Sunday, July 31, 2005

Labor's Love Lost


Organized labor's most important economic contribution is in spreading out the wealth of a market economy by driving up the standard of living for all working people. When the unionized plant up the street pays a dollar an hour more, the non-union competitor the next town over either raises his wages or loses out in the competition for workers.

Labor can only make this system work by organizing employees of private enterprise. It is all well and good to raise the standard of living for public employees, but it also has the effect of turning the government into its own lobbyist. Better to make certain that the real engine of a free-market economy is being maintained by union workers.

How Wall Street Wrecked United's Pension

HAD anyone listened to Doug Wilsman, tens of thousands of United Airlines employees would not be facing big cuts in their pensions. And the federal agency that guarantees pensions might not be struggling with its biggest losses ever.

So who is Doug Wilsman? He is a retired pilot and a former fiduciary of United's pension plan for pilots, and in 1987 he discovered that the company had abandoned its older, tried-and-true approach of investing retirees' money in bonds timed to pay when the pensions came due. Instead, it had bought into the promises of Wall Street that it could put less money into the plan - and take out more later - if it just put most of the assets into the stock market.

Mr. Wilsman was skeptical of such promises, and soon after learning of the change in strategy, he filed a grievance with his union, the Air Line Pilots Association. "Hey, you guys are really building yourselves a trap," he recalled warning them at the time. "Someday, at the worst possible moment, when the bottom falls out of the stock market, the plan is going to have to come up with new money, and it's going to be enough to kill the company."

"Everybody knows stocks are cyclical," Mr. Wilsman said last week. So is the airline business. All along, he said, he thought it was almost inevitable that both would one day go south at the same time, with catastrophic results - which is just what happened this year.

Given Mr. Wilsman's prescience, one might think that experts would be examining how United's investment strategies contributed to the demise of its pension funds - and whether similar scrutiny elsewhere could prevent more pension plans from crashing.

Not a chance. Congress, regulators, lobbyists and the news media are all scrambling to find out what has gone wrong with the pension system. Hearings have been convened in the wake of United's default, chief executives examined under oath, bills introduced in Congress, numbers crunched. But virtually everyone is looking at the rules covering how much money a company puts into a pension plan every year - not at what happens to the money after that.

While the money managers and other pension professionals who ran United's pension plan walked away from the wreck unscathed - indeed, they collected about $125 million in fees over the last five years alone, records show - the ones who will have to pick up the bill for the advisers' collective failure will be the airline's 130,000 employees and pensioners, the federal pension guarantor and probably, someday, the taxpayers.

The Pension Benefit Guaranty Corporation has said that since 1974, when the insurance program was created, United has paid a little less than $100 million in premiums to insure employees' pensions. Of the $6.8 billion the agency will pay United's retirees in coming years, all but what United paid in premiums will be borne by the other companies participating in the insurance program.

If those companies ever tire of footing other companies' bills, they may cancel their pension plans and drop out of the system. At that point, the taxpayers will have to step in.

United is far from unique. Lifting the lid on how most pension funds are invested might raise an outcry if the 44 million Americans covered by company plans knew these things:

Pension investing is largely unregulated, even though the federal government effectively covers the investment losses when a defined-benefit plan fails. At United, this freewheeling approach gave rise to investments in junk bonds, dot-coms and even what appears to be an energy venture in Albania.

The Securities and Exchange Commission recently said that more than half of the consultants who help pension funds invest their money have outside business relationships that could taint their advice.

It's impossible to get a current list of a company's pension investments. The most detailed, up-to-date information, on file at the Labor Department, is at least two years old.

The Labor Department records also show that the money managers, actuaries, consultants and other professionals who handled United's pension plan earned about $125 million from 1999 to 2003, paid out of plan assets. The records are silent on how the individual money managers performed, nor do they even mention United's main pension consultant, the Russell Investment Group, or how much it was paid.

OFFICIALS at the Pension Benefit Guaranty Corporation, the federal agency that takes over pension funds when they fail, are combing through United's pension documents, trying to ascertain how much the agency owes. What is clear is that as United's pension obligations soared, its pension assets fell. By the time the airline turned over its plan to the pension agency, the shortfall was $10.2 billion.

While the federal agency tries to pinpoint its obligations, apparently no one in an official capacity is pausing to ask who the plans' outside investment professionals were, much less how they made their decisions and how they responded as the airline's fortunes faded.

"It's just a nonstarter," said Richard A. Ippolito, the pension agency's former chief economist, who is now retired. A few years ago, he recalled, a director of the federal pension agency appeared before Congress and suggested that if companies wanted to invest their pension funds in stocks, they should pay more for their pension insurance coverage.

"I could politely say that he was vilified," he said. "They basically accused him of being un-American because he was asking companies to pay for the privilege of investing in stocks. He just dropped that idea."

United's actions offer a typical example of how most companies manage their pension funds. Its portfolio may look aggressive in hindsight - including high-yield bonds in companies like Adelphia and Bethlehem Steel that eventually went bankrupt, technology stocks that evaporated when the bubble burst and an assortment of private partnerships.

But the general approach was in keeping with what most companies do: about 60 percent stocks, 30 percent bonds and a mixture of "alternatives" including real estate and private equity investments. Local governments often invest their pension funds much more aggressively.

A spokeswoman for United, Jean Medina, said United's pension investments "have outperformed other similar large plans." She added: "United has always operated our plans in the best interests of our participants and beneficiaries, and believe our advisers act similarly."

Companies do not generally invest their pension money themselves, but instead farm out the work to an array of outside professionals. There are pension consultants to help set an investment strategy and recommend the money managers who actually pick the stocks and other particular investments. There are actuaries to design benefits packages and calculate how much companies need to contribute each year.

Custodial banks hold the assets in trust. Brokers execute trades. Once a year, an outside auditor is supposed to review the plan and issue an opinion about its conformity with generally accepted accounting principles.

Problems can arise when there are undisclosed relationships among these different service providers.

"Asset allocation is very much driven by hidden financial considerations," said Edward A. H. Siedle, the president of Benchmark Financial Services, a company that audits pension funds. He said one reason that pension funds tend to invest heavily in high-turnover, active equities is that "those investments have commissions and fees that can be shared with gatekeepers and others that pave the way." Companies that sponsor pension plans can also reap accounting gains if they increase the risk of their pension investments.

There are regulations and other legal safeguards intended to protect pensions, and companies often cite the cost and difficulty of complying with those rules. But much of this protective superstructure was designed decades ago, before the rise of the independent money manager - and before some of today's investment instruments were invented.

"Pensions are heavily regulated," Mr. Siedle said, "yet it's a kind of funny regulation where the regulators who are responsible for pensions really don't know much about managing money."

Thus there are rules to make sure that pension plans are not really tax shelters in disguise, rules to make sure companies treat low- and high-income workers equitably and, since 1989, rules to keep companies from taking money out of pension funds and using it to run their businesses.

But there is no rule limiting aggressive investment strategies or requiring companies that want to pursue them to pay more for their pension insurance.

Congress sets the premium rates, and there are bills in both houses that would raise them. But even now, the bills make no mention of studying, much less capping, investment risk, or of setting insurance premiums based on portfolio risk factors.

The S.E.C. monitors investment advisers but has no legal standing to enforce the pension rules. In a study, released in May, of pension consultants, it found the industry vulnerable to abuse and referred a dozen consultants to its investigative branch for possible enforcement action.

But it did not name individual consulting firms it suspected of conflicts, nor did it look specifically at how United's pension consultant, the Russell Investment Group, performed in the years leading up to the collapse of the airline's plans. Nor did the S.E.C. say if Russell was one of the consultants now being investigated more deeply.

A spokeswoman for Russell, Jennifer Tice, said the company had not received any inquiries from S.E.C. since the commission completed its general examination of the industry.

Ms. Tice said Russell could not explain why its name and fees were not listed in the United plan's official records, noting that plan sponsors file those records, not the consultant. United said Russell's omission from its filings was an oversight. Both Russell and United declined to say how Russell was compensated.

Ms. Tice, however, said Russell helps its clients answer any questions raised by the S.E.C.'s findings, and regularly tells its consulting clients in the United States about potential conflicts of interest and Russell's policies for managing them. "Russell is committed to full and timely disclosure of any potential conflicts of interest," she said.

THE Internal Revenue Service provides yet another layer of protection to pensions, but it has authority only over how companies design their benefits and contribute money to their plans - not over whether they have fulfilled their fiduciary duty to invest prudently. That is a job for the Labor Department.

In June, the Government Accountability Office warned of chronic weakness in the Labor Department's enforcement of the pension law, and said the department ought to be coordinating its efforts with the S.E.C.

The Labor Department also has authority over the disclosure of pension data. It collects long lists of all the investments in each pension fund, and of all of the money managers. But it does not track which money managers were responsible for which investments.

That does not sit well with the United employees and retirees who are waiting to find out how much of their pension benefits is covered by the federal pension agency's insurance and how much they may lose.

"When I get a job, I put my name, my file number and my license in a permanent record, and I'm accountable if something goes wrong," said Bob Stone, a lead mechanic for United Airlines who retired this year. "It's possible for every single aircraft mechanic in the country to keep track of every single job they do. But we can't keep track of the money managers. That's too complicated for us."

Because of limits on the government's pension insurance, they will collectively lose benefits worth about $3.4 billion. Pilots will lose the most because they were promised the richest pensions.

