Monday, April 30, 2007

Pro-peace lobby is needed

By Emad Omar

Jimmy Carter, the previous American president who received the Nobel Peace Prize and initiated putting human rights on the US agenda during his term, was the first to break the state of hostility between Israel and the Arabs with the first peace treaty in the history of this conflict. In 1978, the famous peace treaty between the Egyptians and the Israelis was a great opportunity for Israel to obtain recognition and end the state of war. Yet in spite of this, the pro-Israel lobby in US raised hell against Carter after publishing his latest book “Palestine: Peace not Apartheid.” In the book, he told of the successive Israeli governments that have routinely undermined the peace process through obstinate aggressive and illegal occupation of the territories seized in 1967. The lobby’s reaction confirmed what Carter mentioned in his book and in a number of his press interviews, that “the Jewish general public is more eager for peace than their political leaders.”

The former American Secretary of the State, James Baker, was the engineer of the second reduction in hostility between Israel and Arab states. Baker sponsored the direct negotiations between Israel and neighboring Arab countries in 1991, giving Israel an historic opportunity to be recognized and accepted in the region. Despite that, a considerable wing of the lobby, during that time, led a campaign against him. They accused him of vilifying the Jews in a private meeting when he claimed that they do not vote for the Republicans. Recently, Baker, with his colleague Lee Hamilton, in the Bi-partisan Iraq study group, found that “the United States will not be able to achieve its goals in the Middle East unless it deals directly with the Arab-Israeli conflict,” he was attacked by this wing that seems careless about American interests in the region and sees only the strategic bi-lateral relation between Israel and US as its only concern.

Carter and Baker are among the most respected American politicians when it comes to American foreign policy. Their careers in diplomacy are behind them now and they can afford to tell the truth and focus on the real and possible solutions.

George Soros, a rich American Jew, experienced suffering in eastern Europe during the fascist reign and the Holocaust, which gave him extreme sensitivity towards the oppressed. As such, he supported black students in South Africa against the Apartheid regime and the dissident movements in Eastern Europe against the communist tolatarian regimes. “I have a great deal of sympathy for my fellow Jews and deep concern for the survival of Israel,” Soros says. Lately, he criticized in an article published in the New York Review of Books, dated April 12, 2007, saying, “Recently, the pro-Israel lobby has gone on the offensive, accusing the so-called progressive critics of Israel’s policies of fomenting anti-Semitism and endangering the very existence of the Jewish state.” He warned that “There is the growing danger of a regional conflagration in which Israel and the US could well be on the losing side.” Supporters of the pro-Israel lobby attacked Soros by comparing his criticisms to the so-called blood libels directed against Jews in medieval Europe.

President of the esteemed Council on Foreign Relations, Richard Haas recently noted, “Diplomacy also needs to be revived in the Israeli-Palestinian conflict, which is still the issue that most shapes (and radicalizes) public opinion in the region…The United States should articulate those principles it believes ought to constitute the elements of a final settlement, including the creation of a Palestinian state based on the 1967 lines.” Pro-Israel lobby has publicly disagreed with Haas's conclusions.

One year ago, John Mearsheimer and Stephen Walt, two prominent academics from Chicago and Harvard universities respectively, prepared a joint research paper about the lobby supporting Israel in America. In a documented and scientific way, they criticized the negative role played by the Israeli lobby today in American democratic life and in America’s foreign policy. In a joint essay published in the London Review of Books, they wrote that, “The Lobby’s influence has been bad for Israel. Its ability to persuade Washington to support an expansionist agenda has discouraged Israel from seizing opportunities – including a peace treaty with Syria and a prompt and full implementation of the Oslo Accords – that would have saved Israeli lives and shrunk the ranks of Palestinian extremists.”

As a result of this, they were targeted by a fierce campaign that made it almost impossible for both to publish their research in US.

The pro-Israel lobby in America that has attacked any sort of criticism of Israeli policies is like the father who exaggerates in protecting his children and spoils them, turning them into a troublemakers in the neighborhood and bringing their parents a bad reputation. This lobby’s policy contributes to maintaining the dangerous stagnation and status quo, the very problem King Abdullah II of Jordan warned of in his historical speech to the American Congress last March, when he said, “The status quo is pulling the region and the world towards greater danger... The cycle of crisis is spinning faster.”

The Arabs today are promoting their historic peace initiative, which is an historical opportunity, and the Israeli lobby in the US should push for a positive Israeli response in order to transform it into a regional peace plan instead of indulging in blindly defending the status quo and thus taking Israel, the region, and American interests into an endless hell that it may not recover from for many decades to come.

* Emad Omar is a conflict resolution and media expert based in Amman, Jordan.

Behind the scenes of the economy

Willem Middelkoop on the economy - April 18th, 2007

A series of conversations between economics reporter Willem Middelkoop and Daan de Wit on current economic affairs.


Olbermann: Truth little, truth late on Iraq

Truth little, truth late on Iraq

Obama Bows to the American Military

William M. Arkin on National and Homeland Security

Does America really need a larger military?

If the United States got out of Iraq, and refocused its counter-terrorism efforts to stress non-military as well as military tools, bolstered its diplomacy, improved its alliances and pushed further burden-sharing, would it still need to expand the Army and Marine Corps?

Presidential hopeful Sen. Barack Obama (D-IL) thinks so, ignoring the implications of his own foreign policy intentions, which would alleviate much of the current strain on America's armed forces.

Obama's foreign policy and defense plan was unveiled earlier this week, with all of the beautiful and hopeful words and vision we have grown to expect from the candidate.

But when it comes to the military, Obama seem hesitant and confused. I know that supporting the troops is American catechism: it would just be nice if the Senator asked why there is such a crisis in the armed forces today and then followed by questioning whether we have the military we need to pursue his foreign policy agenda.

In a speech before the Chicago Council on Global Affairs on Monday, presidential hopeful Barack Obama described a five point plan to enhance U.S. security and restore America's reputation, influence and respect around the world.

Obama says we need to "show the world" that America is the last, best hope on Earth, offering what he calls "a new vision of American leadership and a new conception of our national security" based upon the view that "the security of the American people is inextricably linked to the security of all people."

Obama denounces the current American foreign policy as being based on a "flawed ideology" and "a belief that tough talk can replace real strength and vision" saying that the Iraq war was "based on a fundamental misunderstanding of the threats that 9/11 brought to light."

He calls for a phased withdrawal of American forces "with the goal of removing all combat brigades from Iraq by March 31st, 2008." Obama's plan "allows for a limited number of troops to remain in Iraq to fight al Qaeda and other terrorists" and would include "an over-the-horizon force that could prevent chaos in the wider region."

Iraq, he says, was and is "an unnecessary diversion from the struggle against the terrorists." He calls instead for the United States to "refocus ... on the critical challenges in the broader region" and says that more "American forces are needed to battle al Qaeda, track down Osama bin Laden, and stop [Afghanistan] from backsliding toward instability."

There are all the requisite and conventional words about Iran and North Korea ("we must never take the military option off the table") and reducing the threat of weapons of "mass annihilation" ("rises above all others in urgency"), about a more "nimble intelligence community," and freeing the United States from "our oil addiction."

Where Obama's heart is though is in articulating a different vision, and he speaks of a "common humanity" and there's lots of talk of leadership ("by deed and example") and "reaching out to all those living disconnected lives of despair in the world's forgotten corners."

The spread of democracy and freedom are indeed America's larger purpose, but "this yearning is not satisfied by simply deposing a dictator and setting up a ballot box," he says. "The true desire of all mankind is not only to live free lives, but lives marked by dignity and opportunity; by security and simple justice."

Rhetorically, Obama is soothing and poetic, and he calls for a massive infusion of U.S. foreign assistance and aid to push his soft power agenda and improve the lives and circumstances of America's potential enemies.

