into Gaza and “the reopening of the crossings” based on agreements reached in 2005.

Those agreements, brokered by the United States, called for Palestinian Authority forces loyal to President Mahmoud Abbas of Fatah, a Hamas rival, to secure the Palestinian side of the crossings. But Hamas took control of Gaza in 2007, routing the Palestinian Authority forces there. Israel has since imposed a strict economic embargo on Gaza, letting in only humanitarian aid and basic supplies.

An Olmert aide said the prime minister told Mr. Mitchell that the crossings would “not be permanently opened” until the case of a captured Israeli soldier, Cpl. Gilad Shalit, was resolved. Corporal Shalit was seized in a cross-border raid in 2006 and taken into Gaza. Hamas is demanding that Israel release hundreds of Palestinian prisoners, including many convicted of major terrorist acts, in exchange for his release.

Hamas has rejected any linkage between the reopening of the passages and the case of Corporal Shalit, and it insists on the reopening as a prerequisite to a lasting cease-fire. In a statement issued in Syria on Wednesday, the exiled leaders of Hamas and seven other Palestinian militant groups said the “factions of the resistance reject the signing of a truce agreement before the opening of all crossing points, the lifting of the blockade and the arrival of supplies.”

Mr. Mitchell planned to meet Mr. Abbas and other Palestinian Authority leaders on Thursday. Mr. Mitchell had no plans to meet with any representatives of Hamas, which the United States, like Israel and the European Union, classifies as a terrorist organization.

In Davos, Switzerland, meanwhile, the United Nations Secretary General, Ban Ki-moon, launched an appeal for $613 million in emergency aid for Palestinians in Gaza, saying: “Help is needed urgently,” news reports said.

Mr. Ban visited Gaza after both sides declared unilateral cease-fires almost two weeks ago. He is the highest-ranking international figure to have visited Gaza since the war. Mr. Ban was speaking to reporters covering the World Economic Forum in Davos.

Isabel Kershner reported from Jerusalem. Ethan Bronner and Taghreed El-Khodary contributed reporting from Gaza, Myra Noveck from Jerusalem, and Alan Cowell from Paris.


The Wrong Man for the Job - By Scott Ritter (LATEST UPDATE - 29/1/09)

24 January  2009, TruthDig

It was early in October 2001, and I had been invited to New York City on behalf of The History Channel for a show in which I was to discuss the situation in Afghanistan in the aftermath of the Sept. 11 attacks. I was pitted against a seasoned American diplomat who had made his reputation negotiating peace accords in difficult corners of the world. I felt a little out of place, since my area of expertise was arms control and disarmament, and specifically how arms control was being implemented in Iraq. I had written a few scholarly articles about Afghan-Soviet relations, with a focus on the ethnic and tribal aspects of Afghan politics, and in the mid-1980s I had been an analyst with the Marine Corps component of the rapid deployment force, following very closely the Soviet war against the Afghan mujahedeen, so I wasn't totally out of my element.

I fully expected to play second fiddle to the veteran diplomat, and appreciated the opportunity to hear his insights into what clearly was a very difficult situation facing the Bush administration. Osama bin Laden and his al-Qaida organization had used their status as guests of the Taliban government of Afghanistan to formulate and implement their terrorist attacks against the United States. The question confronting the Bush administration was how best to respond. I had spent some time thinking over the problem and came down firmly against the idea of direct military intervention. History had shown that, since the time of Alexander the Great through the Soviet invasion and occupation, outside forces had fared poorly when they tried to impose their will on the diverse grouping of tribes and ethnic groups that made up Afghanistan.

Our fight, in any case, wasn't against the people of Afghanistan. To a certain extent, it wasn't even against the Taliban, since it was al-Qaida, not the Taliban, that had attacked us. Some, including leaders of the Bush administration, were making the case that the Taliban was directly implicated in the attacks since it had provided al-Qaida with a safe haven to plan the events of 9/11. It had yet to be proved that the Taliban was a witting host, however. As a student of the region, I believed that the United States would do well to use tribal concepts of honor to isolate and disenfranchise bin Laden and his Arab outsiders from their Taliban host. If the United States, working through the offices of the Pakistani intelligence services, could convince the Taliban that its hospitality had been abused by al-Qaida-in that the murder of innocents had been committed while under its protection-then Afghan tribal custom and honor and, even more important to the fundamentalist Taliban, Islamic law, dictated that the Taliban revoke the protections and privileges afforded bin Laden and al-Qaida.

I did not believe that the Taliban would impose justice itself, but rather could be convinced, through a combination of logic and economic incentive, to disperse al-Qaida and turn bin Laden and his senior leadership over to a third party, presumably an Islamic nation such as Pakistan or the United Arab Emirates. If a direct approach failed, then covert action, using proxy forces in Pakistan and Iran, would make contact with moderate elements of the Taliban, personified by its foreign minister, to remove the conservative Mullah Omar from power and achieve a more direct result against bin Laden and his cohorts. A new, moderate Taliban leadership would be more than capable of assembling the religious clerics necessary to convene a sharia, or Islamic, court, which would find the actions of al-Qaida to be violations of Islamic law. Also, a loya jirga, or tribal gathering, would revoke the protected status of "guest" enjoyed by bin Laden and his fellow terrorists. The least productive option America could pursue was that of direct military intervention, and I anticipated that the veteran diplomat would concur with that point of view.

What happened, however, was the exact opposite. The diplomat rejected out of hand any sort of diplomacy, arguing that there were only extremists within the ranks of the Taliban. There was, in his opinion, no such thing as a moderate Taliban, and as such the United States had no choice but to lump the Taliban and al-Qaida into a singular target set, and initiate direct military action designed to remove the Taliban from power and destroy al-Qaida in Afghanistan. I responded by noting that it would not be an easy thing to separate the Taliban from Afghan society, since the Taliban was a product of Afghan society, and that any military action against the Taliban would only strengthen the bonds between it and al-Qaida, which was of course the last result the United States should be seeking. The diplomat rejected my argument as simplistic and unrealistic. He argued for a military solution, and, of course, that was the result the Bush administration delivered. The diplomat's name? Richard Holbrooke.

The new secretary of state, Hillary Clinton, has appointed Holbrooke as the U.S. special envoy for Afghanistan and Pakistan. With his extensive experience in peacemaking, including negotiating the Dayton Accords, which brought an end to the horrific fighting in Bosnia-Herzegovina, Holbrooke seems an ideal candidate for the complexities represented by the ongoing situation in Afghanistan, as well as by the related unrest in neighboring Pakistan. The presence of NATO forces in Afghanistan also plays to Holbrooke's perceived strengths, given the role played by NATO in bringing an end to the fighting in the former Yugoslavia. However, at a time when NATO itself questions the viability of the mission in Afghanistan, pushing for a solution emphasizing social and economic stability over military action, the selection of a hawk like Holbrooke is ill-advised. Not only has he demonstrated a lack of comprehension when it comes to the complex reality of Afghanistan (not to mention Pakistan), Holbrooke has a history of choosing the military solution over the finesse of diplomacy. The Dayton Accords, after all, were built on the back of a NATO military presence. This does not bode well for the Obama administration.

It is highly doubtful that Holbrooke will bring anything more to the table than cheerleading. President Obama's stated intention to increase the size of the U.S. military presence in Afghanistan and to more forcefully assert U.S.-imposed "security" through continued military action in the Northwest Frontier of Pakistan is a dangerous scheme, one Holbrooke will enthusiastically support. Reinforcing failure is never a sound solution. Take it from the veteran British military officers who have served in Afghanistan and now advise that there is no military solution to the Afghan problem. Listening to advice like that would go a long way toward developing stability in Afghanistan and Pakistan and neutralizing al-Qaida's ability to organize and operate in those nations. The British recognize that the Taliban is not the problem, but rather part of the solution to what ails Afghanistan.

There will be no peace without a negotiated settlement that includes the Taliban. To accomplish this, leadership is required which recognizes the Taliban as a force of moderation, and not extremism. Holbrooke does not have a record which indicates he would be willing to consider direct negotiations with the Taliban. He tends to seek military solutions to difficult ethnic-based problems, and he is likely to argue for the deployment of even more U.S. troops to that war-ravaged nation. That would be a historic mistake.

Instability within Afghanistan continues to bleed over into Pakistan. As the United States pushes for a more effective military solution, there will be even greater pressures placed on U.S. leadership to become directly involved in Pakistan. The recent events in Mumbai, where Pakistani-based terrorists killed scores of innocent civilians, only underscore the inherent instability of Pakistan, which is fighting its own internal struggle against the forces of Islamic fundamentalism. Increased American military operations against Taliban and al-Qaida forces operating inside Pakistan will be a direct result of any increased U.S. military presence in Afghanistan. Such military operations will only increase the influence of Islamic fundamentalists inside Pakistan, while doing little to halt the efforts of the Taliban inside Afghanistan.

The radicalization of Pakistan has potentially disastrous implications for Pakistani-Indian relations. There is already increased talk about the possibility of war between these two nuclear-armed regional powers. Any conflict between India and Pakistan, nuclear or not, brings with it the likelihood of a breakdown of central authority within Pakistan, and would even further empower radical Islamic fundamentalists. That would bring the possibility that sensitive nuclear material, up to and including a nuclear device, would fall into their control. Such an outcome is the stuff of nightmares.

The cause-and-effect relationship between what the United States does inside Afghanistan and what occurs inside Pakistan cannot be ignored by American policymakers. As such, the goal of any U.S. special envoy to the region should be to stabilize the internal Afghan situation and de-emphasize cross-border military operations into Pakistan. Any effort which embraces the Taliban as part of a new Afghan reality would, by extension, eliminate the need to strike Taliban strongholds inside Pakistan. With the Taliban co-opted as a part of the central Afghan government, the forces of al-Qaida would lose their effectiveness, as any effort to continue to fight in Afghanistan would invariably pit them against their former allies. Reduction of hostilities in Afghanistan would create a similar reduction in hostilities in the Northwest Frontier of Pakistan. This in turn would result in a reduction of events which could be used by fundamentalists to justify radical behavior. And a reduction in radical Islamic fundamentalism would in turn allow for a more stable, moderate Pakistani government operating in a manner not only conducive to peace in Afghanistan but also peace with India and the entire region.

To embrace such a policy, the United States needs to contract the services of a U.S. special envoy capable of visionary thinking, one who possesses the political courage to stand up to a president and a secretary of state and argue against bad policy. I do not believe Holbrooke is such a man. As a result, I fear that the Obama administration will find the situation in Afghanistan and Pakistan continuing to deteriorate to the detriment of American national security, and will increasingly waste time and energy in a period of so many problems at home and abroad. Afghanistan does not need to be one of these problems, but the selection of Richard Holbrooke as U.S. special envoy bodes ill for the prospect of lasting peace and security in a volatile region.

Scott Ritter, a U.N. weapons inspector in Iraq from 1991 to 1998, is the author of "Waging Peace: The Art of War for the Antiwar Movement" (Nation Books, 2007) and "Target Iran."

Obama-Biden Defence Agenda (LATEST UPDATE - 29/1/09)

Thursday, 29 January 2009 09:47

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Obama-Biden Foreign Policy Agenda (LATEST UPDATE - 29/1/09)

Thursday, 29 January 2009 10:00

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Obama-Biden Iraq Agenda (LATEST UPDATE - 29/1/09)

Thursday, 29 January 2009 12:50

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Obama-Biden Homeland Security Agenda (LATEST UPDATE - 29/1/09)

Thursday, 29 January 2009 12:42


Obama Economic Agenda (LATEST UPDATE - 29/1/09)

Thursday, 29 January 2009 12:50

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Obama Fiscal Agenda (LATEST UPDATE - 29/1/09)

Thursday, 29 January 2009 12:55

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Obama's First Proclamation (LATEST UPDATE - 29/1/09)

Thursday, 29 January 2009 12:53

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Who Is Barack Obama - By Jeff Gates (LATEST UPDATE - 29/1/09)

Jeff Gates
Thursday, 29 January 2009 00:34

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Mossad Implicated In A Coup Plot In Turkey, A NATO Country; CIA Fingerprints Also Found On Attempt - By Wayne Madsen

15 January  2009, Online Journal
Fresh from revelations, reported by WMR, that Israel’s Mossad and Chabad House-based criminal syndicates were targets in a criminal gangland retribution attack by a notorious Muslim gang in Mumbai, comes word that Mossad has, once again, been implicated in an intelligence and criminal network, this time in Turkey.

What makes this latest example of Israel’s failure to stem the criminal activities of its intelligence service and criminal syndicates worse is that Turkey, unlike Israel, is a NATO ally of the United States and, therefore, the United States is bound by treaty to protect NATO allies from aggression by non-NATO states, including Israel.

The Turkish and other Middle East media are reporting that the Mossad has been fingered in connection with a right-wing Turkish criminal and intelligence gang, known as Ergenekon, that stands accused of attempting to overthrow Turkey’s democratically-elected Justice and Development (AKP) Party of Prime Minister Recep Tayyip Erdogan and President Abdullah Gul. Several Turkish papers have named a Turkish rabbi, Tuncay Guney, aka Daniel T. Guney and Daniel Levi and code-named “Ipek” or “Silk,” as having served as a double agent for the Turkish National Intelligence Organization (MIT) tasked with infiltrating the shadowy but powerful “state within a state” group Ergenekon. Guney had been arrested by Turkish authorities in 2001 for distributing fake drivers’ licenses and phony license plates for luxury cars. A document recently uncovered by the Turkish press revealed that Guney had also infiltrated a police intelligence unit (JITEM) working with Ergenekon to destabilize Turkey. Guney was exfiltrated to the United States and he now heads up the B’nai Yaakov Synagogue and Community Center in Toronto, Canada. Guney has denied that he has been an agent for Israel, Turkey or the United States but the MIT has confirmed the document identifying Guney as an agent for MIT is authentic.

The Turkish daily Hurriyethas reported that Guney served in MIT’s Counter-terrorism Unit (CTU) and in the MIT unit that monitors Iran. Hurriyet also reported that Guney had developed a contact at the Iranian consulate in Istanbul, Muhsin Karger, the consulate’s political affairs undersecretary.

Guney also has claimed to be a journalist and it is also alleged that he was a member of the PKK. Silvyo Ovaydo, the leader of the Turkish Jewish community, called Guney a fraudulent rabbi and said he was not even registered as a rabbi at the B’nai Yaakov synagogue in Toronto. Guney is said to have once worked for Islamist media organizations in Turkey but suddenly converted to Judaism and became an “instant rabbi” in Toronto.

At the heart of the Ergenekon story lies Mossad and its reported attempts to turn Turkey into another Lebanon or West Bank/Gaza, a country wracked by internal strife and constant warfare that would usher into power a strong right-wing military dictatorship. In the trial of one of the accused murderers of Turkish-Armenian journalist Hrant Dink, the lawyer for one of the accused murderers asked another accused murderer, Erhan Tuncel, a one-time police informer like Guney, if he had an Israeli girlfriend. Tuncel refused to answer the question, citing an invasion of his privacy. However, it was clear that what the lawyer was driving at was a Mossad connection to the murder of Dink, a murder that was being pinned on Turkish anti-Armenian nationalists by the corporate and heavyily Israeli Lobby-influenced media in the West.

When 89 suspects were named in a 2,455-page indictment by a criminal court in Istanbul last July, many retired Turkish army officers, the neocon network, especially in Washington, which is their major citadel, along with Jerusalem and London, began to throw cold water and the term “conspiracy theory” around charges in the Turkish indictment that Ergenekon played a major role in the formation of several Turkish terrorist groups to disrupt Turkish politics, including the illegal Kurdistan Workers’ Party (PKK), Turkish Hizbollah (Party of God), the Marxist-Leninist People’s Liberation Party/Front (DHKP-C), and the little-known Islamic Great East Raiders Front (IBDA-C). The neocon Jamestown Foundation in Washington called the indictment’s links between Turkish military elements and radical terrorists a “conspiracy theory.” Organizations like Jamestown have no other choice. If it were also proven, as it was in Turkey, that various terrorist groups like “Al Qaeda,” “Deccan Mujaheddin,” and others exist courtesy of the nurturing and support by American, Israeli, and other Western military-intelligence structures, groups like Jamestown would lose their reasons for existence — to make propaganda and receive funding in order to keep the terrorist bogeymen, the actual “Emmanuel Godsteins,” alive.

Guney is reported to be the 86th suspect in the indictment of Ergenekon. Guney is believed to have revealed the initial detailed information on the existence of Ergenekon in order to avoid being charged in the case.

The involvement of extreme right-wing Turkish military and intelligence officials and Turkish organized crime networks, with Mossad and, possibly, CIA agents acting in concert with a suspected CIA-funded Turkish Islamic charismatic madrassaand Islamic centers’ chief named Fethullah Gulen — whose activities parallel pan-Turkic/Eurasianist (re: George Soros) goals of Ergenekon — is similar to the scenario now playing out in India where a little known group called “Deccan Mujaheddin” may have been created as a ruse by Indian right-wing military and intelligence officers, allied with Mossad and CIA agents, to sow discord in India and bring about a right-wing Bharatiya Janata Party-Shiv Sena Hindu government.

Gulen owns a number of media and business interests in Turkey and runs Islamic centers throughout central Asia and even in Russia.

In polls, some one-third of the Turkish public believe Islamist Nurcu sect charismatic leader Grand Hodja Fethullah Gulen, who lives in Pennsylvania, is part of a movement that aims to seize control of the Turkish state and a little over a third believe that Gulen is funded by “international powers.” After he was acquitted in Turkey of attempting to overthrow the secular state with his religious organization, Gulen was first denied a Permanent Resident Card or “Green Card” to remain in the United States by the U.S. Distrrict Court for the Eastern District of Pennsylvania but then an appeals court granted Gulen a Green Card. In October of this year, a federal appellate court found that U.S. immigration authorities improperly rejected Gulen’s request for a Green Card. The appeals court ruled that Gulen was “an alien of extraordinary ability,” a decision that saw approval of Gulen’s residency status. Observers of the case suspect the CIA intervened with the court on Gulen’s behalf. Gulen’s support for the AKP government may be an insurance policy by the CIA to maintain a close relationship with the “Islamist tendency” AKP government in Ankara. The Bush administration, after seven years of trying to deport Gulen to Turkey, suddenly dropped its opposition to his permanent residency status.

The public prosecutor in the U.S. Citizenship and Immigration Service (USCIS) case against Gulen’s permanent residency status argued in filed documents that Gulen’s movement was financially supported by Saudi Arabia, Iran, the Turkish government, and the “Central Intelligence Agency.” The deposition stated that some Ankara businessmen donated up to 70 percent of their income to Gulen’s movement.

If Gulen’s operations are funded by the CIA that means the “Agency” may be linked to Ergenekon. With the U.S. having a mutual defense treaty with Turkey’s recognized government that puts the CIA potentially in violation of U.S. law. And Israel’s connections with Ergenekon means that the United States is bound by treaty to protect its ally Turkey from Israeli covert or overt aggression.

There is an element of “McCarthyism” in the Ergenekon case. Some well-meaning officials have been subjected to being tainted by the broad brush of being associated with Ergenekon. One is Asil Serdar Sacan, the former head of the Istanbul organized crime department, who was the first to confiscate documents on Ergenekon in 2001 and broadened his investigation to include both Ergenekon and the Gulen organization. Sacan, who investigated the murder of Turkey’s “King of Casinos” Omer Lutfu Topol, successfully beat attempts to smear him, being acquitted of 36 criminal charges brought against him and being reinstated six times to his police position. Sacan is currently in jail as an Ergenekon suspect but his only “crime” appears to have exposed Guney as a possible triple agent for the MIT, Mossad, and CIA. In 2001, Guney was spirited out of Turkey thanks to an agreement between MIT’s undersecretary Senkal Atasagun and the CIA. Guney was given a 10-year U.S. visa thanks to the CIA’s intervention.

In fact, Ergenekon and its “deep state” players in Turkey and Shiv Sena and its extremist Hindu “deep state” allies in India, backed by elements of Mossad and the CIA, appears to be a replay of the CIA’s secret “Gladio” network in Europe that placed weapons caches in the hands of fascists and neo-Nazis groups to take up arms in the event of a Soviet invasion of Western Europe.

The use of “false flag” terrorist attacks in Western Europe by Gladio units were blamed on Communists in an effort to forestall Communist-Socialist coalition governments in Western Europe, particularly in Italy and France.
Similarly, Ergenekon stands accused of inciting conflicts between Turks and Kurds to create anarchy in the country with the aim of having Ergenekon seizing control of the Turkish government and re-cementing close ties with the United States and Israel.

In 2004, Ergenekon attempted three military coups against the AKP government. They were code-named Eldiven (The Glove”), Sarikiz (“The Blond Girl”), and Ayisigi (“Moonlight’).
Ergenekon has been cagily kept off the newspaper pages and TV news screens in the United States. To investigate Ergenekon and Gulen in Turkey is to peel away at an onion that could expose some other “unpleasantness” for certain quarters.

On January 10, 2007, WMR reported: “According to Federal law enforcement sources, two influential businessmen — Turkish Sunni Muslim Fetullahci charismatic leader Fetullah Gulen, who lives in Pennsylvania after being acquitted in Turkey in 2006 of plotting against the secular republic, and Saudi BMI Islamic investment chief investor Yasin Qadi, a major investor in Turkey who was named in October 2001 by President Bush as a Special Designated Global Terrorist — were both involved with the CIA in the late 1990s in funneling weapons and other support to the Kosovo Liberation Army (KLA), an Albanian terrorist group operating in the former Yugoslavia. The KLA was allied with the Clinton administration and supported by leading neocons such as Richard Perle, whose lobbying firm, International Advisers, Inc., counts Turkey as its major client. Gulen’s books have been translated into Albanian. BMI’s founder, Soliman Biheiri, also helped to start PTech, a Braintree, Massachusetts-based firm that had active software contracts with the Federal Aviation Administration (FAA) and Pentagon on 9/11. PTech’s offices were raided by federal authorities in December 2002 after it came under suspicion for terrorist financing. Qadi is suspected of using a series of northern Virginia-based businesses and charities to fund ‘Al Qaeda’ activities in Bosnia. Osama Bin Laden was granted a special passport by the Bosnian government in 1993. Qadi was reportedly a business partner of Turkish businessman Cuneyd Zapsu, an adviser to the Prime Minister Recep Tayyip Erdo?an’s Justice and Reconciliation Party (Adalet ve Kalkinma Partisi, AKP).”

The dramatic revelations about Ergenekon coming out of Turkey also points to the reasons why the neocons in Washington were keen to stymie the work of FBI Turkish translator Sibel Edmonds and the CIA’s non-official cover agent Valerie Plame Wilson, both of whom had smuggling and other activities in Turkey high on their priority lists. On January 18, 2008, WMR reported: “WMR has learned that former CIA covert agent Valerie Plame Wilson, whose covert status was leaked by the Bush White House, and former FBI translator Sibel Edmonds, who was focused on a major covert network involving Turkish, Israeli, and key members of the Bush administration and Republican Party and weapons and drug smuggling, were essentially looking at the same network. The nexus of Turkey with both the covert CIA Brewster Jennings and Associates operations and the Turkish-Israeli network of influence active within the Defense and State Departments, is the key factor in understanding the complicated counter-espionage operation conducted by both the FBI and CIA.” It now appears that the Washington-connected criminal network being looked at by Edmonds and Plame was, in fact, closely linked to the Ergenekon network in Turkey.

WMR’s January 18, 2008 report continued: “Special Counsel Patrick Fitzgerald was also, according to our sources, well aware of the massive conspiracy to cover-up the smuggling of weapons of mass destruction components from former Soviet Central Asian states, as well as Ukraine, Moldova, and Ukraine, to the international weapons bazaar. The Abdul Qadeer Khan (A Q Khan) network based in Pakistan was a major beneficiary of the weapons smuggling operation that used Turkey as a pass-through. Rather than expand his investigation, Fitzgerald demurred on looking at the activities of the American Turkish Council, Turkey’s influential lobbying group in Washington, and its parallel symbiotic organization, the American Israel Public Affairs Committee (AIPAC). Turkey and Israel are close military and intelligence partners.”

Illinois Democratic Senator Dick Durbin has called on President-elect Barack Obama to reappoint Fitzgerald as U.S. Attorney for Northern Ilinois. If Obama does so, it means that the network being investigated by Edmonds and Plame, one that stretches to Ergenekon and the Gulen network in Turkey, has its hooks deep into the future Obama administration.

Children of Gaza: Stories of Those Who Died and the Trauma for Those Who Survived - By Rory McCarthy (LATEST UPDATE - 29/1/09)

24 January  2009, The Guardian

Rory McCarthy reports from Gaza City on the individual stories of some victims and the physical and psychological toll on an estimated 350,000 youngsters

Amira Qirm lay on a hospital bed today with her right leg in plaster, and held together by a line of steel pins dug deep into her skin. For several days after her operation Amira, 15, was unable to speak, and even now talks only in a low whisper.

In her past are bitter memories: watching her father die in the street outside their home, then hearing another shell land and kill her brother Ala'a, 14, and her sister Ismat, 16, and then the three days that she spent alone, injured and semi-conscious, trying to stay alive in a neighbour's abandoned house before she could be rescued last Sunday.

Ahead of her, she has a long recovery. First there is an imminent flight to France for the best possible medical treatment, many more operations and then months of rehabilitation and psychiatric care.

Only now, after most of the dead have been buried, is the first properly researched reckoning of the toll emerging. What already stands out is the striking cost borne by the children of Gaza, who make up more than half of the 1.5 million people living in this overcrowded strip of land.

The Palestinian death toll after three weeks of Israel's war was 1,285, according to the Palestinian Centre for Human Rights, or 1,268, according to the al-Mezan Human Rights Centre. Among those dead were at least 280 children.

The impact will be felt by many more for years to come. Among the more than 4,000 people injured more than a quarter were children, some left with severe disabilities. The Gaza Community Health Programme estimates that half Gaza's children – around 350,000 – will develop some form of post-traumatic stress disorder.

Amira Qirm, who lived in Tel al-Hawa, the scene of some of the heaviest fighting in Gaza City, is among the few in line to receive medical treatment abroad.

Already she has a dream to fulfil once she returns to Gaza. "I want to be a lawyer," she said today , "and to stand in court facing the Israelis for what they have done."

Most of the other children will have to make do with treatment in Gaza. Last week some psychologists were walking through the ruins of a house in Atatra, talking to a boy from the Abu Halima family who had lost his father, three brothers and an infant sister in a horrific fire after an Israeli phosphorus shell hit the house.

"The problem is they are not feeling safe even in their own homes, on the streets, in the mosques," said Ehassan Afifi, the psychologist. "This boy is seeing what happened as if it is an endless movie. The physically affected can be operated on, sometimes cured. But these mental problems may lead to problems for the rest of their lives."

Israel has consistently rejected international criticism that its forces used excessive and indiscriminate firepower.

Asked about the criticisms, the prime minister, Ehud Olmert, said in an interview yesterday in the Israeli paper Ma'ariv that the mental health of the children of southern Israel had suffered in recent years. He added: "So now there is talk about Israel's cruelty. When you win, you automatically hurt more than you've been hurt. And we didn't want to lose this campaign. What did you want, for hundreds of our soldiers to die? That, after all, was the alternative."

On the Israeli side 13 died in this conflict, three of them civilians. In total in the past eight years, 20 people in Israel have died from rocket and mortar attacks launched by militants in Gaza.

Halting this rocket fire was Israel's primary goal and for the last few days, at least, it has achieved its aim.

But Eyad al-Sarraj, a prominent psychiatrist who leads the Gaza community health programme, said that years of violence in Gaza had only fostered radicalism among its young people, who have seen their fathers humiliated and now left defenceless.

His organisation is training 1,000 ¬people to spread out across Gaza to offer help with grief and mourning and to pass serious cases on to professional therapists.

Already there were reports, he said, of children bed-wetting, stuttering, falling mute, having trouble sleeping, becoming violent or restless and losing their appetites.

The difference between this war and the uprisings, like the first intifada of the late 1980s, was that whereas there was once a frontline, with tanks near the border, now the bombing and artillery reached deep inside Gaza's urban areas and into the homes of ordinary families. "Yes, we have developed a coping strategy but we are still frightened of the Israelis doing this again and again," said al-Sarraj.

"The devastation is a reminder of what the Israelis will do. You need to give children a protective environment and give a chance to the fathers to regain their status as protectors and providers by giving them jobs and homes to live in … This is a massive, man-made disaster and we have to tackle the results."

Breaking Gaza’s Will: Israel’s Enduring Fantasy - By Ramzy Baroud (LATEST UPDATE - 29/1/09)

25 January 2009, Information Clearinghouse

My three-year-old son Sammy walked into my room uninvited as I sorted through another batch of fresh photos from Gaza.
I was looking for a specific image, one that would humanise Palestinians as living, breathing human beings, neither masked nor mutilated. But to no avail.
All the photos I received spoke of the reality that is Gaza today - homes, schools and civilian infrastructure bombed beyond description. All the faces were either of dead or dying people.

I paused as I reached a horrifying photo in the slideshow of a young boy and his sister huddled on a single hospital trolley waiting to be identified and buried. Their faces were darkened as if they were charcoal and their lifeless eyes were still widened with the horror that they experienced as they were burned slowly by a white phosphorus shell.
It was just then that Sammy walked into my room snooping around for a missing toy. "What is this, daddy?" he inquired.
I rushed to click past the horrific image, only to find myself introducing a no less shocking one. Fretfully, I turned the monitor off, then turned to my son as he stood puzzled. His eyes sparkled inquisitively as he tried to make sense of what he had just seen.
He needed to know about these kids whose little bodies had been burned beyond recognition.
"Where are their mummies and daddies? Why are they all so smoky all the time?"
I explained to him that they are Palestinians, that they were hurting "just a little" and that their "mummies and daddies will be right back."
The reality is that these children and thousands like them in Gaza have experienced the most profound pain, a pain that we may never in our lives comprehend.
"I think that Gaza is now being used as a test laboratory for new weapons," Mads Gilbert, a Norwegian doctor who had recently returned from Gaza told reporters in Oslo.
"This is a new generation of very powerful small explosives that detonates with extreme power and dissipates its power within a range of five to 10 metres
"We have not seen the casualties affected directly by the bomb, because they are normally torn to pieces and do not survive, but we have seen a number of very brutal amputations."
The dreadful weapons are known as dense inert metal explosives (DIME), "an experimental kind of explosive" but only one of several new weapons that Israel has been using in Gaza, the world's most densely populated regions.
Israel could not possibly have found a better place to experiment with DIME or the use of white phosphorus in civilian areas than Gaza.
The hapless inhabitants of the strip have been disowned. The power of the media, political coercion, intimidation and manipulation have demonised this imprisoned nation fighting for its life in the tiny spaces left of its land.
No wonder Israel refused to allow foreign journalists into the tiny enclave and brazenly bombed the remaining international presence in Gaza.
As long as there are no witnesses to the war crimes committed in Gaza, Israel is confident that it can sell a fabricated story to the world that it is, as always, the victim, one that has been terrorised and, strangely enough, demonised as well.
The Jerusalem Post quoted Israeli Foreign Minister Tzipi Livni on January 15.
"Livni said that these were hard times for Israel, but that the government was forced to act in Gaza in order to protect Israeli citizens.
"She stated that Gaza was ruled by a terrorist regime and that Israel must carry on a dialogue with moderate sources while simultaneously fighting terror."
The same peculiar message was conveyed by Israeli Prime Minister Ehud Olmert as he declared his one-sided ceasefire on January 17.
Never mind that the "terrorist regime" was democratically elected and had honoured a ceasefire agreement with Israel for six months, receiving nothing in return but a lethal siege interrupted by an occasional round of death and destruction.
Livni is not as perceptive and shrewd as the US media fantasises. Blunt-speaking Ehud Barak and stiff-faced Mark Regev are not convincing men of wisdom. Their logic is bizarre and wouldn't stand the test of reason.
But they have unfettered access to the media, where they are hardly challenged by journalists who know well that protecting one's citizens doesn't require the violation of international and humanitarian laws, targeting medical workers, sniper fire at children and demolishing homes with entire families holed up inside. Securing your borders doesn't require imprisoning and starving your neighbours and turning their homes to smoking heaps of rubble.
Olmert wants to "break the will" of Hamas, i.e. the Palestinians, since the Hamas government was elected and backed by the majority of the Palestinian people.
Isn't 60 years of suffering and survival enough to convince Olmert that the will of the Palestinians cannot be broken? How many heaps of wreckage and mutilated bodies will be enough to convince the prime minister that those who fight for their freedom will either be free or will die trying?
Far-right politician Avigdor Lieberman, a rising star in Israel, is not yet convinced. He thinks that more can be done to "secure" his country, which was established in 1948 on the ruins of destroyed Palestinian towns and villages. He has a plan.
"We must continue to fight Hamas just like the United States did with the Japanese in World War II," said the head of ultra-nationalist opposition party Yisrael Beitenu.
A selective reader of history, Lieberman could only think of the 1945 atomic bombs dropped on Nagasaki and Hiroshima. But something else happened during those years that Lieberman carefully omitted. It's called the Holocaust, a term that many are increasingly using to describe the Israeli massacres in the Gaza Strip.
It is strange that conventional Israeli wisdom still dictates that "the Arabs understand only the language of force." If that were true, then they would have conceded their rights after the first massacre in 1948. But, following more than 60 years filled with massacres new and old, they continue to resist.
"Freedom or death," is the popular Palestinian mantra. These are not simply words, but a rule by which Palestinians live and die. Gaza is the proof and Israeli leaders are yet to understand.
My son persisted. "Why are Palestinians so smoky all the time, Daddy?"
"When you grow up, you'll understand."
Ramzy Baroud ( ) is an author and editor of His work has been published in many newspapers, journals and anthologies around the world. His latest book is, "The Second Palestinian Intifada: A Chronicle of a People's Struggle" (Pluto Press, London).

Brave New (Financial) World - By Satyajit Das (LATEST UPDATE - 29/1/09)

23 January 2009, Federated Equity Management Company

From the Financial to the Real …

As the “financial’’ crisis moved into the “real” economy at the end of 2008, the incomprehensible discourse about arcane minutiae of securitized debt and derivatives (toxic three letter acronyms such as ABS, CDO, MBS, SIV; CDS etc,) that no sane person really understood, could be abandoned for the more familiar language of “recessions” and “depressions.” Familiarity, no matter how terrible, is comforting.

Commentators and pundits, generally with books to promote, jostled for position to proclaim that this was the “worst crisis’’ since, well at least, the ‘‘last worst crisis.’’ A new three letter acronym – GFC (Global Financial Crisis) – gained currency. The real causes of the crisis, its continued evolution and, most crucially, the solution remained elusive. As John Kenneth Galbraith observed: “Between human beings there is a type of intercourse which proceeds not from knowledge, or even lack of knowledge, but from failure to know what isn’t known. This is true of much of the discourse on the market.”

2008 – Look Back with Horror!

In the financial carnage of 2008, the value of financial assets fell to such depths that shell-shocked investors needed specialized diving equipment just to find what anything was worth.

Shares (both developed and emerging market), residential and commercial property, credit investments and commodities all fell sharply in value. Defensive assets (traditional widows and orphans stocks and high quality corporate bonds) fell. Alternative assets (private equity and hedge funds) that were meant to perform differently to other asset classes and diversify investment portfolios also fell. Only “boring” investors who presciently owned government bonds or “lucky” shorts who had short-sold everything else registered positive returns.

Volatility reached astonishing levels. Correlation between asset classes hovered close to one as all prices moved in unison, mimicking gold-medal winning synchronized divers. An investment in a Zambian copper mine behaved almost identically to a bond issued by a high quality corporation in Scandinavia.

What the “geeks bearing Greeks” and their quantitative investment models, risk analysis and trading strategies made of all this is unknown.

The Great Deleveraging …

Fundamentals of value were largely irrelevant as the “great deleveraging’’ (surely the financial word of 2008) dominated. In recent years, cheap and abundant money (mainly borrowed) drove up the value of other assets. As the debt in the financial system was contracted, money became scarce and expensive, triggering a sharp fall in asset prices. Anybody who had borrowed to purchase financial assets had to stump up margins or were forced to sell to reduce debt.

A shortage of buyers and lack of available liquidity meant that generally selling risky assets was nigh impossible. The marginal seller, usually distressed, and the cash-rich buyer, increasingly scarce, set market prices. Central banks and governments, depending on the plan du jour to save the world, were “buyers of last resort.”

The process is far from complete. Many hedge funds put off liquidating positions taking refuge behind “gates” – the new buzzword for suspending redemptions to prevent hapless investors taking out their vanishing investment capital.
The hope was that markets would miraculously improve in the New Year (I think it was 2009 that they were referring to but am not sure!).

On Life Support …

The health of the financial system and the extent of the slowdown in the real economy remain keys to economic stability and recovery. Banks continue to be on shaky life support. Further losses, more bank failures, a bleak earnings outlook and difficulties in raising equity and funding mean that state led “no bank left behind” support programs continue to be necessary for survival. The creeping nationalization of many banking systems is probable.

The cost of money rose and availability reduced. As Mark Twain observed: “A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.’’  “Loan” and “debt” are now four letter words.

Substantial losses in investment portfolios of insurance companies, pension funds, asset managers and endowments will emerge. A combination of investor redemptions and unavailability of leverage will result in gradual liquidation of a significant portion of the hedge fund industry.

The sharp decrease in debt levels is driving reduction in growth pushing most major economies into recessions or near recessions.

The financial headlines scream “deleveraging” at every turn. Companies are cutting production, reducing staff and costs, suspending investment plans, raising equity and trying to sell assets to reduce debt. Consumer spending is falling sharply as individuals increase savings and reduce debt. Falling investment earnings and lower interest rates also adversely affect the income of savers reducing consumption. Increasing unemployment (as companies retrench) and lower investment (as global demand collapses) mean the chance for a quick recovery is receding.

U.S. employment statistics are bleak with the rate of job losses now running at around 500,000 per month. The state of Ohio reported receiving 80,000 calls per day for unemployment claims (versus a normal 7,500 per day). Ohio indicated that it needed to hire temporary staff to handle the volumes of unemployment claims – surely an unproductive employment scheme. The problem of rising unemployment is now a global phenomenon.

Emerging markets have not “decoupled.” China and India have slowed dramatically. Russia, Brazil and the Gulf are also facing a slowdown as commodity prices fall sharply in the face of slower global growth. Global trade is also slowing.

There is renewed concern about emerging markets, especially in Central and Eastern Europe (“CEE”), Latin America and Asia. The fundamentals of the CEE economies are not dissimilar to the position of the Asian economies in the period immediately before the 1997/1998 crisis. European banks have large exposures to emerging markets in CEE, Latin America and Asia. “It’s deja-vu all over again” as Yogi Berra might have said.

The deleveraging may claim further casualties. Companies that have taken on debt to finance acquisitions will face challenges in refinancing debt. Many private equity transactions, undertaken on aggressive terms, may be unable to service its debt commitments and will need to be restructured or will default. More than 71% of debt outstanding in 2008 was rated non-investment grade. This compares with less than 30% as at 1980 and less than 50% as at 1990.

We are all Keynesians Now!

The markets are placing considerable reliance on the ability of governments to arrest the decline and restore the global economy’s health.

Central banks have flooded money markets with liquidity. The money unsurprisingly is not flowing through into the economy.

Banks are stockpiling the cash or using it to purchase government bonds. The money is needed by banks to finance around $5 trillion to $10 trillion of assets that are returning to bank balance sheets from the off-balance “shadow banking” system. Banks also need to refinance substantial amounts of maturing debt and finance corporations who are drawing down credit facilities. Banks are reluctant to lend as the real economy slows with rising unemployment and lower corporate earnings. They also lack the risk capital to make loans.

Central banks, in some countries, have moved to recapitalize the banks and have guaranteed bank borrowings. This provides the banks with expensive capital and funding. It is difficult to see that these steps will be sufficient to arrest a sharp decline in the balance sheets and credit creation capacities of banks.

Governments are resorting to lower interest rates and massive spending initiatives to stimulate growth. It seems we are all Keynesians now!

But the experience of Japan is salutary. Zero interest rates and repeated doses of fiscal medicine have not restored the health of the Japanese economy that remains mired in a form of suspended animation. The rest of world is struggling to avoid “turning Japanese.”

In 2008, aware of the massive deleveraging of the financial system, credit markets bought government bonds anticipating slower growth and lower interest rates. Equity markets, at least initially, viewed lower rates as supporting growth and to corporate earnings. By late 2008, equity markets saw low rates as symptomatic of low growth prospects and declining corporate earnings. Equity market did not react positively to the announcement from the U.S. Federal Reserve that it will adopt a zero interest rate policy. Equities remained weak even as interest rates continued to decline.

Corporate bailouts are all the rage. The financial sector has prompted others to get into the queue − carmakers are apparently now banks! Larry Flynt (founder of Hustler magazine) and Joe Francis (creator of “Girls Gone Wild” videos) are – tongue in cheek – seeking $5 billion to bailout the adult entertainment industry where revenues are falling.  Flynt reportedly stated that “Americans can do without cars and such, but they cannot do without sex.”

Government spending has converted a private sector problem into a public sector financing problem. High levels of public debt in and poor fiscal positions of some countries mean that the spending may be difficult to finance. The continued heavy reliance on savers in Asia, Europe and the Middle East is increasingly problematic given emerging problems in these countries that may limit the funds available. At a minimum, the increased issuance of public debt risks crowding out other borrowers.

The problem is most acute for the United States. In late 2008, Akio Mikuni, president of Japanese credit ratings agency Mikuni & Co., suggested that Japan should write-off its holdings of Treasurys because he believed that the U.S. government would struggle to finance increasing debt levels let alone repay the borrowings. He suggested that debt forgiveness was the only way out of the problem.

These pressures have manifested themselves in the currency markets. The last weeks of 2008 saw astonishing volatility in the euro/U.S. dollar rate, which moved between U.S. $1.3356 to U.S. $1.4719 (10.2%) in less than one week.
The risk of deflation (falling prices) is creating another massive asset price bubble in government bonds. Investors concerned about recession and deflation have purchased long maturity bonds, driving long-term interest rates to unprecedented levels. A rate less than 3% per annum for 30-year U.S.  government debt appears inadequate compensation for the risk entailed.

From ‘Shock and Awe’ to ‘Trench Warfare’ …

The aggressive reduction in debt globally will result in a sharp reduction in sustainable growth rates. Four to five dollars of debt is required to create $1 of growth.

Approximately half the recorded growth in the United States in  recent years was driven by debt, primarily from mortgage equity withdrawals. As the level of debt in the global economy decreases, attainable growth levels also decline.

In effect, the world used debt to accelerate its consumption. Spending that would have taken place normally over a period of many years was squeezed into a relatively short period because of the availability of cheap financing. Business over-invested, misreading the demand and assuming that the exaggerated growth would continue indefinitely creating significant over-capacity in many sectors.
2008 was the year of “shock and awe.” 2009 may well prove to be a year of grim and brutal trench warfare as the world adjusts to a new economic order and reduced expectations.

A lower growth future has political and social implications. China and India are deeply concerned about failing to provide jobs for the millions coming into the workforce each year.

New Investment Mantras  …

Investment logic has undeniably changed. Any business model based on the availability of cheap and abundant debt, such as private equity or hedge funds, is now questionable. Anybody with major amounts of debt to refinance in the immediate future or any other financial cash calls (such as margin calls on credit downgrades) will be carefully scrutinized.

In recent years, the value of real and financial assets were driven by a combination of higher earnings from the “great moderation” (strong economic growth and low interest rates) and an expansion of price earning multiples.

During this period, earnings also became “financialized.” Companies relied on financial engineering to boost earnings. Industrial companies boosted profits by financing purchases of their products, acquiring, merging and de-merging, borrowing to share buybacks, or trading in financial instruments. Financial sector profits rose to around 30% to 40% of total corporate profitability.

Prices reflected high termination or or resale values from private equity, hedge funds and share buybacks; that is, a “greater fool” with even greater leverage and more “financial engineering” would come along and buy whatever the investor had bought at an even higher price. All this now is a distant and fond memory that is unlikely to return until collective memory fades and scar tissue heals.

Investors are now focused on cash flows (income or dividends) from the investment. Capital gains have joined the list of endangered species. Prices must equate to the cash flows discounted back at capitalization rates factoring in much higher costs of capital. Valuation fundamentals that Benjamin Graham would have recognized are once again fashionable.

Some of this is already in the price. Nobody knows whether assumed earnings sufficiently factor in the low growth environment ahead or whether the higher costs of capital have been incorporated.

Investment patterns favor debt over equity. Current credit margins are pricing in very high levels of default on high quality debt. Abundance of cheap debt drove down debt margins boosting equity returns. As credit margins increase there is a transfer of value from equity to debt. Potential equity raisings and asset sales as companies deleverage also increase the risk of dilution of equity returns.

The form of investment may also change. Investors want to get as close to the cash flows as possible and avoid complex investment structures. Leveraged investment vehicles are out of fashion. Absolute rather than relative returns will be sought.

Management of the “liability” side of funds, specifically redemption risk, is increasingly important. Investors will be wary of the risk of value erosion in pooled investment structures (such as mutual funds and unit trusts). In 2008, unrelated redemption pressures drove down values of pooled investment and absorbed scarce liquidity. Closed end funds and self liquidating structures may become the new “New thing.’’

Fund manager’s fees will be under pressure. A fee of 1% plus management expenses of 1% for a fund where the returns are negative will not pass muster. The hedge fund standard 2% and 20% of performance will only be acceptable for exceptional managers with a long history of high and stable returns (like Mr. Bernard Madoff) or where the performance fee is paid on realized returns.
We are, of course, in a “new paradigm.” Investors will need to adjust their expectations. The new investment mantras may well be:
1.    Flat is the new up.
2.    Debt is the new equity.
3.    Interest and dividends are the only return.

4.    If you’re looking for the bottom of the market there’s a special offer − buy one, you get the next one free.

Keynes famously observed that investment is “anticipating the anticipations of others.” Bill Gross, founder of Pimco, one of the world’s largest investment managers, recently suggested that the best investment strategy may well be to buy whatever it is that the governments of the world will buy up next.

Range Rover to Game Over …

The best investment story of 2008 relates to a banker who had a modest shareholding in his employer – a storied investment bank. Upon being transferred to London, he sold the stock to finance a Range Rover. As business in London turned down, the banker was transferred to Dubai.

When selling his Range Rover, he suffered a loss of around 50% of the price he paid barely six month ago. The interesting thing was that the proceeds from the sale of the car (despite the 50% loss) would have allowed the banker to purchase five times the number of shares he sold to finance the car. 2008 is perhaps the only year on record in which a distressed price for a Range Rover outperformed equities.

In Iceland, where there is an oversupply of Range Rovers as the economic good times ended, the cars are now known as “Game Overs.’’ For investors, 2008 was also a case of game over.

As in Genesis, the “years of plenty” have ended. The improvident wasted the bounty of the years of prosperity and now find themselves in want in the “years of dearth.”
Satyajit Das is a risk consultant and author of a number of key reference works on derivatives and “Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives” (2006, FT-Prentice Hall).

Malaysian Voodoo Economics Revisited - By Matthias Chang (LATEST UPDATE - 29/1/09)

Up to the date of President Obama’s inauguration as the 44th President of the United States, the Prime Minister and the Bank Negara, specifically its Governor have been most optimistic about the Malaysian economy and her ability to withstand the impact of the Global Financial Tsunami.

They made assuring statements that our country’s fundamentals are strong, the banks are well capitalised and the banking system is flushed with liquidity and that the nation has a high savings rate, and as such there was no need for any worries of a recession or worse.

This optimism was echoed by the Asian Strategy and Leadership Institute (Asli). Speaking at the media briefing to release Asli’s bi-yearly report on Malaysia’s Economic Perspectives, Datuk Dr. Gan Khuan Poh was reported by NST as saying that he is confident Malaysia will be able to weather the financial crisis to post a 4 per cent growth this year, surpassing the government’s official forecast of 3.5 per cent. Emerging markets such as Malaysia are standing on their own feet to a greater extent than before, especially after the 1997-1998 Asian financial crisis.   

Datuk Gan repeated the same economic mantras previously dished out by the government and Bank Negara – “Strong macro fundamentals, a sound financial system, with about RM180 billion liquidity, low foreign debts, declining inflation and a high savings rate that can be mobilised for domestic consumption.”

Asli’s forecast for 2008 was off the mark and had to revise its original figures downwards from 6.2 per cent to 5.5 per cent. The Asli economic team must be wearing blinkers in 2007.

One can be forgiven for lack of foresight, as not everyone has common sense and or the ability to apply common sense in resolving complex issues. But when a person with the benefit of hindsight still gets it wrong, we have to question the integrity of his findings and motives.

The Prime Minister, Bank Negara and Asli cannot be said to be unaware that even the Fed, Bank of England and the ECB have concluded that the global banking system is utterly broken and almost all major international banks are insolvent and world trade has dived.

Neither can they be excused from not knowing that at the recent confirmation hearings of Timothy Geithner as Treasury Secretary by the US Senate Finance Committee, the following testimonies were proffered. If they were in fact unaware, they have no business commenting on the economy, as their views are totally inconsistent with the stark reality. I invite you to consider the following statements at the said hearing:

Paul Volker: “To put it starkly, we are in a serious recession with no end clearly insight. The financial system is broken. It’s a serious obstacle to recovery…”

Sen John Kerry:  “People are fond of saying that we have a crisis of confidence. I don’t believe we have a crisis of confidence. I believe that we have a reality crisis. We have a real crisis in the fiscal reality of our lending institutions…”

Sen Bob Corker:  “A Zombie banking system is being created. Large banks are insolvent, and need to be seized. Write-downs must be done. The longer we wait, the further we will be from dealing with the root cause. I talk to bankers on Wall Street. They know they are insolvent. We have to face it like adults. Face up to the insolvency. Face up to these major losses…”

The US is one of Malaysia’s biggest export markets and to say that Malaysia will be able to cope with the crisis because of our strong macro fundamentals is gross irresponsibility. I therefore question the integrity of the findings of Asli’s report. It is misleading and gives a false sense of comfort to the people. It should be flushed down the toilet.

I am now throwing a gauntlet at Asli. I hope that they will take up the challenge. It is a simple challenge – at the end of 2009, if Malaysia’s economy attains Asli’s projected growth of 4 per cent, I will donate RM10,000 to its coffers. If Malaysia fails to achieve the projected growth, Datuk Dr Gan Khuan Poh and Asli must donate the same amount to a charity designated by me.

Put up the money or shut up. Stop misleading the public! This challenge is open for acceptance by Asli within two weeks from the date of posting of this article to my website.

What was most interesting was that on the very day of the publication of the Asli Report, Bank Negara dropped a bombshell – the Overnight Policy Rate (OPR) was reduced by 75 basis points and the Statutory Reserve Requirement was also reduced! What a contradiction!

Just this fact alone will be enough to demolish the stupid conclusion of Asli’s report. I refer once again the rationale of Dr. Gan: “Strong macro fundamentals, a sound financial system, with about RM180 billion liquidity, low foreign debts, declining inflation and a high savings rate that can be mobilised for domestic consumption.”

If there is so much liquidity, there is no need for Bank Negara to reduce its Overnight Policy Rate (OPR) by a massive 75 basis points to 2.5 per cent as well as reducing the Statutory Reserve Requirement (SRR) for banks to 2 per cent from 3.5 per cent effective February 1, 2009. As reported by Business Times on the January 22, 2009 the rationale for the drastic reduction was:

“A reduction in the SRR will inject a certain amount of liquidity into the financial system, allowing the banks to lend more to finance economic activities.”

“Bank Negara said that with Malaysia’s growth prospects under threat, the big reductions in the OPR and the SRR were aimed at being pre-emptive in providing a more supportive environment for the domestic economy.”

If as stated by Asli there was ample liquidity, why was there a need to “inject a certain amount of liquidity”?
The Star newspaper reported as follows:

“The sharper deterioration of the global economy is expected to have a greater impact on the Malaysian economy with the large decline in external demand already seen…”

Additionally, Bank Negara said that, “these developments have also affected labour market conditions. Under these circumstances, the urgent implementation of policy measures will be key towards ensuring the Malaysian economy continues to experience positive growth in 2009.”

For the entire 2007 and 2008, the mantra was “all is well as we will not be adversely affected by the global crisis.” Now it is a matter of urgency for policy measures to be implemented!  This is the ultimate flip flop.  

The first stimulus plan was presented to the country some months ago. But no one has any idea where the money came from and how it was spent. Agatha Christie could not have come up with a better mystery!

Prime Minister Badawi has recently announced that another stimulus will be implemented, to give more liquidity to the economy.

Tan Sri William Cheng, President of the Associated Chinese Chambers of Commerce reiterated that a second stimulus was needed to avoid a recession and that the focus should be on the manufacturing and the construction sectors, these being the areas most threatened by the global economic crisis. Yet, just a few months ago, the mantra was that there will be no threat of recession!

We have also been assured by Bank Negara that our banks are all adequately capitalised. So how should one make of this news report by The Star dated January 24, 2009?

“Maybank mulls over RM3bil rights issue. It wants to strengthen balance sheet to face tough times ahead.

“The rights issue, the source adds, is one of several options being considered by the bank to boost its capital structure. The bank’s total capital requirement is RM12 bil while it has thus far raised some RM9.1 bil.”

Having to expose the several contradictions of the Government and Bank Negara is getting tiresome but I feel compelled to do so as the mainstream media seem oblivious to these policy twists and turns and happily repeats them so as to assist the government to win a by-election.

The days are long gone when the government can pull the wool over the eyes of the public and seduce them with false promises to win elections.

Barisan Nasional is just so stupid. The people are saying in no uncertain terms – “stop the lies, stop the fairy tales!”

The people have been saying this since the March 2008 General Elections, but the political warlords are just too occupied with power grabs and looting the treasury to bother to listen.

Will Barisan Nasional survive beyond 2010?

At this rate of stupidity and self-denial, the ruling elites will be buried for good by 2010!

Israel Accused of Executing Parents in Front of Children in Gaza - By Murray Wardrop (LATEST UPDATE - 27/1/09)

Israel has refuted allegations of war atrocities in Gaza after Palestinian children described how their parents had been "executed" by Israeli troops.

January 21, 2009 The Telegraph

One nine-year-old boy said his father had been shot dead in front of him despite surrendering to Israeli soldiers with his hands in the air.

Another youngster described witnessing the deaths of his mother, three brothers and uncle after the house they were in was shelled.

He said his mother and one of his siblings had been killed instantly, while the others bled to death over a period of days.

A psychiatrist treating children in the village of Zeitoun on the outskirts of Gaza City, where the alleged incidents took place, described the deaths as a "massacre".

Rawya Borno, a Jordanian doctor, said civilians, including children, were rounded up and killed by Israeli troops.

Israel has denied the claims, dismissing them as Hamas propaganda, but said that an investigation is being conducted into soldiers' conduct in the area.

In interviews with ITV News, Palestinians claimed that Israeli forces knowingly killed civilians in Zeitoun on the morning of Jan 14.

Abdullah Samouni, nine, described the moment his father was allegedly executed" by Israeli soldiers.

Holding his arms in the air, he said: "He was surrendering like this. My father came out and they shot him right away."

A boy named Ahmed said he was trapped for days in the wreckage of the shelled Samouni family's house.

He said: "My mother was dead beside me, she was clutching my brother Nasser and they were dead. My brother Itzaq was bleeding for two days and then he died. My brother Izmael bled to death in one day. My uncle Talal was bleeding for two hours and he died. God bless them."

Dr Borno said: "It's a massacre. They collected them from their houses. They knew that they were civilians. They were children."

When asked if Hamas had been in Zeitoun, Dr Borno replied: "Suppose that there is one of the fighters around, what is it to do with all these? Is the price to kill the family as a whole? Is this baby carrying a machine gun?"

Israeli spokesman Mark Regev suggested the claims could be Hamas propaganda and said an investigation was under way. However, he said that Israeli troops had reported that Zeitoun was "full of Hamas" militants and that soldiers encountered booby traps in "every house" in the village.

He said: "When people live in an authoritarian regime, when it's clear there is an official message and the message is to give out atrocity propaganda, [then] at least I think we should ask questions.

"Hamas has an interest in sending out this sort of atrocity propaganda.

"What happened in that village is under investigation. I know from speaking to IDF officers that there was very serious combat in that village, that every house was booby-trapped, there were guns. Very difficult military operation.

"If there is any Israeli solder that has done something inappropriate of course that will be discovered and there will be law, but I am very concerned about a situation where children are manipulated, where everyone is on the same message.

"We know that village was full of Hamas fighters. It's against the rules of engagement of the Israeli army to shoot innocent civilians."

Israel Admits Using White Phosphorous In Attacks On Gaza - By James Hider in Jerusalem and Sheera Frenkel in Gaza City (LATEST UPDATE - 27/1/09)

By James Hider in Jerusalem and Sheera Frenkel in Gaza City
Tuesday, 27 January 2009 18:00

January 24, 2009 TimesOnline



The incident being investigated is believed to be the firing of white phosphorous shells at a UN school in Beit Lahiya on January 17


After weeks of denying that it used white phosphorus in the heavily populated Gaza Strip, Israel finally admitted yesterday that the weapon was deployed in its offensive.


The army’s use of white phosphorus – which makes a distinctive shellburst of dozens of smoke trails – was reported first by The Times on January 5, when it was strenuously denied by the army. Now, in the face of mounting evidence and international outcry, Israel has been forced to backtrack on that initial denial. “Yes, phosphorus was used but not in any illegal manner,” Yigal Palmor, a Foreign Ministry spokesman, told The Times. “Some practices could be illegal but we are going into that. The IDF (Israel Defence Forces) is holding an investigation concerning one specific incident.”


The incident in question is thought to be the firing of phosphorus shells at a UN school in Beit Lahiya in the northern Gaza Strip on January 17. The weapon is legal if used as a smokescreen in battle but it is banned from deployment in civilian areas. Pictures of the attack show Palestinian medics fleeing as blobs of burning phosphorus rain down on the compound.


A senior army official also admitted that shells containing phosphorus had been used in Gaza but said that they were used to provide a smokescreen.


The Ministry of Defence gave lawyers the task before the attack of investigating the legal consequences of deploying white phosphorus – commonly stocked in Nato arsenals and used by US and British forces in Iraq and Afghanistan – inside the Gaza Strip, home to 1.5 million Palestinians, and one of the most densely populated places in the world.


“From what I know, at least one month before it was used a legal team had been consulted on the implications,” an Israeli defence official said. He added that Israel was surprised about the public outcry. “Everyone knew we were using it, and everyone else uses it. We didn’t think it would get this much attention,” he said.


Because Israel is not a signatory to the treaty that created the International Court of Justice in The Hague, it cannot be tried there. Any country that is a signatory to the Geneva Convention, however, can try to prosecute individuals who took part in the Gaza operation as culpable of war crimes.


Despite a denial when The Times first reported the use of white phosphorus, an army spokeswoman said yesterday that the military had never tried to cover up its deployment. “There was never any denial from the beginning,” she said.


- President Sarkozy of France ordered the deployment of a frigate to international waters off Gaza to patrol against arms smuggling into the territory. Preventative measures against arms trafficking are one of Israel’s demands for a peace deal with Hamas. The warship will conduct surveillance with Egypt and Israel, the French presidency said.




January 5 The Times reports that telltale smoke has appeared from areas of shelling. Israel denies using phosphorus


January 8 The Times reports photographic evidence showing stockpiles of white phosphorus (WP) shells. Israel Defence Forces spokesman says: “This is what we call a quiet shell – it has no explosives and no white phosphorus”


January 12 The Times reports that more than 50 phosphorus burns victims are taken into Nasser Hospital. An Israeli military spokesman “categorically” denies the use of white phosphorus


January 15 Remnants of white phosphorus shells are found in western Gaza. The IDF refuses to comment on specific weaponry but insists ammunition is “within the scope of international law”


January 16 The United Nations Relief and Works Agency headquarters are hit with phosphorus munitions. The Israeli military continues to deny its use


January 21 Avital Leibovich, Israel’s military spokeswoman, admits white phosphorus munitions were employed in a manner “according to international law”


January 23 Israel says it is launching an investigation into white phosphorus munitions, which hit a UN school on January 17. “Some practices could be illegal but we are going into that. The IDF is holding an investigation concerning one specific unit and one incident” Source: Times database



(On Jan 24, 2009, Hanan commented on Boycott - this is my reply)

Dear Hanan,

1. I agree entirely with you that building a great nation doesn't only take brains, but as you said it sure does help.

2. However brains alone without a heart (feelings) can produce a monster.

3. Israel is undoubtedly a great nation, becoming great through the brains and the numerous achievements you have listed. Yes I have used Israeli originated products like Microsoft Windows and Pentium chips (made in Malaysia) by Intel, an American company.

4. In fact I owe my life ultimately to Israel because there must be something invented by Israelis in the numerous instruments used in heart surgery. However most of the products used were invented and produced by Japanese.

5. I am amazed at the number of Nobel Laureates Israel has produced. I admit we have not produced even one.

6. But when the brain is without a heart it does not care for the misery resulting from the products of the brain.

7. The atom bombs which killed 100,000 men, women, children and babies are the product of Israeli (Jewish) brain. Most of the diabolical weapons now being used to kill millions of people are also the creation of Israelis on Zionist Jews. The depleted uranium and phosphorous shells being used in Gaza are also the product of Israeli brains.

8. The current financial crisis which is destroying the economies of the U.S. Britain and in fact all the countries of the world is due to manipulations of banks, financial institutions and the monetary system by Jewish supporters of Israel.

9. The negation of the freedom of speech when it comes to the alleged killings of Jews in World War II are also inspired by Zionist Jews.

10. But worse of all is the seizure of Palestinian land to create the state of Israel. Not content with the area given to the Jews by the United Nations you have seized more Palestinian land, built settlements on many parts of Palestine, disallowed the use of roads built on Palestinian land to the Palestinians, erected your own check points at the borders of Palestine with Jordan and built your version of the Berlin Wall through Palestinian villages on land that is not part of Israel.

11. Before the creation of Israel, the Jews and Arabs in Palestine lived in peace. Historically Jews had always sought refuge in Muslim countries when the Europeans conducted pogroms against them. This only stopped after the U.S. offered asylum.

12. All the terrorism that we see today, whether state initiated or by irregulars, started after the U.S. backed Israel against Arab attempts to regain their land through conventional wars. Because they were outclassed in terms of weapons by the U.S, / Israel, alliance, then only did the Arabs resort to what is called terrorism. The Israeli response have always been with greater terrorism as is seen in Gaza.

13. I have asked an American what he would do if Texas was given to the Jews to create the state of Israel. He did not answer. But I believe he would fight to get back Texas, employing all the weapons at its disposal.

14. Yet had the United States been willing to create the nation of Israel in the lands under U.S. control or in the U.S. itself, there would be no terrorism in Palestine or in the Middle East. There would be no terrorism in America either because Israel would be wiped out by the U.S. forces. The world would remain peaceful.

15. The brutality committed by your forces in Gaza is out of all proportion to the puny rocket attacks by Hamas. That attack was the result of Israel and the U.S. failing to accept the results of a properly conducted election.

16. Hamas could only establish their Government in Gaza. But you blockaded Gaza, denying them food, medicine, power, fuel etc. If you had not done that I doubt that Hamas would fire rockets at you.

17. Malaysia is well aware that total boycott of Israel is not possible. We are in fact boycotting American products which is an even more impossible task. We would not be able to bring America or Israel down.

18. But what we aim to do is to demonstrate the disgust and the anger that we feel over the inhumanity of the brainy but primitive peoples of Israel and America.

19. You can collect Nobel prizes and other prizes but the world will look down upon you as very primitive people who robbed land through terror against perfidious British and subsequently used your control over the world's greatest military power to oppress the people whom you had robbed.

20. You have nothing to be proud of, unless of course you take pride in being heartless, in being primitive brutes.

21. The only mitigating factor is the presence among Israelis of a small number who are ashamed of what you have done to the people of Gaza.


Sky joins BBC in ban on Gaza aid appeal

Press Association
Monday, 26 January 2009


Sky News announced today that it was joining the BBC in refusing to broadcast an emergency appeal for Gaza.

The broadcaster said in a statement that it had informed the Disasters Emergency Committee (DEC), an umbrella organisation for 13 humanitarian aid agencies, of its decision.

John Ryley, head of Sky News, said: "The conflict in Gaza forms part of one of the most challenging and contentious stories for any news organisation to cover.

"Our commitment as journalists is to cover all sides of that story with uncompromising objectivity."

The decision comes after BBC Director-General Mark Thompson today defended the corporation's decision not to broadcast the appeal in spite of more than 10,000 complaints.

He said the BBC was "passionate" about defending its impartiality.

Speaking on Sky News, the channel's head of foreign news, Adrian Wells, said: "Passions are raised on this story, passions are raised in this country and that is only a small reflection of the passions raised in the Middle East. And that is part of the backdrop of why we've made the decision we've made.

"We have to, as an international channel, focus on our primary role and that is to report the story and not become the story."

Asked why Sky had decided not to broadcast the appeal but Channel 5, for whom they provide news coverage, will show it, he said: "The dynamics for Sky News are different. Channel 4, 5 are not international news channels - they are broad channels showing all sorts of programmes. The dynamics about what is right for us are different to what is right for them.

"Let me say to those people who might be angry, people who might be passionate about this, there is no question about Sky's commitment to reporting the region. We've had our reporters there since the gates of Gaza opened. There is absolutely no question of Sky viewers not being aware of the humanitarian crisis."

He said that Sky had "no problem with the good intentions of the DEC appeal".

Mr Ryley continued in his statement: "We have provided, and we will continue to provide, extensive coverage from Gaza and from the wider region on the conflict and its human consequences for people on both sides.

"Our team is on the ground in the region and will continue to cover the story in the coming days and weeks.

"The absolute impartiality of our output is fundamental to Sky News and its journalism.

"That is why, after very careful consideration, we have concluded that broadcasting an appeal for Gaza at this time is incompatible with our role in providing balanced and objective reporting of this continuing situation to our audiences in the UK and around the world.

"It is important to state that this decision is not a judgment on the good intentions of the appeal.

"No-one could fail to be touched by the human suffering on both sides of the conflict, which has been the focus of much of our own reporting in the region."

The decision by Sky comes after the BBC came under intense pressure over its decision not to broadcast the appeal.

More than 10,000 complaints have been received about the BBC decision and it has been urged by a series of public figures including the Archbishops of Canterbury and York to reconsider its decision.

A parliamentary motion also urging the BBC to screen the appeal was backed by more than 50 MPs from across the Commons.

Terrestrial broadcasters ITV, Channel 4 and Five said they would show the advert from today.

Over the weekend, thousands of people demonstrated against the decision outside the BBC's Broadcasting House in central London and, last night, about 50 protesters "occupied" the lobby of BBC Scotland's headquarters in Glasgow.

The DEC - which brings together several major aid charities including the British Red Cross, Save the Children and Oxfam - wants the appeal to be broadcast on TV and radio to help raise millions of pounds for people in need of food, medicines and shelter following Israel's three-week assault on the Palestinian territory.

Secretary of State for International Development Douglas Alexander told Sky News that the BBC was, "a treasured national institution" and that their coverage of the conflict, in common with Sky's, had been "exemplary".

But he said: "My appeal is a much more straight forward one. People are suffering right now, many hundreds of thousands of people are without the basic necessities of life. That for me is a very straight forward case and I sincerely hope that the British people respond with characteristic generosity.

He said that the government is today sending armoured cars to Gaza to help the UN deliver aid and was donating money to the mine clearance effort.

"We are matching our words of concern with practical actions. We are getting on with the job this week to distribute money on behalf of the British people to British organisations."

Defending the BBC decision, Mr Thompson said potentially many millions of people would find out about the appeal through BBC news programmes.

Asked how he could justify refusing a request made on behalf of major charities such as the Red Cross, Save the Children and Christian Aid, Mr Thompson told BBC Breakfast: "When they first contacted us they absolutely acknowledged that the particular nature of what was going on in Gaza might well cause a problem for the BBC's impartiality.

"Right from the start, the DEC knew because this is not a new policy, the idea that the BBC would take really quite a strict view about impartiality, especially in a story as complex and contentious as Gaza and the broader Israel/Palestine story, that is not news and wasn't a surprise to the DEC either."

He added that if the situation was the "other way round" and the principal humanitarian concern was in Israel and not Gaza, the view of the corporation would be "exactly the same".

He said the BBC understood the "absolutely good intentions" behind the appeal.

Other public figures to criticise the BBC decision include Samantha Morton, the Golden Glob- winning actress, who said she would never work for the BBC again if it failed to change its decision.

The advert was not a political message but "about raising money for children who are dying", she said.

The early day motion to be tabled by Labour's Richard Burden has received the support of 51 MPs from across the Commons.

Mr Burden, a member of the Commons' International Development Committee, said he had written to Mr Thompson to press for an explanation for the BBC's decision, calling those given so far "both unconvincing and incoherent".

"This is not about taking sides in the conflict. It is about providing urgent help to people in desperate need," he said.

"More than 400 children have died, thousands are homeless and nothing short of a humanitarian catastrophe is unfolding in Gaza.

"The important thing is to get aid into Gaza. This is recognised by almost everyone - including the Government. The BBC appears to be the only one who has a problem seeing this."


Iceland’s Government Collapses

Published: January 26, 2009

BERLIN — Iceland’s coalition government collapsed Monday, the latest fallout from a global financial crisis that has sparked angry demonstrations against governments across Europe.

Brynjar Gauti/Associated Press

Prime Minister Geir Haarde of Iceland at the parliament in Reykjavik on Monday.

Prime Minister Geir Haarde said he was unwilling to meet the demands of his coalition partners, the Social Democratic Alliance Party, which had insisted upon getting the post of prime minister to keep the coalition intact, The Associated Press reported from Reykjavik, the Icelandic capital.

Last week, Mr. Haarde called elections for May, bringing forward a vote originally scheduled for 2011, after weeks of protests by Icelanders angered by soaring unemployment and rising prices. But Mr. Haarde said he would not lead his Independence Party into the new elections because he needed treatment for cancer.

Iceland has been in crisis since the collapse of its banks because of massive debt in September and October, with its currency, the krona, plummeting. The country’s commerce minister, Bjorgvin Sigurdsson, quit Sunday, citing the pressures of the economic collapse, The A.P. reported.

The demonstrations in Iceland, which have also demanded the resignation of governor of the nation’s central bank, have been mirrored elsewhere in Europe.

The Latvian government, which this month pushed through wage and spending cuts but also tax hikes in order to cope with the banking crisis, faced demonstrations that turned into violent riots. Neighboring Lithuania also had to contend with protesters after the government introduced a package of austerity measures to protect the financial sector.

In southern Europe, tens of thousands turned out in the Spanish city of Zaragoza last week to press the local authorities to deal with soaring unemployment as the country’s construction and retailing industries are hit by the global downturn. And in Greece, the government is still coming to terms with widespread student protests against education reforms.

In all cases, the demonstrations have had a mix of sentiments — anti-globalization, anti-capitalist and anti-reform.

So far, Europe’s largest economies, France, Germany and Britain, have been spared demonstrations. All three governments have introduced huge stimulus measures aimed at spurring employment and protecting banks.

Regardless of the outcome, the three countries will face large budget deficits and higher state borrowing, which economists say will be passed on to taxpayers. And in the case of France and Germany, the governments could find it more difficult to introduce bold reforms in a time of recession.

President Nicolas Sarkozy of France, who had advocated strong state intervention to protect his country against recession, is thinking twice about introducing a variety of reforms, especially involving high school education, because of the fear of demonstrations. Already, Mr. Sarkozy is dealing with another round of trade union strikes, which started Thursday, to protest against unemployment.

In Germany, Europe’s biggest economy, Chancellor Angela Merkel’s coalition government recently pushed through a batch of stimulus measures worth more than 80 billion euros. These are aimed at curbing unemployment by providing public money for roads, schools and consumer car-loan incentives.

But with many German companies already hit by the global slowdown and desperate to introduce savings and keep wages down, strikes cannot be ruled out. Lufthansa, the profitable national airline, has already called warning strikes, with its union demanding pay raises of more than 10 percent.

Still, despite the tens of thousands of workers who have been put on shorter working weeks, the Merkel government has not yet faced massive anti-capitalist demonstrations.

Instead, Germany’s leftist parties, fighting bitterly among themselves to gain political mileage during an election year, are heaping blame on bankers, not the regulatory processes, for the financial crisis.

Franz Müntefering, the leader of the Social Democrats, told the Sunday Frankfurter Allgemeine newspaper that while some bankers were competent, others had “lost track of what they were doing.”

In Iceland, Foreign Minister Ingibjörg Sólrún Gisladóttir, head of the Social Democratic Alliance Party, is expected to start talks immediately with opposition parties in an attempt to form a new government that would rule until the new elections are held, The A.P reported.

Ms. Gisladottir said Monday that she won’t seek to become Iceland’s new prime minister, proposing instead another member of her party, Social Affairs Minister Johanna Sigurdardottir.

The prime minister, who was also reaching out to potential prime minister candidates, told reporters Monday that he hoped a national government, formed from all of Iceland’s main political parties, could lead the country until the elections, The A.P. reported.


America is a Jewish Colony: Olmert reveals all.

By Bob Finch

On monday january 12, 2009, the leader of the jews-only state in palestine ehud olmert revealed to a jewish audience in ashkelon that he had insisted george bush should tell condoleeza rice to vote against a united nations’ resolution calling for a ceasefire to the jews’ attack on gaza. Olmert did not inadvertently humiliate the president of the united states of america; the secretary of state, condoleeza rice; congress; and the american people, by divulging this information. On the contrary. He was boasting about his power to humiliate the president and thus the american people.

The global Jewish Empire: a global Zionist conspiracy.
There are a handful of commentators in the western world who have been compiling the evidence that america, the world’s greatest democracy and military hyper-power, has been taken over by a jewish elite which acts on behalf of the jews-only state in palestine. America’s ruling jewish elite’s most well known operatives are the jewish lobby and the jewish neocons. These israel-firsters have been corrupting the bush regime into implementing policies which promote the interests of the racist state even though they have become increasing catastrophic, economically, militarily, politically, and morally, for america and the american people. After al qaeda’s attacks on new york and the pentagon, zionists imported the jews’ decades-old war against terrorism into america and ever since the bush regime has been implementing this disastrous zionist doctrine.

Hardline warmongering zionists in the jews-only state, america, and the rest of the western world, (including most recently, india) have been setting the global political agenda: an invasion of afghanistan, an invasion of iraq, an invasion of lebanon, continued ethnic cleansing of palestinians, and an attack on iran to trigger a regional, perhaps even a global, war to boost the jews-only state’s military dominance of the greater middle east.

The mainstream media in the western world is dominated by zionists who use their paper publications, tv, and films, to issue the most blatant zionist propaganda which many westerners welcome because of the disgusting islamophobia in which it is wrapped. Jewish power in america is now so blatant that jewish extremists are commissioned to publish articles in the country’s most prestigious newspapers advocating world war three. It has to be asked: what normal, sane, decent person around the world wants another world war? The only people insane enough to demand world war three are hysterical, paranoid, warmongering, jews.

The irony of the politically kosher worldview which pervades the western world is that the jewish propagandists who go out of their way to ridicule the idea of a global jewish conspiracy are themselves advocates of a global islamic conspiracy. In this hollywood concoction al quaeda, osma bin laden, hezbollah, hamas, iran, saddam’s iraq, etc, etc, have all been secretly working together to exterminate the jews and overthrow western civilization. Such fantastic drivel is being spewed out solely to cover up the global jewish conspiracy.

Any decent, open-minded, person observing geopolitics since the foundation of the jews-only state in palestine, would have been all too well aware of the way that america has been colonized by jewish neocons. What is so remarkable about this feat is not so much that a tiny minority could colonize a global hyperpower but that this minority could keep the colonization out of the public realm for so long even though the facts themselves have been screaming out to anyone who could be bothered to listen.

In the politically kosher western world, anti-zionist propositions are usually ostracized but mostly ridiculed or denounced in passing. However, when one of the jewish leaders at the centre of this global zionist conspiracy gives a clear cut example of his treatment of the president of the united states as a whipping boy, the deniers are put in an embarrassing position. This is especially so since olmert’s order to bush was in the best interests of the jews-only state but was in the president’s (and america’s) worst possible interests because it provoked the rest of the world to despise him, and america, even more for his continued warmongering. So, the question arises, how are mainstream commentators going to confront such a shocking and indisputable revelation? Here’s a spectacular firework display of the truth about jewish control over america so are they now going to pretend they can’t see the fireworks? In the recent past western politicians wholeheartedly supported the jewish fantasy that saddam possessed nuclear weapons. Is the world just going to continue upholding the latest jewish fantasy that iran is close to getting closer to acquiring nukes whilst, at the same time, pretending that the jews don’t have them? This article looks at commentators’ response to olmert’s sudden revelation.

What Olmert said.
Many mainstream american publications covered the story of olmert’s abusive and humiliating treatment of bush. Although they quoted from his speech the vast majority used only a few selective quotes and often quoted from different parts of his speech. It is only when the entire speech is heard that the intensity of olmert’s taunting of bush becomes clear. The american media thus seemed to limit the quotes it used partly in order to avoid undermining the authority of the president of the united states but also to protect the racist state by preventing americans from appreciating just how vicious olmert’s attack on bush had been.