Finally, at the end of the regulatory patchwork is the Pension Benefit Guaranty Corporation. Officials there have access to some of the most current and detailed information about pensions, but they cannot do a lot with it; a 1994 act of Congress requires them to keep it secret.

Officials at the pension agency sometimes confide that they feel like they are running not an agency but a big garbage can, where companies can dump their defunct pension plans, no questions asked.

Earlier this year, when United defaulted, Mr. Stone's union began to ask questions about the money managers who handled its pension plan in its final years - who they were and how they had made their decisions. That labor group, the Aircraft Mechanics Fraternal Association, began to represent United's mechanics only in 2003, after the airline had gone bankrupt. It had no qualms about asking questions about how the pension fund was handled when the previous union had some say over it.

"We have to learn what went wrong," Mr. Stone said. He added that he was sure that some money managers "did their level best for people," but that they all should stand by their decisions. "Unless you separate it out and have accountability," Mr. Stone said, "how are you ever going to reward the good guys and get rid of the bad guys?"

This summer, the labor group wrote to Labor Secretary Elaine L. Chao and Bradley D. Belt, executive director of the pension agency, asking for a forensic audit of United's pension plans, "to determine whether any of the parties providing financial services to the plans may have contributed to their demise."

The letter, signed by the association's national director, O. V. Delle-Femine, cited the recent S.E.C. report warning of potential conflicts of interest among pension professionals, and it urged the pension agency to find out whether tainted advice had played any role in plan losses or underperformance.

"While the plan sponsor may be bankrupt, the parties that have been dealing with the plan are not," Mr. Delle-Femine wrote. "It may be possible to recover assets from these parties on behalf of the plan's participants."

The association also called for an audit of the pension plans at Northwest Airlines, where it also represents the mechanics. Northwest is still running its pension plans but intends to freeze one of them, for salaried employees, at the end of August, locking in employees' benefits at current levels rather than allowing them to increase as they normally would as people worked longer.

Northwest is also seeking its unions' permission to freeze the other three plans. The airline has been warning that if it does not get a break on its pension funding requirements, it may have to declare bankruptcy sometime next year. Bankruptcy is often a prelude to a pension default.

Mr. Delle-Femine sent his letter in June. So far, said the association's legislative liaison, Maryanne DeMarco, there has been no response from the pension agency. The Labor Department told her that Ms. Chao could not participate in an audit of Northwest's pension plans because she served on that airline's board before her confirmation as labor secretary and had recused herself from any involvement in its labor disputes. The Labor Department has yet to respond to the request for an audit of United's pension fund.

"We're all stunned that there isn't a review taking place," said Bill Moons, a United mechanic and the president of the union's local in Denver. "We all want the truth."

He said he and Mr. Stone were two-time losers, having earlier lost another chunk of their retirement savings when United first went bankrupt and its employee stock ownership program lost all of its value.

The pilots' union had pushed hard for the employee stock ownership program back in the 1980's, at about the same time that Mr. Wilsman, the retired pilot, noticed that the airline had changed its previous investment policy for people like him.

In the past, whenever a pilot retired, the airline used money from the pension fund to buy him or her an annuity from an insurance company. Annuities are lifelong streams of monthly payments, but insurance companies pay them, not pension funds.

Insurance companies are regulated differently, and they have no federal guarantor like the Pension Benefit Guaranty Corporation to cover potential losses. Therefore they tend to invest conservatively, in assets that will not become wildly out of step with the payments they owe.

Mr. Wilsman said he thought that an annuity was a surer thing than a pension promise backed by stocks. He also thought United had violated the terms of the pension plan, and maybe the pilots' labor contract, by making the change unilaterally.

He persuaded other retired pilots to join him in bringing a case before the airline's pension board. Each retiree chipped in $25 to cover the cost of a lawyer. At roughly the same time, Mr. Wilsman also filed a grievance with the union.

But the retired pilots were no match for the siren song of the stock market. The union, which handled their grievance, sided with the airline on investment policy. It said it believed that a high-risk, high-return strategy was best because, over time, it would lower United's compensation costs and free up more money to raise salaries.

"The argument was that the new people could get more benefits if they could do it by gambling than if the plan was secure," Mr. Wilsman said.

A spokesman for the pilots' union said he could not recall Mr. Wilsman's grievance and was unable to comment on it.

Ms. Medina, the United spokeswoman, said that United tried to buy all the pilots' annuities in 1985, as part of a plan to terminate the pension fund and take out the surplus assets for business purposes, but that the pilots' union had blocked it. Two years later, when Mr. Wilsman and the other retirees said they wanted annuities, United told them they were too late, she said.

NOT only were United and the pilots' union lined up against the retirees, Mr. Wilsman said. Even the arbitrator who was brought in to hear the case before the pension board said that he couldn't see why the retirees preferred an annuity to a pension, if the monthly payout was the same either way.

"He said that as far as he was concerned, there was absolutely no difference between an annuity and the company's promise," Mr. Wilsman recalled. Afterward, he said, he thought he should have come up with an example of why they weren't the same, but he was tired of arguing with people dead-set against him. So he withdrew the grievance.

"It has always haunted me that I failed to cite an example," he said in a recent telephone interview.

But the best example didn't happen until 18 years later.

Alterman on media conglomerates

From CAP:

But a problem with this kind of "cross pollination" approach is that the more media conglomerates can combine their print and broadcast operations in single markets, the easier it may be for them to nudge them to speak with one voice, thereby lessening the impact of independent, critical thought. I happen to have a friend who runs a shelter for the homeless in a small town in the Midwest. Because the family that owns the local newspaper and local TV and radio stations happens to hate the homeless and wants to defund any program that might help take care of them, getting the good news out about my friend's shelter's accomplishments to the community is nearly impossible.

Without the hullabaloo that accompanied Michael Powell's attempted corporate giveaways before he left the chairmanship of the FCC – a public outcry that led to Powell's plans being thwarted – his successor Kevin Martin has been quietly rewriting media ownership rules to allow corporate behemoths to own more TV stations and newspapers in single markets – thus shutting out smaller, independent voices. If he succeeds, and this melding of editorial functions continues apace, it looks like some markets would be fully subsumed under the watchful eye of a single company, which would control the stories the public sees, and they way they see them.

Income lag? Blame China

From the Economist, via bigpicture.

Friday, July 29, 2005

US-India nuclear deal

From Globalresearch:
IN THE fullness of time, last week's nuclear agreement between India and the United States will be seen as one of those decisive moments in international politics when two powers who have been courting each other for some time decide finally to cross the point of no return. The U.S. and India have `come out', so to speak, and the world will never be the same again.

Every world order needs rules in order to sustain itself but sometimes the rules can become a hindrance to the hegemonic strength of the power that underpins that order. Following India's nuclear tests in 1998, the U.S. had two options: continuing to believe the Indian nuclear genie could be put back, or harnessing India's evident strategic weight for its own geopolitical aims before that power grows too immense or is harnessed by others like Europe or China. The U.S. has chosen the latter option, and the joint statement released by President George W. Bush and Prime Minister Manmohan Singh on July 18 is the most dramatic textual manifestation of what Washington is attempting to do

London Police's Mossad-style Execution of a 'Suspect'

From Globalresearch.
Short, but I agree completely.

Thursday, July 28, 2005

The Yuan Yawn,0,5383489.story?coll=la-news-comment-editorials

How important was the Yuan devaluation really? Maybe not that important, according to this LA Times editorial, but we may have to wait a few decades.

Why the Saudi envoy really went home (?)

The Saudi ruling family has tried to convince the world that everything is just as it should be inside the kingdom in the two months since the ailing King Fahd was hospitalized with chronic pneumonia.

But the resignation this week of Prince Bandar, the Saudi ambassador to Washington for 22 years, and the announcement that he will be replaced by the current London ambassador, Prince Turki al-Faisal, heightens speculation that an announcement of the king's death is imminent. Bandar's dramatic return to Riyadh will allow him to jostle for position when Crown Prince Abdullah becomes king.

The long-anticipated death of Fahd has given the al-Saud plenty of time to plan for the consequences, and the immediate succession of Abdullah is unlikely to be controversial. But subsequent successions are unlikely to be so smooth.

Wednesday, July 27, 2005

Why Kansas?

The incomparable Thomas Frank discusses his new book "What's the Matter With Kansas (which I highly recommend) over at TPM Cafe. Check it out.

Tuesday, July 26, 2005

Inaction in Darfur

One Year After Declaring It Genocide, U.S. Congress Still Yet to Act to Protect Darfur's Citizens, Groups Charge
by Abid Aslam

WASHINGTON - Congress has done little to protect lives in Darfur in the year since it declared, unanimously, that mass killings there amounted to genocide, a leading U.S.-based advocacy group has charged amid an upsurge in violence in the western Sudanese region.

''Legislative action on Darfur has failed to build on the strong statement of bipartisan support'' shown on July 22, 2004, when Congress issued its declaration, said Salih Booker, executive director at Africa Action.

''Congress has focused on sanctions and divestment, which are insufficient to stop genocide, and it has let the [U.S.] administration off the hook for its appalling apathy on this crisis,'' said Booker. His organization has led calls for urgent multinational intervention to quell fighting that has killed some 400,000 and driven more than half the region's 5.5 million people from their homes and villages over the past three years, according to estimates from U.N. agencies and advocacy groups.

