QE Infinity: What Is It Really About?

Ellen Brown

QE3, the Federal Reserve’s third round of quantitative easing, is so open-ended that it is being called QE Infinity.  Doubts about its effectiveness are surfacing even on Wall Street.  The Financial Times reports:

Among the trading rooms and floors of Connecticut and Mayfair [in London], supposedly sophisticated money managers are raising big questions about QE3 — and whether, this time around, the Fed is not risking more than it can deliver.

Which raises the question, what is it intended to deliver?  As suggested in an earlier article here, QE3 is not likely to reduce unemployment, put money in the pockets of consumers, reflate the money supply, or significantly lower interest rates for homeowners, as alleged.  It will not achieve those things because it consists of no more than an asset swap on bank balance sheets.  It will not get dollars to businesses or consumers on Main Street.

So what is the real purpose of this exercise?  Catherine Austin Fitts recently posted a revealing article on that enigma.  She says the true goal of QE Infinity is to unwind the toxic mortgage debacle, in a way that won’t bankrupt pensioners or start another war:

The challenge for Ben Bernanke and the Fed governors since the 2008 bailouts has been how to deal with the backlog of fraud – not just fraudulent mortgages and fraudulent mortgage securities but the derivatives piled on top and the politics of who owns them, such as sovereign nations with nuclear arsenals, and how they feel about taking massive losses on AAA paper purchased in good faith.

On one hand, you could let them all default. The problem is the criminal liabilities would drive the global and national leadership into factionalism that could turn violent, not to mention what such defaults would do to liquidity in the financial system. Then there is the fact that a great deal of the fraudulent paper has been purchased by pension funds. So the mark down would hit the retirement savings of the people who have now also lost their homes or equity in their homes. The politics of this in an election year are terrifying for the Administration to contemplate.

How can the Fed make the investors whole without wreaking havoc on the economy?  Using its QE tool, it can quietly buy up toxic mortgage-backed securities (MBS) with money created on a computer screen.

Good for the Investors and Wall Street, But What about the Homeowners and Main Street?

 The investors will get their money back, the banks will reap their unearned profits, and Fannie and Freddie will get bailed out and wound down.  But what about the homeowners?  They too bought in good faith, and now they are either underwater or are losing or have lost their homes.  Will they too get a break?  Fitts says we’ll have to watch and see.  Perhaps there was a secret agreement to share in the spoils.  If so, we should see a wave of write-downs and write-offs aimed at relieving the beleaguered homeowners.

A nice idea, but somehow it seems unlikely.  The odds are that there was no secret deal.  The banks will make out like bandits as they have before.  The never-ending backdoor bailout will keep feeding their profit margins, and the banks will keep biting the hands of the taxpayers who feed them.

How can Wall Street be made to play well with others and share in their winnings?  In a July 2012 article in The New York Times titled “Wall Street Is Too Big to Regulate,” Gar Alperovitz observed:

With high-paid lobbyists contesting every proposed regulation, it is increasingly clear that big banks can never be effectively controlled as private businesses.  If an enterprise (or five of them) is so large and so concentrated that competition and regulation are impossible, the most market-friendly step is to nationalize its functions. . . .

Nationalization isn’t as difficult as it sounds.  We tend to forget that we did, in fact, nationalize General Motors in 2009; the government still owns a controlling share of its stock.  We also essentially nationalized the American International Group, one of the largest insurance companies in the world, and the government still owns roughly 60 percent of its stock.

Bailout or Receivership?

Nationalization also isn’t as radical as it sounds.  If nationalization is too loaded a word, try “bankruptcy and receivership.”  Bankruptcy, receivership and nationalization are what are SUPPOSED to happen when very large banks become insolvent; and if the toxic MBS had been allowed to default, some very large banks would have wound up insolvent.

Nationalization is one of three options the FDIC has when a bank fails.  The other two are closure and liquidation, or merger with a healthy bank.  Most failures are resolved using the merger option, but for very large banks, nationalization is sometimes considered the best choice for taxpayers.  The leading U.S. example was Continental Illinois, the seventh-largest bank in the country when it failed in 1984.  The FDIC wiped out existing shareholders, infused capital, took over bad assets, replaced senior management, and owned the bank for about a decade, running it as a commercial enterprise.  In 1994, it was sold to a bank that is now part of Bank of America.

Insolvent banks should be put through receivership and bankruptcy before the government takes them over.  That would mean making the creditors bear the losses, standing in line and taking whatever money was available, according to seniority.  But that would put the losses on the pension funds, the Chinese, and other investors who bought supposedly-triple-A securities in good faith—the result the Fed is evidently trying to avoid.

How to resolve this dilemma?  How about combining these two solutions?  The money supply is still SHORT by $3.9 trillion from where it was in 2008 before the banking crisis hit, so the Fed has plenty of room to expand the money supply.  (The shortfall is in the shadow banking system, which used to be reflected in M3, the part of the money supply the Fed no longer reports.  The shadow banking system is composed of non-bank financial institutions that do not accept deposits, including money market funds, repo markets, hedge funds, and structured investment vehicles.)

Rather than a never-ending windfall for the banks, however, these maneuvers need to be made contingent on some serious quid pro quo for the taxpayers.  If either the Fed or the banks won’t comply, Congress could nationalize either or both.  The Fed is composed of twelve branches, all of which are 100% owned by the banks in their districts; and its programs have consistently been designed to benefit the banks—particularly the large Wall Street banks—rather than Main Street.  The Federal Reserve Act that gives the Fed its powers is an act of Congress; and what Congress hath wrought, it can undo.

Only if the banking system is under the control of the people can it be expected to serve the people.  As Seumas Milne observed in a July 2012 article in the UK Guardian:

Only if the largest banks are broken up, the part-nationalised outfits turned into genuine public investment banks, and new socially owned and regional banks encouraged can finance be made to work for society, rather than the other way round.  Private sector banking has spectacularly failed – and we need a democratic public solution.

_______________________

Ellen Brown is an attorney and president of the Public Banking Institute.  In Web of Debt, her latest of eleven books, she shows how a private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites are http://WebofDebt.com, http://EllenBrown.com, andhttp://PublicBankingInstitute.org.

Tonge storms out of Lords after Israel rant refused

Jewish Chronicle
Jennifer Lipman

Baroness Jenny Tonge stormed out of the House of Lords during a recent debate on the reform of universal jurisdiction legislation.

The Lords were debating an amendment to the Police Reform and Social Responsibility Bill, during which three Liberal Democrat peers mounted an unsuccessful attempt to derail the measures. They proposed amending the bill to limit the discretion of the Director of Public Prosecutions.

Baroness Tonge, a prominent anti-Israel activist, accused those who supported the bill of destroying a safeguard against political interference by the Government. She denied that the current rules on magistrates issuing arrest warrants for foreign dignitaries, which prompted Israeli opposition leader Tzipi Livni to cancel a trip to Britain in 2009, had ever been abused in the past.

The Liberal Democrat peer then used the opportunity to complain about Ms Livni, at which point another of the party's peer, Lord Carlisle, noted: "What my noble friend is saying is out of order, inappropriate and not related to the amendment. She is having a rant at Mrs Livni."

His complaint was supported by Lord Wallace, who said he comments were ranging from the subject "much more widely than is normal".