The three quotes following provide a fullish account of olmert’s speech. "According to Olmert, he called the White House upon hearing of the upcoming UN Security Council resolution. "I said, 'Get me President Bush on the phone.' They said he was in the middle of giving a speech in Philadelphia. I said I didn't care: 'I need to talk to him now.' He got off the podium and spoke to me," Olmert said, according to multiple media reports. As a result of his conversation with President Bush, Olmert claimed, the president called Rice and forced her to abstain from voting on the measure, which she herself had helped author. "He gave an order to the secretary of state and she did not vote in favor of it, a resolution she cooked up, phrased, organized, and maneuvered for. She was left pretty shamed and abstained on a resolution she arranged," Olmert said." (Daniel Luban ‘Olmert's Claims Revive Israel Lobby Controversy’ January 14, 2009); "According to Olmert, he told Bush that the US should not vote for the resolution, and Bush then directed Rice to abstain. "She was left pretty embarrassed," Olmert said. Like Olmert's aides, an official in the Prime Minister's Office said "the Prime Minister's comments on Monday were a correct account of what took place."" (Herb Keinon, Allison Hoffman ‘'PM stands by his version in diplo spat'’ January 14, 2009); "So, here, in Olmert's words, is what happened next. "In the night between Thursday and Friday, when the secretary of state wanted to lead the vote on a cease-fire at the Security Council, we did not want her to vote in favor. I said, 'Get me President Bush on the phone.' They said he was in the middle of giving a speech in Philadelphia. I said I didn't care. 'I need to talk to him now.' He got off the podium and spoke to me." According to Olmert, Bush was clueless. "He said: 'Listen. I don't know about it. I didn't see it. I'm not familiar with the phrasing.’ I told him the United States could not vote in favor. It cannot vote in favor of such a resolution. He immediately called the secretary of state and told her not to vote in favor."" (Patrick J. Buchanan ‘Is Ehud's Poodle Acting Up?’ January 17, 2009).

U.S. State Department response.
America’s state department was angry with olmert but whether this was because it didn’t like the president being humiliated or because they were furious he’d given the game away is not clear. "The U.S. State Department fiercely denied claims made by Ehud Olmert about his influence over President George W. Bush, in an incident that has stirred up old debates about the role of the Israeli government and the so-called "Israel lobby" in formulating Middle East policy in Washington." (Daniel Luban ‘Olmert's Claims Revive Israel Lobby Controversy’ January 14, 2009).

Olmert not backing down.
"The State Department immediately contradicted Olmert’s claims, insisting that "the government of Israel does not make US policy." Spokesman Sean McCormack also suggested that Israel might want to "clarify or correct the record" with respect to the comments. Rice has dismissed Olmert’s claims as "fiction." The comments have sparked no small concern in Israel, where the fear is that Olmert’s claims to be able to order the President of the United States around will only increase public opposition in America to Israel’s influence on its foreign policy. Yet spokesmen for Olmert say that the prime minister stands behind his version of events." (‘Olmert Stands Behind Rice-Shaming Claim: Rice Calls Prime Minister's Comments "Fiction"’ January 14, 2009).

Haaretz suggests Olmert closer to the truth than Rice.
"Inquiries with people uninvolved in the spat between Prime Minister Ehud Olmert and U.S. Secretary of State Condoleezza Rice reveal that his version of the lead-up to America's vote on last week's Security Council resolution is closer to the truth than hers. The whole story would have ended well had Olmert behaved like a responsible adult and restrained his own impulses. Even his close associates admit that he would have done better to skip the public boasting about how he persuaded Bush to overrule Rice. Quite aside from the fact that this embarrassed the U.S. administration, Olmert's associates understand all too well that this story merely provides fresh ammunition to those who claim the Jews are the ones who really control America." (Akiva Eldar ‘Inquiries show Olmert version of UN Gaza vote spat closer to truth than Rice's’ January 01, 2009).

How have America’s commentators reacted to Olmert confession?
In the past, american commentators have adamantly refused to discuss jewish economic, cultural, or political, power in america. Indeed, their silence is yet another piece of evidence as to the existence of such power. So, will olmert’s confession set them free to challenge the jews’ colonization of america and its calamitous consequences for the country (and many other countries around the world)? Or will they just go on living comfortably in the zionist fantasy world created for them by america’s jewish ruling elite?

Juan Cole picks up on Olmert’s confession to propose that Jewish nazis are exercising their power in America not merely through Bribery but Blackmail.
Cole covered the outburst in detail and speculated that zionist power in america might derive from mossad’s acquisition of material with which it could blackmail bush. For a political commentator such as cole, a high profile member of america’s defunct wasp establishment, to have to resort to such a wacky, fringe, idea is unusual to say the least. But then again what alternative does he have since he won’t talk about america’s ruling jewish elite, the colossal economic power acquired by the jewish elite, nor the zionists near total domination of congress and the american media.

Steven C Clemons.
Clemons personalizes olmert’s statement so that it is merely a kick in the face for the president and condoleeza rice rather than a statement of shame about the gross subservience of america’s much vaunted democratic system and the ignominious position of the american people whose political leaders care more about protecting the jews-only state in palestine than looking after their own citizens. "No matter what one may think of Condoleezza Rice's diplomatic record, which I think is better than many liberal critics gauge, the fact that Israel Prime Minister Ehud Olmert gave her a kick in the teeth as she departs her office is obnoxious and harmful all around. Shaming a US President and Secretary of State may not change the course in policy and may not shift America's general approach to the region, at least for the time being, but it does take the fizz out of the unique relationship." (Steven C Clemons ‘Defending Condi: Olmert Shames Himself in Kick-in-the-Teeth Attack on Rice’ January 12, 2009). Clemons has no interest in questioning the political significance of america’s democracy, reputed by common opinion to be the best in the world, even though its president and members of congress are mere vassals to a rogue state, a hive of jewish racists, in the middle east.

Philip Weiss.
"Clemons gets it right re Olmert and Condi, that it's a disgraceful attack. I missed the humiliation in this. Israel often treats our executive like the help, because Israelis know they have power in Washington. It's similar to Ehud Barak treating Bill Clinton like a peer in 2000, and Yitzhak Shamir lying to George Bush about not building more settlements, in '91. They always get away with it, because of the lobby. No wonder the fury at J Street has been coordinated by the Israeli embassy. They have so much to lose." (Philip Weiss ‘Where is Hillary on cease-fire?’ January 13, 2009). Here’s one jewish writer making a determined effort to learn the truth about american politics.

Xymphora points out Kouchner’s Zionist Treachery.
"Juan Cole, who seems to be letting his freak flag fly recently, has an excellent detailed posting on the automatic control that the Israeli government has over the American government, exemplified by Olmert picking up the phone and ordering Bush around to the extent that the United States changed its mind and abstained, rather than voted for, the latest UN cease-fire resolution. This was a public slap in the face for Rice, who actually helped draft the resolution, and Olmert is crowing about it. Note the behind-the-scenes trickery of the Jew Kouchner, who valiantly worked for his homeland, Israel, naturally, not France, to try to block the resolution. Cole concludes by raising the most important issue of all, the consideration of which is necessitated by the lack of any obvious motive for Bush to act as he did, the conspiracy theory that the mysterious hold of Zionism over American politicians is connected to blackmail. Israeli intelligence, with the aid of the secret cadre of dual-loyalty American Jews, gathers dossiers of information on characters like Bush, people who have a lot of embarrassments in their pasts, and holds it over them. Other than direct payments of cash, which probably explains Cheney, this is by far the most plausible theory for why American politicians consistently and blatantly act against American interests (sorry Noam). I wonder what the Israeli dossier on Obama looks like?" (Xymphora ‘The mysterious hold of Zionism over American politicians’ January 13, 2009).

Matthew Yglesias.
"The State Department has some not-terribly-convincing denials out. But one way or another it seems both telling and unseemly that Olmert is going around bragging about this." (Matthew Yglesias ‘Olmert Claims to Control US Foreign Policy’ January 13, 2009). Olmert should be applauded for telling the truth not criticized for bragging. Now that the truth is out why doesn’t yglesias spend his time outlining its fundamental political implications and ramifications?

Paul Craig Roberts.
The inimitable paul craig roberts is a unique and fearless commentator: a former politician who speaks truth to power. "Israeli politicians have been bragging for decades about the control they exercise over the US government. In his final press conference, President Bush, deluded to the very end, said that the whole world respects America. In fact, when the world looks at America, what it sees is an Israeli colony. What is happening to the Palestinians herded into the Gaza Ghetto is happening because of American money and weapons. It is just as much an attack by the United States as an attack by Israel. The US government is complicit in the war crimes. "Our" president was a puppet for a cabal led by Dick Cheney and a handful of Jewish neoconservatives, who took control of the Pentagon, the State Department, the National Security Council, the CIA, and "Homeland Security." From these power positions, the neocon cabal used lies and deception to invade Afghanistan and Iraq, pointless wars that have cost Americans $3 trillion, while millions of Americans lose their jobs, their pensions, and their access to health care." (Paul Craig Roberts ‘The White House Moron Stumbles to the Finish: The Humiliation of America’ January 14, 2009).

Steven Spiegel.
"Middle East expert Steven Spiegel described the episode as "the worst faux pas by an Israeli prime minister in history. You really do wonder what the prime minister was thinking, if it's true, you'd really want to keep it as quiet as possible, and if it's not true, why would you want to make up a story that would embarrass both the Bush administration and the Israeli government and draw criticism from those who are antagonistic to Israel?" asked Spiegel, director of the Center for Middle East Development at UCLA. "No matter how you play it, exaggeration, falsehood, whole truth, the whole thing makes them all look bad," Spiegel told The Jerusalem Post." (Herb Keinon, Allison Hoffman ‘'PM stands by his version in diplo spat'’ January 14, 2009).

Justin Raimondo.
In the past, raimondo has been edging towards stating that the jews-only state in palestine, with the aid of its political agents in america, controls america’s foreign policies. It might have been thought he would have taken olmert’s statement as a great opportunity to highlight this fundamental reality of american politics. At first it seems he would. "It (Olmert’s statement) tells us who is used to giving orders, and who is accustomed to obedience." (Justin Raimondo ‘Israel versus America: Is the 'special relationship' over? January 16, 2009). But he doesn’t. "What Gaza signals is a new turn for the Israelis, a clean break, if you will, with their status as an American puppet in the Middle East. They are clearly going off on their own, intent on waging a war of unmitigated aggression against all their neighbors." (Justin Raimondo ‘Israel versus America: Is the 'special relationship' over? January 16, 2009). When given the opportunity he ducks it. The apartheid state has always been an american puppet but is now going off on its own. Such an argument would make sense if america had stopped giving the racist state vast annual tribute payments and stopped providing it with endless quantities of weapons and munitions with which to slaughter innocent civilians. Oh well, seems like raimondo’s back in the closet.

Patrick J. Buchanan.
Over the last couple of decades, buchanan has been one of the few mainstream american politicians who have criticized the jews-only state and jewish power in america and has suffered the consequences. And yet he’s been quite restrained about olmert’s confession. "With Bush and Rice leaving office in hours, and Olmert in weeks, the story may seem to lack significance. Yet, public gloating by an Israeli prime minister that he can order a U.S. president off a podium and instruct him to reverse and humiliate his secretary of state may cause even Ehud's poodle to rise up on its hind legs one day and bite its master. Taking such liberties with a superpower that, for Israel's benefit, has shoveled out $150 billion and subordinated its own interests in the Arab and Islamic world would seem a hubristic and stupid thing to do." (Patrick J. Buchanan ‘Is Ehud's Poodle Acting Up?’ January 17, 2009).

Brian Cloughley.
Cloughley enters the fray, "And the President of the United States of America jumps to obey the Israeli prime minister." (Brian Cloughley ‘The Power of AIPAC: Who Runs America?’ January 16-18, 2009).

However, the reason that america’s ruling jewish elite is nigh on impervious is because those on the left refuse to challenge it. Cloughley points out that members of congress are funded by jews but doesn’t generalize beyond this to expose america’s ruling jewish elite. "There is one thing certain: the US Congress is going to continue its unconditional support for Israel, no matter what war crimes are committed by its disgusting thugs-in-uniform. The Reps need the money, after all, which they get through political action committees which are generously funded by American Jews. And they are scared to political death by the threat that pro-Israel agencies will destroy them politically if they dare say a word against Israel. There are very few Representatives of the people of America who would dare challenge Israel, or who might possibly criticize Israel, or who have the courage to condemn atrocities committed by Israel." (Brian Cloughley ‘The Power of AIPAC: Who Runs America?’ January 16-18, 2009).

He criticizes the american media for not telling the truth. "Not many Americans know anything about the hideous barbarity in Gaza, because US cable networks and newspapers rarely carry pictures of disfigured blood-splashed children who have been killed, maimed or orphaned by the Israelis. But here in Europe we have access to some TV channels and newspapers that are very different from the pliant pro-Zion patsies of the major news outlets across the Atlantic." (Brian Cloughley ‘The Power of AIPAC: Who Runs America?’ January 16-18, 2009). But he fails to tell the truth by not denouncing the zionist owned and controlled american media. The media in any country is a reflection of that society’s ruling class. No ruling class rules without the help of a cheerleading media. The reason that america’s mainstream media supports the jews-only state is because it is owned and staffed primarily by members of america’s ruling jewish elite.

Tony Karon.
As far as is known karon has made no comment about olmert’s confession. However, the confession places karon’s comments about rice’s supervision of the jewish war against lebanon in 2006 in a different light. "It was clear, at the time, that the neophyte Olmert was outsourcing his decision-making to Condi Rice. I wrote at the time of the sense that Israel was waging a proxy war for the Bush Administration, a sense confirmed at the time by the hawkish dean of Israeli military correspondents, Ze’ev Schiff, who wrote at the height of the conflict: "U.S. Secretary of State Condoleezza Rice is the figure leading the strategy of changing the situation in Lebanon, not Prime Minister Ehud Olmert or Defense Minister Amir Peretz. She has so far managed to withstand international pressure in favor of a cease-fire, even though this will allow Hezbollah to retain its status as a militia armed by Iran and Syria." (Tony Karon ‘Olmert: His Own Shlemiel, or Bush’s?’ January 31, 2008). If olmert was capable of humiliating rice over the united nations’ resolution over gaza is it likely that, two years earlier, he’d allowed her to run the show slaughtering lebanese civilians?

George Bush, the Jews’ whipping Boy.
What has not been pointed out by commentators on olmert’s confession was that he was referencing a statement made by ariel sharon a few years earlier. In september 2001, sharon had publicly humiliated bush by calling him a chamberlain. "Don't repeat the terrible mistake of 1938 when the enlightened democracies of Europe decided to sacrifice Czechoslovakia for a convenient temporary solution. Do not try to placate the Arabs at our expense ... Israel will not be Czechoslovakia. Israel will fight terror." (‘Israel consumed by victim culture’ Guardian 5.10.2001). A few days later, sharon compounded the humiliation, "Every time we do something, you (Shimon Peres) tell me Americans will do this and will do that. I want to tell you something very clear. Don’t worry about American pressure on Israel; we, the Jewish people, control America and the Americans know it." (Zionist Prime Minister Ariel Sharon October 3, 2001 IAP News).

Olmert’s jewish audience would have picked up on this reference and understood that olmert was trying to cloak himself with sharon’s mantle as one of the jews’ most belligerent warmongers (although whether they believed olmert deserved such a comparison is another matter).

Olmert’s humiliation of bush could not be a more fitting finale to bush’s presidency. His presidency began not so much on september 11, 2001 with al qaeda’s attacks on new york and the pentagon but with sharon’s success in forcing him to accept the likudnik interpretation of this event. The bush regime did not respond to this event by implementing policies to protect and promote american interests. On the contrary, sharon, and the jewish neocons/lobby in america, pushed the bush regime into implementing policies that boosted the interests of the jews-only state in palestine even though these policies would have a catastrophic impact on america’s interests. In other words, the president of the united states failed to interpret this critical event, even though it happened in his own country, because he was overwhelmed by the narrative put forward by the leader of a shitty little country on the other side of the planet and by jewish neocons in america loyal to that country. Al quaeda attacked america because of its unconditional support for the jews-only state. Bush and america could have realized that such unconditional support was against america’s interests, but the rogue state and its jewish agents in america pressured the president into adopting even more extreme zionist policies which put america interests at even greater risk.

Al qaeda’s payback on america was a major turning point in american history but americans had nothing to do with the direction in which their own country then moved. "Common wisdom has it that after 9/11, a new era of geo-politics was ushered in, defined by what is usually called the Bush doctrine: pre-emptive wars, attacks on terrorist infrastructure (read: entire countries), an insistence that all the enemy understands is force. In fact, it would be more accurate to call this rigid worldview the Likud doctrine. What happened on September 11, 2001 is that the Likud doctrine, previously targeted against Palestinians, was picked up by the most powerful nation on earth and applied on a global scale. Call it the Likudisation of the world: the real legacy of 9/11." (Naomi Klein ‘The Likud doctrine’ The Guardian,2763,1301504,00.html September 10, 2004); "But the idea of a super-power behaving in a similar way, responding to terrorist threats or guerrilla incursions by flattening another country just to preserve its own deterrent credibility, is odd in the extreme. It is one thing for the US unconditionally to underwrite Israelis’ behaviour (though in neither country’s interest, as some Israeli commentators at least have remarked). But for the US to imitate Israel wholesale, to import that tiny country’s self-destructive, intemperate response to any hostility or opposition and to make it the leitmotif of American foreign policy: that is simply bizarre. Bush’s Middle Eastern policy now tracks so closely to the Israeli precedent that it is very difficult to see daylight between the two. It is this surreal turn of events that helps explain the confusion and silence of American liberal thinking on the subject (as well, perhaps, as Tony Blair’s syntactically sympathetic me-tooism). Historically, liberals have been unsympathetic to ‘wars of choice’ when undertaken or proposed by their own government. War, in the liberal imagination (and not only the liberal one), is a last resort, not a first option. But the United States now has an Israeli-style foreign policy and America’s liberal intellectuals overwhelmingly support it." (Tony Judt ‘Bush’s Useful Idiots’ September 21 2006).

An american president who calls for a palestinian state (the first to do so) but fails to deliver it, despite the successive, nonstop, diplomatic efforts of colin powell and condoleezza rice, america’s massive funding of the apartheid state, and the widespread international support for such a goal, is clearly subservient to zionist power and influence. Brent scowcroft was one of the few to confront such fundamental realities of american political life when he stated that ariel sharon had bush wrapped around his little finger. It is a remarkable testimony to americans’ capability for living in their highly leveraged zionist fantasy world that they ignored scowcroft’s insider remark and continued their patriotic bleats about how america is the most powerful country in the world with the world’s sole military hyper-power.

For a number of other blatant examples of how sharon continually beat up bush and got him to support extreme zionist policies which have had the most devastating economic, political, and military, consequences for america please see ‘America is a Jewish Colony: Bush is Sharon’s Muppet’

It is hardly surprising then that the bush presidency should end so ignominiously when another hysterical, paranoid, warmonger from the jewish nazi state boasted to the whole world that, in effect, bush was nothing but his whipping boy. Why should olmert fear retribution for his gross humiliation of bush and the american people when they can’t harm jewish power in america?



1. I have been in the United Kingdom for more than a week - a long time for me to stay in any place abroad.

2. When I left Malaysia the papers and television were full of reports on the Israeli brutalities in Gaza. There were heart-wrenching pictures of little children half-buried in the rubble of destroyed houses. I was very upset with Israeli brutalities and I thought the whole world would condemn Israel.

3. I was shocked that in the United Kingdom, the land of the free press and free speech there was hardly any report on Gaza and the Israeli invasion. Certainly there were no pictures of the brutal killing of children.

4. I understand that it is the same in America, another great advocate of the freedom of the Press.

5. Maybe by freedom of the Press they mean allowing the Press to pick and choose what they wish to publish. Yet they talk about self-censorship in Malaysia. What our papers fail to report is nothing compared to what the British and American media fail to report. Obviously they are protecting Israel's interest.

6. All these give credence to the allegation that the Jews control the Western media. When in 2003 at the OIC conference I said that the Jews rule the world by proxy, I was condemned by the Western press and the US Government. It would seem that Jewish control over the ethnic European countries, in particular the United States of America is total.


BBC left isolated as rival channels back aid appeal

Ministers step into row over corporation's refusal to show charities' plea for donations to Gaza

By Emily Dugan, Jane Merrick and Matthew Bell
Sunday, 25 January 2009

Protesters outside BBC offices in central London yesterday

Tom Saunderson

Protesters outside BBC offices in central London yesterday

The BBC was engaged in a war of words with ministers last night over its refusal to broadcast an urgent appeal for humanitarian aid to Gaza. Government figures, aid workers and BBC staff expressed outrage that the corporation has not backed down, as some of its rivals did yesterday, and broadcast the Disasters Emergency Committee (DEC) appeal. The BBC said yesterday it was concerned that access to aid in Gaza might be problematic, and that it did not want to endanger the public's perception of the impartiality of its reporting.

The BBC Trust chairman Sir Michael Lyons expressed concern that the "level and tone" of the political comments were "coming close to constituting undue interference in the political independence" of the corporation.

Channel 4, Five, ITV and al-Jazeera English announced they will be airing the DEC appeal tomorrow, after initially falling in behind the BBC. Sky News was considering its position last night.

Public figures were outraged by the broadcaster's decision not to air the appeal, calling it a "terrible mistake". One former senior BBC journalist referred to "a culture of timidity". The BBC has previously aired DEC pleas for humanitarian help in volatile regions such as Congo and Burma.

Yesterday a march that had been organised to complain about the BBC's alleged pro-Israel bias, which began outside Broadcasting House, was given new focus by the row.

The director-general, Mark Thompson, stood by his decision last night, despite critics' attempts to draw a distinction between politics and aid.

The row once again pitted the Government against the BBC, six years on from the David Kelly controversy. It raised further questions over the judgement of senior BBC officials weeks after the Ross/Brand affair.

In an unusual intervention by a cabinet minister, the International Development Secretary, Douglas Alexander, wrote to Mr Thompson on Friday urging him to reconsider, but Whitehall sources said the BBC seemed determined not to back down. The health minister Ben Bradshaw, a former BBC journalist, said the decision was "inexplicable" and called the corporation's justification "completely feeble". The Communities and Local Government Secretary, Hazel Blears, added: "I sincerely hope the BBC will urgently review its decision."

A motion has been tabled in the Commons for tomorrow expressing astonishment at the corporation's judgement in blocking airtime from the coalition of major aid charities, including the British Red Cross.

It is understood that it was Mr Thompson's decision, and chief operating officer Caroline Thomson was ordered to go on radio – initially on Friday on Radio 4's The World Tonight – to defend the position. A source close to the row said: "Because she [Ms Thomson] has gone so strongly on editorial independence, it is very difficult to see how they can back down."

Ms Thomson said yesterday: "It is important to remember that broadcasting appeals like this is a unique thing we do and we have to be clear about two things when we do it. First, that that money will go to the people it is intended for; but second, that we can do it within our own impartiality principles and without affecting and impinging on the audience's perception of our impartiality."

Protocol dictates that the BBC leads the way on deciding a consensus on DEC appeals with other channels. But rival channels allege the corporation made an announcement on Thursday before consulting them, forcing them to break with the convention.

The DEC is an apolitical umbrella organisation made up of UK major aid organisations ActionAid, British Red Cross, Cafod, Care International UK, Christian Aid, Concern Worldwide, Help the Aged, Islamic Relief, Merlin, Oxfam, Save the Children, Tearfund and World Vision.

Mr Alexander welcomed the move by rival broadcasters to air the appeal: "The DEC appeal is crucial to help alleviate the suffering of people injured, displaced and hungry in Gaza."

Many former BBC stalwarts were appalled at the news and called for an immediate reversal of the decision. John Tusa, former managing director of BBC World Service, said: "It's a terrible mistake and I think they have lost for the moment any sense of judgement and a good deal of courage. Anybody who thinks giving aid to badly injured children in Gaza would be taken as bias needs their heads examined."

Former BBC correspondent Martin Bell said: "Old BBC soldiers like me are appalled by the BBC's decision. There are civilians dying out there who desperately need aid."

Director-general is under pressure to go

Mark Thompson's statement last night was a typically robust reaction to the latest challenge troubling his tenure as director-general of the BBC.

A scandal surrounding rigged phone-in contests on 'Blue Peter' in 2007 led to the regulator Ofcom fining the BBC £50,000. The BBC1 controller Peter Fincham resigned in the same year over the the editing of a trailer that misleadingly suggested that the Queen had stormed out of a photo session.

Mr Thompson came under pressure to resign last year, in the wake of controversy surrounding lurid calls to the actor Andrew Sachs, which resulted in the departure of Russell Brand, the resignation of BBC Radio 2 controller Lesley Douglas, and the suspension of Jonathan Ross.

Ministerial anger over his decision not to back down over the appeal will add to the pressure for Mr Thompson to do what some of his senior staff have done in recent years – resign.

Balance in the media: Has the BBC lost its nerve over Gaza?

The BBC is used to being accused of anti-Israel bias, but in 2004 it was jolted by a study that said BBC1 and ITV news were guilty, if unthinkingly, of under-reporting the Palestinian cause. Worse, the Glasgow Media Unit found viewers thought the "occupation" of the West Bank and Gaza referred to the Palestinians, not Israeli settlers.

At the same time, the BBC fell foul of the Israeli authorities over an interview with the nuclear whistleblower Mordecai Vanunu, released in 2004 after 18 years in prison, which was smuggled out of Israel. The BBC's then deputy bureau chief, Simon Wilson, had his work permit withdrawn and was barred from the country. He was allowed back in after the BBC bowed to demands that he make a written apology to the Israeli government for dodging its censors.

The BBC appointed a senior broadcaster, Malcolm Balen, to "take stock" of Middle East coverage, in his words. He drew up an internal report that has never been released, but one result appeared to be the appointment, in mid-2005, of Jeremy Bowen as the BBC's Middle East editor. His stated role was to supply context amid the footage of bloodshed and mayhem.

Why critics accuse the BBC of losing its nerve is because, several times during the present conflict, almost as much airtime has been given to the chief Israeli spokesman, Mark Regev, as if by allowing him his say, the BBC is supplying the necessary "balance" to the images of Palestinian victims. A live "two-way" between Mr Regev and Jon Snow of 'Channel 4 News' became a shouting match, but this has never happened on the BBC.

Donations can be made to the DEC Gaza appeal via its website or by calling 0370 60 60 900


Donald Macintyre: An assault on the peace process

Israel devastated the Strip's production capacity as well as destroying homes

Monday, 26 January 2009

A Palestinian woman waits at a UN food distribution centre in Gaza City yesterday


A Palestinian woman waits at a UN food distribution centre in Gaza City yesterday

Israeli forces used aerial bombing, tank shelling and armoured bulldozers to eliminate the productive capacity of some of Gaza's most important manufacturing plants during their 22 days of military action in the Gaza Strip. The attacks – like those which destroyed at least 4,000 homes, left some residential areas resembling an earthquake zone and more than 50,000 people in temporary shelters at their peak – destroyed or severely damaged 219 factories, Palestinian industrialists say.

Leaders of Gaza's business community – who have long stayed aloof from the different Palestinian political factions – say that much of the 3 per cent of industry still operating after the 18-month shutdown caused by Israel's economic siege has now been destroyed.

Chris Gunness, chief spokesman for the UN Relief and Works Agency (UNRWA), said that widespread destruction of "civilian economic infrastructure" was a strike "at the heart of the peace process" because "economic stability is an essential component of a durable peace."

While the main impact of the destruction is likely to be on the already politically fraught prospects of medium to long-term reconstruction in Gaza, it it is unlikely to make efforts to help its many stricken and displaced residents any easier. It is those humanitarian relief efforts for which the main British aid agencies are appealing for help in the advertisement so far barred by the BBC. Meanwhile, the UNRWA is separately pressing donors for $345m for immediate repairs to homes still standing and to its own damaged premises.

The destroyed factories include: Alweyda, the biggest Palestinian food-processing plant and the only one still operating in Gaza until the war; Abu Eida, the largest, and now flattened, ready-mixed concrete producer; and the 89-year-old Al Badr flour mills, which have the biggest storage facilities anywhere in the Strip. The owners of all three said yesterday they were proud of their close and long-standing contact with Israeli partner firms and suppliers. Dr Yaser Alweyda, owner and engineering director of the demolished food-processing plant, estimated the total damage to his plant at $22.5m and accused Israel of wanting "to destroy the weak Palestinian economy". He added: "They want to ensure that we will never have a state in Palestine."

Tawfiq Abu Eida, the owner of the concrete factory, said he had been preparing just before the war to supply the Beit Lahiya sewage works, a key project of the Middle East envoy Tony Blair.

The air and ground strikes have compounded the impact of the trade embargo, which Israel imposed in June 2007 after Hamas's enforced takeover of the Strip. Amr Hamad, the executive manager of the Palestinian Federation of Industries, said: "What they were not able to reach by the blockade, they have reached with their bulldozers." He added: "Businessmen are not connected at all to Hamas and are very pragmatic and open-minded.

"They are the the last layer in Palestinian society who believe in peace and the importance of the economy. They also believe that the only economic link should be with Israel," Mr Hamad said.

The Israeli Prime Minister, Ehud Olmert, told his cabinet that with "typical moral acrobatics", the "terrorist organisations" were trying to lay the blame on Israel, and that "the State of Israel did everything in order to avoid hitting civilians." Israel would ensure that soldiers and officers who took part in the operation would be safe from any tribunals investigating them, he said.

At the Al Badr mills in Sudaniya, north of Gaza City, owner Rashed Hamada, 55, said his company had been making flour for bakeries right up until the attack on 10 January. He strongly denied that his compound, which was locked at night and had a security guard, had been used by Hamas gunmen, and said it was clear the production line itself had been the target.

"It seems that the father of the commander had owned a flour mill," he commented ironically. "He knew exactly where to hit. The Israelis ... used to encourage me to expand production here. Now they have destroyed it. I don't understand why."

Standing beside mangled and incinerated refrigeration vans and the burned-out ruins of his food factory and warehouses, located for ease of access to Israel between the eastern Gaza City district of Shajaia and the border 650 metres away, Dr Alweyda said that, as well as the production lines, 26 vehicles had been destroyed. The company, sole Gaza agent for Tnuva, an Israeli milk-products company, had managed to keep biscuit production going up until the outbreak of war. The Israeli military said yesterday that it was still investigating allegations of civilian casualties and property damage but that it "does not target civilians or civilian infrastructure, including factories, unless it is being used by Hamas for terrorist purposes."

But Amr Hamad said that he believed the two purposes of the strikes was to make Gaza's economy dependent on Israel's, and to stimulate popular pressure on Hamas to agree to certain compromises as a precondition to a reopening of the crossings – such as allowing the Ramallah-based Palestinian Authority control of the crossings and also the release of Israeli corporal Gilad Shalit, abducted two-and-a-half years ago by Hamas and other militants.


Alarm Spreads Over Use of Lethal New Weapons - By Erin Cunningham (LATEST UPDATE - 25/1/09)

January 22, 2009 Inter Press Service

GAZA CITY - Eighteen-year-old Mona Al-Ashkar says she did not immediately know the first explosion at the United Nations (UN) school in Beit Lahiya had blown her left leg off. There was smoke, then chaos, then the pain and disbelief set in once she realized it was gone - completely severed by the weapon that hit her.

Mona is one of the many patients among the 5,500 injured that have international and Palestinian doctors baffled by the type of weaponry used in the Israeli operation. High-profile human rights organizations like Amnesty International are accusing Israel of war crimes.

Mona's doctors at Gaza City's Al-Shifa hospital found no shrapnel in her leg, and it looked as though it had been "sliced right off with a knife."

"We are not sure exactly what type of weapon can manage to do that immediately and so cleanly," said Dr. Sobhi Skaik, consultant surgeon general at Al-Shifa hospital. "What is happening is frightening. It's possible the Israeli army was using Gaza to experiment militarily."

Both international organizations and human rights groups, including the UN, Human Rights Watch and Amnesty International, have condemned Israel's use of unconventional weapons in civilian areas of the Gaza Strip.

Amnesty International's chief researcher for Israel and the Palestinian Territories, Donatella Rovera, told IPS in Beit Lahiya that Israel's use of white phosphorus and other "area weapons" on civilian populations amounted to war crimes.

"The kind of weapons used and the manner in which they were used indicates prima facie evidence of war crimes," she said.

Israel announced Wednesday it would be launching its own probe into reported use of white phosphorus, but has so far refused to comment further.

The International Atomic Energy Agency (IAEA), the UN's nuclear watchdog, said it would look into a claim made by the ambassadors of a number of Arab nations that Israel used depleted uranium in its recent attacks on Gaza.

Local doctors say a number of both widespread and unusual injuries may indicate that new types of weapons were used on the Gaza population during the war. Health officials are seeing wounds they have never seen before, or at least not on such a massive scale.

"There has been a significant loss of life here in Gaza for reasons that are unexplainable medically," said Dr. Skaik.

Mona's injury is characteristic of Dense Inert Metal Explosives (DIME). DIMEs are munitions that, packed with tungsten powder, produce an intense explosion at about the level of the knee, with signs of severe heat at the point of amputation.

"If you ask a patient how it happened, how their leg was removed, they won't know," Dr. Skaik said. "They'll say that a rocket or missile exploded and took only their lower limbs off."

Once in the body, tungsten is both difficult to detect and extremely carcinogenic, and can produce an aggressive form of cancer, according to both military experts.

Dr. Skaik says the Al-Shifa hospital alone has seen between 100 to 150 patients with this type of injury. Over 50 patients at Al-Shifa had two or more limbs severed, he says.

But because Gaza's hospitals are so poorly equipped, it has been nearly impossible so far to test properly for the substances and count accurately how many wounded Palestinians may have been hit with this weapon.

The Norwegian doctor Mads Gilbert who worked at Al-Shifa hospital during the siege confirmed to journalists that the injuries were aligned with those produced by DIME explosives.

Human rights groups say Israel used the weapon for the first time in Lebanon in 2006.

What is worrying health officials even more, however, is that some of the patients' organs are being ruptured with little or no sign of a shrapnel entry point.

This is something they have never seen before, they say, and also something they do not know how to treat.

"Normal shrapnel has a clear path, with both an entry and an exit point," said Dr. Mohamed Al-Ron, another surgeon at Al-Shifa hospital.

"But someone's entire abdomen will be ripped open, and only after searching will we find a miniscule hole in the skin. Then we will find small black dots all over the organ, but we don't know what they are."

It is an indication, he continued, that whatever is entering the body is exploding and doing the damage once it is inside. Multiple organs will fail, and will continue to fail even after surgery removes any shrapnel.

"We are consulting with international colleagues, and they are confirming that there is something unusual going on with these cases," said Dr. Skaik.

"We have seen plenty of nails, of metal shrapnel and foreign metallic parts, but there was never violence of this character or something that continued to damage even after the parts of the weapon were removed. What is being intentionally created is a population of handicapped people."

Some of the injuries, including multiple organ failure, mutilation and severed limbs, are so debilitating that Dr. Karim Hosni, an Egyptian doctor volunteering at the Al-Naser hospital in Khan Younis, says he wishes he could just end his patients' misery.

"Sometimes I wish my patients would just die," he said. "Their injuries are so horrifying, that I know they will now have to lead terrible and painful lives."

Calling a Time Out - By George McGovern (LATEST UPDATE - 25/1/09)

January 22, 2009 Washington Post

As you settle into the Oval Office, Mr. President, may I offer a suggestion? Please do not try to put Afghanistan aright with the U.S. military. To send our troops out of Iraq and into Afghanistan would be a near-perfect example of going from the frying pan into the fire. There is reason to believe some of our top military commanders privately share this view. And so does a broad and growing swath of your party and your supporters.

True, the United States is the world's greatest power -- but so was the British Empire a century ago when it tried to pacify the warlords and tribes of Afghanistan, only to be forced out after excruciating losses. For that matter, the Soviet Union was also a superpower when it poured some 100,000 troops into Afghanistan in 1979. They limped home, broken and defeated, a decade later, having helped pave the way for the collapse of the Soviet Union.

It is logical to conclude that our massive military dominance and supposedly good motives should let us work our will in Afghanistan. But logic does not always prevail in South Asia. With belligerent Afghan warlords sitting atop each mountain glowering at one another, the one factor that could unite them is the invasion of their country by a foreign power, whether British, Russian or American.

I have believed for some time that military power is no solution to terrorism. The hatred of U.S. policies in the Middle East -- our occupation of Iraq, our backing for repressive regimes such as Egypt and Saudi Arabia, our support of Israel -- that drives the terrorist impulse against us would better be resolved by ending our military presence throughout the arc of conflict. This means a prudent, carefully directed withdrawal of our troops from Iraq, Afghanistan, Saudi Arabia, Qatar and elsewhere. We also need to close down the imposing U.S. military bases in this section of the globe, which do so little to expand our security and so much to stoke local resentment.

We cannot evade this reckoning. The British thought they could extend their control over Iraq even while pulling out their ground forces by creating a string of bases in remote parts of the country, away from the observation of most Iraqis. It didn't work. No people that desires independence and self-determination wishes to have another nation's military bases in its country. In 1776, remember, 13 little colonies drove the mighty British Empire from American soil.

In 2003, the Bush administration ordered an invasion of Iraq, supposedly to reduce terrorism. But six years later, there is more terrorism and civil strife in Iraq, not less. The same outcome may occur in Afghanistan if we make it the next American military conflict.

Mr. President, the bright promise of your brilliant campaign for the White House and the high hopes of the millions who thronged the Mall on Tuesday to watch you be sworn in could easily be lost in the mountains and wastelands of Afghanistan.

The Nobel Prize-winning economist Joseph E. Stiglitz has estimated that the war in Iraq will have a total cost of more than $3 trillion. That war has clearly weakened our economy and our armed forces even as it has made the national debt soar. The Bush administration committed itself to Iraq before the recession. Today, with our economy teetering, does the Obama administration believe that it is time for yet another costly war in yet another Muslim country?

I'm aware that some of my fellow Americans regard me as too idealistic. But sometimes idealism is the best realism. And at a minimum, realism and idealism need not be contradictory. The invasion and occupation of Iraq has not only angered Iraqis who have lost family members, neighbors or homes; it has also increased the level of anger throughout the Muslim world and thrown up obstacles to our political leadership in that deeply important part of the planet.

Like you, Mr. President, I don't oppose all wars. I risked my life in World War II to protect our country against genuine danger. But it is the vivid memory of my fellow airmen being shot out of the sky on all sides of me in a war that I believe we had to fight that makes me cautious about sending our youth into needless conflicts that weaken us at home and abroad, and may even weaken us in the eyes of God.

As you have noted, Mr. President, we take pride in our soldiers who conduct themselves bravely. But as you have also said, some of these soldiers have served two, three and even four tours in dangerous combat. Many of them have come home with enduring brain and nerve damage and without arms and legs. These troops need rest, rehabilitation and reunions with their families.

So let me suggest a truly audacious hope for your administration: How about a five-year time-out on war -- unless, of course, there is a genuine threat to the nation?

During that interval, we could work with the U.N. World Food Program, plus the overseas arms of the churches, synagogues, mosques and other volunteer agencies to provide a nutritious lunch every day for every school-age child in Afghanistan and other poor countries. Such a program is now underway in several countries approved by Congress and the United Nations, under the auspices of the George McGovern-Robert Dole International Food for Education and Child Nutrition Act. (Forgive the self-serving title.) Although the measure remains painfully underfunded, with the help of other countries, we are reaching millions of children. We could supplement these efforts with nutritional packages for low-income pregnant and nursing mothers and their infants from birth through the age of 5, as is done here at home by WIC, the Special Supplemental Nutrition Program for Women, Infants and Children.

Is this proposal pie-in-the-sky? I don't think so. It's food in the stomachs of hungry kids. It would draw them to school and enable them to learn and grow into better citizens. It would cost a small fraction of warfare's cost, but it might well be a stronger antidote to terrorism. There will always be time for another war. But hunger can't wait.

Mystery Prison Buses in the Desert - By Ellen Brown (LATEST UPDATE - 25/1/09)

Global Research, January 22, 2009

On a recent visit to Tucson, Arizona, where I was invited to give a presentation on monetary reform, I was disturbed by a story of strange goings on in the desert. A little over a year ago, it seems, a new industrial facility sprang up on the edge of town. It was in a remote industrial zone and appeared to be a bus depot. The new enterprise was surrounded by an imposing security fence and bore no outward signs identifying its services. However, it soon became apparent that the compound was in the business of outfitting a fleet of prison buses. Thirty or so secondhand city buses were being reconfigured with prison bars in the windows and a coat of fresh paint bearing the “Wackenhut G4S” logo on the side.

The new Wackenhut operation is shrouded in mystery. It has been running its fleet of empty prison buses night and day, apparently logging miles on a Department of Homeland Security (DHS) contract. Multiple buses can be seen driving all over town and even on remote desert back roads. Oddly, except for the driver and one escort guard seated in front, these buses are always empty.

Wackenhut Services was founded by George Wackenhut in 1954 to provide prison guard services to state and federal governments. Wackenhut Services is now owned by the Danish corporation G4S.

Observers originally thought that the purpose of the new Wackenhut operation was to outfit prison buses to be distributed in other parts of the country. But it soon became apparent that none of the buses was leaving the Tucson depot. Recently, a passerby observed what appeared to be a training operation there. In what seemed to be strange activity for 10:30 PM on a Saturday night, the depot yard was fully illuminated, the entire fleet of buses was up and running, and drivers and guards were scrambling around the yard. The question is, what were they training for?

Wackenhut has never officially announced itself to the community, and the local news media have never mentioned its presence. Hiring has been discreetly conducted via the Internet, and an apathetic general public has taken little notice. Among the few who have noticed, one theory is that the prison bus depot is simply infrastructure for border security. But if so, where are the illegal aliens? Why are these buses always empty? What is the alleged justification for burning thousands of gallons of diesel fuel to run thirty decrepit, smoking buses night and day without passengers?

There is another interesting piece to this puzzle. On the desolate plain between Phoenix and Tucson is a tiny town called Florence, Arizona, which features a population consisting largely of prisoners. For decades, Florence has been the home of two of the largest county and federal prisons in the state; and in 2007, a vast new DHS prison was built there as well. Like the Wackenhut buses, this shiny new facility, which literally disappears into the horizon, has gone unannounced and unnoticed by the general public. A new facility for imprisoning illegal aliens? It is hard to imagine such expensive infrastructure being built for that purpose when U.S. policy has been to simply return illegals to their home countries.

Fraud and waste aside, this mysterious activity has sinister implications. Why the obvious secrecy? Since the World Trade Center disaster in 2001, the Department of Homeland Security has grown to monster proportions, claiming a projected $50 billion of the federal budget in 2009. DHS includes the Federal Emergency Management Agency (FEMA), which earned notoriety in 2005 for its gross mishandling of the Katrina disaster in New Orleans. Al Martin, a retired naval intelligence officer and former contributor to the Presidential Council of Economic Advisors, has linked the remilitarization of FEMA to the civil unrest anticipated along with economic collapse. He wrote in a November 2005 newsletter called “Behind the Scenes in the Beltway”:

“FEMA is being upgraded as a federal agency, and upon passage of PATRIOT Act III, which contains the amendment to overturn posse comitatus, FEMA will be re-militarized, which will give the agency military police powers. . . . Why is all of this being done? Why is the regime moving to a militarized police state and to a dictatorship? It is because of what Comptroller General David Walker said, that after 2009, the ability of the United States to continue to service its debt becomes questionable. Although the average citizen may not understand what that means, when the United States can no longer service its debt it collapses as an economic entity. We would be an economically collapsed state. The only way government can function and can maintain control in an economically collapsed state is through a military dictatorship.” [1]

All of this is quite ominous. It is also a good argument for considering radical funding alternatives. There are other ways to deal with the federal debt besides relying on the waning appetites of the Chinese and the Japanese for U.S. securities. Some innovative alternatives for funding both the federal debt and President Obama’s new economic stimulus package will be the subject of followup articles. Stay tuned.

Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her earlier books focused on the pharmaceutical cartel that gets its power from “the money trust.” Her eleven books include Forbidden Medicine, Nature’s Pharmacy (co-authored with Dr. Lynne Walker), and The Key to Ultimate Health (co-authored with Dr. Richard Hansen). Her websites are and

[1] Al Martin, “FEMA, CILFs and State Security: Shocking Updates,” (November 28, 2005)

Posturing and Laughter as Victims Rot - By Robert Fisk (LATEST UPDATE - 25/1/09)

Mahmoud Abbas stepped further into humiliation by saying the only option for Arabs is to make peace with Israel

January 21, 2009, The Independent

The front page of the Beirut daily As-Safir said it all yesterday. Across the top was a terrible photograph of the bloated body of a Palestinian man newly discovered in the ruins of his home while two male members of his family shrieked and roared their grief. Below, at half the size, was a photograph from Israel of Western leaders joking with Ehud Olmert, the Israeli Prime Minister. Olmert was roaring with laughter. Silvio Berlusconi, arms on the back of Olmert's shoulders, was also joshing and roaring – with laughter, not grief – and on Olmert's right was Nicolas Sarkozy of France wearing his stupidest of smiles. Only Chancellor Merkel appeared to understand the moral collapse. No smiles from Germany.

Europe laughs while Palestinians mourn their dead. No wonder that in the streets of Beirut, shops were doing a flourishing trade in Palestinian scarves and flags. Even some of Palestine's most serious enemies in Lebanon wore the Palestinian keffiyeh in solidarity with the people of Gaza. Over and over again, Al-Jazeera television strapped headlines on to their news reports of Palestinians carrying the decomposing corpses of their dead: "More than 1,300 dead in Gaza, 400 of them women and children – Israeli dead in the war 13, three of them civilians." That, too, said it all.

All day, the Arabs also had to endure watching their own leaders primping and posing in front of the cameras at the Arab summit in Kuwait, where the kings and presidents who claim to rule them also smiled and shook hands and tried to pretend that they were unified behind a Palestinian people who have been sorely betrayed. Even Mahmoud Abbas was there, the powerless, impotent leader of "Palestine" – where is that precisely, one had to ask? – trying to suck some importance from the coat-tails and robes of his betters.

Slipping and sliding on the corpses of Gaza, these assembled supreme beings should perhaps be pitied. What else could they do? Saudi King Abdullah announced £750,000 to rebuild Gaza; but how many times have the Arabs and the Europeans been throwing money at Gaza only to see it torn to shreds by incoming shell-fire?

It has to be said that the two cowled Hamas gunmen who announced that they had won a "victory" in the ruins of Gaza were only fractionally less hypocritical. Still they had not understood that they were not the Hizbollah of Lebanon. Gaza was no longer Beirut. Now, it seemed, Gaza was Stalingrad. But whose uniforms did Hamas think they were wearing: German or Soviet?

"Israel has to understand," the good king said – as if the Israelis were listening – "that the choice between war and peace will not always stay open and that the Arab initiative (for Arab recognition in return for an Israeli withdrawal to the 1967 borders of Israel) that is on the table today will not stay on the table." He knew that "an eye for an eye ... did not say an eye for the eyes of a whole city". But how many times – how many bodies have to be pulled from the ruins – before the Saudis realise that time has run out?

The Israelis briskly dismissed land for peace in 2002 but yesterday they suddenly showed their interest again. "We continue to be willing to negotiate with all our neighbours on the basis of that initiative," the Israeli government spokesmen said – as if his own country's original rejection had never been thrown at the Arabs.

President Bashar al-Assad of Syria, of course, dismissed the whole initiative in Qatar last week as dead, insisting that Israel be declared a "terrorist entity". But Mahmoud Abbas stepped further into humiliation yesterday by announcing that the "only option" for Arabs was to make peace with Israel. It was Arab "shortcomings" that led to the failure of the 2002 Arab initiative. Not Israel's rejection, mark you. No, it was all the fault of the Arabs. And this from the leader of "Palestine".

No wonder America's man in Egypt – a certain Hosni Mubarak – repeated the tired old slogan that "peace in the Middle East is an imperative that cannot be delayed". And then the Emir of Kuwait invited Bashar and Hosni and King Abdullah of Jordan and the other King Abdullah of Saudi Arabia to have lunch together – the menu was not disclosed – to end their feuding.

Al-Jazeera showed the ever-more putrid bodies being tugged from beneath cross-beams and crushed concrete as these mighty potentates debated their little disputes. There was really no adequate comment for this charade.

International Law and Israel's War on Gaza - By Francis A. Boyle (LATEST UPDATE - 25/1/09)

Professor of International Law

Legal Advisor to the Palestinian Delegation to the Middle East Peace Negotiations (1991-93)

When the Oslo Document was originally presented by the Israeli government to the Palestinian Delegation to the Middle East Peace Negotiations in the Fall of 1992, it was rejected by the Delegation because it obviously constituted a bantustan. This document carried out Menachem Begin's disingenuous misinterpretation of the Camp David Accords--expressly rejected by U.S. President Jimmy Carter--that all they called for was autonomy for the people and not for the land too.

Soon thereafter, unbeknownst to the Delegation and to almost everyone else, the Israeli government opened up a secret channel of negotiations in Norway. There the Israeli government re-presented the document that had already been rejected by the Palestinian Delegation in Washington, D.C. It was this document, with very minor modifications, that was later signed at the White House on 13 September 1993.

Before the signing ceremony, I commented to a high-level official of the Palestine Liberation Organization: "This document is like a straight-jacket. It will be very difficult to negotiate your way out of it." This PLO official agreed with my assessment and responded: "Yes, you are right. It will depend upon our negotiating skill."

Of course I have great respect for Palestinian negotiators. They have done the best they can negotiating in good faith with the Israeli government that has been invariably backed up by the United States. But there has never been any good faith on the part of the Israeli government either before, during or after Oslo. Ditto for the United States.

Even if Oslo had succeeded, it would have resulted in the imposition of a bantustan upon the Palestinian People. But Oslo has run its course! Therefore, it is my purpose here today to chart a NEW DIRECTION for the Palestinian People to consider.

An agenda for an international legal response:

First, we must immediately move for the de facto suspension of Israel throughout the entirety of the United Nations System, including the General Assembly and all U.N. subsidiary organs and bodies. We must do to Israel what the U.N. General Assembly has done to the genocidal rump Yugoslavia and to the criminal apartheid regime in South Africa! Here the legal basis for the de facto suspension of Israel at the U.N. is quite simple:

As a condition for its admission to the United Nations Organization, Israel formally agreed to accept General Assembly Resolution 181 (II) (1947) (partition/Jerusalem trusteeship) and General Assembly Resolution 194 (III) (1948) (Palestinian right of return), inter alia. Nevertheless, the government of Israel has expressly repudiated both Resolution 181 (II) and Resolution 194 (III). Therefore, Israel has violated its conditions for admission to U.N. membership and thus must be suspended on a de facto basis from any participation throughout the entire United Nations System.

Second, any further negotiations with Israel must be conducted on the basis of Resolution 181 (II) and its borders; Resolution 194 (III); subsequent General Assembly resolutions and Security Council resolutions; the Third and Fourth Geneva Conventions of 1949; the 1907 Hague Regulations; and other relevant principles of public international law.

Third, we must abandon the fiction and the fraud that the United States government is an "honest broker." The United States government has never been an honest broker from well before the very outset of these negotiations in 1991. Rather, the United States has invariably sided with Israel against the Palestinians. We need to establish some type of international framework to sponsor these negotiations where the Palestinian negotiators will not be subjected to the continual bullying, threats, harassment, intimidation and outright lies perpetrated by the United States government.

Fourth, we must move to have the U.N. General Assembly impose economic, diplomatic, and travel sanctions upon Israel pursuant to the terms of the Uniting for Peace Resolution (1950), whose Emergency Special Session on Palestine is now in recess.

Fifth, the Provisional Government of the State of Palestine must sue Israel before the International Court of Justice in The Hague for inflicting acts of genocide against the Palestinian People in violation of the 1948 Genocide Convention!

Sixth, An International Criminal Tribunal for Israel (ICTI) can be established by the UN General Assembly as a "subsidiary organ" under article 22 of the UN Charter. Article 22 of the UN Charter states the UN General Assembly may establish such subsidiary organs as it deems necessary for the performance of its functions. The purpose of the ICTI would be to investigate and Prosecute suspected Israeli war criminals for offences against the Palestinian people.

On January 4, 2009, Nobel Peace Laureate, Mairead Maguire wrote to the UN Secretary General, Ban Ki-Moon and Father Miguel D'Escoto President of United Nations General assembly adding her voice to the many calls from International Jurists, Human rights Organizations, and individuals, for the UN General Assembly to seriously consider establishing an International Criminal Tribunal for Israel in view of the ongoing Israeli atrocities against the people of Gaza and Palestine.

Maguire said:

"In November 2008 I visited Gaza and was shocked at the suffering of the people of Gaza, being under 'siege' as they are for over two years. This collective punishment by the Israeli Government, has lead to a great humanitarian crisis. Collective punishment of the civilian community by the Israeli Government breaks the Geneva Convention, is illegal and is a war crime and crime against humanity.

"Instead of protecting the civilian community of Gaza and relieving their Suffering by lifting the 'siege', the Israeli military have carried out 7 days consecutive bombardment of civilians, by sea and air. Dropping Israeli bombs from the air and sea on unarmed civilians, many women and children, destroying mosques, hospitals, and and homes, and infrastructure, is illegal and constitutes war crimes. The deaths of people in Gaza is now over 600 with over 2,500 people injured - many women and children. The infrastructure of Gaza has been destroyed, and the people cut off from the world – including journalists, Humanitarian workers, locked out of Gaza, and unable to go to the aid of the people.

"The UN must help uphold Human rights and Justice for Palestinian People, by seriously considering establishing an International criminal tribunal for Israel, (ICTI) in order that Israeli Gov., be held accountable for war crimes."

NOTE:  Professor Boyle's call for an International Criminal Tribunal on Israel is now being circulated by member states of the UN General Assembly.

Francis A. Boyle is a leading American professor, practitioner and advocate of international law. He was responsible for drafting the Biological Weapons Anti-Terrorism Act of 1989, the American implementing legislation for the 1972 Biological Weapons Convention. He served on the Board of Directors of Amnesty International (1988-1992), and represented Bosnia-Herzegovina at the World Court. Professor Boyle teaches international law at the University of Illinois, Champaign, author of, inter alia, World Politics and International Law, The Future of International Law and American Foreign Policy, Foundations of World Order,  The Bosnian People Charge Genocide, The Criminality of Nuclear Deterrence, Palestine, Palestinians and International Law, Destroying World Order, Biowarfare & Terrorism, Breaking All the Rules, and Tackling America's Toughest Questions (forthcoming). He holds a Doctor of Law Magna Cum Laude as well as a Ph.D. in Political Science, both from Harvard University.

Another Real Estate Crisis Is About To Hit - By Paul Craig Roberts (LATEST UPDATE - 25/1/09)

January 21, 2009

For a picture of the US real estate crisis, imagine New Orleans wrecked by Hurricane Katrina, and before the waters even begin to recede, a second Katrina hits.

The 1,120,000 lost US retail jobs in 2008 are a signal that the second stage of the real estate bust is about to hit the economy. This time it will be commercial real estate—shopping malls, strip malls, warehouses, and office buildings. As businesses close and rents decline, the ability to service the mortgages on the over-built commercial real estate disappears.

The over-building was helped along by the irresponsibly low interest rates, but the main impetus came from the slide of the US saving rate to zero and the rise in household indebtedness. The shrinkage of savings and the increase in debt raised consumer spending to 72% of GDP. The proliferation of malls and the warehouses that service them reflect the rise in consumer spending as a share of GDP.

Like the federal government, consumers spent more than they earned and borrowed to cover the difference. Obviously, this could not go on forever, and consumer debt has reached its limit.

Shopping malls are losing anchor stores, and large chains are closing stores and even going out of business altogether. Developers who borrowed to finance commercial ventures are in trouble as are the holders of the mortgages, derivatives and other financial junk associated with the loans.

The main source of the economic crisis is the infantile belief of US policymakers that an economy could be based on debt expansion. As offshoring moved jobs, incomes, and GDP out of the country, debt expanded to take the place of the missing income. When the offshored goods and services were brought back to be sold to Americans, the trade deficit rose, adding another level of financing for an economy that consumes more than it produces.

The growth of debt has outpaced the growth of real output. Yet, the solution offered by Obama’s economic team is to expand debt further. This is not surprising as Obama’s economic team consists of the very people who brought on the debt crisis. Now they are going to make it worse.

The unexamined question is: Who is going to finance the next wave of debt?

The US budget deficit for fiscal year 2009 already appears to be on a path to $2 trillion, and that is before Obama’s stimulus program. What we are looking at is a $3 trillion budget deficit if Obama’s program is enacted in time to impact the economy this year.

Foreign countries can finance a $500 billion US budget deficit out of their trade surpluses with the US. But foreigners do not have the funds to finance a US budget deficit in the trillions of dollars, and they would not finance such a deficit even if they had the funds. Foreigners are over-weighted in dollar holdings and prefer to lighten their holding than to add to them. America’s economic prospects are dim as are the dollar’s prospects as reserve currency. An annual budget deficit in the trillions of dollars makes the dollar’s prospects appear even dimmer.

The federal government’s likely solution to the debt problem will be to monetize the debt, that is, the government will finance its deficit by printing money. Debt will be inflated away. But for those Americans without jobs or whose incomes do not rise with inflation, life will be cruel.

Life is already cruel for Americans living on retirement savings. Not only has the stock market bust reduced their wealth by half, but also their remaining assets are producing no income. Interest rates are so low that debt instruments produce no income, and there are scant capital gains in the stock market. Retirees are living by consuming their capital.

America’s economic policy of low interest rates and debt expansion bodes ill for everyone living off their savings. Their future prospects are even worse as high inflation will destroy the value of their savings, especially if held in cash or debt instruments, including “safe” US Treasuries.

There are more intelligent ways to try to escape from the current crisis. However, the financial gangsters and their shills that Obama has put in charge of economic policy are thinking only of their own interest. What happens to the American people is not a concern.

A compassionate government would handle the crisis in this way:

The trillions of dollars in credit default swaps (CDS) should be declared null and void. These “swaps” are simply bets that financial instruments and companies will fail, and the bulk of the bets are made by people and institutions that do not hold the financial instruments or shares in the companies. The ideology that financial markets were self-regulating allowed illegal gambling free rein. There is no reason under the sun for taxpayers to bail out gamblers.

The bailout money, instead of being given to favored financial institutions to finance their acquisition of other institutions, should be used to refinance the defaulting mortgages. This would slow, if not stop, the growing inventory of foreclosed properties that is driving down home prices.

The mark-to-market rule should be suspended until the real values of the troubled properties and instruments can be determined. Suspension of the rule would prevent the failure of sound institutions and lessen the need for a bailout.

Interest rates have to be raised in order to encourage saving and to provide incomes to retirees.

To preserve the dollar’s status as reserve currency, a credible policy of reducing both budget and trade deficits must be announced. In the near term the budget deficit can be reduced by $500 billion by withdrawing from Iraq and Afghanistan and by cutting a bloated defense budget that represents the now unattainable goal of US world hegemony.

The trade deficit can be significantly reduced by bringing offshored jobs back to America. One way to do this is to tax corporations according to the value added to their output that occurs in the US. Corporations that produce their products for US markets abroad would have high tax rates; those that produce domestically would have low tax rates.

This approach to the economic crisis stands in marked contrast with the approach of the gangsters running US economic policy. The gangsters are using the crisis as an opportunity to steal from taxpayers and to finance their misdeeds and exorbitant salaries with Federal Reserve loans. Their shills among economists and the financial press tell the people that the solution is to fatten up the banks with funds so they will resume lending to an over-indebted public that will then return to the shopping malls.

This unrealistic approach to a serious crisis indicates a leadership crisis on top of an economic crisis.

Financial Brains “Stimulating” America to Rock Bottom - By Ron Paul (LATEST UPDATE - 25/1/09)

WITH ATTENTION TURNING TO THE NEXT big economic stimulus package, questions are still swirling about our economic troubles. How did we get here? How do we get out? As usual, Washington has all the wrong answers. According to many politicians, we got here by not spending enough, not consuming enough, and not regulating enough.

Now government, like some mythical white knight, is going to ride in to save the day by blanketing the economy with dollars, hiring an army of new bureaucrats, creating make-work jobs, and sending everyone some form of a bailout check. The debate seems to focus on whether this will cost enough to save the economy, or if this is just a “down payment” with much more government spending to come. Talk like that would be comical, if the results weren’t going to be so tragic.

The results will be worsening economic woes until we learn our lesson. But instead Congress is behaving like drug addicts who must hit rock bottom before they are ready to face reality. They are playing foolish games with the economy now because they are thinking only of political expedience. This talk of job creation is a perfect example.

Contrary to the belief of many, the goal of the economy is not job creation. Jobs can be a sign of a healthy economy, as a high energy level can be a sign of a healthy body. But just as unhealthy substances can artificially give the addict that burst of energy that has nothing to do with health, artificially created jobs just exacerbate our problems. The goal of a healthy economy is productivity. Jobs are a positive outcome of that.

A “job” could be to dig a hole one day, and fill it back up the next, or perhaps the equivalent at a desk. This does no one any good. But the value in that paycheck ultimately has to come from taxing someone productive.

Some think this round-robin type of economic model is supposed to get us somewhere. Politicians and bureaucrats have already done their fair share to ensure that jobs in the private sector are prohibitively complicated and expensive to create. They are now shocked that the economy is shedding jobs, and want to simply create hundreds of thousands of jobs to make up for the job losses, through another so-called economic stimulus package.

The private sector must be permitted to do that, but instead they are massively burdened with taxes and webs of red tape and regulation.

Washington’s bandaids will only prolong this agony. The Austrian school of economics teaches that only a free market economy, unencumbered by onerous government controls, creates long-term prosperity. Politicians, however, tend to be notoriously short-sighted.

I am left with these questions—who is going to be left standing, to tax in the private sector, to pay for all these public sector make-work jobs? Is D.C. really to be some sort of savior for creating unproductive jobs in place of the productive jobs they eliminated?

We are at an economic dead-end and those in power are in denial. The truth is our economic problems are due to loose monetary policy, central economic planning, and the parasitic expenses of government. Unless we assess these problems honestly, we unfortunately have a long way to go until, like the junkie, we hit rock bottom.

Ron Paul, a medical doctor, is a Republican member of the U.S. Congress who represents the 14th District of Texas. Call his weekly update line toll free at 1-888-322-1414 or visit his website at

Can Fiscal Stimulus Revive the US Economy? - By Frank Shostak (LATEST UPDATE - 25/1/09)

January 22, 2009 Mises Institute

On Thursday, January 8, 2009, US President-elect Barack Obama said,

I don't believe it's too late to change course, but it will be if we don't take dramatic action as soon as possible. If nothing is done, this recession could linger for years.

Most economists and various commentators are in agreement. They hold that the US government must sharply increase its spending in order to arrest the economic crisis that could turn into a prolonged slump.

According to the Congressional Budget Office (CBO), in the absence of a stimulus plan, the unemployment rate could jump to above 9% by early 2010. Some other experts are of the view that without the stimulus plan the unemployment rate could easily surpass the 10% mark.

Most experts hold that on account of the economic slump and the consequent underutilization of resources, economic output in the next two years will be strongly below the potential output. For 2009 and 2010, the production loss is estimated to be in excess of $2 trillion (the gap between the potential GDP and the actual GDP).

Therefore they believe that the effective way to close the gap between the potential output and the actual output is through the fiscal stimulus package — a large increase in government outlays.

Given the possibility that the gap could exceed the $2 trillion mark it seems that the Obama's fiscal stimulus plan of around $800 billion is not going to "do the trick."

Even if one were to allow for the so-called "multiplier effect," Obama's plan will not close the output gap and thus "fix" the problem, so it is held. In Obama's plan, only about $480 billion consists of public spending, which has a multiplier of around 1.5. (That is, a dollar of government expenditure supposedly raises GDP by around $1.5.) The rest of the package consists of tax cuts, which most experts don't believe would boost spending and thus activate the multiplier.

This way of thinking follows the ideas of John Maynard Keynes. In a nutshell, Keynes held that one cannot have complete trust in a market economy, which is inherently unstable. If left free, the market economy could lead to self-destruction. Hence there is the need for governments and central banks to manage the economy.

Successful management, in the Keynesian framework, is done by influencing the overall spending in an economy. It is spending that generates income. Spending by one individual becomes income for another individual.

What drives the economy then is spending. If during a recession consumers fail to spend, then it is the role of the government to step in and boost overall spending in order to grow the economy.

In the Keynesian framework, an output that an economy could generate without causing inflation, given a certain pool of resources — i.e., labor, tools, and machinery, and a given technology — is labeled potential output. Hence the greater the pool of resources, all other things being equal, the more output can be generated.

If, for whatever reasons, the demand for the produced goods is not strong enough, this leads to an economic slump. (Inadequate demand for goods leads to only a partial use of existent labor and capital goods.)

In this framework then, it makes a lot of sense to boost government spending in order to strengthen demand and eliminate the economic slump.

What is missing in this story is the matter of funding. For instance, a baker produces ten loaves of bread and exchanges them for a pair of shoes with a shoemaker. In this example, the baker funds the purchase of shoes by producing ten loaves of bread.

Note that the bread maintains the shoemaker's life and well-being. Likewise, the shoemaker has funded the purchase of bread by means of shoes that maintain the baker's life and well-being.

Now, the baker has decided to build another oven in order to increase the production of bread. In order to implement his plan, the baker hires the services of the oven maker.

He pays the oven maker with some of the bread he is producing. Again, what we have here is a setup where the building of the oven is funded by the production of a final consumer good — bread. If, for whatever reasons, the flow of bread production were disrupted, the baker would not be able to pay the oven maker. As a result, the making of the oven would have to be aborted.

From this simple example we can infer that what matters for economic growth is not just the existing stock of tools and machinery and the pool of labor but the adequate flow of final goods and services that maintains individuals' lives and well-being.

Now, even if we were to accept the Keynesian framework that the potential output is above the actual output, it doesn't follow that the increase in government outlays will lead to an increase in the economy's actual output.

It is not possible to lift overall production without the necessary support from final goods and services or from the flow of real funding or the flow of real savings. (For instance, out of the production of ten loaves of bread, if the baker consumes two loaves, his real saving or real funding is eight loaves.)

We have seen that by means of a final consumer good — the bread — the baker was able to fund the expansion of his production structure.

Similarly, other producers must have final, saved, real consumer goods — real savings — to fund the purchase of goods and services they require. Note that the introduction of money doesn't alter the essence of what funding is. (Money is just a medium of exchange. It is only used to facilitate the flow of goods; it cannot replace the final consumer goods.)

The government as such doesn't create any real wealth, so how can an increase in government outlays revive the economy?

Various individuals who will be employed by the government will expect compensation for their work. The only way it can pay these individuals is by taxing others who are still generating real wealth. By doing this, the government weakens the wealth-generating process and undermines prospects for economic recovery. (We ignore here borrowings from foreigners.)

The only way fiscal stimulus could "work" is if the flow of real savings (i.e., real funding) is large enough to support (i.e., fund) government activities while still permitting a positive rate of growth in the activities of the private sector. (Note that the overall increase in real economic activity is, in this case, erroneously attributed to the government's loose fiscal policy.)

If, however, the flow of real savings is not large enough, then, regardless of any increase in government outlays, overall real economic activity cannot be revived.

In this case the more government spends (i.e., the more it takes from wealth generators), the more it weakens prospects for a recovery.

Thus when government, by means of taxes, diverts bread to its own activities, the baker will have less bread at his disposal. Consequently, the baker will not be able to secure the services of the oven maker. As a result, it will not be possible to boost the production of bread, all other things being equal.

As the pace of government spending increases, a situation could emerge where the baker will not have enough bread even to maintain the existing oven. (The baker will not have enough bread to pay for the services of an oven-maintenance technician.) Consequently, his production of bread will actually decline.

Similarly, other wealth generators, as a result of the increase in government outlays, will have less real funding at their disposal. This, in turn, will hamper the production of their goods and services, thereby retarding, not promoting, overall real economic growth.

As one can see, not only does the increase in government outlays not raise overall output by a positive multiple; but, on the contrary, this leads to the weakening in the process of wealth generation in general. According to Ludwig von Mises, there is need to emphasize the truism that a government can spend or invest only what it takes away from its citizens and that its additional spending and investment curtails the citizens' spending and investment to the full extent of it quantity. (Human Action, chapter 29, section 1)

Death Agony of Thatcher Deregulated Finance Model - By F. William Engdahl (LATEST UPDATE - 25/1/09)

Global Research, January 22, 2009

During the end of the 1970’s into the 1980’s British Conservative Prime Minister Margaret Thatcher and the City of London financial interests who backed her, introduced wholesale measures of privatization, state budget cuts, moves against labor and deregulation of the financial markets. She did so in parallel with similar moves in the USA initiated by advisers around President Ronald Reagan. The claim was that hard medicine was needed to curb inflation and that the bloated state bureaucracy was a central problem. For almost three decades, Anglo-American university economic faculties have turned to Thatcherite deregulation of financial markets as ‘the efficient way,’ in the process, undoing many of the hard-fought gains secured for personal social security, public health care and pension security of the population. Now the ‘poster child’ economy of the Thatcher Revolution, Great Britain, is sinking like the proverbial Titanic, a testimony to the incompetence of what is generally called Neo-liberalism or free market ideology.

As the Neo-liberal revolution began in the economies of the USA and UK, it should not be not surprising that the epi-center of catastrophe in the global crisis now unfolding also lies with the economies of the USA and UK, as well as a handful of economies, including Ireland Canada, Australia, New Zealand and Iceland, all of which embraced the free market Thatcherite agenda most strongly in recent years. Notably, the man who personally implemented Thatcherite financial market reforms and deregulation during the era of Tony Blair in Britain was Gordon Brown, then Treasury Secretary.

A sample of most recent British developments is instructive. Britain's economy is about to suffer its most vicious slump since 1946, shrinking by a drastic 2.8 per cent this year, according to EU latest estimates. The UK is predicted to suffer the worst recession of any large European economy.

The consequences for the UK will include soaring unemployment, while the economy also teeters on the brink of full-blown deflation. Unemployment will rise by more than 900,000 people over the next 12 months, driving the jobless total to 2.55 million by the end of the year, or 8.2 per cent of the workforce, from 5.3 per cent at present.

In parallel, the currency, the Pound, which is not part of the Eurozone currencies, has fallen dramatically against the Euro and even the US dollar in recent weeks over growing fears of the collapsing UK economy and banking system. Sterling has fallen below $1.40 to its lowest point in seven and a half years because of concerns about the depth of Britain's banking crisis and the Government's rising debt levels. This coming year the UK Government's borrowing levels may exceed £118 billion, equal to 8 per cent of GDP.

Britain will not be able to reap much benefit from a lower pound for exports because, as part of the Thatcher Revolution, the national economy has out-sourced, de-industrialized and turned to a service economy where, as in the USA, finance and banking became the motor of economic growth the past two decades. That motor has now broken.

Public debt soaring

Fuelled by the cost of state bank bailouts, the UK's national debt is set to rise to £1.06 trillion, or 72 per cent of GDP, by 2010, a sharp rise of more than 70% from present levels.

Yesterday, the Gordon Brown Government, only three months ago hailed as the place which was taking effective action to control the global financial meltdown, was forced to introduce yet another new bank bailout package of measures designed to rescue the country's banking sector. He refused to put any ceiling on the amount that he might ultimately need, creating great distrust in the Brussels and across the EU.

Combined, British banks have some $4.4 trillion of foreign liabilities. That is twice the size of the British economy. UK foreign reserves are virtually nothing at $60.6 billion. Little wonder that savvy currency traders and hedge funds have decided the British Pound can go only one way, down. Swap markets for CDS now price in an alarming 10% probability of Britain having to default on state debt obligations in the next few years as public debt explodes.

The last time England had a default on state debt in the early 14th Century when King Edward III decided to declare default on his then huge debts to the large Italian banking house of Bardi & Peruzzi, taking the large bank down with it and spreading ruin across Europe.

‘…giving the kiss of life to a corpse'

The Brown Government admits it does not know whether the second bank rescue package it just launched will work, senior ministers admit. One minister is quoted anonymously in the British press, ‘The truth is that we can't be sure whether it will be effective. We have to look calm to try to instil some confidence in the system. But we don't know what will happen next. No one can be sure that this is the end of it. We are in completely uncharted waters. The position is changing all the time.’ In brief, the authorities have lost control in the UK.

Gordon Brown and Treasury Secretary Alistair Darling claim the second bailout did not mean the first package they unveiled last October had failed. That deal, they insist, was about preventing banks from going bust; this one was about ensuring they had the confidence to lend to businesses and the public.

The Government refuses to reveal how much it would cost taxpayers. Officials dismissed talk of a £200bn bailout, saying some measures had a low risk and figures were still being calculated. Labour backbenchers conceded it would be difficult to "sell" the rescue plan to an increasingly hostile public. Not surprisingly, polls have turned dramatically against Labour and Brown, now showing that were elections held today, the Conservative Party would win a gain over Labour of 9% to 13 %. An astonishing 49% of all Brotins fear losing their job this year as well.

A major impediment to swift and consequent Government action to contain the impact of the banking crisis has been the dominance of Thatcherite ideology as an almost religious dogma that permeates even Labour, where Tony Blair was portrayed as a Labour version of Thatcher. The ideological absurdity of the situation was underscored recently when the Conservative opposition offered broad support for yesterday's measures, even though their concern over soaring borrowing led them to oppose the Government's £20bn fiscal stimulus designed to keep the economy moving.

As well, it is clear, following the nationalization last year of Northern Rock and the forced state share of 70% in the large Royal Bank of Scotland, that a type of approach as that used in the early 1990’s Swedish banking crisis, in which the State nationalized banks that were insolvent and unable to raise private capital. Sweden then split the banks into ‘good bank’ and ‘bad bank.’ In the good bank, business of lending to the real economy continued unabated. The assets in the bad bank, largely illiquid Swedish real estate holdings, were held by the state until economic growth again allowed the government to sell the assets in a healthy market. The ultimate taxpayer cost of the Securum model were estimated to have been zero or even a tiny profit when all costs were factored.

The ideological Labour government is stubbornly refusing to admit the logic of the situation, and ends up ‘cutting the dog’s tail off by inches.’ As certain Labour MPs call for the full nationalisation of the banks the Government says that is not its goal. Chancellor Darling stated, ‘We have a clear view that British banks are best managed and owned commercially and not by the Government. That remains our policy.’

John McFall, Labour chairman of the Treasury Select Committee, who believes full nationalisation of the banks is inevitable, asked Darling in recent House of Commons debate  if the Government would take a 100 per cent stake in the banks if the new package did not restart lending. Vince Cable, Treasury spokesman for the Liberal Democrats, said, ‘The Government increasingly resembles somebody who is trying to give the kiss of life to a corpse. The Government now effectively controls one of the largest banks in the world. It will almost certainly have to put more money in; it may well acquire other banks.’ Cable had also predicted the bursting of the house price and personal debt bubbles – and the nationalisation of Northern Rock.

Royal Bank of Scotland next

The same day Brown’s Government announced the second bank bailout attempt, Royal Bank of Scotland issued a statement revealing it expects losses of £28bn for 2008, far greater than anyone was expecting, and triggered further selloff in all major British banks. The huge losses announced at RBS were mainly the result of its acquisition of ABN Amro in 2007. RBS paid a high price for ABN and yesterday admitted that the business was worth around £20bn less than it had previously thought. This unexpected announcement resulted in a 67 per cent fall in its shares.

Brown, in a pathetic attempt to deflect blame, has said that he was particularly 'angry' at the record losses racked up by the Royal Bank of Scotland, and the large write-offs of foreign debt. Lloyds Bank is rumored to be the next bank in need of emergency help as the economy of Britain goes into free-fall, the tragic eulogy to Thatcherism.

Origins of the neo-liberal model

The so-called neo-liberal finance model which was espoused by the Thatcher government after 1979 had its origins in a decision by leading Anglo-American financial powers and their circle that it was time to begin a wholesale clawing back of the concessions which they had granted under, as they saw it, duress, during the great depression of the 1930’s and in the case of Britain the postwar economic difficulties.

The origins of the effort in the United States go back to a seminal little known book by a scion of the vastly wealthy Rockefeller family, the late John D. Rockefeller III, titled The Second American Revolution. There, amid soporific rhetoric about creation of a ‘humanistic capitalism’ he calls for drastic reduction in the role and size of government in the economy. That theme was then propagated through the efficient propaganda apparatus of the Rockefeller imperium, aided by the economist guru of the Rockefellers’ University of Chicago, Milton Friedman.

Amid the misnamed ‘stagflation’ sluggish growth high inflation era of the late 1970’s into the 1980’s, that propaganda machine, conveniently ignoring the pivotal role of the manipulated oil shocks, shocks incidentally manipulated and brought about by the same Rockefeller family, as I detail in A Century of War: Anglo-American Oil Politics, blamed all ills on ‘big government.’ Rockefeller protégé, Paul Volcker of Chase Manhattan Bank was sent to Jimmy Carter on orders of David Rockefeller, to ‘wring inflation out of the system’ in October 1979, the same general time Thatcher’s Bank of England imposed its own form of economic ‘shock therapy.’

True economic causality was obscured and reams of press copy from the Friedmanite free market camp, during the Reagan and Thatcher era claimed that the ‘defeat of inflation’ had been due to the ruthless discipline of Volcker and Thatcher. That was, we were told, again and again, the reason why the market should be unfettered from government regulation, freed to the devices of its own unbounded innovative genius. The results of that unfettered ‘humanistic capitalism’ or what Alan Greenspan approvingly called the ‘revolution in finance’ is now bringing both meccas of neo-liberalism, the United States and Great Britain to economic ruin. Somewhere between this and Stalin’s Soviet central planning there lies a better way.

F. William Engdahl is author of A Century of War: Anglo-American Oil Politics and the New World Order (Pluto Press) and Seeds of Destruction: The Hidden Agenda of Genetic Manipulation ( The present article is adapted from his forthcoming book, due in summer 2009, Power of Money: The Rise and Decline of the American Century. He may be contacted through his website,

Obama Inauguration: Slide on Wall Street. Where Have All The Creditors Gone?... "When Will We Ever Learn?" - By Michel Chossudovsky (LATEST UPDATE - 25/1/09)

Global Research, January 20, 2009

Across the land, an atmosphere of hope and optimism prevails. The Bush regime has gone. A new president is in the White House.

