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The Law Catches Up To Private Militaries, Embeds

Thu, 04 Jan 2007 19:20:41 -0800

P.W. Singer is Senior Fellow and Director of the 21st Century Defense Initiative at The Brookings Institution.
Posted at Defense Tech - January 3, 2007 05:37 PM | War Update
http://www.defensetech.org/archives/003123.html

Since the start of the Iraq war, tens of thousands of heavily-armed military contractors have been roaming the country -- without any law, or any court to control them. That may be about to change, Brookings Institution Senior Fellow P.W. Singer notes in a Defense Tech exclusive. Five words, slipped into a Pentagon budget bill, could make all the difference. With them, "contractors 'get out of jail free' cards may have been torn to shreds," he writes. They're now subject to the Uniform Code of Military Justice, the same set of laws that governs soldiers. But here's the catch: embedded reporters are now under those regulations, too.

Over the last few years, tales of private military contractors run amuck in Iraq -- from the CACI interrogators at Abu Ghraib to the Aegis company's Elvis-themed internet "trophy video" —- have continually popped up in the headlines. Unfortunately, when it came to actually doing something about these episodes of Outsourcing Gone Wild, Hollywood took more action than Washington. The TV series Law and Order punished fictional contractor crimes, while our courts ignored the actual ones. Leonardo Dicaprio acted in a movie featuring the private military industry, while our government enacted no actual policy on it. But those carefree days of military contractors romping across the hills and dales of the Iraqi countryside, without legal status or accountability, may be over. The Congress has struck back.

Amidst all the add-ins, pork spending, and excitement of the budget process, it has now come out that a tiny clause was slipped into the Pentagon's fiscal year 2007 budget legislation. The one sentence section (number 552 of a total 3510 sections) states that "Paragraph (10) of section 802(a) of title 10, United States Code (article 2(a) of the Uniform Code of Military Justice), is amended by striking `war' and inserting `declared war or a contingency operation'." The measure passed without much notice or any debate. And then, as they might sing on School House Rock, that bill became a law (P.L.109-364).

The addition of five little words to a massive US legal code that fills entire shelves at law libraries wouldn't normally matter for much. But with this change, contractors' 'get out of jail free' card may have been torn to shreds. Previously, contractors would only fall under the Uniform Code of Military Justice, better known as the court martial system, if Congress declared war. This is something that has not happened in over 65 years and out of sorts with the most likely operations in the 21st century. The result is that whenever our military officers came across episodes of suspected contractor crimes in missions like Bosnia, Kosovo, Iraq, or Afghanistan, they had no tools to resolve them. As long as Congress had not formally declared war, civilians -- even those working for the US armed forces, carrying out military missions in a conflict zone -- fell outside their jurisdiction. The military's relationship with the contractor was, well, merely contractual. At most, the local officer in charge could request to the employing firm that the individual be demoted or fired. If he thought a felony occurred, the officer might be able to report them on to civilian authorities.

Getting tattled on to the boss is certainly fine for some incidents. But, clearly, it's not how one deals with suspected crimes. And it's nowhere near the proper response to the amazing, awful stories that have made the headlines (the most recent being the contractors who sprung a former Iraqi government minister, imprisoned on corruption charges, from a Green Zone jail).

And for every story that has been deemed newsworthy, there are dozens that never see the spotlight. One US army officer recently told me of an incident he witnessed, where a contractor shot a young Iraqi who got too close to his vehicle while in line at the Green Zone entrance. The boy was waiting there to apply for a job. Not merely a tragedy, but one more nail in the coffin for any US effort at winning hearts and minds.

But when such incidents happen, officers like him have had no recourse other than to file reports that are supposed to be sent on either to the local government or the US Department of Justice, neither of which had traditionally done much. The local government is often failed or too weak to act - the very reason we are still in Iraq. And our Department of Justice has treated contractor crimes in a more Shakespearean than Hollywood way, as in Much Ado About Nothing. Last month, DOJ reported to Congress that it has sat on over 20 investigations of suspected contractor crimes without action in the last year.

The problem is not merely one of a lack of political will on the part of the Administration to deal with such crimes. Contractors have also fallen through a gap in the law. The roles and numbers of military contractors are far greater than in the past, but the legal system hasn't caught up. Even in situations when US civilian law could potentially have been applied to contractor crimes (through the Military Extraterritorial Jurisdiction Act), it wasn't. Underlying the previous laws like MEJA was the assumption that civilian prosecutors back in the US would be able to make determinations of what is proper and improper behavior in conflicts, go gather evidence, carry out depositions in the middle of warzones, and then be willing and able to prosecute them to juries back home. The reality is that no US Attorney likes to waste limited budgets on such messy, complex cases 9,000 miles outside their district, even if they were fortunate enough to have the evidence at hand. The only time MEJA has been successfully applied was against the wife of a soldier, who stabbed him during a domestic dispute at a US base in Turkey. Not one contractor of the entire military industry in Iraq has been charged with any crime over the last 3 and a half years, let alone prosecuted or punished. Given the raw numbers of contractors, let alone the incidents we know about, it boggles the mind.

The situation perhaps hit its low-point this fall, when the Under Secretary of the Army testified to Congress that the Army had never authorized Halliburton or any of its subcontractors (essentially the entire industry) to carry weapons or guard convoys. He even denied the US had firms handling these jobs. Never mind the thousands of newspaper, magazine, and TV news stories about the industry. Never mind Google's 1,350,000 web mentions. Never mind the official report from U.S. Central Command that there were over 100,000 contractors in Iraq carrying out these and other military roles. In a sense, the Bush Administration was using a cop-out that all but the worst Hollywood script writers avoid. Just like the end of the TV series Dallas, Congress was somehow supposed to accept that the private military industry in Iraq and all that had happened with it was somehow 'just a dream.'

But Congress didn't bite, it now seems. With the addition of just five words in the law, contractors now can fall under the purview of the military justice system. This means that if contractors violate the rules of engagement in a warzone or commit crimes during a contingency operation like Iraq, they can now be court-martialed (as in, Corporate Warriors, meet A Few Good Men). On face value, this appears to be a step forward for realistic accountability. Military contractor conduct can now be checked by the military investigation and court system, which unlike civilian courts, is actually ready and able both to understand the peculiarities of life and work in a warzone and kick into action when things go wrong.

The amazing thing is that the change in the legal code is so succinct and easy to miss (one sentence in a 439-page bill, sandwiched between a discussion on timely notice of deployments and a section ordering that the next of kin of medal of honor winners get flags) that it has so far gone completely unnoticed in the few weeks since it became the law of the land. Not only has the media not yet reported on it. Neither have military officers or even the lobbyists paid by the military industry to stay on top of these things.

So what happens next? In all likelihood, many firms, who have so far thrived in the unregulated marketplace, will now lobby hard to try to strike down the change. We will perhaps even soon enjoy the sight of CEOs of military firms, preening about their loss of rights and how the new definition of warzone will keep them from rescuing kittens caught in trees.

But, ironically, the contractual nature of the military industry serves as an effective mechanism to prevent loss of rights. The legal change only applies to the section in the existing law dealing with those civilians "serving with or accompanying an armed force in the field," i.e. only those contractors on operations in conflict zones like Iraq or Afghanistan. It would apply not to the broader public in the US, not to local civilians, and not even to military contractors working in places where civilian law is stood up. Indeed, it even wouldn't apply to our foes, upholding recent rulings on the scope of military law and the detainees at Gitmo.

In many ways, the new law is the 21st century business version of the rights contract: If a private individual wants to travel to a warzone and do military jobs for profit, on behalf of the US government, then that individual agrees to fall under the same codes of law and consequence that American soldiers, in the same zones, doing the same sorts of jobs, have to live and work by. If a contractor doesn't agree to these regulations, that's fine, don't contract. Unlike soldiers, they are still civilians with no obligation to serve. The new regulation also seems to pass the fairness test. That is, a lance corporal or a specialist earns less than $20,000 a year for service in Iraq, while a contractor can earn upwards of $100,000-200,000 a year (tax free) for doing the same job and can quit whenever they want. It doesn't seem that unreasonable then to expect the contractor to abide by the same laws as their military counterpart while in the combat theatre. Given that the vast majority of private military employees are upstanding men and women -- and mostly former soldiers, to boot -- living under the new system will not mean much change at all. All it does is now give military investigators a way finally to stop the bad apples from filling the headlines and getting away free.

The change in the law is long overdue. But in being so brief, it needs clarity on exactly how it will be realized. For example, how will it be applied to ongoing contracts and operations? Given that the firm executives and their lobbyists back in DC have completely dropped the ball, someone ought to tell the contractors in Iraq that they can now be court martialed.

Likewise, the scope of the new law could made more clear; it could be either too limited or too wide, depending on the interpretation. While it is apparent that any military contractor working directly or indirectly for the US military falls under the change, it is unclear whether those doing similar jobs for other US government agencies in the same warzone would fall under it as well (recalling that the contractors at Abu Ghraib were technically employed by the US Department of Interior, sublet out to DOD).

On the opposite side, what about civilians who have agreed to be embedded, but not contracted? The Iraq war is the first that journalists could formally embed in units, so there is not much experience with its legal side in contingency operations. The lack of any legal precedent, combined with the new law, could mean that an overly aggressive interpretation might now also include journalists who have embedded.

//SNIP//

But given the current lack of satisfaction with the embed program in the media, any effect here may be a tempest in a tea pot. As of Fall 2006, there were only nine embedded reporters in all of Iraq. Of the nine, four were from military media (three from Stars and Stripes, one from Armed Forces Network), two not even with US units (one Polish radio reporter with Polish troops, one Italian reporter with Italian troops), and one was an American writing a book. Moreover, we should remember that embeds already make a rights tradeoff when they agree to the military's reporting rules. That is, they have already given up some of their 1st Amendment protections (something at the heart of their professional ethic) in exchange for access, so agreeing to potentially fall under UCMJ when deployed may not be a deal breaker.

The ultimate point is that the change gives the military and the civilians courts a new tool to use in better managing and overseeing contractors, but leaves it to the Pentagon and DOJ to decide when and where to use it. Given their recent track record on legal issues in the context of Iraq and the war on terror, many won't be that reassured.

Congress is to be applauded for finally taking action to reign in the industry and aid military officers in their duties, but the job is not done. While there may be an inclination to let such questions of scope and implementation be figured out through test cases in the courts, our elected public representatives should request DoD to answer the questions above in a report to Congress. Moreover, while the change may help close one accountability loophole, in no way should it be read as a panacea for the rest of the private military industry's ills. The new Congress still has much to deal with when it comes to the still unregulated industry, including getting enough eyes and ears to actually oversee and manage our contracts effectively, create reporting structures, and forcing the Pentagon to develop better fiscal controls and market sanctions, to actually save money than spend it out.

A change of a few words in a legislative bill certainly isn't the stuff of a blockbuster movie. So don't expect to see Angelina Jolie starring in "Paragraph (10) of Section 802(a)" in a theatre near you anytime soon. But the legal changes in it are a sign that Congress is finally catching up to Hollywood on the private military industry. And that is the stuff of good governance.

Got Gold Report - Liquidity Floods Into Silver ETF

Mon, 25 Dec 2006 14:12:16 -0800

By Gene Arensberg
24 Dec 2006 at 09:11 AM EST
http://www.resourceinvestor.com/pebble.asp?relid=27509

HOUSTON (ResourceInvestor.com) -- What is the big news in this issue of the Got Gold Report? It is the stunning 325 tonnes of new silver added to Barclay�s iShares Silver Trust [AMEX:SLV], the U.S. silver ETF. For details see the Silver ETF section below.

