Former budget office chiefs say 'something has to give'

A blue-ribbon panel that includes three former heads of the Congressional Budget Office is telling President Obama and the Democrat-controlled Congress that the federal deficit must be cut now or the national debt within about two generations will be 600 percent of the gross domestic product.

"The debt level of the United States is unsustainable, something has to give," said Rudolph Penner, former head of the CBO and co-chairman of a report issued last week by the National Research Council and the National Academy of Public Administration.

The report concludes federal deficit spending is so out of control that unless Obama and Democrat leaders on the Hill make changes now, debt in 2080 will be six times what the nation produces.

The alarm is being sounded just as the Obama administration is preparing to push his nationalized health care plan through Congress. It comes from a bipartisan group of top economic policy experts, including three former heads of the CBO, who warned existing entitlement programs including Medicare, Medicaid and Social Security already are creating a fiscal crisis for the nation without the addition of government-funded universal health care.

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WND MONEY

Forecast: Debt to dwarf GDP

Former budget office chiefs say 'something has to give'

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Posted: January 18, 2010
10:14 pm Eastern

By Jerome R. Corsi
© 2010 WorldNetDaily

President Obama

A blue-ribbon panel that includes three former heads of the Congressional Budget Office is telling President Obama and the Democrat-controlled Congress that the federal deficit must be cut now or the national debt within about two generations will be 600 percent of the gross domestic product.

"The debt level of the United States is unsustainable, something has to give," said Rudolph Penner, former head of the CBO and co-chairman of a report issued last week by the National Research Council and the National Academy of Public Administration.

The report concludes federal deficit spending is so out of control that unless Obama and Democrat leaders on the Hill make changes now, debt in 2080 will be six times what the nation produces.

The alarm is being sounded just as the Obama administration is preparing to push his nationalized health care plan through Congress. It comes from a bipartisan group of top economic policy experts, including three former heads of the CBO, who warned existing entitlement programs including Medicare, Medicaid and Social Security already are creating a fiscal crisis for the nation without the addition of government-funded universal health care.

(Story continues below)

"The fundamental problem is that we have these three very large programs – Medicare, Medicaid and Social Security – that … are growing faster than tax revenues and faster than the economy," Penner told WND.

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The result is "an unsustainable federal budget deficit" that Penner described as "ever onward and upward."

With the recession and the huge stimulus package added to the beginning of the baby boomers retiring, United States debt is already at 50 percent of gross domestic product, or GDP, and is projected to grow to 80 percent of GDP by 2019, according to Congressional Budget Office estimates of the Obama administration budget plans as they currently stand.

Studying the growth in three major entitlement programs – Medicare, Medicaid, and Social Security – the report, "Choosing the Nation's Fiscal Future," said spending was far outpacing tax revenue such that "any efforts to rein in future deficits must entail either large increases in taxes to support these programs or major restraints on their growth – or some combination of the two."

Unless action is taken immediately, the study warned, the U.S. "faces the risk of a disruptive fiscal crisis."

In an alarming chart, the study projected that federal debt would be more than seven times the nation's GDP in 75 years if no action is taken to constrain or offset the growth of Social Security, Medicare and Medicaid and if tax rates stay near their current level.

The report predicted a frightening fiscal future for the U.S. should the Obama administration and Congress fail to act.

"If remedial action is postponed for even a few years, a large and increasing federal debt will inevitably limit the nation's future wealth by reducing the growth of capital stock and of the economy," the panel advised. "It will also increase the nation's liabilities to investors abroad, who currently hold about one-half of the federal government's debt."

Increasing debt to GDP levels also causes problems with increased interest payments for U.S. taxpayers in the future who will be obligated to pay ever-rising costs just to finance current budget deficits.

"Increasing debt also may contribute to a loss of international and domestic investor confidence in the nation's economy, which would, in turn, lead to even higher interest rates, lower domestic investment, and a falling dollar."

The panel suggested four different solutions, varying the mix of entitlement program spending and tax increases in the policy alternatives:

1. Low Spending and Revenue. Tax revenues are held near their recent average level of 18 to 19 percent of GDP, and entitlement spending is constrained to 2 to 3 percentage points higher than revenues.
   
   "This path would require sharp reductions in projected growth rates for health and retirement programs, as well as reductions in the proportion of the economy's resources available for all other federal responsibilities."
   
   
2. High Spending and Revenue. Taxes and entitlement spending are increased substantially, with spending eventually reaching one-third of GDP.
   
   "Because this spending level is still less than under a continuation of current policies, it would require an eventual reduction in the rate of growth of health spending. It would, however, accommodate the spending needed to maintain currently scheduled Social Security benefits."
   
   
3. Intermediate Path No. 1. Tax revenues and spending rise gradually to about one-fourth of GDP and spending on the elderly population would be constrained to support only modest expansion of other federal spending.
   
   "The growth rates for Social Security Medicare, and Medicaid would be slower than under current policies. This path reflects the view that the government should make selective new public investments to promote economic growth, preserve the environment, and build for the future."
   
   
4. Intermediate Path No. 2 Tax revenues and spending would eventually rise to a little more than one-fourth of GDP.
   
   "Spending for health and retirement benefits for the elderly population would be slowed but less constrained than in the Intermediate-1 path. This reflects the view that the government's implicit promises for the elderly are a higher priority than other spending."

All four budget alternatives were constructed with a view to keeping U.S. debt on what the panel considered a sustainable ratio of 60 percent U.S. debt to GDP.

The problem with implementing any of the budget alternatives is that the Obama administration and the Democrat-controlled Congress have demonstrated a propensity to increase entitlement programs dramatically, without producing a politically acceptable means of increasing taxes to pay for the programs.

Consistently, the Obama administration has resorted to a form of class warfare, threatening to "tax the rich" to pay for expanded social welfare programs, including the Democrat health plan.

Programs like Medicare, Medicaid and Social Security are entitlement programs by nature and have automatic expansion built into them, especially as the baby-boomers retire, Penner noted, in contrast to government-funded health programs in Britain and Canada that operate on fixed budgets and ration health care.

"To restrain these programs, they have to be very significantly restructured. Health programs are especially difficult because they are impacted both by the aging of the population and the inexorable rise in per capita health costs," Penner said.

Penner was also concerned that the political resolve to increase taxes was much less firm than the urge to increase entitlement programs to a level beyond the ability of the federal government to finance the programs with ever-increasing levels of debt spending.

Penner also admitted the tax revenue assumptions of the report were optimistic.

"Our revenue assumptions are extremely optimistic as they stand," he agreed. "We use the CBO baseline, which has us going on current policy and has the deficit ever-increasing. CBO assumes, quite unrealistically, that foreigners are going to provide all the savings we need at a constant interest rate. That's how CBO keeps the economy growing in the face of extraordinarily large deficits."

Higher interest rates needed to attract U.S. savings into Treasury debt financing could deprive the private economy of the capital needed to generate economic growth.

Penner is a fellow at the Urban Institute. He was the director of the Congressional Budget Office from 1983 to 1987. From 1977 to 1983, he was a resident scholar at the American Enterprise Institute.

IMF to Haiti: Freeze Public Wages

Since a devastating earthquake rocked Haiti on Tuesday--killing tens of thousands of people--there's been a lot of well-intentioned chatter and twitter about how to help Haiti. Folks have been donating millions of dollars to Wyclef Jean's Yele Haiti (by texting "YELE" to 501501) or to the Red Cross (by texting "HAITI" to 90999) or to Paul Farmer's extraordinary Partners in Health, among other organizations. I hope these donations continue to pour in, along with more money, food, water, medicine, equipment and doctors and nurses from nations around the world. The Obama administration has pledged at least $100 million in aid and has already sent thousands of soldiers and relief workers. That's a decent start.

But it's also time to stop having a conversation about charity and start having a conversation about justice--about recovery, responsibility and fairness. What the world should be pondering instead is: What is Haiti owed?

Haiti's vulnerability to natural disasters, its food shortages, poverty, deforestation and lack of infrastructure, are not accidental. To say that it is the poorest nation in the Western hemisphere is to miss the point; Haiti was made poor--by France, the United States, Great Britain, other Western powers and by the IMF and the World Bank.

Now, in its attempts to help Haiti, the IMF is pursuing the same kinds of policies that made Haiti a geography of precariousness even before the quake. To great fanfare, the IMF announced a new $100 million loan to Haiti on Thursday. In one crucial way, the loan is a good thing; Haiti is in dire straits and needs a massive cash infusion. But the new loan was made through the IMF's extended credit facility, to which Haiti already has $165 million in debt. Debt relief activists tell me that these loans came with conditions, including raising prices for electricity, refusing pay increases to all public employees except those making minimum wage and keeping inflation low. They say that the new loans would impose these same conditions. In other words, in the face of this latest tragedy, the IMF is still using crisis and debt as leverage to compel neoliberal reforms.

For Haiti, this is history repeated. As historians have documented, the impoverishment of Haiti began in the earliest decades of its independence, when Haiti's slaves and free gens de couleur rallied to liberate the country from the French in 1804. But by 1825, Haiti was living under a new kind of bondage--external debt. In order to keep the French and other Western powers from enforcing an embargo, it agreed to pay 150 million francs in reparations to French slave owners (yes, that's right, freed slaves were forced to compensate their former masters for their liberty). In order to do that, they borrowed millions from French banks and then from the US and Germany. As Alex von Tunzelmann pointed out, "by 1900, it [Haiti] was spending 80 percent of its national budget on repayments."