Memphis City Public Schools Closed Indefinitely Due To Lack Of Funds

Rand Paul Reminds Homeland Security about the Embedded Constitutional Right to Travel

Obama offers Egypt $1B to continue selling under priced gas to Israel

Islamist



JERUSALEM — More than a month after saboteurs blew up an Egyptian pipeline supplying natural gas to Israel, the line is repaired but gas is not flowing and foreign shareholders of the company suspect politics to be the reason. They are threatening legal action against Egypt.

Explosion that damaged the gas pipeline in February

American and Thai shareholders in the pipeline have demanded urgent consultations to avoid resorting to binding arbitration based on trade treaties. One letter to Egyptian ministries from an American company with an Israeli chairman threatens a lawsuit of $8 billion.

In Israel, which depends on Egypt for 40 percent of its natural gas, the electric company has warned that customer rates could rise by 15 percent. Officials in the Israeli company that co-owns the gas line say the Egyptian government is afraid of popular opposition to Israel and the perception that Israel has had a sweetheart deal.

“The repair work was completed more than two weeks ago and we are waiting for the government to order the gas to start flowing, but so far the government is paralyzed,” Nimrod Novik, senior vice president of Merhav, the Israeli company, said in an interview. “Partly there is fear of more sabotage. There has been no decision not to supply gas, but nobody in the government wants to be responsible for a decision that is so unpopular in the street.”

The pipeline supplies not only Israel but also Jordan, Lebanon, Syria and some Egyptian companies. None have had their gas supply restored since the April 27 explosion, and Egypt is losing millions of dollars a day. The pipeline appears to have been sabotaged by Sinai Bedouin eager for a greater share of revenues from the pipeline rather than by known anti-Israel forces in Egypt.

Even so, it is the Israeli part of the equation that seems to be the main cause of the delay.

Since Hosni Mubarak was driven from the presidency in February, Egypt has been governed by an interim military council. Relations with Israel, unpopular but strongly upheld by Mr. Mubarak, have come under scrutiny. The new government has defied Israeli wishes by pushing for reconciliation between the two main Palestinian parties, Fatah and Hamas; reopening the border with Gaza; and announcing plans to exchange ambassadors with Iran.

The new government has promised to uphold existing treaties and commitments, and that includes the peace treaty with Israel.

But Egypt’s former energy minister and five ministry employees are in prison and accused of cheating the state of more than $700 million through the deal with Israel. A close associate of Mr. Mubarak’s, Hussein K. Salem, was a top shareholder in East Mediterranean Gas, or EMG, the company that owns the pipeline, until 2008.

The gas deal has been an integral part of the two countries’ relations and has been supported by Washington. President Obama recently offered Egypt $1 billion in loan guarantees and $1 billion in debt relief on the condition that it meets its commitments. The United States has told Egypt that its security obligations in the northern Sinai are among its commitments, an American official said.
Although gas supplies have been interrupted by two acts of sabotage in recent months, repairs were made quickly. But disputes among Egyptian government agencies — the Defense and Energy Ministries, the police and the army — over security arrangements have stopped the gas from flowing again promptly. In addition, the supply of gas to Israel has become highly politicized.

A former deputy chief of Egypt’s court of appeals, Judge Mahmoud al-Khodheiri, recently expressed a common sentiment about the gas deal in an interview with Al Jazeera. “I consider the export of gas to Israel an act of treason, and we should stop it,” he said. “I salute the people who bombed the gas pipe because this is my blood that is being transferred to the enemy.”

The American company threatening the $8 billion lawsuit is Ampal, whose chairman and chief executive officer is Yosef A. Maiman, also owner of the Israeli company Merhav, another partner in EMG. Another American company involved is EGI, controlled by Sam Zell, a Chicago-based businessman. The EGI letter that was sent to the Egyptian authorities accused them of “failing to provide EMG with full protection and security” for its investment and “refusing to resume delivery of gas to EMG.”

It asks for consultations and threatens to go to binding arbitration in Washington, which experts say could take up to six months.

On Monday, Prime Minister Benjamin Netanyahu of Israel told a parliamentary committee that Egypt was having trouble maintaining security and control in the Sinai and cited the gas explosions as an example.

Mr. Novik, the Israeli corporate official, said that the popular perception in Egypt that Israel had received cheap gas was wrong. He said the figure cited by the prosecution of $714 million that should have gone to Egypt from gas sales was an invention based on the false comparison between the price paid by Israel to Egypt and the price paid by Germany to Russia.

There is no international benchmark price of natural gas because its price depends largely on how the gas is transported and how far it travels. So while Germany pays $7 per million B.T.U.’s to Russia and Israel $3 to $4 per million B.T.U.’s to Egypt, Germany also pays $4 to $5 per unit in transport costs and fees along the way whereas Israel only pays $1. The net profit to Egypt from Israel’s payments is the same or better than that to Russia from Germany, he said.

But the transport and infrastructure costs have been lost in the public discussion in Egypt, he said, creating the impression that Israel has been getting a deal based on Mr. Mubarak’s desire to please Israel and the United States.

Income Inequality Ignorance

US justice goes commercial

With well over two million people in jail, the US has the highest prison population in the world. But some are seeing the inside of a cell because dodgy judges are getting kickbacks from the private sector.

­Two Pennsylvania judges have made a killing on juvenile prisons. Mark Ciavarella and Michael Conahan were convicted of receiving payoffs of more than two million dollars from the developers of several private detention centers.

According to parents, however, the real crime is that these judges sent more than 5,000 children to those very facilities for crimes as small as fighting on a school bus or posting a parody of their teacher on the web.

Sandy Fonzo’s 17-year-old son Edward was a promising student and sportsman when he was arrested at an underage party. Judge Ciavarella locked him up for six months. Shortly after he got out, Edward committed suicide.

“He never looked into the whole picture of the kids,” Sandy Fonzo explains. “He lined them up one by one and he sent them away, shackled them, sent them to places [where] god knows what went on, and then he throws them back. How does a kid deal with that? My son just never recovered from it.”

Ciavarella sent a 12-year-old boy to jail for two years for scratching his mom’s car while joy-riding. He also locked up a teenager for several months over throwing a piece of steak at his mother’s boyfriend.

“I could not believe that I could be sent away for something as stupid as throwing a steak,” the young man said later.

The case of the two Pennsylvania judges being in bed with local private prisons could be just the tip of the iceberg. A recent report revealed America’s largest prison corporations pour hundreds of thousands into the campaigns of governors, state legislators and judges in the hope of advancing their agenda. And it seems to be working.

The number of private prisons in the US is growing rapidly.

“All their money, every penny they get is tax payer dollars they get from the government,” an activist Paul Wright explains. “So, what they do is, they get the money from the government to house prisoners and they turn around and spend some of that money by giving it back to the politicians that pushed the laws and the policies that lead to both more people being incarcerated and more people being incarcerated in private prisons. So, it’s almost money laundering of tax dollars.”

And as the number of prisons increases, so to does the number of prisoners. The US has 2.3 million people behind bars, more than any other country in the world. China, which is four times more populous than the United States, is a distant second, with 1.6 million people in prison.

“You’ve seen prison populations pretty consistently, over the last three decades, move up a couple percent a year…and, unfortunately, as a citizen, that’s not the most exciting statistic. However, when you look at it from a business model perspective, for the private operators, it’s clearly good news”, T.C. Robillard, a managing director at Signal Hill investment banking firm, said in his CNBC interview.

