Sunday, November 30, 2003

It Was All Like Building Sand Castles...These American Inspectors Are Wasting Their Time

Iraq Scientists Say They Lied Over Weapons

Before that first Gulf War, the chief of the weapons program resorted to "blatant exaggeration" in telling Iraq's president how much bomb material was being produced, key scientist Imad Khadduri writes in a new book.

Other leading physicists, in Baghdad interviews, said the hope for an Iraqi atomic bomb was never realistic. "It was all like building sand castles," said Abdel Mehdi Talib, Baghdad University's dean of sciences.

Iraqi scientists have grown more vocal in countering the US administration claims, used to justify the war, that Baghdad had "reconstituted" nuclear weapons development, and that it once was a mere six months from making a bomb.

At best, Khadduri writes, it would have taken Iraq several years to build a nuclear weapon if the 1991 war and subsequent U.N. inspections had not intervened.

His self-published "Iraq's Nuclear Mirage," a chronicle of years of secret weapons work and of a final escape into exile, is part of this senior scientist's emergence from a low profile in Canada - intended to refute what he calls a "massive deception" in Washington that led the United States into war.

Khadduri, a U.S.- and British-educated physicist, writes that he did theoretical work on nuclear weapons as long ago as the mid- 1970s, after joining Iraq's Atomic Energy Commission. By the late 1980s, as the secret bomb program accelerated, he was in a pivotal position as coordinator of all its scientific and engineering information.

"Iraq's Nuclear Mirage," dismisses the U.S. contention that the atom-bomb establishment was resurrected after it was demolished, U.N. inspectors were stationed in Iraq and Iraqi specialists were scattered.

"Where is the scientific and engineering staff required for such an enormous effort?" he asks. "Where are the buildings and infrastructure?"

The continuing U.S. weapons hunt amounts to no more than "investigating mirages," he says.

Khadduri and others said the design and actual production of a bomb would have been an extremely difficult task.

It was an impossible quest, "all futility," said one of Baghdad's senior nuclear physicists, Hamed M. al-Bahili.

Al-Bahili, who joined the Atomic Energy Commission in 1968 but remained outside the weapons program, said his colleagues inside "all knew they wouldn't achieve results." As for whether the program was later revived, he said, "these American inspectors are wasting their time."

Spending Money Like a Drunken Sailor

John McCain comes out swinging...

"The numbers are astonishing," McCain said on "Fox News Sunday."

"Congress is now spending money like a drunken sailor," said McCain, a former Navy officer, "and I've never known a sailor, drunk or sober, with the imagination that this Congress has."

He said growth of spending had been capped at 4 percent, but it was at least 8 percent higher. He said he will continue urging Bush to veto profligate spending bills. The president has not vetoed a single bill since he took office.

Asked if the president bears some responsibility for what is going on, McCain said:

"Yes, because I think that the president cannot say, as he has many times, that 'I'm going to tell Congress to enforce some spending discipline' and then not veto bills."

An example, he said, is a massive energy bill, recently set aside.

"The administration originally supported an energy bill that would cost about $8 billion. This one is up to $24 billion, and the administration is still saying it's one of its highest priorities," McCain said. "I don't know how you rationalize that."

"Any economist will tell you cannot have this level of debt of increasing deficits without eventually it affecting interest rates and inflation," he said. "Those are the greatest enemies of middle-income Americans and retired Americans."

Where do I get more information on American's greatest enemies?

What Kamen's Segway Should've Been...

More Depressing War News...

Some bullish visitors in Tikrit may find great opportunities and get in on a piece of the War profit that is disgracefully spreading through our government at the moment...


Governor: Tikrit, Iraq Open for Business

Jim Gomez reporting.

TIKRIT, Iraq (AP) -- In a tightly guarded ceremony, the governor of Saddam Hussein's home province declared Saturday that the region was open for business, and thanked foreign businessmen who attended a gathering wearing flak jackets and helmets.

The visitors were invited to Salahuddin province by U.S. military and Iraqi officials under tight security to attend the opening of a newly refurbished building that will serve as a business center for potential investors...

The new business center, which was repaired and furnished with $180,000 in U.S. aid, is located near a police station fortified with sandbags and concrete barriers to prevent suicide bombers from crashing through. Nearby, a building once used by Saddam's army lies in ruins, its walls blasted by U.S. air strikes.

  • Read Whole story

  • Or check out

  • On a similiar note, our Presidents offer an awesome amplification of all our sins. Not one can seem to remain stable, rational or sane through their years in public office. Bush seems to be afflicted with either a national socialist streak, a fumbling of the truth disease, an ignorance of fundamentals and thus a stumbling in execution, or a very strange, pronounced plan to make it real bad and then suddenly:

    Bring all our troops home,
    End all foreign aid,
    Eliminate the welfare state,
    Let Israel stand on its own two feet like Netanyahu once advised,
    Allow every American stand up as well
    And Let the free market reign.

    I don't know, you tell me.

    I hope it is the last one.

    Virtual Scary Monsters and Real Nazi Skinheads, Otherwise Known As, the Armed Forces.

    Some of the most important questions to be answered by taxpayer dollars..."At what point does (a soldier) need a break or a drink of water?"..."How long a soldier can operate a piece of a mechanical weapons system and stay alert."...

    "All [this and more] so we can deploy a division anywhere in the world within 36 hours."

    Iowa Researchers Create Virtual Soldiers

    IOWA CITY, Iowa (AP) -- Researchers at the University of Iowa are using artificial intelligence programs to create computer simulations of human soldiers to help test the performance of future U.S. Army combat systems.

    The five-year, $17.5 million project is designed to help make the Army faster, more efficient and lethal with the integration of more sophisticated weapons systems, university officials said.

    The digital soldiers will help researchers test the impact new machinery and weapons systems could have on real troops, researchers said.

    "That's something the army is very interested in: How long a soldier can operate a piece of a mechanical weapons system and stay alert," said Karim Malek, lead researcher and engineering professor. "At what point does (a soldier) need a break or a drink of water?"

    Calculating the human impact of operating new weapons, equipment or battlefield scenarios on digital humans can help save money and determine sooner whether to the Army should pursue or redesign certain military systems, Malek said.

    University researchers have already designed two virtual humans - a male named Tony, and a female, Ella. Each was designed using artificial intelligence programs that use digitized human anatomical data and mathematical models that can predict human thought and behavior, Malek said.

    "They've done this to some degree in the (computer) gaming world, but what we're using here is real-time simulation," he said.

    The research, which is not classified, will be done by a 25-person team of private and public experts. The majority will be medical department researchers and engineering faculty, but Malek said he wants to include engineers from Rockwell Collins, the Cedar Rapids-based company that has a long history of product development with the military.

  • Read More

  • Also take a look at America's Army, the video game.

    The Stirring of Revolutionary Spirit

    Taiwan's President Tests China's Nerves, Threatens Sovereignty Vote in March

    Stephan Grauwels from the AP reports on the stirring of revolutionary spirit off China...

    "TAIPEI, Taiwan (AP) - One day after Taiwan's president said he might hold a vote on the island's 'sovereignty' in March, the ruling party said Sunday that it hasn't decided what specific issue would be on the ballot and that the public should help it decide.

    Holding such a vote could provoke China, which claims self-ruled Taiwan as part of its territory. Beijing has warned the island against seeking a permanant split with the mainland. The two sides separated amid civil war in 1949, and China's says Taiwan must unify eventually or endure another bloody conflict.

    On Saturday, President Chen Shui- bian's threat caught many in Taiwan by surprise. In the four years since he was elected, Chen had always said he would push for formal independence only if China tried to use its massive military to force the island to unify.

    China is pressuring Taiwan - 100 miles off the mainland's coast - to unify and it has threatened to invade if Taiwan drags its feet too long. Taiwan's close friend, the United States, has helped defend the island before and could be asked to do so again...

    'In order to prevent Taiwan's national security and Taiwan's national sovereignty from being threatened by any outside force and from undergoing any change, I have the duty, I have the responsibility to be able to call for a referendum if the government approves,' Chen said."

  • Read the AP Story

  • More Money, More Blood

    Colombian Rebel Commander: Guerrillas Will Attack U.S. Military Personnel

    Nicole Karsin from the Associated Press reports from one of the many other hot spots around the world that are currently under-played in the pop news cycle...

    BOGOTA, Colombia (AP) - Colombia's main rebel group warned Saturday that U.S. military personnel aiding government troops will face attack.

    Raul Reyes, a commander and spokesman of the Revolutionary Armed Forces of Colombia, known as the FARC, issued the threat barely two weeks after a rebel grenade attack on two Bogota brewpubs killed one person and wounded 72, including four Americans...

    The United States has spent some $2.5 billion, most of it in military aid and training, since 2000 to help the Colombian government battle the FARC and a smaller leftist rebel group.

    Some of the U.S. troops in Colombia are Special Forces who are training Colombian battalions in counterinsurgency tactics...

    Colombia's rebel groups have been fighting for four decades against a succession of elected Colombian governments. More than 3,500 people, most of them civilians, die in the fighting each year.

  • Read the Whole Story at The Tampa Tribune

  • Saturday, November 29, 2003

    The Calvin and Hobbes Resurrection

    December 31st, 1995: The last Calvin and Hobbes strip is published. Fans around the world mourn the end of the greatest comic strip ever created…

    February 26th, 2000: The Calvin and Hobbes Resurrection is launched. Fans around the world rejoice! Calvin and Hobbes have been reborn, in Web form…

  • The Calvin and Hobbes Resurrection
  • Dean Kamen Building Robots for US Military

    U.S. considers turning scooters into war robots

    NEW YORK (AP) — It's called the Segway Human Transporter, but the Pentagon is drafting the two-wheeled scooter as part of a plan to develop battlefield robots that think on their own and communicate with troops.

    The program is still in the research phase, so the self-balancing scooters aren't expected to report to boot camp anytime soon.

    So far, university researchers armed with Pentagon funding have programmed Segway robots that can open doors, avoid obstacles, and chase soccer balls -- all without human control.

    Researchers say potential applications for the robots include performing search missions on the battlefield, transporting injured soldiers to safety, or following humans around while hauling their gear.

    Dean Kamen, the Segway's inventor, says he had no qualms about enlisting his brainchild into the military.

