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And, yes, I DO take it personally: 02/15/2009 - 02/22/2009
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Saturday, February 21, 2009

New book - "The Future of Afghanistan" [UPDATE]


if i seem a little obsessed with afghanistan lately, it's probably because i'm sitting here in kabul and am out and about at least twice a day, driving back and forth across the city, going to the office, attending meetings, and occasionally, going out to dinner...


yesterday, i was invited by an afghan colleague to a panel discussion sponsored by the american institute of afghanistan studies and the fulbright alumni association of afghanistan... the purpose was to introduce and discuss a new book called "The Future of Afghanistan"... the colleague who invited me is a former fulbright scholar and i am helping him apply to a u.s. mba program... the discussion was interesting but even more so was the discussion afterward with my colleague on how he feels about listening to americans expounding on the future of his country...


here's a little synopsis of the book...

The authors of The Future of Afghanistan say insecurity, whether due to insurgency, terrorism, regional meddling, or warlordism undermines the potential for progress on all other fronts in Afghanistan, and that success is impossible without competent Afghan security institutions. However, within the international coalition, the goal of establishing internal Afghan-focused security was subordinate to the goal of destroying the international terrorist networks there that were orchestrating a campaign of spectacular attacks. Yet stable Afghan governance and security forces are required to create a viable long-term alternative to the Taliban. Efforts to create a capable and legitimate government, including the development of Afghan security forces, were underfunded and poorly orchestrated.

Of equal importance is the legitimacy of the Afghan government itself and its will and capacity to implement the rule of law. The report argues that U.S. expectations for Afghan democracy were dangerously overblown during the Bush administration, wrongly believing that "democracy would be the panacea to resolving the myriad challenges facing Afghanistan following such a protracted period of conflict." In the long run democratic governance is key to stability, yet it takes considerable time and investment to create the scale and strength of institutions required to maintain constitutional democracy.

The future of Afghanistan also depends upon the ability of its national and local leaders to organize for a common, positive purpose. The international community and the Afghan government must engage the capacity of the broader Afghan society, making them the engine of progress rather than unwilling subjects of rapid change. The new formula is one where the central government continues to ensure security and justice on the national level and uses its position to channel international assistance to promote the rule of law and development at the community level. Such an approach would bring together capacity from four places—local communities, civil society (such as NGOs), Afghan government, and international donors— where none alone would be sufficient.

Finally, The U.S. must work with Afghanistan's neighbors to create a regional environment conducive to Afghanistan's success. Regional competition continues to undermine Afghanistan's long-term prospects, whereas renewed regional cooperation could provide a significant security and economic boost in Afghanistan, Pakistan and the region as a whole.

What is needed now is a coherent strategy to bridge the gap between conflict and democracy, between burkas and women's equality, between tribal councils and a Supreme Court—the next decade must be about building those bridges. The first step is to realign joint priorities and expectations. The international community will be much better off with a right-sized, Afghan-appropriate vision that can actually be implemented than a grand international confection that continues to wilt under the glaring realities of the day, the authors say.

you can download the book for free online from the u.s. institute of peace... (warning: the download is a pdf and, for some reason, the link isn't working... if you're interested, shoot the institute of peace an email and tell 'em to fix the damn thing...)


a timely article from today's wapo...
The additional 17,000 troops the Obama administration is preparing to send to Afghanistan will face both an aggressive, well-armed Taliban insurgency and an unarmed but equally daunting foe: public opinion.

In more than a dozen interviews across the capital this week, Afghans said that instead of helping to defeat the insurgents and quell the violence that has engulfed their country, more foreign troops will exacerbate the problem.

The comments echoed a recent survey by the BBC and ABC News that found that although 90 percent of Afghans oppose the Taliban, less than half view the United States favorably, a sharp drop from a year ago, and a quarter say attacks on U.S. troops can be justified.

In the interviews, most people said they did not like the Taliban and were terrified of the suicide attacks that often occur in public places. Yet they also spoke with anger and suspicion about the U.S.-led coalition forces -- questioning their motives and bitterly complaining about civilian casualties, home invasions and other alleged abuses they suffer at the hands of the once-welcomed American and NATO troops.

i've said it before and i'll say it again... civilian casualties are unacceptable and don't give me any of this horseshit about "collateral damage"... i've about had it with reading things like this...
An investigation into a missile strike carried out by US-led forces in Afghanistan earlier this week has found that 13 civilians were among 16 people killed, the US military has said.

The military made the admission on Saturday, after originally saying that 15 opposition fighters had been killed in the strike in the Gozara district of Herat province.

Afghan officials insisted all along that six women and two children were among those killed.

at least they're admitting this one rather than stonewalling it like usual...

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Friday, February 20, 2009

Fred Kagan is complicit in war crimes and should be tried accordingly

read the horror that issues from this man's mouth...

first this...

