AlJazeera interviews Sy Hersh

The ever-prescient Sy Hersh on Al Jazeera, talking about his latest New Yorker piece.

Part II

How housing ills killed the bull

Who's to blame for the recent stock plunge? Not China. The big cause is a little closer to home.

Latest Market Update

March 06, 2007 -- 16:20 ET

[BRIEFING.COM] One week ago fears that the market was getting ahead of itself, after running virtually unabated since bottoming in July, caught the bulls off guard, resulting in the biggest one-day point decline since the U.S. markets reopened on...

By Bill Fleckenstein

The landscape of Wall Street has changed. Tuesday's shellacking leaves no other conclusion. But how has it been altered, readers will ask, and what might that mean? I've got my opinions, which I'd like to now share.

--MORE--

Goldman Sachs warns of 'dead bodies' after market turmoil

By Ambrose Evans-Pritchard, International Business Editor

Last Updated: 2:19am GMT 06/03/2007

Ian Cowie: Q&A on investing in shares

The global currency storm of the past week is starting to infect the corporate bond markets and may prove harder to contain than last year's May sell-off, Goldman Sachs has warned.

Jim O'Neill, the bank's chief global economist, said investment firms playing the "carry trade" had been caught on the wrong side of huge leveraged bets against the Japanese yen.

"There has been an amazing amount of leverage on currency markets that has nothing to do with real economic activity. I think there are going to be dead bodies around when this is over," he said. "The yen carry trade has reached 5pc of Japan's GDP. This is enormous and highly risky, as we are now seeing."

Stock markets around the world continued to slide as investors scrambled to liquidate bonds, equities and weaker currencies across the board. Japan's stock market slumped 3.3pc, with falls of 3.7pc in India, 4.6pc in Malaysia and 4.7pc in Moscow, where oil and commodity shares tumbled on fears of a global slowdown.

London closed down 57.5 points at 6058.7 and America's Dow Jones was down 66 points in afternoon trading. Copper prices are down 9pc in a week. Base metal inventories are rising fast.

"The unwind of the carry trade has had an impact across emerging markets," said Kingsmill Bond, a strategist at Deutsche Bank. "The capital exporters in Asia and the Middle East have been relative safe havens: the worst hit are Latin America, South Africa, Turkey and eastern Europe."

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The yen has rocketed in a move known as a "short-covering squeeze", rising almost 6pc against the euro and the dollar in a week. Many funds that borrowed at near-zero rates in Japan to chase higher yields abroad are able to close bets at a profit, but some may be forced to liquidate positions - starting a chain reaction through other asset markets, such as gold.

Mr O'Neill said the danger was contagion to low-tier bonds, driving up the cost of borrowing for business.

"Our concern is that the repricing of risk we are seeing could spread to the credit markets. This is potentially more difficult to deal with, and needs watching," he said.

The Itraxx Crossover index used to take the pulse of corporate bonds shows that spreads have widened 43 basis points in a week.

Stephen King, chief economist for HSBC, said it would take two or three weeks to gauge the severity of this shake-out. "The world economy is fundamentally strong, but this reversal of one-way bets built up over years creates great uncertainty. The key worry is that this could reveal a weakness in the architecture of financial markets. We just don't know who is trying to liquidate positions," he said.

Bernard Connolly, chief strategist for Banque AIG, said conditions now are more threatening than they were in the six-week sell-off last spring.

"The carry trade was bound to end with a bang rather than a whimper but this doesn't look to me like forced liquidation yet. However, the yen is going up against all currencies this time and not just the dollar, and stocks are looking more panicky.

"This is going to go on for longer because there has unquestionably been a global financial bubble. Eventually, central banks will reflate but it will have to get worse first. "

Steve Pearson, currency strategist at HBOS, said global markets were waking up to the reality that perma-growth with low inflation was not on the cards. "We're seeing a creeping reassessment of the trade-off between growth and inflation. This is going to weigh on asset prices and threaten risky assets all through the first half of this year."

Whistle-blower Had to Fight NSA, LA Times to Tell Story

March 06, 2007 10:53 AM

Brian Ross and Vic Walter Report:

Whistle-blower AT&T technician Mark Klein says his effort to reveal alleged government surveillance of domestic Internet traffic was blocked not only by U.S. intelligence officials but also by the top editors of the Los Angeles Times.

In his first broadcast interview, which can be seen tonight on World News and Nightline, Klein describes how he stumbled across "secret NSA rooms" being installed at an AT&T switching center in San Francisco and later heard of similar rooms in at least six other cities, including Atlanta, San Diego, Los Angeles, Palo Alto, San Jose and Seattle.

