Wednesday, September 29, 2010

America's China Bashing

September 29 2010
By MICHAEL HUDSON

It is traditional for politicians to blame foreigners for problems that their own policies have caused. And in today’s zero-sum economies, it seems that if America is losing leadership position, other nations must be the beneficiaries. Inasmuch as China has avoided the financial overhead that has painted other economies into a corner, U.S. politicians and journalists are blaming it for America’s declining economic power. I realize that balance-of-payments accounting and international trade theory are arcane topics, but I promise that by the time you finish this article, you will understand more than 99 per cent of U.S. economists and diplomats striking this self-righteous pose.

The dollar’s double standard gives America an international free ride

For over a century, central banks have managed exchange rates by raising or lowering the interest rate. Countries running trade and payments deficits raise rate to attract foreign funds. The IMF also directs them to impose domestic austerity programs that reduce asset prices for their real estate, stocks and bonds, making them prone to foreign buyouts. Vulture investors and speculators usually have a field day, as they did in the Asian crisis of 1997.

Conversely, low interest rates lead bankers and speculators to seek higher returns abroad, borrowing domestic currency to buy foreign securities or make foreign loans. This capital outflow lowers the exchange rate.

There is a major exception, of course: the United States. Despite running the world’s largest balance-of-payments deficit and also the largest domestic government budget deficit, it has the world’s lowest interest rates and easiest credit. The Federal Reserve has depressed the dollar’s exchange rate by providing nearly free credit to banks at only 0.25 per cent interest. This “quantitative easing” (making it easier to borrow more) aims at preventing U.S. real estate, stocks and bonds from falling further in price. The idea is to save banks from more defaults as the economy slips deeper into negative equity territory. A byproduct of this easy credit is to lower the dollar’s exchange rate – presumably helping U.S. exporters while forcing foreign producers either to raise the dollar price of their goods they sell here or absorb a currency loss.

This policy makes the dollar a managed currency. Low U.S. interest rates and easy credit spur investors to lend abroad or buy foreign assets yielding more than 1 per cent. This dollar outflow forces other countries to protect their currencies from being forced up. So their central banks do not throw the excess dollars they receive onto the “free market,” but keep them in dollar form by buying U.S. Government bonds. So the “Chinese savings,” “yen savings” and “Euro savings” that are spent on U.S. Treasury securities (and earlier, on Fannie Mae bonds to earn a bit more) are not really what Chinese people save in their local yuan, or what Japanese or Europeans save. The money used to buy U.S. Government securities consists of the excess dollars that the American military, American investors and American consumers spend abroad in excess of U.S. earning power. To pretend that these savings are “saved up” by foreigners (who save in their own currency, after all) is Junk Economics Error #1.

By lowering U.S. interest rates to near zero, the U.S. Federal Reserve is doing what the Bank of Japan did after its financial bubble burst in 1990, when it helped Japanese banks “earn their way out of negative equity” by providing cheap credit to obtain a markup by lending to speculators and arbitrageurs to buy foreign bonds paying higher rates. This came to be known as the “carry trade.” Arbitrageurs borrowed yen cheaply and converted them into Euros, dollars, Icelandic kroner or other currencies paying a higher rate, pocketing the difference. This threw yen onto foreign-exchange market, weakening the exchange rate and hence helping Japanese automotive and electronics exporters.

This is the easy credit policy that the Fed is following today. U.S. banks borrow from the Federal Reserve at 0.25 per cent, and lend to speculators at a markup of one or two percentage points. These speculators then look for companies, government bonds, corporate stocks and bonds and any other asset in a foreign currency that they believe may yield more than about 2 per cent (or that are denominated in currencies that may raise in price against the dollar by more than 2 per cent annually), hoping to pocket the difference.

Accusations that Japan, South Korea and Taiwan are “making their currencies cheaper” by recycling their dollar inflows into U.S. Treasury securities simply means that they are trying to maintain their currencies at a stable level. Even so, the yen’s exchange rate has risen as international borrowers pay off their carry-trade debts by re-converting the Euros, dollars and other currencies they borrowed in yen to play the arbitrage game. Paying back these foreign currency loans raises the yen’s price. To prevent this from pricing Japanese exporters out of world markets, Japan’s central bank is trying to stabilize the yen/dollar exchange rate by recycling these payments into the purchase of U.S. Treasury securities – exactly what U.S. officials accuse China of doing. It is how most central banks throughout the world are responding to the global dollar glut. They are increasing their international reserves by the amount of surplus free credit” dollars that the U.S. payments deficit is pumping out. To pretend that China is “manipulating its currency” by doing what central banks have done for over a century is Junk Economics Error #2. Back in the early 1970s, U.S. officials told OPEC governments that if they did not do this, it would be deemed an act of war. And Congress has refused to let China buy U.S. companies – so China can only recycle its dollar inflows by buying Treasury securities, thereby financing the U.S. federal budget deficit.

