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SILVER back under 5!!!! Hooray, Hooray,...Hooray-Hooray-Hooray!
Looking for 4.50 or so, then buy buy buy buy...may be a long term hold like several years on the outside ...then again may pay off much quicker than that...
California proves too costly for departing businesses
By Del Jones, USA TODAY
Coast Converters is spending $800,000 to move to Las Vegas, but the Los Angeles plastic bag manufacturer will save enough on workers' compensation, electricity and other costs to recover that in less than a year, CEO Mitchell Greif says.
"It's really an unfair business practice to allow companies to move to Nevada and sell into California," Greif says. "But I'm doing it."
By Robert Hanashiro, USA TODAY
Mitchell Greif, CEO of Coast Converters, looks over a printing press.
California businesses are screaming about the high cost of operating in a state of high taxes, pricey real estate, mandates from Sacramento and a mountain of state budget red ink that someone will have to cover. Some, such as Coast Converters, are fleeing California in search of more friendly business environs. Meanwhile, other states and their cities are lining up to steal California's jobs.
3Com, once a landmark of Silicon Valley, now operates from Marlborough, Mass. Buck Knives, which has been making knives in California since shortly after World War II, will move from El Cajon to Idaho in 2005. Even General Electric, a trendsetter among corporate giants, is weighing a $500,000 incentive from North Carolina to move the GE Nuclear Energy headquarters from San Jose. GE expects to make a decision by year's end.
The recall election for governor has energized criticism of the state's business climate, and if the rhetoric is to be believed, the last job left in California will either be kept by Gov. Gray Davis or be turned over in Tuesday's election to actor Arnold Schwarzenegger or Lt. Gov. Cruz Bustamante.
California has a $1.4 trillion economy, the size of France's, that no serious seller of goods and services can ignore. Costco can't move its California stores, but is considering moving support employees, such as those who do photo finishing and make eyeglasses, because of the biggest crisis hitting California business: workers' compensation.
In many cases, the cost of workers' comp premiums has more than tripled in the past few years. California's system was originally designed to be "no-fault," but lawyers swoop in whenever there's a dispute, says Richard Galanti, chief financial officer of Costco. He says California rules have resulted in injured workers visiting the chiropractor two to four times as often as those suffering the exact injury in other states. Premiums also are escalating because of poor investment decisions by insurance companies, where more money was lost in dot-com investments than in other states.
Costco operates in 37 states. In the other 36, the average amount the company reserves for each injury is $26,000, Galanti says. In California, Costco reserves $71,000 per injury.
There are other laws specific to California, such as those requiring paid family leave and stricter ergonomic standards. Greif says he will save $130,000 a year operating in Nevada, because it requires overtime pay for work in excess of 40 hours in a week, rather than in California, where overtime must be paid for more than eight hours in a day.
Legislation just passed will require employers of more than 50 to provide health care. Companies have until 2007 to comply. Davis is expected to sign it into law before the election.
Labor groups and others defend such measures as necessary to protect workers and their families. "Poverty in California is mushrooming at an incredible rate," says Madeline Janis-Aparicio, executive director of Los Angeles Alliance for a New Economy, a coalition of unions, religious leaders, academics and elected officials.
"Things like the eight-hour day and family medical leave are protections keeping that trend from increasing," says Janis-Aparicio, who says the uprising about California's business climate is coming from "political opportunists."
But that does not deter communities outside California from using sophisticated presentations of charts and diagrams pointing out what an expensive place California is.
• Nevada has launched a print advertising campaign warning California businesses that "Worst case scenario is you're out of business." The state plans to spend $600,000 between August 2003 and June 2004 in newspapers, including the San Francisco Chronicle and The San Diego Union Tribune.
• Oklahoma has its own campaign to take California jobs, informally calling it "Revenge for the Dust Bowl," referring to the 1930s drought that sent farmers migrating to California. Yamanouchi Pharma Technologies moved its headquarters and 200 jobs this summer to Norman, Okla., from Palo Alto.
• Amarillo, Texas mails fake checks to California companies for $1 million to $5 million, which represent the $10,000 Amarillo will award for every job created that pays at least $12 an hour. The money comes from a half-cent sales tax in Amarillo earmarked for economic development.
From Irvine to Amarillo
AccuPoll took Amarillo up on its offer. The Irvine, Calif., company that makes electronic voting systems will open a service operation center in Amarillo before year's end. The company has leased luxurious office space in the Bank One Center in downtown for half of what it was paying for a rundown building in a bad location in Irvine, says company President Frank Wiebe.
For the 25 jobs it brings, Amarillo will pay the company $250,000. What does 25 jobs get you in California? Pretty much ignored, Wiebe says.
No one keeps track of the number of companies leaving California, but it's likely not as many as the critics say. Since the last recession began in March 2001, California has lost 2% of its jobs, the same percentage of jobs lost for the country as a whole, and job losses are concentrated almost entirely in the tech-heavy region around San Francisco and San Jose.