"You needed an ordinary key and the code to punch into a key pad on the door, and the only person who had both of those things was the one guy cleared by the NSA," Klein says of the "secret room" at the AT&T center in San Francisco.

The NSA is the National Security Agency, the country's most secretive intelligence agency, charged with intercepting communications overseas.

Klein says he collected 120 pages of technical documents left around the San Francisco office showing how the NSA was installing "splitters" that would allow it to copy both domestic and international Internet traffic moving through AT&T connections with 16 other trunk lines.

"It's gobs and gobs of information going across the Internet," Klein says.

President Bush has acknowledged he authorized the NSA to intercept the communications of people with known links to terrorist organizations "into or out of the United States," but that "we're not trolling through the personal lives of millions of innocent Americans."

Intelligence experts say the NSA has the means to filter out suspect communications with sophisticated machines that spot key words, names, addresses or patterns.

Eventually, Klein says he decided to take his documents to the Los Angeles Times, to blow the whistle on what he calls "an illegal and Orwellian project."

But after working for two months with LA Times reporter Joe Menn, Klein says he was told the story had been killed at the request of then-Director of National Intelligence John Negroponte and then-director of the NSA Gen. Michael Hayden.

The Los Angeles Times' decision was made by the paper's editor at the time, Dean Baquet, now the Washington bureau chief of The New York Times.

Baquet confirmed to ABCNews.com he talked with Negroponte and Hayden but says "government pressure played no role in my decision not to run the story."

Baquet says he and managing editor Doug Frantz decided "we did not have a story, that we could not figure out what was going on" based on Klein's highly technical documents.

The reporter, Menn, declined to comment, but Baquet says he knows "Joe disagreed and was very disappointed."

Klein says he then took his AT&T documents to The New York Times, which published its exclusive account last April.

As the new Washington bureau chief of The New York Times, Baquet now oversees the reporters who have broken most of the major stories involving the government surveillance program, often over objections from the government.

After The New York Times story appeared, Klein filed an affidavit in a lawsuit against AT&T brought by a civil liberties group, Electronic Frontier Foundation.

The NSA says it will not confirm or deny the existence or the purpose of the "secret rooms," but in a filing in the court case against AT&T, Negroponte formally invoked the "state secrets privilege," claiming the lawsuit and the information from Klein and others could "cause exceptionally grave damage to the national security of the United States."

Klein says what he knows won't help terrorists.

"The only people that are being kept in the dark is the American people who are being misled and not realizing, not being told that their private information, that their liberties are being destroyed and tramped on," he said.

March 6, 2007 in NSA: Wiretapping | Permalink | User Comments (37)

Waiting for the Global Financial Drama

Philip Bowring

02 March 2007

The two-day global equities market meltdown may well signal a much bigger future disaster

The script is complete. The dress rehearsal has been held. But the curtain has yet to go up on the first night of the Great Global Asset Price Collapse.

Markets have recovered some composure after the last two days of February. The steep drops can now be described as a correction, not a collapse. But the payback from sustained overindulgence still awaits. That is not to argue that every index from Dow Jones to Topix via silver futures and Singapore property is going to suffer the same fate. There are elements of the local as well as the global in every national market. But make no mistake: the global liquidity bonanza is the pre-condition for almost every asset market excess.

Don’t read too much into the fact that the recent wobble spread from China. The Chinese market remains among the most closed in the world. What the 9 percent Shanghai shock did was simply remind investors in other markets of how much they had risen in the past year. The Asian ones to suffer most, in addition to China and India, were those which have risen most steeply in recent months -- Malaysia and Singapore. Whatever the macro economic and corporate outlook, profit-taking was overdue. Indeed Asian markets including Korea and Thailand, Malaysia and Singapore look relatively less vulnerable to sustained declines than most.

Top of the worry list remains Mumbai. So it is no surprise to find that it has now fallen 12 percent from its high last month, and with lots more to come. Not only had the market risen fourfold since 2003 but the macro conditions in India are abysmal, with inflation at over 6 percent, the current account deteriorating sharply, bank lending excessive and, to cap it all, the government has just raised the tax on dividends.

Shanghai has better macro-economics to support it for the time being and the rise of the past year has been driven by an abundance of cash not credit to punters. But China’s investors are notoriously skittish and could well defeat any government efforts to stem price falls. Price earnings ratios are even higher than in India and profit growth looks likely to disappoint.