Every currency is managed by recycling dollars to avoid distorted exchange rates

To pretend that exchange rates are determined mainly by international trade is Junk Economics Error #3. International currency speculation and investment is much larger than the volume of commodity trade. The typical currency bet lasts less than a minute, often being computer-driven by arbitrage swap models. This financial fibrillation has dislodged exchange rates from purchasing-power parity or prices for export and imports.

The largest payments imbalances have little to do with “market forces” for imports and exports. They are what economists call price-inelastic – money spent without regard for price. This is true above all for military spending and maintenance of America’s vast network of foreign bases and political maneuverings to control foreign countries. During the 1960s and ‘70s U.S. military spending accounted for the entire balance-of-payments deficit, as private sector trade and investment remained in balance. Escalation of America’s oil war in the Near East and Pipelinistan, and the hundreds of billions of dollars spent to prop up America-friendly regimes, end up in central banks – whose main option, as noted above, is to send them back to the United States in the form of purchases of U.S. Treasury bills – to finance further federal deficit spending!

None of this can be blamed on China. But any nation that succeeds economically is assumed to be doing so at America’s expense if they do not let U.S. investors siphon off the entire surplus. This attitude that other countries should sacrifice themselves is sweeping Congress, whose China bashing is reminiscent of the Japan-phobia of the late 1980s. The United States convinced the Bank of Japan to raise the yen’s exchange rate in the 1985 Plaza Accord, and then to turn Japan into a bubble economy by flooding it with credit under the 1987 Louvre Accord. Tokyo was humorously referred to as “the 13th Federal Reserve district” for recycling its export earnings in U.S. Treasury bills, becoming the mainstay of the Reagan-Bush budget deficits that financed U.S. global military spending while quadrupling the public debt.

U.S. strategists would not mind seeing China’s economy similarly untracked by letting global speculators bid up the renminbi’s exchange rate – by enough to let Wall Street speculators make hundreds of billions of dollars betting on the run-up. “Free capital markets” and “open financial markets” are euphemisms for setting the renminbi’s exchange rate by U.S. and European currency arbitrage and capital flight. The U.S. balance-of-payments outflow would increase rather than shrink, thanks to the ability of American banks to create nearly “free” credit on their keyboards to convert into Chinese or other currencies, gold or other speculative vehicles that look to rise against the dollar.

“In a world awash with excess savings, we don’t need China’s money,” writes Prof. Krugman. After all, “the Federal Reserve could and should buy up any bonds the Chinese sell.” It’s all just electronic credit. From reading such diatribes, or President Obama’s exchange with Prime Minister Wen Jiabao at the United Nations on September 23, one would not realize that Chinese savers have not sent a single yuan of their own money to the United States.

But that is the point! Krugman should have reminded his readers that the balance of payments consists of much more than just the trade balance in today’s world swamped by financial speculation and military spending. What China “invests” in the United States are the dollars thrown off by the U.S. payments deficit. China would take a loss on the yuan-value of these dollars if it revalues its currency – as it has lost on the dollars it has turned over to Blackrock in the hope of making more than the minimal 1 per cent available on U.S. Treasury securities.

Describing China as “deliberately keeping its currency artificially weak. … feeding a huge trade surplus,” Krugman adds that “in a depressed world economy, any country running an artificial trade surplus is depriving other nations of much-needed sales and jobs.” In his reading the problem is not that America has let easy bank credit bid up housing prices for its workers and loaded down their budgets with debt service that, by itself, exceeds the wage levels of most Asian workers. This financialization is largely responsible for the U.S. trade balance moving into deficit (apart from food and arms exports). Homeowners typically pay up to 40 per cent of their income for mortgage debt service and other carrying charges, 15 per cent for other debt (credit card interest and fees, auto loans, student loans, etc.), 11 per cent for FICA wage withholding for Social Security and Medicare, and about 10 to 15 per cent in other taxes (income and excise taxes). To cap matters, the financial burden of debt-leveraged real estate and consumption is aggravated by forced saving pension set-asides turned over to money managers for financial investment in these debt-leveraged financial instruments, and “financialized” wage withholding for Social Security. All these deductions are made before any money is left to buy food, clothing or other basic goods and services.

Chinese currency appreciation would make its exports cost more. But would this spur America rebuild its factories and re-employ the workforce that has been downsized and outsourced? To imagine that long-term investment responds to immediately is Junk Economics Error #4.

The same is true of international commodity trade. “An undervalued currency always promotes trade surpluses,” Krugman explains. But this is only true if trade is “price-elastic,” with other countries able to produce similar goods of their own at only marginally different prices. This is less and less the case as the United States and Europe de-industrialize and as their capital investment shrinks as a result of their expanding financial overhead ends in a wave of negative equity. To assume that higher exchange rates automatically reduce rather than increase a nation’s trade surplus is Junk Economics Error #5. It is a tenet of the free market fundamentalism that Krugman usually criticizes, except where China is concerned.

