Investment Firms Tap Fed for Billions

Big Wall Street investment companies are taking advantage of the Federal Reserve's unprecedented offer to secure emergency loans, the central bank reported Thursday.

The lending is part of a major effort by the Fed to help a financial system in danger of freezing.

Those large firms averaged $13.4 billion in daily borrowing over the past week from the new lending facility. The report does not identify the borrowers.

The Fed, in a bold move Sunday, agreed for the first time to let big investment houses get emergency loans directly from the central bank. This mechanism, similar to one available for commercial banks for years, got under way Monday and will continue for at least six months. It was the broadest use of the Fed's lending authority since the 1930s.

Goldman Sachs, Lehman Brothers and Morgan Stanley said Wednesday they had begun to test the new lending mechanism.

On Wednesday alone, lending reached $28.8 billion, according to the Fed report.

The Fed created a way for investment firms to have regular access to a source of short-term cash.

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Wider U.S. Financial Bailout Could Fuel Inflation

If the U.S. government bails out the financial system by buying mortgage debt directly, the price might be surging inflation and a dollar crisis.

Calls are increasing for the federal government, either directly or through the Federal Reserve, to cut the knot of the credit crisis at a stroke by buying up mortgages that banks and investment banks are finding difficult to finance.

If the government bought mortgage debt at or near 100 cents on the dollar, even though much of it is trading well below that amount, it would allow banks to pay back loans used to finance these holdings.

If done in sufficient size, say $800 billion or $1 trillion, it would relieve the terrible pressure on bank balance sheets and allow other credit markets, like those for corporate loans, to return to something approaching equilibrium.

That, in turn, would make Fed monetary policy more effective in the sense that banks would be able to increase lending and pass on interest rate reductions.

Of course this would be a radical step, and way beyond the Fed's already extraordinary policy of swapping mortgages held by banks and some investment banks for easy-to-finance Treasuries.

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U.S. Slowdown Could Have Been Avoided Says Expert

 Congress and the Federal Reserve missed their chance to keep the country from falling into recession by acting too slowly, according to a well-respected economist.

Lakshman Achuthan, the managing director of the Economic Cycle Research Institute, said the economy has now fallen into what he calls "a recession of choice."

He argues that the economic stimulus package passed by Congress this year is too late to help many consumers and businesses and that the Federal Reserve was too timid when it started trimming interest rates last fall.

Since then the Fed has aggressively cut rates, most recently lowering them by three-quarters of a percentage point at its meeting Tuesday.

"If they had done all this in the fourth quarter, I think we'd be having a different discussion," he said. "We might not have had Bear," he added, referring to the fire sale purchase of brokerage firm Bear Stearns (BSC, Fortune 500) by JPMorgan Chase (JPM, Fortune 500) that the Fed helped arrange over the weekend to avoid a collapse of Bear Stearns.

The ECRI, which forecasts a number of key economic readings such as employment, inflation and production from various business sectors, had been reluctant to join the rising tide of economists arguing that the economy has fallen into a recession. But it changed its call Thursday.

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Hagel Slams Bush War 'Arrogance'

U.S. Sen. Chuck Hagel writes in a new book that the United States needs independent leadership and possibly another political party, while suggesting the Iraq war might be remembered as one of the five biggest blunders in history.

"In the current impasse, an independent candidate for the presidency, or a bipartisan unity ticket ... could be appealing to Americans," Hagel writes in "America: Our Next Chapter," due in stores Tuesday. The Associated Press obtained an advance copy.

The Nebraska Republican, who announced last year he wouldn't seek a third term or the GOP presidential nomination, had been widely mentioned as a running mate on an independent ticket with New York Mayor Michael Bloomberg. Bloomberg said last month he wouldn't run.

Hagel said that despite holding one of the Senate's strongest records of support for President Bush, his standing as a Republican has been called into question because of his opposition to what he deems "a reckless foreign policy ... that is divorced from a strategic context."

Hagel, who's been a harsh critic of the war since 2003, writes that the invasion of Iraq was "the triumph of the so-called neoconservative ideology, as well as Bush administration arrogance and incompetence."