Obama tells the story of a visit to the Horn of Africa and some time he spent with the U.S. military Joint Task Force that has been deployed there since 2003. U.S. military forces might have initially been sent to launch counter-terrorism operations, he said, but now they are spending most of their time "working with our diplomats and aid workers on operations to win hearts and minds."

Obama recounts: "One of the Navy captains who helps run the base recently told a reporter, 'Our mission is at least 95 percent civil affairs. It's trying to get at the root causes of why people want to take on the U.S.' The Admiral now in charge of the Task Force suggested that if they can provide dignity and opportunity to the people in that region, then, 'the chance of extremism being welcomed greatly, if not completely, diminishes.'"

This seems to be the military he most admires, and Obama calls for greater investments "in our men and women's ability to succeed in today's complicated conflicts," including, specifically, greater foreign language capability.

On the armed forces overall, Obama calls for "building a 21st century military to ensure the security of our people and advance the security of all people."

This includes, Barack Obama says, the current plan to expand the overall size of the U.S. military by nearly 100,000 (65,000 soldiers and 27,000 Marines), and "recruiting the best and brightest to service, ... keeping them in service by providing them with the first-rate equipment, armor, training, and incentives they deserve."

America's military, Obama says, should be "the strongest, best-equipped military in the world in order to defeat and deter conventional threats." He specifically supports "sustaining our technological edge."

"I say that if the need arises when I'm President, the Army we have will be the Army we need," Obama says, taking a poke at Donald Rumsfeld.

Sure in the end, Obama says that the United States must show "wisdom in how we deploy" our military, and says that "our first line of offense ... must be sustained, direct and aggressive diplomacy." When the United States sends forces into harm's way, he says they must have a clearly defined mission and "concrete political and military objectives," supported by sound intelligence and a "plan" and, of course, the consent of U.S. military commanders.

It sounds an awful lot like John Kerry, with shades of Bill Clinton. A kinder, gentler military will be valued by President Obama; the big, bad military needed for Iran and North Korea (and the completely unmentioned China) will be fed to make space for the president's non-martial trifles.

It's not as if anyone could get elected president in 2008 arguing that we need a smaller military. I just wish that the visionary Senator had followed his own instincts and asked whether our "technological edge" and "armor" and equipment -- the military we now have and the one he says we need -- points us in the right or needed direction.

By William M. Arkin | April 26, 2007; 9:46 AM ET

When Seeing Is Disbelieving

By Shankar Vedantam

Monday, April 30, 2007; A03

Four years ago tomorrow, President Bush landed on the USS Abraham Lincoln and dramatically strode onto the deck in a flight suit, a crash helmet tucked under one arm. Even without the giant banner that hung from the ship's tower, the president's message about the progress of the war in Iraq was unmistakable: mission accomplished.

Bush is not the first president to have convinced himself that something he wanted to believe was, in fact, true. As Columbia University political scientist Robert Jervis once noted, Ronald Reagan convinced himself that he was not trading arms for hostages in Iran, Bill Clinton convinced himself that the donors he had invited to stay overnight at the White House were really his friends, and Richard M. Nixon sincerely believed that his version of Watergate events was accurate.

Harry S. Truman apparently convinced himself that the use of the atomic bomb against Japan in the fading days of World War II could spare women and children: "I have told Sec. of War to use [the atomic bomb] so that military objectives and soldiers and sailors are the target and not women and children," Truman noted in his diary.

Nor are U.S. presidents alone when it comes to deluding themselves: Successful politicians may just be more skilled at self-deception than the rest of us. Most people, perhaps all, seem hard-wired to be able to interpret reality to suit their ends.

Self-deception has been uncovered in a wide range of situations, says Robert L. Trivers, an evolutionary biologist at Rutgers University who has studied the phenomenon. Before the Challenger explosion, for example, NASA engineers noticed that one of the O-rings on the space shuttle had been eaten a third of the way through. Since the shuttle had flown and returned to Earth, the engineers concluded that it was not a problem. Surveys show that four in five high school seniors believe they have exceptional leadership ability, and nearly every single professor in the country believes he or she is above average.

During Colonial times, there were even people who managed to convince themselves that slavery was in the best interest of slaves; later on, some maintained that colonialism was in the best interest of poor countries.

War provides especially fertile soil for self-deception. Societies at war do not look kindly at derogatory assessments of their own fighting ability and motives, and they do not encourage talking up an enemy's strengths. This explains why both sides in many conflicts believe they are morally and militarily superior. (Each believes the other is deluding itself.)

Self-deception seems to be a universal trait, which presents an interesting problem for science, especially for scientists who study behavior from an evolutionary perspective. It makes sense for deception to abound in nature -- viruses find ways to sneak into our bodies, predators stealthily stalk prey, and countless species use camouflage to hide themselves from their attackers. But why would nature, after spending millennia evolving highly sophisticated senses to perceive the world, build in a psychological capacity that allows us to ignore what is right in front of our eyes?

Trivers says the primary use of self-deception appears to be that it aids people in deceiving others.

"Self-deception evolves in the service of deceit for two reasons," he said. "It improves your ability to fool others and, second, it reduces the cognitive costs of deception."

The thing to keep in mind, Trivers says, is that even as evolution rewarded deceivers, it also punished deceivers who got caught. (The ability to spot deception evolves along with the ability to deceive.)

Deliberate deception among humans, furthermore, requires effort. It requires you to hold both the truth and the untruth in your mind, and consciously suppress the truth. This is why the stereotype of liars depicts them with sweaty palms, croaking voices and shifty eyes -- lying can be hard work, and liars are often nervous about getting caught.

Self-deception, said Trivers, who has studied the phenomenon in contexts ranging from the Challenger explosion to a plane crash in Florida, offers a way around this psychological hurdle. If you can make yourself believe the untruth, for example, by marshaling evidence that supports your view and ignoring evidence that contradicts your position, it becomes that much easier to persuade others.

Like many other aspects of brain functioning, self-deception does not require people to sit down and decide they are going to lie to themselves. (That would actually defeat the point of self-deception.) No, it usually happens subtly, without the person even being aware of it.

"The costs of deception are being detected and punished," Trivers said. "There is definitely a downside to self-deception, and that is you are putting yourself out of touch with reality, but it cuts down the risk of getting caught."

Lyn Nofziger, a longtime adviser to Ronald Reagan, once said the same thing about his boss -- and about the utility of self-deception in politics: He could "convince himself that the truth is what he wants it to be. Most politicians are unable to do this, but they would give their eyeteeth if they could."

Fact and Fantasy

Comstock Partners, Inc.

April 26, 2007

While the market mindlessly climbs as it feeds on its own momentum, let’s take a look at the facts.

1) Global short rates have been rising for some time, and, according to ISI, there is a 62% correlation between that and a weak economy.

2) The yield curve has been inverted for the last few months. This condition has almost always been followed by recessions.

3) Year-over-year housing starts and permits are down by percentages always associated with recessions

4) The Conference Board Index of Leading Indicators is down 0.8% year-over-year. With one exception such negative readings on this indicator have consistantly been followed by recessions

5) Non-farm payroll employment is up only 1.4% over a year earlier. Over the last 50 years whenever this has happened, the reading has always dropped to negative territory, and has been followed by recession

6) The NAHB seasonally adjusted housing index dropped to its lowest level ever for the month of April—and all three components of the index were similarly at their all-time April lows. Significantly, this index is compiled by the home builders.

7) March new home sales were down 23% year-over-year, and the first quarter was down an annualized 45%. The absolute level of sales was the lowest since the 2nd quarter of 2002. Available inventories are equal to an uncomfortable 7.8 months, and even this is understated since order cancellations are not reflected. The median number of months for newly completed houses on the market is 5.6 compared to 3.6-to-3.9 for much of last year.

8) Existing home sales were down 8% in March, the slowest since 2003, with single family homes down 9.5%, the largest decline since January 1989.

9) The Case-Shiller home price index dropped 1.5% year-over-year, the lowest since October 1993. The firm stated that "the declines in home prices are showing no signs of a turnaround."