Still, 2.2 million Californians moved to other states in 1995-2000, according to the Census Bureau, while 1.4 million moved in from other states, for a net out-migration of 800,000. In the years 2000-02, it lost a net 168,000 residents to other states, but added more than 700,000 from foreign countries, including Mexico, according to Straszheim Global Advisors, an economic firm in Santa Monica, Calif.
Whether or not California is facing a job crisis is a matter of debate, but some started moving out during the deeper recession of the early 1990s. East Greenwich, R.I., music software company BitHeadz moved from Santa Cruz more than two years ago before the tech recession.
College graduates from the East weren't demanding a BMW Z3 convertible company car on top of a $60,000-a-year salary, CEO Steve O'Connell says. In Rhode Island, they expected half the pay and no car. They do require more training than those near Silicon Valley, but the state was there to cover $5,000 per employee toward training, saving BitHeadz $50,000, O'Connell says.
One-fifth of 400 businesses surveyed early this year by the California Chamber of Commerce and California Business Roundtable said they were planning to expand elsewhere or relocate entirely.
"We mail 10 to 20 personal relocation packets a day, primarily to Californians," says Harry York, CEO of the Reno-Sparks Chamber of Commerce, 25 miles from the California state line. The city has opened three high schools in the past three years without solving overcrowding problems.
Among U.S. cities, Las Vegas ranks second in job growth in the last five years, second only to the Bentonville, Ark., area, home of Wal-Mart. In the 12 months before July 2003, 20 companies moved from California to Las Vegas creating 1,157 jobs, according to the Nevada Development Authority.
California's reputation has taken an unanswered hit because few in business from inside the state will step up to defend it.
"We're shooting ourselves in the foot," and other states are "naturally" taking advantage, says Wayne Schell, CEO of the California Association for Local Economic Development, a group of 300 economic development associations. "I would do the same thing if I were in Nevada, Arizona or elsewhere. There is a climate that all hell is breaking loose."
Schell says California has business advantages that are being drowned out. It remains the center of technology and a place where investors still like to put capital. It's closer to Asian markets. Yet, the most often-heard defense of California is that it's too expensive for most businesses to move, Schell says.
California will remain a state of innovation, Schell says. "Trouble is, they're going to make it somewhere else."
He says that those soliciting California's jobs aren't fair with their comparisons. A chart provided to USA TODAY by Nevada says a house that costs $729,000 in Los Altos, Calif., goes for just $159,500 in Reno. But Schell says Reno is more similar to the Central Valley of California, where housing costs are more competitive, though still higher.
Taxes blamed
Still, California landed 49th in a business-tax friendliness ranking calculated this year by the Tax Foundation, which argues for lower taxes and tax simplicity.
In addition to personal income taxes, California has the highest corporate tax rate in the West, as high as 10% in some places, an estate tax and an inventory tax. Nevada has none of those, and its Legislature all but solved its budget problems this year by passing a payroll tax of 0.7%, essentially doubling a $100-per-worker tax it replaces. California's state government has an enormous red-ink problem caused largely by inflated spending when taxes from the dot-com boom poured in. The problem will be difficult to solve, no matter who is governor, and business worries that they will be taxed heavily as at least part of the solution.
Johnny Wallace, 55, isn't waiting around. The owner and only employee of John's Locksmithing is closing down in Rio Vista and heading for Reno. He formerly owned a bakery in Rio Vista and sold it, "because my energy bill doubled from $1,000 a month," he says while driving to his native California from a house-hunting trip in Reno. He says a $248,000, 2,600-square-foot house he was looking at in Reno would sell for almost twice that in Rio Vista.
BitHeadz chief O'Connell says he sold his house in Santa Cruz for $715,000 and bought one four times as large in Rhode Island for the same price.
California's biggest threat might not be the loss of existing jobs, but future jobs. Software maker PC-Doctor expects to expand gradually beyond its 50 employees. "It's easier to move before we grow," so it is leaving Emeryville near Berkeley, and operations will start in Reno soon after Tuesday's election, Vice President Aki Korhonen says.
More than half of PC-Doctor's employees have decided to stay with the company and move to Reno, many of them apartment dwellers who will now be able to afford homes, Korhonen says.
Korhonen is a native of Finland who also lived in Germany before moving to the USA 13 years ago. He says California has moved so much toward over-regulation and high taxes that the state reminds him more and more of Europe, although he says California is still far more business friendly than any country in Europe.
California's trend, however, is "scary," Korhonen says, and one reason PC-Doctor moved was as a pre-emptive strike against a competitor thinking about starting up in a low-cost state and seizing the competitive high ground.
http://www.usatoday.com/money/economy/employment/2003-10-01-california_x.htm
Dubai aims for half the world’s gold
New commodities center will focus on production, trade
Ara Alain Arzoumanian
Special to The Daily Star
Dubai is aiming to converge 50 percent of the world’s precious metals and stones production and trade at the Dubai Metals and Commodities Center, according to DMCC chairman Tawfic Abdullah.