    "You build a car and it can either be used as an ambulance, or it can drive your troops around," he said. "My personal reason for liking (this program) is we would love to get more Segways at universities. The more we have our technology among the tech world, particularly the young geeks, it could only help us."

    Any useful applications developed by universities could help kickstart badly needed sales for the fledgling scooter company.

    When the scooters were unveiled with great fanfare in 2001, Kamen's supporters predicted millions would be sold, transforming urban transportation. But in September, when company issued a voluntary recall to fix a problem that caused riders to fall off when the batteries run low, it was disclosed that only 6,000 Segways had been sold.

    Since the Segways retail for $3,995 and $4,495 US, depending on the model, new sales to the government or any other big customer could "help lower the price and let more people afford it," said John Morrell, chief development engineer for privately held Segway LLC.

    So far, the military program involves 15 Segways, which were delivered to university and government research labs over the last few months. The project is funded as part of a program in which the Pentagon is spending $26 million this year to develop software for autonomous systems.

    Jan Walker, a spokeswoman for the Pentagon's defence advanced research projects agency, said the idea is to let researchers concentrate on what the agency calls Mobile Autonomous Robot Software, rather than the mode of transportation. The Segway, which uses gyroscopes to balance itself, provides a common platform on which researchers can swap open-source programs.

    "One of the focuses of this program is to develop software that would allow the robotic system to learn, so it can better perceive its outside environment," Walker said.

    The Segway can make much tighter turns than four-wheeled robotic vehicles currently used in the military and by researchers, and its high centre of gravity means cameras and sensors can be placed a metre or more above the ground _ a height more suitable for interacting with humans.

    The scooters were modified by software engineers at Segway so they could be controlled by laptop computers. The researchers then loaded them up with cameras, sensors, communications gear and other gadgets.

    Researchers at Massachusetts Institute of Technology built a Segway robot that can navigate hallways and open doors.

    At Carnegie Mellon University in Pittsburgh, Segways are being used as part of a lab's ongoing efforts to build robots that can play soccer with humans. So far, the robot can chase an orange soccer ball and kick it. The next goal is to teach the robot the rules of the game and get it to communicate with human players.

    "They will come together not as a master-slave relationship, with the human telling the robot what to do," , said computer science professor Manuela Veloso. "The human and robot will be part of the same task."

    University of Southern California researchers are working on ways to get the Segway to act as a "mule" that follows humans around, carrying their gear. The robotic Segway hauls as much as 45 kilograms.

    Another USC project involves controlling the way the Segway pitches and bounces over rough terrain so it can carry sensitive cargo, perhaps an injured human, according to lead researcher Gaurav Sukhatme.

    A University of Pennsylvania lab is getting a robot-controlled Segway to communicate with an autonomous robotic blimp and small, truck-like vehicles so they can work as a team to find a designated object in a certain geographic area. The robots would navigate and communicate with each other autonomously, but a human would oversee the whole network.

    "The human operator can basically interrogate the robots," said Jim Keller, a project manager. "If a robot has seen something it thinks is interesting, it will send an alert back. The human operator will get more images by bringing in other robots to look at the same location from whatever their perspective is."

    The researchers tried the robots out at Fort Benning in Georgia a few months ago. But mostly they've been testing them out at the university's football stadium.

    The athletes who congregate there "roll their eyes when they see us coming," Keller said.

  • Link to Article
  • Uncensored War Stories From Iraq

    "CBC News interviewed more the 50 journalists for DEADLINE IRAQ: Uncensored Stories of the War.

    Here are the full stories from 12 of them. They tell us more about what is was like when the bombing started over Bahgdad, what is was really like to live in a fox hole with the American troops and what happened when the Palestine Hotel - where the media was based - was bombed.

    They share the excitement, the heartbreak and the horror of the war in Iraq.

    Sinz and her crew were filming in the Palestine Hotel the morning it was bombed. Her cameraman captured footage of the attack, proof that it was the American military that fired on the hotel.

    White was with NBC Correspondent David Bloom when he died of a blood clot on the way to Baghdad with the American army. Only a day later, White was trapped in a fierce battle to take the capital city.

    Chater was one of the first journalists to go live when the bombs starting falling in Iraq. He covered the Iraqi side of the war and documented the human toll of the American invasion.

    Dubbed the 'most dangerous man in Baghdad' by Iraqi officials, Burns remained in Baghdad to cover the war. Just before the Americans captured the city, five Iraqi officials showed up at his hotel room and accused him of espionage.

    Roberts and his crew were towed through the battle for Nasaria by a 7 ton army turck with their Humvee broke down. "It was like a Disney ride through hell."

    Graham was sitting in an internet cafe just outside the Ministry of Information in Baghdad when the 'shock and awe' campaign began. He took shelter inside a bathroom with several Iraqi secret service agents.

    Curtis photographed one of the first American war causalities, Larry Brown, as he was rushed in from the field. It was a picture that scandalized the military.

    Simpson was embedded with the American troops and was one of the first journalists in the race to seize Baghdad. He saw the many Iraqi causalities that were left behind in the countryside.

    Ruth Fremson covered the northern front of the war in Iraq. When the city of Kirkuk fell, she photographed both the celebration and the carnage.

    As Nakhoul watched the Americans take Baghdad from the 15th floor balcony of the Palestine hotel, a American tank fired a shell that ripped through her hotel room.

    Hird covered the front lines of the war, as he traveled with an elite unit of Royal Marines.

    William Branigin was nearby when the American military fired on a Land Rover trying to cross a checkpoint. Many innocent Iraqi civilians were killed in error."

  • Read Their Stories Here
  • What are the German People Thinking?

    An AP story reports the results of a survey concluding the German people believe Konrad Adenauer to be their Country's "greatest" citizen. Martin Luther and Karl Marx round out the top three (I think I'm getting sick). Further down on the list were inconsequential folk with names such as Goethe, Einstein, and Bach.

    German's Postwar Chancellor Beats Out Bach, Einstein as Country's 'greatest' Citizen

    FRANKFURT, Germany (AP) - The chancellor who led Germany as it recovered from the destruction of World War II has been named his country's "greatest" citizen, beating out such luminaries as Johann Sebastian Bach and Albert Einstein.

    Konrad Adenauer, chancellor from 1949 to 1963, won the most votes in a survey conducted by a public television station to name the greatest German of all time.

    Placing second was Martin Luther, the theologian who sparked the Protestant Reformation, ZDF television said Friday in announcing the results of its survey.

    Karl Marx - a favorite among former East Germans - placed third.

    Of more than 3.3 million votes collected over three months, Adenauer received 778,984, Martin Luther followed with 556,298 and Marx came in with 500,442.

    Adenauer is credited with pulling postwar Germany out of the ashes and earning it a place on the world stage.

    The channel invited Germans to vote by telephone, cell phone text message, Internet and mail to determine the overall winner.

    Johann Sebastian Bach and Albert Einstein were among 10 finalists, along with the poet Johann Wolfgang von Goethe; printing pioneer Johannes Gutenberg and Hans and Sophie Scholl, siblings who were beheaded by the Nazis in 1943 for opposing Adolf Hitler.

    Former West German chancellor Willy Brandt, who promoted detente with eastern Europe, and Otto von Bismarck, the "Iron Chancellor" who unified the nation, were also among the finalists.

  • Germany's Greatest Citizen
  • Euro Rises Above $1.20, Slips Back

    Euro Rises Above $1.20 for First Time

    The euro broke through $1.20 for the first time in its nearly five-year history Friday, surging amid fears about the U.S. trade and budget deficits.

    The 12-country currency hit $1.2015 in European trading - the highest since it was introduced on Jan. 1, 1999 - then slipped back to $1.1995.

    Across the Channel, the British pound hit a five-year high Friday against the dollar at $1.7240. In late trading in New York, the pound was worth $1.7216.

    The dollar also was quoted at 109.55 yen in late New York trading, up from 108.98 yen late Wednesday. The dollar was quoted at 1.2915 Swiss francs, down from 1.2935, and 1.2983 Canadian dollars, down from 1.3039.

    Wednesday, November 26, 2003

    Another $373 Billion Down the Drain

    Highlights of a $373 billion bill that congressional and White House bargainers agreed to on Tuesday financing much of the government for the federal budget year that began Oct. 1. House and Senate votes could come next month.

    -Agencies financed: Departments of Agriculture, Commerce, Education, Health and Human Services, Housing and Urban Development, Justice, Labor, State, Transportation, Treasury, Veterans Affairs. Also covers the Environmental Protection Agency, NASA, the federal courts, assistance to the District of Columbia, and U.S. foreign aid programs.

    -$4.6 billion for the FBI, $423 million over last year.

    -$1.2 billion for Amtrak, $180 million over last year.

    -Nearly $4.9 billion for the federal judicial system, $240 million over last year.

    -$1.5 billion to aid states, local governments to update voting systems.

    -$339 million for the Legal Services Corp., $2 million more than last year.

    -$545 million for the District of Columbia. Has $14 million that some of the city's low- income students could use as vouchers to help pay for private schools.

    -$17.6 billion for foreign aid, nearly $3 billion below last year, including mid-year bills financing overseas efforts against terrorism. Includes $1 billion for new program to help countries making democratic reforms. Has $405 million for Afghanistan, nothing for Iraq.

    -$444 million for AmeriCorps national service program, $170 million over last year and $10 million over President Bush's request.

    -$12.4 billion to help poor school districts, $727 million over last year.

    -$6.8 billion for Head Start preschool program, $148 million over last year.

    -$8.4 billion for Environmental Protection Agency, $330 million over last year.

    -$15.4 billion for NASA, $90 million over last year, including $3.9 billion for the space shuttle.

    -Eliminates provisions in earlier versions easing travel and trade restrictions with Cuba.

    -Delays for two years required labels that identify the country many foods come from. They were due to take effect next September. Wild and farm-raised fish would stick with the earlier schedule.

    -Forbids the U.S. Patent Office from granting patents on human organisms, such as genetically engineered embryos.

    -Lets networks own television stations reaching 39 percent of viewers, up from 35 percent.