KAGAN: The interesting thing is that when we were fighting those battles and doing that damage [in Iraq], on the whole the Iraqis were not bitching about collateral damage. You had nothing like the degree of upset about how many civilians were being injured and how much damage was being done to the infrastructure in Iraq at a much higher level of destruction than you have in Afghanistan at a much lower level of destruction.

and then this...
KAGAN: ... Afghans don’t fight in their cities. Iraqis do. For good or ill, Iraqis expect to fight in their cities. That’s where the insurgents dug in, Saddam Hussein planned to dig in to the cities or lure us into an urban fight. It’s sort of understood that the battlefield is going to be there, that doesn’t mean that they don’t complain about it, that doesn’t mean that it’s not a problem, but it does mean that when the insurgents dig in and we root them out, the Iraqis don’t on the whole say “darn it, you shouldn’t have blown up all of our houses.” They sort of accept that. Afghans do not.

i'm sitting here in the capital city of a country that has endured and continues to endure horrific and unacceptable civilian casualties, a high percentage of them children and this son-of-a-bitch, fred kagan, has the unutterable gall to talk about how iraqis ACCEPT civilian casualties and afghans DON'T...! jeezus fricking kee-rist on a pogo stick...! can you name me one single person, mom, dad, brother, sister, grandparent, uncle, aunt, cousin, niece, nephew, friend, or acquaintance that you can imagine in your wildest dreams in any country of any region of the world telling you that, of course, THEY CAN ACCEPT CIVILIAN CASUALTIES...!

fred kagan is an evil man...

(thanks to think progress... the video and audio transcripts are available on the aei website here...)

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The Dow is at 7345 at noon today [UPDATE]

it's currently 9:30 p.m. friday here in kabul... i'll have to wait to see what happened the rest of the day when i wake up in the morning... ain't lookin' good...
At midday, the Dow is down 121 to 7,345. The Standard & Poor's 500 index is down 13 at 766, and the Nasdaq composite index is down 8 at 1,435.

[UPDATE, 5:30 a.m., Saturday, 21 February, Kabul]

i see the dow closed at 7,365.67, down 100.28...

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Argentina's ESMA becomes UNESCO Human Rights Center


ESMA [Escuela de Mecánica de la Armada - the Navy Mechanics
School] was a fully functioning naval school during the time that
it was being used as a torture camp. The Officer's quarters, which
was located only a few hundred feet from a busy street in Buenos
Aires and is visible to pedestrian traffic, was the main building
used to house and torture the victims.

i posted on this back in october 2007... the esma building just so happens to be about five blocks from where i live in barrio nuñez... a week ago saturday, i walked past it on the way back from parque de los niños and paseo de la costa...
The grounds of the largest clandestine detention and torture centre in Buenos Aires during Argentina's "dirty war" crackdown on dissent are now a United Nations human rights centre.

Nearly 5,000 political prisoners are estimated to have passed through the main building of the former Navy Mechanics' School during the 1976-83 dictatorship. After being tortured with racks, electrical prods and other devices, an estimated 90 percent of the prisoners were executed, joining the 13,000 who were killed or made "to disappear." Rights groups put the number closer to 30,000.

The site became emblematic of the human rights violations committed by the region's military dictatorships during the 1970s and 1980s.

On Friday, Argentine President Cristina Fernandez de Kirchner and the head of UNESCO inaugurated the International Centre for the Promotion of Human Rights on the grounds of the former school.

"The centre is a symbol of the contribution of Latin America to the promotion of human rights on a global level," UNESCO Director-General Koichiro Matsuura said, referring to the ongoing trials and investigations of former leaders of the region's military dictatorships.

from my october 2007 post...
The Naval Mechanics School (ESMA), located in Buenos Aires, is one of nearly 400 concentration camps/torture centers that operated in Argentina during the dictatorship. It is estimated that over 5,000 people were interrogated and tortured at ESMA and only 150 survived. ESMA had specially equipped detention and torture rooms as well as "birthing" rooms. Many of the children brought to ESMA and other concentration camps with their parents, or babies born at these facilities, were either tortured and ultimately killed in an attempt to extract information from their mother, or were seized and given to military families. In recent years, efforts initiated by the Grandmothers of the Plaza de Mayo have been successful in confirming the "true" identity (using DNA testing) of about 85 of roughly 400 children who were "disappeared."

it was an ugly and horrifying time, and, to this day, few argentines really want to talk about it...

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Yikes...! Dow closes on Thursday at 7465.95

i guess we're going to have to hold our breath and see what's going to happen today...

Dow Jones Industrial Average ... 7,465.95 ... -89.68

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Wednesday, February 18, 2009

What I would do in Afghanistan if I had a magic wand


a friend asked me to comment on yesterday's news that obama is raising troop strength in afghanistan by 17,000...

OK - you're there and can see what's going on. What's your opinion? Obviously Bush and company really, really screwed things up over there. Do you think this will help if they start getting the contractors in line and take the graft out of the US companies doing business there?

i guess i had too much time on my hands because i offered up this rather lengthy response...
just because i'm here doesn't mean i'm any smarter than the average bear... however, here's what i think needs to happen...

- stop the civilian deaths and, if, despite all precautions, they happen anyway, eat humble pie, apologize all over the place, and make reparations, even IF you think they might have been hostile elements...

- lower the boom on the afghan government and force them to stop funneling money to their cronies... the afghan people ain't stupid... they can see what's happening and are sick and tired of it...

- stop awarding massive amounts of money to u.s. contractors who either pocket most of it or waste it on showcase projects that do nothing except make somebody in d.c. feel good...

- refocus development efforts (such as i'm involved in) to actually build the capacity of the afghans to do for themselves instead of allowing the ex-pats to huff and puff and pretend we know it all and that the afghans are nothing but a bunch of dirtballs...