“The Middle East, with a 26.5 percent market share, is the biggest consumer of gold and diamonds in the world,” said Abdullah, during a news conference at the Metropolitan Hotel in Beirut on Tuesday.
“The entire Eastern regions of the globe constitute 76 percent of the world market.” The DMCC delegation was visiting Beirut to promote the benefits of setting up operations in the 300-hectare project, which was conceived in 2002. The facility is a zone built for the sole purpose of offering residents a full market infrastructure for its core segments of gold, diamonds, precious metals, colored stones and commodities.
According to Abdullah, the DMCC is the only institution in the United Arab Emirates to offer complete ownership of business premises, as well as 100-percent ownership of the business itself. Businesses also enjoy a 50-year exemption from personal, corporate and income taxes and benefit from exemptions of customs duties.
Other unique features include the freedom to repatriate both capital and profits, and the benefits of having access to gold-trading facilities, storage hallmarking and essaying. A dedicated package for delivery facilities and access to several on-site gold refineries is also offered.
“The 56-story Almas (Diamond) Tower, scheduled for completion in 2005, will be the focal point of the project,” said Abdullah. “It will host the gold, diamond and commodities exchanges and form the base of all support facilities for local and international companies.
Demonstrating their commitment to provide a fully supportive market infrastructure, DMCC recently revealed plans to launch a system of commodity warehouse receipts, the Dubai Commodity Receipts, starting from early 2004.
Statistics show that Dubai imported some 300 tons of gold in 2002. The emirate has over 6,000 retail gold outlets, with the Dubai Duty Free selling over four tons of gold, worth $4.2 million, in 2002.
http://www.dailystar.com.lb/business/01_10_03_a.asp
Y I K E S !
Think gold forget the dollar
DUBAI WATERSHED/Michael Power
WHAT will history remember about 2003? That the eradication of Saddam Hussein's Iraq was but a pyrrhic victory for the US? That the Battle of Baghdad was a mere skirmish ahead of a much more seismic defeat in the Middle East? That the US won a war at the northern end of the Arabian Gulf only to be drubbed in nearby Dubai a few months later?
Let me explain: the decision made at the G-7 meeting in Dubai last week to weaken the dollar was a watershed in the rapidly unfolding some would say unravelling global economy.
And although the Americans see a drooping dollar as a triumph, my own view is that it signifies the beginning of the end of Pax Americana.
Any economist can tell you the US is living off borrowed money. Many will tell you it is also living off borrowed time. The big question is how long will it be before Uncle Sam feasting on a fix of 2,7bn worth of other nations' money per working day suffers from a bad case of cold turkey?
But before you start celebrating the prospect of the humbling of the hegemon, there is a catch. And it is a big one. Unfortunately, we are all hooked on the same habit. The globalised financial and trading system is high on a drug manufactured not in the Republic of Colombia but the District of Columbia: namely the US dollar.
Unrestrained production of the US currency is the cocaine that drives today's global economy. (It seems fitting that the US treasury secretary goes by the name of Snow!)
Once every three years, the International Monetary Fund-World Bank meeting is held away from the DC factory. This time, it was the turn of Dubai to play host to the circus of high finance, now characterised by armies of Armanis up to their necks in Nokias.
Yet the refreshing result was that discussions touched on subjects that had the Americans been the hosts would have been, if not untouchable, rude. It was a surreal scene: amidst the shimmering skyscrapers of Arabia, the world's moneymen talked openly of heretofore heresies like "Has the US bitten off more than it can chew in Iraq?", and "Is China about to eclipse the US?"
The general conclusion was "no": the US was still in charge. But it was telling that this was the first meeting that such a conclusion needed to be qualified by that all-revealing word "still". It begs the question: "For how much longer?"
The debate in Dubai centred on whether the coming collapse of the dollar would be a smooth retreat or an unseemly rout. Few officials from any nation wanted the latter, but markets often seem to go out of their way to snub their noses at such public sector wishes.
So brace yourselves: with the US now addicted to debt, needing 70% of the world's mobile savings to feed its growing habit, the question must be asked: are we entering the Teotwawki zone? Is this "the end of the world as we know it"?
How on earth did we get here? What has the world done to create such a dangerous reliance on a fiat currency, one backed by blind faith rather than something more tangible like gold?
The simple answer is that US consumers have developed eyes bigger than their wallets and the rest of the world (more fool us!) have been willing to sell to Joe Six-Pack on credit. Asia in particular exports tons of Toshibas only to be paid with Fed-printed dollars that are then recycled into US treasuries that in turn help finance the US budget deficit.
So the world turns. And as this merrygo-round gathers speed, the childish exhilaration we all feel grows. But it is not hard to predict it will all end in tears.
Meanwhile, many of the world's poorest nations nearly all also drowning in their own dollar debt came to Dubai to beg for time to carry out their own restructurings. They arrived a bedraggled bunch, a week after the developed world had drenched them in the cant of Cancun (now cynically renamed "Can-can't"). So, not surprisingly, they came not to raise the dollar but to bury it.