Krugman urges the United States to do what it “normally does” when other countries subsidize their exports: impose a tariff to offset the supposed subsidy. Congress is increasing the drumbeat of accusations that China is violating international trade rules by protecting itself from financialization. “Democrats in Congress are threatening to … slap huge tariffs on Chinese goods to undermine the advantages Beijing has enjoyed from a currency, the renminbi, that experts say is artificially weakened by 20 to 25 percent.” The aim is to make China “lift the strict controls on its currency, which keep Chinese exports competitive and more factory workers employed.” But such legislation is illegal under world trade rules. This has not stopped the United States in the past, but the believe that it might succeed internationally is Junk Economics Error #6.

This kind of propaganda does not see the United States as guilty of “managing the dollar” by its quantitative easing that depresses the exchange rate below what would be normal for any other economy suffering so gigantic and chronic s payments deficit. What makes this situation inherently unfair is that while the Washington Consensus directs other countries to impose austerity plans, raise their taxes on consumers and cut vital spending, the Bush-Obama administration blames China, not the U.S. financial system or post-Cold War military expansionism.

The cover story is that foreign exchange controls and purchase of U.S. securities keep the renminbi’s exchange rate low, artificially spurring its exports. The reality is that these controls protect China from U.S. banks creating free “keyboard credit” to buy out its companies or load down its economy with loans to be paid off in renminbi whose value will rise against the deficit-prone dollar.

The House Ways and Means Committee is demanding that China raise its exchange rate by 20 per cent. This would enable speculators to put down 1 per cent equity – say, $1 million to borrow $99 million and buy Chinese renminbi forward. The revaluation being demanded would produce a 20,000 per cent profit, turning the $100 million bet (and just $1 million “serious money”) into making $2 billion. It also would bankrupt Chinese exporters who had signed dollarized contracts with U.S. retailers. So it’s the arbitrage opportunity of the century that lobbyists are pressing for, not the welfare of workers.

The Internal Revenue Service treats such trading gains as “capital gains” and taxes them at only 15 per cent, much less than the tax rate on earned income that wage-earners must pay. The Brazilian real has risen by about 25 per cent against the dollar since January 2009. Last week, Brazil’s state oil company, Petrobras, issued $67 billion in shares to exploit the nation’s new oil discoveries. Foreigners have been swamping Brazil’s central bank with a reported $1 billion per day for the past two weeks – about 10 times its daily average in recent months – but this was largely to absorb money entering the country to take part in last week’s issue by the national oil company.

The U.S. and foreign economies alike are suffering from the idea that the way to get rich is by debt leveraging, and that the wealth of nations is whatever banks will lend – the “capitalization rate” of the available surplus. The banker’s dream is to lend against every source of revenue until it ends up being pledged to pay interest. Corporate raiders use business cash flow to pay bankers for the high-interest loans and junk bonds that provide them with takeover credit. Real estate investors use their rental income to service their mortgages, while consumers pay their disposable income as interest (and late fees) to the banks for credit cards, student loans and other debts.

But Paul Krugman and Robin Wells blame China for Wall Street’s junk mortgage binge. Instead of pointing to criminal behavior by the banks, brokerage companies, bond rating agencies and deceptive underwriters, they take the financial sector off the hook: “Just as global imbalances – the savings glut created by surpluses in China and other countries – played an important part in creating the great real estate bubble, they have an important role in blocking recovery now that the bubble has burst.”

This sounds more like what one would hear from a Wall Street lobbyist than from a liberal Democrat. It is as if the real estate bubble didn’t stem from financial fraud, junk mortgages, NINJA loans or the Federal Reserve flooding the U.S. economy with credit to inflate the real estate bubbles and sending electronic dollars abroad to glut the global economy. It’s China’s fault for running large trade surpluses “at the rest of the world’s expense.” The authors do not explain how it helps China or other economies to let foreign investors buy their companies at a 20 per cent return and pay in dollars that must be recycled to the U.S. Treasury earning just 1 per cent. And Congress won’t let the Chinese buy U.S. companies. It blocks such inflows, managing the economy ostensibly on national security grounds – in practice a structural payments deficit.

Wall Street’s idea of “equilibrium” is for foreign countries to financialize themselves along the lines that the United States is doing, then global equilibrium could be restored. But the most successful economies have kept their FIRE-sector costs of living and doing business within reasonable bounds, and are not remotely as debt-leveraged as the United States. German workers pay only about 20 per cent of their income for housing – about half the rate of their U.S. counterparts. German practice is not to make 100 per cent mortgage loans, but to require down payments in the range of 30 per cent such as characterized the United States as recently as the 1980s.