- if the u.s. is going to support someone for afghan president in the upcoming election, pick someone who is squeaky clean and can command the respect of the afghan people as well as hold his own in the world community... the average afghan desperately needs someone they think is looking after THEIR interests AND the good of the country as a whole...

- the troops, existing and incremental, need to be focused almost 100% on helping the folks in the countryside get re-established in being able to make a living... the farmers, goat and sheep herders have been devastated over 30 years of chaos, so that DOESN'T mean popping in out of the blue in choppers killing their poppy fields with herbicide and wiping out their only means of support... it means getting down in the dirt with them, helping them make a living out of raising and selling legitimate crops that will help feed the nation and reducing its dependence on imported foodstuffs from pakistan which is where most of the afghan food currently comes from...

- control the borders... besides insurgents coming in from pakistan, there are so many goods coming in uninspected and duty-free, it ain't funny... afghanistan could damn near become self-supporting just from customs duty enforcement alone, but because there are so many palms being greased up to and including those at the ministerial level in charge of customs duty enforcement, everyone just turns a blind eye...

- get cracking on developing cross-border trade and, yes, you idiots, this means with iran on the western side of the country... there are only two remotely accessible ports, karachi in pakistan and bandar abbas in iran... everything's now coming through karachi... also, build a railway spur from herat up to turkmenistan to open up access to the larger railway and road network through central asia east to china and west to the urals, eastern europe and beyond... build a decent relationship with uzbekistan so that the bridge across the river from mazar e sharif can be more than just decoration...

- go full-tilt boogie on infrastructure... kabul is a ruined city, almost more so than when the u.s. took over in late 2001/early 2002, and the rest of the country (with a few exceptions such as cities like jalalabad, herat and mazar e sharif) have never had infrastructure to begin with... i'm talking water, sanitation, electricity, roads, health care, schools, etc...

- get prices under control... the americans (in kabul, at least) have grossly distorted rents, wages, and prices of everything... when the project i work for is paying $15K a month, 3 months in advance, for ONE up-armored toyota suv, and $35K a month for one house that's used as the project office, you know things are out of control... i know an afghan woman who runs her own consulting company who had to hire someone from india to manage her office because she can't afford to hire an afghan... what's wrong with this picture...?

- the obama administration should plan to conduct monthly visits to afghanistan by administration higher-ups... that means the secdef, the sec'y of state, the special envoy, the vp and the prez hisself... message: we're paying attention, we care, we want to see what's happening on the ground, we're not afraid to come there...

you asked...

now, hell, i don't know if any of that makes sense or is even remotely possible but, hey, if i had a magic wand, that's what i'd do... whether it would make any difference or not is a whole 'nother question...

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The child scavangers of Kabul


what a tragedy... i see them every day all over the city...

from al jazeera...

Foreign leaders say the ultimate goal in Afghanistan is to improve the lives of ordinary people. For more than forty thousand children forced to survive by taking up work in Kabul, there's little evidence of anything actually improving.

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Tuesday, February 17, 2009

The transcript of Bill Moyers interview with Simon Johnson, former IMF chief economist

this is critical to a fuller understanding of just exactly what the hell is going on with these so-called "bailouts"...

courtesy of information clearing house...

High Noon: Geithner v. The American Oligarchs

Bill Moyers interviews former chief economist of the International Monetary Fund (IMF), MIT Sloan School of Management professor and senior fellow at the Peterson Institute for International Economics, Simon Johnson examines President Obama's plan for economic recovery.

BILL MOYERS: The battle is joined as they say — and here's the headline that framed it: "High Noon: Geithner v. The American Oligarchs." The headline is in one of the most informative new sites in the blogosphere called: . Here's the quote that grabbed me:

"There comes a time in every economic crisis, or more specifically, in every struggle to recover from a crisis, when someone steps up to the podium to promise the policies that — they say — will deliver you back to growth. The person has political support, a strong track record, and every incentive to enter the history books. But one nagging question remains. Can this person, your new economic strategist, really break with the vested elites that got you into this much trouble?"

And here's the man who asked that question. Simon Johnson is former chief economist at the International Monetary Fund. He now teaches global economics and management at MIT's Sloan School of Management and is a senior fellow of the Peterson Institute. He is co-founder of that website I quoted — — where he analyzes the global economic and financial crisis.

Welcome, Simon Johnson to the Journal.

SIMON JOHNSON: Nice to be here.

BILL MOYERS: What are you signaling with that headline, "Geithner vs. the American Oligarchs"?

SIMON JOHNSON: I think I'm signaling something a little bit shocking to Americans, and to myself, actually. Which is the situation we find ourselves in at this moment, this week, is very strongly reminiscent of the situations we've seen many times in other places.

But they're places we don't like to think of ourselves as being similar to. They're emerging markets. It's Russia or Indonesia or a Thailand type situation, or Korea. That's not comfortable. America is different. America is special. America is rich. And, yet, we've somehow find ourselves in the grip of the same sort of crisis and the same sort of oligarchs.

BILL MOYERS: Oligarchy is an un-American term, as you know. It means a government by a small number of people. We don't like to think of ourselves that way.

SIMON JOHNSON: It's a way of governing. As you said. It comes from, you know, a system they tried out in Greece and Athens from time to time. And it was actually an antithesis to democracy in that context.

