Bulletin N° 251


Subject : ON COURAGE, FEAR, AND THE FUTURE


6 August 2006
Grenoble, France

Dear Colleagues and Friends of CEIMSA,
The governments of England and the United States have endorsed the continuation of Israeli aggressions in Palestine and Lebanon, against overwhelming opposition from world public opinion. The information struggle during and after this violence will play a large role in determining the results of this war for imperialist advances in the Middle East. Just as the American Indian wars and Napoleonic wars are seen by many people today as "great achievements for progress," despite humiliating defeats and the carnage of millions of peasants caused by these wars, so the masters of war today and their apologists will attempt to spin a victory using the classic argument of "the ends justify the means" after the slaughter in the Middle East subsides. Unlike mater-energy, writes Anthony Wilden in his book The Rules are No Game, information can be created and destroyed, and reconstructed a posteriori. The Media Rule, as George Orwell defined it is :

Those who control the present control the past. Those who control the past control the future.

For those of us seeking a better world, we are well advised to look at reality as we find it. Acknowledging the real constraints should enable us to modify institutions and structures in a way that better satisfies our real needs. We have much to learn from those who have seized control of important institutions to serve their short-term interests. Their ideologues will justify their use of force over us, but how they took power is more important than why, and all ideological justifications are irrelevant to this primary question.

My own mother lived in Germany, as an American exchange student, during the last years of the Weimar Republic. She witnessed the pre-fascist formations within German institutions and society. Ontological insecurities were a precondition that facilitated the Nazi seizure of power in 1933, that unnameable fear which kept the German population passive and obedient became almost ubiquitous throughout the society. The German psychoanalyst, Wilhelm Reich, studied this phenomenon in depth while working in Berlin before the war.

Under the influence of politicians, masses of people tend to ascribe the responsibility for wars
to those who wield power at any given time. In World War I it was the munitions industrialists;
in World War II it was the psychopathic generals who were said to be guilty. This is passing the
buck.
The responsibility for wars falls solely upon the shoulders of these same masses of people, for
they have all the necessary means to avert war in their own hands. In part by their apathy, in
part by their passivity, and in part actively, these same masses of people make possible the
catastrophes under which they themselves suffer more than anyone else. To stress this guilt on
the part of the masses of people, to hold them solely responsible, means to take them seriously.
On the other hand, to commiserate masses of people as victims, means to treat them as small,
helpless children. The former is the attitude held by genuine freedom fighters; the latter that
attitude held by power-thirsty politicians.
                                                                                --Wilhelm Reich, The Mass Psychology of Fascism


History can only serve as a guide for possible explanations; there is no replay! As human beings seek to fulfill their needs and desires, they encounter all sorts of obstacles. The social classes which today control the institutions that govern the political economy are collectively encountering many obstacles. Their use of force to overcome these obstacles is real, and we can foresee the possible consequences, the evidence of which, if they succeed, will be falsified or simply eliminated.

This is the politics of language today, where meanings are modified to accommodate the needs and whims of the powerful. We can see this tendency toward adaptation in the mainstream media during the present debacle.


We at CEIMSA have benefited from the courageous coverage by Amy Goodman in her daily Pacifica Radio broadcast, Democracy Now, which recently featured Professor Juan Cole, on the History Department faculty at The University of Michigan-Ann Arbor. Dr. Cole is a specialist in modern Middle East history, and his Blog is very informative of contemporary events in the Middle East: http://www.juancole.com/.


Below, we included 7 more news items and analyses recently received at CEIMSA :

Item A. includes two articles on Israeli war crimes : The first by Jim Lobe, "Human Rights Watch Accuses Israel of War Crimes," and the second, "Israel's claims about pin-point strikes and proportionate responses are pure fantasy,"  by Peter Bouckaert , which was first published in the International Herald Tribune

Item B. is another eye witness account by Robert Fisk on the continued slaughter in Lebanon by Israeli-American arms.

Item C., from Edward Herman, is a proposed list of rules which seem to govern news reporting on the Israeli-Arab conflicts.

Item D., from TruthOut, is a sample of mainstream media coverage in America, a report on objectivity in the press from National Public Radio.

Item E. is an invitation from Ralph Nader to compare for yourself the quality of news reporting from mainstream outlets like NPR with new reporting from small progressive stations like "Democracy Now" on the Public Broadcasting Service (PBS).

Item F. is an excerpt form Greg Palast's new book, Armed Madhouse.

Item G. is an expanded version of Gabriel Kolko's analysis of "the economic meltdown" now underway in the global financial markets.


Sincerely,
Francis McCollum Feeley
Professor of American Studies/
Director of Research
Université Stendhal
Grenoble, France
http://dimension.ucsd.edu/CEIMSA-IN-EXILE/


__________________
A.
from Information Clearing House :
4 August 2006
http://www.informationclearinghouse.info/


Human Rights Watch Accuses Israel of War Crimes
By Jim Lobe

08/02/06 "IPS " -- -- In systematically failing to distinguish between Hezbollah fighters and civilian population in its three-and-a-half-week-old military campaign in Lebanon, the Israeli Defense Forces (IDF) have committed war crimes, according to a report released by Human Rights Watch Wednesday.

The 50-page report, "Fatal Strikes: Israel's Indiscriminate Attacks Against Civilians in Lebanon," detailed nearly two dozen cases of IDF attacks in which a total of 153 civilians, including 63 children, were killed in homes or motor vehicles.

In none of the cases did HRW researchers find evidence that there was a significant enough military objective to justify the attack, given the risks to civilian lives, while, in many cases, there was no identifiable military target. In still other cases cited in the report, Israeli forces appear to have deliberately targeted civilians.

"By consistently failing to distinguish between combatants and civilians, Israel has violated one of the most fundamental tenets of the laws of war: the duty to carry out attacks on only military targets," according to the report.

"The pattern of attacks during the Israeli offensive in Lebanon suggests that the failures cannot be explained or dismissed as mere accidents; the extent of the pattern and the seriousness of the consequences indicate the commission of war crimes," it concluded.

The report, which was based on interviews with victims and independent witnesses of attacks, as well as investigation of the sites where the attacks occurred, called for the United States to immediately suspend transfers to Israel of arms, ammunition, and other material credibly alleged to have been used in such attacks until they cease.

In addition, it called on United Nations Secretary-General Kofi Annan to establish a formal commission to investigate the alleged war crimes with a view to holding accountable those responsible for their commission.

Such a commission should also investigate Hezbollah's rocket attacks against Israel which have been the subject of previous HRW reports. Since the onset of the latest round of fighting July 12, Hezbollah has launched some 2,000 rockets into predominantly civilian areas in Israel, killing at least 19 Israeli civilians and wounding more than 300 others. Given the inherently indiscriminate nature of the rockets, these attacks also constitute war crimes, according to the New York-based group.

