An empire in decline as the world turns upside down

Evidence is accumulating that we have reached a civilisational turning point. The aftermath of the global financial crisis is showing strong signs it was the inflection point where the decline of the West accelerated and the rise of the great, new, poor powers became nearer and more assured.

History is quickening.

When the crisis broke out in 2008, the world already had a two-speed economy - the rich countries of the West were out for a gentle stroll while the rising poor countries were at a sprint. But both parts of that trend have sharpened now the acute phase of the crisis has passed, and both look set to sharpen yet further in the years ahead.

In the current issue of Foreign Affairs, the Harvard historian Niall Ferguson points out a common element in the collapse of eight mighty empires. Those of Rome, imperial China, Bourbon France, Hapsburg Austria-Hungary, Ottoman Turkey, Romanov Russia, Britain and the Soviet Union, came to abrupt ends at least in part because of debt overload.

"All the above cases were marked by sharp imbalances between revenues and expenditures, as well as difficulties with financing public debt," he writes, before drawing the obvious conclusion for America.

"Alarm bells should therefore be ringing very loudly, indeed, as the US contemplates a deficit for 2009 of more than $1.4 trillion - about 11.2 per cent of GDP, the biggest deficit in 60 years - and another for 2010 that will not be much smaller. Public debt, meanwhile is set to more than double in the coming decade . . . interest payments on that debt are forecast to leap from 8 per cent of federal revenues to 17 per cent."

The Obama healthcare plan approved yesterday, by the way, is not expected to make this problem worse in the medium term. Despite hysterical scaremongering from opponents, the non-partisan Congressional Budget Office says it will actually have a helpful effect on the long-run US deficit.

While it creates some costs, it contains others, like Medicare. The Congressional Budget Office estimates the net effect will be to cut the deficit by $138 billion in the first 10 years and by $1.2 trillion over the second 10 years.

But while this helps at the margin, it does not solve the central problem. The US is at a tipping point where, without vigorous reform, its government debt and interest payments will continue to snowball. The other main powers of the Western bloc - Europe and Japan - have the same problem, only in a more virulent form.

The deputy managing director of the International Monetary Fund, John Lipsky, gave a deeply troubling speech at the weekend about the "deep scars" in government balance sheets in the rich countries. "We project that gross general government debt in the advanced economies will rise from an average of about 75 per cent of GDP at end-2007 to about 110 per cent of GDP at end-2014," he said.

And that is based on the happy assumption the temporary, crisis-related stimulus measures are all withdrawn in the next few years. Lipsky went on: "Indeed, we expect that all G7 countries except Canada and Germany will have debt-to-GDP ratios close to or exceeding 100 per cent by 2014."

That means the other five members of the G7 biggest developed economies - the US, Japan, Britain, France and Italy - will have government debt loads as big as their countries' entire national economies.

"Already in 2010, the average debt-to-GDP ratio in advanced economies is projected to reach the level prevailing in 1950, in the aftermath of World War II."

They were able to overcome their 1950 debt burdens pretty successfully. Can't they do it again? Lipsky makes this point: "This surge in government debt is occurring at a time when pressure from rising health and pension spending is building up."

The main powers of the West not only have huge and unsustainable debt burdens but their people have unrealistic expectations. The voters expect their living standards will only improve and their entitlements are secure.

There are ageing populations in the main powers of Europe and Japan, though not in the US.

This coming demographic tsunami is "not a transitory wave like the baby boom many affluent countries experienced in the 1950s or the baby bust they experienced in the 1930s," says the Centre for Strategic and International Studies in its 2008 report, The Greying of the Great Powers. "It is, instead, a fundamental shift with no parallel in the history of humanity."

The last time public debt burdens were this heavy, not a single country in the world had a median age higher than 36.

Today, half of western Europe has one over 40. This means bigger health and welfare costs with a smaller base of taxpaying workers to pay for them.

But still, this, the future of the West, is only half the story. What about the rising powers, China and India and Brazil in particular, but also potentially Indonesia? As Lipsky reported: "The average debt ratio in emerging economies is expected to decline next year, after rising in 2009 and 2010."

In the absence of serious reform, the West is looking at a long twilight of sclerotic growth, falling living standards and relative decline in global weight and power.

The rising powers - paradoxically becoming great powers as they remain home to most of the world's poor - are on a trajectory of fast growth, rising living standards and a preponderance of global power. Sooner than we thought.

Peter Hartcher is political editor.


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More on China's exchange rate

If Clinton Dines is right that a revaluation of the RMB will only benefit China, why is Beijing maintaining its undervalued exchange rate?


After all, as Clinton rightly points out, one obvious consequence of the current policy is that China has to effectively overpay both for imports and for purchases of foreign assets. Perhaps Beijing is just being dumb. Or perhaps there are some significant economic benefits arising from its current exchange rate policy. I know which of these my money is on.

Clinton also draws attention to the high level of foreign value added in China's exports to argue that a revaluation would actually increase China's export competitiveness. Well, no, it wouldn't. What it does mean is that the impact of any given revaluation will be muted.

For example, this study by the US CBO suggests that the average domestic value added of Chinese exports to the US is probably between 35% and 55%. That means a 20% revaluation of the RMB (roughly the mid-point of the estimates of current RMB undervaluation) would only cause the average price of US imports from China to rise by roughly 7%-11%, assuming that Chinese exporters fully passed through all their costs and previous profit rates.

Since in practice those exporters may well decide to reduce their margins to maintain market share, the increase in prices would probably be even lower, and the impact on trade flows even more subdued.
A couple of caveats. First, the studies cited by the CBO report are based on fairly old data, and it's quite possible that the domestic content of Chinese exports is now higher than these estimates suggest. Second, it's often argued that China's reluctance to revalue its exchange rate means that other Asian economies are also unwilling to allow their currencies to appreciate as much as they otherwise would. If that's right, then a RMB revaluation might also occur in conjunction with an appreciation in other regional currencies. This could increase the price of inputs to Chinese producers.

Photo by Flickr user jimmiehomeschoolmom, used under a Creative Commons license.

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RMB revaluation: Careful what you wish for

Clinton Dines is an Australian businessman who has lived and worked in China for 31 years, until recently for 21 years as BHP Billiton’s senior in-country executive.

I'm hearing some alarming noises coming out of the US on the topic of the RMB. This goes to some of the themes I alluded to in my Changing China lecture but needs some elaboration.

Consider this: if the Chinese currency was to appreciate rapidly and materially, China's ability to compete for resources, commodities, technology and in global mergers and acquisitions would be substantially enhanced. Everything they want to buy becomes relatively cheaper for them.

On the other side of this everything-they-buy-becomes-cheaper story is that a very high proportion of the goods that China exports are processed or assembled. In other words, much of what China exports has recently been imported (by some estimates, in excess of 50% by value). The imported components which go into Chinese exports will also become cheaper by virtue of a revaluation of the RMB, thus enhancing China's export competitiveness rather than diminishing it.

There is more to add to the fact base, but against this background alone, the Western world needs to be careful what it wishes for. An RMB appreciation could well make China more export competitive and enhance its capacity to compete for commodities and assets globally. Wouldn't that be a great strategic outcome!

The tone of the global conversation regarding the RMB seems to be devoid of discussion of these facts and has few connections with reality – it's almost delusional and totally for domestic political consumption — and could be quite dangerous as a result. Is it any wonder that the pragmatic Chinese are beginning to a little snitchy about being constantly nagged about the RMB on the basis of either a lack of comprehension of the facts or a deliberate misrepresentation of them?

Either way, it must be hard for the Chinese leadership to have much respect for their Western counterparts in this debate, which is precisely the position of weakness we don’t want to be in if we aspire to have any hope of influencing the outcome.

Photo by Flickr user andreasnilsson1976, used under a Creative Commons license.

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China, Pakistan's all-weather friend

Dipanjan Roy Chaudhury, Special Correspondent for India's Mail Today, is the author of two books on India's Northeast and Kazakhstan. 


China is Pakistan's all-weather friend. Despite mounting terror attacks and the presence of terror outfits in Pakistan, Beijing has immense faith in Islamabad's capabilities.

This was reiterated on 7 March by none other than Chinese Foreign Minister Yang Jiechi at a press conference in Beijing. 'China and Pakistan will continue to expand practical cooperation in various fields on the basis of equality and mutual benefit, and China will continue to support the stability, development and prosperity in Pakistan,' were Yang's exact words.

A closer look at Sino-Pak ties will underline that Yang's remarks are rooted in history. Beginning from their border settlement pact of 1963, China has emerged as Pakistan's single most trusted and enduring military ally.

China provided support in the construction of several crucial infrastructure projects including Karakoram Highway (pictured; the highest paved international road in the world, connecting China and Pakistan), ports such as Gwadar, and the nuclear programme. In 1986, Pakistan and China signed a civilian nuclear technology agreement. According to a 2001 US Department of Defence report, China has supplied Pakistan with nuclear materials and provided critical technical assistance in the construction of Pakistan's nuclear facilities.
Most importantly, China has lent muscle to Pakistan's military machine against India. In fact, the first formal step towards Sino-Pak defence cooperation was taken soon after 1965 Indo-Pakistan war. Pakistan's missile development programme was started in the 1980s with assistance from the Chinese.