But, exactly what you said, it's a small group with a lot of power. A lot of wealth. They don't necessarily - they're not necessarily always the names, the household names that spring to mind, in this kind of context. But they are the people who could pull the strings. Who have the influence. Who call the shots.

BILL MOYERS: Are you saying that the banking industry trumps the president, the Congress and the American government when it comes to this issue so crucial to the survival of American democracy?

SIMON JOHNSON: I don't know. I hope they don't trump it. But the signs that I see this week, the body language, the words, the op-eds, the testimony, the way they're treated by certain Congressional committees, it makes me feel very worried.

I have this feeling in my stomach that I felt in other countries, much poorer countries, countries that were headed into really difficult economic situation. When there's a small group of people who got you into a disaster, and who were still powerful. Disaster even made them more powerful. And you know you need to come in and break that power. And you can't. You're stuck.

BILL MOYERS: Both the "Wall Street Journal" and "The New York Times" reported this week that Obama's top two political aides, Rahm Emanuel and David Axelrod, have pushed for tougher action against the banks. But they didn't prevail. Obama apparently sided with Geithner and the Treasury Department in using a velvet glove.

SIMON JOHNSON: What I read from that is that there is an unnecessary and excessive deference to the experts, or the supposed experts.

And I think the view that a lot of people have in Washington - I live in Washington, I follow this very closely - the view is that you need to rely on the technocrats. And the technocrats are saying, "This is the way to go, and you mustn't be too tough on because banks, because that will have adverse consequences for credits, and for the economy, and for unemployment," and so on and so forth. Those technocrats, if that's what they're saying, are wrong. That is not the right way to deal with this crisis.

There are many find professionals at Treasury with great experience, who have spent their lives working on important issues related to the United States. What we face right now is not a typical U.S. issue. We face a crisis, and the president said this on Monday night, the president said, President Obama said, "We've never seen anything like this since the Great Depression."

Therefore, nobody working now, you know, has any firsthand experience. And he also said, "We may face what we call a lost decade." We've never seen that anywhere other than Japan in the 1990s, right?

And something for Treasury officials to really understand, and to really understand the alternatives - they're not, I mean, with all due respect to them, they're not the ultimate authority. I don't think they're the right people.

The correct people you should be asking this question to are people at the IMF. And I can tell you what they're saying is the policy that we seem to be perusing, of being nice to the banks, is a mistake. The powerful people are the insiders. They're the CEOs of these banks. They're the people who run these banks. They're the people who pay themselves the massive bonuses at the end of the last year. Now, those bonuses are not the essence of the problem, but they are a symptom of an arrogance, and a feeling of invincibility, that tells you a lot about the culture of those organizations, and the attitudes of the people who lead them.

BILL MOYERS: Geithner has hired as his chief-of-staff, the lobbyist from Goldman Sachs. The new deputy secretary of state was, until last year, a CEO of Citigroup. Another CFO from Citigroup is now assistant to the president, and deputy national security advisor for International Economic Affairs. And one of his deputies also came from Citigroup. One new member of the president's Economic Recovery Advisory Board comes from UBS, which is being investigated for helping rich clients evade taxes.

You're probably too young to remember that old song, "Sounds like the Mack the Knife is back in town." I mean, is that what you're talking about with this web of relationships?

SIMON JOHNSON: Absolutely. I don't think you have enough time on your show to go through the full list of people and all the positions they've taken. I'm sure these are good people. Don't get me wrong. These are find upstanding citizens who have a certain perspective, and a certain kind of interest, and they see the world a certain way.

And it's exactly a web of interest, I think, is what you said. And that's exactly the right way to think about it. That web of interest is not my interest, or your interest, or the interest of the taxpayer. It's the interest, first and foremost, of the financial industry in this country.

BILL MOYERS: Do you think that Obama understands how these guys play the game? Let me play you the recording of a conference call "Huffington Post" released this week. One of the top officials of Morgan Stanley is speaking to his colleagues. Here it is.

JAMES GORMAN: I'm going to turn to a topic that I suspect is near and dear to everybody's hearts, which is retention. There will be a retention award. Please do not call it a bonus, it is not a bonus it is an award. The award will be based on '08 full year production. Clearly it would have been cheaper to do it off '09 but we think it's the right thing to do and we've made that decision.

SIMON JOHNSON: What he's basically saying is business as usual. Go about your daily lives. Get the bonuses. Re-brand them as awards. But it really shows you the arrogance, and I think these people think that they've won. They think it's over. They think it's won. They think that we're going to pay out ten or 20 percent of GDP to basically make them whole. It's astonishing.

BILL MOYERS: Why wouldn't they believe that? I mean, when I watched the eight CEOs testify before Congress at the House Financial Services Committee earlier this week, I had just finished reading a report that almost every member of that Committee had received contributions from those banks last year. I mean in a way that's like paying the cop on the beat not to arrest you, right?

SIMON JOHNSON: I called up one of my friends on Capitol Hill after that testimony, and that session. I said, "What happened? This was your moment. Why did they pull their punches like that?" And my friend said, "They, the Committee members, know the bankers too well."

BILL MOYERS: Last year, the securities and investment industry made $146 million in campaign contributions. Commercial banks, another $34 million. I mean, American taxpayers don't have a flea's chance on a dog like that, do they?

