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Thursday, July 31st, 2008
Volume 7, No. 13
4 Articles, 16 Pages
2. Record-High Ratio of Americans in Prison
4. Iraq War 'Caused Slowdown In US'
(Editors note: July 26th message from the Cuban Five
July 26, 2008.
Dear Friends and Supporters:
By next September the 12th it will be 10 years since our arrests.
Back then, by putting us in jail, the U.S. government materialized a
conscious political decision: The full weight of their law
enforcement agencies and their corrupt system of justice would be
thrown in support of the terrorists and criminals we were monitoring
in Miami .
No wonder our trial has been kept a well guarded secret from the
American people. Moving away from every tradition of the mainstream
media, nobody seems interested on entertaining the public with a
lengthy espionage trial, or willing to take the opportunity to play
the usual scare script, or to take this unique opening to warn about
a threat to American national security, or to take advantage of the
chance to practice the always profitable sport of slandering
Communist Cuba.
As five dangerous Communist spies are given the combined sentences of
four life terms plus seventy five years, nobody seems interested in
learning what peril was the United States into, such as to warrant
such punishment. The free press runs away from the courtrooms and the
fourth power, as compliant as the other three, cancels interviews and
suppresses the case from the news.
All of this shows the uphill battle we must face to convey the truth
to the people of this country. It also shows the extraordinary human
quality of those who have gotten themselves involved, and the depth
of their commitment to justice.
We all still have a hard struggle ahead to bring awareness to the
American people; it is a struggle that demands determination,
initiative and lots of imagination.
From our five prison cells we want to express to all or you our
gratitude for what have been already achieved, and our full trust on
what remains to be done.
A big hug to all.
Gerardo, Ramon, Antonio, Fernando and Rene)
(Editor's second note:
$16bn
The amount the US spends on the monthly running costs of the wars in Iraq and Afghanistan - on top of regular defence spending
$138
The amount paid by every US household every month towards the current operating costs of the war
$19.3bn
The amount Halliburton has received in single-source contracts for work in Iraq
$25bn
The annual cost to the US of the rising price of oil, itself a consequence of the war
$3 trillion
A conservative estimate of the true cost - to America alone - of Bush's Iraq adventure. The rest of the world, including Britain, will shoulder about the same amount again
$5bn
Cost of 10 days' fighting in Iraq
$1 trillion
The interest America will have paid by 2017 on the money borrowed to finance the war
3%
The average drop in income of 13 African countries - a direct result of the rise in oil prices. This drop has more than offset the recent increase in foreign aid to Africa)
1. THAR SHE BLOWS
(The Last Hurrah for the Banking System)
BY
MIKE WHITNEY
The Bush administration will be mailing out another batch of "stimulus" checks in the very near future. There's no way around it. The Fed is in a pickle and can't lower interest rates for fear that food and energy prices will shoot to stratosphere. At the same time, the economy is shrinking faster than anyone thought possible with no sign of a rebound. That leaves stimulus checks as the only way to "prime the pump" and keep consumer spending chugging along. Otherwise business activity will slow to a crawl and the economy will tank. There's no other choice.
The daily barrage of bad news is really starting to get on people's nerves. Most of the TV chatterboxes have already cut-out the cheery stock market predictions and no one is praising the "impressive powers of the free market" anymore. They know things are bad, real bad. A pervasive sense of gloom has crept into the television studios just like it has into the stock exchanges and the luxury penthouses on Manhattan's West End. That same sense of foreboding is creeping like a noxious cloud to every town and city across the country. Everyone is cutting back on non-essentials and trimming the fat from the family budget. The days of extravagant impulse-spending at the mall are over. So are the "big ticket" purchases and the "go-for-broke" trips to Europe. Consumer confidence is at historic lows, disposal income is a thing of the past, and all the credit cards are at their limit. The country is drowning in red ink.
Something has gone terribly wrong with the economy, but no one knows what it is? In the last three months bank credit has shrunk faster than any time since 1948. The banks aren't lending and people aren't borrowing; that's a lethal combo. When credit-creation slows, the economy falters, unemployment rises and the misery index soars. That's why Bush will have to mail out more stimulus checks whether he wants to or not; his back is against the wall. He'll try to make it look like the economy is still breathing on its own and just needs a spell on the respirator before resuming its normal activities. But Bush is wrong; we've reached Peak credit and the blood-transfusions won't work anymore. The vital signs have shut down and rigamortis is already setting in. Our goose is cooked.