10) Countrywide financial said that tighter banking regulation may push more homeowners into foreclosure by making it harder to finance sub-prime mortgages. Moody’s stated that losses on subprime home loans will be more than they expected. Mortgage delinquency and default rates are soaring.

11) Contrary to consensus views, the housing woes are already spreading, as the following items will indicate. Mortgage Equity Withdrawals (MEW) has declined 54%. A recent study by Greenspan and James Kennedy, issued by the Federal Reserve Board, estimated that home equity financed almost 4% of consumer expenditures from 2001 through 2005. That impetus is no longer there, while the household savings rate has been negative for almost two years.

12) General Motors said the mortgage meltdown would be worse than previously forecast and would have a serious impact on auto sales. Ward’s is forecasting a sharp decline in April light vehicle sales.

13) The four-week average of new unemployment claims is trending higher, and has been doing so since early 2006. Continuing claims are at the highest level since early 2006 with the exception of one reading in February. Surveys show that the jobs harder to get number is rising while the jobs plentiful figure is declining.

14) UPS said the softening economy hurt its package delivery volume in the first quarter.

15) Non-defense durable goods orders ex-transportation, a good indicator of capital goods expenditures, was down an annualized 15% in the 1st quarter, after a drop of 4% in the 4th quarter.

16) Industrial production has been flat since last August.

17) Year-over-year retail sales growth is less than half of what it was this time last year, and yearly growth of core retail sales is the lowest since May 2003.

The above-mentioned indicators of a weakening economy occurred before the newly issued tighter mortgage regulations were put into effect. The new rules will eliminate most of the non-traditional mortgages including no documentation, no interest, no down payment and waver of payments. This will drive housing demand down even more and spread to the rest of the economy. Even in more normal times, the housing industry was the main conduit through which credit tightening or easing was transmitted to the economy at large. Following this historic boom, the impact of housing is likely to be even greater than usual. In our view the probability of a hard landing is extremely high.

The current upward momentum in the stock market reminds us a lot about the situation near the market peak in March 2000 when we also bucked the consensus. At that time we had just started writing these commentaries, and began with a series of articles with titles such as "Bad Ending Likely"; "Stretched to the Breaking Point"; "A Game the Market Cannot Win"; Traditional Rules Still Apply"; and "Rally Not Soundly Based". Perhaps this time we’ll be wrong, but as we see it, the probabilities strongly favor a hard landing.

All the World's a Bubble

Follow the Money

Jeremy Grantham: All the World's a Bubble

By Brett Arends
Mutual Funds Columnist
4/27/2007 10:07 AM EDT

How high will the Dow go? 15,000? 20,000?

How about 36,000?

While euphoria sweeps stock markets here and worldwide, there are at least a few voices of dissent.

One, unsurprisingly, is legendary value investor Jeremy Grantham -- the man Dick Cheney, plus a lot of other rich people, trusts with his money. Grantham, chairman of Boston firm Grantham Mayo Van Otterloo, has been a voice of caution for years. But he has upped his concerns in his latest letter to shareholders. Grantham says we are now seeing the first worldwide bubble in history covering all asset classes.

Everything is in bubble territory, he says.


"From Indian antiquities to modern Chinese art," he wrote in a letter to clients this week following a six-week world tour, "from land in Panama to Mayfair; from forestry, infrastructure and the junkiest bonds to mundane blue chips; it's bubble time!"

"Everyone, everywhere is reinforcing one another," he wrote. "Wherever you travel you will hear it confirmed that 'they don't make any more land,' and that 'with these growth rates and low interest rates, equity markets must keep rising,' and 'private equity will continue to drive the markets.' "

As Grantham points out, a bubble needs two things: excellent fundamentals and easy money.

"The mechanism is surprisingly simple," he wrote. "Perfect conditions create very strong 'animal spirits,' reflected statistically in a low risk premium. Widely available cheap credit offers investors the opportunity to act on their optimism."

And it becomes self-sustaining. "The more leverage you take, the better you do; the better you do, the more leverage you take. A critical part of a bubble is the reinforcement you get for your very optimistic view from those around you."

It's something to think about the next time you hear someone tell you that the stock market will keep rising simply because the world economy is doing so well. That would make sense only if we were paying a constant price for each unit of world GDP, instead of higher and higher prices for one slice of that GDP -- equity.

Grantham concludes that every asset class is expensive today compared with historic averages and compared with the cost of replacing it. By his calculations, the only assets likely to beat inflation by any significant margin if you hold them for the next seven years are managed timber, "high-quality" U.S. stocks, and bonds.

As noted in this column several weeks ago, Grantham's U.S. "high-quality" stocks include Home Depot (HD) , Merck (MRK) , Wal-Mart (WMT) , AT&T (T) , Pfizer (PFE) , Johnson & Johnson (JNJ) , Exxon Mobil (XOM) , UnitedHealth (UNH) , Verizon (VZ) and Lowe's (LOW) .

"The bursting of [this] bubble will be across all countries and all assets, with the probable exception of high-grade bonds," Grantham warned. "Since no similar global event has occurred before, the stresses to the system are likely to be unexpected. All of this is likely to depress confidence and lower economic activity."


Grantham sees two big potential catalysts that might turn this bull market into a bear: a surge in inflation, leading to higher interest rates, and a squeeze on profit margins, which are currently running way above long-term averages.

As for timing, he concedes that's impossible to predict. But here's the kicker: Even Grantham thinks you probably need to be bullish right now. The reason? Most bubbles, he notes, go through a short but dramatic "exponential phase" just before they burst. Like Japan in 1989 or the Internet in early 2000.

"My colleagues," wrote Grantham, "suggest that this global bubble has not yet had this phase and perhaps they are right. ... In which case, pessimists or conservatives will take considerably more pain."

Bush Has Destroyed Iraq and America

by Paul Craig Roberts

Every American who voted Republican shares responsibility for the great evil America has brought to the Middle East.

The evil that America brought to Iraq transcends the tens or hundreds of thousands of Iraqi civilians who have been killed and maimed in the conflict. The evil goes beyond the destruction of ancient historical artifacts and the civilian infrastructure of a secular state and the decimation of the lives, careers, and families of millions of Iraqis.

The violence and killing that Bush brought to Iraq has spread antagonism between Sunni and Shiite throughout the Middle East with potentially draconian consequences. Bush’s war has turned Muslim hearts and minds against America and made terrorism an acceptable means to resist American hegemony. With his mindless war, Bush has created more terrorism than the world has ever seen.

The reasons given for the American invasion of Iraq have been exposed as lies, revealing America as either a country of fools and idiots or of war criminals. Worldwide polls show that America is no longer regarded as a guiding light but is tied with Israel as the second greatest threat to world stability.

The nuclear-armed Russians, alarmed by America’s gratuitous aggression and interference in Russian and Middle Eastern internal affairs and by Bush’s aggressive withdrawal on June 13, 2002 from the 1972 anti-ballistic missile treaty, no longer see the US as a partner in peace but as a dangerous militaristic aggressor. The chance for understanding and trust with Russia has been destroyed by the stupid Bush administration. The White House Moron, who cannot successfully occupy Baghdad, believes he can run over Russia.

Former CIA director George "Slam-Dunk" Tenet writes in a new book, At the Center of the Storm: My years at the CIA that Vice President Dick Cheney and the neoconservatives caused America to invade Iraq without ever holding a serious debate about whether Iraq was a threat. Tenet writes: "There was never a serious debate that I know of within the administration about the imminence of the Iraqi threat."

The 2003 American invasion of Iraq is a war crime under international law. The invasion caused sectarian violence far beyond anything Iraq had ever experienced under Saddam Hussein. Tenet writes that "sectarian violence in Iraq has taken on a life of its own and that US forces are becoming more and more irrelevant to the management of that violence."