    -Excludes provision approved by the Senate - and the House in a nonbinding vote - blocking Bush administration rules critics say could cost 8 million workers their overtime pay. Administration says plan is needed to update to old regulations.

    -Allows to proceed much of Bush's plan to replace some federal workers with private contractors.

    -Lets California - but no other states - issue regulations on pollution by small engines like lawnmowers, but would need federal approval. EPA would have to develop national standards.

    Harnessing the Power of Kinetic Energy

    New developments at Hitachi Co. Ltd.'s central lab in Tokyo are leading to a water-powered battery. Another approach includes tapping vibrations to create electricity caused by mechanical pressure or strain.

    Masayuki Miyazaki, a senior researcher, seems confident we can generate electricity from the ambient energy all around us. A building's walls and windows can create energy as they vibrate in the wind, the air conditioners roar, and through the motion of passing cars and trucks. Thus, one day, we will power everything through our own activity.

  • The Christian Science Monitor on Alternative Energy Generators
  • Monday, November 24, 2003

    "Leave No Lobbyist Behind Act of 2003"

    Bob Novak reminds us that it's massive congressional pork "logrolling" time again this year. John McCain sums it all up...

  • Novak's Chicago Sun-Times Column
  • Respect for the Humanity of the Enemy and the Innocent

    Joe Sobran on the apocalyptic style of government and a clue on what to do about it...

    "An apocalyptic style is common in modern politics, and it isn’t necessarily religious. Communism saw history as headed for a final showdown between the working classes and capitalism — how quaint that seems already! — and Hitler saw history as a grand racial struggle. In his second inaugural address, Lincoln shifted from the limited claims of his first inaugural, in which he merely denied the right of states to secede and was willing to leave slavery alone, to an apocalyptic interpretation of the Civil War as God’s punishment for the sin of slavery. Woodrow Wilson and Franklin Roosevelt justified American participation in two world wars as a moral crusade against evil itself, with vaguely religious overtones — much like Bush’s crusade against the “axis of evil.”

    The trouble with this style of politics is that when you see your enemy as evil incarnate, it’s fatally easy to start seeing yourself as God’s (or history’s) agent. The natural result of such an outlook is to forget your own moral limitations, and to consider any means of fighting evil as justified by your supremely righteous ends. And you may wind up dropping atomic bombs on cities.

    The Catholic tradition has been more modest — even, you might say, more earthy. War is always an evil, we don’t know when the end times will occur, and God’s plan is always a mystery to mere mortals. All we can do is try to keep warfare, when it comes, within civilized bounds. This view is the source of just war theory, which demands respect for the humanity of the enemy and the innocent."

  • Read Sobran's Wahington Watch
  • Friday, November 21, 2003

    US in Uncontrollable "Death Spiral," Time to "Reclaim Your Soul"

    Former Professor Plans Vermont Secession

    Thomas Naylor suggests Vermont should secede from the United States and become a republic. He has founded a political movement to that end, the Second Vermont Republic, and recently published a book: The Vermont Manifesto.

    Naylor argues Vermont should "reclaim its soul" and return to the independent republic it was between 1777 and 1791. He also believes New Hamphire and Maine should as well.

    "The U.S. is not a sustainable economy. Do you want to go down with the Titanic? No empire has survived the test of time."

    Naylor says the US "death spiral" began with the attacks of Sept. 11, 2001, and got another jolt with Bush's preemptive strike on Iraq. Eventually, as happened with the Soviet Union, he states, states will break away.

    "The United States is not going to survive as an empire. It's just fundamentally unmanageable. It's just totally out of control."

    Dr. Naylor was an economics professor at Duke University for 30 years. In Vermont, he taught economics at Middlebury College and at the business school at the University of Vermont.

  • Read Complete Story at the Times Argus Online
  • Thursday, November 20, 2003

    Charles Adams Destroys the Gettysburg Address

    Tom DiLorenzo provides a brief synopsis of Charles Adams's "common sense dissection" of the Gettysburg Address, from Adams's book; 'When in the Course of Human Events'...

    "Four Score and Seven Years Ago . . ." was 1776, but as the New York World newspaper remarked at the time, "This United States was not created by the Declaration of Independence but . . . the Constitution" more than a decade later.

    "Our Fathers Brought Forth on This Continent A New Nation. . ." Wrong again. The colonists created a compact among the thirteen free, independent, and sovereign states, and did not create a "nation." The "new nation" was created in 1865 at gunpoint.

    "Today We Are Engaged in A Great Civil War . . ." It wasn't a civil war, because it wasn't fought over control over the central government, as with the English Civil War. Jefferson Davis did not want to run the government in Washington any more than George Washington wanted to run the government in London. It was a War to Prevent Southern Independence.

    Testing Whether That Nation Can Long Endure . . ." What nonsense. Robert E. Lee never intended to conquer the North.

    "Those Who Here Gave Their Lives That That Nation Might Live." More nonsense on stilts. The "dying nation" proceeded to field the largest army in the history of the world for four years.

    "And That Government Of The People, By the People and For the People Shall Not Perish From the Earth . . ." If the Confederates had won, democracy would have still existed in the North, the South, in England, Canada, France, the Netherlands, Switzerland, etc., etc. As Jeff Hummell says in Emancipating Slaves, Enslaving Free Men, this is "just plain nonsense."

    When I was a young lad I once wrote out this speech on the top of one of my skateboards, I was so impressed by the idealism. My friends thought it quite odd, but for reasons other than Adams's critique. Fortunately, shortly thereafter I learned of the true folly of Lincoln's war.

    Lincoln failed in business and was bankrupt by 1831. He was defeated for the legislature in 1832. He had a nervous breakdown in 1836 after his fiancee dies. He was again defeated in an election in 1836. Again, defeated in a race for U.S Congress in 1843. And once again defeated for U.S. Congress in 1848. Defeated for U.S. Senate in a race in 1855. Then defeated in the 1856 election for vice president. In 1858, he was defeated again in a race for the U.S. Senate.

    In 1860...well you know the rest. It is no wonder why he acted the way he did.

    Wednesday, November 19, 2003

    Lew Rockwell Says the US Will Leave Iraq Next Year

    In an article freh off the presses, Lew Rockwell makes a few predictions...

    "The unworkability of the occupation and public pressure will force the US to leave Iraq at some point in the next year. The neocons will scream that the failure was due to doves in the Bush administration. Bush himself will go down in history as a dupe, or a tragic figure at best. Iraq will become decentralized politically, intolerant religiously, and continue to be violent, dangerous, and poor for many years. The ostensible head of the Iraqi state will receive the grudging backing of the US because there will be no choice. And the American people will forget about the place, just as they have forgotten about Panama, Somalia, Haiti, Bosnia, Libya, and all the other lucky beneficiaries of US bombs."

    While I still don't see much momentum in that direction quite yet. Rockwell goes on to provide great insight into the meaning of recent events...

    "In all the talk of the calamity of this war, never forget the broader picture: what an incredible opportunity was squandered after the end of the Cold War. The US had emerged as the universally acknowledged ideological victor in that forty-year struggle. That the Cold War was not actually an ideological struggle so much as a classic standoff between two evil empires is irrelevant for understanding the implications of this fact: totalitarian communism collapsed while the free economic system of the market economy remained standing in total triumph. The world was ready for a new period of genuine liberalism, and looking to the US. On the verge of an amazing period of technological advance, we were perfectly situated to lead the way.

    There had never been a time in US history when George Washington's foreign policy made more sense. A beacon of liberty. Trade with all, belligerence toward none. Commercial engagement with everyone, political engagement with as few as possible. The hand of friendship. Good will. This was the prescription for peace and freedom. It was within our grasp. Our children might have grown up in a world without major political violence. A world of peace and plenty. It could have been."

    God willing, it still may be...

  • Read Lew's Article at LRC
  • Euro Rises to $1.1953 Against the Dollar

    Net capital inflows into the US were reported to have fallen from $50 billion in August to only $4.2 billion in September.

    Moreover, foreigners engaged in net selling of "agency" debt sold by Freddie Mac and Fannie Mae for the first time since October 1998, getting rid of a net $3.2 billion after buying $8.9 billion last month.

    Private accounts and central banks sold $6.3 billion worth of equities.

    Private foreign accounts, private accounts and hedge funds, sold $2 billion of Treasuries in September and $6 billion of agency debt. Yet, central banks, with large foreign reserves, have not yet begun to sell.

    The Treasury report stated in total, foreigners bought a net $5.6 billion of Treasuries in September, down from $25.1bn in August.

    Interetingly, Japanese buying of US assets remains strong, with some net $20bn of debt and equity purchases.

  • Read the Story at the Financial Times
  • Gold Reaches $400 an Ounce

    I hope you have already made the call to Burt Blumert over at Camino Coin...

  • Live Gold Chart

  • Sunday, November 16, 2003

    Dean: Fiscal Discipline in Our Future?

    Bruce Bartlett on Robert Rubin' Master Plan

    As I predicted yesterday, the publication of Bob Rubin's memoir is going to provide considerable ammunition for Democrats to make fiscal responsibility their mantra. In coming weeks, we are going to hear over and over again how Clinton's deficit reduction plan in 1993 created the 1990s economic boom.

    The first excerpt of Rubin's book, In an Uncertain World (Random House), appears in today's Financial Times. Not surprisingly, it deals entirely with the 1993 budget deal.

    Rubin explains how Clinton apparently adopted deficit reduction as his "threshold" issue without much of any persuasion. In truth, Clinton had to be dragged kicking and screaming into abandoning all his populist, big government spending plans. This is well documented in Bob Woodward's 1994 book, The Agenda (Simon & Schuster).

    Nevertheless, to his credit, Clinton did become a born again budget balancer. Rubin explains why this triggered the 1990s boom:

    "The view over the next few years that fiscal discipline was being restored contributed to lower interest rates and increased confidence, and that led to more spending and investment, which in turn led to job creation, lower unemployment rates and increased productivity."

    There I think you have the Democrats' 2004 economic playbook. We are going to hear it over and over again. Howard Dean is already preparing to run as a fiscal conservative. With Rubin at his side, once he gets the Democratic nomination, he is going to get support from some of those ordinarily expected to support the Republican candidate.

