Thursday, January 21, 2010

U.S.-China Military Tensions Grow

Even though the U.S. military budget is almost ten times that of China's (with a population more than four times as large) and Washington plans a record $708 billion defense budget for next year compared to Russia spending less than $40 billion last year for the same, China and Russia are portrayed as threats to the U.S. and its allies.

China has no troops outside its borders; Russia has a small handful in its former territories in Abkhazia, Armenia, South Ossetia and Transdniester. The U.S. has hundreds of thousands of troops stationed in six continents.

While Gates was in charge of the wars in Afghanistan and Iraq and responsible for almost half of international military spending he was offended that the world's most populous nation might desire to "deny others countries the ability to threaten it."

On December 23 of last year Raytheon Company announced that it had received a $1.1 billion contract with Taiwan for the purchase of 200 Patriot anti-ballistic missiles. In early January the U.S. Defense Department cleared the transaction "despite opposition from rival China, where a military official proposed sanctioning U.S. firms that sell arms to the island." [1]

The sale completes a $6.5 billion weapons package approved by the previous George W. Bush administration at the end of 2008. In the words of the Asia bureau chief of Defense News, "This is the last piece that Taiwan has been waiting on." [2]

Defense News first reported on the agreement and reminded its readers that "Raytheon already won smaller contracts for Taiwan in January 2009 and in 2008 for upgrades to the Patriot systems the country already had. Those contracts were to upgrade the systems to Configuration 3, the same upgrade the company is completing for the U.S. Army."

The source also described what the enhanced Patriot capacity consisted of: "Configuration 3 is Raytheon's most advanced Patriot system and allows the use of Lockheed Martin's Patriot Advanced Capability-3 (PAC-3) missiles [and] Raytheon's Guidance Enhanced Missile-Tactical [Patriot-2 upgrade] missiles...." [3]

The PAC-3 is the latest, most advanced Patriot missile design and the first capable of shooting down tactical ballistic missiles. It is the initial tier of a layered missile shield system which also includes Terminal High Altitude Area Defense (THAAD), Ground Based Interceptor (GBI), Ground-Based Midcourse Defense (GMD), Terminal High Altitude Area Defense (THAAD), ship-based Aegis Ballistic Missile Defense equipped with Standard Missile-3 (SM-3) interceptors, Forward Based X-Band Radar (FBXB) and Exoatmospheric Kill Vehicle (EKV) components. An integrated network that ranges from the battlefield to the heavens.

The system is modular and highly mobile and its batteries are thus more easily able to evade detection and attack. It also extends the range of previous Patriot versions several fold.

"[T]he PAC-3 interceptors, enhanced by [an] advanced radar and command center, are capable of protecting an area approximately seven times greater than the original Patriot system." [4]

If like the rest of the world Chinese authorities anticipated a reduction if not halt in the pace of American global military expansion with the advent of a new administration in Washington a year ago, like everyone they else have been rudely disabused of the notion.

Vice Foreign Minister He Yafei urged the United States to reconsider the Taiwan arms package in the sixth official Chinese warning in a week earlier this month, telling his nation's Xinhua News Agency that "China had strongly protested the U.S. government's recent decision to allow Raytheon Company and Lockheed Martin Corp. to sell weapons to Taiwan" and "The U.S. arms sales to Taiwan undermine China's national security." [5]

Later information added to the inventory and to China's ire when it was revealed that "the Obama Administration would soon announce the sale to Taiwan of a package worth billions of U.S. dollars including Black Hawk helicopters, anti-missile systems and plans for diesel-powered submarines in a move likely to anger China." [6]

In addition, the China Times reported that Taiwan was to obtain eight second-hand Oliver Hazard Perry-class frigates from the U.S. in addition to the 200 Patriot missiles. The warships were designed in the 1970s as comparatively inexpensive alternatives to World War II-era destroyers. The new deal will double the amount of U.S. Perry-class frigates that Taiwan already possesses to 16.

They will also factor into missile defense and at a higher level, as "The island hopes to arm them with a version of the advanced Aegis Combat System (see above), which uses computers and radar to take out multiple targets, as well as sophisticated missile launch technology...." [7]

While both Washington and Taipei will present the weapons transactions as strictly defensive in nature, it is worth recalling that last autumn Taiwan conducted its "largest-ever missile test...launched from a secretive and tightly guarded base in southern Taiwan" with missiles "capable of reaching major Chinese cities." [8]

President Ma Ying-jeou observed the missile launches which "included the test-firing of a top secret, newly developed medium-range surface-to-surface missile with a range of 3,000 kilometres, capable of striking major cities in central, northern and southern China." [9]

The Patriot Advanced Capability and SM-3 interceptor missiles the U.S. is providing Taiwan could well be employed to counter a mainland Chinese counterattack or at the least protect the launch sites of Taiwanese medium range missiles which, as noted above, are capable of hitting most of China's major cities.

Beijing responded on January 11 by conducting a ground-based midcourse interceptor missile test over its territory.

Professor Tan Kaijia of the People's Liberation Army's (PLA) National Defense University told Xinhua "If the ballistic missile is regarded as a spear, now we have succeeded in building a shield for self-defense." [10]

Time Magazine characterized the significance of the test in writing: "There's no chance China's gambit will deter the U.S. from backing Taiwan....But the test does signal a ratcheting up of tensions between Beijing and Washington...." [11]

Both China and the U.S., the first in 2007 and the second the following year, with a Standard Missile-3 fired from an Aegis-class frigate in the Pacific Ocean in the American case, destroyed satellites in orbit. The dawn of space war had begun.

A January 15 feature on a Russian website titled "Possible space wars in the near future" provided background information. "It is hard to overestimate the role played by military satellite systems. Since the 1970s, an increasingly greater number of troop-control, telecommunications, target-acquisition, navigation and other processes depend on spacecraft which are therefore becoming more important...The space echelon's role is directly proportional to the development level of any given nation and its armed forces." [12]

China and Russia for years have been advocating a ban on the use of space for military purposes, annually raising the issue in the United Nations. The U.S. has just as persistently opposed the initiatives.

To comprehend the context in which recent developments have occurred, Washington has for three years increasingly and tenaciously included China and Russia with Iran and North Korea as belligerents in prospective future conflicts.

The campaign began in earnest in February of 2007 when then and still Pentagon chief Robert Gates testified before the U.S. House Armed Services Committee on the Defense Department Fiscal Year 2008 Budget Request and said among other matters:

"In addition to fighting the global war on terror, we also face the danger posed by Iran and North Korea's nuclear ambitions and the threat they pose not only to their neighbors, but globally because of their record of proliferation; the uncertain paths of China and Russia, which are both pursuing sophisticated military modernization programs; and a range of other flashpoints and challenges....We need both the ability for regular force-on-force conflicts because we don't know what's going to develop in places like Russia and China, in North Korea, in Iran and elsewhere." [13]

If it be objected that Gates was only alluding to general contingency plans, ones that could apply to any major nation, neither his comments nor any by U.S. defense officials since have mentioned fellow nuclear powers Britain, France, India and Israel in a similar vein, but have reiterated concerns about Russia and China with an alarming consistency. In fact China and Russia have been substituted for Iraq in the former axis of evil category.

Even though the U.S. military budget is almost ten times that of China's (with a population more than four times as large) and Washington plans a record $708 billion defense budget for next year compared to Russia spending less than $40 billion last year for the same, China and Russia are portrayed as threats to the U.S. and its allies. China has no troops outside its borders; Russia has a small handful in its former territories in Abkhazia, Armenia, South Ossetia and Transdniester. The U.S. has hundreds of thousands of troops stationed in six continents.

Russia and China both reacted harshly to Gates' statements in February of 2007 and only three days afterward, with Gates in the audience, Russian President Vladimir Putin delivered a speech at the annual Munich Security Conference in which he warned:

"[W]hat is a unipolar world? However one might embellish this term, at the end of the day it refers to one type of situation, namely one centre of authority, one centre of force, one centre of decision-making.

"It is world in which there is one master, one sovereign. And at the end of the day this is pernicious not only for all those within this system, but also for the sovereign itself because it destroys itself from within."

"Unilateral and frequently illegitimate actions have not resolved any problems. Moreover, they have caused new human tragedies and created new centres of tension. Judge for yourselves: wars as well as local and regional conflicts have not diminished....And no less people perish in these conflicts - even more are dying than before. Significantly more, significantly more!

"Today we are witnessing an almost uncontained hyper use of force - military force - in international relations, force that is plunging the world into an abyss of permanent conflicts."