MORE BANK RUNS
On Friday, after the market had closed, the FDIC shut down two more banks, First Heritage Bank and First National Bank. Two weeks earlier, regulators seized Indymac Bancorp following a run by depositors. The FDIC now operates like a stealth paramilitary unit, deploying its shock troops on the weekends to do their dirty work out of the public eye and at times when it will least effect the stock market. The reasons for this are obvious; there's only one thing the government hates more than seeing flag-draped coffins on the evening news, and that's seeing long lines of frantic soccer moms and blue-collar working guys waiting impatiently to get what's left of their savings out of their now-deceased bank. After all, flag-draped coffins merely indicate that we're losing a war, but lines at the bank prove that the system is broken. And the system is broken, that's why people are depressed and confidence is waning.
Banks-runs are a shock to the collective psyche; they demonstrate that the stewards of the system are incompetent and have made a mess of things. When depositors see a bank run they realize that their hard-earned money is not safe. That's why they get edgy and cut back on their spending. When their confidence wanes, it extends to the whole system. Suddenly they start questioning everything they once took for granted. They become skeptical of the institutions which, just days earlier, seemed rock-solid. That's why bankers surround themselves with marble columns, vaulted ceilings and lofty-sounding titles; to maintain the illusion of security while masking the truth, that fractional banking is the biggest scam in history. It relies on the "greater fools" theory which assumes that bankers can be trusted to only create credit when it is backed by sufficient capital. But it is not true. The banks have put us all at risk.
Bank runs are a direct hit on the foundation of the free market system. Unchecked, the tremors can ripple through the entire society and trigger violent political upheaval, even revolution. The public may not grasp their significance, but everyone in Washington is paying attention. They take it seriously, very seriously. It is a sign that the system is disintegrating and it may be irreversible.
SABER-RATTLING AT THE FDIC
An article in the San Francisco Business Times said that the FDIC is worried about the reporting on Internet blogs. They'd rather keep banking system's troubles out of the news. The publicity just further undermines the publics confidence and spreads fear. Sheila Bair, chairman of the Federal Deposit Insurance Corp., summed it up like this after the run on Indymac:
"The blogs were a bit out of control. We're very mindful of the media coverage and blogs in controlling misinformation. All I can say is were going to continue to stay on top of it. The misinformation that came out over the weekend fed a lot of depositors' fears."
Is that a threat? The cure for a failed banking system is adequate capital and prudent oversight not threats to critics of the system. That's balderdash. Commissar Blair apparently believes that bloggers should be treated the same way as journalists in Iraq, who, if they veer ever so slightly from the Pentagon's "the surge is a great triumph" script, find themselves on the smoky end of an M-16 at some unmarked checkpoint outside Baquba.
If Blair wants people to take her seriously, she should stop the paramilitary-type mothballing operations to shut down banks and tell the American people the truth about what is going on. The banking system is busted; Blair knows that as well as anyone. Now its time for someone to accept the mantle of leadership, step up to the microphone and tell the public what they really need to know:
"My fellow citizens, we are embroiled in the greatest financial crisis our nation has ever faced and we will have to take emergency action to keep the entire system from melting down."
How hard is that? But it won't happen, because everyone in the administration has an aversion to telling the truth; it's like the Devil and Holy Water. Besides, its easier to blame the bloggers, that harmless subspecies that spend long hours pecking away at their keyboards in their windowless 5' by 7' hovels.
Bloggers aren't the problem; the problem is a system that's collapsing from decades of abusive credit expansion creation and insufficient capital. Now everyone is going to pay for the excesses of the few.
As the bank-runs increase, the FDIC will be forced to admit the truth, that they don't have the resources to deal with a problem this big. Currently, the FDIC has only $53 billion in reserves to guarantee $4 trillion in total bank deposits. The entire system has a mere $267 billion cash in the vaults. What a shabby way to run a banking system. Where's the money going to come from when depositors start withdrawing their savings? How will the FDIC deal with the ongoing deleveraging in the market which is forcing more and more investors move into cash?
