Monday, June 7, 2010

Another Reason for States to Own Their Own Banks

While individuals, businesses and governments suffer from a credit crisis created on Wall Street, the banks responsible for the crisis are tapping into nearly-interest-free credit lines and using the money to speculate or to make commercial loans at much higher rates. By forming their own banks, states too can tap into very low interest rates, and can buffer themselves from another Lehman-style credit collapse.

Keeping interest rates low is considered the first line of defense for central banks bent on easing the credit crisis and getting banks to lend again. The Federal Reserve's target for the federal funds rate - the overnight interest rate that banks charge each other - has been kept at a rock-bottom 0% to 0.25% ever since December 2008. A growing number of economists now think it could stay there well into 2011 or even 2012, prompted by fears that a spreading debt crisis in Europe could hurt a budding U.S. recovery.

Dirk van Dijk, writing for the investor website, explains what a good deal this is for the banks:

"Keeping short-term rates low . . . is particularly helpful to the big banks like Bank of America (BAC) and JPMorgan (JPM). Their raw material is short-term money, which is effectively free right now. They can borrow at 0.25% or less, and then turn around and invest those funds in, say, a 5-year T-note at 2.50%, locking in an almost risk-free profit of 2.25%. On big enough sums of money, this can be very profitable, and will help to recapitalize the banking system (provided they don't drain capital by paying it out in dividends or frittering it away in outrageous bonuses to their top executives)."

This can be very profitable indeed for the big Wall Street banks, but the purpose of the near-zero interest rates was supposed to be to get the banks to lend again. Instead, they are investing this virtually interest-free money in risk-free government bonds, on which we the taxpayers are paying 2.5% interest; or are using the money to engage in the same sort of unregulated speculation that nearly brought down the economy in 2008, or to buy up smaller local banks, or to pay "outrageous bonuses to their top executives." Even when banks do deign to use their nearly-interest-free funds to support loans, they do not pass these very low rates on to borrowers. The fed funds rate was lowered by 5% between August 2007 and December 2008; yet the 30 year fixed mortgage rate dropped less than 1%, from 6.75% to only about 6%.

Why Do Banks Need to Borrow? Because They Don't Really Have the Money They Lend

Dirk van Dijk writes that "short-term money" - meaning money borrowed short-term from other banks - is the "raw material" of the big banks. Why, you may ask, do banks need to borrow from each other? Don't they just take in money from their depositors and re-lend it? The answer is no. Banks do not lend their depositors' money or their own money. As the Federal Reserve Bank of Dallas explains on its website:

"Banks actually create money when they lend it. Here's how it works: Most of a bank's loans are made to its own customers and are deposited in their checking accounts. Because the loan becomes a new deposit, just like a paycheck does, the bank . . . holds a small percentage of that new amount in reserve and again lends the remainder to someone else, repeating the money-creation process many times."

A bank simply advances bank credit created on its books. This credit becomes a deposit in the account of the borrower, who can write checks on it. The checks then get deposited in other banks and trade in the economy as what we all know as "money."

A bank can create as much money on its books as it can find credit-worthy borrowers for, up to the limit of its capital requirement. The hitch comes when the checks drawn on these loans-turned-deposits are cleared, usually through the Federal Reserve. A bank with a 10% reserve requirement must keep 10% of its deposits either as "vault cash" or in a reserve account at the Fed, and when checks are cleared by the Fed, it is through this account. The effect is to make the bank [bank A] short of reserves, which it can try to replenish by attracting back the customers of the bank where the credit was deposited [bank B]. But as was explained by the Winterspeak blogging team:

"If bank A fails to do this [attract new depositors], then it simply borrows the reserves it needs overnight from . . . bank B. The overnight lending market is designed to do exactly this. Bank B, in this case, happens to have exactly the quantity of reserves bank A needs, and since reserves earn no interest, is happy to lend to bank A at the federal funds rate, which is the overnight interbank lending rate."

In effect, a bank can create money on its books, lend the money at interest (today about 4.7% on a fixed rate mortgage), then clear the outgoing check by borrowing back the money it just created, at a cost to the bank of only the very low fed funds rate (now .2%). The bank creates bank credit, lends it at 4.7%, then borrows it back at .2% to clear the outgoing checks, collecting 4.5% interest as its profit. The credit the bank has lent is not something it "owns" but is simply "the full faith and credit of the United States" - the credit of the people collectively. Yet the bank is allowed to pocket a hefty interest spread on this credit-generating scheme; and that is assuming it lends at all, something that is happening less and less these days, since bankers find it safer and more lucrative to use their nearly interest-free credit lines to invest in risk-free government bonds at taxpayers' expense, engage in speculation, or pay themselves sizeable bonuses.

Avoiding Another Lehman-style Credit Collapse

The reason banks are highly dependent on loans from each other, then, is that they need these low-cost loans to keep the credit shell game going. This is particularly true for large Wall Street banks. Small banks get their funds mainly from customer deposits, and usually have more deposits than they can find creditworthy borrowers for. Large banks, on the other hand, generally lack sufficient deposits to fund their main business - dealing with large companies, governments, other financial institutions, and wealthy people. Most borrow the funds they need from other major lenders in the form of short-term liabilities that must be continually rolled over.

That helps shed light on what really caused the credit crisis following the collapse of Lehman Brothers in September 2008. The Lehman bankruptcy triggered a run on the money markets, causing interbank lending rates to soar. The London interbank lending rate (LIBOR) normally adheres closely to official interest rate expectations (meaning, in the U.S., the targeted fed funds rate); but after Lehman went bankrupt, the LIBOR rate for short-term loans shot up to around 5%. Since the cost of borrowing the money to cover their loans was too high for banks to turn a profit, lending abruptly came to a halt.

LIBOR rates are moving up again now, due to tensions arising from the possibility that Europe's sovereign debt crisis could turn into another global banking crisis. This is just one of many reasons that states should consider following the model of North Dakota, the only state that currently owns its own bank. The state-owned Bank of North Dakota (BND) helped North Dakota escape the credit crisis. The BND has a very large and captive deposit base, since all of the revenues of the state are deposited in the bank by law, keeping the bank solvent regardless of what is happening in the interbank lending market. North Dakota is currently the only state not struggling with a budget deficit.

Nations could follow this model as well. A recent article in The Economist noted that the strong and stable publicly-owned banks of India, China and Brazil helped those countries weather the banking crisis afflicting most of the world in the last two years.

If You Can't Beat Them, Join Them

While the banks responsible for today's economic crisis are enjoying unprecedented benefits, state and local governments are forced to maintain very large and wasteful rainy day funds, even as they are slashing services to balance their budgets. They have to do this because they do not have the secure, nearly-interest-free credit lines available to private banks. Owning their own banks can allow local governments to tap into the very low interest rates available to private banks, by giving them the same authority to create "bank credit" on their books that private banks have. North Dakota, which has had its own government-owned bank for over 90 years, not only is the only state to sport a budget surplus but has the lowest unemployment rate in the U.S. It evidently has no funding problems at all. Five other states currently have bills on their books to consider forming their own banks, and several others have discussed that option in their legislatures.

The Federal Reserve and the U.S. government have gone to extraordinary lengths to keep a corrupt banking system afloat, including buying toxic assets off their books and making credit available nearly interest-free, all in the name of turning the credit spigots back on Main Street; but the banks have not kept their end of the bargain. In fact, they are just doing what their business models require of them - making the highest possible return for their shareholders. Publicly-owned banks operate on a different model: they must serve the community. Like China, India and Brazil, U.S. states would be well served to set up publicly-owned banks that could provide credit to the local economy when the private banking scheme fails.