While America had its eyes riveted on the live TV broadcast of  Barack Obama's presidential inauguration, financial markets were sliding.

A major "market correction" had occurred. Removed from the public eye, virtually unnoticed, a new stage of the financial crisis has unfolded.

Immediately following the inauguration, the Dow Jones plummeted, largely affecting the share prices of major financial institutions.

The quoted stock values of major Wall Street banks plummeted. Citigroup fell by 20 percent, Bank of America by 29 percent and JP Morgan Chase by 20 percent. The Royal Bank of Scotland fell by 69 percent in New York trading.

The difficulties and book value losses of major banks were known well in advance of the inauguration of President Obama.

So why now?

The inauguration of a president Obama was expected to provide confidence to financial markets. Exactly the opposite occurred.

There was nothing spontaneous and accidental in this collapse of the stock values of major financial institutions.

Obama's speech outside the Capitol, had been drafted well in advance. Its contents was carefully prepared.

President Obama made explicit reference to the global economy's woes, while emphasizing that: "without a watchful eye, the market can spin out of control."

"Obama warned the economic recovery would be difficult and that the nation must choose "hope over fear, unity of purpose over conflict and discord" to overcome the worst economic crisis since the Great Depression." (Associated Press, January 20, 2009)

There were "high expectations" on Wall Street. Many Wall Street brokers, who were not privy to the contents of Obama's speech, were "betting" President Obama's statements would help stabilize financial markets.

Those who drafted Obama's speech were fully aware of its possible financial repercussions.

"High expectations for details on how the new administration would address the growing banking crisis and faltering economy were dampened after the inauguration speech."(Reuters, Jan 20, 2009)

Coincidentally, the chairman of the Securities and Exchange Commission, Christopher Cox, appointed by Bush in 2005, resigned on the very same day of the presidential inauguration, leading to vacuum in the adoption of crucial financial regulatory decisions. His successor, Mary Shapiro, will only take office following lengthy Senate confirmation hearings.

Those who had advanced knowledge and/or inside information regarding the text of Obama's speech and who had the ability to "move the market" at the right time and the right place, stood to gain in the conduct of major speculative transactions on stock markets and currency exchanges.

Were these speculative transactions planned in advance of January 20th? (See Video)

Was there a concerted and deliberate effort to "short the market" on the very same day as the presidential inauguration?

On currency markets, the movement was in reverse, the US dollar was rising, the Euro, the British Pound and the Canadian dollar were plummeting. Canada's Central Bank Governor chose the date of the presidential inauguration to announce a cut in the interest rate in an apparent "bid to stimulate the economy and boost lending to consumers and businesses". The impact: the Canadian dollar declined dramatically in relation to Greenback.   
Were have All the Creditors Gone?

The largest financial institutions are said to be in troubled waters, indebted to unnamed creditors. Since the onslaught of the financial meltdown, the identity of the creditors remains a mystery.

Over the years, the financial establishment has set up private hedge funds invariably registered in the name of wealthy individuals. Large amounts of wealth have been transferred from the large financial institutions to these privately owned hedge funds, which largely escape government regulation.

Why are the banks indebted? To whom? Are they the victims or the recipients? Are they the debtors or the creditors?

America's largest banks have, over the years, sifted off part of their surplus profits to various proxy financial outfits, hedge funds, accounts registered in tropical offshore banking havens, etc.

While these billion dollar transfers are conducted electronically from one financial entity to another, the identity of the creditors is never mentioned. Who is collecting these multibillion debts which are in large part the consequence of financial manipulation?

The collapse in bank stock market values was in all likelihood known in advance. The banks had already moved their loot to a safe financial haven.

The banks are in troubled water after having received hundred of billions of dollars of bailout money.

Where is the bailout money going? Who is cashing in on the multibillion dollar government bailout money? This process is contributing to an unprecedented concentration of private wealth.

The financial press acknowledges the existence of billions of dollars of "inter bank debt". But not a word is mentioned about the creditors.

For every debtor, there is a creditor.

Is this not money which the financial elites owe to themselves?

Whoever holds these trillions will eventually pick up the pieces. They will transform their enormous paper wealth into the acquisition of real assets.

Waking up the Day After

And the day after the hopes and promises of the presidential inauguration, Middle Class Americans who had invested in "safe" bank shares, will come to realize that part of their lifelong savings have once again been confiscated.

So Far, Obama's Missed The Point on Gaza... - By Robert Fisk (LATEST UPDATE - 24/1/09)

January 22, 2009 The Independent UK

It would have helped if Obama had the courage to talk about what everyone in the Middle East was talking about. No, it wasn't the US withdrawal from Iraq. They knew about that. They expected the beginning of the end of Guantanamo and the probable appointment of George Mitchell as a Middle East envoy was the least that was expected. Of course, Obama did refer to "slaughtered innocents", but these were not quite the "slaughtered innocents" the Arabs had in mind.

There was the phone call yesterday to Mahmoud Abbas. Maybe Obama thinks he's the leader of the Palestinians, but as every Arab knows, except perhaps Mr Abbas, he is the leader of a ghost government, a near-corpse only kept alive with the blood transfusion of international support and the "full partnership" Obama has apparently offered him, whatever "full" means. And it was no surprise to anyone that Obama also made the obligatory call to the Israelis.

But for the people of the Middle East, the absence of the word "Gaza" - indeed, the word "Israel" as well - was the dark shadow over Obama's inaugural address. Didn't he care? Was he frightened? Did Obama's young speech-writer not realise that talking about black rights - why a black man's father might not have been served in a restaurant 60 years ago - would concentrate Arab minds on the fate of a people who gained the vote only three years ago but were then punished because they voted for the wrong people? It wasn't a question of the elephant in the china shop. It was the sheer amount of corpses heaped up on the floor of the china shop.

Sure, it's easy to be cynical. Arab rhetoric has something in common with Obama's clichés: "hard work and honesty, courage and fair play ... loyalty and patriotism". But however much distance the new President put between himself and the vicious regime he was replacing, 9/11 still hung like a cloud over New York. We had to remember "the firefighter's courage to storm a stairway filled with smoke". Indeed, for Arabs, the "our nation is at war against a far-reaching network of violence and hatred" was pure Bush; the one reference to "terror", the old Bush and Israeli fear word, was a worrying sign that the new White House still hasn't got the message. Hence we had Obama, apparently talking about Islamist groups such as the Taliban who were "slaughtering innocents" but who "cannot outlast us". As for those in the speech who are corrupt and who "silence dissent", presumably intended to be the Iranian government, most Arabs would associate this habit with President Hosni Mubarak of Egypt (who also, of course, received a phone call from Obama yesterday), King Abdullah of Saudi Arabia and a host of other autocrats and head-choppers who are supposed to be America's friends in the Middle East.

Hanan Ashrawi got it right. The changes in the Middle East - justice for the Palestinians, security for the Palestinians as well as for the Israelis, an end to the illegal building of settlements for Jews and Jews only on Arab land, an end to all violence, not just the Arab variety - had to be "immediate" she said, at once. But if the gentle George Mitchell's appointment was meant to answer this demand, the inaugural speech, a real "B-minus" in the Middle East, did not.

The friendly message to Muslims, "a new way forward, based on mutual interest and mutual respect", simply did not address the pictures of the Gaza bloodbath at which the world has been staring in outrage. Yes, the Arabs and many other Muslim nations, and, of course, most of the world, can rejoice that the awful Bush has gone. So, too, Guantanamo. But will Bush's torturers and Rumsfeld's torturers be punished? Or quietly promoted to a job where they don't have to use water and cloths, and listen to men screaming?

Sure, give the man a chance. Maybe George Mitchell will talk to Hamas - he's just the man to try - but what will the old failures such as Denis Ross have to say, and Rahm Emanuel and, indeed, Robert Gates and Hillary Clinton? More a sermon than an Obama inaugural, even the Palestinians in Damascus spotted the absence of those two words: Palestine and Israel. So hot to touch they were, and on a freezing Washington day, Obama wasn't even wearing gloves.

Jewish Lobby Gives Obama His Marching Orders - By Michael Collins Piper (LATEST UPDATE - 24/1/09)

THE POWERFUL JEWISH LOBBY in Washington is already issuing marching orders to President-elect Barack Obama. One of the most influential voices of the lobby has published an array of “working papers” designed to tell the president how he must maintain the “special relationship” between the United States and Israel, increase pressure on a variety of Arab and Muslim states that are perceived as dangers to Israel, and generally assure that Israel’s interests will always be first and foremost in the conduct of U.S. foreign policy, not only in the Middle East but around the globe.

The Jewish Institute for National Security Affairs (JINSA), a particularly vocal force in the Jewish lobby, published an entire edition of its Journal of International Security Affairs (dated fall 2008), sending the official word to Obama. JINSA was founded by one Stephen Bryen who—along with a host of other well known names connected to JINSA—was once investigated by the FBI on charges of espionage for Israel.

A variety of articles in the journal addressing “Middle East Policy and the Next President” and “Iran, Iraq and Beyond,” make it clear that JINSA—best known as a nest of the infamous “neo-conservatives” who misdirected U.S. foreign policy during the outgoing Bush administration, sparking the war in Iraq and continuing to clamor for action against Iran—wants Obama to pursue Bush-style policies.

AIPAC is particularly obsessed with using U.S. military and economic power to force Arab and Muslim nations to “reform” from within. Talk of “democracy” flows freely within AIPAC’s assorted essays, demanding that Israel’s neighbors conform to the Western version of democracy. But when the Palestinian people voted the Hamas movement into power in the Palestinian Authority in the occupied West Bank and the Gaza strip, AIPAC and other elements in the Jewish lobby immediately began calling for the United States to reject that freely elected government.

Now, of course, Hamas is largely only in control of the beleaguered Gaza—which many refer to as “ghetto”— and the Palestinian statehood movement has been eviscerated, at least for now. This makes AIPAC and the lobby for Israel quite happy, for Israel has long encouraged U.S. policies—and helped create conditions—that have the effect of “divide and conquer” in the Arab and Muslim world.

Israel is not like any other nation in the world, in that it seems to thrive best (and enjoys the benefits of) having its neighbors quarreling among themselves and rent within. Other nations prefer neighbors that are peaceful and internally secure. Israel wants its neighbors in chaos, because this prevents them from waging war against Israel, either individually or united. And although in the wake of the debacle in Iraq, which led many Israelis and their allies in the United States to suddenly proclaim that the Iraq war should never have been waged, the fact is that Israel and its U.S.-based agents-in-place were the prime movers behind that war and it was Israeli intelligence that was providing what critics now recognize was the “bad intelligence” that led the Bush administration to “mistakenly” conclude that Iraq was working toward an assembly of nuclear weapons to rival that of Israel.

The Israelis and their American spokesmen evidently now believe that if they tell the “big lie” often enough—the lie that Israel’s interests played no part in orchestrating the debacle in Iraq—that it will make Americans forget that Israel was the foremost advocate of the war in the first place.

However, the evisceration of Iraq by the United States is part and parcel of a long-standing Israeli national security policy aimed toward “balkanizing” the Muslim world.

Yet, AIPAC, in its journal, is now working to perpetuate the myth of Iraqi nuclear weapons and suggesting that Iraq’s weapons were transported into Syria, another nation which has been on the “wish list for war” of Israel and its lobby in America. And AIPAC makes it clear that the destruction of Iran’s nuclear development program is a “must.”

AIPAC is not the only Israeli lobby unit sending the message to the new president. Commentary magazine, long affiliated with the American Jewish Committee, has—in recent issues—been trumpeting a similar bellicose refrain directed at Obama. The editorial director of the Jewish lobby journal is John Podhoretz, a longtime close personal and political associate of the ubiquitous William Kristol, editor of the Weekly Standard magazine, which is the most infamous voice of the neo-conservative, hard-line pro-Israel elements operating in the media, in the think tanks, and in official policy making and national security and intelligence circles in Washington.

Their fathers, Irving Kristol and Norman Podhoretz, are two of the founding fathers of the neoconservative network, both Trotskyite Marxists who announced their “conversion” to conservatism during the latter days of the Cold War, banging the drum for intensified U.S. support for Israel.

A complete overview of the neo-conservative power structure and its rather bizarre origins in the days when American Jewish communists like Kristol and Podhoretz turned on the Soviet Union when then- Soviet chief Josef Stalin began moving against Jewish and Zionist elements inside Russia can be found in The High Priests of War and The Judas Goats, two works by this author.

Whether President Obama intends real change, as he promised, or whether he will advance the Israeli agenda (which saw its power expand exponentially in the Republican administration of George W. Bush) remains to be seen. But “the lobby” is making its voice heard and Obama knows that he better not ignore it.

A journalist specializing in media critique, Michael Collins Piper is the author of The High Priests of War, The New Jerusalem, Dirty Secrets, The Judas Goats, The Golem, Target Traficant and My First Days in the White House All are available from AFP.

Worse Than An Earthquake - By Kathy Kelly (LATEST UPDATE - 24/1/09)

January 22, 2009 Commondreams

RAFAH - Traffic on Sea Street, a major thoroughfare alongside Gaza's coastline, includes horses, donkeys pulling carts, cyclists, pedestrians, trucks and cars, mostly older models. Overhead, in stark contrast to the street below, Israel's ultra modern unmanned surveillance planes criss-cross the skies. F16s and helicopters can also be heard. Remnants of their deliveries, the casings of missiles, bombs and shells used during the past three weeks of Israeli attacks, are scattered on the ground.

Workers have cleared most of the roads. Now, they are removing massive piles of wreckage and debris, much as people do following an earthquake.

"Yet, all the world helps after an earthquake," said a doctor at the Shifaa hospital in Gaza. "We feel very frustrated," he continued. "The West, Europe and the U.S., watched this killing go on for 22 days, as though they were watching a movie, watching the killing of women and children without doing anything to stop it. I was expecting to die at any moment. I held my babies and expected to die. There was no safe place in Gaza."

He and his colleagues are visibly exhausted, following weeks of work in the Intensive Care and Emergency Room departments at a hospital that received many more patients than they could help. "Patients died on the floor of the operating room because we had only six operating rooms," said Dr. Saeed Abuhassan, M.D, an ICU doctor who grew up in Chicago. "And really we don't know enough about the kinds of weapons that have been used against Gaza."

In 15 years of practice, Dr. Abuhassan says he never saw burns like those he saw here. The burns, blackish in color, reached deep into the muscles and bones. Even after treatment was begun, the blackish color returned.

Two of the patients were sent to Egypt because they were in such critical condition. They died in Egypt. But when autopsies were done, reports showed that the cause of death was poisoning from elements of white phosphorous that had entered their systems, causing cardiac arrests.

In Gaza City, The Burn Unit's harried director, a plastic surgeon and an expert in treating burns, told us that after encountering cases they'd never seen before, doctors at the center performed a biopsy on a patient they believed may have suffered chemical burns and sent the sample to a lab in Egypt. The results showed elements of white phosphorous in the tissue.

The doctor was interrupted by a phone call from a farmer who wanted to know whether it was safe to eat the oranges he was collecting from groves that had been uprooted and bombed during the Israeli invasion. The caller said the oranges had an offensive odor and that when the workers picked them up their hands became itchy.

Audrey Stewart had just spent the morning with Gazan farmers in Tufaa, a village near the border between Gaza and Israel. Israeli soldiers had first evacuated people, then dynamited the houses, then used bulldozers to clear the land, uprooting the orange tree groves. Many people, including children, were picking through the rubble, salvaging belongings and trying to collect oranges. At one point, people began shouting at Audrey, warning her that she was standing next to an unexploded rocket.

The doctor put his head in his hands, after listening to Audrey's report. "I told them to wash everything very carefully. But these are new situations. Really, I don't know how to respond," he said.

Yet he spoke passionately about what he knew regarding families that had been burned or crushed to death when their homes were bombed. "Were their babies a danger to anyone?" he asked us.

"They are lying to us about democracy and Western values," he continued, his voice shaking. "If we were sheep and goats, they would be more willing to help us."

Dr. Saeed Abuhassan was bidding farewell to the doctors he'd worked with in Gaza. He was returning to his work in the United Arab Emirates. But before leaving, he paused to give us a word of advice. "You know, the most important thing you can tell people in your country is that U.S. people paid for many of the weapons used to kill people in Gaza," said Dr. Saeed Abuhassan. "And this, also, is why it's worse than an earthquake."

Kathy Kelly ( kathy@vcnv.orgThis e-mail address is being protected from spambots. You need JavaScript enabled to view it ) is a co-coordinator of Voices for Creative Nonviolence ( ) She and Audrey Stewart have been in Gaza for the past six days.

The Gaza Bombshell Part 1 - By David Rose (LATEST UPDATE - 24/1/09)

The Gaza Bombshell

After failing to anticipate Hamas’s victory over Fatah in the 2006 Palestinian election, the White House cooked up yet another scandalously covert and self-defeating Middle East debacle: part Iran-contra, part Bay of Pigs. With confidential documents, corroborated by outraged former and current U.S. officials, the author reveals how President Bush, Condoleezza Rice, and Deputy National-Security Adviser Elliott Abrams backed an armed force under Fatah strongman Muhammad Dahlan, touching off a bloody civil war in Gaza and leaving Hamas stronger than ever.

January 21, 2009 "Vanity Fair"

April 2008 -- The Al Deira Hotel, in Gaza City, is a haven of calm in a land beset by poverty, fear, and violence. In the middle of December 2007, I sit in the hotel’s airy restaurant, its windows open to the Mediterranean, and listen to a slight, bearded man named Mazen Asad abu Dan describe the suffering he endured 11 months before at the hands of his fellow Palestinians. Abu Dan, 28, is a member of Hamas, the Iranian-backed Islamist organization that has been designated a terrorist group by the United States, but I have a good reason for taking him at his word: I’ve seen the video.

It shows abu Dan kneeling, his hands bound behind his back, and screaming as his captors pummel him with a black iron rod. “I lost all the skin on my back from the beatings,” he says. “Instead of medicine, they poured perfume on my wounds. It felt as if they had taken a sword to my injuries.”

On January 26, 2007, abu Dan, a student at the Islamic University of Gaza, had gone to a local cemetery with his father and five others to erect a headstone for his grandmother. When they arrived, however, they found themselves surrounded by 30 armed men from Hamas’s rival, Fatah, the party of Palestinian president Mahmoud Abbas. “They took us to a house in north Gaza,” abu Dan says. “They covered our eyes and took us to a room on the sixth floor.”

The video reveals a bare room with white walls and a black-and-white tiled floor, where abu Dan’s father is forced to sit and listen to his son’s shrieks of pain. Afterward, abu Dan says, he and two of the others were driven to a market square. “They told us they were going to kill us. They made us sit on the ground.” He rolls up the legs of his trousers to display the circular scars that are evidence of what happened next: “They shot our knees and feet—five bullets each. I spent four months in a wheelchair.”

Abu Dan had no way of knowing it, but his tormentors had a secret ally: the administration of President George W. Bush.
A clue comes toward the end of the video, which was found in a Fatah security building by Hamas fighters last June. Still bound and blindfolded, the prisoners are made to echo a rhythmic chant yelled by one of their captors: “By blood, by soul, we sacrifice ourselves for Muhammad Dahlan! Long live Muhammad Dahlan!”

There is no one more hated among Hamas members than Muhammad Dahlan, long Fatah’s resident strongman in Gaza. Dahlan, who most recently served as Abbas’s national-security adviser, has spent more than a decade battling Hamas. Dahlan insists that abu Dan was tortured without his knowledge, but the video is proof that his followers’ methods can be brutal.

Bush has met Dahlan on at least three occasions. After talks at the White House in July 2003, Bush publicly praised Dahlan as “a good, solid leader.” In private, say multiple Israeli and American officials, the U.S. president described him as “our guy.”

The United States has been involved in the affairs of the Palestinian territories since the Six-Day War of 1967, when Israel captured Gaza from Egypt and the West Bank from Jordan. With the 1993 Oslo accords, the territories acquired limited autonomy, under a president, who has executive powers, and an elected parliament. Israel retains a large military presence in the West Bank, but it withdrew from Gaza in 2005.

In recent months, President Bush has repeatedly stated that the last great ambition of his presidency is to broker a deal that would create a viable Palestinian state and bring peace to the Holy Land. “People say, ‘Do you think it’s possible, during your presidency?’?” he told an audience in Jerusalem on January 9. “And the answer is: I’m very hopeful.”

The next day, in the West Bank capital of Ramallah, Bush acknowledged that there was a rather large obstacle standing in the way of this goal: Hamas’s complete control of Gaza, home to some 1.5 million Palestinians, where it seized power in a bloody coup d’état in June 2007. Almost every day, militants fire rockets from Gaza into neighboring Israeli towns, and President Abbas is powerless to stop them. His authority is limited to the West Bank.

It’s “a tough situation,” Bush admitted. “I don’t know whether you can solve it in a year or not.” What Bush neglected to mention was his own role in creating this mess.

According to Dahlan, it was Bush who had pushed legislative elections in the Palestinian territories in January 2006, despite warnings that Fatah was not ready. After Hamas—whose 1988 charter committed it to the goal of driving Israel into the sea—won control of the parliament, Bush made another, deadlier miscalculation.

Vanity Fair has obtained confidential documents, since corroborated by sources in the U.S. and Palestine, which lay bare a covert initiative, approved by Bush and implemented by Secretary of State Condoleezza Rice and Deputy National Security Adviser Elliott Abrams, to provoke a Palestinian civil war. The plan was for forces led by Dahlan, and armed with new weapons supplied at America’s behest, to give Fatah the muscle it needed to remove the democratically elected Hamas-led government from power. (The State Department declined to comment.)

But the secret plan backfired, resulting in a further setback for American foreign policy under Bush. Instead of driving its enemies out of power, the U.S.-backed Fatah fighters inadvertently provoked Hamas to seize total control of Gaza.

Some sources call the scheme “Iran-contra 2.0,” recalling that Abrams was convicted (and later pardoned) for withholding information from Congress during the original Iran-contra scandal under President Reagan. There are echoes of other past misadventures as well: the C.I.A.’s 1953 ouster of an elected prime minister in Iran, which set the stage for the 1979 Islamic revolution there; the aborted 1961 Bay of Pigs invasion, which gave Fidel Castro an excuse to solidify his hold on Cuba; and the contemporary tragedy in Iraq.

Within the Bush administration, the Palestinian policy set off a furious debate. One of its critics is David Wurmser, the avowed neoconservative, who resigned as Vice President Dick Cheney’s chief Middle East adviser in July 2007, a month after the Gaza coup.

Wurmser accuses the Bush administration of “engaging in a dirty war in an effort to provide a corrupt dictatorship [led by Abbas] with victory.” He believes that Hamas had no intention of taking Gaza until Fatah forced its hand. “It looks to me that what happened wasn’t so much a coup by Hamas but an attempted coup by Fatah that was pre-empted before it could happen,” Wurmser says.

The botched plan has rendered the dream of Middle East peace more remote than ever, but what really galls neocons such as Wurmser is the hypocrisy it exposed. “There is a stunning disconnect between the president’s call for Middle East democracy and this policy,” he says. “It directly contradicts it.”

Preventive Security

Bush was not the first American president to form a relationship with Muhammad Dahlan. “Yes, I was close to Bill Clinton,” Dahlan says. “I met Clinton many times with [the late Palestinian leader Yasser] Arafat.” In the wake of the 1993 Oslo accords, Clinton sponsored a series of diplomatic meetings aimed at reaching a permanent Middle East peace, and Dahlan became the Palestinians’ negotiator on security.

As I talk to Dahlan in a five-star Cairo hotel, it’s easy to see the qualities that might make him attractive to American presidents. His appearance is immaculate, his English is serviceable, and his manner is charming and forthright. Had he been born into privilege, these qualities might not mean much. But Dahlan was born—on September 29, 1961—in the teeming squalor of Gaza’s Khan Younis refugee camp, and his education came mostly from the street. In 1981 he helped found Fatah’s youth movement, and he later played a leading role in the first intifada—the five-year revolt that began in 1987 against the Israeli occupation. In all, Dahlan says, he spent five years in Israeli jails.

From the time of its inception as the Palestinian branch of the international Muslim Brotherhood, in late 1987, Hamas had represented a threatening challenge to Arafat’s secular Fatah party. At Oslo, Fatah made a public commitment to the search for peace, but Hamas continued to practice armed resistance. At the same time, it built an impressive base of support through schooling and social programs.

The rising tensions between the two groups first turned violent in the early 1990s—with Muhammad Dahlan playing a central role. As director of the Palestinian Authority’s most feared paramilitary force, the Preventive Security Service, Dahlan arrested some 2,000 Hamas members in 1996 in the Gaza Strip after the group launched a wave of suicide bombings. “Arafat had decided to arrest Hamas military leaders, because they were working against his interests, against the peace process, against the Israeli withdrawal, against everything,” Dahlan says. “He asked the security services to do their job, and I have done that job.”

It was not, he admits, “popular work.” For many years Hamas has said that Dahlan’s forces routinely tortured detainees. One alleged method was to sodomize prisoners with soda bottles. Dahlan says these stories are exaggerated: “Definitely there were some mistakes here and there. But no one person died in Preventive Security. Prisoners got their rights. Bear in mind that I am an ex-detainee of the Israelis’. No one was personally humiliated, and I never killed anyone the way [Hamas is] killing people on a daily basis now.” Dahlan points out that Arafat maintained a labyrinth of security services—14 in all—and says the Preventive Security Service was blamed for abuses perpetrated by other units.

Dahlan worked closely with the F.B.I. and the C.I.A., and he developed a warm relationship with Director of Central Intelligence George Tenet, a Clinton appointee who stayed on under Bush until July 2004. “He’s simply a great and fair man,” Dahlan says. “I’m still in touch with him from time to time.”

“Everyone Was Against the Elections”

In a speech in the White House Rose Garden on June 24, 2002, President Bush announced that American policy in the Middle East was turning in a fundamentally new direction.

Arafat was still in power at the time, and many in the U.S. and Israel blamed him for wrecking Clinton’s micro-managed peace efforts by launching the second intifada—a renewed revolt, begun in 2000, in which more than 1,000 Israelis and 4,500 Palestinians had died. Bush said he wanted to give Palestinians the chance to choose new leaders, ones who were not “compromised by terror.” In place of Arafat’s all-powerful presidency, Bush said, “the Palestinian parliament should have the full authority of a legislative body.”

Arafat died in November 2004, and Abbas, his replacement as Fatah leader, was elected president in January 2005. Elections for the Palestinian parliament, known officially as the Legislative Council, were originally set for July 2005, but later postponed by Abbas until January 2006.

Dahlan says he warned his friends in the Bush administration that Fatah still wasn’t ready for elections in January. Decades of self-preservationist rule by Arafat had turned the party into a symbol of corruption and inefficiency—a perception Hamas found it easy to exploit. Splits within Fatah weakened its position further: in many places, a single Hamas candidate ran against several from Fatah.

“Everyone was against the elections,” Dahlan says. Everyone except Bush. “Bush decided, ‘I need an election. I want elections in the Palestinian Authority.’ Everyone is following him in the American administration, and everyone is nagging Abbas, telling him, ‘The president wants elections.’ Fine. For what purpose?”

The elections went forward as scheduled. On January 25, Hamas won 56 percent of the seats in the Legislative Council.

Few inside the U.S. administration had predicted the result, and there was no contingency plan to deal with it. “I’ve asked why nobody saw it coming,” Condoleezza Rice told reporters. “I don’t know anyone who wasn’t caught off guard by Hamas’s strong showing.”

“Everyone blamed everyone else,” says an official with the Department of Defense. “We sat there in the Pentagon and said, ‘Who the fuck recommended this?’?”

In public, Rice tried to look on the bright side of the Hamas victory. “Unpredictability,” she said, is “the nature of big historic change.” Even as she spoke, however, the Bush administration was rapidly revising its attitude toward Palestinian democracy.

Some analysts argued that Hamas had a substantial moderate wing that could be strengthened if America coaxed it into the peace process. Notable Israelis—such as Ephraim Halevy, the former head of the Mossad intelligence agency—shared this view. But if America paused to consider giving Hamas the benefit of the doubt, the moment was “milliseconds long,” says a senior State Department official. “The administration spoke with one voice: ‘We have to squeeze these guys.’ With Hamas’s election victory, the freedom agenda was dead.”

The first step, taken by the Middle East diplomatic “Quartet”—the U.S., the European Union, Russia, and the United Nations—was to demand that the new Hamas government renounce violence, recognize Israel’s right to exist, and accept the terms of all previous agreements. When Hamas refused, the Quartet shut off the faucet of aid to the Palestinian Authority, depriving it of the means to pay salaries and meet its annual budget of roughly $2 billion.

Israel clamped down on Palestinians’ freedom of movement, especially into and out of the Hamas-dominated Gaza Strip. Israel also detained 64 Hamas officials, including Legislative Council members and ministers, and even launched a military campaign into Gaza after one of its soldiers was kidnapped. Through it all, Hamas and its new government, led by Prime Minister Ismail Haniyeh, proved surprisingly resilient.

Washington reacted with dismay when Abbas began holding talks with Hamas in the hope of establishing a “unity government.” On October 4, 2006, Rice traveled to Ramallah to see Abbas. They met at the Muqata, the new presidential headquarters that rose from the ruins of Arafat’s compound, which Israel had destroyed in 2002.

America’s leverage in Palestinian affairs was much stronger than it had been in Arafat’s time. Abbas had never had a strong, independent base, and he desperately needed to restore the flow of foreign aid—and, with it, his power of patronage. He also knew that he could not stand up to Hamas without Washington’s help.

At their joint press conference, Rice smiled as she expressed her nation’s “great admiration” for Abbas’s leadership. Behind closed doors, however, Rice’s tone was sharper, say officials who witnessed their meeting. Isolating Hamas just wasn’t working, she reportedly told Abbas, and America expected him to dissolve the Haniyeh government as soon as possible and hold fresh elections.

Abbas, one official says, agreed to take action within two weeks. It happened to be Ramadan, the month when Muslims fast during daylight hours. With dusk approaching, Abbas asked Rice to join him for iftar—a snack to break the fast.

Afterward, according to the official, Rice underlined her position: “So we’re agreed? You’ll dissolve the government within two weeks?”

“Maybe not two weeks. Give me a month. Let’s wait until after the Eid,” he said, referring to the three-day celebration that marks the end of Ramadan. (Abbas’s spokesman said via e-mail: “According to our records, this is incorrect.”)

Rice got into her armored S.U.V., where, the official claims, she told an American colleague, “That damned iftar has cost us another two weeks of Hamas government.”

“We Will Be There to Support You”

Weeks passed with no sign that Abbas was ready to do America’s bidding. Finally, another official was sent to Ramallah. Jake Walles, the consul general in Jerusalem, is a career foreign-service officer with many years’ experience in the Middle East. His purpose was to deliver a barely varnished ultimatum to the Palestinian president.

We know what Walles said because a copy was left behind, apparently by accident, of the “talking points” memo prepared for him by the State Department. The document has been authenticated by U.S. and Palestinian officials.

“We need to understand your plans regarding a new [Palestinian Authority] government,” Walles’s script said. “You told Secretary Rice you would be prepared to move ahead within two to four weeks of your meeting. We believe that the time has come for you to move forward quickly and decisively.”

The “talking points” memo, left behind by a State Department envoy, urging Palestinian president Mahmoud Abbas to confront Hamas. The memo left no doubt as to what kind of action the U.S. was seeking: “Hamas should be given a clear choice, with a clear deadline: … they either accept a new government that meets the Quartet principles, or they reject it The consequences of Hamas’ decision should also be clear: If Hamas does not agree within the prescribed time, you should make clear your intention to declare a state of emergency and form an emergency government explicitly committed to that platform."

Walles and Abbas both knew what to expect from Hamas if these instructions were followed: rebellion and bloodshed. For that reason, the memo states, the U.S. was already working to strengthen Fatah’s security forces. “If you act along these lines, we will support you both materially and politically,” the script said. “We will be there to support you.”

Abbas was also encouraged to “strengthen [his] team” to include “credible figures of strong standing in the international community.” Among those the U.S. wanted brought in, says an official who knew of the policy, was Muhammad Dahlan.

On paper, the forces at Fatah’s disposal looked stronger than those of Hamas. There were some 70,000 men in the tangle of 14 Palestinian security services that Arafat had built up, at least half of those in Gaza. After the legislative elections, Hamas had expected to assume command of these forces, but Fatah maneuvered to keep them under its control. Hamas, which already had 6,000 or so irregulars in its militant al-Qassam Brigade, responded by forming the 6,000-troop Executive Force in Gaza, but that still left it with far fewer fighters than Fatah.


In reality, however, Hamas had several advantages. To begin with, Fatah’s security forces had never really recovered from Operation Defensive Shield, Israel’s massive 2002 re-invasion of the West Bank in response to the second intifada. “Most of the security apparatus had been destroyed,” says Youssef Issa, who led the Preventive Security Service under Abbas.

The irony of the blockade on foreign aid after Hamas’s legislative victory, meanwhile, was that it prevented only Fatah from paying its soldiers. “We are the ones who were not getting paid,” Issa says, “whereas they were not affected by the siege.” Ayman Daraghmeh, a Hamas Legislative Council member in the West Bank, agrees. He puts the amount of Iranian aid to Hamas in 2007 alone at $120 million. “This is only a fraction of what it should give,” he insists. In Gaza, another Hamas member tells me the number was closer to $200 million.

The result was becoming apparent: Fatah could not control Gaza’s streets—or even protect its own personnel.

At about 1:30 p.m. on September 15, 2006, Samira Tayeh sent a text message to her husband, Jad Tayeh, the director of foreign relations for the Palestinian intelligence service and a member of Fatah. “He didn’t reply,” she says. “I tried to call his mobile [phone], but it was switched off. So I called his deputy, Mahmoun, and he didn’t know where he was. That’s when I decided to go to the hospital.”

Samira, a slim, elegant 40-year-old dressed from head to toe in black, tells me the story in a Ramallah café in December 2007. Arriving at the Al Shifa hospital, “I went through the morgue door. Not for any reason—I just didn’t know the place. I saw there were all these intelligence guards there. There was one I knew. He saw me and he said, ‘Put her in the car.’ That’s when I knew something had happened to Jad.”

Tayeh had left his office in a car with four aides. Moments later, they found themselves being pursued by an S.U.V. full of armed, masked men. About 200 yards from the home of Prime Minister Haniyeh, the S.U.V. cornered the car. The masked men opened fire, killing Tayeh and all four of his colleagues.

Hamas said it had nothing to do with the murders, but Samira had reason to believe otherwise. At three a.m. on June 16, 2007, during the Gaza takeover, six Hamas gunmen forced their way into her home and fired bullets into every photo of Jad they could find. The next day, they returned and demanded the keys to the car in which he had died, claiming that it belonged to the Palestinian Authority.

Fearing for her life, she fled across the border and then into the West Bank, with only the clothes she was wearing and her passport, driver’s license, and credit card.

To be continued ... (See "The Gaza Bombshell Part 2")

The Gaza Bombshell Part 2 - By David Rose (LATEST UPDATE - 24/1/09)

Continued from "The Gaza Bombshell Part 1"

“Very Clever Warfare”

Fatah’s vulnerability was a source of grave concern to Dahlan. “I made a lot of activities to give Hamas the impression that we were still strong and we had the capacity to face them,” he says. “But I knew in my heart it wasn’t true.” He had no official security position at the time, but he belonged to parliament and retained the loyalty of Fatah members in Gaza. “I used my image, my power.” Dahlan says he told Abbas that “Gaza needs only a decision for Hamas to take over.” To prevent that from happening, Dahlan waged “very clever warfare” for many months.

According to several alleged victims, one of the tactics this “warfare” entailed was to kidnap and torture members of Hamas’s Executive Force. (Dahlan denies Fatah used such tactics, but admits “mistakes” were made.) Abdul Karim al-Jasser, a strapping man of 25, says he was the first such victim. “It was on October 16, still Ramadan,” he says. “I was on my way to my sister’s house for iftar. Four guys stopped me, two of them with guns. They forced me to accompany them to the home of Aman abu Jidyan,” a Fatah leader close to Dahlan. (Abu Jidyan would be killed in the June uprising.)
The first phase of torture was straightforward enough, al-Jasser says: he was stripped naked, bound, blindfolded, and beaten with wooden poles and plastic pipes. “They put a piece of cloth in my mouth to stop me screaming.” His interrogators forced him to answer contradictory accusations: one minute they said that he had collaborated with Israel, the next that he had fired Qassam rockets against it.

But the worst was yet to come. “They brought an iron bar,” al-Jasser says, his voice suddenly hesitant. We are speaking inside his home in Gaza, which is experiencing one of its frequent power outages. He points to the propane-gas lamp that lights the room. “They put the bar in the flame of a lamp like this. When it was red, they took the covering off my eyes. Then they pressed it against my skin. That was the last thing I remember.”

When he came to, he was still in the room where he had been tortured. A few hours later, the Fatah men handed him over to Hamas, and he was taken to the hospital. “I could see the shock in the eyes of the doctors who entered the room,” he says. He shows me photos of purple third-degree burns wrapped like towels around his thighs and much of his lower torso. “The doctors told me that if I had been thin, not chubby, I would have died. But I wasn’t alone. That same night that I was released, abu Jidyan’s men fired five bullets into the legs of one of my relatives. We were in the same ward in the hospital.”

Dahlan says he did not order al-Jasser’s torture: “The only order I gave was to defend ourselves. That doesn’t mean there wasn’t torture, some things that went wrong, but I did not know about this.”

The dirty war between Fatah and Hamas continued to gather momentum throughout the autumn, with both sides committing atrocities. By the end of 2006, dozens were dying each month. Some of the victims were noncombatants. In December, gunmen opened fire on the car of a Fatah intelligence official, killing his three young children and their driver.

There was still no sign that Abbas was ready to bring matters to a head by dissolving the Hamas government. Against this darkening background, the U.S. began direct security talks with Dahlan.

“He’s Our Guy”

In 2001, President Bush famously said that he had looked Russian president Vladimir Putin in the eye, gotten “a sense of his soul,” and found him to be “trustworthy.” According to three U.S. officials, Bush made a similar judgment about Dahlan when they first met, in 2003. All three officials recall hearing Bush say, “He’s our guy.”

They say this assessment was echoed by other key figures in the administration, including Rice and Assistant Secretary David Welch, the man in charge of Middle East policy at the State Department. “David Welch didn’t fundamentally care about Fatah,” one of his colleagues says. “He cared about results, and [he supported] whatever son of a bitch you had to support. Dahlan was the son of a bitch we happened to know best. He was a can-do kind of person. Dahlan was our guy.”
Avi Dichter, Israel’s internal-security minister and the former head of its Shin Bet security service, was taken aback when he heard senior American officials refer to Dahlan as “our guy.” “I thought to myself, The president of the United States is making a strange judgment here,” says Dichter.

Lieutenant General Keith Dayton, who had been appointed the U.S. security coordinator for the Palestinians in November 2005, was in no position to question the president’s judgment of Dahlan. His only prior experience with the Middle East was as director of the Iraq Survey Group, the body that looked for Saddam Hussein’s elusive weapons of mass destruction.

In November 2006, Dayton met Dahlan for the first of a long series of talks in Jerusalem and Ramallah. Both men were accompanied by aides. From the outset, says an official who took notes at the meeting, Dayton was pushing two overlapping agendas.

“We need to reform the Palestinian security apparatus,” Dayton said, according to the notes. “But we also need to build up your forces in order to take on Hamas.”

Dahlan replied that, in the long run, Hamas could be defeated only by political means. “But if I am going to confront them,” he added, “I need substantial resources. As things stand, we do not have the capability.”

The two men agreed that they would work toward a new Palestinian security plan. The idea was to simplify the confusing web of Palestinian security forces and have Dahlan assume responsibility for all of them in the newly created role of Palestinian national-security adviser. The Americans would help supply weapons and training.

As part of the reform program, according to the official who was present at the meetings, Dayton said he wanted to disband the Preventive Security Service, which was widely known to be engaged in kidnapping and torture. At a meeting in Dayton’s Jerusalem office in early December, Dahlan ridiculed the idea. “The only institution now protecting Fatah and the Palestinian Authority in Gaza is the one you want removed,” he said.

Dayton softened a little. “We want to help you,” he said. “What do you need?”

“Iran-Contra 2.0”

Under Bill Clinton, Dahlan says, commitments of security assistance “were always delivered, absolutely.” Under Bush, he was about to discover, things were different. At the end of 2006, Dayton promised an immediate package worth $86.4 million—money that, according to a U.S. document published by Reuters on January 5, 2007, would be used to “dismantle the infrastructure of terrorism and establish law and order in the West Bank and Gaza.” U.S. officials even told reporters the money would be transferred “in the coming days.”

The cash never arrived. “Nothing was disbursed,” Dahlan says. “It was approved and it was in the news. But we received not a single penny.”

Any notion that the money could be transferred quickly and easily had died on Capitol Hill, where the payment was blocked by the House Subcommittee on the Middle East and South Asia. Its members feared that military aid to the Palestinians might end up being turned against Israel.

Dahlan did not hesitate to voice his exasperation. “I spoke to Condoleezza Rice on several occasions,” he says. “I spoke to Dayton, to the consul general, to everyone in the administration I knew. They said, ‘You have a convincing argument.’ We were sitting in Abbas’s office in Ramallah, and I explained the whole thing to Condi. And she said, ‘Yes, we have to make an effort to do this. There’s no other way.’?” At some of these meetings, Dahlan says, Assistant Secretary Welch and Deputy National-Security Adviser Abrams were also present.

The administration went back to Congress, and a reduced, $59 million package for nonlethal aid was approved in April 2007. But as Dahlan knew, the Bush team had already spent the past months exploring alternative, covert means of getting him the funds and weapons he wanted. The reluctance of Congress meant that “you had to look for different pots, different sources of money,” says a Pentagon official.

A State Department official adds, “Those in charge of implementing the policy were saying, ‘Do whatever it takes. We have to be in a position for Fatah to defeat Hamas militarily, and only Muhammad Dahlan has the guile and the muscle to do this.’ The expectation was that this was where it would end up—with a military showdown.” There were, this official says, two “parallel programs”—the overt one, which the administration took to Congress, “and a covert one, not only to buy arms but to pay the salaries of security personnel.”

In essence, the program was simple. According to State Department officials, beginning in the latter part of 2006, Rice initiated several rounds of phone calls and personal meetings with leaders of four Arab nations—Egypt, Jordan, Saudi Arabia, and the United Arab Emirates. She asked them to bolster Fatah by providing military training and by pledging funds to buy its forces lethal weapons. The money was to be paid directly into accounts controlled by President Abbas.

The scheme bore some resemblance to the Iran-contra scandal, in which members of Ronald Reagan’s administration sold arms to Iran, an enemy of the U.S. The money was used to fund the contra rebels in Nicaragua, in violation of a congressional ban. Some of the money for the contras, like that for Fatah, was furnished by Arab allies as a result of U.S. lobbying.

But there are also important differences—starting with the fact that Congress never passed a measure expressly prohibiting the supply of aid to Fatah and Dahlan. “It was close to the margins,” says a former intelligence official with experience in covert programs. “But it probably wasn’t illegal.”

Legal or not, arms shipments soon began to take place. In late December 2006, four Egyptian trucks passed through an Israeli-controlled crossing into Gaza, where their contents were handed over to Fatah. These included 2,000 Egyptian-made automatic rifles, 20,000 ammunition clips, and two million bullets. News of the shipment leaked, and Benjamin Ben-Eliezer, an Israeli Cabinet member, said on Israeli radio that the guns and ammunition would give Abbas “the ability to cope with those organizations which are trying to ruin everything”—namely, Hamas.

Avi Dichter points out that all weapons shipments had to be approved by Israel, which was understandably hesitant to allow state-of-the-art arms into Gaza. “One thing’s for sure, we weren’t talking about heavy weapons,” says a State Department official. “It was small arms, light machine guns, ammunition.”

Perhaps the Israelis held the Americans back. Perhaps Elliott Abrams himself held back, unwilling to run afoul of U.S. law for a second time. One of his associates says Abrams, who declined to comment for this article, felt conflicted over the policy—torn between the disdain he felt for Dahlan and his overriding loyalty to the administration. He wasn’t the only one: “There were severe fissures among neoconservatives over this,” says Cheney’s former adviser David Wurmser. “We were ripping each other to pieces.”

During a trip to the Middle East in January 2007, Rice found it difficult to get her partners to honor their pledges. “The Arabs felt the U.S. was not serious,” one official says. “They knew that if the Americans were serious they would put their own money where their mouth was. They didn’t have faith in America’s ability to raise a real force. There was no follow-through. Paying was different than pledging, and there was no plan.”

This official estimates that the program raised “a few payments of $30 million”—most of it, as other sources agree, from the United Arab Emirates. Dahlan himself says the total was only $20 million, and confirms that “the Arabs made many more pledges than they ever paid.” Whatever the exact amount, it was not enough.

Plan B

On February 1, 2007, Dahlan took his “very clever warfare” to a new level when Fatah forces under his control stormed the Islamic University of Gaza, a Hamas stronghold, and set several buildings on fire. Hamas retaliated the next day with a wave of attacks on police stations.

Unwilling to preside over a Palestinian civil war, Abbas blinked. For weeks, King Abdullah of Saudi Arabia had been trying to persuade him to meet with Hamas in Mecca and formally establish a national unity government. On February 6, Abbas went, taking Dahlan with him. Two days later, with Hamas no closer to recognizing Israel, a deal was struck.

Under its terms, Ismail Haniyeh of Hamas would remain prime minister while allowing Fatah members to occupy several important posts. When the news hit the streets that the Saudis had promised to pay the Palestinian Authority’s salary bills, Fatah and Hamas members in Gaza celebrated together by firing their Kalashnikovs into the air.

Once again, the Bush administration had been taken by surprise. According to a State Department official, “Condi was apoplectic.” A remarkable documentary record, revealed here for the first time, shows that the U.S. responded by redoubling the pressure on its Palestinian allies.

The State Department quickly drew up an alternative to the new unity government. Known as “Plan B,” its objective, according to a State Department memo that has been authenticated by an official who knew of it at the time, was to “enable [Abbas] and his supporters to reach a defined endgame by the end of 2007 The endgame should produce a [Palestinian Authority] government through democratic means that accepts Quartet principles.”

Like the Walles ultimatum of late 2006, Plan B called for Abbas to “collapse the government” if Hamas refused to alter its attitude toward Israel. From there, Abbas could call early elections or impose an emergency government. It is unclear whether, as president, Abbas had the constitutional authority to dissolve an elected government led by a rival party, but the Americans swept that concern aside.

Security considerations were paramount, and Plan B had explicit prescriptions for dealing with them. For as long as the unity government remained in office, it was essential for Abbas to maintain “independent control of key security forces.” He must “avoid Hamas integration with these services, while eliminating the Executive Force or mitigating the challenges posed by its continued existence.”

In a clear reference to the covert aid expected from the Arabs, the memo made this recommendation for the next six to nine months: “Dahlan oversees effort in coordination with General Dayton and Arab [nations] to train and equip 15,000-man force under President Abbas’s control to establish internal law and order, stop terrorism and deter extralegal forces.”

The Bush administration’s goals for Plan B were elaborated in a document titled “An Action Plan for the Palestinian Presidency.” This action plan went through several drafts and was developed by the U.S., the Palestinians, and the government of Jordan. Sources agree, however, that it originated in the State Department.

The early drafts stressed the need for bolstering Fatah’s forces in order to “deter” Hamas. The “desired outcome” was to give Abbas “the capability to take the required strategic political decisions … such as dismissing the cabinet, establishing an emergency cabinet.”

The drafts called for increasing the “level and capacity” of 15,000 of Fatah’s existing security personnel while adding 4,700 troops in seven new “highly trained battalions on strong policing.” The plan also promised to arrange “specialized training abroad,” in Jordan and Egypt, and pledged to “provide the security personnel with the necessary equipment and arms to carry out their missions.”

A detailed budget put the total cost for salaries, training, and “the needed security equipment, lethal and non-lethal,” at $1.27 billion over five years. The plan states: “The costs and overall budget were developed jointly with General Dayton’s team and the Palestinian technical team for reform”—a unit established by Dahlan and led by his friend and policy aide Bassil Jaber. Jaber confirms that the document is an accurate summary of the work he and his colleagues did with Dayton. “The plan was to create a security establishment that could protect and strengthen a peaceful Palestinian state living side by side with Israel,” he says.

The final draft of the Action Plan was drawn up in Ramallah by officials of the Palestinian Authority. This version was identical to the earlier drafts in all meaningful ways but one: it presented the plan as if it had been the Palestinians’ idea. It also said the security proposals had been “approved by President Mahmoud Abbas after being discussed and agreed [to] by General Dayton’s team.”

On April 30, 2007, a portion of one early draft was leaked to a Jordanian newspaper, Al-Majd. The secret was out. From Hamas’s perspective, the Action Plan could amount to only one thing: a blueprint for a U.S.-backed Fatah coup.

“We Are Late in the Ball Game Here”

The formation of the unity government had brought a measure of calm to the Palestinian territories, but violence erupted anew after Al-Majd published its story on the Action Plan. The timing was unkind to Fatah, which, to add to its usual disadvantages, was without its security chief. Ten days earlier, Dahlan had left Gaza for Berlin, where he’d had surgery on both knees. He was due to spend the next eight weeks convalescing.

In mid-May, with Dahlan still absent, a new element was added to Gaza’s toxic mix when 500 Fatah National Security Forces recruits arrived, fresh from training in Egypt and equipped with new weapons and vehicles. “They had been on a crash course for 45 days,” Dahlan says. “The idea was that we needed them to go in dressed well, equipped well, and that might create the impression of new authority.” Their presence was immediately noticed, not only by Hamas but by staff from Western aid agencies. “They had new rifles with telescopic sights, and they were wearing black flak jackets,” says a frequent visitor from Northern Europe. “They were quite a contrast to the usual scruffy lot.”

On May 23, none other than Lieutenant General Dayton discussed the new unit in testimony before the House Middle East subcommittee. Hamas had attacked the troops as they crossed into Gaza from Egypt, Dayton said, but “these 500 young people, fresh out of basic training, were organized. They knew how to work in a coordinated fashion. Training does pay off. And the Hamas attack in the area was, likewise, repulsed.”

The troops’ arrival, Dayton said, was one of several “hopeful signs” in Gaza. Another was Dahlan’s appointment as national-security adviser. Meanwhile, he said, Hamas’s Executive Force was becoming “extremely unpopular I would say that we are kind of late in the ball game here, and we are behind, there’s two out, but we have our best clutch hitter at the plate, and the pitcher is beginning to tire on the opposing team.”

The opposing team was stronger than Dayton realized. By the end of May 2007, Hamas was mounting regular attacks of unprecedented boldness and savagery.

At an apartment in Ramallah that Abbas has set aside for wounded refugees from Gaza, I meet a former Fatah communications officer named Tariq Rafiyeh. He lies paralyzed from a bullet he took to the spine during the June coup, but his suffering began two weeks earlier. On May 31, he was on his way home with a colleague when they were stopped at a roadblock, robbed of their money and cell phones, and taken to a mosque. There, despite the building’s holy status, Hamas Executive Force members were violently interrogating Fatah detainees. “Late that night one of them said we were going to be released,” Rafiyeh recalls. “He told the guards, ‘Be hospitable, keep them warm.’ I thought that meant kill us. Instead, before letting us go they beat us badly.”

On June 7, there was another damaging leak, when the Israeli newspaper Haaretz reported that Abbas and Dayton had asked Israel to authorize the biggest Egyptian arms shipment yet—to include dozens of armored cars, hundreds of armor-piercing rockets, thousands of hand grenades, and millions of rounds of ammunition. A few days later, just before the next batch of Fatah recruits was due to leave for training in Egypt, the coup began in earnest.

Fatah’s Last Stand

The Hamas leadership in Gaza is adamant that the coup would not have happened if Fatah had not provoked it. Fawzi Barhoum, Hamas’s chief spokesman, says the leak in Al-Majd convinced the party that “there was a plan, approved by America, to destroy the political choice.” The arrival of the first Egyptian-trained fighters, he adds, was the “reason for the timing.” About 250 Hamas members had been killed in the first six months of 2007, Barhoum tells me. “Finally we decided to put an end to it. If we had let them stay loose in Gaza, there would have been more violence.”

“Everyone here recognizes that Dahlan was trying with American help to undermine the results of the elections,” says Mahmoud Zahar, the former foreign minister for the Haniyeh government, who now leads Hamas’s militant wing in Gaza. “He was the one planning a coup.”

Zahar and I speak inside his home in Gaza, which was rebuilt after a 2003 Israeli air strike destroyed it, killing one of his sons. He tells me that Hamas launched its operations in June with a limited objective: “The decision was only to get rid of the Preventive Security Service. They were the ones out on every crossroads, putting anyone suspected of Hamas involvement at risk of being tortured or killed.” But when Fatah fighters inside a surrounded Preventive Security office in Jabaliya began retreating from building to building, they set off a “domino effect” that emboldened Hamas to seek broader gains.

Many armed units that were nominally loyal to Fatah did not fight at all. Some stayed neutral because they feared that, with Dahlan absent, his forces were bound to lose. “I wanted to stop the cycle of killing,” says Ibrahim abu al-Nazar, a veteran party chief. “What did Dahlan expect? Did he think the U.S. Navy was going to come to Fatah’s rescue? They promised him everything, but what did they do? But he also deceived them. He told them he was the strongman of the region. Even the Americans may now feel sad and frustrated. Their friend lost the battle.”

Others who stayed out of the fight were extremists. “Fatah is a large movement, with many schools inside it,” says Khalid Jaberi, a commander with Fatah’s al-Aqsa Martyrs’ Brigades, which continue to fire rockets into Israel from Gaza. “Dahlan’s school is funded by the Americans and believes in negotiations with Israel as a strategic choice. Dahlan tried to control everything in Fatah, but there are cadres who could do a much better job. Dahlan treated us dictatorially. There was no overall Fatah decision to confront Hamas, and that’s why our guns in al-Aqsa are the cleanest. They are not corrupted by the blood of our people.”

Jaberi pauses. He spent the night before our interview awake and in hiding, fearful of Israeli air strikes. “You know,” he says, “since the takeover, we’ve been trying to enter the brains of Bush and Rice, to figure out their mentality. We can only conclude that having Hamas in control serves their overall strategy, because their policy was so crazy otherwise.”

The fighting was over in less than five days. It began with attacks on Fatah security buildings, in and around Gaza City and in the southern town of Rafah. Fatah attempted to shell Prime Minister Haniyeh’s house, but by dusk on June 13 its forces were being routed.

Years of oppression by Dahlan and his forces were avenged as Hamas chased down stray Fatah fighters and subjected them to summary execution. At least one victim was reportedly thrown from the roof of a high-rise building. By June 16, Hamas had captured every Fatah building, as well as Abbas’s official Gaza residence. Much of Dahlan’s house, which doubled as his office, was reduced to rubble.

Fatah’s last stand, predictably enough, was made by the Preventive Security Service. The unit sustained heavy casualties, but a rump of about 100 surviving fighters eventually made it to the beach and escaped in the night by fishing boat.

At the apartment in Ramallah, the wounded struggle on. Unlike Fatah, Hamas fired exploding bullets, which are banned under the Geneva Conventions. Some of the men in the apartment were shot with these rounds 20 or 30 times, producing unimaginable injuries that required amputation. Several have lost both legs.

The coup has had other costs. Amjad Shawer, a local economist, tells me that Gaza had 400 functioning factories and workshops at the start of 2007. By December, the intensified Israeli blockade had caused 90 percent of them to close. Seventy percent of Gaza’s population is now living on less than $2 a day.

Israel, meanwhile, is no safer. The emergency pro-peace government called for in the secret Action Plan is now in office—but only in the West Bank. In Gaza, the exact thing both Israel and the U.S. Congress warned against came to pass when Hamas captured most of Fatah’s arms and ammunition—including the new Egyptian guns supplied under the covert U.S.-Arab aid program.

Now that it controls Gaza, Hamas has given free rein to militants intent on firing rockets into neighboring Israeli towns. “We are still developing our rockets; soon we shall hit the heart of Ashkelon at will,” says Jaberi, the al-Aqsa commander, referring to the Israeli city of 110,000 people 12 miles from Gaza’s border. “I assure you, the time is near when we will mount a big operation inside Israel, in Haifa or Tel Aviv.”

On January 23, Hamas blew up parts of the wall dividing Gaza from Egypt, and tens of thousands of Palestinians crossed the border. Militants had already been smuggling weapons through a network of underground tunnels, but the breach of the wall made their job much easier—and may have brought Jaberi’s threat closer to reality.

George W. Bush and Condoleezza Rice continue to push the peace process, but Avi Dichter says Israel will never conclude a deal on Palestinian statehood until the Palestinians reform their entire law-enforcement system—what he calls “the chain of security.” With Hamas in control of Gaza, there appears to be no chance of that happening. “Just look at the situation,” says Dahlan. “They say there will be a final-status agreement in eight months? No way.”

“An Institutional Failure”

How could the U.S. have played Gaza so wrong? Neocon critics of the administration—who until last year were inside it—blame an old State Department vice: the rush to anoint a strongman instead of solving problems directly. This ploy has failed in places as diverse as Vietnam, the Philippines, Central America, and Saddam Hussein’s Iraq, during its war against Iran. To rely on proxies such as Muhammad Dahlan, says former U.N. ambassador John Bolton, is “an institutional failure, a failure of strategy.” Its author, he says, was Rice, “who, like others in the dying days of this administration, is looking for legacy. Having failed to heed the warning not to hold the elections, they tried to avoid the result through Dayton.”

With few good options left, the administration now appears to be rethinking its blanket refusal to engage with Hamas. Staffers at the National Security Council and the Pentagon recently put out discreet feelers to academic experts, asking them for papers describing Hamas and its principal protagonists. “They say they won’t talk to Hamas,” says one such expert, “but in the end they’re going to have to. It’s inevitable.”

It is impossible to say for sure whether the outcome in Gaza would have been any better—for the Palestinian people, for the Israelis, and for America’s allies in Fatah—if the Bush administration had pursued a different policy. One thing, however, seems certain: it could not be any worse.

David Rose is a Vanity Fair contributing editor.

Robert Fisk: So far, Obama's missed the point on Gaza.

Thursday, 22 January 2009


It would have helped if Obama had the courage to talk about what everyone in the Middle East was talking about. No, it wasn't the US withdrawal from Iraq. They knew about that. They expected the beginning of the end of Guantanamo and the probable appointment of George Mitchell as a Middle East envoy was the least that was expected. Of course, Obama did refer to "slaughtered innocents", but these were not quite the "slaughtered innocents" the Arabs had in mind.

There was the phone call yesterday to Mahmoud Abbas. Maybe Obama thinks he's the leader of the Palestinians, but as every Arab knows, except perhaps Mr Abbas, he is the leader of a ghost government, a near-corpse only kept alive with the blood transfusion of international support and the "full partnership" Obama has apparently offered him, whatever "full" means. And it was no surprise to anyone that Obama also made the obligatory call to the Israelis.

But for the people of the Middle East, the absence of the word "Gaza" – indeed, the word "Israel" as well – was the dark shadow over Obama's inaugural address. Didn't he care? Was he frightened? Did Obama's young speech-writer not realise that talking about black rights – why a black man's father might not have been served in a restaurant 60 years ago – would concentrate Arab minds on the fate of a people who gained the vote only three years ago but were then punished because they voted for the wrong people? It wasn't a question of the elephant in the china shop. It was the sheer amount of corpses heaped up on the floor of the china shop.

Sure, it's easy to be cynical. Arab rhetoric has something in common with Obama's clichés: "hard work and honesty, courage and fair play ... loyalty and patriotism". But however much distance the new President put between himself and the vicious regime he was replacing, 9/11 still hung like a cloud over New York. We had to remember "the firefighter's courage to storm a stairway filled with smoke". Indeed, for Arabs, the "our nation is at war against a far-reaching network of violence and hatred" was pure Bush; the one reference to "terror", the old Bush and Israeli fear word, was a worrying sign that the new White House still hasn't got the message. Hence we had Obama, apparently talking about Islamist groups such as the Taliban who were "slaughtering innocents" but who "cannot outlast us". As for those in the speech who are corrupt and who "silence dissent", presumably intended to be the Iranian government, most Arabs would associate this habit with President Hosni Mubarak of Egypt (who also, of course, received a phone call from Obama yesterday), King Abdullah of Saudi Arabia and a host of other autocrats and head-choppers who are supposed to be America's friends in the Middle East.

Hanan Ashrawi got it right. The changes in the Middle East – justice for the Palestinians, security for the Palestinians as well as for the Israelis, an end to the illegal building of settlements for Jews and Jews only on Arab land, an end to all violence, not just the Arab variety – had to be "immediate" she said, at once. But if the gentle George Mitchell's appointment was meant to answer this demand, the inaugural speech, a real "B-minus" in the Middle East, did not.

The friendly message to Muslims, "a new way forward, based on mutual interest and mutual respect", simply did not address the pictures of the Gaza bloodbath at which the world has been staring in outrage. Yes, the Arabs and many other Muslim nations, and, of course, most of the world, can rejoice that the awful Bush has gone. So, too, Guantanamo. But will Bush's torturers and Rumsfeld's torturers be punished? Or quietly promoted to a job where they don't have to use water and cloths, and listen to men screaming?

Sure, give the man a chance. Maybe George Mitchell will talk to Hamas – he's just the man to try – but what will the old failures such as Denis Ross have to say, and Rahm Emanuel and, indeed, Robert Gates and Hillary Clinton? More a sermon than an Obama inaugural, even the Palestinians in Damascus spotted the absence of those two words: Palestine and Israel. So hot to touch they were, and on a freezing Washington day, Obama wasn't even wearing gloves.


Robert Fisk: Plots, sense and nonsense: the view from the post bag

A letter tells me that I am encouraging fundamentalist attacks on the West

Saturday, 24 January 2009

Mail that you don't see in the Letters to the Editor column. First, here's reader Jack Hyde tipping me off about a possible (real) reason behind Israel's bloodletting in Gaza. He encloses a paper by University of Ottawa economist Michel Chossudovsky who says that "the military intervention of the Gaza Strip by Israeli Forces bears a direct relation to the control and ownership of strategic offshore gas reserves". It's not exactly The Plot. But it's something that Obama and his lads and lasses may need to study in the next few days.

For according to Chossudovsky, British Gas and its partner, the Athens-based Consolidated Contractors International Company – owned, apparently, by two Lebanese families – were granted 25-year oil and exploration rights off the Gaza coast by Yasser Arafat's Palestinian Authority in 1999. About 60 per cent of reserves along the Gaza-Israel coastline belong to "Palestine" (wherever that is these days).

But since the Hamas election victory in 2006 and its coup in Gaza in 2007, the Hamas government has been by-passed, even though poor old "President" Mahmoud Abbas, marooned in the West Bank, can only glimpse the Mediterranean from a hill near Jenin. Many negotiations later – and after Israeli "defence" officials claimed that the Palestinians could be paid only in goods and chattels for their gas rather than cash which might go to the dreaded Hamas – there was a proposed agreement under which Palestinian gas from Gaza wells would be channelled via undersea pipelines to the Israeli port of Ashkelon, thus transferring the control of gas sales to Israel. British Gas withdrew from these talks in December 2007.

But in June of 2008 – when, according to the Israeli daily Haaretz, Israel began its invasion plans for Gaza – Israel suddenly asked British Gas to resume talks. And, so says Chossudovsky, negotiations began again for the purchase of natural gas from the Gaza offshore fields. Israeli tanks have now driven out of the Gaza Strip, but Israeli naval vessels still control the coast and there's an obvious question: if the Israelis can continue to violate international law by seizing Palestinian land in the West Bank, why cannot they seize the sovereignty of Palestinian gas fields off Gaza? If Israel can annex Jerusalem, why not annex Gaza's maritime areas?

Less wholesome material is now turning up in my mail bag. Lebanese friends have shown me copies of a new Palestinian blog in which photographs of Palestinian women waiting at Israel's abominable checkpoints and Israeli soldiers firing at Palestinians are "matched" with archive pictures of the Jewish Holocaust. But the women and children waiting in the older photos are queuing at the infamous Auschwitz death ramp and the black-and-white image of a Nazi soldier firing his rifle has been artfully cropped to delete two figures on the right of the original picture: a cowering Jewish woman holding her child, who are being shot in the back. Yes, I believe the Israelis have committed war crimes in Gaza. And in Lebanon. But this Palestinian comparison is utterly self-defeating because it is based on a lie.

What am I to make, for instance, of another pamphlet that has flopped out of my mail package from the "refugees of Ein Karem, Jerusalem"? These Palestinians, originally expelled from 1948 Palestine in Israel's initial act of ethnic cleansing, state that "in view of the current events in Gaza and Palestine", Israel should be "dismantled" because "the savage acts by its forces (are) far beyond war crimes committed in World War Two". Ye Gods! Sixty million humans were slaughtered in the Second World War and the number of murdered Jews equals the entire present-day Palestinian population, including refugees.

But do not think that this is the only nonsense floating around. A letter with no printed author's name and no address arrives to tell me that I am encouraging "extreme fundamentalists to carry out attacks on Western Countries" by exercising "the old chestnut" of "proportionality". Disregarding the fact that Muslims are enraged by Israel's savagery in Gaza – not by our reporting of it – the reader asks me: "Were not far more German civilians killed in the last war than British civilians? Should all the British Generals be held up as war criminals? Don't talk nonsense!"

Of course, it's the same old canard. Now, it appears, it's OK to kill 100 Palestinians in Gaza for every Israeli in the area because "we" killed more German civilians than the Germans killed Brits in the Second World War. Note, here, how Germans subtly become the slaughtered Palestinians, the Israelis (and their ruthless generals) transmogrified into, I suppose, Air Marshal Harris.

There's an even more amazing letter that arrived on my Beirut desk this week – it came from an address in Wimbledon – which deserves to be quoted in full:

"Dear Mr Fisk, I recently saw an interview that you gave on French News TV. I was amazed at the size of your massive long nose that (sic) you have. Is it true that the Hamas Neo-Nazi thugs want to use it next time they need to hide from the Israelis? Yours faithfully..."

Again, the Palestinians become Nazi Germans. Do I reply to this racist dirt? Yes, I rather think I do, with the usual threat of legal action. But I absolutely promise – a repeated pledge by your reporter – I will not mention the Second World War!


Israel Accused of War Crimes - Gaza Offensive A Crime Against Humanity: UN Special Rapporteur - By Chris Gelken (LATEST UPDATE - 22/1/09)

January 20,2009

Outrage and Impotence as Gaza Burned

United Nations chief Ban Ki-moon expressed his "outrage" and the President of the General Assembly, Miquel d'Escoto Brockmann, accused Israel of violating international law.

"Gaza is ablaze," he told the UN General Assembly, "it has been turned into a burning hell."

The UN's Special Rapporteur for Human Rights in the Occupied Territories, Professor Richard Falk, characterized the Israel offensive as containing "severe and massive violations of international humanitarian law."

But an outspoken US lawyer isn't overly impressed with the indignant words of Ban, Brockmann, or Falk.

"Saying is one thing," according to international attorney Francis A. Boyle, "doing is another."

He accused the UN creating the problem in the first place by what he described as the "illegal" partitioning of the Palestine Mandate that led to a massive displacement of the indigenous Arab population.

"You can never trust the United Nations to do the right thing for the Palestinians. The Palestinians have always been on their own, and they know it," he said, "Abandoned and betrayed by the entire world now for 60 years."

Professor George Bisharat from the Hastings College of the Law at the University of California says the United Nations owes the people of Palestine a moral debt.

"The UN is deeply implicated in the injustices and violations of rights of the Palestinians over the last six decades," he said. "It is not at all clear that the General Assembly had the legal authority to partition Palestine, and the plan it passed in 1947 violated the rights of the indigenous people of Palestine to self-determination.

"The United Nations has owed the Palestinian people a moral debt since that time ? and one that it has never effectively paid."

Author and political scientist, Norman G. Finkelstein, expressed his frustration at the inaction of global leaders, and the inability of the United Nations to even enforce its own resolutions.

"The world does nothing," he said. "Most states are led by cowards and slaves of the United States. The only ones showing any courage right now are the UN agencies in Gaza. Their representatives are telling the truth."

Dr. Mohammad Marandi, head of the Department of North American Studies at Tehran University shares Finkelstein's low opinion of UN leadership.

"While the UN staff in Gaza are doing heroic work," he said, "their statements are not reflected by the higher authorities of the UN or the countries that are represented there."

Boyle, meanwhile, says the legal tools are available to enforce resolutions and international law, but Finkelstein believes it is not simply a question of law, but rather a lack of political will.

"The UN is not impotent," he said. "It chooses to be silent because it is composed of craven slaves of the United States."
Under the current circumstances, says Finkelstein, Israel believes it can act with impunity.

"Why should Israel care? The world is doing nothing. The only hope is public opinion, which is light years ahead of the elected representatives."

The Israeli offensive against Gaza triggered massive anti-Israel protests around the world, and according to Kole Kilibarda, an organizer with the Toronto-based Coalition Against Israeli Apartheid (CAIA), they have an important role to play.

"It is a mistake to view the UN in monolithic terms, and in no way should its actions or inaction serve as a substitute for individuals to organize themselves in their communities to fight and struggle for what they see as just," he said.

"Social change has never come from the UN," Kilibarda said. "At its best, the UN has only managed to legitimize what social movements had fought for over decades and sometimes centuries."

But Kilibarda says it is clear the Israeli leadership is indifferent to the overwhelming majority of world opinion that has condemned their attack.

"Israel was ready for this reaction and it is obvious that the 'media war' was prepared months in advance in an attempt to prevent a repeat of Israel's PR fiasco during its 2006 attack on Lebanon.

"The fact is," Kilibarda said, "Israeli leaders only care about the opinion of politicians in Washington and other world capitals. So long as these governments see a strategic interest in supporting Israeli apartheid as a means of repressing the self-determination of the people living in the Middle East, Israel will continue on its course."

Prof. Bisharat says the real responsibility lies not with the UN itself, but with the handful of powerful nations that run it according to their own interests and moral outlook.

"The UN will likely never become a venue sympathetic to Palestinian rights until it undergoes substantial reform and democratization," he said.

Dr. Marandi says the problem with the UN is that it is undemocratic, and it is unlikely that Israel will face serious condemnation.

"The only thing that will impact events on the ground is a change of attitude by the United States or an increase in resistance [to US influence] by countries such as Egypt, Jordan and Saudi Arabia.

"It is ironic," Dr. Marandi said, "that the United States considers the UN and the UN Security Council to be legitimate bodies, but their key ally ? Israel ? never accepts their resolutions."

Holding Israel Accountable for War Crimes

Israel's reaction to the passage of Resolution 1860 calling for an immediate ceasefire was to dismiss it as an unworkable piece of paper.

Prime Minister Ehud Olmert said since the "terrorist organizations" would not honor it, then why should Israel. Consequently, he and other senior cabinet ministers said they would simply ignore it.

The position taken by Israel was a clear violation of their responsibilities as a member of the world body.

"All members pledge to uphold the charter of the UN and to abide by Security Council resolutions," said Prof. Bisharat.

"However, this resolution was not taken under Chapter Seven of the charter which is the chapter under which enforcement actions -- including the use of force -- are authorized. So Israel can ignore the resolution with impunity."

In fairness, the professor added, Hamas too scorned the resolution, maintaining that its perspective was never heard.

Given the ferocity of the Israeli campaign in Gaza and the extraordinarily high proportion of civilians killed and injured, some governments have begun to call for legal action against Israel for war crimes and crimes against humanity.

Prof. Bisharat outlined two possible courses of action to hold Israel legally accountable for its violations of international law in Gaza.

"One is to form a special international criminal tribunal under the authority of the UN General Assembly to create subsidiary organs under Article 22.

"This would be unprecedented. All special tribunals in the past -- for Rwanda and the former Yugoslavia for example -- have been established by the Security Council."

Prof. Bisharat said the unusual move of seeking a tribunal without UNSC approval is being taken because of the omnipresent threat of a US veto.

"The other course is to refer the matter to the International Court of Justice for an advisory opinion, similar to what was done in respect of Israel's 'separation wall' built by Israel in the occupied territories.

"My sense is that many people internationally, and to an extent in the US, are finally shocked enough at Israel's behavior that real action will be taken," he said.

But, the professor added, it will be a political battle within the General Assembly and no one can precisely predict its outcome.

A good start, according to Boyle, would be to have Israel suspended from the United Nations.

"The UN General Assembly can vote to suspend Israel from all participation in the activities of the UNGA, as well as affiliated agencies, organizations, institutions and other activities," he said, "And this would not be subject to a US veto."

He pointed out that similar measures were taken against the apartheid regime in South Africa and the rump Yugoslavia -- which at the time was being accused of genocide.

"Both of these cases, apartheid and genocide apply to Israel," Boyle said, "and you can quote me on that."

As a condition for its admission into the United Nations, Boyle explained in a recent legal article, Israel formally agreed to accept General Assembly Resolution 181 (II) (1947) (partition/Jerusalem trusteeship) and General Assembly Resolution 194 (III) (Palestinian right of return).

"Israel has repudiated both these resolutions (among other things) and consequently has violated its conditions for admission to UN membership," Boyle wrote.

Prof. Bisharat agrees that, in theory at least, it would be possible to have Israel suspended from the United Nations.

"It is theoretically possible, but highly unlikely," he said, "There are few nations that would brook the wrath of the US that would surely follow any such action."

Boyle has previously offered his services to the government in Iran if they wished to pursue legal action against Israel, and said he is pleased that Tehran -- along with Malaysia and other countries -- appear to be taking his suggestions seriously.

Sometimes described as being a little on the "fringe" or eccentric, Boyle had a sharp response to critics.

"I am the same eccentric person who single-handed won two World Court orders for Bosnia and Herzegovina against the genocidal rump Yugoslavia to cease and desist from committing all acts of genocide against the Bosnians. The first and only time a feat like that has been accomplished in the history of the court," he said.

"And I can do the same for Iran, or anyone else, on behalf of the Palestinians against Israel."

Zionism Is An Incurable Disease of The Mind - By Zaid Nabulsi (LATEST UPDATE - 22/1/09)

January 21, 2009 ArabComment

I lost my gloves one day in a coffee shop in Geneva, and I tell you, it’s difficult to ride without them when it’s really cold. So as I was paying for a new pair with a credit card, the salesman, whom I knew was from Israel, tried to start some small talk by asking me what my family name means. I told him that it relates to the city of Nablus where my family is originally from.

Suddenly, the most bewildered look was plastered on his face. “Where is Nablus?” he asked, “I’ve never heard of it.” Then, after realizing that I knew he was bullshitting me, he pretended to remember, “Ah, Shkheim you mean?”With my insistence not to learn these ugly names that the deranged Zionists have dug up from oblivion to erase our identity, that name certainly didn’t ring a bell. But now it was my turn. Although I knew where he was from, I asked “And you’re… from?” As he smiled while reminding me, I replicated the same look on his face moments ago. “Israel? Where is that?” Then after a brief pause, “Ah, the land of Canaan you mean. Palestine”.

You see if you want to get biblical on me, there is no such thing as Israel either, and I made that clear to this smartass. Here we were all of a sudden; my family descended from a place called Shkheim, and this guy a Palestinian. God does work in mysterious ways, but I still thanked Him for His small mercies that at least my name was not Zaid Shkheimy. “Have a nice day”, I told my Israeli friend. It was in fact a very cold, but still magnificently sunny day to hit the roads. The gloves warmed up my grip on the bike, but my heart was still frozen. I just cannot stand thieves who steal your gloves, or any other kind of thieves.

It was then that it finally occurred to me. Zionism is a sickness, for it takes much more than just a twisted ideology to make people think like that. It requires a profound leap of immorality of a higher order to instill this mentality in your followers. Zionism is not merely a political movement, but in its essence represents a deeply disturbed view of the world, which is a reflection of a terrible disease of the mind.

Indeed, to deny the existence of a vibrant community such as the Palestinian society in the early twentieth century and describe Palestine as “a land without a people for a people without a land” is a disease of the mind.

To assert property claims over real estate after the lapse of more than 2000 years with the same certainty of title as if one resided there yesterday is a disease of the mind.

To describe the colonial immigration to Palestine of a European people with no proven historical link to the ancient Israelites – and whose great, great recorded ancestors have never set foot there – as some kind of a “return” to that land is indicative of a perverted misunderstanding and misapplication of the verb to “return” and can only be a result of a disease of the mind.

To blame the Palestinians for being unreasonable in rejecting a partition plan in 1947 which gave the Jews, who only owned 7 percent of the land, an astonishing half of Palestine, is a disease of the mind.

To demand of the Arabs at the time to peacefully succumb to such partition, where 86 percent of the land designated for the proposed Jewish state was Palestinian-inhabited and owned land, is a disease of the mind.

To eventually grab 78 percent of Palestine through war and to force the flight of the population through deliberate massacres and then call it a war of independence is a disease of the mind.

To deny the orchestrated massacres and eradications of hundreds of Palestinian villages in 1948 and then denounce the Israeli historians who later exposed this truth as self-hating Jews is a disease of the mind.

To claim that having escaped the horrors of Auschwitz-Birkenau, Treblinka, and Dachau is a justification for the murde expulsion, and occupation of another guiltless people is a disease of the mind.

To legislate that any resident of Poland, Hungary, New York, Brazil, Australia, Iceland, or even Planet Mars, who happens to be blessed with a Jewish mother (yet cannot point to Palestine on the map) has a superior right to “return” and settle in Palestine to someone who has been expelled from his very own land, confined to a squalid refugee camp, and still holds the keys to his house, is a disease of the mind.

To blame God for the theft and occupation of someone else’s land by claiming that it was He who had pledged this land exclusively to the Jews, and to seriously promote the myth of a land promised by the Almighty to His favorite children as an excuse for this crime, is a disease of the mind.

To milk the pockets of the world for the atrocities of the Nazis, while stubbornly refusing a simple admission of guilt, let alone compensation or repatriation, for the catastrophe that befell the Palestinian people is a disease of the mind.