On Sunday, Sudan's army and rebels accused each other of fresh attacks on villages and convoys starting last Friday. Secretary of State Condoleezza Rice, on a visit to Sudan last week, urged the government to end the violence.

However, U.S.-Sudanese intelligence cooperation in what the White House calls its ''war on terror'' and prospects for peace in war-torn southern Sudan dominated Rice's talks with President Omar Hassan Ahmad al-Bashir and senior government officials.

The meetings also were clouded by a scuffle between U.S. journalists and Sudanese security personnel.

Many U.S. lawmakers have traveled to Darfur over the past year and congressional appropriations have yielded ''important humanitarian assistance and financial support'' for African peacekeepers deployed in the western Sudanese region.

But ''congressional leadership has failed to exert strong pressure on the Bush administration to take urgent action at the international level on the most immediate priority--protecting the people of Darfur,'' Africa Action said in a statement.

The organization gave credit for last July's congressional declaration to the Congressional Black Caucus, which, in addition to pushing fellow legislators, joined Africa Action in gathering more than 30,000 signatures on a petition calling on then-Secretary of State Powell to acknowledge the genocide in Darfur.

''The political pressure generated by Congress and thousands of Americans in that petition, plus the overwhelming evidence on the ground, left the administration with no alternative but to declare genocide was taking place in Darfur,'' Africa Action said.

The group now is gathering signatures on a message to President George W. Bush demanding urgent action to stop the genocide. It plans to submit the new petition to the White House on Sep. 9, one year after the administration officially recognized as genocide what was happening in Darfur.

The death toll will exceed one million people by the end of the year unless bold steps are taken to rein in the conflict between rebel groups of African descent and Arab militias that the regime in Khartoum stands accused of arming and abetting, Africa Action warned. It has urged Washington to push for the deployment of an international peacekeeping force and has demanded that Africa Union peacekeepers be given a political mandate to intervene in the fighting to protect civilians.

The fighting started over rebels' claims that the Sudanese government had deliberately neglected Darfur, starving it of basic services and development money. It has been compounded by competition for control of local oil, gas, and mineral resources.

Even as government and rebel forces implement a peace process in the country's south, the Khartoum regime appears to be girding for new violence in eastern Sudan, where local populations also are rebelling against the government, according to Africa Action.

In 2000, the group was among the first to warn of what it then saw as an impending crisis in Darfur.

Separately, anti-genocide activists are pressing U.S. television networks to increase coverage of the Darfur situation, described by the United Nations as the world's worst humanitarian crisis.

The campaign -- run by the American Progress Action Fund and the Genocide Intervention Fund -- asks Americans to send a message to networks to ''be a witness'' to what the U.S. government has termed genocide in Darfur.

''Genocide is the ultimate crime against humanity and a government-backed genocide is unfolding in the Darfur region of the Sudan. As the horror in Darfur continues, our major television news networks are largely missing in action,'' campaign organizers said.

They said they hoped increased coverage would move voters to exert pressure on elected officials.

''Television has told us stories of important human brutality before, and Americans have responded by demanding action from our elected representatives,'' the campaign said, citing examples including the civil rights struggles of the 1950s and 1960s and the Ethiopian famine of the 1980s.

Last year, the ABC, CBS, and NBC network nightly newscasts aired a total of only 26 minutes on genocide and fighting in Sudan, the Tyndall Report found. ABC devoted 18 minutes to Darfur coverage, NBC five and CBS only three. By contrast, lifestyle doyenne Martha Stewart's legal woes received 130 minutes of nightly news coverage.

Christopher Cox nomination

From tompaine

South America’s New Militarism

From Narconews:

"Several months ago, an official Brazilian commission visited Vietnam. With the goal of “sharing information about resistance doctrine,” the commission composed of colonels and lieutenant-colonels visited Hanoi, Ho Chi Min City (formerly Saigon), and the Cu Chi Province, where 250 kilometers (150 miles) of underground tunnels constructed during the war with the United States still remain. On the Brazilian army’s webpage, Gen. Claudio Barbosa Figuereido, head of the Amazon Military Command, asserts that Brazil will face actions similar to those that have taken place in Vietnam, and now in Iraq, should the Amazon come into conflict:

The resistance strategy does not differ much from guerrilla warfare, and it is an option the army will not hesitate to adopt facing a confrontation with another country or group of countries with greater economic and military power.” He added, “The jungle itself should serve as an ally in combating the invader.”1 The news had little impact on the media, but it demonstrates that Brazil’s armed forces have their own strategic plans and that they see the United States as a potential military enemy."

Iraqi constitution and women

From msnbc:

"Most worrying for women's groups has been the section on civil rights, which some believe would significantly roll back women's rights under a 1959 civil law enacted by a secular regime.

In the copy obtained by the AP on Monday, Article 19 of the second chapter says "the followers of any religion or sect are free to choose their civil status according to their religious or sectarian beliefs."

Shiite Muslim leaders have pushed for a stronger role for Islam in civil law but women's groups argue that could base legal interpretations on stricter religious lines that are less favorable to women."

Ivens on AFL-CIO battle

Very interesting article. I'm not sure whether I agree that CWC should be supported over the AFL-CIO. I just don't know enough about the situation.
Of course, any labor experts (or anyone else for that matter) are welcome to post their thoughts...

"Both sides are slugging hard in this fight but are still talking and negotiating, too -- they realize a split can only weaken labor in the short run. This is not so much a left-versus-right fight as it's old strategy versus new -- restructuring labor in ways that make more sense for a de-industrializing economy. Pretty much everyone who supports labor has friends on both sides. I'm supporting Stern and the CWC because the AFL is way too much about protecting turf."

See this editorial from the Washington Post as well:

and from the Nation:

Pentagon: Terrorists infiltrating Iraqi police force

Uhh...this isn't good.

"Inducting criminals into the [Iraqi police] is a continual concern," the report says, quoted by AP news agency.

"Even more troubling is infiltration by intending terrorists or insurgents. There is sufficient evidence to conclude that such persons indeed are among the ranks of the [police]."

The report adds that coalition personnel are ineffective as recruiters, and focus on quantity rather than quality.

"There is a perception that training programmes have produced 'cannon fodder' - numbers of nominal policemen incapable of defending themselves, let alone the Iraqi public," it says.

New Name for 'War on Terror' Reflects Wider U.S. Campaign

From NY Times
WASHINGTON, July 25 - The Bush administration is retooling its slogan for the fight against Al Qaeda and other terrorist groups, pushing the idea that the long-term struggle is as much an ideological battle as a military mission, senior administration and military officials said Monday.

In recent speeches and news conferences, Defense Secretary Donald H. Rumsfeld and the nation's senior military officer have spoken of "a global struggle against violent extremism" rather than "the global war on terror," which had been the catchphrase of choice. Administration officials say that phrase may have outlived its usefulness, because it focused attention solely, and incorrectly, on the military campaign.

Gen. Richard B. Myers, chairman of the Joint Chiefs of Staff, told the National Press Club on Monday that he had "objected to the use of the term 'war on terrorism' before, because if you call it a war, then you think of people in uniform as being the solution." He said the threat instead should be defined as violent extremists, with the recognition that "terror is the method they use."

Although the military is heavily engaged in the mission now, he said, future efforts require "all instruments of our national power, all instruments of the international communities' national power." The solution is "more diplomatic, more economic, more political than it is military," he concluded.

Administration and Pentagon officials say the revamped campaign has grown out of meetings of President Bush's senior national security advisers that began in January, and it reflects the evolution in Mr. Bush's own thinking nearly four years after the Sept. 11 attacks.

Mr. Rumsfeld spoke in the new terms on Friday when he addressed an audience in Annapolis, Md., for the retirement ceremony of Adm. Vern Clark as chief of naval operations. Mr. Rumsfeld described America's efforts as it "wages the global struggle against the enemies of freedom, the enemies of civilization."

The shifting language is one of the most public changes in the administration's strategy to battle Al Qaeda and its affiliates, and it tracks closely with Mr. Bush's recent speeches emphasizing freedom, democracy and the worldwide clash of ideas.

"It is more than just a military war on terror," Steven J. Hadley, the national security adviser, said in a telephone interview. "It's broader than that. It's a global struggle against extremism. We need to dispute both the gloomy vision and offer a positive alternative."

The language shifts also come at a time when Mr. Bush, with a new appointment for one of his most trusted aides, Karen Hughes, is trying to bolster the State Department's efforts at public diplomacy.

Lawrence Di Rita, Mr. Rumsfeld's spokesman, said the shift in language "is not a shift in thinking, but a continuation of the immediate post-9/11 approach."

"The president then said we were going to use all the means of national power and influence to defeat this enemy," Mr. Di Rita said. "We must continue to be more expansive than what the public is understandably focused on now: the military actions in Afghanistan and Iraq."

By emphasizing to the public that the effort is not only military, the administration may also be trying to reassure those in uniform who have begun complaining that only members of the armed forces are being asked to sacrifice for the effort.

New opinion polls show that the American public is increasingly pessimistic about the mission in Iraq, with many doubting its link to the counterterrorism mission. So, a new emphasis on reminding the public of the broader, long-term threat to the United States may allow the administration to put into broader perspective the daily mayhem in Iraq and the American casualties.