"One state and, of course, first and foremost the United States, has overstepped its national borders in every way. This is visible in the economic, political, cultural and educational policies it imposes on other nations...." [14]

The warning was not heeded in Washington.

Three months later the Pentagon chief resumed his earlier accusations. In May of 2007 the Defense Department issued its annual report on China’s military capability, citing "continuing efforts to project Chinese power beyond its immediate region and to develop high-technology systems that can challenge the best in the world."

"U.S. Defense Secretary Robert Gates says some of China’s efforts cause him concern."

The report said "China is pursuing long-term, comprehensive transformation of its military forces” to "enable it to project power and deny other countries the ability to threaten it." [15] While Gates was in charge of the wars in Afghanistan and Iraq and responsible for almost half of international military spending he was offended that the world's most populous nation might desire to "deny others countries the ability to threaten it."

A year after Gates linked China and Russia with surviving "axis of evil" suspects Iran and North Korea, National Director of Intelligence Michael McConnell singled out China, Russia and the Organization of the Petroleum Exporting Countries (OPEC) as the main threats to the United States, even more than al-Qaeda.

The Voice of Russia responded to McDonnell's accusations in a commentary that included these excerpts:

"Russia has demanded an explanation from America over a report by the Director of American national intelligence in which Russia, China, Iraq, Iran, North Korea and al-Qaida are described as sources of strategic threats to the U.S....Quite possibly, the report by the U.S intelligence community amounts to accounting for the staggering sums of money that is allocated yearly for its upkeep. There could be other reasons to explain why Russia has been included among states posing a threat to America." [16]

Gates has remained as defense secretary for the new American administration and so has the anti-Chinese and anti-Russian rhetoric.

On May 1 of last year Secretary of State Hillary Clinton said that "The Obama administration is working to improve deteriorating U.S. relations with a number of Latin American nations to counter growing Iranian, Chinese and Russian influence in the Western Hemisphere...." [17] The month after she spoke those words a military coup was staged in Honduras and two weeks after that the U.S. secured the use of seven military bases in Colombia.

In September Director of National Intelligence Dennis Blair issued the U.S.'s quadrennial National Intelligence Strategy report which said "Russia, China, Iran, and North Korea pose the greatest challenges to the United States' national interests. [18]

Agence France-Presse said that "The United States on [September 15] put emerging superpower China and former Cold War foe Russia alongside Iran and North Korea on a list of the four main nations challenging American interests" and quoted from Blair's report:

China was fingered for its "increasing natural resource-focused diplomacy and military modernization."

"Russia is a US partner in important initiatives such as securing fissile material and combating nuclear terrorism, but it may continue to seek avenues for reasserting power and influence in ways that complicate US interests." [19]

China is not allowed to deny other nations the ability to threaten it and Russia is not permitted to complicate U.S. interests.

The trend, ominous in its relentlessness, continues into this year.

The vice president of Lockheed Martin's Missile Defense Systems, John Holly, touted his company's role in the Aegis Ballistic Missile Defense System - components of which are being delivered to Taiwan - as "the shining star" of Lockheed's interceptor missile portfolio, and according to a newspaper in the city which hosts the Pentagon's Missile Defense Agency "Pointing to missile programs in North Korea, Iran, Russia and China, Holly said, 'the world is not a very safe world ... and it is incumbent upon us in industry to provide [the Pentagon] with the best capabilities.'" [20]

Three days afterward the Pentagon's Assistant Secretary of Defense for Asian and Pacific Security Affairs Wallace Gregson "voiced doubts about China's insistence that its use of space is for peaceful means" and stated "The Chinese have stated that they oppose the militarization of space. Their actions seem to indicate the contrary intention." [21]

The next day Admiral Robert Willard, head of the U.S. Pacific Command, stated in testimony before the House Armed Services Committee that China's "powerful economic engine is also funding a military modernization program that has raised concerns in the region — a concern also shared by the U.S. Pacific Command." [22]

The U.S. Navy has six fleets and eleven aircraft carrier strike groups in or available for deployment to all parts of the world, but China with only a "brown water" navy off its own coast is a cause for concern to the U.S.

As Alan Mackinnon, the chairman of the Scottish Campaign for Nuclear Disarmament, wrote last September:

"The world of war is today dominated by a single superpower. In military terms the United States sits astride the world like a giant Colossus. As a country with only five per cent of the world's population it accounts for almost 50 per cent of global arms spending.

"Its 11 naval carrier fleets patrol every ocean and its 909 military bases are scattered strategically across every continent. No other country has reciprocal bases on US territory - it would be unthinkable and unconstitutional. It is 20 years since the end of the Cold War and the United States and its allies face no significant military threat today. Why then have we not had the hoped-for peace dividend?

Why does the world's most powerful nation continue to increase its military budget, now over $1.2 trillion a year in real terms?

What threat is all this supposed to counter?

"The US response has been largely military - the expansion of NATO and the encirclement of Russia and China in a ring of hostile bases and alliances. And continuing pressure to isolate and weaken Iran." [23]

Observations to be kept in the forefront of people's minds as China is increasingly presented as a security challenge - and a strategic threat - to the world's sole military superpower.

“War on terror” as a cover for US terrorism

By Paul J. Balles

Paul J. Balles considers the USA’s use of the so-called “war on terror” as a cover for US state-sponsored terrorism against anyone who stands in the way of Washington’s global hegemonic ambitions or even questions US or Israeli policies.

Dissent is no longer the duty of the engaged citizen but is becoming an act of terrorism. (Chris Hedges)

It's ironic. It's hypocritical. It's a fraud. The "war on terrorism" branded by America is a propaganda cover for the worst terrorists in the world.

What was the invasion and occupation of Iraq but an act of terrorism? Everyone now knows that the faux war was born of a fraud. The deception had no legitimate purpose except to terrorize countries that (a) produce oil, (b) harbour Al-Qaeda or (c) threaten Israel.

Even the invasion of Afghanistan, considered a legitimate response to 9/11, could have been avoided. The Taliban appropriately asked the US to provide evidence of Osama bin Laden's complicity in the 9/11 affair before deporting him.

Instead, we attacked Afghanistan to the cheers of terrorizing avengers. "We'll show you what we do to those who terrorize America!" was the mantra. The USA is still terrorizing Afghanistan, thereby increasing Al-Qaeda cells.

The icing on the spread-fear cake has involved the USA terrorizing Libya, Somalia, Sudan and Yemen. Not only are the countries America bombs terrorized. Every other country that might disobey our commands is threatened and made to fear for its existence.

Human life outside America and its stooges isn't worth a tinker's damn to terrorist America. Some 567,000 Iraqi children under the age of five died from American sanctions on Iraq. On 60 minutes in 1996, Secretary of State Madeleine Albright said: "We think the price is worth it."

As of January 2010 and since the invasion and occupation of Iraq in 2003, 1,366,350 Iraqi lives have been lost to terrorist slaughterers. "Never mind," you say? "The price is worth it. Beside, they’re only Muslims who want to multiply and take over the world."

Guantanamo, Abu Ghraib, Bagram and rendition programmes have been nothing but terrorizing to plant fear in the hearts and minds of any Arab or Muslim with negative feelings toward America.

Something about being a terrorist of "lesser breeds” tends to become a mindset that disregards national identities. Even Americans can become the objects of American terrorists. American Arabs and Muslims have been the objects of terrorism ever since 9/11.

According to Chris Hedges, “An Arab American, Syed Fahad Hashmi, made provocative statements, including calling America “the biggest terrorist in the world”. That led to his arrest and prosecution on trumped up charges, in much the same way that Professor Sami al-Aryan lost his job and freedom for being an outspoken critic of US and Israeli policy.

Hedges relates the terrorizing effect of these prosecutions even of American citizens. “The state,” he says, “can detain and prosecute people not for what they have done, or even for what they are planning to do, but for holding religious or political beliefs that the state deems seditious. The first of those targeted have been observant Muslims, but they will not be the last.

Chris Floyd points to incidents in countless towns and villages across America's terror war fronts in Iraq, Afghanistan, Somalia and Yemen where a multitude of grieving, angry Iraqis are further embittered against the American occupation by America's terrorist killings.

"You want to stop the 'radicalization' of young Muslims? Chris asks. "It's simple: stop killing innocent Muslims in wars of domination all over the world. Stop running ‘covert ops’ in every nation of the world (as Obama's ‘special envoy’ Richard Holbrooke admitted last week) – murders, kidnappings, corruption and deception that make a howling mockery of the very ‘civilized values’ these wars and ops purport to defend."