To keep reminding and blackmailing the world of the plight of the Jews under Hitler 70 years ago, while at the same time inflicting on the Palestinians today the same fate of the Jews of the Warsaw Ghetto, is a disease of the mind.

To impose a collective guilt overshadowing Western civilization for the Holocaust and then to criminalize all legitimate historical debate of the nature and extent of that horrific event is a disease of the mind.

To virtually incarcerate the Palestinian people inside degrading cages, destroying their livelihoods, confiscating their lands, stealing their water and uprooting their trees, and then to condemn their legitimate resistance as terrorism is a disease of the mind.

To believe you have the right to chase the Palestinians into an Arab capital city in 1982 and to indiscriminately bombard its civilians for a relentless three months, murdering thousands of innocent people is a disease of the mind.

To encircle the civilian camps of Sabra and Chatila after evacuating the fighters and to unleash on them trained dogs (while providing them with night-illuminating flares for efficiency) and then deny culpability for the carnage is a disease of the mind.

To publicly declare a policy of breaking the bones of Palestinian stone-throwers to prevent them from lifting stones again and to enact this policy is a disease of the mind.

To have the sadistic streak of exacting vengeance on the innocent families of suicide bombers by punishing them with the dynamiting of their home is a disease of the mind.

To describe the offer of giving the Palestinians 80 percent of 22 percent of 100 percent of what is originally their own land as a “generous” offer is a disease of the mind.

To believe that you have the right to continue to humiliate the Palestinians at gun point by making them queue for hours to move between their villages, forcing mothers to give birth at check-points is a disease of the mind.

To flatten the camp of Jenin on its inhabitants and deny any wrongdoing is a delusional condition which is symptomatic of a serious disease of the mind.

To build a huge separation wall under the pretext of security, which disconnects farmers from their farms and children from their schools, while stealing even more territory as the wall freely zigzags and encroaches on Palestinian land is a disease of the mind.

To leave behind, in the last 10 days of a losing war in Lebanon, more than one million cluster bombs which have no purpose except to murder and maim unsuspecting civilians is a product of an evil disease of the mind.

To believe that the entire world is out to get you and to denounce any critic of the racist policies of the State of Israel as an anti-Semite, the latest victim being none other than peace-making Jimmy Carter, is an acute stage of mass paranoia, which is a disease of the mind.

To possess, in the midst of a non-nuclear Arab world, more than 200 nuclear warheads capable of incinerating the whole planet in addition to having the most advanced arsenal of weaponry in the world while continuing to play the role of a victim is a disease of the mind.

Yes, and for that salesman in peaceful Geneva to be so insecure as to refuse to acknowledge the name of the largest West Bank city under his country’s brutal military occupation is, sadly, nothing but an infectious disease of the mind.

That’s all what it is, ladies and gentlemen: Zionism is an incurable disease of the mind.

Take care, and if you ride, do it safely.

Zaid Nabulsi is a lawyer. He spent many years working for the United Nations in Geneva. He has a passion for (glorious) Harley Davidson bikes.

This article was originally published in Jordan’s Living Well magazine

The Economic Pearl Harbour - The Alarm Bells Have Been Sounded - By Matthias Chang (LATEST UPDATE - 22/1/09)

On January 18, 2009, the Associated Press reported that in an interview aired on “Dateline NBC” the Chairman and CEO of Berkshire Hathaway Inc., Warren Buffet said that the “US is engaged in an economic Pearl Harbour.”

A shiver ran down my spine!

There was hardly any comment by any of our national dailies or the leading financial dailies.

Obviously, what Warren Buffet said is open to several interpretations. Whatever it may be, it cannot be good.


If the United States is engaged in an economic Pearl Harbour, it follows that there must be an enemy. Who is this enemy?

When the Japanese attacked Pearl Harbour, it gave President Roosevelt the pretext to enter World War II, at a time when the nation was against going to war. It was a day of infamy and American blood must be avenged. The rest, as they say is history – but a distorted one at that. It is now widely held that President Roosevelt had received advance warnings about the Japanese attack on December 7, 1941. But the intelligence never reached the US Fleet and the ensuing anger and outrage compelled what was once a reluctant public to join the British induced war against Germany.

But recently, this reference to Pearl Harbour by the neo-cons gave rise to the Global War of Terror in 2001 which postponed the day of financial reckoning by seven years, when President George Bush pumped over US$3 trillion into the war economy.

Recall what the neo-con think tank, Project for the New American Century foretold: “the process of transforming the US into tomorrow’s dominant force was likely to be a long one, in the absence of some catastrophic and catalyzing event like a new Pearl Harbour.”

September 11 was the catalyzing event, the New Pearl Harbour, which enabled the neo-cons to put into action their plan for global domination. And like the events leading to the original Pearl Harbour, President Bush and his regime were warned by eleven countries and were supplied with specific intelligence in the months before 9/11 but no actions were taken.

It was another day of infamy and the United States was led once again by the nose to embark on a military misadventure in Afghanistan and Iraq. The Global War on Terror was unleashed!

This is the third time that a catastrophic event is invoked to justify a certain course of action.


That it is Warren Buffet who is making this reference is most telling, for he is the hidden economic and financial adviser to President Obama. Warren Buffet has in fact said that Obama is the best man for the job!

Warren Buffet is not the effable businessman that the mass media make him out to be. He is an insider in every sense of the word. He is also the biggest and baddest insider-trader in the world. His so-called financial wizardry is all baloney, a more sophisticated Madoff ponzi scheme!

I have said repeatedly for over two years that there is an on going global currency warfare and what is at stake is the hegemony of the dollar. Warren Buffet knows that if the dollar ends up officially as toilet paper, his fortune and that of his global partnership – the hidden manipulators would be finished.

This message that the US is in an economic Pearl Harbour is meant for the enemy, as yet to be disclosed to the American public. It is a warning no less.

President Obama has echoed the sentiments in the course of his inauguration speech.

Food for thought:

In both the previous Pearl Harbour events, there were advance warnings of the impending attacks on the United States, which were later used as a pretext for waging global wars – World War II and the Global War on Terror.

What is in store for the United States and the world in this, the third and final Pearl Harbour?

Since Warren Buffet has stated that the United States is already “engaged in an economic Pearl Harbour”, I can only conclude that we are going to be in a real big mess very soon – to be precise, the end of the first quarter of 2009! 

Jim Rogers: "Sell Any Sterling You Might Have. It's Finished." - Investment Guru Issues Grim Warning As Sharp Fall In Inflation Hits Pound - By Sean O'Grady

Thursday, 22 January 2009 22:08

Economics Editor - January 21, 2009 The Independent

[FF Editorial: In Part 5 of the book: “The Shadow Money-Lenders and The Global Financial Tsunami, Matthias Chang reproduced an article he wrote dated November 11, 2007 wherein he advised: “Dump the £. The £ has been artificially overvalued. It is in fact a sick currency, buying the British currency is like ‘jumping from the frying pan into the fire.’ If you trust the British now you deserve to be burnt. Dump whatever £ you have in your portfolio now! This is a no brainer.”]

Fresh concerns about the British economy and fears for the stability of the UK's financial system pushed sterling to new record lows against the dollar, euro and yen yesterday.

One of the world's leading investors voiced the markets' concerns. Jim Rogers, of the Singapore-based Rogers Holdings and co-founder of the Quantum fund with George Soros, told Bloomberg Television: "I would urge you to sell any sterling you might have. It's finished. I hate to say it, but I would not put any money in the UK."

Mr Rogers added that the pound will fall below its record low of $1.0520 reached in February 1985. Given near parity with the euro, it raises the intriguing possibility that the pound/dollar/euro exchange rate could yield a "triple parity".

At the same time, the Office for National Statistics released the latest inflation figures, down sharply to 3.1 per cent in December, from 4.1 per cent in November. Investors took this as a sign of the weakness of demand in the UK economy, rather than of its fundamental strength. Before the official growth figures for the last three months of 2008, to be published on Friday, the Governor of the Bank of England, Mervyn King, warned that the world economy had "fallen off a cliff" and that, for the UK, "total output in the fourth quarter is expected to have fallen sharply. In the first half of this year, the rate of contraction is likely to continue to be marked". Some economists believe that the figure will be -1.5 per cent, one of the sharpest downturns since the Second World War.

Mr King also acknowledged the "risk" that inflation would drop below the target rate of 2 per cent in coming months, and confirmed that the Bank would embrace "unconventional measures" – also known as quantitative easing, or printing money – to stimulate the economy. Most economists believe that inflation will come close to zero before the end of the summer, and, on the RPI measure, will actually turn negative.

The Bank and the Treasury have so far remained relatively relaxed about the decline in sterling, believing that a boost to exports and manufacturing would help "rebalance" the economy, but that may change as the depreciation shows signs of turning into a rout, because of a lack of confidence in the British authorities to manage the situation. Worries about the scale of government borrowings, the cost of bailing out the commercial banks and that the slump in sterling will become self-reinforcing helped to push the pound to an eight-year low against the dollar, an all-time low against the yen and back towards parity with the euro. In trading, the pound crashed as much as 4 per cent to lows of around $1.386, in its biggest one-day slide against the dollar since Britain fell out of the European Exchange Rate Mechanism in 1992.

Neil MacKinnon, director and chief economist at ECU Group, said: "There's a real danger of the decline in sterling becoming a full-blown crisis. The Government and the Bank of England have to change their tune on the pound pretty quickly."

However, John Higgins, of Capital Economics, said: "It is perhaps not surprising that investors are getting increasingly nervous about the health of the UK's public finances. The 5-year credit default swap for the UK government has widened by 25bp since early January. 'Printing press' headlines make for uncomfortable reading. But there is little reason to think that the adoption of quantitative easing should be negative for the pound, any more than for the dollar."

Unlike the dollar and the euro, though, sterling does not enjoy the backing of a large economic area, nor the status of a "reserve currency", its banking sector is unusually large in relation to national GDP (400 to 450 per cent), and the UK economy is forecast, by the IMF and others, to be due for the biggest contraction of any major advanced economy in 2009.

Even weaker demand and output than previously thought is helping to push inflation down by the fastest pace since the recession of the early 1990s. The Government's VAT reduction and heavy pre-Christmas discounting on the high street drove the December CPI down to 3.1 per cent. The RPI, which includes housing costs, plunged from 3 per cent to 0.9 per cent, helped down by lower interest rates. Reductions in clothing and fuel prices were the other significant factors; that the falls were not even bigger may be due to the precipitous fall in sterling. Some economists believe the RPI could decline to as much as –5 per cent for a time in the summer, with the CPI hovering around zero, all of which will keep up the pressure for bank rate moving down from its current level of 1.5 per cent.

Colin Ellis of Daiwa Securities said: "The prospect of inflation getting below zero and staying there is the key reason the Monetary Policy Committee has been cutting bank rate aggressively – and was also arguing behind the scenes for the pot of money the Government gave it to fund security purchases. This asset-buying facility is not strict quantitative easing yet – it will be funded by T-bills, not by creating money – but it sets up a framework for how the MPC will try to reflate the economy once rates get down near zero. That is increasingly only looking like a matter of time."

Bush Sets New Standards for Failure - By Brent Budowsky (LATEST UPDATE - 20/1/09)

18 January  2009 , Consortium News

At least Richard Nixon negotiated with Russia, opened doors to China and created the Environmental Protection Agency. What did George Bush achieve?

Many historians already name Bush as the worst president in history. I go further: He may well be our nation's first catastrophic President.

It will take years to clean up the financial fiasco that occurred on his watch, a unique combination of incompetence, corruption and massive social inequity. It will take years to clean up the military mess he leaves behind with one war we should not have fought, another war that is not going well and our greatest enemy, who masterminded the World Trade Center attacks, still alive doing his dirty deeds.

While the Vice President goes from interview to interview on his "torture tour," the President desperately tries to rewrite history in one final public-relations failure while his popularity sinks to 22 percent and the nation eagerly awaits his departure.

Karl Rove's dream of a one-party state was so close he could taste it; yet the one party that now controls Congress and the presidency is the Democratic Party.

The pundits, politicians and hangers-on who gave this catastrophic President their undivided support are now reduced to arguing there should be no prosecutions for crimes. How odd; how sad; how ridiculous; how fitting.

This catastrophic President who inherited a budget surplus from his predecessor leaves his successor a disaster of deficits and debt and joblessness and fear and uncertainty and failure.

This catastrophic President who promised modesty in foreign policy and gave us arrogance and imperial attitudes and a blundering war and scandals of wounded troops, yet permitted Osama bin Laden to escape now gives farewell interviews trying to rewrite the legacy it will take a generation to correct.

This catastrophic President who promised to be a uniter and not a divider polarized Americans against each other, allowed the questioning of the patriotism of Americans who were far wiser than he, and only now unites Americans in disgust at what he did and the desire that he leave.

This catastrophic President, who ran on a platform of law and order, gave us White House counsels and an Attorney General who wrote torture memos, corrupted U.S. Attorneys, justified massive violations of eavesdropping laws and left office with the desperate hope that they themselves will not be investigated or prosecuted for crimes.

This President who ran as a CEO gave us the incompetence and bungling of Katrina, the unregulated markets that led to catastrophe from bankers and masters of the universe, and bailouts that spend trillions of dollars of taxpayers’ money, a vast sum that has helped those who caused the mess without providing help to those who suffered from the mess.

Many historians already call Bush the worst President ever. I nominate him for a higher honor: America's first catastrophic President.

Brent Budowsky was an aide to Sen. Lloyd Bentsen and to Rep. Bill Alexander, then the chief deputy whip of the House. He can be read in The Hill newspaper, where he is a columnist. He can be reached at brentbbi@webtv.netThis e-mail address is being protected from spambots. You need JavaScript enabled to view it .

The 43 Who Helped Make Bush The Worst Ever - By Progress Report (LATEST UPDATE - 18/1/09)

16 January  2009

Next week, "change is coming to America," as President George W. Bush wraps up his tenure as one of the worst American presidents ever. He wasn't able to accomplish such an ignominious feat all by himself, however; he had a great deal of help along the way. The Progress Report heralds the conclusion of the Bush 43 presidency by bringing you our list of the top 43 worst Bush appointees. Did we miss anyone? Who should have been ranked higher? Let us know what you think.

1. Dick Cheney -- The worst Dick since Nixon. The man who shot his friend while in office. The "most powerful and controversial vice president." Until he got the job, people used to actually think it was a bad thing that the vice presidency has historically been a do-nothing position. Asked by PBS's Jim Lehrer about why people hate him, Cheney rejected the premise, saying, "I don't buy that." His top placement in our survey says otherwise.

2. Karl Rove -- There wasn't a scandal in the Bush administration that Rove didn't have his fingerprints all over -- see Plame, Iraq war deception, Gov. Don Siegelman, U.S. Attorney firings, missing e-mails, and more. As senior political adviser and later as deputy chief of staff, "The Architect" was responsible for politicizing nearly every agency of the federal government.

3. Alberto Gonzales -- Fundamentally dishonest and woefully incompetent, Gonzales was involved in a series of scandals, first as White House counsel and then as Attorney General. Some of the most notable: pressuring a "feeble" and "barely articulate" Attorney General Ashcroft at his hospital bedside to sign off on Bush's illegal wiretapping program; approving waterboarding and other torture techniques to be used against detainees; and leading the firing of U.S. Attorneys deemed not sufficiently loyal to Bush.

4. Donald Rumsfeld -- After winning praise for leading the U.S. effort in ousting the Taliban from Afghanistan in 2001, the former Defense Secretary strongly advocated for the invasion of Iraq and then grossly misjudged and mishandled its aftermath. Rumsfeld is also responsible for authorizing the use of torture against terror detainees in U.S. custody; according to a bipartisan Senate report, Rumsfeld "conveyed the message that physical pressures and degradation were appropriate treatment for detainees."

5. Michael Brown -- This former commissioner of the International Arabian Horse Association was appointed by Bush to head FEMA in 2003. After Katrina made landfall as a Category 4 hurricane, Brownie promptly did a "heck of a job" bungling the government's relief efforts, and was sent back to Washington a few days later. He was forced to resign shortly thereafter.

6. Paul Wolfowitz -- As Deputy Secretary of Defense from 2001 to 2005, Wolfowitz was one of the primary architects of the Iraq war, arguing for the invasion as early as Sept. 15, 2001. Testifying before Congress in February 2003, Wolfowitz said that it was "hard to conceive that it would take more forces to provide stability in post-Saddam Iraq than it would take to conduct the war itself." Wolfowitz eventually admitted that "for bureaucratic reasons, we settled on one issue, weapons of mass destruction," as a justification for war, "because it was the one reason everyone [in the administration] could agree on."

7. David Addington -- "Cheney's Cheney" was the "most powerful man you've never heard of." As the leader of Bush's legal team and Cheney's chief of staff, Addington was the biggest proponent of some of Bush's most notorious legal abuses, such as torture and warrantless surveillance, and is a loyal follower of the so-called unitary executive theory.

8. Stephen Johnson -- The "Alberto Gonzales of the environment," EPA Administrator Johnson subverted the agency's mission at the behest of the White House and corporate interests, suppressing staff recommendations on pesticides, mercury, lead paint, smog, and global warming.

9. Douglas Feith -- Undersecretary of Defense for Policy from 2001-2005, Feith headed up the notorious Office of Special Plans, an in-house Pentagon intelligence shop devised by Rumsfeld and Paul Wolfowitz to produce intelligence to justify the invasion of Iraq. A subsequent investigation by the Pentagon's Inspector General found the OSP's work produced "conclusions that were not fully supported by the available intelligence."

10. John Bolton -- As Undersecretary of State, Bolton offered a strong voice in favor of invading Iraq and pushed for the U.S. to disengage from the International Criminal Court and key international arms control agreements. A recess appointment landed Bolton the job of U.S. ambassador to the United Nations, despite his stringent animosity toward the world body. Today, he spends his time calling for war with Iran.

11. John Yoo -- As a lawyer for the Justice Department's Office of Legal Counsel, Yoo authored a series of legal memos giving military interrogators authority to use torture and coercive techniques when interviewing terrorist suspects. Yoo said that only those techniques that inflict pain equivalent to "death, organ failure or permanent damage resulting in a loss of significant body functions" constitute torture. Last year, he refused to answer whether or not the president could order a detainee to be buried alive.

12. Ari Fleischer -- Bush's first press secretary helped redefine the role as that of liar-in-chief rather than informer of the public, earning a reputation as "the world's most dishonest flack." Whereas his successors sometimes looked uncomfortable lying, Fleischer was having fun, spinning a cowed and gullible press corps through two massive tax cuts and the initiation of a war undertaken on false pretenses.

13. John Ashcroft -- In 2003, as Bush's first Attorney General, Ashcroft approved waterboarding and other torture techniques on detainees. Ashcroft's nomination was controversial, as he had a history of opposing school desegregation. The chief architect of the invasive Patriot Act, Ashcroft maintains to this day that Bush is "among the most respectful of all leaders ever" of civil liberties.

14. Henry Paulson -- Even as the financial system was crashing down around him, Treasury Secretary Paulson insisted for months that the banking system was "safe and sound." Once he decided that the economy needed saving, Paulson requested nearly unfettered authority to send billions of taxpayer dollars to banks with no oversight.

15. L. Paul Bremer -- This Presidential Medal of Freedom winner took over the Coalition Provisional Authority in May 2003. Under his mismanagement, the insurgency exploded in Iraq. Bremer claimed he had all the troops he needed to secure the country, overestimated the strength of the new U.S.-trained Iraqi army, disbanded the Iraqi army leaving thousands of Iraqi soldiers with no income and no occupation, and enacted a de-Baathification law that barred many experienced Iraqis from government positions.

16. Bradley Schlozman -- As a recent DOJ Inspector General report demonstrates, Schlozman was a central figure in Bush's politicization of the Justice Department. Violating civil service laws, Schlozman used political and ideological considerations to ensure that only "right-thinking Americans" received jobs. He eventually lied to Congress about his efforts.

17. J. Steven Griles -- A former energy lobbyist and no. 2 official in the Interior Department, Griles went to jail for lying to Congress about illegal favors he did for corrupt lobbyist Jack Abramoff. Griles also abused his position "to unlock nearly every legal barrier to exploitation" of our nation's oil and mineral reserves. Before his conviction, Griles left the White House to become a lobbyist for ConocoPhillips.

18. Condoleezza Rice -- As Bush's national security adviser, Rice was another strong advocate for invading Iraq, once famously warning that the U.S. should attack Iraq and not wait for solid proof of its WMD because "we don't want the smoking gun to be a mushroom cloud."  Rice also ignored an urgent warning from the CIA before the Sept. 11, 2001, terrorist attacks that a strike inside the U.S. was imminent.

19. Scooter Libby -- Cheney's former chief of staff was a key player in the outing of CIA operative Valerie Plame as part of the Bush administration's quest to punish Plame's husband, former ambassador Joseph Wilson, for publishing an op-ed debunking one of the White House's main justifications for invading Iraq. Libby was ultimately convicted of perjury and obstructing justice in a federal investigation into Plame's outing but later had his 30-month prison sentence commuted by Bush.

20. Monica Goodling -- Goodling was the most notorious graduate of Pat Robertson's Regent University during her tenure in the Justice Department. As the White House liaison at the DOJ, she based the department's hiring of candidates on their sexual preference, GOP loyalty, and adherence to conservative ideology.

21. Alphonso Jackson -- As Housing and Urban Development Secretary, Jackson let the U.S. housing market crumble while he was busy giving lucrative contracts to his golfing buddies, retaliating against Bush critics, and erecting giant photo homages to himself.

22. Michael Hayden -- As director of the National Security Agency, Hayden ran Bush's warrantless wiretapping program and misled Congress about the program's legality. After moving to the CIA, he dismissed the destruction of evidence implicating the CIA in torture as "in line with the law."

23. Lurita Doan --  The former head of the General Services Administration (GSA)who doled out a no-bid contract to a friend, Doan famously hosted a meeting of White House political operatives where she asked how GSA employees could "help 'our candidates' in the next election." After the Office of Special Counsel called for her firing, she was forced to resign at the request of the White House.

24. Gale Norton -- A former industry lobbyist and Bush's first Secretary of the Interior, Norton pushed a radical ideological agenda "through regulatory rollbacks, suppression of science, preferential treatment, and collusion with industry" -- including doctoring scientific findings on the impacts of oil drilling on caribou. After resigning under the cloud of ties to Jack Abramoff, she joined  Shell Oil.

25. Lester Crawford -- After promising to act on the morning-after contraceptive pill during his confirmation hearings, the former FDA Commissioner "indefinitely postponed nonprescription sales of emergency contraception over the objections of staff scientists who had declared the pill safe." Crawford resigned after just two months on the job and later pleaded guilty "to charges that he hid his ownership of stock in food and drug companies that his agency regulated."

26. Harriet Miers -- Well-known for being Bush's failed Supreme Court nominee, Miers also thought it was "important" to her as White House Counsel that Rove protege Tim Griffin was installed as a U.S. Attorney, making her a central figure in the U.S. Attorney scandal. She is said to have called Bush "the most brilliant man she had ever met."

27. Hans Von Spakovsky -- Originally a political appointee in the Civil Rights Division of the Justice Department, Spakovsky "injected partisan political factors into decision-making" and used every opportunity "to make it difficult for voters -- poor, minority and Democratic -- to go to the polls." In 2008, Spakovsky withdrew his name from consideration for the FEC, following months of opposition from lawmakers and civil rights groups.

28. Tommy Franks -- As head of U.S. Central Command from 2000 to 2003, Franks oversaw Osama bin Laden's great escape from Afghanistan, gave orders for the stabilization of Iraq via PowerPoint, assumed that the U.S. would draw down to 25,000 troops by the end of 2004, and had American soldiers stand idly by as chaos and lawlessness took hold after the invasion.

29. Thomas Scully -- As chief administrator for the Center for Medicare and Medicaid Services, Scully was the White House's head negotiator on the Medicare prescription drug bill. Scully threatened to fire chief actuary Richard Foster if he revealed that Bush's Medicare Part D legislation "would cost 25% to 50% more than the Bush administration's public estimates."

30. Julie MacDonald -- A top Interior Department appointee, MacDonald "interjected herself personally and profoundly" and "tainted nearly every decision made on the protection of endangered species" over a five-year period, intimidating the staff with "abrupt and abrasive, if not abusive" tactics. MacDonald also leaked government documents to a young acquaintance whom she met while playing "internet role-playing games."

31. William Haynes -- As the former general counsel at the Defense Department, he was part of a five-person team of high-level administration lawyers, dubbed the "War Council," that tossed the Geneva Conventions aside and hatched out the legal framework for torture in secret meetings.

32. David Safavian -- Safavian was (twice) tried and convicted for his role in the jack Abramoff scandal. Safavian was found guilty of "lying and obstructing justice" in an attempt to cover-up "his many efforts to assist Abramoff in acquiring two properties controlled by the GSA."

33. James Connaughton -- As chairman of the White House Council of Environmental Quality, Connaughton wrote EPA press releases downplaying the danger of the air quality in lower Manhattan following 9/11. "A former lobbyist for utilities, mining, chemical, and other industrial polluters," Connaughton insisted "there's a lot of disagreement" about humans' impact on global warming, and he touted a bogus study purporting to show that the 20th century was not unusually warm.

34. William Luti -- A former Navy officer and Cheney aide, Luti was dispatched to the Pentagon in 2001 to work underneath Feith to find "evidence" to support his boss's belief in conspiracy theories linking Saddam to al Qaeda. Luti was an integral component of Cheney's campaign to pressure intelligence professionals to conform their judgments to administration policy rather than reality.

35. Susan Orr -- As Assistant Deputy Secretary for Population Affairs, this former Family Research Council official oversaw funding for the only federal program that provided contraceptive services to low-income Americans. Orr cheered Bush's anti-contraception record, saying, "Fertility is not a disease. It's not a medical necessity that you have [contraception]."

36. Christopher Cox -- Under Chairman Cox, the Securities and Exchange Commission censored internal reports showing that it ignored critical signs pointing to Wall Street's meltdown. Cox's SEC also failed to detect Bernie Madoff's $50 billion Ponzi scheme, despite a decade of warnings.

37. Elliott Abrams -- An Iran-Contra convict pardoned by Bush 41, Abrams was named by Bush 43 as the Special Assistant to the President and Senior Director for Democracy, Human Rights, and International Operations. As a founding Project for a New American Century signatory and a staunchly pro-Israel neoconservative, Abrams supported expanding Israel's 2006 bombing of Lebanon into Syria and advocated a Fatah coup after Hamas won the February 2006 Palestinian elections.

38. Philip Cooney -- A former oil lobbyist who served as chief of staff of the White House Council on Environmental Quality, Cooney doctored climate reports to "soften" words and phrases linking greenhouse gas emissions to global warming. After his political interference was revealed, Cooney left the White House to become a lobbyist for Exxon.

39. Colin Powell -- Though Bush called him "an American hero" when he appointed him to be the first African-American Secretary of State, Powell placed an ugly "blot" on his record when he pushed the Bush administration's faulty case for the Iraq war in a speech to the U.N. on Feb.5, 2003, using inaccurate information. Liberal hawks and the media rallied around Powell's false case, calling it the "winning hand" for war.

40. Elaine Chao -- The Labor Secretary made it through all eight years of the Bush administration, driving morale at the Labor Department so low that staffers threw a "good-riddance party" to cheer her departure. She leaves behind a "deeply troubled department" that "spent eight years attacking workers' rights, strong workplace health and safety rules, and unions while they carried the water for Big Business."

41. Julie Myers -- After being hired as head of Immigration and Customs Enforcement based on little more than her personal connections, Myers made herself famous by awarding "Most Original Costume" to an employee who dressed up in blackface and a prison costume for Halloween. She was also heavily criticized for conducting politically-motivated immigration raids.

42. Wade Horn -- As Assistant Secretary for Community Initiatives at the Department of Health and Human Services, Horn funneled millions of tax-payer dollars into right-wing abstinence-only programs. Shortly before he resigned, it was revealed that he had given nearly $1 million "to the National Fatherhood Initiative (NFI), where he was the president for at least three years until joining the Bush administration in 2001."

43. George Deutsch -- As a young, inexperienced press officer for NASA, Deutsch "told public affairs workers to limit reporters' access to a top climate scientist and told a Web designer to add the word 'theory' at every mention of the Big Bang." He resigned in 2006 after it was discovered he had lied on his resume, falsely claiming that he had a journalism degree from Texas A&M.

Dishonorable Mentions: Bush appointees who didn't quite make the list included a child pornography aficionado, a patron of hookers, a shoplifter, a mail fraudster, an operator of an illegal horse gambling ring, and a CIA official who took bribes in the form of prostitutes.

Unless we are decisive Britain faces bankruptcy - By Will Hutton (LATEST UPDATE - 20/1/09)

18 January 2009 The Guardian

Our financial institutions are fighting for their lives and the Treasury may not be able to bail them out. The government needs to get serious to avert meltdown

It's no wonder that so many Icelanders are angry. They live in a country bankrupted by the excesses of their bankers, who took on liabilities 10 times the nation's GDP, betting billions in Britain's property bubble. Bailed out only by a jumbo IMF loan, inflation and interest rates are now 18% and rising. Many are considering emigration. Only membership of the euro, if it can be secured, offers a lifeline.

Ireland made the same bet, and on Friday the government had to nationalise its third biggest bank - Anglo Irish. Like the Icelandic banks, it had been speculating in Britain's property bubble. The joke across the Irish sea is that the only difference between Ireland and Iceland is one letter and six months. But there is another, more crucial, difference. Ireland is in the euro; otherwise, like Iceland, it would be bust.

After what happened to the world's banks last week - and to Barclays Bank in particular, whose share price collapsed 25% in an hour on Friday - it's clear that Britain is at risk of being next in line. We too have a banking system that is huge in relation to our GDP, but, like Iceland, we are not in the euro. Unless we act quickly, decisively and cleverly, the difficulties of our banks could overwhelm us, triggering an enormous run on the pound. Britain, in short, risks bankruptcy.

Friday's warning from the deputy governor of the Bank of England, Sir John Gieve, that more will almost certainly have to be done to save the banking system is a statement of the obvious. As was his grim assessment that the recession will be deeper and longer than anyone thought, even late last year.

Britain's problem is threefold. We have an American-scale property crisis and a credit crunch in our own banking system. But on top, we were uniquely reliant on foreign banks and foreign capital. They support up to a third of all UK lending, and they have gone bust or fled. Britain's banks are in no position to plug the gap. So, the UK government has to put the system back together with a weak, non-reserve currency.

Events in America last week showed how the contagion in so-called investment banking - I prefer casino banking - is murdering honest-to-God commercial banking. Bank of America and Citigroup are fighting for their lives as they are engulfed by losses from their investment/casino operations.

Citigroup has had to break itself up, siphoning off its toxic assets in a separate entity insured by a $306 billion US government guarantee. Bank of America has been shattered by titanic losses in "investment bank" Merrill Lynch, which it bought just months ago. Without $20bn of taxpayer support and a $118bn guarantee of its toxic assets, it would be in receivership.

On top the US is able to keep finance flowing to its housing market only by offering federal guarantees on mortgage-backed securites. It also buys securities backed by car loans, student loans and credit card debt - anathema to the hyper-conservative Bank of England. Americans have the advantage that the dollar is the world currency - 64% of all foreign exchange reserves are held in dollars - so that it can do what it wants. Nonetheless it has taken monumental US taxpayer investment, guarantees of up to $500bn toxic loans and the willingness of the Federal Reserve to buy trillions of dollars of securitised assets even to begin to stabilise matters.

Britain, by contrast, has not begun to mobilise on anything like the same scale - even though in many respects our crisis is more acute. Barclays, for example, is in a position analogous to Citigroup and Bank of America. In 2007 close to half its profits came from "investment banking", now so perilous for its American counterparts. Barclays is the leader in so-called corporate "synthetic" structured investment vehicles - complex and even more dodgy than the securities that have brought low Citigroup and Bank of America. On Friday credit-rating agency Moodys announced new and more demanding criteria for how "synthetics" will be valued in future - implying that bank guarantors will need to find billions extra in capital to support them. Barclays could have to raise up to another £10bn capital to support its investment bank operation; impossible, except from the taxpayer. With the ban on short selling lifted on Friday - an asinine genuflection to the interests of hedge funds - it was an obvious target. The bank rushed out a statement late in the evening declaring good 2008 profits and solid capital ratios. But the issue is 2009, given the new rules. A taxpayer bail-out for Barclays - a view shared by a growing number of officials, if not all - is close to inevitable.

The prime minister is incandescent; the bank has not been straight with either the government or its shareholders about its balance-sheet risks. It did not share in the first round of bank recapitalisation, instead raising cripplingly expensive funds from Arab sovereign wealth funds. When Britain needs all its big banks to act together to stop a credit crunch-induced slump, Barclays, putting its own interests - and bonuses - first instead triggers a second phase of the crisis.

HSBC may also need to raise money - £20bn in the view of analysts at Morgan Stanley. But although it is headquartered in London and formally the responsibility of the UK, the Hong Kong Monetary Authority (a lesson here for the Bank of England and FSA?) has independently regulated its Asian operations, and strictly. It is not - a Barclays, RBS or HBOS - yet. UK depositors owe Hong Kong a thank you.

The cumulative cost of what has to be done is stunning, thanks to the City being such a vast part of our economy. The government must ensure that the banking system, Barclays included, has got sufficient capital to underpin the outstanding loans (at a much cheaper rate). Next it has to be prepared, like the Americans, to offer insurance guarantees on toxic loans which freeze the banks from new lending. Then it has to offer US-style guarantees on new issues of financial securities backed by mortgages, student loans, company loans and even credit card debt; and the Bank of England must be instructed to buy them.

On top of this, there is a budget deficit next year of £118bn, which may have to increase again - with another big Obama-style fiscal stimulus - if the recession deepens. My view is that the financial markets will accept actual spending only if Britain pre-announces that after financial stabilisation has worked, it intends to join the euro - otherwise we will find ourselves in the same position as Iceland.

These are the grimmest economic circumstances since the 1930s. Lives and businesses are being wrecked as I write. There will be little appetite for my proposed measures; how much better to hope that we can muddle through, looking for "green shoots" of recovery and doing little radical.

But after last week the government - and the opposition - have to get serious. Britain is on the edge.

Global Margin Call - By Brent Budowsky (LATEST UPDATE - 20/1/09)

January 18  2009, Consortium News

The world is facing a global margin call.

In a margin call, traders must put up a percentage of cash, which is leveraged against the value of assets they trade. When asset value declines, they are forced to put up more cash to meet margin requirements.

These margin calls create a downward spiral in markets. Selling begets selling; asset values decline further. More forced selling follows. The spiral cascades.

When banks buy, sell and trade often-indecipherable financial instruments, often using heavily leveraged borrowed money, and the value of those assets decline, the banks essentially face margin calls.

Treasury Secretary Henry Paulson, who has acted like an agent for the banks, should be drawn and quartered for not demanding full disclosure of liabilities and not demanding assurances that the money would be used as intended.

Now Paulson wants to use taxpayer money to subsidize Bank of America, whose management originally claimed it did not need federal money, to buy Merrill Lynch, whose management has been lavishly compensated based on the falsehood that they had managed their business well.

Perhaps this is necessary. Perhaps not. The point is that both Bank of America and Merrill Lynch have greater problems than have been disclosed. Taxpayer money has been been used far less effectively than has been promised. Future taxpayer support will be greater than has been discussed.

Let’s be honest. The banks are not alone. Consumer debt, corporate debt, budget deficits have all skyrocketed. Even today, banks, investment houses, traders, hedge funds and speculators play markets with heavily margined accounts, using borrowed money with assets of declining value, forcing this global margin call to cascade.

While banks foreclose homeowners, markets threaten foreclosure of banks.

We must urgently build firewalls against these cascading calls of debt. As I have argued in this column since 2007, we must freeze foreclosures now, which is one action that can be effectuated promptly to limit the cascade and restore confidence.

We must impose aggressive limits on all forms of margin trading and investing. We must end the era of speculation financed by huge debt, which is a central cause of this global wave of margin calls.

We must return to a first principle of finance where real assets are bought with real money. We must return to a first principle of management where CEOs understand the assets they are buying and leaders understand the actions they are taking.

We must demand full, honest accounting of the exact condition of banks so we don’t keep wasting money on what are essentially short-term margin calls that help neither taxpayers nor banks solve the real problem.

We must understand that the problem is a global margin call. Once we do, we can build the proper firewalls, halt the slide and set the stage for the great recovery that will begin once we realize the nature of the crisis and end it.

Brent Budowsky was an aide to Sen. Lloyd Bentsen and to Rep. Bill Alexander, then the chief deputy whip of the House. He can be read in The Hill newspaper, where he is a columnist. He can be reached at brentbbi@webtv.netThis e-mail address is being protected from spambots. You need JavaScript enabled to view it .

The End of Banking as We Know It - By Gretchen Morgenson (LATEST UPDATE - 20/1/09)

18 January 2009,NYT

The concept of the financial supermarket — the all-things-to-all-people, intergalactic, behemoth banking institution — bit the dust last week.

The first death notice came on Tuesday, when Citigroup, Exhibit A for the failure of the soup-to-nuts business model, said it was dismantling. Just over a decade after the deal-maker Sanford I. Weill tried to meld insurance, investment banking, mortgage lending, credit cards and stock brokerage services, the dissolution began.

Citigroup, it turned out, was too big to manage, too unwieldy to succeed and too gigantic to sell to one buyer.

A few days later, Bank of America, another serial acquirer of troubled institutions —Merrill Lynch and Countrywide Financial most recently — fessed up that its deals now need taxpayer backing. The United States government invested an additional $20 billion in Bank of America (after $25 billion last fall) and agreed to guarantee more than $100 billion of imperiled assets.

Clearly, the entire financial industry is in the midst of a makeover. And while no one wants to call it nationalization, perhaps we can agree on this much: The money business as we have come to know it over the last two decades — with its lush salaries, big-swinging risk-takers and ultrathin capital cushions — is a goner.

Got that? Toast. Toe-tagged.

And that’s a good thing, because maybe we can go back to a banking model that is designed to do more than simply enrich the folks at the top of the enterprise while shareholders and taxpayers absorb all the hits.

Banking, because it oils the crucial wheels of commerce, has a special standing in our world. That will always be the case.

But in exchange for that role, our country’s leading bankers might have approached their jobs with a sense of prudence and duty. Instead, a handful of arrogant greedmeisters blew up their institutions and took our economy off the cliff along the way.

It’s too soon to say how much taxpayer money will be spent trying to rebuild banks hollowed out by bad lending practices. Paul J. Miller, an analyst at Friedman, Billings, Ramsey, thinks that the nation’s financial system needs an additional $1 trillion in common equity to restore confidence and to get lending — the lifeblood of a thriving and entrepreneurial free-market economy — moving again.

That $1 trillion would come on top of funds disbursed through the Troubled Asset Relief Program, which has tapped $700 billion, and the president-elect’s stimulus plan, clocking in at $825 billion.

Larger capital requirements, beefed up to serve as a proper buffer when lenders misfire, will be one change facing banks when we emerge from this mess, Mr. Miller said. He thinks regulators will require banks to hold tangible common equity of 6 percent of assets. Now many institutions hold under 4 percent.

Such a requirement will cut into earnings, of course. Toning down the risk-taking will also reduce the profitability — or the appearance of it — at these institutions.

“This industry made a lot of money by taking a business line with 20 percent return on assets and levering it up 30 times,” Mr. Miller said. “But no more. Banks are going back to being the boring companies they should be, growing roughly in line with gross domestic product.”

Clearly this means that the rip-roaring performance of financial services companies and their stocks isn’t likely to return anytime soon. Because these companies’ earnings fed both the economy and the stock market in recent years, a more muted performance has considerable implications for investors, consumers and the economy.

FOR example, since 1995, according to Standard & Poor’s, earnings of financial concerns have accounted for 22 percent of profits, on average, among the S.& P. 500 companies. That performance is almost double that of the next largest contributor — the energy industry. In 2003, earnings among financial companies peaked at 30 percent of total profits generated by the S.& P. 500; back in 1995, financial company earnings accounted for 18.4 percent of the total.
Of course, many of these earnings were ephemeral and have since turned to losses. But while the companies were reporting the profits, their stocks roared.

Between 2003 and the peak in 2007, the American Stock Exchange financial services index essentially doubled. At the peak, financial services companies dominated the S.& P. 500 index, accounting for 22 percent of its market value in 2007. With many of these stocks in free fall, that figure is now just 12.5 percent.

Will valuations on financial services stocks bounce back soon? Not in Mr. Miller’s view. “They are going to look more like the insurance industry, trading at book value or 1.5 times book,” he said. “That is, if you are really good.”

For financial services workers, of course, the inevitable downsizing has already begun. But there will be more. “The industry was way too big; too many people were not producing anything,” Mr. Miller said. “Jobs will be lost and not replaced. And financial industry salaries won’t be anywhere close to where they have been.”

The bright side is that all those displaced financial services professionals can now set their sights on doing something, well, truly useful.

Still, this adjustment will be painful for all those who have to carve out new careers, as well as for New York and other places these companies call home.

Finally, what will a humbled financial services industry mean for consumers? Higher borrowing costs, Mr. Miller said.
“The leverage that these companies were using allowed them to lower their rates,” he said. “Rates have to go higher for the banks to operate in a safe and sound manner and make money.”

Credit is also likely to remain tight, in Mr. Miller’s opinion. A result is that consumer spending won’t recover to bubble levels.

“It is going to be difficult to get credit, and that is something the system has to adapt to,” Mr. Miller said. “That is where the government is going to have to step in and replace that debt growth to make sure there is a smooth transition.”
In other words, Barack Obama’s first stimulus plan is not likely to be his last.

When a driving economic force takes a big dive, the ripples are far-reaching. Change is painful, there is no doubt. But American business can be awfully good at reinventing itself when it needs to.

And does it ever need to now

THE GAZA ATTACK: A WAR CRIME? - By Prof. Gurdial Singh Nijar (LATEST UPDATE - 20/1/09)

19th January, 2009 , Law faculty, University of Malaya

For the past two weeks we have been witnessing the daily massacre of Palestinian civilians trapped in Gaza. Nothing has been spared. Schools, public buildings, homes, mosques, UN convoys, humanitarian missions – all bear the brunt of the highly militarized State of Israel. And with ‘smart’ weapons that will continue to destroy long after hostilities end. The latest UN report says that Israeli forces evacuated a large number of Palestinians into a single-residence house in Zeitun, warning them to stay indoors, and soon after shelled the home repeatedly killing some 30 people.

A UN official has asked that Israel be charged for humanitarian crimes in the ongoing war on Gaza.

Can it be charged? And on what basis? This article explores the applicability of international law to this ‘War on Gaza’.

International law consists of multilateral agreements – such as treaties and conventions - made between states; as well as what is accepted by States customarily. International law regulates wars in 2 ways. Initially, it restricts the justifications for starting a war. Then when war erupts, it has rules for the conduct of a ‘humane’ war. One such set of rules provides protection for civilians. It is Chapter IV of the Geneva Conventions of 1949.  Virtually the whole world, including Israel and the US, are parties to this Convention.

All parties must respect the rules ‘under all circumstances’. This means that there can be no excuse of any kind for not obeying it. Not the necessity defence (‘I had no choice but to take this action’). Nor the self-defence reason (‘I had to do it to protect myself’). Even if the other party does not stick to the rules, a Party to the Convention must still follow it. In other words, no reason or excuse of any kind can justify targeting the civilian population by any one at war. This reflects the values of Common Humanity, deep rooted in cultures and civilisations - whether Hindu, Buddhist, Chinese, Christian, Islamic or traditional African. Indeed, this is the basis of international humanitarian law, as the International Court of Justice declared in an Advisory Opinion in 1966.

These rules outlaw many acts. Such as: killings, causing suffering or serious injury, destroying property – including schools, hospitals, places of worship, intentionally targeting the civilian population or objects or humanitarian assistance personnel, launching an attack deliberately to cause loss of life or injury to civilians, attacking towns, villages, refugee camps which are undefended and are not military objects. In short, the attacker must distinguish between the civilian population and combatants and between civilian objects and military objects.

Weapons are banned if their use has an indiscriminate effect between civilians and combatants; or are used out of all proportion to military objectives; or adversely affect the environment; or cause superfluous injury and unnecessary suffering. Genocidal and omnicidal radioactive depleted uranium weapons, in common use now, are outlawed. They have a life of 4.5 billion years. Their blast accumulates in organs. Their deadly effects linger on in the soil, air and water for a life time and more.

These rules must not be violated in an armed conflict of any sort. If they are, the State or organization can be charged for a humanitarian crime. If they are breached in an armed conflict of an ‘international’ character, then a ‘war crime’ is committed.

Israel argued at the International Court of Justice (‘the ICJ’), in a case in 2004, that this particular Geneva Convention did not apply because Palestine has never been a sovereign territory. It is merely an occupied territory. The Convention, it said, applies only to State parties. Israel is really saying that the Palestine Liberation Movement (PLO), the governing authority in the West Bank, is not acting for a sovereign State because there is no such State.

The International Court rejected this argument. It said that the Convention guaranteed the protection of civilians in time of war even in the occupied territories of Palestine. And that this had been affirmed several times by the countries who are Parties to the Convention, the UN General Assembly and the Security Council. Even the Supreme Court of Israel said in 2004 that the Israel military must respect civilian populations under the rules established by the Convention.

The upshot then is that Israel can be charged for the war crime of violating the relevant Geneva Convention.

It is instructive to recall Israel’s 2006 attack against Lebanon in 2006. Much the same reasons were given (‘abduction of soldiers, rocket attacks, using civilians as human shields’). The independent Human Rights Commission investigating that war concluded that Israel was guilty of using indiscriminate force against civilians and civilian objects and had punished civilians collectively.

As for the initiation of the war on Gaza, the UN Charter prohibits members to use force unless it is in self-defence. The threat must be imminent. More importantly, the recourse to war must be necessary and proportional to the armed attack. Even then, before any such action is taken, it is mandatory to negotiate, conciliate, mediate, arbitrate and seek judicial settlement. In short, war is only as a very last resort. Even then the war measures must be temporary until the Security Council can take measures. If none of these conditions are met, the war is illegal. It is unjustified aggression – a war crime. It is instructive that the US termed the Soviet presence in Afghanistan at the request of the then Government in 1979 as ‘military aggression’. On the face of it, Israel stands charged for the crime of aggression, sometimes called the crime against peace.

The UN Security Council is tasked with the obligation to initiate action for the war crime. The US is clearly resolute to prevent any such prosecution. For acts against humanity, States have a duty to act against their citizens who breach the rules. Israel cannot possibly prosecute itself!

In either case the rules of international law are being flagrantly and openly defied. Is it not time for the world community to act beyond making pious and empty rhetorical statements?

The civilian men and women of Gaza await as they carry the corpses of their dead children for yet another round of burials.

Can Israel Be Stopped? - By Prof. Gurdial Singh Nijar (LATEST UPDATE - 20/1/09)

January 19  2009, Law faculty, University of Malaya

Last week Israel promptly refused to abide by the UN Security resolution calling for an ‘immediate and durable’ ceasefire in their war on Gaza. It proceeded to kill civilians and bomb institutions in clear violation of international humanitarian law. Now it has announced a unilateral ceasefire. But it still refuses to withdraw its troops and reserves the right to attack again if it thinks it necessary to do so. In short, Israel acts as and how it likes undeterred by any UN resolution. This defiance is an open challenge to the world community acting to preserve peace and protect civilians.

This is not the first time that Israel has acted in contempt of UN decisions. Indeed, it has a disturbingly long and consistent history of snubbing UN Security Council resolutions, especially since 1967 when it forcibly expropriated even larger chunks of Palestinian territory.

It refuses to withdraw from these territories as ordered to do so by UN Security Council resolution 242 of 1967. It refuses to acknowledge UN Security Council resolution 298 of 1971 that declared as illegal its take over of Jerusalem. It snubbed UN Security Council resolution 478 of 1980 that condemned its act of making Jerusalem the capital of Israel. And it has refused to dismantle settlements it built in occupied Palestinian territory as ordered to do so by UN Security Council resolutions 452 of 1979 and 465 of 1980.

Nor has it complied with the 2004 decision of the judicial organ of the UN – the International Court of Justice (ICJ) – ordering it to pull down the 190 km ‘Wall’ that it has built on occupied Palestinian territory and pay compensation for the  lands it expropriated.

And of course, Israel is playing deaf to the condemnation of the UN Emergency Special Session General Assembly a few days ago.

Now the issue is: can a member State of the UN act in such utter disregard and with impunity? Is the world completely helpless when a war crime and a violation of international humanitarian law of such a catastrophic magnitude took place last week? And the threat of a repeat disaster remains with Israel’s troops refusing to leave.

The UN Security Council can act to enforce its decision. But the US is complicit with Israel in this war. And the US veto power guarantees Israel that no such action will be authorized. The critical question then is: could Israel’s past action have been stopped without the approval of the Security Council? And can it be similarly stopped in the future?
The crisp answer is: yes it can.

This has indeed been done before. Not once but several times. Force can be used by a group of countries in extreme cases to avert a humanitarian crisis. It can even be used to justify action against activities being done within a sovereign country. This was the basis of NATO’s action against Serbia – to save the 1.7 million Kosovars who were in the process of being murdered. India intervened in 1971 to stop genocide in Bangladesh. Even Israel went into Uganda on this basis to rescue hostages at Entebbe airport.

This encapsulates the evolving principle in international law of ‘humanitarian necessity’. Countries have the legal right to use proportionate force to prevent or stop a human catastrophe that is serious and imminent.

There are of course limits to the exercise of such a power. There must first be a general consensus that the action to be stopped was wrong. In the Gaza war this is amply shown by both the UN Security Council and the General Assembly resolutions. The UN President has said that the violations of international law ‘have been well documented: collective punishment, disproportionate military force and attacks on civilian targets … homes, mosques, universities, schools’. He categorized the action as amounting to genocide.

Secondly the countries that act collectively to intervene must represent an alliance of countries with no objective but to save those being killed in violation of international law. And finally they must deploy proportionate force that has a reasonable prospect of stopping or deterring the perpetrators.

All the requirements for collective coercive intervention against Israel existed in this case. And will equally be satisfied if there is a continuation or repeat of this 22-day war on civilians by Israeli troops still on Gaza soil. All that remains then will be for the collective will and verve to stop these crimes against humanity – even without Security Council approval.

Olmert’s Poodle - By Patrick J. Buchanan (LATEST UPDATE - 20/1/09)

18 January 2009, American Conservative

As Israel entered the third week of its Gaza blitz, Prime Minister Ehud Olmert regaled a crowd in Ashkelon with an astonishing tale.

He had, said Olmert, whistled up George Bush, interrupted him in the middle of a speech and told him to instruct Condi Rice not to vote for a U.N. resolution Condi herself had written. Bush did as told, said Olmert.

The crowd loved it. Here is the background.

After intense negotiations with Britain and France, Secretary of State Rice had persuaded the Security Council to agree on a resolution calling for a cease-fire. But Olmert wanted more time to kill Hamas.

So, here, in Olmert’s words, is what happened next.

“In the night between Thursday and Friday, when the secretary of state wanted to lead the vote on a cease-fire at the Security Council, we did not want her to vote in favor.

“I said, ‘Get me President Bush on the phone.’ They said he was in the middle of giving a speech in Philadelphia. I said I didn’t care. ‘I need to talk to him now.’ He got off the podium and spoke to me.

According to Olmert, Bush was clueless.

“He said: ‘Listen. I don’t know about it. I didn’t see it. I’m not familiar with the phrasing.’”

“I told him the United States could not vote in favor. It cannot vote in favor of such a resolution. He immediately called the secretary of state and told her not to vote in favor.

“She was left shamed. A resolution that she prepared and arranged, and in the end she did not vote in favor.”

The U.N. diplomatic corps was astonished when the United States abstained on the 14-0 resolution Rice had crafted and claimed her country supported. Arab diplomats say Rice promised them she would vote for it.

State Department spokesman Sean McCormack, with Rice at the United Nations during the debate on the resolution, said Olmert’s remarks were “just 100 percent, totally, completely untrue.”

But the White House cut Rice off at the knees, saying only that there were “inaccuracies” in the Olmert story. The video does not show Bush interrupting his speech to take any call.

Yet the substance rings true and is widely believed, and Olmert is happily describing the egg on Rice’s face:

“He (Bush) gave an order to the secretary of state, and she did not vote in favor of it — a resolution she cooked up, phrased, organized and maneuvered for.
She was left pretty shamed. …”

With Bush and Rice leaving office in hours, and Olmert in weeks, the story may seem to lack significance.

Yet public gloating by an Israeli prime minister that he can order a U.S. president off a podium and instruct him to reverse and humiliate his secretary of state may cause even Ehud’s poodle to rise up on its hind legs one day and bite its master.

Taking such liberties with a superpower that, for Israel’s benefit, has shoveled out $150 billion and subordinated its own interests in the Arab and Islamic world would seem a hubristic and stupid thing to do.

And there are straws in the wind that, despite congressional resolutions giving full-throated approval to all that Israel is doing in Gaza, this is becoming a troubled relationship.

Two weeks ago, Foreign Minister Tzipi Livni, in opposing any truce, assured the world there “is no humanitarian crisis in the (Gaza) Strip,” and the humanitarian situation there “is completely as it should be.”

Not so to Hillary Clinton. In her confirmation hearings, the secretary of state-designate, reports the New York Times, “struck a sharper tone toward Israel on violence in the Middle East.”

Clinton “seemed to part from the tone set by the Bush administration in calling attention to what she described as the ‘tragic humanitarian costs’ borne by Palestinians, as well as Israelis.”

More dramatic was a weekend report by the Times‘ David Sanger that the White House had rebuffed Olmert’s request for new U.S. bunker-buster bombs and denied Israel permission to overfly Iraq in any strike on Iran’s nuclear enrichment plant at Natanz.

Sanger described these U.S.-Israeli talks as “tense.”

Repeatedly, Israel has warned that Iran is close to a bomb and threatened to attack unilaterally. Indeed, Israel simulated such an attack in an air exercise of 100 planes that went as far as Greece.

Bush both blocked and vetoed that attack, says Sanger. But he did assure Olmert that America is engaged in the sabotage of Iran’s nuclear program by helping provide Tehran with defective parts.

This would seem a stunning breach of security secrets, but no outrage has been heard from the White House, nor has any charge come that the Times compromised national security.

With Olmert, Rice, and Bush departing, and Obama and Hillary taking charge committed to talking to Iran, can the old intimacy survive the new friction and colliding agendas?

'Israel's Supposed Victory Is Really a Defeat' - By Spiegel Onliine (LATEST UPDATE - 20/1/09)

19 January  2009

[FF Editorial: In two separate articles, one before the ceasefire, and one after, we forecasted and hailed the great strategic victory of Hamas over Zionist Israel. For those who have any more doubts, especially Malaysians, this objective article should end the argument. Unless Israel makes peace and agree to a single state of Palestine for all in the Holy Land, its fate is sealed and it would be a matter of time before it is totally liquidated as a state.]

Israel and Hamas individually called truces over the weekend, bringing a fragile cease-fire to the Gaza Strip. German commentators ask what Israel actually achieved with its three-week offensive.

An uneasy peace continued on Monday in the Gaza Strip after weekend truces ended -- at least temporarily -- a three-week Israeli offensive which left as many as 1,300 Palestinians dead.

Israel called a cease-fire on Saturday, claiming its war aims had been met. The militant Islamist group Hamas, which controls the Gaza Strip, responded with its own truce on Sunday, saying it would hold fire for one week to give Israel time to withdraw its troops.

An Israeli soldier stands on a tank near the Israel-Gaza border Monday.

Israel continued moving its troops and tanks out of the territory on Monday. Government spokesman Mark Regev said that Israel's departure would be "almost immediate," provided Gaza remains calm. Unnamed Israeli officials told the Associated Press on Monday that Israeli troops would leave the Gaza Strip before Barack Obama's inauguration as US president on Tuesday.

Israeli Prime Minister Ehud Olmert emphasized that Israel had no desire to stay in Gaza. "We didn't set out to control Gaza, we don't want to remain in Gaza and we intend (to leave) Gaza as quickly as possible," he told visiting European leaders at a dinner in Jerusalem on Sunday night.

Hamas for its part claimed that Israel had failed to achieve its war aims. "God has granted us a great victory, not for one faction, or party, or area, but for our entire people," said the top Hamas leader in Gaza, Ismail Haniya, in a televised speech.

The Israeli offensive, which lasted over three weeks and was aimed at stopping rocket attacks on southern Israel from the Gaza Strip, killed around 400 Hamas members, according to the militant group. Many of the rest, according to Palestinian figures, were women and children. A total of 13 Israelis were killed. The Gaza Strip is now said to be in dire need of basic supplies, with shortages of food, medicine and fuel being reported. Some 4,000 buildings are reported to have been destroyed.

It is unclear how long the fragile cease-fire will last. Around 20 rockets were fired into Israel from the Gaza Strip after Israel announced its cease-fire, with Israel responding with an air strike. However the situation on the ground was reported to be peaceful Monday.

As the post-war analysis begins, many questions remain. The extent to which Israel will open border crossings to Gaza remains unclear, as does the current extent of Hamas's power and how the Gaza population will view the organization in the future. The key issue of how to stop weapons smuggling across the Egyptian border to Gaza also remains open. Israel signed a security accord Friday with the US that calls for increased information-sharing and technical assistance to prevent Hamas from obtaining smuggled weapons. Israel has said it will resume military action if Hamas attempts to continue smuggling arms into Gaza.

Hamas, however, was adamant in its attention to re-arm. "Do whatever you want. Manufacturing the holy weapons is our mission and we know how to acquire weapons," Abu Ubaida, a spokesman for Hamas's armed wing, told a news conference Monday.

Commentators writing in Germany's main papers Monday were split over what Israel had achieved during the offensive and how to move forward.

The center-left Süddeutsche Zeitung writes:

"What has Israel's offensive actually achieved, apart from more than 1,300 people dead, more than 5,300 wounded, and some relatively unproductive crisis diplomacy? Israeli Prime Minister Ehud Olmert announced that the aim of the offensive had been achieved. But so far he still hasn't spelled out what the objective of the war against Hamas actually was. He has only talked in vague terms of wanting to change the security situation in the south of Israel. But just in the past three weeks alone, Hamas terrorists fired more than 700 rockets at Israel. Hence Olmert is trying, shortly before the end of his term in office, to put a positive spin on his second war -- just as he did with the Lebanon war in 2006."

"Hamas may be divided and hundreds of its fighters may be dead, but the majority of the 1.5 million people in the Gaza Strip see Israel as being responsible for the devastation and destruction. Israel's supposed victory, which Olmert talks of, is in reality a defeat. The campaign has sown hatred and anger and brought Israel only insecurity in return."

The center-right Frankfurter Allgemeine Zeitung writes:

"Israel has largely achieved what can be achieved militarily in terms of weakening Hamas in the Gaza Strip. Moreover, its tough -- sometimes too tough -- response to the rocket attacks against Israeli towns is a signal to the Lebanese group Hezbollah and other terrorist groups, who are equipped with missiles of ever-increasing range and who will therefore sooner or later have the capability to strike targets in the Israeli heartland. The offensive against the terrorist attacks from the Gaza Strip was also aimed at Tehran, home to the weapons suppliers and those who stir up the conflict."

"Anything more than a -- hopefully long-lasting -- cease-fire in the Middle East is currently unachievable. It is still too early to be talking about a peace process."

The left-leaning Die Tageszeitung writes:

"Israel is certainly a big step closer to its aim of bringing weapons smuggling into Gaza under control. The EU has pledged its support, and the US wants to cooperate more closely with Israel by sharing intelligence in order to intercept weapon deliveries coming from Tehran. But did it really need a war to achieve this? Did the Europeans and the Americans really need a military operation and hundreds of dead children in order to be convinced that cooperating with Israel makes sense? The Western nations are on the same page when it comes to the fight against Islamic extremism and terrorism. The three-week bombardment of Gaza was first and foremost aimed at convincing Hamas (to stop its rocket attacks). Everything else is a byproduct."

"Hamas has survived the war. It exists, and it is here to stay. Therefore, it is essential that an easing of the Western boycott against the Islamists is considered. A gradual process should be sought, with the participation of the moderate Palestinian leadership, with the aim of creating normalcy for the people in Gaza."

The conservative Die Welt writes:

"One must first recognize the central problem (of the Israeli-Palestinian conflict) and then deal with it thoroughly. The main issue which needs to be addressed is the support that religious -- in this case Islamic -- fundamentalism and its representatives receive from both governments and, especially, religious leaders."

"The most important thing is the rhetoric of hate which originates in many mosques and is then spread by Arab TV and radio stations and the Internet. The fight -- including the armed struggle -- of Islam against all 'infidels' is not only promoted but both encouraged and demanded. Potential suicide bombers are praised and promised glorious rewards in paradise.... It is now up to the political and religious leaders of the West to assert their influence. Only when all imams stop glorifying murder can there be real peace in the Holy land. The people in Gaza, and also in Sderot, deserve it."

Gaza: so what really happened?

As Israeli troops withdraw, Anne Penketh, Diplomatic Editor, analyses claims from both sides - and prospects for the future

Monday, 19 January 2009

A Palestinian man carries his belonging in the rubble of Jabalia's Ezbet Abdrabbo neighbourhood


A Palestinian man carries his belonging in the rubble of Jabalia's Ezbet Abdrabbo neighbourhood

It started with "shock and awe" at 7.30pm on 27 December as flares lit up the skies and 100 tons of bombs rained down on the Gaza Strip in the space of 24 hours. Israel declared it was time to put an end to the Hamas rockets terrorising its people, as the world's leaders enjoyed a Christmas break.

It ended with a fragile ceasefire shored up by the international community after a three-week military campaign that resulted in the deaths of 1,300 Palestinians and 13 Israelis - and calls for an investigation into alleged Israeli war crimes.

The Israeli prime minister said his country's military goals had been achieved, and Hamas, which was still able to fire its rockets yesterday, declared a "great victory". But there were fears that the Israeli offensive, which was halted only two days before the inauguration of Barack Obama as US president, may have created a new generation of Palestinian radicals in the rubble of the Strip. The prospects of a peace deal between Israeli and Palestinians may be even more remote than ever.

The timing of Operation Cast Lead, which sent tanks crashing into the northern Gaza Strip while Israeli F16s dropped their payloads on Saturday 27 December, must have seemed propitious to the Israeli leaders as they prepared for an election in February. George Bush, Israel's staunch supporter, would not lift a finger to halt the offensive and still had three weeks in office as a lame duck president.

Barack Obama, the president-elect, was consumed by the economic meltdown and sticking to his mantra that in foreign policy there could only be "one president at a time". European leaders were out of the office.

Domestically the lame duck prime minister, Ehud Olmert, had nothing to lose from a Gaza assault after his last disastrous war on Hizbollah in 2006, and Foreign Minister Tzipi Livni had been gaining in the opinion polls over her hawkish opponent Benyamin Netanyahu by promising to topple Hamas. The Defence Minister, Ehud Barak, the Labour party leader, also saw an opportunity to improve his poll ratings.

The first reactions as the Israeli bombs fell on Gaza, killing 225 people in the initial hours according to Palestinian medics, gave Israel no reason to be deterred. The first day, the US and UK placed the blame for the Israeli attacks on Hamas and called on the militants to cease all rocket attacks immediately. It was only on 28 December, after a four-hour UN Security Council session, that the British government called for an immediate end to "all violence" while the French president, Nicolas Sarkozy, condemned the "disproportionate" onslaught. The US agreed with Israeli statements that Israel was acting in "self defence".

With the attacks playing positively in Israeli public opinion, the Israelis deployed their formidable PR weapon as the world scrambled to react. Ministers, ambassadors and spokesmen sent out the message that the government had decided that "enough was enough" after Hamas stepped up its rocket attacks against Israeli towns and declared the end of a six-month ceasefire. Mr Olmert's spokesman Mark Regev noted that the squeals of protest from the international community were not opposed to Israel's targeting of Hamas militants but against the humanitarian costs. With journalists barred from the territory, it was left to Hamas to highlight the civilian casualties even as it continued to fire its missiles against Israeli cities while the 1.5m residents of the Strip were pounded by the bombing campaign.

On 28 December, a medium-range Grad missile struck the Israeli town of Ashdod, the furthest ever inside Israel, heightening fears among the Israeli civilian population. On the same day, Israeli warplanes concentrated their fire power on the network of tunnels - possibly as many as 300 - supplying the Gaza Strip with weapons and commercial goods from Egypt.

The government denied that it sought to overthrow Hamas. But international suspicions were heightened when the occasional Israeli official would break ranks to say that the goal was to overthrow the Iranian-backed Islamic militants bent on the destruction of Israel, and when it was revealed that Israeli military preparations had been underway for the last six months.

On 29 December, the home of the Hamas prime minister Ismail Haniyeh was razed by an Israeli bomb as the campaign targeted the symbols of the besieged Islamists' power, by bombing a mosque and an Islamic university. But the first Israeli soldier was killed near a border crossing, and a civilian was killed in Ashkelon as the Hamas missiles struck deeper into Israeli territory. The next day the Hamas rockets thrust still deeper, striking Beersheba for the first time.

The diplomatic machine kicked into gear. On 30 December, in the dying days of its EU presidency, France demanded a 48-hour "humanitarian truce" as the Palestinian death toll reached 400 and summoned a meeting of EU foreign ministers who agreed on a ceasefire call. On the same day the Middle East Quartet - grouping the US, UN, EU and Russia - agreed on a ceasefire call. Until that moment the Bush administration had failed to call on both sides to immediately halt hostilities, and soon reverted to its demand that echoed Israel's insistence on a "sustainable" ceasefire that would silence the Hamas rockets for ever.

But Israel decided to press on saying that it had not yet achieved its war aims.

In the days that followed, Israel kept up its relentless campaign by land, air and sea, pushing deeper into the Gaza Strip after cutting it in two, and benefiting from the lack of a united international response as a series of envoys shuttled around the region. On 3 January, Israel launched its long-awaited ground offensive as troops entered the northern part of the Strip.

On 5 January, at least 30 members of the extended Samouni family in the Gaza City district of al Zeitoun were killed by Israeli tank shelling. Neighbours said they were ordered to seek shelter in their compound by Israeli forces. Four children were discovered lying by the bodies of their dead mothers two days later by the International Committee of the Red Cross, which accused Israel of "unacceptable" delays in allowing medics access to the wounded.

It soon became clear that Egypt, Israel's trusted negotiating partner with Hamas in the past, was prepared to risk accusations from its Arab rivals that it was "selling out" to Israel by mediating again with the Islamists whose leaders in Gaza had gone underground. After President Sarkozy flew into Cairo from Syria, where the senior Hamas leader, Khaled Meshaal, resides under Syrian protection, he and the Egyptian President, Hosni Mubarak, announced an initiative on 6 January that became the basis for the deal that eventually produced the ceasefire.

With the Palestinian death toll standing at 600, President Mubarak proposed an immediate truce between Israel and the Palestinians in Gaza, to be followed by talks on long-term border security and an end to the Israeli blockade of the Strip. The Egyptians also pressed for Hamas to be reconciled with its bitter rival Fatah which the West insists is the only way to lay the groundwork for a future two-state solution with Israel.

The initiative came on the same day that Israeli artillery shells killed 40 people at a UN school, in Jabalya refugee camp, where hundreds of people were sheltering from the Israeli blitz. Israel was forced to retract accusations that militants had fired first from the school courtyard.

But Mr Sarkozy's triumphant announcement the following day that Israel had agreed to the truce proved premature.

Foreign ministers from the moderate Arab states, their streets teeming with anti-Israeli protesters, headed to New York and insisted that the UN security council deliver a resolution demanding a ceasefire. On 7 January, Israel agreed to the first daily three-hour ceasefire during which the wounded could be brought out while the besieged local residents could venture out and seek supplies or return to the remains of their homes.

On 8 January, rockets fired from southern Lebanon injured two Israelis in northern Israel, prompting short-lived fears of a second front opening up from the region controlled by Iran's Hizbollah allies.

The same night, after two days of tense negotiations brokered by Britain, in which the US had strenuously resisted a legally-binding ceasefire resolution, the security council spoke. But the United States abstained, after an 11th hour telephone call from President Bush to his secretary of state, Condoleezza Rice, just as she was about to enter the Council chamber to vote in favour. The president picked up the phone after Mr Olmert delivered a personal ultimatum warning him that Israel remained opposed to any such resolution.

But any hopes raised by the UN security council were dashed the following day when the fighting resumed between Hamas forces and the Israeli army as ferociously as before.

On Saturday, 10 January, with more than 800 Palestinians killed, hundreds of protesters clashed with police outside the Israeli embassy in London for the second time during a demonstration demanding a ceasefire, and 15 people were arrested.

The following Monday, Israeli ground troops entered Gaza City, where there were reports of fierce fighting. Last Thursday, UN headquarters were struck by Israeli artillery shells that set the building ablaze. UN officials accused Israel of illegally using white phosphorus, although the Israeli military denies using "illegal weaponry."

The UN secretary-general, Ban Ki-Moon, who had joined the international search for peace, condemned the attack and told Israeli leaders that its campaign, which had killed hundreds of Palestinian children, was "unbearable." He received an apology from Prime Minister Olmert for the mistaken targeting of the UN compound.

The endgame was in sight. It would take another three days – and the assassination of Hamas' powerful security chief Said Siyyam – before the Egyptian initiative would achieve a breakthrough. On Friday, Ms Livni ruffled Egyptian feathers by making a lightning journey to Washington for the signing of a memorandum of understanding providing for US help on the Gaza-Egypt border in halting Palestinian weapons smuggling – a key Israeli condition for halting the war.

But by Sunday, when eight European and Arab leaders gathered in the Egyptian resort of Sharm el Sheikh to pledge their support for a durable peace and the rebuilding of Gaza, the guns had fallen silent. Israel's unilateral ceasefire was followed by Hamas announcing a truce.

Gazans, trapped inside the Strip by an Israeli blockade since the Hamas takeover, emerged again from their homes and began digging bodies from the rubble. But still they did not dare to hope.

According to Israeli military intelligence, only a few hundred of the 20,000 Hamas fighters were killed and they retain much of their rocket capabilities.

Mr Netanyahu, who is expected to emerge as prime minister after next month's election, said: "the Israel Defence Forces have dealt Hamas a severe blow, but unfortunately the job has not been completed."


Henry Kissinger: The world must forge a new order or retreat to chaos

Not since JFK has there been such a reservoir of expectations

Tuesday, 20 January 2009

Not since JFK has there been such a reservoir of expectations


Not since JFK has there been such a reservoir of expectations

As the new US administration prepares to take office amid grave financial and international crises, it may seem counterintuitive to argue that the very unsettled nature of the international system generates a unique opportunity for creative diplomacy.

That opportunity involves a seeming contradiction. On one level, the financial collapse represents a major blow to the standing of the United States. While American political judgments have often proved controversial, the American prescription for a world financial order has generally been unchallenged. Now disillusionment with the United States' management of it is widespread.

At the same time, the magnitude of the debacle makes it impossible for the rest of the world to shelter any longer behind American predominance or American failings. Every country will have to reassess its own contribution to the prevailing crisis. Each will seek to make itself independent, to the greatest possible degree, of the conditions that produced the collapse; at the same time, each will be obliged to face the reality that its dilemmas can be mastered only by common action.

Even the most affluent countries will confront shrinking resources. Each will have to redefine its national priorities. An international order will emerge if a system of compatible priorities comes into being. It will fragment disastrously if the various priorities cannot be reconciled.

The nadir of the international financial system coincides with simultaneous political crises around the globe. Never have so many transformations occurred at the same time in so many different parts of the world and been made accessible via instantaneous communication. The alternative to a new international order is chaos.

The financial and political crises are, in fact, closely related partly because, during the period of economic exuberance, a gap had opened up between the economic and the political organisation of the world. The economic world has been globalised. Its institutions have a global reach and have operated by maxims that assumed a self-regulating global market. The financial collapse exposed the mirage. It made evident the absence of global institutions to cushion the shock and to reverse the trend. Inevitably, when the affected publics turned to their political institutions, these were driven principally by domestic politics, not considerations of world order. Every major country has attempted to solve its immediate problems essentially on its own and to defer common action to a later, less crisis-driven point.

So-called rescue packages have emerged on a piecemeal national basis, generally by substituting seemingly unlimited governmental credit for the domestic credit that produced the debacle in the first place, so far without achieving more than stemming incipient panic. International order will not come about either in the political or economic field until there emerge general rules toward which countries can orient themselves.

In the end, the political and economic systems can be harmonised in only one of two ways: by creating an international political regulatory system with the same reach as that of the economic world; or by shrinking the economic units to a size manageable by existing political structures, which is likely to lead to a new mercantilism, perhaps of regional units. A new Bretton Woods kind of global agreement is by far the preferable outcome.

America's role in this enterprise will be decisive. Paradoxically, American influence will be great in proportion to the modesty in our conduct; we need to modify the righteousness that has characterised too many American attitudes, especially since the collapse of the Soviet Union. That event and the subsequent period of nearly uninterrupted global growth induced too many to equate world order with the acceptance of American designs, including our domestic preferences. The result was a certain inherent unilateralism – the standard complaint of European critics – or else an insistent kind of consultation by which nations were invited to prove their fitness to enter the international system by conforming to American prescriptions.

Not since the inauguration of president John F Kennedy half a century ago has a new administration come into office with such a reservoir of expectations. It is unprecedented that all the principal actors on the world stage are avowing their desire to undertake the transformations imposed on them by the world crisis in collaboration with the United States.

The extraordinary impact of the President-elect on the imagination of humanity is an important element in shaping a new world order. But it defines an opportunity, not a policy. The ultimate challenge is to shape the common concern of most countries and all major ones regarding the economic crisis, together with a common fear of jihadist terrorism, into a strategy reinforced by the realisation that the new issues like proliferation, energy and climate change permit no national or regional solution.

The new administration could make no worse mistake than to rest on its initial popularity. The role of China in a new world order is crucial. A relationship that started on both sides as essentially a strategic design to constrain a common adversary has evolved over the decades into a pillar of the international system. China made possible the American consumption splurge by buying American debt; America helped the modernisation of the Chinese economy by opening its markets to Chinese goods.

Each side of the Pacific needs the cooperation of the other in addressing the consequences of the financial crisis. Now that the global financial collapse has devastated Chinese export markets, China is emphasising infrastructure development and domestic consumption. It will not be easy to shift gears rapidly, and the Chinese growth rate may fall temporarily below the 7.5 per cent that Chinese experts define as the line that challenges political stability.

What kind of global economic order arises will depend importantly on how China and America deal with each other over the next few years. A frustrated China may take another look at an exclusive regional Asian structure, for which the nucleus already exists in the ASEAN-plus-three concept. At the same time, if protectionism grows in America or if China comes to be seen as a long-term adversary, a self-fulfilling prophecy may blight the prospects of global order. Such a return to mercantilism and 19th-century diplomacy would divide the world into competing regional units with dangerous long-term consequences.

The Sino-American relationship needs to be taken to a new level. This generation of leaders has the opportunity to shape relations into a design for a common destiny, much as was done with trans-Atlantic relations in the postwar period – except that the challenges now are more political and economic than military.

The complexity of the emerging world requires from America a more historical approach than the insistence that every problem has a final solution expressible in programmes with specific time limits not infrequently geared to our political process. We must learn to operate within the attainable and be prepared to pursue ultimate ends by the accumulation of nuance. An international order can be permanent only if its participants have a share not only in building but also in securing it. In this manner, America and its potential partners have a unique opportunity to transform a moment of crisis into a vision of hope.

The author was National Security Adviser, 1969-75 and US Secretary of State, 1973-77.

© 2009 Distributed by Tribune Media Services, Inc.


Robert Fisk: Posturing and laughter as victims rot

Mahmoud Abbas stepped further into humiliation by saying the only option for Arabs isto make peace with Israel

Tuesday, 20 January 2009

Palestinian President Mahmoud Abbas, seated, at the Arab Economic Summit in Kuwait yesterday


Palestinian President Mahmoud Abbas, seated, at the Arab Economic Summit in Kuwait yesterday

The front page of the Beirut daily As-Safir said it all yesterday. Across the top was a terrible photograph of the bloated body of a Palestinian man newly discovered in the ruins of his home while two male members of his family shrieked and roared their grief. Below, at half the size, was a photograph from Israel of Western leaders joking with Ehud Olmert, the Israeli Prime Minister. Olmert was roaring with laughter. Silvio Berlusconi, arms on the back of Olmert's shoulders, was also joshing and roaring – with laughter, not grief – and on Olmert's right was Nicolas Sarkozy of France wearing his stupidest of smiles. Only Chancellor Merkel appeared to understand the moral collapse. No smiles from Germany.

Europe laughs while Palestinians mourn their dead. No wonder that in the streets of Beirut, shops were doing a flourishing trade in Palestinian scarves and flags. Even some of Palestine's most serious enemies in Lebanon wore the Palestinian keffiyeh in solidarity with the people of Gaza. Over and over again, Al-Jazeera television strapped headlines on to their news reports of Palestinians carrying the decomposing corpses of their dead: "More than 1,300 dead in Gaza, 400 of them women and children – Israeli dead in the war 13, three of them civilians." That, too, said it all.

All day, the Arabs also had to endure watching their own leaders primping and posing in front of the cameras at the Arab summit in Kuwait, where the kings and presidents who claim to rule them also smiled and shook hands and tried to pretend that they were unified behind a Palestinian people who have been sorely betrayed. Even Mahmoud Abbas was there, the powerless, impotent leader of "Palestine" – where is that precisely, one had to ask? – trying to suck some importance from the coat-tails and robes of his betters.

Slipping and sliding on the corpses of Gaza, these assembled supreme beings should perhaps be pitied. What else could they do? Saudi King Abdullah announced £750,000 to rebuild Gaza; but how many times have the Arabs and the Europeans been throwing money at Gaza only to see it torn to shreds by incoming shell-fire?