Typically thin holiday trading and a lack of marquee gold-moving news had the ancient standard of wealth moving sideways more or less for most the week. Ho, ho, ho hum.... That is to be expected in the last full trading week before Christmas, especially when the holiday falls on a Monday.

Since gold put in an interim high on December 1 in the $650s it has now retreated to the lower edge of an up-trending channel and tantalizingly close to what bears would view as a chance for gold breakdown pay dirt.

What better a week than this or next to attempt to crash the obvious implied support indicated on this graph. (See the close-together popular moving averages). For more see the Gold Charts section below.

Should we expect a visit from short selling Grinches right out of the gate on Tuesday? Sure, but they are only half the equation. January is practically here, equity options have already expired and how much ammunition is left in the bear�s collective magazine?

Not that it couldn�t change and change quickly, but one problem from the bear�s point of view is that the recent weakness for gold metal is not and has not been well supported by the indicators followed closely by this report. The usual rundown of some of the indicators follows, but before we take a look at them just a quick word of thanks to all our loyal readers and best holiday wishes to all. Got Gold?

Moving right into this report�s indicators:

COT Changes. The Tuesday 12/19 commitments of traders report (COT) shows that the large commercials (LCs) collective combined net short positions (LCNS) fell 14,550 or -13% to 101,732 contracts net short Tuesday to Tuesday having declined 3,886 lots the previous week. Gold metal dipped $7.45 or -1.2% to $622.70 Tuesday to Tuesday. The last trade on the cash market Friday showed $621.21 or pretty much sideways from Tuesday�s last tick. Gold managed a $5.49 gain for the calendar week.

Total COMEX gold open interest added 3,995 lots to 337,096 open contracts having inched 2,571 contracts up the prior week. Long-term December �07 and beyond COMEX forwards ended the week 4,760 contracts higher at 68,836 or 20.4% of open contracts.

As of Tuesday, which followed gold�s near-significant dip to the $612 region on the cash market Monday 12/18, (the day before the COT cutoff), the data show the large commercials reducing net short exposure at an accelerated pace. As one measure of that metric, consider that as gold declined 1.2% the LCs reduced net short exposure by 13%, nearly an 11:1 ratio. For another measure, we have to go all the way back to the September 12, 2006 COT report to find a larger reduction in the LCNS percentage wise. In that September 12 report the LCNS declined 20,570 contracts or 16% but was during a week that saw gold metal cliff dive a whopping $47.96 or 7.5% from $637.94 to a bone shattering $589.98. (Roughly only a 2:1 ratio then.)

Gold bulls will be comforted by the faster pace of LCNS reduction which occurred above key support for gold metal. This indicator stays on the bullish side of the gold market ledger.

Gold versus the large commercial net short positions as of the Tuesday COT cutoff:

//SNIP//

Gold ETFs. This week gold holdings at streetTRACKS Gold Shares, the largest gold exchange traded fund [NYSE:GLD], added another 3.09 tonnes to 452.01 tonnes of gold bars held by a custodian in London for the trust. The previous week saw an addition of 7.4 tonnes.

The U.K. equivalent to GLD, LyxOR Gold Bullion Securities Limited, was near flat for the week at 90.30 tonnes of gold held, while Barclays� iShares COMEX Gold Trust [NYSE:IAU] jumped 1.23 to 44.46 tonnes of gold metal held for its investors.

After a short pause, positive money flow into gold ETFs is plainly apparent. The last full Got Gold Report two weeks ago mentioned: �Even though positive money flow seems to have paused, we cannot ignore the over 52 tonnes of new gold metal added to GLD alone in the month of November. Intuitively that kind of wealth flowing into gold sure seems like it ought to have long term bullish implications. Something to watch for over the near term now that gold has pulled back some is whether GLD ends up adding or subtracting gold��

Well, since then GLD alone has added over 10 tonnes of fresh new gold bars to its hoard indicating that more wealth has been entering gold ETFs than leaving it. Investors have indeed been buying the dip. That is good to know, but the positive money flow indicated into gold ETFs pales in comparison to the strongly positive money flow story for silver (explained below). This indicator remains on the bullish side of the gold market ledger.

Financial data for GLD are updated daily at streetTRACKS Gold Trust.

//SNIP//

Silver ETF: While silver metal on the cash market was mistreated over the past two weeks and plunged as much as $1.89 the ounce, metal holdings for Barclays� iShares Silver Trust [AMEX:SLV], the U.S. silver ETF, skyrocketed by a stunning 325.5 tonnes to total 3,768.02 tonnes (121,144,585 ounces) worth $1.51 billion as of Friday�s figures. And get this; 279.02 tonnes of that titanic increase in silver holdings occurred on Thursday, December 21. Talk about positive money flow!

To put this eye-opening liquidity-induced silver positive money flow event into context, consider that the 279 tonnes of silver metal added to SLV�s holdings Thursday 12/21 is higher than each of the previous four monthly additions (November 153.8, October 14.09, September 123.02 and August 247.35 tonnes of silver added to SLV holdings). Not since the week following SLV�s April 28 inception has there been a 200-plus tonne addition in one day and only a few weekly totals top 200 tonnes, the last one way back in June (June 19-23, 264.16 tonnes).

So, positive money flow continued for SLV in a huge way. Does anyone doubt that investors are buying this dip for silver?

Meanwhile silver metal appears to be attempting to mark support with a new pivot near $12.50. Given the extremely large inflow into the metal evidenced by the SLV metal holdings, a pretty good case can be made for sustained support to form somewhere between right here and the 38.2% Fibonacci retrace level. (�Here� is the cash market intra-day low Monday 12/18 at $12.29. The 38.2% Fib basis is shown on the 1-year graph below and comes in at around $11.94.)

Please also see the 1-year silver graph for additional commentary. Each tick lower will very likely see buying pressure for physical metal in most popular forms increasing logarithmically as the trading approaches both the 200-dma and the 38.2% Fib and just below that, in the roughly $11.70 region as of Friday, is the lower edge of a medium-period up-trending channel now well defined. In other words, all things else being equal, silver bears face a rather daunting challenge over the near term if this report�s read is close.

Having said that, when downward momentum is ruling, new silver purchases made in this region should be made only with fairly tight new-trade trailing stops, but can be attempted here in incremental scale-in amounts in this report�s opinion. That is, of course, provided traders are disciplined in the use of appropriate stop management. As always, each trader should study the issues carefully and make their own trading decisions.

SLV metal holdings graph as of Friday, 12/22:

//SNIP//

Gold Charts. The daily chart shows gold metal roughly hugging the 50-dma having briefly touched the 200-dma and modestly bouncing off of it. Both popular moving averages are above the bottom feature breakout level of $607-$610 which happens to coincide and frame the 38.2% Fibonacci retrace level. (Please see the 2-year chart for Fibonacci basis.) Gold has traversed what could be a developing uptrend channel and if so currently resides near an implied uptrend support lower channel line. Bad news for bears, definition of the uptrend channel is yet to be confirmed and if that tentative level is defeated there should be strongly increasing support not very far underneath. Bears beware of a potential light liquidity trap door reversal which very well could follow a 200-dma breach. Many hot-money short stops will likely be very tight, �at support� levels by now, meaning any convincing thrust would gain some additional fuel.

On the other hand, mentioned out of an abundance of caution, a very large number of sell stops and long trailing stops will have no doubt accumulated by now in the $5 to $8 region below the November breakout ($607-$610). It would not be all that surprising to see a determined attempt by energized fund traders to crash that important technical level during the thin-market conditions extant in the week between Christmas and New Years Day. It is this report�s opinion that should that significant technical event occur it would be an opportune time to begin scaling into new long positions for gold metal. More likely than not, such a breach would be of short duration, no pun intended.

Please also see the 2-year weekly version for context as well as additional commentary. This indicator remains bullish and as of Friday (12/22) negative momentum developed over the past three weeks seems to be pausing, if not losing steam. (Note the histogram in the MACD). A convincing dip into the low $600s (below $607) would alter the chart signature if not immediately (within a few days) corrected. Emphasis on the word �convincing.�

U.S. Dollar. Data in the 12/19 commitments of traders report (COT) show that as the U.S. dollar index rose 51 basis points from 82.94 to 83.45 Tuesday to Tuesday the LCs pared their considerable net long positions by a scant 616 contracts to 15,177 NYBOT contracts net long. Since Tuesday the index tacked on 35 ticks to close Friday at 83.80.

The last U.S. Dollar section two weeks ago included: �Given the apparent support forming for the U.S. paper currency here this indicator has to move over to the short-term bearish side of the market ledger for gold. Even though the former lock-step inverse correlation of gold and the U.S. dollar ended convincingly in 2005, large moves in the dollar still affect gold in short term bursts. Over time though gold more or less trades independently now, answering primarily to demand and liquidity in all paper currencies.�

For whatever reasons the LCs are way long the greenback and at the same time they are short the British Pound in a hefty way, long the Canadian dollar, modestly long the euro, long the Japanese yen, while short the Mexican peso, and flat Swiss francs. Judging by that it looks like the LCs are strongly positioned for weaker pounds versus the other paper currencies while remaining short gold in what has become an average sort of way.

Given that set up, this report suspects that gold will once again break free from the anti-dollar reverse correlation (ingrained in so many short-term traders) imminently, a matter of days or weeks, not months. Gold remains strongly undervalued basis the paper promises issued by governments and central banks of the world and we should not forget that some central banks and probably other large holders of U.S. dollar denominated forex reserves are likely to add the metal as part of a long-term diversification away from U.S. dollars.

This indicator has to stay on the bearish side of the gold market ledger for now. Although the LCs have not exactly been in sync with the USD of late this indicator tracks changes to their positioning in the buck and they most likely won�t be out of sync for long.

Please see the 1-year daily USD chart and the 2-year weekly USD version for additional commentary about our large commercial paper currency trader friends.

Gold Indexes. All over the globe technically minded portfolio and fund managers, long and short-term traders and investors large and small track their favorite indexes and make trading decisions based on them. The AMEX Gold Bugs index, [AMEX:^HUI] which follows a basket of fifteen of the most popular mining companies that generally do not use hedging and therefore should have more leverage to the gold market, is one of the most popular of those indexes and is the index that this report tends to focus on.

The 6-month daily HUI chart has mining shares stepping out to the downside of the steep up-trending channel formed as the index shot 32% higher in just two months to 362.53 from its October nadir of 274.72. Fibonacci enthusiasts will be looking for support to form near the current level (328.02) as the 38.2% Fibonacci target for that short-term move resides at about 329.05. Next on the Fib-scale is the 50% level at 318.67, then the 61.8% Fib on down below at 308.30. This report has the rounded bottom breakout near 313, so there are a multitude of potential support targets in the neighborhood.

Unless gold bears are rewarded with a key support gold technical breakdown (convincingly below $607-$610) a strong bullish case can be made for sustained support to form here or not very far below. �Here� is the intra-day low marked Friday 12/22 at 324.70. �Not very far below� includes the Fibonacci targets mentioned above or within 10% in other words.

Please also see the 3-year weekly HUI chart for context and additional commentary. One long-time reader who runs a medium size fund based in California focused on the natural resources sector commented Friday that he felt that some of the weakness seen in the past week was from book squaring ahead of the holiday. In addition late year profit taking ahead of the January bonus month (presumably for funds and firms with calendar year ends?) might also have a little skin in the game. Meanwhile he notes that at least so far we have not witnessed the harsh, high percentage plunges which followed both the May and September highs. �They (mining shares) seem more resilient this time than then,� he said.