Pakistan has benefited a great deal from Beijing's aid, which, unlike other aid providers, has come without strings. Their friendship probably reflects the commonly used refrain, 'my enemy's enemy is my friend' (South Asian giant India remains an adversary to both Beijing and Islamabad). So much so that on the eve of resumption of Indo-Pakistani talks in New Delhi on 25 February, Pakistani Foreign Minister Shah Mehmood Querishi said in Beijing that China has a 'blank cheque' from Pakistan for mediating between Pakistan and India.

But India, which has ruled out any third party mediation in Indo-Pak affairs, has been circumspect of Sino-Pak ties. Last year it lodged a strong protest with China over announcing support for hydro power projects in Pakistan-occupied Kashmir. Media reports suggest Beijing is not pursuing the projects.

Photo by Flickr user dreamX, used under a Creative Commons license.

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The political economy of pressuring China

I see I was not the only blogger to point out the Paul Krugman = neoconservative argument -- see Ryan Avent's recent posts over at Free Exchange, which also challenge Krugman on the question of whether an appreciating yuan would actually reduce macroeconomic imbalances.  It's safe to say that the neocon meme got Krugman and his supporters a wee bit snippy. 

Krugman has posted a more substantive reply, however, and Avent has responded as well.  They are debating across a number of issues:  1)  whether the Chinese government can truly control China's consumption rate; 2) whether a revaluation would in fact lead to an improvement in U.S. exports/macroeconomic imbalances; and 3)  The best way to get China to alter its status quo policies. 
On the first two questions, I find myself siding with Avent on the first point (it's going to take a looong time for China's consumption rate to increase) and with Krugman on the second point (revaluation would still make a difference).  Scott Summer, Michael Pettis, and Tom Oatley have all also posted thoughtful responses/critiques of Krugman that are worth checking out.  

I want to focus on the third question, however -- what's the best way to pressure China into altering its position?  Krugman's proposal in his op-ed was Nixon redux -- slap on a 25% import surcharge and let slip the dogs of a trade war.  It was the unilateralist (and violation-of-WTO-trade-rules) aspect of Krugman's proposal that sparked the neocon snark on my part.  In my opinion, the U.S. should not act in a unilateral manner on the currency issue when other countries are also seriously put out with China's behavior.  I'm not saying it should be off the table, either -- but it's a policy of last resort rather than first resort.  Coordinated action to isolate China -- through the G-8, G-20, and other international bodies -- seems like the next step, rather than slapping on an import surcharge. 
Krugman elaborates -- a bit -- here: 

Here’s how the initial phases of a confrontation would play out – this is actually Fred Bergsten’s scenario, and I think he’s right. First, the United States declares that China is a currency manipulator, and demands that China stop its massive intervention. If China refuses, the United States imposes a countervailing duty on Chinese exports, say 25 percent. The EU quickly follows suit, arguing that if it doesn’t, China’s surplus will be diverted to Europe. I don’t know what Japan does.
Suppose that China then digs in its heels, and refuses to budge. From the US-EU point of view, that’s OK! The problem is China’s surplus, not the value of the renminbi per se – and countervailing duties will do much of the job of eliminating that surplus, even if China refuses to move the exchange rate.
And precisely because the United States can get what it wants whatever China does, the odds are that China would soon give in.

Look, I know that many economists have a visceral dislike for this kind of confrontational policy. But you have to bear in mind that the really outlandish actor here is China: never before in history has a nation followed this drastic a mercantilist policy. And for those who counsel patience, arguing that China can eventually be brought around: the acute damage from China’s currency policy is happening now, while the world is still in a liquidity trap. Getting China to rethink that policy years from now, when (one can hope) advanced economies have returned to more or less full employment, is worth very little. (emphasis added) 

Look, Krugman is blogging here -- I'm sure that he's thought about the political economy dimension a bit more that a single post suggests.  That said, Krugman is talking exactly like the most neocon of neoconservatives was before Iraq.  He evinces complete disregard for existing multilateral structures, makes casual assumptions about how allies will line up behind the United States and adversaries will simply fold, and underappreciates the policy externalities that would take place if his idea was implemented. 

On the multilateralism point:  as Simon Lester points out, a countervailing duty applied against all of China's imports across the board because of currency manipulation would be a flagrant violation of WTO rules.  So, question to Krugman (and Bergsten):  are you prepared to jettison the WTO to alter China's behavior?  Because that's exactly the policy choice you're setting up in your proposal.

This leads to the next problem -- Krugman/Bergsten's assumptions about how other countries would react.  First of all, I'm not sure at all that China will roll over.  I agree with Krugman that China's compellence power over the United States is limited.  The thing is, America's compellence power over China is also limited. It's the larger economy and the deficit country, so it does have some leverage.  What Krugman is suggesting is a huge demand, however -- one that would have wrenching effects on China's domestic political economy.  Expectations of future conflict between the two countries are quite high, and have escalated in the past two months.  Chinese nationalism is pretty robust at the moment, and nationalists are willing to make economic sacrifices rather than suffer a perceived blow to their country's prestige.  This is not a good recipe for concessions, even if China is hurt more than the United States by a trade war. 

Because that's what would happen -- Beijing would immediately respond with its own retaliatory tariffs on U.S. imports.  They would likely harrass U.S. companies with significant amounts of FDI in China.  These moves would hurt China a little, but hurt the United States more.  Like Michael Pettis, I think the chance of a full-blown trade war at this point becomes pretty high. 

Krugman's assumption that Europe would automatically follow suit without prior consultation seems awfully casual.  As the New York Times reported today, there are a lot of European companies that are not thrilled with volatility in the value of the euro -- and what Krugman is proposing is guaranteed to increase volatility.  European authorities might  prioritize bolstering the EU's reputation as an actor that doesn't violate multilateral norms over the economic issues at stake (and if you think that materialist explanations always
trump arguments about political prestige, well, then, the euro should never have been created in the first place).  I'm not sure how keen the Europeans will be about the unilateral move Krugman is suggesting.  It's far from guaranteed that the EU would even be able to speak with a single voice on the issue. 

Krugman's ignorance about how Japan would react (to be fair, Japan is not the easiest read right now), and his omission to mention how the rest of the G-20 or ASEAN would respond, suggests that he really hasn't thought this all the way through.  I'd like to see some contingency planning in case the rest of the world doesn't line up the way he thinks. 

Finally, there's no discussion -- none -- about what the political and economic effects would be during the period of uncertainty and/or  if China decided they weren't going to acquiesce.  Let's keep this within the economic realm and consider the following question:  what's the effect of political uncertainty on investment behavior?  Consumption levels?  I would posit that it would increase risk-averse behavior -- particularly if this kind of trade war roiled financial markets.  Wouldn't this simply exacerbate the liquidity trap concerns that Krugman has been fretting about? 

Note that much of the last paragraph was framed in the form of questions.  I'm not sure my answers are correct -- but I'm really not sure that Krugman's assertions/assumptions are correct. 

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Smartening up military writing

James Brown is a Lowy Institute intern. He has worked as an ADF officer and completed his Masters in Strategic Studies in 2009. These are his personal views.
 

Military officers are easily typecast as unthinking and uncritical. In Australia we have done little to bust that stereotype, having few warrior-academics in the league of General David Petraeus. Serving military officers are notably absent from public discourse on defence and national security strategy.

But recent articles in the Australian Army Journal suggest that a quiet revolution in Australia's military thinking may be underway.

The Australian Army Journal itself has been something of a revolution for the ADF. Ten years ago Australia's professional military journal seemed like little more than a clearing house for articles begrudgingly written by senior officers as part of their checklist for promotion. Coinciding with both the appointment of Peter Leahy as Chief of Army and with the increase in operational tempo of the Australian Army, the Australian Army Journal was revived in 2003 with a mandate to develop professional military debate.

Writing in the most recent edition, Lieutenant Colonel Richard King looks at critical underlying factors in the way Army officers think, speak, and more importantly write. He concludes that problems in Army's thinking culture 'result in officers expressing forceful, persuasive, but dull opinions and ideas that are given greater credibility than they deserve'.
To prove his point, King uses the Flesch-Kincaid method of determining ease of reading and applies it to Army documents that explain the recent Adaptive Army initiative, which plans to make Australia's army 'the best small Army in the world', according to the current Chief of Army. The Flesch-Kincaid method analyses a document and provides a score that indicates ease of readability. Flesch-Kincaid also identifies how many years of education would be required to understand what is being read.