Tenet says that Dick Cheney made him a scapegoat for the disastrous war by misrepresenting to media what he meant by "slam-dunk." Interviewed by "60 Minutes," Tenet said that the administration misrepresented his comment to mean that the case was air tight that Saddam Hussein had weapons of mass destruction. Tenet states that the Bush administration’s misrepresentation of what he said is "the most despicable thing that ever happened" to him.

The American people have never been told the real reasons that Bush-Cheney and the Republican Party rushed us to war in Iraq. Americans have only been fed a pack of transparent lies.

The war has brought no honor, no glory, and no tangible benefit. The war has brought shame upon America for routine torture of Iraqi detainees and for the routine slaughter of unarmed Iraqi civilians – mothers, fathers, children, grandparents – by trigger-happy American troops. There are even reports of US mercenaries having fun riding around taking pot shots at Iraqi civilians.

Billions of dollars in "aid" are missing. The stench of corruption is heavy in the air. There are myriad investigations of Bush administration and contractor corruption. Who can keep up with them all? Cheney’s Halliburton, the greatest hog at the trough, has not been indicted. The missing suitcases of cash have not been recovered. The earnest efforts of Congress have taken on a pathetic, plodding life of their own.

In an article just published in the Armed Forces Journal, Lt. Col. Paul Yingling, one of the commanders of the 3rd Armored Cavalry Regiment in Iraq, condemns American generals as " mild-mannered team players" who "are not worthy of their soldiers" and who "underestimated the strength of the enemy, overestimated the capabilities of Iraq’s government and security forces and failed to provide Congress with an accurate assessment of security conditions in Iraq."

Captains, majors, and lieutenant colonels are frustrated with the political cowardice of their general officers and are leaving the service in droves. The Army is trying to improve retention by offering $20,000 cash payments to the officers – another stupid Bush administration policy as any officer who sells his soul is demoralized.

Col. Yingling writes that Congress must step in and break up the way administrations use promotions to acquire compliant generals as accomplices in deceiving the American people.

The most frightening fact about the Bush administration is that not a single office is held by a competent or qualified person. Integrity is so rare among Bush appointees that integrity has been silenced.

That should concern all Americans. Even Republicans.

April 30, 2007

Paul Craig Roberts [send him mail] wrote the Kemp-Roth bill and was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review. He is author or coauthor of eight books, including The Supply-Side Revolution (Harvard University Press). He has held numerous academic appointments, including the William E. Simon Chair in Political Economy, Center for Strategic and International Studies, Georgetown University and Senior Research Fellow, Hoover Institution, Stanford University. He has contributed to numerous scholar journals and testified before Congress on 30 occasions. He has been awarded the U.S. Treasury's Meritorious Service Award and the French Legion of Honor. He was a reviewer for the Journal of Political Economy under editor Robert Mundell. He is the co-author of The Tyranny of Good Intentions. He is also coauthor with Karen Araujo of Chile: Dos Visiones – La Era Allende-Pinochet (Santiago: Universidad Andres Bello, 2000).

Copyright © 2007 Creators Syndicate

How much further do the bulls have to run on Wall Street?

By Stephen Foley in New York

Published: 27 April 2007

Hang out the bunting, prepare the sandwiches and the fizzy pop, get ready for a street party. A Wall Street party. The US stock market is very, very close to reaching an all-time high, and it could break the record at any moment.
But hang on, regular readers will be saying, didn't the Dow Jones Industrial Average power into virgin territory last autumn? Indeed, didn't it just shoot through the 13,000 barrier for the first time on Wednesday?

Yes and yes. The Dow is the most visible measure of the US stock market and has served well as a yardstick for 111 years, but it measures just 30 stocks. The much wider S&P 500 has claim to be the best measure of US equities, and it remains a tad over 2 per cent below its dotcom-era peak. It is this index that Wall Streeters measure their performance against, and it is a record on this index that will trigger the big party.

Either way, though, we are definitely into party season. The stock market is surging, whichever way you measure it. Company profits are growing faster than anyone dared hope. Their profit margins are at 50-year highs. The US economy continues to grow, too, albeit at a slower pace this past year, confounding the sceptics. Corporate executives are confident enough in the outlook to embark on brave merger-and-acquisition deals that boost the share prices of companies likely to be taken over. Lenders are confident, too, and are advancing plenty of money to companies to finance such deals and to hedge-fund investors to play the stock market. Wall Street banks are raking in more money than they ever have before.

And the best thing about this party is that there are so many party-poopers about.

David Tice, investment adviser to Prudent Bear mutual funds, is one. Share prices and other assets have been driven high because of "global liquidity and massive credit that comes from ignoring risks. Credit lending is going to be more restrained in the future. This market is going to go down".

Richard Bernstein, chief investment strategist at Merrill Lynch, often sounds like another. "Valuations are fair, but nothing more. Investors who claim that stocks are immensely undervalued probably are not aware that S&P 500 earnings are the most cyclical in history. Low price/earnings ratios might simply reflect peak earnings rather than value. This was certainly true for the housing stocks during the past year or so."

There are so many warning voices, and they have a coherent case. They argue that the US consumer economy is teetering. House prices in many parts of the country have taken a dive and sales of existing homes fell at their sharpest rate in 18 years last month. Mortgage arrears and now repossessions have been rising steadily, and in the riskiest parts of the mortgage market - the so-called sub-prime market - defaults by the poorest homeowners are running so high that several lenders have gone bust.

Investment strategists at Citigroup, the US investment bank, have an intriguing tool for judging these things, an amalgamation of different measures of investor sentiment which it calls its "panic/euphoria model". It says the tool is very useful in predicting the future direction of the market and guiding what an investor should do: buy when it shows people are panicking about the economic and investment outlook, sell when there is euphoria. It has only recently crept back into neutral territory, after being in "panic" for most of the past six years.

Tobias Levkovich, the bullish chief investment strategist at Citigroup, came back from a tour of European investors this month, with a new list of their worries. "The primary investment concern relating to equities remains the direction of earnings, given that US corporate margins sit at 50-year highs. Investors often cite worries about geopolitics, oil prices, sub-prime credit contagion, housing, twin deficits, negative savings rates, protectionism, terrorism, inflation, jobs and the weak dollar as reasons for holding back from buying stocks, but these catalysts are not the issue by themselves - the issue at hand is that they all have earnings ramifications."

At the start of last month, it was the fear of "contagion" from the sub-prime market meltdown, the fear that major financial institutions would suffer destabilising losses from their dealing with sub-prime lenders, which contributed to the stock market's wobble.

Since then, though, giant banks have promised that their exposure is limited, that their own levels of bad loans are not growing as fast as investors had feared. As in the financial sector, so it is across the rest of corporate America. Most of the country's biggest companies have now reported their profits for the first three months of the year, and they have averaged growth of 11 per cent, exactly the same as in the fourth quarter of 2006. Analysts had predicted a growth rate of barely half that.

In short, the stock market's revival from its wobble in March, the Dow's 126-day progress from 12,000 to 13,000, and its 80 per cent surge since the bear market nadir in 2002 - all has been largely justified by improvements in corporate earnings.

The average S&P 500 stock is valued at a little below 16 times its reported earnings of last year, and at a little over 16 times the consensus estimate of the coming year's earnings. This does not take the market into territory that would be called irrational exuberance.

And the confidence that those estimates of future earnings are sound, if not even conservative, are based on a view of the Federal Reserve's ability to keep the economy on an even keel. A Treasury bond auction yesterday was priced with a yield lower than expected, another example of the market's belief in interest rate cuts soon to prop up a slightly weaker economy.

Even admitting clouds over the US economy, bulls argue that the addition of China, India and other emerging markets to the super-league of economic nations means that global growth can continue without it. More than half of the earnings of the Dow's 30 industrial giants come from overseas, so they are fatter in dollar terms and they are able to offset any US slowdown.

Richard Jeffrey, chief economist at Ingenious Securities in London, said: "Stock markets around the world are telling us two things. First, they are telling us that there is a high degree of confidence that the world's central banks will be able to successfully manage their way through the various issues they face without causing undue turbulence, without inflation becoming a problem or the US economy going into a recession. Second, there is also a recognition that the global economy is no longer so dependent on the US. The American economy is no longer the sole locus of growth, so the impact of a slowdown in the US is not as large as it once was."