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Ex-chief Weapons Inspector Slams Iraq War as 'Tragedy'

Hans Blix, the former chief UN weapons inspector, slammed the Iraq war as a "tragedy" and blamed it on leaders ignoring the facts, in a comment piece published Thursday.

Writing in The Guardian on the five-year anniversary of the US-led invasion of Iraq, Blix, who clashed with Washington in the run-up to the Iraq war, described the war as "a tragedy -- for Iraq, for the US, for the UN, for truth and human dignity."

In the sub-headline to the comment piece, Blix, who headed the UN Monitoring, Verification and Inspection Commission, wrote that responsibility for the war "must lie with those who ignored the facts five years ago".

At the time of the Iraq war, Blix accused the US and Britain of exaggerating the threat from Iraqi dictator Saddam Hussein's alleged "weapons of mass destruction" -- traces of which have never been found.

In his comment piece, he said the war was a "setback in the world's efforts to develop legal restraints on the use of armed force between states" and added that in 2003, "Iraq was not a real or imminent threat to anybody."

Blix wrote that had coalition troops not deposed Saddam, "he would, in all likelihood, have become another Kadhafi or Castro; an oppressor of his own people but no longer a threat to the world."

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How the GOP Will Benefit From Impending Economic Collapse

Republicans benefit from the fact that recessions are class conscious, affecting worse those who can least afford them. An era of highly leveraged US economic expansion and empire is about to come crashing down and swept away. Count on the GOP to make out like bandits.

It seems like ages ago, the US was at peace, there was a budget surplus, the economy was growing, and the unemployment rate was very low. But not everyone was happy. There was an entire group of people who harbor not good, but ill will; an entire class wished for bad times and got it.

An era of highly leveraged US economic expansion and empire is about to come crashing down and swept away. Until now, China had an interest in keeping the US ponzi scheme propped up --they sold billions to US citizens via Wal-Mart, the economic Kudzu that ate America. But since a Chinese sub popped up undetected in the middle of the US fifth fleet, it has been apparent that the honeymoon is over. China now leads the world in dumping dollars. Everywhere, it seems, it has become a habit.

If this were mere recession staring back at us from a fun house mirror, it might be shrugged off. After all, the GOP has always loved recessions and benefited from them.

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CIA Transfers Another Detainee From Secret Prison System

The US Defense department announced March 14 that the CIA had transferred a detainee held in secret for at least six months to the military prison camp at Guantánamo Bay. The transfer, the second since the Bush administration admitted the existence of the secret CIA prison network a year and a half ago, is further confirmation that the US continues to use secret prisons to illegally hold and torture prisoners.

The detainee, Muhammad Rahim al-Afghani, was captured in Pakistan last summer by local police and handed over to the CIA in August. US officials described Rahim as a “high-level member of al Qaeda and a close associate of Osama bin Laden,” who helped in the hiding and escape of al Qaeda leaders in Afghanistan following the US invasion. Rahim allegedly worked as a translator and an assistant to bin Laden.

In a memo circulated to agency employees, CIA director Michael Hayden also alleged that Rahim was plotting to attack US troops in Afghanistan with chemical weapons, although no such attack took place and no evidence was provided for the allegation.

Like thousands of other detainees held by the US in Afghanistan, Iraq, Guantánamo Bay and elsewhere, Rahim has not been charged with a crime, and has not had contact with legal or human rights groups.

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China Admits Shooting Tibet Protesters!

China today admitted for the first time that anti-government demonstrations had spread to other regions and that soldiers had shot rioters "in self-defense".

The state-run Xinhua news agency reported recent unrest in Sichuan and Gansu provinces, blaming supporters of the Dalai Lama.

It said Chinese forces had shot and wounded four rioters "in self defence" during unrest in Sichuan last weekend.

China has come under international pressure to act with restraint in Tibet.

The US secretary of state, Condoleezza Rice, was reported to have "strongly urged" her Chinese counterpart, Yang Jiechi, to tread carefully in the region during a 20-minute phone call.

Rice also pushed Beijing to open talks with the Dalai Lama, Tibet's exiled spiritual leader.

Yesterday, Gordon Brown said the Chinese premier, Wen Jiabao, had told him he was willing to meet the Dalai Lama if the Tibetan leader ruled out independence and renounced violence - conditions which have already been met.