The Adaptive Army documents fail on both counts, requiring the reader to possess between 4 and 7 years of university education just to understand what they are reading. This is problematic for a document that aims to drive cultural change in an organisation with an average education level at the Year 10 mark. For anyone who has ever read current Australian military publications the news that they are dense and incomprehensible will come as no surprise.

It is promising that not only can King write an article titled 'How Stupid Are We?' without being lynched by his military peers, but that he is part of an internal Army project called 'Towards a Smarter Army'. The ADF's tempo of the past decade may be producing more officers who understand that broad thinking and simple communications are required to solve military problems. This can only help in improving Australia's military thinking for both our Defence Force and those who work with it.
Photo by Flickr user Mark78_xp, used under a Creative Commons license.

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When facts and propaganda collide - The BBC bends over backwards to accommodate Israeli claims

When a Thai kibbutz worker was killed in Israel by a rocket launched from Gaza last week, BBC News online gave the incident headline coverage flagged up on its home page. (BBC news online, 'Rocket fire from Gaza kills man in southern Israel', 23:42 GMT, Thursday, 18 March 2010 http://news.bbc.co.uk/1/hi/world/middle_east/8574138.stm)

By contrast, the killing of two Palestinian teenagers, Mohammad Qadus and Osaid Qadus, by Israeli soldiers on Saturday was buried at the end of a short news report on UN Secretary-General Ban Ki-Moon's Middle East visit. Even worse, the BBC's footnote simply echoed Israeli propaganda that "no live bullets were fired, only tear gas and rubber bullets", despite ample evidence to the contrary. (BBC news online, 'UN chief says Gaza suffering under Israeli blockade', 11:26 GMT, Sunday, 21 March 2010, http://news.bbc.co.uk/1/hi/world/middle_east/8578611.stm)

Yesterday morning, we joined with a number of media activists in sending complaints to the BBC. We emailed Middle East editor, Jeremy Bowen. We asked Bowen why BBC News so often channels the Israeli version of events without proper scrutiny. We pointed out that, in contrast to the BBC, other news media had given the tragic killings of Mohammad Qadus and Osaid Qadus significant prominence, while also providing strong evidence that directly contradicted Israeli claims. For example, the Palestinian Ma'an news agency reported that the Israeli human rights group B'Tselem had obtained an X-ray of Osaid Qadus's body that refuted the Israeli army's assertion that "no live bullets were fired". B'Tselem commented:

"Rubber-coated steel bullets will not enter and exit the body in that way. It's very clear these injuries would not have been caused by any kind of crowd-control measure. The army's explanation is simply impossible and not consistent with the evidence." (Ma'an news agency, 'Army explanation "simply impossible"', 22 March, 2010; http://www.maannews.net/eng/ ViewDetails.aspx?ID=270326)

Likewise, the Guardian challenged Israeli claims on the use of live ammunition, reporting that "a hospital x-ray of Osaid Qadus, seen by the Guardian, showed a bullet lodged in his brain." The Guardian added:

"Ahmed Hamad, a doctor at the hospital who treated the two, said the x-ray showed a 'classic, pure metallic bullet'. He said both boys had injuries with small entry wounds." (Rory McCarthy, 'Palestinians shot dead by Israeli troops near Nablus. Two teenagers killed day after boys, 15 and 17, shot in village', guardian.co.uk, Sunday 21 March 2010 14.22 GMT; http://www.guardian.co.uk/world/2010/mar/21/palestinians-shot-dead-isreal-nablus)

The Independent was also able to verify that a conventional bullet was "lodged in the brain of Osaid Qadus". (Donald Macintyre, 'Two more Palestinian youths shot dead by Israelis in bloody weekend. X-rays show deaths were caused by conventional bullets but military claim only rubber rounds were fired', Independent, 22 March 2010; http://www.independent.co.uk/news/world/middle-east/two-more-palestinian-youths-shot-dead-by-israelis-in-bloody-weekend-1925044.html)

We concluded our challenge to Bowen:

"Why, by contrast, has the BBC provided an echo chamber for Israeli propaganda on the army killings of these two Palestinian boys? Why were their deaths buried at the end of a report on Ban Ki-Moon's visit? Why not give headline coverage, as you did when rocket fire from Gaza killed a man in Israel?"

We have not yet received a response.

 Postscript: A Belated Note of Scepticism

Several hours after media activists emailed the BBC, an online news report finally appeared on the BBC website casting doubt on the official Israeli version of events. ('B'tselem says live bullets may have killed Palestinians', 18:42 GMT, March 22, 2010; http://news.bbc.co.uk/1/hi/world/middle_east/8580150.stm).

Perhaps the BBC would anyway have returned to the story, but we suspect that the complaints pricked consciences and at the very least helped accelerate the response (BBC personnel have admitted as much to us in the past). What, in any case, did the broadcaster now report?

The new BBC article stated that B'Tselem is "calling for an investigation into the deaths of two Palestinians it suspects were killed by live fire, contrary to military claims." The report then generously afforded Israel some wiggle room:

"On Saturday, the Israeli military said live fire had not been used.

"On Monday, spokeswoman Avital Liebowich told the BBC that had been the conclusion of an initial investigation, and maintained that the army 'did not give any orders to use live fire'.

"She said a 'debriefing' was taking place at brigade level regarding the incident."

The article was, as far as we could see, not flagged up from the BBC news home page - in stark contrast to last week's report of the kibbutz worker killed in Gaza.

This latest report also carefully stepped back from the BBC's initial echoing of Israeli propaganda on the deaths of two more Palestinian youths killed on Sunday; namely, that "the Israel army said soldiers shot dead two Palestinians who tried to stab a soldier at a checkpoint in the West Bank." (BBC news online, 'UN chief says Gaza suffering under Israeli blockade', 11:26 GMT, Sunday, 21 March 2010, http://news.bbc.co.uk/1/hi/world/middle_east/8578611.stm)

In the latest approved version, published yesterday evening, the BBC again worked hard to accommodate the shifting Israeli version of events:

"The military initially said the Palestinians had tried to stab a soldier. Later reports said they had attacked security forces with pitchforks and an axe.

"On Monday Ms Liebowich said the two Palestinians were carrying a container filled with rocks and a medical syringe, and possibly also pitchforks.

"'The soldiers understood they were about to get hurt and opened fire to save themselves,' she said.

"But a local Palestinians [sic] told the BBC the two men were arrested before they were killed, on the basis of a phone call a village elder says he received from the military saying they were being held, before later hearing that they had been shot dead."

It is clear that this is a real test for BBC News - while it much prefers to echo the Israeli perspective, the facts must somehow be accommodated.

Serious questions remain, then, about the BBC's professed commitment to fair and impartial reporting. Why did the broadcaster's initial reporting present the Israeli view at face value? Why was it so slow to present evidence to the contrary? And why does it continue to give so little prominence to the deaths of Palestinian youths at the hands of Israeli soldiers?

Suggested Action

The goal of Media Lens is to promote rationality, compassion and respect for others. If you do write to journalists, we strongly urge you to maintain a polite, non-aggressive and non-abusive tone.

Jeremy Bowen, BBC Middle East editor
Email: jeremy.bowen@bbc.co.uk

Steve Herrmann, BBC online news editor
Email: steve.herrmann@bbc.co.uk

Mark Thompson, BBC director general
Email: mark.thompson@bbc.co.uk

Helen Boaden, BBC news director
Email: helenboaden.complaints@bbc.co.uk

Please send a copy to the Chair of the BBC Trust which is responsible for ensuring that the BBC upholds its obligations to the public:
Michael Lyons
Email: michael.lyons@bbc.co.uk

Please also send a copy of your emails to us
Email: editor@medialens.org

The second Media Lens book, 'NEWSPEAK in the 21st Century' by David Edwards and David Cromwell, was published in 2009 by Pluto Press. John Pilger writes of the book:
"Not since Orwell and Chomsky has perceived reality been so skilfully revealed in the cause of truth."
http://www.medialens.org/bookshop/newspeak.php

Our earlier book, 'Guardians of Power: The Myth Of The Liberal Media' (Pluto Books, London), was published in 2006: http://www.medialens.org/bookshop/guardians_of_power.php

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America's "Houdini Recovery" under IMF-Type Austerity

America's "Houdini Recovery" under IMF-Type Austerity - by Stephen Lendman

It's what economist David Rosenberg calls recovery given plenty of supportive evidence, including:

-- over five million homeowners behind on their mortgage payments;

-- at record levels, foreclosures are alarmingly high; moreover, "the foreclosure pipeline is enormous;"

-- "housing, the quintessential leading indicator," turning lower again in starts, sales and prices;

-- instead of a normal 5 - 6 months home supply, the market has a 21 month overhang, including shadow inventory from the foreclosure pipeline;

-- mortgage applications for new home purchases down 13.9% on top of last year's 29.4%;

-- over six million Americans unemployed for at least six months, "a record 40% of the ranks of the joblessness;"

-- over 11 million full-time jobs lost since late 2007, and well over four and a half million since Obama took office, despite pledging to create them;

-- millions of jobs lost despite massive economic stimulus, and when it slows, watch out;

-- a federal deficit over 10% of GDP, twice the 1930s ratio;

--private capital growing at its slowest rate in nearly two decades;

-- 30% of manufacturing capacity idle;

-- 19 million vacant residential housing units - about 15% of the total;

-- one in six Americans unemployed or underemployed;

-- the adult male employment-to-population ratio at a record low 67% compared to 73% when the recession began;

-- at this stage of the economic cycle (two and a half years after Fed easing began), employment typically expands at least 150,000 per month; instead, it's still contracting, the level is 8.4 million lower than before the recession began, and the economy is 12 million jobs shy of full employment, a gap that will take years of sustainable growth to close;

-- commercial real estate values down 30% in the past year and falling;

-- the average American worker $100,000 poorer (including loss of home equity), even with the stock market rally;

-- bank credit contracting at an unprecedented 15% annual rate this year "as lenders sit on a record $1.3 trillion in cash;"

-- collapsed commercial and industrial loans;

-- Falling Gross Domestic Income, approaching an annualized minus 4% compared to the 1982 recessionary low of plus 4% and 2001 low of plus 2%; "the discrepancy between the income and spending accounts has never been so wide as" today; and

-- unit labor costs down 4.7% in the past year, meaning workers earn and spend less.