It has to be said that the two cowled Hamas gunmen who announced that they had won a "victory" in the ruins of Gaza were only fractionally less hypocritical. Still they had not understood that they were not the Hizbollah of Lebanon. Gaza was no longer Beirut. Now, it seemed, Gaza was Stalingrad. But whose uniforms did Hamas think they were wearing: German or Soviet?

"Israel has to understand," the good king said – as if the Israelis were listening – "that the choice between war and peace will not always stay open and that the Arab initiative (for Arab recognition in return for an Israeli withdrawal to the 1967 borders of Israel) that is on the table today will not stay on the table." He knew that "an eye for an eye ... did not say an eye for the eyes of a whole city". But how many times – how many bodies have to be pulled from the ruins – before the Saudis realise that time has run out?

The Israelis briskly dismissed land for peace in 2002 but yesterday they suddenly showed their interest again. "We continue to be willing to negotiate with all our neighbours on the basis of that initiative," the Israeli government spokesmen said – as if his own country's original rejection had never been thrown at the Arabs.

President Bashar al-Assad of Syria, of course, dismissed the whole initiative in Qatar last week as dead, insisting that Israel be declared a "terrorist entity". But Mahmoud Abbas stepped further into humiliation yesterday by announcing that the "only option" for Arabs was to make peace with Israel. It was Arab "shortcomings" that led to the failure of the 2002 Arab initiative. Not Israel's rejection, mark you. No, it was all the fault of the Arabs. And this from the leader of "Palestine".

No wonder America's man in Egypt – a certain Hosni Mubarak – repeated the tired old slogan that "peace in the Middle East is an imperative that cannot be delayed". And then the Emir of Kuwait invited Bashar and Hosni and King Abdullah of Jordan and the other King Abdullah of Saudi Arabia to have lunch together – the menu was not disclosed – to end their feuding.

Al-Jazeera showed the ever-more putrid bodies being tugged from beneath cross-beams and crushed concrete as these mighty potentates debated their little disputes. There was really no adequate comment for this charade.


Gaza was demolished in three weeks. Rebuilding it will take years

By Patrick Cockburn in Jerusalem
Tuesday, 20 January 2009 


A mother and child sit among the ruins of their home in Rafah, southern Gaza, one of 4,000 homes destroyed in the war


A mother and child sit among the ruins of their home in Rafah, southern Gaza, one of 4,000 homes destroyed in the war

The rebuilding of Gaza after the Israeli bombardment already faces unique problems and is likely to be the most difficult reconstruction project in the world. This is because of the sheer scale of the devastation, the economic siege of the Palestinian enclave by Israel and Egypt, and the attempt to exclude Hamas, the elected rulers of Gaza, from any role in the rebuilding.

The difficulties are all the greater because of the destruction of much of the tunnel system linking Gaza to Egypt. Israeli and European leaders talk of the tunnel system – by one estimate there are 1,100 of them – as if it was exclusively devoted to supplying weapons and ammunition to Hamas. In reality, "the tunnel economy" has been the way in which food, fuel and everything else has reached Gaza since Israel and Egypt sealed off the Strip 18 months ago, when Hamas drove out the rival Palestinian faction Fatah in 2007. Military supplies were always a very small part of Gaza's imports through the tunnels.

"Everything from Viagra to diesel entered Gaza through the tunnels," said one source. At one point before the Israeli attack, the price of petrol went down in Gaza because a pipeline had been threaded through one of the tunnels, all of which are privately dug and owned. Cooking-gas bottles are in short supply because they previously came in through tunnels that are now closed.

"I know middle-class families in Gaza cutting up their furniture to build fires so they can cook their food," said an aid official yesterday. Spare parts are desperately needed for generators.

The Palestinian tunnels and the Israeli-Egyptian border closure were two issues at the centre of the war and their future is still unresolved.

Until Gaza has continual access to the outside world, any real reconstruction will be impossible. A senior EU official said no aid would be spent rebuilding buildings and infrastructure while Hamas remained in control.

Israel says that it will have withdrawn all its troops from the Gaza Strip by the time Barack Obama is inaugurated today. A first priority forthe UN Relief and Works Agency (UNRWA) will be to bring in foodstuffs and medicines and rebuild its supply system stretching from the Israeli port of Ashdod to the Gaza Strip. Then it will try to restore the electricity, water and sewage systems wrecked by Israeli bombs and shells. Amnesty International yesterday accused Israel of war crimes, saying its use of white phosphorus munitions in densely populated areas of Gaza was indiscriminate and illegal.

UNRWA will probably carry out the preliminary assessment of damage and initial repairs because Israel, Egypt, the US and the Europeans are boycotting Hamas, although UNRWA is nervous of acting as a substitute government of Gaza. One Palestinian estimate suggests that the cost of rebuilding will be $1.4bn (£970m). Saudi Arabia has already pledged $1bn but promises on aid are seldom kept in full.

Rebuilding will take place in a 139-square-mile enclave that is packed with 1.5 million Palestinians, of whom 70 per cent are from refugee families expelled from Israel during the creation of the state. More than a million are already receiving UN food supplies.

The initial assessment is that 20,000 homes lived in by 120,000 people have been somewhat damaged and can be patched up so they are habitable again. The 4,000 homes that have been destroyed cannot be rebuilt because Israel is refusing to let construction materials cross the border into Gaza.

Israel, the US and their European allies are eager to prevent Hamas taking charge of reconstruction because this might add to its political standing among Palestinians. They recall that after the Israeli attack on Lebanon in 2006, many Lebanese at first blamed Hizbollah for provoking the assault. But Hizbollah took charge of rebuilding and Iran reportedly gave $14,000 to every family which had lost its home, money that was channelled to grateful recipients through Hizbollah.

The major potential donors for Gaza will try to get aid distributed through the Palestinian Authority of President Mahmoud Abbas. But he is, if anything, more discredited in the eyes of Palestinians and the Arab world as an Israeli and American stooge than he was before war in Gaza. Hamas, which won the heavily-monitored Palestinian election of 2006, will not want to dilute its power but there will be international pressure on Palestinians to form a government that is acceptable to donors.

If Gaza is to be restored even to the miserable condition it was in before 27 December, then the economic siege has to be lifted. But Israeli leaders like the Foreign Minister, Tzipi Livni, and the Defence Minister, Ehud Barak have claimed success in the war. If the blockade is raised, then Hamas will say it won the war – and the election of Benjamin Netanyahu as the next Prime Minister of Israel in the election on 10 February will become even more certain.

So were there any winners or losers?

What was Hamas's aim? Rocket attacks intended to force Israel to end blockade that has trapped 1.5m Palestinians inside Gaza Strip since Hamas takeover. Hamas also seeking recognition by West

What happened? Security arrangements are to be imposed on Hamas and no ceasefire agreement has been signed with the Islamists

Did they succeed? No.

What was Israel's aim? Gaza offensive launched to "teach Hamas a lesson". Some Israeli politicians called for overthrow of Hamas, while contenders in next month's election sought improved ratings

What happened? The majority of the estimated 20,000 Hamas fighters escaped with their lives. Hamas rockets were still being fired at the end of Israeli offensive when Israel declared unilateral ceasefire

Did they succeed? No.

What was Egypt's aim? To secure end to offensive through ceasefire agreement leading to truce, border security, reopening of crossings, Israeli troop withdrawal and Palestinian reconciliation

What happened? US negotiated separate deal with Israel on arms smuggling. Hamas set its own truce conditions and refused reconciliation with Fatah. Egyptian mediation deepened split between moderate Arab states and others

Did they succeed? No.

What was the EU's aim? To profit from power vacuum in US and play lead negotiating role. To map out road to peace and promise support for Palestinian leadership afterwards

What happened? Plethora of negotiators undermined EU credibility as didthe incompetence of Czech EU presidency

Did they succeed? No.


Eco-Explosives, A Bleeding BEAR, And The Armani-Clad Super Soldier: Future Shock At The Army Science Conference - By Nick Turse (LATEST UPDATE - 18/1/09)

15 January 2009,

[Research support for this article was provided by the Investigative Fund  at the Nation Institute.]

On paper, every session looked like gold to me. Technology and the Warfighter. Neuroscience and Its Potential Applications. Lethality Technologies. Autonomous/Unmanned Systems. (Robots!)

But when I got to the luxury hotel in sunny Orlando, Florida, for the 26th Army Science Conference, all that potentially glittered, it often seemed, was nowhere to be found -- except, perhaps, in the threads of the unlikeliest of military uniforms.

I expected to hear about nefarious new technologies. To see tomorrow's killing machines in a dazzling exhibit hall. To learn something about the Army's secret plans for the coming decades. To be awed -- or disgusted -- by a peek at the next 50 years of war-making.

What I stumbled into, however, seemed more like a cross between a dumbed-down academic conference and a weekend wealth expo, paired with an exhibit hall whose contents might not have rivaled those of a regional auto show. I came away knowing less about the next half century of lethal technologies than the last eight years of wheel-spinning, never-winning occupations of foreign lands.

If you didn't know that the Army held its science conference last month -- much less that they've been going on biennially since 1957 -- you can't be faulted. Only a handful of reporters were on the premises, most of them with small defense industry publications.

Officially, according to its own publicity handout, the conference was intended "to promote and strategically communicate that the Army is a high-tech force, enable the public to understand what the Army S&T [science and technology] community does to support the Soldier, and enable conference attendees to better appreciate the potential emerging technologies have to provide disruptive capabilities to our Soldiers in the future."

In reality, it was a junket for Army civilian personnel, enlisted troops, and officers, along with academic researchers from top universities, representatives of defense contractors, a handful of foreign military folks from across the globe, and, for one day, about 100 grade school children. It was a chance for the thousand or so attendees to schmooze and booze, compare notes, and trade business cards.

Don't get me wrong. The military does some striking science and, not surprisingly, some of the high-tech research presented was nothing short of mind-blowing. Who knew you could potentially grow a battery -- for a flashlight or a truck -- the way a clam grows a shell? Or that memories in mice can be selectively erased? But all too often the talks and panels were mind-numbing, leaving plenty of time for catered breaks, the downing of overpriced drinks, and a chance to wander through hallways filled with the military/scientific version of those posters you invariably see at high school science fairs, including the one that should have won all awards for pure indecipherability:

"Osteomyelitis Treatment with Nanometer-sized Hydroxyapatite Particles as a Delivery Vehicle for a Ciprofloxacin-bisphosphonate Conjugate; New Fluoroquinolone-bisphosphonate Derivatives Show Similar Binding Affinity to Hydroxyapatite and Improved Antibacterial Activity Against Drug-resistant Pathogens."

Then there was the exhibit hall.

A Disembodied Head, a Cobra, and a Bleeding BEAR

With a military budget approaching a trillion dollars, you'd think at least the exhibits would wow you. No such luck. At the entrance to the "Coquina Ballroom" was no futuristic space tank, but an old Canadian Cougar  -- a 1970s-vintage general purpose armored vehicle loaned to the U.S. Army by America's northern neighbors for research purposes. The first time I passed it, I was heading for a press-only preview of the latest innovation produced by the Institute for Creative Technologies -- an Army-founded and funded center at the University of Southern California set up  in 1999 "to build a partnership among the entertainment industry, army and academia with the goal of creating synthetic experiences so compelling that participants react as if they are real."

The only thing less impressive than the press corps on hand for that day's unveiling (two slightly rumpled "defense" reporters and me) was the unveiled itself: an interactive 360-degree, 3D holographic display. Sure, it sounds impressive, but if, back in 1977, you saw that fake Princess Leia hologram  in Star Wars, then you're already, in your imagination, light years ahead of what the military has produced. In fact, if you caught CNN reporter Jessica Yellin appearing by hologram from Chicago in Wolf Blitzer's studio on election night  (and you were me), you might have wondered whether you shouldn't have been attending the latest Cable News Science Conference rather than this one.

Basically, what I saw was a man sitting behind a curtain while his head was projected onto a nearby fast-spinning piece of polished metal. In other words, a black-and-white, three-dimensional, disembodied head right out of some campy 1950s sci-fi film "spoke" to us via a perfectly ordinary microphone and speaker set-up. When perfected, claimed ICT, the technology would be used for 3D visual communication, 3D gestures evidently being considered vastly superior to the 2D variant on or off the battlefield.

I walked away convinced that Dick Tracy could have done it a lot better. The only advantage of the current Army system is that it should be fairly cheap to reproduce -- now that they know how to do it -- since it uses relatively low-tech, off-the-shelf (if modded out) components. Why they need to do it in the first place isn't so clear.

But hope springs eternal... so I headed for the nearby robot exhibits where a pitchman was touting one upcoming battlefield model in a slightly defensive fashion: "It's not the T-1000, but we're workin' on it." He was referring, of course, to the morphing late-model Terminator that tried to take out Arnold Schwarzenegger (aka model T-101) in Terminator 2.

The sparse audience was noticeably underwhelmed, as his robot lacked anything approaching a liquid metal structure or even a Schwarzeneggerian android physique. It was, in fact, a little tracked vehicle resembling a slightly bulked up, if markedly slower, radio-controlled toy car. It certainly looked ready for the battlefield -- of my childhood playroom floor, where it could have taken on my Milton Bradley-made programmable, futuristic toy tank, Big Trak .

Another nearby 'bot was BEAR -- the Battlefield Extraction Assist Robot -- a four-foot-tall would-be rescue automaton with tank treads. Its claim to fame seems to be that it can rear up to six feet tall, with its tracks becoming legs, and walk. Of course, with its rudimentary teddy bear head, it's likely to crack up friend and foe alike on any futuristic battlescape.

I'd read about BEAR for years, but had never seen it in person (so to speak). Not only was it remarkably balky, but it bore a disappointing lack of resemblance to the renderings of it  on the website of its maker, Vecna Robotics. One of its pitchmen spent a great deal of time kicking very specific objects into a very specific position so BEAR could actually lift them -- not exactly a battlefield likelihood -- while another gave an apologetic spiel explaining the robot's many drawbacks, including its low battery life. "Obviously, this couldn't go on a battlefield," he said. Soon after, red liquid began to pool on the floor just beneath the BEAR. "It bleeds like a human, too," one sarcastic conference-goer remarked as the robot hemorrhaged hydraulic fluid.

Strapped into a Cobra helicopter gunship simulator -- actually the cockpit of an old chopper best known for its service in Vietnam  -- I was a BEAR-like bust myself. Pilots, I was assured, can pick up the system within 10 minutes and indeed the woman strapped in when I got there -- the self-proclaimed "world's worst video game player" -- had just done a serviceable job of "flying" the Cobra and knocking out three enemy vehicles on its surprisingly low-tech video game screen. Donning a wired-up flight vest that buzzes your body whenever your helicopter is drifting, I took a seat at the controls. My lower brain, the designer assured me, would take over and I'd steer intuitively.

Not a chance. A "virtual wind" caused the copter to drift and I fired way too wide at the enemy tank and the mobile missile launcher, even with the most generous blast-radius imaginable; then I missed an enemy copter too, which was just getting away when I launched a second rocket that exploded nowhere nearby but somehow caused it to erupt in a fireball anyway. My performance was all too pathetic, given that the simulator struck me as state-of-the-art -- circa 1997. Humbled by the chopped-up chopper with Nintendo 64-quality graphics, I wandered off.

On opening night, I found myself walking in the wake of a French General who seemed to be everywhere at the conference, with her aide de camp always in tow. She was drinking red wine (the aide, a Bud) and their path through a sea of pasta, pork, and turkey-gorging corporate suits, federally-funded professors, and military men and women taking advantage of the one-night-only buffet seemed hardly less aimless than mine.

Still, I pressed on, past a giant orb that looked like a gravitationally-challenged weather balloon -- actually, a DSCT or Deployable Satellite Communication Terminal portable satellite system -- until I stumbled upon the "Future Force Warrior," accompanied by Jean-Louis ("Dutch") DeGay, an Army veteran who serves as a civilian equipment specialist at the U.S. Army Natick Soldier Research, Development and Engineering Center.

The Armani-Clad Super Soldier

Early in the decade, the Army began promoting the idea of the "Future Force Warrior" -- then known as  the "Objective Force Warrior." It was touted as a robo-suit with on-board computers, advanced armor, and integrated weapons systems that, when introduced around 2020, would revolutionize land warfare. The jet-black suit was going to transform every soldier into an advanced exoskeleton-clad cyborg. The United States would instantly have an army of high-performance Darth Vaders , not pathetically human, ground-pounding grunts.

Today, the date for fielding the super-soldier suit has been pushed to 2030, while the old mock-up, after so many appearances, is starting to show its age. And it's not even black. The tacky-looking tan outfit proved a mix of glittery, gold-flecked clingy fabric and plastic armor pieces -- with a motocross-like helmet that encapsulates the whole head and hides the face behind a visor. It would have been laughed out of the nearest sci-fi convention.

Still, that didn't stop the Army from, once again, formally unveiling the Future Force Warrior during an afternoon panel discussion, and touting the project as a great leap forward, an "F-16 on legs concept." In a corridor behind the scenes, the costumed character was awaiting his moment to stride out in front of the audience. From far away, he might have looked almost ready to take on space aliens à la Master Chief  from the Halo video games but, close up, he had a nasty case of static cling and needed an attendant to help keep the suit's stretchy, shimmery fabric from bunching up at the ankles.

"Nobody's gonna want to take your picture without your helmet on," DeGay told the Army's lone costumed character as a woman approached with a digital camera. The poor staff sergeant inside the suit grimaced. He had already taken a day's punishment -- people constantly asking if the suit was too hot (it is!) or uncomfortable (it is!). "I love that everybody asks that. Everybody either asks him that or hits him. That's the two things that always happen," DeGay said with a laugh. "You were on the ground 20 minutes and somebody hit ya and it was a woman."

The super soldier dutifully donned the helmet for the photo. "I've gotten a lot of requests," said DeGay. "Is he available for parties, graduations, bar mitzvahs?" A slightly drunk attendee suddenly began to razz the super-soldier. "How do you feel about the glittery shirt? Does it make you feel tough?"

DeGay promptly interjected that the suit's sparkly fabric had an absurd backstory. "We were trying to find replacements. We did a fabric search and came to find out it's Armani. There were only four yards left. It's about $320 a yard... This is actually an end roll off Armani and we took the last five yards of it that exists. And because it's Armani, we heated it up and dyed it and changed the colors. It's kinda like taking a big poop on the hood of a Ferrari."

The picture taken, the Army's living plastic-clad prop shifted his weight and took off his helmet, while DeGay added a final quip. "At least," he told the sergeant, "you can say for once in your Army career you wore Armani."

Going Green

What explosives can do to a human body isn't pretty. After all, they can turn what once was a foot into an ankle with an unnatural fleshy stump on the end, or a working eye into a useless perpetual wink. When you've seen it all up close, it's hard not to shake your head on first hearing about green explosives, but that's what the Army's working on.

Don't get me wrong. On some level, there is merit in the work. While more people are aware of the deleterious health effects  of the depleted uranium (DU) projectiles the U.S. military now regularly uses in its wars, there are many other types of munitions whose chemical components, in addition to their destructive purpose, are dangerous to human health and the environment. Typical would be RDX (Hexahydro-1, 3, 5-trinitro-1, 3, 5-triazine).

Dr. Betsy Rice, a slight scientist who's worked for the Army for about 20 years, explained with a twang, "We are tasked with trying to find replacements for RDX, a conventional explosive that's widely used. RDX is a neurotoxin and it's a major contaminant of training grounds, so there is a great need to replace this with something -- an environmentally friendly alternative." And to that end, the U.S. Army Research Laboratory, where she's a research chemist in the Weapons and Materials Research Directorate, is striving to create the "most environmentally-friendly explosive product known to man."
The would-be green explosive, polynitrogen, is currently too unstable to be used, but her lab is hard at work solving that problem. If you want call it that. Rice doesn't. To her, it's "a really fun project." Fun and green! It was as if the polynitrogen project was going to yield clean, cheap energy, instead of maiming and killing people in an ecologically-friendly way. But nobody seemed to blink and the conference rolled along.

Top Grunt: We Can't Keep Up With al-Qaeda

Through the four days of the Army Science Conference, two obvious elephants -- or were they 800-pound gorillas? -- inhabited every room, corridor, and common area: the wars in Iraq and Afghanistan. People regularly talked about both wars without significantly addressing their impact in terms of science and technology, let alone larger issues.

Post-surge, it was certainly easier for the attendees to discuss the younger of the two conflicts in which many seemed to take pride, even though the ongoing, financially ruinous occupation had led to the deaths of huge numbers of Iraqis. That was, after all, about as close as the highest tech military on the planet could actually come to a success story. The formerly successful war in Afghanistan, now raging into its eighth year, was far more wince-worthy, even though attendees clearly preferred to look upon it as an upcoming challenge -- and, of course, testing ground for Army science and technology -- not as a longstanding catastrophe.

But as one panel discussion drew to a close, one of the top-ranking enlisted men in the Army, a highly decorated veteran of the Global War on Terror, made a startling admission. He was discussing the typical pack-laden, weapons-toting, up-armored U.S. soldier "goin' up and down the mountains of Afghanistan right now." As he pointed out, that grunt could not haul one more piece of gear. "Nor is there a soldier," he continued in a burst of candor, "that, currently configured, can keep up with al-Qaeda because we're chasing guys that are armed with AK-47s and tennis shoes."

I asked him later whether it made sense to spend close to $20,000, the average price today to kit up (as the British might say) a soldier who can't keep up with the insurgents he is meant to track down. Has anyone considered, I asked, going back to the $1,900 it cost to outfit a less encumbered grunt of the Vietnam War era who could, assuredly, have kept better pace with today's guerillas.

As I learned at this conference, however, questions like these go nowhere in a big hurry. Instead, he backpedaled quickly, declaring that, in Afghanistan, "we're gettin' it done." A colleague of the same rank, and fellow GWOT veteran, quickly jumped in, pointing out that today's bulky body armor has saved a lot of lives. As for today's insurgents, he said, "Yeah, I can't run the mountain with them, but I'll still get them -- eventually."

The big-picture lesson seemed to be that current Army technology has made American wars feasible, but interminable. Heavy body armor has helped keep U.S. combat deaths down to a level acceptable to the American public; but, of course, the same bulky gear helps ensure that fast-moving insurgents, who already know the land well, live to fight another day. And, since the enemy is unlikely to be caught on foot, U.S. troops become ever more reliant on air or artillery strikes that are likely to kill civilians in rural Afghanistan and so recruit more insurgents. The scenario suggested is one that's already in operation: an endless cycle of American failure and foreign carnage enabled, implemented, and exacerbated by recent technological innovations.

On paper, advances in Army science and technology research tended to sound scary and look impressive. In practice, as the 26th Army Science Conference showed, seeing is believing. I had expected everything to be big, bad, and bellicose; what I found fit better with what we already know about the realities of an over-bloated, over-stressed, over-strained Pentagon. While glossy brochures and programs were festooned with pictures of the black-clad Future Force Warrior, Army robots, and dazzling screen shots of video-game-like simulators, these gilded graphics couldn't obscure the disappointing realities and air of desperation lurking just below the surface of the conference.

So I left Orlando with more questions than answers when it comes to the future of the U.S. Army.

Is there any possibility that holography will really revolutionize Army communications early enough to matter? Or is this just an area where taxpayers are funding needlessly militarized science projects?

Will the mildly absurd dream of an environmentally-safe explosive be realized anytime soon? Will the Army's future consist of battalions of armed Terminators, as many fear , or will the next generation of robots cost a fortune and bleed out like BEAR?

What does it say about the U.S. Army when its prototype future super-soldier models haute couture from a high-priced, glittery foreign fashion house?

And since Armani's run out of the Army's favorite fabric, does Dolce & Gabbana have a shot?

Israel and The United States: Up In Arms - By Frida Berrigan (LATEST UPDATE - 18/1/09)

15 January 2009, Foreign Policy In Focus

In answering questions before the Senate Foreign Relations Committee, Secretary of State-designate Hillary Clinton acknowledged what she called the "tragic humanitarian costs of conflict in the Middle East, and the pain and suffering of Palestinian and Israeli civilians." She continued by saying that "we cannot give up on peace."

As the bombardment of Gaza enters its third week and the civilian death toll continues to rise, Clinton's remarks offer a thin ray of hope that the next president will deviate from the long-set pattern of U.S.-Israeli relations.

The Bush administration has been unwilling to use the considerable U.S. influence - as Israel's major military and political backer - to dissuade the government in Tel Aviv from its pattern of claiming self-defense while perpetrating collective punishment, human rights violations, and massively disproportionate attacks that harm and kill civilians.

If the next administration is making a genuine commitment to "a just and lasting peace that brings real security to Israel, normal and positive relations with its neighbors; independence, economic progress and security to the Palestinians in their own state" - as Hillary Clinton described the vision for the future - they will have their work cut out for them.

Arms Package

That work begins with a reevaluation of the financial and military commitment the United States made to Israel. During the Bush administration, Israel received over $21 billion in U.S. security assistance, including $19 billion in direct military aid under the Pentagon's Foreign Military Financing (FMF) program. Through the FMF program, Israel remains the single largest recipient of U.S. military aid each year, which they use to purchase U.S. weapons.

The bulk of Israel's current arsenal is composed of equipment supplied under U.S. assistance programs. For example, Israel has 226 U.S.-supplied F-16 fighter and attack jets, over 700 M-60 tanks, 6,000 armored personnel carriers, and scores of transport planes, attack helicopters, utility and training aircraft, bombs, and tactical missiles of all kinds.

Hardware continues to flow in, despite the fact the Arms Export Control Act (AECA) requires nations receiving U.S. arms to certify the weapons are used for internal security and legitimate self-defense, and that their use doesn't lead to an escalation of conflict. During 2008 alone, the United States made over $22 billion in new arms sales offers to Israel, including a proposed deal for as many as 75 F-35 Joint Strike Fighters, worth up to $15.2 billion; nine heavy transport aircraft, worth up to $1.9 billion; four Littoral Combat Ships and related equipment, worth as much as $1.9 billion; and up to $1.3 billion in gasoline and jet aviation fuel.

One lone congressman - Dennis Kucinich (D-OH) - raised concerns about Israel's possible violations of the AECA. He hasn't had a response from the State Department. What use are our laws if they are not followed?

The last time the United States cut off military aid and weapons transfers to Israel was in 1981. During Israel's incursion into Lebanon, the Reagan administration cut off U.S. military aid and arms deliveries for 10 weeks while it investigated whether Israel was using weapons for "defensive purposes," as required under U.S. law.

The United States lifted the ban after Secretary of State Alexander Haig suggested that one could "argue until eternity" about whether a given use of force was offensive or defensive.

Since then, the United States has investigated Israel's use of U.S.-origin weapons in relationship to the AECA a few times, most notably in 2006, when Israel let loose on southern Lebanon with millions of cluster bomblets. The State Department Office of Defense Trade Controls investigated the situation, and informed Congress with preliminary findings indicating Israel may have violated agreements by using cluster bombs against civilian-populated areas. According to a January 2008 Congressional Research Service report , Israel denied violating agreements, saying that it had acted in self-defense, and a final determination wasn't made.

The issue was dropped and weapons transfers continued.

An Obama Alternative?

Those who seek peace in the Middle East, who refuse to "give up" on it, must insist that the United States stop funding and fueling the war.

What can Obama do differently? Enforce the AECA in a uniform and dispassionate way. Given the close political and military ties between the United States and Israel, Haig's observation is a cover for inaction, and worse. While the finer points of offense and defense are being argued "until eternity," U.S.-origin weapons are killing women and children.


1. Perhaps it would be worthwhile if we read again the Charter of the United Nations to see how we and other countries subscribe to and carry out the objectives of the Charter.

Below is the introduction to the Charter;

"We the peoples of the United Nations determined to save succeeding generation from the scourge of war, which twice in our lifetime has brought untold sorrow to mankind, and to reaffirm faith in fundamental human rights, in the dignity and worth of the human person, in the equal rights of men and women and of nations large and small, and to establish conditions under which justice and respect for the obligations arising from treaties and other sources of international law can be maintained, and to promote social progress and better standard of life in larger freedom, and for these ends to practice tolerance and live together in peace with one another as good neighbours, and to unite our strength to maintain international peace and security, and to ensure, by the acceptance of principles and the institution of methods, that armed force shall not be used, save in the common interest, and to employ international machinery for the promotion of the economic and social advancement of all peoples, have resolved to combine our efforts to accomplish these aims accordingly, our respective Governments, through representatives assembled in the city of San Francisco, who have exhibited their full powers found to be in good and due form, have agreed to the present Charter of the United Nations and do hereby establish an international organisation to be known as the United Nations."

2. Clearly the United Nations is aimed at saving succeeding generations (we and our children, grand children....) from the scourge of war.

3. Who wars today? Is it us or is it the very country which initiated this Charter, on whose soil the countries of the world gathered to formulate and to sign.

4. Total disregard for the "sorrow to mankind" is shown repeatedly by the United States and Britain.

5. And has the United States shown any "faith in fundamental human rights, in the dignity and worth of the human person, in the equal rights of men and women and of nations large and small".

6. Look at the millions killed, millions more injured, cities and towns devastated by wars of aggression by the United States, look at the detention without trial and the torture of suspected "terrorists", the sanctions which killed hundreds of thousands of children and many other obvious disregard for fundamental human rights; look at them and ask yourselves what kind of people are the Americans who signed the UN Charter.

7. Then there is the obligation "to establish conditions under which justice and respect for the obligations arising from treaties and other sources of international law".

8. Have the United States and Britain, the main signatories of the United Nations Charter "established conditions under which justice and respect for .... treaties and international laws".

9. Both countries totally ignored the Charter of the United Nations the treaty that established it, when both warred against Iraq without the approval of the United Nations. Numerous international laws on rights of citizens and non-citizens, imprisonment and torture, international agreements on the environment have been flouted by the United States. Even the authority of the World Court has been rejected by the US.

10. Has the United States promoted social progress and better standards of life? Killing people in order to promote democracy is totally contrary to this undertaking.

11. Has the United States practiced tolerance and lived in peace as good neighbours? Has the United States obeyed the injunction not to use armed force and has it used international machinery for the promotion of economic and social advancement of all people? To all these questions, the answer is a resounding "No"!

12. Truly the United States and at times Britain together with Israel have never honored anything that they have undertaken to do in the Charter of the Untied Nations or at any other time.

13. And yet these two countries often take the high moral ground to preach to other people about human rights, about the rule of law, about respect for international law, about respecting treaties and agreements, about equality and freedoms etc.

14. Never has the world seen hypocrisy on this scale.


Israel wages political pre-election war against Palestine


The Israeli administration decided to finish the operation in the Gaza Strip, but peace is not going to come to the region anyway. The consequences of the Israel-led operation in the Gaza Strip are horrifying. The Israeli administration may have launched the operation for its own political reasons. It may just so happen that it is a pre-election war for Israel.

Israeli Prime Minister Ehud Olmert stated on Saturday that the Israeli Army had been ordered to cease fire since the goals of the operation had been achieved. He did not specify which kind of goals the operation had. Hamas refused to cease fire as long as Israeli troops were present on the Gaza Strip, whereas Israel was not going to pull out from the region.

One may assume that Israel unleashed the military operation in the Gaza Strip to raise chances of the ruling party during the upcoming election and complete the operation before the end of Bush’s term in the office, the Ambassador of Palestine to the Russian Federation said.

The diplomat backed the suggestion to establish an international committee for the investigation of the actions of the Israeli military in Gaza. “I represent the whole Palestinian nation here – 11 million people. Five million of them live in the historical land of Palestine . Six more million live all over the world as a result of the war of 1948. We, the Palestinian nation, have become the victims of the European history. We have become the Jews of Israel,” the diplomat wrote.

The Palestinians have always been proud of their political pluralism. The nation was always ready to preserve both the political pluralism and democracy. “We have a home problem now, but we lay big hopes on Egypt ’s goodwill mission,” the diplomat said. Egypt is one of the key states in the League of Arab States. The League entrusted Egypt with a mission of truce several months ago.

“We represent the national Palestinian movement since the war of 1973. We have been gradually moving towards consent and co-existence of two states in the Middle East. I always say that we were very reasonable even beyond reason. We support the peaceful solution of the problem through negotiations,” the ambassador wrote in an email to

The war in Gaza continues. The beginning of any war implies a diplomatic debacle. The ambassador lays hopes on Russia’s mission. This is a great nation, a constant UN Security Council member and the basic country of the four international mediators, which decided to hold the Mideastern conference in Moscow this coming spring.

The international community is certain that there was no need for Israel to strike such serious blows on Gaza. “I read Israeli papers every day. Only 13 Israelis have been killed, whereas the number of victims in Palestine exceeds 1,100 people, many of them are children below 12. Five thousand people have been wounded, many of them are women, children and elderly people. The Gaza Strip is a heavily populated territory. The bombings of Gaza always strike civil objects,” he wrote.

Over 200,000 people have lost their homes in the Gaza Strip, the territory suffered 3-billion-dollar damage as a result of the war. Israel struck several blows on UN objects, probably deliberately. Israel used prohibited kinds of weapons, including white phosphorus, against civil objects. This substance literally dissolves eyes and burns flesh without fire. Israel denied journalists entrance to the Gaza Strip having claimed that such “observers” would bring nothing but more problems.

The US administration promised the whole world that it would do everything to freeze the illegal construction of Jewish settlements. As experience shows, the settlements continue to appear, and the Israeli checkpoints were not removed. Unfortunately, Israel is not waging war against Hamas – it is waging war against the whole Palestinian nation.

Israel will go to the polls on February 10, so this war can be described as a pre-election war. Israeli officials believe that their tough actions against Palestine will bring better results. This is a very short-sighted kind of politics. The Israeli administration does not realize the whole depth of the moral crisis of the Israeli society. An opinion poll conducted in the USA showed that 44 percent of Americans support Israel, whereas 41 percent of them say that they condemn the actions of the Israeli administration. More importantly, about 30 percent of Barack Obama’s electors set out their sympathies with Palestine.

Vladimir Anokhin

Robert Fisk: So, I asked the UN secretary general, isn't it time for a war crimes tribunal?

Mr Ban said it would not be up to him to launch a war crimes tribunal. It was pathetic

Monday, 19 January 2009

It's a wrap, a doddle, an Israeli ceasefire just in time for Barack Obama to have a squeaky-clean inauguration with all the world looking at the streets of Washington rather than the rubble of Gaza. Condi and Ms Livni thought their new arms-monitoring agreement – reached without a single Arab being involved – would work. Ban Ki-moon welcomed the unilateral truce. The great and the good gathered for a Sharm el-Sheikh summit. Only Hamas itself was not consulted. Which led, of course, to a few wrinkles in the plan. First, before declaring its own ceasefire, Hamas fired off more rockets at Israel, proving that Israel's primary war aim – to stop the missiles – had failed. Then Cairo shrugged off the deal because no one was going to set up electronic surveillance equipment on Egyptian soil. And not one European leader travelling to the region suggested the survivors might be helped if Israel, the EU and the US ended the food and fuel siege of Gaza.

After killing hundreds of women and children, Israel was the good guy again, by declaring a unilateral ceasefire that Hamas was certain to break. But Obama will be smiling on Tuesday. Was not this the reason, after all, why Israel suddenly wanted a truce?

Egypt's objections may be theatre – the US spent £18m last year training Egyptian security men to stop arms smuggling into Gaza and since the US bails out Egypt's economy, ignores the corruption of its regime and goes on backing Hosni Mubarak, there's sure to be a "compromise" very soon.

And Hamas has had its claws cut. Israel's informers in Gaza handed over the locations of its homes and hideouts and the government of Gaza must be wondering if they can ever close down the spy rings. Hamas thought its militia was the Hizbollah – a serious error – and that the world would eventually come to its aid. The world (although not its pompous leaders) felt enormous pity for the Palestinians, but not for the cynical men of Hamas who staged a coup in Gaza in 2007 which killed 151 Palestinians. As usual, the European statesmen appeared hopelessly out of touch with what their own electorates thought.

And history was quite forgotten. The Hamas rockets were the result of the food and fuel siege; Israel broke Hamas's own truce on 4 and 17 November. Forgotten is the fact Hamas won the 2006 elections, although Israel has killed a clutch of the victors.

And there'll be little time for the peacemakers of Sharm el-Sheikh to reflect on the three UN schools targeted by the Israelis and the slaughter of the civilians inside. Poor old Ban Ki-moon. He tried to make his voice heard just before the ceasefire, saying Israel's troops had acted "outrageously" and should be "punished" for the third school killing. Some hope. At a Beirut press conference, he admitted he had failed to get a call through to Israel's Foreign Minister to complain.

It was pathetic. When I asked Mr Ban if he would consider a UN war crimes tribunal in Gaza, he said this would not be for him to "determine". But only a few journalists bothered to listen to him and his officials were quickly folding up the UN flag on the table. About time too. Bring back the League of Nations. All is forgiven.

What no one noticed yesterday – not the Arabs nor the Israelis nor the portentous men from Europe – was that the Sharm el-Sheikh meeting last night was opening on the 90th anniversary – to the day – of the opening of the 1919 Paris peace conference which created the modern Middle East. One of its main topics was "the borders of Palestine". There followed the Versailles Treaty. And we know what happened then. The rest really is history. Bring on the ghosts.

We will not go down (Song for Gaza)





War On Terror Crashes Into India: The November 2008 Mumbai Attack - By Come Carpentier de Gourdon (LATEST UPDATE - 18/1/09)

9 January 2009

The tragic terrorist attack which struck Mumbai from 26 to 29 November 2008 evinced in its ruthless efficiency the hand of the Special Forces' operatives who trained the terrorists for this audacious urban raid.
It is now universally acknowledged that an operation of this scope and complexity, involving many months of preparation and training, international sea transport for the selected commandos, and provision of sophisticated equipment and detailed intelligence, backed by direct overseas electronic communication and supervision, required the institutional support of a government agency, or at least of an equivalent private or privatized organization.
The prime suspect from the outset was the Lashkar e Tayyiba (LeT), set up and operated under the close supervision of Pakistan's intelligence community, specifically the ISI, which over the years established or condoned and supported the creation of a number of private guerilla terrorist outfits in order to supplement its own warfare capacities in Afghanistan, Kashmir and anywhere else in India. A Russian KGB Commando veteran of the Afghan war and expert on guerilla warfare, Vladimi Klyukin, said on 30 November 2008 that the terrorists who attacked Mumbai were "probably trained by the special operation forces called the Green Flag groups," created by US agents in Pakistan in the final year before Soviet withdrawal from Afghanistan. Such training, conducted by American black or green beret instructors, involved the Pakistani elite units and the ISI as well.

Pakistan's strategic doctrine relies on asymmetric combat abilities to make up for its demographic and conventional inferiority vis-à-vis India and other bigger potentially hostile neighbours such as Iran. To fulfill this agenda, the military leadership in Rawalpindi has sponsored and maintained a succession of semi-private, elusive and religiously motivated guerilla organizations such as the LeT, Harkat ul Mujahideen, Maktab al Khidamat, Jaish i Muhammad, Hizb ul Tahrir, as well as financial support systems such as the Jamaat ul Dawa (JuD), which also have charitable activities that provide an important and often indispensable replacement for the non-existent or sorely deficient public welfare system. This privatized theocratic-military infrastructure affords Pakistani military rulers "plausible deniability" when needed.

The country's nuclear strike force is the other pillar of its unconventional military strategy, designed to deter India from undertaking air raids over Pakistan or a land invasion of its territory.

It must be kept in mind, when analyzing Pakistan's military strategy, that its founders did not intend it to stay within the borders they found themselves in 1947 in the wake of the bloody and traumatic partition from India. Muhammad Ali Jinnah and his successors saw Pakistan as the homeland for all South Asian Muslims and, in that capacity, as the true successor to the great Islamic Empires that held sway over the sub-continent from the end of the twelfth century, particularly the Mughal realm. Hence they expected to extend their own rule to the North Indian plains and to all areas where substantial Muslim populations remained.

The newborn state of West and East Pakistan was thus seen as a springboard for the gradual re-conquest of the sub-continent, as well as the domination of Afghanistan and Central Asia. This vision reflected both the age-old Islamic ideal of expansion of "Dar ul Islam" by military means when suitable, and the universal practice of territorial annexation through war that was also quite traditional in the Indian context among both Hindus and Muslims. In that regard, Pakistan offers some grounds for comparison with its contemporary, the state of Israel, which also intended to gather all Jews within its borders and to gradually encompass the historical territories of Israel and Judea in the mythical days of their greatest kings.
Seen in the backdrop of South Asia's history, Pakistan is only the latest of many states that emerged and declined or broke down in succession, along centuries. More specifically, it is the contemporary version of the Sultanates that held sway over diverse regions of India, from Bengal to the Deccan, in the last eight hundred years. Geographically, Pakistan is poised on the north-west of India and sits astride the Khyber Pass, gateway to the sub-continent, through which all Islamic invasions passed. Thus, the rulers of Islamabad could hope to one day follow their warlike predecessors, from Mahmud of Ghazni to Ahmed Shah Abdali, to restore the hoary imperial order, hopefully with the support of the many co-religionaries left in India.

It is impossible to understand the rationale of the Pakistani armed forces and their security and Intelligence appendages, without taking into account the dream of Mughal restoration. The country's civilian elected authorities have been and are only a temporary, unessential façade to lend legitimacy to the real military rulers. In the eyes of the latter, the sole "raison d'etre" of Pakistan is to provide the support and logistical platform for carrying out their grand scheme. While India is a geographical whole that over the millennia became a nation through a combination of cultural and political factors, Pakistan is a military state dedicated to expanding its influence in the wider region, inevitably at the expense of its neighbours. In the traditional perspective adopted by almost all regional states in the history of the sub-continent, the conquest of greater India was a goal pursued by all sufficiently powerful kings, Hindus, Muslims, Rajputs, Mahrattas and Afghans alike, but the Islamic factor added an essential religious and cultural parameter that transformed inter-state battles for supremacy into a strategic Jihad for lasting conquest and conversion.

Further, like all Muslim polities in north-western India that preceded it, Pakistan seeks to extend its control over Afghanistan and Kashmir in order to secure strategic depth and command the heights of the Hindukush and the Himalayas.

The British and US role

There is substantial evidence, some provided in Ambassador Narendra Singh Sarila's book "The Shadow of the Great Game" (Constable, 2006), to support the belief that British policy encouraged and supported the partition of India between Hindus and Muslims and the establishment of Pakistan, viewed in London as a prospective bulwark for the protection of its Imperial interests in the Gulf and against the threat of Soviet-Communist influence in the sub-continent.

Sir Muhammad Aga Khan III recalls in his memoirs, "World Enough and Time" (1954), how HM's Government invited him to coordinate and lead a unified Muslim response to the programme of the Indian National Congress that advocated national independence. The Aga Khan was unapologetic about his loyalty to the British King-Emperor and campaigned against Muslim support for Britain's enemies, such as the Ottoman Empire, during the First World War. His role was subsequently assumed by Mohammed Ali Jinnah, who was also culturally and ideologically close to the British rulers.

In due course, many statesmen in London came to believe that in view of the inevitability of India's freedom, the country might break up into several parts since many "native" states would not agree to accede to the Republic. Hyderabad, Jammu and Kashmir, Travancore and certain kingdoms in Gujarat, Rajasthan, Central India and the North East (Tripura and Manipur) were regarded as possible future independent nations over which British influence would remain strong because of historic, economic and cultural factors. At the very least, it was likely that, given its bewildering diversity, independent India would become a federation with a weak central government.

Generally US policies under Roosevelt were at variance with those of their British allies, as Washington was opposed to perpetuation of European colonial empires and had no interest in the division of India or preservation of its monarchic states, preferring instead to see India and other formerly colonized lands emerge as pro-Western democracies loosely patterned on the Anglo-Saxon model.

However, the American attitude seems to have changed on President Truman's watch when, faced with the peril of Communism worldwide and the rise of the USSR as a global power, the US decided to support a "continuation of the British empire by other means" whenever possible as a strategy to fight the Cold War. The perceived leftward shift in India under Pandit Nehru's leadership and its championship of "Non Alignment" (seen as an anti-Atlantic ideology) induced Washington to form strong strategic and economic bonds with Pakistan as the stalwart of anti-Soviet-ism in the region and a reliable ally in the new Great Game.

Pakistan was firmly entrenched in the western camp by the early fifties as a member of the Baghdad Pact or CENTO, and SEATO, and could benefit from virtual assurances of Western support in its chronic dispute with India over Kashmir. That promoted its transformation into a more or less permanent conservative military dictatorship, like several other US client states in South East Asia, Africa, the Near East and Latin America, not to omit certain European nations like Spain and Greece, which also enjoyed "special relationships" with Washington.

Britain thus successfully co-opted the US into supporting its own traditional policies and interests in its historic overseas empire.

The attitude of the US in particular and the NATO powers in general to Pakistan's offensive infrastructure could thus only be described as benign, when not decidedly favourable. The Iranian revolution of 1979 and the Soviet invasion of Afghanistan immensely increased Pakistan's importance in the eyes of the Anglo-Americans on the Middle Eastern strategic map. The Pentagon and the CIA undertook to boost and retool at great costs the Pakistani military-security complex, to turn it into a state-of-the-art war machine for subversive and guerilla warfare against the Red Army, at a time when India was seen as an ally of Moscow in the latter's advance towards the warm waters of the Persian Gulf. Earlier in the decade, China also became an objective US ally against USSR, just like Beijing's old friend Pakistan.

Therefore, America had no qualms if Pakistan's improved offensive abilities were to be used sooner or later against its big neighbour to the East. It has remained a desideratum of Anglo-American or Atlantic policy to keep India and Pakistan in a position to neutralize each other mutually, under a local version of the old balance-of-terror system between the USA and the USSR. This kept India locked in its region and held in check its economic and strategic growth until such time when the USA decided it could facilitate a détente between the two inimical neighbours.

In keeping with that logic, Washington firmly turned a blind eye to Pakistan's long standing nuclear military armament and proliferation programme, knowing full well that Islamabad had set up a semi-private espionage, procurement and construction network under A.Q. Khan, also ensuring plausible deniability with the complicity of the US Intelligence community.

In April 1999, General Pervez Musharraf, then chief of staff, already known for his closeness to the American military leadership, set up the National Command Authority (NCA) to control the nuclear arsenal, shortly before staging a coup and taking over the government. In practice, direct authority over the atomic weapons belongs to the Director General of the NCA's Strategic Planning Division, a general. The army chief of staff is the real ultimate controller of the strike force and that, according to several hints from the US Administration, provides the Pentagon with effective vetting power over the nukes, which is the only reason why Islamabad was allowed to build up and keep an atomic stockpile, despite being an Islamic nation.

Ironically, according to D. Frantz and C. Collins' "The Man from Pakistan," various scientists working within the A.Q. Khan network collaborated with Osama bin Laden and his Al Qaida colleagues as late as August 2001 when they went to meet with him in Kandahar, a visit obviously approved by the Pakistani military command (then headed by Musharraf). This could not have escaped detection by US Intelligence which was present throughout the area, but seemingly did nothing to stop those contacts though Osama bin Laden was already accused of ordering various major terrorist attacks against American interests.

Given the inability of the US to prevent India from acquiring the know-how to make nuclear weapons, despite the alleged assassination of  Dr. Homi Bhabha, father of India's atomic programme, by the CIA in 1966, according to the confession provided to veteran journalist Gregory Douglas in 1997 by CIA agent  Robert T. Crowley  (in Truthseeker, available at, 11 July 2008), the White House and Pentagon saw advantage in letting Pakistan go nuclear too in order to checkmate India and keep a minimal balance of force on the sub-continent.

Just as it condoned Pakistan's acquisition of an Islamic Bomb, the USA also supported the development of the Islamic Republic's paramilitary and clandestine "Jihadi" outfits, drafted to serve the radical "Takfiri' or "Tablighi" ideology of Sunni conquest. That affiliation enjoyed the sympathy of the US military and political establishment because of its ability to train fanatical warriors and build visceral hatred against Communism and also against Shiite Islam, seen as the major threat to Anglo-Saxon imperial interests in the Middle East from 1979, when Ayatollah Khomeini's revolution took over Iran.

The Takfiri or Salafist creed was also theologically kindred with Wahabi Islam practiced in Saudi Arabia, the Anglo-Americans' main protégé in the Gulf region and the world's largest oil producer. The marriage between the US foreign policy establishment and the Jihadi leadership was thus consummated, and though there may be a separation, divorce papers have not yet been filed.

t is fascinating to note that US and Pakistani policies have in some ways been on parallel tracks as both countries have been taken over more or less overtly by the military-industrial complex and the Intelligence community which exercise extra-constitutional, unchecked power under the excuse of protecting national security, while siphoning off an ever-growing share of the national budget and generating massive unreported and un-audited revenues. The ISI and its CIA godfather function in similar ways and the post-9/11 reforms carried out at Vice-President Dick Cheney's initiative according to the parameters of Rand Corporation's ANSER report, made the two governments strangely convergent.

Afghan war and the takeover of Pakistan

The decision to invade and occupy Afghanistan almost immediately following the 11 September 2001 terrorist attacks denoted Washington's  strategic resolve to position its forces across Central Asia, to exercise predominant influence in the resource-rich region in Russia's and China's backyard, while encircling Iran and locking Pakistan in a tighter embrace. Hence the Bush administration did not pursue its avowed commitment to catch or kill Osama bin Laden (not charged in the US to this day for his alleged role in 9/11) and his major associates, preferring to use them bogeymen to justify continued NATO military activities in the region in the face of European hesitations and Russian and Chinese reservations.
American initiatives to increase their clout in Pakistan have generally brought about or closely followed military coups, as armed forces are the preferred counterparts for the White House in Islamabad due to the latter's heavy dependence on US financial and technological support. General Pervez Musharraf was hence Washington's leader of choice in the troublous period between 1999 and 2008; he enjoyed American support to the end, despite growing domestic dissatisfaction with his ambiguous policy of mostly fulfilling the American agenda while trying to placate the Islamists at home.

The ineffective civilian government of President Asif Ali Zardari reflects the customary tendency of the aristocratic land-owning elite that is mostly concerned about its own welfare and has no particular animus towards India, contrary to the army-ISI leadership which has internalized a deep aversion towards its Hindu majority neighbour and is largely committed to the Jihadi policy of attrition and eventual conquest. The least that can be said is that the US Government has done very little to try to change the Pakistani generals' ideology, which keeps them in thrall of the US whose support is critical to their grandiose military designs.
However, since the mid-nineties, successive American administrations have decided that India is indeed capable of becoming a superpower and that it is critical to enroll it's rapidly rising capabilities and ambitions in the service of US interests. A strategy had to be designed to bring India close, while preserving and even enhancing the special relationship with Pakistan and its ominous military machine. The Bush administration devised the Indo-US nuclear agreement as the cornerstone of a strategic partnership between Washington and New Delhi, but at the same time keeps lavishly funding the Pakistani defense and intelligence apparatus and tolerating it's well-known institutional links with Jehadi terrorist outfits and the Afghan Taliban which Islamabad built up in the mid-nineties with connivance of the CIA.

The conundrum extends to the Pakistani underworld which US clandestine agencies have used extensively in support of their military and covert operations on Pakistani soil and in Afghanistan, to protect their supply lines and raise funds from narcotics, arms and other traffic in the sub-continent and in Central Asia.

One of the linchpins of the Mafia in the sub-continent is Indian fugitive Dawood Ibrahim, who has lived for years between Karachi and Dubai reportedly under ISI (and  possibly CIA) protection. Though Ibrahim is known to provide support to Jihadi outfits involved in terrorism, the Americans have done nothing to stop or restrict his activities, though they enjoy unrivalled abilities for carrying out abductions or "wet operations" on Pakistani soil, where a number of CIA, FBI and special forces cells operate. Jeremy Hammond, editor of Foreign Policy Journal, pointed out in an article dated 22 December 2008, that "(Dawood Ibrahim's) capture and handover to India might prove inconvenient for either the ISI or the CIA or both". The only captured Mumbai terrorist, Ajmal Amir Kasab, "characterized Ibrahim as the mastermind of those attacks according to the first accounts."

Yet subsequently, noted Hammond: "Ibrahim is being downplayed: first the terrorists set out from Karachi on the MV Alpha, a ship belonging to Ibrahim." Hammond quotes Yoichi Shimatsu, a former Editor of Japan Times, who reported that Ibrahim had worked with the US to finance the Afghan Mujahedeen in the eighties, mostly through international drug trafficking. The CIA thus has a lot riding on this man and does not want him interrogated by Indian authorities for fear of likely damaging revelations. Significantly, as of 2 January 2009, the White House indicated US preference for the Mumbai accused to be tried in Pakistan, probably behind closed doors.

Israel is also being used by America as a parallel channel, or Trojan horse, to penetrate and influence Indian policy in Intelligence, defence and diplomacy. The Israelis have built over the years an extensive network of contacts in Indian political, business and military sectors, and often enjoy better access to decision-making circles than Americans, as they arouse less misgiving and attract substantial sympathy in the Hindu conservative nationalist milieu.

Israeli interests are not always fully congruent with America's, but overall there is complete solidarity and coordination between the two on important matters of foreign policy and geo-strategy. Americans usually defer to Israel on issues deemed critical by the latter, because of the overwhelming influence of pro-Zionist lobbies in the US. Israel is not suspected in India of playing the double game that USA has become noted for between the largest South Asian States, though indeed the covert relations between Tel Aviv and Islamabad are not bad either. Thus Israel can operate with the Indian Establishment without generating the concerns associated with the USA or Britain, which is also an active and deeply embedded force in Indian foreign and domestic polity.

The USA, UK and Israel all have much to gain from the climate of chronic instability and tension between India and Pakistan as it gives them exceptional opportunities to play mediatory and advisory roles with both sides (at least as far as Washington and London are concerned). Meanwhile, Israel is able to multiply its highly profitable defence-related exports and joint ventures, while supplying India with selected valuable Intelligence, gaining in the process inside knowledge of its military and scientific infrastructure.

The interests pursued by Israel and its Western allies are thus at some level not always contradictory with the agenda pursued by Pakistani Jihadists for bleeding and destabilizing India, which dovetails with the wider Takfiri Middle Eastern project to expel US forces from the region, defeat Israel, overthrow "corrupt puppet regimes" supported by the West, crush Iran's and Iraq's Shiite power, and proclaim a new universal Caliphate.

This project, however unrealistic it appears, is finding unexpected support and gaining credibility in the current context when the US and its allies are bruised and in full retreat in Iraq and Afghanistan, while Pakistan is on the brink of civil war and disintegration, and Israel is finding it increasingly difficult to prevail over local resistance movements of Hezbollah and Hamas. At the same time, the global economic crisis is providing perverse confirmation of predictions made in the apocryphal Protocols of Zion – a bestseller in the Muslim world and a textbook used by Jihadis to make their case against the "Jews and Crusaders".

Not only the decried Protocols, but a succession of famous Westerners, from Alexander Hamilton to Henry Ford, Charles Lindbergh and Adolf Hitler, all issued dire warnings about the eventual takeover of the world's wealth by financiers who would bankrupt the great majority of people and concentrate all power in their hands by acquiring a monopoly on credit and the emission of virtual money. The current situation is thus bringing plenty of grist to the mills of radical Islamic ideologues as a result of an extraordinary coincidence which they use as proof of their doctrine.

Obviously, deriving such conclusions from the present state of affairs might lead to being suspected of anti-Semitism, but even when we disagree with them, we must recognize that those are the charges made by the Jihadis who, like many Far-Right activists in the USA and Europe, connect the creation of the privately-held Federal Reserve in the US in 1913 (thoroughly researched by Eustace Mullins in his classic "Secrets of the Federal Reserve", 1952) to the birth of the virtual State of Israel as a result of the Balfour Declaration and to  the later invasions of Afghanistan and Iraq, which they see as steps towards the ultimate conquest and subjection of the world by imperial financial interests.

To that conspiracy for global control, which they describe as Godless and satanic, the Takfiris proffer their own alternative of Jihad for restoration of the Divine rule of Islam on Earth. That is a powerful Apocalyptic and Messianic vision which can generate fanatical support among the Muslim masses and even among many non-Muslim victims of the current neo-colonial system. It is hence little wonder that the Jihadi movement can recruit so many fighters and muster a seemingly endless supply of candidates to suicide by weaving the Palestinian liberation struggle with the wider goals of evicting foreigners from the lands of Islam and reclaiming India as a part of the Caliphate.

The Mumbai terror attacks of November 2008 may then be placed in this context as a direct response from the ISI-Jihadi nexus to Pakistani President Zardari's declared resolve to curb the army's role in the polity and bring the rogue ISI under his direct control while dramatically improving relations with India which, he stated on record, was not Pakistan's enemy. An Indo-Pakistani agreement for long-term friendship and cooperation was seen as a death warrant by the radical armed forces leadership and their fundamentalist protégés whose power greatly rests on a continuing, if latent, state of hostility with India.

It must be also seen that the preservation of the military's supremacy in Pakistan ensures continued US-British influence in the country, and Anglo-American ability to play power broker between the two neighbours.

It is hence difficult to escape the conclusion that faced with the desire to maintain their preponderance, the need to protect their unsavoury agents such as Dawood Ibrahim and his underworld networks, and the priority to coax India into junior partner role, the US military-security leadership may have had no desire to prevent the ISI-nurtured attacks on Mumbai on which it had specific advance information that seems to have been passed on, in all or part, to India's RAW, according to a report on (29 November 2008). Yet it is troubling that Michel Chossudovsky has pointed out in Global Research, "The ISI does not act (and probably cannot, given the extensive involvement of the Americans in Pakistani internal affairs) without the consent of its US Intelligence counterpart." One can thus wonder about how much the CIA knew and how much it told the Indian side at the time.

Damage control is now underway and involves US Intelligence agencies pointing to a number of mid-level Lashkar-e-Taiba operatives and their ISI contacts, including Zaki ur Rahman Lakhwi and Zarar Shah, and even fingering some retired directors of the dreaded ISI, such as Gen. Hamid Gul, known for his undiplomatic statements about US responsibility for international terrorism. Are they to serve as scapegoats to protect the ultimate instigators of the outrage from exposure and prosecution?

US role during the crisis

As soon as the crisis began in Mumbai, western powers became closely involved in view of the large number of foreigners present on some locations where attacks took place, amidst universal and almost non-stop media coverage. The USA (which acknowledged it was listening in "live" to telephone communications between Mumbai commandos and their supervisors in Pakistan, specifically Zarar Shah who appears to have been the ISI handler for the LeT team), the major European countries and Israel in particular, began consultations with Indian authorities at the highest political and military levels.

The Kremlin also keenly followed the situation and regularly exchanged information with New Delhi. It was reported that Prime Minister Vladimir Putin, when he spoke on telephone to Prime Minister Manmohan Singh at the peak of the drama on the 28th, warned him against the risk of escalation as India was actively considering launching air strikes on LeT facilities in Pakistan. Retaliation from Islamabad would have been certain. It seems Putin indicated that this was the very trap laid for India as certain entities abroad wished to trigger a war between the two neighbours.

The subsequent "mystery" call that Indian Foreign Minister Pranab Mukherjee was alleged to have made to the Pakistani President to voice threats of war seems to have been faked, but the author of the call must have had access to restricted communication technology in order to engineer such a sophisticated simulation, and that seems to betray the hand of an intelligence agency, whether ISI or another. Whereas US agencies have an inside track to Pakistan's telecommunication network, the Indian military communications system uses Israeli technology. An even bigger tragedy was averted by a hairsbreadth.

The position of the US, as expected given the background and context outlined earlier, was ambiguous. On one hand, the White House through Secretary of State Condoleezza Rice and President Bush in person intervened to dissuade India from escalating the situation by taking military action against Pakistan; but Senator (and Republican Presidential candidate) John McCain, who seems to have acted as an officious envoy for his Government to both India and Pakistan, expressed the conviction in Islamabad that India was preparing an attack on its neighbour and stated that he did not think it was avoidable.
Such a declaration was described by some as a way of forcing India's hand by challenging it to make good on its alleged threats. In fact, following seasoned Indian diplomat M.K. Bhadrakumar (The Hindu, 25 December 2008), one may wonder if the Republican leadership (over and above the Administration itself) did not relish the prospect of an Indo-Pakistani war which might have dealt a severe lesson to a recalcitrant Islamabad and directly involved India in the "war on terror" and Afghan conflict on the side of America. It has been obvious for years that USA would like New Delhi to pull some Middle Eastern chestnuts out of the fire on its behalf and share in the war burden in response to the "Indian 9/11" as US decision makers were quick to label the Mumbai terrorist attacks.

Bhadrakumar wrote: "The US design confronts India with a threefold challenge: it insists that India is a protagonist in the US-led war on terror; Indo-Pakistan relationship is a crucial factor of regional security and stability which directly affects the US interests and therefore necessitates an institutional American mediatory role and, it asserts a US obligation to be involved in "nation-building" in South Asia on a long-term footing".

By a sleight of hand similar to what the Bush administration did in the wake of 11 September 2001 tragedy, the White House has been clearly trying to redirect Indian animus against the Pakistani leadership towards its own Iranian "bete noire". The US did clearly not try to influence the openly pro-American and US-trained chief of the armed forces staff (and ex-Director General of the ISI) Gen. Ashfaq Kiyani when the latter stepped in to prevent current ISI chief Gen. Ahmed Shuja Pasha from going to India in spite of President Zardari's instructions to that effect. Once more, a powerless civilian President, interested in defusing the crisis, was overruled by a military strongman who has a direct line to the Pentagon and CIA and depends on them for funding his forces.

The same calculation clearly obtains in Israel, which has also been building a partnership with India, with a view to use it in the service of its own strategic objectives. As Harsh V. Pant puts in a Jerusalem Post article dated 31 December 2008: "India and Israel not only exchange email Intelligence information on Islamist terrorist groups, but Israel is also helping India to fight terrorism in Kashmir by providing important logistical support…It is a distinct possibility that the level of Intelligence cooperation may be even more extensive that that between India and the US, with the two nations deciding to share Intelligence on a regular basis in their efforts to fight terrorism jointly."

He noted: "there remain differences of perception on the issue of terrorism. While for India Pakistan is the epicenter of terrorism, Israel reserves that status for Iran…Israel might be sympathetic to India's concerns regarding Pakistan, but it is not ready to make new enemies" (thereby confirming that Pakistan is indeed on equable terms with the Jewish state).

To make the message clearer, Pant recalls "Israel's long experience in training, equipping and operating elite undercover units deployed in Palestinian towns and villages to gather Intelligence, spot targets and engage gunmen is useful for the Indian security forces," hence building a case for a long-term Israeli military and espionage presence in India's sensitive border zones, which already seems to have taken root through the implantation of a number of Israeli covert agents on the coastlines (Mumbai, Goa, Kerala), in Kashmiri Ladakh, Himachal Pradesh,  the North East and Nepal.

Pant concludes by echoing the Israeli and American official message that "the recent terror attacks should force the international community into recognizing the costs of not doing anything to prevent irresponsible nations such as Iran or Pakistan from acquiring nuclear weapons". Presto! the trick is done: Iran which has had historically unfriendly relations with Pakistan as a Shiite state and regional competitor, is promptly lumped with its old enemy as if Tehran had a hand in the Mumbai attacks, thereby inviting India to sever traditional links with Iran. In the same breath, the hypothetical military nuclear ambition of Iran is bracketed with Pakistan's atomic strike force, acquired with the tacit support of USA and NATO (and at least the tolerance of Israel, according to some Indian analysts) and is most probably under the control of USA, as pointed out earlier.

There are reasons to believe Israel would have liked an Indian assault on Pakistan to coincide or shortly precede its own attack on the Gaza strip started in the final days of December 2008, thus providing a picture of bi- or trilateral coordination against Islamic terrorism and drawing a convenient parallel between Hamas and Lashkar-e-Taiba. On 1 January 2009, using the fact that some Jews had been murdered in Mumbai, the Tel Aviv Government placed thirty five Islamic organizations active in Pakistan, Afghanistan and Bangladesh on its terrorist list, injecting itself as a party in the sub-continent's inner conflicts, while pressing India and particularly the BJP opposition to take sides with the Jewish State in its operations to crush the democratically elected Hamas government of Gaza.

The American-led "war on terror," launched partly as a response to an Israeli demand, is now spilling over into India, which is being urged to declare its allegiance and close ranks with its US strategic partner to help the latter dominate the resource-rich Middle Eastern and Central Asian regions. Pakistan remains a more or less reluctant pawn (saddled with a willing army) in this high-stakes game. Terrorism is an instrument of choice used by various players, with Israel playing "good cop" to America's bullying policeman.

India risks falling into widespread civil turmoil in the wake of the global financial and economic crisis if it becomes embroiled in the international struggle for control of oil and gas reserves to the West, between the Anglo-Saxon empire, the Jihadi resistance, Russia and China. New Delhi must resist calls to join a "global league of democracies" to fight other people's enemies in the US-led inter-continental crusade, and concentrate instead on pacifying the situation and building economic and strategic links with its South Asian neighbours. Recent elections in Bangladesh and Jammu & Kashmir may result in some progress towards this goal.

The other priority is to establish a joint security architecture with Russia, China, Iran and Central Asian States all the way to Turkey, perhaps by joining the SCO and acting together to push overseas military actors out of the region that they are turning into an ever-expanding battleground, in the image of Iraq and Afghanistan. To this end, cooperation of the European Union can be secured as the latter would prefer an independent role in Asia without following the US, which has generally taken Washington's confederates in the wrong direction.

Internecine struggles within greater India allowed Central Asian and later European colonial powers to gradually take over the sub-continent. Those who forget the lessons of history are doomed to relive them.

The author is Convener, Editorial Board, World Affairs Journal

David Miliband Expands on Criticism of "War on Terror" Phrase: In Speech In Mumbai, Foreign Secretary Applies Theme To India-Pakistan Tensions - By Julian Borger (LATEST UPDATE - 18/1/09)

15 January  2009, The Guardian UK

MUMBAI - The foreign secretary, David Miliband, today declared that the use of the phrase "war on terror" as a western rallying cry since the September 11 attacks had been a mistake that may have caused "more harm than good".
In an article in today's Guardian, five days before the Bush administration leaves the White House, Miliband delivered a comprehensive critique of its defining mission, saying that the war on terror was misconceived and that the west cannot "kill its way" out of the threats it faces.

This morning in Mumbai he repeated that message in a speech delivered in the Taj Mahal hotel, one of the targets of the attacks in November that left more than 170 people dead.

He applied his theme to regional tensions, urging further restraint from India in the wake of the attacks, which originated in Pakistan, according to British and Indian intelligence.

Miliband also defended himself and the British government from the accusation of political cowardice for not publicly airing deep policy differences with the Bush administration years ago.

Edward Davey, the Liberal Democrats' foreign affairs spokesman, said today: "If the British foreign secretary had said this to President Bush many months, if not years ago, then it would have deserved some credit. Mimicking President-elect Obama's lines days before his inauguration does not show leadership."

"Judge us by our actions as well as our words," Miliband said, claiming that British counter-terrorism strategy had been "consistent" and not guided by the "war on terror" mentality.

British officials said that the timing of the speech was dictated more by the Mumbai attacks than by George Bush's departure next week, but added that the fact that a transition in Washington was under way meant that the foreign secretary had been able to use stronger language than would have been the case while the Bush administration still held power in Washington.

British officials quietly stopped using the phrase "war on terror" in 2006, but this is the first time it has been comprehensively discarded, in the most outspoken remarks on US counter-terrorism strategy to date by a British minister.

Miliband described the "war on terror" approach as "misleading and mistaken".

"Historians will judge whether it has done more harm than good," he said, adding that, in his opinion, the whole strategy had been dangerously counterproductive, helping otherwise disparate groups find common cause against the west.

"The more we lump terrorist groups together and draw the battle lines as a simple binary struggle between moderates and extremists or good and evil, the more we play into the hands of those seeking to unify groups with little in common, and the more we magnify the sense of threat," Miliband argued, in a clear reference to the signature rhetoric of the Bush era. "We should expose their claim to a compelling and overarching explanation and narrative as the lie that it is."

The foreign secretary pointed to the statement on Gaza issued earlier this week by Osama bin Laden, which he portrayed as the al-Qaida leader's attempt to capitalise on the crisis, although he had not made much of the Palestinian issue when he began his terrorist career in the 1990s.

"Terrorism is a deadly tactic, not an institution or an ideology," Miliband said.

He argued that "the war on terror implied a belief that the correct response to the terrorist threat was primarily a military one: to track down and kill a hardcore of extremists". He quoted an American commander, General David Petraeus, who said that the western coalition in Iraq "could not kill its way out of the problems of insurgency and civil strife".

Miliband said that western solidarity "should not be based on who we are against but instead on the idea of who we are and the values we share".

To stay true to those values, "democracies must respond to terrorism by championing the rule of law, not subordinating it."

Miliband linked the argument with US detention policy. "That is surely the lesson of Guantánamo and it is why we welcome President-elect Obama's clear commitment to close it," he said, referring to the US detention camp in Cuba.

After the al-Qaida attacks of 11 September 2001, the Bush administration presented the threat of a global terrorist onslaught as justification for pre-emptive military action, long-term detention without trial and severe interrogation techniques widely denounced by human rights groups as torture.

A senior Bush administration official admitted this week for the first time that a Guantánamo detainee was tortured by the US military.

The incoming Obama administration is expected to avoid using the term "war on terror" and adopt a more multilateral and less military-focused approach to global threats.

British officials are signalling, in increasingly public ways, that they cannot wait for the new team to take office next Tuesday and wave goodbye to an eight-year administration with which they felt increasingly ill at ease, particularly following the departure of Tony Blair as prime minister in 2007.

Miliband said last night that the incoming administration's "instinctive multilateralism" and proposed use of "smart power" meshed with his arguments. "The new administration has a set of values that fit very well with the values and priorities I am talking about," he told the Guardian.

UK-US relations have been particular sour in recent days after Washington reneged on a pledge to back a largely British-drafted UN resolution calling for a ceasefire in Gaza. The White House overruled US diplomats after a demand from the Israeli prime minister, Ehud Olmert, reports have claimed.

Terrorism on the New York Times Op-Ed Page - Friedman Supports Civilian Suffering As Education - By Fairness & Accuracy In Reporting (FAIR) (LATEST UPDATE - 18/1/09)

WASHINGTON - New York Times foreign affairs columnist Thomas Friedman endorsed terrorism in a January 14 column  defending Israel's attacks on the Gaza Strip.

To answer his own question about Israel's plan--"What is the goal?"--Friedman referred back to the 2006 attacks on Lebanon, which killed about 1,000 Lebanese civilians. To Friedman, this was the "education" of the Lebanese militant group Hezbollah:

Israel's counterstrategy was to use its air force to pummel Hezbollah and, while not directly targeting the Lebanese civilians with whom Hezbollah was intertwined, to inflict substantial property damage and collateral casualties on Lebanon at large. It was not pretty, but it was logical. Israel basically said that when dealing with a non-state actor, Hezbollah, nested among civilians, the only long-term source of deterrence was to exact enough pain on the civilians--the families and employers of the militants--to restrain Hezbollah in the future.

The "logical" plan, as Friedman explained it, is to punish civilians in the hopes that this will force the political change you prefer. This is precisely the "logic" of terrorists.

According to Friedman, this "education" worked on Hezbollah, and he hopes it will work in the current conflict: "In Gaza, I still can't tell if Israel is trying to eradicate Hamas or trying to 'educate' Hamas, by inflicting a heavy death toll on Hamas militants and heavy pain on the Gaza population." Friedman's preference is for the terrorism "education."

This pro-terrorism argument has been made before by Friedman, who advocated the same sort of terror against Serbs, writing (4/6/99 ) that "people tend to change their minds and adjust their goals as they see the price they are paying mount. Twelve days of surgical bombing was never going to turn Serbia around. Let's see what 12 weeks of less than surgical bombing does. Give war a chance."

The New York Times has developed certain rules and guidelines for its opinion columnists over the years--they are not permitted to endorse political candidates, and they are generally expected to refrain from criticizing one another by name in print. Other policies have been made clear in the past--as when liberal columnist Paul Krugman was instructed not to refer to George W. Bush as "lying" during the 2000 campaign (Washington Post, 1/22/03 ).

Does the Times have a similar standard for columnists who endorse inflicting suffering on civilians? Or does the acceptability of advocating terrorism depend on who is being terrorized?

ACTION: Ask the Times if Thomas Friedman's column advocating terrorism against civilians in Gaza meets the paper's standards for its opinion columns.

CONTACT: New York Times
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FAIR , the national media watch group, has been offering well-documented criticism of media bias and censorship since 1986. We work to invigorate the First Amendment by advocating for greater diversity in the press and by scrutinizing media practices that marginalize public interest, minority and dissenting viewpoints.
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Filling the Holes in Krugman's Analysis - By Robert P. Murphy (LATEST UPDATE - 18/1/09)

15 January 2009, Mises Institute

Although many free-market economists were aghast that Paul Krugman won the Nobel (Memorial) Prize in Economics, I have come to realize that he is every bit as brilliant as that august award indicates. For some time now, Krugman has said we are in "depression economics" mode, where the normal rules of scarcity and tradeoffs don't apply. In this universe, it makes sense to have one group of workers dig holes, and another group fill them back up. Sure, when all is said and done, there is nothing tangible to show for this effort, but at least it "creates jobs."

So what I've come to realize is that in these last few months Krugman has implemented his own private-sector stimulus plan. He has been working furiously, cranking out fallacious articles and blog posts, which then provide work for people like Bill Anderson and me, as well as thousands of other bloggers who still can't understand why it's bad for families to save more. A clever chap, this Dr. Krugman, no?

Today my make-work will fill in two holes in a recent Krugman blog post. The first flaw is his belief that output generates employment (rather than vice versa), and the second is his belief that government spending is a measure of real output.
Krugman Thinking Backwards

In his post, Krugman goes through some "stimulus arithmetic" to see how much spending the incoming Obama administration needs to avert a serious recession:

The starting point for this discussion is Okun's Law, the relationship between changes in real GDP and changes in the unemployment rate. Estimates of the Okun's Law coefficient range from 2 to 3. I'll use 2, which is an optimistic estimate for current purposes: it says that you have to raise real GDP by 2 percent from what it would otherwise have been to reduce the unemployment rate 1 percentage point from what it would otherwise have been. Since GDP is roughly $15 trillion, this means that you have to raise GDP by $300 billion per year to reduce unemployment by 1 percentage point.
We already see the problem. Regardless of whatever correlations Okun may have found, it is quite obvious that to increase real output — to crank out more units of goods and services — you must first get more people working to create the products. In other words, higher real GDP is associated with lower unemployment, because more people are working and thus producing more output.

But because Krugman ignores supply and insists on viewing everything through the prism of aggregate demand, he thinks that government spending gives businesses the incentive to hire workers. That is how he manages to reverse cause and effect and think that changes in output ("real GDP") drive changes in unemployment. By making sheer "spending" the primary consideration — rather than focusing on the important economic problem of channeling scarce resources into those lines most desired by consumers — Krugman worries about "multipliers" and how tax cuts aren't nearly as potent in boosting GDP as government spending:

Now, what we're hearing about the Obama plan is that it calls for $775 billion over two years, with $300 billion in tax cuts and the rest in spending. Call that $150 billion per year in tax cuts, $240 billion each year in spending.

How much do tax cuts and spending raise GDP? The widely cited estimates of Mark Zandi of indicate a multiplier of around 1.5 for spending, with widely varying estimates for tax cuts. Payroll tax cuts, which make up about half the Obama proposal, are pretty good, with a multiplier of 1.29; business tax cuts, which make up the rest, are much less effective.…

Let's be generous and assume that the overall multiplier on tax cuts is 1. Then the per-year effect of the plan on GDP is 150 x 1 + 240 x 1.5 = $510 billion. Since it takes $300 billion to reduce the unemployment rate by 1 percentage point, this is shaving 1.7 points off what unemployment would otherwise have been.

I confess that I have not delved into this "multiplier" literature, but I am very skeptical that the models being estimated have adequately dealt with the causality problem mentioned above.

In any event, we don't need to rely on sophisticated econometric critiques. Suppose the government borrows an extra $750 billion and spends it on "infrastructure." Assume for the sake of argument that the loss of this money from private capital markets, as well as households' increased savings (because they fear higher future tax burdens), does not totally cancel the increased government spending. In other words, suppose that total "spending" really does go up because of the government's move. Unemployment really does go down.

Even so, does this mean the plan was a success? Hardly. This is because aggregate measures of gross output are bogus when they include government expenditures. Even though purists can (rightfully) point out all sorts of methodological problems, it sort of makes sense to add up how much a family spends on rent, dining out, clothing, and other items, in order to measure the family's total "consumption" over the year.

The justification for adding up expenditures to get a gauge of total production is that a household will only spend its limited dollars on things that are more valuable than the dollar bills needed to purchase the items. So if a man spends $10,000 on a car, it sort of makes sense (though not really) to say he is consuming ten times as much as someone who buys a $1,000 computer. Correspondingly, we can justifiably claim that the car manufacturer and computer company together must have produced $11,000 worth of goods.

Government Expenditures Don't Measure Real Output

But what happens when the government spends $10 million on refurbishing an airport? Does that mean the community in question is now that much richer, as if a thousand new cars had appeared from heaven? Of course not. Politicians and bureaucrats don't have the incentive to economize on their spending, to make sure every dollar counts. On the contrary, President-elect Obama has specifically said that state and local governments need to "use it or lose it" when it comes to possible stimulus aid. They are going to throw those billions at anything that moves.

In the final analysis, even if a government "stimulus" plan managed to bring down unemployment, it wouldn't represent a true economic recovery. To the extent that the newly hired laborers — such as the construction workers fixing up the airports — seem genuinely richer, it would only be at the expense of taxpayers, whose share of the federal debt had increased.