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UN Says Israel Guilty of Gaza War Crimes

A United Nations official confirmed yesterday that the targeting of a Hamas government office by Israel which resulted in serious casualties at a wedding being held nearby was a war crime and that those responsible should be brought to justice.

UN human rights rapporteur , John Dugard said “Those responsible for such cowardly action are guilty of serious war crimes and should be prosecuted and punished for their crimes.”

A UN Human Rights Commission statement slammed the Israeli attack saying “It violates one of the basic principles of international humanitarian law that military action must distinguish between military and civilian targets.”

Iraq Better Off Under Saddam Says U.S. Military Aide

Lutfi Saber, an aide to the military coalition in Iraq, has said that the country would be better off if it were still under the rule of Saddam Hussein.

Saber slammed the current system in Iraq saying, "None of these people trust each other. Everything comes down to that. The whole system is set up to ensure that nobody does anything that somebody else thinks is wrong."

He went on to say that the country was "engulfed in chaos and nobody does anything because they all refuse to take responsibility". Meanwhile, US President George W Bush continues to insist that progress is being made.

It now appears that, far from improving the quality of life for Iraqi youngsters, the US-led military assault on Iraq has inexplicably doubled the number of children under five suffering from malnutrition. Under Saddam, about 4% of children under five were going hungry, whereas by the end of last year almost 8% were suffering.

Libby Is Disbarred in Washington

I. Lewis Libby’s career suffered another blow today as a result of the investigation into a C.I.A. leak in 2003, this one from the United States Court of Appeals for the District of Columbia:

It is hereby ORDERED that I. Lewis Libby, Jr. is disbarred from the practice of law in the District of Columbia, and his name shall be stricken from the roll of attorneys authorized to practice before this court.

The former aide to Vice President Cheney was suspended from practicing law in the nation’s capital since his conviction on four counts, but that is not enough for disbarment. The key factor, the ruling said, was whether he was guilty of “moral turpitude” in any of those charges, all stemming from lies during the inquiry.

The judges decided that three of the four charges qualified. “This court has held that obstruction of justice and perjury are crimes of moral turpitude,” the ruling said. The fourth conviction — for lying to F.B.I. investigators asking about Mr. Libby’s conversations with Tim Russert of NBC — did not make the cut.

The ruling [pdf] was widely expected and not contested by Mr. Libby, who expected to lose his license, according to his lawyer. “This action is required by the rules following a conviction regardless of the merits of the case,” William Jeffress told The Associated Press.

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Fed Deal Done in Secret By Secret Central Banker!

The Federal Reserve's unprecedented bailout of Bear Stearns was crafted not at the White House or the Treasury but in secret by a New York central banker whose name is unknown to Washington power brokers and who was a Clinton administration presidential appointee.

"It's a new day," commented one investor and longtime Fed watcher. Around the world, that day's dawning is viewed with apprehension because of election-year rhetoric from America.

The plan pressed by Timothy F. Geithner, president of the New York Federal Reserve Bank, effectively substitutes the central bank for the market in determining financial outcomes. Nobody takes seriously the assertions by Fed spokesmen that the aid for Bear Stearns and its dictated bargain-price sale to J.P. Morgan was "extraordinary." In Washington and New York, the question is who will be next. Speculation turned to who else will qualify as "too big to fail."

One candidate was Lehman Brothers, whose stock dropped 19.1 percent the day after the bailout was announced. Government-backed lending agencies Fannie Mae and Freddie Mac have also been seen as bailout candidates.

The central bank's bold new role relieves the pressure on American financiers who have committed serious errors, but it does not reassure investors around the world who are alarmed by what they perceive in the U.S. political process, where class warfare has gained traction.

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AP President: U.S. Arrests Journalist in Iraq to 'Control' Information

Associated Press president Tom Curley says his news organization does not buy the government's argument that one of its photographers arrested in Iraq was working on behalf of the enemy, and he alleged the US is rounding up journalists in an attempt to control information.

"To say the least, we see things very differently," Curley commented dryly, regarding photographer Bilal Hussein, who was arrested two years ago and remains in military custody.