The rest of the world need not worry itself with either Mumbai or Shanghai, both primarily driven by local factors. Falls of even 50 percent would cause barely a ripple elsewhere. The world has plenty of other issues to worry about and the recent correction has pointed at the two major ones but without coming to a definitive conclusion as to if and when they will hit.

The first is the US consumer. Has the bonanza of the real estate cash-out come to an end? House prices have finally begun to slip and interest rates show no signs of falling – though real rates remain well below historical norms. Companies in the US, as almost everywhere, are cash-rich but showing little desire to increase investment – and household incomes are barely rising faster than inflation. Two things will happen when the US consumer-led boom stalls. Most obviously, imports will tend to fall, with a consequent knock-on effect for Asian exporters, China more than most because of the Chinese economy’s exposure to US-bound exports. Contrary to some current belief, it will not be question of the world catching cold when China sneezes, but of China catching a cold from the US.

Quite how much damage that will do to China’s own growth rate remains to be seen but given that China (and India) have been growing at unsustainably high rates, the downward shift could be severe. It will anyway be accompanied by a politically driven continued gradual appreciation of the yuan against the dollar which will squeeze Chinese corporate revenues and profits – and also those of US retailers like Wal-Mart which source heavily from China.

That brings up the secondary impact of the US consumer retreat: the narrowing of the current account deficit, which would reduce the pace of global liquidity creation. Growth of base money has been fuelled by a 15 percent plus increase in global reserve assets, still mostly held in dollars.

A weak US economy would have the secondary effect of causing most currencies, particularly the Asian ones which are conspicuously cheap (headed by the yen) to rise. In turn this would further contract the local liquidity expansion effects of the US deficit. The impact would be particularly felt by China, for whom the trade surplus is a key to over-rapid credit growth.

It would likely be less marked in countries such as Malaysia and Taiwan. Both seem candidates for currency appreciation and reduced current account surpluses. But the liquidity expansion effect of their huge current surpluses has been significantly offset by capital outflows, while China has had large net capital inflow in addition to its current surplus.

Apart from the US consumer, the other global party pooper will be Japan. Whether led by a change of heart by Japanese institutions or by fear replacing greed in the hearts of investment bankers and hedge fund gamblers, the huge outflow of yen will come to a halt. Indeed, for many with leveraged positions in the carry-trade it will be dramatically reversed.

The importance of a sudden rise in the yen, back to say 105 to the US dollar, would not be so much on its trade surplus or domestic profit, which is super-competitive at current low exchange rates. It is the sudden increase in the exchange-rate cost of borrowing Japanese savings. That will mean a sharp pullback in the global liquidity expansion by which Japanese savers have been financing consumer booms in the US, UK, Australia, New Zealand etc and driving interest rates in sickly emerging markets such as the Philippines to rock bottom levels.

Quite how fast all this happens is impossible to tell, if only because of the opaque nature of the credit derivatives business and the sheer size of currency hedging books. But once markets get a whiff of trouble, rout could follow and take some big institutions and funds down with it. There was a hint of panic this week even though the US consumer’s retreat is not yet a sure bet in the near term, and Japan’s weak-willed central bank has appeared to extend the life of the yen carry trade and by implication the Taiwan dollar and Swiss franc equivalents (both have been unnaturally weak despite huge current account surpluses).

So what does this say to investors? Will it take commodity markets down with stock markets as demand stalls simultaneously with the contraction in liquidity? Some impact in inevitable at least on base metals such as copper. But the overall impact on commodities may well be modest as investments in new production have lagged demand and new mines come on stream only slowly. Food commodity prices will be kept under upward pressure by demand from ethanol and biodiesel plants. Precious metals may even benefit as investors seek refuge from currencies as well as stocks.

But don’t rush out and buy Australia. Australian consumption and property prices are likely to suffer badly as the cost of sustaining its huge current account deficit increases just as commodity markets falter. Avoid the Aussie and NZ dollars which have been buoyed up by the carry trade.

The euro will probably get even stronger against the US dollar as the ECB keeps monetary policy quite tight even as the US heads for recession. But it has already risen so steeply since its nadir five years ago that a major new move seems unlikely. Ditto the Canadian dollar, which would also suffer from a commodity decline.

The currency action is going to be mostly in Asia and the yen will be the key. The NT dollar will not be far behind and may well strengthen against the yuan as well as the US dollar. Ditto the ringgit. Further appreciation against the US dollar is likely for the won, Singapore dollar and baht, but having led the way in Asian currency appreciation they will now likely lag.