US officials actually claim they won the debate in Dubai in getting the Group of Seven to accept that foreign exchange markets should allow "a smooth adjustment of international imbalances based on market mechanisms". If so, this too will be a pyrrhic victory.
Already the central banks of Asia which are the main underwriters of the US's excesses are starting to doubt the dollar. Should they put all their foreign exchange nest eggs in the dollar basket? Increasingly the answer though few would admit to it in public is "no".
The US, from being the lender of the last resort to the global economy in the 1950s and 1960s, has become the borrower of the first resort in 2003. And like any banker faced with a runaway borrower, this is spreading a chill through the minds of the lenders of Asia.
Post 9/11, we have entered a dangerous period not just in global geopolitics but also geo-economics. The metric of value long central to global commerce the dollar is no longer the true north about which the world of finance can easily navigate.
The US triumphant last man standing after the Cold War slugfest is now faced with that most insidious of enemies: the Pete from Peoria who cannot say no to that interest-free Nissan.
Is there a silver lining to this cloud? Probably not. But there is a golden one, and SA can at least take some comfort in that. For the first time in my investment career during which time I regarded admitting as much as akin to committing a professional foul I am a gold bull.
And, at the risk of mixing metaphors, I predict this bull will run riot in a China shop, not an American one.
Power is portfolio manager, Investec Asset Management.
Oct 02 2003 07:48:16:000AM Business Day 1st Edition
Friday
03 October 2003
http://www.bday.co.za/bday/content/direct/1%2C3523%2C1444604-6096-0%2C00.html
Fifteen Fundamental Reasons To Own Gold.
John Embrey, a partner of Toronto-based Sprott Asset Management, and portfolio manager of the Sprott Gold & Precious Metals Fund which consistently ranks at or near the top of the world's best performing gold funds, has published his 15 Fundamental Reasons To Own Gold. They are well worth reading and are attached below with due acknowledgement to the Daily Reckoning..
1. Global Currency Debasement:
The US dollar is fundamentally & technically very weak and should fall dramatically. However, other countries are very reluctant to see their currencies appreciate and are resisting the fall of the US dollar. Thus, we are in the early stages of a massive global currency debasement which will see tangibles, and most particularly gold, rise significantly in price.
2. Investment Demand for Gold is Accelerating:
When the crowd recognizes what is unfolding, they will seek an alternative to paper currencies and financial assets and this will create an enormous investment demand for gold. To facilitate this demand, a number of new vehicles like Central Gold Trust and gold Exchange Traded Funds (Elf's) are being created.
3. Alarming Financial Deterioration in the US:
In the space of two years, the federal government budget surplus has been transformed into a yawning deficit, which will persist as far as the eye can see. At the same time, the current account deficit has reached levels which have portended currency collapse in virtually every other instance in history.
[Huh! what? I do not see dis on d faux news...or SeeBS or CNBC (Contains Nothing But Crap)]
4. Negative Real Interest Rates in Reserve Currency (US dollar):
To combat the deteriorating financial conditions in the US, interest rates have been dropped to rock bottom levels, real interest rates are now negative and, according to statements from the Fed spokesmen, are expected to remain so for some time. There has been a very strong historical relationship between negative real interest rates and stronger gold prices.
5. Dramatic Increases in Money Supply in the US and Other Nations:
US authorities are terrified about the prospects for deflation given the unprecedented debt burden at all levels of society in the US. Fed Governor Ben Bernanke is on record as saying the Fed has a printing press and will use it to combat deflation if necessary. Other nations are following in the US's footsteps and global money supply is accelerating. This is very gold friendly.
6. Existence of a Huge and Growing Gap between Mine Supply and Traditional Demand:
Gold mine supply is roughly 2500 tonnes per annum and traditional demand (jewellery, industrial users, etc.) has exceeded this by a considerable margin for a number of years. Some of this gap has been filled by recycled scrap but central bank gold has been the primary source of above-ground supply.
7. Mine Supply is Anticipated to Decline in the next Three to Four Years:
Even if traditional demand continues to erode due to ongoing worldwide economic weakness, the supply-demand imbalance is expected to persist due to a decline in mine supply. Mine supply will contract in the next several years, irrespective of gold prices, due to a dearth of exploration in the post Bre-X era, a shift away from high grading which was necessary for survival in the sub-economic gold price environment of the past five years and the natural exhaustion of existing mines.
8. Large Short Positions:
To fill the gap between mine supply and demand, central bank gold has been mobilized primarily through the leasing mechanism, which facilitated producer hedging and financial speculation. Strong evidence suggests that between 10,000 and 16,000 tonnes (30- 50% of all central bank gold) is currently in the market. This is owed to the central banks by the bullion banks, which are the counter party in the transactions.
9. Low Interest Rates Discourage Hedging:
Rates are low and falling. With low rates, there isn't sufficient contango to create higher prices in the out years. Thus there is little incentive to hedge, and gold producers are not only not hedging, they are reducing their existing hedge positions, thus removing gold from the market.