The FIRE sector’s business plan has priced U.S. labor out of world markets. There seems little likelihood of making Chinese and German workers pay rents or mortgage interest as high as the United States? How can American economic strategists force them to raise the price of their college and university tuition so that they must take on the enormous student loans of the magnitude that Americans have to assume? How can they be persuaded to follow the high-cost U.S. practice of adding FICA-type wage withholding to the cost of living to save up pensions, Social Security and medical insurance in advance, instead of the pay-as-you-go basis that Germany quite rightly follows?

Such suggestions are a cover story for America’s own financial mismanagement. The U.S. idea for global equilibrium is to demand that that the rest of the world follow suit in adopting the short-term time frame typical of banks and hedge funds whose business plan is to make money purely from financial maneuvering, not long-term capital investment. Debt creation and the shift of economic planning to Wall Street and similar global financial centers is confused with “wealth creation,” as if it were what Adam Smith was talking about.

A Proposal

China is trying to help by voluntarily cutting back its rare earth exports. It has almost a monopoly, accounting for 97 per cent of global trade in these 17 metallic elements. These exports are “price inelastic.” There is little known replacement cost once existing deposits are depleted. Yet China charges only for the cost of digging these rare metals out of the ground and refining them. They are used in military and other high-technology applications, from guided missile steering systems and computer hard drives to hybrid electric automobile batteries. This has prompted China to recently cut back its exports to save its land from environmental pollution and, incidentally, to build up its own stockpile for future use.

So I have a modest suggestion. If and when China starts re-exporting these metals, raise their price from a few dollars a pound to a few hundred dollars. According to a theory put forth by Paul Krugman and the U.S. Congress, this price increase should slow demand for Chinese exports. It also would help promote world peace and demilitarization, because these rare metals are key elements in missile guidance systems. China should build up its national security stockpile of these key minerals for the future – say, the next prospective five years of production. Let this be a test of the junk paradigms at work.

Thursday, September 23, 2010

The Real Merchants of Death

By CONN HALLINAN

Accused Russian arms dealer Viktor Bout is a centerpiece for the book “Merchant of Death” and the model for the Hollywood movie “The Lord of War.” Washington apparently traded military hardware to the Thais in order to get him extradited from a Bangkok jail.

Major actor in the international arms trade, or a penny ante operator who can’t hold a candle to the real “merchants of death”?—the U.S., Russia, Britain, France, Italy, and immense corporations like Lockheed Martin, BAE Systems, General Dynamics, Dassault Aviation, Finmeccanica, Boeing, Rosoboronexport, and Northrop Grumman?

The global arms trade is a $60 billion yearly business, of which the U.S. controls nearly 40 percent, and a political and economic juggernaut that defends its turf with the ferocity of a junkyard dog.

Bout is like the guy you buy a Saturday night special from in a back alley. If you want something that will flatten a village you need a Massive Ordinance Penetrator from Boeing, or a General Atomics “Reaper” drone armed with Lockheed Martin “Hellfire” missiles.

The charges against him create an interesting juxtaposition.

The former Russian naval officer is accused of running guns to the Revolutionary Armed Forces of Colombia (FARC), the Taliban, and anti-government insurgents in Somalia. The U.S. has sent some $5 billion in military aid to the Colombian government to fight the FARC, has spent over $300 billion trying to defeat the Taliban, and props up the current Somali government.

There are arms dealers out there, but they are not sitting in a Bangkok prison. The 10 biggest arms exporters are—in order—the United States, Russia, Germany, France, the United Kingdom, Spain, China, Israel, the Netherlands, and Italy. Sweden and Switzerland are close behind. This order shifts from year to year, but one thing never changes: the U.S. is always number one.

According to the Congressional Research Service, due to the current economic downturn, world arms sales dipped 8.5 percent in 2009. But “dipped” is a relative term. The price tag was still $57.5 billion, of which the U.S.’s 39 percent share came to $22.6 billion. Russia was second at $10.4, and France third with $7.4 billion in sales. Other countries split the rest.

Most of the trade—$45.1 billion—focuses on developing nations. Of the top seven arms purchasers in 2008, four of them—India, Malaysia, Pakistan, and Algeria—are countries that can ill afford to put money into weapons systems.

Brazil, Venezuela, Egypt, and Vietnam were also among the bigger arms buyers in 2009, and Iraq is planning to purchase $13 billion in U.S. weaponry. All are countries struggling with poverty.

The U.S. overwhelmingly dominates arms sales to the developing world. In 2008 it cornered 68.4 percent of such sales, and 45.1 percent in 2009. (10) It is currently negotiating a $60 billion arms sale to Saudi Arabia that will probably cost $120 billion when parts and maintenance is added in.

Arms sales many times parallel the foreign policy of the suppliers. When the U.S. sells arms to Egypt, Israel, Jordan, Saudi Arabia, Kuwait, the United Arab Emirates, Colombia, Japan, and South Korea, it is arming its allies against regional antagonists, like Iran, Syria, China and Venezuela. Arms sales to places like Yemen and Somalia support U.S. allies caught up in civil wars.