If America wants to stop terrorism, it needs to stop terrorizing the world.

The Times to Charge for Frequent Access to Its Web Site

Taking a step that has tempted and terrified much of the newspaper industry, The New York Times announced on Wednesday that it would charge some frequent readers for access to its Web site — news that drew ample reaction from media analysts and consumers, ranging from enthusiastic to withering.

Starting in January 2011, a visitor to will be allowed to view a certain number of articles free each month; to read more, the reader must pay a flat fee for unlimited access. Subscribers to the print newspaper, even those who subscribe only to the Sunday paper, will receive full access to the site without any additional charge.

Executives of The New York Times Company said they wanted to create a system that would have little effect on the millions of occasional visitors to the site, while trying to cash in on the loyalty of more devoted readers. But fundamental features of the plan have not yet been decided, including how much the paper will charge for online subscriptions or how many articles a reader will be allowed to see without paying.

“This announcement allows us to begin the thought process that’s going to answer so many of the questions that we all care about,” Arthur Sulzberger Jr., the Times Company chairman and publisher of the newspaper, said in an interview. “We can’t get this halfway right or three-quarters of the way right. We have to get this really, really right.”

For years, publishers banked on a digital future supported entirely by advertising, dismissing online fees as little more than a formula for shrinking their audiences and ad revenue. But two years of plummeting advertising has many of them weighing anew whether they might collect more money from readers than they would lose from advertisers.

Financial analysts and writers who follow the media business had mostly qualified praise for the decision of The Times. is the most popular newspaper site in the country, with more than 17 million readers a month in the United States, according to Nielsen Online; analysts say it is the leader in advertising revenue, as well, giving The Times more to lose if the move backfires.

“You can’t continue to be The New York Times unless you find” a new source of revenue, said James McQuivey, media analyst at Forrester Research.

Mike Simonton, an analyst at Fitch Ratings, said, “We expect that The Times will be able to execute a strategy like this,” adding that other papers will try it in the near future, but few are likely to succeed.

But the response was far from universally positive. Felix Salmon, a respected writer on media for Reuters, wrote, “Successful media companies go after audience first, and then watch revenues follow; failing ones alienate their audience in an attempt to maximize short-term revenues.”

Others endorsed the idea of a pay wall generally, while criticizing the approach of The Times.

Thousands of readers sent e-mail messages to The Times or posted comments on the site Wednesday, with those saying they supported the move outnumbered by others who vowed not to pay.

Shares of the Times Company fell 39 cents, closing at $13.31.

All visitors to will have full access to the home page. In addition, readers will be able to read individual articles through search sites like Google, Yahoo and Bing without charge. After that first article, though, clicking on subsequent ones will count toward the monthly limit. Among the nation’s largest newspapers, only The Wall Street Journal and Newsday charge for access to major portions of their Web sites. A few smaller ones also do, including The Financial Times, The Arkansas Democrat-Gazette and The Albuquerque Journal, and more are expected to join their ranks this year.

The Times Company has been studying the matter for almost a year, searching for common ground between pro- and anti-pay camps. Company executives said the changes would wait another year primarily because they need to build pay-system software that works seamlessly with and the print subscriber database.

“There’s no prize for getting it quick,” said Janet L. Robinson, the company’s president and chief executive. “There’s more of a prize for getting it right.”

Within the newsroom of The Times, where there has long been strong sentiment in favor of charging, the primary criticism was about the wait until 2011.

“I think we should have done it years ago,” said David Firestone, a deputy national news editor. “As painful as it will be at the beginning, we have to get rid of the notion that high-quality news comes free.”

The Times has tried and abandoned more limited online pay models. In the 1990s it charged overseas readers, and from 2005 to 2007 the newspaper’s TimesSelect service charged for access to editorials and columns.

Company executives said the current decision was not a reaction to the ad recession but a long-term strategy to develop new revenue. “This is a bet, to a certain degree, on where we think the Web is going,” Mr. Sulzberger said. “This is not going to be something that is going to change the financial dynamics overnight.”

Most readers who go to the Times site, as with other news sites, are incidental visitors, arriving no more than once in a while through searches and links, and many of them would be unaffected by the new system. A much smaller number of committed readers account for the bulk of the site visits and page views, and the essential question is how many of them will pay.

The Times Company looked at several approaches, including a straightforward pay wall similar to The Journal’s, which makes some articles available to any visitor, and others accessible only to paying readers. It also rejected the ideas of varying the price depending on how much a consumer uses the site, and a “membership” format similar to the one used in public broadcasting.

The approach the company took was “the one that after much research and study we determined has the most upside” in both subscriptions and advertising, said Martin A. Nisenholtz, senior vice president for digital operations. “We’re trying to maximize revenue. We’re not saying we want to put this revenue stream above that revenue stream. The goal is to maximize both revenue streams in combination.”

U.S. Housing Starts Down 39% in 2009

U.S. housing starts fell 4% to a seasonally adjusted annual rate of 557,000 in December compared with the revised November estimate of 580,000.

For the full year, housing starts were down 38% to an estimated 553,800 housing units versus the 2008 figure of 905,500.

Of note, however, building permits, which signal potential future construction jumped by 11% during the month to a seasonally adjusted rate of 653,000 – the highest level in more than a year.

US housing starts unexpectedly fall in Dec

WASHINGTON, Jan 20 (Reuters) - New U.S. housing starts unexpectedly fell in December, pulled down by a drop in construction activity for single-family dwellings, a government report showed on Wednesday.


The Commerce Department said housing starts fell 4 percent to a seasonally adjusted annual rate of 557,000 units. Analysts polled by Reuters had expected housing starts to rise to 580,000 units. November's housing starts were revised upwards to 580,000 units from the previously reported 574,000 units. The drop in housing starts was likely the result of unusually cold weather last month.

Groundbreaking activity dropped a record 38.8 percent to an all-time low of 553,000 units for the whole of 2009.

Starts for single-family homes fell 6.9 percent last month to an annual rate of 456,000 units after rising 4.0 percent in November. Groundbreaking for the volatile multifamily segment rose 12.2 percent to a 101,000 unit annual pace, after surging 69.8 percent in November.

Housing is on the mend after a three-year slump and new home construction contributed to economic growth in the third quarter of 2009 for the first time since 2005.

However data such as pending home sales and homebuilder sentiment have hinted at potential weakness in a sector whose collapse triggered the most brutal U.S. recession since the Great Depression of the 1930s.

New building permits, which give a sense of future home construction, rose 10.9 percent to 653,000 units last month, the highest since October 2008. That compared to analysts' forecasts for 590,000 units. For the whole of 2009, permits dropped 36.9 percent, the department said.

The inventory of total houses under construction dropped 3.8 percent to a record low of 511,000 units last month, while the total number of permits authorized but not yet started rose 8.4 percent to 95,800 units. (Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Illinois enters a state of insolvency

As Illinois' fiscal crisis deepens, the word "bankruptcy" is creeping more and more into the public discourse.

"We would like all the stakeholders of Illinois to recognize how close the state is to bankruptcy or insolvency," says Laurence Msall, president of the Civic Federation, a fiscal watchdog in Chicago.

"Bankruptcy is the reality that looms out there," Republican gubernatorial candidate Andrew McKenna Jr. says.

While it appears unlikely or even impossible for a state to hide out from creditors in Bankruptcy Court, Illinois appears to meet classic definitions of insolvency: Its liabilities far exceed its assets, and it's not generating enough cash to pay its bills. Private companies in similar circumstances often shut down or file for bankruptcy protection.

"I would describe bankruptcy as the inability to pay one's bills," says Jim Nowlan, senior fellow at the University of Illinois' Institute of Government and Public Affairs. "We're close to de facto bankruptcy, if not de jure bankruptcy."

Legal experts say the protections of the federal bankruptcy code are available to cities and counties but not states.

While Illinois doesn't have the option of shutting its doors or shedding debts in a bankruptcy reorganization, it seems powerless to avert the practical equivalent. Despite a budget shortfall estimated to be as high as $5.7 billion, state officials haven't shown the political will to either raise taxes or cut spending sufficiently to close the gap.

As a result, fiscal paralysis is spreading through state government. Unpaid bills to suppliers are piling up. State employees, even legislators, are forced to pay their medical bills upfront because some doctors are tired of waiting to be paid by the state. The University of Illinois, owed $400 million, recently instituted furloughs, and there are fears it may not make payroll in March if the shortfall continues.