Read the Govt’s Report Blasting Drilling Regulators on Ethics, Drugs and Porn

When news of the Gulf oil spill first broke, we wondered if previously reported problems [1] at the Minerals Management Service, the agency that regulates offshore drilling, extended to the Gulf.

The Department of the Interior’s Office of the Inspector General released a report [2] this morning indicating as much. At one Gulf Coast office of MMS, agency officials attended sporting events [3] on the dime of oil companies, stored porn [4] on company computers, used cocaine and crystal meth [4], and falsified inspection reports [5]. (The above links go directly to the relevant pages in the report [2], thanks to our ever-handy document viewer.)

The ethical violations described in the IG report occurred between 2000 and 2008, around the same time as another sex, drugs and royalty scandal [6] at the agency.

Interior Secretary Ken Salazar said in a statement [7] that he found the behavior “reprehensible” and the report “deeply disturbing [7].” Salazar took over as head of the Interior Department—of which MMS is a part—in January 2009. He added that some of the employees cited have since “resigned, been terminated or referred for prosecution.”

Read choice excerpts from the report ...

On receiving gifts:

An MMS clerical employee informed investigators that one inspector at the MMS Lake Charles Office had told her “everyone has gotten some sort of gift before at some point” from an oil and gas company representative.

On special treatment for “good friends” in the oil industry [8], from a 2006 e-mail exchange between an MMS inspector and an employee of ConocoPhillips:

The e-mail chain began with the inspector sending the Conoco Phillips employee an e-mail with the subject line, “Civil Penalty Case recaps - 1st quarter 2006.” He stated, “These are the fines that we assessed to different companies for breaking the rules.” The Conoco Phillips employee responded, “[E]ver get bribed for some of that?” He replied, “They try all the time.” The Conoco Phillips employee responded back, “[E]ver take em?” the inspector said, “I accept ‘gifts’ from certain people. But we have VERY strict ethic standards as you could imagine.” The Conoco Phillips employee replied, “[C]ertain people, meaning women?” the inspector said, “No. meaning good friends that I wouldn’t write up anyway.”

On drugs:

During his interview, the MMS inspector initially denied using crystal methamphetamine, but he later admitted to it. He claimed that the last time he used crystal methamphetamine was the weekend of the 2009 Super Bowl, in February. He explained that he had never possessed or used crystal methamphetamine while at work but admitted that he might have been under the influence of the drug at work after using it the day before.

On pornography:

We found numerous instances of pornography and other inappropriate material on the e-mail accounts of 13 employees, six of whom have resigned. We specifically discovered 314 instances where the seven remaining employees received or forwarded pornographic images and links to Internet websites containing pornographic videos to other federal employees and individuals outside of the office using their government e-mail accounts.

On falsified inspection reports:

Another confidential source told investigators that some MMS inspectors had allowed oil and gas production company personnel located on the platform to fill out inspection forms. The forms would then be completed or signed by the inspector and turned in for review. According to the source, operating company personnel completed the inspection forms using pencils, and MMS inspectors would write on top of the pencil in ink and turn in the completed form.

Salazar said he has asked for the inquiry to be expanded to see if unethical behaviors continued after he put new ethics rules into effect.

Gulf Coast Oil Leak

Click this link .....

'Top Kill' LIVE feed: BP says oil spill stopped

Click this link ......

Gulf coast Birds in Oil: AP video

Click this link .....

Euro 'will be dead in five years'

The euro will have broken up before the end of this Parliamentary term, according to the bulk of economists taking part in a wide-ranging economic survey for The Sunday Telegraph.

The euro is facing its worst crisis since it was founded
The survey's findings underline suspicions that the new Chancellor, George Osborne, will have to firefight a full-blown crisis in Britain's biggest trading partner in his first years in office

The single currency is in its death throes and may not survive in its current membership for a week, let alone the next five years, according to a selection of responses to the survey – the first major wide-ranging litmus test of economic opinion in the City since the election. The findings underline suspicions that the new Chancellor, George Osborne, will have to firefight a full-blown crisis in Britain's biggest trading partner in his first years in office.

Of the 25 leading City economists who took part in the Telegraph survey, 12 predicted that the euro would not survive in its current form this Parliamentary term, compared with eight who suspected it would. Five declared themselves undecided. The finding is only one of a number of remarkable conclusions, including that:

• The economy will grow by well over a percentage point less next year than the Budget predicted in March.

• The Government will borrow almost £10bn less next year than the Treasury previously forecast, despite this weaker growth.

• Just as many economists think the Bank of England will not raise rates until 2012 or later as think it will lift borrowing costs this year.

But the conclusion on the euro is perhaps the most remarkable finding. A year ago or less, few within the City would have confidently predicted the currency's demise. But the travails of Greece, Spain and Portugal in recent weeks, plus German Chancellor Angela Merkel's acknowledgement that the currency is facing an "existential crisis", have radically shifted opinion.

Two of the eight experts who predicted that the currency would survive said it would do so only at the cost of seeing at least one of its members default on its sovereign debt. Andrew Lilico, chief economist at think tank Policy Exchange, said there was "nearly zero chance" of the euro surviving with its current membership, adding: "Greece will certainly default on its debts, and it is an open question whether Greece will experience some form of revolution or coup – I'd put the likelihood of that over the next five years as around one in four."

Douglas McWilliams of the Centre for Economics and Business Research said the single currency "may not even survive the next week", while David Blanchflower, professor at Dartmouth College and former Bank of England policymaker, added: "The political implications [of euro disintegration] are likely to be far-reaching – Germans are opposed to paying for others and may well quit."

Four of the economists said that despite the wider suspicion that Greece or some of the weaker economies may be forced out of the currency, the most likely country to leave would be Germany.

Peter Warburton of consultancy Economic Perspectives said: "Possibly Germany will leave. Possibly other central and eastern European countries – plus Denmark – will have joined. Possibly, there will be a multi-tier membership of the EU and a mechanism for entering and leaving the single currency. I think the project will survive, but not in its current form."

Tim Congdon of International Monetary Research said: "The eurozone will lose three or four members e_SEnDGreece, Portugal, maybe Ireland e_SEnD and could break up altogether because of the growing friction between France and Germany."

The recent worries about the euro's fate followed the creation last month of a $1 trillion (£691bn) bail-out fund to prevent future collapses. Although the fund boosted confidence initially, investors abandoned the euro after politicians showed reluctance to support it wholeheartedly.

How 'BT Sarah' spies on your Facebook account: secret new software allows BT and other firms to trawl internet looking for disgruntled customers

Some of Britain’s biggest firms were last night accused of ‘spying’ on their customers after they admitted ‘listening in’ on disgruntled conversations on the internet.

The companies include BT, which uses specially developed software to scan for negative comments about it on websites including Twitter, Facebook and YouTube.

Budget airline easyJet, mobile-phone retailer Carphone Warehouse and banks including Lloyds TSB are also monitoring social networking sites to see what is being said about them.

The firms claim there is nothing sinister about the practice, with BT insisting it is merely acting as ‘a fly on the wall’ to ‘listen and engage with our customers’.

But privacy campaigners have accused them of ‘outright spying’ while legal experts have suggested that firms making unsolicited approaches to customers could fall foul of data protection laws.

There are also fears the technique could be used to inundate customers with sales pitches and advertising, or be used by political parties.

Research published last year found that a negative review or comment by a frustrated customer on the internet can lose companies as many as 30 other customers.