The good news for the prison industrial complex turned into a nightmare for thousands of underage victims of the two judges in Pennsylvania.

“There is an incentive in private industry, obviously, to make money, that’s what private industry is for,” Barry Dyller explains. “So, there’s an incentive to have more prisoners and incentive to keep those prisoners incarcerated for longer periods of time. There’s really no incentive for rehabilitation, incentives are reversed.”

The so-called cash-for-kids case in Pennsylvania showed just how backwards the incentives can be, and raised the question: with judges interested in sending people away for longer terms and keeping their benefactors’ private prisons full, what justice can one count on?

There’s a Secret Patriot Act, Senator Says

Wired
Spencer Ackerman


You may think you understand how the Patriot Act allows the government to spy on its citizens. Sen. Ron Wyden (D-Oregon) says it’s worse than you’ve heard.

Congress is set to reauthorize three controversial provisions of the surveillance law as early as Thursday. But Wyden says that what Congress will renew is a mere fig leaf for a far broader legal interpretation of the Patriot Act that the government keeps to itself — entirely in secret. Worse, there are hints that the government uses this secret interpretation to gather what one Patriot-watcher calls a “dragnet” for massive amounts of information on private citizens; the government portrays its data-collection efforts much differently.

“We’re getting to a gap between what the public thinks the law says and what the American government secretly thinks the law says,” Wyden tells Danger Room in an interview in his Senate office. “When you’ve got that kind of a gap, you’re going to have a problem on your hands.”

What exactly does Wyden mean by that? As a member of the intelligence committee, he laments that he can’t precisely explain without disclosing classified information. But one component of the Patriot Act in particular gives him immense pause: the so-called “business-records provision,” which empowers the FBI to get businesses, medical offices, banks and other organizations to turn over any “tangible things” it deems relevant to a security investigation.

“It is fair to say that the business-records provision is a part of the Patriot Act that I am extremely interested in reforming,” Wyden says. “I know a fair amount about how it’s interpreted, and I am going to keep pushing, as I have, to get more information about how the Patriot Act is being interpreted declassified. I think the public has a right to public debate about it.”

That’s why Wyden and his colleague Sen. Mark Udall offered an amendment on Tuesday to the Patriot Act reauthorization.

The amendment, first reported by Marcy Wheeler, blasts the administration for “secretly reinterpret[ing] public laws and statutes.” It would compel the Attorney General to “publicly disclose the United States Government’s official interpretation of the USA Patriot Act.” And, intriguingly, it refers to “intelligence-collection authorities” embedded in the Patriot Act that the administration briefed the Senate about in February.


Wyden says he “can’t answer” any specific questions about how the government thinks it can use the Patriot Act. That would risk revealing classified information — something Wyden considers an abuse of government secrecy. He believes the techniques themselves should stay secret, but the rationale for using their legal use under Patriot ought to be disclosed.

“I draw a sharp line between the secret interpretation of the law, which I believe is a growing problem, and protecting operations and methods in the intelligence area, which have to be protected,” he says.
Surveillance under the business-records provisions has recently spiked. The Justice Department’s official disclosure on its use of the Patriot Act, delivered to Congress in April, reported that the government asked the Foreign Intelligence Surveillance Court for approval to collect business records 96 times in 2010 — up from just 21 requests the year before. The court didn’t reject a single request. But it “modified” those requests 43 times, indicating to some Patriot-watchers that a broadening of the provision is underway.

“The FISA Court is a pretty permissive body, so that suggests something novel or particularly aggressive, not just in volume, but in the nature of the request,” says Michelle Richardson, the ACLU’s resident Patriot Act lobbyist. “No one has tipped their hand on this in the slightest. But we’ve come to the conclusion that this is some kind of bulk collection. It wouldn’t be surprising to me if it’s some kind of internet or communication-records dragnet.” (Full disclosure: My fiancée works for the ACLU.)

The FBI deferred comment on any secret interpretation of the Patriot Act to the Justice Department. The Justice Department said it wouldn’t have any comment beyond a bit of March congressional testimony from its top national security official, Todd Hinnen, who presented the type of material collected as far more individualized and specific: “driver’s license records, hotel records, car-rental records, apartment-leasing records, credit card records, and the like.”

But that’s not what Udall sees. He warned in a Tuesday statement about the government’s “unfettered” access to bulk citizen data, like “a cellphone company’s phone records.” In a Senate floor speech on Tuesday, Udall urged Congress to restrict the Patriot Act’s business-records seizures to “terrorism investigations” — something the ostensible counterterrorism measure has never required in its nearly 10-year existence.

Indeed, Hinnen allowed himself an out in his March testimony, saying that the business-record provision “also” enabled “important and highly sensitive intelligence-collection operations” to take place. Wheeler speculates those operations include “using geolocation data from cellphones to collect information on the whereabouts of Americans” — something our sister blog Threat Level has reported on extensively.

It’s worth noting that Wyden is pushing a bill providing greater privacy protections for geolocation info.

For now, Wyden’s considering his options ahead of the Patriot Act vote on Thursday. He wants to compel as much disclosure as he can on the secret interpretation, arguing that a shadow broadening of the Patriot Act sets a dangerous precedent.
“I’m talking about instances where the government is relying on secret interpretations of what the law says without telling the public what those interpretations are,” Wyden says, “and the reliance on secret interpretations of the law is growing.”

Is Obama about to break the law?

Dana Bash

Washington (CNN) -- President Obama may be on the brink of breaking the law.

At issue: The 1973 War Powers Act, which says if the president does not get congressional authorization 60 days after military action, the mission must stop within 30 days.

The president formally notified Congress about the mission in Libya with a letter on March 21, which makes Friday the 60-day deadline.

Inaction is angering lawmakers from both the left and the right who rarely agree on anything.

Rep. Brad Sherman, D-California, tells CNN he believes Obama is trying to "bring democracy to Libya while shredding the Constitution of the United States."

"He cannot continue what he is doing in Libya without congressional authorization. When a president defiantly violates the law, that really undercuts our efforts to urge other countries to have the rule of law," Sherman said.

Sen. Rand Paul, R-Kentucky, concurs.

"You could say, 'Well, we have a good president, he'll do the right thing.' Well, someday you may have a president who does the wrong thing, and that's why you have rules, because you can never count on people being good people," Paul told CNN.

He called it "appalling" and a "terrible precedent" to engage in military action without the people's representatives -- Congress -- debating it.

To be sure, presidents in both parties often ignored another part of the War Powers Act -- that the commander-in-chief should get congressional approval before any military action.

Still, in recent years, President Bush did seek and receive congressional authority for Afghanistan and Iraq prior to launching those missions.

But it is virtually unprecedented for a president to continue a mission beyond 60 days without a resolution from Congress.

"Make no mistake: Obama is breaking new ground, moving decisively beyond his predecessors," Yale law professors Bruce Ackerman and Oona Hathaway wrote this week in the Washington Post.

The only thing that comes close is President Clinton's military effort in Kosovo.

He failed to get congressional approval before the 60-day deadline was up. His administration argued that Congress had effectively authorized the mission by approving money for it, and the Kosovo conflict lasted 78 days.

The Obama administration doesn't have that option with Libya, because the Pentagon is using existing money. Congress never specifically funded the mission.

Now, the administration is trying to figure out what to do.

"We are actively reviewing our role going forward. Throughout, the president has been mindful of the provisions of the War Powers Resolution," Deputy Secretary of State James Steinberg recently testified before Congress. "He has acted in a manner consistent with it. He will continue to do so."