It took Haiti 122 years, but in 1947 the nation paid off about 60 percent, or 90 million francs, of this debt (it was able to negotiate a reduction in 1838). In 2003, then-President Aristide called on France to pay restitution for this sum--valued in 2003 dollars at over $21 billion. A few months later, he was ousted in a coup d'etat; he claims he left the country under armed pressure from the US.

Then of course there are the structural adjustment policies imposed by the IMF and World Bank in the 1990s. In 1995, for example, the IMF forced Haiti to cut its rice tariff from 35 percent to 3 percent, leading to a massive increase in rice-dumping, the vast majority of which came from the United States. As a 2008 Jubilee USA report notes, although the country had once been a net exporter of rice, "by 2005, three out of every four plates of rice eaten in Haiti came from the US." During this period, USAID invested heavily in Haiti, but this "charity" came not in the form of grants to develop Haiti's agricultural infrastructure, but in direct food aid, furthering Haiti's dependence on foreign assistance while also funneling money back to US agribusiness.

A 2008 report from the Center for International Policy points out that in 2003, Haiti spent $57.4 million to service its debt, while total foreign assistance for education, health care and other services was a mere $39.21 million. In other words, under a system of putative benevolence, Haiti paid back more than it received. As Paul Farmer noted in our pages after hurricanes whipped the country in 2008, Haiti is "a veritable graveyard of development projects."

So what can activists do in addition to donating to a charity? One long-term objective is to get the IMF to forgive all $265 million of Haiti's debt (that's the $165 million outstanding, plus the $100 million issued this week). In the short term, Haiti's IMF loans could be restructured to come from the IMF's rapid credit facility, which doesn't impose conditions like keeping wages and inflation down.

Indeed, debt relief is essential to Haiti's future. It recently had about $1.2 billion in debt canceled, but it still owes about $891 million, all of which was lent to the country from 2004 onward. $429 million of that debt is held by the Inter-American Development Bank (IDB), to whom Haiti is scheduled to make $10 million in payments next year. Obviously, that's money better spent on saving Haitian lives and rebuilding the country in the months ahead; the cancellation of the entire sum would free up precious capital. The US controls about 30 percent of the bank's shares; Latin American and Caribbean countries hold just over 50 percent. Notably, the IDB's loans come from its fund for special operations (i.e. the IDB's donor nations and funds from loans that have been paid back), not from IDB's bonds. Hence, the total amount could be forgiven without impacting the IDB's triple-A credit rating.

Finally, although the Obama administration temporarily halted deportations to Haiti, it hasn't granted Haitians temporary protected status (TPS), which would save them from being deported back to the scene of a disaster for as long as 18 months, allow them to work in the US and, crucially, send money back to relatives in Haiti. In the past, TPS has been given to countries like Honduras and Nicaragua in 1998 after Hurrican Mitch, but it has never been extended to Haitians, even after the 2008 storms, presumably because immigrations officials fear a mass exodus from Haiti.

But decency, as well as fairness, should trump those fears now. As Sunita Patel, an attorney with CCR, told me, "We have granted TPS to El Salavador, Honduras, Nicaragua, Somalia and Sudan following natural disasters. To apply different rules here would fly in the face of the administration's efforts to build good will abroad."

(UPDATE: It has just been announced that the Obama administration has granted Temporary Protected Status to Haiti. This is a great relief to Haitians in the US and a victory for those who pressured the administration to do so.)

UK's inflation rate jumps massively 1-19-10

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Stranger and Stranger

The fallout from the IPCC Himalayan glacier situation gets stranger and stranger. Now an IPCC lead author has stepped forward claiming that the error has been known by the IPCC all along. From Agence France-Presse:

A top scientist said Monday he had warned in 2006 that a prediction of catastrophic loss of Himalayan glaciers, published months later by the UN's Nobel-winning climate panel, was badly wrong.

The Intergovernmental Panel on Climate Change (IPCC) report said in 2007 it was "very likely" that the glaciers, which supply water to more than a billion people across Asia, would vanish by 2035 if global warming trends continued.

"This number is not just a little bit wrong, but far out of any order of magnitude," said Georg Kaser, an expert in tropical glaciology at the University of Innsbruck in Austria.

"It is so wrong that it is not even worth discussing," he told AFP in an interview.

It gets more interesting:

Kaser suggested the initial error originated from a misreading of a 1996 Russian study or from findings on a handful of glaciers that were mistakenly extended to apply to the whole region.

In either case, he suggested, the fact that it found its way into the report underpinning global climate negotiations signalled the need for a reform of the way the IPCC collects and reviews data.

"The review community has entirely failed" in this instance, he said.

Kaser was a lead author in Working Group I of the IPCC report, which dealt with the physical science of climate change.

Its conclusions -- that climate change is "unequivocal" and poses a major threat -- remain beyond reproach, he said.

The prediction for the Himalayan glaciers was contained in the separately published Working Group II report, which assessed likely impacts of climate change.

More specifically, the chapter focussed on an assessment of Asia, authored by scientists from the region.

"This is a source of a lot of misunderstandings, misconceptions or failures," Kaser said, noting that some regions lacked a broad spectrum of expertise.

"It is a kind of amateurism from the regional chapter lead authors. They may have been good hydrologists or botanists, but they were without any knowledge in glaciology."

Kaser said some of the scientists from other regional groups took heed of suggestions, and made corrections ahead of final publication in April 2007.

But the Asia group did not. "I pointed it out," he said of the implausible prediction on the glaciers.

"For a reason I do not know, they did not react."

But blame did not rest with the regional scientists alone, Kaser added.

"I went back through the comments afterward, and not a single glaciologist had any interest in looking into Working Group II," he said.

And there is more:

The IPCC's Fifth Assessment, scheduled for release in 2013, will probably be adjusted to avoid such problems, said Kaser.

"All the responsible people are aware of this weakness in the Fourth Assessment. All are aware of the mistakes made," he said.

"If it had not been the focus of so much public opinion, we would have said 'we will do better next time.' It is clear now that Working Group II has to be restructured," he said.

The implications of Kaser's comments are not good for the IPCC, however that they are interpreted.

Given Rajendra Pachauri's vigorous defense of the claims made by the IPCC about Himalayan glacier melt, Dr. Kaser's comment that -- "All the responsible people are aware of this weakness in the Fourth Assessment. All are aware of the mistakes made" -- raises an eyebrow. It must be the case that Dr. Pachauri either knew of the error or he did not. Neither state of affairs is good for the IPCC.

Consider a further implication: If indeed "all the responsible people are aware" of the mistakes in the IPCC, then what in the world explains their complete silence over the past few years while headlines like the following were being announced to the world?

Think about this statement:

"If it had not been the focus of so much public opinion, we would have said 'we will do better next time.'"

Is it really the case that IPCC scientists would have continued to sit on a known error with important policy implications in complete silence until their hand was forced by the focus of public opinion? Really?!

I wonder what other known errors are being sat on?

Intel agents 'certain' terrorists will try for Pakistan's bombs

Editor's Note: The following report is excerpted from Joseph Farah's G2 Bulletin, the premium online newsletter published by the founder of WND. Subscriptions are $99 a year or, for monthly trials, just $9.95 per month for credit card users, and provide instant access for the complete reports.

LONDON – Agents for Britain's MI6 Secret Intelligence Service say they are "certain" al-Qaida is poised to try and grab some of the 80 nuclear weapons that Pakistan possesses, according to a report from Joseph Farah's G2 Bulletin.

The al-Qaida leadership – Osama bin Laden and Ayman a-Zawahri – are believed to have spent the winter months in Pakistan's Tribal Areas finalizing their plans for an attack.

It will spearhead al-Qaida's global network and its capability to carry out a wide range of terrorist onslaughts.

The MI6 analysis is based on what the agency calls "al-Qaida's zone of terrorism." It includes the Afghan Taliban, the Islamic Movement of Uzbekistan in East Turkistan and al-Shabaab in Somalia. In the Sahara region al-Qaida has reformed Islamic Magreb (AQIM) which has grown out of Algerian resistance movement.

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FROM JOSEPH FARAH'S G2 BULLETIN

Al-Qaida seeking tools for nuclear 9/11

Intel agents 'certain' terrorists will try for Pakistan's bombs

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Posted: January 18, 2010
10:56 pm Eastern

© 2010 WorldNetDaily

Editor's Note: The following report is excerpted from Joseph Farah's G2 Bulletin, the premium online newsletter published by the founder of WND. Subscriptions are $99 a year or, for monthly trials, just $9.95 per month for credit card users, and provide instant access for the complete reports.

LONDON – Agents for Britain's MI6 Secret Intelligence Service say they are "certain" al-Qaida is poised to try and grab some of the 80 nuclear weapons that Pakistan possesses, according to a report from Joseph Farah's G2 Bulletin.

The al-Qaida leadership – Osama bin Laden and Ayman a-Zawahri – are believed to have spent the winter months in Pakistan's Tribal Areas finalizing their plans for an attack.

It will spearhead al-Qaida's global network and its capability to carry out a wide range of terrorist onslaughts.