10. Rising Gold Prices and Low Interest Rates Discourage Financial Speculation on the Short Side:
When gold prices were continuously falling and financial speculators could access central bank gold at a minimal leasing rate (0.5 - 1% per annum), sell it and reinvest the proceeds in a high yielding bond or Treasury bill, the trade was viewed as a lay up. Everyone did it and now there are numerous stale short positions. However, these trades now make no sense with a rising gold price and declining interest rates.
11. The Central Banks are Nearing an Inflection Point when they will be Reluctant to Provide more Gold to the Market:
The central banks have supplied too much already via the leasing mechanism. In addition, Far Eastern central banks who are accumulating enormous quantities of US dollars are rumored to be buyers of gold to diversify away from the US dollar.
12. Gold is Increasing in Popularity:
Gold is seen in a much more positive light in countries beginning to come to the forefront on the world scene. Prominent developing countries such as China, India and Russia have been accumulating gold. In fact, China with its 1.3 billion people recently established a National Gold Exchange and relaxed control over the asset. Demand in China is expected to rise sharply and could reach 500 tonnes in the next few years.
13. Gold as Money is Gaining Credence:
Islamic nations are investigating a currency backed by gold (the Gold Dinar), the new President of Argentina proposed, during his campaign, a gold backed peso as an antidote for the financial catastrophe which his country has experienced and Russia is talking about a fully convertible currency with gold backing.
14. Rising Geopolitical Tensions:
The deteriorating conditions in the Middle East, the US occupation of Iraq, the nuclear ambitions of North Korea and the growing conflict between the US and China due to China's refusal to allow its currency to appreciate against the US dollar headline the geopolitical issues, which could explode at anytime. A fearful public has a tendency to gravitate towards gold.
15. Limited Size of the Total Gold Market Provides Tremendous Leverage:
All the physical gold in existence is worth somewhat more than $1 trillion US dollars while the value of all the publicly traded gold companies in the world is less than $100 billion US dollars. When the fundamentals ultimately encourage a strong flow of capital towards gold and gold equities, the trillions upon trillions worth of paper money could propel both to unfathomably high levels.
http://www.minesite.com/archives/features_archive/2003/Oct-2003/reasons021003.htm
And don't forget about silver.
"It makes no difference who you vote for – the two parties are really one party representing 4 percent of the people." --Gore Vidal
I think he would have said: "It makes no difference for whom you vote – the two parties are really one party representing 4 percent of the people."
Just cuz that Veedal guy don't probly use no phrases ending in pre postions...
Ya know, being elaquint an all...
The 9/11 Hijackings - An Inside Job?
An Inside Job?
US officials are compiling what one called "growing" evidence that other hijackings may have been planned for September 11. Officials from both the government and the airline industry tell TIME Magazine that a knife-like weapon was found on each of two separate Delta Airlines aircraft later that day, although neither plane took off due to the nationwide grounding after the World Trade Center and Pentagon attacks on hijacked United and American airlines planes.
Investigators are not yet certain how these weapons came to be on board the aircraft. But they increasingly believe that the weapons may have been prepositioned by accomplices for use by others. As one US official told TIME, "These look like inside jobs."
Numbers suggest terrorists targeted flights
The numbers appear out-of-whack, thankfully. And so, a lingering question is why the passenger loads on the four planes hijacked in U.S. skies are being described by industry officials as "very, very low."
"You have to think it was by design, that they didn't want to go on a flight with the chance of the passengers working against them,' said Dave Esser, head of the aeronautical science department at Embry-Riddle Aeronautical University. "If you've got the threat of a bomb or a gun you can hold people at bay. These guys were strong-arming people with box cutters and knives.
"They wanted the numbers to be on their side.'
And they were, staggeringly so.
Three of the transcontinental flights departed for the West Coast with at least two-thirds of the seats empty. Only 37 of the 182 seats were occupied -- including four by hijackers, at least two in first class -- as United Airlines' Flight 93 left Newark for San Francisco.
The only flight that was even half full proved to be American Airlines' Flight 11, a wide-body Boeing 767 that left Boston bound for Los Angeles with 81 passengers.
Bush-Linked Company Handled Security for the WTC, Dulles and United
George W. Bush's brother was on the board of directors of a company providing electronic security for the World Trade Center, Dulles International Airport and United Airlines, according to public records.
All 9/11 airports serviced by one Israeli company
ICTS is [...] an Israeli owned company, and [...] it sells services to every airport from which the hijacked planes operated, including security, sometimes through wholly owned subsidiaries like Huntleigh USA Corporation.
It has been suggested that the incredible feat of hijacking four aircraft without a single arrest at the gate would require the resources of a nation-state. This is even more true with the revelation that at least one gun had managed to be aboard a hijacked plane. One company had automatic inside access to all of the airports from which hijacked planes departed on 9-11, and to the airports used by Richard Reid, the shoe bomber. An Israeli company. One that Mossad agents could easily find employment with without the management knowing who they were or what their purpose really was.