Without quick corrective action or a sharp economic upturn, Illinois is headed toward a governmental collapse. At some point, unpaid vendors will stop bidding on state contracts, investors will refuse to buy Illinois bonds and state employees will get paid in scrip, as California did last year.

"The crisis will come when you see state institutions shutting down because they can't pay their employees," says David Merriman, head of the economics department at the University of Illinois at Chicago.

A record $5.1 billion in state bills was past due at yearend, almost doubling to 92 days from 48 days a year earlier the average amount of time it takes the state to pay vendors such as doctors, hospitals, non-profit service providers and other contractors.

"I don't see any light at the end of the tunnel," says Dan Strick, CEO of SouthStar Services, a Chicago Heights non-profit that helps people with developmental disabilities. "It seems to be getting worse and worse, and the delays longer and longer." SouthStar hasn't been paid since July, forcing him to borrow to keep afloat.

State tax receipts from July through December last year were running more than $1 billion behind 2008, including a $460-million plunge in sales taxes and a $349-million drop in personal income taxes. Even with a 22% increase in money from the federal government, thanks largely to the stimulus program, total state revenues were down 2.1%, or $284 million, from the previous year.

While new spending is down nearly 2% in the six months ended in December, the state started the fiscal year $3.9 billion in the hole from the previous year's unpaid bills, which means actual spending was up 2.2%, according to the Illinois comptroller's most recent report.

The resulting $5.1-billion backlog of unpaid bills doesn't include $1.4 billion in Medicaid and group health bills that haven't been processed, plus $2.25 billion in short-term borrowing that must be repaid soon.

Illinois is living hand to mouth, paying bills as revenues come in each day, building up cash when special payments are coming due. Cash on hand varies from day to day, sometimes dipping below $1 million, says a spokeswoman for Illinois Comptroller Dan Hynes.

The state's credit rating has been steadily worsening since 1997, with three downgrades in the past 13 months. "The absence of recurring solutions in the next year to deal with the current budget challenges and begin to stabilize liquidity will likely result in a further downgrade of Illinois," Standard & Poor's said last month.

As credit ratings dropped, the state has to pay more to borrow. The state also has to pay interest on bills unpaid after 90 days, adding further to its costs.

The real fear is that the state could eventually be unable to plug its budget gaps with short-term borrowing. Illinois is still a long way from Arkansas during the Great Depression, believed to be the only instance in the past century when a state defaulted on its debt. But California was forced to seek a federal guarantee for its borrowing last year when credit dried up. It didn't get the guarantee, and state officials are now seeking a $6.9-billion federal bailout.

While California has an even bigger budget hole to fill, Illinois ranks dead last among the states in terms of negative net worth compared with total expenditures. The state's liabilities, including future pension payments, exceed its unrestricted assets by $39 billion, more than 72% of its total expenditures as of mid-2008, according to Richard Ciccarone, managing director and chief research officer at McDonnell Investment Management LLC, an Oak Brook money manager that invests in bonds. "It's probably higher now," he adds.

Investors like Mr. Ciccarone already are starting to wonder if Illinois' shaky finances and rising debt are a threat to the regular, on-time payments bond investors expect. "You really can't just look at default risk," he says. "For an investor looking for stable performance, Illinois leaves you waiting. There are tremendous unresolved issues."

In addition to its day-to-day budget, Illinois faces rising pension expenses in coming years. Lawmakers have skimped on required contributions to employee pension funds and even borrowed to make those smaller payments. Unfunded liabilities and pension debt are projected to reach $95 billion by June 30. The state must contribute $5.4 billion to the pension funds next year, and more than $10 billion a year in the future. Required contributions will soon start increasing dramatically because the state has repeatedly pushed back a payment schedule enacted in 1995 to set aside enough to cover 90% of its pension obligations by 2045, up from 43% today, one of the worst unfunded liabilities in the nation.

The sharp rise in pension payments is the biggest factor pushing Illinois toward what a legislative task force last November called "a 'tipping point' beyond which it will be impossible to reverse the fiscal slide into bankruptcy." The little-noticed report on the state's pension problems warned that "the radical cost-cutting and huge tax increases necessary to pay all the deferred costs from the past would become so large that many businesses and individuals would be driven out of Illinois, thereby magnifying the vicious cycle of contracting state services, increasing taxes, and loss of the state's tax base."

While the Illinois Constitution protects vested pension benefits, that promise, like all the state's obligations, is only as good as its ability to pay. The Civic Federation warned lawmakers last fall that "there is mounting evidence that a judge could find the state is already insolvent. If the state is found to be insolvent under the classical cash-flow definition of insolvency, which is 'the inability to pay debts as they come due,' it is not only the pension rights of non-vested employees that will be in jeopardy. All the obligations of the state, whether vested or not, will be competing for funding with the other essential responsibilities of state government. Even vested pension rights are jeopardized when a government is insolvent."

The WHO Global Tax Proposals Why We Must Oppose It

Fresh on the heels of a Dutch investigation into the conflicts of interest of their chief influenza advisor and the bombshell announcement that the Council of Europe will be probing their role in creating and sustaining panic over the recent H1N1 outbreak in order to sell vaccines for Big Pharma, the World Health Organization is now conisdering "innovative" proposals for raising additional revenues, including levying a global tax on internet activity.

The startling revelation comes in a report submitted by an Expert Working Group ahead of the biannual meeting of the WHO's Executive Board. Tasked with finding a financial mechanism for funding the WHO's mandate of transfering health technologies to the developing world, the team of bureaucrats and medical researchers have spent the past 14 months developing a variety of suggestions, including:

-A digital tax: "Internet traffic is huge and likely to increase rapidly; this tax could yield tens of billions of US dollars from a broad base of users."

-A financial transaction tax: "Brazil's financial transaction tax"[...] set at 0.38% levied on paying bills online and major withdrawals, it was raising an estimate [sic] US$ 20 billion per year and funding some 87% of the Government's key social protection programme, Bolsa Familia, before it was voted down."

-An arms trade tax: "a 10% tax on the arms trade market, which might net about US$ 5 billion per annum."

The funds raised from such schemes—ranging into the tens of billions of dollars depending on which plans are enacted—would be ostensibly used to aid in the transfer of medical technologies to the developing world so that local research, development and production of medicines can be ramped up. It is argued that this is needed to fill the gap left by pharmaceutical companies who have no motivation to produce medicines for areas of the world that can't afford to pay for them. Additionally, local research and development would allow for the incorporation of local ingredients and traditional medicines in different parts of the globe.

Although these aims are laudable on the surface, such platitudes obscure the underlying reality that the WHO's plans would amount to nothing more than the latest attempt by the UN to set the precedent for a global tax to fund their stated goal of establishing global governmental structures. On top of that, the WHO itself has recently been exposed as little more than a vehicle for Big Pharma-connected fraudsters to line their own pockets. Add to that the fact that the WHO and other UN-affiliated agencies have been caught sterilizing women without their knowledge or consent in countryafter country and it quickly becomes apparent that these are no ordinary taxation proposals by misguided do-gooders. On the contrary, these measures if enacted could signal the birth of a UN-administered global eugenics body.

Global Tax and Global Government

Although it has received almost no attention in the establishment media (with the notable exception of George Russell's Fox News article which broke the story and leaked the report), the fact that the WHO is seiously considering a global tax to fund its global aspirations is an incredible admission for the global health arm of the United Nations to make. Coming as it does on the heels of call after call for global taxation by the UN and the subsequent attempt to introduce such measures at the UN-led climate change conference in Copenhagen last month, this new proposal can be seen as only the latest move toward establishing a funding mechanism for a UN-led global governmental institution.

At this point, the UN does not have the authority to unilaterally levy direct taxes on its members, but such schemes can be 'voluntarily' implemented by the coordinated action of individual member states. In fact, this technique has already been used to fund UNITAID, a WHO program set up in 2006 to combat AIDS, malaria and TB. As the WHO's report explains in glowing terms, the program has already raised $1 billion dollars from an airline tax that has been voluntarily levied in 13 countries. For some time now, anyone who buys a plane ticket in Brazil, Britain, France or any of 10 other countries has unknowingly supported a UN-administered global health program.

