The Militant Libertarian

I'm pissed off and I'm a libertarian. What else you wanna know?

Saturday, May 16, 2009

CNBC Contributor Howard Dean: 'I Think We Had Quite Enough Capitalism'

by Jeff Poor

Back in March, CNBC in what seemed to be an effort to pander to critics on the left, officially named former DNC chair and former Vermont Gov. Howard Dean a CNBC contributor.

But aside from campaigning for left-wing causes in his spare time, Dean will appear on daily CNBC programming. But on the May 7 "Power Lunch," Dean, a contributor for the network with the slogan, "First in Business Worldwide," explained to viewers we've had enough capitalism after conservative radio talk show host Jason Lewis derided the president for supporting bailouts over bankruptcy. (h/t IHTM)

"I think we had quite enough capitalism in the last eight years and I think we need some regulation now," Dean said.

Aside from attacking what went on during the Bush administration, as his colleague CNBC colleague Keith Boykin did before him, Dean also praised President Barack Obama's paltry $17 billion in cuts from his $3.6 trillion budget. But, he also said more cuts and revenues would be needed and admitted supporting a carbon tax.

"It's a good start," Dean said. "It's not a lot of money by federal budget standards. It's a great deal of money by most of our standards. It's a decent start and oddly enough, it's almost exactly what George Bush tried to cut and was turned down by his own Republican Congress. Getting Congress to cut stuff is tough. And let's not full around here. You've got to make bigger cuts. You're also going to have to have some revenue increases to pay for all this stuff. There's no question about that. And my favorite is a carbon tax."

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CIA OSC: Secret Israeli database shows full extent of illegal settlements, Apr 2009


In late January, WikiLeaks released a 186 page secret Israeli Ministry of Defense database, which showed the full extent of illegal Israeli settlements in Gaza and the West Bank. A version of the document had first been obtained by the well regarded Israeli newspaper Haaretz. The leak made headlines, but its global political impact was limited by its presentation in Hebrew.

Subsequently the United States commissioned the Central Intelligence Agency's Open Source Center to translate the leak to English. The translation was not released by the CIA, but a copy was obtained by Stephen Aftergood, editor of the US based Federation of American Scientist's Secrecy News and is presented here.

According to Haaretz, "An analysis of the data reveals that, in the vast majority of the settlements - about 75 percent - construction, sometimes on a large scale, has been carried out without the appropriate permits or contrary to the permits that were issued,", and "The database also shows that, in more than 30 settlements, extensive construction of buildings and infrastructure (roads, schools, synagogues, yeshivas and even police stations) has been carried out on private lands belonging to Palestinian West Bank residents."

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No, the Free Market Did Not Cause the Financial Crisis

by Thomas E. Woods, Jr.

In March 2007 then-Treasury secretary Henry Paulson told Americans that the global economy was “as strong as I’ve seen it in my business career.” “Our financial institutions are strong,” he added in March 2008. “Our investment banks are strong. Our banks are strong. They’re going to be strong for many, many years.” Federal Reserve chairman Ben Bernanke said in May 2007, “We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.” In August 2008, Paulson and Bernanke assured the country that other than perhaps $25 billion in bailout money for Fannie and Freddie, the fundamentals of the economy were sound.

Then, all of a sudden, things were so bad that without a $700 billion congressional appropriation, the whole thing would collapse.

In the wake of this change of heart on the part of our leaders, Americans found themselves bombarded with a predictable and relentless refrain: the free market economy has failed. The alleged remedies were equally predictable: more regulation, more government intervention, more spending, more money creation, and more debt. To add insult to injury, the very people who had been responsible for the policies that created the mess were posing as the wise public servants who would show us the way out. And following a now-familiar pattern, government failure would not only be blamed on anyone and everyone but the government itself, but it would also be used to justify additional grants of government power.

The truth of the matter is that intervention in the market, rather than the market economy itself, was the driving factor behind the bust.

F.A. Hayek won the Nobel Prize for his work showing how the central bank’s intervention into the economy gives rise to the boom-bust cycle, making us feel prosperous until we suffer the inevitable crash. Most Americans know nothing about Hayek’s theory (known as the Austrian theory of the business cycle), and are therefore easy prey for the quacks who blame the market for problems caused by the manipulation of money and credit. The artificial booms the Fed provokes, wrote economist Henry Hazlitt decades ago, must end “in a crisis and a slump, and…worse than the slump itself may be the public delusion that the slump has been caused, not by the previous inflation, but by the inherent defects of ‘capitalism.’”

Although my recently released book, Meltdown explains the process in more detail, an abbreviated version of Austrian business cycle theory might run as follows:

Government-established central banks can artificially lower interest rates by increasing the supply of money (and thus the funds banks have available to lend) through the banking system. This is supposed to stimulate the economy. What it actually does is mislead investors into embarking on an investment boom that the artificially low rates seem to validate but that in fact cannot be sustained under existing economic conditions. Investments that would have correctly been assessed as unprofitable are falsely appraised as profitable, and over time the result is the squandering of countless resources in lines of investment that should never have been begun.

If lower interest rates are the result of increased saving by the public, this increase in saved resources provides the material wherewithal to see the additional investment through to completion. The situation is very different when the lower interest rates result from the Fed’s creation of new money out of thin air. In that case, the lower rates do not reflect an increase in the pool of savings from which investors can draw. Fed tinkering, in other words, does not increase the real stuff in the economy. The additional investment that the lower rates encourage therefore leads the economy down a path that is not sustainable in the long run. Investment decisions are made that quantitatively and qualitatively diverge from what the economy can support. The bust must come, no matter how much new money the central bank creates in a vain attempt to stave off the inevitable day of reckoning.

The recession or depression is the necessary, if unfortunate, correction process by which the malinvestments of the boom period, having at last been brought to light, are finally liquidated. The diversion of resources into unsustainable investments out of conformity with consumer desires and resource availability comes to an end, with businesses failing and investment projects abandoned. Although painful for many people, the recession/depression phase of the cycle is not where the damage is done. The bust is the period in which the economy sloughs off the malinvestments and the capital misallocation, re-establishes the structure of production along sustainable lines, and restores itself to health. The damage is done during the boom phase, the period of false prosperity that precedes the bust. It is then that the artificial lowering of interest rates causes the squandering of capital and the initiation of unsustainable investments. It is then that resources that would genuinely have satisfied consumer demand are diverted into projects that make sense only in light of the temporary and artificial conditions of the boom.

Adding fuel to the fire of the most recent boom was the so-called Greenspan put, the unofficial policy of the Greenspan Fed that promised assistance to private firms in the event of risky investments gone bad. The Financial Times described it as the view that “when markets unravel, count on the Federal Reserve and its chairman Alan Greenspan (eventually) to come to the rescue.” According to economist Antony Mueller, “Since Alan Greenspan took office, financial markets in the U.S. have operated under a quasi-official charter, which says that the central bank will protect its major actors from the risk of bankruptcy. Consequently, the reasoning emerged that when you succeed, you will earn high profits and market share, and if you should fail, the authorities will save you anyway.” The Financial Times reported in 2000, in the wake of the dot-com boom, of an increasing concern that the Greenspan put was injecting into the economy “a destructive tendency toward excessively risky investment supported by hopes that the Fed will help if things go bad.”

When things do go bad, pumping more money into the banking system, thereby lowering interest rates once again, only exacerbates the problem, because it encourages the continued wasteful deployment of capital in unsustainable lines that will eventually have to be abandoned anyway, and it forces healthy, wealth-generating firms to have to go on competing with bubble firms for labor and capital. When interest rates are made artificially low, they encourage the kind of investment that would normally occur only if more saved resources existed to fund them than actually do. Continuing to force interest rates down only perpetuates the allocation of capital into outlets that the economy’s current resource base cannot sustain.