Although a bit crude, it may clarify things to imagine three groups in the economy:

1.    the taxpayers

2.    the unemployed

3.    the capitalists

What Krugman wants to do is have the capitalists give (say) $750 billion of their wealth right now to the unemployed. The unemployed are definitely fond of this plan. But why would the capitalists do it? It seems as if they're out $750 billion, doesn't it?

Ah, the capitalists go along because the government promises that over the coming years, it will force the taxpayers to fork over the equivalent of (say) $800 billion of their wealth to the capitalists.[1] Say what you will about this game, but it has not made all three groups richer. Notice that the capitalists and the unemployed can refuse to go along with the stimulus plan. But the taxpayers have no choice; armed men ultimately throw them in jail if they refuse to play along.

In conclusion, Paul Krugman reverses cause and effect in his analysis, and he also fails to note the difference between private and government expenditures. But hey, at least he provided me with an hour's worth of employment.
Robert Murphy, an adjunct scholar of the Mises Institute and a faculty member of the Mises University, runs the blog Free

Advice and is the author of The Politically Incorrect Guide to Capitalism, the Study Guide to Man, Economy, and State with Power and Market, and the Human Action Study Guide. Send him mail. See his latest article and his article archives. You can subscribe to future Bob Murphy articles via this RSS feed. Comment on the blog.

[1] Note that this $800 billion figure is in present discounted terms. It is higher than the $750 billion that the capitalists lend out for two reasons: first, I assume that the capitalists reap a net subsidy from the existence of the US Treasury; second, the government itself sucks up resources in its own operations to effect the transfers.

Money Games - By Tom (LATEST UPDATE - 18/1/08)

Dear Friends and Family:
For some years now, I have been saying that the "money changers" and "banksters" in London and New York are setting us up.  They playing a money game in which all of the marbles are on the table.  It seems that this game is now in the bottom of the Ninth inning. Tonight I listened to the Reverend Lindsey Williams on American Voice Radio, hosted by Ms. Gianni Hayes.  Some people will recognize his name, some won't.  I am not going to go into a lengthy bio.  You will have to do that research yourself, assuming you even have an interest.  I will only mention that he is the man who, because of his contacts in the oil industry, correctly predicted that the world price for oil would fall from roughly $140.00 per barrel to less than $50.00 per barrel.    He claims to be well connected to what he calls "the power elite," and I firmly believe that he is telling the truth.  But, what he calls the power elite is just one level of corporate America.  He interacted with the high paid servants of the oil industry.  That would be the executives of ARCO and other big oil companies when he served as chaplain for the Alaska pipeline.  He knows and admits that the "real power" is much further up the food chain.  Bottom line?  Personally, as far as I am concerned,  Reverend Williams character and credibility are unimpeachable.  I think it is very important to pay attention to what he has to say.

After two hours of interview I had four legal pages of notes.   I am going to relate as best I can the highlights of that interview.  Some of you will get duplications because some of you are on more than one of my mailing lists.  Please understand.  I consider this matter to be extremely important!
This will be rough, since it will be stream of consciousness, right off of my note pad. But it is the message that is important and not the delivery.
1.   The reason why the "elite" dropped the world price of oil down below $50.00 a barrel was to wage economic warfare against the Arab/ OPEC countries.   "They" seek to bankrupt OPEC countries., especially the Iranians by cutting their revenues more than 75%.  (Do you think that is why Mr. Chavez is so belligerent towards the USA?)  Why would they do that?   Because Iran and the other OPEC states are getting too strong and too wealthy.   The Iranians are running an oil bourse, that effectively sidesteps the oil markets of New York and London.  (My note. Even worse they are trading oil not for dollars but for other currencies such as the Euro.  This is a direct threat to the western banking system.) According to Williams, this will not be allowed to continue.  This is about control!!  "What is happening today has  been planned for years and there are other more nefarious motives, which will be outlined below.
2.    The world reserve currency is the dollar and dollar denominated assets such as U.S.  Treasury Debt.  The Arabs have been recycling their petro dollars into U.S. Treasury debt for thirty five years.   (My comment. The Arabs/OPEC have been financing our national debt.  This is per agreement with the New York Banking establishment, and the U.S. Treasury. This arrangement has been part of the world order since the collapse of the Bretton Wood Agreement in 1971. This is now coming to an end.)  Now that they are being bankrupted (intentionally) the OPEC/Arab  states are no longer willing or able to buy Treasury Debt.  Hence,  the interest on the National Debt (which now exceeds 15 Trillion dollars?) is not being financed by foreign creditors.  China, India and other Asian states are doing the same thing.  "They are running from dollar denominated assets." Therefore, the Federal Reserve is now buying up all the Treasury Debt issued by the U.S. Treasury to cover the debt maintenance on the national debt.  (My Comment.  This is called monetization and it is highly inflationary.) (My note. To put this in perspective, the so-called bailout, which was really nothing but a heist without the guns, in the amount of 700 billion dollars, was actually in the amount of 8.5 trillion dollars.  All of this sum represents more debt "created" by the Federal Reserve which is then added to the National Debt. In addition to being  extremely inflationary, we will be paying interest ("tribute?") on this debt to the banksters in perpetuity.)     
3.    Gold and Oil generally move in tandem i.e., when oil goes up, so does gold.   This has not been the case since the oil market collapsed.  Gold has shown huge relative strength to the price of oil.   Because of intense world wide demand and speculation the relationship between gold and oil will no longer continue.  Gold will now move independently of oil.
4.    This year, 2009, the USA will face total financial collapse.  The dollar will also collapse in value, and it will take years for the U.S.A. to recover.
5.     OPEC has been cutting production steadily but they cannot influence the supply of oil enough to affect the world price.
6.      Ms. Hayes tried to get pastor Lindsey to point the finger at a particular ethnic group.   He would not do so, but  much to his credit he said that the Papacy and the Jesuits had nothing to do with what was going on.
7.     He said we have more than enough oil in the USA for our own needs, but the so-called "elite" as he calls them have no intention of EVER developing a major oil field in the continental U.S. or Alaska.  "They" will not allow this country to become energy independent, and they intend to  continue to keep us dependent on foreign oil sources.  (My note.  Dependency is another world for control.)   Later he mentioned the field just disclosed by the USGS which is located in Montana and N. Dakota. (This I believe is the Bakken Field.)  He said that it contains 320 billion barrels which is only 10% of the reserves.  This oil is worth about 15 trillion dollars.  (My note. In others words the 300 BB is the easy oil.  Its the oil that will flow out of the ground under its own pressure. That means total reserves of this one field using secondary and tertiary recovery techniques are probably  near  three trillion barrels. To put that in perspective the Saudis have reserves of about 260 Billion barrels.)  One of the senators from Montana has been screaming about this to Congress. He has been totally ignored by both Congress and the media.
8.     Regarding Obama.  "It did not matter who won the election."  The handlers around Obama are, for the most part, members of the Council on Foreign Relations.  "The elite." "The globalists."  They are essentially the same people who ran the Clinton administration and both Bush Administrations.   "There will be absolutely no change in either our domestic or foreign policy.  (My note.  The people who have looted this country will continue to loot this country.)  Regarding, economic policies "Obama" will be another Hoover."  In other words Obama will follow orders and  will take the fall for the economic calamity that is about to unfold.  (My note. Obama is another feckless, empty suit, who was selected, trained, groomed, packaged and sold to a gullible, naive and lazy American public.)
9.      Because of the tremendous cut in revenue to the Arab states (75%.) Dubai will become a "wasteland."  Already they have suspended all construction on major buildings in Dubai.  "There will be no change in the future. "
10.     All of the Arab states are sliding into a depression.  There budget planning is based upon $80.00 oil, so they are cutting there expenditures dramatically----especially infrastructure and public works.
11.     In addition to no longer buying our treasury debt, the Arab/OPEC states are now actively selling what treasury debt they hold.  This is also occurring throughout Asia, especially china.  This of course amounts to Trillions of dollars of Treasury debt etc. (My Note.  If the Fed is now magnetizing these debt instruments, which they must surely do since they are the buyer of last resort, this will also be highly inflationary.)  The Arabs/OPEC/Asia  are converting their dollars and dollar denominated assets to gold and other hard assets.
12.    The long term goal of "these people" is  to control and own everything.  "They intend to break us."  (My comment.   Geeeez.  I am confused.  Here, all along, I have been told by the media that our enemies are in the middle east.)
13.    Gasoline will remain  at approximately $1.50 per gallon for the next year to a year and half.   This is killing the State government gas tax revenues.   Total, state tax revenues are collapsing. Expect many states to go bankrupt----especially California.
14.     "They" intend to control the world price of oil  by dumping massive amounts of oil on the market to keep the price down.  They intend to use, among other sources, an oil field in Indonesia that "they" just brought "on line."  This field has reserves of more than 300 billion barrels.   He also mentioned another field in northern Russia.
15.      The ultimate objective is to "destroy the USA."   At the same time "they" seek to consolidate control over all assets of any significance.  "They" already own and control, the banks, and the media.  (My note. Williams did not say, but obviously, they also control the oil industry.)  "They" intend to gain control of the entire auto industry.  According to Williams "why not buy the auto industry? All they need to do is create the credit in a computer entry."  The takeover of the auto industry will happen when the time is right.  They also seek control of all the real estate that is worth owning.   According to pastor Williams, everyone is going to be paying rent by the time this thing is over.  Again he emphasized that "After years of collapse they intend to own everything."  
16.      Russia is a major world power.  Tensions will increase between the west and Russia.  Look for a return of the cold war. (My note. He did not say it but I got the feeling that the Russians are not anxious to become part of the New World Order.   Of course this oil price suppression is really hurting the Russians. They have had to devalue the Ruble seven times.)
17.     "There will be no attack on Iran.  There will no war with Iran."  "The American people will not stand for it."  They intend to accomplish their goal of destroying Iran by economic means.  "They will accomplish their goal of destroying Iran without the need of another 911 false flag operation."
18.     "Within six to nine months we will be into full blown hyper inflation."  "Buy everything you need right NOW!!!!"   "Prepare your dinner table NOW!  It is going to be 1933 all over again."
19.     "The nations of the world, especially China, are dumping U.S. currency and buying gold.
20.     "The reason why it is getting so hard for people to buy gold is that "they" do not want people to be able to protect themselves."
"They don't want people to have something that is REAL."  (My note.  It is hard to find any significant quantities of gold anywhere. Silver too!)
21.     "They fear people buying gold because it is something "they" can't control.  They feel that only they, the elite, should own gold.""They regard it as real money."
22.      There greatest fear is that the people will "wake up" from their slumber. "In fact they are terrified."  They do not intend to impose martial law.  They believe this would cause an armed revolution and that they do not want.  Hmmmm. ( I guess that is why the founders included the Second Amendment in the Constitution.)   "A revolution  means they could lose control."
23.      "The American people are terrified of Obama."  "The day after the election the gun shops in the USA were emptied by alarmed and frightened citizens."  "Wal Mart reported that the day after the election their sales of ammunition went up by 400%.  It was a record for ammunition sales in a twenty four hour period. (My note.  This continued for several weeks after the election.)  Evidently this behavior caused a great deal of alarm.
24.      "They" have given up on implementing the North American Union and are "going all the way."  The goal is total global control of everything.  Global Government. Global bank. Global Currency. Etc. (My note. This NWO globalism business has always included a global army, and a global religion.  I am sure we will be hearing  more about global religion from "Americas pastor,"  Rick Warren)
Pastor Williams was asked what can we do?  He made some suggestion which are not surprising.  They are:
1.  Get your spiritual house in order. (My note.  I totally agree with Rev. Williams.  At the core,  this struggle is spiritual in nature.  It is also a war on human consciousness. And, It is about both controlling and breaking the human spirit.  That can only happen if we allow it to happen.  "They" need us to surrender our God given powers to them for them to accomplish their evil deeds.  Think, think, think! People must learn to use the magnificent brain that God gave us.   Be skeptical of everything.   In the coming months accept nothing at face value.  Investigate everything. To do that you will need to turn off the "electronic sewer" "they" call television.  Better yet, throw the damn thing in the dump where it belongs.The electronic and print media are a wasteland designed to keep you distracted, misled, confused and misinformed.   You will NEVER discover anything of value watching boobokvision.  Never!!!!  Trust nobody until that person has EARNED your trust.  And above all, question everything, especially if it comes from people in a position of authority.  And, finally recognize that "the enemy" is within.  The enemies of freedom are right here. Inside the gates.)
2.  Plant a garden.
3.  Get out of debt.  He said debt is the main weapon of subversion and control used by "these people."   (My note. I totally agree with that remark unless all of your debt is unsecured and you own no real assets. Can't squeeze blood from a stone.)
4.  Store lots of food.  "The farm economy is collapsing."
That was all he had to say, but I am sure everyone on this list can fill in the rest.
I would only add, that disclosure is what these parasitic cockroaches fear the most.  So, feel free to circulate this memo. But, PLEASE remove my  address.  I don't want to be spammed.  I have already won so many lotteries I just can't collect the money fast enough.    
Get ready.  Be prepared.  Protect yourself and your family.  Protect your fellow Americans.
Keep smiling!!!    It confuses "the enemy."
Good luck and God bless!   Choose life!!!!    Tom

MUST-WATCH VIDEO: Raw Footage - Zionist Israel's Heinous War Crimes In Gaza (LATEST UPDATE - 18/1/09)

Sunday, 18 January 2009 20:31

Click here to watch


MUST-WATCH VIDEO: George Galloway - We Are Authors of This Tragedy (LATEST UPDATE - 18/1/09)

Sunday, 18 January 2009 20:28

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MUST-WATCH VIDEO: Norman Finkelstein - Hezbollah, the Honour of Lebanon (LATEST UPDATE - 18/1/09)

Sunday, 18 January 2009 20:23

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MUST-WATCH VIDEO: Jewish British Lawmaker Likens Israel to Nazis (LATEST UPDATE - 18/1/09)

Sunday, 18 January 2009 20:27

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All Glory To The Hamas Resistance - All Glory To The Palestinians In Gaza - All Glory To Their Victory Over Zionist Israel - By Matthias Chang (LATEST UPDATE - 18/1/09)

On January 6, 2009 I posted an article to my website, “Palestinians’ Total Victory Over Zionist Israel Is Assured” and declared that the blood of martyrs will cleanse the treachery of Mahmoud Abbas and the Arab Regimes. Many people in Malaysia, especially the Muslims could not understand my optimism. But Palestinians were appreciative of my faith and confidence in their heroic struggle.

Why this glaring contrast?

While I am aghast and angered by the horrors of war inflicted on the innocent men, women and children in Gaza, I am also realistic enough to know that the Palestinians will make every sacrifice for freedom, independence, dignity and the establishment of the Palestinian State. The Palestinians would rather die than live as slaves of the Zionist Anglo-American colonial regime!

History is replete with the heroic struggles of nations and peoples overcoming superior forces and weaponry to inflict humiliating defeats on colonial occupiers.

The struggle of the Palestinians will be another glorious chapter in the annals of resistance against oppression and war for liberation.

The victory of the Palestinians in Gaza over Zionist Israel armed to the teeth by the incestuous partnership of the US and Britain, is more remarkable and strategic than that of Hizbollah in 2006 because they did not have a strategic hinterland of Syria.

Palestinians in Gaza were betrayed from within by Mahmoud Abbas and his corrupt entourage of ministers and security officials armed by Israel and from without, principally by the Arab regimes of Egypt, Jordan and Saudi Arabia.

Prior to this barbaric armed aggression, these traitors and Zionist Israel imposed a blockade on Gaza hoping to starve the people into submission. The resistance in Lebanon did not have to suffer this atrocity.

Yet, with everything against them, the Hamas-led resistance had not only withstood the so-called mighty Zionist army (which in truth is but an army of cowards and child killers) for over 21 days, but has now in the last few days inflicted strategic battlefield victories. These victories have been so stunning that Zionist Israel will be compelled to declare a unilateral ceasefire, not because they want peace, but as a face-saving tactic to avoid a humiliating defeat, militarily as well as politically.

Hamas has already declared that even if the Zionist terrorists were to stop military actions, resistance will continue unless and until all Zionist terrorists have withdrawn from Gaza.

The excuse for the unilateral ceasefire will be the so-called agreement between the US Secretary of State, Condoleezza Rice and the Zionist Israel foreign minister Tzipi Livni that the US will assist in the prevention of arm smuggling into Gaza.

What utter rubbish! If all these years the fascist US, Egypt and Zionist Israel cannot prevent the legitimate right of the Palestinians to arm themselves, how can they stopped it now. To call the brave endeavours to arm the Palestinians as “smuggling” is the most insidious propaganda. The fascist US can openly arm the Zionist regime with the latest weaponry, but the resistance cannot defend themselves. What double standards!

Be that as it may, surely the so-called mighty Israel can come up with a better excuse than this stupid reason. It is a reflection of the desperation of Zionist Israel, the US and the Arab traitors that they must do everything possible to avoid a military defeat. The global mass media is already primed to cover-up this military disaster. To suffer another defeat by the heroic resistance is just too unbearable for the Zionist Anglo-American war party. So they have to concoct a cover for their shameful retreat.

Consider the following military dispatches from the frontlines of Gaza:

1)  “We will not accept Israel’s conditions for a cease fire. The aggression must stop, Israeli troops must withdraw and crossings into Gaza must be opened immediately.”

Is this a statement of a vanquished resistance or a demand of a victorious and confident resistance?

2)  Israeli tanks retreat from Tal Al-Hawa after hours of intense gun battles with Palestinian fighters.

Has Zionist Israel defeated Hamas or is it the other way round?

Hamas has not surrendered and or retreated from the frontlines.

3)  Palestinians have continued to fire rockets and mortar shells into Israeli towns.

With all their planes, attack helicopters, drones and other sophisticated weaponry, Zionist Israel cannot even defend their plundered land and settlements!

4)  Hamas maintains that 34 Israeli soldiers have been killed and 96 others have been injured in clashes with Palestinian fighters.

Without the cowardly and indiscriminate bombing of civilians, the Zionist Israeli naked aggression would have nothing to show for their war criminal actions after 21 days of fighting!

5) Three Israeli generals as well as scores of soldiers have been reportedly wounded on the 18th day of attacks on Gaza!

The fact that Israeli generals have been wounded is an indication that the war is going badly for the Zionist aggressors.

This is a glorious day for Palestine and for Hamas!

But the treacherous Arab regimes and so-called Muslim nations that are always in awe of the United States and other “white-regimes” will never understand why the Palestinians cannot be subjugated. The culture of traitors and puppet regimes is that of a subservient lapdog, devoid of self-respect and dignity!

Soon these traitors will be publicly executed for their treachery and crimes.

Let them tremble and beg for mercy! But there will be no mercy.

A curse has fallen on these regimes and their families. Each of them will die a painful and terrible death and for a thousand years, their future generations shall bear the mark of a traitor on their foreheads as a reminder to all that the punishment for the sin of treachery and betrayal of an oppressed people is for a thousand years!

Too far fetched?

Time will tell and it will be soon!

Condoleezza Rice, A Freak! She Is Worse, She Is A Bitch! - By Matthias Chang (LATEST UPDATE - 18/1/09)

I can anticipate that some readers will scream in horror and complain that such language should not be used to describe this Afro-American and that I should use more temperate language.

I have always called a spade, a spade and Condoleezza Rice should count herself fortunate that she has been able to avoid a direct tongue lashing from me.

She should ask Colin Powell what I did to him at a luncheon meeting at Sri Carcosa some years ago. That war criminal was justly denounced!

What really gets me mad is when the Tan Sris, Datuks and the social elites troop up unashamedly to such war criminals and entertain them as celebrities, and to be honoured with red carpet treatment. Whenever there are atrocities such as the on-going genocide in Gaza, these hypocrites would shout the loudest for justice and retribution.

I am getting ahead of myself. I would like to explain the title and the reason for writing this article.

I had not seen and or heard Norman Finkelstein speaking before but this afternoon I chanced upon a video clip of this good professor who was giving an interview on the heroic struggle of Hizbollah!

Surprise, surprise a Jew praising Hizbollah.

If only Sunni Muslims in the Middle East have the clarity of mind and vision, and the courage of this Jew, the Palestinians would have their state a long time ago. But these Sunni Muslims are all slaves to the Saudi’s filthy money!

Go to You Tube and search for: “There Will Be Another War. Hezbollah, the Honour of Lebanon” An interview with Norman Finkelstein.

The good professor stole a march on me. He called Condoleezza Rice a “freak” because only a freak like Condoleezza Rice would compare the birth pangs of a child to the destruction of an entire nation – the war in Lebanon would be the birth pangs of a new Middle East.

I hope every mother reading this article would one day lynch her on a street lamp-post. Her statement is an insult to every mother and child. Just as well she is not a mother and hopefully she will never be one.

But calling Condoleezza Rice a freak is too kind, for it implies that she may not have the presence of mind or the intellect to appreciate the folly of her statement. In the event of a war crimes hearing, she may quote Norman Finkelstein and plead the defence of insanity to avoid culpability for the genocide of the Iraqis and the Palestinians.

That is why, I prefer to use the term “Bitch”. It is most appropriate and I did so only after I had consulted the Oxford Advance Learner’s Dictionary. This authority on English states and I quote:

BITCH: n 1 female dog, fox, otter or wolf: a greyhound bitch 2 (a) (sl derog) spiteful woman: Don’t talk to me like that, you bitch!  (b) (sl) difficult problem or situation 3 (idm) son of a bitch

Bitch:  v make spiteful comments: complain or grumble: She’s always bitching about the people at work.

Bitchy: adj spiteful or bad tempered: a bitchy remark   Bitchiness n

Anyone who has watched Condoleezza Rice justifying the illegal invasion of Iraq and the war of aggression against Afghanistan and now the genocide of Gaza cannot but call her actions, bitchy and that she is always bitching about how she must bring democracy to the Middle East. And now she is bitching about how there is a need to prevent arms smuggling into Gaza. Is she therefore not a Bitch?

This bitch is now trying to save the Zionist child killers from a humiliating defeat at the hands of Hamas by proposing an agreement to halt arms smuggling as a basis of a ceasefire in Gaza!

This is the perverse logic of the bitch. Instead of calling for the complete cessation of the naked aggression by Israel and the complete withdrawal of all Zionist terrorists from Gaza as a condition precedent for peace, she touts a piece of paper bearing her signature and that of the child killer, the Zionist foreign minister Tzipi Livni as the condition precedent for the cessation of the slaughter of the innocents in Gaza.

Enough is enough!

Just as Zionist Israel with the connivance and full backing of the US, has made extra-judicial assassination of resistance leaders an official policy, on the basis that they are “killing terrorists”, so I believe that it is right that this bitch be subjected to the same policy since she is a terrorist and together with her boss, President Bush et. al have slaughtered more innocent men, women and children  than any organization or person that she has conveniently labeled as “terrorists” to justify her wanton killings.

Come January 20, 2009, she will no longer be the US Secretary of State. She will have no place to hide. It is about time she face the victims of her injustice and criminal actions.

Let her tremble!      

UNITED NATIONS Press Release Committee on the Rights of the Child (LATEST UPDATE - 18/1/09)

13 January 2009

The following statement was issued today by the 18-member UN Committee on the Rights of the Child, which is currently in session.

"The United Nations Committee on the Rights of the Child is deeply  concerned at the devastating effects that the current military engagement in Gaza is having on children. Hundreds of children haveeen killed or injured, many seriously. Many others have lost their loved ones. The continuous fighting and destruction of livelihoods and basic infrastructures, severely compromise enjoyment of human rights especially in relation to health, education and family life.

Children have also experienced serious difficulties in accessing humanitarian aid. The emotional and psychological effects of these events on an entire generation of children will be severe.

The Convention on the Rights of the Child has been ratified by 193 States, testifying to a universally recognized commitment for the respect and protection of the rights of children. But the rights enshrined in the Convention, including the right of children to life, survival and development and to be protected from all forms of violence, have been blatantly violated during this crisis. The Committee recalls that human rights law, including the Convention, applies at all times, including in situations of armed conflict.

The Committee stresses that, under article 38 of the Convention, States parties - in accordance with their obligations under international humanitarian law to protect the civilian population in armed conflicts - shall take all feasible measures to ensure protection and care of children who are affected by an armed conflict.

They also undertake to respect and to ensure respect for the rules of international humanitarian law applicable to them in armed conflicts which are relevant to the child. The Committee emphasizes that all parties must ensure the protection of children during the conflict and abide by the relevant provisions of international law in this respect.

The Committee also underlines that in the preamble of the Optional Protocol to the Convention on the involvement of children in armed conflict -- to which Israel is a Party -- States parties condemn: "the targeting of children in situations of armed conflict and direct attacks on objects protected under international law, including places at generally have a significant presence of children, such as schools and hospitals." This affirmation is undermined by the fact that many children have lost their lives as a result of manifest disrespect for their protection and that of their schools, including some administered by the United Nations itself.

The Committee joins the calls of Security Council Resolution 1860 (adopted on 8 January 2009), the Secretary-General, the High Commissioner for Human Rights and the Special Representative of the Secretary-General for Children and Armed Conflict for an immediate cessation of hostilities from both sides".

The UN Committee on Rights of the Child is one of eight human rights treaty bodies whose role is to monitor signatory states' implementation of key international human rights treaties. The Committee monitors the implementation of the Convention on the Rights of the Child, and its two Optional Protocols. For more information on the work of the Committee and other treaty bodies, go to:

To arrange interviews with a member of the Committee on this press
release, please call + 41 22 917 9629

Robert Fisk’s World: When it comes to Gaza, leave the Second World War out of it

How do Holocaust survivors in Israel feel about being called Nazis?

Saturday, 17 January 2009

Exaggeration always gets my goat. I started to hate it back in the 1970s when the Provisional IRA claimed that Long Kesh internment camp was "worse than Belsen". It wasn't as if there was anything nice about Long Kesh – or the Maze prison as it was later politely dubbed – but it simply wasn't as bad as Belsen. And now we're off again. Passing through Paris this week, I found pro-Palestinian demonstrators carrying signs which read "Gaza, it's Guernica" and "Gaza-sur-Glane".

Guernica, as we all know, was the Basque city razed by the Luftwaffe in 1937 and Oradour-sur-Glane the French village whose occupants were murdered by the SS in 1944. Israel's savagery in Gaza has also been compared to a "genocide" and – of course – a "holocaust". The French Union of Islamic Organisations called it "a genocide without precedent" – which does take the biscuit when even the Pope's "minister for peace and justice" has compared Gaza to "a big concentration camp".

Before I state the obvious, I only wish the French Union of Islamic Organisations would call the Armenian genocide a genocide – it doesn't have the courage to do so, does it, because that would be offensive to the Turks and, well, the million and a half Armenians massacred in 1915 happened to be, er, Christians.

Mind you, that didn't stop George Bush from dropping the word from his vocabulary lest he, too, should offend the Turkish generals whose airbases America needs for its continuing campaign in Iraq. And even Israel doesn't use the word "genocide" about the Armenians lest it loses its only Muslim ally in the Middle East. Strange, isn't it? When there's a real genocide – of Armenians – we don't like to use the word. But when there is no genocide, everyone wants to get in on the act.

Yes, I know what all these people are trying to do: make a direct connection between Israel and Hitler's Germany. And in several radio interviews this past week, I've heard a good deal of condemnation about such comparisons. How do Holocaust survivors in Israel feel about being called Nazis? How can anyone compare the Israeli army to the Wehrmacht? Merely to make such a parallel is an act of anti-Semitism.

Having come under fire from the Israeli army on many occasions, I'm not sure that's necessarily true. I've never understood why strafing the roads of northern France in 1940 was a war crime while strafing the roads of southern Lebanon is not a war crime. The massacre of up to 1,700 Palestinians in the Sabra and Chatila camps – perpetrated by Israel's Lebanese Phalangist allies while Israeli soldiers watched and did nothing – falls pretty much into the Second World War bracket. Israel's own estimate of the dead – a paltry 460 – was only nine fewer than the Nazi massacre at the Czech village of Lidice in 1942 when almost 300 women and children were also sent to Ravensbrück (a real concentration camp). Lidice was destroyed in revenge for the murder by Allied agents of Reinhard Heydrich. The Palestinians were slaughtered after Ariel Sharon told the world – untruthfully – that a Palestinian had murdered the Lebanese Phalangist leader Bashir Gemayel.

Indeed, it was the courageous Professor Yeshayahu Leibovitz of the Hebrew University (and editor of the Encyclopaedia Hebraica) who wrote that the Sabra and Chatila massacre "was done by us. The Phalangists are our mercenaries, exactly as the Ukrainians and the Croatians and the Slovakians were the mercenaries of Hitler, who organised them as soldiers to do the work for him. Even so have we organised the assassins of Lebanon in order to murder the Palestinians". Remarks like these were greeted by Israel's then minister of interior and religious affairs, Yosef Burg, with the imperishable words: "Christians killed Muslims – how are the Jews guilty?"

I have long raged against any comparisons with the Second World War – whether of the Arafat-is-Hitler variety once deployed by Menachem Begin or of the anti-war-demonstrators-are-1930s-appeasers, most recently used by George Bush and Lord Blair of Kut al-Amara. And pro-Palestinian marchers should think twice before they start waffling about genocide when the Grand Mufti of Jerusalem once shook Hitler's hand and said – in Berlin on 2 November 1943, to be precise – "The Germans know how to get rid of the Jews... They have definitely solved the Jewish problem." The Grand Mufti, it need hardly be added, was a Palestinian. He lies today in a shabby grave about two miles from my Beirut home.

No, the real reason why "Gaza-Genocide" is a dangerous parallel is because it is not true. Gaza's one and a half million refugees are treated outrageously enough, but they are not being herded into gas chambers or forced on death marches. That the Israeli army is a rabble is not in question – though I was amused to read one of Newsweek's regular correspondents calling it "splendid" last week – but that does not mean they are all war criminals. The issue, surely, is that war crimes do appear to have been committed in Gaza. Firing at UN schools is a criminal act. It breaks every International Red Cross protocol. There is no excuse for the killing of so many women and children.

I should add that I had a sneaking sympathy for the Syrian foreign minister who this week asked why a whole international tribunal has been set up in the Hague to investigate the murder of one man – Lebanese ex-prime minister Rafiq Hariri – while no such tribunal is set up to investigate the deaths of more than 1,000 Palestinians.

I should add, however, that the Hague tribunal may well be pointing the finger at Syria and I would still like to see a tribunal set up into the Syrian massacre at Hama in 1982 when thousands of civilians were shot at the hands of Rifaat al-Assad's special forces. The aforesaid Rifaat, I should add, today lives safely within the European Union. And how about a trial for the Israeli artillerymen who massacred 106 civilians – more than half of them children – at the UN base at Qana in 1996?

What this is really about is international law. It's about accountability. It's about justice – something the Palestinians have never received – and it's about bringing criminals to trial. Arab war criminals, Israeli war criminals – the whole lot. And don't say it cannot be done. Wasn't that the message behind the Yugoslav tribunal? Didn't some of the murderers get their just deserts? Just leave the Second World War out of it.


Gold & The New Era - By Darryl Robert Schoon (LATEST UPDATE - 16/1/08)

Darryl Robert Schoon
Friday, 16 January 2009 10:56

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Inquiry started of financier who invested with Madoff

J. Ezra Merkin, a New York financier, wrote his investors last month that he too was shocked by the news that Bernard Madoff's hedge fund was an elaborate Ponzi scheme.

But not everyone sees him as a victim. The New York attorney general, Andrew Cuomo, has issued subpoenas in an effort to determine whether Merkin had defrauded universities and charities when he invested their money with Madoff, a person with knowledge of the case said Thursday.

Cuomo's office is seeking information from Merkin, the three investment funds that he operated and 15 nonprofit institutions that gave him money to manage. Many of the institutions are now suing Merkin, claiming that they lost millions of dollars when he had invested money with Madoff without telling them.

The person with knowledge of the case said the investigation would examine whether Merkin had properly disclosed where the money was being invested. The institutions are being asked how they were affected by the Madoff scandal. The subpoenas were issued Wednesday night.

A lawyer for Merkin, Andrew Levander, said, "We will fully cooperate with any investigation by the New York attorney general's office.

"I'm astonished," said Mortimer Zuckerman, the publisher and real estate executive whose charitable trust lost $30 million through Merkin. "Frankly, I was absolutely hoodwinked."

Today, say those who know him, Merkin is keeping a low profile. He still attends services at the Fifth Avenue Synagogue, where he is president. But he is rarely seen outside his office and home, both on Park Avenue. He has either resigned from — or been asked to leave — many of the boards on which he served.

New York University is suing Merkin over $24 million it lost. The university's chief investment officer rejected a suggestion last October by Merkin, who managed part of its endowment, that it invest in a Madoff fund. But, unknown to the university, Merkin had been investing its money with Madoff for at least eight years.

New York Law School has filed suit over a $3 million loss. Tufts University is facing a $20 million loss. Other victims include Yeshiva University, where Merkin was a trustee and headed the investment committee. Yeshiva lost $110 million of the money invested with him.

Marc Rich, the financier who was pardoned by President Bill Clinton, lost $10 million to $15 million. And Bard College, where Merkin sat on a board, estimates losses of $11 million.

They blame Merkin at least as much as Madoff.

"This has been a terrible shock," said Leon Botstein, president of Bard College. "When I first read about Bernie Madoff, I thought, 'He's not part of our team.' Back then I had no idea that somehow we would be caught up in that."

Merkin was named to the board of the Levy Economics Institute at Bard College on the recommendation of Leon Levy himself, a legendary Wall Street financier and philanthropist who died in 2003. When Yeshiva University expressed concerns over possible conflicts about investing with Merkin since he was a trustee, Ira Millstein, the respected corporate governance lawyer, blessed the relationship so long as it was disclosed.

And the offering prospectuses for Merkin's funds gave few clues. In nearly all cases, there was no mention of Madoff, just a diverse range of commonplace investments.

One mention of Madoff is in the Ascot fund prospectus, which was entirely invested with Madoff. But it does not cite Madoff as a money manager. Instead, he was listed as one of two brokers — the other was Morgan Stanley — that would clear Ascot trades.

Merkin's lineage provided him with a remarkable calling card. His father, Hermann Merkin, who fled Nazi Germany, made a fortune in the shipping business and became a major figure in New York's Jewish philanthropic elite. The elder Merkin was the founding president of the Fifth Avenue Synagogue, a center of modern Orthodox Judaism, and gave millions to help build Yeshiva University and the Merkin Concert Hall near Lincoln Center.

Ezra Merkin's address is 740 Park Avenue, the celebrated cooperative building where Jacqueline Kennedy grew up and John D. Rockefeller once lived. More recently it has been home to financiers like Ronald Perelman, Saul Steinberg, Henry Kravis and Stephen Schwarzman.

His 18-room duplex contained one of the largest private collections of Mark Rothko's large abstract paintings, valued at over $150 million.

Merkin, a graduate of Columbia University and Harvard Law School, has been described as being brusque in public, but devoted to his family in private.

"He was a member of the social elite of New York, so he was attractive to be on the board of a think tank," said Dimitri Papadimitriou, president of the Levy Economics Institute at Bard. "There was certainly no concern that there was any negligence."

Another important connection for Merkin was Stephen Feinberg, head of Cerberus Capital Management, a private investment fund with big stakes in Chrysler and GMAC, the financing arm of General Motors.

Merkin became an investor in Cerberus and put money from Merkin funds into Cerberus and its portfolio companies. For instance, his Gabriel fund invested $79 million in Chrysler, $66 million in GMAC and $67 million in Cerberus partnerships, according to year-end statements. In 2006, Cerberus appointed Merkin as nonexecutive chairman of GMAC, a position Merkin recently resigned.

Merkin's financial empire was built in large part by his management fees: 1 percent to 1.5 percent of the $5 billion in assets under management. In 2007, for instance, Merkin collected $28 million from the Ascot fund and another $12 million from the Gabriel fund.

But because Merkin is a general partner in his funds, his assets are now at risk. Should his clients prevail in court, all Merkin's assets — including his art collection and apartment — can be used to settle claims, which are estimated at $2 billion.

"If even only a few of the lawsuits are successful, the defendant, Merkin, will likely be rendered insolvent," lawyers for NYU said in a court filing. Harry Susman, an lawyer representing Merkin investors, added: "Unless he has a good explanation, he will have people after him for a long time in the future."

Zachery Kouwe and Alison Leigh Cowan contributed reporting.



Turkey’s Premier Erdogan: Israel Must Be Barred From UN - By PressTV (LATEST UPDATE - 17/1/09)

Saturday, 17 January 2009 20:01

Turkish Premier Recep Tayyip Erdogan

"How is such a country, which does not implement resolutions of the UN Security Council, allowed to enter through the gates of the UN (headquarters)?" Recep Tayyip Erdogan inquired on Friday.

The remarks came before UN Secretary General Ban Ki-moon's arrival in Ankara to discuss the conflict and amid growing outrage in Turkey over Israel's attacks on Gaza.

Erdogan lashed out at the Israeli army's raids on civilians under the pretext of targeting the Palestinian fighters in the territory. He also accused the Israeli media of falsely suggesting that Hamas uses civilians as human shields in the Gaza Strip.

The UN chief, who traveled to the West Bank on Thursday, has urged an end to the 'unbearable' situation in Gaza and called on Israel for a unilateral humanitarian truce.

Last Thursday, the UN Security Council approved a resolution which demanded an "immediate" and "durable" ceasefire leading to the "full withdrawal" of Israeli forces from Gaza. It also called for "the unimpeded provision and distribution throughout Gaza of humanitarian assistance, including of food, fuel and medical treatment."

Israeli Prime Minister Ehud Olmert, however, vowed to resist outside pressure and push ahead with the military action against Gaza, while Foreign Minister Tzipi Livni said Israel would act 'only according to its interests'.

Weeks of ceaseless Israeli airstrikes and tank shelling have so far killed more than 1,133 Palestinians across the impoverished coastal sliver, which has been under Israel's crippling blockade since June 2007.

On Friday, Turkish President Abdullah Gul renewed calls for an immediate cease-fire and urged US President-elect Barack Obama to focus on a comprehensive, long-lasting and fair solution to the issue once he is in office.

FF Editorial

This is a logical step forward in the global efforts to condemn the mass murder of Palestinians by Zionist Israel whose leaders without exception must be indicted for War Crimes. Security Council under the control of the US / UK incestuous partnership have derailed and continue to derail and obstruct each and every resolution that called for peace in the Holy Land so as to advance their selfish military and economic interests in the region.

It is amazing that the Arab Regimes continue to get away with their insidious propaganda, no doubt under the direct urging of their Zionist Masters, that the United States is an “honest broker” for peace between the Palestinians and the Zionist racist state of Israel.

How can the US be an “honest broker” when each and every President, State Secretary and “Peace Envoy” have been and are either Zionist themselves or swear allegiance to Zionism since the establishment of Israel?

By attacking UN facilities in Gaza, Israel has demonstrated once again that it does not respect and adhere to International laws and conventions, specifically those that demand full compliance to upholding human rights, the prohibition in the killings of innocent civilians, and the prohibition of fascist armed aggression. We must expose the ideological moles and so-called do-gooders who under the pretext of adhering to international law, surreptiously sabotage and or mislead our efforts to expose the crimes of Israel, the United States and Britain!

Given this state of affairs that have spanned over the last sixty years, it is absolutely useless to continue to demand that Israel adhere to international law and convention.

It is a Pariah!

It is a fascist criminal state!

And as such it must be punished with the severest of punishments. No less that the liquidation of this fascist state and that the entire Holy land be constituted as one unitary state for all the people living there who wish to live in peace and harmony.

The expulsion of Israel from the United Nations is a critical first step.

An international armed force must be assembled and deployed to Palestine to protect and defend the Palestinians as the second critical step.

There must be imposed a total blockade of Israel and boycott of all her products and services and non-recognition of each and every Israeli institutions in all fields. This is the third step.

The United States, Britain and other countries must be prohibited from arming Israel, failing which, there should be a global boycott of as many US and UK goods as are practical and effective – starting with the rejection of the US Dollar and Pound Sterling in trade and settlement of international financial obligations.

It is perverse logic for the Arab traitors to agree with Israel and the US that as a condition for a cease-fire, the heroic Palestinians must “stop the smuggling of weapons”. The US and UK are allowed to openly arm and re-arm Israel, already the most powerful military in the Middle East with the latest weaponry to slaughter innocent civilians and to destroy the Palestinian resistance. But the defenceless Palestinians are not even allowed to have the weapons to defend itself from the barbarity inflicted by war criminals.

It follows that OIC, NAM and the Arab League must provide all the means and capability for the Palestinians to defend itself against this armed aggression and war crime by Israel, US and UK.

Nothing less will suffice.

Victory to the Palestinian Resistance!


How To Resolve The Credit Crisis - Credit Where Credit Is Due - By Ellen Brown (LATEST UPDATE - 15/1/09)

January 13, 2009 Information Clearinghouse

Letter to the bank –

Dear Sirs, In light of recent developments, when you returned my check marked “insufficient funds,” were you referring to my funds or yours?

Economist John Kenneth Galbraith famously said, “The process by which banks create money is so simple that the mind is repelled.” If banks can create money, why are we suffering from a “credit crunch”? Why can’t banks create all the money they can find borrowers for? Last fall, Congress committed an unprecedented $700 billion in taxpayer money to reversing the credit crisis, and the Federal Reserve has already fanned that into $8.5 trillion in loans and commitments. [1] But the bank bailout has proven to be no more than a boondoggle for a handful of lucky Wall Street banks, without getting credit flowing again.

To understand the real cause of the credit crisis and how it can be reversed, we first need to understand credit itself – what it is, where it comes from, and what the real tourniquet is that has limited its flow. Banks actually create credit; and if private banks can do it, so could public banks or public treasuries. The crisis is not one of “liquidity” but of “solvency.” It has been caused, not by the banks’ inability to get credit (something they can create with accounting entries), but by their inability to meet the capital requirement imposed by the Bank for International Settlements, the private foreign head of the international banking system. That inability, in turn, has been caused by the derivatives virus; and only a few big banks are seriously infected with it. By bailing out these big banks, the government is actually spreading the virus by furnishing the funds for them to take over smaller regional banks.

A more effective alternative than trying to patch up the hopelessly imperiled derivatives positions of these few Wall Street banks would be to simply create another credit system with a pristine set of books. We don’t need to fix the Wall Street disease; we can bypass the whole problem and create a new, healthy, parallel system. A network of public banks (federal and state) could create “credit” just as private banks do now. This credit could be extended at low interest rates to consumers and at very low interest to local governments, drastically reducing the cost of public projects by reducing the cost of funding them.

That is not a radical proposal. It is what private banks themselves do every day. But bankers will dispute it, and most people have trouble believing it. So to make a compelling case for this solution, the first thing that needs to be established is that . . .

Banks Create the Money They Lend

Bankers will tell you that they do not create money. At a 10% reserve requirement, they simply lend out 90% of their deposits. The catch is that their “deposits” include the money they have written into their customers’ accounts as loans. That is how loans are made: numbers are simply written into the accounts of borrowers, as many reputable authorities have attested. Here are two of them, dating back to when officials were either more aware of what was going on or more open about it:

“[W]hen a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposit; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.”

– Robert B. Anderson, Treasury Secretary under Eisenhower, in an interview reported in the August 31, 1959 issue of

U.S. News and World Report

“Do private banks issue money today? Yes. Although banks no longer have the right to issue bank notes, they can create money in the form of bank deposits when they lend money to businesses, or buy securities. . . . The important thing to remember is that when banks lend money they don’t necessarily take it from anyone else to lend. Thus they ‘create’ it.”

– Congressman Wright Patman, Money Facts (House Committee on Banking and Currency, 1964)

The process by which banks create money was detailed in a revealing booklet put out by the Chicago Federal Reserve titled Modern Money Mechanics. [2] The booklet was periodically revised until 1992, when it had reached 50 pages long. It is written in somewhat difficult prose, but here are a few relevant passages:

“The actual process of money creation takes place primarily in banks.” [p3]

Translation: banks create money.

“In the absence of legal reserve requirements, banks can build up deposits by increasing loans and investments so long as they keep enough currency on hand to redeem whatever amounts the holders of deposits want to convert into currency.” [p3]

Translation: banks can create as much money as they want by writing loans into their borrowers’ accounts, limited only by (a) legal reserve requirements (money that must be held in reserve – traditionally about 10% of outstanding deposits and loans) or (b) the amount of money they will need to keep on hand to pay any depositors who might come for their money (also traditionally about 10%).

“Banks may increase the balances in their reserve accounts by depositing checks and proceeds from electronic funds transfers as well as currency.” [p4]

Translation: the “reserves” that count toward the reserve requirement include currency, deposited checks, and electronic funds transfers. (Note that the “deposits” created as loans are excluded from this list of allowable reserves: the bank cannot just keep bootstrapping loans on top of loans but must have money from external sources backing up its liabilities equal to about 10% of its loans and deposits.)

“The money-creation process takes place principally through transaction accounts [accounts that can be drawn on without restriction].” [p2]

“With a uniform 10 percent reserve requirement, a $1 increase in reserves would support $10 of additional transaction accounts.” [p49]

Translation: $1 deposited by a customer can be fanned into $10 in loans.

“In the real world, a bank’s lending is not normally constrained by the amount of excess reserves it has at any given moment. Rather, loans are made, or not made, depending on the bank’s credit policies and its expectations about its ability to obtain the funds necessary to pay its customers’ checks and maintain required reserves in a timely fashion.”

Translation: In practice, banks issue loans without worrying too much about whether they have the reserves to cover them. If they come up short, they can just borrow them:

“[Since] the individual bank does not know today precisely what its reserve position will be at the time the proceeds of today’s loans are paid out. . . . many banks turn to the money market - borrowing funds to cover deficits or lending temporary surpluses.” [p50]

“[A] bank may [also] borrow reserves temporarily from its Reserve Bank. . . .

[However], banks are discouraged from borrowing [Reserve Bank] adjustment credit too frequently or for extended time periods.” [p29]

Translation: If the bank finds at the end of the accounting period that its reserves do not come to the required 10% of its outstanding loans and deposits, it can simply borrow the reserves it needs from the money market or its Federal Reserve Bank.

A 2002 article posted on the website of the Federal Reserve Bank of New York noted that today, few banks are constrained by reserve requirements at all:

“Since the beginning of the last decade, required reserve balances have fallen dramatically. The decline stems in part from regulatory action: the Federal Reserve eliminated reserve requirements on large time deposits in 1990 and lowered the requirements on transaction accounts in 1992. But a far more important source of the decline in required reserves has been the growth of sweep accounts. In the most common form of sweeping, funds in bank customers’ retail checking accounts are shifted overnight into savings accounts exempt from reserve requirements and then returned to customers’ checking accounts the next business day. Largely as a result of this practice, today only 30 percent of banks are bound by a reserve balance requirement.” [3]

Even without official reserve requirements, however, banks must keep enough money on hand to meet withdrawals or checks written against the accounts of their depositors; and that generally means about 10% of outstanding deposits and loans, as moneylenders discovered centuries ago. But if the banks come up short, they can borrow this money from the money market or the Federal Reserve; and if the Fed comes up short, it can create new reserves. [4] So why the current credit crunch? What is limiting bank lending?

One answer is that borrowers are simply “tapped out” and not in a position to take out as many loans as they used to. When housing and the stock market crashed, consumers no longer had home or stock equity to borrow against. [5] But to the extent that the blockage is with the banks themselves, it is not caused by the reserve requirement. Something else is putting the squeeze on credit . . . .

The Real Tourniquet: Capital Adequacy and the Mark-to-Market Rule

What actually constrains bank lending is the capital adequacy requirement, something that is imposed not by our own central bank but by the Bank for International Settlements (BIS). Called “the central bankers’ central bank,” the BIS pulls the strings of the private international banking system from Basel, Switzerland.

How the capital requirement is determined is even more complicated than the reserve requirement, but it needs to be understood to understand why banks with the power to create money are going bankrupt. So here is a simplified version. A bank’s “capital” consists of its assets minus its liabilities. Under the capital adequacy rule imposed by the Basel Accords, assets are “risk-weighted,” with some being considered riskier than others. Ordinary loans have a “risk weighting” of 1. The capital adequacy rule requires that the ratio of a bank’s capital to its assets with a risk-weighting of 1 be at least 8%. That means the bank must have $8 in capital for every $100 in ordinary loans. Federal bonds have a risk-weighting of zero: they are considered to be as safe as dollars and don’t need any extra capital backing them. Mortgage loans (which are secured by real estate) have a risk weighting of .5. That means they need only $4 of capital per $100 of loans. Other bank exposures given risk weightings include such things as derivatives and foreign exchange contracts. [6] (Interestingly, the $700 billion committed by Congress to bailing out the financial system is approximately 8% of the $8.5 trillion the Fed has now promised in loans and commitments. Even the Federal Reserve evidently feels constrained by the BIS capital requirement.)

A very controversial accounting rule imposed on banks for their capital ratio calculations is the “mark to market” rule. This rule requires banks to revalue all of their assets each day as if the assets had to be sold that day. Capital calculations thus fluctuate with the market; and in today’s volatile market, all asset classes have plunged at the same time. Since assets get marked to market but liabilities don’t, a bank may suddenly find that its assets are insufficient to support its liabilities, rendering it insolvent and unable to make new loans. Banks have gotten around the capital adequacy requirement by reducing risk on their balance sheets with a form of private bet known as “derivatives.” At least, they thought they had gotten around the rule. But this unregulated form of insurance proved to be based on faulty mathematical models. (See Ellen Brown, “”Credit Default Swaps: Derivative Disaster Du Jour,” and “It’s the Derivatives, Stupid!,”

“Credit default swaps” (CDS) are a form of derivative widely sold as insurance against default. When AIG, the world’s largest insurance company, ventured into CDS in the late 1990s, the presumption was that “housing always goes up” and that the risk of default was so remote that selling “credit protection” was virtually “free money”. [7] But this free money turned into a serious liability to the protection sellers when the “remote” actually happened and a flood of defaults struck. The value of the derivatives protecting securitized mortgages became so questionable that they were unmarketable at any price. Banks counting them as assets on their books then had to “mark them to market” effectively at zero, reducing the banks’ capital below the levels called for in the Basel Accords and rendering the banks officially insolvent.

When AIG went broke in September 2008, banks heavily involved in derivatives faced double jeopardy: not only would they have to write down the derivative protection they had sold to others and counted as assets on their books, but they could no longer count on the derivative insurance they had bought to minimize the risk of default on their other assets. AIG got a massive bailout from the Fed in return for most of its equity, but even that bailout money is not expected to be enough to get it out of its derivative nightmare and keep it afloat.

Derivatives have introduced a lack of transparency into bank portfolios, creating fear and uncertainty on the part of lenders, depositors and investors alike. This uncertainty has prevented banks from raising capital by selling stock, or meeting reserve requirements by getting interbank loans; and it has discouraged investors from investing in the money market. Banks don’t know whether the money they lend to each other will be repaid, since they don’t have a clear view of the value of the assets carried on bank balance sheets. The result is a crisis of confidence: the players are all eying each other suspiciously and holding their cards close to the chest.

Going Local

Fortunately, according to a recent study using the Treasury Department’s own data, the banking crisis is not widespread but is limited to only “a few big, vocal banks.” [8] The real credit problem lies with the financial institutions with significant derivative exposure, and most of this liability is carried by only a handful of Wall Street giants. In early 2008, outstanding derivatives on the books of U.S. banks exceeded $180 trillion. However, $90 trillion of this was carried on the books of JPMorgan Chase alone, while Citibank and Bank of America each had $38 trillion on their books. [9] Needless to say, these are also the banks that are first in line for the Treasury’s bailout money under the Troubled Asset Relief Program. Rather than excising the relatively contained derivative tumor, the Treasury and the Fed are feeding it with trillions in taxpayer money; and this money is being used, not to unfreeze credit by making loans, but to buy up smaller banks.[10] That means the derivative cancer, rather than being excised, is liable to spread.

We the people and our representatives in Congress have allowed Wall Street to call the shots because we think we are dependent on their credit system, but we aren’t. There are other ways to get credit -- ways that are fair, efficient, transparent, and don’t encourage greed. Public credit could be generated by a system of public banks. Precedent for this solution is to be found in the state-owned Bank of North Dakota, which has been generating credit for North Dakota since 1919, keeping the state fiscally sound when other states are floundering. (See Ellen Brown, “Sustainable Government: Banking for a ‘New’ New Deal,”, December 8, 2008.)

The credit crunch could be avoided by “going local” not just in the United States but around the world. Countries that have been seduced or coerced into funneling their productive assets into serving foreign markets and foreign investors could become self-sustaining, using their own credit and their own resources to feed and serve their own people. There is much more to be said on this subject, but it will be saved for future articles. Stay tuned.

Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her earlier books focused on the pharmaceutical cartel that gets its power from “the money trust.” Her eleven books include Forbidden Medicine, Nature’s Pharmacy (co-authored with Dr. Lynne Walker), and The Key to Ultimate Health (co-authored with Dr. Richard Hansen). Her websites are and


1. Kathleen Pender, “Government Bailout Hits $8.5 Trillion,” San Francisco Chronicle (November 26, 2008).

2. Modern Money Mechanics: A Workbook on Bank Reserves and Deposit Expansion (Federal Reserve Bank of Chicago, Public Information Service, 1992, available at ModernMoneyMechanics.pdf.

3. Paul Bennett, Savros Peristiani, “Are Reserve Requirements Still Binding?”, Economic Policy Review (May 2002).

4. Modern Money Mechanics, op. cit.

5. Joshua Holland, “Was the ‘Credit Crunch’ a Myth Used to Sell a Trillion-Dollar Scam?”, AlterNet (December 29, 2008).

6. “Capital Requirement,” Wikipedia.

7. Robert O’Harrow Jr., Brady Dennis, “Complex Deals Led to AIG’s Undoing,” Los Angeles Times (January 1, 2009).

8. J. Holland, op. cit.

9. Comptroller of the Currency, “OCC’s Quarterly Report on Bank Trading and Derivatives Activities Third Quarter 2008,”; “US Bank Derivative Exposure,” FDIC/IRA Bank Monitor, chart reproduced on The Big Picture (blog), August 2008.

10. Joe Nocera, “So When Will Banks Give Loans?”, New York Times (October 25, 2008).

Merrill Lynch Says Rich Turning To Gold Bars For Safety - By Ambrose Evans-Pritchard (LATEST UPDATE - 15/1/09)

Merrill Lynch has revealed that some of its richest clients are so alarmed by the state of the financial system and signs of political instability around the world that they are now insisting on the purchase of gold bars, shunning derivatives or "paper" proxies.

January 9, 2009 Telegraph UK

[FF Editorial: We have been saying that is the safest haven when there is a crisis and that the rich will find their get-away well before the rest get clobbered!]

Rich investors are spurning gold exchange traded funds in favour of krugerrands.

Gary Dugan, the chief investment officer for the US bank, said there has been a remarkable change in sentiment. "People are genuinely worried about what the world is going to look like in 2009. It is amazing how many clients want physical gold, not ETFs," he said, referring to exchange trade funds listed in London, New York, and other bourses.

"They are so worried they want a portable asset in their house. I never thought I would be getting calls from clients saying they want a box of krugerrands," he said.

Merrill predicted that gold would soon blast through its all time-high of $1,030 an ounce, and would hit $1,150 by June.

The metal should do well whatever happens. If deflation sets in and rocks the economic system it will serve as a safe-haven, but if massive monetary stimulus gains traction and sets off inflation once again it will also come into its own as a store of value. "It's win-win either way," said Mr Dugan.

He added that deflation may prove the greater risk in coming months. "It's very difficult to get the deflation psychology out of the human brain once prices start falling. People stop buying things because they think it will be cheaper if they wait."

Merrill expects global inflation to hover near zero, with rates of minus 1pc in the industrial economies. This means that yields on AAA sovereign bonds now at 3pc will offer a real return of 4pc a year, which is stellar in this grim climate. "Don't start selling your government bonds," Mr Dugan said, dismissing talk of a bond bubble as misguided.

He warned that the eurozone was likely to come under strain this year as slump deepens. "There is going to be friction as governments in the south start talking politically about coming out of the euro. I don't see the tensions in Greece as a one-off. It is a sign of social strain in countries that have lost competitiveness."

Shipping Rates Hit Rock Bottom - I Hope You Understand What This Means - By Matthias Chang (LATEST UPDATE - 15/1/09)

Thursday, 15 January 2009 22:51

Global Trade Has Collapsed Totally

Shipping Companies Like MISC and Major Ports Will Be In Deep Shits

Revising My Previous Forecast On Growth

It Will Be Negative in 2009 For Malaysia

In a recent Strategy Forum which I conducted, I shared a very simple method of gathering “intelligence on our export trade” with the delegates.

I told them that all I need to do is to observe the ships departing from the ports. I look at the load waterline (L.W.L. - the waterline at which the ship will float when loaded to its designed draft). This will indicate whether a ship is fully laden with cargo. This is simple common sense.

In the past few weeks, many ships were not fully laden. This means that we are not shipping out that many exports – Q.E.D! The authorities can fudge the figures, but the load water-line cannot lie.

Today, if you go to Singapore, ships are all over the port and idling for want of cargo.

It has now been reported that shipping rates for containers hit zero. Holy smoke, the shit has really hit the ceiling fan! This has never happened before. This means that demand for industrial goods have slumped big time. World trade has collapsed. Exporting economies in Asia have been hit hard by the fall in demand in US and Europe.

Last year, I reported and drew your attention that the Baltic Dry Index which measures freight rates for bulk commodities such as iron ore, grains etc. crashed – dropping a whopping 96 per cent.

Some idiots in Malaysia have been trumpeting for over a year that Asia’s economies have de-coupled from the Western economies. This is bullshit!

A big chunk of our exports goes to USA and Europe. Now that these markets have collapsed, it is only time that we will face a major downturn that will be deep and long which I estimate will commence by end of the first quarter 2009.

Had Malaysia took pre-emptive measures in 2006 and early 2007, we could have mitigated our exposure. But Badawi was “sleeping” and his stupid 4th Floor boys were too concerned in plundering the economy for themselves, and to quote one of them, “it is our turn.”

Now is too late.

Even RM73 Billion may not be enough to bailout those corporate entities considered too big to be allowed to fail.

It is time to start PRAYING!

Gaza: UN Official Reports Horrific Hospital Scenes of Casualties - UN News Centre (LATEST UPDATE - 15/1/09)

January 12, 2009

Appalled that fighting was still continuing in Gaza despite the Security Council’s ceasefire resolution, senior United Nations officials said today they were horrified at the human costs amid reports that over 40 per cent of the nearly 900 Palestinians killed in the Israeli offensive, and almost half of the 3,860 wounded, were women and children.

“Behind those statistics that we read out every day is really profound human suffering and grave tragedy for all involved and not just for those who are killed and injured but for their families as well,” UN Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) Director of Operations John Ging told a news conference in New York, speaking by video link from Gaza, where he had just visited the main Al Shifa hospital.

“(It) is the place of course where you see the most horrific human consequences of this conflict. Among the tragic cases that I saw were a child, six years of age, little or no brain activity, people don’t have much hope for her survival; multiple amputee – another little girl; and a pregnant woman who’d lost a leg,” he said, as the Israeli offensive went into its 17th day with the stated aim of ending Hamas rocket attacks into Israel.

“The hospital is really full of patients whose lives have been in many instances really destroyed, and they’re alive.”

Mr. Ging paid tribute to “the heroes,” the Palestinian hospital staff who have been working round the clock and have lost track of time, and the 40 expatriate medical staff who have joined them from Norway, the Netherlands, Egypt and Jordan, among other places.

He said the sense of fear in Gaza was all pervasive among a battle-hardened population of 1.5 million that had already seen many years of conflict. “In my three years here I have never witnessed anything like the scale of fear that is there,” he stressed. “We have to recognize that there’s no safe place in Gaza and that continues to be the case and the casualty figures speak to that.”

Speaking in New York, Under-Secretary-General for Humanitarian Affairs John Holmes told the news conference the UN had been unable to independently verify the casualty figures given by the Palestinians but they seemed plausible. As of today, there were 884 dead, 275 of them children and 93 women (42 per cent), and 3,860 wounded, 1,333 of them children and 587 women (49 per cent).

“I am appalled that violence on this scale is still continuing in Gaza and horrified at the human cost of all this,” he said. “What continues to be worrying is that the Palestinian civilian casualty rate appears to be still increasing.”

On a more positive note, the two officials reported that UN food delivery and other operations, suspended after a fatal attack on an UNRWA driver last week, have resumed following Israeli reassurances and aid is now moving around Gaza as much as possible. Mr. Ging said he was very satisfied with the more effective system put in place in high-level talks with the Israelis.

Mr. Holmes said more food supplies were getting through and power supply had improved because of infrastructure repairs and some fuel getting through, but the situation was still not satisfactory even if better than before. Some 500,000 people still lack water as Israel’s daily three-hour lull in fighting was insufficient for carrying out repairs and other UN operations, he added, urging Israel to extend the time period.

The UN Children’s Fund (UNICEF) has appealed for $16 million to provide families and children with emergency supplies. “We desperately need more resources,” Director of Emergency Operations Louis-George Arsenault said, calling on Israel to increase the daily three-hour window for deliveries.

Asked what would happen if Israel escalated its operations deeper into Gaza’s cities, Mr. Holmes said UNRWA, the UN World Food Programme (WFP) and others would want to continue their activities insofar as they can. “The fear is that any escalated operations would produce even more casualties, especially when operating in these densely populated urban areas and this would compound what is already a very dramatic humanitarian crisis,” he added.

Mr. Ging said 35,000 Gazans had now fled their homes for shelter in 38 UNRWA locations, and many more had sought refuge with relatives in other parts of the Gaza Strip. In answer to questions, he said he had no evidence that Shifa hospital was being used for Hamas military purposes and reiterated his call for an independent investigation amid conflicting reports on deadly Israeli shellings near an UNRWA school and a housing complex in Zaitoun last week.

“I hope that those who are dealing with this issue [the conflict] at the political level will have the same courage and humanity as I’ve witnessed here at Shifa hospital with the doctors who have come from abroad to help. They can only deal with the consequences in the terms of the injuries,” he concluded. “The solution here is to stop the fighting, stop creating the casualties, that’s what we want.”


By Dr. Mahathir Mohamad
on January 15, 2009 6:10 PM |

1. I would like to have the Malaysian Armed Forces attack the United States and Israel.

2. But I don't think the Government and the MAF would agree with me.

3. So what do we do?

4. We could blockade the United States and deny it food and medicine.

5. The blockade would have to go on for a hundred years. A lot of innocent people would die. But as Madeleine Albright said when asked whether killing 500,000 Iraqi babies was worth it, she said it was difficult but it was worth it. So Malaysians should not mind killing a few million Americans including babies because although it will be difficult it would be worth it.

6. But I suspect we cannot blockade either.

7. So what do we do? Let the bully do what it likes? But the bully is killing lots of innocent people together with small children and babies.

8. But on the other hand we need to drink Coca-Cola, use the Internet, fly Boeing jets, see Rambo movies etc etc. Can we sacrifice all these simply because babies are being decapitated by Israeli soldiers using highly sophisticated and costly weapons donated by the kind Americans? Of course we cannot.

9. What we can do is totally worthless. We can boycott US products.

10. But can we? Well not completely. Maybe partially. Like not drinking Coca-Cola, or not seeing the latest blockbuster.

11. It is not going to stop the United States from remaining the most powerful nation and continuing to kill people directly or indirectly.

12. But if 10 per cent of the people in the world who drink Coca-Cola stop drinking it there would be some impact. If Malaysians drink, say 50 per cent less Coca-Cola (because their lives depend on it) there would be some impact also. If nothing else it will demonstrate our displeasure with the Americans.

13. But what about the Malaysians working in factories producing coke? I don't believe they produce only Coca-Cola. They produce other drinks as well. If people switch from Coca-Cola to another drink produced by the same company, then the company will have to produce more of this alternative drink and there would be no need to close down and sack the workers.

14. The idea is to do what we can to show displeasure at what the US is doing. We will not bring the US economy crashing down. It will continue to prosper. But the US and Americans must know how much the world dislike or even hate them.

15. Presently the President of the United States claims "the world respects America for its compassion".

16. I am appending below an article by Paul Craig Roberts, former Assistant Secretary of the Treasury in the Reagan Administration.

17. Please read it carefully since you may think as a Muslim I am biased against the United States and Israel.

18. I will be putting on my blog other articles by other people and you can judge for yourselves.

The White House Moron Stumbles to the Finish

The Humiliation of America


"Early Friday morning the secretary of state was considering bringing the cease-fire resolution to a UNSC vote and we didn't want her to vote for it," Olmert said. "I said 'get President Bush on the phone.' They tried and told me he was in the middle of a lecture in Philadelphia. I said 'I'm not interested, I need to speak to him now.' He got down from the podium, went out and took the phone call."

"Let me see if I understand this," wrote a friend in response to news reports that Israeli Prime Minister Olmert ordered President Bush from the podium where he was giving a speech to receive Israel's instructions about how the United States had to vote on the UN resolution. "On September 11th, President Bush is interrupted while reading a story to school children and told the World Trade Center had been hit--and he went on reading. Now, Olmert calls about a UN resolution when Bush is giving a speech and Bush leaves the stage to take the call. There exists no greater example of a master-servant relationship."

Olmert gloated as he told Israelis how he had shamed US Secretary of State Condi Rice by preventing the American Secretary of State from supporting a resolution that she had helped to craft. Olmert proudly related how he had interrupted President Bush's speech in order to give Bush his marching orders on the UN vote.

Israeli politicians have been bragging for decades about the control they exercise over the US government. In his final press conference, President Bush, deluded to the very end, said that the whole world respects America. In fact, when the world looks at America, what it sees is an Israeli colony.

Responding to mounting reports from the Red Cross and human rights organizations of Israel's massive war crimes in Gaza, the United Nations Human Rights Council voted 33-1 on January 12 to condemn Israel for grave offenses against human rights.

On January 13, the London Times reported that Israelis have gathered on a hillside overlooking Gaza to enjoy the slaughter of Palestinians in what the Times calls "the ultimate spectator sport."

It is American supplied F-16 fighter jets, helicopter gunships, missiles, and bombs that are destroying the civilian infrastructure of Gaza and murdering the Palestinians who have been packed into the tiny strip of land. What is happening to the Palestinians herded into the Gaza Ghetto is happening because of American money and weapons. It is just as much an attack by the United States as an attack by Israel. The US government is complicit in the war crimes.

Yet in his farewell press conference on January 12, Bush said that the world respects America for its compassion.

The compassion of bombing a UN school for girls?

The compassion of herding 100 Palestinians into one house and then shelling it?

The compassion of bombing hospitals and mosques?

The compassion of depriving 1.5 million Palestinians of food, medicine, and energy?

The compassion of violently overthrowing the democratically elected Hamas government?

The compassion of blowing up the infrastructure of one of the poorest and most deprived people on earth?

The compassion of abstaining from a Security Council vote condemning these actions?

And this is a repeat of what the Israelis and Americans did to Lebanon in 2006, what the Americans did to Iraqis for six years and are continuing to do to Afghans after seven years. And still hope to do to the Iranians and Syrians.

In 2002 I designated George W. Bush "the White House Moron." If there ever was any doubt about this designation, Bush's final press conference dispelled it.

Bush talked about connecting the dots, but Bush has failed to connect any dots for eight solid years. "Our" president was a puppet for a cabal led by Dick Cheney and a handful of Jewish neoconservatives, who took control of the Pentagon, the State Department, the National Security Council, the CIA, and "Homeland Security." From these power positions, the neocon cabal used lies and deception to invade Afghanistan and Iraq, pointless wars that have cost Americans $3 trillion, while millions of Americans lose their jobs, their pensions, and their access to health care.

"These obviously very difficult economic times," Bush said in his press conference, "started before my presidency."

Bush has plenty of liberal company in failing to connect a $3 trillion dollar war with hard times. The Center on Budget and Policy Priorities blames Bush's tax cut, not the wars, for "the fiscal deterioration."

Bush told the White House Press Corps, a useless collection of non-journalists, that the two mistakes of his invasion of Iraq were: (1) Putting up the "mission accomplished" banner on the aircraft carrier, which, he said, "sent the wrong message," and (2) the absence of the alleged weapons of mass destruction that he used to justify the invasion.

Although Bush now admits that there were not any such weapons in Iraq, Bush said that the invasion was still the right thing to do.

The deaths of 1.25 million Iraqis, the displacement of 4 million Iraqis, and the destruction of a country's infrastructure and economy are merely the collateral damage associated with "bringing freedom and democracy" to the Middle East.

Unless George W. Bush is the best actor in human history, he truly believes what he told the White House Press Corps.

What Bush did not explain is how America is respected when its people put a moron in charge for eight years.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration.


By Dr. Mahathir Mohamad

1. I was shocked when a reporter asked me why I regard the Israelis as terrorists when it is the Muslims who blow themselves up so as to kill children. The Israelis are apparently not considered to be terrorists despite daily reports with pictures of the women, children and babies who have been killed and wounded.

2. Do the suicide bombers deliberately target children? Would they kill children if they could kill Israeli soldiers? What is their objective in killing children? Is it because they know it would win them the war?

3. I have no liking for people who resort to killing by blowing themselves up. But they are not regular soldiers who can be protected by tanks and powerful bombardment before they shoot and kill their victims. In fact the regular soldiers of the Israeli forces need not expose themselves to any danger as they choose their targets. They can shoot missiles from far off. Yet there can be no doubt that civilians including children have been deliberately killed by them in much greater numbers than the suicide bombers have ever done.

4. For the suicide bombers, fear of being discovered before they could blow themselves up must be very real. They have to control themselves and appear calm and innocent as they seek the most effective time and place to blow themselves up. The tension must be great for they know soon they would be dead, killed by the explosives they were carrying.

5. To get close to Israeli soldiers would be a great feat. The soldiers would not allow Arabs to get near them knowing that they might be suicide bombers. Not being able to go back with the bomb unexploded the bombers must blow themselves up somewhere.

6. Have they all targeted children? I don't think so. The Western media is biased and are controlled by Jews. The Israelis do not allow foreign Press reporters to see them killing the people of Gaza and elsewhere. The reports of the suicide bombers targeting children came from the Israelis. Can we believe them? Do we get any pictures of children being killed like the pictures we see of children in Gaza being killed?

7. In any case we know that the number of Israelis killed by suicide bombers or Hamas rockets are nothing compared to the nearly 1,000 Gazans confirmed killed so far. Even the Red Cross and other international agencies have condemned Israeli atrocities.

8. Yes the suicide bombers are terrorists. But they have no other choice. They don't have bomber and fighter planes, tanks, guns, rockets and chemical weapons to fight their enemies.

9. The Israelis are terrorists by choice. They have been trained to kill using powerful weapons. We see them killing on television and in pictures in newspapers.

10. The whole world condemns Israeli attacks. It is strange that a Malaysian reporter should think it is all the fault of the people of Gaza and Hamas.


By Dr. Mahathir Mohamad
on January 13, 2009 5:08 PM |
(On Jan 9, 2009, Rob commented on Open Letter to Barack Hussein Obama President-elect of the United States of America - this is my reply) )

Dear Rob,

1. I hope this is your name. I am always saddened by the ignorance of the average American. Yet America is so powerful that directly or indirectly it rules the world. For a country with ignorant people to rule the world it is an unmitigated disaster.

2. Clearly you have never been to Malaysia. But if I may say so we are not obsolete. But I admit we have only primitive weapons for our defence. You can, with a few nuclear bombs wipe our country from the surface of this earth.

3. Sorry for the 3,000 of your innocent citizens incinerated in their place of employment. At least three of those incinerated were actually Malaysians. I understand hardly any Jews were in the building. They were not incinerated.

4. But consider the 300,000 Vietnamese, 50,000 Afghans, 100,000 Iraqis whom you have killed. Mostly they were not soldiers. They were not working in the offices either. They were babies, schoolchildren, sick men and women in hospitals. Of course they could all be terrorists, including the babies and the schoolchildren.

5. Who are terrorists? Are they only the suicide bombers? What about the countries, which sent their soldiers, air force, navy with tanks and guns and rocket launchers, and bomber and fighter planes to shock and awe and to kill people by the thousands. Aren't their victims (the children, old men and women, the sick in the hospitals) terrified when they hear bombers flying above, when bombs and shells burst around them, killing their fathers and mothers, their brothers and sisters; when any time they themselves would be blown to pieces. Aren't they terrified?

6. If they are terrified aren't the people who terrify them also terrorists? If you have a right to kill "terrorists" (also to detain and torture them), then they have a right to kill the terrorists who attacked and kill them and their people. I don't like terrorism but I also don't like terrorism by Governments. Both terrify.

7. We are primitive of course because we defend ourselves with primitive weapons. You train your children to kill by launching rockets from a thousand miles away, bombing with planes beyond the range of the primitive guns of your victims. You don't have to be frightened of us. But we must be frightened of the murdering bullies whom you think so highly of.

8. Saddam had killed people and buried them in mass graves. You kill many times more Iraqis, Afghans and Vietnamese and left them unburied, to rot and to be eaten by dogs. Remember My Lai?

9. May I know who were fed to the lions by Saddam. You must be absolutely ignorant if you are not aware how unfettered capitalism has actually destroyed your own country.

10. Yes the United Nations is a waste of money. That is because the US prevents it from carrying out its work to restore peace and justice in this world.

11. I think you need to go to school to improve your knowledge and understanding of what is happening around you, not American school of course because obviously they don't teach anything beyond glorifying the genocides perpetrated by you throughout history.

Robert Fisk: Tin-pot rockets won't open a second front

Thursday, 15 January 2009


A Lebanese farmer with the remains of a rocket fired at Israel. The rocket fell short


A Lebanese farmer with the remains of a rocket fired at Israel. The rocket fell short

The "Popular Front for the Liberation of Palestine–General Command" – the quotation marks are necessary since this outfit controls at most 500 cadres – is responsible for all the tin-pot rockets fired into Israel from Lebanon this past week.

It is not the next "front". It is not the beginning of the "northern front". No one was injured when three rockets fired from southern Lebanon fell in open areas near the Israeli town of Kiryat Shemona yesterday. A blaze of outdated rockets on northern Israel – "about 1944, I date them", as one Palestinian put it in Beirut – is not going to ignite another conflict for Hamas in Gaza. In Lebanon, the guns are silent – and when they are not, the world will know about it.

The Hizbollah are not behind them – though it is strange that the Iranian-supplied militia failed a second time to prevent the PFLP-GC from firing over the border – and the organisation's preposterous attempt to ignite another conflict did little more than advertise the divisions within the Palestinian refugee community inside Ein el-Hilweh refugee camp east of Sidon. For the West, the PFLP-GC is an unspeakable problem. Most Arabs suspect theywere behind the Lockerbie bombing. Thus did most Western "analysts" believe, until the PFLP-GC's Syrian supporters were needed after Saddam Hussein's invasion of Kuwait in 1990 – Syrian troops were sent to Saudi Arabia to help defend the kingdom – after which Libya and a certain Mr Megrahi became the culprits, and the PFLP-GC became the blameless boys of the Middle East.

The UN peacekeeping force in southern Lebanon should have spotted the latest attack – but, relying on Hizbollah to defend them from their "al-Qa'ida" enemies – they did not keep their eye on the ball. The Israelis know all this. Nor did they want to smear the UN yesterday (that will come later).

The Israelis do not want a second war right now. It's not the moment to claim that the PFLP-GC, with its nests around Sidon, is the "centre of world terror". That will be a surprise for the West's "analysts" – and for the Obama administration – in due course.


Ismail Haniyeh: My message to the West – Israel must stop the slaughter

Thursday, 15 January 2009


Ismail Haniyeh, the Palestinian Prime Minister, speaking on Al-Aqsa TV in Gaza earlier this week


Ismail Haniyeh, the Palestinian Prime Minister, speaking on Al-Aqsa TV in Gaza earlier this week

I write this article to Western readers across the social and political spectrum as the Israeli war machine continues to massacre my people in Gaza. To date, almost 1,000 have been killed, nearly half of whom are women and children. Last week's bombing of the UNRWA (UN Relief Works Agency) school in the Jabalya refugee camp was one of the most despicable crimes imaginable, as hundreds of civilians had abandoned their homes and sought refuge with the international agency only to be mercilessly shelled and bombed by Israel. Forty-six children and women were killed in that heinous attack while scores were injured.

Evidently, Israel's withdrawal from the Gaza Strip in 2005 did not end its occupation nor, as a result, its international obligations as an occupying power. It continued to control and dominate our borders by land, sea and air. Indeed the UN has confirmed that between 2005 and 2008, the Israeli army killed nearly 1,250 Palestinians in Gaza, including 222 children. For most of that period the border crossings have remained effectively closed, with only limited quantities of food, industrial fuel, animal feed and a few other essential items, allowed in.

Despite its frantic efforts to conceal it, the root cause of Israel's criminal war on Gaza is the elections of January 2006, which saw Hamas win by a substantial majority. What occurred next was that Israel alongside the United States and the European Union joined forces in an attempt to quash the democratic will of the Palestinian people. They set about reversing the decision first by obstructing the formation of a national unity government and then by making a living hell for the Palestinian people through economic strangulation. The abject failure of all these machinations finally led to this vicious war. Israel's objective is to silence all voices that express the will of the Palestinian; thereafter it would impose its own terms for a final settlement depriving us of our land, our right to Jerusalem as the rightful capital of our future state and the Palestinian refugees' right to return to their homes.

Ultimately, the comprehensive siege on Gaza, which manifestly violated the Fourth Geneva Convention, prohibited the most basic medical supplies to our hospitals. It disallowed the delivery of fuel and supply of electricity to our population. And on top of all of this inhumanity, it denied them food and the freedom of movement, even to seek treatment. This led to the avoidable death of hundreds of patients and the spiralling rise of malnutrition among our children.

Palestinians are appalled that the members of the European Union do not view this obscene siege as a form of aggression. Despite the overwhelming evidence, they shamelessly assert that Hamas brought this catastrophe upon the Palestinian people because it did not renew the truce. Yet we ask, did Israel honour the terms of the ceasefire mediated by Egypt in June? It did not. The agreement stipulated a lifting of the siege and an end to attacks in the West Bank and the Gaza Strip. Despite our full compliance, the Israelis persisted in murdering Palestinians in Gaza as well as the West Bank during what became known as the year of the Annapolis peace.