In both the May and September periods mining shares refused to answer the last impulses up for gold metal prior to those harsh plunges as gold sold off. This time, however, is different. Mining shares were outperforming the metal at the most recent high for the HUI at the same time as a flood of liquidity was entering the gold ETFs (November). Can we make the connection that so much new wealth having flowed into gold and silver ETFs over the past two months might be correlated directly to the reluctance of the miners to fall? And is that a reliable signal? We�ll see.

HUI:Gold Ratio. The popular HUI:Gold Ratio measures the relative performance of mining shares versus gold. When the ratio is rising mining shares are putting in a stronger performance relative to the metal and vice versa.

The one-year daily HUI/Gold ratio chart shows mining shares finally answering the gold and silver pullbacks some, but certainly not as much as they are capable of. For an example of what the HUI components are capable of when a liquidity exodus is in play take a look at the September period. Nothing prevents such a mining share liquidity exodus from taking place, it just hasn�t yet. While gold has pulled back as much as roughly $40 the ounce off its December 1 high, or about 6.1%, mining shares on the HUI are off about 10.4% off theirs. That�s not even a 2:1 ratio.

The last HUI/Gold Ratio section two weeks ago said: �A reasonable pullback in the ratio here while the HUI stages for another run at its 350-ish resistance would not be surprising at all and would still be within the context of a continued trend of mining share strength.�

Well, please also see the 2-year weekly HUI/Gold version for additional commentary which includes that the action seen over the past two weeks remains consistent with what has been a steady, but choppy outperformance by mining shares versus the metal since September.

For now this indicator remains bullish.

Cash Gold-HUI. The cash gold minus HUI indicator comes in this report at 293.19, a jump of 16.82 points from the 276.37 reading in the last full report two weeks ago. Ordinarily a large jump in the spread is cause for concern if sustained so this indicator bears watching near term. Having said that, the jump higher was from what has been a low-ish level for all of 2006 and could just be a snapback to equilibrium. For an example of what would raise caution flags at this level, a move over 305-310 from here would signal a short-term loss of collective confidence by mining share investors in this report�s opinion.

//SNIP//

Short-Term Outlook: (Continued cautiously bullish; add into significant dips; add more aggressively into strong dips. Trailing stops normal for gold and mining shares.)

On the bullish side of the gold market indicator ledger we have the LCs reducing their collective net short interest by the largest percentage since September 12, (-13%). Positive money flow into gold ETFs continued as gold moved sideways following a dip. A galactic sized increase in silver holdings shows in the silver ETF of over 325 tonnes the past two weeks which makes the phrase �positive money flow� seem inadequate. Gold charts still possess bullish technical signatures although trading has neared key implied support. And, mining shares seem reluctant to sell off like mining shares can do.

On the bearish side of the ledger, the LCs remained very strongly long the greenback, some weakening of mining share investor confidence surfaced via the Cash Gold-HUI indicator albeit from a low level, physical gold demand was lackluster for much of the prior week although it picked up noticeably late week, and premiums for physical precious metals on electronic bourses remained noticeably less firm for much of the week, also firming somewhat late week.

The last full Got Gold Report two weeks ago included: ��an apparent bull market style pullback, the third of the current advance, is once again underway as expected. As mentioned above so far the current pullback is not supported by most of the indicators followed closely by this report. That is not to say that the indicators couldn�t turn right around and answer a determined sell-down, they just haven�t done so. Given that, and assuming that there is not a significant deterioration of the indicators over the near term gold metal is nearing significant dip status and any further weakness, if any, ought to trigger a legion of dip buyers into action.�

Sure enough, dip buying is certainly underway as evidenced by the metal additions to the ETFs, with the additions to the silver ETF no less than spectacular. While we have to note some weakening of collective confidence for mining shares, the miners continue to not (repeat not) lead this market lower. Instead they seem reluctant to sell off as they are capable of.

Ever mindful of the occasional light-liquidity holiday period hi jinx attempted by energetic funds with access to electronic bourses and more leverage than they deserve, unless there is an unexpectedly significant deterioration in the indicators between now and the next scheduled report in two weeks, this report plans to remain cautiously bullish for gold and mining shares with normal trailing stops. Provided resource investors are disciplined in the use of reasonable new-trade trailing stops for protection, significant dips can be bought in scale-in measured increments and stronger dips bought more aggressively.

Mentioned last, but not least, in the event of a gold metal technical breakdown during the upcoming light-liquidity period, it is this report�s intention to add gold metal in measured increments using reasonable new-trade trailing stops and to add aggressively should that breakdown turn into a high percentage sell stop triggering event. It just might be the last opportunity for cheap gold for some time to come.

Until next time as always MIND YOUR STOPS.

Long-Term Outlook: A secular bullish perfect storm trend for precious metals continues. Rapidly escalating global investor demand, easier participation by investors via ETFs, conversion of Middle East petroleum dollars to gold, rising new demand from Asia, possible central bank buying partially offsetting central bank selling, conversion from dollars to gold by large U.S. dollar denominated foreign exchange reserves, declining gold production, increased political and NGO interference to bring new sources on line, rapidly escalating costs to produce, delays and shortages of equipment and manpower, previous two-decade bear-market-induced shortage of intellectual capital for miners, safe-haven buying to hedge strong, reckless, competitive dilution of under-backed fiat paper currencies, probably continued de-hedging and continued troubling global political and religious tensions are just some of the factors contributing to the long-term bullish winds now blowing. In real terms gold remains undervalued versus nearly all other commodities and strongly undervalued as measured by the world�s fiat paper promises.... The Great Gold Bull has a long way to go. It just won�t go straight up.

Three Strikes Against the Dollar

Sun, 24 Dec 2006 14:56:18 -0800

20 December 2006 — GoldMoney Alert from James Turk
http://goldmoney.com/en/commentary.php#current

The markets are winding down for the year-end holidays, and as a consequence, little consideration or attention is being paid to three events, each of which adds another nail to the dollar's coffin.

1) Iran and euros

Though it has been given scant coverage in the US, Iran's decision to drop the dollar in favor of the euro has been receiving widespread attention in Europe. As reported by Agence France-Presse on Monday, Iranian government spokesman Gholam Hossein Elham told news reporters: "The [Iranian] government has ordered the central bank to replace the dollar with the euro…in commercial transactions," repeating exactly what Saddam Hussein did in September 2000. Lest there be any misunderstanding, Elham went on to say: "Foreign income sources and oil revenues will be calculated in euros, and we will receive them in euros in order to put an end to our dependence on the dollar."

This change will lessen the demand for dollars, which will cause the value of the dollar to drop. Strike one.

2) US Ban on melting and export of coin

The US Mint implemented a new regulation that bans the melting down and exporting of pennies and nickels. It is sound economics to harvest the metallic value of these coins, because the value of their base metal content is greater than the coin's face value. Here's what Lee Rogers, editor of the Funny Money Report, says about it. His analysis is spot-on:

"They [i.e., US Mint officials] claim that they are imposing these rules because they don't want certain individuals who melt down coins taking advantage of the American tax payer. It isn't the people who are melting down the pennies and nickels that are taking advantage of the American tax payer. Those people are just trying to protect themselves from the stupidity of the Federal Reserve that continues to destroy our currency. The Federal Reserve is the very reason why the melt value of these coins has risen beyond their face value. Federal Reserve Notes have lost over half of its value in terms of gold and silver since 2000 because they have dramatically increased the money supply over this period of time. The Federal Reserve has taken advantage of the American tax payer, not the people who are melting down these coins. It is complete rubbish that the U.S. Mint would make scapegoats out of individuals who melt their coins to be the ones who are screwing over American taxpayers. The press release should be blaming Alan Greenspan for taking advantage of American taxpayers because he was responsible for creating the excessive amount of credit that has since decreased the value of the currency.

What is going on with pennies and nickels is an exact repeat of what took place in the late 1960's. Back then the U.S. Mint made melting silver coins illegal. At that point in time the melt value of silver coins became worth more than their face value. As a result, these coins began to disappear from circulation because people realized what was happening and kept them. Why would people use a coin to pay for something if the face value of it is worth less than the melt value? That's why the coins stopped circulating. I believe that the same exact thing is going to happen to the currently circulating forms of pennies and nickels."

The entire article in the Funny Money Report is worth reading. It also includes the press release by the US Mint announcing their new regulation.
http://www.funnymoneyreport.com/article_view.php?id=20

There are many lessons that we can garner from monetary history, but one of them is unmistakable. When debasement becomes so extreme that even the base metal content of circulating coins is greater than the coin's face value, that country's currency is headed for the currency graveyard and will soon be buried there. Strike two.

3) Increasing government control

There is a corollary to the lesson from monetary history explained above. When a government interferes with commerce by imposing restrictions, commerce suffers. These restrictions impede economic activity, and that is a bad outcome because it is economic activity that is the backbone of society as each of us strives to meet our needs and wants.

There is perhaps no better account of this principle than the one penned in 1912 by Andrew Dickson White in his classic book, Fiat Money Inflation in France, which describes the horrific monetary debasement the French people suffered prior to Napoleon.
//SNIP//
White's book is essential reading for everyone, and can be downloaded for free at the following link:
http://www.gutenberg.org/etext/6949

We have this week seen the principles expounded by White at work. The Thai government announced the implementation of foreign exchange controls, and one immediate response was the stock market there dropped 15%. Untold and unknown at this early stage is how severe the repercussions will be on that country's capital flows, both domestically and in its relations with the rest of the world.

Lest you think the actions taken by the Thai government are an isolated event that could not happen in Europe or the US, I suggest you read the following article published 3 weeks ago in the online version of London's Daily Telegraph:
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/11/27/ccview27.xml

While acknowledging that "currency controls" would be the "nuclear option", the article says that "Brussels may lawfully freeze capital flows in and out of the EU, and within it, and that this could be done by a "qualified majority" of EU finance ministers." It goes on to say that this authority is already in place in Europe and was granted "to enable Europe to stem the rise of the euro if the dollar goes into free fall, the underlying argument being that Washington should not be allowed [to] export the consequences of its own reckless spending policies through a "beggar-thy-neighbour" devaluation. The idea was to stop money coming in, though it could equally be used to stop money leaving." The really interesting question is why would the EU want to stop money from leaving?

Simple. If capital controls are imposed, they would come with compliance from other countries, particularly the US and Japan, which would impose controls complementary to those implemented in Europe. In other words, though the above quote implies that the EU would pursue its own interests, the reality is that these countries' central banks are joined at the hip. Therefore, it is likely that the US and the EU (with Japan as well) would pursue a common agenda. Namely, they would drop the value of their fiat currencies more or less in concert so that they all end up losing purchasing power against gold and other tangible assets, but more importantly, these currencies would drop in unison against the Chinese yuan. In this way the yuan's exchange rate would rise, in theory bringing down its trade surplus and also reducing the investment money flowing into China. It seems probable that the EU may justify taking this dire step toward capital controls on the spurious grounds that they need to prevent their monetary union from unraveling. So strike 3 is against the US dollar, euro and Japanese yen.

In summary, the outlook for the US dollar is worsening, which is a conclusion that can also be reached by looking at what happened during last week's trip to China by Treasury secretary Paulson and Fed chairman Bernanke. They came home empty handed, without any concessions from the Chinese or commitments by them to help the US by continuing to hold dollars, which the US is recklessly spewing throughout the world as a consequence of its ongoing trade deficits.

James K. Galbraith: Paulson and Bernanke were clueless in China

Sun, 24 Dec 2006 14:34:20 -0800

Submitted by cpowell on Thu, 2006-12-21 22:18. Section: Daily Dispatches, Gold Anti-Trust Action Committee
http://www.gata.org/node/4638

By James K. Galbraith
The Guardian, Manchester, England, UK
Monday, December 18, 2006

http://commentisfree.guardian.co.uk/james_k_galbraith/2006/12/clueless_i...