The MI6 analysis is based on what the agency calls "al-Qaida's zone of terrorism." It includes the Afghan Taliban, the Islamic Movement of Uzbekistan in East Turkistan and al-Shabaab in Somalia. In the Sahara region al-Qaida has reformed Islamic Magreb (AQIM) which has grown out of Algerian resistance movement.

(Story continues below)

But nothing poses more of a threat than al-Qaida's plan to steal Pakistan’s nuclear weapons.

Keep in touch with the most important breaking news stories about critical developments around the globe with Joseph Farah's G2 Bulletin, the premium, online intelligence news source edited and published by the founder of WND.

MI6 agents in Pakistan say there is mounting evidence "the leadership is thinking of a nuclear 9/11 and are approaching it in increasingly professional ways."

Nuclear experts have told the Secret Intelligence Service that the biggest fear is of "an inside job."

One analyst said, "There are up to 12,000 people in Pakistan with some kind of role which brings them into nuclear facilities, whether as part of a team of scientists or working in security."

Professor Shaun Gregory, director of the Pakistan security research center at Bradford University in England, has tracked a number of attempted security breaches in the past four years at Pakistan's nuclear facilities.

Past attacks have included a suicide bomber striking Kamra where Pakistan Air Force F-16 jet aircraft are stationed with nuclear bombs. Another attack was against a nuclear weapons complex in Punjab where a nuclear warhead assembly plant is based

International Hearings Begin On “Falsified” Swine Flu Pandemic

“Greatest medical scandal of the century” to come under scrutiny

The Parliamentary Assembly of the Council of Europe, a 47 nation body encompassing democratically elected members of parliament, has begun hearings to investigate whether the H1N1 swine flu pandemic was falsified or exaggerated in an attempt to profit from vaccine sales.

A PACE resolution, passed last month, gave context to the hearings which began yesterday in Strasbourg.

“In order to promote their patented drugs and vaccines against flu, pharmaceutical companies influenced scientists and official agencies, responsible for public health standards to alarm governments worldwide and make them squander tight health resources for inefficient vaccine strategies and needlessly expose millions of healthy people to the risk of an unknown amount of side-effects of insufficiently tested vaccines. The “bird-flu”-campaign (2005/06) combined with the “swine-flu”-campaign seem to have caused a great deal of damage not only to some vaccinated patients and to public health-budgets, but to the credibility and accountability of important international health-agencies.”

Heading the hearings will be chairman of the Health Committee of PACE, Dr. Wolfgang Wodarg, a former German lawmaker, a medical doctor and epidemiologist. Wodarg has referred to the swine flu pandemic as “one of the greatest medical scandals of the century.”

Wodarg charges that the WHO altered the definition of a pandemic from an outbreak in several continents at once with an above-average death rate, to one where the spread of the disease is constant.

The Parliamentary inquiry will determine if a “falsified pandemic” was declared by WHO in June 2009 on the advice of medical advisors, many of whom have close financial ties to the very pharmaceutical giants – GlaxoSmithKline, Roche, Novartis, – that produced the H1N1 vaccines.

It will also look into the controversy surrounding the fact that two shots were initially advised when it was later revealed that one dose was entirely suitable.

Pharmaceutical companies are thought to have made a profit of somewhere in the region of $7.5-$10 billion on H1N1 vaccines. The worldwide death toll from H1N1 is thought to be around 13,500, just over a third of the number who die from regular flu every year in the U.S. alone.

PACE has noted that the alleged conspiracy could have exposed “millions of healthy people to the risk of side-effects of insufficiently tested vaccines”.

Many countries have begun offloading huge stockpiles of unused vaccines and canceling outstanding orders. The latest to do so is Greece, where the government had announced that it would make H1N1 vaccination mandatory.

PACE will also hold a debate next week entitled ‘Faked pandemics, a threat to health’, to be attended by representatives of the World Health Organisation (WHO) and the European pharmaceutical industry.

“Unlike the European Parliament, it has no decision-making powers, but, as was demonstrated by its report into extraordinary rendition, it does have the power to make life uncomfortable for the powers that be,” notes the Irish TImes.

Related Reading: H1N1-GATE: Big Pharma, WHO crafted ‘organized panic,’ European health head claims

Google China hacks 'a possible inside job'

Cyber attacks against human rights activists could have been facilitated by people working in Google's China office, say reports

Google is investigating whether its own employees played a role in the recent Chinese cyber attacks against the search company, reports Reuters Photo: GETTY

Sources familiar with the situation told Reuters that Google is investigating the possibility that employees with access to specific parts of Google's networks could have played a role in the cyber attacks, which saw the email accounts of human rights activists compromised, and prompted the search giant to announce that it was considering closing its Chinese operation unless it could offer the country's citizens access to an uncensored web.

"We're not commenting on rumour and speculation," said Google in a statement. "This is an ongoing investigation, and we simply cannot comment on the details," a Google spokeswoman said.

According to local Chinese media, some Google China workers were denied access to the company's internal networks after Jan 13, the day after Google announced its "new approach" to business in the country. Local media also reported that some staff were put on leave and others were transferred to different Google offices across the Asia-Pacific region.

Security analysts believe the malicious software used to carry out the attacks against Google, Chinese dissidents and human rights supporters, was a variation of the Hydraq virus. This virus, known as a Trojan, allowed hackers to gain unauthorised access to computers and networks through a "back door", giving them control of the machine.

Those Zero Percent Offers have now Turned into 30% Offers with Annual Fees. Banks have over $2 Trillion in Excess Reserves yet are unable to Offer a D

Credit cards are ubiquitous like air in the American economy. Virtually every American that can qualify for a credit card has one (or many) in their wallet. Credit card companies have flooded the market with millions of plastic rectangles that have now come back to bite many American consumers. If we rewind back to the early days of this crisis, (so much has happened since that time) we will remember that the banking bailout involved some necessity of keeping credit alive. At least this is how it was presented to the American public. No bailout equaled no access to credit. Yet since that time we have seen consumer credit simply collapse on a record pace. Part of this is due to the extinguishing of debt via bankruptcy but also the fact that credit card companies (aka big banks) are not making loans accessible to the public.

Now banks have shifted gears and are playing on the average American’s need for credit access in a troubled economy. The American consumer is the clutch of this economy and it is burned out. Banks are now saying that they need to be prudent because that is what led them into this mess in the first place. Correct. But that was not the pretense for the bailouts. Now that they have trillions in taxpayer money they have now found some sort of financial religion:

Credit card debt is contracting at its fastest pace since the Great Depression. In fact, over $17 billion in consumer credit was yanked from the market last month. And you don’t need to know the hard data coming out of the Federal Reserve to know this. Just look at your weekly mail:

Source: Paul Kedrosky

And of the offers, good luck finding any of those 0 percent offers for 12 months with no fees. Now offers that you get in the mail come with onerous terms, multiple pitfalls, and annual rates that would make your local payday lender look like a generous Midwest banker. Credit card companies are now putting the vice grip on the heads of good paying customers since many of their other “subprime” borrowers are defaulting in mass. Keep in mind these are the borrowers they so heavily recruited during the bubble. After all, we are talking about an industry that gave a cat a $4,000 credit card offer.

During the boom, I would get 3 to 4 offers per day regarding credit cards. Now, it is more like 3 to 4 in a month and the offers are horrible. And the above chart shows that volume has fallen in tandem with the stock market. But unlike the recent stock market rise, credit card offers are still being yanked from average Americans:

“(Synovate) A significant proportion of credit card accounts are being closed, either by issuers or by the consumers themselves due to the change in terms proposed by issuers,” said Anuj Shahani, Director of Competitive Tracking Services for Synovate’s Financial Services Group.

“This was inconsequential initially as issuers were mainly cutting lines on inactive accounts or for transactors, people who pay their balance in full each month. Recently, we are seeing many issuers reduce credit lines on active accounts or for revolvers, people who do carry a balance each month. This can put many households in a risky situation,” he added.

For example, if a household with $25,000 in credit lines across all their cards has one of their $10,000 limit cards cancelled, the credit limit for the household is reduced to $15,000. If they were to revolve on one card with $5,000 as an outstanding balance, their utilization ratio (ratio of outstanding balance to available credit limit) increases from 20% to 33%.

“A utilization ratio above 30% is considered risky by the industry and this makes the household a credit risk in the eyes of most issuers, potentially triggering further reductions in their existing credit limits, making matters even worse,” said Shahani.”

I can tell you from personal experience that this happened to me. One of my credit cards had an excellent fixed rate (something that seemed permanent during the boom times) at 4.99%. Clearly this was a fantastic deal and for years, I kept this card for random purchases. The limit on this card was $5,000 and I rarely put over $1,000 on it. Well all of a sudden once the banks received their bailout money, I get a message saying they are raising their rate to 19.99% because of “adverse changes in the economy” and they needed to be more careful. Very quickly I picked up the phone and called up the number to say I object to the new terms.

Well after being transferred halfway around the world, I thought all was done. A week later I get a letter telling me my account is closed because of my objection to the new terms. So much for that “permanent” 4.99 percent rate. And you would think that banks have no money to lend right?