None of the atrocities committed against our schools, universities, mosques, ministries and civil infra-structure would deter us in the pursuit of our national rights. Undoubtedly, Israel could demolish every building in the Gaza Strip but it would never shatter our determination or steadfastness to live in dignity on our land. Surely, if the gathering of civilians in a building only to then bomb it or the use of phosphorous bombs and missiles are not war crimes, then what is? How many more international treaties and conventions must Zionist Israel breach before it is held accountable? There is not a capital in the world today where free and decent people are not outraged by this brutal oppression. Neither Palestine nor the world would be the same after these crimes.

There is only one way forward and no other. Our condition for a new ceasefire is clear and simple. Israel must end its criminal war and slaughter of our people, lift completely and unconditionally its illegal siege of the Gaza Strip, open all our border crossings and completely withdraw from Gaza. After this we would consider future options. Ultimately, the Palestinians are a people struggling for freedom from occupation and the establishment of an independent state with Jerusalem as its capital and the return of refugees to their villages from which they were expelled. Whatever the cost, the continuation of Israel's massacres will neither break our will nor our aspiration for freedom and independence.

The writer is the Prime Minister of Gaza


Israel Strikes U.N. Complex in Gaza Strip


Published: January 15, 2009

GAZA — Amid reports that a United Nations building had been hit, Israeli forces shelled areas deep inside Gaza City and edged forward toward the city center Thursday, sending thousands of panicked residents fleeing from their homes, witnesses said.

Among the buildings hit in the center of Gaza City, the witnesses said, was one housing the headquarters of the United Nations Relief and Works Agency that assists Palestinian refugees and another occupied by several media organizations.

The Israeli military would not give precise details of its ground operations, but a spokesman said that “fierce fighting” was under way “relatively deep inside Gaza.”

The military push may be aimed at stepping up pressure on Hamas as cease-fire talks in Egypt entered a pivotal stage.

Overnight, Israeli planes struck around 70 targets, including a mosque in the southern town of Rafah used to stockpile rockets, and several squads of gunmen, the military said. Within two hours on Thursday morning, militants in Gaza launched 15 rockets and mortars against Israel, the military said, a marked increase in fire compared to Wednesday when there were 16 launches the entire day.

Palestinians arriving with injured relatives at Shifa Hospital in Gaza City on Thursday, some barefoot and in nightgowns, told of intense Israeli shelling in several neighborhoods including the Sabra and Tufah districts. Two television cameramen arrived for treatment after the building housing the media offices was hit. They had been filming from a window, they said.

As the Gaza death toll passed an estimated 1,000 people and concerns about the humanitarian situation inside Gaza grew, Egypt announced on Wednesday that it was making progress toward an interim cease-fire, with some officials predicting that one could be five to six days away. A senior Israeli defense official, Amos Gilad, arrived in Cairo on Thursday to continue the talks.

Also on Wednesday, nine Israeli human rights groups called for an investigation into whether Israeli officials had committed war crimes in Gaza. The groups say that tens of thousands of civilians in Gaza have nowhere to flee, the Gaza health system has collapsed, many people are without electricity and running water, and some are beyond the reach of rescue teams.

“This kind of fighting constitutes a blatant violation of the laws of warfare and raises the suspicion, which we ask be investigated, of the commission of war crimes,” the groups said in a news conference on the 19th day of the war.

The president of the International Committee of the Red Cross, Jakob Kellenberger, who spent Tuesday in Gaza City, agreed that the situation with civilians was dire but said that the principal hospital was making do with medical supplies, and that doctors, working around the clock, were mostly coping with the flow of the wounded.

“In general, they did not complain about the lack of equipment or material,” he said at a news conference in Jerusalem.

Hamas’s leaders met with Egyptian officials in Cairo and agreed in principle to a monitoring force in Gaza composed of Europeans to prevent weapons smuggling, said a senior Egyptian official. Israel’s defense minister, Ehud Barak, and his generals favor a temporary cease-fire of several days to a week, partly so that when President-elect Barack Obama is inaugurated next week it would be during a lull rather than in the middle of a battle, and his administration could offer its views on the next step, Israeli officials said.

The short-term cease-fire would, if successful, be followed by a negotiated yearlong truce, something that Egypt says Hamas favors if it includes an opening of commercial traffic into Gaza. But splits in Hamas exist between its leaders based in Syria and those in Gaza. The Gazans are more open to a weeklong break, while the leaders in Syria want something from Israel in return for holding fire.

Secretary General Ban Ki-moon of the United Nations arrived in Cairo Wednesday as part of a regional tour to press all parties to carry out a Security Council resolution calling for a cease-fire. He met with President Hosni Mubarak and then issued a plea for peace.

President Bashar al-Assad of Syria also called for a cease-fire, saying in an interview with the BBC that the effects of war could be more dangerous than war itself, “sowing seeds of extremism and terror around the region.”

Osama bin Laden, the leader of Al Qaeda, in a taped audio message, called on Muslims everywhere to fight Israel in a holy war.

The Israeli human rights groups that called for an investigation said that while they believed that it was legitimate for Israel to bomb military installations, it was a violation of international law to hit civilian sites and government buildings that contained no weapons.

The groups included the Israel section of Amnesty International, B’Tselem, Gisha and Physicians for Human Rights-Israel. Israeli Jews are firmly behind the government’s conduct of the war, with the human rights groups representing a small minority.

Mr. Kellenberger of the Red Cross said that Israel had facilitated his trip to Gaza and added that he had seen no evidence of the use of white phosphorus, an obscurant used in military conflicts that can be dangerous for civilians under certain circumstances. Palestinians say Israel is using it in Gaza.

Last week, the Red Cross issued an unusually harsh condemnation of Israel for refusing to allow its personnel into Gaza to rescue people trapped in battle. On Wednesday, Mr. Kellenberger said that although the situation remained critical, rescue missions had not been entirely shut down. The organization rescued 100 people trapped in Jabaliya, north of Gaza City, on Tuesday.

Taghreed el-Khodary reported from Gaza and Isabel Kershner from Jerusalem. Ethan Bronner and Sabrina Tavernise contributed reporting from Jerusalem, Souad Mekhennet from Frankfurt, and Michael Slackman from Cairo.


Valerie belajar bahasa Arab sebelum kenali Islam

POSKAD yang diterima Valerie daripada sahabat penanya Yasemin dari Turki.

HIJRAH akidah Islamiah Valerie Wright pada hakikatnya telah bermula lebih awal sebelum beliau sendiri menyedarinya. Dilahirkan dengan masalah pendengaran yang teruk dan cuma disedari ibunya sewaktu dia berusia empat tahun. Semenjak itu, Valerie menerima alat bantuan pendengaran dan memulakan persekolahan khas untuk kanak-kanak pekak yang dicampurkan dengan kanak-kanak normal.

Ikuti kisahnya yang dikongsi menerusi laman web bagaimana Islam hadir dalam kamus hidupnya serta beberapa pengalaman rohaniah yang dikira pelik dan unik.

"Pada peringkat awal persekolahan, saya diletakkan sekelas dengan kanak-kanak pekak namun kemudiannya dimasukkan ke kelas kanak-kanak normal. Di situ, saya dibantu menyesuaikan diri oleh seorang guru. Saya terasa seperti di rumah sedangkan tanpa saya sedari perancangan pihak sekolah untuk menukarkan saya ke sekolah awam aliran utama.

"Sebaik berada di sekolah tersebut, saya menghadapi kesukaran menyesuaikan diri, apatah lagi kekerapan saya berpindah rumah menambah burukkan keadaan. Akhirnya, di kelas pertengahan, saya berjaya temui kestabilan.

"Saya tinggal di sebuah pekan kecil di Texas, Amerika Syarikat yang dipanggil Wylie. Pada usia kira-kira 12 tahun, saya mempunyai seorang guru Bahasa Inggeris yang begitu istimewa. Dia berasal dari Turki.

"Guru itu datang ke pekan kami melalui program pertukaran. Sungguhpun dia tidak pernah bercerita tentang agama dalam kelas kami namun mengenalinya sudah mencukupi. Dia memperkenalkan kami dengan projek rakan pena dengan pelajar dari Turki.

"Nama rakan pena saya ialah Yasemin. Sehingga kini, saya masih menyimpan kad yang dihantar kepada saya. Di atas kad itu tergambar lukisan masjid dan gereja sebelah-menyebelah. Signifikan daripadanya tidak jelas pada saya ketika itu tetapi ia adalah satu daripada banyak petanda yang Allah telah memilih saya untuk menerima hidayah-Nya.

"Ditambah pula, pada saat itu saya terlalu ingin hampir dengan Tuhan, mengakui-Nya dan menerima kasih sayang daripada-Nya. Saya mula melibatkan diri secara serius di gereja milik datuk saya. Datuk dan adik-beradiknya yang lain dibesarkan sebagai Pentekosta (Christianity) dan bapa datuk dan abangnya adalah paderi.

"Setiap tengah hari sebaik balik dari sekolah saya akan bermain piano. Saya bermain untuk Tuhan dan demi mencari kedamaian diri. Pernah suatu ketika, ketika asyik memainkan piano, saya terasa seperti Tuhan hadir dalam bilik kecil itu, saya terhenti menyanyi dan jari jemari saya kaku seketika. Saya mula menggigil dan terpaku kaku. Kemudian, naluri saya seakan menyuruh saya berpaling daripada piano dan meniarap.

"Saya mengakui saya tidak mungkin menjadi sempurna tetapi perasaan saya masih tidak tenteram. Kesunyian dan gementar menyelubungi jiwa ini. Saya hanya berharap agar Tuhan menjadikan saya istimewa dan mengabdikan diri kepada-Nya. Beberapa minit kemudian, barulah saya mampu menarik nafas panjang, berdiri dan meneruskan aktiviti seperti biasa," ceritanya.


Satu lagi keanehan yang dialami iaitu di mana ibu bapa dan murid-murid berkumpul pada majlis penyampaian hadiah akademik di sekolah. Selepas habis acara, ibu memberitahu bahawa ada seorang perempuan tua yang tidak dikenalinya menghampirinya sewaktu saya naik ke atas pentas untuk menerima anugerah.

Kata ibu, perempuan tua itu memberitahu bahawa sebaik sahaja dia melihat saya, dia mengetahui bahawa Tuhan mempunyai perancangan untuk saya. Sejak itu, saya selalu terfikir apakah mungkin perancangan-Nya untuk saya.

"Pada masa yang sama, saya tertekan dengan banyak sangat larangan di Gereja Pentekosta. Saya tidak berapa memahami begitu jelas tujuan mereka. Saya juga sedikit keliru dengan apa yang terdapat di Injil dan apabila diminta penjelasan, selalu mengecewakan. Malah persoalan yang diujarkan itu sentiasa dibantah. Maka ibu dan saya bertukar ke gereja lain.

"Sekali lagi dalam dua majlis, ibu dihampiri dua orang yang tidak dikenali memberitahu perkara yang sama seperti perempuan tua tadi.

"Saya masih ingat di mana saya meminta untuk bersemuka dengan paderi untuk membincangkan sesuatu. Salah satu soalan saya ialah, "Adakah saya akan ke syurga. Paderi itu bertanya: "Adakah saya mempercayai Nabi Isa? Saya menjawab: Ya. "Jadi anda akan ke syurga," jawabnya.

Jauh di sudut hati saya saya tidak berpuas hati dengan jawapannya. Saya meraguinya. Musim panas kembali lagi dan saya mengikuti perkhemahan gereja, di mana dua insiden penting berlaku.

Pertama, seorang paderi menyuruh kami yang berharap untuk lebih hampir dengan Tuhan agar ke hadapan. Kerana katanya dia akan membantu mendoakan bagi pihak kami. Maka saya adalah salah seorang daripada mereka itu. Lantas paderi itu, meletakkan tapak tangannya di atas ubun-ubun kepala kami seorang demi seorang sambil membuat rayuan. Tiba-tiba sesuatu yang ganjil berlaku. Semua daripada kami jatuh seperti sebuah domino. Paderi itu datang kepada saya dan menepuk ubun kepala saya dan menolak saya sedikit. Sebahagian daripada kami sahaja yang mampu berdiri semula. Perkara pelik ini benar-benar membingungkan.

Selain itu, semasa kami mendengar ceramah penuh emosi daripada seorang paderi tiba-tiba dia datang ke hadapan saya dan memanggil nama saya lalu memberitahu bahawa Tuhan mahu memulihkan pendengaran saya. Lantas, dia meletakkan tangannya di telinga saya sambil berdoa. Tidak ada apa yang berlaku dan saya rasa sungguh malu.

Pada keesokannya, seorang pelajar bertanya adakah kemungkinan Nabi Isa tidak menjawab doa kita. Katanya: "Tuhan menjawab segala doa. Tetapi ada ketikanya kita tidak mempunyai kepercayaan yang mencukupi untuk menerimanya," sambungnya. Ibu saya dan saya begitu berduka cita dan kami meninggalkan gereja itu pula.

"Saya hanyut seketika dengan tidak menghadiri mana-mana aktiviti gereja. Saya rasa seperti kehilangan dan terus jatuh. Walau bagaimanapun, saya silap.

Pada usia 15 tahun, saya tinggal dengan bapa selama lebih kurang dua setengah tahun lamanya. Sepanjang tinggal dengan bapa saya terlibat pula dengan Gereja Methodist. Kadang kala saya mengikuti ibu tiri ke Gereja Baptist.

"Setiap kali berada di kedua-dua gereja ini saya merasakan sesuatu kehilangan walaupun semua orang di situ menerima saya. Saya selalu merasakan tidak ada keserasian di situ. Pun begitu, tidak terlintas untuk mencari ke dalam agama lain.

"Apabila saya mencecah 17 tahun, saya bermimpi berdiri bersebelahan dengan rimbunan pohon hijau yang berdaun kecil serta berbunga kuning. Saya melihat bidadari mengambil sejambak bunga-bungaan itu dan memberikannya kepada saya. Bunga itu bersinar. Kemudian, bidadari itu membawa saya terbang ke satu tempat yang istimewa.

"Di situ, terdapat ramai orang dewasa dan kanak-kanak, mereka dalam keadaan gembira. Mereka keluar apabila kami (saya dan bidadari) masuk ke dalam demi memberi kami privasi. Seorang tua yang muncul dalam mimpi saya itu memberitahu bahawa saya perlu terlebih dahulu membuat perubahan di dalam hidup. Kata-katanya begitu menakutkan memandangkan tidak mengetahui kemampuan dan kekuatan diri.


Saya berpaling kepada bidadari tadi lalu berkata: "Saya tidak tahu adakah saya mampu melakukannya". Bidadari terus mengangkat dan mencampakkan saya ke udara dan di situlah mimpi saya berakhir.

Menghampiri hari terakhir persekolahan, saya menghadiri majlis perpisahan seorang teman warga asing yang mengikuti program pertukaran pelajar. Seorang ibu kepada kenalan saya memberitahu apabila anak perempuannya bercerita tentang saya dia sudah dapat merasai bahawa Tuhan sudah perancangan-Nya untuk saya.

Masa berlalu dan saya hampir menamatkan pengajian sekolah tinggi. Pada ketika itulah saya bertemu dengan beberapa Muslim dan mempunyai hubungan begitu rapat dengan mereka. Sejak itu saya mula berminat mengetahui tentang agama dan bahasa mereka.

Satu-satunya kelas yang dirasakan sesuai dengan jadual harian saya ialah yang dibuat di sebuah masjid tempatan. Jadi saya ke sana. Saya tidak mempelajari tentang bahasa Arab tetapi seorang rakan wanita di situ mengajar saya tentang agama Islam. Mereka menyediakan saya dengan jawapan yang begitu ringkas dan amat logikal. Akhirnya, saya mengakui bahawa Islam adalah agama yang saya cari-cari selama ini.

Jadi pada ulang tahun kelahiran yang ke 19 saya secara sah melakukan syahadah. Sebaik mengakui bahawa tiada Tuhan yang disembah melainkan Allah dan Nabi Muhammad itu pesuruh Allah saya melonjak gembira dan serasa seakan saya terbang di udara.

Setelah bergelar Muslim, saya rasa lebih aman dan tenang. Papa peringkat permulaannya, keluarga agak kecewa dengan keputusan saya namun kasih sayang mereka tidak pernah surut. Ada di antara mereka sudah mula memahami tentang agama Islam, sekali gus menerima pilihan saya itu. Syukur kepada Allah SWT.


Remaja teras kekuatan umat

DUNIA sekali lagi menyaksikan kekejaman yang dilakukan ke atas bumi Palestin. Kali ini Semenanjung Gaza dibedil dengan hebatnya, kononnya untuk menghapuskan pejuang-pejuang Hamas yang dilabel pengganas oleh Amerika Syarikat dan sekutu-sekutunya.

Sungguhpun begitu, tempat-tempat awam seperti hospital, masjid dan universiti pula yang disasarkan dengan bedilan bom, lantas mencetuskan kemarahan masyarakat antarabangsa.

Serangan darat menambah buruk lagi keadaan rakyatnya. Lebih 800 nyawa sudah gugur dan beribu-ribu lagi cedera dalam permainan senjata Israel. Apatah lagi dengan sekatan bekalan makanan dan ubat-ubatan, kelangsungan hidup rakyat Palestin kini sangat kritikal dan mereka hidup dalam keadaan yang sangat memilukan.

Di kaca televisyen, kita boleh melihat visual bom berangkai dilepaskan sewenang-wenangnya di tempat awam, seolah-olah nyawa rakyat Palestin seperti sudah tiada harga lagi.

Tindakan provokasi

Persengketaan Palestin-Yahudi Israel bukanlah sesuatu yang baru. Negara Palestin adalah tempat lahir dan tinggal sebahagian besar para Rasul dan Nabi Allah menyebarkan Islam, kawasan terletaknya Masjid al-Aqsa, tempat berlakunya Israk dan Mikraj serta kiblat pertama umat Islam.

Menurut sumber sejarah, bangsa Yahudi hanya duduk memerintah selama empat kurun sahaja semenjak zaman Nabi Allah Daud, Nabi Sulaiman dan dijajah pula oleh bangsa Parsi dan Rom selepas itu. Umat Islam pula telah memerintahnya semula selama 12 kurun semenjak ditadbir oleh Saidina Umar r.a pada tahun 636 Masihi sehingga diambil alih oleh Kerajaan Uthmaniah.

Puak Yahudi tidak berputus asa dan dengan sokongan Britain yang berjanji untuk mewujudkan negara Yahudi di bumi Palestin, mereka telah mempengaruhi Pertubuhan Bangsa-Bangsa Bersatu (PBB) untuk mengeluarkan Ketetapan 181 (UNISCOP 1947) pada November 1947. Ketetapan ini telah membahagikan 55 peratus tanah Palestin kepada pendatang haram Yahudi dan selebihnya diserah kepada penduduk asal Palestin yang sah.

Akhirnya Yahudi berjaya menubuhkan negara Israel secara haram pada 1948 dengan sokongan Britain dan nasionalis Arab Palestin. Ia bercanggah dengan prinsip PBB sendiri kerana tidak mengambil kira hak dan suara rakyat Palestin.

Peperangan Arab-Israel yang diakhiri dengan kekalahan di tangan Arab akibat kelemahan pimpinan politik dan tentera telah memberi peluang kepada Israel menambah peluasan wilayah mereka kepada 78 peratus wilayah Palestin.

Sekutunya Amerika Syarikat (AS) merestui tindakan peperangan Israel dan baru-baru ini menolak pelan damai Hamas-Israel dengan hujah bahawa Hamas merupakan kumpulan militan yang bertindak merampas kuasa daripada Pihak Berkuasa Palestin.

Namun begitu, tindakan ketenteraan Israel kali ini lebih dilihat untuk mencetuskan provokasi terhadap negara Islam yang lain, iaitu Iran dan Hizbullah. Iran yang diketahui mempunyai program pembangunan nuklear dan telah berupaya membangunkan kekuatan ketenteraan seperti membina jet pejuang dan bom sendiri telah mencetuskan kebimbangan di kalangan kuasa besar.

Maka tindakan ini tidak lebih daripada provokasi Presiden Bush sebelum tamat penggal pemerintahannya untuk mengheret Iran dan negara Islam lain ke dalam peperangan Israel-Palestin agar mereka mempunyai alasan untuk menutup program pembangunan nuklear dan melemahkan kekuatan negara tersebut.

Ia secara tidak langsung menguji dan mengheret pentadbiran Barrack Hussien Obama, presiden AS seterusnya ke kancah peperangan.

Sesungguhnya sebagai umat Islam dan manusia yang bertanggungjawab, kita kesal kerana negara Barat yang kononnya kuat mempertahankan hak-hak asasi manusia, demokrasi dan sebagainya berlepas tangan apabila berlaku pencabulan hak asasi rakyat Palestin. Penubuhan negara Israel secara haram diiktiraf sah oleh pihak Barat tetapi mereka tidak mengiktiraf pergerakan Hamas yang memenangi pilihan raya secara demokrasi.

Membina kekuatan

Amat sedih apabila terdapat negara Islam terpaksa bertungkus lumus dan bersusah payah menjawab surat tunjuk sebab kepada PBB kerana dikatakan melanggar hak asasi manusia, sedangkan PBB sendiri tidak bertanggungjawab dengan ketetapan sedia ada untuk Palestin atau negara Islam yang lain.

Justeru sebagai remaja yang melihat situasi penderitaan saudara di Palestin dan tempat lain, runtunan emosi seperti marah, sedih dan sebagainya sudah pasti wujud, tetapi seharusnya diikuti dengan perasaan untuk membantu semangat memajukan negara dengan rasa tanggungjawab dan iltizam untuk memajukan umat.

Tunjuk perasaan dan tindakan memulaukan barangan Yahudi dan AS mungkin merupakan langkah yang boleh dilakukan sebagai protes terhadap tindakan mereka, tetapi ia merupakan tindakan jangka pendek. Persoalannya, adakah umat Islam sendiri telah bersedia untuk memulaukan barangan dengan mencipta barangan keluaran mereka sendiri?

Oleh itu sebagai strategi jangka masa panjang, umat Islam perlu berusaha membina kekuatan agar dapat dimanfaatkan untuk menjaga kemaslahatan umat Islam serta membina pelan tindakan yang konsisten dan tersusun di mana kesemua negara Islam terlibat sama.

Dalam melakukan proses tersebut, remaja seharusnya meningkatkan ilmu duniawi, dan dalam pada masa yang sama harus berusaha meningkatkan kefahaman terhadap iman dan akhlak.

Misalnya, remaja boleh membantu bukan sahaja diri sendiri, tetapi juga untuk keperluan umat Islam dengan sentiasa istiqamah dalam menambah pengetahuan dan kemahiran. Sekiranya remaja mempunyai bakat kepimpinan, bakat tersebut boleh disuburkan untuk memimpin bangsa agama dan negara.

Jika remaja tersebut mempunyai bakat dalam mencipta sesuatu yang baru, bakat tersebut boleh digunakan untuk kepentingan orang Islam. Justeru, tidak kira apa bidang yang diceburi, remaja merupakan aset penting kepada negara yang diharapkan menjadi penyumbang kepada kemajuan umat Islam dan membina kekuatan yang diharapkan.

Krisis di Palestin juga seharusnya memberi pengajaran terutamanya kepada remaja Islam berusaha menyusun strategi jangka panjang, meningkatkan pengetahuan terhadap sejarah lampau dan tentang pentingnya keamanan dan perpaduan.

Remaja Islam harus menginsafi bahawa kemajuan teknologi boleh dijadikan alat untuk membuat kebaikan, tetapi juga teknologi juga boleh digunakan untuk menganiayai dan menindas orang. Apabila teknologi berada pada tangan yang rakus dengan kuasa, maka ia akan membawa mala petaka yang besar terhadap masyarakat sekelilingnya.

Perbezaan antara orang Islam dengan Yahudi ialah mereka mempunyai semangat jihad yang tinggi. Walaupun tanpa sokongan alat ketenteraan yang besar dan kuat, mereka mempunyai semangat juang yang sangat tinggi untuk mengembalikan hak mereka.

Tentera Israel berani melakukan kezaliman terhadap penduduk Palestin kerana banyak bergantung kepada kelengkapan tentera dan mendapat sokongan kuasa-kuasa besar.

Justeru, inilah masanya umat Islam bersatu dan berusaha untuk membina kekuatan sendiri. Umat Islam wajib bersatu padu mempertahankan Islam dan tidak bergantung harap bantuan orang bukan Islam untuk menyelamatkan maruah Islam.


Israel akan pasti terus berusaha untuk mengusir rakyat Palestin dan menguasai sepenuhnya negara Palestin. Di negara lain, umat Islam juga terhina di bumi sendiri. Sikap tidak peduli umat Islam tentang persoalan akidah, ibadah, syariat dan akhlak akan menjerumuskan umat Islam di bawah telunjuk Yahudi dan pakatan mereka.

Umat Islam, khususnya remaja Islam harus berhati-hati terhadap propaganda Amerika terhadap perjuangan Palestin dan umat Islam seluruh dunia di dalam media yang kebanyakannya dikuasai oleh mereka.


Investment Outlook: Andrew Mellon vs. Bailout Nation - By Bill Gross (LATEST UPDATE - 14/1/09)

2008 was the year when the United States led the charge of bailout nations, lending and literally guaranteeing trillions of dollars of private liabilities in an effort to avoid the advent of another Great Depression. Nothing, with the possible exception of George Bush’s IQ was the subject of greater debate. To begin with, the rescue plan itself was controversial even amongst its implementers: Congress voted against it, then a week later voted for it; Treasury Secretary Paulson designated it “TARP” (short for “Troubled Asset Relief Program”), then a month later did a 180°, refusing to buy subprime mortgages and asserting his right to change his mind because the facts themselves had changed. But the broader question reached beyond politics and into the realm of the dismal science itself. Was it necessary and productive to mutate 21st century American-style capitalism into a thinly disguised knock-off of the New Deal?

Better, some thought, to have followed the advice of early 1930s Treasury Secretary Andrew Mellon: “Liquidate labor, liquidate stocks, liquidate the farmers – purge the rottenness from the system.” The Mellons of the world argued that bailouts were akin to pouring gasoline on a fire, adding trillions of dollars of new debt to a domestic and global economy that had broken down because of, because of, well, because of – too much debt.

Wall Street, the Fed, and Newport Beach took the other side. Those steeped in economic history felt that the Great Depression and more recently the “lost decade” in Japan had both experienced a “liquidity trap,” a monetary black hole where lenders, savers, and ultimately consumers were frightened into stuffing their money into a mattress rather than circulating it in classic capitalistic fashion. Sensing a freezing of credit markets following the default of Lehman Brothers, policymakers decided it was better to become a bailout nation than a sunken ship.

The debate, of course, can never be resolved. You can’t prove a negative nor recreate history to show what might have been. What we do know, however, is that even with U.S. and indeed global bailouts, almost every major economy entered recessionary territory in 2008 and that the “D” word, while unmentionable in official policy circles, was nevertheless on the tip of their tongues and at the forefront of their contingency plans. As we closed the year, “quantitative easing” was the publically acknowledged future policy of the Federal Reserve, which in short meant “buy assets, support Wall Street, and in the process, hope that some of it might trickle down to labor and the farmers.” Ben Bernanke is no Andrew Mellon. There may be rottenness in the system, but our Chairman surely doesn’t believe in starving a cold, or pneumonia for that matter. The Fed’s willing accomplice was the United States Treasury and the FDIC, extending not only $350 billion of TARP money but literally guaranteeing three quarters of the liabilities of U.S. banks. For those who fear nationalization of our financial system, the destination seemed just over the horizon.

Still, while such a transformation is, to put it mildly, undesirable, the policies are necessary. As outlined in these pages, the U.S. and many of its G-7 counterparts over the past 25 years have become more and more dependent on asset appreciation. Under the policy-endorsed cover of technology and somewhat faux increases in financial productivity, we became a nation that specialized in the making of paper instead of things, and it fell to Wall Street to invent ever more clever ways to securitize assets, and the job of Main Street to “equitize” or, in reality, to borrow more and more money off of them. What was not well recognized was that these policies were hollowing, self-destructive, and ultimately destined to be exposed for what they always were: Ponzi schemes, whose ultimate payoffs were dependent on the inclusion of more and more players and the production of more and more paper. Bernie Madoff? As with every financial and economic crisis, he will probably go down as this generation’s fall guy – the Samuel Insull, the Jeffrey Skilling, of 2008.

But Madoff’s scheme has a host of culpable look-alikes and one has only to begin with the mortgage market to understand the similarities. Option ARMs or Pick-A-Pay home loans allowed homeowners to make monthly payments that were so small they did not even cover their interest charges. Two million mortgagees either chose or were sold this Ponzi/Madoff form of skullduggery, believing that home prices never go down and that shoppers never drop. One can add to this the trillions in home equity/second mortgage loans that extracted “savings” in order to promote current instead of future consumption, and one begins to realize that Bernie Madoff and  our cartoon’s Wimpy had company all these years.

What about the shabby performance of the rating agencies? Were they not equally at fault for perpetrating a giant charade that was bound to end in tears? Of course: Aaa subprimes structured like a house of straw; Aaa monoline insurers built like a house of sticks; Aaa credits like AIG, FNMA, and FHLMC where only a huff and a puff could expose them for what they were – levered structures dependent upon asset price appreciation for their survival. Ponzi finance.

I will go on. Municipalities with begging bowls now extended for over a trillion of Federal taxpayer dollars, based their budgets and their own handouts on the perpetual rise in home prices, the inevitable upward slope of sales taxes, and the never-ending increase in employment and personal income taxes. To add injury to insult, they conveniently “balanced” their books with a host of accounting tricks that Bernie Madoff could never have come up with in his wildest imagination. Now, with cash flow insufficient to meet current outflows, they are proving my point that we have met Mr. Ponzi and he is us – all of us: auto companies that siphoned sales dollars to make labor peace instead of research and design expenditures; hedge funds that preposterously billed investors for 2% and 20% of nothing; a President and politicians who thought they could fight a phony war for free and distract the nation’s attention from $40 trillion of future social security and health care liabilities. Ponzi, Ponzi, Ponzi.

Still, future policymakers must confront the reality that is, not the one that should have been. And investors must do likewise, casting aside personal philosophies for a clear-headed view of the future horizon. PIMCO’s view is simple: shake hands with the government; make them your partner by acknowledging that their checkbook represents the largest and most potent source of buying power in 2009 and beyond. Anticipate, then buy what they buy, only do it first: agency-backed mortgages, bank preferred stocks, and senior bank debt; Aaa asset-backed securities such as credit card, student loan, and auto receivables. These have been well-advertised PIMCO strategies over the past 6 months but there are others in clear sight. An Obama administration will quickly be confronted by the need to provide those hundreds of billions of dollars to states and large municipalities. Their requests total nearly a trillion dollars and to think California or NYC would be allowed to fail is, well – unthinkable. Municipal bonds then, selling at historically high ratios relative to U.S. Treasuries, offer attractive price appreciation potential, or at the very least a defensiveness with high carry that a 2½% 10-year Treasury cannot.

Here’s another thought. While TIPS or inflation-protected securities cannot logically be a recipient of Uncle Sam’s checkbook over the next 12 months, they can benefit if and when the government’s efforts to reflate begin to take hold. 2½% real yields cannot possibly be maintained unless deflation as opposed to inflation becomes the odds-on favorite. What bond investors know as “breakeven inflation rates” are currently signaling a future where the U.S. CPI averages -1% for the next 10 years. Possible, but not likely. As an additional strategy, global bond investors should recognize the value in high-quality investment-grade corporate bonds in many markets. Yields of 6%+ for intermediate maturities are still common and readily available.

There is legitimate concern as to the ultimate destination and outcome of our “bailout nation.” Realistically, quantitative easing, a two-trillion-dollar expansion of the Fed’s balance sheet, and the near certainty of future budget deficits approaching 6-7% of GDP should alert bond investors to once again become vigilant as was the case in the 1980s and 90s. Vigilantes we should be, but that is a battle to be fought in the Treasury market where low yields offer little reward and increasing risk. For now, our Ponzi-style economy and its policy remedies encourage bond investors to mimic Uncle Sam and its global compatriots. Buy what they buy, but get there first. Andrew Mellon would surely have disapproved. Liquidation was his game. Wimpy? Well, he’s gonna have to start paying for those burgers on Monday, even in a bailout nation.

Petition to Call for Investigations on Gaza - New Weapons Research Committee (LATEST UPDATE - 14/1/09)

(FF Editorial: We encourage all visitors to endorse this petition. Future Fastforward endorses this petition unreservedly.)

To the Secretary General of UN Assembly, Marcos Manuel D'Escoto,

to the Human Right Council,

to the World Health Organization,

to the UN representative for Palestine Prof. A.Richard Falk

We, the undersigned organizations and professionals in Medicine, Science and Law ask you to respond to with prompt and strong determinations to the issues raised by the report of illegal, inhumane and uncontrollable weapons on the civil population in Gaza, specifically with reference to the use of thermobaric weapons in populated areas, targeting of civilians and children by so called low collateral damage weapons and DIME, use of White Phosphoruson inhabited areas, use of weapons that liberate submunitions, use of heavymetals containing weapons that pollute and put at risk the population for the time to be.

We are aware that the medical and scientific communities have the tools to investigate the truth of these claims, and we ask that they will be allowed, protected and supported in doing so immediately.

We are aware that it is in the duty and in the possibilities of the UN bodies to achieve proofs of the facts of war.

We ask that you provide that the right to investigate will be established through deliberations, in your respective competence, and made operative with decisions taken immediately.

To investigate the claims above, first of all is required that sample collection for testing is allowed, be these environmental or bioptic samples, by independent scientists under the guidance of local scientist and doctors who only can direct this endeavors, as they are professionally competent and also knowledgeable of the cases under suspect. It is necessary that the assignment of the research on the samples will beregulated on the basis of open calls for demonstration of intent, and that it will be done by independent research teams. Avoidance of conflict of interest, will imply the exclusion from participation of teams from the countries involved in the conflict and from those countries that produce or import the weapons under assessment, or privately funded institutions by these and industrial parties with conflicting interests. The investigations should be done on the same samples independently and blindly from at least 3 independent teams of research and the resulting data will have to be published.

We hope that the international Institutions that govern our living together will not leave again unlistened these requests, as it already occurred in the occurrence of the 2006 war to Lebanon and aggression in Gaza. At that time similar claims as those presented now were substantiated by Doctors and Scientists, but no investigation under monitoring of International bodies was undertaken.

We also request that, should any of the party involved in the conflict be resisting your deliberation for fair assessment of the facts, this party will be sanctioned for breaches of the laws and agreements that govern the society of the UN.

We undertake this call with the hope that obtainment of proofs might represent a mean to reduce further damage also due to continuing effects in time of the weapons used, and toward the re-opening of treaties on the "laws of war and protection of civil population" that will have to include the many new weapons, that reside in a limbo position with respect with the Geneva Protocols and the International agreements on use of force.

With great hope that the matter will be confronted, resolutions taken and operative actions undertaken,

The undersigned

New weapons research committee (NWRC)

What You Don’t Know About Gaza - By Rashid Khalidi (LATEST UPDATE - 14/1/09)

10 January 2009, NY Times

NEARLY everything you’ve been led to believe about Gaza is wrong. Below are a few essential points that seem to be missing from the conversation, much of which has taken place in the press, about Israel’s attack on the Gaza Strip.

THE GAZANS Most of the people living in Gaza are not there by choice. The majority of the 1.5 million people crammed into the roughly 140 square miles of the Gaza Strip belong to families that came from towns and villages outside Gaza like Ashkelon and Beersheba. They were driven to Gaza by the Israeli Army in 1948.

THE OCCUPATION The Gazans have lived under Israeli occupation since the Six-Day War in 1967. Israel is still widely considered to be an occupying power, even though it removed its troops and settlers from the strip in 2005. Israel still controls access to the area, imports and exports, and the movement of people in and out. Israel has control over Gaza’s air space and sea coast, and its forces enter the area at will. As the occupying power, Israel has the responsibility under the Fourth Geneva Convention to see to the welfare of the civilian population of the Gaza Strip.

THE BLOCKADE Israel’s blockade of the strip, with the support of the United States and the European Union, has grown increasingly stringent since Hamas won the Palestinian Legislative Council elections in January 2006. Fuel, electricity, imports, exports and the movement of people in and out of the Strip have been slowly choked off, leading to life-threatening problems of sanitation, health, water supply and transportation.

The blockade has subjected many to unemployment, penury and malnutrition. This amounts to the collective punishment — with the tacit support of the United States — of a civilian population for exercising its democratic rights.

THE CEASE-FIRE Lifting the blockade, along with a cessation of rocket fire, was one of the key terms of the June cease-fire between Israel and Hamas. This accord led to a reduction in rockets fired from Gaza from hundreds in May and June to a total of less than 20 in the subsequent four months (according to Israeli government figures). The cease-fire broke down when Israeli forces launched major air and ground attacks in early November; six Hamas operatives were reported killed.

WAR CRIMES The targeting of civilians, whether by Hamas or by Israel, is potentially a war crime. Every human life is precious. But the numbers speak for themselves: Nearly 700 Palestinians, most of them civilians, have been killed since the conflict broke out at the end of last year. In contrast, there have been around a dozen Israelis killed, many of them soldiers. Negotiation is a much more effective way to deal with rockets and other forms of violence. This might have been able to happen had Israel fulfilled the terms of the June cease-fire and lifted its blockade of the Gaza Strip.

This war on the people of Gaza isn’t really about rockets. Nor is it about “restoring Israel’s deterrence,” as the Israeli press might have you believe. Far more revealing are the words of Moshe Yaalon, then the Israeli Defense Forces chief of staff, in 2002: “The Palestinians must be made to understand in the deepest recesses of their consciousness that they are a defeated people.”

Rashid Khalidi, a professor of Arab studies at Columbia, is the author of the forthcoming “Sowing Crisis: The Cold War and American Dominance in the Middle East."

Want to End the Violence in Gaza? Boycott Israel - By Naomi Klein (LATEST UPDATE - 14/1/09)

9 January 2009 , Alternet The Nation

It’s time. Long past time. The best strategy to end the increasingly bloody occupation is for Israel to become the target of the kind of global movement that put an end to apartheid in South Africa.

In July 2005 a huge coalition of Palestinian groups laid out plans to do just that. They called on "people of conscience all over the world to impose broad boycotts and implement divestment initiatives against Israel similar to those applied to South Africa in the apartheid era." The campaign Boycott, Divestment and Sanctions -- BDS for short -- was born.

Every day that Israel pounds Gaza brings more converts to the BDS cause, and talk of cease-fires is doing little to slow the momentum. Support is even emerging among Israeli Jews. In the midst of the assault roughly 500 Israelis, dozens of them well-known artists and scholars, sent a letter to foreign ambassadors stationed in Israel. It calls for "the adoption of immediate restrictive measures and sanctions" and draws a clear parallel with the antiapartheid struggle. "The boycott on South Africa was effective, but Israel is handled with kid gloves.… This international backing must stop."

Yet even in the face of these clear calls, many of us still can't go there. The reasons are complex, emotional and understandable. And they simply aren't good enough. Economic sanctions are the most effective tools in the nonviolent arsenal. Surrendering them verges on active complicity. Here are the top four objections to the BDS strategy, followed by counterarguments.

1.?Punitive measures will alienate rather than persuade Israelis. The world has tried what used to be called "constructive engagement." It has failed utterly. Since 2006 Israel has been steadily escalating its criminality: expanding settlements, launching an outrageous war against Lebanon and imposing collective punishment on Gaza through the brutal blockade. Despite this escalation, Israel has not faced punitive measures -- quite the opposite. The weapons and $3 billion in annual aid that the US sends to Israel is only the beginning. Throughout this key period, Israel has enjoyed a dramatic improvement in its diplomatic, cultural and trade relations with a variety of other allies. For instance, in 2007 Israel became the first non–Latin American country to sign a free-trade deal with Mercosur. In the first nine months of 2008, Israeli exports to Canada went up 45 percent. A new trade deal with the European Union is set to double Israel's exports of processed food. And on December 8, European ministers "upgraded" the EU-Israel Association Agreement, a reward long sought by Jerusalem.

It is in this context that Israeli leaders started their latest war: confident they would face no meaningful costs. It is remarkable that over seven days of wartime trading, the Tel Aviv Stock Exchange's flagship index actually went up 10.7 percent. When carrots don't work, sticks are needed.

2.?Israel is not South Africa. Of course it isn't. The relevance of the South African model is that it proves that BDS tactics can be effective when weaker measures (protests, petitions, back-room lobbying) have failed. And there are indeed deeply distressing echoes of South African apartheid in the occupied territories: the color-coded IDs and travel permits, the bulldozed homes and forced displacement, the settler-only roads. Ronnie Kasrils, a prominent South African politician, said that the architecture of segregation that he saw in the West Bank and Gaza was "infinitely worse than apartheid." That was in 2007, before Israel began its full-scale war against the open-air prison that is Gaza.

3.?Why single out Israel when the United States, Britain and other Western countries do the same things in Iraq and Afghanistan? Boycott is not a dogma; it is a tactic. The reason the BDS strategy should be tried against Israel is practical: in a country so small and trade-dependent, it could actually work.

4.?Boycotts sever communication; we need more dialogue, not less. This one I'll answer with a personal story. For eight years, my books have been published in Israel by a commercial house called Babel. But when I published The Shock Doctrine, I wanted to respect the boycott. On the advice of BDS activists, including the wonderful writer John Berger, I contacted a small publisher called Andalus. Andalus is an activist press, deeply involved in the anti-occupation movement and the only Israeli publisher devoted exclusively to translating Arabic writing into Hebrew. We drafted a contract that guarantees that all proceeds go to Andalus's work, and none to me. In other words, I am boycotting the Israeli economy but not Israelis.

Coming up with our modest publishing plan required dozens of phone calls, e-mails and instant messages, stretching from Tel Aviv to Ramallah to Paris to Toronto to Gaza City. My point is this: as soon as you start implementing a boycott strategy, dialogue increases dramatically. And why wouldn't it? Building a movement requires endless communicating, as many in the antiapartheid struggle well recall. The argument that supporting boycotts will cut us off from one another is particularly specious given the array of cheap information technologies at our fingertips. We are drowning in ways to rant at one another across national boundaries. No boycott can stop us.

Just about now, many a proud Zionist is gearing up for major point-scoring: don't I know that many of those very high-tech toys come from Israeli research parks, world leaders in infotech? True enough, but not all of them. Several days into Israel's Gaza assault, Richard Ramsey, the managing director of a British telecom specializing in voice-over-internet services, sent an email to the Israeli tech firm MobileMax. "As a result of the Israeli government action in the last few days we will no longer be in a position to consider doing business with yourself or any other Israeli company."

Ramsey says that his decision wasn't political; he just didn't want to lose customers. "We can't afford to lose any of our clients," he explains, "so it was purely commercially defensive."

It was this kind of cold business calculation that led many companies to pull out of South Africa two decades ago. And it's precisely the kind of calculation that is our most realistic hope of bringing justice, so long denied, to Palestine.
Naomi Klein's latest book is The Shock Doctrine: The Rise of Disaster Capitalism.

Tunnel Vision - By Kathy Kelly (LATEST UPDATE - 13/1/09)

11 January 2009 ,Common Dreams

ARISH, Egypt - As I write, we can hear the dull thud of explosions in the distance. Israeli airstrikes continue to blast targets in southern Gaza. Merciless bombing of the small Gaza Strip continues into a third week. I heard some people here in Egypt wonder if the Israeli Air Force must be running out of places and people to target. But perhaps the surveillance drones we heard and saw flying over the Rafah border crossing today hunted down more spots on which bombers could fix their cross-hairs. Perhaps they spotted underground tunnels. The Israeli government has, reportedly, already destroyed 80% of the tunnels that connect Gaza with the outside world. It's common knowledge that a vast network of tunnels, some say as many as 1700, were constructed, many from outside Gaza's territorial borders, leading into the Territory. Israel claims the tunnels are legitimate targets because the Hamas government can use them to import weapons. But the buildup of the tunnel industry was fueled by desperation for needed goods, within Gaza, a desperation caused by Israel's decision, over the past 16 months, to tighten the thumbscrews of its blockade on Gaza. If the blockade continues, and if the tunnels are completely destroyed, besieged Gazans will be cut off from secure supplies of food, medicine and fuel, yet another terrifying prospect for people who are desperate to protect their children from any greater harm.

Supposedly concerned for Israeli security, the United States supports the Israeli government's objective of eliminating Hamas's capacity to fire primitive rockets into Israel. The extensive tunnel industry may be used for weapons transport. I believe it's wrong to transport weapons, and it's wrong to develop, store, sell or use them. Distant thuds reinforce this belief, but if the U.S. and Israel believe importation of weapons via underground tunnels is wrongful, then the U.S. transfer of sophisticated weaponry to Israel must, seen in perspective, be abominable, given the slaughter Israel has inflicted on Gazan civilians since the airstrikes began on December 27th.

The taxpayers of the U.S. provided Israel with F16 fighter jets and missiles to carry out these attacks. From 2001 – 2006, the United States transferred to Israel more than $200 million worth of spare parts to fly its fleet of F16s. Last year, the United States signed a $1.3 billion contract with Raytheon to transfer to Israel thousands of TOW, Hellfire, and "bunker buster" missiles. In July 2008, the United States gave Israel 186 million gallons of JP-8 aviation jet fuel.

U.S. donations of jet fuel enable Israel to fire missiles into Gazan homes, streets, schools and hospitals. Meanwhile, ambulances drivers in Gaza, also directly targeted, don't have enough diesel fuel to bring injured and wounded people to the Rafah border crossing, where patients might be allowed to enter Egypt for critically needed care.

Within Gaza, even before December 27th, civilians lacked essential fuels to power the main power plant, which operated at about 2/3 capacity. Now, it's inoperative. When trucks don't have fuel, this means that rubbish can't be collected. Hundreds of tons of rubbish went uncollected in Gaza because of the blockade. 77,000 cubic meters of raw and partially treated sewage were dumped into the sea. Farmers couldn't operate 70% of their agricultural wells. Power cuts affected hospitals, water pumps, sewage treatment plants, bakeries and other facilities dependent on back-up diesel generators.
Now Gazans not only face the consequences of a destroyed health care system and rising sickness due to water-borne diseases, they also face the reality that Hamas could be forced to sign a cease-fire that doesn't allow for opening the Rafah border and which insists that Egypt assume responsibility to prevent usage of underground tunnels. In exchange for relief from cowering under bombs fired by sophisticated weapon systems, Gazans would be required to endure slow motion death through systematic cutoffs of their access to food, medicine, and potable water. This is why it is so important for people all over the world to insist that Israel not only stop attacking Gaza, but also end the brutal and lethally punitive blockade imposed on Gaza.

Here in Egypt, the government has stated that it will undertake responsibility to be an effective partner in negotiating a cease-fire.

Israelis expect Egyptians to stop the tunnel industry. Egypt would be responsible to assure that no one enters a tunnel, builds a tunnel, or is an accomplice to maintaining a tunnel. Already, any Egyptian caught inside a tunnel faces 15 years in prison. How much better for all concerned if the cease-fire negotiations asked the Egyptians to maintain an open border with Gaza, to lift the punitive blockade, and to assist in the immediate and ongoing transport of goods and services that could help Gaza rebuild and assume responsibility, above-ground, for maintaining its citizenry and its sovereignty.

Egypt, the second largest recipient of military aid from the U.S., will be encouraged to use threat and force to curtail the tunnels, supposedly in the name of insuring security for Israel. But who will challenge the obscenely bloated so-called "defense industry" that allows elite gangs, some comfortably occupying the board rooms of major corporations, to supply a repressive, immoral and illegal occupation force with the disproportionate capacity to kill, using conventional weapons against civilian people who have no means to escape?

U.S. support for hard-line, extremist Israeli government policies again represents tunnel vision by choice. U.S. foreign policy makers can begin a cure for this dangerously impaired vision by recognizing the basic human rights of all Palestinian people, and at this crucial moment by caring for the survival and dignity of Gazan people, especially those for whom meeting basic needs depends on what might come through a tunnel.

Kathy Kelly, a co-coordinator of Voices for Creative Nonviolence , is writing from Arish, a town near the Rafah border between Egypt and Gaza. Bill Quigley, a human rights lawyer and law professor at Loyola New Orleans and Audrey Stewart are also in Egypt and contributed to this article. Kathy Kelly's email is kathy@vcnv.orgThis e-mail address is being protected from spambots. You need JavaScript enabled to view it

Kissinger: Obama Primed To Create "New World Order": Policy Guru Says Global Upheaval Presents "Great Opportunity" - By Drew Zahn (LATEST UPDATE - 11/1/09)

January 6, 2009 WorldNetDaily

Conflicts across the globe and an international respect for Barack Obama have created the perfect setting for establishment of "a New World Order," according to Henry Kissinger, the Nobel Peace Prize winner and former secretary of state under President Nixon.

Kissinger has long been an integral figure in U.S. foreign policy, holding positions in the Nixon, Ford and Reagan administrations. Author of over a dozen books on foreign policy, Kissinger was also named by President Bush as the chairman of the Sept. 11 investigatory commission.

Kissinger made the remark in an interview with CNBC's "Squawk on the Street" hosts Mark Haines and Erin Burnett at the New York Stock Exchange, after Burnett asked him what international conflict would define the Obama administration's foreign policy.

"The president-elect is coming into office at a moment when there is upheaval in many parts of the world simultaneously," Kissinger responded. "You have India, Pakistan; you have the jihadist movement. So he can't really say there is one problem, that it's the most important one. But he can give new impetus to American foreign policy partly because the reception of him is so extraordinary around the world. His task will be to develop an overall strategy for America in this period when, really, a new world order can be created. It's a great opportunity, it isn't just a crisis."

The phrase 'new world order' traces back at least as far as 1940, when author H.G. Wells used it as the title of a book about a socialist, unified, one-world government. The phrase has also been linked to American presidents, including Woodrow Wilson, whose work on establishing the League of Nations pioneered the concept of international government bodies, and to the first President Bush, who used it in a 1989 speech.

"A new partnership of nations has begun, and we stand today at a unique and extraordinary moment," said Bush before a joint session of Congress. "Out of these troubled times, our fifth objective – a new world order – can emerge: A new era … in which the nations of the world, east and west, north and south, can prosper and live in harmony."

The phrase "New World Order" causes alarm for many Americans, particularly those concerned about an international governing body trumping U.S. sovereignty or those that interpret biblical prophecy to foretell the establishment of a one-world government as key to the rise of the Antichrist. Conspiracy theorists, too, have latched on to the phrase, concerned that powerful financial or government figures are secretly plotting to rule the world.

Kissinger's ties to government and international powers – as well as his use of the phrase – have made him suspect in the eyes of many who are wary of what "new world order" might actually mean.

"There is a need for a new world order," Kissinger told PBS interviewer Charlie Rose last year, "I think that at the end of this administration, with all its turmoil, and at the beginning of the next, we might actually witness the creation of a new order – because people looking in the abyss, even in the Islamic world, have to conclude that at some point, ordered expectations must return under a different system."

As WND reported, Kissinger was also part of last year's super-secret Bilderberg Group, an organization of powerful international elites, including government, business, academic and journalistic representatives, that has convened annually since 1954.

According to sources that have penetrated the high-security meetings, the Bilderberg meetings emphasize a globalist agenda and promote the idea that the notion of national sovereignty is antiquated and regressive.
CNBC's Haines concluded the Kissinger interview by asking, "Are you confident about the people President-elect Obama has chosen to surround him?"

Kissinger replied, "He has appointed an extraordinarily able group of people in both the international and financial fields."

Boikot gaya hidup tajaan Yahudi

KEGANASAN di Palestin bukan perkara baru bagi umat Islam. Ia telah menjadi suatu indikator bagi mengukur lemah atau kuatnya umat Islam di seluruh dunia. Apa yang berlaku di Palestin merupakan sebahagian daripada peperangan bentuk fizikal manakala di bumi sebelah lain, umat Islam turut diserang oleh gaya hidup yang ditaja dan dicipta oleh Yahudi dan AS.

Media hiburan yang dikuasai oleh Yahudi dan AS menaja gaya hidup bebas dari agama melalui filem, lagu dan rancangan realiti TV. Semuanya berakar daripada Barat yang dicipta oleh Yahudi. Ia disalurkan ke media melalui siaran TV dan juga Internet.

Dunia tanpa sempadan menjadi medium terbaik untuk mereka mengeksport budaya songsang ke negara-negara Islam. Akibatnya generasi muda Islam hampir lumpuh daya fikirnya dan semakin tumpul semangat jihadnya.

Apa sahaja rancangan TV yang dikira mempunyai keuntungan besar semuanya ditiru secara melulu. Sehingga menjadikan generasi muda kita berjiwa santai dan tidak mahu memikirkan hal yang lebih serius dan mencabar.

Penguasaan ilmu dan teknologi masih berada di tangan pihak Yahudi dan AS. Mereka menguasai bidang sains teknologi dan ketenteraan. Sehinggakan jutaan ringgit dilaburkan di kalangan negara Islam untuk membeli senjata dari AS. Negara-negara Islam juga banyak bergantung kepada AS sebagai rakan dagangan utama.

Kebergantungan kepada kuasa besar ini turut mempengaruhi dasar luar negara-negara Islam untuk melaksanakan tindakan secara bersepadu. Kesemua dakyah yang ditabur dan dicipta ini telah berjaya mengkucar-kacirkan kekuatan umat Islam di seluruh dunia. Amat malang sekali seandainya kita tidak sedar dan insaf tentang gaya hidup yang dicipta oleh Yahudi ini.

Dalam konteks negara kita, pelbagai langkah untuk mengecam tindakan rejim Zionis Israel kini giat dilaksanakan. Apa yang penting kita bukan sahaja perlu memboikot barangan buatan Yahudi dan AS, malahan bertekad memboikot sebarang gaya hidup tajaan Yahudi dan AS yang semakin kuat mengakar dalam kehidupan masyarakat Muslim.

Rancangan berbentuk keagamaan dan ilmiah perlu diangkat martabatnya dalam siaran TV di negara kita. Rancangan hiburan berlebihan harus dikurangkan dan diganti dengan program yang dapat membentuk fikrah masyarakat Islam.

Masyarakat Islam perlu sedar bahawa kita sekarang telah diserang dari pelbagai sudut, kita perlu bangkit dari tidur yang lena. Golongan belia Islam juga harus sedar dan melaksanakan perubahan baru untuk menjadi lebih kuat dan bebas daripada serangan halus gaya hidup tajaan Yahudi.


Cukupkah sekadar marah kepada Israel?

ISRAEL telah mengganyang bumi Gaza hingga meragut lebih 900 nyawa. Hampir separuh daripadanya adalah kanak-kanak, wanita dan orang awam.

Dalam kebanyakan gambar yang disiarkan oleh akhbar, saya amat tersentuh dan gambar yang disiarkan di muka hadapan Utusan Malaysia bertarikh 7 Januari 2009 lalu. Gambar yang memaparkan mayat seorang budak perempuan Palestin sangat menyentuh perasaan saya.

Dia kemungkinan sebaya dengan anak perempuan bongsu saya yang berumur 4 tahun. Gambar berkenaan bukanlah satu-satunya gambar yang menceritakan penderitaan bangsa palestin.

Gambar berkenaan juga mengingatkan saya kepada gambar yang hampir serupa ketika media memaparkan gambar mayat seorang kanak-kanak Palestin yang terkorban dalam tragedi Shabra dan Shatila kira-kira 20 tahun yang lalu.

Setiap kali menyaksikan penindasan yang menimpa umat Islam, kita sering melihat reaksi balas umat Islam dan warga dunia yang lain meluahkan perasaan marah di jalan-jalan raya. Ia mungkin sebahagian daripada reaksi segera yang mampu kita lakukan.

Namun apakah ia memberi kesan yang segera kepada keangkuhan Israel yang menjadi semakin gila? Benarlah ingatan al-Quran kepada umat Islam bahawa Yahudi dan Nasrani tidak sekali-kali akan reda dengan Islam melainkan kita mengikuti ajaran mereka.

Dengan kemelut yang melanda umat Islam hari ini, tidak ada apa yang boleh kita lakukan dengan berkesan. Tindakan memboikot barangan Israel dan sekutunya AS mungkin pilihan terbaik setakat ini.

Tetapi tindakan ini juga akan memberi kesan kepada negara kita sendiri kerana terdapat juga pemegang francais kepada produk yang hendak diboikot di negara kita adalah usahawan tempatan seperti JCorp yang memegang francais KFC.

Saya menyokong sepenuhnya pandangan Tun Dr. Mahathir Mohamad yang meminta umat Islam terutama di negara kita supaya membuat pembetulan diri dengan mengambil Palestin sebagai iktibar.

Tidak guna kita menyalahkan Yahudi dan AS jika sebahagian besar keperluan hidup kita bergantung kepada mereka.

Bukan sahaja kita memerlukan mereka untuk menyediakan senjata kepada kita, malah kita juga memerlukan mereka untuk menyediakan keperluan makanan seharian kita. Itu belum lagi mengambil kira keperluan ilmu pengetahuan dan teknologi.


Tidak ada apa yang boleh kita lakukan jika tidak memiliki ilmu pengetahuan terutama dalam bidang sains dan matematik.

Penguasaan ilmu pengetahuan pula janganlah diukur dengan hanya melihat pangkat dan kelulusan akademik semata-mata, tetapi ia perlu diterjemahkan kepada sumbangannya kepada pembangunan umat secara keseluruhannya.

Universiti kita janganlah hanya menjadi gedung ilmu semata-mata dengan segala tenaga pakar dan hasil pelbagai jenis kajian, tetapi hendaklah turut berperanan sebagai penjana kepada setiap keperluan umat Islam. Ramai tenaga pakar dan ilmuwan yang mampu mengkaji, menulis, bersyarah dan bercakap. Begitu juga ramai pemimpin dan pentadbir Islam yang kaya dengan idea dan kuasa.

Tetapi tidak ramai yang bersedia turun padang mengorbankan masa, wang ringgit dan kedudukan masing-masing untuk mengubati penyakit umat.

Untuk mencapai semua ini, ia bukanlah semudah menulis pendapat ini. Ia memerlukan umat yang sedia berkorban seperti mana yang dilakukan oleh generasi umat terdahulu.

Untuk itu, saya menyeru diri saya sendiri dan semua umat Islam, mulakan dengan diri kita sendiri, keluarga kita dan sahabat yang sedia memilih perjuangan ini.

Perjuangan ini melampaui batasan ideologi politik, sempadan negara dan warna kulit. Mulakan dengan doa kerana kita sering lupa bahawa umat Islam memiliki senjata yang lebih ampuh daripada senjata nuklear iaitu doa.

Alor Star, Kedah


Ekonomi Barat boleh digugat

Konflik Israel-Palestin dan keganasan Israel tanpa peri kemanusiaan ke atas penduduk Islam Palestin di Gaza sebenarnya mencerminkan kelemahan pemimpin-pemimpin negara Islam itu sendiri.

Demonstrasi, boikot dan bantahan sama ada diplomasi atau keras tanpa tindakan balas yang setara ke atas keganasan Israel tidak membawa sebarang pengertian.

Tidak hairanlah Israel masih mengganas walaupun resolusi gencatan senjata telah diluluskan oleh Majlis Keselamatan Pertubuhan Bangsa-Bangsa Bersatu (PBB). Seperti biasa, Amerika Syarikat (AS) mengambil sikap berkecuali dalam resolusi PBB itu.

Konflik Israel-Palestin dan serangan rejim Zionis ke atas Gaza mencerminkan kelemahan kesatuan geopolitik dalam kalangan pemimpin negara Islam.

Kelemahan negara Islam dari segi ekonomi, politik dan tentera, terutamanya selepas Perang Dunia Kedua, memberi ruang kepada negara Barat, terutamanya AS dan Kesatuan Eropah (EU) untuk menentukan hala tuju ekonomi dan politik dunia.

Merekalah arkitek kepada penubuhan PBB, Dana Kewangan Antarabangsa (IMF), Bank Dunia dan Pertubuhan Perdagangan Antarabangsa (WTO).

Menerusi institusi antarabangsa itu, AS dan EU melaungkan peri pentingnya demokrasi dan meluaskan pengaruh mereka menerusi bantuan keselamatan dan kewangan kepada negara sedang membangun, termasuk negara Islam.

Liga Arab (22 negara ahli) dan Pertubuhan Persidangan Islam (OIC, 57 negara ahli) tidak dapat mempengaruhi, apa lagi menguasai konflik Israel-Palestin, sebaliknya bergantung kepada PBB untuk menyelesaikan konflik itu.

Adakala melobi negara Rusia untuk mencari jalan penyelesaian kepada konflik itu, namun Rusia kini bukan lagi kuasa ekonomi dan politik yang besar.

Bagaimanapun, sebarang resolusi mengenai konflik Israel-Palestin yang ditentukan oleh PBB akan memihak kepada Israel dan disertai dengan sokongan padu daripada AS.

Pada satu pendekatan ekstrem, AS berperanan sebagai polis dunia dan pendamai antarabangsa dalam sebarang konflik dunia jika ia menggugat kepentingannya.

Malah ada negara Islam yang menjemput AS dan EU menyelesai masalah dalaman negara mereka. Satu ironi yang besar.

Krisis kewangan yang melibatkan berbilion dolar di AS dan euro di EU menunjukkan bahawa ekonomi negara Barat itu bukan tidak boleh digugat.

Negara Islam perlu memanfaatkan kelemahan ekonomi negara Barat pada masa ini dengan mewujudkan wilayah perdagangan bebas (FTA) sejagat dalam kalangan negara Islam, khususnya OIC-FTA.

Misinya adalah untuk menguasai hala tuju ekonomi politik dunia yang selama ini ditentukan oleh AS dan EU. Blok OIC-FTA perlu mengambil gagasan baru yang lebih agresif dengan menjadi saingan kepada AS dan EU.


Ini boleh dilakukan dan telah dilakukan oleh negara Islam yang merupakan pelaku utama dalam geopolitik dunia dan menjadi pusat rujukan antarabangsa sebelum kejatuhan Empayar Turki Uthmaniyah.

Kekuatan negara Islam terletak pada kesatuan geopolitiknya. Untuk mencapai matlamat itu, ekonomi negara-negara Islam perlu diperkukuhkan terlebih dahulu.

Pergantungan kepada blok Barat dari segi bantuan keselamatan dan kewangan memberi implikasi yang tidak sihat.

Akibatnya, negara Islam tidak bebas daripada pengaruh dasar luar terutamanya dari AS dan EU. Situasi ini juga berpunca daripada kelemahan ekonomi negara ahli OIC dan pemimpin negara Islam dalam pengurusan ekonomi dan kekayaan negara masing-masing.

Walaupun negara-negara Islam menguasai pengeluaran minyak mentah dunia dan AS pula pengguna minyak terbesar dunia, negara Islam masih tidak dapat mempengaruhi dan menguasai AS. Ini merupakan isu besar.

Daripada 13 negara Pertubuhan Negara-negara Pengeksport Petroleum (OPEC), 10 adalah negara Islam dengan Arab Saudi, Iran, Iraq dan Kuwait mempunyai rezab minyak mentah yang terbesar di dunia.

Minyak dikeluarkan sebegitu banyak oleh negara Islam OPEC tetapi malangnya tidak membawa apa-apa formula demi survival negara-negara Islam di dunia, khususnya untuk menyelesaikan konflik Israel-Palestin dan Barat-Islam.

Oleh itu, anugerah minyak yang diberi oleh Allah tidak digunakan oleh pemimpin Islam untuk menjaga agama Islam dan masyarakatnya.

Ini kerana pemimpin negara Islam tidak bergerak secara kolektif sebagaimana blok AS dan EU sering bekerjasama menerusi badan dunia yang disahkan oleh masyarakat antarabangsa dan juga negara Islam seperti PBB, IMF, Bank Dunia dan WTO untuk menjaga kepentingan mereka dan masyarakatnya.

Sumbangan OIC kepada output dunia adalah kecil. Berdasarkan data 2006, OIC menyumbang hanya lapan peratus dalam output dunia, berbanding EU sebanyak 30 peratus, dan AS menyumbang 23 peratus.

Ini bererti daripada satu ringgit, 30 sen ekonomi dunia dijana oleh blok EU dan 23 sen dihasilkan oleh AS. Sementara negara OIC yang terdiri daripada 57 negara ahli menjana lapan sen sahaja. Inilah gambaran jurang kekuatan ekonomi antara Barat dan Islam.

Penyumbang terbesar dalam output dunia, ialah AS, Jepun, China, Jerman, Perancis, United Kingdom, Itali, Rusia, Sepanyol dan Brazil.

Ini bererti, tidak ada negara Islam individu yang menduduki tangga 10 teratas dari segi sumbangan kepada output dunia.

Daripada 180 negara di dunia, kedudukan yang tertinggi tercapai oleh negara Islam ialah Turki, di tangga ke-17.

Sumbangan Turki dalam output dunia hanya satu peratus diikuti dengan Arab Saudi (ke-19), Indonesia (ke-26) dan Iran (ke-26).

Seperti Turki, kegiatan ekonomi Iran ialah di EU dan Asia. Malaysia pula di tangga ke-41 dalam kedudukan dunia tetapi di tangga ke-7 dalam kedudukan OIC.

Apa yang menarik ialah Iran, ia masih mampu membangunkan ekonominya walaupun dengan sekatan dan halangan perdagangan daripada AS dan salah satu daripada negara Islam yang tidak boleh dipengaruhi oleh AS. Kecuali, Turki dan Iran, kebanyakan negara Islam bergantung kepada AS dalam perdagangan dan pelaburan antarabangsa.


Ekonomi negara Islam dapat dikukuhkan dengan penubuhan OIC-FTA yang sistematik dan bergerak secara kolektif dan agresif dan menyelesai segera konflik Sunni-Syiah. Kerjasama ekonomi yang teratur sesama negara Islam sudah pun dilaksanakan menerusi penubuhan D-8 pada tahun 1996.

Blok dagangan itu bagaimanapun berskala kecil kerana hanya melibatkan lapan negara ahli OIC terpilih iaitu Bangladesh, Mesir, Indonesia, Iran, Malaysia, Nigeria, Pakistan dan Turki.

Blok D-8 dan Perjanjian Perdagangan Keutamaan (PTA) yang berkuat kuasa 1 Januari 2009 sesama negara ahli OIC akan menyediakan laluan pembangunan kepada kejayaan penubuhan blok OIC-FTA yang lebih luas lagi.

Bilangan penduduk Islam di dunia yang hampir 1.8 bilion orang (2006) sudah menyediakan pasaran kepada negara Islam. Penduduk Islam menyumbang kira-kira 28 peratus kepada jumlah penduduk dunia seramai 6.3 bilion orang (2006).


Sebenarnya, negara Islam mempunyai kekuatan ekonomi jika ia bergerak secara kolektif dan itulah yang dikehendaki oleh Islam. Krisis kewangan di Barat menunjukkan ekonomi AS dan EU adalah rapuh.

Sistem ekonominya bergerak dalam jaringan hutang dan wang ciptaan dan bukannya bersandarkan emas.

Negara Islam perlu memanfaat kelemahan itu. Kedudukan rezab kewangan AS dan beberapa negara EU sebenarnya boleh disaingi oleh negara Islam.

Rezab tukaran asing dan emas adalah antara beberapa petunjuk kekuatan ekonomi kewangan sesebuah negara.

Daripada 25 negara teratas dalam ranking dunia, China mempunyai rezab tukaran asing dan emas yang tertinggi, iaitu AS$1.5 trilion dan diikuti Jepun (AS$954 bilion) dan Rusia (AS$476 bilion).

AS yang merasakan ia mempunyai kekuatan ekonomi dalam bentuk sumbangannya kepada output dunia, berada di tangga ke-21 (AS$71 bilion) berbanding negara Islam seperti Algeria (ke-12 dengan AS$111 bilion), Malaysia (ke-13 dengan AS$101 bilion) dan Libya (ke-17 dengan AS$80 bilion).

Jika rezab tukaran asing dan emas digabungkan di bawah blok OIC-FTA, negara Islam secara kesatuan mempunyai kekuatan kewangan.

Ia memberi asas kepada OIC-FTA untuk membentuk sistem monetari yang berasaskan emas (atau dinar) bagi tujuan perdagangan dan pelaburan sesama 57 negara ahli.

Ini mengelak mereka daripada terikat dengan sistem IMF, WTO dan Bank Dunia ciptaan Barat. Malah kewujudan negara Israel adalah ciptaan Britain dengan sokongan AS untuk menguasai negara Islam di Timur Tengah.

Sistem monetari dinar yang diuar-uarkan oleh kerajaan Malaysia adalah langkah permulaan dan praktikal bagi OIC-FTA, di samping PTA, untuk mengurangkan pergantungan negara Islam kepada blok Barat secara berperingkat.

Selain itu memberi isyarat kepada AS dan EU bahawa negara Islam adalah serius untuk mewujudkan blok OIC-FTA yang mempunyai keabsahan (legitimacy) bagi menentukan hala tuju ekonomi politik dunia.

Dalam pada itu, ia memberi keabsahan kepada Liga Arab yang akan menjadi sayap politik OIC-FTA untuk melobi, mempengaruhi dan menguasai PBB untuk menyelesaikan konflik Israel-Palestin.

Meningkatkan kekuatan ekonomi, politik dan tentera sesama negara Islam adalah satu amanah bagi menjaga masyarakat Islam antarabangsa.

Kerjasama perniagaan, perdagangan dan pelaburan antara negara Islam menerusi blok OIC-FTA memperkasakan ekonomi ummah Islam.

Kini keabsahan negara Islam dan survival masyarakat pada masa ini bergantung kepada Mekah dengan Masjid al-Haram, Madinah dengan Masjid Nabawi, dan Baitulmaqdis dengan Masjid Al-Aqsa.

Masyarakat Islam antarabangsa yang berketurunan bukan Arab akan selalu mengaitkan diri mereka dengan ketiga-tiga masjid yang utama dalam Islam. Di masjid-masjid ini adalah lambang tauhid dan persaudaraan manusia sejagat.


US Promotes Israeli Genocide - By Francis A. Boyle (LATEST UPDATE - 11/1/09)

9 January 2009, Palestinian Chronicle

 'I anticipate no fundamental change in US support for Israeli campaign of genocide.'

As long ago as October 19, 2000, the then United Nations Human Rights Commission (now Council) condemned Israel for inflicting "war crimes" and "crimes against humanity" upon the Palestinian people, most of whom are Muslims. The reader has a general idea of what a war crime is, so I am not going to elaborate upon that term here. But there are different degrees of heinousness for war crimes. In particular are the more serious war crimes denominated "grave breaches" of the Fourth Geneva Convention. Since the outbreak of the first Intifada in 1987, the world has seen those heinous war crimes inflicted every day by Israel against the Palestinian people living in occupied Palestine: e.g., willful killing of Palestinian civilians by the Israeli army and by Israel's illegal paramilitary settlers. These Israeli "grave breaches" of the Fourth Geneva Convention mandate universal prosecution for the perpetrators and their commanders, whether military or civilian, including and especially Israel’s political leaders.

But I want to focus for a moment on Israel’s “crimes against humanity” against the Palestinian people—as determined by the U.N. Human Rights Commission itself, set up pursuant to the requirements of the United Nations Charter. What are “crimes against humanity”? This concept goes all the way back to the Nuremberg Charter of 1945 for the trial of the major Nazi war criminals in Europe. In the Nuremberg Charter of 1945, drafted by the United States Government, there was created and inserted a new type of international crime specifically intended to deal with the Nazi persecution of the Jewish people:

“Crimes against humanity: namely, murder, extermination, enslavement, deportation, and other inhumane acts committed against any civilian population, before or during the war, or persecutions on political, racial or religious grounds in execution of or in connection with any crime within the jurisdiction of the Tribunal, whether or not in violation of the domestic law of the country where perpetrated.”

The paradigmatic example of “crimes against humanity” is what Hitler and the Nazis did to the Jewish people. This is where the concept of “crimes against humanity” came from. And this is what the U.N. Human Rights Commission determined that Israel is currently doing to the Palestinian people: crimes against humanity. Expressed in legal terms, this is just like what Hitler and the Nazis did to the Jews. That is the significance of the formal determination by the U.N. Human Rights Commission that Israel has inflicted “crimes against humanity” upon the Palestinian people. The Commission chose this well-known and long-standing legal term of art quite carefully and deliberately based upon the evidence it had compiled.

Furthermore, the Nuremberg “crimes against humanity” are the historical and legal precursor to the international crime of genocide as defined by the 1948 Genocide Convention. The theory here was that what Hitler and the Nazis did to the Jewish people was so horrific that it required a special international treaty that would codify and universalize the Nuremberg concept of “crimes against humanity.” And that treaty ultimately became the 1948 Genocide Convention.
Article II of the Genocide Convention defines the international crime of genocide in relevant part as follows:
In the present Convention, genocide means any of the following acts committed with intent to destroy, in whole or in part, a national, ethnical, racial or religious group as such:

(a) Killing members of the group;

(b) Causing serious bodily or mental harm to members of the group;

(c) Deliberately inflicting on the group conditions of life calculated to bring about its physical destruction in whole or in part;

As documented by Israeli historian Ilan Pappe in his seminal book The Ethnic Cleansing of Palestine (2006), Israel’s genocidal policy against the Palestinians has been unremitting, extending from before the very foundation of the State of Israel in 1948, and is ongoing and even intensifying against the 1.5 million Palestinians living in Gaza. Zionism’s “final solution” to Israel’s much touted “demographic threat” allegedly posed by the very existence of the Palestinians has always been genocide.

Certainly, Israel and its predecessors-in-law—the Zionist agencies, forces, and terrorist gangs—have committed genocide against the Palestinian people that actually started on or about 1948 and has continued apace until today in violation of Genocide Convention Articles II(a), (b), and (c). For at least the past six decades, the Israeli government and its predecessors-in-law—the Zionist agencies, forces, and terrorist gangs—have ruthlessly implemented a systematic and comprehensive military, political, and economic campaign with the intent to destroy in substantial part the national, ethnical, racial, and different religious (Jews versus Muslims and Christians) group constituting the Palestinian people. This Zionist/Israeli campaign has consisted of killing members of the Palestinian people in violation of Genocide Convention Article II(a). This Zionist/Israeli campaign has also caused serious bodily and mental harm to the Palestinian people in violation of Genocide Convention Article II(b). This Zionist/Israeli campaign has also deliberately inflicted on the Palestinian people conditions of life calculated to bring about their physical destruction in substantial part in violation of Article II(c) of the Genocide Convention.

Article I of the Genocide Convention requires all contracting parties such as the United States “to prevent and to punish” genocide. Yet to the contrary, historically the “Jewish” state’s criminal conduct against the Palestinians has been financed, armed, equipped, supplied and politically supported by the “Christian” United States. Although the United States is a founding sponsor of, and a contracting party to, both the Nuremberg Charter and the Genocide Convention, as well as the United Nations Charter, these legal facts have never made any difference to the United States when it comes to its blank-check support for Israel and their joint and severable criminal mistreatment of the Palestinians—truly the wretched of the earth!

The world has not yet heard even one word uttered by the United States and its NATO allies in favor of “humanitarian intervention” against Israel in order to protect the Palestinian people, let alone a “responsibility to protect” the Palestinians from Zionist/Israeli genocide. The United States, its NATO allies, and the Great Powers on the U.N. Security Council would not even dispatch a U.N. Charter Chapter 6 monitoring force to help protect the Palestinians, let alone even contemplate any type of U.N. Charter Chapter 7 enforcement actions against Israel – shudder the thought!. The doctrine of “humanitarian intervention” so readily espoused elsewhere when U.S. foreign policy goals are allegedly at stake has been clearly proved to be a joke and a fraud when it comes to stopping the ongoing and accelerating Israeli campaign of genocide against the Palestinian people.

Rather than rein in the Israelis—which would be possible just by turning off the funding pipeline—the United States government, the U.S. Congress, and U.S. taxpayers instead support the “Jewish” state to the tune of about 4 billion dollars per year, without whose munificence this instance of genocide – and indeed conceivably the State of Israel itself – would not be possible. What the world witnesses here is (yet another) case of “dishumanitarian intervention” or “humanitarian extermination” by the United States and Israel against the Palestinians and Palestine. In today’s world genocide pays so long as it is done at the behest of the United States and its de jure or de facto allies such as Israel.

Of course miracles can always happen. But I anticipate no fundamental change in America’s support for the Israeli campaign of genocide against the Palestinians during the tenure of the Obama/Clinton administration.
(From "Tackling America’s Toughest Questions," now at

Francis Boyle is a distinguished University of Illinois law professor, activist, and internationally recognized expert on international law and human rights. He contributed this article to

Value of 2008 Bailouts Exceeds Combined Costs of All Major U.S. Wars - By Fred Lucas

 The total value of the bailouts undertaken by the federal government in 2008 now exceeds the combined cost of every major war the United States has ever engaged in, according to a comparison of war costs calculated by the Congressional Research Service (CRS) and the value of the bailouts as calculated by Bloomberg News or Bianco Research.
According to CRS, all major U.S. wars (including such events as the American Revolution, the War of 1812, the Civil War, the Spanish American War, World War I, World War II, Korea, Vietnam, Iraq and Afghanistan, but not the invasion of Panama or the Kosovo War), cost a total of $7.2 trillion in inflation-adjusted 2008 dollars.
According to Bloomberg, the federal government has made commitments worth a total of $8.5 trillion in the bailouts of 2008. That includes actual expenditures as well as loan and asset guarantees.
Bianco Research puts the total value of the bailouts at $8.7 trillion.