The report, whose main conclusions about Israel's failure to discriminate between civilian and military targets echo a statement by Amnesty International two days ago, was issued just hours after HRW released the preliminary results of its investigation of the July 30 Israeli air strike on an apartment building in Qana in southern Lebanon, which was initially reported to have killed 54 people, most of them children, who had taken refuge in the basement.

HRW, which took testimony from some of the nine survivors it identified, said that it had confirmed the deaths of 28 people, including 16 children, in the building and that 13 others remained missing and were believed to be buried in the rubble. It said that at least 22 people survived the attack and escaped the basement.

One of the survivors, Muhammad Mahmud Shalhoub, as well as a Qana villager who helped in the rescue effort, strongly denied initial Israeli claims that any Hezbollah fighters or rocket launchers were present in or around the home when the attack took place. HRW said its own on-site investigation, which took place July 31, as well as interviews with dozens of international journalists, rescue workers and international observers who visited Qana July 30 and 31, also yielded no evidence of any Hezbollah military presence in or around the building.

"The deaths in Qana were the predictable result of Israel's indiscriminate bombing campaign in Lebanon," said Sarah Leah Whitson, director of HRW's Middle East and North Africa Division, who called for international investigation to determine what took place.

Israel has insisted that it has tried hard to avoid civilian casualties, although the great majority of the more than 500 Lebanese who have reportedly been killed by Israeli fire have been civilians. Israel has claimed that Hezbollah's alleged practice of shielding its fighters and arms by locating them in civilian homes or areas and firing off missiles in populated areas – allegations which HRW said are the subject of ongoing investigations – has made civilian casualties unavoidable.

But the rights group said its own investigations of specific Israeli attacks, which included interviews with victims and witnesses, on-site visits, as well as corroboration, where available, by accounts by independent journalists and aid workers, had failed to uncover any evidence that Hezbollah was operating in or around the area during or before each attack.

"Hezbollah fighters must not hide behind civilians – that's an absolute – but the image that Israel has promoted of such shielding as the cause of so high a civilian death toll is wrong," according to HRW's executive director, Kenneth Roth. "In the many cases of civilian deaths examined by [us], the location of Hezbollah troops and arms had nothing to do with the deaths because there was no Hezbollah around."

He cited a July 13 attack which destroyed the home of a cleric known to be a Hezbollah sympathizer but with no record of having taken part in hostilities. The strike killed the cleric's wife, their 10 children, the family's Sri Lankan maid, as well as the cleric himself, according to the report.

In a July 16 attack on a home in Aitaroun, an Israeli aircraft killed 11 members of the al-Akhrass family, including seven Canadian-Lebanese dual nationals who were vacationing in the village at the time. HRW said it interviewed three villagers independently, all of whom denied that the family had any connection to Hezbollah. Among the victims were four children under the age of eight.

The report also assailed statements by Israeli officials and IDF commanders that only people associated with Hezbollah remain in southern Lebanon, so all are legitimate targets of attack. Israel has dropped leaflets in the region and even telephoned residents warning them that if they do not flee, they will be subject to attack.

But the report stressed that many civilians have been unable to leave because they are sick, wounded, or lack the means, such as money or gasoline, or are providing essential services to the civilian population that remains there. Still others have said they are afraid to leave because the roads have come under attack by Israeli warplanes and artillery.

Indeed, the report documents 27 deaths of civilians who were trying to flee the fighting by car and notes that the actual number of killings is "surely higher." In addition, the report cites air strikes against three clearly marked humanitarian aid vehicles.

"The pattern of attacks shows the Israeli military's disturbing disregard for the lives of Lebanese civilians," said Roth. "Israeli warnings of imminent attacks do not turn civilians into military targets," he added, noting that, according to the IDF's logic, "Palestinian militant groups might 'warn' Israeli settlers to leave their settlements and then feel justified in attacking those who remained."

Amnesty accused Israel of trying to convert southern Lebanon into a "free-fire zone," which it said Monday was "incompatible with international humanitarian law."

Copyright © 2006 IPS-Inter Press Service. All rights reserved.


See also: Peter Bouckaert's article published in the International Herald Tribune, " For Israel, innocent civilians are fair game."


_________________
B.
from Robert Fisk :
August 01, 2006
The Independent

How Can We Stand By And Allow This to Go On?
by Robert Fisk


They wrote the names of the dead children on their plastic shrouds. "Mehdi Hashem, aged seven - Qana," was written in felt pen on the bag in which the little boy's body lay. "Hussein al-Mohamed, aged 12 - Qana',' "Abbas al-Shalhoub, aged one - Qana.' And when the Lebanese soldier went to pick up Abbas's little body, it bounced on his shoulder as the boy might have done on his father's shoulder on Saturday. In all, there were 56 corpses brought to the Tyre government hospital and other surgeries, and 34 of them were children. When they ran out of plastic bags, they wrapped the small corpses in carpets. Their hair was matted with dust, most had blood running from their noses.

You must have a heart of stone not to feel the outrage that those of us watching this experienced yesterday. This slaughter was an obscenity, an atrocity - yes, if the Israeli air force truly bombs with the "pinpoint accuracy' it claims, this was also a war crime. Israel claimed that missiles had been fired by Hizbollah gunmen from the south Lebanese town of Qana - as if that justified this massacre. Israel's Prime Minister, Ehud Olmert, talked about "Muslim terror" threatening "western civilisation" - as if the Hizbollah had killed all these poor people.

And in Qana, of all places. For only 10 years ago, this was the scene of another Israeli massacre, the slaughter of 106 Lebanese refugees by an Israeli artillery battery as they sheltered in a UN base in the town. More than half of those 106 were children. Israel later said it had no live-time pilotless photo-reconnaissance aircraft over the scene of that killing - a statement that turned out to be untrue when The Independent discovered videotape showing just such an aircraft over the burning camp. It is as if Qana - whose inhabitants claim that this was the village in which Jesus turned water into wine - has been damned by the world, doomed forever to receive tragedy.

And there was no doubt of the missile which killed all those children yesterday. It came from the United States, and upon a fragment of it was written: "For use on MK-84 Guided Bomb BSU-37-B". No doubt the manufacturers can call it "combat-proven" because it destroyed the entire three-storey house in which the Shalhoub and Hashim families lived. They had taken refuge in the basement from an enormous Israeli bombardment, and that is where most of them died.

I found Nejwah Shalhoub lying in the government hospital in Tyre, her jaw and face bandaged like Robespierre's before his execution. She did not weep, nor did she scream, although the pain was written on her face. Her brother Taisir, who was 46, had been killed. So had her sister Najla. So had her little niece Zeinab, who was just six. "We were in the basement hiding when the bomb exploded at one o'clock in the morning,' she said. "What in the name of God have we done to deserve this? So many of the dead are children, the old, women. Some of the children were still awake and playing. Why does the world do this to us?"
Yesterday's deaths brought to more than 500 the total civilian dead in Lebanon since Israel's air, sea and land bombardment of the country begun on 12 July after Hizbollah members crossed the frontier wire, killed three Israeli soldiers and captured two others. But yesterday's slaughter ended more than a year of mutual antagonism within the Lebanese government as pro-American and pro-Syrian politicians denounced what they described as "an ugly crime".