In response to the dot-com and NASDAQ collapses and the modest recession that accompanied them in 2000 and 2001, that Alan Greenspan and the Fed chose to embark on a robust policy of inflation, an approach that culminated in lowering the federal funds rate (the rate at which banks lend to each other) to a mere one percent from June 2003 to June 2004. Already by early 2001 the Fed had begun to ease once again. That year saw no fewer than 11 rate cuts. The unsustainable dot-com boom could not, in the end, be reignited, and thank goodness – the resource misallocations in that sector were unhealthy for the economy. But the Fed’s easy money and refusal to allow the recession of 2000 to take its course led to an even more perilous bubble elsewhere. That was the only recession on record in which housing starts did not decline. Not coincidentally, that was also the moment at which people began to conclude that house prices never fall, that a house is the best investment one can make, and so on. By intervening in the market then, the Fed prevented the market from making a full correction, thereby perpetuating unsustainable investment and consumption decisions. In so doing it merely postponed what it was trying to avoid, and made the crash worse when it finally came.

Fiscal stimulus, meanwhile, merely diverts resources from the productive sector in order to fund money-losing enterprises arbitrarily chosen by government. These artificial expenditures, moreover, interfere with the market’s attempt to sort out genuine demand from bubble demand. “Stimulus” spending can in fact keep firms (construction companies, for example) in business that for the sake of genuine economic health need to be liquidated so their resources can be more sensibly employed in more urgently demanded lines of production.

The claim that “stimulus” spending is necessary to bring “idle resources” back into use also misfires, since it fails to consider why so many entrepreneurs – who have survived as long as they have on the market because of their skill at anticipating consumer demand – should suddenly have become, all at once, such poor forecasters that they’re all saddled with idle resources.

The reason for the idle resources is, obviously, some prior act of miscalculation. And what could have created such systemic miscalculation? Could it be the Fed’s artificially low interest rates, that distort entrepreneurial forecasting and encourage the wrong kind of investments at the wrong time?

Consider a restaurant owner who mistakes the temporary demand for his product deriving from the presence of the Olympics in his city with real, sustainable demand. Suppose he opens a new location to accommodate all this new demand. When the Olympics are over, he’s left with idle resources – labor with nothing to do and empty restaurant space for starters. Should we want to “stimulate” these resources back into activity? Of course not. They shouldn’t have been allocated this way in the first place. We should want the market, guided by the price system, to redeploy them into sensible channels.

The problem, therefore, isn’t that we lack enough “spending” or “demand,” and that we need government to fill in the “missing demand.” The problem is that in the wake of Fed-induced misallocations of resources we wind up with structural imbalances, a mismatch between the capital structure and consumer demand. The recession is the period in which the economy repairs this mismatch by reallocating resources into lines of production that actually correspond to consumer demand. The modern preoccupation with levels of spending instead of patterns of spending obscures the most important aspects of the question.

Had the market been allowed to work before the collapse, there would have been no housing bubble and no crisis in the first place. Had the market been allowed to work when the crisis hit, recovery would have been swift – as it was in 1920–21, when an even worse depression came to a rapid end without any open-market operations by the Fed, and without any fiscal stimulus. (In fact, the federal budget was cut in half from 1920 to 1922.)

What, in short, should we do now? Exactly the opposite of what our so-called experts, who in a sane world would be forever discredited, urge upon us.

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Friday, May 15, 2009

RSU: National Tax On Booze & Smokes?

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ACLU Engaging in 'Shakedown' Project


On 5 May, 2007, the Associated Press ran a story entitled "Local Immigration Laws Bring High Costs." It described a nationwide shakedown project by the ACLU. Only the AP missed the larger story.

The story as written, said, "Cities across the U.S. are spending hundreds of thousands of dollars defending themselves against lawsuits and other challenges to ordinances enacted to keep out illegal immigrants."

It went on to describe how at least 90 cities had considered ordinances like those of Hazleton, Pennsylvania, but that many were backing away in fear of the costs. And, those costs come in two varieties: the fees that cities pay to their lawyers to defend themselves from legal attacks by the ACLU. The second cost is that courts may order cities to pay legal fees and costs to the ACLU.

It is only between the lines of the facts in this story that readers can see the 'shakedown' project being run by the ACLU. The ACLU wants fear, not logic, to stop cities from acting to protect their own citizens from criminal and financial losses at the hands of illegal immigrants.

It is beyond the ken of the AP to recognize that it is describing a wholesale assault on American civil rights. The first right claimed by the Declaration of Independence is self-government. The most basic right guaranteed by the Constitution is "republican government." For those not up on their constitutional definitions, that means living under laws written by our elected representatives.

In simple terms even a grade school student would understand, Americans are opposed to "taxation without representation." That means that all levels of government, including cities, should tax and spend through decisions of elected representatives, not non-elected judges. That means the whole thesis of this article should be reversed.

Hazleton-type laws should be approved by the courts, not struck down. And then, fee awards should be made against the ACLU in favor of the victimized cities. That's because the ACLU is attacking the most basic right of Americans, the right to self-government.

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Things Are Not As They Seem

Great set of videos. If you're inclined, subscribing to this guy on YouTube is a great idea. Nicely done stuff from Argentina, looking at the world at large.

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Thursday, May 14, 2009

Everyday is Doomsday in Washington

by Tom Engelhardt

Secretary Doomsday and the Empathy Gap: The Everyday Extremism of Washington

A front-page New York Times headline last week put the matter politely indeed: "In Pakistan, U.S. Courts Leader of Opposition." And nobody thought it was strange at all.

In fact, it's the sort of thing you can read just about any time when it comes to American policy in Pakistan or, for that matter, Afghanistan. It's just the norm on a planet on which it's assumed that American civilian and military leaders can issue pronunciamentos about what other countries must do; publicly demand various actions of ruling groups; opt for specific leaders, and then, when they disappoint, attempt to replace them; and use what was once called "foreign aid," now taxpayer dollars largely funneled through the Pentagon, to bribe those who are hard to convince.

Last week as well, in a prime-time news conference, President Obama said of Pakistan: "We want to respect their sovereignty, but we also recognize that we have huge strategic interests, huge national security interests in making sure that Pakistan is stable and that you don't end up having a nuclear-armed militant state."

To the extent that this statement was commented on, it was praised here for its restraint and good sense. Yet, thought about a moment, what the president actually said went something like this: When it comes to U.S. respect for Pakistan's sovereignty, this country has more important fish to fry. A look at the historical record indicates that Washington has, in fact, been frying those "fish" for at least the last four decades without particular regard for Pakistani sensibilities.

In a week in which the presidents of both Pakistan and Afghanistan have, like two satraps, dutifully trekked to the U.S. capital to be called on the carpet by Obama and his national security team, Washington officials have been issuing one shrill statement after another about what U.S. media reports regularly term the "dire situation" in Pakistan.

Of course, to put this in perspective, we now live in a thoroughly ramped-up atmosphere in which "American national security" – defined to include just about anything unsettling that occurs anywhere on Earth – is the eternal preoccupation of a vast national security bureaucracy. Its bread and butter increasingly seems to be worst-case scenarios (perfect for our 24/7 media to pounce on) in which something truly catastrophic is always about to happen to us, and every "situation" is a "crisis." In the hothouse atmosphere of Washington, the result can be a feeding frenzy in which doomsday scenarios pour out. Though we don't recognize it as such, this is a kind of everyday extremism.

Being Hysterical in Washington

As the recent release of more Justice Department torture memos (which were also, in effect, torture manuals) reminds us, we've just passed through eight years of such obvious extremism that the present everyday extremity of Washington and its national security mindset seems almost a relief.

We naturally grasp the extremity of the Taliban – those floggings, beheadings, school burnings, bans on music, the medieval attitude toward women's role in the world – but our own extremity is in no way evident to us. So Obama's statement on Pakistani sovereignty is reported as the height of sobriety, even when what lies behind it is an expanding "covert" air war and assassination campaign by unmanned aerial drones over the Pakistani tribal lands, which has reportedly killed hundreds of bystanders and helped unsettle the region.

Let's stop here and consider another bit of news that few of us seem to find strange. Mark Lander and Elizabeth Bumiller of the New York Times offered this tidbit out of an overheated Washington last week: "President Obama and his top advisers have been meeting almost daily to discuss options for helping the Pakistani government and military repel the [Taliban] offensive." Imagine that. Almost daily. It's this kind of atmosphere that naturally produces the bureaucratic equivalent of mass hysteria.