Regardless of what one thinks of the humanitarian intentions that are supposedly behind such schemes (more on that later), the danger of ceding national sovereignty over health issues to an unaccountable, non-democratic UN-led organization should be self-evident. As Lord Monckton pointed out in the run-up to the climate change conference in Copenhagen, the draft text of the UNFCCC proposal included talk of setting up a system of global governance to administer the proposed carbon trading scheme, but notably omitted any mention of a vote, ballot, election or any other pretence of democracy in the proposed governmental institution. With bodies like the WTO, WHO, IMF and World Bank already wielding incredible authority over the lives of people around the world, giving these bodies greater and greater power to expand their global agendas without transparency, democracy or accountability is a formula for global tyranny.

Defenders of the UN will no doubt argue that the humanitarian intentions of the WHO programs and the reputation of the WHO itself should assuage any fears that these taxes would be misappropriated or misplaced. The facts, however, do not support this reasoning on either count.

Swine Flu Panic Exposes WHO Conflicts of Interest

Just as the WHO is gearing up to lobby for a global tax in support of its activities, the global health body is being rocked by an investigation into how its top officials and advisors deliberately exaggerated the H1N1 threat in order to sell vaccines for the pharmaceutical industry. The Council of Europe has launched an official inquiry into the scandal, with the President of the Council's Health Committee, Wolfgang Wodarg, saying he is "certain" that corruption "does exist" in the organization.

Describing the vaccine manufacturers like Novartis, GlaxoSmithKline and Baxter Vaccines who made billions of dollars off of the contracts that ensued from the WHO's declaration of an "emergency pandemic" last June, Wodarg noted that "These large firms have 'their people' in the cogs and then they pull strings so that the right policy decisions are taken." He cites Klaus Stohr, a top executive at Novartis who was formerly a WHO official in charge of pandemic preparedness plans, as an example of the conflicts of interest and tangled relations between the WHO and Big Pharma.

In a painstakingly researched article from December 2009, F. William Engdahl identified Albert Osterhaus, the so-called "Dr. Flu" who was the WHO's chief influenza advisor, as another key individual in the scam. Ostershaus is chairman of the European Scientific Working Group on Influenza, an advisory group financed by Novartis, Hoffman-La Roche, GlaxoSmithKline, Baxter Vaccines, Sanofi Pasteur and other companies that were estimated to have made as much as 8 billion Euros in profit from the WHO's declaration of pandemic emergency. Osterhaus was also a member of the WHO's scientific advisory group, SAGE, which advocated that a pandemic emergency be declared despite this bout of H1N1 being potentially the mildest influenza outbreak in recorded history.

The Council of Europe investigation follows a Dutch parliamentary investigation of Osterhaus that resulted in new legislation requiring scientific advisors to disclose their financial ties to companies. It also follows calls by Russian parliamentarians for "an international commission of inquiry" into the scandal. As Wodarg noted, international institutions like the WHO "are now discredited, because millions of people have been vaccinated with products with inherent possible health risks. This was not necessary. It has also led to a considerable mismanagement of public money."

To give the WHO a global tax revenue stream while it is being investigated for one of the largest public health frauds in history would be absurd. But to do so in the belief that the WHO's programs are benevolent and humanitarian would be worse than absurd. It would be potentially genocidal.

UN 'Humanitarian Aid' and the Eugenics Agenda

At almost the precise moment when the WHO global taxation ambition was exposed,reports began to emerge that a 'humanitarian' program administered by another UN organization, UNICEF, had failed. Remarkably, a review of the program—which was intended to provide basic supplies and humanitarian aid to African children—found that children who were receiving the UN aid actually died at higher rates than children who received no aid at all.

Although the UNICEF program may seem like an isolated example of the failure of a humanitarian project, the UN as a whole is replete with examples of supposedly benevolent programs causing disorder, unrest, and even death. UN peacekeepers have become renowned the world over for their corruption, with child abuse, rape, human trafficking and torture becoming (even by the UN's own admissions) a systemic problem. UN administered programs to provide women in Botswana with infant formula have led to widespread infant death and UN run tests of anti-AIDS gels actually increased the likelihood of participants contracting AIDS.

An examination of various WHO vaccination programs uncovers an even bleaker reality. The WHO has been actively engaged in seeking effective contraceptive vaccines for decades. In 1988 they published the results of a Phase I trial of a birth control vaccine in the prestigious medical journal The Lancet. This vaccine worked by causing the immune system of those injected to develop antibodies against human chorionic gonadotropin (hCG), a hormone produced in a woman's body that is necessary for the maintenance of a pregnancy. In effect, women who are vaccinated in this way have their immune systems primed to perform a spontaneous abortion.

In 1996, the Philippine Medical Association concluded that tetanus vaccines administered as a part of a WHO vaccination program in that country contained hCG. Women who had taken the vaccine and suffered miscarriage shortly thereafter were found to have had the hCG anti-bodies. That the hCG could have accidentally ended up in the tetanus vaccines is almost unthinkable, especially since tetanus toxoids in particular have been known as ideal carriers for the hormone since at least 1980. In 2004, independent testing of a polio vaccine being administered by UNICEF found sterilizing agents had been added to those vaccines as well. In Thailand, the tetanus vaccine is routinely administered to women during pregnancy, often resulting in spontaneous abortions.

The widespread prevalance of similar problems in completely unrelated batches of vaccine produced in different laboratories in different parts of the globe in different years suggest that this pattern is not explicable as mere accident or negligence, but malicious forethought. The fact that many of the key United Nations agencies from thePopulation Division (Frank Notestein) to UNESCO (Julian Huxley) were set up and directed by card carrying members (and presidents) of eugenics societies should give an indication as to the true purpose and intentions of the UN "Humanitarian Aid" programs.


The recent WHO proposal, although shocking, is unlikely to become a reality in the near future, especially given the pending investigations into the organization's role in the H1N1 pandemic scam. What is more worrying is that these very "innovative" financing ideas—from internet taxes to financial transaction taxes, airline taxes, carbon taxes and others—that supposedly took the expert working group 14 months to compile have in fact been making their rounds at the UN for at least a decade. Whether or not they are implemented immediately or by a slow process of transformation, it seems the agenda of implementing global taxes for the funding of nascent global governmental bodies is not likely to abate until the UN is abolished or their demands are met.

In order to counteract these proposals, they must first be exposed for what they are: attempts to sneak non-accountable, non-democratic global governance structures in the back door by establishing indirect taxation mechanisms for funding them. In order to expose the agenda and what is really at stake, everyone must do their part in spreading the information about the UN and its programs to de-legitimize the process long before such taxes can be enacted by sovereign governments.

James Corbett is a frequent contributor to Global Research.

Mass exodus from Michigan as wheels come off US car industry - Feature

Detroit - Chris Jaszczak took a gamble when he bought a theatre in the heart of Detroit in 1987, at a time when the steady decline of the US car industry was prompting many to flee a region that was once the pride of US manufacturing. "My friends all thought I was nuts," said Jasczczak, owner of 1515 Broadway. "In the '80s, people were abandoning buildings, not buying them."Yet Jaszczak, whose father spent 44 years in the car industry as an interior designer for Fisher Body, has managed to keep his business afloat as Detroit and the state of Michigan seemed to fall apart around him. That gave him a more optimistic sense of the city's future. "Detroit's not going anywhere. My intention is to be here for the reformation of it," Jaszczak said. Detroit was looking for such a rebound as it hosted the annual North American International Auto Show this week. The nine-day Detroit show, a trendsetter for the wider industry, is expected to attract about 700,000 visitors through Sunday, bringing in more than 300 million dollars for the local economy. With a new focus on smaller and cleaner cars, the US auto industry is hoping it has turned a corner after decades of decline. Michigan officials are hoping that the reorganization of the industry marks the start of an effort to return people to the state. Michigan has been suffering from a mass exodus over the last few years, the result of a steadily declining auto industry that has been the state's main employer for the last century. In 2009, Michigan's population fell below 10 million for the first time since 2000, according to the US Census Bureau. The state has lost more than 100,000 people just since 2005. "We will at some point have a major 'Come home to Michigan' campaign, but we are not there yet," Governor Jennifer Granholm conceded during the auto show. That campaign is unlikely to be launched before the end of her term in January 2011, she said. For those left behind, the bottom fell out over the last two years as the United States entered its worst recession in seven decades, bringing the car industry to its knees. At about 15 per cent, Michigan has by far the highest unemployment rate in the country. Its largest city, Detroit, is in even more dire straits, with more than a quarter of its population out of work. Detroit has long ridden the highs and lows of the US car industry, putting it on a path toward decline since the 1960s. Foreign carmakers for decades have steadily gnawed into the market share of General Motors, Ford and Chrysler, Detroit's once-proud "Big Three."GM and Chrysler entered bankruptcy in spring 2009 and have slashed their workforces to stay afloat. Foreign carmakers operating in the United States have chosen to build their plants in southern states including Tennessee and Alabama, which have cheaper worker costs, cultures less open to labour organizing and less government red tape. "It's still going to be a couple of tough years for us," said Beth Chappell, head of the Detroit Economic Club. "We are not in any way, shape or form out of the woods yet."Artefacts of the city's once-bustling lifestyle are everywhere. Detroit once boasted more theatre seats than any other city in the United States, built to accommodate a population that is now half of what it was in the 1950s. Downtown buildings have stood empty for so long that they spawned a new art form - graffiti painted from the inside of windows. Abandoned auto plants have become an attraction unto themselves: The DetroitYes Project has been running a tour - "The Fabulous Ruins of Detroit" - for more than 10 years. Local residents rummage through remains of the old Packard plant, which closed in 1956, hoping to find a souvenir from Detroit's past. "People go to Italy to see the Coliseum. Here in Detroit, they want to see the ruins," said Jaszczak. Detroit's population peaked at nearly 1.85 million in 1950, making it the fourth-largest US city. It has since slipped to about 900,000. Jaszczak reckons the bleeding won't stop until the city hits 500,000 people. Echoing local politicians, Jaszczak suggested the wider state could make more use of its fresh-water resources. The state borders three of North America's chain of Great Lakes: "Michigan is the Saudi Arabia of water."Politicians now recognize the desperate need to diversify the state's economy. But with the car industry as the engine of prosperity in Michigan for most the 20th century, the prospects for a turnaround are uncertain. "I don't think there is any one industry," Chappell said, "that will ever replace the auto industry as we have known it in Michigan over the last 100 years."