SIMON JOHNSON: It a massive problem, obviously. And I do think, though, the good news there are people in the White House - I think the president himself, is aware of this broader issue. And, obviously, the campaign, the Obama campaign was very good at getting small contributions, and trying to minimize the impact of major donors like that.

But, at the same time, these people are throughout the system of government. They are very much at the forefront of the Treasury. The Treasury is apparently calling the shots on their economic policies. This is a decisive moment. Either you break the power or we're stuck for a long time with this arrangement.

BILL MOYERS: When Tim Geithner said, earlier in the week, that the American people have lost faith in some financial institutions and the government, did it occur to you that this was the same man who was president of the New York Fed through much of this debacle?

SIMON JOHNSON: I have no problem with poachers turning gamekeeper, right? So if you know where the bodies are buried maybe you can help us sort out the problem. And I did think the first three or four minutes of what Mr. Geithner said were very good.

As a definition of a problem, and pointing the finger clearly at the bankers, and saying that the government had been slow to react, and, of course, that included himself. I liked that. And then he started to talk about the specifics. And he said, "The compensation caps we've put in place, for the executives of these banks, are strong." And at that point I just fell out of my chair. That is not true. That is factually inaccurate, in my opinion.


SIMON JOHNSON: That this $500,000 limit, and deferred stock, is some kind of restriction on what they do? It's deferred stock, Bill. It's not restricted. You can get as much stock as you want, as soon as you pay back the government, you can cash out of that. That's one.

Second, you can, sorry to get technical, but reset the strike price. This is something you and your and your viewers, you need to hear this one out. Just look for these words, okay, follow them through the press. When you get into trouble, when your company goes down, and you have massive amounts of stock options that aren't worth much anymore, because the stock price has gone down, you say, "Oh, well, we're going to reset our option prices."

And, basically, it means that, at the end of the day, these people are going to walk away with tens if not hundreds of millions of dollars paid for by basically, insurance policy that you and I are providing.

Think of it like this, our taxpayer money is ensuring their bonuses. We're making sure that companies, that banks survive. And eventually, of course, the economy will turn around. Things will get better. The banks will be worth a lot of money. And they will cash out. And we will be paying higher taxes, we and our children, will be paying higher taxes so those people could have those bonuses. That's not fair. It's not acceptable. It's not even good economics.

BILL MOYERS: Are we chumps?

SIMON JOHNSON: We'll find out. Yes, we may be. Okay. It depends on how we play this politically. It depends on what our political system does. It depends, I think, on the level of reaction. The financial system is playing us for chumps, okay? The bankers think we're chumps. We'll find out. We have leadership that can handle this. We'll find out what they do.

BILL MOYERS: There was a moment in the hearings this week, when Senator Bernie Sanders, an independent, the independent senator from Vermont, almost lost his cool. Watch this.

SENATOR BERNARD SANDERS: In 2006 and 2007, Lloyd Blankfein, the CEO of Goldman Sachs, was the highest paid executive on Wall Street, making over 125 million in total compensation. Due to its risky investments, Goldman Sachs now has over 168 billion in total outstanding debt. It's laid off over 10 percent of its workforce. Late last year, the financial situation at Goldman was so dire that the taxpayers of this country provided Goldman Sachs with a $10 billion bailout.

Very simple question that I think the American people want to know. Yes or no, should Mr. Blankfein be fired from his job and new leadership be brought in?

SECRETARY GEITHNER: Senator, that's a judgment his board of directors have to make.

I want to say one thing which is very important. Everything we do going forward has to be judged against the impact we're going to have on the American people and the prospects for recovery. And every dollar we spend will have to be measured against the benefits we bring in terms of-

SENATOR SANDERS: Mr. Secretary, you're not answering my question. You have a person who made hundreds of millions for himself as he led his institution that helped cause a great financial crisis. We have put, as taxpayers, $10 billion to bail him out and we have no say about whether or not he should stay on the job?

SECRETARY GEITHNER: No, I didn't say that. I think there will be circumstances, as there have been already, where the government intervention will have to come with very tough conditions, including changes in management and leadership of institutions. And where we believe that makes sense, we will do that.

BILL MOYERS: Geithner says that's something "his" board of directors, the board of Goldman Sachs, will have to decide. But aren't we all ipso facto stock holders now?

SIMON JOHNSON: We should certainly have a big say over critical matters like this. Like the CEO. Because, two things. First of all, it's our money that kept these banks in business. Not just the treasury recapitalization money, that's relatively small.

It's the financial support provided by the Federal Reserve. Make no mistake about it, if the Federal Reserve hadn't stepped in late September, in dramatic fashion, to prop up organizations like Goldman Sachs, they would be out of business, okay?

It was our money that did that. The Federal Reserve acting on behalf of the American taxpayer. And secondly, Senator Sanders is exactly right. That a CEO, like Lloyd Blankfein, made mistakes, and led his company into deep trouble.

Now, other companies are in deeper trouble. His company was in deep trouble and had to be rescued at that moment. It's absolutely the right way to pose the question. And the answer to Senator Sanders' question is, in my opinion, yes. We should change the leadership of these major banks.

BILL MOYERS: And, yet, Secretary Geithner's chief-of-staff is the former lobbyist for Goldman Sachs. How - serious question - how do they make a dispassionate judgment about how to deal with Goldman Sachs when they're so intertwined with Goldman Sachs' mindset?