Thousands of protesters attacked the largest United Nations building in Beirut, screaming: "Destroy Tel Aviv, destroy Tel Aviv," and Lebanon's Prime Minister, the normally unflappable Fouad Siniora, called US Secretary of State Condoleezza Rice and ordered her to cancel her imminent peace-making trip to Beirut.

No one in this country can forget how President George Bush, Ms Rice, and Tony Blair have repeatedly refused to call for an immediate ceasefire - a truce that would have saved all those lives yesterday. Ms Rice would say only: "We want a ceasefire as soon as possible,' a remark followed by an Israeli announcement that it intended to maintain its bombardment of Lebanon for at least another two weeks.

Throughout the day, Qana villagers and civil defence workers dug through the ruins of the building with spades and with their hands, tearing at the muck until they found one body after another still dressed in colourful clothes. In one section of the rubble, they found what was left of a single room with 18 bodies inside. Twelve of the dead were women. All across southern Lebanon now, you find scenes like this, not so grotesque in scale, perhaps, but just as terrible, for the people of these villages are terrified to leave and terrified to stay. The Israelis had dropped leaflets over Qana, ordering its people to leave their homes. Yet twice now since Israel's onslaught began, the Israelis have ordered villagers to leave their houses and then attacked them with aircraft as they obeyed the Israeli instructions and fled. There are at least 3,000 Shia Muslims trapped in villages between Qlaya and Aiteroun - close to the scene of Israel's last military incursion at Bint Jbeil - and yet none of them can leave without fear of dying on the roads.

And Mr Olmert's reaction? After expressing his "great sorrow", he announced that: "We will not stop this battle, despite the difficult incidents [sic] this morning. We will continue the activity, and if necessary it will be broadened without hesitation." But how much further can it be broadened? Lebanon's infrastructure is being steadily torn to pieces, its villages razed, its people more and more terrorised - and terror is the word they used - by Israel's American-made fighter bombers. Hizbollah's missiles are Iranian-made, and it was Hizbollah that started this war with its illegal and provocative raid across the border. But Israel's savagery against the civilian population has deeply shocked not only the Western diplomats who have remained in Beirut, but hundreds of humanitarian workers from the Red Cross and major aid agencies.

Incredibly, Israel yesterday denied safe passage to a UN World Food Programme aid convoy en route to the south, a six-truck mission that should have taken relief supplies to the south-eastern town of Marjayoun. More than three quarters of a million Lebanese have now fled their homes, but there is still no accurate figure for the total number still trapped in the south. Khalil Shalhoub, who survived amid the wreckage in Qana yesterday, said that his family and the Hashims were just too "terrified" to take the road out of the village, which has been attacked by aircraft for more than two weeks. The seven-mile highway between Qana and Tyre is littered with civilian homes in ruins and burnt-out family cars. On Thursday, the Israeli Army's Al-Mashriq radio, which broadcasts into southern Lebanon, told residents that their villages would be "totally destroyed" if missiles were fired from them. But anyone who has watched Israel's bombing these past two weeks knows that, in many cases, the Israelis do not know the location in which the Hizbollah are firing missiles, and - when they do - they frequently miss their targets. How can a villager prevent the Hizbollah from firing rockets from his street? The Hizbollah do take cover beside civilian houses - just as Israeli troops entering Bint Jbeil last week also used civilian homes for cover. But can this be the excuse for slaughter on such a scale?

Mr Siniora addressed foreign diplomats in Beirut yesterday, telling them that the government in Beirut was now only demanding an immediate ceasefire and was not interested any longer in a political package to go with it. Needless to say, Mr Jeffrey Feltman, whose country made the bomb which killed the innocents of Qana yesterday, chose not to attend.
© 2006 Independent News and Media Limited



_________________
C.
from Edward Herman :
Subject: FW: [AcademicsforJustice] The rules of covering the Israeli-Arab conflict
Date: Thu, 3 Aug 2006
http://academicsforjustice.org


Francis,
Could be the instruction list on the basis of which the US media work.
Ed


__________________________________________________________

English version

The rules of covering the Israeli-Arab conflict

 Rule # 1: In the Middle East, it is always the Arabs that attack first, and
it's always Israel who defends itself. This is called "retaliation".
 
Rule # 2: The Arabs, whether Palestinians or Lebanese, are not allowed to
kill Israelis. This is called "terrorism"
 
 Rule # 3: Israel has the right to kill Arab civilians; this is called
"self-defense", or these days "collateral damage".
  
  Rule # 4: When Israel kills too many civilians. The Western world calls
for restraint. This is called the "reaction of the international community".

  
  Rule # 5: Palestinians and Lebanese do not have the right to capture
Israeli military, not even a limited number, not even 1 or 2.
  
  Rule # 6: Israel has the right to capture as many Palestinians as they
want (Palestinians: around 10000 to date, 300 of which are children,
Lebanese: 1000s to date, being held without trial). There is no limit; there
is no need for proof of guilt or trial. All that is needed is the magic
word: "terrorism"
  
  Rule # 7: When you say "Hezbollah", always be sure to add "supported by
Syria and Iran"
  
  Rule # 8: When you say "Israel", never say "supported by the USA, the UK
and other European countries", for people (God forbid) might believe this is
not an equal conflict   
  
  Rule # 9: When it comes to Israel, don't mention the words "occupied
territories", "UN resolutions", "Geneva conventions". This could distress
the audience of Fox.
  
  Rule # 10: Israelis speak better English than Arabs. This is why we let
them
Speak out as much as possible, so that they can explain rules 1 through 9.
This is called "neutral journalism".
  
  Rule # 11: If you don't agree with these rules or if you favor the Arab
side over the Israeli side, you must be a very dangerous anti-Semite. You
may even have to make a public apology if you express your honest opinion
(isn't democracy wonderful?)