A negative comment from a celebrity can be even more damaging. Earlier this year, BT was forced to act quickly after singer Lily Allen wrote on her Twitter page:

‘Anyone know who the CEO of BT is? I’d find out myself but my internet connection is so bad I can’t even Google. Such bad service, awful.’

BT is using software called Debatescape, which trawls social networking sites for keywords to identify anyone making negative comments about the company. Angry customers are then contacted by email suggesting ways BT can help to solve the problem.

The move comes as many of BT’s customers turn to the web to air their complaints because of the difficulties in getting through to its call centres.

Ironically, many of the comments on BT’s own Twitter page are written by those complaining they are not able to reach service staff.

Managers overseeing BT’s social networking operation claim ‘most of the feedback we get is positive – customers like it when we pick up on their BT-related issues without them asking directly’.


Lily Allen's angry Twitter post

However, one disgruntled customer said he was stunned to be approached by the firm after he posted angry comments on his personal Facebook page.

The BT business customer, who has asked not be named, wrote that he thought ‘BT are just a bunch of unaccountable, business shafting, useless b*******’.

Within hours he had been contacted by someone calling themselves ‘BT Sarah’, saying: ‘I saw your post about having problems with your BT services. Is there anything I can do to help?’

The customer, who runs an online business, said: ‘I did not expect what I was saying to my friends to be seen. I have since changed my privacy settings so only my friends can access my page. What happened was quite Big Brotherish and sinister.’

It comes just two years after BT was involved in another internet privacy storm over its installation of software called Phorm, which delivers targeted advertising to internet customers. The Information Commissioner’s Office and the European Commission both voiced legal concerns about the system.

But Warren Buckley, BT’s managing director of customer services, defended the practice, saying the system has been used to help around 30,000 people.

‘The key is we are only looking at what people are talking about in public spaces,’ he said. ‘We are not picking up anything private. These are all discussions that can be seen by anyone on the web.


Listening in: Some angry BT customers, unable to get through to its call centres, are turning to the internet to post disgruntled messages

‘I would liken it to someone having a conversation in a pub – it’s just a very big pub. We can’t stop people saying negative things about us. What we can do is identify them and offer to address those concerns.

‘Many people we contact in this way are wowed by it. And for us it is another way to listen to what our customers are saying and to reach out to them.’

A spokesman for easyJet, which uses the internet for 97 per cent of its ticket sales, said using Twitter and Facebook was a natural extension of its online presence.

‘The initial reaction of some is that it is a bit like Big Brother watching them,’ he added. ‘They can be quite upset. But when they realise we are trying to help they are quite surprised and positive.’

A spokesman for Carphone Warehouse said: ‘We can often use this to turn a negative situation into a positive one. People complaining on the internet do it in an instant.

‘They are frustrated and use it to vent that anger. When we identify them we can often offer a solution. People we speak to are often blown away that Carphone Warehouse is listening and are overwhelmingly positive about it.’

There are continuing concerns over the level of protection given to people’s information on Facebook.

The firm came under fire last year after it introduced changes to its default privacy settings which allowed people’s personal details to be viewed by anyone from internet search engines like Google.

BT comments

Warren Buckley, BT's managing director of customer services, defended the practice, saying the system has been used to help around 30,000 people

Simon Davies, director of human rights group Privacy International, said: ‘People venting to their friends do not suddenly expect the object of their anger to be listening in and then to butt in on their conversations. This is nothing short of outright spying.

‘The firms liken this to listening to a conversation in the pub. But it is more like listening at someone’s door with a very large glass. It may not be illegal but it is morally wrong. And it is unlikely to stop there. If the regulators decide there is nothing wrong then political parties are sure to use it, along with lobbyists and firms trying to sell us things. ’

Dr Yaman Akdeniz, a legal expert and director of online privacy group Cyber-Rights, also warned that many of the firms could be breaking data protection laws.

‘Just because I am on Facebook or Twitter does not give BT or any other company the right to contact me unsolicited,’ he said. ‘These may be public conversations but firms should not be contacting users without their consent.

'People should refuse to speak to those companies and register a complaint with the Information Commissioner.’

Liberal Democrat MP Alan Reid called for an investigation.

‘This may well be within the law, but I don’t think I would be very pleased if a firm suddenly contacted me out of the blue after I said something on the internet,’ he added.’

Extra mutations help flu evade drug

A woman receives a H1N1 influenza vaccine shot from a medical staff at a hospital in Nonthaburi province, on the outskirts of Bangkok January 11, 2010. REUTERS/Chaiwat Subprasom

WASHINGTON (Reuters) - Two extra mutations set the stage for the seasonal influenza virus to evolve into a form that now resists three of the four drugs designed to fight it, researchers reported on Thursday.


Their study, published in the journal Science, provides a way for scientists to keep an eye out for dangerous mutations in new flu viruses, including the ongoing pandemic of H1N1 swine flu.

Only four drugs are on the market to treat flu and two, the adamantines, are useless against virtually all circulating strains because the viruses have evolved resistance.

Tamiflu, known generically as oseltamivir, is the current drug of choice. It comes as a pill made by Roche AG under license from Gilead Sciences. GlaxoSmithKline makes an inhaled drug that works in a similar manner called Relenza, or zanamivir generically.

Both can help reduce flu symptoms if taken quickly and can keep the most vulnerable patients out of the hospital, or keep them alive if they are severely ill. But two years ago the common circulating strain of seasonal H1N1 developed resistance to Tamiflu.

Doctors were surprised, because the mutation that help the virus evade the effects of Tamiflu also usually made it a weak virus that did not infect or spread well.

"People have known about this H274Y mutation for over a decade, but the mutation seemed to interfere with the virus's ability to replicate and be transmitted," Jesse Bloom of the California Institute of Technology, who led the study, said in a statement.

"Something happened to make the Tamiflu-resistant virus also capable of replicating and spreading like wild-type flu viruses."

Bloom and Dr. David Baltimore, an expert on AIDS and on the genetic functions of cells and viruses at Caltech, led a study to find out how this happened.

They found two other mutations in the virus allowed it not only to evade the effects of Tamiflu but to survive and spread.

In addition, the mutations took place before the third and final mutation allowing the virus to evade the drugs. This means that scientists can monitor flu viruses for the initial two mutations to give early warning that they are about to become drug resistant.

This is important in planning for both seasonal influenza and pandemics. Seasonal flu kills between 250,000 and 500,000 people every year globally.

H1N1 swine flu may have been just slightly more deadly -- statistics will take years to gather -- but it affects younger adults and children in contrast to seasonal flu, which kills more elderly people.

Currently swine flu is easily treated by Tamiflu but that could change at any time.

So doctors need drugs on hand to save lives and if one drug will be useless, they need to know that because flu must be treated within days of onset for treatment to be useful.

Earlier on Thursday the World Health Organization said the H1N1 pandemic was not yet over although its most intense activity has passed in many parts of the world.

(Reporting by Maggie Fox, editing by Philip Barbara)

We Bought The Bullets

The bullets used to kill 19-year-old Furkan Dogan, a Turkish-American college student born in Troy, New York, were fired by soldiers in a foreign army -- but they were paid for with money extorted from U.S. taxpayers.

A post-mortem documented that Dogan was shot four times in the head and once in the chest by the commandos of Unit 13, which assaulted the humanitarian flotilla attempting to break the Israeli government's blockade of Gaza. Dogan was one of nine Turkish nationals killed in the attack.

Of the incident in which this young American citizen was murdered, Vice President Biden -- an infinitely self-replenishing Artesian gusher of unfiltered foolishness -- had this to say: "What's the big deal here?"