Banks are holding over $2 trillion in excess reserves. This is taxpayer money funded through the Federal Reserve and U.S. Treasury. What this actually tells us is that banks are gearing up for more internal problems like the $3.5 trillion implosion of the commercial real estate market or rising defaults. Currently banks have made massive profits by gambling with taxpayer money in the stock markets. The spigot to the consumer is nowhere to be found.

The troubling issue as well is that by closing accounts down debt ratios shoot up and impact credit scores. So by closing down an account, a prudent move on the surface, may actually hurt your overall credit score. And FICO scores carry a lot of weight and unjustifiably so.

But surely those that are getting credit card offers are being given generous terms since banks have been saved by taxpayers:

“Many new card offers now carry an annual fee (30% of the offers in Q3 2009 carried an annual fee versus 28% in Q2 2009). A recent Consumer Confidence Survey conducted by Synovate reported that 15% of consumers said they’d cancel all their credit cards if charged an annual fee and 38% said they’d keep only one card or cancel the ones they don’t use. Another 24% of consumers would look for a card with a lower fee and the rest would take no action.

“Whenever you have a situation where less than a quarter, at best, of customers feel secure, and the rest are either in the process of cancelling their cards or intend to find a new one, it’s reasonable to conclude that the credit card situation remains dire,” Shahani added.”

Not at all. Banks can borrow from the Fed at zero and lend out money at ridiculous rates. Massive margin gains. How else are banks making record profits while unemployment is near the peak and average American are seeing their salaries being slashed?

If you add up the numbers, banks are creating a new debt serfdom for Americans. They are foreclosing on homes at a record pace and pulling back credit even though they explicitly stated that the bailouts were to help the housing industry and keep credit alive. The only housing loans they are making are government backed loans (i.e., Fannie Mae and Freddie Mac conforming)! They won’t even dare put their own money (your money) at risk anymore if they don’t have a government guarantee. With credit cards, it is their money and here they are yanking it all back. This is the plight of our current economy.

Peter Schiff On American Samoa, The Minimum Wage And What It Means

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Fight For Your LIfe

The Fight of Your Life--Get ready, it's coming

It's not your average blog. Grab your rifle.

Monday, January 18, 2010

Calm Before The Storm? A Reply To My Last Post And You Better Read IT

I usually post all of my blog entries on tree of liberty forum. Alot of the time I get some flak from the usual trolls and debunkers. I threw a line in my last post to quit debunking everything and wake up. I only received one reply and it was quite startling. I am unsure the accuracy of the reply and the info; but I swear you better all read this and pay attention:


Well it seems NORTHCOM agrees with your view.

Below is some of what a former US military Flag officer sent me .


Russian forces have been asked to help in America

" I have some very recent and specific information about Russian (yes I said Russian) forces which have been tapped to "assist" U.S. forces in the near future. My wife is Russian and one of her relatives is a high placed officer who I know very well (by-the-way I speak fairly good Russian).


Several weeks ago (I am not sure of the exact date) Lt. Gen. Steven Blum the Deputy Commander of NORTHCOM requested from the Russian government pursuant to a secret agreement the use of 3 to 4 brigades of military security forces to be deployed in the U.S. presumably to assist local law enforcement in "peace keeping operations". When the request was made this very senior officer which my wife is related to expressed serious concerns about losses because of how well the "Americans" were armed. This officer and relative told me directly that he was assured by Gen. Blum that his forces would not be in the direct line of fire and that they would be free to use "whatever force was necessary to defend themselves and prevent future attacks".


When I spoke to this officer he asked how stiff the resistance would be? I let him know that it would make the fight in Afghanistan and Chechnya look like a Sunday walk in the park (the Soviet losses in Afghanistan unofficially topped 30,000 and in Chechnya the losses were even greater), I told him that the resistance would be unbelievable. He should expect a lot of snipers, men who have hunted big game for years an know how to hide and shoot, he should also not expect any quarter, anyone in uniform will be a target and that he should expect his officers to be targeted first. Roadside bombs and direct attacks on roadblocks and checkpoints will be commonplace. I let him know his troops would not be welcome and that he should oppose this request, I even offered to come to Moscow to give a briefing as to what they could expect should his government agree to provide the troops.


I am sorry I can not give any specifics, this information was given to me directly from the officer in Russia and confirmed by from a high level source at NORTHCOM. Neither could give a specific time frame but my general take was months but less than a year.



Update

This morning I received a call from Deputy Prime Minister Sergei Ivanov's office about giving a briefing/presentation in Moscow later this month on "the extent of resistance Russian security forces would face if they were to be stationed on American soil in a Peace Keeping Roll" i. I would of course be responsible for my own expenses (typical cheap ass Russians) but the defense ministry would provide ground transportation and appropriate security should I agree to come to Moscow. Needless to say I accepted and a preliminary date was set for January 28th at 0930. ".


end of quotes.


Remember that it has already been confirmed that the US and Canada have such an agreement for Canadian troops to be used in CONUS if the US requests them.



So can anyone here cite where in the US Constitution where it authorizes foreign military to exercise authority over US Citizens in the US?

While studing Consitutional Law in University I never ever discovered such a cite or even doctrine.
__________________
Information like fertilizer does no good unless you spread it.


Robert Jones

Labour's computer blunders cost £26bn

Ministers blamed for 'stupendous incompetence' after taxpayers left with huge bills for bungled projects

A series of botched IT projects has left taxpayers with a bill of more than £26bn for computer systems that have suffered severe delays, run millions of pounds over budget or have been cancelled altogether.

An investigation by The Independent has found that the total cost of Labour's 10 most notorious IT failures is equivalent to more than half of the budget for Britain's schools last year. Parliament's spending watchdog has described the projects as "fundamentally flawed" and blamed ministers for "stupendous incompetence" in managing them.

Further evidence has emerged over the failings of Labour's most costly programme, the mammoth £12.7bn IT scheme to revolutionise the NHS. The Independent has learnt that just 160 health organisations out of about 9,000 are using electronic patient records delivered under the scheme. The vast majority of those were GP practices. New figures have also revealed that millions of pounds have been paid out in legal fees. The taxpayer has footed a £39.2m bill for "legal and commercial support" for the National Programme for IT (NPfIT).

Alan Milburn, the former health secretary, said in 2001 that everyone would have access to their health records online by 2005, but it is understood that the Department for Health is still "years away" from fulfilling the pledge.

Government departments right across Whitehall have been guilty of overseeing embarrassing IT failures. A project that was meant to save the Department for Transport (DfT) about £57m eventually cost £81m, and workers at the Driver and Vehicle Licensing Agency (DVLA) were forced to brush up on their language skills when computer systems gave them messages in German.

Another ill-fated IT scheme, designed to allocate subsidies to farms, cost the Department for Environment, Food and Rural Affairs about £350m and left British farmers more than £1bn out of pocket. Last year the Public Accounts Committee (PAC) warned that the system was already "at risk of becoming obsolete". In 2004, the Department for Justice gave the go-ahead for the National Offender Management Information System (C-Nomis) to be rolled out to prisons and the probation service in an attempt to make sharing information about offenders easier. But in 2007, when the estimated cost doubled to more than £600m and senior officials questioned the validity of the project, it was abandoned – after £155m had been wasted.

The MoD's Defence Information Infrastructure project is currently running more than £180m over budget and 18 months late, and is now set to cost £7.1bn. Last year, Edward Leigh, chairman of the PAC, said: "No proper pilot for this highly complex programme was carried out, and entirely inadequate research led to a major miscalculation of the condition of the Department's buildings in which the new system would be installed."

Other botched IT projects include the identity cards scheme; the Libra system for modernising magistrates' courts; an attempt to move the Government's GCHQ computer systems into a new building which ended up costing more than £300m; the Benefit Processing Replacement Programme; and the Foreign and Commonwealth Office's Prism system.

IT experts blamed ministers for being too easily wooed by suppliers. Insiders said a lack of expertise within the Government about the technology industry meant they were willing to believe claims made by major IT firms before contracts were awarded.

Several projects are now under renewed threat of being cut back or abandoned altogether as Alistair Darling, the Chancellor, has targeted them as an area of government spending that can be reined in as he attempts to tackle Britain's record £175bn deficit.

Tony Collins, an expert on the Government's IT failures, said Labour had displayed an "irrational exuberance" for IT projects that has often led them to throw good money after bad at failing schemes. "There are too few people in the hierarchy of Labour who understand IT enough to understand that it is not a talisman – there is nothing magical about it."

David Cameron, the Tory leader, has signalled a move away from big IT projects, suggesting he will use technology to increase the transparency of government. "It is easy to make these noises out of office," said Mr Collins. "Once you've got civil servants giving you a host of reasons why you should not be more open, I fear the Tories will sink into the same depths of secrecy that Labour has found itself in."

Botched projects: The cost of failure

£12.7bn National Programme for IT (NHS)

It was meant to revolutionise the way the health service worked. But far from heralding a new age of efficiency, the National Programme for IT is now widely perceived as the greatest government IT white elephant of history. As well as the huge costs involved, suppliers have walked away, projects are running years behind schedule, while medical professionals have complained that they were never consulted on what they wanted the new system to achieve.

£7.1bn Defence Information Infrastructure (DII)

It seemed like a good idea at the time. In 2005, the Ministry of Defence decided to offer a contract to a consortium of suppliers to replace the hundreds of different computer systems being used by the military with a single system that would be used by the army, navy and air force, as well as the MoD itself. It was to be used by 300,000 people across 2,000 sites. However, it is running more than £180m over budget and 18 months late. A parliamentary inquiry also warned that forces' reliance on older systems put them at risk of a security breach.