    The fact that Dean, the presumptive Democratic nominee, plans to forego matching funds means he will have to go to Wall Street and the business community for campaign contributions, which will reinforce the need for him to make fiscal responsibility a key issue. With his left-wing base secured by Iraq and Bush hatred, they will say nothing critical of Dean's move to the right on fiscal policy.

    My fear is that President Bush may feel the need to respond to a constant drumbeat of criticism about the deficit amid rising interest rates. Since, realistically, you can't cut much out of the deficit without touching entitlements or raising taxes--especially with defense off limits-- this will give Democrats a chance to scare seniors and demoralize the Republican base. As I said yesterday, their goal is to replay the 1992 election.

  • Trend Macro
  • Tarantino Exposed!

    Wednesday, November 12, 2003

    "Official" Figures Show 27% Increase in USG Spending in 2 Years

    Government Outgrows Cap Set by President

    Discretionary Spending Up 12.5% in Fiscal '03
    By Jonathan Weisman in the Washington Post

    Confounding President Bush's pledges to rein in government growth, federal discretionary spending expanded by 12.5 percent in the fiscal year that ended Sept. 30, capping a two-year bulge that saw the government grow by more than 27 percent, according to preliminary spending figures from congressional budget panels.

    The sudden rise in spending subject to Congress's annual discretion stands in marked contrast to the 1990s, when such discretionary spending rose an average of 2.4 percent a year. Not since 1980 and 1981 has federal spending risen at a similar clip. Before those two years, spending increases of this magnitude occurred at the height of the Vietnam War, 1966 to 1968.

    The preliminary spending figures for 2003 also raise questions about the government's long-term fiscal health. Bush administration officials have said fiscal restraint and "pro-growth" tax cuts should put the government on a path to a balanced budget. Bush has demanded that spending that is subject to Congress's annual discretion be capped at 4 percent.

    But the Republican-led Congress has not obliged. The federal government spent nearly $826 billion in fiscal 2003, an increase of $91.5 billion over 2002, said G. William Hoagland, a senior budget and economic aide to Senate Majority Leader Bill Frist (R-Tenn.). Military spending shot up nearly 17 percent, to $407.3 billion, but nonmilitary discretionary spending also far outpaced Bush's limit, rising 8.7 percent, to $418.6 billion.

    Much of the increase was driven by war in Afghanistan and Iraq, as well as homeland security spending after the attacks of Sept. 11, 2001. But spending has risen on domestic programs such as transportation and agriculture, as well. Total federal spending -- including non-discretionary entitlement programs such as Social Security, Medicare and Medicaid -- reached $2.16 trillion in 2003, a 7.3 percent boost, according to the Congressional Budget Office.

    White House officials have said the president's 4 percent annual growth cap was never supposed to curtail "one-time" spending requests, such as natural disaster aid or wars. But even if such emergency spending measures are removed, spending jumped last year by 7.9 percent, Hoagland said.

    "Getting growth down to 4 percent? We're still not there, not by any stretch of the imagination," he said.

    Administration officials say spending is being brought under control. White House spokeswoman Jeanie Mamo said the president cut spending growth, excluding the Pentagon and homeland security, to 6 percent in 2002 and 5 percent in 2003, and has proposed to hold all discretionary spending to 4 percent growth this year.

    "The president has said that he would spend what's necessary to win the war on terrorism and protect Americans at home," she said, "but outside these items, he has put a serious brake on other spending, which is key to halving these deficits over five years."

    Even some Republicans have trouble squaring such comments with the evidence. "It's still more than it ought to be," Hazen Marshall, Senate Budget Committee staff director, said of spending that excludes the military and homeland security.

    Official spending figures for fiscal 2003 will not be released until January, when the nonpartisan Congressional Budget Office unveils its next 10-year federal deficit forecast. But the latest figures track closely with the CBO estimates released in August.

    "I don't expect the official numbers to be any different than those, or not much different," Marshall said.

    Regardless of the final numbers, there can be little doubt that government growth has been accelerating, said Richard Kogan, a federal budget analyst at the Center on Budget and Policy Priorities. And although Congress ultimately controls the purse strings, Bush is not immune from criticism, said Rudolph G. Penner, a Republican and former CBO director.

    "The most interesting thing is Bush has not vetoed anything, let alone a spending program," Penner said. "One wonders how serious the White House is about holding the line."

    Stan Collender, a federal budget analyst at Fleishman-Hillard Inc., said: "This is an administration that cannot possibly take up the mantle of fiscal conservatism. It's probably the least fiscally conservative in history."

    Penner said the lapse in spending restraint occurred in two stages. First came large, projected budget surpluses at the end of the Clinton administration. Discretionary spending rose 0.9 percent in 1998, then 3.6 percent in 1999 and 7.5 percent in 2000. The projected surpluses have disappeared into a flood of red ink, but the 2001 terrorist attacks, coupled with a recession that year, eliminated any sense of restraint beyond rhetoric, Penner said.

    "After September 11, it was 'We have to do anything we can to pull ourselves out of recession and protect ourselves,' " he said, adding that the surge in deficits and spending have so far had few political ramifications. "I don't remember a time when there's been so little commentary on it, and I can't really explain it."

    Marshall said the surge in military spending was inevitable, once the nation mobilized for war, first in Afghanistan and then in Iraq. The nonmilitary discretionary spending increases have been driven by increases in homeland security spending, he said.

    But even after factoring those out, some Republicans say spending is rising too quickly. Marshall noted that after Republicans took control of Congress in the 1994 elections, discretionary spending actually fell, by 1.6 percent between 1994 and 1996.

    Budget experts said taxpayers should not anticipate a return to austerity anytime soon. The military bill that passed Congress yesterday would mandate $40 billion in additional spending over the next decade, Marshall said. Nearly half of that would be for veterans' benefits, but $18 billion would finance a controversial program to buy and lease military tanker planes from Boeing Co.

  • Have Aspirin Ready...
  • USG Distortions According To Retired USAF Colonel

    "Retired USAF Colonel and former National War College Professor Sam Gardiner has analyzed this phenomenon of con as it relates to Bush’s current adventures in democracy through occupation. Beyond the obvious fabrications that you and I might have seized upon, Colonel Gardiner painstakingly identifies 50 discrete and mostly successful efforts of this administration to mislead the American people, the Congress, and the world.

    Fourteen administration lies are listed below. They represent less than a third of the well- circulated and promoted storylines 'manufactured or at least engineered that distorted the picture of Gulf II for the American and British people,' such as:

    The link between terrorism, Iraq and 9/11.

    Iraqi agents meeting with 9/11 hijacker Mohammed Atta.

    Iraq's possession of chemical and biological weapons.

    Iraq's purchase of nuclear materials from Niger.

    Saddam Hussein's development of nuclear weapons.

    Aluminum tubes for nuclear weapons.

    The existence of Iraqi drones, WMD cluster bombs and Scud missiles.

    Iraq's threat to target the US with cyber warfare attacks.

    The rescue of Private Jessica Lynch.

    The surrender of a 5,000-man Iraqi brigade.

    Iraq executing Coalition POWs.

    Iraqi soldiers dressing in US and UK uniforms to commit atrocities.

    The exact location of WMD facilities.

    WMDs moved to Syria."

  • Read Karen Kwiatkowski's Article @ LRC
  • Tuesday, November 11, 2003

    A Few Phenomenal Returns On Investment...

    NY art auctions start with a bang at Christie's

    By Christopher Michaud

    NEW YORK (Reuters) - Prices were strong and bidding brisk on Tuesday at the first of auction houses Christie's and Sotheby's semi-annual Impressionist, modern and contemporary art sales, with new records set for both Modigliani and Leger.

    Christie's officials called the $117 million result of its sale "a really fantastic evening," and for once the comment didn't feel like spin.

    The top lot, a large-scale Modigliani, "Nu couche (sur le cote gauche)," from 1917 soared to $26,887,500 including Christie's commission, leading the way toward a total that auctioneer Christopher Burge, Christie's hononary chairman, said was the best the auction house had seen in several years.

    The previous record for a Modigliani of $16,777,500 was set in 1999. The pre-sale estimate for the work, which went to an anonymous telephone bidder, was $20 million to $25 million.

    Even at $26.9 million, however, the Modigliani was nearly eclipsed by the price commanded by Leger's "La femme en rouge et vert." Estimated at $10 million to $15 million, it soared to $22,407,500 with spirited bidding in both the packed sales room and from clients on the telephone. The price smashed the mark for a Leger, set at Christie's just two years ago, of $16,726,000.

    Christie's had said before the auction, which carried a pre-sale estimate of $90.5 million to $125.2 million, that it had sought to keep the estimates conservative, and the strategy appeared to have paid off. Some 81 percent of the 43 lots offered found buyers, while the sale managed an impressive 94 percent of its dollar value which Burge said was "a signal that the market is very strong."


    "The sale did fantastically well," he said. "It was the best sale of Impressionist art in several years" at Christie's, taking in a total of $117,011,300. Burge added there was "tons of activity" in terms of bidding.

    Other highlights of the sale included two van Goghs which were the third and fourth-highest priced works of the evening. "L'allee des Alyscamps," a vivid landscape from 1888, sold for $11,767,500, just under its low estimate of $12 million, while the small watercolor "Le pont de Langlois a Arles," from the same year, fetched $8,295,500, beating its $8 milion high estimate.

    The latter work was in especially pristine condition, having belonged to the same owner for decades and spending much of that time stored in a vault.

    A record was also set for sculptor Henry Moore, whose large scale work "Three Piece Reclining Figure: Draped" went for $6,167,500, easily eclipsing the old mark of $4,072,500 set in 1999.

    Sculpture, which has been hot in recent years, commanded especially strong prices despite being relativley under-represented at both Christie's and Sotheby's this fall. Two other Moore works beat their high estimates, while Giacometti's "Buste de Diego," estimated at $600,000 to $800,000, soared to an astronomical $2,359,500.

    Gustave Caillebotte's "Chemin montant," from 1881, set the number-two auction price for the artist, selling for $6,727,500, making it the fifth- highest priced lot of the sale. Monet's "Nympheas," one of the artist's seminal water lillies works, exceeded its high estimate of $3.5 million and sold for $4,151,500. And another van Gogh, "Nature morte, branche d'amandier," went for $4,375,500, easily beating its high estimate of $4 million.