Although Dogan was the only U.S. citizen to be killed, other Americans who protested the Gaza blockade suffered grievously at the hands of U.S.-subsidized Israeli soldiers.

Paul Larudee, a 64-year-old peace activist who was also involved in the flotilla, was severely beaten and otherwise abused during his two-day detention in Israel because he refused to defer to the "authority" of the Israeli hijackers. Emily Henochowicz, a 21-year-old from Maryland, lost an eye while taking part in a demonstration in Jerusalem protesting the attack on the flotilla, and the ongoing blockade of Gaza: She was shot in the face with a (U.S.-subsidized) tear gas grenade fired by an Israeli soldier.

Blinded eyewitness: Emily Henochowicz in the hospital.

By any rational definition, the attack on civilian ships in international waters was an act of criminal aggression.

Apologists for the Israeli government's actions insist that the commandos who invaded the Turkish-flagged ships were forced to defend themselves when they found themselves outnumbered by civilians armed with knives and pipes. But just as pirates and armed robbers have surrendered the right to self-defense, the commandos had no moral or legal right to continue their aggression through violent means once they met resistance.

The commando raid was simple piracy and murder. The blockade it was meant to enforce is a campaign of state terrorism.

Defenders of the Israeli government describe the blockade as (to borrow Charles Krauthammer's expression) a form of "passive defense." It is better described as a policy of collective punishment. Supposedly intended to deprive Hamas of war materiel, the Israeli blockade also interdicts many indispensable foodstuffs, along with building materials, medicines, and such strategically critical items as wheelchairs and children's toys. More importantly, the Gazans themselves are effectively penned in an open-air prison camp. It's doubtful that there is an approach more perfectly calibrated to cultivate terrorism, rather than dissuade it.

It is hyperbole to describe Gaza as a modern equivalent of the Warsaw Ghetto. It is no exaggeration, however, to say that the Israeli government is using, on a much larger scale, the same tactics against the 1.5 million Gazans that were used by the FBI against the Branch Davidians. One federal official who disapproved of the 51-day siege at Mt. Carmel -- during which time water and other necessities were cut off -- described it as an exercise in torturing children to force their parents to surrender.

The face of "Terrorism": Ekrem Cetin and his son, Turker Kaan

Appropriately, that tactic reportedly played a role in the assault on the Gaza relief flotilla. Eyewitnesses testify that Israeli troops seeking to commandeer the Mavi Marmara pointed their guns at the one-year-old son of ship engineer Ekrem Cetin, threatening to murder the child unless the captain stopped the ship.

Had the trigger been pulled and the child -- who, I'm constrained to point out, somewhat resembles my own one-year-old son, Justus -- been slaughtered, we would have been treated to another chorus of an increasingly familiar refrain: It wasn't the fault of the Israeli commandos that the child's parents brought him to a war zone.

During the 2009 Israeli Defense Force "Operation Cast Lead" offensive in Gaza, one sniper platoon expanded that principle of collective responsibility to include pregnant mothers and their unborn children. A souvenir t-shirt distributed to snipers depicted a visibly pregnant Palestinian mother in the targeting scope of a rifle; the illustration bore the caption, "One shot -- two kills."

The official t-shirt of the Lon Horiuchi Brigade?

Israeli officials insisted that those t-shirts were a product of bad taste, rather than a reflection of official policy. Those assurances are stoutly disputed by numerous Israeli veterans who have served in Gaza, who testify that indiscriminate attacks on civilians are passively encouraged by the IDF, and generally covered up by it after the fact.

In search of a candid description of the doctrine of collective responsibility and indiscriminate warfare that prevails in both Jerusalem and Washington, we turn to the detestable Alan Dershowitz.

Unless he's being paid a sultan's ransom to defend a celebrity murder defendant, Dershowitz is a consistent defender of state power. He supports the institutionalization of torture, and endorses preemptive nuclear war against Iran. Four years ago, in his book Pre-emption, Dershowitz introduced a concept of collective punishment based on what he calls a "continuum of civilianality" in which protected civilian status "is often a matter of degree, rather than a bright line."

During the summer of 2006, Israeli troops invaded Lebanon following terrorist attacks by Hezbollah. In a July 22, 2006 Los Angeles Times column, Dershowitz insisted that those Lebanese who refused to abandon their homes when commanded to do so by an invading foreign army became retroactively "complicit" in Hezbollah's attacks, and were thus fair game. Those who were unable to leave, such as the elderly and infirm, were "innocent victims," he allowed -- but the IDF shouldn't be expected to spare them if doing so detracted from their military objectives.

Two weeks later, Dershowitz abandoned any pretense of proportionality, insisting that the only requirement to be considered a "terrorist" is to be a citizen of a country that has been invaded by the Israeli (or, presumably, the U.S.) Army.

"Lebanon has chosen sides -- not all Lebanese, but the democratically chosen Lebanese government," wrote Dershowitz. "When a nation chooses sides in a war ... its civilians pay a price for that choice.... Lebanon has chosen the wrong side and its citizens are paying the price. Maybe next time a democracy must choose between collaborating with terrorism or resisting terrorism, it will choose the right side."

Reading those words I was irresistibly reminded of a conversation I had with a self-described Holocaust skeptic in White Plains, New York during the fall of 2001. During our conversation, this fellow admitted that under Nazi rule German and other European Jews were branded like cattle, deprived of their property, and penned in concentration camps, but insisted that this was necessary because they constituted a "security risk."

Owing to the fact that a portion of the German Jewish population consisted of Marxist radicals who threatened the German state, that entire sub-population had defined itself as the enemy, and could be dealt with in any fashion necessary in order to preserve the Volkish state.

If there is a moral difference between that individual's view of collective punishment, and the one expressed by Dershowitz and other people of his ilk, I've yet to learn of an instrument capable of measuring it.

It's not at all surprising that Dershowitz invoked his concept of the "continuum of civilianality" to justify both the Gaza blockade and the attack on the relief flotilla.

"The act of breaking a military siege is itself a military act," pontificated the love-child of Lazar Kaganovich and Bozo the Clown. "It is a close question whether `civilians' who agree too [sic] participate in the breaking of a military blockade have become combatants. They are certainly something different than pure, innocent civilians, and perhaps they are also something different from pure armed combatants. "

The place assigned by Dershowitz to such people on his "continuum of civilianality" depends entirely on their response to aggression by people wearing state-issued costumes: If their reaction is anything other than immediate, unconditional submission, then -- according to Dershowitz -- those defending themselves become terrorists, and the costumed aggressors are the victims.

Where the use of aggressive force is concerned, the only serious moral question -- for Dershowitz and other high priests of statism -- is whether those committing it are swaddled in government-approved attire.

As Augustine pointed out, the key difference between a state and any other criminal gang is not the "renouncing of aggression" but rather the "attainment of impunity." Like the behemoth in Washington that lavishly underwrites it, nurtures its worst and most corrupt instincts, and shields its rulers from accountability, the Israeli government is a criminal band that acts with utter impunity -- not to protect its citizens, but to defend and enhance the state's power and the material advantages of those allied to it.

The Israeli government, like the one ruling us, thrives on crises and seems to go to great lengths to cultivate them. As I've pointed out before, there is a sick symbiosis between the Israeli regime and Palestinian terrorist chieftains, a relationship documented by Richard Ben Cramer in his valuable and infuriating book How Israel Lost.

"Things are not as they seem," writes Cramer. "The [Palestinian Authority's] business intersects with Israeli business at the highest levels of Israeli political life." This explains the tacit "arrangement" in which Israeli and Palestinian rulers sustain each other through carefully timed incidents of lethal violence.