But the arms trade is also an enormously profitable enterprise for the companies involved, and any effort to curb that trade brings on an assault of lobbyists and political action committees. Lockheed Martin, the world’s largest arms producer, spent over $20 million to lobby Congress in 2009.

The companies have carefully spread their operations to scores of states, so that when an effort is made to cutback or eliminate certain weapons, some local congress member will rise to defend jobs in his or her district.

When a move was made to cut the B-2 stealth bomber—an almost useless aircraft that cost $2.1 billion apiece—its manufacturer, Northrop Grumman, mobilized 383 congressional districts in 46 states to successfully save the plane.

In reality, military spending doesn’t create jobs, it kills them. According to a study by the Center for Economic and Political Research, military spending actually has a negative impact on economic growth. A one percent increase in defense spending—U.S. Defense Secretary Robert Gates’ current proposal—would, over 20 years, reduce GDP by 0.6 percent. That translates into approximately 700,000 jobs, with construction and manufacturing particularly hard hit.

While Gates talks about “efficiencies,” he is not proposing to cut the military budget, just trim things like health care and bureaucracy and shift those savings to support troops in the field.

“The long-term impact of our increased defense spending will be a reduction in GDP of 1.8 percent,” says economist Dean Baker. “The projected job loss from this increase in defense spending would be close to two million [jobs].”

The result of PACs and lobbing efforts by the arms companies is not only continued spending, but also expensive weapons systems that don’t work or are simply unneeded. The U.S. currently has 11 aircraft carriers in spite of the fact that no other nation possesses even one carrier that can match the huge $6.2 billion Nimitz-class vessels in the U.S. fleet.

Lockheed Martin’s taxpayer funded F-35 Joint Strike Fighter—at $184 million apiece, the most expensive weapons system ever built—is, according to arms analysts Pierre Sprey and Winslow Wheeler, an overweight, underpowered turkey that is so complex it will likely spend most of its time in the repair shop. Lockheed Martin is already taking orders from foreign buyers.

Many companies have responded to the recession by buying up enterprises specializing in defense electronics, cyber security, and the hottest new thing: killer robots.

Countries all over the world are clamoring to buy General Atomics’ Predators and Reapers, BAE’s Tiranis, and Israel’s Harpy and Heron, the latter a mega beast the size of a commercial airliner and capable of carrying a wide range of weapons. Predators runs $4.5 million apiece and the larger, more muscular Reaper, $10.5.

The international arms trade will not even notice if Viktor Bout ends up behind bars. Men like Bout are shadowy actors that play on the margins. To have a real impact on the global arms enterprise will require confronting powerful corporations, with their lobbies and their PACs, as well as an immense military establishment.

But according to Frida Berrigan of the Arms and Security Project of the New American Foundation, the Obama Administration is “investigating” how to make the selling of military technology easier.

A number of NGOs, including Amnesty International, the International Network on Small Arms, and Oxfam, are working on an arms trade treaty that would try to keep weapons out of the hands of human rights abusers.

But “human rights abusers” is a slippery term. For the U.S., Venezuela is a human rights abuser and can’t buy U.S. arms, while Honduras and Colombia are okay, even though regimes in both of the latter countries have been accused of working with death squads. The most Venezuelan President Hugo Chavez can be accused of is a certain love of bombast and strong opposition to Washington’s policies in the region.

A United Nations conference on drawing up an arms trade treaty is set for 2012, although there have been no serious negotiations to date. But such a treaty will need to do more than just get a handle on some of the more odious practices currently underway, it most restrict and then move toward an eventual ban on the trade itself.

Sunday, September 12, 2010

There are no good men left here

September 10 - 12, 2010

The Kill Team in Afghanistan and the Kill Team at Home
No Good Men Left Here
By CHRISTOPHER KETCHAM

We already know enough from the Wikileaks Afghan archives to conclude that the news of the so-called “Kill Team” in Afghanistan – twelve US Army soldiers wantonly murdering and mutilating Afghan civilians – is no news at all. It is the norm of empire. It is the monstrous quotidian. Certainly there are many more instances like it that will never come to light.

The soldier who first revealed the predations of the Kill Team, in a post to his parents on Facebook, writes of Afghanistan that “There are no good men left here. It eats away at my conscience every day.” Would that it ate at his fellow Americans. The Team’s work, after all, is ours, paid for by us, abetted by our silence and our receivables, sanctioned by our standing up nowhere to be seen in opposition to a government that renders barbarism as statesmanship. The work, to be sure, consisted of that for which the Team was well-trained, their minds at ease for the labor, the empire having asked of them only to oil their muscles and derange their hearts enough to put into action the deranged policy programmed by the higher-ups behind the laptops and in the lounge chairs. That all war creates victims of soldiers, victimized by their own governments, is forgotten, yet it should be the axiom of the age.