In fact, other reports indicate that Obama's national security team has been convening regular "crisis" meetings and having "nearly nonstop discussions" at the White House, not to mention issuing alarming and alarmist statements of all sorts about the devolving situation in Pakistan, the dangers to Islamabad, our fears for the Pakistani nuclear arsenal, and so on. In fact, Warren Strobel and Jonathan Landy of McClatchy news service quote "a senior U.S. intelligence official" (from among the legion of anonymous officials who populate our nation's capital) saying: "The situation in Pakistan has gone from bad to worse, and no one has any idea about how to reverse it. I don't think 'panic' is too strong a word to describe the mood here."

Now, if it were the economic meltdown, the Chrysler bankruptcy, the bank stress tests, the potential flu pandemic, or any number of close-to-home issues pressing in on the administration, perhaps this would make some sense. But everyday discussions of Pakistan?

You know, that offensive in the Lower Dir Valley. That's near the Buner District. You remember, right next to the Swat Valley and, in case you're still not completely keyed in, geographically speaking, close to the Malakand Division. I mean, if the Pakistani government were in crisis over the deteriorating situation in Fargo, North Dakota, we would consider it material for late night jokesters.

And yet, in the strange American world we inhabit, nobody finds these practically Cuban-Missile-Crisis-style, round-the-clock meetings the least bit strange, not after eight years of post-9/11 national security fears, not after living with worst-case scenarios in which jihadi atomic bombs regularly are imagined going off in American cities.

Keep in mind a certain irony here: We essentially know what those crisis meetings will result in. After all, the U.S. government has been embroiled with Pakistan for at least 40 years and for just that long, its top officials have regularly come to the same policy conclusions – to support Pakistani military dictatorships or, in periods when civilian rule returns, pour yet more money (and support) into the Pakistani military. That military has long been a power unto itself in the country, a state within a state. And in moments like this, part of our weird extremism is that, having spent decades undermining Pakistani democracy, we bemoan its "fragility" in the face of threats and proceed to put even more of our hopes and dollars into its military. (As Strobel and Landy report, "Some U.S. officials say Pakistan's only hope, and Washington's, too, at this stage may be the country's army. That, another senior official acknowledged Wednesday, 'means another coup.'")

In the Bush years, this support added up to at least $10 billion, with next to no idea what the military was doing with it. Another $100 million went into making that country's nuclear-weapons program, about which there is now such panic, safer from theft or other intrusion, again with next to no idea of what was actually done with those dollars. And now the Obama administration is rushing to create a new Pakistan Counterinsurgency Capability Fund that will be controlled by General David Petraeus, head of U.S. Central Command. If Congress agrees – and in this panic atmosphere, how could it not? – there will be an initial rushed down payment of $400 million to train the Pakistani military, probably outside that country, in counterinsurgency warfare. ("The fund would be similar to those used to train and equip Iraqi and Afghan soldiers and police, Petraeus said.")

Doomsday Scenarios

Oh, and speaking of extremism, the ur-extreme statement of the last few weeks came from Secretary of State Hillary Clinton and was treated like the most ho-hum news here. In congressional testimony, she insisted that the situation in Pakistan – that Taliban thrust into Swat and the lower Dir Valley – "poses a mortal threat to the security and safety of our country and the world."

Umm... Okay, the situation is unnerving – certainly for the Pakistanis, the large majority of whom have not the slightest love for the Taliban, have opted for democracy and against military dictatorship with a passion, and yet strongly oppose the destabilizing American air war in their borderlands. It could even result in the fall of the elected government or of democracy itself – not exactly a rare event in the annals of recent Pakistani history. It's undoubtedly unnerving as well for the American military, intent on fighting a war in Afghanistan that has spilled disastrously across the open border. (As Pakistan expert Anatol Lieven wrote recently: "The danger to Pakistan is not of a Taliban revolution, but rather of creeping destabilization and terrorism, making any Pakistani help to the U.S. against the Afghan Taliban even less likely than it is at present.")

In other words, it's not a pretty picture. If you happen to live in the tribal borderlands, or Swat, or the Dir Valley, squeezed between the Taliban, the Pakistani Army, whose attacks cause great civilian harm, and those drones cruising overhead, you may be in trouble, if not in flight – or you may simply support the Taliban, as most of the rest of Pakistan does not. If you happen to live in India, you might start working up a sweat over what the future holds on the other side of the border. But all of this is unlikely to be a "mortal threat" even to Islamabad, the Pakistani military, or that nuclear arsenal American national security managers spend so much time fretting about. It is certainly not a "mortal threat to the security and safety of our country."

So here's a little common sense. If Pakistan poses a mortal threat to you in New York, Toledo, or El Paso, well then, get in line. Believe me, it will be a long one and you'll be toward the back. Despite constant reports that lightly armed Taliban militants are only 60 miles from the "doorstep" of Islamabad, Pakistan's national capital, and increasing inside-the-Beltway invocations of Ayatollah Khomeini's 1979 revolution in Iran, you're unlikely to see a Taliban government in Islamabad anytime soon, or probably ever. As one unnamed expert commented recently in the insider Washington newsletter, the Nelson Report, "I find it troubling that we are hyping the 'security situation' in Pakistan. Pakistan is not being taken over, the FATA [Federally Administered Tribal Areas] is. This has been happening since 2004."

Mind you, when Vice President Joe Biden said something extreme about flu precautions – don't take the subway! – the media didn't hesitate to laugh him off stage. When Hillary Clinton said what should be considered the equivalent about Pakistan, everyone treated it as part of a sober national-security conversation.

Of course, when it comes to hysteria, nothing helps like a nuclear arsenal, and in recent weeks nuclear doomsday scenarios have broken out like a swine flu pandemic, even though a victorious Taliban regime in Islamabad with a nuclear arsenal would undoubtedly still find the difficulties of planting and detonating such devices in American cities close to insurmountable.

By the way, for all our kindly talk about how the poor Pakistanis just can't get it together democracy-wise, the U.S. has a terrible record when it comes not just to promoting democracy in that country, but to really giving much of a damn about its people. In fact, not to put too kindly a point on things, Washington has, over the past decades, done few favors for ordinary Pakistanis. Having played our version of the imperial Great Game first vis-à-vis the Soviets and, more recently, a bunch of jihadist warriors, we are now waging a most unpopular and destabilizing air war without mercy in parts of that country, and another deeply unpopular war just across its mountainous, porous border.

And this brings us to perhaps the most extreme aspect of the mentality of our national security managers – what might be called their empathy gap. They are, it seems, incapable of seeing the situations they deal through the eyes of those being dealt with. They lack, that is, all empathy, which means, in the end, that they lack understanding. They take it for granted that America's destiny is to "engineer" the fates of peoples half a world away and are incapable of imagining that the United States could, in almost any situation, be part of the problem, not a major part of its solution. This is surely folly of the first order and, year after year, has only made the "situation" in Pakistan worse.

Closing the Empathy Gap?

To complete our picture of this over-the-top moment, we have to leave the heated confines of Washington and head for California's China Lake. That's where the U.S. military tests some of its advanced weapons.

On April 20th, Peter Pae of the Los Angeles Times reported the following: "A 5-pound missile the size of a loaf of French bread is being quietly tested in the Mojave Desert north of Los Angeles as the military searches for more deadly and far more precise robotic weapons for modern warfare."

This tiny missile called the Spike will someday replace the 100-pound Hellfire missiles mounted on our Predator and more advanced Reaper unmanned aerial drones flying those assassination missions over the tribal lands of Pakistan. New weaponry like this is invariably promoted as being more "precise," and so capable of causing less "collateral damage," than whatever we've been using; that is, as an advance for humanity. But in this case, up to 12 of these powerful micro-weapons will someday replace the two Hellfires now capable of being mounted on a Predator, which means a future drone will have to come home far less often as it cruises the badlands of the planet looking for targets.

According to Pae, this new development is considered a "milestone" in weaponizing robot planes. Chillingly, he quotes Steven Zaloga, a military analyst with the Teal Group Corporation as saying, "We're sort of at the same stage as we were in 1914 when we began to arm airplanes."