£5bn National Identity Scheme

Originally budgeted at £3bn, the Government’s plan for new identity cards, containing biometric data and linked to a central database, soon came under heavy criticism from civil liberty campaigners. As the costs spiralled, so the Home Office began to water down the aims of the scheme to assuage the critics. In July, Alan Johnson announced that the cards would no longer be compulsory, while moves to force all airport workers to use the cards were also abandoned.

£400m Libra system (for magistrates' courts)

An attempt to bring records used by magistrates courts into the digital age backfired when trying to introduce one universal IT system to all courts descended into a costly mess. Fujitsu originally bid £146m to deliver the Libra system in 1998. However, the project proved more complicated than anticipated, and costs have now been put at more than £400m.

£350m Single Payment Scheme system (SPS)

The Single Payment Scheme system was designed in 2003 to be a sophisticated way of giving farmers their subsidies, by mapping their land and working out their level of payment. But failures with the IT systems being used mean that farmers were left short-changed. In 2006, around £1.28bn of the £1.5bn subsidies destined for British farmers still had not been given out. The Rural Payments Agency overseeing the project was ordered to make 23 major changes to the system. Despite the £350m spent on the technology, the Public Accounts Committee warned last year that it was already “at risk of becoming obsolete”.

£300m GCHQ "box move" of technology

When the Government’s intelligence organisation, GCHQ, decided to move its complex computer systems into a new building in 1997, the projected £41m cost was so small that officials believed it could be absorbed within existing budgets. That was until the Curse of the Government IT Project struck. Costs of the so-called “box move” soon began to rise out of control. In 2003, the National Audit Office (NAO) put the costs at more than £300m. Edward Leigh, Tory chairman of the Commons Public Accounts Committee, called the original budget “staggeringly inaccurate”.

£155m National Offender Management Information System (C-Nomis)

In an attempt to make sharing information about offenders easier, the Department for Justice gave the go-ahead for the National Offender Management Information System (C-Nomis) to be rolled out to prisons and the probation service. As the estimated cost doubled to more than £600m and senior officials questioned the whole point of the project, it was abandoned in 2007, with £155m already spent.

£106m Benefit Processing Replacement Programme

In June 2006, the Department for Work and Pensions confidently assured Parliament that new funding for its Benefit Processing Replacement Programme (BPRP) had been approved. So it came as a surprise to many when it emerged just three months later that the project had been quietly scrapped. Little information has emerged on why BPRP was abandoned, but the Government has admitted that £106m had already been spent on it before it pulled the plug.

£88.5m Prism IT project

Undeterred by past failures, the Foreign and Commonwealth Office (FCO) thought it would be a good idea in 2002 to order a new computer system for their 200 offices around the globe. The result was the Prism IT project, seemingly a bargain at just £54m. However, delays and costs have risen, while the contractor was even forced to temporarily halt the scheme in 2005 while an investigation took place into its various problems. The system has not proved a hit with staff. One wrote in 2004: “In all the FCO’s long history of ineptly implemented IT initiatives, Prism is the most badly designed, ill-considered one of the lot.”

£81m Shared Services Centre

To officials at the Department for Transport, the Shared Services Centre seemed to good to be true: not only would it integrate the human resources and financial services of the department and its various agencies, it would even save the taxpayer £57m. Unfortunately, those hopes were dashed as the scheme became another example of an IT project going horribly wrong. Workers at the Driver and Vehicle Licensing Agency (DVLA) were forced to brush up on their language skills as computer systems gave them messages in German. It will now cost £81m, a failure in management that the Public Accounts Committee described as a display of “stupendous incompetence”.

TOTAL: £26.3bn

Looting Social Security

Is Social Security threatened by entitlement reformers? David M. Walker, president and CEO of the Peter G. Peterson Foundation responds to William Greider's essay here. Read William Greider's answer to Peterson's criticism here.

Governing elites in Washington and Wall Street have devised a fiendishly clever "grand bargain" they want President Obama to embrace in the name of "fiscal responsibility." The government, they argue, having spent billions on bailing out the banks, can recover its costs by looting the Social Security system. They are also targeting Medicare and Medicaid. The pitch sounds preposterous to millions of ordinary working people anxious about their economic security and worried about their retirement years. But an impressive armada is lined up to push the idea--Washington's leading think tanks, the prestige media, tax-exempt foundations, skillful propagandists posing as economic experts and a self-righteous billionaire spending his fortune to save the nation from the elderly.

These players are promoting a tricky way to whack Social Security benefits, but to do it behind closed doors so the public cannot see what's happening or figure out which politicians to blame. The essential transaction would amount to misappropriating the trillions in Social Security taxes that workers have paid to finance their retirement benefits. This swindle is portrayed as "fiscal reform." In fact, it's the political equivalent of bait-and-switch fraud.

Defending Social Security sounds like yesterday's issue--the fight people won when they defeated George W. Bush's attempt to privatize the system in 2005. But the financial establishment has pushed it back on the table, claiming that the current crisis requires "responsible" leaders to take action. Will Obama take the bait? Surely not. The new president has been clear and consistent about Social Security, as a candidate and since his election. The program's financing is basically sound, he has explained, and can be assured far into the future by making only modest adjustments.

But Obama is also playing footsie with the conservative advocates of "entitlement reform" (their euphemism for cutting benefits). The president wants the corporate establishment's support on many other important matters, and he recently promised to hold a "fiscal responsibility summit" to examine the long-term costs of entitlements. That forum could set the trap for a "bipartisan compromise" that may become difficult for Obama to resist, given the burgeoning deficit. If he resists, he will be denounced as an old-fashioned free-spending liberal. The advocates are urging both parties to hold hands and take the leap together, authorizing big benefits cuts in a circuitous way that allows them to dodge the public's blame. In my new book, Come Home, America, I make the point: "When official America talks of 'bipartisan compromise,' it usually means the people are about to get screwed."

The Social Security fight could become a defining test for "new politics" in the Obama era. Will Americans at large step up and make themselves heard, not to attack Obama but to protect his presidency from the political forces aligned with Wall Street interests? This fight can be won if people everywhere raise a mighty din--hands off our Social Security money!--and do it now, before the deal gains momentum. Popular outrage can overwhelm the insiders and put members of Congress on notice: a vote to gut Social Security will kill your career. By organizing and agitating, people blocked Bush's attempt to privatize Social Security. Imagine if he had succeeded--their retirement money would have disappeared in the collapsing stock market.

To understand the mechanics of this attempted swindle, you have to roll back twenty-five years, to the time the game of bait and switch began, under Ronald Reagan. The Gipper's great legislative victory in 1981--enacting massive tax cuts for corporations and upper-income ranks--launched the era of swollen federal budget deficits. But their economic impact was offset by the huge tax increase that Congress imposed on working people in 1983: the payroll tax rate supporting Social Security--the weekly FICA deduction--was raised substantially, supposedly to create a nest egg for when the baby boom generation reached retirement age. A blue-ribbon commission chaired by Alan Greenspan worked out the terms, then both parties signed on. Since there was no partisan fight, the press portrayed the massive tax increase as a noncontroversial "good government" reform.

Ever since, working Americans have paid higher taxes on their labor wages--12.4 percent, split between employees and employers. As a result, the Social Security system has accumulated a vast surplus--now around $2.5 trillion and growing. This is the money pot the establishment wants to grab, claiming the government can no longer afford to keep the promise it made to workers twenty-five years ago.

Actually, the government has already spent their money. Every year the Treasury has borrowed the surplus revenue collected by Social Security and spent the money on other purposes--whatever presidents and Congress decide, including more tax cuts for monied interests. The Social Security surplus thus makes the federal deficits seem smaller than they are--around $200 billion a year smaller. Each time the government dipped into the Social Security trust fund this way, it issued a legal obligation to pay back the money with interest whenever Social Security needed it to pay benefits.

That moment of reckoning is approaching. Uncle Sam owes these trillions to Social Security retirees and has to pay it back or look like just another deadbeat. That risk is the only "crisis" facing Social Security. It is the real reason powerful interests are so anxious to cut benefits. Social Security is not broke--not even close. It can sustain its obligations for roughly forty years, according to the Congressional Budget Office, even if nothing is changed. Even reports by the system's conservative trustees say it has no problem until 2041 (that report is signed by former Treasury Secretary Henry Paulson, the guy who bailed out the bankers). During the coming decade, however, the system will need to start drawing on its reserve surpluses to pay for benefits as boomers retire in greater numbers.

But if the government cuts the benefits first, it can push off repayment far into the future, and possibly forever. Otherwise, government has to borrow the money by selling government bonds or extend the Social Security tax to cover incomes above the current $107,000 ceiling. Obama endorses the latter option.

Follow the bouncing ball: Washington first cuts taxes on the well-to-do, then offsets the revenue loss by raising taxes on the working class and tells folks it is saving their money for future retirement. But Washington spends the money on other stuff, so when workers need it for their retirement, they are told, Sorry, we can't afford it.