So what does this scenario do for Asian stock, property and bond markets? Clearly exporters’ margins will be squeezed by weak US demand, a possibly faltering China and by currency appreciation. Reduced global liquidity should put upward pressure on interest rates but commodity-driven inflation is falling and stronger currencies will deter authorities from raising rates. So bond markets may be quite stable (except for the weaker countries like the Philippines and Indonesia). Stock markets can expect to suffer broadly but domestically-oriented issues including banks in most of Asia should not be badly hurt. (China and India excepted)

Indeed, Taiwan and Japan may well see repatriated funds invested in the property market. Hong Kong’s property market should also benefit from a weak currency vis-à-vis China.

As for Wall Street, the end of the consumer and property booms will see some horrendous casualties in the credit sector, retail and real estate. But some boring old manufacturing outfits would do really well out of a declining dollar and continued, if slower, growth in foreign markets, especially in Asia.

Perhaps the overriding question is not what the trend is going to be but how fast it will happen and hence how destabilizing. The impact of interest rate and currency adjustments has so far been gradual and un-alarming. If continued there will be no crisis but a slow but sure shift to a new trade and market equilibrium.

However, experience suggests that after such a long period of monetary expansion there will be a catharsis, not as severe as the 1997 Asian crisis but on a scale that spans the whole globe.

BBC names Blair aides in banned funding report

Tue Mar 6, 2007 10:24 AM IST

LONDON (Reuters) - More details emerged on Monday of a "cash-for-honours" scandal that has dogged Tony Blair's last months as British prime minister when the BBC named two of his staff allegedly involved in an email exchange about it.

The British Broadcasting Corporation said the aides were connected to a story it has been banned by a court injunction from reporting about a police inquiry into a potential criminal cover-up at Blair's office.

Detectives have been investigating for the past year whether political parties nominated people for state honours in return for loans but are now also probing whether any Blair official sought to conceal evidence from police.

Blair, who is expected to step down by July after 10 years in office, has been questioned twice as a witness by police.

He has said that nobody in the Labour Party, to his knowledge, sold honours that bring with them seats in parliament's upper chamber, the House of Lords.

A court blocked the BBC late on Friday from running a report about an internal email between "two members of Blair's inner circle" that it said could prove central to the cover-up inquiry.

Attorney General Lord Peter Goldsmith obtained the injunction at the request of police. Officers argued information in the story could jeopardise their inquiries.

The injunction was amended on Monday, allowing the BBC to report that the email was from Ruth Turner, director of government relations in Blair's office, to Jonathan Powell, Blair's chief of staff.

The message concerned Blair's chief fundraiser and Middle East envoy Lord Michael Levy, the BBC said. The broadcaster was still barred from revealing the contents of the email.

Blair's spokesman contested the BBC report. "This story is not accurate because we dispute this version of events," he said, declining to specify which aspect of the story he was disputing.

Levy was arrested in January on suspicion of conspiracy to pervert the course of justice and Turner the same month on suspicion of perverting the course of justice, but both were released without charge.

The injunction against the BBC sparked speculation among politicians and lawyers that officers were planning to bring charges against one or more people and that police could be on the verge of wrapping up their probe.

What We Know About Waste and War in Iraq

Tomgram: The Last Hot-button Issue for the Bush Adminstration

Hostages to Policy

By Tom Engelhardt

Let's start with the obvious waste. We know that hundreds of thousands of Iraqis have lost their lives since the Bush administration invaded their country in March 2003, that almost two million may have fled to other countries, and that possibly millions more have been displaced from their homes in ethnic-cleansing campaigns. We also know that an estimated 4.5 million Iraqi children are now malnourished and that this is but "the tip of the iceberg" in a country where diets are generally deteriorating, while children are dying of preventable diseases in significant numbers; that the Iraqi economy is in ruins and its oil industry functioning at levels significantly below its worst moments in Saddam Hussein's day -- and that there is no end in sight for any of this.

We know that, while the new crew of American military officials in Baghdad are starting to tout the "successes" of the President's "surge" plan, they actually fear a collapse of support at home within the next half-year, believe they lack the forces necessary to carry out their own plan, and doubt its ultimate success. What a tragic waste.

We know that while the U.S. military focuses on the Iraqi capital and al-Anbar Province, the heartland of the Sunni insurgency, taking casualties in both places, fleeing Iraqi refugees are claiming that jihadis have largely taken over the city of Samarra, north of Baghdad, and renamed it "the Islamic Emirate of Samarra" -- a grim sign indeed. (Here's just one refugee's assessment: "that large areas of the farms around Samarra have been transformed into camps like those of Al-Qaeda and Taliban in Afghanistan.")