______________________________________________________________________
version française
Voici, en exclusivité, ces règles que tout le monde doit avoir à l'esprit lorsqu'il regarde le JT (journal télévisé) le soir, ou quand il lit son journal le matin. Tout deviendra simple.
Règle numéro 1: Au Proche Orient, ce sont toujours les arabes qui attaquent les premiers et c'est toujours Israël qui se défend. Cela s'appelle des représailles.
Règle numéro 2: Les arabes, Palestiniens ou Libanais n'ont pas le droit de tuer des civils de l'autre camp. Cela s'appelle du terrorisme.
Règle numéro 3: Israël a le droit de tuer les civils arabes. Cela s'appelle de la légitime défense.
Règle numéro 4: Quand Israël tue trop de civils, les puissances occidentales l'appellent à la retenue. Cela s'appelle la réaction de la communauté internationale.
Règle numéro 5: Les Palestiniens et les libanais n'ont pas le droit de capturer des militaires israéliens, même si leur nombre est très limité et ne dépasse pas trois soldats.
Règle numéro 6: Les israéliens ont le droit d'enlever autant de palestiniens qu'ils le souhaitent (environ 10,000 prisonniers à ce jour dont près de 300 enfants). Il n'y a aucune limite et n'ont besoin d'apporter aucune preuve de la culpabilité des personnes enlevées. Il suffit juste de dire le mot magique "terroriste".
Règle numéro 7: Quand vous dites "Hezbollah", il faut toujours rajouter l’expression «soutenu par la Syrie et l'Iran».
Règle numéro 8: Quand vous dites "Israël", Il ne faut surtout pas rajouter après: «soutenu par les Etats-Unis, France et l'Europe», car on pourrait croire qu'il s'agit d'un conflit déséquilibré.
Règle numéro 9 : Ne jamais parler de "Territoires occupés ", ni de résolutions de l'ONU, ni de violations du droit international, ni des conventions de Genève. Cela risque de perturber le téléspectateur et l'auditeur de France Info.
Règle numéro 10 : Les israéliens parlent mieux le français que les arabes. C'est ce qui explique qu'on leur donne, ainsi qu'à leurs partisans, aussi souvent que possible la parole. Ainsi, ils peuvent nous expliquer les règles précédentes (de 1 à 9). Cela s'appelle de la neutralité journalistique.
Règle numéro 11 : Si vous n'êtes pas d'accord avec ses règles ou si vous trouvez qu'elles favorisent une partie dans le conflit contre une autre, c'est que vous êtes un dangereux antisémite.
 
            soyez  humain et soutenez les libanais  !!!!!!        



------------------------------------------------------------------------------
Contact your representatives and elected officials: use
http://cflweb.org/congress_merge_.htm

For other ways to help, see http://BoycottIsraeliGoods.org


_________________
D.
from TruthOut :
4 August 2006
http://www.truthout.org
 Reporters vs. the White House
    NOW
    t r u t h o u t | Programming Note
    Airdate: Friday, August 4, 2006, at 8:30 p.m. on PBS.
    (Check local listings at http://www.pbs.org/now/sched.html.)
Is the press failing its responsibility to the truth? This time on NOW.

    Is the press still fulfilling its obligation to the truth? NOW's David Brancaccio talks with Orville Schell, writer and Dean of the Graduate School of Journalism at the University of California, Berkeley, about the role of the press as a democracy watchdog. Some say the Fourth Estate has lost its teeth and is being manipulated into biased coverage of the war on terror and the White House in particular. Who's pulling the press' strings? This time on NOW.

    Note: The NOW website at www.pbs.org/now will provide additional coverage starting Friday morning, August 4. Features will include a review of rocky relations between the White House and journalists. Also, Middle East expert Alon Ben-Meyer puts the Lebanon Crisis in context.
  -------
  Jump to today's Truthout Features at http://www.truthout.org :

 Today's Truthout Features -------------- Top Military Lawyers Oppose Plan for Special Courts Administration, Congress Eye "Liberation" of Cuba Human Rights Watch: Israel Guilty of War Crimes Judith Coburn | How Not to Vietnamize Iraq John R. MacArthur | The American Raj Requires Instability Exodus of Somali Ministers Puts Power in Islamists' Hands Rumsfeld Testifies to Senate About Iraq Jean Daniel | Israel in Iran's Trap Bill Moyers: Faith & Reason | Pema Chodron Stacy Bannerman | Fly the Flag, Forget the Dead British Ambassador Gives Dire Prediction on Iraq Lebanese Premier: Death Toll Tops 900 Barb Guy | Signing Off on a Constitutional Crisis The New York Times | Strong-Arming the Vote Guantanamo Detainees May Remain Indefinitely: Gonzalez Army Raises Enlistment Age to 42 Court Rules DeLay's Name Stays on Ballot Israel and Hezbollah Continue War; Civilian Death Toll Rises NOW | Reporters vs. the White House Military Unit Accused of "Racism" and "Kill Counts" -------------- t r u t h o u t  Town Meeting t r u t h o u t  Home

_________________
E.

From: Ralph Nader and Peter Camejo :
Date: Fri, 4 Aug 2006
Subject: Fisk v. Friedman



Dear Friend,
There are no more excuses.
Either we organize for change.
Or we don’t.
We have the technology.
We have access to a flood of information.

Here’s a case in point:
Let’s say that you want to listen to a news show about the war in Lebanon. In most areas of the United States, you can pick up National Public Radio’s Fresh Air with Terri Gross.
This week, Gross interviewed New York Times columnist Thomas Friedman. Friedman has just returned from the Middle East.
“I don’t care at the end of the day what Hezbollah says about Israel. They can hate the Israelis and the Jews all they want,” Friedman told Gross. “What really disgusts me and makes me enormously angry is not what they do to the Israelis. It’s what they do to their own people. The future they have deprived their own children of. The fact that they hate Israel more than they love their own kids. That is such a travesty.”
Gross then asked whether Friedman has agonized over the death of innocents in Lebanon.
“Of course,” Friedman said. “And this isn’t some – I feel agonized about all civilians. I lived in Beirut for five years... I was so excited to go back and see the incredible amount of rebuilding that had happened... I have a lot of friends there. Lebanon is where I started my career. It breaks my heart to see this.”
If so, why not save some “disgust” and “anger” for the illegal collective destruction through mass bombing of Lebanese families, their homes and critical public services – paid for in part by American taxpayers?

So, you can listen to Gross interview Friedman, or you can change the channel and listen to Democracy Now and listen to Amy Goodman interview the London Independent’s Robert Fisk.
Unlike Friedman, who now speaks to diplomats and world leaders, Fisk goes to the scene of the various bloody fields and reports first hand.
Fisk reported on last week’s Israeli bombing massacre of more than 60 civilians – about half of them children – at Qana, Lebanon – a city that saw an aerial massacre by Israel of 106 innocents in 1996.
The Israelis said they fired in the area because Hezbollah was firing rockets from Qana – a claim residents of Qana disputed.
Here is what he told Amy Goodman just three days ago:
“It’s quite clear from listening to the Israeli Defense Forces statement today that they believe that family deserved to die, because 90 feet away, they claim, a missile was fired. So they sentenced all those people to death. Is that what we're supposed to believe? I mean, presumably it is. I can't think of any other reason why they should say, ‘Well, 30 meters away a missile was fired.’ Well, thanks very much. So those little children’s corpses in their plastic packages, all stuck together like giant candies today, this is supposed to be quite normal, this is how war is to be waged by the IDF.”

“I got back from Tyre on a very dangerous overland journey on an open road, which was under air attack, and I got back, and just before the electricity was cut, I saw the BBC reporting what the Israelis had said, but without questioning the morality that if someone fires a missile near your home, therefore it is perfectly okay for you to die.”