    George Soros Comes Out Swinging...

    Soros's Deep Pockets vs. Bush
    Financier Contributes $5 Million More in Effort to Oust President

    By Laura Blumenfeld

    NEW YORK -- George Soros, one of the world's richest men, has given away nearly $5 billion to promote democracy in the former Soviet bloc, Africa and Asia. Now he has a new project: defeating President Bush.

    "It is the central focus of my life," Soros said, his blue eyes settled on an unseen target. The 2004 presidential race, he said in an interview, is "a matter of life and death."

    Soros, who has financed efforts to promote open societies in more than 50 countries around the world, is bringing the fight home, he said. On Monday, he and a partner committed up to $5 million to, a liberal activist group, bringing to $15.5 million the total of his personal contributions to oust Bush.

    Overnight, Soros, 74, has become the major financial player of the left. He has elicited cries of foul play from the right. And with a tight nod, he pledged: "If necessary, I would give more money."

    "America, under Bush, is a danger to the world," Soros said. Then he smiled: "And I'm willing to put my money where my mouth is."

    Soros believes that a "supremacist ideology" guides this White House. He hears echoes in its rhetoric of his childhood in occupied Hungary. "When I hear Bush say, 'You're either with us or against us,' it reminds me of the Germans." It conjures up memories, he said, of Nazi slogans on the walls, Der Feind Hort mit ("The enemy is listening"). "My experiences under Nazi and Soviet rule have sensitized me," he said in a soft Hungarian accent.

    Soros's contributions are filling a gap in Democratic Party finances that opened after the restrictions in the 2002 McCain-Feingold law took effect. In the past, political parties paid a large share of television and get-out-the-vote costs with unregulated "soft money" contributions from corporations, unions and rich individuals. The parties are now barred from accepting such money. But non-party groups in both camps are stepping in, accepting soft money and taking over voter mobilization.

    "It's incredibly ironic that George Soros is trying to create a more open society by using an unregulated, under-the-radar-screen, shadowy, soft-money group to do it," Republican National Committee spokeswoman Christine Iverson said. "George Soros has purchased the Democratic Party."

    In past election cycles, Soros contributed relatively modest sums. In 2000, his aide said, he gave $122,000, mostly to Democratic causes and candidates. But recently, Soros has grown alarmed at the influence of neoconservatives, whom he calls "a bunch of extremists guided by a crude form of social Darwinism."

    Neoconservatives, Soros said, are exploiting the terrorist attacks of Sept. 11, 2001, to promote a preexisting agenda of preemptive war and world dominion. "Bush feels that on September 11th he was anointed by God," Soros said. "He's leading the U.S. and the world toward a vicious circle of escalating violence."

    Soros said he had been waking at 3 a.m., his thoughts shaking him "like an alarm clock." Sitting in his robe, he wrote his ideas down, longhand, on a stack of pads. In January, PublicAffairs will publish them as a book, "The Bubble of American Supremacy" (an excerpt appears in December's Atlantic Monthly). In it, he argues for a collective approach to security, increased foreign aid and "preventive action."

    "It would be too immodest for a private person to set himself up against the president," he said. "But it is, in fact" -- he chuckled -- "the Soros Doctorine."

    His campaign began last summer with the help of Morton H. Halperin, a liberal think tank veteran. Soros invited Democratic strategists to his house in Southampton, Long Island, including Clinton chief of staff John D. Podesta, Jeremy Rosner, Robert Boorstin and Carl Pope.

    They discussed the coming election. Standing on the back deck, the evening sun angling into their eyes, Soros took aside Steve Rosenthal, CEO of the liberal activist group America Coming Together (ACT), and Ellen Malcolm, its president. They were proposing to mobilize voters in 17 battleground states. Soros told them he would give ACT $10 million.

    Asked about his moment in the sun, Rosenthal deadpanned: "We were disappointed. We thought a guy like George Soros could do more." Then he laughed. "No, kidding! It was thrilling."

    Malcolm: "It was like getting his Good Housekeeping Seal of Approval."

    "They were ready to kiss me," Soros quipped.

    Before coffee the next morning, his friend Peter Lewis, chairman of the Progressive Corp., had pledged $10 million to ACT. Rob Glaser, founder and CEO of RealNetworks, promised $2 million. Rob McKay, president of the McKay Family Foundation, gave $1 million and benefactors Lewis and Dorothy Cullman committed $500,000.

    Soros also promised up to $3 million to Podesta's new think tank, the Center for American Progress.

    Soros will continue to recruit wealthy donors for his campaign. Having put a lot of money into the war of ideas around the world, he has learned that "money buys talent; you can advocate more effectively."

    At his home in Westchester, N.Y., he raised $115,000 for Democratic presidential candidate Howard Dean. He also supports Democratic presidential contenders Sen. John F. Kerry (Mass.), retired Gen. Wesley K. Clark and Rep. Richard A. Gephardt (Mo.).

    In an effort to limit Soros's influence, the RNC sent a letter to Dean Monday, asking him to request that ACT and similar organizations follow the McCain-Feingold restrictions limiting individual contributions to $2,000.

    The RNC is not the only group irked by Soros. Fred Wertheimer, president of Democracy 21, which promotes changes in campaign finance , has benefited from Soros's grants over the years. Soros has backed altering campaign finance, an aide said, donating close to $18 million over the past seven years.

    "There's some irony, given the supporting role he played in helping to end the soft money system," Wertheimer said. "I'm sorry that Mr. Soros has decided to put so much money into a political effort to defeat a candidate. We will be watchdogging him closely."

    An aide said Soros welcomes the scrutiny. Soros has become as rich as he has, the aide said, because he has a preternatural instinct for a good deal.

    Asked whether he would trade his $7 billion fortune to unseat Bush, Soros opened his mouth. Then he closed it. The proposal hung in the air: Would he become poor to beat Bush?

    He said, "If someone guaranteed it."

  • Read Article at the Washington Post
  • Roderick Long on Veteran's Day

    "Is it really true that we in the United States owe what freedom we have to U.S. veterans? Certainly the Bill of Rights was made possible by veterans of the American Revolution, and the 13th, 14th, and 15th Amendments were made possible by veterans of the Civil War. But none of those veterans are currently living. No American war in living memory was one in which the United States was in serious danger of being conquered by a foreign aggressor; hence no living veteran can plausibly claim to have played a role in defending our freedom.

    In fact the U.S. government has used each of its wars as a pretext for increased violations of all the rights listed above. (Not that veterans should be blamed for this result; veterans and civilians alike have been victimised by the murderous militarist schemes of politicians.)

    To treat veterans as the principal explanation of American freedom is to suggest that the chief threat to our freedom lies with foreign aggressors rather than with our own government. This may have been true in the early days of the Republic; it would be difficult to argue convincingly that it is true today.

    The best way to honour Veteran's Day is to ensure that we avoid having veterans in the future."

  • Read Roderick Long's In a Blog's Stead
  • Saturday, November 08, 2003

    FDR Was No Savior

    Dr. Robert Higgs from the Independent Institute corrects the economics policies of FDR for the hapless Wall St. Journal:

    "Roosevelt did not leave the United States “twice as wealthy as it was when he assumed the presidency”; indeed, according to Commerce Department estimates, the net stock of structures and equipment in the nonfarm private business sector lost approximately 15 percent of its value between 1933 and 1944. "

  • Read Dr. Higgs' Letter to the WSJ and More @

  • Friday, November 07, 2003

    AP on the $400 BILLION Defense Bill and All The Joy It Brings

    Deal Reached on $400.5B Defense Bill

    WASHINGTON (Nov. 6) - House and Senate negotiators reached an agreement Thursday on a $400.5 billion defense bill that would raise soldiers' pay, give the Pentagon more control over its civilian employees and lift a ban on research on low-yield nuclear weapons.

    The bill authorizing 2004 defense programs is likely to be approved by the House on Friday and by the Senate early next week. It will then go to President Bush for his signature.

    "This is a great bill," said Chairman Duncan Hunter of California. "It makes sweeping reforms that will accrue to the benefit of men and women in uniform."

    The House and Senate approved separate versions of the bill in the summer, but a dispute over expanding "Buy America" rules bogged down negotiations.

    Hunter's proposal would have required that 65 percent of components in items purchased by the Pentagon be made in America, compared with 50 percent under current law. Certain items, such as machine tools and tires, would have to be made in America.

    Details of the final language weren't available, but congressional staff said the 65 percent requirement would be dropped. They said the final language was expected to require the Pentagon to examine how domestic purchases could be increased and to bar purchases from countries that have refused to provide materials because of their objections to U.S. military operations.

    "It got watered down by the Senate considerably, although there are a couple of provisions that did prevail," said Rep. Ike Skelton of Missouri, the top Democrat on the House Armed Services Committee.

    Skelton said he has some reservations about the bill, but "it's good for the troops and good for the families."

    The bill would raise soldiers' pay by an average of 4.15 percent. It would also extend an increase in monthly combat pay to $225 a month from $150, and increase a monthly family separation allowance to $250 from $100.

    Congress initially approved the combat pay and family separation increases in spring, but they expired Sept. 30. Democrats have repeatedly attacked the Bush administration for opposing an extension. The Pentagon has said it planned to ensure that compensation for soldiers in Iraq and Afghanistan remain stable by giving them other forms of raises.

    The civilian personnel issue was one of the Pentagon's top priorities. Defense Secretary Donald Rumsfeld said he needed more flexibility in hiring workers, firing incompetent ones and granting raises. He said that outdated personnel rules force the Pentagon to use service members for jobs better performed by civilians.

    Unions and many Democrats opposed his plan, saying it strips workers' of basic rights. The Senate added additional worker protections and congressional staff said some of those provisions were likely to be included in the final version.

    According to lawmakers and congressional staff, the bill also:

    Includes a compromise plan to lease 20 Boeing 767 planes as midair refueling tankers and buy another 80. Some senators objected to the Air Force's original proposal to lease all 100 planes as too costly. The Bush administration agreed to the compromise Thursday.

    Lifts a decade-old ban on the research of low-yield nuclear weapons, though it would require the administration to go back to Congress before development work could begin. It also authorizes $15 million for continued research into the Robust Nuclear Earth Penetrator, a powerful nuclear weapon capable of penetrating deep underground bunkers.