No one knows. All we get is more prevaricating; more smoke and mirrors, Bush assures us that "Our capital markets are functioning efficiently and effectively." Nonsense. The markets are cratering and the banks are toast. A blind man can see it. The FDIC is listing and Blair knows it. Bush needs to cut the gibberish and tell the American people the truth so they can prepare for the hard times ahead.
P.T. PAULSON: "The the banking system is sound... This is a very manageable situation."
Last Sunday, Treasury Secretary Henry Paulson tried to reassure the public that the banking system is sound, while bracing people for more trouble ahead:
"I think it's going to be months that we're working our way through this period — clearly months. But again, it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation."
Paulson is like a broken record. Everything is always hunky-dory. He is the consummate Wall Street investment sharpie; a bright guy who could charm a hungry dog off a meat-wagon. But when it comes to telling the truth; forget about it. You'd be better off listening to Bush, which isn't saying much. The banking system is not sound nor is it well capitalized. It is a corpse that's been propped up in the office hallway next to the water-cooler so that everyone who passes bye gets a stifling whiff of the decaying flesh. Still, the charade goes on. Still the lies persist.
If the rate of bank closures continues at the present pace, by the middle of 2009 there will be restrictions on withdrawals. Even now, if you go to your bank and try to withdraw $9,000 or $10,000, it sends waves of panic through the entire building like a 5-alarm fire that quickly engulfs the main exits. It's crazy. Tellers go scampering around helter-skelter, and bank managers suddenly appear at the window grimacing in pain and wringing the sweat from their brows.
"Did you say $10,000, sir?" which is usually followed by low moaning sounds and heavy wheezing.
Journalist Bill Sardi summed it up nicely in an article last week on lewrockwell.com titled "Could Your Bail Fail?":
"The banking industry is walking on pins and needles, hoping the bad news doesn’t become a self-fulfilling prophecy that drives bank depositors to demand withdrawal of funds en masse........ There is a high likelihood the American banking system will fail, and you will likely be the last to know. The more panicked you get, and withdraw funds, the worse the implosion. In an effort to avert runs on the banks, will the news media delay informing the public of the current dire situation, which appears to be an inevitable system-wide banking collapse?
What to do?
So, while your bank still has money and can process your checks, it may be time to pay down debts, pay quarterly taxes and mortgage payments in advance, and think of having money outside of banks (gold, foreign currencies), etc., before your money is inaccessible or even evaporates! Don’t think all your investments outside of banks are immune from all this turmoil. For example, money market mutual funds, where Americans have invested $3 trillion, are not covered by FDIC insurance (however, money market accounts offered by banks are covered). Recent losses in some of these money market mutual funds have caused some companies to rush to plug the losses. For example, Legg Mason Inc. and SunTrust Banks Inc., recently pumped $1.4 billion each into its money market funds. Bank of America Corp. has injected $600 million.
As for your checking and savings accounts, recognize you may have five different accounts in the same bank, but the FDIC only insures individuals, not each account, up to $100,000. Putting your money in different accounts in the same bank does not necessarily provide better insurance for your deposits. (Bill Sardi, "Could Your Bail Fail?", lewrockwell.com)
Good advice, but if the whole system blows; we're all in trouble. It's probably wise to have a back-up plan; like plenty of ammo and a couple hundred pounds of seed potatoes. It could get hairy.
FANNIE BAILOUT: "If they dumped these securities on the market today, their value would go straight to 0."
Most people are unaware of the fact that the new Fannie Mae and Freddie Mac bailout package that was passed into law on Saturday, provides Paulson with $300 billion of taxpayer dollars to shore up the faltering mortgage behemoths. In order to accomplish this, the congress increased the national debt by a whopping $800 billion sending it over the $10 trillion mark for the first time in history. Naturally the congress buried this little tidbit of information deep in the 600 pages of legislation. It's clear that the administration is lying about Fannie and Freddie. They'll need much more than the $25 billion infusion that Paulson is predicting. That's why the national debt is ballooning. This is the biggest boondoggle of all time and it's spearheaded by the "dueling windbags", Chris Dodd and Barney Frank; both Democrats. Dodd's lengthly oratory on the floor of the House on Friday nearly earned him a citation from the EPA for releasing massive levels of toxic gas into the jet-stream and accelerating the rate of global warming.
So it's not just the Fed and the Treasury that are ruining the system; the politicos are busy bankrupting the country, too. In fact, the Fannie bailout could quite possibly be the last straw.