Speaking as I rarely feel entitled to do, on behalf of all my fellow professional economists, I felt true, true sympathy last week for Ben Bernanke, as he trailed after Henry Paulson in China.

Paulson's China policy is easily understood. In the United States government the Treasury represents the interests of Wall Street, as Joe Stiglitz has written eloquently from direct observation. An alumnus of Goldman Sachs, Secretary Paulson is ideally suited to his job.

And what Wall Street wants from China is what Wall Street always wants: the freedom to speculate (excuse me, invest) in currency, corporate stocks and bonds, and real estate. Wall Street loves risk, uncertainty and volatility. The Chinese don't. This is a conflict. It is not in any sense a complicated question.

Paulson made a power play, based on a threat: open up or we'll shoot. More precisely, it was a power play based on a bluff. Since the bluff was transparent, the Chinese called it. And when they did, the US side folded. The Chinese then completed the hand by giving back a few symbolic concessions, so that Paulson's team would not have to admit to the obvious fact, that the trip had accomplished nothing at all.

For Paulson, a business negotiator, it was pretty much routine stuff: sometimes you win and sometimes you don't. But Bernanke is an economist. Despite his high public position, he is at heart an academic. In other words, he has standards, and a certain amount of professional dignity to maintain.

And last week he had the sorry job of putting economic lipstick on Paulson's pig. More than that: Bernanke had to argue that it was in China's economic interests to go along with Paulson's plan. Worst of all, he had to talk past the Chinese officials, who somehow seemed to feel that they have a better understanding of their own interests. It must have been dreadfully embarrassing.

Bernanke gave it a good college try, with an impressively wonkish speech, replete with 22 footnotes, delivered to the Chinese Academy of Social Sciences. On no evidence at all, he argued that a higher RMB would help China maintain its economic growth. The trouble with this that current policy has given China world-beating economic growth for three decades. Bernanke knows this (and said so), so he couldn't press this argument very far.

Next, having credited Chinese growth partly to its high savings, Bernanke made his second argument: China should now bring its savings rate down. This he said should be achieved by improving China's social safety net, so that Chinese families would feel less need to squirrel away funds to cover health care and old age. Apart from the direct benefits, Bernanke argued that this would reduce China's trade surplus by increasing Chinese household consumption.

Finally, as the US delegation left town, Paulson rather gratuitously promised to try to increase private savings rates in the United States, which Paulson wants to do, of course, by cutting Social Security and Medicare.

So here's the Bernanke-Paulson position in brief summary:

1) China's currency strategy has helped produce rapid growth for 30 years; therefore it should be abandoned.

2) China's high savings rates have been a key to this success; therefore they should be reduced.

3) China, a country emerging from communism, should spend more on public health and social security, so that ordinary Chinese can save less. (This is actually a good point, as far as it goes.)

4) The United States, a capitalist country, should spend less on social security and public health, so that ordinary Americans will be forced to save more.

5) Somehow, all this will reduce the deficit in the US-China balance of trade, a goal whose importance everyone agrees on but that no one can actually explain.

Adam Smith wrote it; I only quote it:

//SNIP//
-------

James K. Galbraith holds the Lloyd M. Bentsen Jr. chair of government/business relations at the Lyndon B. Johnson school of public affairs at the University of Texas at Austin. He is a senior scholar with the Levy Economics Institute and chair of the board of Economists for Peace and Security, an international association of professional economists. His new book is "Unbearable Cost: Bush, Greenspan, and the Economics of Empire" (Palgrave MacMillan, 2006).

Mike Gallagher Hates the First Amendment

Sat, 23 Dec 2006 18:58:27 -0800

BLOG: Another Day In The Empire
Thursday December 21st 2006, 10:21 pm
http://kurtnimmo.com/?p=699

If talk radio host Mike Gallagher has his way, Matt Damon, Joy Behar, Keith Olbermann, and any number of dedicated or casual readers of this blog will be shipped off to a FEMA camp for the crime of exercising their once respected right to freedom of speech under the First Amendment. According to Gallagher, the above “traitors” should be incarcerated for the duration of the “war on terror,” promised to last a couple generations, possibly a hundred years or more. In other words, Gallagher is calling for life in prison for disagreeing with the unitary decider and his minions, such as Donald Rumsfeld, a malicious war criminal who would, during normal times, stand accused of murdering 650,000 Iraqis.

It seems Gallagher, the 6th most listened-to radio talk show host in the United States, currently tied with Neal Boortz, who tells his listeners Rep. Cynthia McKinney “looks like a ghetto slut,” at about 3,750,000 listeners, is clueless when it comes to natural rights, George Mason’s 1776 Virginia Declaration of Rights, the 1689 English Bill of Rights, and the bedrock philosophy of the Age of Enlightenment, all increasingly under attack. Gallagher, and no shortage of other “conservatives,” in essence authoritarian thugs, including Newt Gingrich, who has called for the First Amendment be struck, lest the “terrorists” use the internet and attack us, are routinely provided with substantial airtime to push their fascistic ideas, especially over at the unitary decider network, Fox News, where the Führer Principle (Führerprinzip) is on display 24/7.

However, when you take a gander at history, you realize the act of rounding people up and slamming them in concentration camps here in America is nothing new or is it particularly surprising. 120,000 Japanese and Japanese Americans were sent to concentration camps, thanks to Franklin D. Roosevelt’s Executive Order 9066, and this was given the blessing of the Supreme Court in 1944 (as rounding up people at gunpoint is fine and dandy if there is a “pressing public necessity”). In fact, generally speaking, the bovine and easily frightened public support this sort of business, as they did when AG Palmer, under Woodrow Wilson, and his sidekick J. Edgar Hoover, rounded up 10,000 people, denied many of them due process, subjected hundreds to brutal interrogation methods (in other words, they were tortured), and deported thousands for the crime of disagreeing with the government, especially during a time of war, when disagreeing counts.

Later, there was Operation Garden Plot, a plan for implementing martial law, and this was coupled with Cable Splicer, the organized takeover of state and local government in response to “major domestic civil disturbances.” Garden Plot didn’t go away—it is now run out of the U.S. Northern Command. Recall NORTHCOM’s Gen. Ralph E. Eberhart declaring the Posse Comitatus Act an anachronism as military operations increasingly merge with domestic law enforcement.

More recently, there was Rex 84, short for Readiness Exercise 1984, designed specifically to detain large numbers of Americans. Rex 84, hooked up with Night Train 84, a worldwide military command post exercise, including the participation of CONUS (Continental U.S. Forces), was a pet project of the Joint Chiefs out of the Pentagon. Some of us recall a day in July, 1987, when the Miami Herald reported the war criminal and drug-runner Ollie North’s mention of Rex 84 during the Iran-Contra hearings. It was quickly swept under the rug and, according to the staid Wikipedia, was “hyperbolized it into a form of urban legend or conspiracy theory,” as the benevolent and kindly U.S. government would never do such a thing, Operation Northwoods not withstanding. Ollie, of course, is a celebrity now, with his very own Fox News television show, as crime, especially at the behest of the government, is on occasion rewarded.

In short, there is nothing new about authoritarian personality types, more than a few acting as highwaymen for the global bankster criminal network, calling for Gestapo tactics against those who call a spade a spade—indeed, George Bush is Hitler-like, although this comparison is admittedly rather facile.

No, such draconian proposals, easily rolled off the tongue of fascist goons, are not surprising, and are in fact rather mundane and predictable.

//SNIP//

Report Reveals 2.2 Million Borrowers Face Foreclosure on Subprime Home Loans; Homeowners to lose Billions

Thu, 21 Dec 2006 18:50:08 -0800

From the Center for Responsible Lending:

A new CRL study reveals that millions of American households will lose their homes and as much as $164 billion due to foreclosures in the subprime mortgage market.

The “Losing Ground” study is the first comprehensive, nationwide review of millions of subprime mortgages originated from 1998 through the third quarter of 2006. CRL finds that despite low interest rates and a favorable economic environment during the past several years, the subprime market has experienced high foreclosure rates, and we project that one out of five (19.4%) subprime loans issued during 2005-2006 will fail.

More after the jump.

Continued:

The report discusses a number of factors that drive subprime foreclosures—these include adjustable rate mortgages with steep built-in rate and payment increases, prepayment penalties, limited income documentation, and no escrow for taxes and insurance. We also determine that these features cause a higher risk of default regardless of the borrower’s credit score.

Our study also finds that recent high appreciation in many areas has masked problems in the subprime market, and that the cooling housing market will cause failure rates to rise sharply in many major markets. California, Arizona, Nevada, and greater Washington DC will be especially hard hit. Also in this report, we project lifetime foreclosure rates for 2006-originated subprime loans in each MSA in the United States.

Download the report here. (Warning, *.pdf.) Of course, there is much more to read:

Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners

Executive Summary of Losing Ground report

Regional (MSA) Projected Foreclosure Rates

Audio of 12-19 Telenews Event

Joe Galloway: Double Down in Iraq -- Or Back Away from the Table?

Wed, 20 Dec 2006 18:21:14 -0800

By Joseph L. Galloway
(December 19, 2006)
E&P - The president looks like he wants to send a new "surge" of troops to Iraq. Should the press go along with the gamble? Or is it just throwing good money after bad?

Will Rogers said that the first thing you do when you find yourself in a hole is quit digging. All the signs out of the nation’s capital indicate that President George W. Bush -- who's in a very deep hole of his own making in Iraq -- is about to ask for a bigger shovel.

The word is that Bush is tilting toward the most dangerous option of all the recommended moves he has on his desk: A temporary "surge" of an additional 20,000 to 30,000 American troops thrown into the bloody agony that's Iraq today.

If he chooses this option, it will be against the best advice of the American military commanders on the ground, the unanimous opposition of the service chiefs in the Pentagon and the most thoughtful military analysts in and out of uniform.

It's clear that the surge option will break the Army and Marine Corps, already stretched so thin that they're barely able to meet the current requirements for maintaining a force of 140,000 troops in Iraq and some 20,000 in Afghanistan, leaving few if any in reserve for emergencies elsewhere.

The additional troops for a Bush surge in 2007 could be found only by extending indefinitely the combat tours of troops finishing their second or third deployments to Iraq, accelerating the deployment of replacement divisions and brigades by cutting their time at home short of the promised 12 months and tapping even more National Guard and Reserve troops.

The buzz phrase for such a move is "doubling down," a gambler’s term for upping your bet when you’ve already lost a bundle. Another and far more apt description would be: Throwing good money after bad.

The wisdom of doing this, and throwing additional troops into the bloody cauldron that's Baghdad, the sprawling cockpit of the Iraqi civil war, is very much in question.

In late summer, American commanders sent about 10,000 U.S. troops into Baghdad in a mini-surge that they hoped would calm the death squads filling the streets with corpses. This operation was a complete failure: Sectarian killings increased. The American death toll did, too. And one of the biggest stumbling blocks to the American effort proved to be our man in Iraq, Prime Minister Nouri al Maliki.

//SNIP//

Soon we'll see if, as Gates promised Congress, he's willing to tell the president the unvarnished truth: That there are no good options for victory in Iraq; that there is no hope of victory and vindication for anyone in Iraq; and that the only real option is to declare mission accomplished again and pull our troops out as swiftly as humanly possible.

We've already spent nearly half a trillion dollars and the lives of nearly 3,000 Americans and scores of thousands of Iraqis on a war born out of a president’s ego and the pipe dreams of a whole horde of neo-conservative dark princes.

Sending in more Americans for six or eight or 12 more months won’t result in victory, only more death and dying. Surging deeper into quicksand is not a recommended solution. Staying a course that's failed is no way to rescue your reputation and secure your legacy as anything but the worst president in history.