We know that, as the U.S. military concentrates its limited forces and the minimal Iraqi units that fight with them, in a desperate battle to control the capital, for both Sunnis and Shia, the struggle simply spreads to less well-defended areas. We also know that the Sunni insurgents have been honing their tactics around Baghdad, their attacks growing deadlier on the ground and more accurate against the crucial helicopter support system which makes so much of the American occupation possible. Some of them have also begun to wield a new, potentially exceedingly deadly and indiscriminate weapon -- trucks filled with chlorine gas, essentially homemade chemical weapons on wheels which can be blown up at any moment.

In other words, before the Bush administration is done two of its bogus prewar claims -- that Saddam's Iraq was linked to the Islamic extremists who launched the 9/11 attacks and that it had weapons of mass destruction -- could indeed become realities. What a pathetic waste.

We know that, while Americans tend to talk about the "Iraq War," with a few exceptions like the fierce battle with Shia cleric Moqtada al-Sadr's Mahdi Army militia in Najaf in 2004, it has actually been a remarkably unsuccessful pacification campaign against a Sunni insurgency alone; that is, a war against less than 20% of the Iraqi population (even if every Sunni supports some insurgent faction). We know that billions and billions of dollars have gone down the rat-hole of Iraqi "reconstruction" -- with multimillions more simply stolen or utterly unaccounted for by American financial overseers -- and that what reconstruction has been done is generally substandard and overpriced in the extreme. What a waste of resources.

We know, on the other hand, that a series of vast military bases have been built in Iraq of a permanency that is hard to grasp from thousands of miles away and that the largest embassy in the history of the universe has been going up on schedule on an almost Vatican-sized plot of land in Baghdad's highly fortified Green Zone to represent the United States to a government whose powers don't extend far beyond that zone. Talk about waste!

We know that we stand at the edge of a possible war with Iran. It could come about thanks to a Bush administration decision to launch a massive air attack on that country's nuclear facilities; or it could simply happen, thanks to ever more provocative U.S. acts and Iranian responses, leading to a conflict which would undoubtedly play havoc with the global energy supply, threaten a massive global recession or depression, and create untold dangers for the American military in Iraq, which might then have to face something closer to an 80% Iraqi insurgency. What a ridiculous waste.

Hot-button Politics

We know that, since the moment President Bush stood under the "Mission Accomplished" banner on the USS Abraham Lincoln in early May 2003 and declared "major combat operations in Iraq have ended," American deaths have risen from relatively few into the range of nearly 100 a month or more. We know that these deaths have also grown steadier on a day-to-day basis like a dripping faucet that can't be fixed. This February, for instance, there were only five days on which, according to the definitive Iraq Coalition Casualty Count, the Pentagon did not report at least one (and often multiple) American deaths.

It's finally national news that Americans wounded in Iraq come home "on the cheap" (as Tomdispatch's Judith Coburn reported back in April 2006). The crisis at the country's premier military hospital, Walter Reed Army Medical Center, is already proving to be another "Brownie-heck-of-a-job" privatization scandal (with the contract to run the place having gone to a company headed by two former Halliburton execs), and the nightly network news as well as major newspapers assure us that this is just "the tip of the iceberg."

According to a Congressional staffer quoted in human-rights lawyer Scott Horton's "No Comment" newsletter, "This is Hurricane Katrina all over again. Grossly incompetent management and sweetheart contracts given to contractors with tight GOP connections. There will be enough blame to go around, but the core of the problem is increasingly clear: it's political appointees near the center of power in the Pentagon who have spun the system for partisan and personal benefit. But they'll make a brigade of soldiers and officers walk the plank to try to throw us off the scent."

As Juan Cole pointed out recently,

"The privatization of patient care services is responsible for a lot of the problem here… The Bush-Cheney regime rewarded civilian firms with billions while they paid US GIs a pittance to risk their lives for their country. And then when they were wounded they were sent someplace with black mold on the walls. A full investigation into the full meaning of 'privatization' at the Pentagon for our troops would uncover epochal scandals."

What a needless waste!

We know that the U.S. military has been ground down; that the National Guard has been run ragged by its multiple Iraq call-ups and tour-of-duty extensions -- according to the Washington Post, "Nearly 90 percent of Army National Guard units in the United States are rated ‘not ready'" -- and can no longer be counted on to "surge" effectively in crises like Hurricane Katrina here at home; that the Reserves are in equally shaky shape; that troops are being shipped into Iraq without proper training or equipment; that the Army is offering increasing numbers of "moral waivers" for criminal activities just to fill its ranks; that the soldiers joining our all-volunteer military, however they come home, are increasingly from communities more likely to be in economic trouble -- rural and immigrant -- either forgotten or overlooked by most Americans; that these traditionally patriotic areas are now strikingly less supportive of administration policy; and that the death rate in Iraq and Afghanistan is 60% higher for soldiers from rural than suburban or urban areas. If all of this doesn't add up to a programmatic policy of waste and evasion of responsibility, what does?