Federal budget analysts try to brush aside these facts by claiming the government is merely "borrowing from itself" when it dips into Social Security. But that is a substantive falsehood. Government doesn't own this money. It essentially acts as the fiduciary, holding this wealth in trust for the "beneficial owners," the people who paid the taxes. This is the bait and switch the establishment intends to execute.

Peter Peterson, a Republican financier who made a fortune doing corporate takeover deals at Wall Street's Blackstone Group, is the Daddy Warbucks of the "fiscal responsibility" crusade. He has campaigned for decades against the dangers that old folks pose to the Republic. Now 82 and retired, Peterson claims he will spend nearly one-third of his $2.8 billion in wealth--he ranks 147 on the Forbes 400 list of richest Americans--alerting the public to this threat (leave aside the fact that old people have already paid for their retirement or that Social Security's modest benefits are equivalent to minimum-wage income). The major media treat him adoringly. Most reporters are too lazy (or dim) to check out the facts for themselves, so they simply repeat what Peterson tells them about Social Security.

It is a frightful message. Peterson describes a "$53 trillion hole" in America's fiscal condition--but the claim assumes numerous artful fallacies. His most blatant distortion is lumping Social Security, which is self-funded and sound, with other entitlements like Medicare and Medicaid. Those programs do face financial crisis--not because the elderly and poor are greedily gaming the system but because the medical-industrial complex has the profit incentive to drive healthcare costs higher and higher. Healthcare reform can solve the financing problem only if it imposes cost controls on private players like the insurance and pharmaceutical industries.

Peterson is financing a media blitz. His tendentious documentary--I.O.U.S.A.--opened in 400 theaters and was broadcast on CNN with appropriate solemnity. Last September Peterson bought two full pages in the New York Times to urge the next president to create a "bipartisan fiscal responsibility commission" once he was in office (Peterson was for John McCain). This group of so-called experts would be authorized to design the reforms for Congress to enact. But Peterson does not want Congress to have a full, freewheeling debate on the particulars. The reform package, he suggests, should be submitted to a single "up-or-down vote by Congress, as is done with military base closings." That's one of the gimmicks intended to give politicians cover and protect them from their constituents. It is profoundly antidemocratic. But that's the idea--save the government from the unruly passions of citizens. Peterson's proposal also resembles the notorious fast-track provision, which for years enabled presidents to steamroll Congress on trade agreements, no amendments allowed.

Peterson's proposal would essentially dismantle the Social Security entitlement enacted in the New Deal, much as Bill Clinton repealed the right to welfare. Peterson has assembled influential allies for this radical step. They include a coalition of six major think tanks and four tax-exempt foundations.

Their report--Taking Back Our Fiscal Future, issued jointly by the Brookings Institution and the Heritage Foundation--recommends that Congress put long-term budget caps on Social Security and other entitlement spending, which would automatically trigger benefits cuts if needed to stay within the prescribed limits. The same antidemocratic mechanisms--a commission of technocrats and limited Congressional discretion--would shield politicians from popular blowback.

The authors of this plan are sixteen economists from Brookings and Heritage, joined by the American Enterprise Institute, the Concord Coalition, the New America Foundation, the Progressive Policy Institute and the Urban Institute. "Our group covers the ideological spectrum," they claim. This too is a falsehood. All these organizations are corporate-friendly and dependent on big-money contributors. No liberal or labor thinkers need apply, though the group includes some formerly liberal economists like Robert Reischauer, Alice Rivlin and Isabel Sawhill.

The ugliest ploy in their campaign is the effort to provoke conflict between the generations. "The automatic funding of Social Security, Medicare and Medicaid impedes explicit consideration of competing priorities and threatens to squeeze out spending for young people," these economists declared. Children, it is suggested, are being shortchanged by their grandparents. This line of argument has attracted financial support from some leading foundations usually associated with liberal social concerns--Annie E. Casey, Charles Stewart Mott, William and Flora Hewlett. Peterson has teamed up with the Pew Trust and has also created front groups of "concerned youth."

Trouble is, most young people did not buy this pitch when George W. Bush used it to sell Social Security privatization. Most kids seem to think Grandma is entitled to a decent retirement. In fact, whacking Social Security benefits, not to mention Medicaid, directly harms poor children. More poor children live in families dependent on Social Security checks than on welfare, economist Dean Baker points out. If you cut Grandma's Social Security benefits, you are directly making life worse for the poor kids who live with her.

The assault sounds outrageous and bound to fail, but the conservative interests may have Obama in a neat trap. Their fog of scary propaganda makes it easier to distort the president's position and blame him for any fiscal disorders driven by the current financial collapse. He will be urged to "do the right thing" for the country and make the hard choices, regardless of petty political grievances (words and phrases he has used himself). Obama's fate may depend on informing the public--now, not later--so that people are inoculated against these artful lies.

The real crisis, in any case, is not Social Security but the colossal failure of the private pension system. Most people know this, either because their 401(k) account is pitifully inadequate, or their company dumped its pension plan, or the plummeting stock market devoured their savings. Obama can protect himself with the public by speaking candidly about this reality and proposing a forceful, long-term solution. He should expand the guarantees that ordinary people need to get their families through these adverse times. Instead of taking away old promises to people, the president should make some new ones. Healthcare reform is obviously an important imperative, but so is retirement security.

The solution to retirement insecurity is the creation of a national pension, alongside Social Security, that would be the bedrock social insurance. Improving Social Security benefits is one step, but it cannot possibly restore what so many middle-class families have lost. Tinkering with the 401(k) would be doomed, because it is basically a tax subsidy for the middle and upper classes, another way to avoid taxes that failed utterly to produce real savings [see Greider, "Riding Into the Sunset," June 27, 2005].

The new universal pension would be mainly self-financing--that is, funded by mandatory savings--but the system would operate as a government-supervised nonprofit, not manipulated by corporate executives or Wall Street firms. A national pension would combine the best qualities of defined-benefit plans and individual accounts. Each worker's pension would be individualized and portable, moving with job changes, but the savings would be pooled with others for diversified investment.

There is nothing radical about this approach. It follows the form of the government's thrift savings plan for civil servants and members of Congress, TIAA-CREF for college professors or other union pension plans jointly managed by labor and management trustees. The crucial difference is that since the new universal pension would be nonprofit, nobody would get to play self-interested games with the money that employees are storing in it for retirement. People could check their accumulated balance at any time.

Washington would set the performance standards and enforce proper behavior, but the operations of retirement programs could be widely decentralized among many private organizations or sector by sector. Other nations, like Australia, have proved this can be both democratic and reliable. Economist Teresa Ghilarducci of the New School has designed a promising and plausible plan (available at the Economic Policy Institute's website, epi.org, or in her book When I'm Sixty-Four: The Plot Against Pensions and the Plan to Save Them). With payroll savings of 5 percent and government-guaranteed returns on investment, average workers could count on pensions that would replace 70 percent of pre-retirement earnings when combined with Social Security. Low-wage earners could be subsidized by government to make up for inadequate pay. Private retirement plans that collect a higher percentage of pay and provide higher benefits could continue, so long as they exceed the federal standard. One great virtue of this approach is that nobody gets left behind, dependent on charity, the predatory instincts of the financial system or the magic of the marketplace.

Another great virtue is that a national pension would confront the country's glaring economic weakness--the collapse of national savings. As the economy digs out of its hole, restoring household savings will be crucial for ultimate recovery and for reduction of our dangerous dependence on foreign capital. Obviously, any system that adds a new payroll tax cannot be introduced at the depth of a recession, but the work of constructing it can begin right now, with the new system phased in gradually, as economic conditions permit. Instead of second-guessing the past and destroying its accomplishments, this reform would look forward and create conditions for a more promising future. Nobody gets a free lunch, and everybody has to take personal responsibility. But unlike what the governing elites are attempting, nobody gets thrown over the side.

Charges of ballot tampering fly last minute in Massachusetts vote

The Coakley campaign claims that a "serious violation" has taken place in the Massachusetts election, calling into question the validity of the election results even before the tally is in.

In a prepared statement, the campaign took issue with pre-marked ballots being given to voters, claiming that in five instances they were marked in favor of Republican candidate Scott Brown.

"We've received several independent and disturbing reports of voters across the state being handed ballots that are already marked in favor of Scott Brown," the Coakley campaign said. "This is obviously a serious violation, and our legal team is taking immediate steps to protect the integrity of this election.

"We do not yet know why this is happening, but you and everyone you know needs to be aware of the situation so that you can carefully inspect your ballot."