So, you have a choice : NPR’s Terri Gross and the New York Times’ Thomas Friedman or  Democracy Now’s Amy Goodman and the London Independent’s Robert Fisk.

(Now, you might say – how am I supposed to listen to Democracy Now? I can’t get it on my radio dial. If you can’t, you can get it on-line. You can get almost every radio station on line. And soon the same will be true for television. As it is now true for print.)

There is one answer to war: peace.

There is one answer to violence: non-violence.

There is one answer to the right-wing corporatist drift in our country – organize.

Our children don’t know that answer because we live in such a militaristic culture that non-violence, peace and organizing have been shut out. (One thing the children of the United States, Lebanon, Israel and Palestine of a certain means have in common is violent video games.)

But Americans can organize the people for settling conflicts through peace and non-violence – an organizing strategy still in its infancy – although it has worked well in South Africa, in the Ukraine, in the Philippines – and earlier in India.

In the 1990s, a Palestinian-American, Mubarak Awad, started a center for non violence in the West Bank. He imported the complete works of Mahatma Gandhi – but the Israelis threw him out of the country for advocating a non-violent revolution against the occupation.

Kids know more today about X-Box video games than they know about Dorothy Day, Cesar Chavez, and Martin Luther King.

They know far more about war games and mayhem than they know about Gandhi and Saul Alinsky.

To help turn this situation around, and as our enduring recognition of your ongoing support, we offer you today three important books for a contribution of $100 to help us pay down our dwindling campaign expenses.

Image  

First, hot off the presses, Gandhi and Beyond: Nonviolence For an Age of Terrorism by David Cortright (2006)

This is the long awaited introduction to the history of non-violence resistance by Cortright, the former head of the largest peace organization in the United States during the 1980s – SANE – and now a professor at the Joan B. Kroc Institute for International Peace Studies at the University of Notre Dame.
Image
 

Second is a book about non violence for the younger generation – Non Violence Explained to My Children by French scholar Jacques Semelin (2002)

Semelin has been working on the issues of violence and non-violent action for almost twenty years – and he’s found that most of the questions children ask about this subject deal with day-to-day life: If someone hassles me, what should I do? How do I deal with bullies at school? What about violent kids? This book is based on his teenaged daughters’ nearly seventy questions – and he gives answers from an ethical and historical perspective.



And third, Robert Fisk’s classic – Pity the Nation: The Abduction of Lebanon (2002).

Abducted once, abducted once again. But maybe someday, we can learn from history. If you know nothing about Israel’s meddling with Lebanon, start with this book.

Again, that’s three cogent learned books – a special gift for young and old alike – for a donation of $100 to our campaign. Please consider giving a second set of these three books to friends in need – of political insight.

Onward in peace.

Sincerely,
Ralph Nader and Peter Camejo



_________________
F.
from Greg Palast :
August 3, 2006

THE NEW PALAST INVESTIGATIONS
"THE BEST THING IN THE WORLD FOR BIG OIL"










… Bobby Kennedy and Palast on why Saddam had to go :

"This war in Iraq has been the best thing in the world for Big Oil and OPEC. They've made the largest profits in the history of the world. The interesting thing about your book is you show how it was all planned from the beginning. The story is like a spy thriller." -- Robert F. Kennedy Jr.


Listen to RFK and Greg Palast on Iraq, a 20-minute conversation about blood and oil, the podcast of 'Ring of Fire' from Air America.


The following is part of the story referenced in their discussion:
THE JERK: WHY SADDAM HAD TO GO
by Greg Palast
Excerpt from ' Armed Madhouse'

The 323-page multi-volume "Options for Iraqi Oil" begins with the expected dungeons-and-dragons warning:
The report is submitted on the understanding that [the
State Department] will maintain the contents confidential.

 

For two years, the State Department (and Defense and the White House) denied there were secret plans for Iraq's oil. They told us so in writing. That was the first indication the plan existed. Proving that, and getting a copy, became the near-to-pathologic obsession of our team.

Our big break came when James Baker's factotum, Amy Jaffe, first reached on her cell in Amsterdam, then at Baker's operation in Houston, convinced herself that I had the right to know about the plan. I saw no reason to correct her impression. To get the plan's title I used a truly dumb trick, asking if her copy's headings matched mine. She read it to me and listed its true authors from the industry.

The plan carries the State Department logo on the cover, Washington DC. But it was crafted in Houston, under the tutelage of the oil industry -- including, we discovered, Donald Hertzmark, an advisor to the Indonesia state oil company, and Garfield Miller of Aegis Energy, advisors to Solomon Smith Barney, all hosted by the James A. Baker III Institute.

After a year of schmoozing, Jaffe invited me to the Baker lair in Houston.

The James A. Baker III Institute is constructed a bit like a church or mosque, with a large echoing rotunda under a dome at its center, encircled by memorabilia and photos of the Great Man himself with the world's leaders, about evenly split between dictators and democrats.

And there is the obligatory shot of a smiling Nelson Mandela shaking Baker III's hand. (Mandela is not so impolite as to remind Jim that he was Reagan's Chief of Staff when Reagan coddled the regime that kept Mandela imprisoned.)

For tax purposes, it's an educational institute, and looking through the alarm-protected display cases along the wall was unquestionably an education. You could virtually write the recommendations of the 'Options for Iraqi Oil' report by a careful inspection of the trinkets of Baker's travels among the powerful.

There is the golden royal robe given Baker by Kazakh strongman Nazerbaev, the one who shared in the $51 million payment from ExxonMobil -- a James A. Baker client -- and alongside it a jeweled sword with a note from Nazerbaev, "Jim, there will always be a slice for you." (I made that up.)

Who is this James A. Baker III that he rates a whole institute, and one that will tell Iraq its oil future? Once Secretary of State to Bush Sr., Baker was now promoted to consigliere to ExxonMobil, the Republican National Committee and the Kingdom of Saudi Arabia.

In Houston, I found in Jaffe a preppy, talky Jewish girl with a Bronx accent like a dentist's drill who, stranded in a cowboy world, poignantly wanted to be one of The Boys. She thinks she can accomplish this through fashion accoutrements -- she showed me her alligator cowboy boots and rolled her eyes -- "for Rodeo Day!"

Lucky for me and my (hidden) recorder, she did not learn from Baker and the boys' Rule #1 for rulers: shut up.

So while Amy was in the mood to say too much, and before I got into the details of Big Oil's plan for Iraq, I needed Amy's help in finding the answer to the question that was just driving me crazy: why did Saddam have to go? Why did the oil industry promote an invasion of Iraq to get rid of Saddam?

The question is basic but the answer is not at all obvious.

We know the neo-cons' answer: Their ultimate target of the invasion was Saudi Arabia, which would be cut low by a Free Iraq's busting the OPEC oil cartel. But Big Oil wouldn't let that happen. The neo-cons' scheme ended up an unnoted smear under
Amy's alligator boot heels.

And we can rule out Big Oil's desire for Iraq's oil as the decisive motive to invade. The last thing the oil industry wanted from Iraq in 2001 was a lot more oil.