Conclusion - "the era of 'green shoots' is officially dead." Now you see them, now you don't because they never were there in the first place.

A recent issue of the Economist magazine asked "Why Is the recovery jobless? Maybe because it isn't a recovery," with no lack of supportive evidence. "In February, for the twenty-fifth time in 26 months, the American economy shed jobs," and beneath the surface it's much worse.

The official 9.7% headline number (so-called U-3; U-6, including discouraged workers, is 16.8%) obscures the true figure, what economist John Williams calculates at 21.6%, minus the manipulated deception. The Economist concludes that "the American economy simply hasn't been doing as well as the output figures have suggested."

Take GDP, for example. Rosenberg explains that Q 4's 5.9% growth "came in two non-recurring items - inventories and capital spending (the former a temporary alignment of stocks with sales and the latter a late-year rush to take advantage of some tax goodies)."

Those aside, the economy slowed to less than 1%, may be revised lower, and the two headline figures won't likely repeat, given a wealth of depressing data, including retail sales. The headline February 0.3% (0.8% minus autos) rise beat an expected 0.2% decline.

However, the raw data paints a different picture - minus 1.6% month-over-month in February (a month when rises usually occur) or four times as bad as the norm, and worst February in 12 years.

This (says Rosenberg) in spite of "the greatest stimulus experience in seven decades, and retail sales are still down 5% from the pre-recession peak and on a per capita basis 8%." They're lower than in January 2006 despite a 4.3% larger population, and adjusted for inflation, they're down to 1996 levels on a per capita basis.

Some recovery, and little wonder the latest Conference Board consumer confidence survey showed only 6.2% of the public thinks business conditions are good - a record low.

As a result, several presidential tracking polls have Obama at from 44 - 49%, down from 68% in January 2009, and for Congress it's worse at around about 30%. If conditions worsen, expect further erosion, and if an economic storm erupts, they may crash.

Money Creation Madness

Through September 2008, it took the Fed nearly 14 years to double bank reserves. Bernanke did it again in less than four months, swapping good assets for bad ones, bank held toxic junk, but only a small fraction of their total holdings, so the big ones remain insolvent.

Bailouts and massive borrowing are crowding out the private sector, making it hard to impossible for most businesses and consumers to borrow. In his March 15 commentary titled, "The Great Credit Squeeze," financial expert and investor safety advocate Martin Weiss explains the dangers:

-- total government borrowing (federal, state and local) at an annual pace of over $1 trillion; while

-- businesses reduced existing debts at a near $1.1 trillion annual rate; and

-- consumers virtually shut out entirely from credit markets "cut(ting) their existing mortgages at the annual rate of $365.1 billion and their consumer credit at the rate of $145.3 billion," totaling an annualized $510.4 billion cutback.

Confirming the ongoing record bank credit contraction, "credit (overall) is actually being sucked out of the consumer and corporate economy at a torrid pace." The real economy is starved because of massive government borrowing fueling a potential sovereign debt crisis like in Iceland, Greece, and Eastern Europe, and threatening Portugal, Ireland, Italy, Spain, the UK, and America.

Author Niall Ferguson sees three possible Greek outcomes, potentially affecting all heavily indebted countries:

-- "one of the most excruciating fiscal squeezes in modern European history;

--outright default; (or)

-- some kind of bailout," but he omitted the one chosen as a long-term fix - the imposition of IMF austerity, including deficit reduction through:

-- large government layoffs;

-- a public sector 10% wage cut, including a 30% reduction in salary entitlements;

-- a 20% cut in civil service bonuses;

-- freezing pensions;

-- a two-year increase in the average retirement age;

-- increasing the current 19% value added tax to 21%;

-- higher fuel, alcohol, tobacco, and luxury goods taxes; and it's only the beginning with more painful measures to come.

IMF chief economist Olivier Blanchard warns that high-debt countries like Greece face budget squeezes for a decade or two, requiring "painful sacrifices". Of concern is that spreading Greek troubles threaten a very dicey situation in Europe, America, and elsewhere - the reason David Rosenberg calls today's crisis:

"a depression because (post-WW II) recessions were merely small backward steps in an inventory cycle but in the context of expanding credit. Whereas now, we are in a prolonged period of credit contraction, especially as it relates to households and small businesses."

It's why financial expert Bob Chapman says America's financial system "is on the edge of default," and public anger is growing, a recent poll showing "92% of those surveyed wanted to unseat their current representative or Senator....and only 21% believe that government enjoyed the consent of the governed."

Given bipartisan criminality, a president beholden to power, a Congress long ago bought and paid for, and the notion of a government of, by and for the people ludicrous, but not funny given growing unaddressed human desperation - about to worsen when the full Obama package becomes law, including worsening a dysfunctional healthcare system, destroying public education, putting the Fed (Wall Street) in charge of financial reform and consumer protection, and imposing IMF-style austerity.

IMF Austerity Arriving in America

It's not coming. It's here, being incrementally rolled out, including painful structural adjustments - some legislated, others unavoidable like the possibility suggested in Jonathan Laing's March 15 Bloomberg.com article, titled "The $2 Trillion Hole" in public-employee retirement plans.

About 80% of them are defined benefit plans, meaning monthly payments are guaranteed, but can insolvent states and municipalities comply, especially given years of under-funding, fewer contributing workers at lower pay, and continuing large budget cuts, including mass layoffs and reduced benefits making a bad situation worse.

Enough for University of Chicago finance professor Robert Novy-Marx and Northwestern University's Joshua Rauh to estimate a $3 trillion + pension funding gap for states alone, and if economic conditions worsen, who knows how much higher, or if millions of retirees will, in fact, get promised benefits, despite guarantees and taxpayers hit for the shortfall.

Corporations renege on Defined Benefit Pension Plans (DBPP) by cutting benefits, switching to Defined Contribution Pension Plans (DCPP), or going bankrupt and eliminating them entirely with the help of obliging courts. So why not states and municipalities, especially given to how close to the edge they are, forcing once unthinkable actions with sweeping consequences.

What's happening regionally and locally arrived in America from reckless policies creating unsustainable rising debt levels - "debt peonage" for economist Michael Hudson that "can't be repaid." It's the core problem, and no evidence shows "countries simply grow out of their debts," according to University of Maryland Professor Carmen Reinhart and Harvard's Kenneth Rogoff, or borrow their way out for Michael Hudson. When the going gets tough, some default, others inflate, but most rely on spending cuts and higher taxes, making people pay for political indiscretions - make that crimes.

Washington may impose higher taxes and devalue the dollar, but mostly expect benefit cuts, the idea being to end core ones including Medicare, Social Security, eventually Medicaid, plus others millions rely on but won't get if tough measures are enacted. Expect them. Some are here. Others are coming through the same structural adjustments imposed on developing countries and just as painful and destructive.

Definitions

One calls structural adjustment programs (SAPs) "a series of economic policies designed to reduce the role of government," replacing its obligations with market incentives - in other words, privatize.

BusinessDictionary.com calls it "change effected in the basic framework of an economy by the impact of policy reforms, such as 'liberalization' of the economy by reducing protectionism and state intervention" - in other words, what government does, business does better so let it.

It's pure Chicago School fundamentalism, Milton Friedman (1912 - 2006) its leading advocate for public wealth in private hands, unrestrained accumulation of profits, abolition of corporate taxes, and social services curtailed or ended. He called economic freedom an end to itself; opposed minimum wages, unions and an egalitarian society; supported a flat tax for the rich; wanted Social Security and Medicare abolished; believed private schools should replace public ones; wanted everyone to be on their own "free to choose;" and called profit-making the essence of democracy - a dark world view harmful to the majority and devastating to the poor and disadvantaged, characterized by SAP harshness.