Not only that but the Spike may someday soon be mounted on a new generation of more deadly drones, one of which, General Atomics Aeronautical Systems' Avenger or Predator C, is already being tested. It will be able to fly 50% faster than the Reaper and at up to 60,000 feet for 20 hours before returning to base.

In other words, the decisions to be made in future panicky "crisis" meetings in Washington, when "American security" once again faces a "mortal threat," are already being predetermined in the Mojave desert and elsewhere. In the Pentagon's eternal arms race of one, a major vote is being cast at China Lake for future Terminator wars. In a crisis mood of desperation, we tend to fall back on what we know. This, too, plays into Washington's national-security extremism.

By now it should be obvious enough that the military approaches to Afghanistan and Pakistan (or the newly merged Af-Pak battlefield) have been in the process of failing for years. Take just our drone wars: they are not only killing significant numbers of civilians, but also destabilizing Pakistan's tribal lands – military and civilian officials there have long begged us to ground them – and so creating an anti-American atmosphere throughout that country. Recently, former advisor to Gen. David Petraeus and counterinsurgency expert David Kilcullen told Congress:

"We need to call off the drones... Since 2006, we've killed 14 senior Al Qaeda leaders using drone strikes; in the same time period, we've killed 700 Pakistani civilians in the same area. The drone strikes are highly unpopular. They are deeply aggravating to the population. And they've given rise to a feeling of anger that coalesces the population around the extremists and leads to spikes of extremism... The current path that we are on is leading us to loss of Pakistani government control over its own population."

Sage advice. If President Obama temporarily suspended the Bush-era drone war, which his administration has recently escalated, it would represent a start down a different path, one not already strewn with the skeletons of failed policies. And while he's at it – and here's a little touch of extremism by American standards – why not declare a six-month moratorium on all drone research of any sort, a brief period to reconsider whether we really want to pursue such "solutions" ad infinitum?

Why not, in fact, call for a six-month moratorium on all weapons research? A long Pentagon holiday. Militarily, the U.S. is in no danger of losing significant military ground globally by shutting down its R&D machine for a time, while reconsidering whether it actually wants to lead the planet into a future filled with Spikes and Avengers.

If, however, nothing else was done, at least the president should order his national security team to calm down, skip those crisis meetings on Pakistan, tamp down the doomsday scenarios, and try to take a few minutes to imagine what the world looks like if you're not in Washington or the skies over our planet. Are there really no solutions anywhere that don't need to be engineered first in our national capital?

Note: You could easily drown in the tsunami of recent semi-hysterical pieces about the Pakistan or Af-Pak situation. Fortunately, I have Juan Cole's Informed Comment, Paul Woodward's The War in Context, and to depend on to help me sort through the crucial reportage of this moment. What would I do without them? Let me thank as well Christopher Holmes, TomDispatch Tokyo bureau chief, whose keen eye keeps these posts relatively free of goofs. Note as well the appearance of the first TD author photo in this piece. Site photographer Tam Turse took it. We'll probably be phasing in more of her author photos over the coming months.

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Harvard Study: Gun Control Is Counterproductive

The ACRU Blog

I've just learned that Washington, D.C.'s petition for a rehearing of the Parker case in the U.S. Court of Appeals for the D.C. Circuit was denied today. This is good news. Readers will recall in this case that the D.C. Circuit overturned the decades-long ban on gun ownership in the nation's capitol on Second Amendment grounds.

However, as my colleague Peter Ferrara explained in his National Review Online article following the initial decision in March, it looks very likely that the United States Supreme Court will take the case on appeal. When it does so - beyond seriously considering the clear original intent of the Second Amendment to protect an individual's right to armed self-defense - the justices of the U.S. Supreme Court would be wise to take into account the findings of a recent study out of Harvard.

The study, which just appeared in Volume 30, Number 2 of the Harvard Journal of Law & Public Policy (pp. 649-694), set out to answer the question in its title: "Would Banning Firearms Reduce Murder and Suicide? A Review of International and Some Domestic Evidence." Contrary to conventional wisdom, and the sniffs of our more sophisticated and generally anti-gun counterparts across the pond, the answer is "no." And not just no, as in there is no correlation between gun ownership and violent crime, but an emphatic no, showing a negative correlation: as gun ownership increases, murder and suicide decreases.

The findings of two criminologists - Prof. Don Kates and Prof. Gary Mauser - in their exhaustive study of American and European gun laws and violence rates, are telling:

Nations with stringent anti-gun laws generally have substantially higher murder rates than those that do not. The study found that the nine European nations with the lowest rates of gun ownership (5,000 or fewer guns per 100,000 population) have a combined murder rate three times higher than that of the nine nations with the highest rates of gun ownership (at least 15,000 guns per 100,000 population).

For example, Norway has the highest rate of gun ownership in Western Europe, yet possesses the lowest murder rate. In contrast, Holland's murder rate is nearly the worst, despite having the lowest gun ownership rate in Western Europe. Sweden and Denmark are two more examples of nations with high murder rates but few guns. As the study's authors write in the report:

If the mantra "more guns equal more death and fewer guns equal less death" were true, broad cross-national comparisons should show that nations with higher gun ownership per capita consistently have more death. Nations with higher gun ownership rates, however, do not have higher murder or suicide rates than those with lower gun ownership. Indeed many high gun ownership nations have much lower murder rates. (p. 661)
Finally, and as if to prove the bumper sticker correct - that "gun don't kill people, people do" - the study also shows that Russia's murder rate is four times higher than the U.S. and more than 20 times higher than Norway. This, in a country that practically eradicated private gun ownership over the course of decades of totalitarian rule and police state methods of suppression. Needless to say, very few Russian murders involve guns.

The important thing to keep in mind is not the rate of deaths by gun - a statistic that anti-gun advocates are quick to recite - but the overall murder rate, regardless of means. The criminologists explain:

[P]er capita murder overall is only half as frequent in the United States as in several other nations where gun murder is rarer, but murder by strangling, stabbing, or beating is much more frequent. (p. 663 - emphases in original)
It is important to note here that Profs. Kates and Mauser are not pro-gun zealots. In fact, they go out of their way to stress that their study neither proves that gun control causes higher murder rates nor that increased gun ownership necessarily leads to lower murder rates. (Though, in my view, Prof. John Lott's More Guns, Less Crime does indeed prove the latter.) But what is clear, and what they do say, is that gun control is ineffectual at preventing murder, and apparently counterproductive.

Not only is the D.C. gun ban ill-conceived on constitutional grounds, it fails to live up to its purpose. If the astronomical murder rate in the nation's capitol, in comparison to cities where gun ownership is permitted, didn't already make that fact clear, this study out of Harvard should.

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Cybersecurity Bill Jumpstarts Debate

CD&T Blog

The Cybersecurity Act of 2009, S. 773, introduced by Senators Rockefeller (D-WV) and Snowe (R-ME), has kicked off what promises to be an intense debate over the federal government’s cybersecurity policy. There’s broad consensus about the goal – better security for both governmental and private sector critical infrastructure information systems – but not much agreement about how to achieve it.

The Rockefeller/Snowe bill includes some especially troubling provisions. For starters, it would give the President the authority to limit or shut down Internet traffic to federal government and private critical infrastructure systems. It would give the Secretary of Commerce the power to override any law, regulation, or policy – including privacy laws and laws protecting trade secrets – to obtain access to information held by private parties that might be relevant to cybersecurity threats and vulnerabilities. Broadly read, the provision would authorize the Secretary of Commerce to override the Wiretap Act and the Electronic Communications Privacy Act to gain access to communications content. Finally, it includes provisions that would allow the government to dictate software design standards for the private sector.

CDT has prepared a detailed analysis of the Rockefeller-Snowe bill here.

Fortunately, the Rockefeller/Snowe bill isn’t the only game in town.

Senator Carper’s (D-DE) U.S. Information and Communications Enhancement (ICE) Act (S. 921) takes an entirely different, and much more appropriate, approach. It focuses primarily on strengthening the security of governmental information systems by amending the Federal Information Security Management Act. In contrast, many provisions of the Rockefeller-Snowe bill would apply the same measures and authorities without distinction to both private and public systems.