If the Kill Team is guilty of what we’re told, then how judge them? The twelve soldiers now charged with premeditated murder, conspiracy, and “possessing human body parts” were said to have slaughtered innocent men, exploding their bodies with grenades or gunning them down, then laying into the dead flesh with knives. They collected as keepsakes the fingerbones, leg bones, teeth; one soldier carried off an Afghan skull as thanks for the memories.

They are guilty only of bringing the policy to its logical conclusion. The policy is lunatic. It has no purpose beyond its own justification, which is that it must succeed because it is our policy. It cannot succeed because it entails the subjugation of a fractious tribal people who have shown to history again and again that they will not be subjugated. The lunacy of the policy has its predictable effect on the troops who are meant to enforce it. Leaping on corpses to take scalps seems the natural course, the meaningful act in a meaningless affair, the occupation of Afghanistan finally making a twisted sense, freed of the hypocrisies of the political class. We are there with guns to kill other human beings, the corpses as totems of victory – the people subjugated at last! – an accomplishment where there is no victory to be had.

Godspeed, and more please. Or so we are to interpret the message from Congress, whose members, our very own representative kill team, year after year vote the appropriations for the continuing of the lunacy. The real kill team, of course, is in the White House, under the leadership of a Democratic president who, it’s clear by now, is covertly serving out George W. Bush’s third term in office. The kill team is an executive and its minions asserting the right of assassination of any person deemed fit, the Joint Chiefs of Staff drawing up “hit lists” that include American citizens, the Obama Administration expressly authorizing the CIA to bring down the death sentence on its select targets in the manner of a thunderbolt from the skies – no arrest, no charges, no trial, no defense, no prosecution, no process.

The same day the story of our centurions collecting fingerbones in Afghanistan hit the pages of the press, we might have looked to find the Ninth Circuit court, in its own way, educating the faithful soldiers in what is right and what is wrong. The circuit had ruled that the Obama Administration shall be free to continue the torture of human beings under cover of law. The case, Binyam Mohamed vs. Jeppesen Dataplan, Inc. – the defendant, a subsidiary of Boeing, contracts to provide the critical flight planning and logistical support for the CIA’s “extraordinary renditions” – was brought by the ACLU on behalf of five victims of torture. The victims, innocents all, attested that under the watch of the CIA and their other “extraordinary” handlers, they were beaten, their bones broken, their penises cut open, a “hot stinging liquid” poured into the open wounds, bottles pushed into their anuses, their arms shackled as they were hung from ceilings. At least one of them was placed for a month in a room with open sewage.

Barack Obama, following the lead of his predecessor, saw nothing wrong here, no need for truth or reconciliation or, god forbid, an apology, instead intervening in the case to prevent whatever “state secrets” the full hearing of the matter might reveal. And the Ninth Circuit dutifully decided in favor of the secrets to be kept. The court’s work is also, needless to say, part of the kill team. “There are no good men left here.”

Saturday, September 11, 2010

The Problem is Empire, not Islam

Friday, September 10, 2010
by Jacob G. Hornberger

I suspect that the reason that so many Americans have gone off on the anti-Islamic kick is their steadfast refusal to confront the fact that the 9/11 attacks were the direct consequence of the bad things their federal government had been doing to Muslims in the Middle East prior to 9/11. It’s as if people perceive the federal government to be a sacred god, one that is all-knowing and all-good.

Woe to the blasphemer and the heretic who dare to point out that the 9/11 attacks were nothing more than retaliation for the horrific things that the U.S. Empire was doing to Muslims prior to 9/11. One is simply not supposed to say such things. If you do, you’re labeled an America-hater, as if the federal government and our country were one and same thing.

No, you’re supposed to just continue to blindly repeat the mantra: Islam is bad and the Muslims are coming here to America to establish Sharia law. Our government must continue to protect us from the coming invasion. That’s why the Empire has been occupying Iraq and Afghanistan for longer than World War II — to protect us from Muslims … well, except for the fact that the regimes that the U.S Empire is protecting in Iraq and Afghanistan happen to be Muslim regimes.

Prior to 9/11, we here at The Future of Freedom Foundation predicted the 9/11 attacks. That doesn’t make us brilliant soothsayers. It didn’t take a rocket scientist to make such a prediction. We knew what the U.S. Empire was doing in the Middle East, we knew the tremendous anger it was generating, and we knew that ultimately there would be people who would retaliate.

Since the U.S. Empire was doing the bad things to countries that were predominantly Muslim, it also didn’t take a rocket scientist to predict that the people who would inevitably retaliate would be Muslims. Duh!

In order to avoid having to confront these unpleasant facts, all too many Americans, however, have gone off on this anti-Islamic kick, claiming that the 9/11 attacks had nothing to do with retaliation but instead everything to do with some sort of worldwide Muslim campaign to conquer the world.