They benefit capital, not people, and the more severe, the greater the harm. They're a package of wage and benefit cuts, mass layoffs, privatization of government services, deregulation, de-unionization, currency devaluation, free capital flows, market-based pricing, free (not fair) trade, environmental harm, and at least one other few know about.

A provision in the 2008 Farm Bill lets Washington withhold up to 15% of Social Security and disability benefits from anyone with outstanding government debts, no matter how old. It applies to farm and small business loans, unpaid or disputed taxes, health care amounts veterans owe, and other government debt, potentially affecting millions late in life when they can least afford it.

Overall, the effects are devastating, including growing poverty, inequality, the destruction of the middle class and unions, hunger, homelessless, environmental harm, and police state measures to quell dissent - the essence of tyranny showing up in America and arriving at a fast clip.

Barack Obama - Neoliberal Neocon

As a candidate, he promised change, a new course, sweeping government reforms, addressing people needs, and "ensur(ing) that the hopes and concerns of average Americans speak louder in Washington than the hallway whispers of high-priced lobbyists...."

As president, he's for business as usual, not the public. Besides unbridled militarism, imperial wars, handouts to the rich, shocking lawlessness, embracing torture, political persecutions, illegal spying, and police state rule, he ignores growing poverty, joblessness, homelessness, human despair, and budget-strapped states in favor of a discretionary spending freeze from 2011 through 2013, amounting to one-sixth of the budget. Defense, national security, and business needs remain unconstrained.

That was his State of the Union message, followed up by Executive Order (EO) 13531 on February 18 titled, "National Commission on Fiscal Responsibility and Reform." In other words, soak the poor. Enrich the wealthy, the way it always works, mostly in recent decades, especially since 2000, and more than ever under Obama - central casting's poster child for power.

His EO charges the Commission with "improv(ing) fiscal sustainability over the long run (and) balanc(ing) the budget" by 2015, - impossible given trillion dollar + annual deficits as far as the eye can see. Its real aim is to dehumanize America, strip off its democratic veneer, and transform it full-blown into Guatemala, Honduras, or occupied Iraq, Afghanistan, or Palestine through imposed austerity enforced by militarized repression.

As for "fiscal responsibility," financial writer Ellen Brown calls it fear-mongering code language for:

"delivering public monies into private hands and raising taxes on the already-squeezed middle class," not a measure "to save the country from bankruptcy."

She quoted Professor Carroll Quigley from his 1966-published "Tragedy and Hope: A History of the World in Our Time," saying:

Financial capitalism's "far-reaching aim (is) to create a world system of financial control in private hands able to dominate the political system of each country and (world) economy....This system (aims for control) in a feudalist fashion by (world) central banks....acting in concert, by secret agreements arrived at in frequent private meetings and conferences."

He was prescient, former high-level government and business insider, Catherine Austin Fitts revealing "a financial coup d'etat," including engineering a "fraudulent housing and debt bubble, illegally shift(ing) vast amounts of capital" offshore, and "us(ing) privatization as a form of piracy - a pretext to move government assets to private investors at below-market prices and then shift private liabilities back to government at no cost to the private liability holder."

It's a government-business cabal to suck wealth from the many to the few, and from the wreckage propose reform, meaning sweeping austerity and greater than ever top down control, in America and globally - a cynical scheme using populist rhetoric and "slow burn" tactics for what Michael Parenti described in his 2002 "Global Rollback" article, saying:

"Throughout history (ruling classes most of all have wanted) all the choice lands, forests, game, herds, harvests, mineral deposits and precious metals of the earth; all the wealth, riches, and profitable returns; all the productive facilities; all the gainful inventiveness, and technologies; all the surplus value produced by human labor; all the control positions of the state and other major institutions; all public supports and subsidies, privileges and immunities; all the protections of the law with none of the constraints; all the services, comforts, luxuries, and advantages of civil society with none of the taxes and costs. Every ruling class has wanted only this: all the rewards and none of the burdens."

As their faithful servants, Barack Obama, Congress, and the courts are delivering the whole package, or, in other words, poverty for the many and unlimited wealth and privilege for the power elite. When will enough concerned people act in their own self interest to stop them?

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Venezuela in Washington's Crosshairs

Venezuela in Washington's Crosshairs - by Stephen Lendman

Washington fears Hugo Chavez for good reason. His "good example" threat raises concerns that other regional leaders may follow. As a result, throughout his tenure, he's been targeted and vilified - to discredit, weaken and undermine his government to destroy Bolivarian benefits millions of Venezuelans now enjoy, won't easily give up, nor should they.

Several failed coup attempts included:

-- April 2002 for two days, an effort aborted by mass street protests and support from many in Venezuela's military, especially from the middle-ranking officer corp;

-- the 2002 - 2003 general strike and oil management lockout, causing severe economic disruption and billions of dollars in losses; and

-- the August 2004 national recall referendum that Chavez won overwhelmingly with a 59% majority.

Thereafter, disruptions regularly followed to help domestic and US oligarchs regain what they lost, so far without success, but they persist, with supportive editorial, op-ed, and on-the-ground reporting. Also from an Organization of American States (OAS) report, the Vision of Humanity's annual Global Peace Index (GPI), US State Department, and Pentagon.

On March 19, Reuters reported that, in testimony before the House Armed Services Committee, General Douglas Fraser, USSOUTHCOM (US Southern Command) head, claimed Chavez backs Colombian leftists, saying:

His government "continue(s) to have a very anti-US stance and look(s) to try and restrict US activity wherever they have the opportunity to do that. (It's) continuing to engage with the region....and continuing to pursue (its) socialism agenda. (It) remain(s) a destabilizing force in the region."

He said Venezuela continues to support FARC-EP rebels, providing "financial logistical support" and a safe haven based on evidence found on a laptop seized in a 2008 Ecuadorean guerrilla camp raid - information later proved bogus.

Yet a week earlier, before the Senate Armed Services Committee, Fraser testified otherwise, saying:

"We have not seen any connections specifically that I can verify that there has been a direct government-to-terrorist connection" between Chavez and either the FARC-EP or the Basque separatist group ETA. "We have continued to watch very closely for any connections between illicit and terrorist organization activity within the region. We are concerned about it. I'm skeptical. I continue to watch for it," but as yet haven't found it.

During her March 1 - 5 Latin American tour, Secretary of State Hillary Clinton gratuitously insulted Chavez. So did Assistant Secretary of State for Western Hemisphere Affairs, Arturo Valenzuela, in Senate testimony, accusing him of FARC-EP ties - suggesting much more to come to boost opposition candidates in September parliamentary elections.

US State Department 2009 Human Rights Report: Venezuela

Released on March 11, it followed earlier ones, bogusly accusing Chavez of:

-- harassing and intimidating political opponents;

-- targeting the media; and

-- numerous human rights violations, including:

-- "unlawful killings;

-- summary executions of criminal suspects;

-- widespread criminal kidnappings for ransom;

-- prison uprisings resulting from harsh prison conditions;

-- arbitrary arrests and detentions;

-- corruption and impunity in police forces;

-- a corrupt, inefficient, and politicized judicial system characterized by trial delays and violations of due process;

-- (targeting) political opponents and selective prosecution(s) for political purposes;

-- infringement of citizens' privacy rights by security forces;

-- government closure of radio and television stations and threats to close others;

-- government attacks on public demonstrations;

-- systematic discrimination based on political grounds;

-- considerable corruption at all levels of government;

-- threats and attacks against domestic NGOs;

-- violence against women;

-- inadequate juvenile detention centers;

-- trafficking in persons; and

-- restrictions on workers' right of association."

Other charges have included drugs trafficking and ties to bogusly designated "foreign terror organizations" like the FARC-EP and ETA.

These sham charges and similar ones repeat regularly to discredit and undermine Chavez. Ironically, they're more descriptive of American domestic and foreign policies - ones that defy US and international laws with regard to human and civil rights, equal justice, war, occupation, domestic tranquility, and the Constitution's Article I, Section 8 for the Congress to "provide (for) the general welfare of the United States," the so-called welfare clause applying also to the Executive and judiciary.

In contrast, Chavez promotes world solidarity, democratic freedoms, human and civil rights, judicial fairness, fair and open elections, and a free and open media. He doesn't invade other countries, has no secret prisons, doesn't practice torture, or conduct fraudulent elections. As a result, he inspires millions worldwide, and has widespread domestic majority support. Yet bogus State Department charges persist.

Ones as well from a recent OAS report titled, "Democracy and Human Rights in Venezuela," produced under the mandate of the Washington-based Inter-American Commission on Human Rights (IACHR).