Also taking a more cautious approach is Senator Lieberman’s (I-CT) S. 946, which focuses on securing the electric power grid against cyber attack. While it is true that “bits are bits,” the sectoral approach to cybersecurity recognizes that measures appropriate for securing systems that are used to control the electric power grid might be inappropriate for securing elements of the communications infrastructure. This sectoral approach says, basically, “Let’s identify the ways in which the electric power grid is vulnerable and develop solutions for those vulnerabilities.”

To the credit of Senators Rockefeller and Snowe, they have actively solicited comments and suggestions for improving their legislation. CDT has met with staff for both Senators and has shared its views and concerns as well as ideas for alternative approaches.

Soon, the report of the team President Obama appointed to review cybersecurity policy government-wide will be made public. Melissa Hathaway and her team gave the report to the President on April 17. This report will sketch out at a high level the Administration’s views about how cybersecurity should be addressed. It will no doubt spur additional legislation and further advance the debate.

Almost every week, a new major cybersecurity breach is reported in the media. The test for Congress and the Administration will be to address the security issues that permit these incidents to occur without doing unnecessary damage to the openness and innovation that has made the Internet so successful.

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Wednesday, May 13, 2009

Obama Loses His "Cool"

With his glib dismissal of pot legalization, the president looks less like the man, and more like The Man. (Reason Magazine) Matt Welch

When the generation of Americans under the age of 30 gets around to realizing that this handsome young president might not be nearly as cool as they’d hoped, it won’t be hard to affix a date on when the milk began to sour. It was March 26, 2009, when Barack Obama conducted a live town hall press conference featuring questions submitted online.

Near the beginning of this hip and mildly groundbreaking interaction, the president said this: “We took votes about which questions were gonna be asked.…Three point five million people voted. I have to say that there was one question that was voted on that ranked fairly high, uh, and that was whether legalizing marijuana would improve, uh, the economy and job creation. And, uh (chuckles), uh, I don’t know what this says about the online audience (laughs), but I just want—I don’t want people to think that—this was a fairly popular question; we want to make sure that it was answered. Uh, the answer is, no, I don’t think that is a good strategy to grow our economy.”

The live audience laughed and applauded. The kids online? Not so much.

“Way to discredit a lot of the ‘online audience’ who got you elected, Mr. President,” wrote one commenter on the social news-aggregating website Digg, where Obama’s dismissal was heavily criticized. “Enjoy your approval rating now, Mr. President, I think you just lost a bunch of help,” wrote another. A third Diggster treated legalization with a seriousness (if not grammaticalness) that Obama failed to muster: “To me this is justa common sense issue, legalize Marijuana, decriminalize drug use, thereby crippling drug lords, creating a safe and in the open means to distribute cannabis, give the economy a shot in the arm, and propel snack food sales through the roof. I know the man has a lot on his plate, but seriously this is not justa pot head issue. and it ain’t cute that folks are rotting in prisons for cultivating and smoking a ***** plant.”

No, it ain’t cute at all.

Scratch a young Obama voter and you won’t necessarily find someone who likes bailouts or cares about financial market regulations one way or another. Instead you’re likely to hear about how the awful Republicans wage wars, bait gays and racial minorities, and basically act like a bunch of mean old white men. Party membership and voting are frequently more about group identity than philosophical orientation about the proper role of government. (For a wonderful exploration of the dissonances this can create, see Associate Editor Katherine Mangu-Ward’s “Dangerous Toys, Strange Bedfellows,” page 42.) There’s little doubt about the broad mores of Generation Obama: pro-choice, pro-gay, and pro-legalization. Obama’s got the first one covered, but his youngest supporters are finding out quickly that on the latter two the president is not offering substantive “change” from the last few administrations.

Freedom works in chaotic, unpredictable ways. Sometimes you can go for decades without an inch of progress; and then, the next thing you know, the whole architecture of oppression gets swept away within a matter of days. At a recent screening in Washington, D.C., for the new Velvet Revolution documentary The Power of the Powerless, an American activist type asked the former Czech student leader Šimon Pánek how much behind-the-scenes logistical groundwork and drawn-out planning his fellow revolutionaries engaged in before the 10 days in November 1989 that overthrew the Communist Party. Pánek laughed. “Oh, no,” he said. “It all happened so fast, you cannot plan for such a thing.”

Marijuana legalization isn’t happening remotely that fast, but there are some preliminary indicators that something new and hopeful is stirring within the populace in 2009. It started in late January, when photos surfaced of record-shattering Olympic gold medal swimmer Michael Phelps smoking a bong at a party. As a nation prepared for the usual round of hypocritical and self-righteous denunciations, something stranger happened: nothing. The country’s sports pages, normally not known for their permissive attitudes about what humans put in their bodies, greeted the news of a 23-year-old acting like a 23-year-old with a collective shrug.

Ostensibly conservative corporate America, at least in the form of Phelps’ many sponsors, almost unanimously stood by their man. The one company that did not, cereal-maker Kellogg Co., found itself the target of a boycott, and its spokespeople spent the month of February loudly (and not very convincingly) claiming that the two sides’ parting of the ways was a simple matter of a contract expiring. “Our marijuana laws have been ludicrous for as long as we’ve been alive,” the conservative columnist Kathleen Parker wrote in the Washington Post. “The problem isn’t Phelps, who is, in fact, an adult. The problem is our laws—and our lies.”

Aside from the shattered lives of those caught either in the drug war or in the dangerous black market that prohibition produces, it is the lies that make marijuana criminalization so infuriating. For decades we have allowed billions of our tax dollars to be spent on propaganda telling us, falsely, that pot is “dangerous,” that winners don’t do drugs, and that recreational drug users finance terrorism. Barack Obama is the living refutation of all of that: Not only did he inhale, but he freely admitted that “that was the point.” Yet countless federal agencies still require either marijuana-free pasts or (more likely) skilled lying about it. This at a time when more than half of Americans born after World War II have tried pot at least once.

Forcing people to lie, even a little bit, is one of the single most appalling and corrosive things a government can do. That’s the bad news. The good news is that this model is ultimately unsustainable, for the simple reason that people would rather tell the truth. At Andrew Sullivan’s blog in March and April, readers sent in dozens of testimonials explaining that they are perfectly upstanding members of society yet have broken the nation’s idiotic marijuana laws multiple times in the past and are now tentatively “coming out of the closet” about it. Though it’s another sign that the architecture of lies is finally showing the first signs of collapse, the act is nonetheless kind of pathetic. What kind of fearful, groveling supplicants have we become after these four decades of abuse?

That’s why Obama’s pot answer, and the immediately hostile reaction to it by his core fan base, was so interesting. The president has done some good things in office, most notably giving word to the Drug Enforcement Administration that it is no longer to conduct raids on medical marijuana clubs in states they are legal. Though there still have been a couple of raids during the transition period, the new policy presents a marked change from the past. But considering that that’s about as far as Obama appears willing to go, events and public sentiment may soon overtake him.

In moments of liberation, leaders who seemed so progressive during times of stagnation suddenly appear archaic, even obstructionist. Mikhail Gorbachev was far more liberal than the communist leaders of East Germany and several other Soviet satellites, yet the revolutionaries there who rammed through the opening he helped create nonetheless tended to hate his guts. He was, after all, still an authoritarian Communist. By demonstrating that some winners do do drugs, and by allowing cannabis clubs to show the world that pot buyers and sellers are as American as apple pie, Obama is perhaps unwittingly helping to unleash a long-overdue correction in the way America lies to itself. Taking advantage of that window of opportunity might not be a good strategy for growing the economy, but it’s an excellent way to begin regrowing our spines.

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Montana Nullifies Federal Gun Laws!

MountainDoc, Campaign for Liberty

Anyone who has had the privilege to listen to a lecture from Tom Woods or read Judge Andrew Napolitano knows this is big news. Nullification is one the best weapons in our constitutional arsenal to check the power of the federal government back to its proper levels; although nullification is relatively unknown. Nullification declares a federal law the state feels is unconstitutional invalid within the state passing the nullification law. It goes beyond the language of state sovereignty acts and takes action.