Douglas J. Feith, the under secretary of defense for policy, said in an interview that if the nation's efforts were limited to "protecting the homeland and attacking and disrupting terrorist networks, you're on a treadmill that is likely to get faster and faster with time." The key to "ultimately winning the war," he said, "is addressing the ideological part of the war that deals with how the terrorists recruit and indoctrinate new terrorists."

And great commentary from Fred Kaplan at slate:

"It took four years for the president of the United States to realize that fighting terrorism has a political component? It took six months for his senior advisers to retool a slogan? We are witnessing that rare occasion when the phrase "I don't know whether to laugh or cry" can be uttered without lapsing into cliché."

Palestinian security forces in disarray (surprise)

According to the BBC:

An independent study of the Palestinian security forces in Gaza and the West Bank has concluded that they are weak, ill-equipped and divided.
It also says that the Palestinian Authority (PA) forces are overstaffed and outgunned by militant groups.

Monday, July 25, 2005

SCOTUS: The Roberts stonewall

via Dailykos

Supreme Court nominee John Roberts declined Monday to say why he was listed in a leadership directory of the Federalist Society and the White House said he has no recollection of belonging to the conservative group. The question of Roberts' membership in the society -- an influential organization of conservative lawyers and judges formed in the early 1980s to combat what its members said was growing liberalism on the bench -- emerged as a vexing issue at the start of another week of meetings for President Bush's nominee on Capitol Hill.
Although no Democrats have publicly threatened to filibuster his nomination, they have said they're concerned that not enough is known about Roberts' personal and legal views. Questions about where he stands on a range of issues, including abortion, likely will be front-line matters at his confirmation hearings later this summer.
Roberts, nominated by Bush last week to replace retiring Justice Sandra Day O'Connor, was asked by a reporter about the discrepancy during a morning get-acquainted meeting with Sen. Dianne Feinstein (D-CA). He smiled but didn't reply.
"I don't think he wants to take any questions," Feinstein interjected during the session with photographers and reporters that was part of the meeting in her office with the Supreme Court nominee

Iraq: on the road to civil war?

Great post from billmon.

Sunday, July 24, 2005

AFL-CIO breakup imminent?

From mydd:

Poll: Many seeing Iraq war hurting war on terror

WASHINGTON -- A growing number of Americans fear the war in Iraq is undermining the fight against terrorism and raising the risk of terrorist attacks in this country, a poll found.

Almost half, 47 percent, say the war in Iraq has hurt the fight against terrorism -- the highest number to say that since the war began in March 2003, according to the Pew Research Center for the People & the Press.

And about the same number, 45 percent, said soon after the first round of subway bombings in London that the war in Iraq was raising the risk of terrorism in this country. That's up from 36 percent last fall. [AP]

Saturday, July 23, 2005

Terror attacks in Egypt

From Middle East expert Juan Cole:

see also:

Friday, July 22, 2005

What is the war on terror costing us?

From BigPicture.

Roberts Family in Sunday best

Funny article from TBogg.

China's Currency Devaluation

NY Times

Thursday's statement from the People's Bank of China, announcing that the yuan is no longer pegged to the dollar, was terse and uninformative - you might say inscrutable. There's a good chance that this is simply a piece of theater designed to buy a few months' respite from protectionist pressures in the U.S. Congress.

Nonetheless, it could be the start of a process that will turn the world economy upside down - or, more accurately, right side up. That is, the free ride China has been giving America, in which the world's richest economy has been getting cheap loans from a country that is dynamic but still quite poor, may be coming to an end.

It's all about which way the capital is flowing.

Capital usually flows from mature, developed economies to less-developed economies on their way up. For example, a lot of America's growth in the 19th century was financed by investors from Britain, which was already industrialized.

A decade ago, before the world financial crisis of 1997-1998, capital movements seemed to fit the historic pattern, as funds flowed from Japan and Western nations to "emerging markets" in Asia and Latin America. But these days things are running in reverse: capital is flowing out of emerging markets, especially China, and into the United States.

This uphill flow isn't the result of private-sector decisions; it's the result of official policy. To keep China's currency from rising, the Chinese government has been buying up huge quantities of dollars and investing the proceeds in U.S. bonds.

One way to grasp how weird this policy is would be to think about what a comparable policy would look like in the United States, scaled up to match the size of our economy. It's as if last year the U.S. government invested $1 trillion of taxpayers' money in low-interest Japanese bonds, and this year looks set to invest an additional $1.5 trillion the same way.

Some economists think there is a deep rationale for this seemingly perverse policy. I think it's something the Chinese government stumbled into as it tried to protect itself from the 1997-1998 crisis, and it is reluctant to change because the Chinese economy has been doing well. That is, China's leaders don't want to mess with success.

But pressures against China's dollar purchases are building. By keeping the yuan down, China is feeding a trade surplus that is creating a growing political backlash in America and Europe. And China, which is still a poor country, is devoting a lot of resources to the accumulation of a basically useless pile of dollars instead of to higher living standards.

The question is what happens to us if the Chinese finally decide to stop acting so strangely.

An end to China's dollar-buying spree would lead to a sharp rise in the value of the yuan. It would probably also lead to a sharp fall in the value of the dollar relative to other major currencies, like the yen and the euro, which the Chinese haven't been buying on the same scale. This would help U.S. manufacturers by raising their competitors' costs.

But if the Chinese stopped buying all those U.S. bonds, interest rates would rise. This would be bad news for housing - maybe very bad news, if the interest rate rise burst the bubble.

In the long run, the economic effects of an end to China's dollar buying would even out. America would have more industrial workers and fewer real estate agents, more jobs in Michigan and fewer in Florida, leaving the overall level of employment pretty much unaffected. But as John Maynard Keynes pointed out, in the long run we are all dead.

In the short run, some people would win, but others would lose. And I suspect that the losers would greatly outnumber the winners.

And what about the strategic effects? Right now America is a superpower living on credit - something I don't think has happened since Philip II ruled Spain. What will happen to our stature if and when China takes away our credit card?

This story is still in its early days. On the first day of the new policy, the yuan rose only 2 percent, not enough to make any noticeable difference. But one of these days Chinese dollar purchases will trail off, and we'll find ourselves living in interesting times.

see also this atimes article:
and this article from billmon:

Thursday, July 21, 2005

Some more bad news on Roberts

From Thinkprogress.

"Though John Roberts’ views on privacy and reproductive rights are still unknown (like so much about the nominee), Roberts’ wife is a prominent anti-choice activist.
Jane Sullivan Roberts has extensive ties to the conservative group Feminists for Life. As late as 1998, Mrs. Roberts was the group’s Executive Vice President. In 2001, she was identified as the “FFL board counsel,” and in the Summer 2002 FFL quarterly, The American Feminist, Roberts is listed as a member of the “Elizabeth Cady Stanton Circle” of fundraisers, who have raised between $1,000-$2,499 for the organization."

John Roberts played a role in the great 2000 recount
and environmental groups are are concerned about some of his past rulings. . And radical anti-choice group Operation Rescue's press release on the nomination says it all:

In New Security Move, New York Police to Search Commuters' Bags

It's a brave new world...

NY Times:

New York City will begin tomorrow morning randomly checking bags at subway stations, commuter railways and on buses, officials announced today in the wake of the terrorist bombings in London.

This is the first time the city has undertaken such a security effort of this scale on the commuter transportation system.

"We will be instituting random searches of bags and packages as people enter the transit system," Police Commissioner Raymond W. Kelly, adding that the city is consulting with its attorneys to formulate a plan. "We're going to do it in a reasonable, common-sense way."

Mayor Michael R. Bloomberg and Mr. Kelly said that the focus of the searches will be the subway system, but that the Police Department would reserve the right to check passengers' bags on buses and ferries as well. Officials said they would take pains to avoid racial and ethnic profiling.

"We live in a world where sadly these types of security measures are necessary," Mr. Bloomberg said.

The announcement raised concerns from some quarters about protecting New Yorkers' constitutional right to privacy.

"The police can and should be aggressively investigating anyone they suspect is trying to bring explosives into the subway," said Christopher Dunn, associate legal director at the New York Civil Liberties Union. "However, random police searches of people without any suspicion of wrongdoing are contrary to our most basic constitutional values. This is a very troubling announcement."

The threat level for the city has been orange, the second highest. since the terrorist attacks at the World Trade Center on Sept. 11, 2001, but police officers have not previously searched the bags of mass transit passengers before - even after a firebombing on a subway station in Lower Manhattan in 1994, a deadly sarin gas attack in the Tokyo subway in 1995 and a foiled plot to bomb the subway in Brooklyn in 1997.

Bags are occasionally checked during large events, like the annual New Year's Eve celebration at Times Square. Bags have also been regularly checked since the World Trade Center attacks at museums and professional sports events.

Officials at the Metropolitan Transportation Authority said internal discussions about random checks had been going on for several weeks - before the bombings of subway trains and buses in London on July 7 and again today. No one is believed to have been killed in today's attacks in London, but the first series of bombings in that city killed 56 people and wounded 700 others.

"It was something that had been discussed for several weeks," M.T.A. spokesman Tom Kelly said in a telephone interview.

Police spokesman Paul Browne said that during a meeting at Police Headquarters this morning, police officials decided to start the random checks, which police officials have discussed periodically for the past three years.

"In light of what appeared to be the continuing nature of the attacks in London, the decision was made to move to this next step," Mr. Browne said.

M.T.A. officers will also carry out checks on commuter rail lines, including the Long Island Railway and Metro North.