Before Yasir Arafat died, he would be regularly "rescued" by Israeli military strikes against Palestinian targets, Cramer observes. The same was true of Arafat's supposed arch-enemy, Ariel Sharon: "If his polls dropped, something terrible happened -- dead Jews all over the TV" -- and Sharon's political fortunes would dramatically improve.

One reason Israeli intelligence helped create Hamas in the first place was to provide a hunting preserve of Palestinian radicals who could be killed in this ongoing charade. Now we're told that the establishment of a Hamas-dominated political regime in Gaza justifies the starvation blockade and the slaughter on the high seas of anyone -- including American citizens -- who tries to run that blockade.

All of this is necessary, we are incessantly told, in order to ensure the survival of the Jewish State. But self-defense is an individual right. No state, Jewish or otherwise, has the "right" to exist, and all of them -- the Israeli state emphatically included -- prosper at the expense of those they supposedly protect.

We can't guarantee Israel's security and have no authority to do so even if we could, but we'd do both ourselves and the inhabitants of that country a tremendous favor if we were to stop paying for the Israeli government's bullets.

How crazy can it get? Scientists propose sun block for the entire planet to save it

(NaturalNews) In an article published in the journal Nature, three scientists have called for governments to fund a massive research effort in ways to shield the planet from solar radiation as a way to stave off global warming.

"The idea of deliberately manipulating Earth's energy balance to offset human-driven climate change strikes many as dangerous hubris," wrote David Keith of the University of Calgary, Canada, Edward Parson of the University of Michigan and Granger Morgan of Carnegie Mellon University.

"Many scientists have argued against research on solar radiation management, saying that developing the capability to perform such tasks will reduce the political will to lower greenhouse gas emissions. We think that the risks of not doing research outweigh the risks of doing it."

The practice of "geoengineering" consists of finding ways to limit the amount of solar radiation reaching the earth, thus slowing the rate of planetary warming. Suggested methods include simulating a massive volcanic eruption by generating sulphate aerosols high in the atmosphere, or spraying tiny seawater droplets to create low clouds over the ocean. Although the subject was considered fringe only a few years ago, scientific interest in geoengineering is on the rise.

The article's authors noted that geoengineering cannot be a substitute for reductions of greenhouse gas emissions, but could stave off catastrophic warming until emissions reductions can take effect.

Suggested drawbacks of geoengineering include altering weather patterns and a failure to address increasing acidity of oceans caused by increased carbon dioxide levels in the atmosphere.

The scientists said that the time to study the benefits and drawbacks of geoengineering is now, before countries are driven by desperation to initiate projects on their own, without international consensus.

"It is plausible that, after exhausting other avenues to limit climate risks, such a nation might decide to begin a gradual, well-monitored program of deployment, even without any international agreement on its regulation," they warned. "In this case, one nation -- which need not be a large and rich industrialized country -- could seize the initiative on global climate, making it extremely difficult for other powers to restrain it."

WHO scandal exposed: Advisors received kickbacks from H1N1 vaccine manufacturers

(NaturalNews) A stunning new report reveals that top scientists who convinced the World Health Organization (WHO) to declare H1N1 a global pandemic held close financial ties to the drug companies that profited from the sale of those vaccines. This report, published in the British Medical Journal, exposes the hidden ties that drove WHO to declare a pandemic, resulting in billions of dollars in profits for vaccine manufacturers.

Several key advisors who urged WHO to declare a pandemic received direct financial compensation from the very same vaccine manufacturers who received a windfall of profits from the pandemic announcement. During all this, WHO refused to disclose any conflicts of interests between its top advisors and the drug companies who would financially benefit from its decisions.

All the kickbacks, in other words, were swept under the table and kept silent, and WHO somehow didn't think it was important to let the world know that it was receiving policy advice from individuals who stood to make millions of dollars when a pandemic was declared.

WHO credibility destroyed

The report was authored by Deborah Cohen (BMJ features editor), and Philip Carter, a journalist who works for the Bureau of Investigative Journalism in London. In their report, Cohen states, "...our investigation has revealed damaging issues. If these are not addressed, H1N1 may yet claim its biggest victim -- the credibility of the WHO and the trust in the global public health system."

In response to the report, WHO secretary-general Dr Margaret Chan defended the secrecy, saying that WHO intentionally kept the financial ties a secret in order to "...protect the integrity and independence of the members while doing this critical work... [and] also to ensure transparency."

Dr Chan apparently does not understand the meaning of the word "transparency." Then again, WHO has always twisted reality in order to serve its corporate masters, the pharmaceutical giants who profit from disease. To say that they are keeping the financial ties a secret in order to "protect the integrity" of the members is like saying we're all serving alcohol at tonight's AA meeting in order to keep everybody off the bottle.

It just flat out makes no sense.

But since when did making sense have anything to do with WHO's decision process anyway?

Even Fiona Godlee, editor of the BMJ, had harsh words for the WHO, saying, "...its credibility has been badly damaged. WHO must act now to restore its credibility."

Yet more criticism for WHO

The BMJ isn't the only medical publication criticizing WHO for its poor handling of conflicts of interest. Another report from the Council of Europe Parliamentary Assembly also criticized WHO, saying: "Parliamentary Assembly is alarmed about the way in which the H1N1 influenza pandemic has been handled, not only by the World Health Organization (WHO), but also by the competent health authorities at the level of the European Union and at national level." It went on to explain that WHO's actions led to "a waste of large sums of public money, and also unjustified scares and fears about health risks faced by the European public at large."

The funny thing is, NaturalNews and other natural health advocates told you all the same thing a year ago, and we didn't have to spend millions of dollars on a study to arrive at this conclusion. It was obvious to anyone who knows just how corrupt the sick-care industry really is. They'll do practically anything to make more money, including bribing WHO scientific advisors and paying them kickbacks once the vaccine sales surge.

The vaccine industry and all its drug pushers are, of course, criticizing this investigative report. They say WHO "had no choice" but to declare a pandemic and recommend vaccines, since vaccines are the only treatment option for influenza. That's a lie, of course: Vitamin D has been scientifically proven to be five times more effective than vaccines at preventing influenza infections, but WHO never recommended vitamin D to anyone.

The entire focus was on pushing more high-profit vaccines, not recommending the things that would actually help people the most. And now we know why: The more vulnerable people were to the pandemic, the more would be killed by H1N1, thereby "proving" the importance of vaccination programs.

People were kept ignorant of natural remedies, in other words, to make sure more people died and a more urgent call for mass vaccination programs could be carried out. (A few lives never gets in the way of Big Pharma profits, does it?)

How the scam really worked

Here's a summary of how the WHO vaccine scam worked:

Step 1) Exaggerate the risk: WHO hypes up the pandemic risk by declaring a phase 6 pandemic even when the mortality rate of the virus was so low that it could be halted with simple vitamin D supplements.

Step 2) Urge countries to stockpile: WHO urged nations around the world to stockpile H1N1 vaccines, calling it a "public health emergency."

Step 3) Collect the cash: Countries spend billions of dollars buying and stockpiling H1N1 vaccines while Big Pharma pockets the cash.

Step 4) Get your kickbacks: WHO advisors, meanwhile, collected their kickbacks from the vaccine manufacturers. Those kickbacks were intentionally kept secret.

Step 5) Keep people afraid: In order to keep demand for the vaccines as high as possible, WHO continued to flame the fears by warning that H1N1 was extremely dangerous and everybody should continue to get vaccinated. (The CDC echoed the same message in the USA.)