The War Powers Resolution passed in 1973 because of concerns about excess executive power in Vietnam. Congress approved it over President Nixon's veto.

Angry lawmakers in both parties say part of the problem now is that their own congressional leaders are not raising a stink about Obama's failure to come to Congress about Libya.

"Very few people are talking about this; they're just letting the president do whatever he wants, and I think that's Congress abdicating the rule of law and abdicating constitutional restraints that he should obey," Paul said.

Paul and five of his GOP Senate colleagues are thinking about taking this to the Supreme Court, which has never formally ruled on the constitutionality of the War Powers Act.

A spokesman for Senate Majority Leader Harry Reid suggested no urgency to force the president to comply with the War Powers Act when it comes to Libya.

"The administration has done a good job of keeping Congress informed about operations in Libya. U.S. operations appear to be limited and intermittent, but we are examining whether further Senate action is needed," said Jon Summers, Reid's spokesman.

Rep. Brad Sherman, a Democrat, says congressional leaders in both parties are letting this go and shirking responsibility because they don't want to have to take a tough vote on whether to give the president authority for military action in Libya.

"Americans are not of one mind on this, and some of my colleagues would just assume not do their job because this is a difficult part of it," Sherman said.

Some constitutional and legal experts are watching the president's moves carefully, and are preparing to say R.I.P to the War Powers Act.

Ackerman and Hathaway wrote on the same in the Washington Post op-ed:

"If nothing happens, history will say that the War Powers Act was condemned a quiet death by a president who had solemnly pledged, on the campaign trail, to put an end to indiscriminate war making."

Lawmakers largely silent on war powers authority in Libya

The Hill



U.S. operations in Libya hit the 60-day mark Friday, but Congress has grown largely silent on the administration’s unilateral intervention into the war-torn North African nation.

The 1973 War Powers Act (WPA) — the statute President Obama invoked when he launched forces in March — requires presidents to secure congressional approval for military operations within 60 days, or withdraw forces within the next 30.

Congress did not authorize the mission — which includes a no-fly zone, bombing raids, a sea blockade and civilian-protection operations — but the deadline has stirred little sense of urgency on Capitol Hill.

House lawmakers are in the midst of a weeklong recess. And the Senate, which stuck around, is also unlikely to address the issue this week, according to Sen. Carl Levin (D-Mich.), the chairman of the Armed Services Committee.

There has been some congressional action, however.
On Thursday, six Senate Republicans wrote to Obama asking him if he intends to comply with the WPA.

“Friday is the final day of the statutory sixty-day period for you to terminate the use of the United States Armed Forces in Libya under the War Powers Resolution,” reads the letter, spearheaded by Sen. Rand Paul (R-Ky.). “As recently as last week your administration indicated use of the United States Armed Forces will continue indefinitely.”

Sens. Mike Lee (R-Utah), Jim DeMint (R-S.C.), Ron Johnson (R-Wis.), Tom Coburn (R-Okla.) and John Cornyn (R-Texas) also endorsed the letter.

The White House did not respond to requests for comment Thursday.

Rep. Dennis Kucinich (D-Ohio) is another vocal critic of the Libya intervention. He has vowed to introduce legislation Monday invoking the War Powers Act in an effort to pull U.S. forces from the conflict.

“At home, people are being told to sacrifice their own quality of life because our government does not have sufficient resources for healthcare, education, retirement security and job creation,” Kucinich said. “Yet at the same time we are setting the stage for endless war which will bring ruin and poverty.”
Sen. Dick Lugar (Ind.), senior Republican on the Foreign Relations Committee, warned earlier in the month, however, that such a resolution would likely be shot down in the Senate.

Others, including Levin, simply think that formal congressional authorization for the Libyan intervention is unnecessary. Still, he left open the possibility that the upper chamber could eventually act on a Libya resolution — if “a number of legal questions” are ironed out.

Breaching the 60-day deadline sets a bad precedent for administrations to come, according to critics on and off of Capitol Hill, who are calling on Congress to push back against the president’s war-waging powers.

Bruce Ackerman, professor of law and political science at Yale University, said the Libya war is “a classic case of what could go wrong with executive war-making.”

“My concern is not this relatively small war,” Ackerman said in a phone interview. “This is going to be a precedent for the next president.”

With longtime Libyan dictator Moammar Gadhafi threatening to attack those critical of his regime, international forces — led by the U.S. — launched air and missile strikes in March to establish a no-fly zone over the beleaguered North African nation. The U.S. ceded control of the operations to NATO a few days later.

At the time, several lawmakers expressed concern that the president had not consulted Congress before acting.

Obama on Thursday defended his decision, arguing that thousands of civilians would have been killed at the hands of Gadhafi.

“In Libya, we saw the prospect of imminent massacre; we had a mandate for action and heard the Libyan people’s call for help,” the president said in a speech at the State Department. “Had we not acted along with our NATO allies and regional coalition partners, thousands would have been killed.”
Deputy Secretary of State James Steinberg told the Senate Foreign Relations Committee on May 12 that the administration does want some form of congressional authorization. Steinberg described what the administration would seek as a “narrow set of authorities,” and promised to work with Congress on how those powers would be used.

Laena Fallon, spokesman for House Majority Leader Eric Cantor, said Thursday that the Virginia Republican is more concerned with “the lack of a defined mission and purpose” in Libya than he is with the president’s authority to extend the operations beyond the 90-day window without congressional authority.

Still, Fallon added, the House could “possibly consider this issue on the floor during the defense authorization debate next week.”

Yet Michael Steel, spokesman for Speaker John Boehner (R-Ohio), provided the more typical response from congressional leaders regarding Friday’s deadline. Asked if Boehner thinks the White House needs congressional approval to continue U.S. operations in Libya, Steel responded with one sentence.
“The House,” he said, “is not in session this week.”

Reports Of Mortgage Fraud Rose To Record Level Last Year

William Alden
Alden@huffingtonpost.com 

After the housing market crashed, reports of suspected mortgage fraud soared.




As lenders, homeowners and brokers rushed to close deals, the process during the boom years was tainted by fakery, according to reports later submitted to the Financial Crimes Enforcement Network, an agency of the Treasury Department. The number of reports of suspected mortgage fraud rose to its highest level on record last year, as 70,472 reports were submitted to the government agency, according to a new release from the LexisNexis Mortgage Asset Research Institute.


That's nearly double the number of cases reported in 2006 when the market was at its peak, and it's nearly 22 times the number of cases reported in 2000. From the LexisNexis release:

Fraudsters thrive on inadequacies within lengthy loan-related processes and a lack of consistency across organizations and/or industries that help them hide their true motives. Technology has enabled faster loan production through automation, ease of processing, and analytics. Industry professionals have keen knowledge of those processes, which makes it much easier to manipulate protocols in place to thwart adverse activities.

The number of verified cases of mortgage fraud declined from 2009 to 2010, but that's partially attributable to a decline in the number of new loans, the LexisNexis report says. Reports of suspected fraud increased nearly 5 percent during that period.

Homeowners and investors have filed numerous lawsuits against mortgage companies, claiming that crucial mortgage documents were misplaced or even forged. Some of these suits have been successful, bolstered by testimony from bank employees. In a widely cited example, an employee of the lender now owned by Bank of America testified in a New Jersey court in 2009 that her company regularly held onto mortgage notes even as the loans were sold to investors, contradicting what contracts usually require.