The $296 billion spent on World War II, America’s most expensive war, would be $4.1 trillion adjusted to today’s dollars, according to the CRS report from June.
The adjusted cost of the Civil War would be $60.4 billion for both the Union and the Confederacy combined. The inflation-adjusted cost of the Vietnam War would be $686 billion. The cost of the current Iraq war up to last June was $648 billion, while the adjusted cost for Afghanistan to that point was $171 billion.
The total cost of the American Revolution was a relatively inexpensive $1.8 billion.
“World War II was financed by savings, the American people’s savings, when Americans bought war bonds,” said Olivier Garret, CEO of Casey Research, who analyzed the value of the bailout compared to the major U.S. wars and other major historical government expenses. “Today, families are in debt and government is in debt.”

A Bianco Research report cited in Politico puts the number for the total value of bailouts at $8.7 trillion and also affirms the value to be higher than the cost of all American wars and historic initiatives. A spokesman with Bianco Research could not be reached for comment as this story went to press.
The bailouts, led by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, were taken as emergency actions to keep U.S. companies from going under and to prevent a total financial markets meltdown in the United States. Similar bailouts were issued in other countries to address the global financial crisis.
The Bush administration is mulling whether to use some of the $700 billion in TARP funds approved by Congress to bailout the financial industry to bailout U.S. automakers.
The bailouts could put U.S. taxpayers in a tough spot in the future, said Pete Sepp, spokesman for the National Taxpayers Union.
“I’m assuming the figures do not include the Cold War defense expenditures, which would probably amount to several trillion on their own,” Sepp told “In any case, it’s a stark illustration of just how quickly the federal government has gotten into a huge financial hole and dragged taxpayers into it in the process.”
“We can only hope and pray that many of these liabilities and guarantees and commitments the government has made will not have to be made good on,” Sepp said. “If we were to be responsible for paying out all of these obligations, even in the period of one or two years, it would be financially disastrous to the government’s credit rating and our own as taxpayers.”
Garret pointed to the cost that will be paid by Americans in the future.  “Future generations of Americans are going to continue to finance the enormous amount of debt,” he said.

Government Panic Could Herald Dollar Panic - By John Browne

Government Panic Could Herald Dollar Panic - By John Browne

Euro Pacific Capital

One of the few things more troubling for an economy than government intervention is government intervention driven by panic. Time and again, history has shown that when governments rush to engineer solutions to pressing problems, unintended difficulties arise.

In the current crisis, there is growing evidence that Washington is in a state of increasing panic. Despite its massive cash injections, market manipulations and 'rescue' plans, the recession is clearly deepening and spreading. With little to show thus far, politicians don't know if they should redouble past efforts, break ground on new initiatives, or both. However all agree, unfortunately, that the consequences of doing too little far outweigh the consequences of doing too much.

Although there are many parallels between the current crisis and the Crash of 1929, one key difference is the global profile of the U.S. dollar. In 1929, the dollar was on the rise, and would soon eclipse the British Pound Sterling as the world's 'reserve' currency. Furthermore, the American economy was fundamentally so strong that in 1934 America was the only major nation able to maintain a currency tied to gold.

Ever since, the U.S. dollar's privileged 'reserve' status has been a principal factor in America's continued prosperity. The dollar's unassailable position has enabled successive American governments to disguise the vast depletion of America's wealth and to successfully increase U.S. Treasury debt to where the published debt now accounts for some 100 percent of GDP. The total of U.S. Government debt, including IOU's and unfunded programs, now stands at a staggering $50 trillion, or five times GDP! If the dollar were just another currency, this never would have been possible.

In today's crisis however, the dollar is likely making its last star turn as the leading man in the global financial drama. Other stronger, less burdened currencies are waiting in the wings for the old gent to take his final bows.

The dollar's demise is being catalyzed by the neglect of the Federal Government. Instead of enacting policies that would restructure the U.S. economy, and restore productive, non-inflationary wealth creation, Congress is simply financing the old crumbling edifice.

Faced with the growing realization that America is not doing the work necessary to right its economic ship, it will not be long before America's primary creditors begin to seriously question the nation's ability to service, let alone repay, its debts.

There is now the prospect (inconceivable until recently), that America could lose its prestigious 'triple-A' credit rating. In today's risk adverse market, this could cost the Treasury one percent in interest on long bonds. Each additional percentage point of interest would cost America some $10 billion a year on each trillion dollars of new debt, or some $300 billion over the life of a 30-year bond.

Many of the foreign governments who hold huge amounts of U.S. dollar Treasury debt, such as China and Japan, have announced plans to spend money on their own ailing economies. Should these foreign central banks divert to domestic initiatives some of the funds used to buy U.S. Treasuries, serious upward pressure on U.S. interest rates will result. Should they actually sell parts or all of their holdings they will likely put serious downward pressure on the U.S. dollar. Last week, a Chinese official claimed the U.S. dollar should be phased out as the world's 'reserve' currency.

In the short term, as dollar 'carry-trades' continue to be unwound and questions of political will and falling interest rates haunt the Euro and some other currencies, the U.S. dollar may be the recipient of some upward appreciation. But with the American Government appearing increasingly to be in panic mode, a run on the U.S. dollar could develop rapidly into cascading devaluation. Even if no such panic run materializes the long-term outlook for the U.S. dollar is one of high risk and low return. This beckons major upward pressure on precious metals.

John Browne is the Senior Market Strategist for Euro Pacific Capital, Inc. Mr. Browne is a distinguished former member of Britain's Parliament who served on the Treasury Select Committee, as Chairman of the Conservative Small Business Committee, and as a close associate of then-Prime Minister Margaret Thatcher. A graduate of the Royal Military Academy Sandhurst, Britain's version of West Point and retired British army major, John served as a pilot, parachutist, and communications specialist in the elite Grenadiers of the Royal Guard.

In addition to careers in British politics and the military, John has a significant background, spanning some 37 years, in finance and business. After graduating from the Harvard Business School, John joined the New York firm of Morgan Stanley & Co as an investment banker. He has also worked with such firms as Barclays Bank and Citigroup. During his career he has served on the boards of numerous banks and international corporations, with a special interest in venture capital. He is a frequent guest on CNBC's Kudlow & Co. and the former editor of NewsMax Media's Financial Intelligence Report and He holds FINRA series 7 & 63 licenses.

A Shocking Revelation - A Massive RM73 Billion Bailout or A Quantum-Leap Stimulus? Prepare For Very Bad News By End of 1st Quarter - By Matthias Chang (LATEST UPDATE - 15/1/09)

When certain financial information which should come from official sources gets announced through a private vested interest, it is an indication that we must prepare for a national security alert, to be precise a FINANCIAL RECKONING that will send a shiver down our spines!

In the last quarter of 2008, our listless government announced that it had provided a RM7.5 billion stimulus to overcome the effects of the global financial crisis which had impacted on our economy.

Some quarters have indicated that this is a pittance and is a reflection that the government is still in a state of denial and or at a lost as to what remedies need to be adopted.

Be that as it may, it is clear that the RM7.5 Billion stimulus is insufficient as the Prime Minister was quick to declare within weeks that further stimulus would be required.

I waited a week before writing this article to see whether any financial analyst would pick up on this staggering revelation. But nothing, absolutely nothing was written in any of the business / financial dailies.

Judge for yourself - how can anyone not comment on this piece of revelation:

Wednesday January 7, 2009 Business Times (NST)

“Govt likely to sell RM73b worth of bonds: CIMB

“Malaysia will sell a record amount of bonds this year to fund economic stimulus spending and may offer its first foreign-currency bonds since 2002, according to CIMB Investment Bank Bhd.

“The Finance Ministry will probably sell a record RM73 billion of securities as revenue trails spending for an 11th straight year, said Lum Choong Kuan, head of bond research at CIMB, a unit of Bumiputera Commerce Holdings Bhd, the second largest banking group.

“… ‘A wider deficit will necessitate a bigger bond sale,’ he said in a phone interview…”

One can look at this unusual revelation from two perspectives bearing in mind that the Group CEO of CIMB is the younger brother of the Deputy Prime Minister and Finance Minister and maybe the next Prime Minister if one believes that Badawi would in fact relinquish power!

Firstly: The economy must be in a real shit state to require such a massive RM73 billion stimulus, a record sale of securities by the government. It follows that all this while, we were lulled into believing that all is well and that Malaysia will not be affected by the global financial tsunami. The person most responsible for this fairy tale is none other than the Governor of Bank Negara (our central bank). This is almost ten times the original stimulus of RM7.5 Billion announced recently.

Secondly: This RM73 Billion sale of securities is not a stimulus to spur the economy but a massive bailout of financial institutions as well as a desperate measure to shore up our declining liquidity as our foreign exchange reserves have plunged from a massive US$124 Billion in August 2008 to US$96 Billion in December 2008 – a loss of US$28 Billion in a mere three months. In the coming months, our reserves will decrease further!

There is also the added problem that as the US$ depreciates, our dollar reserves’ purchasing power will decline proportionately! In simple layman’s terms, if US$100 can buy ten pairs of shoes in 2007 and if the dollar has declined by 30 per cent, the US$100 dollars that we have will now buy 7 pairs of shoes.

This is a double whammy – an absolute decline on US Dollar reserves as well as a decline in its purchasing power!

I take the view that the RM73 Billion is earmarked for a massive bailout of our financial institutions. This is because, a few months ago, Bank Negara announced that it would follow Singapore’s lead in exempting banks which have transferred off-balance sheet “assets” back on their books from the statutory requirement to mark-to-market the value of such “assets”. This means that these assets which may be worth almost nothing are allowed to retain their “original value” thereby hiding the losses suffered by our banks.

Other than Bank Negara and the Finance Ministry, no one actually knows the extent of our banks’ exposure notwithstanding the repeated declarations that our banks are healthy and resilient. If in fact they are well capitalized, there is no need to waive the requirement to mark-to-market the off-balance sheet “assets”. If these “assets” are worthless, they should be written off, if our banks are able to absorb such huge write-offs.

Additionally, with the crude prices hovering around US$40, Petronas is bleeding and our 2009 budget as well as the 9th Malaysia plan is totally screwed up. We just don’t have the money to finance the 2009 budget and the 9th Malaysia Plan.

Our economy will contract substantially after the first quarter of 2009. We will be lucky if we achieve 1% growth. But I doubt it.


Wall Street’s bull is already dead. What can we expect from our water buffalo?

New World Order Will Emerge in 2009, with U.S. plunging - By Paul Kennedy (LATEST UPDATE - 14/1/09)

January 2009 Salt Lake Tribune

Every so often in the history of international affairs, a great transnational turbulence shakes the foundations of the world and brings many of its older structures tumbling to the ground, as we witnessed in 1919, 1945 and 1989. In the confusion and babble that follow, it's difficult to see through the dust and recognize the shape of the altered strategic landscape.

Peering through the wreckage of the past year's financial crisis, it seems clear that every nation was a loser in 2008. The world's developed economies have taken a heavy beating, whether measured by their collapsing industrial production, tumbling exports, surging unemployment, frozen credit markets or the near- paralysis of maritime trade.

Yet we also hear cries of distress across the globe. Vladimir Putin's proud Russia is reeling toward internal collapse. China is sending factory workers home to the countryside. The International Monetary Fund is trying to rescue Iceland and Ukraine from economic oblivion. Brazil's currency is plummeting against the U.S. dollar. And the brief honeymoon for commodity-exporting African countries is over. Which national economy didn't take a blow to the head in this annus horribilus?

When the dust settles, will we see all countries equally battered, like the streets of Dresden after the Allied bombings in February 1945? Will every power simply have taken several steps backwards, so that the "order of things" that existed in January 2008 will be the same in December 2009? I doubt it.

In the midst of general turmoil, there are always relative winners and losers. Those who are likely to lose most in the coming year will include Russia, Venezuela and Iran (too dependent on oil), most of Africa and Latin America (too tied to commodities), and Japan, Taiwan and South Korea (too wedded to exports, shipping, electronics).

By contrast, and unless it falls into the trap of a Pakistan war, India will advance; none of its banks (so far) are on the Bear Stearns Cos. track. China will take hits, but that probably means an increase in economic growth of 5 percent or 6 percent, deriving more from domestic development, and less from cheap exports.

Europe's prospects for 2009 are mixed, which is simply another way of saying that here, too, there will be relative winners and losers. Norway will ride the storm on its still-massive currency reserve and the rest of Scandinavia has strength in depth -- unlike the less competitive economies of East and Central Europe. Germany's combination of ultra-high-quality production, superb infrastructure and financial caution (few Germans use credit cards: Americans, take note!) give it strengths that are lacking in the U.K., France, Italy, Spain, Greece and other European countries that fell for easy credit and large government deficits. Prussian fiscal rectitude will keep the euro high, and compound the dollar's weaknesses.

The biggest question concerns the United States. My instinct tells me it will lose ground in 2009. I simply don't see how the Treasury can print $1 trillion to cover deficit spending, offer those bills at very low interest rates, and expect foreigners (not Americans, because we don't have the savings) to buy them, persuading the world to keep afloat its greatest debtor since Phillip II of Spain. Why should sensible Chinese investors do that when they can buy Swiss bonds, gold, or Scottish real estate? Yet if Asians decline to buy tens of billions of Treasuries each month in 2009, U.S. interest rates will have to go up again.

So: India up, China up, Germany up (all relatively). The developing world down, Russia down, most of Europe and Japan down, and President Barack Obama's America down and down. I'd like to believe I am very wrong. I worry that I'm not.

Paul Kennedy is professor of history and director of International Security Studies at Yale University. He is the author/editor of 19 books, including The Rise and Fall of the Great Powers. He wrote this column for Bloomberg News.

U.S. Seeks Ship To Move Arms To Israel - By Stefano Ambrogi (LATEST UPDATE - 13/1/09)

9 January 2009 Reuters

(FF Editorial: Read the last two paragraphs. This is the giveaway. It means that Us and Zionist Israel, planned in advance the invasion back in 2008, in September o be precise when the first shipment of these weapons were made. Now that they have used most of them, the war criminal Bush is sending another shipment. Therefore it is a damn lie for the Zionist Israel to say that they bombed and invaded Gaza because of Hamas rocket attacks!)

LONDON - The U.S. is seeking to hire a merchant ship to deliver hundreds of tons of arms to Israel from Greece later this month, tender documents seen by Reuters show.

The U.S. Navy's Military Sealift Command (MSC) said the ship was to carry 325 standard 20-foot containers of what is listed as "ammunition" on two separate journeys from the Greek port of Astakos to the Israeli port of Ashdod in mid-to-late January.

A "hazardous material" designation on the manifest mentions explosive substances and detonators, but no other details were given.

"Shipping 3,000-odd tons of ammunition in one go is a lot," one broker said, on condition of anonymity.

"This (kind of request) is pretty rare and we haven't seen much of it quoted in the market over the years," he added.

The U.S. Defense Department, contacted by Reuters on Friday in Washington, had no immediate comment.

The MSC transports amour and military supplies for the U.S. armed forces aboard its own fleet, but regularly hires merchant ships if logistics so require.

The request for the ship was made on December 31, with the first leg of the charter to arrive no later than January 25 and the second at the end of the month.

The tender for the vessel follows the hiring of a commercial ship to carry a much larger consignment of ordnance in
December from the United States to Israel ahead of air strikes in the Gaza Strip.

A German shipping firm which won that tender confirmed the order when contacted by Reuters but declined to comment further.


Shipping brokers in London who have specialized in moving arms for the British and U.S. military in the past said such ship charters to Israel were rare.
Israel is one of America's closest allies and both nations regularly sell arms to each other.

A senior military analyst in London who declined to be named said that, because of the timing, the shipments could be "irregular" and linked to the Gaza offensive.

The ship hired by the MSC in December was for a much larger cargo of arms, tender documents showed.

That stipulated a ship to be chartered for 42 days capable of carrying 989 standard 20-foot containers from Sunny Point,

North Carolina to Ashdod.

The tender document said the vessel had to be capable of "carrying 5.8 million pounds (2.6 million kg) of net explosive weight," which specialist brokers said was a very large quantity.

The ship was requested early last month to load on December 15.

In September, the U.S. Congress approved the sale of 1,000 bunker-buster missiles to Israel. The GPS-guided GBU-39 is said to be one of the most accurate bombs in the world.

The Jerusalem Post, citing defense officials, reported last week that a first shipment of the missiles had arrived in early December and they were used in penetrating Hamas's underground rocket launcher sites.

Israel Is Experimenting New Non-Conventional Weapons In Gaza - By New Weapons Research Committee (LATEST UPDATE - 13/1/09)

PRESS RELEASE By New Weapons Research Committee

Mounting evidence is emerging that Israel is experimenting new non-conventional weapons on civilian population in Gaza. "It is happening again what we saw in Lebanon two years ago", says Paola Manduca, genetics teacher and researcher at the University of Genoa and member of New Weapons Research Committee (NWRC), "where Israel used white phosphorus, Dense inert metal explosive (DIME), thermobaric bombs, cluster bombs and uranium ammunitions and experimented novel weapons and delivery modalities. Still today there are unexploded bombs and radioactivity on the ground".

Emerging evidence now shows that at least some of these weapons are in use in the Gaza Strip, though it is not possible to verify this directly, due to the lack of access to the area. "The images of the dead and wounded and the news from witness coming from the area of aggresion show significant resemblance with those gathered and verified during the July - August war in 2006 in Lebanon", explains Mrs Manduca. Mads Gilbert, a Norwegian doctor, member of a non-governmental organization Norwac, who works currently at the Gaza's largest hospital, Shifa, denounces that "many arrive with extreme amputations, with both legs crushed", wounds, he explains, "that I suspect are inflicted by Dime weapons". The images arriving from Gaza seem to confirm these suppositions as well. The burns suffered by some children in Gaza result very similar to those documented in 2006 by doctor Hibraim Faraj, a surgeon at the Hiram hospital in Tyre and by doctor  Bachir Cham at the Hospital du Sur, Sidon. "At the moment", points out Mrs Manduca, "we have reports from doctors and informed witnesses that make us believe new types of weapons are being tested today in Gaza, apart from those used in 2006. This makes it necessary for further technical and scientific researches to be undertaken".

In the last two years NWRC, together with Lebanese and Palestinian doctors, has produced scientific data using techniques of histology, Scansion electron microscopy and chemical analysis on bioptic samples from victims of the 2006 aggressions. It has collected clinical evidence and documentation that proves the use of thermobaric bombs in open spaces, DIME and subletal targeted weapons in 2006 in Lebanon, and DIME and subletal targeted weapons in Gaza.

NWRC submitted in 2007 a report on the subject to the UN Human Rights Council, and in 2008 at the International Citizens Tribunal on War Crimes in Lebanon and to the Italian Parliament's committee of inquiry on depleted uranium. NWRC has also been working together with international scientists who documented the use of uranium ammunitions in Lebanon.

NWRC is a group of independent scientists and doctors based in Italy which studies the non-conventional weapons and their middle-term effects on the residents of areas afflicted by the conflicts. NWRC aims at: obtaining proofs of weapons utilized; assessing the long term risks on individuals and populations also after the end of the war; learning how to take care of and protect survivors utilizing the tools of clinical and predictive investigations.

Press contacts
Fabio De Ponte
TEL. +39-347-9422957
MAIL: info@newweapons.orgThis e-mail address is being protected from spambots. You need JavaScript enabled to view it

Time To Bomb Israel For Its Development, Production and Deployment of Weapons of Mass Destruction - The Populist


PLUTONIUM PRODUCTION: Once described as a "textile factory," the Dimona Center actually produces about 40 kilograms of weapons grade plutonium every year and has been doing so for 10 and possibly 20 years. The entire facility is protected by anti-aircraft defenses.

LOCATION: Dimona is located 8.5 miles from the town of the same name. Given that about four kilograms of weapons grade plutonium are used in each nuclear weapon, Israel has produced enough plutonium at Dimona to construct between 100 and 200 nuclear weapons. It has also produced about 170 kilograms of Lithium-6, which would produce about 220 kilograms of lithium-6 deuteride. Roughly 6 kilograms are needed to construct a thermo-nuclear weapon. Israel could, therefore, have as many as 35 thermo-nuclear weapons.

STRUCTURE: Once described as a "textiles factory" by David Ben-Gurion, Dimona is made up of separate blocks. Currently, there are nine of these blocks, called machons. Machons 1, 2, 8 and 9 are directly involved in producing materials for nuclear or thermo-nuclear weapons; the others provide services for these four.

THE REACTOR: Machon 1, the domed structure is the reactor built by France. Machon 2 is the reprocessing plant which removes the plutonium produced in the reactor. It also contains an operation that separates the isotope lithium-6 from natural lithium for ultimate use in thermonuclear weapons. This is the key facility and the primary target in any raid on the center. Without it, there is no nuclear weapons development. Of the 2,700 employees at Dimona, only 150 are permitted access to Machon 2, which extends six floors underground.

THE CENTRIFUGE: Machon 8 contains a gas centifuge for the production of enriched uranium, an alternative fissile material, by an advanced laser enrichment process. And Machon 9 contains a laser isotope separation facility which can be used to enrich uranium and to increase the proportion of isotope plutonium-239 in plutonium, helping Israeli nuclear weapons scientists get more bang for their buck.

The facility's reactor is now 35 years old and thus reaching the end of its practical lifetime.


TEST RANGE: Palmikhim is where missiles and rockets are assembled and tested. It is the main research and development facility. The US believes that Israel has a capability to develop and launch ICBM's (and is thus a danger to the entire world), although it has never tested one.

LAYOUT: Satellite photos of the area show an airfield with one runway and seven large hangars (suitable for cargo-liners) inside the security zone. In addition, there are other manufacturing facilities inside the zone. The missile assembly building is at the south end of the security zone, as is the launch site. Some sources indicate that Palmikhim may also be home to an airborne command post that would be used in wartime. Other sources suggest it is located in a hangar at Lod Airport.


CHEMICAL/BIOLOGICAL WEAPONS: Beyond nuclear weapons, Israel is has biological and chemical weapons as well as the means to deliver them, primarily the Jericho missile.

RESEARCH AND WEAPONIZATION: A 1989 Defense Intelligence Agency report, obtained by the Natural Resources Defense Council, reported that Israel's Jericho missiles could carry high explosive or chemical warheads as well as nuclear. The country's leading chemical and biological warfare facility is at Nes Zionyaa, outside Tel Aviv. The Israeli Institute for Bio-Technology is the home of both offensive and defensive research.


NUCLEAR STORAGE: Eilabun is Israel's second weapons storage facility. Tactical nuclear shells and landmines are among its contents.

LOCATION: Eilabun is located near the town of the same name just west of the Sea of Gallilee off Route 65.

CONTENTS: There, reportedly, are stored the nuclear artillery shells, nuclear landmines and other tactical nuclear weapons (possibly including neutron bombs (but this seems quite unlikely)).

The landmines stored here would be taken to holes previously dug along the base of the Golan Heights during a crisis with Syria. The U.S. and Russia both had such landmines, but have abandoned them. The artillery shells could be used to devastate targets as far away as Damascus.


NUCLEAR STORAGE: Tirosh is one of two nuclear weapons storage facilities, according to various sources, is located near the town of Tirosh.

LOCATION: Clearly visible from space, the facility appears as a network of roads linking bunkers spaced about 25 yards apart. There are about 70 bunkers. The facility, also off Israel's Route 38, is heavily guarded and surrounded by a perimeter road and security fences. It is possible that Tirosh is the strategic weapons storage site, while Eilabun is the tactical weapons storage site.


STRATEGIC AIR POWER: Tel Nof is home to Israel's "Black Squadrons," the F-4 and F-16 units assigned to the nuclear strike mission. A large airbase off Route 4, it is located only a few miles from both Tirosh and Hirbat Zekharyah.

LOCATION: Like the two other nuclear facilities, Tel Nof is just south of Tel Aviv. Several aircraft are believed to be on 24-hour alert at the base. In 1973, eight F-4's were on alert and could have been ordered to drop nuclear bombs on Egyptian and Syrian targets. It is possible that today some of the 24 F-15E "Strike Eagles" are stationed there. The "Strike Eagles" were originally developed as a tactical nuclear bomber and it is the only Israeli aircraft capable of flying a round-trip to Iran without refueling.


MISSILE RANGE: The mobile Jericho-I and Jericho-II missiles, Israel's strategic rockets, are deployed at this base. They constitute the so-called "second wing" of the Israeli Air Force.

LOCATION: Hirbat Zekharyah is near the town of Zekharyah between Jerusalem and the sea.

WEAPONRY: In satellite photos, about 100 missile emplacements can be seen, evenly divided between the short-range Jericho-I and the medium-range Jericho-II. Jericho-I range is about 500 miles while Jericho-II has a range of about 750 miles. They are kept inside tunnels dug into limestone formations that are prevalent in the area, and rolled out for firing. In December 1990, just before the Gulf War, Israel test-fired a Jericho from Zekharyah. Another Pentagon document states that the missiles can carry high-explosive, chemical or nuclear warheads.


WEAPONS RESEARCH: Soreq is the national weapons laboratories and is considered to be among the most sophisticated such operation in the world. It handles weapons design and construction as well as research.

LOCATION: Soreq is near the town of Yavne and shares a security zone with the higly secret Palmichim Air Base. According to a 1987 Pentagon study obtained by NBC News, "The Soreq Center runs the full nuclear gamut of activities required for nuclear weapons design and fabrication."

CAPABILITIES: Soreq is involved in research into nuclear explosive detonation as well as the diagnosis of radiation effects on biological systems, including human beings, and the processing of various nuclear fuels. A Pentagon study - now ten years old - concluded that "as far as nuclear technology is concerned, the Israelis are roughly where the U.S. was in the fission weapon field from about 1955 to 1960," a time when the US was moving from nuclear to thermonuclear weapons.

REACTOR: The facility is built around a five megawatt reactor supplied by the United States under the "Atoms for Peace" program in 1960. The U.S. supplied it with nuclear fuel through 1977.


MISSILE PRODUCTION: Just outside the town of Be'er Yaakov lies Israel's main missile assembly facility. There, in a long building, the Jericho and Arrow missiles as well as the Shavit launch vehicle are assembled. The Jericho's and Shavit are assembled in one area, the Arrow in another.

PROXIMITY TROUBLE: The U.S. has expressed concern about the proximity of the two assembly halls since the U.S. provides technology for the development of the Arrow - a missile meant to improve on the Patriot anti-missile system. The U.S. also views the Jericho as a missile proliferation problem.


COMMAND AND CONTROL: The "Bor" is Israel's underground command post. Located beneath the Defense Ministry complex in Tel Aviv. Israeli officials can command a war from the facility and there are other facilities of a similar but less strategic nature around the country.


MISSILE DEVELOPMENT: Rafael is a high-tech weapons research and development organization. The Haifa area is home to several Rafael facilities. Rafael has been responsible for the actual assembly of Israeli nuclear weapons since the first two weapons were built in late 1966 but now concentrates on ballistic missiles. A more modern and remote facility at Yodefat east of Haifa is where the weapons are assembled today.

MISSILES: Satellite photos of the area show a highly secure underground facility. Mordechai Vanunu, a dissident Israeli nuclear scientist now jailed for speaking of the country's weapons program, told The Sunday Times of London convoys carry plutonium from Dimona to Yodefat.

WARHEADS: In addition, a 1987 Pentagon report describes warheads and Mach-7 reentry vehicles for Israel's ballistic missiles as being developed at Rafael. Rafael is home to Israel's ballistic missile research and development effort.


UN Resolutions Against Israel, 1955-1992

   1. Resolution 106: "...'condemns' Israel for Gaza raid"
   2. Resolution 111: "...'condemns' Israel for raid on Syria that killed fifty-six people"
   3. Resolution 127: "...'recommends' Israel suspend its 'no-man's zone' in Jerusalem"
   4. Resolution 162: "...'urges' Israel to comply with UN decisions"
   5. Resolution 171: "....determines flagrant violations' by Israel in its attack on Syria"
   6. Resolution 228: "...'censures' Israel for its attack on Samu in the West Bank, then under Jordanian control"
   7. Resolution 237: "...'urges' Israel to allow return of new 1967 Palestinian refugees"
   8. Resolution 248: "...'condemns' Israel for its massive attack on Karameh in Jordan"
   9. Resolution 250: "...'calls' on Israel to refrain from holding military parade in Jerusalem"
  10. Resolution 251: "...'deeply deplores' Israeli military parade in Jerusalem in defiance of Resolution 250"
  11. Resolution 252: "...'declares invalid' Israel's acts to unify Jerusalem as Jewish capital"
  12. Resolution 256: "...'condemns' Israeli raids on Jordan as 'flagrant violation"
  13. Resolution 259: "...'deplores' Israel's refusal to accept UN mission to probe occupation"
  14. Resolution 262: "...'condemns' Israel for attack on Beirut airport"
  15. Resolution 265: "...'condemns' Israel for air attacks for Salt in Jordan"
  16. Resolution 267: "...'censures' Israel for administrative acts to change the status of Jerusalem"
  17. Resolution 270: "...'condemns' Israel for air attacks on villages in southern Lebanon"
  18. Resolution 271: "...'condemns' Israel's failure to obey UN resolutions on Jerusalem"
  19. Resolution 279: "...'demands' withdrawal of Israeli forces from Lebanon"
  20. Resolution 280: "...'condemns' Israeli's attacks against Lebanon"
  21. Resolution 285: "...'demands' immediate Israeli withdrawal form Lebanon"
  22. Resolution 298: "...'deplores' Israel's changing of the status of Jerusalem"
  23. Resolution 313: "...'demands' that Israel stop attacks against Lebanon"
  24. Resolution 316: "...'condemns' Israel for repeated attacks on Lebanon"
  25. Resolution 317: "...'deplores' Israel's refusal to release Arabs abducted in Lebanon"
  26. Resolution 332: "...'condemns' Israel's repeated attacks against Lebanon"
  27. Resolution 337: "...'condemns' Israel for violating Lebanon's sovereignty"
  28. Resolution 347: "...'condemns' Israeli attacks on Lebanon"
  29. Resolution 425: "...'calls' on Israel to withdraw its forces from Lebanon"
  30. Resolution 427: "...'calls' on Israel to complete its withdrawal from Lebanon"
  31. Resolution 444: "...'deplores' Israel's lack of cooperation with UN peacekeeping forces"
  32. Resolution 446: "...'determines' that Israeli settlements are a 'serious obstruction' to peace and calls on Israel to abide by the Fourth Geneva Convention"
  33. Resolution 450: "...'calls' on Israel to stop attacking Lebanon"
  34. Resolution 452: "...'calls' on Israel to cease building settlements in occupied territories"
  35. Resolution 465: "...'deplores' Israel's settlements and asks all member states not to assist Israel's settlements program"
  36. Resolution 467: "...'strongly deplores' Israel's military intervention in Lebanon"
  37. Resolution 468: "...'calls' on Israel to rescind illegal expulsions of two Palestinian mayors and a judge and to facilitate their return"
  38. Resolution 469: "...'strongly deplores' Israel's failure to observe the council's order not to deport Palestinians"
  39. Resolution 471: "...'expresses deep concern' at Israel's failure to abide by the Fourth Geneva Convention"
  40. Resolution 476: "...'reiterates' that Israel's claims to Jerusalem are 'null and void'"
  41. Resolution 478: "...'censures (Israel) in the strongest terms' for its claim to Jerusalem in its 'Basic Law'"
  42. Resolution 484: "...'declares it imperative' that Israel re-admit two deported Palestinian mayors"
  43. Resolution 487: "...'strongly condemns' Israel for its attack on Iraq's nuclear facility"
  44. Resolution 497: "...'decides' that Israel's annexation of Syria's Golan Heights is 'null and void' and demands that Israel rescind its decision forthwith"
  45. Resolution 498: "...'calls' on Israel to withdraw from Lebanon"
  46. Resolution 501: "...'calls' on Israel to stop attacks against Lebanon and withdraw its troops"
  47. Resolution 509: "...'demands' that Israel withdraw its forces forthwith and unconditionally from Lebanon"
  48. Resolution 515: "...'demands' that Israel lift its siege of Beirut and allow food supplies to be brought in"
  49. Resolution 517: "...'censures' Israel for failing to obey UN resolutions and demands that Israel withdraw its forces from Lebanon"
  50. Resolution 518: "...'demands' that Israel cooperate fully with UN forces in Lebanon"
  51. Resolution 520: "...'condemns' Israel's attack into West Beirut"
  52. Resolution 573: "...'condemns' Israel 'vigorously' for bombing Tunisia in attack on PLO headquarters"
  53. Resolution 587: "...'takes note' of previous calls on Israel to withdraw its forces from Lebanon and urges all parties to withdraw"
  54. Resolution 592: "...'strongly deplores' the killing of Palestinian students at Bir Zeit University by Israeli troops"
  55. Resolution 605: "...'strongly deplores' Israel's policies and practices denying the human rights of Palestinians"
  56. Resolution 607: "...'calls' on Israel not to deport Palestinians and strongly requests it to abide by the Fourth Geneva Convention"
  57. Resolution 608: "...'deeply regrets' that Israel has defied the United Nations and deported Palestinian civilians"
  58. Resolution 636: "...'deeply regrets' Israeli deportation of Palestinian civilians"
  59. Resolution 641: "...'deplores' Israel's continuing deportation of Palestinians"
  60. Resolution 672: "...'condemns' Israel for violence against Palestinians at the Haram al-Sharif/Temple Mount"
  61. Resolution 673: "...'deplores' Israel's refusal to cooperate with the United Nations"
  62. Resolution 681: "...'deplores' Israel's resumption of the deportation of Palestinians"
  63. Resolution 694: "...'deplores' Israel's deportation of Palestinians and calls on it to ensure their safe and immediate return"
  64. Resolution 726: "...'strongly condemns' Israel's deportation of Palestinians"
  65. Resolution 799: "...'strongly condemns' Israel's deportation of 413 Palestinians and calls for their immediate return."

(From Findley's Deliberate Deceptions, 1998 pages 188 - 192) The following are the resolutions vetoed by the United States during the period of September, 1972, to May, 1990 to protect Israel from council criticism:

   1. "....condemned Israel's attack against Southern against southern Lebanon and Syria..."
   2. "....affirmed the rights of the Palestinian people to self-determination, statehood and equal protections..."
   3. "....condemned Israel's air strikes and attacks in southern Lebanon and its murder of innocent civilians..."
   4. "....called for self-determination of Palestinian people..."
   5. "....deplored Israel's altering of the status of Jerusalem, which is recognized as an international city by most world nations and the United Nations..."
   6. "....affirmed the inalienable rights of the Palestinian people..."
   7. "....endorsed self-determination for the Palestinian people..."
   8. "....demanded Israel's withdrawal from the Golan Heights..."
   9. "....condemned Israel's mistreatment of Palestinians in the occupied West Bank and Gaza Strip and its refusal to abide by the Geneva convention protocols of civilized nations..."
  10. "....condemned an Israeli soldier who shot eleven Moslem worshippers at the Haram al-Sharif/Temple Mount near Al-Aqsa Mosque in the Old City of Jerusalem..."
  11. "....urged sanctions against Israel if it did not withdraw from its invasion of Lebanon..."
  12. "....urged sanctions against Israel if it did not withdraw from its invasion of Beirut..."
  13. "....urged cutoff of economic aid to Israel if it refused to withdraw from its occupation of Lebanon..."
  14. "....condemned continued Israeli settlements in occupied territories in the West Bank and Gaza Strip, denouncing them as an obstacle to peace..."
  15. "....deplores Israel's brutal massacre of Arabs in Lebanon and urges its withdrawal..."
  16. "....condemned Israeli brutality in southern Lebanon and denounced the Israeli 'Iron Fist' policy of repression...."
  17. "....denounced Israel's violation of human rights in the occupied territories..."
  18. "....deplored Israel's violence in southern Lebanon..."
  19. "....deplored Israel's activities in occupied Arab East Jerusalem that threatened the sanctity of Muslim holy sites..."
  20. "....condemned Israel's hijacking of a Libyan passenger airplane..."
  21. "....deplored Israel's attacks against Lebanon and its measures and practices against the civilian population of Lebanon..."
  22. "....called on Israel to abandon its policies against the Palestinian intifada that violated the rights of occupied Palestinians, to abide by the Fourth Geneva Conventions, and to formalize a leading role for the United Nations in future peace negotiations..."
  23. "....urged Israel to accept back deported Palestinians, condemned Israel's shooting of civilians, called on Israel to uphold the Fourth Geneva Convention, and called for a peace settlement under UN auspices..."
  24. "....condemned Israel's... incursion into Lebanon..."
  25. "....deplored Israel's... commando raids on Lebanon..."
  26. "....deplored Israel's repression of the Palestinian intifada and called on Israel to respect the human rights of the Palestinians..."
  27. "....deplored Israel's violation of the human rights of the Palestinians..."
  28. "....demanded that Israel return property confiscated from Palestinians during a tax protest and allow a fact-finding mission to observe Israel's crackdown on the Palestinian intifada..."
  29. "....called for a fact-finding mission on abuses against Palestinians in Israeli-occupied lands..."

(From Findley's Deliberate Deceptions, 1998 pages 192 - 194)

Investment Outlook: Andrew Mellon vs. Bailout Nation - By Bill Gross (LATEST UPDATE - 14/1/09)

 January 2009, PIMCO
2008 was the year when the United States led the charge of bailout nations, lending and literally guaranteeing trillions of dollars of private liabilities in an effort to avoid the advent of another Great Depression. Nothing, with the possible exception of George Bush’s IQ was the subject of greater debate. To begin with, the rescue plan itself was controversial even amongst its implementers: Congress voted against it, then a week later voted for it; Treasury Secretary Paulson designated it “TARP” (short for “Troubled Asset Relief Program”), then a month later did a 180°, refusing to buy subprime mortgages and asserting his right to change his mind because the facts themselves had changed. But the broader question reached beyond politics and into the realm of the dismal science itself. Was it necessary and productive to mutate 21st century American-style capitalism into a thinly disguised knock-off of the New Deal?

Better, some thought, to have followed the advice of early 1930s Treasury Secretary Andrew Mellon: “Liquidate labor, liquidate stocks, liquidate the farmers – purge the rottenness from the system.” The Mellons of the world argued that bailouts were akin to pouring gasoline on a fire, adding trillions of dollars of new debt to a domestic and global economy that had broken down because of, because of, well, because of – too much debt.

Wall Street, the Fed, and Newport Beach took the other side. Those steeped in economic history felt that the Great Depression and more recently the “lost decade” in Japan had both experienced a “liquidity trap,” a monetary black hole where lenders, savers, and ultimately consumers were frightened into stuffing their money into a mattress rather than circulating it in classic capitalistic fashion. Sensing a freezing of credit markets following the default of Lehman Brothers, policymakers decided it was better to become a bailout nation than a sunken ship.

The debate, of course, can never be resolved. You can’t prove a negative nor recreate history to show what might have been. What we do know, however, is that even with U.S. and indeed global bailouts, almost every major economy entered recessionary territory in 2008 and that the “D” word, while unmentionable in official policy circles, was nevertheless on the tip of their tongues and at the forefront of their contingency plans. As we closed the year, “quantitative easing” was the publically acknowledged future policy of the Federal Reserve, which in short meant “buy assets, support Wall Street, and in the process, hope that some of it might trickle down to labor and the farmers.” Ben Bernanke is no Andrew Mellon. There may be rottenness in the system, but our Chairman surely doesn’t believe in starving a cold, or pneumonia for that matter. The Fed’s willing accomplice was the United States Treasury and the FDIC, extending not only $350 billion of TARP money but literally guaranteeing three quarters of the liabilities of U.S. banks. For those who fear nationalization of our financial system, the destination seemed just over the horizon.

Still, while such a transformation is, to put it mildly, undesirable, the policies are necessary. As outlined in these pages, the U.S. and many of its G-7 counterparts over the past 25 years have become more and more dependent on asset appreciation. Under the policy-endorsed cover of technology and somewhat faux increases in financial productivity, we became a nation that specialized in the making of paper instead of things, and it fell to Wall Street to invent ever more clever ways to securitize assets, and the job of Main Street to “equitize” or, in reality, to borrow more and more money off of them. What was not well recognized was that these policies were hollowing, self-destructive, and ultimately destined to be exposed for what they always were: Ponzi schemes, whose ultimate payoffs were dependent on the inclusion of more and more players and the production of more and more paper. Bernie Madoff? As with every financial and economic crisis, he will probably go down as this generation’s fall guy – the Samuel Insull, the Jeffrey Skilling, of 2008.

But Madoff’s scheme has a host of culpable look-alikes and one has only to begin with the mortgage market to understand the similarities. Option ARMs or Pick-A-Pay home loans allowed homeowners to make monthly payments that were so small they did not even cover their interest charges. Two million mortgagees either chose or were sold this Ponzi/Madoff form of skullduggery, believing that home prices never go down and that shoppers never drop. One can add to this the trillions in home equity/second mortgage loans that extracted “savings” in order to promote current instead of future consumption, and one begins to realize that Bernie Madoff and  our cartoon’s Wimpy had company all these years.

What about the shabby performance of the rating agencies? Were they not equally at fault for perpetrating a giant charade that was bound to end in tears? Of course: Aaa subprimes structured like a house of straw; Aaa monoline insurers built like a house of sticks; Aaa credits like AIG, FNMA, and FHLMC where only a huff and a puff could expose them for what they were – levered structures dependent upon asset price appreciation for their survival. Ponzi finance.

I will go on. Municipalities with begging bowls now extended for over a trillion of Federal taxpayer dollars, based their budgets and their own handouts on the perpetual rise in home prices, the inevitable upward slope of sales taxes, and the never-ending increase in employment and personal income taxes. To add injury to insult, they conveniently “balanced” their books with a host of accounting tricks that Bernie Madoff could never have come up with in his wildest imagination. Now, with cash flow insufficient to meet current outflows, they are proving my point that we have met Mr. Ponzi and he is us – all of us: auto companies that siphoned sales dollars to make labor peace instead of research and design expenditures; hedge funds that preposterously billed investors for 2% and 20% of nothing; a President and politicians who thought they could fight a phony war for free and distract the nation’s attention from $40 trillion of future social security and health care liabilities. Ponzi, Ponzi, Ponzi.

Still, future policymakers must confront the reality that is, not the one that should have been. And investors must do likewise, casting aside personal philosophies for a clear-headed view of the future horizon. PIMCO’s view is simple: shake hands with the government; make them your partner by acknowledging that their checkbook represents the largest and most potent source of buying power in 2009 and beyond. Anticipate, then buy what they buy, only do it first: agency-backed mortgages, bank preferred stocks, and senior bank debt; Aaa asset-backed securities such as credit card, student loan, and auto receivables. These have been well-advertised PIMCO strategies over the past 6 months but there are others in clear sight. An Obama administration will quickly be confronted by the need to provide those hundreds of billions of dollars to states and large municipalities. Their requests total nearly a trillion dollars and to think California or NYC would be allowed to fail is, well – unthinkable. Municipal bonds then, selling at historically high ratios relative to U.S. Treasuries, offer attractive price appreciation potential, or at the very least a defensiveness with high carry that a 2½% 10-year Treasury cannot.

Here’s another thought. While TIPS or inflation-protected securities cannot logically be a recipient of Uncle Sam’s checkbook over the next 12 months, they can benefit if and when the government’s efforts to reflate begin to take hold. 2½% real yields cannot possibly be maintained unless deflation as opposed to inflation becomes the odds-on favorite. What bond investors know as “breakeven inflation rates” are currently signaling a future where the U.S. CPI averages -1% for the next 10 years. Possible, but not likely. As an additional strategy, global bond investors should recognize the value in high-quality investment-grade corporate bonds in many markets. Yields of 6%+ for intermediate maturities are still common and readily available.

There is legitimate concern as to the ultimate destination and outcome of our “bailout nation.” Realistically, quantitative easing, a two-trillion-dollar expansion of the Fed’s balance sheet, and the near certainty of future budget deficits approaching 6-7% of GDP should alert bond investors to once again become vigilant as was the case in the 1980s and 90s. Vigilantes we should be, but that is a battle to be fought in the Treasury market where low yields offer little reward and increasing risk. For now, our Ponzi-style economy and its policy remedies encourage bond investors to mimic Uncle Sam and its global compatriots. Buy what they buy, but get there first. Andrew Mellon would surely have disapproved. Liquidation was his game. Wimpy? Well, he’s gonna have to start paying for those burgers on Monday, even in a bailout nation.

PM: Rice Left Embarrassed In UN Vote - By Yaakov Lappin (LATEST UPDATE - 14/1/09)

January 12, 2009, The Jerusalem Post

[FF Editorial: This Statement by Israel’s PM Olmert shows clearly that the so-called most powerful leader in the world, the President of the USA, War Criminal Bush, is a mere lapdog and sycophant of the Zionists. One phone call, and the President trembles and jumps to obey the command. So China, Russia, the Arabs etc. why are you so fearful of the US President? Why are you so weak at the Security Council? What secrets have they over you, that you fail to stand by the Palestinians. Bloody cowards! Shame, shame on you all! You are mere worshippers of the US toilet paper money and very stupid at that!]

The Security Council resolution passed on Friday calling for an immediate cease-fire in Gaza was a source of embarrassment for US Secretary of State Condoleezza Rice, who helped prepare it but ultimately was ordered to back down from voting for it and abstain, Prime Minister Ehud Olmert said Monday.

Rice did not end up voting for Resolution 1860, thanks to a phone conversation Olmert held with US President George Bush shortly before the vote, the prime minister told a meeting of local authority heads in Ashkelon as part of a visit to the South.

Upon receiving word that the US was planning to vote in favor of the resolution - viewed by Israel as impractical and failing to address its security concerns - Olmert demanded to get Bush on the phone, and refused to back down after being told that the president was delivering a lecture in Philadelphia. Bush interrupted his lecture to answer Olmert's call, the premier said.

America could not vote in favor of such a resolution, Olmert told Bush. Soon afterwards, Rice abstained when votes were counted at the UN.

During a visit to the Osem plant in Sderot organized by the Bureau of Economic Organizations, Olmert addressed the state of the war in Gaza, saying that Israel was now at a decisive stage, but had not yet reached the two main goals it set for itself.

"We have no interest in endlessly continuing the campaign. It will stop when the conditions that are essential for Israel's security are met. First and foremost, all terrorist operations against us must stop. The strengthening of the terrorist organizations via the smuggling of war material from Egypt into Gaza must also stop," he said.

"We are dealing with brutal terrorist organizations devoid of the compassion and tolerance which characterize us. The blow that we have inflicted on them is unprecedented in its strength," Olmert added.

In a clear reference to Hizbullah, Olmert said, "We hope that nobody will test either our determination or our resiliency on any other front."

Olmert was accompanied by Finance Minister Ronnie Bar-On; Interior Minister Meir Sheetrit; Industry, Trade and Labor Minister Eli Yishai; Manufacturers Association President Shraga Brosh and Histadrut Chairman Ofer Eini.

Ashkelon Mayor Benny Vaknin told The Jerusalem Post his message for Olmert was "not to stop the fire until the threat of rockets is lifted from Ashkelon for years to come."

Vaknin praised the cooperation between the central government and local authorities, adding that he backed a proposal by Sheetrit for a NIS 300 million aid package to the South to help the region deal with reconstruction efforts.

"I will demand the most from the aid package because we received the most rockets," Vaknin added. The mayor proudly noted that a poll of local residents in the city found that 86 percent were satisfied with the municipality's management during wartime.

Military officials told the Ashkelon conference that 800 trucks of humanitarian aid had entered Gaza since the start of Operation Cast Lead, and that Israel had repaired electric and sewage infrastructures in the Strip throughout the fighting.

Rocket attacks were noticeably lower since the start of the war, the military officials said, adding that two weeks ago the rocket attacks numbered in the 80s, while the current number of daily rocket launches from Gaza has plunged to the 20s.

The Crisis in 10 Points - By Robert Stewart

Sunday, 04 January 2009 00:12

31 December 2008, Mises Institute

The 2007–2008 financial crisis had its genesis in the United States housing markets, but it rapidly spread to other economies, first to the United Kingdom, but then almost everywhere else, including such unlikely spots as Iceland whose banking system collapsed.[1] Because events in the United States triggered the crisis, this essay will concentrate on the US causes although they had their many counterparts elsewhere.

There are at least three long-standing background influences that contributed to the financial debacle that dominated the US economy in 2008:

1.    For almost 100 years, the US government has not felt constrained to match its expenditure with its revenue. This policy was given intellectual justification by the writings of John Maynard Keynes who argued in the 1930s that, during periods of slow economic growth, active and purposeful government policies would allow the economy to spend its way out of recession.[2] It was simply a matter of time before citizens aped the financial habits of their governments by living beyond their means.

2.    The Federal Reserve System (the Fed — created in 1913) has accommodated government's policy of spending to excess by inflating the money supply and keeping interest rates artificially low. Today's dollar will buy what in 1913 would cost less than a nickel. This easy-money policy has not only led to inflation but has resulted in investments taking place that would not be justified had the money supply been constrained, and had interest rates more clearly reflected economic reality.

3.    Since the 1960s, politicians parroting the suspect theories of Keynes have fed the public's naïve belief that government can provide ever-increasing living standards by means of its monetary and fiscal policies. Pulling a fiscal lever here and pushing a monetary button there meant that constraints on spending were old fashioned, and living standards would forever improve. The limitations imposed by the laws of economics had been repealed if you voted for politicians who promised to provide you with something for nothing. Fiscal prudence was simply a capitalist lie.
It is against this long term, more philosophic backdrop, that the following, more immediate issues, assumed greater importance.

4.    Households collectively made little attempt to save for the future. The United States, in particular, borrowed from China, Japan, and Middle Eastern countries to finance its spending addictions. Financial responsibility was considered an old-fashioned, or even an irrelevant, virtue, and people were led to believe that government could, by waving its magic wand, provide improved housing without the pain of saving or foregoing immediate consumption.

5.    The acquisition of a house was viewed by many buyers not so much as having somewhere to live but as a painless way to make money. House prices, they naively believed, would always continue to increase in value while the relative burden of mortgages would continue to fall. Not only that, but as house values increased, a house could be used as collateral for a further loan. The financial equivalent of turning sea water into gold had been created. So long as house prices increased, borrowers were in financial heaven. When house prices fell, the earth opened up under the feet of lenders.

6.    Government-sponsored entities like Fannie Mae and Freddie Mac subsidized mortgages for people who, under more-prudent rules of borrowing, would never have qualified for a loan from a conservative banking institution. Congressman Barney Frank in 2003 stated in a moment of candor, "I want to roll the dice a little bit more in this situation toward subsidized housing."[3] Well he certainly did, at the same time accepting with gratitude campaign contributions from Fannie and Freddie.

7.    The egalitarian policies of government through such legislation as the Community Reinvestment Act of 1977 "persuaded" lenders, Mafioso style, to lend to low-income borrowers, against their better judgment. Government lawyers made it clear that the consequences of failing to meet politically imposed targets and quotas could be dire.

8.    It was a matter of time before a substantial minority of borrowers could not or would not service their mortgages. Partly because astute people predicted this, well-known names in the financial world began to package, or sponsor, mortgage and other debts such as credit-card balances into what were called structured-investment vehicles (SIV), dubbed "financial weapons of mass destruction" by Warren Buffet. So complicated were the terms contained in such instruments that many legal minds and the credit-rating agencies were baffled as to exactly what they meant and where the ultimate risk lay. Banks and others could benefit by lending to people who could not afford to pay interest, far less capital, provided they were able to sell the SIVs to gullible investors. Money managers naively bought such investments for pension funds, money market funds, and (even more surprisingly) for their firms' own accounts. This was the primrose path to unlimited housing ownership, with no painful cash deposit, and no adverse consequences to the first lenders.

9.    So long as (a) the value of housing increased, (b) borrowers paid on time, and (c) confidence remained in the credibility of SIVs, everything was hunky-dory. Unfortunately, all three cratered about the same time; house values stagnated or fell as supply exceeded demand; when values stuttered, so did borrowers repayments, and confidence plunged. Borrowers, having promised to pay and having offered security for their promises, were failing to pay because their security had declined in value. They repudiated their debts, and the burden fell on hapless financial institutions. Populist politicians rarely blamed the borrowers, because there are so many of them and they vote; instead they blamed greedy capitalists, speculators, short sellers, anyone except the debtors, and the imprudent economic policies of the US government.

10.    As events began to unravel in mid-2008, well-established firms like Lehman Brothers, went to the wall. Others like Bear Stearns and Merrill Lynch were sold at knockdown prices. Yet others, like insurance giant AIG, were effectively nationalized.[4] Meanwhile, the stock-market value of banks and other financial institutions took a nosedive. For example, Citibank stock price fell by 79% between October 2008 and October 2009. The broader stock-market indices like the Dow Jones also plummeted by around 40%. The US government had no systematic policy, and rules were made up as more and more bad news emerged, especially about jobs. Citibank had a labor force of 375,000 in 2007; in November 2008, it was announced that 53,000 jobs would go by the first quarter of 2009. Senior government officials were like shipwrecked sailors (and were spending money like drunken sailors) paddling like mad but with little idea of where they were going, or why. The only consistent rule was that something had to be done, and the US government must be the action party.[5]

It is difficult not to recall the words of Herbert Spencer: "The ultimate result of shielding man from the effects of folly is to people the world with fools."

The financial crisis of 2007–2008 was a Ponzi scheme writ large. A Ponzi scheme, or chain letter, initially succeeds but eventually collapses, just as imprudent loans may at first succeed in their objectives but eventually the laws of economics come into play and expose the futility of the whole exercise. A pyramid scheme is always unsustainable for the simple reason that it is based on faulty principles and built on flawed foundations. Until too late, no one in authority (regulators, risk managers, senior bank executives, credit-rating agencies, investment analysts) asked the key question, namely, how on earth was it possible in the long term to make profits by lending money to people whose chances of paying it back were practically nil?[6] The issue was simply swept under the carpet because loans to deadbeats provided a better short-term return than did lower-risk debt instruments.

In summary, the essence of the subprime crisis is that money was lent (often through the agency of questionable mortgage brokers) at very low interest rates (courtesy of the Fed) to hundreds of thousands of people (all they needed was a credit score and a pulse) who could not afford to pay it back; and it was backed by collateral (a house) that was not properly valued.[7] Such assets, accurately described as "liar loans," were then packaged into opaque securities, known as structured-investment vehicles (sponsored but not guaranteed by a respected and well-known name), which very few people understood. They were sold on to pension funds, banks, and others whose gullible investment managers also did not understand them and failed to carry out the rigorous analysis that their clients had a right to expect.[8]

Government encouraged all of this by supporting affordable housing (which was politically correct) and accusing banks of redlining (failing to lend to poor and black people in the same proportion as they lent to the rich and white). When the borrower, already maxed out on his credit cards, predictably failed to make payments, the scale of the problems eventually became apparent to somnolent regulators and financial institutions. Confidence and trust evaporated, because no one knew which institutions held suspect securities, how much the losses were, and who was ultimately safe. A financial system built on debt and excessive leverage was a financial system built on sand.

The errors and fallacies that weave and surround this awful catalog of errors could have largely been avoided by paying attention to a single sentence written by Henry Hazlitt over 60 years ago:

The art of economics consists in looking not merely at the immediate but at the long effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.


[1] See, for example, an excellent analysis by Alex Brummer the city editor of the Daily Mail in his book The Crunch: The Scandal of Northern Rock and the Escalating Credit Crisis.

[2] See Keynes, General Theory of Employment, Interest, and Money, and also The Critics of Keynesian Economics edited by Henry Hazlitt.

[3] Quoted in the European Wall Street Journal, November 6, 2008, page 15.

[4] Credit-default swaps proved to be too complex for risk managers at AIG whose computer models were not up to the task. See the European Wall Street Journal of November 3, 2008, page 1.

[5] Government action was centered around the Troubled Asset Relief Program (TARP), a boondoggle of gigantic proportions. How successful this will prove to be is beyond the scope of this article.

[6] See an excellent article by David Carr in the International Herald Tribune on September 30, 2008, page 17, entitled "How a Stupid Question Clarified Subprime Mess."

[7] Sometimes a pulse was not even necessary as 23 dead people in Ohio were approved for loans. Ibid.

[8] Was this a "Black Swan" event — see book of the same title by Nassim Taleb.

Bob Stewart has lived in Bermuda all of his adult life, and was chief executive of the Royal/Dutch Shell Group of Companies in Bermuda until his retirement in 1998. Subsequently, he was President of Old Mutual Asset Managers, Bermuda, and retired from there at the end of 2002. He is a director of several Bermuda companies and investment funds, and the author of A Guide to the Economy of Bermuda.

He wrote this essay to help explain the issues of the subprime crisis to the boards of the various companies he sits on. His email is rstewart@ibl.bmThis e-mail address is being protected from spambots. You need JavaScript enabled to view it . Comment on the blog.

The Ponzi Scheme in Every Hedge Fund - By Arri J Officer

5 January  2009, Times

Bernard Madoff's $50 billion Ponzi scheme continues to rock the financial world. But most hedge funds actually engage in similar — albeit legal — practices in the short run. These practices helped inflate their gains, as well as hedge fund managers' salaries and bonuses, in the past, but subsequently helped bring about the recent failure of many major hedge funds.

At the heart of this is the distinction between realized gains and unrealized gains. Gains are realized when assets are liquidated into cash. For instance, if you buy a stock for $100 and it is currently trading at $200, you have made $100 in unrealized gains. If you sell it at $200, you have made $100 in realized gains. Most hedge funds do not regularly liquidate their entire portfolio, so they always report unrealized gains to their investors and to the public.

Now comes the murkier part: Many assets — particularly those that unregulated hedge funds can trade — are not as liquid as stocks, and so they do not always have a definite price on the market. Since a fund reports unrealized gains, it could easily get away with inflating profits. More specifically, the fund could use the most optimistic models to price its illiquid assets, which include mortgage-backed securities and other swaps. After all, economists disagree about how to value these assets, so the fund is not necessarily dishonest in its assessment.

Madoff never even came close to realizing the gains he reported and paid out to some investors. Yet even funds with fairly accurate estimates of unrealized gains are guilty of engaging in similar Ponzi practices in the short term. Here's why:

Suppose some investors decide to withdraw their money from a hedge fund. The fund must liquidate the appropriate amount of its assets to pay these investors. Say the fund holds large positions in illiquid assets. The fund cannot immediately sell these assets, except at a fatal loss, so it would sell its more liquid assets. Given that the fund is more likely to inflate its estimation of the illiquid assets, it would seem that investors who withdraw early get the better returns over that time period. Sounds a bit like a Ponzi scheme, right?

Even in the most vanilla of trading, liquidation can impact the market price. With lightly traded securities, this can be magnified. For example, a fund might corner some asset by buying and buying and buying, and then report a huge unrealized gain. But the moment the fund tries to sell and realize the gain (perhaps to pay off its last few investors), demand disappears, and the asset crashes. Again, investors withdrawing early get better returns over that time period than those who wait until later.

Every year, hedge funds do have to liquidate part of their profits in order to pay their managers, traders, and other support staff. Fund managers typically keep 20% of (unrealized) trading profits. But first they must realize that 20%: it comes from selling the liquid assets. If a fund is overestimating the value of the illiquid assets, then the managers' profit is grossly overestimated. In most cases, the profit is at least slightly overestimated, due to slippage in the liquid assets. In other words, if a fund liquidated all profits, the supposed 20% taken out first would actually be larger than 20% of the total realized profit.

If hedge funds had to regularly liquidate assets, we would not see the spectacular returns reported in the past. One factor of the supposed success of hedge funds is their ability to report unrealized gains and to be flexible in liquidation, since investors who believe they are getting high returns are unlikely to withdraw their money. That was how Madoff was able to maintain his charade so long.

Wonder why Chicago-based hedge fund Citadel is not allowing investors to withdraw their money until at least March? Citadel has already reported about 50% losses for its two largest funds. Remember: these are unrealized losses. If Citadel liquidated assets to pay out investors, losses would be even greater. Barring a miracle, the first investors out would lose less than those out later. But even in good times, the withdrawal of money from a hedge fund impinges its performance.

Hedge funds are designed to take in more and more investors' money. Then inefficiencies and performance distortions of withdrawing money for investors and profit-taking for managers are smoothed out. The recent failures in hedge funds, while rooted in the financial meltdown, have been further fueled by the lack of new investment, as well as pressure from current investors to take their money and run. Regardless of a fund's investment strategy, liquidation tends to make unrealized gains smaller — and unrealized losses larger — when they are finally realized.

By design, hedge funds most benefit managers, rather than investors. Since the liquidation of assets always results in slippage — the more that is sold, the worse the price — managers for every hedge fund always get the "best" 20% of the profit.

So, you see, there could be a little Ponzi scheme in every hedge fund. It is inherent to the model of the modern hedge fund. The only way to avoid these Ponzi-esque schemes is to regularly liquidate all assets and allow all investors to decide what to do with their cash returns. In the past, this would have meant seemingly diminished returns. With returns seemingly high, investors did not complain about the status quo. Now, given that regular liquidation would mean more transparency and diminished losses in recent days, investors' opinions would likely differ.

Willem Buiter Warns of Massive Dollar Collapse - By Edmund Conway

6 January 2009 ,The Telegraph

Americans must prepare themselves for a massive collapse in the dollar as investors around the world dump their US assets, a former Bank of England policymaker has warned.

The long-held assumption that US assets - particularly government bonds - are a safe haven will soon be overturned as investors lose their patience with the world's biggest economy, according to Willem Buiter.

Professor Buiter, a former Monetary Policy Committee member who is now at the London School of Economics, said this increasing disenchantment would result in an exodus of foreign cash from the US.

The warning comes despite the dollar having strengthened significantly against other major currencies, including sterling and the euro, after hitting historic lows last year. It will reignite fears about the currency's prospects, as well as sparking fears about the sustainability of President-Elect Barack Obama's mooted plans for a Keynesian-style increase in public spending to pull the US out of recession.

Writing on his blog , Prof Buiter said: "There will, before long (my best guess is between two and five years from now) be a global dumping of US dollar assets, including US government assets. Old habits die hard. The US dollar and US Treasury bills and bonds are still viewed as a safe haven by many. But learning takes place."

He said that the dollar had been kept elevated in recent years by what some called "dark matter" or "American alpha" - an assumption that the US could earn more on its overseas investments than foreign investors could make on their American assets. However, this notion had been gradually dismantled in recent years, before being dealt a fatal blow by the current financial crisis, he said.

"The past eight years of imperial overstretch, hubris and domestic and international abuse of power on the part of the Bush administration has left the US materially weakened financially, economically, politically and morally," he said. "Even the most hard-nosed, Guantanamo Bay-indifferent potential foreign investor in the US must recognise that its financial system has collapsed."

He said investors would, rightly, suspect that the US would have to generate major inflation to whittle away its debt and this dollar collapse means that the US has less leeway for major spending plans than politicians realise.      

Banks Pare Fed Loans After Increase for Year-End Cash - By Scott Lanman

8 January  2009, Bloomberg

Banks pared borrowing from the Federal Reserve during the past week, reducing their dependence on the central bank after stocking up on cash at the end of 2008, the Fed’s consolidated balance sheet showed today.

Discount window lending to commercial banks fell to $83.7 billion as of yesterday, from $93.8 billion the previous Wednesday, the central bank said in a release in Washington. Primary dealers reduced their borrowings from the Fed to $34.3 billion yesterday from $37.4 billion Dec. 31.

The Fed may still build on the $1.26 trillion increase in its total assets over the past year after a Dec. 16 Federal Open Market Committee decision to switch the focus of monetary policy to the balance sheet and away from interest rates.

The FOMC voted last month to reduce the federal funds rate to a range of zero to 0.25 percent and committed to lowering yields for consumers and businesses through asset purchases.

Outstanding loans to banks through the Term Auction Facility dropped to $384 billion from $450.2 billion, the Fed release showed.

The Fed’s holdings of commercial paper in a program helping U.S. corporations finance short-term notes was little changed at $334.5 billion yesterday from $334.4 billion a week earlier.

Total holdings of federal agency securities fell to $19.3 billion as of yesterday from $19.7 billion the previous week.

Mortgage Securities Purchased

Separately, the Fed said today it bought $10.2 billion of mortgage-backed securities under a $500-billion program aimed at lowering home-loan rates begun this week. Only fixed-rate- mortgage bonds guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae will be eligible for purchases.

BlackRock Inc., Goldman Sachs Asset Management, Pacific Investment Management Co. and Wellington Management Co. are managing the purchases.

Credit to American International Group Inc. was little changed at $82.6 billion from $82.7 billion, while the Fed’s loans to a program providing liquidity to the asset-backed commercial paper market dropped to $21.1 billion from $23.8 billion.

The Fed said the M2 money supply rose by $5.3 billion in the week ended Dec. 29. That left M2 growing at an annual rate of 8.1 percent for the past 52 weeks, above the target of 5 percent the Fed once set for maximum growth. The Fed no longer has a formal target.

The Fed reports two measures of the money supply each week. M1 includes all currency held by consumers and companies for spending, money held in checking accounts and travelers checks. M2, the more widely followed, adds savings and private holdings in money market mutual funds.

During the latest reporting week, M1 increased by $14 billion. Over the past 52 weeks, M1 rose 11.8 percent. The Fed no longer publishes figures for M3.

BOE Cuts Rate to Lowest Since Bank’s Creation in 1694 - By Svenja O’Donnell

8 January 2009 Bloomberg

The Bank of England cut the benchmark interest rate to the lowest since the central bank was founded in 1694 as policy makers tried to prevent the credit squeeze from deepening Britain’s recession.

The bank rate was reduced a half-point to 1.5 percent, bringing policy makers closer to the point at which they will run out of options to fight the financial crisis with conventional tools. The pound rose against the euro and the dollar because some investors had bet on a larger reduction.

“They’ll come down below 1 percent by the second quarter,” said Philip Shaw, chief economist at Investec Securities in London. “Things have deteriorated further and this highlights the need for further monetary stimulus. Non- conventional monetary policy techniques are on the cards.”

Bank of England Governor Mervyn King may have to cooperate with Prime Minister Gordon Brown to inject money into the economy and the financial system through so-called quantitative easing as Britain suffers its first recession since 1991.

After almost 16 years of continuous growth, the economy contracted 0.6 percent in the third quarter, and the Bank of England predicts it will shrink 1.3 percent in 2009.

“The availability of credit to both households and businesses has tightened further, pointing to the need for further measures to increase the flow of lending to the non- financial sector,” the Bank of England said in a statement. “Output is likely to continue to fall sharply during the first part of this year.”

Pound Rises

The pound climbed as much as 1.3 percent against Europe’s single currency after the rate decision and traded at 90.44 pence per euro as of 4:32 p.m. in London. Against the dollar, it increased as much as 1.2 percent and traded at $1.5193.
The central bank reduced the interest rate by 1.5 percentage points in November and by 1 percentage point in December.

The Bank of England may soon have to join the U.S. Federal Reserve and the Bank of Japan in expanding its toolkit to fight the financial crisis. U.S. officials, led by Fed Chairman Ben S. Bernanke, lowered their main interest rate close to zero in December and on Jan. 5 started buying mortgage-backed securities.
Rates in Japan are also close to zero and the central bank has increased its emphasis on adding funds to the financial system.

Treasury Role

The European Central Bank has cut its key interest rate by 1.75 percentage points to 2.5 percent since early October, and may reduce it again next week. President Jean-Claude Trichet may provide clues on his thinking when he gives a speech in Bratislava at 8 p.m. local time today.

Chancellor of the Exchequer Alistair Darling told the Financial Times this week that the U.K. Treasury may need to play a bigger role in setting monetary policy if interest rates approach zero. That may prompt the government to authorize the central bank to buy assets including government securities and perhaps create money to pay for them.

Darling today tried to damp speculation the government is ready to create money as part of a quantitative easing policy.

“Nobody is talking about printing money,” he told broadcasters today.

Financial institutions are hoarding cash and a Bank of England survey last week showed they plan to constrict credit further even after the government unveiled a 50 billion-pound ($75 billion) rescue plan last year. Mortgage approvals dropped to the lowest level since at least 1999 in November.

Brown ‘Fighting’

“We are fighting to do the right things,” Brown said today in Liverpool, northwest England, where he is holding his weekly Cabinet meeting. “The global banking system failed. We have got to rebuild it.”

“It’s baked in the cake that we’ve got higher unemployment coming, and that economic growth is likely to remain weak for a long time,” said George Buckley, chief U.K. economist at Deutsche Bank AG in London. The Bank of England “can still cut further.” The benchmark rate has never been this low since King William III founded the central bank to fund a war against Louis XIV’s France. The rate began at 6 percent and fell no lower than 4 percent throughout the 18th century.

Rate History

It touched 2 percent several times in the second half of the 19th century. The central bank held it at that level throughout World War II until 1951.

Unemployment rose at the fastest pace since 1991 in November and a survey released yesterday by the Recruitment and Employment Confederation and KPMG showed the number of workers placed in permanent jobs fell at the fastest pace since 1997 last month.

Barclays Plc, the U.K.’s third-biggest bank, said yesterday it will cut 408 information-technology jobs, primarily in London and Cheshire, England. Marks & Spencer Group Plc, Britain’s largest clothing retailer, said it will cut 1,230 of its staff.

Easing price pressures are giving the Bank of England scope to keep cutting interest rates. Inflation slowed to 4.1 percent in November from 4.5 percent the previous month. King predicted on Dec. 16 that the rate of annual price increases may drop below the 1 percent lower limit this year.

“I’m not sure interest rates will necessarily get to zero,” said Matthew Sharratt, an economist at Bank of America Corp. in London. “We may see them at 0.5 percent by the end of the first quarter. But now it’s really about what they do about quantitative easing.”

Fed Predicts Economy Will Get Worse - By Chris Isidore

6 January 2009 ,

In the minutes from its last meeting, the central bank said it expects GDP to decline in 2009 and unemployment to rise into 2010.

NEW YORK - The U.S. economy is likely to deteriorate further this year and unemployment will rise into 2010, according to the latest forecasts from the staff of the Federal Reserve.

This bleak forecast was presented to Fed policymakers when they met last month and lowered interest rates to near zero. Low interest rates are one key tool the central bank uses to try to spur economic activity.

According to the minutes from that meeting, the central bank is now predicting that gross domestic product, the broadest measure of economic activity, will fall in 2009.

"I think that the Fed is really very scared right now -- like everybody else -- and they want to pull out all the stops," said David Wyss, chief economist for Standard & Poor's.

The Fed indicated that most members at its meeting expected a slow recovery to begin in the second half of the year, but that unemployment would still rise "significantly" into 2010.

Employers cut 1.9 million jobs over the first 11 months of 2008, which took the unemployment rate up to 6.7%. The December report will be released by the Labor Department Friday and economists surveyed by expect a loss of 475,000 jobs and that the unemployment rate will rise to 7%, which would mark a 15-year high.

The Fed cited a multitude of problems dragging down the economy besides rising unemployment, including stock market declines, low consumer confidence, weakened household balance sheets and tight credit conditions. It said business spending is also likely to fall due to weak retail sales and the credit crunch.

In addition, some members of the Fed expressed concerns that the economy could worsen even more than currently expected.

"Meeting participants generally agreed that the uncertainty surrounding the outlook was considerable and that downside risks to even this weak trajectory for economic activity were a serious concern," the Fed said in the minutes.

If the current recession, which began in December 2007, lasts throughout 2009, that would make it the longest U.S. economic downturn since the Great Depression.

Wyss said he thinks there is now little debate among policymakers about the problems in the economy and the need to take unprecedented action.

"They're already jumping, they're just asking how high," said Wyss.

The minutes also showed that some Fed members are now more worried about the threat posed by deflation, or falling prices, than they are about inflation. Deflation can slow economic activity dramatically since it could lead to businesses to cut their production plans in the wake of lower prices.

The Fed also revealed more details about other moves it plans to make to boost the economy now that it has lowered rates as far as it can.

According to the minutes, the Fed anticipates completing previously announced purchases of $600 billion in debt and mortgage backed securities from firms such as Fannie Mae and Freddie Mac by the end of June 2009. The plan to buy back these securities has already helped to lower mortgage rates in recent weeks. 

Fiscal Therapy - By David Cay Johnston (LATEST UPDATE - 13/1/09)

11 January  2009, Mother Jones

Getting the economy back on its feet, giving taxpayers a break, saving your retirement fund and your kid's college tuition? Done. And it won't cost you a penny.

For years now, whenever I've been invited to lecture students on how our tax system works, I have asked a simple question: What is the purpose of the United States of America? The most common answer, be it at prestigious universities, elite prep schools, rural community colleges, or crowded urban high schools, is this: To make people rich.

This should come as no great surprise. For anyone born after, say, 1970, the world has been shaped by Ronald Reagan's remaking of government's relationship with private interests-a vision of lower taxes, less regulation, and maximum economic leeway for those at the top. In this view, the pursuit of wealth is the warp and weft of America; everything else will follow.

By contrast, the preamble to the Constitution tells us the nation's reason for being in 52 words that can be reduced to six principles: society, justice, peace, security, commonwealth, and freedom. Individual riches don't make the list. They are a product of American society, not its guiding purpose. Progress, then, must begin with a return to the best of the values that created this Second American Republic-one born, it's worth remembering, from the failure of the Articles of Confederation, whose principles (weak government, unfettered capitalism) found their resurrection in the economic policies of the past three decades.

Even judged by its own yardstick, the trickle-down approach has failed to deliver: Rather than getting richer, we have been slowly impoverishing ourselves. While incomes at the very top have soared to levels beyond imagining even a generation ago, the average inflation-adjusted income of the bottom 90 percent of earners was lower in 2006 than it was back in 1973. And since 2000, the median income of all Americans has actually slipped, proof that tax cuts for the rich do not create general prosperity. Today, more and more of us do not have enough money to live on without going into debt. For each dollar of equity people gained in their homes from 1980 to 2006, they borrowed two-and while a portion of that is accounted for by poor decision making, much has to do with the sheer impossibility of making ends meet.

Debt payments-individual and governmental-now consume so much income that they are suffocating economic growth.

Interest on the federal government's debt this year will eat up the equivalent of all the income taxes we pay from January until at least sometime in May. (Already, the financial system bailout has added more than $3 trillion to the national debt-see "$3.4 Trillion & Counting "-for an extra $170 billion in annual interest payments.) This keeps us from making productive use of our tax dollars-launching universal health care, rebuilding our crumbling infrastructure, or funding the research we need to transform our energy system. We've been sold on tax cuts as the best way to spur growth, but what we really got was weak job growth, a sinking economy, and a slew of tax deferrals that cause increasing revenue shortfalls and force the government to borrow even more-with all of us paying the interest.

For the past 14 years, on my former beat as the tax reporter for the New York Times, and now as a columnist for the trade journal Tax Notes, I have been documenting the myriad ways in which our economy has been recalibrated to take from the poor, the middle class, and even the affluent and give to large corporations and the very richest of the rich. I discovered, for example, that in 2000, people making between $50,000 and $75,000 paid the same share of their income to the federal government as those making more than $87 million, and that those making between $100,000 and $200,000 were taxed more heavily than those making $10 million-a state of affairs the Bush administration called "progressive" when I first reported it in 2005. Thanks to Reaganite economic policies, we have encouraged once-competitive industries such as oil, car manufacturing, accounting, and news media to congeal into unchecked (and now struggling) oligopolies. We have slashed the ranks of white-collar cops-the auditors and investigators whose beats are taxes, securities, food and drugs, pollution, etc.-and hamstrung those who are left. And we have transformed the idea that bankers would self-regulate from a crackpot notion into the essence of government policy, with results as predictable as if we removed all traffic lights and stop signs on the theory that most drivers are responsible.

Over and over for the past decade, our leaders argued that the fundamentals holding up our economy were strong. Now we know that this floor of shiny statistics merely concealed the rot below. But there is an upside to this realization: The economic crisis can help us clear away the rot and build a more solid foundation-one that elevates people over capital, kick-starts commerce, and removes some of the costliest barriers to individual success and national progress.

Change will not be easy, and the cost of cleaning up the current mess will be a huge drag on the economy in the near term. But we are, at last, at a turning point; we have a chance to end the socialism for the rich that put us into this hole.

How? By, in effect, reverse engineering the debacle. Rewriting tax laws and financial regulations has been the principal vehicle for turning government into a subsidy system for the deep-pocketed and well motivated. It can work in reverse as well. President-elect Obama has offered some interesting ideas to make the tax code more fair-but by and large, his proposals amount to tinkering around the edges, not the kind of serious restructuring previous presidents, most notably Reagan, undertook.

Here's another way to go. We can start by eliminating some of the most spectacular tax giveaways and move on to doable, efficient steps toward shoring up our biggest asset-not stocks, bonds, or houses, but people. Best of all, much of this won't cost a penny; in fact, it will raise billions for the big tasks ahead.

Stop the Giveaways

Quit Cooking the Books

By law, companies must keep two sets of books, one for shareholders, the other for the irs. As a result, many corporations routinely tell investors they incur millions in corporate income taxes, while the financial records they give the irs show they owe nothing or are due refunds. They do this by using tax shelters, offsetting income with losses from years ago, and employing countless other devices that make them look like paupers to the irs but money machines to investors.
It's time to require companies to use the same accounting rules across the board-and then demand immediate payment of unpaid taxes. This would align the interests of investors with those of taxpayers while eliminating the obvious moral hazard of keeping two sets of books.

Executives are sure to complain that such a retroactive change is unfair. But recall that in 2006, when Congress voted to raise taxes on the interest from teenagers' college funds, Sen. Charles Grassley (R-Iowa) said it is proper to end abusive practices retroactively. Perhaps now's the time to prove it; the treasury could use a few hundred billion dollars.
Make the Superrich Pay Their Share

Back in 1990, people making more than $1 million in today's dollars earned less than 0.8 percent of all the wages paid in America. Last year these multimillionaires sucked up more than 5 percent, squeezing everyone else. Also during this period, the number of people getting million-dollar-plus salaries grew 12 times faster than the number of workers overall, tax data show-this in an economy where, in 2007, one in three workers earned less than $15,000, more than three-fourths made less than $50,000, and 99 percent earned less than $200,000.

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