Neither Saddam's affection for euro currency nor panic over oil supply 'peaking' ruffled the international oil industry. What, then, made Saddam, so easy to hug in the 1980s, unbearable in the 1990s?

Saddam had to go, but why?

Amy told me they held meetings about it.

Beginning just after Bush's Florida 'victory' in December 2000, the shepherds of the planet's assets got together to plan our energy future under the weighty aegis of the "Joint Task Force on Petroleum of the James A. Baker III Institute and the Council on Foreign Relations." The master plan makers included Paul Bremer's and Kissinger's partner, Mack McLarty, CEO of Kissinger McLarty Associates; John Manzoni of British Petroleum; Luis Giusti, former CEO of the Venezuelan state oil company (until Hugo Chavez kicked him out); Ken Lay of Enron (pre-indictment); Philip Verleger of the National Petroleum Council, and other movers and shakers crucial to such bi-partisan multi-continental group gropes -- all chaired by Dr. Edward Morse, the insider's insider, from Hess Oil Trading.

Their final report detailed Saddam's crimes. Gassing Kurds and Iranians? No. James A. Baker was the Reagan Chief of Staff when the U.S. provided Saddam the intelligence to better target his chemical weapons. Weapons of Mass Destruction? Not since this crowd stopped selling him the components.

In the sanitary words of the Council on Foreign Relations' report (written up by Jaffe herself), Saddam's problem was that he was a "swinger":
Tight markets have increased U.S. and global vulnerability
to disruption and provided adversaries undue potential in-
fluence over the price of oil. Iraq has become a key
"swing" producer, posing a difficult situation for the U.S.
government.

Now hold on a minute: Why is our government in a "difficult" position if Iraq is a "swing producer" of oil?

The answer was that Saddam was jerking the oil market up and down. One week, without notice, the man in the moustache suddenly announces he's going to "support the Palestinian intifada" and cuts off all oil shipments. The result: Worldwide oil prices jump up. The next week, Saddam forgets about the Palestinians and pumps to the maximum allowed under the Oil-for-Food Program. The result: Oil prices suddenly dive-bomb. Up, down, up, down. Saddam was out of control.

"Control is what it's all about," one oilman told me. "It's not about getting the oil, it's about controlling oil's price."

So, within days of Bush's election in November 2000, the James Baker Institute issued this warning:
In a market with so little cushion to cover unexpected
events, oil prices become extremely sensitive to perceived
supply risks. Such a market increases the potential lever-
age of an otherwise lesser producer such as Iraq...

I met with Falah Aljibury, an advisor to Goldman Sachs, the Baker/CFR group and, I discovered, host to the State Department's invasion planning meetings in February 2001. The Iraqi-born industry man put it this way: "Iraq is not stable, a wild card." Saddam cuts production, or suddenly boosts it, playing games with the U.N. over the Oil-for-Food Program. The tinpot despot was, almost alone, setting the weekly world price of oil and Big Oil did not care for that. In the CFR's sober language:
Saddam is a "destabilizing influence... to the flow of oil
to international markets from the Middle East."

With Saddam out of control, jerking markets up and down, the price of controlling the price was getting just too high. Saddam drove the oil boys bonkers. For example, Saddam's games pushed the State Department, disastrously, to launch, in April 2002, a coup d'etat in Venezuela.

This could not stand. Saddam delighted in playing cat-and-mouse with the USA and our oil majors. Unfortunately for him, he wasn't playing with mice, but a much bigger and unforgiving breed of rodents.

Saddam was asking for it. It was time for a "military assessment." The CFR concluded:
Saddam Hussein has demonstrated a willingness to
threaten to use the oil weapon to manipulate oil mar-
kets... United States should conduct an immediate pol-
icy review toward Iraq, including military, energy,
economic, and political/diplomatic assessments.

The true motive to invade Iraq, Saddam's "manipulation of oil markets," was there, but not yet, in April 2001, the official excuse.

Not surprisingly, the desires of the "Project for a New American Century," the neo-con field of dreams, of remaking Arabia, was not in the Baker Institute-CFR plan. However, the conclusion, Saddam must go, matched the neo-con's policy demand, if for highly different reasons. The Baker-CFR panel had a limited concern: Get rid of the jerk, the guy yanking the market.

Morse was close-lipped about who saw and used the 2001 Baker-CFR report, but Amy Jaffe could not help telling me that Morse reported its conclusions in a briefing at the Pentagon.

More important, back in early 2001, the initial Baker-CFR report (another participant tipped me) was handed directly to Vice President Dick Cheney. Cheney met secretly with CFR task force members (including Ken Lay) to go over the maps of Iraq's oil fields. That, apparently, sealed it. Cheney took the CFR/Baker recommendations as his own plan for dissecting Iraq, I'm told, beginning with the none-too-thinly-veiled take-out-Saddam "assessment."

And whose plan was it? I knew the membership of the Baker-CFR group was Big Oil and its retainers. But I was curious to know who put up the cash for drafting the extravagant report that was so protective of OPEC and Saudi interests. This document was, after all, the outline on which the Bush administration drew its grand design for energy, from Iraq to California to Venezuela. According to Jaffe, the cost of this exercise in Imperialism Lite was funded by "the generous support of Khalid al-Turki" of Saudi Arabia.

**********
Excerpt adapted from Greg Palast's just-released New York Times bestseller, " ARMED MADHOUSE: Who's Afraid of Osama Wolf?, China Floats Bush Sinks, the Scheme to Steal '08, No Child's Behind Left and other Dispatches from the Front Lines of the Class War." www.GregPalast.com. May be reproduced without permission.
Special thanks to investigator Leni von Eckardt for preferring documentation over sleep.


______________
G.
from Gabriel Kolko :
26 July 2006
Counterpunch


Bankers Fear World Economic Meltdown

On June 15 we published Gabriel Kolko’s essay on the enormous instability of the world’d financial system. In the ensuing weeks Professor Kolko has enlarged his analysis, and here we offer our readers his updated version. AC / JSC

T here has been a profound and fundamental change in the world economy over the past decade. The very triumph of financial liberalization and deregulation, one of the keystones of the “Washington consensus” that the U.S. government, International Monetary Fund (IMF), and World Bank have persistently and successfully attempted over the past decades to implement, have also produced a deepening crisis that its advocates scarcely expected.


The global financial structure is today far less transparent than ever. There are many fewer reporting demands imposed on those who operate in it. Financial adventurers are constantly creating new “products” that defy both nation-states and international banks. The IMF’s managing director, Rodrigo de Rato, at the end of May 2006 deplored these new risks – risks that the weakness of the U.S. dollar and its mounting trade deficits have magnified greatly.