Mr. Kelly acknowledged that the random searches were without precedent, but added that he hoped riders would not consider the actions an inconvenience.

"We're going to alert our passengers on the subways as well as the commuter rail lines that their packages are subject to inspection," he said. "It's a safety issue. People don't consider any measures that you take for safety to be an inconvenience. This is New York City."

Wednesday, July 20, 2005

The liberal disease

Two fantastic posts by Billmon here and here.

He's on the money as usual.

Pentagon develops new "ray gun" for use in Iraq

This is not a joke.

Scientists are questioning the safety of a "Star Wars"-style ray gun due to be deployed in Iraq for riot control next year.

The Active Denial System weapon, classified as “less lethal” by the Pentagon, fires a 95-gigahertz microwave beam at rioters to cause heating and intolerable pain in less than five seconds.

The idea is that people caught in the beam will rapidly try to move out of it and therefore break up the crowd

Wolf: Tough liberalism is the only response

Great editorial by Martin Wolf in the FT.

It is far easier to enumerate the challenges than find the solutions. But a tough-minded liberalism, in its European more than American sense, is the only answer. That was the solution proposed by the founders of the multilateral world order after the second world war. It remains the best solution today. We must agree, within reason, to differ. In essence, this means that we agree more on procedural norms than on substantive ones. Moreover, we enshrine those procedural norms within institutions.

This means multilateralism. The only alternatives are empires or the balance of power. Neither is a workable basis for international order in so interdependent and dangerous a world. The former is impossible at the global level. The latter is inherently unstable. International order can only be built on co-operation among the larger powers within a system of principles and rules that all share in making and to which all are committed. The attachment of the Bush administration to unilateralism is a huge strategic blunder. It leaves the US shorn of legitimacy, bereft of allies and desperately trying to impose order by force. This strategy is failing, as it was bound to do.

Roberts: political hack

From David Sirota.

But all this said, it looks like he will get confirmed. As John McCain says: Elections have consequences.

Roberts gives Bush "blank check" on civil liberties

From Slate:

"Roberts may indeed turn out to be a wise, thoughtful, and appealing justice. Tonight when Bush announced his nomination, Roberts talked about feeling humbled, which won him points on TV. But an opinion that the 50-year-old judge joined just last week in the case Hamdan v. Rumsfeld should be seriously troubling to anyone who values civil liberties. As a member of a three-judge panel on the D.C. federal court of appeals, Roberts signed on to a blank-check grant of power to the Bush administration to try suspected terrorists without basic due-process protections."

Roberts on Roe

Roberts Wrote the Roe v Wade Was "Wrongly Decided and Should be Overturned."

In 1990 while serving as the Deputy Solicitor General, Roberts coauthored a brief in the case of Rust v. Sullivan, "[w]e continue to believe that Roe was wrongly decided and should be overruled . . . [T]he Court's conclusion [] in Roe that there is a fundamental right to an abortion . . . find[s] no support in the text, structure, or history of the Constitution." [Brief for the Respondent, Rust v. Sullivan, 1989 U.S. Briefs 1391 (1990).]

Roberts Wrote Amicus Brief in Support of Radical Anti-Choice Group.

While serving as Deputy Solicitor General, Roberts authored an amicus curiae brief in the Supreme Court in the case of Bray v. Alexandria Women's Health Clinic. Roberts filed the brief in support of the radical anti-choice group, Operation Rescue that had blocked access to woman's health care clinics. Roberts wrote that the protestors had not amounted to the discrimination of women "even though only women can have abortions." [Brief for the United States as Amicus Curiae Supporting Petitioners, Bray v. Alexandria Women's Health Clinic, 1990 U.S. Briefs 985 (1991)]

Tuesday, July 19, 2005

PR firms ghostwriting articles for EPA

Very dodgy indeed...from NYTimes
Public Relations Campaign for Research Office at E.P.A. Includes Ghostwriting Articles

WASHINGTON, July 17 - The Office of Research and Development at the Environmental Protection Agency is seeking outside public relations consultants, to be paid up to $5 million over five years, to polish its Web site, organize focus groups on how to buff the office's image and ghostwrite articles "for publication in scholarly journals and magazines."

The strategy, laid out in a May 26 exploratory proposal notice and further defined in two recently awarded public relations contracts totaling $150,000, includes writing and placing "good stories" about the E.P.A.'s research office in consumer and trade publications.

The contracts were awarded just months after the Bush administration came under scrutiny for its public relations policies. In some cases payments were made to columnists, including Armstrong Williams, who promoted the federal education law known as No Child Left Behind and received an undisclosed $240,000. In January, President Bush publicly abandoned this practice.

The governmentwide public relations strategies, however, continue to include the preparation of TV-ready news reports on government policies.

An E.P.A. spokeswoman said over the weekend that the effort to raise the profile of the agency's research had a worthwhile goal: calling attention to the work of 1,900 scientists and staff members. Noting that the office's annual budget is $600 million, the spokeswoman, Eryn Witcher, said, "We would like to use less than 1 percent of that to make information accessible to the public."

Three similar contracts - one of which was abandoned, the agency said - and the broader $5 million proposal were provided to The New York Times by the environmental group Public Employees for Environmental Responsibility. Its director, Jeff Ruch, said he had received them from an agency employee who believed that research money was being inappropriately diverted to a public relations campaign.

"The idea that they would take limited science dollars and spend them on P.R. is not only ill advised, it's just plain stupid," Mr. Ruch said in an interview.

Ms. Witcher responded: "It's not spending money on communications at the expense of research but rather in support of it. This allows the results of E.P.A. research to be shared with the general public."

While the scope of the exploratory proposal is new, Ms. Witcher said, the two smaller contracts "are standard. It's standard to get more help with skills that folks don't have. It's very common throughout the entire federal government."

One of the smaller contracts asks the contractor to "develop feature article research and strategy" and to "write the strategy to support a new unit that will be identifying feature story ideas, creating slant, identifying consumer magazines to target and polishing the final article."

That contract, for feature articles, was awarded to JDG Communications of Falls Church, Va., for $65,692.62, Ms. Witcher said.

The second smaller contract was also awarded to JDG Communications, for $85,829.06. It calls on the contractor to develop two "perception specific indicators" that "must show whether public relations efforts to create awareness and improve the reputation of E.P.A.'s research and development, its labs and its top-quality scientists has favorably influenced public perception."

The more extensive and expensive plan seeks help from public relations agencies to, among other things, "provide research, writing and editing of Office of Research and Development articles for publications in scholarly journals and magazines."

Donald Kennedy, the editor of Science magazine and a former head of the Food and Drug Administration, said in a telephone interview on Saturday that he found the idea of public relations firms ghostwriting for government scientists "appalling."

"If we knew that it had been written by someone who was not a scientist and submitted as though it were the work of a scientist, we wouldn't take it," Mr. Kennedy said. "But it's conceivable that we wouldn't know, if it was carefully constructed."

He added that the practice of putting public relations polish on scientific work has already been practiced by industry. "We had seen it coming in the pharmaceutical industry and were sort of wary about it," he said. "The idea that a government agency would feel the necessity to do this is doubly troubling."

Speaking of ghostwriting, Mr. Kennedy said: "If the ghostwriting is the kind of ghostwriting that most of the good mentors I knew did with Ph.D. students on first paper, it could be a good thing. But I sincerely doubt if any for-profit P.R. firm hired in the interest of improving a scientific publication is going to be the right person to do that."

The contract for assessing the office's image states that the public relations research data "will also be used to show E.P.A.'s relative position with its competitors." The contract's list of competitors included the National Institute of Environmental Health Sciences, the National Institutes of Health, the National Aeronautics and Space Administration, private industry and academia.

Mr. Ruch, of Public Employees for Environmental Responsibility, suggested that the notion of a government science agency having competitors might reflect an increasing push across the government to solicit outside support, often from industry, for federal scientific research.

But Ms. Witcher of the environmental agency rejected that hypothesis, saying that the other federal agencies mentioned in that contract were not thought of as competitors. "They are looking at other federal agencies that also do science and research to see how they are communicating to the public," she said.

As for the issue of ghostwriting for journals, she said: "Nothing's been done. Nothing's been awarded. What they envisioned is looking at this very technical" material presented by scientists and making it accessible to laymen. The ghostwriters, should they ever be hired, she said, "can't make up the material. They are taking scientists' work and making it more understandable."

FBI spying on war protesters (COINTEL Part II)

See here and here.

"The Federal Bureau of Investigation (FBI) has amassed at least 3,500 pages of internal documents from political protest groups in what the targets say amounts to political surveillance of some of President George W. Bush's leading critics."

Sachs recommends Africa not to engage with trade negotiations

Jeffrey Sachs, a top economic adviser to U.N. Secretary General Kofi Annan, said that existing tariffs meant cocoa-producing countries such as Ghana were unable to export chocolate to Europe and had to remain exporters of cocoa, used in making chocolate. European tariffs on raw material are lower than tariffs on final product.


Poor nations say subsidies in rich nations cause artificially low international prices and hurt farmers in developing countries because rich country producers are able to "dump" their cheap cotton on the world market.

Vioxx alert

How corporate execs can still send emails like these post-Enron is beyond me.

Merck & Co.'s marketing team targeted doctors viewed as unfriendly toward Vioxx to bring them into the fold, neutralize or discredit them, the plaintiff's lawyer in the nation's first Vioxx-related lawsuit to go to trial alleged Tuesday.