One year since Obama’s inauguration


One year ago today, on January 20, 2009, Barack Obama was sworn in as the 44th president of the United States. The event was greeted with enthusiasm in the US, as well as in Europe, the Middle East and elsewhere. Many millions around the world hoped the long period of political reaction in the US was finally ending. A year later, this wishful thinking has turned into disillusionment, anger and opposition.

Some 2 million people gathered in Washington on Inauguration Day to celebrate the end of the Bush years. From the opening words of his address, however, Obama indicated that he would continue the policies of his Republican predecessor that had been repudiated by the American people.

Before making any reference to the economic and social crisis gripping America, Obama declared, "Our nation is at war against a far-reaching network of violence and hatred." This was an unmistakable olive branch to the Republicans and a declaration that his administration would uphold the bogus "war on terrorism" in order to justify militarism and attacks on democratic rights.

He went on to assert that the American people themselves shared the blame for the financial disaster, cynically foisting responsibility on the victims of a catastrophe entirely the making of the ruling class.

The president who ran as the candidate of "change" has continued the right-wing policies of Bush. In foreign policy, he has maintained the occupation of Iraq, increased US troop levels in Afghanistan, and expanded the war into Pakistan.

Obama has explicitly upheld the Bush doctrine of pre-emptive war, by which the US arrogates to itself the right to wage war against any target it deems a present or potential danger to its interests. Yemen has become the latest target of US threats, along with Iran, while the tragedy in Haiti has been used to carry out a military occupation and strengthen the stranglehold of US imperialism on that impoverished country.

The American gulag in Guantanamo remains open, renditions and torture continue, and the administration has insisted that no one from the Bush administration or the CIA be held accountable for war crimes and violations of international law.

In a statement issued on Election Day 2008, the World Socialist Web Site succinctly characterized the class interests that the new administration represented and would defend. The WSWS pointed out that "powerful forces in the American political and financial establishment have rallied behind Obama precisely because they believe that he, after eight disastrous years of Bush, will help restore the battered image of American imperialism. The hundreds of millions of dollars that Obama has received from the business community testify eloquently to the social and financial interests that he represents."

In his inaugural address, Obama declared that the American people would have to submit to a "new era of responsibility." Commenting on these remarks, the WSWS wrote on January 22, 2009, "The meaning of these arguments is unmistakable. The advent of Obama will signal no reprise of the New Deal or the Great Society. There will be no revival of social reformism, but rather a turn to fiscal austerity and counter-reforms directed against what little remains of a social safety net in America, embodied in such programs as Social Security and Medicare.

"The central political aim of the new administration, like the one that it is replacing, will be protecting the interests and wealth of a narrow financial elite, who will be bailed out at the expense of millions of American workers and their families."

Obama staffed his administration with corrupt representatives of Wall Street, including former New York Federal Reserve President Timothy Geithner and Lawrence Summers, two protégés of Robert Rubin, the chief architect of financial deregulation during the Clinton years. Over the last year, the administration has expanded the scale of the Wall Street bailout, which has allowed the banks to make huge profits, hand out tens of billions in compensation and resume their speculative activities.

No relief has been forthcoming for the millions of workers who have lost their jobs and homes. On the contrary, the White House has used the economic crisis to force through a drastic and permanent reduction in the living standards of the working class, beginning with the forced bankruptcies of General Motors and Chrysler and the wage and benefit reductions imposed on auto workers.

The Obama White House has refused to provide relief to the states, leading to unprecedented attacks on public education and other social services. With its push for health care "reform," the administration aims to reduce corporate and government spending by rationing health care, slashing benefits for millions of working people and drastically cutting Medicare spending.

Obama’s second year will begin with a State of the Union address next week in which he will unveil an agenda of budget-cutting and austerity. In order to finance the ongoing bailout of the wealthiest 1 percent of the American people, the administration is preparing to slash entitlement programs and impose regressive taxes on the working population.

From day one, Obama has worked unflaggingly to rehabilitate the Republicans, after they had been decisively repudiated by the voters in the 2008 election. He appointed former Bush officials, including Defense Secretary Robert Gates, and sought to tailor his policies to the demands of the Republican right. The latest instance of the mantra of bipartisanship is Obama’s revolting appointment of George Bush, an unrepentant war criminal, to co-head with Bill Clinton the US "relief" effort in Haiti.

Obama’s posturing as the tribune of "new politics" and the apostle of progressive change was a fraud. He was selected and elevated by powerful sections of the ruling elite, who calculated that a young African-American in the White House would provide more favorable conditions to push through their reactionary agenda.

The last year has exposed the democratic and progressive pretensions of identity politics, and demonstrated that the fundamental division in American society is not race, nationality or gender, but class.

It has also exposed the role of publications like the Nation and other pseudo-left supporters of Obama, who campaigned for him and continue to defend his policies, including the war in Afghanistan and the gutting of health care. These are right-wing forces that represent privileged social layers who are contemptuous of and hostile to the working class.

As the administration begins its second year, it is gripped by crisis. The debacles in Iraq and Afghanistan continue, and despite the recovery on Wall Street the social crisis is worsening and the chief cause of the economic meltdown—the decline in the world position of American capitalism—continues. The prospects for a second and even more destructive financial crash are all too real.

According to all opinion polls, Obama’s approval ratings have plummeted and a majority believes that the US is going in the wrong direction.

The Obama administration’s first year in power underscores the fundamentally undemocratic character of the entire political system. The aspirations and interests of the working population can find no expression within a system monopolized by two parties of big business.

The record of the administration has only intensified popular disillusionment with the government and all official institutions. "Capitalism," as in much of the 20th century, is once again becoming a dirty word.

This foreshadows the emergence of a new period of class battles and social upheavals, not just in the US, but internationally. The central and most critical issue is the development of a new leadership to arm this coming movement with a revolutionary, socialist and internationalist program. That is the task to which the World Socialist Web Site and the Socialist Equality Party are dedicated.

Barack Obama: review of pledges kept and promises broken in first year

President Barack Obama was elected on a campaign pledge of sweeping change in US policies at home and abroad. A year after taking office, some promises have been kept, others broken and still others subjected to compromise or delay.


Obama's biggest promise was to make rescuing the economy his top priority. The results have been mixed or inconclusive so far.

A $787 billion stimulus he said was needed to jolt the country out of recession but which Republicans said was larded with too much spending was passed.

The economy is growing again but job losses persist, with unemployment at 10 per cent. He is now vowing to spur job creation. Whether he succeeds or fails could determine his political future.

A Wall Street bail-out is credited with helping avert a collapse, but the return of massive bonuses has outraged Main Street. A promised financial regulatory overhaul faces obstacles in Congress. While Obama has been lauded for acting to defuse the crisis, critics fault him for tackling health care and climate change instead of keeping the focus on the economy.