    Democrats say this research could lead to a new generation of nuclear weapons and trigger a new arms race.

    Grants the military exemptions to the Endangered Species Act and the Marine Mammal Protection Act. The Pentagon says those and other environmental rules impede training exercises. Environmentalists say exemptions could be detrimental.

    Allows foreign-born U.S. soldiers to seek citizenship after one year's service. Their immediate families could also become citizens. The change would follow an executive order by Bush to speed the process for foreign-born soldiers to become citizens.

    Approves a $22 billion plan to partially overturn rules preventing disabled veterans from receiving some of their retirement pay.

    The negotiators rejected a House provision that would restrict the number of military bases the Pentagon could shut in the 2005 round of closings. The House bill would have required the military to retain enough facilities to support a military force larger than today's. The White House strongly opposed the provision.

    Instead, the compromise bill instructs the Pentagon to consider future threats as it goes through the base-closing process.

    The bill does not provide the money for military programs. Most of the funding will come from a $368 billion defense appropriations bill signed by Bush on Sept. 30.

    Thursday, November 06, 2003

    No Chicken Little Act for Chairman Greenspan

    Remarks by Chairman Alan Greenspan at the Securities Industry Association annual meeting, Boca Raton, Florida
    November 6, 2003

    I am pleased to join you today to discuss the outlook for the United States economy.1

    About a year ago, the uncertainties surrounding a possible war in Iraq began to have a perceptible macroeconomic effect. Those uncertainties, coupled with the lingering concerns that had been created by corporate governance scandals, were among the key factors causing the performance of the U.S. economy late last year and early this year to be lackluster.

    Risk spreads on corporate bonds peaked in the fall of 2002 at the highest levels observed in at least a decade. Business fixed investment then stalled in the first quarter of this year, and many firms, particularly outside the motor vehicle sector, were content to meet some of the increase in demand by drawing down inventories. Fortunately, a vibrant housing market lifted construction activity and, by facilitating home equity extraction, provided extra support to consumer spending.

    When hostilities commenced in March, uncertainties related both to the potential for damage to Iraq's oil fields and to the possibility of broader turmoil in the Middle East rapidly dissipated. Risk spreads fell sharply as did the price of oil. Stock prices rose. Economic activity perked up in late spring and then accelerated further this summer as tax cuts provided a substantial boost to the disposable incomes of households.

    For the third quarter as a whole, real GDP, our broadest measure of output, is reported to have increased 7-1/4 percent at an annual rate, the fastest quarterly rate of growth in nearly twenty years and obviously a pace not sustainable over the longer run. Even though consumer spending evidently slowed somewhat this fall, new orders received by manufacturers of nondefense capital goods, excluding aircraft, have been rising as have unfilled orders--developments that suggest some further increase in equipment spending is likely in train.

    There have been some signs in recent weeks that the labor market may be stabilizing. However, viewed from the perspective of the past couple of years, the jobs picture has been weak. Indeed, since November 2001--the estimated trough of this cycle--total payroll employment is currently reported to have declined by 1 million, and aggregate hours worked in the nonfarm business sector have come down 1-1/2 percent.

    The combination of growing output and falling hours worked was made possible by a startlingly large rise in productivity. Indeed, since the fourth quarter of 2001, output per hour in the nonfarm business sector has increased 5 percent at an annual rate. And during the second and third quarters of this year, output per hour increased at the astonishing average annual pace of about 7-1/2 percent. This outcome has been associated with a dramatic increase in profits despite little evidence of corporate pricing power.

    The explanations of the past two years' surge in productivity are wide-ranging.

    One hypothesis is that some of the increase represents a temporary rise in the level of productivity reflecting a view that an unusual amount of caution is leading businesses to press workers and facilities to a greater degree than can be sustained over the longer haul. By this hypothesis, as that caution dissipates, employment growth will pick up and the level of output per hour will drop back.

    Another hypothesis is that the level of productivity has undergone a one-time permanent upward shift. This hypothesis builds on the idea that the heavy emphasis on exploiting new and expanding markets from 1995 to 2000 likely diverted some corporate management from the hard work of controlling costs. The payoffs from cost control doubtless seemed small relative to those thought to attend big-picture expansion. But with tepid sales growth, uncertainty about the strength of future demand, and a fierce discipline exerted by financial markets, companies have been forced to search aggressively for ways to use resources more efficiently, to cut costs, and restore operating profit margins. The extent to which businesses have succeeded in boosting output with fewer labor hours and minimal capital investment over the past two years points up the possibility that a considerable stock of inefficiencies accumulated in the boom years and that this stock is still being worked off.

    Finally, yet another hypothesis stresses a more-lasting increase in the growth of output per hour. This notion focuses on the considerable lag between the introduction of new technologies and their full integration into production processes and business practices. To reap the full benefits of technological innovation takes learning time, especially if there are large synergies through network effects.

    Of course, given the exceptionally high rate of growth in output per hour over the past two years, some combination of short-term and longer-term productivity-enhancing forces seems likely to have been at work. In any event, one consequence of these improvements in efficiency has been a temporary ability of many businesses to meet increases in demand while paring existing workforces and continuing to exercise restraint on capital spending.

    * * *

    If businesses are to spend and hire more vigorously, they will need to be convinced that economic growth can be sustained beyond the short run. One prominent concern is that, if the labor market remains weak, household confidence will suffer, with detrimental consequences for spending. Although layoffs seem to be diminishing, surveys indicate that households continue to be worried about the condition of labor markets.

    While real after-tax personal income increased at more than a 7 percent annual rate in the third quarter, most of that gain reflected the influence of this year's cut in taxes. Unless hiring picks up and layoffs ease, assuaging the latent job security fears of many of those currently employed, the share of income spent could decline, a development that would hamper the vigor of the expansion.

    The odds, however, do increasingly favor a revival in job creation. The surge in final demand in recent months has been met in part by drawing down inventories. In many industries, available data suggest that inventories have become low relative to sales, and purchasing managers' perceptions of their customers' inventories corroborate that view. Any swing from inventory liquidation to accumulation would add significantly to the level of GDP. Efforts to rebuild inventories and a dwindling pool of possible efficiencies seem a combination that could generate a notable pickup in hiring should growth in final sales remain firm.

    * * *

    A critical factor distinguishing the current economic environment from much of the previous experience of the past half century is the inflation backdrop. In previous recessions since the 1960s, the underlying rate of inflation at economic troughs remained clearly above any level that could be associated with effective price stability. As a consequence, with some risk to economic activity, monetary policy typically had to move aggressively in the uncertain early stages of past economic recoveries to ensure that inflation would be contained.

    By contrast, in the current episode, core consumer price inflation as measured in the national income and product accounts has been running only a little more than 1 percent over the last year, and firms exhibit scant evidence that they are gaining appreciable pricing power despite the pickup in the pace of economic growth. Indeed, the Federal Open Market Committee has judged that the probability, though minor, of an unwelcome fall in inflation exceeds that of a rise in inflation from its already low level. In these circumstances, monetary policy is able to be more patient. That said, no central bank can ever afford to be less than vigilant about the prospects for inflation.

    * * *

    The foregoing relatively optimistic short-term outlook for the U.S. economy is playing out against a backdrop of growing longer-term concern in financial markets about our federal budget.

    As you know, the Congressional Budget Office is projecting that, if current policies remain in place, the unified budget will post deficits throughout the remainder of this decade--a sharp turnaround from the large and growing surpluses projected just a few years ago.

    Given the events of the past three years--the economic downturn, the retrenchment in equity markets, the increased need for spending on homeland security, and the wars in Afghanistan and Iraq--some deterioration in the federal budget balance was probably unavoidable, particularly in the short term. One source of deterioration--the buildup of a larger military force structure--will not persist indefinitely. Merely maintaining a given force structure rather than increasing it will remove an important factor driving the deficit higher.

    Of course, the deterioration in the fiscal balance has already increased the level of debt relative to GDP, and thus has elevated the starting point from which policymakers will soon have to address the budget implications of the impending retirement of the baby-boom generation.

    Recent budget deliberations are not encouraging. The current debate appears to be about how much to cut taxes or how much to increase spending. No significant constituency seems to support taking the actions that will be necessary to move toward, and one hopes achieve, budget balance. In retrospect, the emergence of budget surpluses in the late 1990s eroded the discipline that emerged as a consequence of the earlier fear of ever rising and, hence, potentially destructive deficits.

    Indeed, many of the rules that helped to discipline budgetary decisionmaking in the 1990s--in particular, the statutory limits on discretionary spending and the so-called PAYGO rules--were allowed to expire. Many analysts properly continue to be concerned that, without these enforcement mechanisms and the fundamental political will they signal, the built-in bias in favor of red ink will once again become entrenched. Policymakers have become all too aware that government spending programs and tax preferences can be easy to initiate but extraordinarily difficult to shut down once constituencies develop that have a stake in maintaining the status quo.

    The now-expired major provisions of the Budget Enforcement Act of 1990, and the act's later modifications and extensions, provided a set of rules that helped translate a general commitment to fiscal discipline into the actions necessary to achieve it.

    Remember that in just five years the first cohort of the baby-boom generation will reach 62, the earliest age at which social security retirement benefits may be claimed and the age at which about half of the prospective beneficiaries choose to retire. In about 2008, the proportion of the working-age population that will retire is projected to begin escalating. Almost surely, the social security and Medicare benefits that are promised under current law to future retirees cannot be financed with existing tax rates. Budget simulations by a broad range of analysts (including those at the Office of Management and Budget and the Congressional Budget Office) suggest that the rapid increase in the unified budget deficits that would occur under current law as the baby-boom generation retires could set in motion an unsustainable dynamic in which large deficits result in growing interest payments that augment deficits in future years. Such a development could have notable, destabilizing effects on the economy.

    Increased productivity growth, while helpful, does not alter that conclusion, because when productivity growth increases, so do social security obligations and, indirectly, Medicare benefits as well. Productivity would have to grow at a rate far in excess of the historical average to fully resolve the long-term financing problems of social security and Medicare.