We know that, on February 11th, the day Sen. Barack Obama, in his first speech as an avowed presidential candidate, said, "We ended up launching a war that should have never been authorized and should have never been waged, and to which we now have spent $400 billion and have seen over 3,000 lives of the bravest young Americans wasted," Sgt. Robert B. Thrasher, 23, of Folsom, California died in Baghdad of "small-arms fire," Sgt. Russell A. Kurtz, 22, of Bethel Park, Pennsylvania in Fallujah from an IED, and Spc. Dennis L. Sellen Jr., 20, of Newhall, California in Umm Qsar of "non-combat related injuries." We know that on February 28th, the day that Senator John McCain announced his candidacy for the presidency on the Late Show with David Letterman, saying, "Americans are very frustrated, and they have every right to be. We've wasted a lot of our most precious treasure, which is American lives, over there," Sgt. Chad M. Allen, 25, of Maple Lake, Minnesota and Pfc. Bufford K. Van Slyke, 22, of Bay City, Michigan died while "conducting combat operations in Al Anbar province."

We know that, while in the remote backlands along the Pakistani border with Afghanistan -- an area our President recently called "wilder than the Wild West" -- and in Afghanistan itself, the Taliban is resurgent and al-Qaeda has reorganized, Americans die in Iraq. We know that every Bush administration public explanation for the invasion and occupation of Iraq -- Saddam's links to the 9/11 attacks, his weapons of mass destruction and burgeoning nuclear program, the "liberation" of Iraqis, the bringing of "democracy" to Iraq -- has sunk beneath the same waves that took down the President's "victory" (a word, as late as November 2005, he used 15 times in a speech promoting his "strategy for victory in Iraq"). We know that the President's policies, from New Orleans to Afghanistan, have been characterized by massive waste, programmatic incompetence, misrepresentation, and outright lies.

We know that the real explanations for the invasion of Iraq -- involving the urge to nail down the energy heartlands of the planet and establish an eternal American dominance in the Middle East (and beyond) -- in part through a series of elaborate permanent bases in Iraq -- still can't be seriously discussed in the mainstream in this country. We know that the Bush administration has never hesitated to press hot-button emotional issues to get its way with the public and that, until perhaps 2005, the hot-button issue of choice was the President's Global War on Terror, which translated into the heightening of a post-9/11 American sense of insecurity and fear in the face of the world. We know as well that this worked with remarkable efficiency, even after the color-coded version of that insecurity and those fears was left in the dust. We know that in this al-Qaeda played a striking role -- from the attacks of September 11, 2001, in which a small number of fanatics were able to create the look of the apocalypse, to the release of an Osama bin Laden video just before the election of 2004. What a waste that such a tiny group of extremists was blown up to the size of Hitler's Germany or Stalin's Russia in the public imagination.

We know that there is only one hot-button issue left for this administration (short of a massive new terrorist attack on "the homeland") -- the American troops already in or going to Iraq or those who have already died there. We know that Senators Obama and McCain had to immediately backtrack and express "regrets" for in any way indicating that American deaths in Iraq might represent a "waste" of young lives; that, for their statements, Obama was promptly attacked by Fox News and right-wing bloggers, while McCain was set upon by the Democratic National Committee. So we also know that there is some kind of agreement across the board politically when it comes to those troops, which goes under the rubric of "supporting" them.

We know that both Senators' statements about a profligate invasion, a disastrous occupation, and a catastrophic pacification campaign, all based on a web of lies and false (or cleverly cherry-picked) intelligence, turning Iraq into a charnel house -- far more Iraqis have now died than were ever killed by Saddam Hussein -- and a center for extremist activity, were promptly pegged in the media as "slips" or "gaffes" that hurt each of the politicians involved. We also know that the American people in poll after poll now say that the Iraq War was not worth fighting and the invasion not worth launching; that similar majorities want the war to end quickly, preferably within a six-month to one-year time-frame for the withdrawal of all troops with no garrisons left in Iraq.