There are other factors to be pulled into the mix to explain the outsize performance of the US stock market. The phenomenon of "de-equitisation" is one, which is adding a little scarcity value to equities. Massive share buy-back programmes by cash-rich companies are boosting earnings per share and returns on equity, and as a result reducing their number of shares in issue. And all the while, private equity funds are snapping up bigger and bigger chunks of corporate America. The past year has seen the 17-year-old record for the biggest ever private equity buy-out finally surpassed not once but several times.

Lest we contribute any temptation to euphoria, the final word should go to Merrill Lynch's Mr Bernstein, who adds a bum note related to the weakening US currency. "The dollar is falling, and much of the stock market's rally is simply 'money illusion' - that is, it takes more less-valuable dollars to buy the same asset. In euros, the Dow has been flat for six months. In a global sense, the US stock market's rally is not a growth story."




April 29, 2007 -- THIS week the Dow Jones in dustrial average hit 13,000 for the first time ever, and the U.S. dollar fell to new record lows against the euro and the pound.

The former milestone was greeted with media fanfare and scores of headlines, while the latter garnered little attention at all.

But the two are closely connected - an anemic dollar means a lot more than pricey cappuccinos and hotel rooms for American travelers to Europe; it's also translating into powerful earnings for the very companies that make up the Dow - big blue-chip multinationals who get a large chunk of their profits from overseas.

It's also why Wall Street has clocked nearly 40 record closing highs in the last six months, despite sobering news from the housing market and a big deceleration in the domestic economy. The wall of worry that Wall Street has been climbing is the same one the dollar has been descending.

Stocks such as IBM tell the story. While Big Blue saw domestic sales rise a mere 1 percent last quarter, sales in Europe, Asia and the Middle East soared by more than 12 percent.

In fact, the incredible shrinking dollar is packing a powerful two-pronged boost for the Dow. Not only do the Dow 30 companies now derive a record 48 percent of their sales from overseas, the rest of the world is growing much faster than the U.S. In other words, it's a good time to be an exporter with a weak currency.

And the latest numbers bear that out: Of the 20 Dow stocks reporting for the first three months of the year, 17 noted the positive currency effects of the weaker greenback. It's the key reason S&P profits look to come in with gains of better than 7 percent - more than twice initial expectations.

But if the dollar becomes too cheap, our foreign friends could get uneasy and decide to park their money elsewhere, sending stocks into a swoon.

Wall Street loves a weak dollar, unless it becomes too weak, then it becomes a "dollar crisis."

Even with the once-almighty greenback at new lows, we're not there yet. But don't forget the dollar the next time you're checking out the Dow.

TERRY KEENAN is anchor of Cashin' In, an investing program that appears on Fox News Channel on Saturdays at 11:30 a.m. E-mail

A modern Orientalist view of Iran

by Shirin Saeidi (source: CASMII )
Friday, April 27, 2007

Editor's note: Shirin Saeidi is a member of the Editorial Board of CASMII.

In an article titled "A Nation of Nose Jobs, Not Nuclear War" by Peter Hitchens in Mail on Sunday is only one of many recent audacious pieces that amalgamates two favorite issues used to support the American propaganda machine against Iranian sovereignty: women and the nuclear energy program. In a disingenuously compassionate tone, and using literary chicanery for his aim, the author draws unsuspecting readers in by impersonating a wide-eyed, open soul in search of understanding an enigma.

The piece starts out like so many others of its genre, which, as the late Edward Said has comprehensively explained in his thesis on Orientalism, dates back to the 19th century: A curious, adventurous Westerner sets out to intellectually and sexually conquer the land of the Persians, friends and family warn him of the “mullahs,” chadors, and myriad other dangers and evils which await in this daring escapade; nevertheless, in the tradition of his colonialist forefathers Hitchens sets out on his journey exemplifying the masculinity that runs through the veins of conquerors and conjuring up images of tanks and artilleries which are its ultimate palpable manifestation.

Aside from shedding light on the fact that Hitchens obviously did not do his homework prior to departure (he does not demonstrate an appropriate understanding of modern Iranian history), the article includes three main themes that are frequently propounded in writings of those who support the Western propaganda machine against Iran, including, native informant tourists and their personal memoirs.

These themes include the hyper-sexualization of Iranian women, derogatory references to Arabs with the aim of creating dissonance in the region, and finally, an implicit promotion of a class system through subtle yet aggressive descriptions of sophistication.

I respond to this article not only because of its orientalist approach to examining modern-day politics of an independent state, but because this form of writing – off-the-cuff, personal narration intended to head straight to the heart of the reader – is fast becoming one of the most effective tools of American empire, proposing in unequivocal terms that some forms of unequal interdependence are legitimate. Most importantly, this kind of writing further enhances a class-system which is adversely impacting the cultural and social fabric of Iranian society.

Before even beginning the article, readers encounter an imposing image of women licking ice cream cones, which does not obviously relate to the article title. However, upon a closer examination of the text, it becomes apparent that the subtly sexual nature of the photo works to frame one of Hitchens’ unstated aims: the sexual objectification of Iranian women. Hitchens makes the following statements throughout the text:

· “…in a park by a lake, some teenage girls are splashing each other…”

· “…and everyone knows that, once it is over [short-time summer crack down on dress codes] scarves will creep back a little further and heels will get a little higher…,”

· “…in the evenings, cinemas are popular places for some mild canoodling…”

· “…but there is plenty of extramarital and illicit sex in Iran…”

· “…women who wish to join the West’s drive for sexual equality also loathe the state..”

· “…the fashionable cafes are full of painted, un-Islamic butterflies, sipping milkshakes or coffee…”

· and finally: “…the desire among lovely Persian women to look like Snow White is strange…”

with Hitchens, in the final quote, grabbing from his tool box of orientalist discourse a child’s fairytale character to compare with the modern day Iranian women.

It quickly becomes clear that Hitchens is more concerned with objectification of Iranian women, dedicating over half of the article to the depiction of offensive imagery, rather then addressing the nuclear program.

Even more disturbing is the message behind these images, that somehow these real or imagined characteristics of Iranian women should be the basis of international dialogue. Even today, some prominent academics refer to the “exceptional” beauty of Iranian women and their embodiment of “modern” ethics as a reason why an invasion should be avoided.

In this process, international law, respect for national sovereignty, and political discourse become secondary. Furthermore, This contradiction also begs the question: What are readers to think, that those nations and people of the world who do not subscribe to neo-liberal standards of beauty and sexuality are suitable for extinction? Is sexual orientation the new marker for salvation from the American empire?

While readers might expect an analysis of the nuclear dispute, Hitchens instead elaborates racist theories of Arabs and Persians hoping the ruse approach of writing dissidence into mainstream discourse will lead to actual strife in the region.

For example, Hitchens writes: “…personally, I found Tehran much less oppressively Islamic than Kensington High Street in London, where an ever-growing number of women voluntarily go about in black shrouds, masks and veils,” “I have tried to understand the sweet, sad mystery of Iran's unique brand of Islam, quite unlike the hard, aggressive faith found in the Arab lands,” and, “…the last thing the ayatollahs need is for the peoples of Europe and America to know much about their country and its people, or to realise the truth - that Iran is our natural ally in the Middle East, a European civilization trapped by history and geography in the midst of Arabia. It does not belong there, culturally or religiously.”

This approach is commonly implemented by the Western propaganda machine aimed at geographically reconstructing the East. Hitchens panders to the colonized Iranian ego, the segment of Iranian society that views light skin, slender forms, and English spoken with an American accent to be markers of “civilization.” In the process, Hitchens (and the propaganda machine he represents) is in reality disintegrating Iranian sovereignty through cultural manipulation by creation of an “Other” in the image of an Arab.