Take a look at these two articles that FFF published in 1999 and 2000 — that is, prior to the 9/11 attacks:

Terrorism, War, and Crises by Jacob G. Hornberger

Breeding Terrorism by Sheldon Richman

Here is what I wrote in part in January 2000 — 18 months prior to the 9/11/2001 attacks:

Throughout all the hype and hysteria, U.S. government officials behaved as if they were innocent babes threatened by people who simply have an overwhelming desire to kill Americans for no good reason at all.

But the truth is that there are plenty of people in the world who have very good reason to hate the U.S. government. If we ignore this, we do so at our peril.

For example, look at what our government has done to the people of Iraq. Ever since the supposed end of the Persian Gulf War, we have maintained a vicious, brutal embargo against the Iraqi people….

The embargo against Iraq has caused extreme suffering, in terms of malnutrition and health conditions, not for Iraq's ruling elite but rather for the Iraqi people, and especially for their children. How many Iraqi babies have died because of the U.S. embargo? How many women have died during childbirth because of the embargo? How many fathers have seen their children's growth stunted?....

If there had been a terrorist attack, you can be 100 percent certain that the U.S. government would have used the crisis as an opportunity to march America farther down the road to total destruction of our civil liberties….

There is one and only one solution to the problem of terrorism by foreigners against Americans: for the American people to put a permanent end to state-sponsored terrorism by their own government.

Here is what Sheldon wrote in December 1999—20 months prior to the 9/11 attacks:

If 2000 comes in with a terrorist's bang, the blame must be squarely placed at the feet of our foreign-policy makers. Of course, the perpetrator is directly responsible for the deaths and injuries of innocent civilians, but that doesn't alter the fact that the foreign-policy establishment, from President Clinton on down, are accessories. They created the indispensable conditions.

Too extreme a statement? Ponder this: someone recently asked when the last act of foreign terrorism was committed against Switzerland. Isn't it interesting that countries that mind their own business aren't targets of violence committed by citizens of other nations? Maybe there's a lesson there somewhere….

Apologists for activist government never tire of telling us that the benevolent state is our protector and that without it we'd be at the mercy of monsters. It is about time that we understood that the U.S. government does more to endanger the American people than any imagined monsters around the world….

There is a way to make the United States terrorist-proof: pursue a foreign policy proper to a constitutional republic, the same policy proposed by George Washington and Thomas Jefferson. In a word: nonintervention. Let countries and populations work out their own disputes. Meddling simply widens and intensifies conflicts.

Was the U.S. Empire waging a religious crusade against Islam when it was doing bad things to Muslims in the Middle East prior to 9/11? Of course not. The Empire was simply pursuing its primary foreign-policy objective — regime change — ousting recalcitrant rulers in foreign countries and replacing them with pro-U.S. rulers who would do the bidding of the Empire. That’s how the Empire works — it engages in coups, assassinations, invasions, foreign aid, occupations, kidnappings, executions, and the like to effect regime change abroad and to exterminate those who resist.

In order to arrive at a correct solution to a problem, it is necessary to arrive at a correct diagnosis. The problems facing our country are not rooted in the Islamic religion or with Muslims. The problems are rooted in U.S. foreign policy.

Thus, the solution is obvious: Stop the Muslim-bashing and simply dismantle the U.S. government’s overseas military empire, bring all the troops home and discharge them, terminate all governmental interventions in the affairs of other countries, and restore a limited-government constitutional republic to our land.

Saturday, September 4, 2010

Obama's Ridiculous Mid-East Summit

By ALEXANDER COCKBURN

It has been impossible to read the agenda for the Oval Office summit between Obama, Netanyahu and Abbas without laughing out loud at the absurdity of its pretensions. The American plan was that President Obama would inform Israeli PM Binyamin Netanyahu and Mahmoud Abbas, representing the Palestinian Authority, that this is make-or -break time for a peaceful settlement. The US wants an agreement within a year, with the stipulations in this agreement to be phased in over a decade.

At issue: the illegal Jewish settlements, the status of East Jerusalem, the treatment of Palestinian refugees and final borders between Israel and a Palestinian state.

The man greeting Netanyahu and Abbas was no longer the icon of change who aroused the world with his address to Muslims in Cairo and who tasked former US Senator George Mitchell with setting the stage for a just settlement of issues that have remained unsettled for more than half a century.

Obama is now in poor political shape. The economy is spiraling down. The midterm elections loom as a possible bloodbath for Democrats in which they may lose at least one, if not both, houses in Congress. As the Israel lobby knows well, the Democrats crave Jewish money and Jewish votes. When it comes to Israel ‘s interests the US Congress jumps to the Lobby’s commands. Secretary of State Hillary Clinton’s speech , laden with honorifics for Netanyahu, could be construed as a fund-raising appeal for her next lunge at the Democratic presidential nomination.