The obvious alternative to a surge -- standing up more Iraqi Army and police units and filling them with many more American advisers -- is little better. It is, in essence, handing over American hostages to the various parties in this civil war who each control their segments of those Iraqi forces.

What we can do is get out of the middle of the crossfire, stand way back and let the Iraqis discover for themselves that nationhood and peace are far better than foreign occupation, civil war and people slaughtered by the millions. Or continue into a very uncertain future as a collection of tribes with flags, guns and unfettered hatred for one another.

That's a decision for the Iraqis to make, and their time for deciding is fast running out. It's not a decision for The Decider, whose every action has unleashed only more violence and death in a land with a history of too much of both.

Double down, Mr. President? Or get smart?

THE UNITED STATES IS INSOLVENT

Wed, 20 Dec 2006 18:13:22 -0800

THE UNITED STATES IS INSOLVENT
by Dr. Chris Martenson
The End of Money
December 17, 2006
http://www.financialsense.com/fsu/editorials/martenson/2006/1217.html

Prepare to be shocked.
The US is insolvent. There is simply no way for our national bills to be paid under current levels of taxation and promised benefits. Our federal deficits alone now total more than 400% of GDP.
That is the conclusion of a recent Treasury/OMB report entitled Financial Report of the United States Government that was quietly slipped out on a Friday (12/15/06), deep in the holiday season, with little fanfare. Sometimes I wonder why the Treasury Department doesn’t just pay somebody to come in at 4:30 am Christmas morning to release the report. Additionally, I’ve yet to read a single account of this report in any of the major news media outlets but that is another matter.
But, hey, I understand. A report this bad requires all the muffling it can get.
In his accompanying statement to the report, David Walker, Comptroller of the US, warmed up his audience by stating that the GAO had found so many significant material deficiencies in the government’s accounting systems that the GAO was “unable to express an opinion” on the financial statements. Ha ha! He really knows how to play an audience!
In accounting parlance, that’s the same as telling your spouse “Our checkbook is such an out of control mess I can’t tell if we’re broke or rich!” The next time you have an unexplained rash of checking withdrawals from that fishing trip with your buddies, just tell her that you are “unable to express an opinion” and see how that flies. Let us know how it goes!
Then Walker went on to deliver the really bad news:
Despite improvement in both the fiscal year 2006 reported net operating cost and the cash-based budget deficit, the U.S. government’s total reported liabilities, net social insurance commitments, and other fiscal exposures continue to grow and now total approximately $50 trillion, representing approximately four times the Nation’s total output (GDP) in fiscal year 2006, up from about $20 trillion, or two times GDP in fiscal year 2000.
As this long-term fiscal imbalance continues to grow, the retirement of the “baby boom” generation is closer to becoming a reality with the first wave of boomers eligible for early retirement under Social Security in 2008.
Given these and other factors, it seems clear that the nation’s current fiscal path is unsustainable and that tough choices by the President and the Congress are necessary in order to address the nation’s large and growing long-term fiscal imbalance.
Wow! I know David Walker’s been vocal lately about his concern over our economic future but it seems almost impossible to ignore the implications of his statements above. From $20 trillion in fiscal exposures in 2000 to over $50 trillion in only six years? What shall we do for an encore…shoot for $100 trillion?
And how about the fact that boomers begin retiring in 2008…that always seemed to be waaaay out in the future. However, beginning January 1st we can start referring to 2008 as ‘next year’ instead of ‘some point in the future too distant to get concerned about now’. Our economic problems need to be classified as growing, imminent, and unsustainable.
And let me clarify something. The $53 trillion shortfall is expressed as a ‘net present value’. That means that in order to make the shortfall disappear we’d have to have that amount of cash in the bank – today - earning interest (the GAO uses 5.7% & 5.8% as the assumed long-term rate of return). I’ll say it again - $53 trillion, in the bank, today. Heck, I don’t even know how much a trillion is let alone fifty-three of ‘em.
And next year we’d have to put even more into this mythical interest bearing account simply because we didn’t collect any interest on money we didn’t put in the bank account this year. For the record, 5.7% on $53 trillion is a bit more than $3 trillion dollars so you can see how the math is working against us here. This means the deficit will swell by at least another $3 trillion plus whatever other shortfalls the government can rack up in the meantime. So call it another $4 trillion as an early guess for next year.
Given how studiously our nation is avoiding this topic both in the major media outlets and during our last election cycle, I sometimes feel as if I live in a small mountain town that has decided to ignore an avalanche that has already let loose above in favor of holding the annual kindergarten ski sale.
The Treasury department soft-pedaled the whole unsustainable gigantic deficit thingy in last year’s report but they have taken a quite different approach this year. From page 10 of the report:
The net social insurance responsibilities scheduled benefits in excess of estimated revenues) indicate that those programs are on an unsustainable fiscal path and difficult choices will be necessary in order to address their large and growing long-term fiscal imbalance.
Delay is costly and choices will be more difficult as the retirement of the ‘baby boom’ gets closer to becoming a reality with the first wave of boomers eligible for retirement under Social Security in 2008
I don’t know how that could be any clearer. The US Treasury department has issued a public report warning that we are on an unsustainable path and that we face difficult choices that will only become more costly the longer we delay.
Perhaps the reason US bonds and the dollar have held up so well is that we are far from alone in our predicament. In a recent article detailing why the UK Pound Sterling may fall, we read this horrifying evidence:
Officially, [UK] public sector net debt stands at £486.7bn. That's equal to US$953.9bn and represents a little under 38% of annual GDP. Add the state's "off balance sheet" debt, however – including its pension promises to state-paid employees – and the total shoots nearly three times higher. Research by the Centre for Policy Studies in London says it would put UK government deficits at a staggering 103% of GDP.
If we perform the same calculations for the US, however, we find that the official debt stands at $8.507 trillion or 65% of (nominal) GDP but when we add in our “off balance sheet” items the national debt stands at $53 trillion or 403% of GDP.
Now that’s horrifying. Staggering. Whatever you wish to call it. More than four hundred percent of GDP(!). And that’s just at the federal level. We could easily make this story a bit more ominous by including state, municipal and corporate shortfalls. But let’s not do that.
Here’s what the federal shortfall means in the simplest terms.
1. There is no way to ‘grow out of this problem’. What really jumps out is that the US financial position has deteriorated by over $22 trillion in only 4 years and $4.5 trillion in the last 12 months (see table below, from page 10 of the report). The problem did not ‘get better’ as a result of the excellent economic growth over the past 3 years but rather got worse and is apparently accelerating to the downside.
Any economic weakness will only exacerbate the problem. You should be aware that the budgetary assumptions of the US government are for greater than 5% nominal GDP growth through at least 2011. In other words, because no economic weakness is included in the deficit projections below, $53 trillion could be on the low side. Further, none of the long-term costs associated with the Iraq and Afghanistan wars are factored in any of the numbers presented (thought to be upwards of $2 trillion more).

//SNIP//

2. The future will be defined by lowered standards of living. As Lawrence Kotlikoff pointed out in his paper titled “Is the US Bankrupt?” posted to the St. Louis Federal Reserve website, the insolvency of the US will minimally require some combination of lowered entitlement payouts and higher taxes. Both of those represent less money in the taxpayer’s pockets and, last time I checked, less money meant a lower standard of living.
3. Every government facing this position has opted to “print its way out of trouble”. That’s an historical fact and our country shows no indications, unfortunately, of possessing the unique brand of political courage required to take a different route. In the simplest terms this means you & I will face a future of uncomfortably high inflation, possibly hyperinflation if the US dollar loses its reserve currency status somewhere along the way.

Of course, it is impossible to print our way out of this particular pickle because printing money is inflationary and therefore a ‘hidden tax’ on everyone. Consider, what’s the difference between having half of your money directly taken (taxed) by the government and having half of its value disappear due to inflation? Nothing. Except that the former is political suicide while the second is conveniently never discussed by the US financial mainstream press (for some reason) and therefore goes undetected by a majority of people as the thoroughly predictable outcome of deficit spending. All printing can realistically accomplish is the preservation of some DC jobs and the decimation of the middle and lower classes.
In summary, I am wondering how long we can pretend this problem does not exist. How long can we continue to buy stocks and flip houses, forget to save, pile up debt, import Chinese made goods, and export debt? Are these useful activities to perform while there’s an economic avalanche bearing down upon us?
Unfortunately, I am not smart enough to know the answer. I only know that hoping a significant and mounting problem will go away is not a winning strategy.
I know that we, as a nation, owe it to ourselves to have the hard conversation about our financial future sooner rather than later. And I suspect that conversation will have to begin right here, between you and me because I cannot detect even the faintest glimmer that our current crop of leaders can distinguish between urgent and expedient.
What we need is a good, old-fashioned grassroots campaign.
In the meantime, I simply do not know of any way to fully protect oneself against the economic ravages resulting from poorly managed monetary and fiscal institutions. For what it’s worth, I am heavily invested in gold and silver and will remain that way until the aforementioned institutions choose to confront “what is” rather than “what’s expedient”. This could be a very long-term investment.
Are you shocked?
All the best.
Chris

Report - China To Dump One Trillion In US Reserves

Mon, 18 Dec 2006 19:00:44 -0800

Chinese tell visiting Bush administration officials they will not sit back and lose their shirts as U.S. Dollar collapses; they are getting out fast and large.

HalTurnerShow.com
12-15-6
Posted on RENSE Blog: http://rense.com/general74/report.htm

BEIJING -- Sources with a U.S. Delegation in Beijing have told The Hal Turner Show the Chinese government has informed visiting Bush Administration officials they intend to dump One TRILLION U.S. Dollars from China's Currency Reserves and convert those funds into Euros, gold and silver!

China was allegedly asked to withhold the announcement until Bullion Markets closed for the weekend to prevent an instant spike in gold and silver prices. This delay will give the world the weekend to consider appropriate actions rather than have a knee-jerk reaction which could see the U.S. Dollar totally collapse in value Monday.

According to this Senior source, China told the U.S. delegation they no longer have faith in U.S. Currency for several reasons:

1) The Federal Reserve Bank ceased publishing "M3" data in March, making it nearly impossible for anyone to know how much cash is being printed. China said this act made it impossible to tell how much a Dollar is worth.

2) The U.S. Dollar has lost upwards of thirty percent (30%) of its value against other foreign currencies in the recent past, meaning China has lost almost $300 Billion simply by holding U.S. Dollars in its reserves.

3) The U.S. has no plans whatsoever to reduce deficit spending or ability pay down any of its existing debt without printing money to pay it off.

For these reasons China has decided to implement an aggressive sell-off of U.S. Dollars before the rest of the world does so. China reportedly told the US delegation; "we are the largest holder of U.S. Currency and if the rest of the world unloads theirs before we unload ours, we will lose our shirts."

Early this week, in an unusual move, the Bush administration sent virtually the entire economic "A-team" to visit China for a "strategic economic dialogue" in Beijing Dec. 14 and 15.

//SNIP//

The Bush administration wanted to get China's cooperation in preventing a dollar collapse. The Hal Turner Show has been told the effort failed.

According to the source, Fed Chairman Bernanke left the meeting "pale and in a cold sweat" as the implications of China's decision seemed to sink in.

The implications are enormous: The U.S. Dollar is likely to collapse in value against all other major currencies as early as Monday, December 18.

This would cause a worldwide sell-off of dollars, create almost immediate "hyper-inflation" in the US and also impact world markets at a level "worse than the Great Depression of 1929."

Arabs to the rescue?

In a strange twist of fate, Arabs and OPEC may come to the rescue of the U.S.!

Senior officials in OPEC made clear that they too would be severely harmed if the U.S. Dollar collapsed, and hinted they "would not be inclined to sell oil to any particular nation that intentionally caused such a collapse."