Houston litigator Mark Lanier questioned Nancy Santanello, head of Merck's epidemiology department, about an internal list of 36 doctors identified as "physicians to neutralize" in an e-mail circulated two months after the popular painkiller went on the market in 1999.

"Attached is the complete list of 36 physicians to neutralize with background information and recommended tactics. You will notice that some have already been 'neutralized,' " the e-mail said. It also said a previous e-mail had a subset of the 36 physicians "we would like to get involved in Merck clinical research" and that the e-mail's recipient should "be aware of our most challenging (and also most vocal) national and regional physicians."


Santanello is Merck's corporate face among the company's team of lawyers and continued absorbing verbal punches from Lanier Monday regarding the ethics of Merck's marketing and commitment to safe drugs.

Lanier pressed her about written recommendations to gain each doctor's support for Vioxx. In one case, the document said, "Show me the money" and then noted Merck had provided him with $25,000 to support a program to examine treatment of arthritis. In another case, the document said "discredit" next to the name of a doctor allegedly deemed unwilling to be swayed.

On Monday Santanello testified that an in-house training game for Vioxx sales representatives dubbed "Dodge Ball" wasn't about learning to dodge questions from doctors about the drug's safety.

Monday, July 18, 2005

G8: Africa's New Best Friends

From Monbiot:

"Just as Gordon Brown's "moral crusade" encourages us to forget the armed crusade he financed, the state-sponsored rebranding of the companies working in Africa prompts us to forget what Shell has been doing in Nigeria, what Barclays and Anglo American and De Beers have done in South Africa, and what British American Tobacco has done just about everywhere. From now on, the G8 would like us to believe, these companies will be Africa's best friends. In the name of making poverty history, the G8 has given a new, multi-headed East India Company a mandate to govern the continent."

Iran & Iraq busy mending fences


Iranian President Mohamed Khatami yesterday hailed a “turning point” in relations with Baghdad as Iraqi Prime Minister Ibrahim al-Jaafari made a historic visit to Tehran aimed at strengthening ties after decades of enmity . . . Jaafari, who took refuge in Iran during the rule of Saddam Hussain, visited the tomb of Iran’s revolutionary leader Ayatollah Khomeini yesterday, and paid homage by laying a wreath of flowers.

It would be interesting to see what kind of reaction al-Jaafari's little Tehran tete-a-tete would cause here in Great Satan Central, if it got 1/20th the coverage of Karl Rove's pimply ass. How would the folks back home feel if they knew their sons and daughters were getting limbs blown off so that Iraqi politicians could jaunt off to Tehran and say warm and fuzzy things about the crazy old man who gave us the Iranian hostage crisis?

And what kind of surrealist cover story would the GOP propaganda machine come up with to convince the Fox News audience that fighting and dying to keep Khomeini lovers in power is really a good thing?

Out of control Morgan Stanley pays millions to fired execs

Corporate governance at its finest. Mack the knife back at Morgan Stanley.

Hersh: Iraq Elections: Fraud and influence from the US

From Hersch:

Les Campbell, the regional director of the N.D.I. for the Middle East and North Africa, told me that he immediately realized “how deep the American desire to do something to help Allawi was.” Campbell acknowledged that he and his colleagues had kept up a running dispute with Warrick. At first, it seemed that the N.G.O.s had won, and the forty million dollars was given in grants for the N.G.O.s to help plan and monitor the election. But the pressure from the Administration to provide direct support for specific parties was unrelenting, and Warrick’s idea didn’t go away. As the campaign progressed, Campbell said, “It became clear that Allawi and his coalition had huge resources, although nothing was flowing through normal channels. He had very professional and very sophisticated media help and saturation television coverage.”

The focus on Allawi, Campbell said, blinded the White House to some of the realities on the ground. “The Administration was backing the wrong parties in Iraq,” he said. “We told them, ‘The parties you like are going to get creamed.’ They didn’t believe it.”

Counting the Dead in Iraq

See here and here for excellent articles.

Reich: Balance Sheets Still Unbalanced

The SEC studied 200 companies, including America's hundred largest, and found their pension plans underfunded by about $86 billion. But on their financial statements, these companies showed net pension assets of $91 billion, which they used to pump up their balance sheets.

The maneuver has led to some whoppers. United Airlines projected its pension fund would earn $740 million back in 2000, making the company look profitable. In fact, United’s pension fund gained only $21 million. If the company had used this real figure it would have shown an overall operating loss. Two years later, of course, United filed for bankruptcy. And now it's ended its pension fund, $10 billion in the hole.

FT states the obvious about the future of oil

FT editorial: (login carter71, rocket 88)

"In spite of delays to flagship energy projects and long-term supply warnings from Saudi Arabia - the world's largest oil supplier - the current escalation in oil prices should be a temporary phenomenon. Complacency, however, would be misplaced: Saudi officials are warning that in about 10 to 15 years' time the Organisation of the Petroleum Exporting Countries will be unable to meet projected demand. Awareness of high oil prices among consumers should be exploited by policymakers, who need to seize the opportunity to introduce politically painful measures promoting energy efficiency."

McNamara on US Nuclear Policy

Robert McNamaran in Poreign Policy:

"Today, the United States has deployed approximately 4,500 strategic, offensive nuclear warheads. Russia has roughly 3,800. The strategic forces of Britain, France, and China are considerably smaller, with 200–400 nuclear weapons in each state’s arsenal. The new nuclear states of Pakistan and India have fewer than 100 weapons each. North Korea now claims to have developed nuclear weapons, and U.S. intelligence agencies estimate that Pyongyang has enough fissile material for 2–8 bombs.

How destructive are these weapons? The average U.S. warhead has a destructive power 20 times that of the Hiroshima bomb. Of the 8,000 active or operational U.S. warheads, 2,000 are on hair-trigger alert, ready to be launched on 15 minutes’ warning. How are these weapons to be used? The United States has never endorsed the policy of “no first use,” not during my seven years as secretary or since. We have been and remain prepared to initiate the use of nuclear weapons—by the decision of one person, the president—against either a nuclear or nonnuclear enemy whenever we believe it is in our interest to do so. For decades, U.S. nuclear forces have been sufficiently strong to absorb a first strike and then inflict “unacceptable” damage on an opponent. This has been and (so long as we face a nuclear-armed, potential adversary) must continue to be the foundation of our nuclear deterrent."

SCO meeting in July: Cutting out the US

From atimes:

"The overall strategic aim of the alliance for Beijing and Moscow is curbing Washington's influence in Central Asia to establish a joint sphere of influence there. For Beijing, the most important goal is to get a lock on the considerable energy resources of the region, but it also seeks markets for its goods, outlets for investment and collaboration against Islamist movements. Moscow has leagued with Beijing to restore some of its influence over its "near abroad". The regimes of the Central Asian states want support for their survival against opposition movements, economic development assistance and increased trade and investment."

also peep this:

"Meanwhile, neoconservatives, Bush administration officials, some members of Congress and (unfortunately) a few labor-connected liberals are making a big deal of CNOOC’s Unocal bid. For perspective, let’s recall that Unocal is the company that did more to support the Taliban than any other U.S. entity, courting those Islamic radicals in search of a pipeline, oil and gas deal in central Asia—and hiring various malleable U.S. strategists to support the Taliban on its behalf, including incoming U.S. ambassador to Iraq, Zalmay Khalilzad. It’s hard to imagine anything that China could do with Unocal that would do more damage to U.S. interests than Unocal has already done. Still, the outcry goes on, most recently during a congressional hearing at which Jim Woolsey, the former CIA director, and Frank Gaffney, the neocon-linked military strategist, railed against China. (CNOOC, by the way, is partly owned by Shell Oil, which bought a big chunk of the mostly state-owned firm when it conducted a public stock offering in 2002.)

According to the U.S. Energy Information Administration, road transportation in China will be the driving force for that country’s enormous oil appetite in the next two decades, noting that “the Chinese passenger car market grew tenfold between 1990 and 2000.” By 2025, says EIA, China’s oil demand will reach nearly 13 million barrels of oil per day. (Saudi Arabia’s entire output is only about 8 million barrels a day.) To meet such demand, China is searching everywhere, from Sudan to Venezuela to Central Asia. Iran and China are making oil deals, too. But by invading and occupying Iraq, the United States has pretty much locked up the most easily expanded source of oil in the world; Iraq, which manages to eke out about 2 million barrels a day, can produce six to eight times that much oil if it made sufficient investments in production facilities. Quite a prize, Iraq—if Washington can hold onto it. No wonder various neoconservative world hegemonists consider talk of an Iraq exit strategy to be treasonous."

Sunday, July 17, 2005

Civil War at AFL-CIO

From BusinessWeek:

"McEntee believes labor can thrive only by maximizing its political strength, while Stern thinks unions must make a massive recruitment push even if they can't elect sympathetic public officials. It's true, as critics charge, that Stern himself has turned the SEIU into the country's largest union primarily by enrolling new public-sector members. The ambitious leader hasn't, they point out, mounted the kind of ground-floor challenge to private-sector employers that he calls for publicly. Even so, Stern insists that given the growing clout of global corporations, unions have no choice but to bulk up and adopt a private-sector growth strategy -- a tangibly different take than McEntee's politics-and-public-sector approach.