Gone was any notion of twisting Netanyahu’s arm, or trying to, as when the Administration criticized one illegal Jewish settlement four months ago and when vice president Biden relayed in Tel Aviv Gen. Petraeus’ concerns that Israel’s obduracy was imperiling US security interests in the region.

The lobby struck back, with political threats. By July, Dana Milbanke of the Washington Post described with unusual frankness Netanyahu’s next visit to Washington:

“A blue-and-white Israeli flag hung from Blair House. Across Pennsylvania Avenue, the Stars and Stripes was in its usual place atop the White House. But to capture the real significance of Prime Minister Binyamin Netanyahu's visit with President Obama, White House officials might have instead flown the white flag of surrender.”

And with the September summit Israeli delightedly pointed to Obama's withdrawal of a demand that Israel freeze Jewish colonies on Palestinian land. Instead he urged "restraint". "The prime minister is satisfied because his main position that negotiations should be without preconditions was accepted," Netanyahu's spokesman Nir Hefetz told Army Radio from New York. Netanyahu himself, who has rejected demands for a settlement freeze, was quoted telling a newspaper: "I understand English -- 'restraint' and 'freeze' are two different words." As for the status of Jerusalem, and the issue of Palestiniamn refugees, Netanyahu adamantly refuses to discuss them.

Simultaneously, hours before the handshakes, Jewish settlers said they were forthwith starting work on buildings in at least 80 settlements, breaking the partial government freeze that ends on September 26.

The tenor of Israeli politics today is one of fanatic rejectionism of any halt to settlements, any serious concession on borders, beyond a Palestinian “state” in small chunks, hemmed in by Israel’s highways and fences, with water diverted and communication between the various fragments of Palestinian territory under rigorous Israeli control and constant harassment. East Jerusalem as the proposed capital of a Palestinisan state is under incessant invasion of new Jewish housing projects.

The Israeli press reports that Netanyahu has yet to evolve a negotiating position. His foreign minister, Avigdor Lieberman refused to attend the summit and thinks Netanyahu should have simply told Obama that construction will continue without any restrictions at all after the present official moratorium ends on September 26.

For his part, Abbas is no longer president of the Palestinian Authority, which has no democratic mandate among the vast majority of Palestinians. They voted for Hamas and regard Abbas as a quisling, who exists solely by the favor of US money, Pentagon security advisors and Israeli support. Hamas expressed its opinion of the meeting by killing four Israeli settlers. (Half a million illegal Jewish settlers have been the most conspicuous consequence of the “peace process.”)

Tactically, Netanyahu has an easy hand to play. He can proclaim Israel’s hopes for peace, yet warn that Israel’s security interests are paramount. He can lecture Obama on Israel’s primal fears of obliteration, yet not be too reticent in indicating that Israel can obliterate its enemies and is quite prepared to do so. Israel’s nuclear arsenal hover spectrally over the proceedings.

When the moratorium expires in three weeks he will allow settlements to go forward, which in turn will prompt Abbas to threaten to act upon his commitment to abandon the talks if this occurs, a scheduled duty, as Jeffrey Blankfort predicted here on our site last week. Israel will continue its rightward lunge, with dissent increasingly purged in an increasingly vicious political environment. The Obama Plan will join all the other diplomatic ruins in the desert of dry bones -- the most conspicuous feature of all maps attempting to depict the search for a “just solution” in the Middle East.

Why is Obama even making the effort? As Blankfort says,

“Every US president since Nixon has made an effort to end Israel's occupation for US strategic reasons, and every one of them has run up against the Lobby and, in the end, proved unable or unwilling to spend the political capital that would be required to enforce their will on Israel. In every instance Congress has stood on Israel's side and never more so than during the Obama administration. The three presidents that did challenge Israel, Ford, Carter, and Bush Sr., were eventually forced to retreat and were turned out at the polls.”

Now why, given this history, did Obama try his hand? Blankfort suspects that there was pressure from the US's European allies to do so because

“the continuance of the I-P conflict jeopardizes their security and society far more than it does that of the US and there have long been calls for the EU to activate its own ‘peace initiative’ and it would be likely to do so if the US withdrew from the field. This is the last thing that either Israel or the Lobby wants so that is why we see the Lobby elements in every administration, currently Ross, Emanuel, et al, making the push for Obama's involvement even though they know it is bound to fail.”

Obama’s recent remodel of the Oval Office features a very cheesy carpet featuring uplifting quotations around its edge : F.D.R.’s “The only thing we have to fear is fear itself”; Martin Luther King Jr.’s “The arc of the moral universe is long, but it bends towards justice”; Lincoln’s “Government of the people, by the people, for the people” and so forth. When Palestinians are scheduled for a rare visit, they should roll the carpet up, and bring out one with the Star of David right in the middle, and stitched round the edge, “Attention Palestinians! Abandon hope all ye who enter here.”