This was a thinly veiled threat to China, which depends heavily on OPEC oil for its rapidly developing energy needs.

The OPEC officials even went so far as to say "Since China lacks the ability to project their military power, OPEC nations need not worry about any Chinese military response to an oil cut-off."

Such brutally candid remarks will not sit well with China; and signal ominous things for the U.S. .

Arabs and OPEC will want something in return for saving the U.S. from economic collapse and it is already widely speculated what they want will be a complete change in U.S. backing of Israel in the Middle East.

If such demands are made by the oil-rich Arabs, the U.S. would be left with little choice but to virtually abandon the jewish state to preserve itself.

UPDATE - 10:18 PM 12-14-6
The Washington Post confirms. . . .
'US, China Clash On Currency'

UPDATE - 12:07 AM EST
Saturday, December 16, 2006:

Additional sources, one in the U.S. Commerce Department and another in the US Treasury have confirmed the initial report above and referred me to another, Third, source in the Pentagon.

Both the Commerce and Treasury Sources report that while China will not be able to simply trade their Dollars for other paper currencies, they will spend their U.S. Cash on commodities such as gold, silver and Rhodoium as well as military hardware; ships and planes, placing large orders and paying for those orders with the one point one trillion in cash dollars they possess.

Extreme Military Concern

In speaking with the contact at the Pentagon, I am able to now report the Pentagon views this currency-killing as a cunning military aspect to Chinese plans:

The Pentagon says that while China has a 2 Million man army, they lack the logistics and heavy lift capability to move that army and supply it. They can, however, get that military to South Korea and to Japan.

The Chinese see that the U.S. Military is over-stretched and almost exhausted by its globe trotting Commander-In-Chief. They feel that by intentionally destabilizing the dollar, the U.S. economy will fail, putting tens of millions of Americans on the unemployment line and putting unbearable pressure on the US Government.

Then, with the U.S. economy in shambles and its manufacturing base eroded by a steady stream of manufacturing plants moving out of the US., the American government will be too occupied with troubles at home to do much internationally. America will be in no position to challenge China, allowing the Chinese to act militarily elsewhere in the world;

Further, if the U.S. attempted to intervene against any Chinese military action, the only plant in the world which can manufacture the specialized gyros needed for U.S. Cruise Missile guidance systems, is now located in. . . . .China.

China could prevent that plant from shipping to the U.S., and once our arsenal of cruise missiles was depleted, it would take a long time to re-tool a plant to make more gyros and resupply cruise missiles for battle. The Chinese feel they could accomplish certain military goals before the U.S. could re-tool.

They are also confident the U.S. will never "go nuclear" as long as the U.S. itself is not attacked.

The Pentagon source went so far as to say "Even if China was to lose the entire one trillion in cash to a collapse of the Dollar as a currency, they will have succeeded in taking the U.S. off the world stage as any type of effective military or economic power -- without firing a shot!" A 'classic' Sun Tzu paradigm of victory - the art of fighting, without fighting.

The crippling of the US is a highly desirable military benefit for China at a relatively cheap price since it will leave their human capital and infrastructure assets in place; assets they know they would lose if a hot war erupted with the US.

Analysts: Dollar collapse would result in 'amero'

Sat, 16 Dec 2006 17:21:18 -0800

Think deep recession likely regardless of Fed's actions

Posted: December 13, 2006 By Jerome R. Corsi
http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=53350

Two analysts who have reconstructed money supply data after the Fed stopped publishing it argue a coming dollar collapse will set the stage for creating the amero as a North American currency to replace the dollar. The reconstructed M3 data – the broadest measure of money – published on econometrician Gary Kuever's website, NowAndFutures.com, shows M3 increased at a rate of 11 percent in May, compared to 9 percent when the Federal Reserve quit publishing M3 data earlier this year.

Asked why the Fed decided to stop publishing M3 data, Kuever told WND, "The Fed probably wants to hide how much liquidity is being pumped into the market, and I expect the trend to keep pumping liquidity into the market will continue, especially since the economy is slowing down."

Why is this important?

"The trend line in my M3-plus-debt chart is staggering," Kuever said. "There has been a straight, long-term trend line of M3-plus-credit increasing since 2000. Long-term, we are creating inflation and the dollar has lost almost 98 percent of its value in the past 100 years."

Kuever, a retired investor, is concerned that with growing budget and trade deficits "the dollar could collapse."

"Especially if the Fed cannot increase rates, because we have already entered a recession," he said.

Analyst Gary Kuever's chart shows M3-plus-credit, short term, from May 2000 to September 2006

Bob Chapman, who issued a reconstructed M3 estimate to the 100,000 subscribers to his newsletter, "The International Forecaster", agrees.

"The world is awash in money and credit," Chapman told WND. "My numbers show M3 increasing at about a 10-percent rate right now."

Chapman believes the U.S. economy entered a recession in February. In his newsletter of Dec. 9 he predicted the Fed would hold interest rates at 5.25 percent.

"The Fed is in a very tough spot here," Chapman wrote, "If they raise rates, the real estate market will collapse, and if they lower rates, the dollar will collapse."

Meeting yesterday, the Federal Reserve Open Market Committee voted, as Chapman had predicted, to hold the overnight lending rates between banks steady at 5.25 percent. This was the fourth straight meeting the Fed had voted not to change rates. In its rate announcement, the Fed affirmed the economy had slowed.

Almost immediately after the announcement of the Fed's decision, the dollar weakened to a new 20-month low against the euro, with currency markets reportedly pricing in the expectation the Fed will be forced to lower rates next year to bolster the economy. Following the announcement by the Fed, the U.S. Dollar Index, or USDX, also dropped, with the dollar going below 83.

A dollar collapse is imminent, Chapman declared.

"Technicians studying the USDX think there is a support level for the dollar at 75, but I don't think so."

How low could the dollar go?

"If the dollar breaks through 78.33 on the USDX," Chapman answered, "my guess is the dollar will go through a 35-percent correction, which would put it at 55."

"The key in how low the dollar goes is the interest rates," Chapman told WND. "In January, the Fed is going to have to make a decision which way to go. If Fed rates go up, the dollar will hold in the 78.33 range, but the stock market and the economy will tank. If next year the Fed lowers rates to keep the economy from crashing, the bottom will fall out of the dollar, and I see it going as low as 55. Once the dollar hits bottom, it will take the stock market and the economy right with it anyway. The Fed is in a box they can't get out of."

As WND reported earlier this week , in an unusual move, the Bush administration is sending virtually the entire economic "A-team" to visit China for a "strategic economic dialogue" in Beijing Thursday and Friday.

//SNIP//

But Chapman doubts the trip will help the Fed to engineer a slow dollar slide.

"The Chinese are going to do what the Chinese want to do, not what we want them to do," he said. "I believe the Chinese are going to send Treasury Secretary Paulson and Fed Chairman Bernanke home packing, with little or nothing to show for the trip."

How severe will the coming dollar collapse be?

"People in the U.S. are going to be hit hard," Chapman warned. "In the severe recession we are entering now, Bush will argue that we have to form a North American Union to compete with the Euro."

"Creating the amero," Chapman explained, "will be presented to the American public as the administration's solution for dollar recovery. In the process of creating the amero, the Bush administration just abandons the dollar."

///////////////////
COMMENT:
The average American is totally unaware of the coming price we may well pay for the Iraq debacle: destruction of the U.S. economy and a possible dictatorship by either Bush43 or whoever overthrows him in a coup. Impossible! you say? Not really since some of our basic Constitutional freedoms have been all but erased (citizenship, free speech, habeus corpus, privacy, search) in laws passed since 9/11 and the precedent established of a "unitary president" able to act on his own to declare any of us an "enemy combatant" and jail us indefinitely. Besides, with a devaluation of the dollar to half its value or less, many in the U.S. middle class will be reduced to the peasant level and homeless. Faced with a subsistence economy with their survival dependent on low wage labor work and government subsistence and shelter, they will be easy to control politically and in the workplace.

No wonder FEMA has Halliburton building large numbers of camps, allegedly for an immigrant crisis that so far does not exist. With huge numbers of citizens homeless, penniless and willing to work in marginal jobs such as farm labor, the need for illegal immigrant labot will vanish. There probably will be a loud outcry for all illegal immigrants to be rounded up and deported, so those FEMA camps would be very busy. And almost certainly the new law providing that Bush43 can deploy troops to maintain order at the local level without consulting state or local governments will be invoked so that Bush43 can exert direct Federal control nationwide using the "illegal immigrant crisis" as an excuse.

FoxTV in 2001 had a program called Dark Angel that illustrated just such a U.S. peasant subsistence economy with a repressive government retaining control with military force for the benefit of a small military/industrial elite. Dark Angel could well be looming on America's horizon...but without any superheros. Or we could be on the edge, given the penetration of evangelicals into the government and military, of a coup leading to the Republic of Gilead described in The Handmaid's Tale (ISBN 0395404258).

Good time to have offshore investments denominated in major currencies (Euro, Yen, Swiss Franc, Pound) other than dollars and holdings in precious metals which tend to increase in value inversely to the value of the dollar. And maybe a place offshore to escape to if things get touchy here.

techadvisor

Tomgram: Nick Turse on the Bush Planetary Lock Up (American Prison Planet)

Sat, 04 Nov 2006 17:28:07 -0800

TomDispatch.com BLOG
Tom Engelhardt
http://www.tomdispatch.com/index.mhtml?pid=135352

The evil nature of our enemies has, it turns out, certain advantages -- at least when secret imprisonment and torture are at stake. The Bush administration has proved adamantly unwilling to talk to, or deal with, the regime of Syrian President Bashar al-Assad, except when it came to parking terror suspects we wanted tortured on his lot. In fact, the Syrians proved so handy and so eager to be good allies in the shadow world of global incarceration that U.S. officials turned over at least 7 of their prisoners to Syrian ministrations, according to a recent piece in the British Guardian.

There was nothing unique about administration reliance on the Syrians for this. From Uzbekistan to Egypt, autocratic regimes willing to torture have been destinations for CIA secret prisoner "rendering" operations. Following kidnappings or captures elsewhere on Earth, the Agency has sent planes hopscotching -- sometimes thousands of miles -- across the globe to our jailors of choice. Though the aircraft used were posh indeed, such assignments proved so rigorous for CIA handlers that they evidently regularly repaired to five-star hotels in Italy, on the Spanish island of Majorca, and possibly elsewhere for a little of the recuperative good life. In places like the Marriott Son Antem, a golfing resort in the Majorcan city of Palma, they could "journey to deep inner peace" (as the hotel spa advertised) at American taxpayer expense, even while on "extraordinary rendition" trips.

In fact, when it comes to what Nick Turse calls the Bush administration's "prison planet," little bits of news about further horrors seep out almost daily. Just in the last week, for instance, thanks to the Israeli paper Haaretz, we learned for the first time that at least some CIA rendition flights stopped at Ben-Gurion International Airport in Tel Aviv on their way to and from Cyprus, Jordan, Morocco, and other spots east and west, north and south -- and that the first case "of the United States handing Israel a world jihadi suspect" in a rendition operation has been confirmed.

At the same time, if you happened to be checking the South African press, you might have noticed a report that, a year ago, 10 unidentified men in several "luxury vehicles" -- luxury being a good sign that the CIA is probably involved -- pulled up in front of a home in the medium-sized town of Estcourt, ransacked it at gunpoint, shooed away the police, and then hooded and dragged off two Muslim men, one of whom was later released (thanks to the intercession of a South African lawyer). The other, Rashid Khalid, a Pakistani national, is suspected of being somewhere in the system of American secret global detention centers, but his fate remains a mystery twelve months later.