It now looks like Obama has been anointed by Wall Street (who are his biggest contributors) to revive the Resolution Trust Corporation (RTC)--a morgue for dead banks---so that the investment giants can off-load hundreds of billions in bad paper in one fell swoop and purge the system. That will be the big "post election" surprise; another bone for investment giants.
The path ahead has never looked so uncertain. Still, neither Paulson nor Bernanke seem at all upset by the riskiness of their strategy or by the fact that the nation's economic future has been reduced to a crap-shoot. The Fed has already spent more than $300 billion to prop up the teetering banking system in the last year alone, plus another $29 (that was never approved by congress) to buy the toxic bonds from Bear Stearns in the JP Morgan acquisition. Now, the Treasury has been authorized by congress to buy an "unlimited amount" of Fannie and Freddie shares at their own discretion. They are presently exchanging Fannie and Freddie securities for US Treasury notes, which means that the dollar is now backed by dodgy mortgage-backed sludge for which there is no market. According to Rep Ron Paul, "This is the asset (MBS) which now backs up our currency. An asset that no one else wants. If they were to dump these securities on the market today, the value of these stocks would go straight to 0. But that is literally the asset that is behind our currency. It is a very serious situation."
None of congress's back-room maneuvering has anything to do with "providing a lifeline for the struggling homeowner", as Senator Dodd claims. That's all bunkum. The homeowner won't get a lick of help from this bill. Its just another handout for the brokerage fraternity. The country is putting its AAA credit rating on the line for same clatter of carpetbaggers who created the mammoth equity bubble in the first place. Now they are being rewarded for their criminal conduct. Also, Bloomberg News notes that, "Sensible people are starting to question whether the U.S. can hang on to its AAA credit rating. The prospect of an extra $5 trillion or thereabouts leaking onto the U.S. government's tab from Fannie Mae and Freddie Mac has spooked investors."
America's AAA rating will vanish in a year. It should be zero anyway. No one really believes the US will repay its debts. The US bond market is just a glitzy imitation of casino roulette only the odds are considerably worse.
Our political leaders have engineered this whole farce and are now speeding up the process by savaging the dollar. How long before foreign creditors see through this ruse and dump their dollar-backed assets on the open market? The hoax can't go on forever.
Of course, some market analysts think the banking system will make it through this rough patch, even though it is likely to take a real pasting. Economics guru, Gary North, for example, expects a slightly different outcome which he details in his latest article on Lew Rockwell's web site "Ben Bernanke's Hush Money":
"There is an enormous difference – a literally life-and-death difference – between individual bank failures and a systemic banking failure. I do NOT believe we are facing a systemic banking failure. But we are facing more individual bank failures...
Beginning in December 2007, the Federal Reserve System has sold Treasury debt whenever it has increased its purchase of questionable assets that it has bought from banks and large financial institutions. It has unloaded about 40% of its holdings of liquid Treasury debt. This has kept it from inflating the money supply at a dramatic rate. At some point, it will run out of Treasury debt to sell to the general public in order to offset the increase of its purchase of questionable assets held by the financial system. At that point, the great inflation will begin. This could be a year away. This could be a month away. All we know is this: when the Federal Reserve system runs out of Treasury debt to sell, its purchase of all assets will be inflationary. The banking system as a whole is protected. What is not protected is the purchasing power of the dollar." ("Ben Bernanke's Hush Money", Gary North, lewrockwell.com)
North makes a good point; when the Fed runs out of US Treasuries, they'll have to rev-up the printing presses and monetize the debt. That'll be doomsday for the dollar. When foreign central banks see the greenbacks a-gushing like the blood from a harpooned whale; they'll have to sell off their dollar stockpiles and take the loss. That will trigger a period of hyper-inflation in the US. Everyone will pay for the excesses of the few.
The whole system has been rejiggered to serve the needs of a few greedy bankers on top of the food chain. They could care less whether the whole country blows up or not as long as they get their slice of the pie. That's all that matters. Congress is just as bad. They abdicated their most important responsibility by giving Paulson the authority to take whatever money he needs to do whatever he wants. If that's their attitude, then what do we need congress for? Let's just board up the House of Representatives and send them all home. It would be a lot cheaper.