This is how WHO pulled off one of the greatest vaccine pandemic scams in the last century, and it worked like gangbusters. WHO advisors walked away with loads of cash, the drug companies stockpiled huge profits, and the taxpayers of nations around the world were left saddled with useless vaccines rotting on the shelves that will soon have to be destroyed (at additional taxpayer cost, no doubt) or dumped down the drain (where they will contaminate the waterways).

Meanwhile, nobody dared tell the public the truth about vitamin D, thereby ensuring that the next pandemic will give them another opportunity to repeat the exact same scam (for yet more profit).

The criminality of the vaccine industry

The bottom line is all this is a frightening picture of just how pathetic the vaccine industry has become and how corrupt the WHO and the CDC really are. What took place here is called corruption and bribery, folks. Kickbacks were paid, lies were told and governments were swindled out of billions of dollars. These are felony crimes being committed by our global health leaders.

The real question is: Why do governments continue to allow public health organizations to be so easily corrupted by the vaccine industry? And who will stand up to this profit conspiracy that exploits members of the public as if they were profit-generating guinea pigs?

The next time you hear the WHO say anything, just remember: Their advisors are on the take from the drug companies, and just about anything you're likely to hear from the World Health Organization originates with a profit motive rather than a commitment to public health.

Oh, and by the way... for the record, there has never been a single scientific study ever published showing that H1N1 vaccines worked. Not only was the H1N1 pandemic a fraud to begin with, but the medicine they claimed treated it was also based on fraud. And now we know the rest of the story of why it was all done: Kickbacks from Big Pharma, paid to advisors who told WHO to declare a pandemic.

Alex Jones: Bilderberg Is Running Scared

Alex Jones breaks down the significant developments that have emerged from sources inside the 2010 Bilderberg meeting in Spain. There is a contentious and urgent atmosphere behind the scenes of the secret meeting. Attendees are reportedly concerned about the potential collapse of the Euro, war with Iran and the rise of political dissent against world government.

Most urgent inside Bilderberg 2010 is the instability surrounding the Euro, which is threatening to unravel, and take the momentum for further regional integration and global currency with it. More gravely, veteran Jim Tucker has told the Alex Jones Show that many attendees inside Bilderberg were very supportive of initiating the long-boiling war with Iran. According to inside sources, even a nuclear strike was not off the table.

Further, it was disclosed that many members declined to attend this year because public awareness has reached a significant enough level that political pressure has been put on figures who attend, perhaps for the first time ever. Many officials were ’scared’ of potential scrutiny.

The overall panicked atmosphere over economic issues during the previous year– most dramatically demonstrated by IMF riots in Greece– has signaled a loss of control, while public anger has spread globally. This year, Bilderberg is also concerned about significant protests outside its own meeting, as well as increasing media coverage of Bilderberg. Mainstream media outlets have begun taking notice: the Drudge Report is linking to coverage; Charlie Skelton has initiated a second year of coverage for the London Guardian; Russia Today has done extensive coverage; speakers are demanding answers about Bilderberg inside the European Parliament.

This attitude carries over to eyewitness accounts of conversation inside the hotel. A ranking member of the conference organizers– the secretariat employees working on behalf of the powerful group– were overheard by London Guardian reporter Charlie Skelton discussing the ’scary’ presence of one Alex Jones who bullhorned the meetings in both 2006 and 2008. These people also joined in lamenting the growing number of protesters who had begun surrounding the hotels across the world during recent years of the conference.

The popular uprising and political dissent via tea parties, “Truthers” and Bilderberg critics have, if nothing else, contributed to the rising tide of voters throwing out incumbents and demonstrating furious anger at both Wall Street and Washington. Part and parcel with this is the near-total failure of the globalists’ agenda for world government at Copenhagen, failure to pass Climate Change taxation schemes and the widespread rejection of phony “global warming” rhetoric and public anger over the cooked data exposed by the Climategate scandal last fall.

This meshes with the melancholy tone of former National Security Advisor and Trilateral Commission co-founder Zbigniew Brzeziski, who recently lamented before his audience at the Council on Foreign Relations that, for the first time in history, “Mankind is now politically awakened and stirring.” He further warned that the rise of China and other powers had forever compromised any hopes for a unipolar world hegemony dictated solely by the Anglo-American elite.

US attendees at ‘world government’ meeting may be breaking law: activists

Activists protesting outside this year's meeting of the secretive Bilderberg Group say American citizens attending the meeting may be breaking the law.

The 56-year-old group, which hosts some of the world's most influential financiers and politicians on annual basis, is alleged to have been the driving force behind the launch of several wars and behind a push to create a single global government -- a claim that many observers describe as not credible.

Among the attendees of previous years' meetings were former President Bill Clinton; former UK prime ministers Tony Blair, Gordon Brown and Margaret Thatcher; World Bank head Robert Zoellick; Fed chairman Ben Bernanke; and US statesman Henry Kissinger. The Independent reports that this year's attendees include Jean-Claude Trichet, head of the European Central Bank, and Queen Reina of Spain. Russia Today reports of "rumors" that Treasury Secretary Timothy Geithner is attending this year's meeting.

Though, of course, there is no way to be certain who is at the conference. This year's meeting is taking place this weekend in Sitges, Spain, a beach resort town south of Barcelona. Like every year, the meeting is closed to the press, and its agenda and list of attendees are secret.

Some protesters outside the meeting say the participation of US citizens in the meeting is forbidden by law. One protester told RT that the Logan Act of 1799 forbids US citizens from negotiating in secret with representatives of foreign governments. Thus, if any American attendee were to come to an agreement on any issue, it could be a violation of federal law.

With Europe focused on the debt crisis in Greece and other countries, European protesters focused on the Bilderberg Group's alleged involvement in the creation of the European Union and Europe's monetary union.

Daniel Estulin, an investigator who has written two books about Bilderberg, told RT that the big question at this year's meeting is whether the Euro will survive the continent's fiscal crisis.

But Estulin said people are mistaken to think the Bilderberg Group is working towards a world government. "Their plan is not about creating one world government, as so many people mistakenly believe, but rather creating what they call themselves the 'aristocracy of purpose' between North American and European elites. ... In other words, the creation of 'One World Company Ltd.' And to have one world company, you can't have countries, you need to have economic blocks."


Members of the Bilderberg Group themselves may share some of the blame for the concerns about the group secretly pushing for a global government. In a 2001 book, author Jon Ronson quotes Denis Healey, one of Bilderberg founding members, as saying: "To say we were striving for a one-world government is exaggerated, but not wholly unfair. Those of us in Bilderberg felt we couldn't go on forever fighting one another for nothing and killing people and rendering millions homeless. So we felt that a single community throughout the world would be a good thing."

But not everyone considers this to mean that Bilderberg is building a new world order. Investigative journalist Chip Berlet told Russia Today that the myriad conspiracy theories surrounding the Bilderberg Group are nonsense.

"This idea that the Bilderberg Group is a secret elite force that controls the world economy and is building a new world order is a giant pot of spoiled borscht made from rotten beets," he told the Russian news service.

Berlet noted that "there are 15 or 20 other similar groups that have secret meetings" and that "most meetings between corporate leaders and government officials are secret."

The theories about Bilderberg are "a hoax carried out by people who believe an elaborate fairy tale," he said.

But Berlet admitted that "from a [public relations] perspective it's idiotic to have secret meetings with secret guest lists and a secret agenda. Of course that encourages conspiracy theories."

He added that "the organization itself has no power. This idea that this is a plot that is carried out by 30 or 40 countries is baloney."