Among others, its bogus accusations include:

-- restricting human rights "enshrined in the American Convention on Human Rights;"

-- no independent separation among government branches;

-- state punitive power to "intimidate or punish people on account of their political opinions;"

-- denying journalists the right to report freely;

-- "a pattern of impunity in cases of violence," especially against "media workers, human rights defenders, trade unionists, participants in public demonstrations, people held in custody, campesinos (small-scale and subsistence farmers), indigenous peoples, and women;"

-- restricted opportunities for opposing political candidates to secure "access to power;"

-- disempowering opposition politicians through legal and other means;

-- intimidating and punishing dissent against official policy through harassment, violence, and criminal proceedings;

-- targeting peaceful opposition demonstrations;

-- the absence of an independent, impartial judiciary; and

-- numerous other charges like the US State Department's, more descriptive of America, suggesting a hidden motive behind the report's issuance; perhaps also its timing, two weeks before the State Department's similar accusations.

Chavez called it "pure excrement....ineffable (and) ignominious" in denouncing the IACHR as "menacing....a true mafia and is part of the OAS, which is why one of these days this organization must disappear....It is the same Commission which backed (the de facto government of Pedro) Carmona" after the April 2002 coup. "But this is part of the attacks, of continued threats against the Bolivarian Revolution, (a) continued campaign (supported by Venezuelan and American oligarchs to) isolat(e) Venezuela."

OAS history is long and shameful in deference to US interests.

Writing in Granma Internacional in June 2009, Editor Oscar Sanchez Serra said:

Throughout its history, the OAS "made democracies ungovernable, turned them into dictatorships, and when they were no longer useful, reconverted them into even more diminished and servile democracies, because in the new, neoliberal era, with transnationalized oligarch(ic) capital, they were part of a much more sophisticated power structure, whose bases were not necessarily located in the presidential palaces or parliaments, but in continental corporations."

OAS nations had decades of "involvement with death, genocide and lies for (it) to survive these times. It is a political corpse and should be buried as soon as possible....The reality is, without the OAS, the United States would lose one of its principle political/legal instruments of hegemonic control over the Western Hemisphere."

In February 2004, Washington got its backing to justify ousting Haiti's President Jean-Betrand Aristide. Then in 2009, it abstained from strong actions after Honduran President Manuel Zelaya was deposed, opting instead for symbolic toothless measures. It's new report reveals transparent support for bogus US charges, not Venezuela's participatory democracy, largely absent in the region and unimaginable in America where Washington is corporate controlled territory, and popular interests go unaddressed.

The Global Peace Index (GPI)

Launched by Australian entrepreneur, Steve Killelea, in May 2007, it claims to be the first study of its kind ranking nations according to peacefulness, identifying key peace drivers. Its initial report included 121 countries, increased to 140 in 2008 and 144 in its latest 2009 report, released in June last year.

Its problematic endorsers include:

-- the Dalia Lama, a known CIA asset from the late 1950s to mid- 1970s, and may still be one now;

-- John Malcolm Fraser, former Australian Prime Minister;

-- Kofi Annan, infamous as UN Secretary-General for backing US imperial wars while ignoring the plight of oppressed Africans and others globally;

-- Ban Ki-moon, current UN Secretary-General, performing the same services as Annan;

-- corporate figures including Ted Turner (CNN founder) and Richard Branson (chairman, Virgin Group);

-- an array of prominent current and past political and diplomatic figures;

-- two members of Jordanian royalty;

-- numerous academics; and others.

Organizations preparing GPI's report and/or responsible for its data include:

-- the Economist Intelligence Unit (founded by a former UK director of intelligence), calling itself "the world's foremost provider of country, industry and management analysis" since 1946;

-- the Uppsala Conflict Data Program at Sweden's Uppsala University, producing annual "States in Armed Conflict" reports;

-- the Oslo, Norway International Peace Research Institute, a private/publicly funded organization, producing "Conflict Resolution and Peacebuilding Annual Reports;" and

-- the London-based International Institute of Strategic Studies (IISS), calling itself "the world's leading authority on political-military conflict" with 450 corporate and institutional members.

The world was less peaceful in 2008, according to GPI, reflecting intensified conflicts and the effects of rising food and fuel prices at a time of global economic crisis, impacting employment, incomes, savings, and for many shelter, enough to eat, and the ability to survive.

GPI used 23 indicators to measure the level or absence of peace, divided into three broad categories, including:

-- ongoing domestic and international conflict;

-- safety and security in society; and

-- militarization.

Scores were then "banded, either on a scale of 1 - 5 (for qualitative indicators) or 1 - 10 (for quantitative data, such as military expenditure or the jailed population, which have then been converted to a 1- 5 scale for comparability when compiling the final index)."

Indicators include:

-- number of external and internal conflicts from 2002 - 07;

-- estimated number of deaths from external conflicts;

-- estimated number from internal ones;

-- level of internal conflicts;

-- relations with neighboring countries;

-- perceptions of criminality in society;

-- number of displaced people as a percentage of population;

-- political instability;

-- level of disrespect for human rights;

-- potential for terrorist acts;

-- number of homicides per 100,000 people;

-- level of violent crime;

-- likelihood of violent demonstrations;

-- number of jailed population per 100,000 people;

-- number of internal security officers and police per 100,000 population;

-- military expenditures as a percent of GDP;

-- number of military personnel per 100,000 population;

-- volume of major weapon imports per 100,000 people;

-- volume of major weapon exports per 100,000 people;

-- funding for UN peacekeeping missions;

-- total number of heavy weapons per 100,000 people;

-- ease of access to small arms and light weapons; and

-- the level of military capability.

Conspicuously absent is any measure of outside influence causing internal violence, instability, and/or disruption. Top rankings went to New Zealand, Denmark and Norway. Ranked worst were Iraq, Afghanistan, Somalia and Israel.

Venezuela ranked an implausible 120th behind Yemen, Haiti, Iran, Honduras, Uzbekistan, Uganda, Rwanda, and dozens of other unlikely choices. America was 83rd, despite hands down being the world's most violent lawless state, directly or through global proxy wars for unchallengeable world dominance.

It's also a domestic armed camp, using police state laws to quash human rights and civil liberties, criminalize dissent, illegally spy, control information, persecute political opponents, steal elections, and transfer public wealth to elitist private hands.

In contrast, Venezuela is democratic and peaceful, except during periods of Washington-instigated disruptions. America alone endangers global stability and world peace, waging permanent wars, targeting peaceful nations, and claiming the unilateral right to use first strike nuclear weapons preemptively. It also maintains over 1,000 bases and many secret ones in over 130 countries. Its annual military budget tops all other nations combined - way over $1 trillion plus tens of additional billions for intelligence and black operations, mostly for covert destabilization.

It overthrows democratically elected governments, assassinates foreign leaders and key officials, props up friendly dictators, practices torture as official policy, operates the world's largest domestic and offshore gulag, destabilizes world regions, and is hated and feared globally as a result.

In contrast, Chavez seeks regional and global alliances; engages foreign leaders cooperatively; assassinates no one internally or abroad; has no nuclear weapons or seeks them; spends less than one-half of one percent of the Pentagon's official budget; doesn't export weapons to neighbors; is socially responsible at home; has no secret prisons; respects the rule of law; is a model participatory democracy; governs peacefully; supports civil and human rights and social justice; affirms free expression; bans discrimination; and uses Venezuela's resources responsibly - for people needs, yet is friendly to business at home and abroad.

Nonetheless, GPI ranks it below America in human and civil rights, level of organized internal conflict, relations with neighboring countries, potential for terrorist acts, level of violent crime, political instability, perceptions of criminality in society, ease of access to small weapons, freedom of the press, political democracy, adult literacy (way above the US Department of Education's assessment), and willingness to fight.

Transparency International (TI) also rates Venezuela low in its 2009 Corruption Perceptions Index (CPI), indicating the perceived level of public sector corruption by country, claiming a 90% confidence of accuracy. It ranks America implausibly high at 19th and Venezuela outrageously low at 162nd out of 180 countries, behind notoriously corrupt states, including corporate occupied Washington, siphoning trillions of public dollars to private hands as part of the greatest ever wealth transfer.

In ranking America v. Venezuela, TI, GPI, and OAS measures look suspiciously manipulated to place a global hegemon above a peaceful democratic state that coincidentally is Washington's top regional target.

Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net. Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.

http://prognewshour.progressiveradionetwork.org/

http://lendmennews.progressiveradionetwork.org/

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Chili Grenade Made From Bhut Jolokia

We have heard of chili sauce, chili powder, chili paste, chili juice, chili cookie and chili plaster. Who could imagine that chili can be used as a weapon ingredient. India has unveiled the latest hot new weapon -- a grenade made using the bhut jolokia, the world's hottest chili.

At more than a thousand times stronger than the average cooking spice the bhut jolokia chili is set to cause a potent explosion on more than just the taste buds.

Military experts in India have developed the new crowd control grenade packed with ground seeds from the chili -- which is officially recognized as the hottest on the planet by Guinness World Records.

When deployed the grenade showers the targets with a dust so spicy that in trials subjects were blinded for hours and left with breathing problems. Lead scientist R.B. Srivastava, from India's Defense Research and Development Organisation, said: "The chilli grenade is a non-toxic weapon and when used would force a terrorist to come out of his hideout.