Without a note, a bank cannot prove it has a right to foreclose on a home; homeowners have used the absence of a note to contest foreclosures. Likewise, a missing note compromises the legal rights of an investor in a mortgage security, a situation that has prompted some investors to sue the banks that sold them the securities.

But it's not just the banks who have been accused of fraud. The Wall Street Journal describes a practice some brokers allegedly used, in which they would get artificially low valuations of distressed homes, and then help a buyer sell those homes for a profit.

Homeowners, too, have been accused of misstating their income on mortgage documents. One borrower is now serving a 21-month prison sentence for mortgage fraud, the New York Times reported.
The chiefs of the lenders that helped fuel this boom, meanwhile, have largely escaped punishment.

Examples of alleged fraud extend to the foreclosure process as well. When it came out last fall that employees at foreclosure processing companies would sign thousands of foreclosure documents daily without even reading them, some of the county's biggest lenders temporarily halted their foreclosures.

The nation's five biggest mortgage lenders -- Bank of America, Wells Fargo, Citigroup, JPMorgan Chase and Ally Financial -- have been accused of wrongfully foreclosing on homeowners and improperly handling mortgages. All 50 state attorneys general along with the Obama administration are working to reach a settlement deal. Fines could reach $30 billion, The Huffington Post reported.

Libya and the Imperial Re-Division of Africa The Imperialist Powers' Odyssey of “Return” into Africa

Global Research
Mahdi Darius

PART I

Plans to attack Libya have been longstanding. The imperial war machine of the United States, Britain, France, Italy, and their NATO allies is involved in a new military adventure that parallels the events that led to the wars against Yugoslavia and Iraq. The war machine has been mobilized under the cover of “humanitarian intervention.”

In fact what the Pentagon and NATO have done is breach international law by intervening on the side of one of the combating parties in Libya in a civil war that they themselves have encouraged and fuelled. They have not protected civilians, but have launched a war against the Libyan regime in Tripoli and actively assisted the Benghazi-based Transitional Council in fighting the Libyan military.

Before the rapprochement with Colonel Qaddafi, for years the U.S., Britain, France, and their allies worked to destabilize Libya. Confirmed by U.S. government sources, Washington attempted regime change in Tripoli several times.[1] According to General Wesley Clark, former NATO commander, the Pentagon had active plans for launching a war against Libya.

The U.S. and its NATO allies are now embroiled in a new war that has the patented characteristics of the wars and invasions of Iraq and the former Yugoslavia.

A large naval armada off the shores of Libya has been bombing Libya for weeks with the declared objective of ousting the Libyan regime. At the same time, Libyan internal divisions are being fueled.

Misinformation is systematically being spewed. Like Saddam Hussein before him, the U.S. and the E.U. have armed and helped Colonel Qaddafi. It is, therefore, important to hold the U.S. and the E.U. accountable for these weapon sales and the training of Libyan forces.

Also, like in Iraq, another Arab dictator was befriended by the U.S., only to be subsequently betrayed.

Prior to Iraq’s rapprochement with the U.S., at the outset of the Iraq-Iran War, Saddam Hussein was a Soviet ally and considered an enemy by Washington.

The case of Colonel Qaddafi is in many regards similar. Ironically, Qaddafi had warned Arab leaders in 2008 at a meeting in Damascus under the auspices of the Arab League about regime change. He pointed to the U.S. government’s “bad habit” of betraying its Arab dictator friends:

   Why won’t the [U.N.] Security Council investigate the hanging of Saddam Hussein? How could the leader of an Arab League state be hanged? I am not talking about Saddam Hussein’s policies or our [meaning the other Arab leaders] animosity towards him. We all had our disagreements with him. We all disagree with one another. Nothing unites us except this hall. Why is there not an investigation about Saddam Hussein’s execution?

   An entire Arab government is killed and hung on the gallows – Why?! In the future it is going to be your turns too! [The rest of the Arab officials gathered start laughing] Indeed!

   America fought alongside Saddam Hussein against Khomeini [in the Iraq-Iran War]. He was their friend. Cheney was a friend of Saddam Hussein. Rumsfeld, the [U.S.] defence secretary during the bombing of Iraq [in 2003], was a close friend of Saddam Hussein.

   At the end they sold him out. They hung him. Even you [the Arab leaders] who are the friends of America – no I will say we – we, the friends of America, America may approve of our hanging one day. [2]

At the end of the 1991 Gulf War, the U.S. deliberately encouraged open revolt against Saddam Hussein’s regime, but stood back and watched as Saddam Hussein put down the Iraqi revolts by force.

In 2011, they have done the same thing against Qaddafi and his regime in Libya. Not only was the revolt in Libya instigated by Washington and its allies, the rebels have been supplied with weapons and military advisers.

When the U.S. and its allies triggered the anti-Saddam revolts in Baghdad in the wake of the Gulf War, “no-fly zones” over Iraq were established by the U.S., Britain, and France under the pretext of protecting “the Iraqi people from Saddam.” For years Iraq was systematically attacked. The Iraqi Republic was bombed and its capabilities to defend itself were eroded.

Today, the U.S. and its allies have imposed a no-fly zone over Libya with the pretext of protecting “the Libyan people from Qaddafi.” If they wanted to protect the Libyan people from Qaddafi, why did they arm Qaddafi in the first place? Why did they enter into business transactions in the wake of the 2006 and 2008 anti-government riots in Libya? There is much more to this narrative, which is part of a broader march to war.

A New Imperial Re-Division of Africa: The London Conference

The London Conference on Libya reveals the true colours of the coalition formed against Libya. In a clear breach of international law, the U.S., Britain, France, Germany, and their allies are making decisions about the future of Libya ahead of any changes on the ground. [4] Democracy is a bottom-up process and Libyan governance is an internal matter to be decided upon by the Libyans themselves. These decisions can not be made by foreign powers that have been the staunch supporters of some of the worst dictatorships.

The nations gathered at the conference table in London have no right whatsoever to decide on whether Qaddafi must stay or go. This is a sovereignty right that only Libyans alone have. Their involvement in the civil war is a breach of international law, as is their siding with one of the camps in the civil war.

The London Conference on Libya can be likened to the Berlin Conference of 1884. Unlike 1884, this conference is aimed at dividing the spoils of war in Libya, instead of the direct carving up of an entire continent. Also, Washington, instead of staying away like in 1884, is the leading power in this new conference involving the affairs of the African continent.  

The position of the U.S. and its Western European allies is very clear:

   U.S. Secretary of State Hillary Rodham Clinton and British Foreign Secretary William Hague led the crisis talks in London between 40 countries and institutions, all seeking an endgame aimed at halting Gadhafi’s bloody onslaught against Libya’s people.

   Although the NATO-led airstrikes on Gadhafi’s forces that began March 19 aren’t aimed at toppling him, dozens of nations agreed in the talks that Libya’s future does not include the dictator at the helm.

   “Gadhafi has lost the legitimacy to lead, so we believe he must go. We’re working with the international community to try to achieve that outcome,” Clinton told reporters.

   As she spoke, U.S. officials announced that American ships and submarines in the Mediterranean had unleashed a barrage of cruise missiles at Libyan missile storage facilities in the Tripoli area late Monday and early Tuesday — the heaviest attack in days.