The truth is, the big money guys have taken a wrecking-ball to the financial system and have now moved on to the real economy. By the time their done, we'll all be picking through the wreckage just to feed our families.
2. RECORD-HIGH RATIO OF AMERICANS IN PRISON
(For First Time in US History, More Than 1 in Every 100 Americans Is Behind Bars)
BY
DAVID CRARY
For the first time in U.S. history, more than one of every 100 adults is in jail or prison, according to a new report documenting America's rank as the world's No. 1 incarcerator. It urges states to curtail corrections spending by placing fewer low-risk offenders behind bars.
Using state-by-state data, the report says 2,319,258 Americans were in jail or prison at the start of 2008 — one out of every 99.1 adults. Whether per capita or in raw numbers, it's more than any other nation.
The report, released Thursday by the Pew Center on the States, said the 50 states spent more than $49 billion on corrections last year, up from less than $11 billion 20 years earlier. The rate of increase for prison costs was six times greater than for higher education spending, the report said.
The steadily growing inmate population "is saddling cash-strapped states with soaring costs they can ill afford and failing to have a clear impact either on recidivism or overall crime," the report said.
Susan Urahn, managing director of the Pew Center on the States, said budget woes are pressuring many states to consider new, cost-saving corrections policies that might have been shunned in the recent past for fear of appearing soft on crime.
"We're seeing more and more states being creative because of tight budgets," she said in an interview. "They want to be tough on crime. They want to be a law-and-order state. But they also want to save money, and they want to be effective."
The report cited Kansas and Texas as states that have acted decisively to slow the growth of their inmate population. They are making greater use of community supervision for low-risk offenders and employing sanctions other than reimprisonment for offenders who commit technical violations of parole and probation rules.
"The new approach, born of bipartisan leadership, is allowing the two states to ensure they have enough prison beds for violent offenders while helping less dangerous lawbreakers become productive, taxpaying citizens," the report said.
While many state governments have shown bipartisan interest in curbing prison growth, there also are persistent calls to proceed cautiously.
"We need to be smarter," said David Muhlhausen, a criminal justice expert with the conservative Heritage Foundation. "We're not incarcerating all the people who commit serious crimes. But we're also probably incarcerating people who don't need to be."
According to the report, the inmate population increased last year in 36 states and the federal prison system.
The largest percentage increase — 12 percent — was in Kentucky, where Gov. Steve Beshear highlighted the cost of corrections in his budget speech last month. He noted that the state's crime rate had increased only about 3 percent in the past 30 years, while the state's inmate population has increased by 600 percent.
The report was compiled by the Pew Center's Public Safety Performance Project, which is working with 13 states on developing programs to divert offenders from prison without jeopardizing public safety.
"Getting tough on criminals has gotten tough on taxpayers," said the project's director, Adam Gelb.
According to the report, the average annual cost per prisoner was $23,876, with Rhode Island spending the most ($44,860) and Louisiana the least ($13,009). It said California — which faces a $16 billion budget shortfall — spent $8.8 billion on corrections last year, while Texas, which has slightly more inmates, was a distant second with spending of $3.3 billion.
On average, states spend 6.8 percent of their general fund dollars on corrections, the report said. Oregon had the highest spending rate, at 10.9 percent; Alabama the lowest at 2.6 percent.
Four states — Vermont, Michigan, Oregon and Connecticut — now spend more on corrections than they do on higher education, the report said.
"These sad facts reflect a very distorted set of national priorities," said Sen. Bernie Sanders, an independent from Vermont, referring to the full report. "Perhaps, if we adequately invested in our children and in education, kids who now grow up to be criminals could become productive workers and taxpayers."
The report said prison growth and higher incarceration rates do not reflect an increase in the nation's overall population. Instead, it said, more people are behind bars mainly because of tough sentencing measures, such as "three-strikes" laws, that result in longer prison stays.
"For some groups, the incarceration numbers are especially startling," the report said. "While one in 30 men between the ages of 20 and 34 is behind bars, for black males in that age group the figure is one in nine."
The racial disparity for women also is stark. One of every 355 white women aged 35 to 39 is behind bars, compared with one of every 100 black women in that age group.
The nationwide figures, as of Jan. 1, include 1,596,127 people in state and federal prisons and 723,131 in local jails. That's out of almost 230 million American adults.