The last dominant problem with the article lies in its articulation of what is deemed as “sophisticated” by the author, who imposes his views on Iranian society both in his writing and certainly during his presence in the country.

For example, Hitchens writes, “On the streets the women walk and stand like Parisians. Somehow, with a belt here and an adjustment there, they manage to make the modest 'manteau' jackets look chic.” Later, he notes that “About one in 50 seems to have had recent plastic surgery on her nose. They wear their bandages with pride and some even stick plaster on their faces to pretend that they have undergone this subversive surgery.” Finally, Hitchens observes that “in a bustling restaurant in north Tehran, where Iran's wealthy middle classes live, it is obvious that Islamic dress has been forced on the many women present and that they are determined to let everyone know it is not their choice.”

These statements imply that religiosity is significantly impacted by class, which is an oft-heard analysis in Western academia; however, an astute observer traveling in Iran will notice an eclectic and variegated understanding of religiosity embodied in neighborhoods throughout the country.

In fact, diversity in thought, political orientation, and religious adherence are dominant characteristics of both historical and contemporary Iranian society. Nevertheless, the theory advocated by Hitchens has been internationally imposed on the Iranian people, engendering social problems and cultural disintegration in the most aggressive way. Further, while Iranian women have been trying to dispel the myth that contemporary style clashes with Islamic-Persian identity for more than a century, Hitchens takes readers back to the early 1900s with the stroke of a pen, proposing a dogmatic understanding of Iranian society which the ulama, he aims to discredit throughout the text, argue against.

Although Hitchens never fully engages readers in an analysis of the nuclear program, his depiction of Iranian women and society is used as a mechanism for addressing the former point. By combining these two issues through real or imagined analyses, Hitchens argues that internally, the Iranian state is weak and unstable, and therefore a soft cultural invasion is a better option than an all-out military assault.

The article portrays the Iranian state as an indecisive, feisty yet weak female, ready to be disciplined and maintained by its beloved Western cowboy. Why bomb them, the author poses, when we can coerce them through other means, and in the process, enjoy the sight and senses of their women.


Shirin Saeidi is a Ph.D. student in the Centre of International Studies at the University of Cambridge, UK, and a member of the Editorial Board of CASMII.

Rumbles in military hint at change

Published on: 04/30/07

Time and again, President Bush has tried to hide his incompetence behind our men and women in uniform. Repeatedly, criticism of his policies has been distorted into an attack on the troops; too often, questions about his strategy have been brushed aside with claims that his policy had been dictated by his generals.

Even now, with the House and Senate trying to force a change of direction, the White House accuses Congress of trying to "micromanage our commanders and generals," redefining the debate as a disagreement between Congress and the military, not with the president.

I think that game is about to end. I think President Bush is losing the American military, and that while he wrangles with Congress over deadlines, in the end it will be the military that forces dramatic changes in policy in Iraq.

Signs of that change abound. When the White House recently asked five retired four-star generals to serve as a so-called "war czar" overseeing our efforts in Iraq and Afghanistan, all five declined, a remarkable sign of disgust among those with a culture of service.

"The very fundamental issue is, they don't know where the hell they're going," retired Marine Gen. John Sheehan said in explaining his refusal to consider the post.

That sense of a military establishment finally losing patience is also reflected in the behavior of Defense Secretary Robert Gates. Gates has refused to toe the party line, asserting an independence that the Bush White House must find maddening. While the president was in Washington condemning Democrats for undercutting the troops, Gates was in Iraq announcing that the debate in Congress "probably has had a positive impact — at least I hope it has in terms of communicating to the Iraqis that this is not an open-ended commitment."

Adm. William Fallon, the head of Central Command, signaled a similar change by banning use of the term "long war" to describe our struggle in the Middle East. "The idea that we are going to be involved in a 'Long War' at the current level of operations is not likely and unhelpful," a spokesman explained.

Perhaps the most telling signal, however, came in a devastating critique published last week in Armed Forces Journal by an active-duty Army lieutenant colonel, Paul Yingling.

The piece, headlined "A Failure of Generalship," is nominally an attack on today's military leadership, which itself is extraordinary. The main thrust of Yingling's argument is that too many generals have stood mute while civilian leaders misled the nation about what is really happening in Iraq, repeating a mistake that led to disaster in Vietnam.

"While the physical courage of America's generals is not in doubt, there is less certainty regarding their moral courage," Yingling writes. "In almost surreal language, professional military men blame their recent lack of candor on the intimidating management style of their civilian masters," and even though that has begun to change, "they may have waited too long."

Yingling has served two tours of duty in Iraq. As a graduate of the Army's School of Advanced Military Studies, he had already been identified as one of the service's best and brightest, and he has made clear his intent to stay in the Army. With this critique, he has placed that career and his chance at a general's stars in severe jeopardy, but his willingness to take that risk will echo through the ranks as an example of the moral courage he finds absent in many of his superiors.

All these signs point to a storm gathering within the military, especially as the strains imposed on the Army by the surge become more apparent. In that regard, it is interesting to note that Army Gen. David Petraeus, commanding officer of U.S. forces in Iraq, has recently and repeatedly stressed his intention to provide the American public an honest assessment of progress or failure by September. By then, he suggests, the effects of the surge and the willingness of the Iraqi government to reform will be more apparent.

Last week, Petraeus was asked whether that assessment could conceivably include telling the president that things aren't working and the troops should come home.

"I have an obligation to some wonderful young men and women in uniform ... who are serving in Iraq, and who deserve a forthright assessment from the folks at the top ... and that's what I'm going to provide," Petraeus said.

Gates and Ryan Crocker, the U.S. ambassador to Iraq, have joined Petraeus in setting September as an crucial time of reassessment. In other words, while Congress and the president wrangle about deadlines, a deadline of sorts may already have been set.

Jay Bookman is the deputy editorial page editor. His column appears Mondays and Thursdays.

Why They Fight

by Anne Williamson

Watching Paul Wolfowitz, exposed in a sex and corruption scandal involving fellow World Banker and private squeeze, Shaha Ali Riza, grappling for several weeks now to save his super-cushy job at the World Bank has brought to mind the infamous quote Ron Suskind teased from a neocon senior aid to George W. Bush, "We're an empire now, and when we act, we create our own reality...and you, all of you, will be left to just study what we do."

Regarding reality, Wolfowitz, it seems, has had to call in re-write (and not for the first time).

By requesting his resignation, the Bank's Board demonstrated to any clear-eyed neocon that they were not studying the correct material. Wolfowitz, instead of acting upon the Board's decision as he previously indicated he would, has hired lawyer-insider Robert Bennet to represent him before that same Board.

Wolfowitz knows the big script, history, clearly has him strategically placed at the World Bank, in control of $25 billion in lending per annum and holding a magic stick of "corruption charges" with which to prod borrowers and trim staff, thereby riding out the Bush administration's departure, especially with a second, possibly even a third, five-year appointment, thereby extending his own foreign policy impact well into the future.

Going forward, the job may prove only a fringe presence in the high-powered world of Washington policymaking, but for Wolfowitz, losing it would be a personal disaster. Bush's political clout is in decline, leaving little chance the president could deliver a comparable perch even if persuaded to expend some of his dwindling power trying. The man himself couldn't survive a hearing for congressional approval which the very best government jobs require, and he sure can't get himself elected. What to do? A sinecure at AEI? How very bleak.

Even were the deluded Wolfowitz to beat the unjustly-enriching-girlfriend-with-other-peoples'-money rap, his behavior in the breech insures he'll never salvage his job. (Today the ministers of the European Parliament have called for his ouster.) If the Bank were the corpse it deserves to be, it's president's current behavior would have it turning over in its grave.

Clumsily, Wolfowitz has attempted what he and his neocon pals managed to do to the Pentagon and the CIA, but unlike those weenies, World Bank staff fought back, proving the old saw, "The price of privilege is eternal vigilance." In an uncharacteristically noisy string of special meetings, memos, reports, internet message boards, chat rooms, public hissing displays and press leaks, they refused to be intimidated while their institution is made a shell and re-designed from within. No "Office of Special Plans Under Construction" sign on their premises!