But one thing is clear. By virtue of the Odigo warning, someone knew enough about the planned attacks to warn Odigo before the planes had even departed the airport gates, yet they did not call the Israeli security company at the airports which could have stopped the flights from leaving.
http://www.whatreallyhappened.com/inside.html
Dragon at the Back Door
http://www.gold-eagle.com/editorials_03/willie100103.html
[Click link page has all kinds of formatting, bolds, green letters etc and the author's emphasis is different from mine. Take your time read the whole thing then go look at the chart on this page, you the one showing 30 yr US Treasuries tanking
http://www.financialsense.com/Market/archive/2003/0929.html ]
Jim Willie CB
In the last two full weeks of September, a significant breakout occurred in the currency markets. Throughout the entire summer, I have been pounding the table, expecting a Japanese Yen breakout on the upside. This was a topic of discussion on my trip to France, as my esteemed host thought a Yen rise would be so dire, that the Bank of Japan would never permit it. I countered that the BOJ was helpless to hold back the tide, and a 20% Yen rise was coming. I expect a painful blow to the US economy, which is suffering from serious imbalances and dependence problems. Following a G7 Meeting in Dubai which concluded on Sept 20th, feces hit the FOREX fan. Calmly delivered exit communiqués trailed contentious internal debate. Finance ministers intend to allow the USDollar to find its freely floating value without interference. What is clear to all experienced hands is that Asians will no longer bear the brunt of responsibility (and enormous expense) of defending the USDollar. They will manage the dollar decline now, rather than prevent that decline. Implications of the Yen rise are being widely misread and misinterpreted as a positive event; they signal severe risk and damage. For every benefit (mainly for multi-national firms) there are 20 big harmful systemic effects (import prices). The US and Japanese central banks are losing control of free markets. The monster at the back door: imported price inflation and higher interest rates, with no repair to pricing power.
Phase #1 of the currency market correction process was totally ineffective. The last 18 months accomplished absolutely nothing in the way of remedy. No trade imbalance of substance exists between the USA and the European Union, yet this initial completed phase was marked by a 30% appreciation in the euro versus the USDollar. The USA endures a truly monstrous trade gap with Asia, yet adjustments to all Asian currencies have been resisted. In fact, the word "monstrous" could be substituted with colossal, significant, spectacular, and in reality serve to minimize the situation. No effect whatsoever was realized on reducing the size of the US trade gap with Asia.
Phase #2 is when the real damage is done, when severely harmful effects are felt inside the US Economy, when the press & media are awakened from slumber, when the public outcry for government action is called for, when job loss accelerates, and when dim-witted (but politically favorable) official financial and executive decisions are made. In this more dangerous phase, watch for the USDollar and USTBonds to decline together, unlike in the initial phase. The dragon is at the back door, but few have noticed.
The primary characteristics of the damaging phase #2 will be many :
IMPORTED ASIAN PRODUCT PRICE INFLATION EFFECT
RISKS DUE TO ASIAN DEPENDENCE UPON CAPITAL AND MFG
ASIAN CENTRAL BANK RESERVE HEDGING RESPONSE
LAGGED FEDERAL RESERVE MONETARY EFFECT ON PRICE LEVELS
INCIPIENT TWO-SIDED PRICE INFLATION THREAT TO USTBONDS
LIKELY ERRORS WITHIN FED RESPONSE, DESPERATION SETS IN
MULTIPLICITY OF POSITIVE EFFECTS ON GOLD
My constant refrain has been and continues to be: the level of economic understanding, policy, and counsel is so abysmal that a galloping recession (or worse) is the most probable scenario, accompanied by price inflation in certain sectors. This country does not admit its errors. It does not detect nor correct its errors. Instead, it compounds its errors by more serious errors. We have no understanding of money or inflation or currency. We regard money much the same as water in pipes to irrigate a field, rather than the output of a day's work. Hence, our fields are flooded, and we urge more water to be delivered. The costs and consequences of many years of ineptitude, speculation, fraud, and political sellouts are soon to demand correction by the powerful free markets, which are more powerful than any set of governments. Reconciliation is overdue.
All signals so far point to more counter-productive policy, high-level desperation, and fruitless responsive action. Here is precisely where politics will interfere with remedy. The last two years have aggravated all imbalances and excesses, have not corrected them, and certainly have not laid the foundation for any economic recovery. We now are seeing the beginning of public outcry. Calls for China trade tariffs and industry protection make for one signal. Calls for rollback of federal tax cuts make for another. Escalation of war costs, together with preservation of prescription drug coverage closes the issue on the direction in fiscal distress relief. All these outcries will result in more mistakes in economic policy, since politics universally makes for bad economics.