De Rato’s fears reflect the fact that the IMF has been undergoing both structural and intellectual crises. Structurally, its outstanding credit and loans have declined dramatically since 2003, from over $70 billion to a little over $20 billion today, doubling its available resources and leaving it with far less leverage over the economic policies of developing nations – and even a smaller income than its expensive operations require. It is now in deficit. A large part of its problems is due to the doubling in world prices for all commodities since 2003 – especially petroleum, copper, silver, zinc, nickel, and the like – that the developing nations traditionally export. While there will be fluctuations in this upsurge, there is also reason to think it may endure because rapid economic growth in China, India, and elsewhere has created a burgeoning demand that did not exist before – when the balance-of-trade systematically favored the rich nations. The U.S.A. has seen its net foreign asset position fall as Japan, emerging Asia, and oil-exporting nations have become far more powerful over the past decade, and they have increasingly become creditors to the U.S.A. As the U.S. deficits mount with its imports being far greater than its exports, the value of the dollar has been declining – 28 per cent against the euro from 2001 to 2005 alone. Even more, the IMF and World Bank were severely chastened by the 1997-2000 financial meltdowns in East Asia, Russia, and elsewhere, and many of its key leaders lost faith in the anarchic premises, descended from classical laissez-faire economic thought, which guided its policy advice until then. “…{O]ur knowledge of economic growth is extremely incomplete,” many in the IMF now admit, and “more humility” on its part is now warranted. The IMF claims that much has been done to prevent the reoccurrence of another crisis similar to that of 1997-98, but the international economy has changed dramatically since then and, as Stephen Roach of MorganStanley has warned, the world “has done little to prepare itself for what could well be the next crisis.”

The whole nature of the global financial system has changed radically in ways that have nothing whatsoever to do with “virtuous” national economic policies that follow IMF advice – ways the IMF cannot control. The investment managers of private equity funds and major banks have displaced national banks and international bodies such as the IMF, moving well beyond the existing regulatory structures. In many investment banks, the traders have taken over from traditional bankers because buying and selling shares, bonds, derivatives and the like now generate the greater profits, and taking more and higher risks is now the rule among what was once a fairly conservative branch of finance. They often bet with house money. Low-interest rates have given them and other players throughout the world a mandate to do new things, including a spate of dubious mergers that were once deemed foolhardy. There also fewer legal clauses to protect investors, so that lenders are less likely than ever to compel mismanaged firms to default. Aware that their bets are increasingly risky, hedge funds are making it much more difficult to withdraw money they play with. Traders have “re-intermediated” themselves between the traditional borrowers – both national and individual – and markets, deregulating the world financial structure and making it far more unpredictable and susceptible of crises. They seek to generate high investment returns – which is the key to their compensation – and they take mounting risks to do so.

In March of this year the IMF released Garry J. Schinasi’s book, Safeguarding Financial Stability, giving it unusual prominence then and thereafter. Schinasi’s book is essentially alarmist, and it both reveals and documents in great and disturbing detail the IMF’s deep anxieties. Essentially, “deregulation and liberalization,” which the IMF and proponents of the “Washington consensus” advocated for decades, has become a nightmare. It has created “tremendous private and social benefits” but it also holds “the potential (although not necessarily a high likelihood) for fragility, instability, systemic risk, and adverse economic consequences.” Schinasi’s superbly documented book confirms his conclusion that the irrational development of global finance, combined with deregulation and liberalization, has “created scope for financial innovation and enhanced the mobility of risks.” Schinasi and the IMF advocate a radical new framework to monitor and prevent the problems now able to emerge, but success “may have as much to do with good luck” as policy design and market surveillance. Leaving the future to luck is not what economics originally promised. The IMF is desperate, and it is not alone. As the Argentina financial meltdown proved, countries that do not succumb to IMF and banker pressures can play on divisions within the IMF membership -– particularly the U.S. –- bankers and others to avoid many, although scarcely all, foreign demands. About $140 billion in sovereign bonds to private creditors and the IMF were at stake, terminating at the end of 2001 as the largest national default in history. Banks in the 1990s were eager to loan Argentina money, and they ultimately paid for it. Since then, however, commodity prices have soared, the growth rate of developing nations in 2004 and 2005 was over double that of high income nations –- a pattern projected to continue through 2008 –- and as early as 2003 developing countries were already the source of 37 per cent of the foreign direct investment in other developing nations. China accounts for a great part of this growth, but it also means that the IMF and rich bankers of New York, Tokyo, and London have much less leverage than ever.

At the same time, the far greater demand of hedge funds and other investors for risky loans, combined with low-interest rates that allows hedge funds to use borrowed money to make increasingly precarious bets, has also led to much higher debt levels as borrowers embark on mergers and other adventures that would otherwise be impossible.

Growing complexity is the order of the world economy that has emerged in the past decade, and the endless negotiations of the World Trade Organization have failed to overcome the subsidies and protectionism that have thwarted a global free trade agreement and end of threats of trade wars. Combined, the potential for much greater instability – and greater dangers for the rich – now exists in the entire world economy.

High-speed Global Economics

The global financial problem that is emerging is tied into an American fiscal and trade deficit that is rising quickly. Since Bush entered office in 2001 he has added over $3 trillion to federal borrowing limits, which are now almost $9 trillion. So long as there is a continued devaluation of the U.S. dollar, banks and financiers will seek to protect their money and risky financial adventures will appear increasingly worthwhile. This is the context, but Washington advocated greater financial liberalization long before the dollar weakened. This conjunction of factors has created infinitely greater risks than the proponents of the “Washington consensus” ever believed possible.

There are now many hedge funds, with which we are familiar, but they now deal in credit derivatives – and numerous other financial instruments that have been invented since then, and markets for credit derivative futures are in the offing. The credit derivative market was almost nonexistent in 2001, grew fairly slowly until 2004 and then went into the stratosphere, reaching $17.3 trillion by the end of 2005.

What are credit derivatives? The Financial Times’ chief capital markets writer, Gillian Tett, tried to find out – but failed. About ten years ago some J.P. Morgan bankers were in Boca Raton, Florida, drinking, throwing each other into the swimming pool, and the like, and they came up with a notion of a new financial instrument that was too complex to be easily copied (financial ideas cannot be copyrighted) and which was sure to make them money. But Tett was highly critical of its potential for causing a chain reaction of losses that will engulf the hedge funds that have leaped into this market. Warren Buffett, second richest man in the world, who knows the financial game as well as anyone, has called credit derivatives “financial weapons of mass destruction.” Nominally insurance against defaults, they encourage far greater gambles and credit expansion. Enron used them extensively, and it was one secret of their success – and eventual bankruptcy with $100 billion in losses. They are not monitored in any real sense, and two experts called them “maddeningly opaque.” Many of these innovative financial products, according to one finance director, “exist in cyberspace” only and often are simply tax dodges for the ultra-rich. It is for reasons such as these, and yet others such as split capital trusts, collateralized debt obligations, and market credit default swaps that are even more opaque, that the IMF and financial authorities are so worried.