SIMON JOHNSON: I have no idea. Of course, the administration, the new administration, has a lot of rules about lobbying. And they have rules that basically say, I think, as understood the rules, when they were first presented, I was very impressed. They basically said, "We're not going to hire lobbyists into the administration. There has to be some sort of cooling off period."

BILL MOYERS: And the next day Obama exempted a number of people from that very rule that he had just proclaimed.

SIMON JOHNSON: Yes. It's a problem. It's a huge problem.

BILL MOYERS: So here's the trillion dollar question that I take from your blog, that I read at the beginning, quote, "Can this person," your new economic strategist, in this case Geithner, "really break with the vested elite that got you into this much trouble?" Have you seen any evidence this week that he's going to be tough with these guys?

SIMON JOHNSON: I'm trying to be positive. I'm trying to be supportive. I like the administration. I voted for the president. The answer to your question is, no, I haven't seen anything. But you know, perhaps next week I will. But right now, as we speak, I have a bad feeling in my stomach.

My intuition, from crises, from situations that have improved, the situations that got worse, my intuition is that this is going to get a lot worse. It's going to cost us a lot more money. And we are going down a long, dark, blind alley.

BILL MOYERS: Let's not leave our public in despair, here at end, Simon. I've read everything you wrote this week, and it comes down to this. We must break the power of the banks and their lobbies. How do we do that?

SIMON JOHNSON: I think it's quite straightforward, in technical or economic terms. At the same time I recognize it's very hard politically, okay? What you need to do is the stress test that, actually, Secretary Geithner outlined in his speech on Tuesday.

BILL MOYERS: Which is?

SIMON JOHNSON: That's where you go and you check the bank's books, and you say, okay, not only do we use market prices, not pretend prices, not what you wished things were worth, what they're really worth, okay, in the market today. We use that to value your loans and the securities that you have, your assets, right?

And we also assess what will happen to the value of the things you own if there's a severe recession. So that's the idea, it's a stress test, like when you go to see the doctor, they put you on a treadmill, and make you run to see how your heart is going to behave under stress.

So you're looking at how the bank's balance sheets will look under stress. And then you say to them, "This is our assessment of the amount of capital you need to cover your losses, and to stay in business, and be able to make loans, through what appears to be a severe recession."

And, as the president said, we may lose a decade. So we've got to be very hard headed, and all the officials forecasters are still too optimistic on that. This is the amount of capital you need. Now you have a month, or two, to raise this amount of capital privately.

And when this was done in Sweden, by the way, in the early 1990s, they did it to three big banks. One of the three was able to go to its shareholders, raise a lot more capital, and stay in business as a private bank, same shareholders. That's an option. Totally fine. However, the ones that can't raise the capital are in violation of the terms of their banking license, if you like.

We have no problem in this country shutting down small banks. In fact, the FDIC is world class at shutting down and managing the handover of deposits, for example, from small banks. They managed IndyMac, the closure of IndyMac, beautifully. People didn't lose touch with their money for even a moment. But they can't do it to big banks, because they don't have the political power. Nobody has the political will to do it.

So you need to take an FDIC-type process. You scale it up. You say, "You haven't raised the capital privately. The government is taking over your bank. You guys are out of business. Your bonuses are wiped out. Your golden parachutes are gone." Okay? Because the bank has failed.

This is a government-supervised bankruptcy process. It's called, in the terminology of the business, it's called an intervention. The bank is intervened. You don't go into Chapter 11 because in that's too messy. Too complicated. There's an intervention, you lose the right to operate as a bank. The FDIC takes you over. I think we agree, everyone agrees, we don't want the government to run banks in this country.

BILL MOYERS: Never done it before.

SIMON JOHNSON: Never done it before. It's not gone well anywhere in the world. And the idea of getting your money out of the bank being like visiting the DMV to get your driver's license, it's not appealing, okay?

That's not what we're going to do. That's not what the Swedes did. That's not the state of the art - it's not what the real banking experts are going to tell you to do. They're going to say, you set it up, you set up the government intervention, and there's various technical ways to do this, so that you re-privatize very quickly.

Now, it might take three months, it might take six months. It'll depend on the overall macro economy turning around. But there's a lot of private money out there. Let's call it private equity.

These people would like to come in and buy these re-privatized banks. You would attach antitrust provisions to this, so the banks are broken up as part of this transaction. Senator Sanders has a great saying. He says, "Any bank that is too big to fail is too big to exist."

And he's exactly right. So, in this transformation, you're bringing in private equity. You're using, I think this is, to me, the right idea, and what we've learned in our country, is you're using part of the powerful financial lobby against another part. You're using private equity, that would do very well in this, against the inbred insider big bankers. And you're doing this in a way so that the taxpayer decides who the new owners are.

The new owners come in and do a lot of the restructuring. They're going to fire all of these managers. I can honestly assure you that. They're going to put in new risk management systems. They're going to have to make the banks smaller. And the taxpayer is going to retain a substantial equity interest. So as these banks recover the value of our investment goes up. And that's how we get upside participation.

BILL MOYERS: So you're not talking about nationalization, are you?

SIMON JOHNSON: I'm talking about a scaled up FDIC intervention. I think we need the FDIC to be empowered. And to have the political support necessary to get this job done.

BILL MOYERS: Splitting this one powerful interest group into competing factions, and taking them on one by one.