"The city clerk's office said a poll worker inadvertently handed out ballots that were already cast,"

Outsourcing War - Rise Of Private Military Contractors (PMCs)

In The Prince, Machiavelli (May 1469 - June 1527) wrote: "The mercenaries and auxiliaries are useless and dangerous, and if anyone supports his state by the arms of mercenaries, he will never stand firm or sure, as they are disunited, ambitious, without discipline, faithless, bold amongst friends, cowardly amongst enemies, they have no fear of God, and keep no faith with men." In an August 11, 2009 Global Research article titled, "The Real Grand Chessboard and the Profiteers of War," Peter Dale Scott called Private Military Contractors (PMCs) businesses "authorized to commit violence in the name of their employers....predatory bandits (transformed into) uncontrollable subordinates....representing....public power in....remote places." True enough. Those performing security functions are paramilitaries, hired guns, unprincipled, in it for the money, and might easily switch sides if offered more. Though technically accountable under international and domestic laws where they're assigned, they, in fact, are unregulated, unchecked, free from criminal or civil accountability, and are licensed to kill and get away with it. Political and institutional expediency affords them immunity and impunity to pretty much do as they please and be handsomely paid for it. So wherever they're deployed, they're menacing and feared with good reason even though many of their member firms belong to associations like the International Peace Operations Association (IPOA) and the British Association of Private and Security Companies (BAPSC). Their conduct codes are mere voluntary guidelines that at worst subject violators to expulsion. When IPOA wanted Blackwater USA investigated (later Blackwater Worldwide, now Xe - pronounced Zee) for slaughtering 28 Iraqis in Al-Nisour Square in central Baghdad and wounding dozens more on September 16, 2007, the company left the association and set up its own, the Global Peace and Security Operations Institute (GPSOI), with no conduct code besides saying: "Blackwater desires a safer world though practical application of ideas that create solution making a genuine difference to those in need (by) solving the seemingly impossible problems that threaten global peace and stability." Blackwater, now Xe, makes them far worse as unchecked hired guns. Wherever deployed, they operate as they wish, take full advantage, and stay unaccountable for their worst crimes, the types that would subject ordinary people to the severest punishments. In his book "Blackwater: The Rise of the World's Most Powerful Mercenary Army," Jeremy Scahill described a: "shadowy mercenary company (employing) some of the most feared professional killers in the world (accustomed) to operating without worry or legal consequences....largely off the congressional radar. (It has) remarkable power and protection within the US war apparatus" to practice violence with impunity, including cold-blooded murder of non-combatant civilians. Employing Mercenaries - A Longstanding Practice Called various names, including mercenaries, soldiers of fortune, dogs of war, and Condottieri for wealthy city states in Renaissance Italy, employing them goes back centuries. In 13th century BC Egypt, Rameses II used thousands of them in battle. Ancient Greeks and Romans also used them. So didn't Alexander the Great, feudal lords in the Middle Ages, popes since 1506, Napoleon, and George Washington against the British in America's war of independence even though by the early 18th century western states enacted laws prohibiting their citizens from bearing arms for other nations. Although the practice continued sporadically, until more recently, private armies fell out of favor. Defining a Mercenary Article 47 in the 1977 Protocol I to the Geneva Conventions provides the most widely, though not universally, accepted definition, based on six criteria, all of which must be met. "A mercenary is any person who: (a) is specially recruited locally or abroad in order to fight in an armed conflict; (b) does, in fact, take a direct part in the hostilities: (c) is motivated to take part in the hostilities essentially by the desire for private gain and, in fact, is promised, by or on behalf of a Party to the conflict, material compensation substantially in excess of that promised or paid to combatants of similar ranks and functions in the armed forces of the Party; (d) is neither a national of a Party to the conflict nor a resident of territory controlled by a Party to the conflict; (e) is not a member of the armed forces of a Party to the conflict; and (f) has not been sent by a State which is not a Party to the conflict on official duty as a member of its armed forces." This Article's Focus and Some Background This article covers the modern era of their resurgence, specifically America's use of private military contractors (PMCs) during the post-Cold War period. However, the roots of today's practice began in 1941 in the UK under Captain David Stirling's Special Air Service (SAS), hired to fight the Nazis in small hard-hitting groups. In 1967, he then founded the 20th century's first private military company, WatchGuard International. Others followed, especially during the 1980s Reagan-Thatcher era when privatizing government services began in earnest. As vice-president, GHW Bush applied it to intelligence, and then defense secretary Dick Cheney hired Brown and Root Services (now KBR, Inc., a former Halliburton subsidiary) to devise how to integrate private companies effectively into warfare. The Current Proliferation of PMCs According to PW Singer, author of "Corporate Warriors: The Rise of the Privatized Military Industry:" Included are companies offering "the functions of warfare....spanning a wide range of activities. They perform everything from tactical combat to consulting (to) mundane logistics....The result is that (the industry) now offers every function that was once limited to state militaries." Warfare, in part, has been privatized so that "any actor in the global system can access these skills and functions simply by writing a check." In the 1991 Gulf War, the Pentagon employed one PMC operative per 50 troops. For the 1999 Yugoslavia conflict, it was one for every 10, and by the 2003 Iraq War, PMCs comprised the second largest force after the US military. They've also been used in numerous civil wars globally in nations like Angola, Sierra Leone, the Balkans throughout the 1990s, Papua New Guinea, and elsewhere. From 1990 - 2000, they participated in 80 conflicts, compared to 15 from 1950 - 1989. Singer cites three reasons why, combined into "one dynamic:" 1. Supply and demand Since the Cold War ended in 1991, the US military downsized to about two-thirds its former size, a process Dick Cheney, as defense secretary, called BRAC - Base Realignment and Closure, followed by privatizing military functions. But given America's permanent war agenda, the Pentagon needed help, especially because of the proliferation of small arms, over 550 million globally or about one for every 12 human beings, and their increased use in local conflicts. 2. Changes in the conduct of war Earlier distinctions between soldiers and civilians are breaking down, the result of low-intensity conflicts against drug cartels, warlords and persons or groups aggressor nations call "terrorists," the same ones they call "freedom fighters" when on their side for imperial purposes. High-intensity warfare also changed, so sailors aboard guided missile ships, for example, serve along side weapons and technology company personal, needed for their specialized expertise. In addition, the combination of powerful weapons and sophisticated information technology let the Pentagon topple Saddam with one-fourth the number of forces for the Gulf War. This strategy can be just as effective in other conventional warfare theaters, depending on how formidable the adversary, but it doesn't work in guerrilla wars - the dilemma America faces in Afghanistan, earlier in Iraq and still now as violence there is increasing. 3. The "privatization revolution" Singer calls it a "change in mentality, a change in political thinking, (a) new ideology that" whatever governments can do, business can do better so let it. The transformation is pervasive in public services, including more spent on private police than actual ones in America. And the phenomenon is global. In China, for example, the private security industry is one of its fastest growing. By privatizing the military, America pierced the last frontier to let private mercenaries serve in place of conventional forces. Singer defines three types of companies: 1. "Military provider firms" Whatever their functions, they're used tactically as combatants with weapons performing services formerly done exclusively by conventional or special forces. 2. Military consulting companies They train and advise, much the way management consulting firms operate for business. They also provide personal security and bodyguard services. 3. Military support firms They perform non-lethal services. They're "supply-chain management firms....tak(ing) care of the back-end, (including) logistics and technology assistance...." They also supply intelligence and analysis, ordnance disposal, weapons maintenance and other non-combat functions. Overall, the industry is huge and growing, grossing over $100 billion annually worldwide, operating in over 50 countries. By far, the Pentagon is their biggest client, and in the decade leading up to the Iraq War, it contracted with over 3,000 PMCs, and now many more spending increasingly larger amounts. A single company, Halliburton and its divisions grossed between $13 - $16 billion from the Iraq War, an amount 2.5 times America's cost for the entire Gulf War. The company profits handsomely because of America's commitment to privatized militarization. More about it below. Since 2003, Iraq alone represents the "single largest commitment of US military forces in a generation (and) by far the largest marketplace for the private military industry ever." In 2005, 80 PMCs operated there with over 20,000 personnel. Today, in Iraq and Afghanistan combined, it's grown exponentially, according to US Department of Defense figures - nearly 250,000 as of Q 3, 2009, mostly in Iraq but rising in Afghanistan to support more troops. Not included are PMCs working for the State Department, 16 US intelligence agencies, Homeland Security, other branches and foreign governments, commercial businesses, and individuals, so the true total is much higher. In addition, as Iraq troops are drawn down, PMCs will replace them, and in Afghanistan, they already exceed America's military force. According to a September 21, 2009 Congressional Research Service (CRS) Report, as of June 2009, PMCs in Afghanistan numbered 73,968, and a later year end 2009 US Central Command figure is over 104,000 and rising. The expense is enormous and growing with CRS reporting that supporting each soldier costs $1 million annually, in large part because of rampant waste, fraud and abuse, unmonitored and unchecked. With America heading for 100,000 troops on the ground and more likely coming, $100 billion will be spent annually supporting them, then more billions as new forces arrive, and the Iraq amount is even greater - much, or perhaps most, from supplemental funding for both theaters on top of America's largest ever military budget at a time the country has no enemies except for ones it makes by invading and occupying other countries and waging global proxy wars. Regulating PMCs Efforts to do so have been fruitless despite the General Assembly trying in 1989 through the International Convention against the Recruitment, Use, Financing and Training of Mercenaries. It took over a decade to get the required 22 signatories, but neither America or other major PMC users were included. An earlier effort also failed when in 1987 a special UN rapporteur was established to examine "the use of mercenaries as a means of impeding the exercise of the right of peoples to self-determination." It was largely ignored, and a 2005 effort won't likely fare better under a working group for the same purpose. Nor will industry associations functioning more for show than a commitment to end bad practices that will always go on as long as rogue firms like Xe and others like it are employed. Singer noted how PMCs have been involved in some of the most controversial aspects of war - from over-billing to ritual slaughter of unarmed civilians. Yet none of them have ever been prosecuted, convicted or imprisoned, an issue Singer cites in listing five "dilemmas:" 1. Contractual ones - hiring PMCs for their skills, to save money, or do jobs nations prefer to avoid. Yet unaccountability injects a "worrisome layer of uncertainty" into military operations, opening the door to unchecked abuses. 