We know that congressional representatives are generally terrified of not seeming to "support the troops"; that somehow those troops themselves have been separated from the actual fighting in Iraq, even though, for better or worse, you can't separate the military from the mission; that, to some extent, you are (and are affected by) what you do; and that when the mission is a "waste" -- or, in this case, even worse than that because it has created conditions more dangerous than those it wiped away -- then any life lost in the process is, by definition, a waste of some sort as well. No matter what your brand of politics might be, this should be an obvious, if painful, fact -- that the loss of young people, who might have accomplished and experienced so much, in the pursuit of such waste is the definition of wasting a life. That this can hardly be said today is one of the stranger aspects of our moment and it has a strange little history to go with it.

How Our Soldiers Became Hostages

You would have to start any brief "support our troops" history with the dismal end of the Vietnam War and a consensus that the antiwar movement had been particularly self-destructive in not supporting the soldiers in Vietnam. (In fact, this is a far more complex subject, but we'll save that for another day.) In any war to come, it was clear that the charge of not supporting the troops was going to be met by an antiwar opposition determined to proclaim their support for the soldiers, no matter what. In fact, nowhere on the political spectrum was anyone going to be caught dead not supporting-the-troops-more-than-thou. This was one simplified lesson everyone seemed to carry away from defeat in Vietnam (despite the fact that in the latter years of the war, the heart of the antiwar movement was antiwar Vietnam veterans and that the Army in Vietnam itself was, until withdrawn, in a state of near revolt and collapse).

Add into this the history of the yellow ribbon. The yellow ribbon had long been a symbol of military men gone to war (and the women they left behind them), while captivity narratives had been among the earliest thrillers, you might say, of American history (though the captives were usually women). In 1973, Tony Orlando and Dawn released "Tie a Yellow Ribbon ‘Round the Ole Oak Tree," a song about a convict returning from prison and wondering whether his wife or lover would welcome him home. It was a massive success as were a postwar spate of films about MIAs and imprisoned American soldiers in Vietnam. In the wake of defeat, the theme of the heroic soldier as mistreated captive and victim came front and center in the culture.

Now jump to 1979 and the Khomeini Revolution against the Shah of Iran. On November 4 of that year, Iranian students broke into the U.S. embassy in Tehran and took the Americans inside hostage, holding them in captivity for 444 days. "In December 1979, Penelope Laingen, wife of the most senior foreign service officer being held hostage, tied a yellow ribbon around a tree on the lawn of her Maryland home. The ribbon primarily symbolized the resolve of the American people to win the hostages' safe release, and it featured prominently in the celebrations of their return home in January 1981."

Throughout the 1980s, the yellow ribbon remained a symbol of support for unarmed Americans kidnapped in the Middle East. In 1990, however, at the time of the First Gulf War, something truly strange, if largely forgotten, happened. The yellow ribbon as a symbol migrated from captive American civilians to American volunteer troops simply sent into action. This was quite new. From the beginning of the First Gulf War, the administration of George H. W. Bush dealt with its troops in the Persian Gulf as if they were potential MIAs. Their situation was framed in a language previously reserved for hostagedom: They were an army of "kids" (as the President called them), essentially awaiting rescue (in victory, of course) and a quick return to American shores.

During that brief war -- which was largely a slaughter of Iraqi conscripts from the army Saddam Hussein had sent into Kuwait -- the most omnipresent patriotic symbol, along with the flag, was the yellow ribbon, tied to everything in sight and now a visible pledge to support our troops re-imagined as potential hostages. The yellow ribbon certainly emphasized the role of those troops as victims. (Because they were already imagined as captives, there was confusion about how to portray the small number of American military personnel actually captured by the Iraqis during hostilities, a few of whom were shown, battered-looking on Iraqi TV.)

The yellow ribbon reappeared for the invasion of Iraq in 2003, largely miniaturized as removable car magnets. It was by now the norm not just to imagine supporting our troops without regard to their mission, but to think of them, however unconsciously, as mass victims, captives of whatever situation they happened to be in once things went bad.

A Policy Built on the Backs of the Dead

With our soldiers transformed into warrior-victims and the objects of all sympathy, the stage was set for the President's latest explanation for his ongoing policy in Iraq. For some time now, he has implied, or simply stated, that his war must go on, if for no other reason than to make sure those Americans who already died in Iraq have not died in vain. This bizarre, self-sustaining formula has by now come to replace just about every other explanation of the administration's stake in Iraq. We are there and must remain there because we must support our soldiers, not just the living ones but the dead ones as well -- and this is the single emotional valence upon which everyone now seems to agree (or at least fears to disagree).