Noting that at least a dozen other Iraqi photographers have been detained or arrested, Curley stated, "It's impossible not to conclude that the words and pictures these journalists produced were considered unhelpful to the war effort and that their arrests would have served a broader strategy of information control."

Curley also called on journalists to demand that all the presidential candidates make a commitment to reversing a directive issued by Attorney General John Ashcroft shortly after September 11 that radically restricted the scope of the Freedom of Information Act.

Ashcroft's memo stated, "When you carefully consider FOIA requests and decide to withhold records, in whole or in part, you can be assured that the Department of Justice will defend your decisions unless they lack a sound legal basis or present an unwarranted risk of adverse impact on the ability of other agencies to protect other important records."

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Video of Japanese MP Yukihisa Fujita, a member of the House of Councillors in the Diet of Japan spoke at the 9/11 Truth conference in Sydney

Editor's Note: Thank you for the link, Damien!

Japanese MP Yukihisa Fujita of the Democratic Party of Japan, a member of the House of Councillors in the Diet of Japan (national legislature), spoke at the 9/11 Truth conference in Sydney.

Mr Fujita is the single most important person to step forward to ask hard questions about 9/11 and the “War on Terror” this year.

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Markets Down, Taxes Up

By Janet Novak / Forbes

Stocks are having a rotten year. Federal capital gains and dividend tax rates are at historic lows. Yet as they complete their 2007 1040s, individual investors are paying the biggest tax bill ever on distributions of capital gains and dividends from their mutual funds.

Lipper Senior Analyst Tom Roseen, who plans to release his widely watched annual tally of fund taxes on April 15th, told Forbes.com that his preliminary calculations show investors' 2007 tax tab will top the record $31.3 billion they paid for 2000. "It's going to be monstrous,'' he says. "This is the year people are going to wake up and go 'wow, taxes matter again,' '' he adds.

Roseen's report isn't about the taxes investors pay when they sell mutual fund shares for a profit. Rather, he tracks the tax burden from the unique--and some argue unfair--tax code treatment of mutual funds.

Funds don't pay taxes themselves, but must distribute at least 90% of their net gains annually to shareholders. When an investor holds fund shares in a taxable account--as opposed to a tax-deferred one, such as an IRA or 401(k)--he pays tax each year on those distributions. That's true even if he has all those payouts automatically reinvested in the fund. By contrast, an investor who owns individual stocks in a taxable account doesn't have to pay capital gains tax until he actually sells the shares, giving him a greater ability to minimize his tax bill.

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Judge Clears Way For CIA "Rendition" Trial

An Italian judge on Wednesday ordered the resumption of a trial against U.S. and Italian spies accused of abducting a terrorism suspect, in a blow to efforts to halt a case that Rome says violates state secrecy rules.

The trial in absentia against 26 Americans -- almost all believed to be CIA agents -- is the first anywhere over the U.S. practice of "extraordinary rendition", whereby terrorism suspects are secretly transferred to third countries.

Italian spies, including the former head of Italy's military intelligence agency Nicolo Pollari, are accused of helping the CIA team abduct Muslim cleric Hassan Mustafa Osama Nasr in 2003 and fly him to Egypt. There, Nasr says he was tortured.

Judge Oscar Magi had suspended proceedings shortly after they began in June last year, saying the criminal trial should wait until Italy's highest court ruled whether prosecutors had broken state secrecy rules when building their case.

But after months of high court delays, Magi decided the trial in Milan could go forward regardless.

"The measure suspending (the trial) can be removed," Magi told the court. "It will not cause any harm to the defense".

Prosecutors say a CIA-led team grabbed Nasr, also known as Abu Omar, off a Milan street, bundled him into a van and drove him to a military base in northern Italy.

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Winter Soldiers

By Madeleine Mysko / Baltimore Sun

From testimony of Jason Hurd of the Army's 278th Regimental Combat Team: One day, Iraqi police got into an exchange of gunfire with some unknown individuals ... [and] some of the stray rounds ... hit the shield of one of our Hummers. The gunner atop that Hummer decided to open fire with his 50-caliber machine gun into that building. We fired indiscriminately and unnecessarily at this building. We never got a body count, we never got a casualty count afterward. ... Things like that happen every day in Iraq. We react out of fear, fear for our lives.