There is speculation that the Supreme Court would take up the eminent case between the federal government and Montana should an emerging consensus arise with several states adopting similar laws, and overturn the expansion of the Interstate Commerce clause, and in doing so severely tie the hands of congress and the executive branch. The federal government currently uses an expanded and unconstitutional interpretation of the interstate commerce clause to interfere in affairs constitutionally left to the states ranging from guns to what a farmer can grow on his farm for personal consumption. Those looking for more information on nullification should check out the Virginia and Kentucky Resolutions of 1798 penned by Jefferson and Madison respectively or check out this Tom Woods video.

Montana's nullification action is with regard to gun laws. Montana has declared that federal gun laws are invalid in the state of Montana on guns made in the state of Montana, used exclusively in the state of Montana, and never transported across state lines. This particular law applies to ammunition and gun accessories as well. This is now a law in Montana. It has been passed and signed by the governor. Similar laws are being formed in Utah, Tennessee, and Texas. Imagine the impact Campaign for Liberty could have in getting similar legislation passed with local efforts within our states.

The law, included below, says in simple terms the following.

Section 1: Gives a name to the bill
Section 2: States why the state of Montana can nullify a federal law, including references to the 2nd, 9th, & 10th amendments to the US Constitution
Section 3: Sets up definitions for terms used in the bill
Section 4: Nullifies federal gun laws relating to arms built, used, and kept within the state of Montana
Section 5: Sets exceptions to what is nullified
Section 6: Brands Montana firearms
Section 7: Lists where the law goes in the Montana Code
Section 8: Sets application date to October 1, 2009

See the original article for more information

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G20 police 'used undercover men to incite crowds'

Jamie Doward and Mark Townsend, The Observer

An MP who was involved in last month's G20 protests in London is to call for an investigation into whether the police used agents provocateurs to incite the crowds.

Liberal Democrat Tom Brake says he saw what he believed to be two plain-clothes police officers go through a police cordon after presenting their ID cards.

Brake, who along with hundreds of others was corralled behind police lines near Bank tube station in the City of London on the day of the protests, says he was informed by people in the crowd that the men had been seen to throw bottles at the police and had encouraged others to do the same shortly before they passed through the cordon.

Brake, a member of the influential home affairs select committee, will raise the allegations when he gives evidence before parliament's joint committee on human rights on Tuesday.

"When I was in the middle of the crowd, two people came over to me and said, 'There are people over there who we believe are policemen and who have been encouraging the crowd to throw things at the police,'" Brake said. But when the crowd became suspicious of the men and accused them of being police officers, the pair approached the police line and passed through after showing some form of identification.

Brake has produced a draft report of his experiences for the human rights committee, having received written statements from people in the crowd. These include Tony Amos, a photographer who was standing with protesters in the Royal Exchange between 5pm and 6pm. "He [one of the alleged officers] was egging protesters on. It was very noticeable," Amos said. "Then suddenly a protester seemed to identify him as a policeman and turned on him. He legged it towards the police line, flashed some ID and they just let him through, no questions asked."

Amos added: "He was pretty much inciting the crowd. He could not be called an observer. I don't believe in conspiracy theories but this really struck me. Hopefully, a review of video evidence will clear this up."

The Independent Police Complaints Commission has received 256 complaints relating to the G20 protests. Of these, 121 have been made about the use of force by police officers, while 75 relate to police tactics. The IPCC said it had no record of complaints involving the use of police agents provocateurs. A Metropolitan Police spokesman said: "We would never deploy officers in this way or condone such behaviour."

The use of plain-clothes officers in crowd situations is considered a vital tactic for gathering evidence. It has been used effectively to combat football hooliganism in the UK and was employed during the May Day protests in 2001.

Brake said he intends to raise the allegations with the Met's commissioner, Sir Paul Stephenson, when he next appears before the home affairs select committee. "There is a logic having plain-clothes officers in the crowd, but no logic if the officers are actively encouraging violence, which would be a source of great concern," Brake said.

The MP said that given only a few people were allowed out of the corralled crowd for the five hours he was held inside it, there should be no problem in investigating the allegation by examining video footage.

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Tuesday, May 12, 2009

Obama seeks to double tax law enforcement budget (IRS)


WASHINGTON (Reuters) - President Barack Obama proposed on Thursday nearly doubling funds to enforce U.S. tax laws next year, with an aim of more than quadrupling funding for tax compliance to $2.1 billion within five years.

The budget plan seeks $12.1 billion for the Internal Revenue Service, responsible for collecting and enforcing individual and corporate tax laws, for fiscal 2010, which begins October 1. That amounts to a roughly 5.2 percent increase over the IRS budget for 2009, which was $11.5 billion.

The budget proposal, which must be approved by Congress, includes a $890 million request to boost tax enforcement, including in the international arena, an increase of $400 million from 2009.

Underreporting of income by individuals and businesses led to a "tax gap" of $345 billion in 2001, the most recent year available, according to the government. Of that, corporate income tax and employment tax underreporting made up about $84 billion, according to a report by the Government Accountability Office.

The Obama administration said it would use the funds to further expand its efforts to boost compliance outside the U.S., "placing greater scrutiny on cross-border transactions and tax issues."

Earlier this week, Obama unveiled a series of proposals to overhaul mainly corporate tax rules and close loopholes in an effort he said would raise $210 billion over 10 years.

Included was a proposal to tighten rules on financial institutions which hold money abroad for U.S. citizens.

The U.S. government is currently suing giant Swiss bank UBS AG to get the names of thousands of mostly wealthy U.S. clients who may be trying to evade tax laws by keeping their money overseas.

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Ah! An infectious disease!

BTM: renaissancemeans

Hey, major reporting outlets, forget swine flu for your fear-inducing headlines; how does, 'Find out about the disease that kills over 2 million young children a year, TONIGHT AT TEN!' sound as a teaser? Malaria kills around 5,500 people A DAY, the vast majority of whom are young children, and it kills off a good number of pregnant women, too.

You could even mention how pretty much all that you need to prevent it is a nutritious diet, a well cared for immune system, and a $2 mosquito net. The ones that are pre-treated with enough insecticide to last 5 years are a whopping $5 each. O, and condoms definitely help immensely to stop it spreading, but don't tell the Religious Right that I said it. Then there'll never be aid money.

O, sorry, yes, I forgot--this is all primarily in sub-Saharan Africa, where we don't have to see it, touch it, feel it, or--hell!--even think about it.

Please excuse me whilst I exit.

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Your Blog is a Weapon? House Bill suggests Hurting Feelings illegal

The Journal-Post

Law prof Eugene Volokh blogs about a U.S. House of Representatives bill proposed by Rep. Linda T. Sanchez and 14 others that could make it a federal felony to use your blog, social media like MySpace and Facebook, or any other web media “To Cause Substantial Emotional Distress Through “Severe, Repeated, and Hostile” Speech.” Oh lordy, there goes 4chan.

Here’s the relevant text:
Whoever transmits in interstate or foreign commerce any communication, with the intent to coerce, intimidate, harass, or cause substantial emotional distress to a person, using electronic means to support severe, repeated, and hostile behavior, shall be fined under this title or imprisoned not more than two years, or both….

["Communication"] means the electronic transmission, between or among points specified by the user, of information of the user’s choosing, without change in the form or content of the information as sent and received; …

["Electronic means"] means any equipment dependent on electrical power to access an information service, including email, instant messaging, blogs, websites, telephones, and text messages.

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Monday, May 11, 2009

Case Against the Fed and Fractional Reserve Lending

From Mish's Trend Analysis

Fractional Reserve Lending (FRL) is fraudulent. Indeed, FRL in conjunction with micro-mismanagement of interest rates by the Fed is the root cause of the financial crisis we are in.

Unfortunately many do not see FRL for the fraudulent scheme that it is. Here are the most common defenses against the allegation of fraud.

Five Arguments Used To Defend FRL

1. FRL is not fraud because the lending is backed by assets.
2. FRL is not fraud because it is allowed by law.
3. Eliminating FRL would require unwarranted "regulation".
4. No one is harmed by FRL.
5. People have a legal right to make agreements with banks allowing their money to be lent with no reserves


1R. To those who claim credit extended by fractional reserve lending is not fraudulent because it's backed by assets, I ask: "What assets?" The answer of course is ....