Dire effects resulting from Asian currency appreciation run the gamut from imported product price inflation, reduced Asian willingness to fund our credit markets, central bank hedging of their Asian reserves, unwinding of a decade-long Yen carry trade, culminating in higher long-term interest rates. The timing should coordinate in close proximity the arrival of delayed price inflation, structurally lagged behind the reckless monetary expansion perpetrated by the US Federal Reserve. The Federal Reserve has misled bond speculators on their intention to monetize purchases of long-dated govt bonds. But Greenspasm has done even worse, by misrepresenting the inflation versus deflation situation. We are suffering the engrained structural consequences of perennial monetary expansion (inflation) policies over decades of abuse. Price deflation is now a structural problem, which cannot be treated by his available monetary mechanisms. The newly constructed bond bubbles are most visible in residential real estate, and most vulnerable in mortgage bonds. Their dissipation will hurt the economy.
We have the confluence of reactive effects simultaneously emerging. The bond bubbles have begun to give off gas, pricked by their chief architect Chairman Greenspasm himself. The European economy is fighting recession. Stock valuations have returned to nosebleed levels not seen since early 2000, driven in part by a five-fold increase in margin debt. And finally, the Asians now throw in the towel on playing the role of "bag holder" in the currency markets. The most likely new role for Asian Central Banks is to manage the long overdue appreciation of their currencies, which is supported by all fundamentals, and has been resisted for several quarters in true mercantile fashion, but to no avail and great expense. Meanwhile, Asians are left holding a significant amount of USTBonds. Perhaps Asian Central Banks could be convinced to trade a large portion of their horde in exchange for the entire state of bankrupt California.
The confluence of effects will be most felt with profitless price pressures and long-term interest rates. Unprecedented and inevitably destructive systemic price inflation is soon due to emerge from the monetary pipeline, which the press & media are fast asleep in recognizing. Inept messages from mainstream economists have been written on billboards, proclaiming that some inflation will offset the persistent decline in prices. Nothing could be further from the truth. Upward pressures will be seen in costs, while downward pressures will continue on pricing power. By early 2004, the US Economy will be the only industrialized economy in the world to be suffering from price inflation, rising rates, and job loss. The forces acting upon our economy will be both internal and external. Govt policy and central bank policy have been rendered ineffective, futile, and toothless.
Once again, the press & media, together with certain economist corners, are anticipating a repeat of phase #1. For the last 18 months, every time the USDollar faltered, our USTBonds enjoyed a rally to produce lower interest rates. That support was provided by the Bank of Japan. In phase #2, Asian support will not be as strong at first, then vanish altogether. They will be diversifying away from dollar-denominated reserves, as rising rates and rising Asian currencies deliver a double whammy to their reserves. They will not work to prevent the Yen appreciation. Instead, they will work to hedge against its damaging effects. Confusion is already evident during interviews of supposed experts. They expect the same pattern to continue, despite a change in the structural forces. Bonds will see a brief assist initially, providing a double-top in the USTBond.
CNBC does have on retainer two smart people. They have weighed in on the currency issue. Art Cashin said last week "since 46% of US Treasurys are owned by Asians, we may see interest rates rise, despite what the Fed tries to do." Also, Rick Santelli from the bond pits in Chicago suspects that "the falling dollar might throw a monkey wrench into the economic recovery." I have found both to be highly proficient over the years. My personal opinion is stated all through this document. I expect liberal numbnut economists to receive an education in Economics 501, an advanced course. However, I expect them to sleep through the lectures, then blame their low grades on politics.
In sharp contrast, expect moronic cheerleading by intelligent people like Robert Hormatz of Goldman Sachs. He should know better than to claim during a CNBC interview that three benefits come from the rising Yen :
US manufacturers will be aided on price competition
the US Economy will receive a much needed boost
excellent timing since there is not much price inflation now
Given that US manufacturers are $90 billion behind Japan in net trade, $120 billion behind China in net trade, and around $60-70 billion behind the rest of Asia in net trade, the real story is higher import prices rather than a rescue of uncompetitive American mfg. Excuse me, but what the hell does this country build for export anyway? We have largely abandoned and forfeited our mfg base to Asia. The pain of higher Asian currency exchange rates will be 10-20 times greater than the benefit. Hormatz should be ashamed of his salesman motivations. He further embarrassed himself by saying that our exporters will benefit, provided Asian economies assist by lowering their interest rates. How does Japan lower rates that lie in the half of one percent range? Lastly, exactly how do rising energy, commodity, and import prices offset price deflation stemming from bankruptcies, liquidations, and debt default. Diminished pricing power is the end result, as China embodies the boot heel on the neck of US mfrs. We have rising production costs and household costs, amidst nearly nonexistent pricing power. Corporate profit margins and discretionary household budgets will each suffer. Let me not mince words. Hormatz stands as the epitome of economic stupidity (or political sellout) coming from an intelligent American icon. He perceives inflation as a commodity without location. Other analysts unfortunately share this incorrect kindergarten view of inflation.
Numerous characteristics will be manifested in the dangerous phase #2. They follow.