2. PMCs constitute an unregulated global business operating for profit, not peace and security when skilled killers are hired - former Green Berets, Delta Force soldiers, Navy Seals, and foreign ones like the British SAS. 3. Conducting public policy as serious as war through private means is worrisome, including covert operations to avoid official oversight and legislative constraints. 4. Moving private companies into the military sphere creates disturbing gray areas. PMCs can't be court martialed, and international law doesn't cover them. Further, operating in war zones makes them even less accountable as who can prove their actions weren't in self-defense, even against unarmed civilians. 5. Increasing PMC use also "raises some deep questions about the military itself." How do you retain the most talented combat troops when they can sell their skills for far greater pay? Also consider the uniqueness of the military. "It is the only profession that has its own court system, its own laws; the only profession that has its own grocery stores and separate bases;" its own pensions and other benefits for those staying around long enough to qualify. So what happens when it's transformed into a business with profit the prime motive? Simple - more wars, greater profits. The same idea as privatizing prisons - more prisoners, fatter bottom line. Another consideration is also worrisome. Given America's imperial ambitions, global dominance, permanent war agenda, and virtual disregard for the law, public distrust is growing for politicians who never earned it in the first place. Given the Pentagon's transformation since 1991, the number of services it privatized, and America's permanent war agenda, what will conditions be in another decade or a few years? How much more prominent will PMCs be? How much more insecurity will result? How soon will it be before hordes of them are deployed throughout America as enforcers in civilian communities outside of conflict zones, with as much unaccountability here as abroad? What will the nation be like if it happens? Halliburton/KRB In his book, "Halliburton's Army: How a Well-Connected Texas Oil Company Revolutionized the Way America Makes War," Pratap Chatterjee describes a company tainted by bribes, kickbacks, inefficiency, corruption and fraud, exploitation of workers as near-slaves, and other serious offenses, yet operates with impunity and sticks taxpayers with many billions of dollars in charges. Before spun off in 2007, KBR won the bulk of Iraq contracts as part of Halliburton, many of them no-bid. Earlier from 2002 to March 2003, it was involved with the Pentagon in planning the war and its role once it ended - the one co-founder George Brown claimed Lyndon Johnson described in the 1960s as a "joint venture (in which) I'm going to take care of politics and you're going to take care of the business side of it." Fast forward, and nothing's changed. In a February 19, 2009 article, titled "Inheriting Halliburton's Army," Chatterjee writes how their employees are in "every nook and cranny of US bases in Iraq and Afghanistan," yet stateside operations yield additional billions in revenue. He describes their "shoddy electrical work, unchlorinated shower water, overcharges for trucks sitting idle in the desert, deaths of KRB (its former subsidiary) employees and affiliated soldiers in Iraq, alleged million-dollar bribes accepted by KBR managers, and billions of dollars in missing receipts, among the slew of other complaints" that got wide publicity since the beginning of the Iraq war. He explains that since it got a 2001 contract to supply US forces in combat theaters, KBR grossed over $25 billion. It then got new contracts under Obama, leading Chatterjee to ask: "How did the US military become this dependent on one giant company?" Tracing its history since the 1960s, he noted its connection to Lyndon Johnson, its profiteering from the Vietnam War, again under Ronald Reagan, then more under GHW Bush and Dick Cheney, his defense secretary who accelerated the Pentagon's privatization agenda, then headed the company as CEO. Bill Clinton continued it, hiring KBR in 1994 to build bases in Bosnia, later Kosovo, and run their daily operations. Then under Bush/Cheney, outsourcing accelerated further, so today there's one KBR worker for every three US soldiers in Iraq. They build base infrastructure and maintain them by handling all their duties - feeding soldiers, doing their laundry, performing maintenance, and virtually all other non-combat functions. Despite its abusive practices, KBR is such an integral part of the Pentagon that Chatterjee asks "could Obama dismiss (its) army, even if he wanted to?" Not at all so expect KRB's $150 billion 10-year LOGCAP contract (the Army's Logistics Augmentation Program - beginning September 20, 2008) to continue, and KBR's army to remain on the march reaping billions from the public treasury as the nation's largest PMC war profiteer. PMCs Under Obama In February 2007, Senator Obama introduced the Transparency and Accountability in Military Security Contracting Act as an amendment to the 2008 Defense Authorization Act, requiring federal agencies to report to Congress on the numbers of security contractors employed, killed, wounded, and disciplinary actions taken against them. Referred to the Senate Armed Services Committee, it never passed. Then in February 2009 as president, Obama introduced reforms to reduce PMC spending and shift outsourced work back to government. He also promised to improve the quality of acquisition workers - government employees involved in supervising and auditing billions of dollars spent monthly on contracts. Even so, PMCs are fully integrated into national security and other government functions, as evidenced by the massive numbers in Iraq and Afghanistan alone. Earlier, PMCs were at times used in lieu of US forces. As mentioned above, they helped General Washington win America's war of independence. Later the war of 1812, and in WW II the Flying Tigers fought the Japanese for China's Chiang Kai-Shek. In the 1960s and early 1970s, they were prominent nation builders in South Vietnam. From 1947 through 1976, the CIA's Southern Air Transport performed paramilitary services, including delivering weapons to the Contras in Nicaragua in the 1980s. In 1985, the Army's LOGCAP was a precursor for more extensive civilian contractor use in wartime and for other purposes. It's involved in pre-planned logistics and engineering or construction contracts, including vehicle maintenance, warehousing, base building abroad, and a range of non-combat functions on them. The Clinton administration's "Reinventing Government" initiative promised to downsize it by shifting functions to contractors as a way cut costs and improve efficiency. Later under George Bush, private companies got to compete for 450,000 government jobs, and in 2001, the Pentagon's contracted workforce exceeded civilian DOD employees for the first time. In 2002, under Army Secretary Thomas White, the military planned to increase its long-term reliance on contracted workers, a plan known as the "Third Wave" after two earlier ones. Its purposes were to free up military manpower for the global war on terror, get non-core products and services from private sources so Army leaders could focus on their core competencies, and support Bush's Management Agenda. In April 2003, the initiative stalled when White resigned, among other reasons for a lack of basic information required to effectively manage a growing PMC force, then estimated to be between 124,000 - 605,000 workers. Today, more precise figures are known and for what functions, but a lack of transparency and oversight makes it impossible for the public, Congress, the administration, or others in government to assess them with regard to cost, effectiveness, their services, whether government or business should perform them, and their effect on the nation for good or ill, with strong evidence of the latter. The 2008 Montreux Document is an agreement obligating signatories with regard to their PMCs in war zones. Seventeen nations ratified it, including America, Britain, France, Germany, Switzerland, Canada and China, pledging to promote responsible PMC conduct in armed conflicts. Divided in two sections, its first one covers international laws binding on private contractors, explains states can't circumvent their obligations by using them, requires they take appropriate measures to prevent violations, address them responsibly when they do, and take effective steps to prevent future occurrences. The second section lists 70 practices for helping countries fulfill their legal obligations, including not using PMCs for activities requiring force, implementing effective control, using surveillance and sanctions in case of breaches, and regulating and licensing contracted companies, that in turn, must train their personnel to observe the rules of law. Given the obvious conflicts of interest, self-regulation won't work. Unchecked, combatant PMCs are accountable only to themselves, operating secretly outside the law - for the Pentagon as an imperial tool. Given Obama's permanent war agenda and how entrenched PMCs have become, expect little constructive change, save for tinkering around the edges and regular rhetorical promises, followed by new fronts in the war on terror and even greater numbers civilians and soldiers for them. Then add hundreds more billions diverted from vital homeland needs to enrich thousands of war profiteers, addicted to sure-fire blood money, and expecting plenty more ahead. They'll get it unless enough public outrage demands an end to this madness before it's too late to matter. Some Final Comments On January 13 (on antiwar.com), Jeremy Scahill reported that Representative Jan Schakowsky (D. IL and House Permanent Select Committee on Intelligence member): "is preparing to introduce legislation (Stop Outsourcing Security Act - SOS) aimed at ending the US government's relationship with Blackwater and other armed contracting companies." Originally introduced in 2007 but not passed, Schakowsky says: "The legislation would prohibit the use of private contractors for military, security, law enforcement, intelligence, and armed rescue functions unless the President tells Congress why the military is unable to perform those functions. It would also increase transparency over any remaining security contracts by increasing reporting requirements and giving Congress access to details about large contracts." Meanwhile on January 12, 2010, a coalition of groups opposed to Blackwater called on Congress to investigate why criminal charges against the company were dismissed on grounds of prosecutorial misconduct. They also want to "pull the funding on war profiteers like Blackwater (and) stop them for good." It's a tall order given how entrenched they are and expanding. In Haiti, for example, reports say Blackwater is there providing security, an indication perhaps of more contingents to follow, from them and other armed contractors, "authorized to commit violence in the name of their employers." Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached at lendmanstephen@sbcglobal.net. Also visit his blog site at sjlendman.blogspot.com and listen to the Lendman News Hour on RepublicBroadcasting.org Monday - Friday at 10AM US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listening.