The following video was broadcast on Russia Today, June 4, 2010.

The following video was broadcast on Russia Today, June 4, 2010.

Correction: a prior version of this story described Ben Bernanke as the "former" Fed chairman..

Gulf oil spill breakthrough? Cap collecting 'majority' of oil.

BP reported Sunday that its containment cap is now collecting 420,000 gallons a day, saying that was a 'majority' of the oil. But the flow rate in the Gulf oil spill is still uncertain, and BP has failed to live up to its optimistic predictions in the past.

BP Chief Executive Tony Hayward waits to appear on BBC TV in London Sunday. Mr. Hayward said a containment cap fitted onto the leaking well causing the Gulf oil spill was 'producing around 10,000 barrels of oil a day to the surface.'

Jeff Overs/BBC/handout/Reuters

Early reports suggest that BP is on the verge of its first significant success in the Gulf oil spill.

BP Chief Executive Tony Hayward told the BBC Sunday that the cut-and-cap maneuver is now collecting 420,000 gallons of oil a day – 40 percent more than it was collecting Saturday.

The improvement raises hope that the containment cap now fitted atop the well might successfully collect as many as 630,000 gallons of oil daily – the highest amount that tanker vessels on the surface can collect.

IN PICTURES: Louisiana oil spill

Mr. Hayward bullishly said he thought the cap was now collecting “the majority, probably the vast majority of the oil."

Yet the comments will be viewed with some caution. BP has failed to match its own optimistic forecasts in the past:

  • Hayward said there was a 60 percent to 70 percent chance that the “top kill” maneuver of two weeks ago would seal the well. It failed.
  • The use of a siphon stuck into the riser pipe three weeks ago prompted Hayward to say: “I do feel that we have, for the first time, turned the corner in this challenge.” The siphon was later abandoned.
  • Early estimates of the oil flow rate were pegged at 210,000 gallons a day – 5,000 barrels – which according to current estimates, might have been four times lower than the actual rate. Some scientists say that even the current estimates are conservative.

The actual flow rate

The containment cap could offer some greater clarity on the actual flow rate. As engineers learn how much oil they are capturing, they’ll be able to compare that with how much they see escaping.

"Hopefully we'll start moving those ranges into a more acceptable representation of what's actually flowing, and the best way to do that is to get a good flow rate of production because once you know what you are producing every day, that's a known quantity you can take off the table," said Coast Guard Admiral Thad Allen, national incident coordinator, in a press conference Saturday.

At the outset of the operation, BP engineers said they did not expect to collect all the oil with the containment cap. Moreover, current flow estimates suggest that as many as 800,000 gallons of oil might be leaking into the Gulf each day, meaning that even in a best-case scenario the containment cap might still allow 170,000 gallons to leak into the Gulf daily. That would be 80 percent of the early 210,000 gallon estimate.

Even at the current capture rate of 420,000 gallons a day, though, the containment cap would represent BP’s greatest success so far.

The company has virtually abandoned the idea of actually stopping the well before a relief well is finished no earlier than August. That leaves collecting the oil at the source as the only way to slow the spill’s environmental destruction.

Cutting the flow rate – perhaps in half – would be a step toward that goal. The oil slick is now moving eastward, with parts of the slick reaching the beaches of Alabama and Florida. There is further concern that, as it expands, the slick be caught in the Gulf’s loop current, which might carry it out of the Gulf and up the Atlantic coast.

The damage to undersea ecosystems, from deep-water coral reefs to the plankton that undergird the food chain, is so far virtually unknown.

BP not done yet

Heyward said BP was planning to implement further measures this week to trim the flow of oil into the Gulf.

First, the tubes used to pump in drilling mud during the failed “top kill” effort would be retasked as additional siphons.

Second, BP plans to build a new riser pipe – starting at the cap and ending about 300 feet below the surface – that would make it easier to start and stop oil-collection operations. Currently, it would take almost a week to reconnect to the containment cap, which is 5,000 feet down, if the connection to the surface was severed. Once a new riser pipe is finished next month, ships would be able to reconnect within two days.

This is designed to be a contingency for hurricanes, when tanker vessels might have to detach from the containment valve.

The containment cap effort suggests that BP is gradually learning from its mistakes. Engineers have proceeded cautiously in closing vents atop the cap, wanting make sure the conditions are right before acting. A previous attempt to contain the oil failed when ice crystals formed in a dome set over the well.

Indeed, each additional step by BP is adding to scientists’ limited understanding of conditions on the sea floor – a place so remote and poorly studied that some call it “inner space.”

The hijacking of the truth: Film evidence 'destroyed'

Protesters say Israel had an assassination list. Israel says soldiers fired only in self-defence. So what really happened on 31 May? Catrina Stewart reports

Jamal Elshayyal, a journalist with al-Jazeera, woke with a start to the opening salvos of an Israeli assault that would transform the decks of the Mavi Marmara, a Turkish vessel bound for Gaza, into a bloodbath.

From the ship's position deep in international waters, satellite images of Israeli speedboats and helicopters approaching the vessel were beamed across the globe before communications were abruptly cut off, leaving the events on the Marmara to unfold away from the eyes of the world.

Six days after the bloody assault that left nine foreign protesters, mainly Turks, dead, nobody can recount with any conviction precisely what happened that night. The convoy of ships, whose passengers included writers, politicians and journalists, had been expected for weeks, with organisers loudly broadcasting their plans to run Israel's blockade of the Gaza Strip and draw international attention to the situation there.

From the beginning, it was clear that Israeli forces were concentrating in their largest numbers on the Marmara, a ship carrying some 550 peace activists. The remaining five boats were much smaller and easily commandeered. After the Marmara was subdued, the passengers silenced, and their recording equipment confiscated, Israel disseminated a carefully choreographed account of the events that night that would dominate the airwaves for the first 48 hours.

Only as eyewitnesses, traumatised by their experiences, started to return to their home countries, were serious questions raised about the veracity of the Israeli version of events. Israeli commandos initiated the attack on the Marmara with stun grenades, paintballs and rubber-cased steel bullets. They were met with water hoses as the ship's passengers tried to form a defensive cordon to prevent soldiers from reaching the wheelhouse. Next, the helicopters started their approach, hovering overhead as they tried to disgorge commandos.

From the other ships, passengers looked on helplessly: "The worst thing was seeing the helicopter come up because I knew they were going to invade," said Ewa Jasiewicz, a 32-year-old organiser. "You could hear the screams when they started shooting ... We wanted to stop and go back but there wouldn't have been anything we could have done."

From the moment the helicopters arrived, the sequence of events becomes confused. The dizzying number of claims and counter-claims serves only to present an incomplete account of a military operation that went badly, badly wrong. More than 1.7 million viewers have pored over the edited YouTube footage posted by the Israeli navy since Wednesday. In the dramatic clip, commandos rappel down on to the deck from a helicopter, where they are met by angry activists armed with iron bars and sticks.

This is a critical point, for Israel has rallied domestic opinion on the crucial claim that its soldiers dropped into a meticulously planned riot for which they were completely unprepared. Panicked, they acted in self-defence after they landed, shooting only those who threatened them.

The video is problematic, though. The images of angry protesters are striking, but they lack context. What happened before? What happened next? Had the soldiers started shooting when they descended to the deck? The only account offered by the Israelis of what happened next is left to Staff Sergeant S, a commando who claims he shot six of the protesters.

The last of 15 to arrive on the deck, he said he saw that two of his colleagues had gunshot wounds. Pushing others into a protective cordon around the injured soldiers, he shot at the protesters to force them to fall back. It's a neat account, but several eyewitness accounts tell a very different story.