The situation has striking parallels with 1930s debates over organizing factory workers, who craft unions all but ignored. That led dissidents to start the Congress of Industrial Organizations, which eventually broke off from the American Federation of Labor. The two remained at odds until they finally merged, forming the AFL-CIO in 1955. Unless labor's chieftains find a way to reconcile, history may be about to repeat itself."

Interview with Tariq Ali

Ali gives his perspective on US interventions in Latin America.

Chile's 'Private' Pensions and the Future of Social Security

A few months old, and as important an issue as ever...

"Many of those advocating privatization of the Social Security system have pointed to the "success" of Chile in privatizing its pension system.

While such advocates highlight high investment returns for some workers, they ignore the downside for most of the population, which as a recent CBS report explained, includes the fact that nearly half of Chile's workforce are either self-employed or seasonal workers who rarely declare income, pay taxes or contribute to their pensions. These people have little to retire on, other than the government's guaranteed payment of $150 a month."

Some good news..Costco in the news

July 17, 2005
How Costco Became the Anti-Wal-Mart
NY Times

JIM SINEGAL, the chief executive of Costco Wholesale, the nation's fifth-largest retailer, had all the enthusiasm of an 8-year-old in a candy store as he tore open the container of one of his favorite new products: granola snack mix. "You got to try this; it's delicious," he said. "And just $9.99 for 38 ounces."

Some 60 feet away, inside Costco's cavernous warehouse store here in the company's hometown, Mr. Sinegal became positively exuberant about the 87-inch-long Natuzzi brown leather sofas. "This is just $799.99," he said. "It's terrific quality. Most other places you'd have to pay $1,500, even $2,000."

But the pièce de résistance, the item he most wanted to crow about, was Costco's private-label pinpoint cotton dress shirts. "Look, these are just $12.99," he said, while lifting a crisp blue button-down. "At Nordstrom or Macy's, this is a $45, $50 shirt."

Combining high quality with stunningly low prices, the shirts appeal to upscale customers - and epitomize why some retail analysts say Mr. Sinegal just might be America's shrewdest merchant since Sam Walton.

But not everyone is happy with Costco's business strategy. Some Wall Street analysts assert that Mr. Sinegal is overly generous not only to Costco's customers but to its workers as well.

Costco's average pay, for example, is $17 an hour, 42 percent higher than its fiercest rival, Sam's Club. And Costco's health plan makes those at many other retailers look Scroogish. One analyst, Bill Dreher of Deutsche Bank, complained last year that at Costco "it's better to be an employee or a customer than a shareholder."

Mr. Sinegal begs to differ. He rejects Wall Street's assumption that to succeed in discount retailing, companies must pay poorly and skimp on benefits, or must ratchet up prices to meet Wall Street's profit demands.

Good wages and benefits are why Costco has extremely low rates of turnover and theft by employees, he said. And Costco's customers, who are more affluent than other warehouse store shoppers, stay loyal because they like that low prices do not come at the workers' expense. "This is not altruistic," he said. "This is good business."

He also dismisses calls to increase Costco's product markups. Mr. Sinegal, who has been in the retailing business for more than a half-century, said that heeding Wall Street's advice to raise some prices would bring Costco's downfall.

"When I started, Sears, Roebuck was the Costco of the country, but they allowed someone else to come in under them," he said. "We don't want to be one of the casualties. We don't want to turn around and say, 'We got so fancy we've raised our prices,' and all of a sudden a new competitor comes in and beats our prices."

At Costco, one of Mr. Sinegal's cardinal rules is that no branded item can be marked up by more than 14 percent, and no private-label item by more than 15 percent. In contrast, supermarkets generally mark up merchandise by 25 percent, and department stores by 50 percent or more.

"They could probably get more money for a lot of items they sell," said Ed Weller, a retailing analyst at ThinkEquity.

But Mr. Sinegal warned that if Costco increased markups to 16 or 18 percent, the company might slip down a dangerous slope and lose discipline in minimizing costs and prices.

Mr. Sinegal, whose father was a coal miner and steelworker, gave a simple explanation. "On Wall Street, they're in the business of making money between now and next Thursday," he said. "I don't say that with any bitterness, but we can't take that view. We want to build a company that will still be here 50 and 60 years from now."

IF shareholders mind Mr. Sinegal's philosophy, it is not obvious: Costco's stock price has risen more than 10 percent in the last 12 months, while Wal-Mart's has slipped 5 percent. Costco shares sell for almost 23 times expected earnings; at Wal-Mart the multiple is about 19.Mr. Dreher said Costco's share price was so high because so many people love the company. "It's a cult stock," he said.

Emme Kozloff, an analyst at Sanford C. Bernstein & Company, faulted Mr. Sinegal as being too generous to employees, noting that when analysts complained that Costco's workers were paying just 4 percent toward their health costs, he raised that percentage only to 8 percent, when the retail average is 25 percent.

"He has been too benevolent," she said. "He's right that a happy employee is a productive long-term employee, but he could force employees to pick up a little more of the burden."

Mr. Sinegal says he pays attention to analysts' advice because it enforces a healthy discipline, but he has largely shunned Wall Street pressure to be less generous to his workers.

"When Jim talks to us about setting wages and benefits, he doesn't want us to be better than everyone else, he wants us to be demonstrably better," said John Matthews, Costco's senior vice president for human resources.

With his ferocious attention to detail and price, Mr. Sinegal has made Costco the nation's leading warehouse retailer, with about half of the market, compared with 40 percent for the No. 2, Sam's Club. But Sam's is not a typical runner-up: it is part of the Wal-Mart empire, which, with $288 billion in sales last year, dwarfs Costco.

But it is the customer, more than the competition, that keeps Mr. Sinegal's attention. "We're very good merchants, and we offer value," he said. "The traditional retailer will say: 'I'm selling this for $10. I wonder whether I can get $10.50 or $11.' We say: 'We're selling it for $9. How do we get it down to $8?' We understand that our members don't come and shop with us because of the fancy window displays or the Santa Claus or the piano player. They come and shop with us because we offer great values."

Costco was founded with a single store in Seattle in 1983; it now has 457 stores, mostly in the United States, but also in Canada, Britain, South Korea, Taiwan and Japan. Wal-Mart, by contrast, had 642 Sam's Clubs in the United States and abroad as of Jan. 31.Costco's profit rose 22 percent last year, to $882 million, on sales of $47.1 billion. In the United States, its stores average $121 million in sales annually, far more than the $70 million for Sam's Clubs. And the average household income of Costco customers is $74,000 - with 31 percent earning over $100,000.

One reason the company has risen to the top and stayed there is that Mr. Sinegal relentlessly refines his model of the warehouse store - the bare-bones, cement-floor retailing space where shoppers pay a membership fee to choose from a limited number of products in large quantities at deep discounts. Costco has 44.6 million members, with households paying $45 a year and small businesses paying $100.

A typical Costco store stocks 4,000 types of items, including perhaps just four toothpaste brands, while a Wal-Mart typically stocks more than 100,000 types of items and may carry 60 sizes and brands of toothpastes. Narrowing the number of options increases the sales volume of each, allowing Costco to squeeze deeper and deeper bulk discounts from suppliers.

"He's a zealot on low prices," Ms. Kozloff said. "He's very reticent about finagling with his model."

Despite Costco's impressive record, Mr. Sinegal's salary is just $350,000, although he also received a $200,000 bonus last year. That puts him at less than 10 percent of many other chief executives, though Costco ranks 29th in revenue among all American companies.

"I've been very well rewarded," said Mr. Sinegal, who is worth more than $150 million thanks to his Costco stock holdings. "I just think that if you're going to try to run an organization that's very cost-conscious, then you can't have those disparities. Having an individual who is making 100 or 200 or 300 times more than the average person working on the floor is wrong."

There is little love lost between Wal-Mart and Costco. Wal-Mart, for example, boasts that its Sam's Club division has the lowest prices of any retailer. Mr. Sinegal emphatically dismissed that assertion with a one-word barnyard epithet. Sam's might make the case that its ketchup is cheaper than Costco's, he said, "but you can't compare Hunt's ketchup with Heinz ketchup."

Still, Costco is feeling the heat from Sam's Club. When Sam's began to pare prices aggressively several years ago, Costco had to shave its prices - and its already thin profit margins - ever further.

"Sam's Club has dramatically improved its operation and improved the quality of their merchandise," said Mr. Dreher, the Deutsche Bank analyst. "Using their buying power together with Wal-Mart's, it forces Costco to be very sharp on their prices."

Mr. Sinegal's elbows can be sharp as well. As most suppliers well know, his gruff charm is not what lets him sell goods at rock-bottom prices - it's his fearsome toughness, which he rarely shows in public. He often warns suppliers not to offer other retailers lower prices than Costco gets.

When a frozen-food supplier mistakenly sent Costco an invoice meant for Wal-Mart, he discovered that Wal-Mart was getting a better price. "We have not brought that supplier back," Mr. Sinegal said.

He has to be flinty, he said, because the competition is so fierce. "This is not the Little Sisters of the Poor," he said. "We have to be competitive in the toughest marketplace in the world against the biggest competitor in the world. We cannot afford to be timid."

Nor can he afford to let personal relationships get in his way. Tim Rose, Costco's senior vice president for food merchandising, recalled a time when Starbucks did not pass along savings from a drop in coffee bean prices. Though he is a friend of the Starbucks chairman, Howard Schultz, Mr. Sinegal warned he would remove Starbucks coffee from his stores unless it cut its prices.