What Wolfowitz wants – the re-politicization and militarization of the Bank on behalf of a neocon-inspired global imperium centered in Washington preferably no more than a short limo ride from his personal residence – is not what the 10,000 member World Bank staff want. Nor, it seems, is it what the majority of the184 other member nations of the World Bank want.

Just when the entire global gang was coming to town for the Spring Meetings, the damning details of Wolfowitz's years of living large spilled out in news reports along with his initial denials and, later, acceptance of the reported facts after a botched cover-up. Handing out territory and cash flows like a Mafia don, he saw to the girlfriend's interests, those of his favored defense department aides', along with his own, negotiating out-sized salaries, guarantees and privileges. In a nice Trotskyite touch, he further made the appointment of a Republican operative and White House pal as director of the Department of Institutional Integrity where, staff says, said agent is to function as Wolfowitz's personal spy on all of them.

A funny turn of events. Republican neocons pulled the congressional dogs off the international institutions just when the Republican Senate's Cox Committee was establishing the abject failure of both the Bank and the Fund in the Russian reform masquerade of the 1990s, which, in turn, threatened both institutions' future funding, possibly even their existence. Neocons, sensing the Republican 2000 victory for the White House, wanted both institutions along with the US bilateral foreign aid infrastructure available for their own use once they had control of the executive branch.

Lucky thing that – just when Iraq started to go south, James Wolfensohn's retirement from the Bank offered an ideal hiding place from an increasingly inquisitive congress and media. The candidate for the Bank's presidency did not require congressional approval, and traditionally the appointment has always been the American executive's. (How terrifying it must be for Wolfowitz to contemplate the current humiliation of Alberto Gonzales!)

Once installed, Wolfowitz decided to focus on Africa, a public relations success. Even now, it continues paying dividends as what support he has received to stay on at the Bank has mostly come from Africa. But as the Bank's very first priority Wolfowitz chose to expand on his predecessor's anti-corruption initiative.

The centerpiece of the policy worked out last September is a Voluntary Disclosure Program (VDP) under which firms, NGOs or individuals who work as contractors on Bank projects are to report their corrupt acts regarding Bank projects for the last five years. In return, the penitents receive confidentiality and the right to continue bidding on Bank projects, all of which actually immunizes wrong-doers while allowing the Bank to cover up its own negligence and/or political agenda.

Hmmm. Written confessions on file. Another nice touch that.

Practically speaking, the program is just dumb. Corruption is part of the organizing structure in the developing world. If you are opening a prenatal care center or a silver mine, doesn't matter which, and the local chief wants his palm greased to demonstrate to the tribe your desire to be part of the community, you are not going to waste the daily cost of labor, of maintaining site infrastructure, and of interest on business loans, to march back to the capital and file a complaint. You are going to darken that man's palm, viewing it not as a bribe but as a tax, and one with the advantage of being directly negotiated. Under Wolfowitz's plan, any rational expediency or opportunity cost could be labeled as criminal conduct.

Wolfowitz has cut off funds to Chad, delayed projects to Kenya, and ordered a stoppage of funds to the Congo and Ecuador (which expelled their in-country World Bank representative today) over various corruption issues and charges, which have mostly served to create confusion and resentment. Critics charge that his concerns regarding what are inarguably high levels of corruption in World Bank projects evaporated when considering lending for Iraq, Pakistan and Afghanistan. Money further flowed to the countries Wolfowitz once recruited to sign on to Washington's counter-terrorism agenda. In the same vein, he elevated nationals from Spain, from San Salvador, and from Jordan – all nations that strongly backed the US invasion of Iraq – to extremely sweet positions within the Bank hierarchy. In contrast, when Uzbekistan denied landing rights to American military aircraft he promptly suspended their Bank program.

By demonstrating that good things and huge streams of cash flow to those countries and individuals that sign on to U.S. aggressions, Wolfowitz is slowly laying the basis for a new exploitation, i.e. the option of contributing troops to US global adventures via an expanded Nato in return for grants. (Grants are flexible, they can be loaded with extraneous political conditions. Loans are precise, legal documents with troublesome consequences if defaulted.)

It might seem surprising but the bank has always had a problem with lending. It was never much of a force in the reconstruction of European industry. By the early '50s there was little demand for its lending, it should have been dismantled then.

Instead, to solve its problem, the Bank cooked up a new agency funded through the donations of wealthy nations that would subsidize credit at zero percent interest on 50-year loans! Thus was born the International Development Association (IDA) which is the funding that allowed the Bank to plunge into the developing world, where it has been disastrously wasting money and harming developing countries ever since, not to mention taxpayers, who are compelled to bail out the bankers cyclically.

The Bank is completely unnecessary. In a world in which central banks are pumping out money and global liquidity is at tsunami levels, there certainly is no need for preferential government-organized taxpayer-subsidized loans. The poor would have been much better served over the decades by arranging for loans on a commercial basis as the discipline required to fulfill standard obligations would represent an economic and political advance for a developing nation, the right of contract being essential to prosperity.

Currently the Bank is in an IDA donor drive, an every third year affair. Contributions are way, way down.

The U.S.'s 16% ownership of the Bank puts it in the institution's driver's seat. Wealthy countries are not eager to donate money for the as yet unknown specifics of what is now viewed as an alarming US foreign policy. Why should anyone sign on to possible future U.S. aggression indirectly through World Bank lending?

Wolfowitz's agenda puts at risk a very cozy world based on the post–World War II modus operandi in which dollar loans are extended to undeveloped and impoverished nations in order to grab control over their resources and governments. The main point is the loan, not the borrower's ability or commitment, but the lender's claim on national collateral. The corruption emerges from institutional action, action inherent in and according to the World Bank's design as a political lender masquerading as a humanitarian enterprise, and nothing effective can be done about it as long as the institution exists. Reform is not an option, only elimination.

For the well-positioned second-raters that people the Bank, there's no advantage in trading in a country club existence and perfumed reputation just to browbeat and bludgeon troops out of poor nations in return for dollar grants. It's so much more agreeable to posture as a helping-hand, hiding the nasty imperial bits in the loan covenants. True, the policies the loans require often lead to public riots, and to resource, land and territorial wars among their clients, but the mainstream media never connects the loans to their bloody consequences. At worst, details of the borrower's thievery leak out.

What's really at stake for staff is the richest, absolute best government plantation in the entire world. World Bankers, along with IMF, IFC and EBRD employees, enjoy a mem-Sahib lifestyle; tax-free six-figure salaries, foreign expeditions involving first-class travel, five-star hotels, generous per diems, lavish banquets, and – if one is obliged to "stay on" overseas for "mission" work – extensive local staff and personal aides, language tutors, tuition support for the children, numerous mandated vacations home per annum, residential rent subsidies, full insurance packages, diplomatic mail for those legally-dubious art acquisitions, the best address, and fancy invites.

If you are a foreign national lucky enough to escape your native backwater for an assignment in Washington, or London, or Paris, or Geneva – all the best places! – there is no treachery you wouldn't commit to stay in place. (The very best institutional reform scheme ever put forward was Christopher Fildes's suggestion to move the Bank's headquarters to Bangladesh.)

If you are a consultant, or an academic "adviser," you'll keep your honest opinions to yourself, and do the job, no matter how mad or useless. There's no way your university could, or your firm would, roll out a red carpet like the World Bank does.

If you are a Third World borrower and a government official and therefore advantageously-positioned to skim the loans and use the principal for purposes more useful to you and your continuing hold on power than to the nation, the World Bank is your literal lifeline. Without scads of dollars to hand out, an honest election or worse – open revolt – are always possibilities.