    Tax rate increases of sufficient dimension to deal with our looming fiscal problems arguably pose significant risks to economic growth and the revenue base. The exact magnitude of such risks are very difficult to estimate, but they are of enough concern, in my judgment, to warrant aiming to close the fiscal gap primarily, if not wholly, from outlay restraint. At the same time, the dimension of the challenge, especially in later years, cannot be underestimated. The one certainty is that the resolution of this situation will require difficult choices, and the future performance of the economy will depend on those choices.

    History has shown that, when faced with large challenges, elected officials have risen to the occasion. In particular, looking back over the past twenty years or so, it has been evident that the prospect of large deficits generally has led to actions to narrow them. I trust that the recent deterioration in the budget outlook and the fast-approaching retirement of the baby-boom generation will be met with similar determination and effectiveness.


    1. The views I will be expressing are my own and not necessarily those of the Federal Reserve Board.

  • Read Greenspan's Remarks

  • "I'm going into the woods to hunt for worms."

    "I'm going to the woods to hunt for seeds."

    "I'm going to the woods to look for berries."

    "Oh no, don't go!" said Chicken Little. "I was there and the sky fell on my head! Come with me to tell the king."

    I'd bet Chairman Greenspan has a nice umbrella...

    Ronald Reagan's First Inaugural

    Ronald Reagan
    First Inaugural Address
    Tuesday, January 20, 1981

    "Senator Hatfield, Mr. Chief Justice, Mr. President, Vice President Bush, Vice President Mondale, Senator Baker, Speaker O'Neill, Reverend Moomaw, and my fellow citizens: To a few of us here today, this is a solemn and most momentous occasion; and yet, in the history of our Nation, it is a commonplace occurrence. The orderly transfer of authority as called for in the Constitution routinely takes place as it has for almost two centuries and few of us stop to think how unique we really are. In the eyes of many in the world, this every-4-year ceremony we accept as normal is nothing less than a miracle.

    Mr. President, I want our fellow citizens to know how much you did to carry on this tradition. By your gracious cooperation in the transition process, you have shown a watching world that we are a united people pledged to maintaining a political system which guarantees individual liberty to a greater degree than any other, and I thank you and your people for all your help in maintaining the continuity which is the bulwark of our Republic.

    The business of our nation goes forward. These United States are confronted with an economic affliction of great proportions. We suffer from the longest and one of the worst sustained inflations in our national history. It distorts our economic decisions, penalizes thrift, and crushes the struggling young and the fixed- income elderly alike. It threatens to shatter the lives of millions of our people.

    Idle industries have cast workers into unemployment, causing human misery and personal indignity. Those who do work are denied a fair return for their labor by a tax system which penalizes successful achievement and keeps us from maintaining full productivity.

    But great as our tax burden is, it has not kept pace with public spending. For decades, we have piled deficit upon deficit, mortgaging our future and our children's future for the temporary convenience of the present. To continue this long trend is to guarantee tremendous social, cultural, political, and economic upheavals.

    You and I, as individuals, can, by borrowing, live beyond our means, but for only a limited period of time. Why, then, should we think that collectively, as a nation, we are not bound by that same limitation?

    We must act today in order to preserve tomorrow. And let there be no misunderstanding, we are going to begin to act, beginning today.

    The economic ills we suffer have come upon us over several decades. They will not go away in days, weeks, or months, but they will go away. They will go away because we, as Americans, have the capacity now, as we have had in the past, to do whatever needs to be done to preserve this last and greatest bastion of freedom.

    In this present crisis, government is not the solution to our problem.

    From time to time, we have been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. But if no one among us is capable of governing himself, then who among us has the capacity to govern someone else? All of us together, in and out of government, must bear the burden. The solutions we seek must be equitable, with no one group singled out to pay a higher price.

    We hear much of special interest groups. Our concern must be for a special interest group that has been too long neglected. It knows no sectional boundaries or ethnic and racial divisions, and it crosses political party lines. It is made up of men and women who raise our food, patrol our streets, man our mines and our factories, teach our children, keep our homes, and heal us when we are sick, professionals, industrialists, shopkeepers, clerks, cabbies, and truckdrivers. They are, in short, "We the people," this breed called Americans.

    Well, this administration's objective will be a healthy, vigorous, growing economy that provides equal opportunity for all Americans, with no barriers born of bigotry or discrimination. Putting America back to work means putting all Americans back to work. Ending inflation means freeing all Americans from the terror of runaway living costs. All must share in the productive work of this "new beginning" and all must share in the bounty of a revived economy. With the idealism and fair play which are the core of our system and our strength, we can have a strong and prosperous America at peace with itself and the world.

    So, as we begin, let us take inventory. We are a nation that has a government, not the other way around. And this makes us special among the nations of the Earth. Our Government has no power except that granted it by the people. It is time to check and reverse the growth of government which shows signs of having grown beyond the consent of the governed.

    It is my intention to curb the size and influence of the Federal establishment and to demand recognition of the distinction between the powers granted to the Federal Government and those reserved to the States or to the people. All of us need to be reminded that the Federal Government did not create the States; the States created the Federal Government.

    Now, so there will be no misunderstanding, it is not my intention to do away with government. It is, rather, to make it work, work with us, not over us; to stand by our side, not ride on our back. Government can and must provide opportunity, not smother it; foster productivity, not stifle it.

    If we look to the answer as to why, for so many years, we achieved so much, prospered as no other people on Earth, it was because here, in this land, we unleashed the energy and individual genius of man to a greater extent than has ever been done before. Freedom and the dignity of the individual have been more available and assured here than in any other place on Earth. The price for this freedom at times has been high, but we have never been unwilling to pay that price.

    It is no coincidence that our present troubles parallel and are proportionate to the intervention and intrusion in our lives that result from unnecessary and excessive growth of government. It is time for us to realize that we are too great a nation to limit ourselves to small dreams. We are not, as some would have us believe, doomed to an inevitable decline. I do not believe in a fate that will fall on us no matter what we do. I do believe in a fate that will fall on us if we do nothing. So, with all the creative energy at our command, let us begin an era of national renewal. Let us renew our determination, our courage, and our strength. And let us renew our faith and our hope.

    We have every right to dream heroic dreams. Those who say that we are in a time when there are no heroes just don't know where to look. You can see heroes every day going in and out of factory gates. Others, a handful in number, produce enough food to feed all of us and then the world beyond. You meet heroes across a counter, and they are on both sides of that counter. There are entrepreneurs with faith in themselves and faith in an idea who create new jobs, new wealth and opportunity. They are individuals and families whose taxes support the Government and whose voluntary gifts support church, charity, culture, art, and education. Their patriotism is quiet but deep. Their values sustain our national life.

    I have used the words "they" and "their" in speaking of these heroes. I could say "you" and "your" because I am addressing the heroes of whom I speak, you, the citizens of this blessed land. Your dreams, your hopes, your goals are going to be the dreams, the hopes, and the goals of this administration, so help me God.

    We shall reflect the compassion that is so much a part of your makeup. How can we love our country and not love our countrymen, and loving them, reach out a hand when they fall, heal them when they are sick, and provide opportunities to make them self-sufficient so they will be equal in fact and not just in theory?

    Can we solve the problems confronting us? Well, the answer is an unequivocal and emphatic "yes." To paraphrase Winston Churchill, I did not take the oath I have just taken with the intention of presiding over the dissolution of the world's strongest economy.

    In the days ahead I will propose removing the roadblocks that have slowed our economy and reduced productivity. Steps will be taken aimed at restoring the balance between the various levels of government. Progress may be slow, measured in inches and feet, not miles, but we will progress. Is it time to reawaken this industrial giant, to get government back within its means, and to lighten our punitive tax burden. And these will be our first priorities, and on these principles, there will be no compromise.

    On the eve of our struggle for independence a man who might have been one of the greatest among the Founding Fathers, Dr. Joseph Warren, President of the Massachusetts Congress, said to his fellow Americans, "Our country is in danger, but not to be despaired of.... On you depend the fortunes of America. You are to decide the important questions upon which rests the happiness and the liberty of millions yet unborn. Act worthy of yourselves."

    Well, I believe we, the Americans of today, are ready to act worthy of ourselves, ready to do what must be done to ensure happiness and liberty for ourselves, our children and our children's children.

    And as we renew ourselves here in our own land, we will be seen as having greater strength throughout the world. We will again be the exemplar of freedom and a beacon of hope for those who do not now have freedom.

    To those neighbors and allies who share our freedom, we will strengthen our historic ties and assure them of our support and firm commitment. We will match loyalty with loyalty. We will strive for mutually beneficial relations. We will not use our friendship to impose on their sovereignty, for our own sovereignty is not for sale.

    As for the enemies of freedom, those who are potential adversaries, they will be reminded that peace is the highest aspiration of the American people. We will negotiate for it, sacrifice for it; we will not surrender for it, now or ever.

    Our forbearance should never be misunderstood. Our reluctance for conflict should not be misjudged as a failure of will. When action is required to preserve our national security, we will act. We will maintain sufficient strength to prevail if need be, knowing that if we do so we have the best chance of never having to use that strength.

    Above all, we must realize that no arsenal, or no weapon in the arsenals of the world, is so formidable as the will and moral courage of free men and women. It is a weapon our adversaries in today's world do not have. It is a weapon that we as Americans do have. Let that be understood by those who practice terrorism and prey upon their neighbors.

    I am told that tens of thousands of prayer meetings are being held on this day, and for that I am deeply grateful. We are a nation under God, and I believe God intended for us to be free. It would be fitting and good, I think, if on each Inauguration Day in future years it should be declared a day of prayer.

    This is the first time in history that this ceremony has been held, as you have been told, on this West Front of the Capitol. Standing here, one faces a magnificent vista, opening up on this city's special beauty and history. At the end of this open mall are those shrines to the giants on whose shoulders we stand.

    Directly in front of me, the monument to a monumental man: George Washington, Father of our country. A man of humility who came to greatness reluctantly. He led America out of revolutionary victory into infant nationhood. Off to one side, the stately memorial to Thomas Jefferson. The Declaration of Independence flames with his eloquence.

    And then beyond the Reflecting Pool the dignified columns of the Lincoln Memorial. Whoever would understand in his heart the meaning of America will find it in the life of Abraham Lincoln.