SIMON JOHNSON: That is classic oligarchy breaking strategy. Now I do admit that once you've done that, you have to worry about the new oligarchs. That's why you're breaking up the banks. You don't want to just change the owners of banks that are too big to fail, because they'll be coming around in five years for another handout.

The structure or banking system, the concentration of power in big financial institutions has to change. There's a lot of appeal to FDR and what he did in the Great Depression.

I would go back to Teddy Roosevelt 100 years ago, and think about trust busting. Okay? Now, the banks don't violate existing antitrust laws. That's 'cause our antitrust laws are 100 years old and need to be changed, okay? We need to break them up for exactly the same reason that Rockefeller and the oil interests, standard oil, at the end of the 19th century, was too powerful, economically and politically. And it had to be broken up. And breaking it up was the right thing to do. That's where we are with the banks today.

BILL MOYERS: Simon Johnson, thank you for being with me on the Journal.

SIMON JOHNSON: My pleasure.

BILL MOYERS: And if you want to find out even more about how we got into this predicament, let me recommend a documentary running this Tuesday night on public television's premier investigative series, "Frontline." It's called "Inside the Meltdown."

NARRATOR: On September 16th, 2008, all around the world money stopped.

PAUL KRUGMAN: Basically we had a complete shutdown of the world capital markets.

SENATOR CHRISTOPHER DODD: Unless we act within days, the financial system will melt down.

MARK LANDLER: Forces have been unleashed that we couldn't control.

JON HILSENRATH: The entire investment banking model was blown up in a week.

NARRATOR: How did it happen?

BILL BAMBER: Regulators have basically been outgunned and outmanned.

NARRATOR:Who is responsible?

DAVID FABER: Oh my God, these guys don't know what they are doing.

NARRATOR: And what happens next?

SENATOR CHRISTOPHER DODD: It's the economic equivalence of 9/11.

and there you have it...

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Stock market plunges

i've said repeatedly, we are far from seeing the worst of this... and, not only haven't we seen the worst of it, the full scope of the disaster isn't being accurately reported... if we were getting the real picture, the bottom would fall out lickety-split...

(Click on graph for larger image)
The next wave of losses for the banking sector could be coming from Eastern Europe.

Worries about the deteriorating financial situation in countries like Romania and Hungary led to a huge sell-off on Tuesday that began overseas and crashed ashore on Wall Street.

Every sector sank, with financial stocks leading the way and energy companies falling on tumbling oil prices. Rattled investors rushed to buy safer investments like gold and Treasury debt.

The losses on Wall Street were part of a global wave of selling that dragged down stock markets from Tokyo to London and Frankfurt to Brazil, highlighting fears about how banks, automakers — entire countries — will fare in a deepening global downturn.

The news helped send the Dow Jones industrial average to nearly the same low that it hit amid the credit crisis last fall. The Dow fell 297.81 points, or 3.8 percent, to 7,552.60, which was almost the same as the 7,552.29 close for the Dow on Nov. 20.

something else i've said repeatedly: let's get on with it... the era of capitalist greed deserves to die and the sooner the better...

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Monday, February 16, 2009

Bigger than Madoff - "the greatest fraud in US history"

and we would be surprised by this because...?
In what could turn out to be the greatest fraud in US history, American authorities have started to investigate the alleged role of senior military officers in the misuse of $125bn (£88bn) in a US -directed effort to reconstruct Iraq after the fall of Saddam Hussein. The exact sum missing may never be clear, but a report by the US Special Inspector General for Iraq Reconstruction (SIGIR) suggests it may exceed $50bn, making it an even bigger theft than Bernard Madoff's notorious Ponzi scheme.

"I believe the real looting of Iraq after the invasion was by US officials and contractors, and not by people from the slums of Baghdad," said one US businessman active in Iraq since 2003.

In one case, auditors working for SIGIR discovered that $57.8m was sent in "pallet upon pallet of hundred-dollar bills" to the US comptroller for south-central Iraq, Robert J Stein Jr, who had himself photographed standing with the mound of money. He is among the few US officials who were in Iraq to be convicted of fraud and money-laundering.

Despite the vast sums expended on rebuilding by the US since 2003, there have been no cranes visible on the Baghdad skyline except those at work building a new US embassy and others rusting beside a half-built giant mosque that Saddam was constructing when he was overthrown. One of the few visible signs of government work on Baghdad's infrastructure is a tireless attention to planting palm trees and flowers in the centre strip between main roads. Those are then dug up and replanted a few months later.

Iraqi leaders are convinced that the theft or waste of huge sums of US and Iraqi government money could have happened only if senior US officials were themselves involved in the corruption. In 2004-05, the entire Iraq military procurement budget of $1.3bn was siphoned off from the Iraqi Defence Ministry in return for 28-year-old Soviet helicopters too obsolete to fly and armoured cars easily penetrated by rifle bullets. Iraqi officials were blamed for the theft, but US military officials were largely in control of the Defence Ministry at the time and must have been either highly negligent or participants in the fraud.

ya know, what really needs to come to light is that the kind of corruption described in the above article is not at all new... it's been going on for a long time... the news is that some of it is FINALLY coming in to public view...

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After having suffered more than a little at the hands of airlines

i can relate, and i'm probably not the only one...

here's a woman who missed her flight... after having worked for an airline, my guess is that she probably was one of those who simply didn't get her ass in gear in time to make the flight... however, i have to confess, after experiencing many years of flight delays and the incredible frustrations of having the departure time repeatedly revised every fifteen minutes, i have considered doing something similar...