Fannie Mae and Freddie Mac debt that would be worthless were it not for taxpayer bailouts.
Asset backed commercial paper that has ceased to trade.
Toggle bonds and other such nonsense where debt is paid back with more debt.
Loans to hedge funds for speculation in credit default swaps and commodities.
Commercial real estate boondoggles including scores of condo towers now sitting empty.
A whole array of other silly loans that should never have been made.

Close analysis shows the "backed by assets" claim only holds true as long as asset prices are rising. When asset prices are falling as they are now, the true state of the non-existent backing is plain to see.

Credit extended via FRL is backed by nothing more than thin air and promises. Those promises are currently worth pennies on the dollar, and the entire global banking system is insolvent as a result.

2R. Some claim that fractional reserve lending cannot be fraud because it is legal. However, Just because something is legal does not make it right. For example: Slavery was once legal. It certainly never was right. Government decree cannot make slavery right, but it can and did make it legal. By the same token, government decree alone cannot change the fact that fractional reserve lending is fraudulent. Proof of fraudulence will be offered in the rebuttal to point number 4.

3R. Some claim that FRL cannot be eliminated because that would require regulation and such regulation would in and of itself be against free market principles. The fact of the matter is that a free market would quickly shut down any bank lending out more money than it had in the vault. No one would possibly trust such a bank. It is only government decree (regulation) that allows banks to get away with such obvious fraud.

Furthermore, people are confused by what "libertarian" means. Libertarian does not mean anarchy. There are laws against murder, theft, fraud, and slavery that no libertarian I know would argue against.

Indeed, for any society to function, there must be certain laws (regulations) in place. Here are the basic tenants of valid laws.

Protection of property rights
Protection of civil rights
Freedom of religion
Equal protection under the law regardless of race, creed, color, sex, nationality, wealth, etc.

4R. Proponents of FRL claim no one is harmed by it. In practice, everyone is harmed by it. Here is how it starts. Those with first access to money accumulate assets and those with later access to money bid up those assets. Consider housing. GSE creation of credit out of thin air is a perfect example of what happens. By the time credit was available to those of lower economic status, the bubble was already formed and ripe for a collapse. Even the non-participants were harmed. How so? Via rising property taxes and rising prices of goods and services without the benefit of rising wages.

Ironically, even those with first access to money (the banks and wealthy) ultimately did not fare well because they were greedy. When the bubble popped (as all debt bubbles eventually do) the only winners were the few who made timely bets on the demise of the bubble.

FRL is the enabler for credit bubbles. Given enough time, credit bubbles are guaranteed to implode in deflationary fashion. History is replete with examples. The South Seas bubble, the John Law Mississippi bubble, and tulip mania are prime examples.

5R. People have no such right to agree to commit fraud. Here are more things people have no right to do: Shout fire in a movie theatre, conspire to steal someone's money, agree to start a toxic waste dump in a location where it would poison every water source in the neighborhood. There is an infinite number of things two people cannot agree to do. The right of people to do things ends when it affects the property rights of everyone else. And as noted in 4R, everyone is affected by fraudulent agreements that allow more credit to be extended than there is money in the bank.

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Leaked Agenda: Bilderberg Group Plans Economic Depression

by Paul Joseph Watson

On the eve of the 2009 Bilderberg Group conference, which is due to be held May 14-17 at the 5 star Nafsika Astir Palace Hotel in Vouliagmeni, Greece, investigative reporter Daniel Estulin has uncovered shocking details of what the elitists plan to do with the economy over the course of the next year.

The Bilderberg Group meeting is an annual confab of around 150 of the world’s most influential powerbrokers in government, industry, banking, media, academia and the military-industrial complex. The secretive group operates under “Chatham House rules,” meaning that no details of what is discussed can ever be leaked to the media, despite editors of the world’s biggest newspapers, the Washington Post, the New York Times and the Financial Times, being present at the meeting.

According to Estulin’s sources, which have been proven highly accurate in the past, Bilderberg is divided on whether to put into motion, “Either a prolonged, agonizing depression that dooms the world to decades of stagnation, decline and poverty … or an intense-but-shorter depression that paves the way for a new sustainable economic world order, with less sovereignty but more efficiency.”

The information takes on added weight when one considers the fact that Estulin’s previous economic forecasts, which were based on leaks from the same sources, have proven deadly accurate. Estulin correctly predicted the housing crash and the 2008 financial meltdown as a result of what his sources inside Bilderberg told him the elite were planning based on what was said at their 2006 meeting in Canada and the 2007 conference in Turkey.

Details of the economic agenda were contained in a pre-meeting booklet being handed out to Bilderberg members. On a more specific note, Estulin warns that Bilderberg are fostering a false picture of economic recovery, suckering investors into ploughing their money back into the stock market again only to later unleash another massive downturn which will create “massive losses and searing financial pain in the months ahead,” according to a Canada Free Press report.

According to Estulin, Bilderberg is assuming that U.S. unemployment figures will reach around 14% by the end of the year, almost doubling the current official figure of 8.1 per cent.

Estulin’s sources also tell him that Bilderberg will again attempt to push for the enactment of the Lisbon Treaty, a key centerpiece of the agenda to fully entrench a federal EU superstate, by forcing the Irish to vote again on the document in September/October despite having rejected it already, along with other European nations, in national referendums.

“One of their concerns is addressing and neutralizing the anti-Lisbon treaty movement called “Libertas” led by Declan Ganley. One of the Bilderberger planned moves is to use a whispering campaign in the US media suggested that Ganley is being funded by arms dealers in the US linked to the US military,” reports CFP.

Daniel Estulin, Jim Tucker, and other sources who have infiltrated Bilderberg meetings in the past have routinely provided information about the Bilderberg agenda that later plays out on the world stage, proving that the organization is not merely a “talking shop” as debunkers claim, but an integral planning forum for the new world order agenda.

Indeed, just last month Belgian viscount and current Bilderberg-chairman Étienne Davignon bragged that Bilderberg helped create the Euro by first introducing the policy agenda for a single currency in the early 1990’s. Bilderberg’s agenda for a European federal superstate and a single currency likely goes back even further. A BBC investigation uncovered documents from the early Bilderberg meetings which confirmed that the European Union was a brainchild of Bilderberg.

In spring 2002, when war hawks in the Bush administration were pushing for a summer invasion of Iraq, Bilderbergers expressed their desire for a delay and the attack was not launched until March the following year.

In 2006, Estulin predicted that the U.S. housing market would be allowed to soar before the bubble was cruelly popped, which is exactly what transpired.

In 2008, Estulin predicted that Bilderberg were creating the conditions for a financial calamity, which is exactly what began a few months later with the collapse of Lehman Brothers.

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Zombie Bank

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The Taliban Are Coming, the Taliban Are Coming!

by Eric Margolis

PARIS – The worldly French and British who are taught history and read books are looking with wry amusement and some pity on the Americans who are now gripped by a renewed bout of Taliban terror.

About ten days ago, a bunch of lightly-armed Pashtun tribesmen rode down from the Malakand region on motorbikes and pickup trucks and briefly swaggered around Buner, only 100 km from Pakistan’s capitol, Islamabad.

Hysteria erupted in Washington. "The Taliban are coming. The Taliban are coming!"

Hillary Clinton, still struggling through foreign affairs 101, warned the scruffy Taliban tribesmen were a global threat. Pakistan’s generals dutifully followed Washington’s orders by attacking the tribal miscreants in Buner who failed to obey the American Raj. Over a hundred people were killed, almost all innocent civilians, and thousands of refuges fled the government bombing and gunfire.

It would have been helpful had the anguished Mrs. Clinton read page 30 of my book, War at the Top of the World:

"In the first quarter of the 20th century…two colorful figures emerged from the barren mountains of the Northwest Frontier. First, a fiery holy man with a wonderful name, the Fakir of Ipi. The old fakir rallied the Pashtun tribes against the infidel and came within a turban’s length of taking Peshawar from the British, who spent a decade chasing the elusive fakir through the mountains of Waziristan."