"The effect is so pungent that it would literally choke them."

The hotness of the bhut jolokia, which is native to Assam, in north-east India, is measured in Scoville heat units and comes in at a massive 1,001,304 -- that is nearly twice as hot as Mexico's red savina that used to hold the record at 577,000.

The average jalapeno measures at about 10,000.

Researchers in India have also come up with some other ingenious uses for the chili.

The scientist said: "There are other applications as well, what we call women power. A specially made chili powder could act as a tool for women to keep away anti-socials and work in this regard is also on."

The department have come up with another plan to rub the chili powder on the fences around army barracks. And Mr Srivastava said: "The chili paste could also act as a major repellent against wild elephants.

Read more: http://www.blogtactic.com/2010/03/chili-grenade-made-from-bhut-jolokia.html#ixzz0j37iVeSI
Under Creative Commons License: Attribution

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Ponting proving a fine and popular leader of the men he's helped mould

Ricky Ponting's relationship with his senior players has been the vital factor in his captaincy. As a young man he inherited a team of champions, several of them serious contenders for the position. Defiant by nature, loyal by instinct and aware that he was among equals as opposed to followers, the Tasmanian was swallowed up by his side. He did not so much shape it as direct it.

Accordingly it fell to Michael Clarke to take the tough decisions about Andrew Symonds. Nor did Ponting stand apart from his men during the infamous SCG Test against India, when a visiting captain of immense dignity became the second man in the history of their game to damn an opponent as unsporting. Instead, he was swayed by the emotion of those days and especially by the belligerence of his Queensland contingent.

In everyone's opinion, except a shrill nationalist rump, Australia reached their lowest point for 25 years in that match.

Not until the elders withdrew and went to collect their IPL riches did Ponting feel secure and strong enough to put his imprint on the side. Ever since he has been more assertive, so much so that some observers call him the fifth selector. Along the way he has shown his preference for experience, questioning the choice of so many youngsters for the South Africa tour, and for reliability, not least in the spin department.

Often he has been proved right. As Steve Waugh resurrected his opening pair, so too do several members of this squad owe a debt of gratitude to their captain. Other leaders might have lost patience with Shane Watson and preferred a fiercer spinner of the ball than Nathan Hauritz. Watson has emerged as a powerful opener while Hauritz, so long scorned, is using footprints and air with equal dexterity.

Clearly Ponting also respects battle-hardened warriors such as Doug Bollinger and Ryan Harris. As players soar when a captain shows faith in them, so a leader responds to the confidence sensed in his players.

As the team's elder as well as skipper, Ponting commands widespread respect. His players listen to him and when necessary he helps them with their games and attitudes. His approach has worked as struggling players respond to his input. As much could be told from the performance of his side in Wellington.

Before the match Ponting spent extra time with Marcus North and Clarke. Captains have plenty on their plate and need to take care of their own games, so it's unusual for a leader to devote as much of his energy to teammates, particularly senior ones. Yet Ponting talked for hours with Clarke, working hard to get his vice-captain in the right frame of mind for the match.

Clarke's innings spoke for itself. Yesterday, the right-hander sat beside his leader at the press conference and was delighted and amazed not to get a single question. The show has moved on.

North's problems were partly technical and partly psychological. Because he was in denial, he had not addressed the errors that had crept into his game, worsening an already fragile defence. Apparently Ponting stood behind the lefty in his first practice, watched him closely and that night reminded him of his strengths and talked to him about his weaknesses. Next day he stood beside North and helped him to apply the corrections.

Ponting did not disclose the changes made to North's game but he seemed better balanced and less inclined to lunge. Certainly he was more nimble and creative. Australians think mostly about footwork, and North's had become ponderous. Whatever, it worked and the Sandgroper contributed a composed hundred. And, like Clarke, he looked altogether more relaxed and cheerful.

Beyond argument this was captaincy of a high order. Only boneheads deny the possibility of improvement. Ponting remains a limited tactician but has done some fine work with the players under his command. Numerous complications have cropped up - Mitchell Johnson and Brett Lee have also endured emotional setbacks - and by and large he has handled them well.

Ponting's next challenge will be to uplift the next generation. Already he sets an example simply by playing every match, batting at three every innings and keeping the team on its toes. It has been a long campaign but no bleating has been heard. Phillip Hughes and Steven Smith can learn from that. Yesterday, Hughes blazed a trail. He has some weaknesses but he is fearless and has the eye of a hawk. And he's playing in a team with a strong culture.


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Zero Public Option + One Mandate = Disaster

Not long ago, the most prominent supporters of the public option were touting it as essential for healthcare reform. Now, suddenly, it's incidental.

In fact, many who were lauding a public option as the key to a better healthcare future are now condemning just about anyone who insists that the absence of a public option makes the current bill unworthy of support.
Consider this statement: "If I were a senator, I would not vote for the current healthcare bill. Any measure that expands private insurers' monopoly over healthcare and transfers millions of taxpayer dollars to private corporations is not real healthcare reform."

That statement is as true today as it was when Howard Dean, former chairman of the Democratic National Committee, made it three months ago in a Washington Post op-ed. But now, a concerted political blitz is depicting anyone who takes such a position as a menace to "real healthcare reform."

After devoting vast amounts of time, money, energy and political capital to banging the drum for the public option as absolutely vital during 2009 and through this winter, countless liberal organizations and prominent Democrats in Congress have made a short-order shift.

You are now to understand that the public option isn't essential -- it's expendable. And all of the sudden, people who assert that a public option is a minimal requirement for meaningful healthcare reform are no longer principled -- they're pernicious.

This dynamic goes way beyond the routine malleability of political positions. While the whips crack on Capitol Hill, what we're seeing is a stampede of herd doublethink.

*****

I continue to believe that guaranteed healthcare -- a.k.a. single-payer or enhanced Medicare for all -- is the only way to solve this country's enormous healthcare crisis. But early last year, before the public option shrank and shrank some more and then disappeared under the bus of the Obama administration, it appeared to possibly be a significant step forward.

But the White House, even while claiming to want a public option, was cutting deals with the pharmaceutical and hospital industries while ditching the public option. For those who doubt that the administration engaged in double-dealing to such an extent, I recommend the March 16 article by Huffington Post writer Miles Mogulescu, "NY Times Reporter Confirms Obama Made Deal to Kill Public Option."
A postscript from Mogulescu voices a broader outlook. I'll quote a couple of paragraphs here:

"Whenever I write blogs which are critical of Obama and Congressional Democrats for making corporatist deals, I get numerous comments from people who believe they are progressive but say they will never vote for Obama or Democrats again, that they will stay home at the next election, or that they will vote for small third parties who have no chance of winning. It's not my intent to encourage those views. Do people making these comments really think bringing Republicans back to power would make things better? . . .
"Progressives need to have a sophisticated and nuanced relationship with elected Democrats. After the 2008 elections, too many progressive organizations demobilized believing their job was simply to take orders from the White House to support Obama's agenda, whatever it was. That was a mistake. It's equally a mistake for progressives to overreact in the opposite direction and think they can abandon electoral politics and do nothing to prevent the Republicans from regaining power. What's needed is a powerful grassroots progressive movement to force elected officials to do the right thing more often and to counter-balance the power of big money in politics. The periods of progressive change in American politics, like the Progressive Era, The New Deal, and the Great Society, have come when strong progressive movements have forced elites and elected officials to enact somewhat progressive legislation."

The dynamic now in full force on Capitol Hill was aptly described by Dean in his Post op-ed midway through December: "In Washington, when major bills near final passage, an inside-the-Beltway mentality takes hold. Any bill becomes a victory. Clear thinking is thrown out the window for political calculus. In the heat of battle, decisions are being made that set an irreversible course for how future health reform is done. The result is legislation that has been crafted to get votes, not to reform healthcare."

A week after Dean's article, the Senate approved the healthcare bill that is now on track to be "deemed" by the House -- with the avid support of Dean and numerous other public-option enthusiasts, and also for that matter with the support of Rep. John Conyers and many other single-payer enthusiasts (including, as of Wednesday, Rep. Dennis Kucinich).

The quality of the Senate healthcare legislation hasn't improved in the three months since Dean condemned it. What has gone over the top is the cacophony of voices and pressures to tout doublethink as virtuous pragmatism.

*****

But there are big problems with skipping lightly past the absence of a public option in the current bill. And none is bigger than the reality of the individual mandate in the legislation.

It's remarkable and sadly revealing that boosters of the bill have scarcely mentioned -- much less publicly come to terms with -- the dire implications of a nearly enacted law that requires people to have health insurance and offers no option other than further enriching the private insurance industry.
Last year, when the subject came up, progressive supporters of the White House's general approach were quick to offer assurances that a public option would mitigate the unpleasant aspects of mandated coverage. After all, the story went, people could select a nonprofit government-run entity for insurance coverage rather than being forced to choose between corporate insurance policies.