    Beyond those monuments to heroism is the Potomac River, and on the far shore the sloping hills of Arlington National Cemetery with its row on row of simple white markers bearing crosses or Stars of David. They add up to only a tiny fraction of the price that has been paid for our freedom.

    Each one of those markers is a monument to the kinds of hero I spoke of earlier. Their lives ended in places called Belleau Wood, The Argonne, Omaha Beach, Salerno and halfway around the world on Guadalcanal, Tarawa, Pork Chop Hill, the Chosin Reservoir, and in a hundred rice paddies and jungles of a place called Vietnam.

    Under one such marker lies a young man, Martin Treptow, who left his job in a small town barber shop in 1917 to go to France with the famed Rainbow Division. There, on the western front, he was killed trying to carry a message between battalions under heavy artillery fire.

    We are told that on his body was found a diary. On the flyleaf under the heading, "My Pledge," he had written these words: "America must win this war. Therefore, I will work, I will save, I will sacrifice, I will endure, I will fight cheerfully and do my utmost, as if the issue of the whole struggle depended on me alone."

    The crisis we are facing today does not require of us the kind of sacrifice that Martin Treptow and so many thousands of others were called upon to make. It does require, however, our best effort, and our willingness to believe in ourselves and to believe in our capacity to perform great deeds; to believe that together, with God's help, we can and will resolve the problems which now confront us.

    And, after all, why shouldn't we believe that? We are Americans. God bless you, and thank you.

    Oligarchs R US

    Matt Taibbi's Cage Match from the New York Press:

    Deep politics swirl behind the arrest of Mikhail Khodorkovsky.

    There is big news brewing in Russia this week, and America is being sold a line of goods about what's happening there. The coverage of the arrest by the Vladimir Putin administration of "businessman" Mikhail Khodorkovsky has featured such grossly, shockingly transparent propaganda that it could hardly have been worse during the Cold War. What's more, some of my old friends, they know who they are, are participating in it.

    This story, about the politically motivated arrest of Khodorkovsky, the Croseus- rich tycoon who heads the oil company Yukos, is in fact an important story for the ordinary American. The clash between two of the world's baddest gangsters, Putin and Khodorkovsky, is also a great symbolic battle, each side representing one of the two great remaining pretenders to global rule.

    Putin represents the past, which also happens to be the American present: the fictional democracy, in fact a ruthless oligarchy of corporate interests, with the state as the castrated referee.

    Khodorkovsky represents the future: no referee. Which is why our media establishment has chosen to take up arms for him. They are making his case into an open referendum on the neo-con revolution that until now has been fought in a largely clandestine manner here at home.

    The backstory to this scandal is far too involved to get into in any detail here, but the outlines are as follows. Khodorkovsky is one of about a dozen major "entrepreneurs" who emerged from the collapse of the Soviet Union to dominate the Russian economy. A series of corrupt privatization deals organized and overseen by American advisors basically ensured that ownership of the assets of the Russian state would go to this small handful of crooks.

    The basic story is that the U.S., in conjunction with the Yeltsin administration, decided to create a super-wealthy class of oligarchs who would ruthlessly defend their assets against any attempt to renationalize the economy. In return, and this is the key point, they were to support, financially, the ruling, Western-friendly "democratic" government. It is through such machinations that we were able to bring about a compliant Russian state, wholly dependent on corporate support, that would answer the bell whenever we needed something ugly out of them, for instance their assistance in our bombing of their traditional allies, the Serbs.

    The key moment in this story was the winter of 1996. Polls showed that Yeltsin was certain to lose a reelection bid against the idiot communist Gennady Zyuganov. So the state, in conjunction with U.S. advisors, sold off the crown jewels of the Russian economy to these crooks for pennies on the dollar. In return, these beneficiaries massively funded Yeltsin's reelection campaign. This is how Khodorkovsky, then the chief of a bank called Menatep, came to control the precious Yukos empire that is now under siege. It was given to him. His bank was put in charge of the auction for 78 percent of the company, and he actually excluded other bidders at will. He "paid" around $300 million (whether or not he ever paid even that money is still a matter of dispute) for his controlling 78- percent stake. The company is now valued at about $15 billion.

    That doesn't begin to tell the Khodorkovsky story. Even in the group of fantastic individuals who participated in this mass robbery, he stands out. He is the Bad Bad Leroy Brown of Russia. You know that opening scene in Goodfellas where Ray Liotta says, "All my life, I wanted to be a gangster"? Just imagine the fleshy, bespectacled Khodorkovsky slamming that trunk shut. In a nation of mobsters, he is king, a stone-cold ruthless genius. It would take a hundred thousand pages to detail all of his schemes, but they make the work of Professor Moriarty seem like a game of Chinese checkers.

    I'll set down one example, from a story I did many years ago about Russian minerals company called Avisma, which eventually filed suit against its owners here in the States, naming Khodorkovsky's Menatep as the chief villain. Menatep (allegedly, I have to say in America) bought the company, then forced its directors to sell its commodities to a Menatep shell company called TMC at pennies on the dollar. TMC then sold the goods (mainly titanium) to Western investors at cost. To make matters worse, TMC then (allegedly) induced Avisma to buy materials from them above cost. Readers are invited to imagine what words like "forced" and "induced" mean in this context. In the end, nothing was left but a skeletonized carcass. Any Brooklyn restaurant owner who has been taken over by the Lucchese or Gambino families will recognize this technique.

    This was what was described as "the encouraging emergence of market capitalism" in the new Russia, and for many years it was cool with everybody, the press, the Russian state, the American diplomatic effort. Until this year, that is, when Khodorkovsky broke the rules of the gangster-arrangement implicit in the new Russian state. He decided he no longer wanted to pay the piper, Putin. Instead of ponying up the agreed-upon tribute, he started making noise about wanting to be president himself in 2008, and then, even worse, he started to fund opposition parties.

    I'll give Putin this: He has balls. Unlike Boris Yeltsin, who dropped to his knees for every greasy hood with a dollar for eight consecutive years, Putin decided to make an example of Misha. In America, we settle these disputes by giving the F- 117 contract to a different company. In Russia, the methods are a little different: an untimely car accident, an exploding briefcase, a mysterious fatal illness contracted after a routine phone conversation. Absolutely the most civilized of these options is imprisonment and seizure of assets. This is the route Putin took with Khodorkovsky. In response to the latter's decision not to abide by the laws of gangsterdom, Putin decided, for once, to enforce the laws of the state.

    How anyone can find morality in any of this is beyond me. But it is not beyond the New York Times, and it is not even beyond the Boston Globe. These papers, along with the vast majority of Western media outlets around the world, have cast this smarmy fight over assets long ago stolen from the Russian people as a battle between the evil forces of nationalization and the good, industrious representatives (Khodorkovsky) of the people-friendly market economy. Here is how Steven Lee Myers of the Times described the resignation of Kremlin chief of staff Alexander Voloshin, who has apparently thrown in his lot with Khodorkovsky:

    "On Mr. Voloshin's side is a coterie of aides who favor greater freedom for the economy. On the other are those advisors who, like Mr. Putin himself, served in the K.G.B. or other security services and favor a stronger role for the state."

    Myers leaves out here the fact that Khodorkovsky himself, like most of the tycoons, is a creature of the security services, having once been a chief of the Komsomol in Moscow. He goes on:

    "That faction, known collectively as the siloviki, or as Chekists after the old Soviet-era word for intelligence operatives, is widely believed to have initiated or supported the prosecutorial assault on Yukos, though exactly why remains unclear."

    This is outright bullshit. Everyone in Russia knows why. It's because Yukos didn't pay the piper. This is typical of the Times, casting mafia disagreements in the garb of an ideological dispute. For a dozen years now, in that paper, anyone who disagreed with the neo-con laissez-faire corporate tribe aligned with U.S. interests has been a Soviet throwback. It is worth noting that just three years ago, when Putin was the same blunt thug he is today, the Times went to great lengths to portray him as the next Thomas Jefferson. He was on our side then.

    Alongside the Myers piece, the Times ran an editorial entitled, "Crime and Punishment for Capitalists." The piece was written by Leon Aron, the author of one of the most shameless blowjobs in the history of biographical art: Yeltsin: A Revolutionary Life. In the piece, Aron actually details many of the same facts I've set down here, but he argues, against all available fact, that the tycoons are actually wonderfully productive people who are doing their darndest to lift Russia to its feet. The piece is full of righteous sentences like the following, condemning Putin: "No one knows how far they will take their campaign against economic vitality."

    The papers have gone so far as to portray Khodorkovsky, a man whose name causes grown men to spit uncontrollably in every part of the Russian empire, as an anti-Soviet martyr along the lines of Andrei Sakharov. The Globe, normally the most sensible source of Russia coverage, even ran an AFP photo showing a woman holding a sign that reads, "Free Khodorkovsky."

    The "pro-Khodorkovsky" demonstration that this woman was a part of is the kind of thing that no journalist with any shame would ever touch. In Russia, it is well- known that "spontaneous" demonstrations on behalf of elitist monsters are usually paid productions. I once went to a demonstration of "Moving Together," the so- called Putin Youth movement, in which the attending kids were given tickets to see Shrek in return for appearing. At another, a demonstration on behalf of Vladimir Zhirinovsky's neo-fascist LDPR party, demonstrators were given free beer. They even gave me some. The LDPR has the best parties in town.

    Many of us who spent the 90s in Russia became aware over time that the aim of the United States was to create a rump state that would allow economic interests to strip assets at will. The population in this scheme was to be good for consuming foreign goods produced abroad with Russia's own cheaply sold raw materials. The aim was a castrated state, anarchy, a vast, confused territory of captive consumers, cheap labor and unguarded oil and aluminum.

    Some of us who came home after seeing this began to realize that the same process is underway in the United States: the erosion of the tax base, the gradual appropriation of the tools of government by economic interests, a massive, disorganized population useless to everybody except as shoppers. That is their revolution: smashing states everywhere and creating a scattered global nation of villas and tax shelters, as inaccessible as Olympus, forbidding entry even to mighty dictators.

    That's what this Khodorkovsky business is all about, preserving that dream. Ask yourself what other reason there could be for the American press to defend a thief with eight billion dollars.

  • Cage Match in the New York Press