Meanwhile, in Iraq, the International Red Cross, it was reported, had "its first opportunity in more than 20 months" to see hundreds of former Abu Ghraib prisoners now rehoused in a state-of-the-art multimillion dollar prison, Camp Cropper, that the Bush administration has built, almost without notice, near Baghdad International Airport. Finally (but not exhaustively), back in our growing homeland security state , "in a stealth maneuver, President Bush has signed into law a provision which, according to Senator Patrick Leahy (D-Vermont), will actually encourage the President to declare federal martial law." The John Warner Defense Authorization Act of 2007, according to Frank Morales, "allows the President to declare a 'public emergency' and station troops anywhere in America and take control of state-based National Guard units without the consent of the governor or local authorities, in order to 'suppress public disorder.'"

And that's just a modest grab bag of recent Bush administration global incarceration news, another humdrum week on what's increasingly coming to look like an American prison planet. These bits and pieces of information seeping out are undoubtedly merely suggestive of what we don't yet know. Now, let Nick Turse, in his usual vivid, well researched fashion, make a little sense of all this for you. Tom

American Prison Planet
The Bush Administration as Global Jailor
By Nick Turse

Today, the United States presides over a burgeoning empire -- not only the "empire of bases" first described by Chalmers Johnson, but a far-flung new network of maximum security penitentiaries, detention centers, jail cells, cages, and razor wire-topped pens. From supermax-type isolation prisons in 40 of the 50 states to shadowy ghost jails at remote sites across the globe, this new network of detention facilities is quite unlike the gulags, concentration-camps, or prison nations of the past.

Even with a couple million prisoners under its control, the U.S. prison network lacks the infrastructure or manpower of the Soviet gulag or the orderly planning of the Nazi concentration-camp system. However, where it bests both, and breaks new incarceration ground, is in its planet-ranging scope, with sites scattered the world over -- from Europe to Asia, the Middle East to the Caribbean. Unlike colonial prison systems of the past, the new U.S. prison network seems to have floated almost free of surrounding colonies. Right now, it has only four major centers -- the "homeland," Afghanistan, Iraq, and a postage-stamp-sized parcel of Cuba. As such, it already hovers at the edge of its own imperial existence, bringing to mind the unprecedented possibility of a prison planet. In a remarkably few years, the Bush administration has been able to construct a global detention system, already of near epic proportions, both on the fly and on the cheap.

//SNIP//

Of the federal prison population, the government classifies about 0.1 % (100 people) as having committed "national security" offenses. There's no category in the U.S. system for political prisoners, which doesn't mean they don't exist. According to a 2002 Harvard BlackLetter Law Journal article by J. Soffiyah Elijah, there were, prior to September 11, 2001, "nearly 100 political prisoners and prisoners of war incarcerated in the United States" -- many of them the surviving victims of Vietnam-era government campaigns against activists.

There is also another group of political prisoners of indeterminate number not listed on the rolls -- war resisters. Just recently Iraq War veteran turned resister Kevin Benderman was released from a military prison where he had been held for over a year for refusing to redeploy to Iraq due to his conscientious objection to the war. While Army Lieutenant Ehren Watada is currently facing an eight-year prison sentence, if convicted, for similar opposition to Iraq. One website lists 27 war resisters "presently in legal jeopardy, or currently incarcerated" who have gone public with their stories.

Additionally, in the immediate wake of 9/11, the government conducted sweeps of Muslim immigrants (and Muslim-Americans) reminiscent of the detentions of Japanese and Japanese-Americans during World War II, "locking up large numbers of Middle Eastern men, using whatever legal tools they can." There was never any full accounting of these mass roundups, codenamed PENTTBOM, or what happened to all the people who were rousted from beds or yanked out of places of work by federal agents. What little is known suggests that "762 of the 1,200 PENTTBOM arrestees were charged with immigration violations at the behest of the FBI because agents thought they might be associated with terrorism... [but] almost every one was either deported or released within a few months." Only a small percentage of the 1,200 are thought to have even been processed through the federal criminal justice system.

This summer the Washington Post announced that, after 5 years of captivity, Benamar Benatta, "believed to be the last remaining domestic detainee from the Sept. 11, 2001, attacks, was released." In mid-October, however, word surfaced that Ali Partovi, also caught in the dragnet, was still being held captive although he "is not charged with a crime, not suspected of a crime, [and] not considered a danger to society."

Preemptive Incarceration

From time to time, certain people in the U.S. also find themselves tossed into special kinds of detention facilities. For example, during the 2004 Republican National Convention (RNC) in New York City, protesters (and also bystanders) swept up in indiscriminate mass arrests or illegal acts of preemptive incarceration were temporarily locked up in "Marine and Aviation Pier 57," a filthy facility of razor-wire topped chain-link cages that was soon dubbed "Guantanamo on the Hudson." While being imprisoned in New York City's own Gitmo didn't begin to compare to being tossed in the real McCoy or any other secret offshore site, there was one striking similarity. U.S. intelligence officials estimated that 70-90% of prisoners detained in Iraq "had been arrested by mistake." That was also 2004. The next year, it was revealed that, of the large majority of RNC arrest cases that had run their course, 91% of the arrests were dismissed or ended in acquittals.

On the American prison planet, not only has the principle of habeas corpus been formally abolished and torture proudly added to the mix, but that crucial tenet of the legal system, the presumption of innocence, has been cast aside. Whether at home or abroad, the solution for U.S. security forces is a simple one, identify the likely suspects, conduct sweeps, and preemptively lock them up.

Concentration Camp, USA?

According to recent statements by the Department Homeland Security 's Immigration and Customs Enforcement bureau, some time in the future undocumented economic migrants may be imprisoned on "old cruise ships." Other illegals may even find themselves in a KBR concentration camp.

Earlier this year, news broke that Halliburton subsidiary, KBR -- the firm infamous for building prison facilities at Guantanamo Bay and for scandals stemming from work in the Iraq war zone -- received a $385 million contract from the Department of Homeland Security (DHS) to build detention centers, according to the New York Times, "for an unexpected influx of immigrants" or "new programs that require additional detention space." For anyone who remembers the First World War-era proposal by four state governors to imprison members of the Industrial Workers of the World (IWW) for the duration of the conflict, or the 1939 Hobbs ("Concentration Camp") Bill that sought the detention of aliens, or the forcible relocation and imprisonment of Japanese and Japanese-Americans during World War II, or the 1950 McCarran Act's provisions for setting up concentration camps for subversives, or the Vietnam-era plans to round up and jail radicals in the event of a national emergency and conduct mass detentions in the face of possible urban insurrections, the announcement may have seemed less than startling. But thought of in the context of prison-planet planning, it nonetheless strikes an ominous note indeed.

One Vietnam-era radical, former Pentagon analyst Daniel Ellsberg, grasped the implications immediately. "Almost certainly this is preparation for a roundup after the next 9/11 for Mid-Easterners, Muslims and possibly dissenters," he said. "They've already done this on a smaller scale, with the 'special registration' detentions of immigrant men from Muslim countries, and with Guantanamo."

Fear of a Prison Planet

In 2005, Irene Khan, Amnesty International's general secretary, described Guantanamo Bay as "the gulag of our time." But the American gulag is so much more than Guantanamo and so much worse. The combination of U.S. "homeland" prisons, where "one in 140 Americans, or as many people as live in Namibia, or nearly five Luxembourgs" are locked away, the offshore imperial detention facilities, the shadowy CIA black sites, and the ever-shifting outsourced detention facilities operated by other nations adds up to something new in history -- the makings of a veritable American prison planet.

The Next Wave

Sat, 04 Nov 2006 17:11:53 -0800

Whiskey Bar Blog
Posted by billmon at November 2, 2006 10:47 PM
http://billmon.org/archives/002922.html

Tsunamis, they say, can be deceptive. Out in the deep ocean, travelling at 400 to 500 mph, they may appear on the surface to be nothing more than just a large swell -- like the wake of a large ship. While sensors can estimate the wave's size and power, it's true destructive force doesn't become visible until it reaches shallower water and all that energy is compressed and forced towards the surface. Then it hits, at which point the last place you want to be is on the beach.
//SNIP//
Which is why if the Dems do win on Tuesday, and win big, they better get the celebrating out of the way fast, and start thinking about how they're going to handle a very angry, very rejected but still very powerful president with points to prove and scores to settle.Because if he goes critical on them (and us) the next big wave could wash us all out to sea. http://billmon.org/archives/tsunami.jpg

COMMENT: And that is probably why Bush43 is rigid about keeping Rumsfeld in place...because Rumsfeld is a total loyalist who will do whatever Cheney (oops! Bush43) wants done. Regardless of whether the JCS or any other military types object. Congress led by Democrats could make a LOT of noise in the long run but by then the die is cast. Unlikely the Iranians or North Koreans will just disengage because Congress pulls funding for a war. Nor is Bush43, the Unitary Executive Leader, likely to tolerate that. Under present law he could declare martial law and rule by fiat. Who, other than potential enemy combatants, would be able to object?

Here Ae Go Again: 'Just Push the Yellow Button and Vote as Many Times as You Want' on Sequoia Touch-Screen Voting Machines!

Thu, 02 Nov 2006 16:48:48 -0800

The Huffington Post
The Blog: Brad Friedman
11.02.2006
http://www.huffingtonpost.com/brad-friedman/here-ae-go-again-just-p_b_33109.htm

New Vulnerability Discovered on Systems Made by One of Country's Largest Voting Machine Companies Will Affect Elections in Dozens of States!

California's Secretary of State Bruce McPherson Denies Knowledge of Vulnerability Well After His Office Had Been Notified...

"Just push the yellow button and you can vote as many times as you want," Tom Courbat, an Election Integrity advocate from Riverside County, California informed The BRAD BLOG tonight. Not that we're in any mood to report more such stories, but this seems to be a big one. A very big one.

It seems there's a little yellow button on the back every touch-screen computer made by Sequoia Voting Systems, that allows any voter, or poll worker, or precinct inspector to set the system into "Manual Mode" allowing them to cast as many votes as they want.

Concerns about the flaw were first reported some thirty days ago to California Secretary of State Bruce McPherson's office by Ron Watt, a Tehama County, CA precinct inspector who has been a poll worker in the county for the last fifteen years. And yet, as recently as a radio interview last Tuesday, McPherson -- who has been crowing about having the country's most stringent security process for voting systems -- denied he was aware of any security issues with Sequoia systems.

"They didn't care about it," Watt told us tonight about his "late September or early October" discussion with McPherson's voting systems chief Bruce McDannold. "He said he didn't think it was an important issue. He said I don't believe this is really a vulnerability."

Watt and Courbat disagreed and placed another phone call to the SoS' office on Friday after Watt received a copy of Sequoia's "Poll Workers Guide, Booklet #5: Troubleshooting" via a public records request in Tehama. On pages 19 through 22 of the booklet -- which is marked as "Confidential and Proprietary" -- he confirmed the simple manual override to the system. He'd learned about it years earlier and the new manuals confirmed that button was still in place. Even in the latest models of the Sequoia Edge voting systems (both models 1 and 2).

The complete sequence to override the system and enter manual voting mode, along with the Sequoia booklet received via Watt's public records request is now posted here at BlackBoxVoting.org.

Watt had been taught to be a poll worker trainer by De La Rue, the former parent company of Sequoia, years ago when the systems were first brought into the county. The two men placed a conference call with McDannold last Friday after receiving the booklet. McDannold again reportedly downplayed the concerns, but said "he'd look into it," according to Courbat.