   German Foreign Minister Guido Westerwelle echoed Clinton’s point.

   “One thing is quite clear and has to be made very clear to Gadhafi: His time is over. He must go,” Westerwelle said. “We must destroy his illusion that there is a way back to business as usual if he manages to cling to power.” [4]

The London Conference on Libya, however, not only deals solely with Libya, but holds the blue prints to a new imperialist re-division of the entire Africa continent. Libya, which became a holdout when Qaddafi changed his mind, will be used to complete the “Union of the Mediterranean” and as a new bridgehead into Africa. This is the start of major steps that will be taken by the U.S. and the E.U. to purge the growing Chinese presence from Africa.

A New Imperial Re-Division of Africa: “Operation Odyssey Dawn”

The name “Operation Odyssey Dawn” is very revealing. It identifies the strategic intent and direction of the war against Libya.

The Odyssey is an ancient Greek epic by the poet Homer which recounts the voyage and trails of the hero Odysseus of Ithaca on his way home. The main theme here is the “return home.”

The U.S. and the imperialist powers are on their own odyssey of “return” into Africa.

This project is also intimately related to the broader military agenda in Southwest Asia and the drive into Eurasia, which ultimately targets Russia, China, and Central Asia.

Washington’s military agenda pertains  to the African and the Eurasian landmass, namely a supercontinent known as the “World-Island.” It is control of the World-Island that is the object of U.S. strategies.

The U.S. and NATO have triggered a civil war in Libya, as their pretext for longstanding plans of military aggression. A systematic media disinformation campaign, similar to the one used against Iraq from 1991 to 2003, has been launched.

In fact, the media has led the way for the war in Libya as it did in the former Yugoslavia, Afghanistan, and Iraq. The U.S. and its cohorts have also used the atmosphere of popular revolt in the Arab World as a cloud to insert and support their own agenda in the Libyan Arab Jamahiriya.

The Libyan Prize of the Mediterranean

There is an old Libyan proverb that says “if your pocket becomes empty, your faults will be many.” In this context, Libyan internal tensions are not dominated by breadbasket issues. This sets Libya apart from Arab countries like Tunisia, Egypt, Yemen, Morocco, and Jordan. [5] In Libya, the lack of freedom as well as rampant corruption has created opposition to the regime, which has been used by the U.S. and its allies as a pretext to justify foreign intervention.

Libya has come a long way since 1951 when it became an independent country. In 1975, the political scientist Henri Habib described these conditions:

   When Libya was granted its independence by the United Nations on December 24, 1951, it was described as one of the poorest and most backward nations of the world. The population at the time was not more than 1.5 million, was over 90% illiterate, and had no political experience or knowhow. There were no universities, and only a limited number of high schools which had been established seven years before independence. [6]

According to Habib the state of poverty in Libya was the result of the yoke of Ottoman domination followed by an era of European imperialism in Libya. [7] Habib explains: “Every effort was made to keep the Arab inhabitants [of Libya] in a servile position rendering them unable to make any progress for themselves or their nation.” [8]  He also explains:

   The climax of this oppression came during the Italian administration (1911 – 1943) when the Libyans were not only oppressed by the [foreign] authorities, but were also subjected to the loss and deprivation of their most fertile land which went to colonists brought in from Italy. The British and French who replaced the Italians in 1943 attempted to entrench themselves in [Libya] by various divisive ways, ultimately to fail through a combination of political events and circumstances beyond the control of any one nation. [9]

Despite political mismanagement and corruption, Libya’s oil reserves (discovered in 1959) were used to improve the standard of living for its population. Libya has the highest standards of living in Africa.

In addition to its energy reserves, the Libyan state played an important role. Libyan energy reserves were nationalized after the 1969 coup against the Libyan monarchy. It should be noted that these Libyan energy reserves are a source of wealth in Libya that if fully privatized would be a lucrative spoil of war.

To a certain extent, the isolation of Libya in the past as a pariah state has also played a role in insulating Libya. As most of the world has become globalized from an economic standpoint, Libyan integration into the global economy has in a sense been delayed.

Despite having vast sums of money stolen and squandered by Qaddafi’s family and their officials, social services and benefits, such as government housing, are also available in Libya. It has to be cautioned too that none of this means that neo-liberal restructuring and poverty are not afoot in Libya, because they very much are.

Until the conflict in 2011 ignited, there was a huge foreign work force in Libya. Thousands of foreign workers from every corner of the globe went to Libya for employment. This included nationals from Turkey, China, sub-Saharan Africa, Latin America, the European Union, Russia, Ukraine, and the Arab World.

Neo-Liberalism and the New Libya: Saif Al-Islam Qaddafi and Rapprochement

From 2001 to 2003, a process of rapprochement began between Libya and the U.S. and its E.U. partners. What changed? Colonel Qaddafi did not stop being a dictator or change his behaviour. Rapprochement brought an end to Tripoli’s defiance to its former colonial masters. Libya had bowed to U.S. and E.U. pressures and a modus vivandi came into effect.

Qaddafi’s credentials as a democrat or a dictator were never an issue. Nor was the use of brute force. Subservience was the real issue.

The force used against the riots in 2006 and 2008 did not even faze the E.U. and Washington, which continued their “business as usual” with Tripoli. Even U.S. government sources implied that economic interests should not be jeopardized by issues of international law or justice; for example, BP pressured the British government in 2007 to move forward with a prisoner exchange with Libya so that a Libyan oil contract could be protected. [10]

Almost overnight, Libya became a new business bonanza for U.S. and E.U. corporations, especially in the energy sectors. These lucrative contracts also included military contracts of the order of $482 million (U.S.) in military hardware, training, and software from E.U. members (including chemical and biological agents). [11]

Yet, two more things were demanded by Washington, namely the imposition of an imperial tribute as well as the the opening up of the Libyan military and intelligence apparatus to U.S. influence. As a result Libya ended all support for the Palestinians and handed the U.S. government its dossiers on resistance groups opposed to Washington, London, Tel Aviv and their allies. This turned Libya into a so-called “partner” in the “Global War on Terrorism.” Washington would get involved in all aspects of Libyan state security:

   Although U.S. sanctions on Libya were lifted in 2004 and terrorism-related restrictions on foreign assistance were rescinded in 2006, Congress acted to limit the Bush Administration’s ability to provide foreign assistance to Libya as a means of pressuring the Administration and the Libyan government to resolve outstanding terrorism claims. The Bush Administration’s October 2008 certification [...] ended standing restrictions on the provision of U.S. foreign assistance contained in appropriations legislation for FY2008 and FY2009. Assistance requests submitted by the Bush and Obama Administrations for FY2009 and FY2010 included funding for programs to reengage with Libyan security forces after “a 35-year break in contact” with their U.S. counterparts and to support Libyan efforts to improve security capabilities in areas of common concern, such as border control, counterterrorism, and export/import monitoring. [12]

Libya has also become active in global banking and finance. The U.S. Federal Reserve Bank of New York even made 73 loans to the Arab Banking Corporation (ABC), which is a bank mostly owned by the Central Bank of Libya, totalling an amount of $35 billion (U.S.). [13] According to Senator Bernard Sanders of Vermont in a complaint to U.S. Treasury Secretary Timothy Geithner and U.S. Federal Reserve Chairman Benjamin Bernanke, the mostly Libyan-owned bank received over $26 billion (U.S.) in near zero interest rate loans from the U.S. Federal Reserve that it has been lending back to the U.S. Treasury at a higher interest rate. [14] The Arab Banking Corporation is currently exempted from sanctions on Libya and may serve in creating a fiscal link between Wall Street and Benghazi.