Obama's goal of getting a health care bill to his desk by the end of 2009 proved overly ambitious, and now with just weeks of negotiations to go, it could be wrecked if Republican Scott Brown wins Sen Edward Kennedy's old seat.

Dithering Democrats were probably more to blame than the president. Liberals wanted a government insurance option and moderates were wary of the cost of reform. Even a newly compromised bill would see Obama would make history.


As promised, Obama switched attention from Iraq to Afghanistan, deciding in December to boost troop levels there by 30,000 after lengthy deliberations that critics called too deliberative.

Now it is Obama's war. The problem is polls show public support has waned as US casualties have increased, and some of Obama's fellow Democrats are balking at the build-up.

Candidate Obama pledged to withdraw all US combat forces from Iraq within 16 months of taking office. He will come close if he sticks to the August 2010 deadline he set as president.


Obama pledged to talk to his enemies, breaking with the isolation policy of his predecessor, George W Bush, at least in his first term.

Obama made overtures to Iran but it remains defiant over its nuclear programme. He also has little to show for outreach to North Korea. He lifted key restrictions on Americans with families in Cuba, but Havana has given little in return.

Critics say such gestures signal weakness, but aides insist it has been important to improve the tone of foreign policy. The White House says it will give Obama greater international leverage if he seeks further sanctions on Tehran this year.


Obama will miss his one-year deadline to close the internationally condemned military prison at Guantánamo Bay in Cuba, a promise stalled by political and legal complications.

But that effort plus his ban on harsh interrogation of foreign terrorism suspects have helped repair some of the damage done to America's international image under Bush.

He kept his pledge to reach out in a major speech to the Muslim world. But many Muslims are disappointed he has not done more to push Israeli-Palestinian peace efforts.

Obama's popularity abroad remains high, as the award of the Nobel Peace Prize before any major foreign policy success showed. But critics at home say he has been too apologetic.


Obama, after accusing the Bush administration of being overly secretive, pledged greater transparency. He did order more openness and tighter limits on lobbyists and held a few televised issue-specific "summits" at the White House.

But much has been made of Obama's failure to keep his campaign pledge to have health care negotiations broadcast live on C-SPAN. The White House press corps has complained that Obama has not held a full-scale press conference since July.

Obama has also faced criticism for allowing exceptions to his promised ban on lobbyists serving in his administration.

He recently acknowledged regret at failing to bridge the bitter divide between Republicans and his fellow Democrats.


Although no major attack has been carried out successfully on US territory since Obama took office, an attempted Christmas Day bombing of a US airliner came very close.

The failed bombing drew criticism from Republicans that Obama's counterterrorism policy was inadequate to keep Americans safe, as he had cited repeatedly as his highest priority.

That has resulted in Obama taking responsibility for the intelligence and security lapses that led to the Christmas incident and promising new reforms to prevent a repeat.


Obama had promised to make the United States a leader in the fight against global warming, in contrast to Bush's more reluctant approach.

He helped broker a non-binding international pact in Copenhagen in December and now faces an uphill fight to get the Senate to pass a law to cut carbon pollution at home while opponents argue that caps would hurt the economy. His stewardship will help determine whether a binding UN climate pact can be reached in 2010 after Copenhagen fell short.


No tax rise for anyone earning under $250,000: Obama has kept this pledge, but political analysts say it could be tested as he faces greater pressure over record budget deficits.

Lift Bush-era restrictions on stem-cell research: Obama moved to ease such limits within months of taking office.

Repeal "Don't ask, Don't Tell" rule for gays in the military: Although the White House has said it remains Obama's goal, he has yet to make a move.

Work for immigration reform: the issue is stalled as Obama grapples with bigger items. He has said, however, he wants to tackle it in early 2010.

Barack Obama: a timeline of his first year in office

On Wednesday it is one year since Barack Obama's inauguration. Here is a timeline of important events in the first year in office of America's 44th president.


-Jan. 20: Obama is sworn in as the 44th president of the United States.

Jan. 22: He signs executive orders to close the Guantánamo detention centre, ban secret CIA prisons overseas and bar CIA interrogators of detainees from using harsh techniques already banned for military questioners.

-Jan. 29: The president signs his first bill into law. The Lilly Ledbetter Fair Pay Act gives workers more time to take their pay discrimination cases to court.

-Feb. 9: Obama's first prime-time news conference.

-Feb. 17: He signs the $787 billion stimulus package into law and approves sending an additional 17,000 troops to Afghanistan.

-Feb. 27: The president announces withdrawal of all American combat forces from Iraq by August 2010, but says the U.S. will leave tens of thousands of support troops behind.

-March 9: Obama abolishes Bush-era restraints on federally funded stem-cell research and issues a new memo that encourages more open scientific discussion without political interference.

-March 19: He becomes the first sitting president to appear on "The Tonight Show".

-March 30: Obama asserts unprecedented government control over the auto industry, rejecting turnaround plans by General Motors Corp. and Chrysler LLC.

-April 2: Obama attends the Group of 20 summit in London, his first European trip as president.

-April 6: The president speaks to Turkey's parliament, declaring that "the United States is not, and will never be, at war with Islam."

-April 7: His first visit to Iraq as president.

-April 14: The first family introduces their new puppy, Bo.

-April 16: Obama absolves CIA officers from prosecution for harsh, painful interrogation of suspected terrorists even as his administration released Bush-era memos graphically detailing – and authorising – grim tactics.

-April 30: Obama announces that Chrysler would head into bankruptcy with the aid of up to an additional $8 billion in taxpayer money.

-May 26: He nominates federal appeals judge Sonia Sotomayor to become the first Hispanic Supreme Court justice.

-June 4: In a speech at Cairo University in Egypt, Obama declares that America has a common cause with Islam and never will be at war with the faith. "America and Islam are not exclusive," he says, "and need not be in competition."

-June 17: Obama signs a memorandum extending some benefits, such as visitation or dependent-care rights, to the same-sex partners of gay federal employees.

-July 11: On his first trip to sub-Saharan Africa, Obama tells lawmakers in Ghana, "I have the blood of Africa within me."

-July 22: He pledges to abide by agreements to pull all U.S. forces out of Iraq by the end of 2011, after a White House meeting with Iraq's prime minister, Nouri al-Maliki.

-July 30: Obama hosts a "beer summit" in the Rose Garden with Henry Louis Gates junior and Cambridge, Mass. police Sgt. James Crowley – two men engulfed in a national uproar over race.

-Aug. 29: Obama delivers the eulogy at Sen. Edward Kennedy's funeral.

-Sept. 9: In a joint session of Congress, the president summons lawmakers to enact sweeping health care legislation, declaring the "time for bickering is over."

-Sept. 23: He addresses the UN General Assembly for the first time, challenging world leaders to shoulder more of the globe's critical burdens and promising a newly co-operative partner in America.

-Sept. 25: Obama says at the Group of 20 summit in Pittsburgh that he and other leaders of the world's 20 largest economies took actions that "brought the global economy back from the brink" and saved or created millions of jobs.

-Oct. 2: He travels to Copenhagen to lobby for Chicago's bid to host 2016 Summer Olympic games. The city is eliminated on the first ballot.

-Oct. 9: Obama wins the Nobel Peace Prize.

-Nov. 10: He attends a memorial service at Fort Hood, Texas, to honour the 13 Americans killed in the shooting rampage at the Army post.

-Nov. 14: In Tokyo on his first presidential trip to Asia, Obama declares that an era of American disengagement in the globe's fastest-growing region is over.

-Nov. 24: His first White House state dinner, honouring Indian Prime Minister Manmohan Singh.

-Dec. 1: Obama orders an additional 30,000 troops to Afghanistan, nearly tripling the force he inherited as commander in chief. He promises to begin bringing units home in 18 months.

-Dec. 10: He accepts the Nobel Peace Prize at a ceremony in Oslo, Norway.

-Dec. 18: Obama spends about 15 hours at a climate summit in Copenhagen, where he brokers a limited deal to fight global warming.

-Dec. 24: The Senate passes health care legislation, a triumph for Obama that clears the way for compromise talks with the House.

-Dec. 28: Obama pledges to use "every element of our national power" to keep Americans safe, in his first public remarks since the Christmas plot to bomb a Detroit-bound airliner.


-Jan. 5: Obama says the government had enough information to thwart the airliner plot, but intelligence agencies did not "connect those dots." He suspends the transfer of Guantánamo detainees to Yemen, but reaffirms his plan to close the facility.