The report said the United States incarcerates more people than any other nation, far ahead of more populous China with 1.5 million people behind bars. It said the U.S. also is the leader in inmates per capita (750 per 100,000 people), ahead of Russia (628 per 100,000) and other former Soviet bloc nations which round out the Top 10.
The U.S. also is among the world leaders in capital punishment. According to Amnesty International, its 53 executions in 2006 were exceeded only by China, Iran, Pakistan, Iraq and Sudan.
3. WALL COMES TUMBLING DOWN
(The inspiring breakout of Palestinians from their imprisonment in Gaza is a timely reminder that this is a people who cannot be caged or wished away)
BY
SEUMAS MILNE
Anyone with a sense of human solidarity must surely celebrate the demolition of the wall on the Gaza-Egyptian border on Wednesday and the mass exodus of hundreds of thousands of Palestinians starved of basic supplies of food, fuel and medicine by Israel's flagrantly illegal act of collective punishment. There was a further breakout today, when a bulldozer pulled down a new section of the barrier.
It has been first and foremost a human triumph. An occupied and imprisoned people has taken its fate into its own hands and broken a shameful blockade, enforced jointly by Israel and Egypt with the support of the Bush administration and the connivance of the US and Israeli-backed rump Palestinian authority in Ramallah.
But it is also a political defeat for the cruelly-enforced attempt to isolate and crush the elected Hamas leadership in Gaza. By tearing down the walls that held 1.5 million people in the world's largest open air prison, Gazans have broken the siege that had become the main weapon to bring the Palestinians to heel and impose a pliant leadership and an occupier's settlement.
Egyptian forces have been struggling to reseal the Rafah border crossing. It was closed last summer in agreement with Israel when Hamas took control of the Gaza strip (see the piece by Yaakov Katz, Khaled Abu Toameh and Herb Keinon in the Jerusalem Post of January 3 2008 on Israel's reaction to the recent more modest breach for Hajj pilgrims). Israel had meanwhile been sharply intensifying the squeeze on supplies through its own closed border crossings since it declared Gaza a "hostile territory" in September, with predictably grim consequences, as UN official Karen Koning AbuZayd spelled out in the Guardian on Wednesday.
But the point has now been clearly demonstrated that it can be re-opened at will. Hamas has been strengthened and the US-Israeli strategy of isolating the Palestinians' most recently elected leaders is in ruins. And the spectacle of Gazans holding candles in Israeli-enforced darkness this week - echoing Yasser Arafat's siege in Ramallah in 2002 - has returned the Palestinian cause to the centre stage of Arab politics.
There was some speculation today - for example, by the commentator Talal 'Awkal in the Palestinian daily al-Ayyam - that Israel appeared to be hoping for a reversion to Gaza's pre-67 status when it was controlled by Egypt, perhaps as a precursor to bringing the West Bank back into the Jordanian orbit. That followed the remarks by Israel's deputy defence minister Matan Vilnai on Thursday that the opening of the Rafah border could pave the way for Israel permanently to hand over all responsibility for supplying Gaza to Egypt.
Neither is a serious option. The Palestinian national genie cannot be put back in the bottle, despite current divisions. And Israel remains the fully responsible occupying power in Gaza, controlling its land access, sea and air space and conducting regular military operations in the territory at will.
Those "incursions" are supposedly carried out to end rocket attacks from Gaza into southern Israel. If so, they are hopelessly ineffective. Benjamin Pogrund asked this week: what can Israel do to stop the rockets, which spread fear and demoralisation in towns like Sderot, even if - unlike Israeli attacks on Gaza - they rarely kill? The obvious answer is to end its illegal occupation of the Palestinian territories and negotiate a just settlement for the refugees, ethnically cleansed nearly 60 years ago, (who, with their families, make up a majority of the Gaza Strip's population).
All the Palestinian factions, including Hamas, accept that as the basis for a permanent settlement or indefinite end of armed conflict. In the meantime, the Palestinians have the right to resist occupation, whether they choose to exercise it or not. The dominant Palestinian view - though not that of PA president Mahmoud Abbas - has long been that negotiation without some element of armed pressure is, as was once said in a rather different British context, to go naked into the conference chamber.