Banks simply do not understand the chain of exposure and who owns what –- senior financial regulators and bankers now admit this. The Long-Term Capital Management hedge fund meltdown in 1998, which involved only about $5 billion in equity, revealed this. The financial structure is now infinitely more complex and far larger – the top 10 hedge funds alone in March 2006 had $157 billion in assets. Hedge funds claim to be honest but those who guide them are compensated for the profits they make, which means taking risks. But there are thousands of hedge funds and many collect inside information, which is technically illegal but it occurs anyway. The system is fraught with dangers, starting with the compensation structure, but it also assumes a constantly rising stock market and much, much else. Many fund managers are incompetent. But the 26 leading hedge fund managers earned an average of $363 million each in 2005; James Simons of Renaissance Technologies earned $1.5 billion.

There is now a consensus that all this, and much else, has created growing dangers. We can put aside the persistence of imbalanced budgets based on spending increases or tax cuts for the wealthy, much less the world’s volatile stock and commodity markets which caused hedge funds this last May to show far lower returns than they have in at least a year. It is anyone’s guess which way the markets will go, and some will gain while others lose. Hedge funds still make lots of profits, and by the spring of 2006 they were worth about $1.2 trillion worldwide, but they are increasingly dangerous. More than half of them give preferential treatment to certain big investors, and the U.S. Security and Exchange Commission has since mid-June 2006 openly deplored the practice because the panic, if not chaos, potential in such favoritism is now too obvious to ignore. The practice is “a ticking time bomb,” one industry lawyer described it. These credit risks – risks that exist in other forms as well – seemed ready to materialize when the Financial Times’ Tett reported at the end of June that an unnamed investment bank was trying to unload “several billion dollars” in loans it had made to hedge funds. If true, “this marks a startling watershed for the financial system.” Bankers had become “ultracreative… in their efforts to slice, dice and redistribute risk, at this time of easy liquidity.” Low-interest rates, Avinash Persaud, one of the gurus of finance concluded, had led investors to use borrowed money to play the markets, and “a painful deleveraging is as inevitable as night follows day…. The only question is its timing.” There was no way that hedge funds, which had become precociously intricate in seeking safety, could avoid a reckoning and “forced to sell their most liquid investments.” “I will not bet on that happy outcome,” the Financial Times’ chief expert concluded in surveying some belated attempts to redeem the hedge funds from their own follies.

A great deal of money went from investors in rich nations into emerging market stocks, which have been especially hard-hit in the past weeks, and if they (leave then the financial shock will be great ­ the dangers of a meltdown exist there too.

Problems are structural, such as the greatly increasing corporate debt loads to core earnings, which have grown substantially from four to six times over the past year because there are fewer legal clauses to protect investors from loss –- and keep companies from going bankrupt when they should. So long as interest rates have been low, leveraged loans have been the solution. With hedge funds and other financial instruments, there is now a market for incompetent, debt-ridden firms. The rules some once erroneously associated with capitalism ­ probity and the like ­ no longer hold.

Problems are also inherent in speed and complexity, and these are very diverse and almost surrealist. Credit derivatives are precarious enough, but at the end of May the International Swaps and Derivatives Association revealed that one in every five deals, many of them involving billions of dollars, involved major errors – as the volume of trade increased, so did errors. They doubled in the period after 2004. Many deals were recorded on scraps of paper and not properly recorded. “Unconscionable” was Alan Greenspan’s description. He was “frankly shocked.” Other trading, however, is determined by mathematical algorithm (“volume-weighted average price,” it is called) for which PhDs trained in quantitative methods are hired. Efforts to remedy this mess only began in June of this year, and they are very far from resolving a major and accumulated problem that involves stupendous sums.

Stephen Roach, Morgan Stanley’s chief economist, on April 24 of this year wrote that a major financial crisis was in the offing and that the global institutions to forestall it– ranging from the IMF and World Bank to other mechanisms of the international financial architecture – were utterly inadequate. Hong Kong’s chief secretary in early June deplored the hedge funds’ risks and dangers. The IMF’s iconoclastic chief economist, Raghuram Rajan, at the same time warned that the hedge funds’ compensation structure encouraged those in charge of them to increasingly take risks, thereby endangering the whole financial system. By late June, Roach was even more pessimistic: “a certain sense of anarchy” dominated the academic and political communities, and they were “unable to explain the way the new world is working.” In its place, mystery prevailed. Reality was out of control.

The entire global financial structure is becoming uncontrollable in crucial ways its nominal leaders never expected, and instability is increasingly its hallmark. Financial liberalization has produced a monster, and resolving the many problems that have emerged is scarcely possible for those who deplore controls on those who seek to make money – whatever means it takes to do so. The Bank for International Settlements’ annual report, released June 26, discusses all these problems and the triumph of predatory economic behavior and trends “difficult to rationalize.” The sharks have outfoxed the more conservative bankers. “Given the complexity of the situation and the limits of our knowledge, it is extremely difficult to predict how all this might unfold.” The BIS (does not want its fears to cause a panic, and circumstances compel it to remain on the side of those who are not alarmist. But it now concedes that a big “bang” in the markets is a possibility, and it sees “several market-specific reasons for a concern about a degree of disorder.” We are “currently not in a situation” where a meltdown is likely to occur but “expecting the best but planning for the worst” is still prudent. For a decade, it admits, global economic trends and “financial imbalances” have created increasing dangers, and “understanding how we got to where we are is crucial in choosing policies to reduce current risks.” The BIS is very worried.

Given such profound and widespread pessimism, the vultures from the investment houses and banks have begun to position themselves to profit from the imminent business distress – a crisis they see as a matter of timing rather than principle. Investment banks since the beginning of 2006 have vastly expanded their loans to leveraged buy-outs, pushing commercial banks out of a market they once dominated. To win a greater share of the market, they are making riskier deals and increasing the danger of defaults among highly leveraged firms. There is now a growing consensus among financial analysts that defaults will increase substantially in the very near future. But because there is money to be made, experts in distressed debt and restructuring companies in or near bankruptcy are in greater demand. Goldman Sachs has just hired one of Rothschild’s stars in restructuring. All the factors which make for crashes – excessive leveraging, rising interest rates, etc. – exist, and those in the know anticipate that companies in difficulty will be in a much more advanced stage of trouble when investment banks enter the picture. But this time they expect to squeeze hedge funds out of the potential profits because they have more capital to play with.

Contradictions now wrack the world’s financial system, and a growing consensus now exists between those who endorse it and those, like myself, who believe the status quo is both crisis-prone as well as immoral. If we are to believe the institutions and personalities who have been in the forefront of the defense of capitalism, and we should, it may very well be on the verge of serious crises.

Gabriel Kolko is the leading historian of modern warfare. He is the author of the classic Century of War: Politics, Conflicts and Society Since 1914 and Another Century of War?. He has also written the best history of the Vietnam War, Anatomy of a War: Vietnam, the US and the Modern Historical Experience. His latest book, The Age of War, was published in March 2006.

He can be reached at: kolko@counterpunch.org