-Jan. 7: The president declares "the buck stops with me" on national security as the White House releases a report on the Christmas plot.

-Jan. 12: Powerful earthquake hits Haiti, causing widespread devastation. Obama marshals the U.S. response, committing $100 million in initial aid and pledging a "swift, co-ordinated and aggressive" relief effort.

Barack Obama's health care reform in doubt after Massachusetts vote

Analysis: Defeat for the Democrats in the special Senate election in Massachusetts has thrown President Barack Obama's health care reforms into doubt.

Victory for Scott Brown, a little known state senator, against the Democratic candidate Martha Coakley leaves Mr Obama one short of the key 60 Senate seats out of 100 he needs to prevent the Republicans from stalling legislation.

Now, barring the success of a charm offensive by the US President which could swing round moderate, wavering Republicans to support his party, he faces a protracted battle. The Republicans will be able to deploy the dreaded "filibuster" - the delaying mechamism under which they are able to debate legislation around the clock so that they render it impossible for the Senate to reach a conclusion.

Mr Brown has promised to use his vote to block plans to provide health care to almost all Americans, which the Democrats have been seeking for decades and Mr Obama was on the verge of delivering. Thirty million Americans are currently unable to afford health care.

One alternative option for Democratic leaders in Congress would be to ram through legislation before Mr Brown can take his seat. It has been filled in the interim by Paul Kirk, a former assistant to the late Senator Edward Kennedy - whose seat has fallen in Massachusetts - who would vote on party lines.

Though not against the rules, the negative political affects of disregarding the popular will in Massachusetts, especially given Mr Obama's pledges to clean up Washington, could prove highly damaging.

Another fallback plan could allow a moderate Republican senator such as Olympia Snowe of Maine to modify the bill as she wanted and then provide the 60th vote. Or negotiations could begin with numerous moderate Republicans who would demand even more changes.

The current most likely Plan B is for the House of Representatives to pass the version of the bill already passed by the Senate. This would avoid the process of reconciliation, in which separate bills already passed by each chamber of Congress would have been merged over the next few weeks.

But liberal Democrats in the House, where the party holds a large majority, were upset at various provisions in the Senate bill, and might decide no bill was a better option. Or some moderate Democrats, fearing for their seats at November's midterm elections, might abandon the health bill altogether after seeing a Republican triumph in strongly Democratic Massachusetts.

The Speaker, Nancy Pelosi, has repeatedly ruled out a House vote on the Senate's version but if Mr Brown wins then all bets could be off.

IRS to expand audits as cash runs low

The agency plans to look through the books of 6,000 companies over 3 years.

The Internal Revenue Service, trying to recoup some of the estimated $14 billion that companies underpay in employer taxes each year, plans to wage a three-year campaign to audit 6,000 businesses.

The cash-strapped government, which separately said it wants to put a levy on large financial companies that received bailouts, will zero in on worker classification, fringe benefits, reimbursed expenses and executive compensation. The selection of the audited companies will be random, and both big and small businesses will be scrutinized.

Defining who is, or isn't, an employee might be the biggest challenge for the IRS and the companies it audits. While some businesses might be confused about how to classify workers, others might misclassify employees to bypass protections, such as minimum-wage laws, child-labor standards and overtime requirements, and avoid having to offer health and pension plans.

The Secret Bank Bailout

There's one method that the Federal Reserve has been employing to shovel money to the bank elite that is rarely mentioned, though I hear the sums that have been shoveled are in the billions and they are showing up on the books of firms like Goldman Sachs as pure profit. It's really pure scam.

Here's what went on for months, according to traders familiar with the situation.

When the Federal Reserve buys and sells Treasury securities it does so through primary dealers. Goldman Sachs and JPMorgan are among the select elite firms that, naturally, got into this club.

So when the Fed wants to trade it goes to one of these primary dealers. In the past, to earn a profit, the banks would execute the trade and mark up the price a bit on a buy to the Fed (or mark down a bit to the Fed when they were selling for the Fed ). Since Fed traders have screens showing them where market prices are, in the past primary dealers were allowed small mark ups and mark downs in line with what banks were marking up and down for their other clients. It would be difficult for a primary dealer to get away with an outrageous mark up or down because the Fed trader would have a pretty good idea of where a trade should have been made.

Once the Fed and Treasury started shoveling money in every possible way they could think of to the elite banks, the word came down to Fed traders to "ease up" on the mark ups and down. Let the banks take a "healthy" mark up and mark down, they were told. I'm advised that the "healthy" mark ups and mark downs have resulted in the Fed overpaying on their trades with primary dealers to the tune of billions. These billions are looking like profitable skilled trades, when they are nothing of the kind. They are hidden gifts from the Federal Reserve that are generally unseen, unknown and will never be paid back.

Fed trades with the primary dealers need to be audited for the period starting Sept. 2008 to date. The prices of trades made by the primary dealers with the Fed need to be compared with market prices at the time to determine exactly how "healthy" these bonus mark ups and mark downs actually have been. Further, it needs to be determined if all primary dealers received the same treatment or were there favored primary dealers, who were shoveled more money than others.

An easy place to start with this investigation is for a Congressman to ask Fed chairman Bernanke, the next time he testifies, if this went on, and, secondly, ask Bernanke for a rough estimate as to how much of a benefit this was for primary dealers, and if all primary dealers benefited to the same degree.

1/19/10 Ron Paul on CNN: The State of the Nation

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Issa: Geithner, Bernanke and Paulson Need to Come Clean on AIG

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Webster Tarpley: FBI violates federal law with phone record requests

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International Hearings Begin On “Falsified” Swine Flu Pandemic

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

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Davidson: Obama White House Is Lying to You

Author, investor and longtime Wall Street observer James Dale Davidson says our government is lying to us: There is no genuine economic recovery happening.

“I think what we have seen ... is a simulated recovery which has been generated by the government faking it in a lot of different ways," putting out what he calls statistical falsehoods on economic numbers "to make it seem that the economy is stronger than it is,” Davidson told Newsmax.

For example, calculations for the recently released unemployment figures released failed to include the fact that the Bureau of Labor Statistics had undercounted the number of unemployed people in 2009 by 824,000 persons.

Video — Davidson: Obama White House Is Lying to You

“They’re supposed to be doing a benchmark adjustment ... and if they do, the unemployment rate will shoot up even higher,” Davidson says.

"A lot of the supposed improvements have been faked by the government," Davidson says.

Davidson believes the government secretly used quantitative easing as an excuse to funnel money into U.S. capital markets.

“It’s not a coincidence that the market started to rally in March at the same time they announced they were going to do the quantitative easing,” he observes.

“In my view, it’s all created by the government as a hoax.”

The whole administration is based on one lie after another, he says.

As revealed in recently uncovered e-mail correspondence with AIG, Treasury Secretary Timothy Geithner effectively told the huge insurer to violate U.S. securities laws.

“I think the way he (Geithner) handled the AIG bonuses last year is a very telling story,” Davidson notes, referring to the media uproar over the bonuses that distracted the public’s attention from the billions of dollars that were being poured into AIG.

The uproar over those bonuses kept people from getting excited over the real issue, Davidson notes. Investors can get excited about only so many AIG-related scandals at once, he says.

At some point, Davidson believes that AIG’s having violated practically every securities law there is will be revealed.

“They’ve done everything they can to create a false impression of stability and strength in a rebounding economy, and I can understand that from the point of view of public policy they want people to think the economy is strong," he says.

"But if you hoax people into going out and spending money on false assumptions … a lot of people are going to lose a lot of money,” he points out.

Davidson believes all investors should hold some gold in their portfolios because the dollar is on its way out as the world’s reserve currency.

“The dollar is cooked,” he says.

“Our ratios are much worse than Brazil was 15 years ago when they had hyperinflation. When you have this kind of spending out of an empty pocket, there’s never anything good as a result. You can’t go on forever spending money you don’t have.”

“It has to stop, and when it does, you’ll be glad you have some gold.”

The heart of the matter, Davidson points out, is that there are huge, gaping holes in everyone’s balance sheets.

“We’ve lost a couple of decades of demand in the U.S. economy because of the de-leveraging that’s happened,” he says.

Americans’ debt loads are still high, and government encouragement to consumers to spend more now is a major misdirection.

As far as other investments go, Davidson feels there’s a strong case to be made for small, special situation companies.

"There’s one company called interCLICK that I like a lot,” he says, “and I’m also invested in Brazil.”

Video — Davidson: Obama White House Is Lying to You
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