But now, if the pending bill becomes law, people will be forced to choose between corporate insurance policies.

Meanwhile, all the hype about how 30 million more Americans "will be covered" fails to deal with the quality and cost of their purported coverage, much less how much real access to healthcare will actually result.
For many, the available coverage would be bottom-of-the-barrel quality -- and even then, given thin personal finances, would cause added strains to pay for premiums. In the absence of public-option health insurance run for purposes other than maximizing profits, the built-in unfairness of an individual mandate becomes magnified.
What's more, the very concept of healthcare as a human right will be fundamentally undermined by placing the health-insurance burden on individuals. Many who receive government subsidies will routinely struggle to make ends meet, while making do with shoddy health plans as part of a new configuration of healthcare apartheid. And, inevitably, the extent of government subsidies will be vulnerable to attacks from politicians eager to cut "entitlements."

On a political level, the mandate provision is a massive gift to the Republican Party, all set to keep on giving to the right wing for many years. With a highly intrusive requirement that personal funds and government subsidies be paid to private corporations, the law would further empower right-wing populists who want to pose as foes of government "elites" bent on enriching Wall Street.

With this turn of the "healthcare reform" screw, the Democratic Party will be cast -- with strong evidence -- as a powerful tool of corporate America. But the Democrats on Capitol Hill and the organizations eagerly whipping for passage are determined to celebrate the enactment of something called "healthcare reform."

*****

"When I use a word," Humpty Dumpty said, "it means just what I choose it to mean -- neither more nor less."
"The question is," Alice replied, "whether you can make words mean so many different things."
"The question is," Humpty Dumpty responded, "which is to be master -- that's all."

Many well-informed and insightful people are now hoping that the current healthcare bill will become law and then lead to something better. But few backers want to dwell on its requirement that everyone get health coverage from the private insurance industry -- a stunning, deeply structural transfer of humongous power and wealth that would greatly boost the leverage of an already autocratic corporate state.

Norman Solomon is a journalist, historian, and progressive activist. His book "War Made Easy: How Presidents and Pundits Keep Spinning Us to Death" has been adapted into a documentary film of the same name. His most recent book is "Made Love, Got War." He is a national co-chair of the Healthcare NOT Warfare campaign. In California, he is co-chair of the Commission on a Green New Deal for the North Bay; www.GreenNewDeal.info.

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The New ‘Forgotten’ War

Iraq occupation falls into media shadows

“The Western world that slaughtered Iraq and Iraqis, through 13 years of sanctions and seven years of occupation, is now turning its back on the victims. What has remained of Iraq is still being devastated by bombings, assassinations, corruption, millions of evictions and continued infrastructure destruction. Yet the world that caused all this is trying to draw a rosy picture of the situation in Iraq.”

-Maki Al-Nazzal, Iraqi political analyst

As Afghanistan has taken center stage in U.S. corporate media, with President Barack Obama announcing two major escalations of the war in recent months, the U.S. occupation of Iraq has fallen into the media shadows.

But while U.S. forces have begun to slowly pull back in Iraq, approximately 130,000 American troops and 114,000 private contractors still remain in the country (Congressional Research Service, 12/14/09)-along with an embassy the size of Vatican City. Upwards of 400 Iraqi civilians still die in a typical month (Iraq Body Count, 12/31/09), and fallout from the occupation that is now responsible, by some estimates, for 1 million Iraqi deaths (Extra!, 1/2/08) continues to severely impact Iraqis in ways that go uncovered by the U.S. press.

From early on in the occupation of Iraq, one of the most pressing concerns for Iraqis-besides ending the occupation and a desperate need for security-has been basic infrastructure. The average home in Iraq today, over six and a half years into the occupation, operates on less than six hours of electricity per day (AP, 9/7/09). “A water shortage described as the most critical since the earliest days of Iraq’s civilization is threatening to leave up to 2 million people in the south of the country without electricity and almost as many without drinking water,” the Guardian (8/26/09) reported; waterborne diseases and dysentery are rampant. The ongoing lack of power and clean drinking water has even led Iraqis to take to the streets in Baghdad (AP, 10/11/09), chanting, “No water, no electricity in the country of oil and the two rivers.”

Devastation wrought by the occupation, coupled with rampant corruption among the Western contractors awarded the contracts to rebuild Iraq’s demolished infrastructure, are to blame (International Herald Tribune, 7/6/09). Ali Ghalib Baban, Iraq’s minister of planning, said late last year (International Herald Tribune, 11/21/09) that the billions of dollars the U.S. has spent on so-called reconstruction contracts in Iraq has had no discernible impact. “Maybe they spent it,” he said, “but Iraq doesn’t feel it.”

Last January, the Los Angeles Times ran a story (1/26/09) that highlighted the lack of electricity: “As elections near, people say it’s hard to have faith in leaders when they don’t even have electricity,” was the subhead. But most other large U.S. papers have avoided the topic-unless it is brought up in such a way as to blame Iraqis for the problem, as the New York Times (11/21/09) did with its piece, “U.S. Fears Iraqis Will Not Keep Up Rebuilt Projects.”
Further complicating matters, a drought that is now over four years old plagues most of Iraq. In the country’s north, lack of water has forced more than 100,000 people to abandon their homes since 2005, with 36,000 more on the verge of leaving (AP, 10/13/09).

Corporate media coverage of the ongoing Iraqi refugee crisis-the U.N. estimates that more than 4.5 million Iraqis in all have been displaced from their homes (UNHCR.org, 1/09)-continues to be scant. The stories that do appear tend to be local stories about Iraqi refugees in the newspaper’s home city (e.g., Chicago Tribune, 10/25/09).

For Iraqis who remain in the country, another critical story is cancer. The U.S. and British militaries used more than 1,700 tons of depleted uranium in Iraq in the 2003 invasion (Jane’s Defence News, 4/2/04)-on top of 320 tons used in the 1991 Gulf War (Inter Press Service, 3/25/03). Literally every local person I’ve ever spoken with in Iraq during my nine months of reporting there knows someone who either suffers from or has died of cancer.

The lead paragraph of an article by Jalal Ghazi, for New America Media (1/6/10), is blunt:

Forget about oil, occupation, terrorism or even Al-Qaeda. The real hazard for Iraqis these days is cancer. Cancer is spreading like wildfire in Iraq. Thousands of infants are being born with deformities. Doctors say they are struggling to cope with the rise of cancer and birth defects, especially in cities subjected to heavy American and British bombardment.

Ghazi reported that in Fallujah, which bore the brunt of two massive U.S. military operations in 2004, as many as 25 percent of newborn infants have serious physical abnormalities. Cancer rates in Babil, an area south of Baghdad, have risen from 500 cases in 2004 to more than 9,000 in 2009. Dr. Jawad al-Ali, the director of the Oncology Center in Basra, told Al Jazeera English (10/12/09) that there were 1,885 cases of cancer in all of 2005; between 1,250 and 1,500 patients visit his center every month now.

Babies born to U.S. veterans of the 1991 war are showing birth defects very similar to affected Iraqi babies (Sunday Herald, 3/30/03), and many U.S. soldiers are now referring to Gulf War Syndrome 2, alleging they have developed cancer because of exposure to depleted uranium in Iraq (New America Media, 1/6/10).
How has this ongoing story been covered by the corporate media? It hasn’t, at least not in the last five years, with the exception of an article in Vanity Fair (2/05) and a few isolated Associated Press stories, like “Sickened Iraq Vets Cite Depleted Uranium” (8/13/06). While smaller publications like the Washington Report on Middle East Affairs (11/05) and the Public Record (10/19/09) have taken it on, none of the other big outlets have touched the story.

While U.S. newspapers have been following the lead-up to the Iraq elections, there has been virtually no coverage of the mass arrests Prime Minister Nouri Al-Maliki’s government is busy conducting in predominantly Sunni areas of Iraq. As the Iraqi daily Azzaman (1/4/10) reported:

Iraqi security forces have launched a wide campaign in Sunni Muslim-dominated neighborhoods of Baghdad and towns and cities to the north and west of the capital…. The campaign is said to be the widest by the government in years and has led to an exodus of people to the Kurdish north.

Family members of those being arrested are not told where their loved ones are being held, only that those arrested will remain behind bars until after the elections. These sweeps have collected members of the formerly U.S.-backed Awakening Councils, Sunni militias once paid off by the U.S. to stop their attacks on occupation forces. The cutoff of U.S. support for the Councils is another underreported story.
Meanwhile, the hardship for Iraqis continues unabated, along with the need to find alternative sources for accurate information-or any information-about an occupation that continues to involve as many troops as when Iraq dominated U.S. headlines in 2004 (Congressional Research Service, 7/2/09).

Dahr Jamail is an independent journalist who has been reporting about the U.S. occupation of Iraq for more than six years. His most recent book is The Will to Resist: Soldiers Who Refuse to Fight in Iraq and Afghanistan.

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