Saif Al-Islam Qaddafi was vital in this process of opening up Libya to trade with Washington and the European Union. In 2000 Saif Al-Islam graduated from a university in Austria and became heavily tied to foreign associates who became his policy advisors and friends.

Prince Andrew of Britain reportedly became a close friend of Said Al-Islam: so close that Chris Bryant, a senior Labour Party politician, demanded in the British House of Commons that Prince Andrew be removed from his position as special trade envoy at the start of the conflict with Libya. [15]

Western advisors to Tripoli played an important role in shaping Libyan policy. A “New Libya” started to emerge under Saif Al-Islam, who pushed for the adoption of IMF-style neo-liberal economic reforms.

Starting in 2005-2006, significant social and income disparities started to emerge in Libya. The Libyan Revolutionary Committees Movement was in large part disbanded by Saif Al-Islam. Had the Committees Movement remained, they would most probably have sought to prevent the present conflict from escalating.

Moreover, Saif Al-Islam went to London and established ties in Britain with Noman Benotman, a former leader of the Libyan Islamic Fighting Group (LIFG). [16] He became friends with Benotman.

Supported by Saif Al-Islam, Benotman and Ali Al-Sallabi, a Libyan citizen based in Qatar (who was on Tripoli’s terrorist list), negotiated a truce between the Libyan Islamic Fighting Group and the Libyan government.

It is also worth noting that all the ministers and ambassadors who defected or left Libya were chosen by Saif Al-Islam.

As in the case of the former Yugoslavia in the 1990s, the neo-liberal reforms applied in Libya created social and income disparities which in turn contributed to political instability.



Rapprochement with Tripoli and Imperial Extortion

In late-2008, the U.S. government got Tripoli to pay what was tantamount to an “imperial tribute.” Libya capitulated and agreed to an uneven reparation agreement with Washington. The agreement is called the “Claims Settlement Agreement between the United States of America and the Great Socialist People’s Libyan Arab.” Under the agreement Libya would concede $1.3 billion U.S. dollars to Washington, while Washington would give the Libyans $300 million U.S. dollars. Article 4 of the agreement’s annex states:

   Once contributions to the Fund Account reach the amount of U.S. $1.8 billion (one billion eight hundred million U.S. dollars), the amount of U.S. $1.5 billion (one billion five hundred million U.S. dollars) shall be deposited into Account A [the U.S. account] and the amount of U.S. $300 million (three hundred million U.S. dollars) shall be deposited into Account B [Libya’s account], which in both cases shall constitute the receipt of resources under Article III (2) of the Agreement. [17]

Despite all this, Libya has remained a relatively wealthy country. In 2010, Tripoli even made an offer to buy a portion of British Petroleum (BP), one of the world’s largest corporations. [18] The National Oil Company of Libya also remains one of the largest oil companies in the world.

Even with the lucrative business deals that resulted from the rapprochement, the U.S. and the E.U. have always had an objective of furthering their gains and control. The E.U. powers and Washington merely waited for the right opportunity. Plans for taking over and controlling Libya and the Libyan energy sector were never abandoned. Nor could Washington and Western Europe accept anything less than a full-fledged puppet government in Libya.

Upheaval and Qaddafi’s Response

Even with the rapprochement with Tripoli, the U.S. and its E.U. partners continued to cultivated ties to so-called “opposition” figures and organizations with a view to implementing regime change at some future date. This is why the National Salvation Front of Libya has been mostly active in Washington. In the words of a timely Congressional Research Service (CRS) report (February 18, 2011):

   The National Conference for the Libyan Opposition (an umbrella organization of opposition groups headed by the National Libyan Salvation Front (NLSF) [. . .]) and Internet-based organizers called for a “day of rage” to take place on February 17. Similar events had been organized by anti-government groups in many other countries in the Middle East and North Africa over the previous month. On February 17, [2011] hundreds of protestors took to the streets in Benghazi and in other cities in its vicinity. [19]

Colonel Qaddafi has ruled Libya under a harsh dictatorship that has systematically used violence and fear. Yet, the level of violence that has put Libya in a state of upheaval has been distorted. [20] Many of the initial reports coming out of Libya in early-2011 were also unverified and in many cases misleading. These reports have to be studied very carefully. According to the same CRS report prepared for the U.S. Congress, initial reports all came from “local [Libyan] media accounts, amateur video footage and anecdotes, and reports from human rights organizations and opposition groups in exile.” [21]

Qaddafi’s objectives are to preserve his regime and not to undo it. After Qaddafi became aware of the growing foreign threat directed towards his regime, the use of force was on the whole restrained. The regime in Tripoli did not want to give further excuses to the U.S., the E.U., and NATO for military intervention in Libya.

Qaddafi had exercised restraint for the sake of preserving his dictatorship. The Libyan regime knew very well that a bloody civil war would be used as a justification for intervention under a humanitarian pretext. That is why Qaddafi opted to try to negotiate where he could instead of using force. The use of violence is not to the favour of the Libyan regime or Libya, but rather works in the favour of the U.S. and the E.U. states.

Mahdi Darius Nazemroaya specializes on the Middle East and Central Asia. He is a Research Associate of the Centre for Research on Globalization (CRG).

Food prices: World Bank warns millions face poverty

Robert Zoellick urges leaders 

not to ignore food inflation

BBC

The World Bank has warned that rising food prices, driven partly by rising fuel costs, are pushing millions of people into extreme poverty.

World food prices are 36% above levels of a year ago, driven by problems in the Middle East and North Africa, and remain volatile, the bank said.

That has pushed 44 million people into poverty since last June.

A further 10% rise would push 10m more below the extreme poverty line of $1.25 (76p) a day, the bank said.

And it warned that a 30% cost hike in the price of staples could lead to 34 million more poor.

'Protect the poor'
 
The World Bank estimates there are about 1.2 billion people living on less than $1.25 a day.
"More poor people are suffering and more people could become poor because of high and volatile food prices," said World Bank president Robert Zoellick.

"We have to put food first and protect the poor and vulnerable, who spend most of their money on food."

Food price changes Q1 2010 to Q1 2011
Source: World Bank Development Prospects Group
Maize	74%
Wheat	69%
Palm oil	55%
Soybeans	36%
Beef	30%
Rice	-2%

Mr Zoellick was speaking before IMF and World Bank spring meetings later this week.

The gatherings will be attended by finance ministers and central bankers including Chancellor of the Exchequer George Osborne, and Governor of the Bank of England, Mervyn King.

Nutrition
 
The World Bank says prices of basic commodities remain close to their 2008 peak, with the prices of wheat, maize and soya all rocketing.

The only exception is rice, which has fallen slightly in price in the past year.

The bank suggests a number of measures to help alleviate the impact of high food prices on the poor.
They include encouraging food-producing countries to ease export controls, and to divert production away from biofuels production when food prices exceed certain limits..

Other recommendations include targeting social assistance and nutritional programmes to the poorest, better weather forecasting, more investments in agriculture, the adoption of new technologies - such as rice fortification to make it more nutritious, and efforts to address climate change.

It also said financial measures were needed to prevent poor countries being subject to food price volatility.