Mr Elshayyal, a reporter for the Arab channel al-Jazeera, was standing to one side of the ship and had a view of the front and back of the vessel when the fighting started. By his account, soldiers fired down on the protesters from the helicopters before an Israeli soldier had even set foot on the ship. A man next to him was shot through the top of his head, dying instantly.

"What I saw were shots being fired from the helicopter above and moments later from below – from the ships," Mr Elshayyal said. "As far as I am concerned, it's a lie to say they only started shooting on deck."

At least two other eyewitnesses saw soldiers firing from above the ships before they landed on the Marmara's deck. It is possible that this is what prompted the fierce resistance to the soldiers when they dropped down. Several passengers recount how organisers urged their peers to stop hitting the soldiers, aware of how it would harm their claim to be peaceful protesters.

Others on the ship claim they raised a white flag, but say that it was ignored. They also used a loudspeaker to reiterate their message of surrender and requested that the injured be taken off the ship to get medical assistance. Again, they were ignored.

At some point early on, the activists dragged three, possibly four, injured soldiers to a lower deck, either to keep as hostages or for their own safety. It was then, several passengers say, that the situation quickly deteriorated. Israel has insisted that the protesters took two of the soldiers' pistols and used them, but others claim the pistols were taken away to prove that Israel planned to use live rounds.

Below, the protesters rummaged through captured soldiers' belongings and claimed to unearth a document that they allege is a list of people Israel intended to assassinate. The booklet, written in Hebrew and in English, contained some photographs of passengers on the Marmara, including the leader of IHH, the Turkish charity that provided two of the ships, an 88-year-old priest and Ra'ad Salah, head of the Northern Branch of the Islamic Movement in Israel, Mr Elshayyal said.

A military spokesman, Lt Col Avital Leibowitz, insisted soldiers acted in self-defence and that she "was not aware" of any list. But one thing is fast becoming clear – many of the dead were shot multiple times at point-blank range. One was a journalist taking photographs. "A man was shot ... between the eyebrows, which indicates that it was not an attack that took place from self-defence," Hassan Ghani, a passenger, said in an account posted on YouTube. "The soldier had time to set up the shot." Mattias Gardell, a Swedish activist, told the TT news bureau: "The Israelis committed premeditated murder ... Two people were killed by shots in the forehead, one was shot in the back of the head and one in the chest."

When Israeli troops had subdued the ship, they rounded up the passengers, bound their wrists, in some cases forcing activists into stress positions, and prevented them from using toilets. Mr Elshayyal said he was given just three sips of water before he was taken off the ship more than 24 hours later.

Their ordeal, of course, was not yet over. Accused of entering Israel illegally, the captives were transferred to an Israeli prison, where many were held in cramped cells and denied phone calls. Furious, Turkey sent three planes to transport the activists out of Israel, threatening to sever all diplomatic ties if they were not all released.

Meanwhile, much of the video footage confiscated from Marmara passengers remains undisclosed, and Israel has sought to undermine some eyewitness accounts by alleging some of the passengers were terrorist sympathisers bent on martyrdom.

Questions remain unanswered on both sides. But without a full and transparent airing of all the evidence, the truth of that dreadful night on the Marmara may never come to light.

In the meantime, the organisers say they will seek again and again to breach Israel's defences. Scottish protester Ali El-Awaisi said: "We sent six ships this time. Next time it will be 30 ships."

U.S. weighing new options over North Korea

SINGAPORE (Reuters) – The United States said on Saturday it was weighing new options beyond the United Nations to punish North Korea, which South Korea blames for the sinking of a warship that has escalated tensions on the peninsula.

Seoul has complained to the U.N. Security Council over the sinking of the corvette Cheonan in March, which killed 46 sailors. South Korea and its main ally, the United States, accuse the reclusive North of torpedoing the ship, although it is unclear what concrete action, if any, the U.N. will take.

U.S. Defense Secretary Robert Gates told a security conference in Singapore it was the "collective responsibility" of Asian states to address North Korean "provocations," increasing pressure on a reluctant China to rebuke its ally.

"To do nothing would set the wrong precedent," Gates said at a meeting with his South Korean and Japanese counterparts.

"One has to wonder what they (the North Koreans) were thinking," he told the BBC in an interview, "and whether there are other provocations to come."

Gates said Washington would conduct more joint exercises with South Korea and support "action" by the Security Council.

"At the same time, we are assessing additional options to hold North Korea accountable," he said, suggesting the United States and its allies could act unilaterally or in concert.

Officials said Washington was looking at options including tightening economic sanctions, expanding searches of North Korean vessels and holding more large-scale shows of military force to try to deter future attacks.

North Korea denies responsibility for sinking the Cheonan and accuses South Korean President Lee Myung-bak of staging the incident to help his chances in local elections this week.

In increasingly shrill rhetoric, the North has warned several times that "war could break out at any moment."

Lee pledged to clamp down on any action deemed threatening but dismissed the likelihood of open conflict.

"There is no possibility of a war. There has been occasionally and locally peace-threatening behavior but we will strongly suppress it," Lee's spokesman, contacted by telephone, quoted him as telling businessmen at the Singapore summit.


U.S. military officials, including Admiral Robert Willard, head of the U.S. Pacific Command, have also played down the risk of a major conflict, saying there were no signs North Korea was preparing a nuclear test or moving troops toward the South.

But officials said another attack could not be ruled out. "When you're dealing with a regime as unpredictable as (North Korea), that is always a concern," Morrell said.

Diplomats said that in talks with Asian leaders, Gates and other officials had made it very clear their goal is to avoid an escalation.

The United States and South Korea face a difficult balancing act -- finding a way to punish the North without provoking another attack. Gates raised the possibility that Seoul would stop short of seeking a full-blown Security Council resolution.

Planned U.S.-South Korea military drills might also be put off, at least until it becomes clear what action the United Nations is prepared to take, officials said.

The big question facing the United States, South Korea and Japan is how to gain leverage over a regime that appears to be indifferent to international pressure and responds in such seemingly erratic ways.

China, North Korea's only major ally and benefactor, may be the central player, although some U.S. intelligence officials have questioned how much sway it really has.

As a permanent member of the Security Council, China can veto any U.N. resolution or statement chastising the North.

Without referring to China by name, Gates pointedly told Asian leaders in Singapore that all the nations in the region "share the task of addressing these dangerous provocations."

"Inaction would amount to an abdication of our collective responsibility to protect the peace and reinforce stability in Asia," he said.

Beijing has so far declined publicly to join international condemnation of Pyongyang, saying it is assessing the evidence.


U.S. officials acknowledge that China appears reluctant to embrace tough measures at the United Nations.

Likewise, Russia has yet to fully sign on to South Korea's version of events about the sinking, they cautioned.

Beijing broke off military ties with Washington after it told Congress in January of a plan to sell up to $6.4 billion of arms to Taiwan, which Beijing regards as a renegade state.

At the annual conference, known as the Shangri-La Dialogue, Gates urged Beijing to accept the "reality" that Washington is committed to arming Taiwan, like it or not.

That drew a sharp challenge from Major General Zhu Chenghu of China's National Defense University. He said continued arms sales to Taiwan sent the message that America saw the Chinese as "enemies." Gates rejected that characterization, saying China and the United States were partners in many areas.

(Additional reporting by Harry Suhartono and Nopporn Wong-Anan in SINGAPORE, and Kim Yeon-hee in SEOUL; Editing by Kevin Liffey)