He called Courbat back on Monday afternoon, however, to say Sequoia technicians had been in the SoS office and had confirmed the vulnerability. (A complete transcript of McDannold's Monday phone message left on Courbat's cell phone, confirming the security issue and describing the actions -- or lack thereof -- being taken, is posted here.)

Sequoia's voting machines are perhaps the most widely used in California, in some 19 different counties, including both Tehama and Riverside, which is known as the "Home of E-Voting" as it was the first county in the nation to deploy such systems. But identical Sequoia machines are also used in dozens of other states around the country including Florida, Illinois and elsewhere.

Thanks to the dilligence of Watt and Courbat, it is now confirmed that all such systems are completely vulnerable to virtually anybody who wishes to cast as many votes as they please.

"I can do it in 18 seconds," says Watt. "I can train you to do it in 3 minutes. Just push the yellow button, wait 3 seconds and it chimes. Push the yellow button again, wait 3 seconds and it chimes again. Then it's all on the screen prompts. You're asked 'Do you want to enter manual mode?' and you push 'Yes'...And then you're on your way."

"You can then vote as many times as you want. You won't ever have to stop until someone physically restrains you from voting," he explained.

"But wouldn't someone hear the chime?" we asked...

"No, it's barely audible. Quieter than the beep on your computer when it boots up. The systems are usually kept up against the wall to be near a power outlet and away from the poll workers for privacy. Plus, if you really wanted to pull it off, just come in with a friend and have them talk to the poll workers to distract them. Nobody would ever know."

McDannold's message left on Courbat's cell phone Monday confirming the issue. "Sequoia was actually in here this morning giving us a demonstration of the feature and how it works and how you would set it up and put it into that mode," said McDannold.

He claimed that the SoS office had then contacted all California counties using the Sequoia Edge and said "they are all doing poll worker training" and "putting signs up to warn people about the severe penalties for tampering with voting equipment uh which is would fall under---- most of them are putting signs actually on the machines."

"They are also being very conscious of the placement of the equipment so that they can observe, actually many of them are - have already planned to assign staff members to do nothing but just watch the machines for that purpose to make sure ah nobody is reaching around or doing anything," McDannold explained on the recorded message.

"It's not the voters we're worried about doing this," Courbat said. "It's the Precinct Captains and Elections Officials across thousands of precincts across the country. This isn't unique to Riverside or Tehama. Tens of thousands of votes can be stolen across the country," he added.

Courbat was furious at Sec. of State McPherson who has been touting his record on security issues for voting systems on the campaign trail. A record, we might add, that seems to have little in common with McPherson's frequent public claims. He has certified system after system in the Golden State despite scores of vulnerabilities, inaccuracies, failures and malfunctions found in each of them.

McPherson is currently in a tight race with his Democratic challenger, State Sen. Debra Bowen who has been a long time champion of Election Integrity and security issues as well as transparency for such systems and in government as a hole. She has also been critical of McPherson's lax security standards, such as allowing hackable Diebold voting systems to be sent home with poll workers on "sleepovers" for days and weeks prior to elections despite serious vulnerabilities, more than 16, found by McPherson's own team of computer scientist advisors at UC Berkley.

"If McPherson says he didn't know about this on Tuesday during that interview, after his office had been notified long ago, then he's lying," Courbat charged. "McPherson had to know by Monday. He either knew about it or his staff never told him, in which case they need to be fired on the spot."

But if Watt knew about this vulnerability for years himself, why didn't he say something prior to 30 days ago?

"Ya know, I always thought people were honest. I really did," he told us during tonight's phone call. "I didn't really think anybody would exploit something like this. I just thought the best of people. But now I feel differently. After this last election, the Primary Election on June 6th, I saw things I couldn't believe. After all this talk about security for these systems, and chain of custody stuff...I saw the chain of custody issues just thrown right out the window in Tehama County," he said.

"Maybe it was naivet� before, I don't know. But after what I saw in that election, it just suddenly dawned on me. We've got a very serious problem here."

The transcript of the phone message left by Bruce McDannold on Tom Courbat's cell phone is at the bottom of the cross-posted version of this article at The BRAD BLOG.
http://www.bradblog.com/?p=3714

20 Damning Facts About Voting In The USA

Sat, 28 Oct 2006 15:40:18 -0700

rense.com (http://www.rense.com/general73/voting.htm)
By Angry Girl of Nightweed.com
9-27-6

Did you know....

1. 80% of all votes in America are counted by only two companies: Diebold and ES&S.
http://www.onlinejournal.com/evoting/042804Landes/042804landes.html

http://en.wikipedia org/wiki/Diebold

2. There is no federal agency with regulatory authority or oversight of the U.S. voting machine industry. http://www.commondreams.org/views02/0916-04.htm

http://www.onlinejournal.com/evoting/042804Landes/042804landes.html

3. The vice-president of Diebold and the president of ES&S are brothers.
http://www.americanfreepress.net/html/private_company.html

http://www.onlinejournal.com/evoting/042804Landes/042804landes.html

4. The chairman and CEO of Diebold is a major Bush campaign organizer and donor who wrote in 2003 that he was "committed to helping Ohio deliver its electoral votes to the president next year."
http://www.cbsnews.com/stories/2004/07/28/sunday/main632436.shtml

http://www.wishtv.com/Global/story.asp?S=1647886

5. Republican Senator Chuck Hagel used to be chairman of ES&S. He became Senator based on votes counted by ES&S machines.
http://www.motherjones.com/commentary/columns/2004/03/03_200.html

http://www.onlinejournal.com/evoting/031004Fitrakis/031004fitrakis.html

6. Republican Senator Chuck Hagel, long-connected with the Bush family, was recently caught lying about his ownership of ES&S by the Senate Ethics Committee.
http://www.blackboxvoting.com/modules.php?name=News&file=article&sid=26

http://www.hillnews.com/news/012903/hagel.aspx

http://www.onlisareinsradar.com/archives/000896.php

7. Senator Chuck Hagel was on a short list of George W. Bush's vice-presidential candidates.
http://www.businessweek.com/2000/00_28/b3689130.htm

http://theindependent.com/stories/052700/new_hagel27.html

8. ES&S is the largest voting machine manufacturer in the U.S. and counts almost 60% of all U.S. votes.
http://www.essvote.com/HTML/about/about.html

http://www.onlinejournal.com/evoting/042804Landes/042804landes.html

9. Diebold's new touch screen voting machines have no paper trail of any votes. In other words, there is no way to verify that the data coming out of the machine is the same as what was legitimately put in by voters.

http://www.commondreams.org/views04/0225-05.htm

http://www.itworld.com/Tech/2987/041020evotestates/pfindex.html

10. Diebold also makes ATMs, checkout scanners, and ticket machines, all of which log each transaction and can generate a paper trail.
http://www.commondreams.org/views04/0225-05.htm

http://www.diebold.com/solutions/default.htm

//SNIP//

The networks' refusal to accept ads for The Dixie Chicks documentary

Fri, 27 Oct 2006 18:12:01 -0700

Friday October 27, 2006
posted by Glenn Greenwald | 9:10 AM
Unclaimed Territory Blog

The new documentary, Shut Up & Sing, chronicles the hostile and sometimes threatening conduct directed towards The Dixie Chicks after one of the group's members criticized the Commander-in-Chief, President George W. Bush, during a 2003 concert. The documentary is being distributed by Harvey Weinstein's film company, and a preview for the film can be seen here.

According to Matt Drudge (a phrase that does not roll out of one's mouth easily), both NBC and the CW Television Network (the joint venture of CBS and Warner Brothers that combines the WB and UPN Networks) are refusing to air ads promoting Shut Up & Sing on the ground that the ads are "disparaging" to our President:

In an Ironic Twist of Events, NBC and The CW Television Network Refuse to Air Ads for Documentary Focusing on Freedom of Speech . . .

NBC responded to a clearance report submitted by the Weinstein Company’s media agency saying that the network “cannot accept these spots as they are disparaging to President Bush.”

The CW Television Network responded that it does “not have appropriate programming in which to schedule this spot.”

According to Drudge, David Boies, presumably representing the Weinstein Co., said that "it is disappointing and troubling that NBC and The CW would refuse to accept an otherwise appropriate ad merely because it is critical of President Bush," while Weinstein himself said that “it’s a sad commentary about the level of fear in our society that a movie about a group of courageous entertainers who were blacklisted for exercising their right of free speech is now itself being blacklisted by corporate America."

Leave to the side for the moment the fact that this controversy is far more likely to help the film than hurt it. Far more important than that issue is the emergence of a very disturbing trend whereby television networks are refusing to broadcast political advocacy material that will offend the Republican power structure in Washington.

//SNIP//

The networks' claim is that they prohibit controversial political advocacy ads because allowing such ads would bestow an unfair advantage in political debates to those with the financial resources to afford to purchase such advertising. But that is just ludicrous, since the networks are awash with all sorts of overtly political ads, corporate ads that convey implicit political values, and politically charged programming content. Worse, the targets of the rejected ads are typically the most empowered and well-financed groups in our country, and it is just laughable for the networks to claim that allowing ads critical of them will put them at an unfair disadvantage in political debates.

Once corporate-owned networks start selecting which politically-tinged ads are "too controversial" and which ones are not, it is inevitable that messages which please the political leadership which regulates those corporations will be allowed, while messages that displease those political leaders will be rejected. That is plainly what is happening.

To see that very disturbing dynamic in action, just contrast (a) CBS' capitulation to demands from conservatives that it not broadcast The Reagans at a time when both the network and its parent company, Viacom, had all sorts of critical legislative and regulatory matters dependent upon Washington Republicans, and (b) ABC's steadfast refusal to cancel Path to 9/11 even once it was revealed that the film contained patently false scenes that blamed the Clinton administration for the 9/11 attacks -- a film objected to by the powerless Democrats but loved by the in-power, Disney-regulating Republicans. As Law Professor Paul Campos pointed out during the MoveOn.org ad controversy:

Decisions of this sort are more than monuments to hypocrisy and double standards. Because those who have the right to broadcast over them have in effect a monopoly on the television airwaves, the television networks are regulated closely by the federal government. By law, the networks hold their broadcast rights in trust, and are thus obligated to do business in a way that is mindful of the public interest.

CBS doesn't serve the public interest when it rejects an otherwise appropriate advertisement because, in the opinion of the network's managers, the ad's message is too politically controversial. This is especially the case when the network broadcasts equally controversial political advertisements, during the same program for which the rejected ad was intended.

Given that CBS is regulated so heavily, and that indeed at this moment major legislation is pending that critics argue will unduly enhance the network's market share, is it possible that "too politically controversial" really means "harmful to CBS's corporate interests?" One need not be a cynic to suspect that, as a great American journalist used to put it, "that's the way it is."

The very idea that it is in the "public interest" to prohibit ads that criticize the Leader is ludicrous on its face. The President is constantly given free airtime to argue his views and propagandize on virtually every issue, and the networks endlessly offer forums for his followers and surrogates to defend him. And the networks' argument is particularly absurd now, given that networks are awash with cash from offensive, obnoxious, and repugnant political ads of every kind.

What possible justification is there for a network to prohibit the promotion of films which are critical of the nation's political leaders? Worse, the networks' recent history of ostensible avoidance of "controversial" political material seems extremely selective and one-sided. "Controversial" in this context seems actually to mean "likely to trigger displeasure among the Leader and his supporters."

The networks are still a very powerful public opinion instrument, and allowing them to become political propaganda venues -- where messages that "disparage" the Leader are prohibited while all sorts of pro-Leader messages are allowed -- has the potential to be quite harmful. We seem to be well on our way to that result.

//SNIP//
Friday October 27, 2006
posted by Glenn Greenwald | 9:10 AM
http://glenngreenwald.blogspot.com/2006/10/networks-refusal-to-accept-ads-for.html