Even significant figures on the Israeli right - including Sharon's former security adviser Giora Eiland, former Mossad boss Efraim Halevi and ex-defence minister Shaul Mofaz – are coming to recognise that the refusal to talk or deal with Hamas is going nowhere. And the argument (made, for example, by senior British ministers) that talks with Hamas will have to wait until the organisation has been politically weakened looks increasingly threadbare.
The same goes for the PA leadership. Waiting for Hamas to go away won't work. Only negotiations without preconditions for Palestinian political reconciliation can both restore national dignity and allow the Palestinians out of the dead end they have been forced into by relentless Israeli and US pressure. The magnificent display of popular power this week has shown that there are other ways ahead.
4. IRAQ WAR 'CAUSED SLOWDOWN IN THE US'
BY
PETERWILSON
The Iraq war has cost the US 50-60 times more than the Bush administration predicted and was a central cause of the sub-prime banking crisis threatening the world economy, according to Nobel Prize-winning economist Joseph Stiglitz.
The former World Bank vice-president yesterday said the war had, so far, cost the US something like $US3trillion ($3.3 trillion) compared with the $US50-$US60-billion predicted in 2003.
Australia also faced a real bill much greater than the $2.2billion in military spending reported last week by Australian Defence Force chief Angus Houston, Professor Stiglitz said, pointing to higher oil prices and other indirect costs of the wars.
Professor Stiglitz told the Chatham House think tank in London that the Bush White House was currently estimating the cost of the war at about $US500 billion, but that figure massively understated things such as the medical and welfare costs of US military servicemen.
The war was now the second-most expensive in US history after World War II and the second-longest after Vietnam, he said.
The spending on Iraq was a hidden cause of the current credit crunch because the US central bank responded to the massive financial drain of the war by flooding the American economy with cheap credit.
"The regulators were looking the other way and money was being lent to anybody this side of a life-support system," he said.
That led to a housing bubble and a consumption boom, and the fallout was plunging the US economy into recession and saddling the next US president with the biggest budget deficit in history, he said.
Professor Stiglitz, an academic at the Columbia Business School and a former economic adviser to president Bill Clinton, said a further $US500 billion was going to be spent on the fighting in the next two years and that could have been used more effectively to improve the security and quality of life of Americans and the rest of the world.
The money being spent on the war each week would be enough to wipe out illiteracy around the world, he said.
Just a few days' funding would be enough to provide health insurance for US children who were not covered, he said.
The public had been encouraged by the White House to ignore the costs of the war because of the belief that the war would somehow pay for itself or be paid for by Iraqi oil or US allies.
"When the Bush administration went to war in Iraq it obviously didn't focus very much on the cost. Larry Lindsey, the chief economic adviser, said the cost was going to be between $US100billion and $US200 billion - and for that slight moment of quasi-honesty he was fired.
"(Then defence secretary Donald) Rumsfeld responded and said 'baloney', and the number the administration came up with was $US50 to $US60 billion. We have calculated that the cost was more like $US3 trillion.
"Three trillion is a very conservative number, the true costs are likely to be much larger than that."
Five years after the war, the US was still spending about $US50billion every three months on direct military costs, he said.
Professor Stiglitz and another Clinton administration economist, Linda Bilmes, have produced a book, The Three Trillion Dollar War, pulling together their research on the true cost of the war, which does not include the cost to Iraq.
One of the greatest discrepancies is that the official figures do not include the long-term healthcare and social benefits for injured servicemen, who are surviving previously fatal attacks because of improved body armour.
"The ratio of injuries to fatalities in a normal war is 2:1. In this war they admitted to 7:1 but a true number is (something) like 15:1."
Some 100,000 servicemen have been diagnosed with serious psychological problems and the soldiers doing the most tours of duty have not yet returned.
Professor Stiglitz attributed to the Iraq war $US5-$US10 of the almost $US80-a-barrel increase in oil prices since the start of the war, adding that it would have been reasonable to attribute more than $US35 of that rise to the war.
He said the British bill for its role in the war was about 20 times the pound stg. 1billion ($2.1 billion) that former prime minister Tony Blair estimated before the war.
The British Government was yesterday ordered to release details of its planning for the war, when the country's Information Commissioner backed a Freedom of Information request for the minutes of two cabinet meetings in the days before the war.
Commissioner Richard Thomas said that because of the importance of the decision to go to war, the public interest in disclosing the minutes outweighed the public interest in withholding the information.
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