Starbucks relented.

"Howard said, 'Who do you think you are? The price police?' " Mr. Rose recalled, adding that Mr. Sinegal replied emphatically that he was.

If Mr. Sinegal feels proprietary about warehouse stores, it is for good reason. He was present at the birth of the concept, in 1954. He was 18, a student at San Diego Community College, when a friend asked him to help unload mattresses for a month-old discount store called Fed-Mart.

What he thought would be a one-day job became a career. He rose to executive vice president for merchandising and became a protégé of Fed-Mart's chairman, Sol Price, who is credited with inventing the idea of high-volume warehouse stores that sell a limited number of products.

Mr. Price sold Fed-Mart to a German retailer in 1975 and was fired soon after. Mr. Sinegal then left and helped Mr. Price start a new warehouse company, Price Club. Its huge success led others to enter the business: Wal-Mart started Sam's Club, Zayre's started BJ's Wholesale Club and a Seattle entrepreneur tapped Mr. Sinegal to help him found Costco.

Costco has used Mr. Price's formula: sell a limited number of items, keep costs down, rely on high volume, pay workers well, have customers buy memberships and aim for upscale shoppers, especially small-business owners. In addition, don't advertise - that saves 2 percent a year in costs. Costco and Price Club merged in 1993.

"Jim has done a very good job in balancing the interests of the shareholders, the employees, the customers and the managers," said Mr. Price, now 89 and retired. "Most companies tilt too much one way or the other."

Mr. Sinegal, who is 69 but looks a decade younger, also delights in not tilting Costco too far into cheap merchandise, even at his warehouse stores. He loves the idea of the "treasure hunt" - occasional, temporary specials on exotic cheeses, Coach bags, plasma screen televisions, Waterford crystal, French wine and $5,000 necklaces - scattered among staples like toilet paper by the case and institutional-size jars of mayonnaise.

The treasure hunts, Mr. Sinegal says, create a sense of excitement and customer loyalty.

This knack for seeing things in a new way also explains Costco's approach to retaining employees as well as shoppers. Besides paying considerably more than competitors, for example, Costco contributes generously to its workers' 401(k) plans, starting with 3 percent of salary the second year and rising to 9 percent after 25 years.

ITS insurance plans absorb most dental expenses, and part-time workers are eligible for health insurance after just six months on the job, compared with two years at Wal-Mart. Eighty-five percent of Costco's workers have health insurance, compared with less than half at Wal-Mart and Target.

Costco also has not shut out unions, as some of its rivals have. The Teamsters union, for example, represents 14,000 of Costco's 113,000 employees. "They gave us the best agreement of any retailer in the country," said Rome Aloise, the union's chief negotiator with Costco. The contract guarantees employees at least 25 hours of work a week, he said, and requires that at least half of a store's workers be full time.

Workers seem enthusiastic. Beth Wagner, 36, used to manage a Rite Aid drugstore, where she made $24,000 a year and paid nearly $4,000 a year for health coverage. She quit five years ago to work at Costco, taking a cut in pay. She started at $10.50 an hour - $22,000 a year - but now makes $18 an hour as a receiving clerk. With annual bonuses, her income is about $40,000.

"I want to retire here," she said. "I love it here."

Bush stands by Rove

From the Observer (UK)

"It was a question the White House press corps once believed unthinkable. Has President George W Bush lost confidence in his political guru, Karl Rove? If simply posing the question was a surprise last week, the answer - or, more accurately, the lack of one - was an even greater shock.

To out a CIA operative for political reasons is just unbelievable. This hurts the intelligence community which is supposed to be protecting us. I hope Rove rots in hell.

When Bush faced reporters at the White House last Wednesday, he dodged questions on Rove. Seated as ever, just behind his President, Rove himself was tight-lipped and pale. The Rove-Bush partnership has changed the face of American politics, propelling Bush from Texas to the White House. Not for nothing is Rove known as 'boy genius' to Republican friends and 'Bush's brain' to Democrat enemies. Now that is under threat.

The so-called 'Valerie Plame affair' has the Bush administration in a panic. An investigation into whether White House officials deliberately blew the cover of a CIA agent in an attempt to hit out at a critic of the Iraq war has Rove firmly in its sights."

Miller Time


"At this point, Judy would have to be deeper into the Vicodan than Rush Limbaugh to not be very worried.

But worried about what? Doing an extra six months in prison? Having a criminal conviction on her wrap sheet?

If Miller really is protecting a source who gave her accurate information upon an absolute guarantee of confidentiality, she could wear that conviction as a badge of honor -- even if it's Karl Rove she's protecting.

If, on the other hand, Miller is protecting a source who lied to her -- say, by telling her that Valerie Plame "authorized" Wilson's trip to Niger -- then she deserves to be held in contempt, morally as well as legally. And if Judy revealed Plame's status as a NOC to anyone not legally authorized to know it, she deserves a nice long stretch in a federal pen for espionage.

Finally, if Plame herself was a confidential source of Miller's, and Judy betrayed her to the Rovians, then she doesn't deserve prison -- she deserves to be drawn and quartered, at least from the perspective of journalistic ethics.

But which is it? Well, there's the rub. There is no way to tell without compelling Miller to testify. And compelling Miller to testify could force her to burn a legitimate confidential source in front of a grand jury. Catch-22."

Iraq, 7/17/05

The government raised the death toll from Saturday's attack in the town south of the Iraqi capital to "more than 90," making it the second deadliest single terrorist bombing since the overthrow of Saddam Hussein in April 2003. More than 150 people were wounded.

Chomsky: History of State and Corporations

Chomsky interview, May 2005

"... in the Anglo-American system the courts, not the legislators, gave the corporate entities extraordinary rights. They gave them the rights of persons, meaning they have the right of freedom of speech, they can propagandize freely, advertise, they run elections and so on, and they have the protection from inspection by the state authorities which means that just as the police technically can't go into your apartment and read your papers, the public can't find out what's going on inside these totalitarian entities. They're mostly unaccountable to the public. Of course they are not real persons, they are immortal, they are collectivist legal entities. In fact they are very similar to other organizational forms we know and are one of the forms of totalitarianism that developed in the 20th century. The others were destroyed, these still exist, and later they were required by law to be what we would call pathological in the case of real human beings.

So they are required legally to maximize power and profit no matter what effect that has on anyone else. They are required to externalize costs, so if they can get the public or future generations to pay their costs, they are required to do that. It would be illegal for corporate executives to do anything else."

Cashing in on cons

Interesting In These Times article, written undercover, dealing with the emerging "prison industrial complex"

"Taking advantage of the unprecedented prison boom of the late ’80s and ’90s, prison administrators, politicians, lobbying firms and corporate boards created a prison-industrial complex in which everyone benefits except the prisoners.
In 1980, federal and state prisons incarcerated 316,000 people. In 1990, that number had grown to 740,000, not including jail populations. By 2000, the number of prisoners had surpassed 1.3 million. Prison construction accompanied this growth: More than 1,000 prisons are now in operation, and each new prison comes with a bevy of contracts for construction and services."


"The real draw of the ACA conference was the exhibitors, who had two full days to showcase their wares. The exhibition hall corridors had been given names like “Corrections Corporation of America Court,” “Verizon Expressway,” “Western Union Avenue,” and “The GEO Court Lounge,” where one could sip Starbucks and eat free glazed doughnuts.
Here, the discussions were all about increasing profit margins, lessening risks and liabilities, winning court cases, and new, improved techniques and technologies for managing the most troublesome inmates. In the glaringly bright exhibit hall, attendees buzzed around booths, snapping up freebies and admiring the latest in prison technology.
Exhibitors hawked restraint chairs, tracking systems, drug-detection tools, suicide-prevention smocks and prison facility insurance. Dozens of companies competed to sell private health care systems, pharmacy plans, commissary services and surveillance systems. Of particular interest were behavior modification programs, juvenile boot camps, and Internet and phone services. Interest in the latter brought in the “big boys” of telecommunications: Sprint, AT&T, NEC, MCI Communications, Verizon, Global Tel*Link and Qwest. And why not? Prison phone contracts that overcharge prisoners and their families generate an estimated $1 billion a year."

Saturday, July 16, 2005

What Uncle Sam Really wants

Here's a link the entire book online:

"A study of the inter-American system published by the Royal Institute of International Affairs in London concluded that, while the US pays lip service to democracy, the real commitment is to "private, capitalist enterprise." When the rights of investors are threatened, democracy has to go; if these rights are safeguarded, killers and torturers will do just fine.

Parliamentary governments were barred or overthrown, with US support and sometimes direct intervention, in Iran in 1953, in Guatemala in 1954 (and in 1963, when Kennedy backed a military coup to prevent the threat of return to democracy), in the Dominican Republic in 1963 and 1965, in Brazil in 1964, in Chile in 1973 and often elsewhere. Our policies have been very much the same in El Salvador and in many other places across the globe.

The methods are not very pretty. What the US-run contra forces did in Nicaragua, or what our terrorist proxies do in El Salvador or Guatemala, isn't only ordinary killing. A major element is brutal, sadistic torture -- beating infants against rocks, hanging women by their feet with their breasts cut off and the skin of their face peeled back so that they'll bleed to death, chopping people's heads off and putting them on stakes. The point is to crush independent nationalism and popular forces that might bring about meaningful democracy. "