On the fifth anniversary of the start of the war in Iraq, my reflections go back much further - to the spring of 1969, when I entered basic training at Fort Sam Houston as a newly commissioned second lieutenant in the U.S. Army Nurse Corps. I had volunteered to serve, but not really out of patriotic duty. I was young and naive, and somehow had begun to picture myself as an angel of mercy who would tend to wounded soldiers.

I knew little about why we were fighting in Vietnam. I hardly ever read the news and had little interest in politics.

For us nurses, basic training was less about nursing and more about acclimation to military life. We were taught how to wear the uniform, how to salute, how to read a map in the wilderness, how to shoot a firearm, how to put on a gas mask in a hurry.

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DNA Collection Bill Runs Into Opposition!

Editor's Note: Anyone can be accused of a crime! Let's contact the Maryland Attorney General or the Governor of Maryland and let them know that unreasonable seizure of our DNA will not be tolerated!

Maryland Gov. Martin O'Malley's bid to expand collection of DNA samples from criminal suspects is sparking intense debate in Annapolis, with black lawmakers so upset they walked out of a Democratic caucus meeting in protest.

With objections from both ends of the political spectrum, the House of Delegates postponed debate on the bill until Thursday.

"This issue is very emotional with many people," said Del. Kumar P. Barve, House majority leader, a Montgomery County Democrat. He declined to discuss what took place at the closed-door caucus, but added: "There's hardly anything more personal than your genetic information."

The House Judiciary Committee approved the administration's DNA bill late Friday, but with significant amendments that would delay the collection and analysis of the samples taken from suspects. It also provided for automatic expungement of the information in some cases if charges are dropped.

But critics in both parties say they remain concerned about the measure, fearing it could infringe on people's constitutional rights and might wind up costing far more than the administration has predicted.

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The Collapse Of American Power

By Paul Craig Roberts

In his famous book, The Collapse of British Power (1972), Correlli Barnett reports that in the opening days of World War II Great Britain only had enough gold and foreign exchange to finance war expenditures for a few months. The British turned to the Americans to finance their ability to wage war.

Barnett writes that this dependency signaled the end of British power. From their inception, America's 21st century wars against Afghanistan and Iraq have been red ink wars financed by foreigners, principally the Chinese and Japanese, who purchase the US Treasury bonds that the US government issues to finance its red ink budgets.

The Bush administration forecasts a $410 billion federal budget deficit for this year, an indication that, as the US saving rate is approximately zero, the US is not only dependent on foreigners to finance its wars but also dependent on foreigners to finance part of the US government's domestic expenditures. 

Foreign borrowing is paying US government salaries--perhaps that of the President himself--or funding the expenditures of the various cabinet departments. Financially, the US is not an independent country.

The Bush administration's $410 billion deficit forecast is based on the unrealistic assumption of 2.7% GDP growth in 2008, whereas in actual fact the US economy has fallen into a recession that could be severe.

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Robert Fisk: The only lesson we ever learn is that we never learn

Five years on, and still we have not learnt. With each anniversary, the steps crumble beneath our feet, the stones ever more cracked, the sand ever finer. Five years of catastrophe in Iraq and I think of Churchill, who in the end called Palestine a "hell-disaster".

But we have used these parallels before and they have drifted away in the Tigris breeze. Iraq is swamped in blood. Yet what is the state of our remorse? Why, we will have a public inquiry – but not yet! If only inadequacy was our only sin.

Today, we are engaged in a fruitless debate. What went wrong? How did the people – the senatus populusque Romanus of our modern world – not rise up in rebellion when told the lies about weapons of mass destruction, about Saddam's links with Osama bin Laden and 11 September? How did we let it happen? And how come we didn't plan for the aftermath of war?

Oh, the British tried to get the Americans to listen, Downing Street now tells us. We really, honestly did try, before we absolutely and completely knew it was right to embark on this illegal war. There is now a vast literature on the Iraq debacle and there are precedents for post-war planning – of which more later – but this is not the point. Our predicament in Iraq is on an infinitely more terrible scale.

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