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Climate change - between a rock and a hard place in Argentina


global warming or no global warming, it's clear that a lot of things about the climate are going nuts...

you've got the drought...

For months now, yellowed pastures, cracked soil and dead livestock have been the landscape of what otherwise are the most productive farming areas of Argentina, Brazil, Paraguay and Uruguay. Scientists say it is so far impossible to determine if the drought is a manifestation of climate change processes.

"Climate change cannot be characterised by one single event, but rather by a series over the long term," University of Buenos Aires climatologist Vicente Barros, member of the Intergovernmental Panel on Climate Change (IPCC), told Tierramérica.

Some experts believe the lack of rain could be related to the influence of La Niña, the cool phase of the cyclical climate event known as El Niño/Southern Oscillation, which changes the surface temperature of equatorial Pacific Ocean currents and affects the region's climate.

"La Niña is still very strong and the forecasting models aren't adjusted to reflect the disturbances it causes," agricultural engineer Eduardo Sierra, an Argentina climate expert, finds himself explaining to someone almost daily.

and then you've got this, all in the same region...

People look at debris after a massive mudslide in Tartagal, a small town
on Argentina's border with Bolivia, Tuesday, Feb. 10, 2009. Officials say
at least eight people are missing and more than 750 residents have been
evacuated after the massive mudslide Monday when heavy rains flooded
the main river that runs through the town and triggered landslides along

A massive mudslide set off by heavy downpours has swept away a railway bridge and swamped houses in the Argentine town of Tartagal.

At least two people were reported missing after the river running through the town broke its banks, flooding roads and triggering landslides.

Some buildings were submerged in up to 1.5m (5ft) of mud.

The heavy rains come as parts of Argentina are suffering their worst prolonged drought in decades.

Torrential downpours caused the River Tartagal to overflow, with floodwaters sweeping away vehicles and inundating roads.

Local authorities said the mudslide had destroyed a railway bridge, making access to the town, which lies on the border with Bolivia, all the more difficult.

The governor of Salta province, Juan Manuael Urtubey, said some 10,000 people had been affected by the mudslide and flooding.

make whatever argument you want, it's clear that, as lewis black says, "something is as-KEW...!"

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Sunday, February 15, 2009

The tragedy of Gaza continues


having spent three weeks in january in jordan, right across the border from israel, in a city that harbors palestine refugees dating back from the late 1940s, the thought of the children caught up in this is heartbreaking...

thanks to juan cole...

People walk amid debris on a street strewn with rubble from
buildings bombed during the current military incursion, in the
southern city of Rafah in the Gaza Strip.

A a girl waits her turn to fill water containers at a public safe
water tap in the southern city of Rafah, a few days after the
ceasefire was declared. Approximately 500,000 people have
no access to running water.

Gaza Children's Appeal

Life for children in the Gaza Strip continues to deteriorate. Shortages of electricity, fuel, safe water and sanitation are having a serious impact on the lives of women and children and the recent conflict is adding to their suffering.

The population of Gaza has now become totally dependent on humanitarian aid for its survival. There are shortages of foodstuffs including flour, rice, sugar, dairy products, milk, canned foods and fresh meats. Last year, 1.4 million Palestinians were estimated to be food insecure.

The health system is overwhelmed, having already been weakened by the 18 month blockade.

Utilities are barely functioning: the only electric power plant has shut down. At the moment, hospitals are relying on back-up generators. The breakdown of these generators would pose a serious risk to public health.

The water system provides running water just once every five to seven days. The sanitation system cannot treat sewage and is dumping 40 million litres of raw sewage into the sea daily.

to donate online, click here...

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Shocker...! Afghans to participate in a major U.S. policy review of Afghanistan...!


Afghanistan will send a team to the US to take part in a major policy review of the region, Afghan President Hamid Karzai has announced.

In a joint news conference with the new US envoy in the region, Richard Holbrooke, Mr Karzai said he was "very thankful" to be involved in the talks.

In recent weeks US officials have been critical of Mr Karzai's leadership.

US President Barack Obama, who regards Afghanistan as a priority, accused his government of being "very detached".

The BBC's Martin Patience, in Kabul, says Mr Karzai and Mr Holbrooke appeared keen to smooth over any apparent discord at the news conference on Sunday.

But our correspondent says it is widely thought that Mr Karzai is no longer popular in the White House - and it may take more than a news conference to change that perception.

ok, look... i'm sitting right here in kabul reading this slightly breathless bbc story about afghans ACTUALLY BEING INVOLVED in talks involving THEIR OWN FRIGGIN' COUNTRY...! WTF...!! the truly breathless news would be that they WOULDN'T...! on this, my first full day back in afghanistan on my third extended visit, i have had at least three conversations with afghans about the fact that, gosh and golly, it's THEIR GODDAM COUNTRY and that folks like me SHOULD BE HERE TO HELP THEM FIGURE HOW TO RUN IT THEMSELVES, not TELLING THEM WHAT TO DO AS THOUGH THEY SOMEHOW WORK FOR US...! goddamit, goddamit, goddamit...! the u.s. needs to pull its head out of its ass on this issue once and for all... WE DON'T RUN THE WORLD...!

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