America's Military Expansion Funded by Foreign Central Banks

Michael Hudson
Global Research

Large amounts of surplus dollars are pouring into the rest of the world.Central banks have recycled these dollar inflows towards the purchase of U.S. Treasury bonds, which serve to finance the federal U.S. budget deficit. Underlying this process is the military character of the U.S. payments deficit and the domestic federal budget deficit. Strange as it may seem and irrational as it would be in a more logical system of world diplomacy, the "dollar glut" is what finances America’s global military build-up. It forces foreign central banks to bear the costs of America’s expanding military empire: effective "taxation without representation".

Keeping international reserves in "dollars" means recycling their dollar inflows to buy U.S. Treasury bills, namely, U.S. government debt issued largely to finance the military.

To date, countries have been as powerless to defend themselves against the fact that this compulsory financing of U.S. military spending is built into the global financial system. Neoliberal economists applaud this as "equilibrium", as if it is part of economic nature and "free markets" rather than bare-knuckle diplomacy wielded with increasing aggressiveness by U.S. officials. The mass media chime in, pretending that recycling the dollar glut to finance U.S. military spending is showing their faith in U.S. economic strength by sending "their" dollars here to "invest". It is as if a choice is involved, not financial and diplomatic compulsion to choose merely between "Yes" (from China, reluctantly), "Yes, please" (from Japan and the European Union) and "Yes, thank you" (from Britain, Georgia and Australia).

It is not "foreign faith in the U.S. economy" that leads foreigners to "put their money here". This is a silly anthropomorphic picture of a more sinister dynamic. The "foreigners" in question are not consumers buying U.S. exports, nor are they private-sector "investors" buying U.S. stocks and bonds. The largest and most important foreign entities putting "their money" here are central banks, and it is not "their money" at all. They are sending back the dollars that foreign exporters and other recipients turn over to their central banks for domestic currency.

When the U.S. payments deficit pumps dollars into foreign economies, these banks are being given little option except to buy U.S. Treasury bills and bonds which the Treasury spends on financing an enormous, hostile military build-up to encircle the major dollar-recyclers: China, Japan and Arab OPEC oil producers. Yet these governments are forced to recycle dollar inflows in a way that funds U.S. military policies in which they have no say in formulating, and which threaten them more and more belligerently. That is why China and Russia took the lead in forming the Shanghai Cooperation Organization (SCO) a few years ago.

In Europe there is a clear awareness that the U.S. payments deficit is much larger than just the trade deficit. The deficit does not stem merely from consumers buying more imports than the United States exports as the financial sector de-industrializes its economy. U.S. imports are now plunging as the economy shrinks and consumers are finding themselves obliged to pay down the debts they have taken on.

Congress has told foreign investors in the largest dollar holder, China, not to buy anything except perhaps used-car dealerships and maybe more packaged mortgages and Fannie Mae stock. This is the equivalent of Japanese investors being steered into spending one billion dollars for the Rockefeller Center, on which they subsequently took a one hundred percent loss, and Saudi investment in Citigroup. That’s the kind of "international equilibrium" that U.S. officials love to see. "CNOOK go home" is the motto when it comes to serious attempts by foreign governments and their sovereign wealth funds (central bank departments trying to figure out what to do with their dollar glut) to make direct investments in American industry.

So we are left with the extent to which the U.S. payments deficit stems from military spending. The problem is not only the war in Iraq, now being extended to Afghanistan and Pakistan. It is the expensive build-up of U.S. military bases in Asian, European, post-Soviet and Third World countries. The Obama administration has promised to make the actual amount of this military spending more transparent. That presumably means publishing a revised set of balance of payments figures as well as domestic federal budget statistics.

The military overhead is much like a debt overhead, extracting revenue from the economy. In this case it is to pay the military-industrial complex, not merely Wall Street banks and other financial institutions. The domestic federal budget deficit does not stem only from "priming the pump" to give away enormous sums to create a new financial oligarchy; it contains an enormous and rapidly growing military component.

So Europeans and Asians see U.S. companies pumping more and more dollars into their economies, not only to buy their exports in excess of providing them with goods and services in return, and not only to buy their companies and "commanding heights" of privatized public enterprises without giving them reciprocal rights to buy important U.S. companies (remember the U.S. turn-down of China’s attempt to buy into the U.S. oil distribution business), and not only to buy foreign stocks, bonds and real estate. The U.S. media somehow neglects to mention that the U.S. Government is spending hundreds of billions of dollars abroad, not only in the Near East for direct combat, but to build enormous military bases to encircle the rest of the world, to install radar systems, guided missile systems and other forms of military coercion, including the "color revolutions" that have been funded and are still being funded all around the former Soviet Union. Pallets of shrink-wrapped hundred-dollar bills, adding up to tens of millions of dollars at a time, have become familiar "visuals" on some TV broadcasts, but the link is not made with U.S. military and diplomatic spending and foreign central-bank dollar holdings, which are reported simply as "wonderful faith in the U.S. economic recovery" and presumably the "monetary magic" being worked by Wall Street’s Tim Geithner at Treasury and "Helicopter Ben" Bernanke at the Federal Reserve.

Here’s the problem: the Coca-Cola Company recently tried to buy China’s largest fruit-juice producer and distributor. China already holds nearly two trillion dollars in U.S. securities, way more than it needs or can use, inasmuch as the United States government refuses to let it buy meaningful U.S. companies. If the U.S. buyout would have been permitted to go through, this would have confronted China with a dilemma:

Choice #1 would be to let the sale go through and accept payment in dollars, reinvesting them in what the U.S. Treasury tells it to do. With U.S. Treasury bonds yielding about one percent, China would take a capital loss on these when U.S. interest rates rise or when the dollar declines, as the United States alone is pursuing expansionary Keynesian policies in an attempt to enable the U.S. economy to carry its debt overhead.

Choice #2 is not to recycle the dollar inflows. This would lead the Renminbi to rise against the dollar, thereby eroding China’s export competitiveness in world markets.

So China chose a third way, which brought U.S. protests. It turned the sale of its tangible company for merely "paper" U.S. dollars, which went with the "choice" to fund further U.S. military encirclement of the SCO. The only people who seem not to be drawing this connection are the American mass media, and hence U.S. public opinion. I can assure you from personal experience, it is being drawn in Europe. (Here’s a good diplomatic question to discuss: Which will be the first European country besides Russia to join the SCO?)

Academic textbooks have nothing to say about how "equilibrium" in foreign capital movements, speculative as well as for direct investment, is infinite as far as the U.S. economy is concerned. The U.S. economy can create dollars freely, now that they no longer are convertible into gold or even into purchases of U.S. companies, inasmuch as America remains the world’s most protected economy. It alone is permitted to protect its agriculture by import quotas, having "grandfathered" these into world trade rules half a century ago. Congress refuses to let "sovereign wealth" funds invest in important U.S. sectors.

So we are confronted with the fact that the U.S. Treasury prefers foreign central banks to keep on funding its domestic budget deficit, which means financing the cost of America’s war in the Near East and encirclement of foreign countries with rings of military bases. The more "capital outflows" U.S. investors spend to buy up foreign economies’ most profitable sectors, where the new U.S. owners can extract the highest monopoly rents, the more funds end up in foreign central banks to support America’s global military build-up. No textbook on political theory or international relations has suggested axioms to explain how nations act in a way so adverse to their own political, military and economic interests. Yet this is just what has been happening for the past generation.

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