If you are a large, richly-endowed private corporation with an eye on the profit possibilities in some foreign hellhole, you'll play along, doing your bit to legitimize, publicize and generally support the Bank. After all, those giveaway loans may well be your critical leverage indirectly. Tit for tat. Loan for license.

Clearly, there's a lot of mouths to be fed. Luckily for the class of useless hors d'oeuvre eaters, there is China.

China is a rare creature in the World Bank firmament in that it is a large and paying customer, taking full advantage of the Bank's subsidized loans despite having an unprecedented $1.2 trillion in reserves. The income China represents to the World Bank is critical; already the Bank's sister institution, the IMF, an agency China does not patronize, is unable to make enough of a return on its international loans to pay its costs and is currently floating the idea of selling a portion of the Fund's contributed gold horde for cash to pay for their jobs and privileges.

The World Bank does not wish to be similarly indisposed.

There really wasn't much heat in the Shaha Riza story. After all, a couple of middle-aged parasites and public policy bores divvying up a big bag of other peoples' money while giving free reign to their shared delusions of bayonet democracy and the Middle East is somehow depressingly familiar.

But in the initial scandal data dump to the Washington Post on 12 April ("World Bank Chief's Leadership Role Called Into Question"), one sizzling fact leaked out apparently by mistake as it was never mentioned again in future reports. The maverick leak was an e-mail "noting that the bank had received a warning from China that it might halt future borrowings if Wolfowitz refused to curb anti-corruption investigations."

Wolfowitz is toast.

Alas, the Bank is not. Not yet, anyway.

If we must have a World Bank, and I am pained to write that it seems we must apparently right up until the very instant of our coming national insolvency, then let it be the redundant, inefficient, indulgent, corrupt waste currently on offer.

A militant, lean and mean neocon lending machine would be far worse.

April 28, 2007

Anne Williamson [send her mail] has been observing the international aid institutions since their arrival in Russia after the 1991 collapse of the Soviet Union. Currently she is expanding and revising her opus on the post-Cold War era, Contagion: The Betrayal of Liberty; the United States and Russia in the Post-Cold War World, to be published by Poor Richard's Press this coming autumn. She no longer lives in the United States. This article was originally published by Sanders Research Associates.

Copyright © 2007

The Iraq war is over. It is the moment for Democrats to show real leadership

If President Bush's veto is not challenged tomorrow, thousands of Iraqis and hundreds of US troops are certain to perish

Gary Younge
Monday April 30, 2007
The Guardian

There is no overestimating the popular reverence Americans have for their men and women in uniform. A direct translation of "squaddie", a term steeped in class contempt which betrays as much antipathy and ambivalence as it does admiration in the UK, simply does not exist in the US. Fighting for your country is generally regarded as the ultimate form of public service.

Flight attendants will announce the presence of an active service man or woman to cheers from the rest of the plane. At anti-war demonstrations, protesters wave banners proclaiming "Support the troops, oppose the war." The nation may be irrevocably split on the moral value of any war, but when it comes to backing the people who are executing it, they speak as one.

If such widespread veneration for the military in a democracy is problematic, the reasons underpinning it extend beyond hyper-patriotism. Thanks to the draft during the Korean and Vietnam wars, many Americans have a close relative who is a veteran. The suburban myth that liberals abused soldiers returning from Vietnam has made progressives anxious to be vocal in their support for the military. And, whatever its reputation abroad, since the second world war the US military has been viewed domestically as an instrument of progressive social change. It was one of the first American institutions to formally integrate. Thanks to the GI bill, which gave housing or an education to those returning from the second world war, it was instrumental in creating the postwar middle class.

Finally, in a nation with no safety net, the military is one of the few government-backed means of advancement for the poor. "I was living in a trailer with my grandmother," says Darrell Anderson, 25, who earned a purple heart in Iraq and later went awol. "I was broke and I needed education and healthcare, and if I had to go to war for them that was just what I had to do. Going to the military was my last chance. My last option." If all else fails, you can yomp and shoot your way to the American dream.

So America's support for its military is as deep as it is complex. While that support may coincide with the backing for a given war, it may at times also contradict it. This may be one of those times. The showdown between the Bush administration and the Democratic Congress over the war in Iraq currently hinges on which side can claim ownership of the troops' interests, and harness that public affection to bolster their position.

President Bush has requested more money from Congress for the war. Congress has passed a bill that gives him more than he requested so long as he sets a timetable for withdrawing the troops. Bush has vowed to veto the bill, effectively demanding a blank cheque for the war. The Democrats do not have enough votes to override the veto. Bush cannot get the money without Congressional approval. For as long as the stalemate continues no money can be earmarked for the war, and at some stage the cash will dry up. In these deliberations the plight of Iraqis, who are dying in their scores every day, is subordinated to more local concerns: which side can convince the public that they are standing their ground to protect the troops, and thereby force the other side to compromise before the money runs out.

You would think this would be a slam-dunk for the Democrats. With approval ratings in the 30s, Bush is deeply unpopular. So is his war. According to a Rasmussen poll last week, 57% of Americans support either an immediate withdrawal (37%) or a deadline for withdrawal (20%), while 60% believe that his "surge" has either made things worse in Iraq or has made no difference. As though that were not enough, he will most likely sign the veto tomorrow, on the fourth anniversary of his "mission accomplished" speech.

Not only is Bush weak, but so is his standing with the troops. Since he announced the surge, the US death toll has remained steady at around three a day, while the situation on the ground has deteriorated and the Iraqi government has disintegrated. Last month came the debacle at Walter Reed hospital, where wounded veterans testified to lying in rooms infested with mice and cockroaches, with mould on the walls.

Then last week came damaging testimony relating to two of the "war on terror's" greatest icons. The first, Jessica Lynch, was hailed as the plucky "Rambo from West Virginia" after she was captured in an ambush at Nassiriya early in the war and later rescued by US forces. "I am still confused as to why they chose to lie and tried to make me a legend when the real heroics of my fellow soldiers that day were, in fact, legendary," said Lynch at a Congressional hearing.

The other was the family of Pat Tillman, a football star, who forwent a $9m contract to volunteer for the military. According to the defence department Tillman was killed by enemy combatants in Afghanistan in 2004 while leading an attempt to rescue US troops. Five weeks later they admitted he was killed by friendly fire. "We believe this narrative was intended to deceive the family but more importantly the American public," said Kevin Tillman, Pat's brother. "Pat's death was clearly the result of fratricide [friendly fire] ... the truth needed to be suppressed."

And so the world Bush occupies - where the war is justified, conditions on the ground are improving, and democracy in the Middle East will flourish - keeps getting smaller. Even those he cast as heroes no longer wish to share the stage with him.

All of this provides ample space for the Democrats to establish an alternative narrative for both supporting the troops and stopping the war. One that says the best way to support them is to remove them from a war they cannot win, and return them home where they will be cared for. An opportunity to represent the people who elected them, implement their mandate, and in so doing fulfil their constitutional duty to check and then balance executive power.

Like most acts of principle, making this move carries significant political risk. But not making it carries the certainty of thousands more dead Iraqis and hundreds more dead soldiers. A CBS-New York Times poll shows only 36% back withholding funds if the president uses his veto. That is where leadership comes in: the Democrats have yet to prove their ability to win people over to a course of action they believe is both justified and necessary. Who knows how many people would support them if they made the case for it. Who knows how many would have opposed the war if they'd been asked. The war is over. To postpone withdrawal is simply to prolong the agony.

Yet it seems the Democrats are set to cave in on their demand of setting a timetable, agreeing instead to "non-binding benchmarks" on the Iraqi government, an impotent body that lacks authority and legitimacy. That would not be compromise but capitulation.

This is only the second time Bush has used his veto. The first was six months ago, to stop a bill on embryonic stem-cell research becoming law. The bill, he said, "would support the taking of innocent human life ... and crosses a moral boundary our decent society needs to respect". Would that he lavished so much care on human life that has evolved beyond a collection of cells. Would that his moral boundaries stretched beyond the green zone. Would that he had an opposition worthy of the name.