"Then, a fearsome figure, the 'Mad Mullah' (as the British press branded him), who rode down from the Malakand Pass at the head of 20,000 savage horsemen, determined to put the impious city of Peshawar (the main British Imperial base) to the sword."

Like Mrs. Clinton, the good Christian ladies of the British Peshawar garrison had a very big scare. Cries were raised that the Mad Mullah and his wicked Muslims were going to lay fire sword on Peshawar and carry off its Christian ladies upon whose white bodies would be inflicted unspeakable Islamic abominations.

Plus ça change…. A century later, western imperial forces are again chasing unruly Pashtun tribesmen on the wild Northwest Frontier. Today, they’re called "terrorists" by western media and politicians. In the 1980’s they and their fathers were hailed as "freedom fighters" battling the Soviet occupation of Afghanistan.

Pashtun (aka Pathan) frontier tribes – collectively mislabeled "Taliban" by western media – are up in arms again because they are being bombed by US Predator drones, and attacked by the Pakistani Army, which the US rents for $1.5 billion annually (the official figure; actually, it’s a lot more), to support its widening war in Afghanistan. Pashtun civilian casualties – "collateral damage" in Pentagonspeak – are rising fast.

The primary cause of the growing rebellion in Pakistan’s Northwest Frontier Province (NWFP) is the US war in Afghanistan, which is rapidly spreading into Pakistan. Most Pakistanis see the Afghan Taliban and their own rebellious Pashtun as heroes fighting western domination, and scorn their own isolated leaders in Islamabad as working for the Yankee dollar.

Equally, the Pashtun tribes of NWFP were guaranteed total autonomy in 1947; Pakistan’s army was formally excluded from the Pashtun tribal region. Washington has pressured Islamabad into violating this basic provision of Pakistan’s constitution by sending troops and warplanes into the independent tribal region.

Even the British Imperial Raj’s most junior officer knew it was foolhardy to provoke warlike Pashtun. But Washington has done just this. Still, the Pashtun "Taliban" have no influence outside their Northwest Frontier and are not about to take over the rest of Pakistan.

But Washington’s ham-handed tactics in Afghanistan and Pakistan are creating a bigger storm: a national revolution in Pakistan against the western-backed feudal oligarchy that has ruled it since 1947.

Pakistan is among the world’s poorest nations. Half its people are illiterate. Most subsist on $1.13 daily. The feudal landowning elite, only .5% of the population, holds over 90% of national wealth. Corruption engulfs everything. Democracy is a sham; the legal system a cruel joke.

Islamic law, however draconian, offers the only justice that cannot be bought. Growing resistance movements in Northwest Frontier and Baluchistan call for national leadership that represents Pakistan’s, rather than western interests. Pakistanis are humiliated by being forced by the US and Britain to wage war against their own people under the pretext of "fighting Islamic terrorism."

The big question in western capitals is: "are Pakistan’s nuclear weapons safe?" Yes. For now. They are heavily guarded by crack army units and ISI, the military intelligence service, and will remain so unless the army splits in a power struggle. Pakistan’s nukes cannot be armed without special security codes.

Even so, there is growing speculation in Pakistan and here in Europe that the US, possibly in league with India and/or Israel, may attempt to seize or destroy Pakistan’s nuclear arsenal.

My esteemed colleague and regional expert, Arnaud de Borchgrave, warns Pakistan could become another Iran. I’m not so sure. Islamic parties have never commanded much support in Pakistan. There is no powerful clergy in Sunni Pakistan, as there was in Shia Iran. Pakistan has a long way to go before becoming an Islamic republic on the Iranian model. But Pakistan is certainly headed into very dangerous waters.

As for the US-led crusade in Afghanistan and Northwest Frontier, we should recall the words of Victorian poet of the British Raj, Rudyard Kipling: "Asia is not going to be civilized after the methods of the West. There is too much Asia and she is too old."

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Sunday, May 10, 2009

College Student Shoots, Kills Home Invader

COLLEGE PARK, Ga. -- A group of college students said they are lucky to be alive and they’re thanking the quick-thinking of one of their own. Police said a fellow student shot and killed one of two masked me who burst into an apartment.

Channel 2 Action News reporter Tom Jones met with one of the students to talk about the incident.

“Apparently, his intent was to rape and murder us all,” said student Charles Bailey.

Bailey said he thought it was the end of his life and the lives of the 10 people inside his apartment for a birthday party after two masked men with guns burst in through a patio door.

“They just came in and separated the men from the women and said, ‘Give me your wallets and cell phones,’” said George Williams of the College Park Police Department.

Bailey said the gunmen started counting bullets. “The other guy asked how many (bullets) he had. He said he had enough,” said Bailey.

That’s when one student grabbed a gun out of a backpack and shot at the invader who was watching the men. The gunman ran out of the apartment.

The student then ran to the room where the second gunman, identified by police as 23-year-old Calvin Lavant, was holding the women.

“Apparently the guy was getting ready to rape his girlfriend. So he told the girls to get down and he started shooting. The guy jumped out of the window,” said Bailey.
A neighbor heard the shots and heard someone running nearby.

“And I heard someone say, ‘Someone help me. Call the police. Somebody call the police,’” said a neighbor.

The neighbor said she believes it was Lavant, who was found dead near his apartment, only one building away.

Bailey said he is just thankful one student risked his life to keep others alive.
“I think all of us are really cognizant of the fact that we could have all been killed,” said Bailey.

One female student was shot several times during the crossfire. She is expected to make a full recovery.

Police said they are close to making the arrest of the second suspect.

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Attack on the Chrysler Capitalists

by Peter Schiff

The Obama administration singled out hedge funds as the bad guys this week in its attempt to reorganize Chrysler.

The accusation falls comfortably into the administration's view that unfettered capitalists on Wall Street and poor planning by short-sighted CEO's are responsible for our financial problems.

Reacting to the setback, President Obama took dead aim at the few capitalists left: the owners of some of Chrysler's securitized bank debt – hedge funds and private investors – who scuttled the plan.

He described these "holdouts" as unwilling to make the sacrifices that the company, the banks, the workers, the pensioners (all on the government dole) and the taxpayers had been prepared to make for the good of the country.

Ironically, the "greedy" group that Obama holds responsible for killing the auto industry is the only force that can save it.

These ideas, echoed in Congress, the media and on Main Street, completely ignore how government intervention incentivized the bad behavior and brought down our economy.

The investors' reluctance to cave in sends Chrysler to bankruptcy court. Normally, this process would be the best means to reallocate Chrysler's assets in a way that benefits our economy. But Obama made it clear that this will be no ordinary bankruptcy.

The guiding hand of Washington had already formulated its far-sighted plan to save Chrysler, and it is meant to strongarm those who won't cooperate.

President Obama is out to restructure Wall Street. As a result, expect a cram-down rather than a negotiation. The sanctity of the bank debt holder's investment contracts will crumble under the political weight of Obama's vision.

Chrysler has not been profitable for years; and with Washington calling all the shots, the potential for long-term viability has been dashed.

A real bankruptcy is the only solution. In it, current shareholders get wiped out, current contracts and obligations are voided, and the remaining assets, both physical and intellectual, are sold to the highest bidders. But the process would create the opportunity for new management, with private capital, to buy auto-producing assets for pennies on the dollar, hire skilled auto workers at much lower costs, scrap out-of-date business practices, and produce cars cheaply and profitably. Under the guise of "saving jobs," the Administration has disrupted this process.

In contrast to the holdouts, the administration claims consensus of all major stakeholders. But this ignores how government has tilted the playing field. Billions of dollars of TARP and bailout subsidies have compromised the ability of the big banks and the Chrysler Board to make decisions independent of politics. The independence retained by the holdouts is a thorn that will, unfortunately, be quickly removed.

Giving control of Chrysler, and soon GM, to the UAW and the government will enshrine a culture of failure and seal Detroit's fate. Both companies will become government-sponsored entities, not too dissimilar from Amtrak or the Post Office, forever relying on taxpayer funds to create products of dubious quality.

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