In January of last year, for instance, Bush said typically, "And, I, as the Commander-in-Chief, I am resolved to make sure that those who have died in combats' sacrifice are not in vain.…"; in October 2006, he commented that "[r]etreating from Iraq would dishonor the men and women who have given their lives in that country, and mean their sacrifice has been in vain."

In a strange way, this is but another version of the "waste" explanation set on its head. Now that "supporting the troops" has become not only the gold standard, but essentially the only standard, by which this administration can rally support for Bush's war, such presidential statements have become commonplace. No longer is Congress to fund the war in Iraq; it is to fund the troops, whatever any particular representative might think of administration policy.

Here, for instance, is how a White House response to the House of Representatives resolution criticizing the President's Iraq surge plan put it on February 16th: "Soon, Congress will have the opportunity to show its support for the troops in Iraq by funding the supplemental appropriations request the President has submitted, and which our men and women in combat are counting on." Or as the President stated the previous day: "Our troops are risking their lives. As they carry out the new strategy, they need our patience, and they need our support… Our men and women in uniform are counting on their elected leaders to provide them with the support they need to accomplish their mission. We have a responsibility, Republicans and Democrats have a responsibility to give our troops the resources they need to do their job and the flexibility they need to prevail." Or in a press conference the day before that: "Soon Congress is going to be able to vote on a piece of legislation that is binding, a bill providing emergency funding for our troops. Our troops are counting on their elected leaders in Washington, D.C. to provide them with the support they need to do their mission."

Put another way, American troops in Iraq, or heading for Iraq, and the American dead from the Iraq War are now hostage to, and the only effective excuse for, Bush administration policy; and American politicians and the public are being held hostage by the idea that the troops must be supported (and funded) above all else, no matter how wasteful or repugnant or counterproductive or destructive or dangerous you may consider the war in Iraq.

The President expressed this particularly vividly in response to the following question at his recent news conference:

"[i]f you're one of those Americans that thinks you've made a terrible mistake [in Iraq], that it's destined to end badly, what do you do? If they speak out, are they by definition undermining the troops?"

Bush replied, in part:

"I said early in my comment… somebody who doesn't agree with my policy is just as patriotic a person as I am. Your question is valid. Can somebody say, we disagree with your tactics or strategy, but we support the military -- absolutely, sure. But what's going to be interesting is if they don't provide the flexibility and support for our troops that are there to enforce the strategy that David Petraeus, the general on the ground, thinks is necessary to accomplish the mission."

This is hot-button blackmail. Little could be more painful than a parent, any parent, outliving a child, or believing that a child had his or her life cut off at a young age and in vain. To use such natural parental emotions, as well as those that come from having your children (or siblings or wife or husband) away at war and in constant danger of injury or death, is the last refuge of a political scoundrel. It amounts to mobilizing the prestige of anxious or grieving parents in a program of national emotional blackmail. It effectively musters support for the President's ongoing Iraq policy by separating the military from the war it is fighting and by declaring non-support for the war taboo, if you act on it.

It indeed does turn the troops in a wasteful and wasted invasion and war, ordered by a wasteful, thoughtless administration of gamblers and schemers who had no hesitation about spilling other people's blood, into hostages. Realistically, for an administration that was, until now, unfazed by the crisis at Walter Reed, this is nothing but building your politics on the backs of the dead, the maimed, and the psychologically distraught or destroyed.

As the Iranians in 1979 took American diplomats hostage, so in 2007 the top officials of the Bush administration, including the President and Vice President, have taken our troops hostage and made them stand-ins and convenient excuses for failed policies for which they must continue to die. Someone should break out those yellow ribbons. Our troops need to be released, without a further cent of ransom being paid, and brought home as soon as possible.

Tom Engelhardt, who runs the Nation Institute's Tomdispatch.com ("a regular antidote to the mainstream media"), is the co-founder of the American Empire Project and, most recently, the author of Mission Unaccomplished: Tomdispatch Interviews with American Iconoclasts and Dissenters (Nation Books), the first collection of Tomdispatch interviews.

[Note: Though this subject has been on my mind for a while, this piece was inspired by Ira Chernus's recent post at this site, "Will We Suffer from the Iraq Syndrome"; for other takes on the issue of "supporting the troops," check out Tom Tomorrow's latest cartoon; and an editorial at Buzzflash.com (also based on the Chernus piece). The always thoughtful Paul Woodward at the War in Context website offered this comment which might be considered the last word on the subject for the moment: "There is something utterly self-serving about 'honoring' the 'sacrifice' made by soldiers who lost their lives or were maimed in a war that should never have been fought."]

Copyright 2007 Tom Engelhardt