A) IMPORTED ASIAN PRODUCT PRICE INFLATION EFFECT
Since the middle of year 2001, the USDollar has topped out, rolled over, and descended with noticeable momentum. See a three-year weekly chart here. The chief defenders of the world reserve currency have clearly been the Asians, in particular the Bank of Japan. They reported recently having pissed into the wind over $70 billion in this calendar year, a quixotic exercise to resist a truly monstrous river (trade surplus) current. The cost has grown with each passing intervention episode. Japan has chosen to prolong their primitive mercantile approach to manage an economy, in an absurd display to preserve their export business with the United States. The list of Asian foreign dependences is vast, including capital (for supply of federal, mortgage, corporate credit), manufacturing (for supply of consumer electronics, cars, computer equipment, industrial components), and for currency intervention rescues (to prevent the Yen from its certain rise).
In my earlier article dated August 6th of this year, in the "Ass-Backward Economics" series, I went public with a prediction of a sharp Yen currency rise, versus the USDollar. See the full article. The Yen has broken out of its range, bound for many months between 115 and 120. Implications are huge. In the article, the words were :
Next up on the FOREX dance floor is for the Japanese yen, sporting a face lift in the eyes of many, but suffering from a heavy handed father at the Bank of Japan. Its annual $90 billion trade surplus versus the US Economy creates a capital flow too large to overcome. In a matter of weeks or months, a rise in the yen relative to the USDollar is inevitable. . .
The Japanese Nikkei stock index has moved strongly upward, breaking a longterm downtrend. First their bonds fall, then their stocks rise, next their currency rises. Note the clear longterm "head & shoulders" bullish pattern in the yen currency, a very reliable pattern in its weekly chart. Note also the nearterm "ascending triangle" bullish pattern in the same chart, which appears to be in a tough struggle for resolution. The Bank of Japan is in the fight of its life. . .
The list of Japanese brands selling into our economy reads like a "to-do list" before a long vacation or a house sale. Sony, Kenwood, JVC, Hitachi, NEC, Sanyo, Canon, Ricoh, Kyocera, Nikon, Fuji, Komatsu, Toyota, Nissan, Honda, Mutsubishi, Bridgestone, and more. A rise in the Yen will first see Japanese exporters scramble to eat profit margins, for the purpose of preserving market share and distribution contracts. After they tire of kicking each other in the shins, they will allow the inevitable price increases in stores, showrooms, and supply chains. Now, it will be incumbent upon exporters to employ the necessary survival tactic, currency hedging on forward contract sales. Alert American consumers will mark time for higher prices on Japanese imported products. This road has no detour, only delay. The Consumer Price Inflation index was designed to take advantage of falling import product prices. A Herculean effort will be required by the USGovt statisticians to put a pretty face on this index, as it rises. Expect steady erosion in the Treasury market.
Currency experts anticipate the Bank of Japan will now manage the Yen appreciation, rather than stubbornly prevent it. So where is the next most likely exchange level range? The multi-year chart indicates the Yen will find resistance at 92-93 and continue long-term until it hits parity at 100. In dollar terms, this means 107.5 to 108.5, then eventually parity. I propose the next managed range will be 101-106, but only after some volatility at and near the next resistance level. The Yen is above 90 at the time of this writing. Americans have remarkably little knowledge of currencies, their behavior, trends, and tendency to run well beyond what is considered rational. We build carry trades, but tend to overlook the enormity of their reversals. For over ten years, the Yen carry trade made for brisk financial commerce, as USTBonds and S&P stocks were direct beneficiaries. I now expect the Yen to be the beneficiary, and our dollar & bonds to suffer. Not only trade surplus, but unwinding of Yen short positions will power the Japanese currency much higher.
Leading players in defending Asian currencies have been Japan, China, Taiwan, Korea, and Hong Kong. It has been long believed that when one leader breaks ranks with the pack, that other currencies would soon follow suit and allow appreciation. China operates off a currency regime, enforced in a Yuan pegged at 8.3 to the USDollar. If they were to repeg 10-20% upward, other Asians would follow. However, it took a G7 Meeting of finance ministers, and the power of the FOREX to shatter the great wall of their defended currencies. In just a matter of time, most Asian currencies will also begin the upward revaluation process, including the critically important Chinese Yuan. They will operate off a plan which dictates minimal disruption to their own continent and its commerce. If the Yen alone is to rise, and no others follow, then massive adjustments will be forced upon the eastern continent. Given that the Chinese have such a large trade surplus with Japan, we are likely to see continued pressure on the Yen before other Asian currencies follow suit. Most major Asian exporters have to some extent, or soon will, hedge by using the only major fully liquid FOREX vehicle, the Japanese Yen. For this reason, the Asian Central Banks will most likely act together in concert as they manage their individual currencies higher.
In a most amazing field trip in mid-September, Treasury Secy Snow traveled to China for the expressed purpose of requesting that Chinese leaders raise the prices on their entire portfolio of exported products to the Untied States. Inept economists and workers alike harbor some deranged notion that a higher Yuan exchange rate will both reduce our bilateral trade gap and restore jobs. No such thing will occur. Instead, the trade gap will increase, even as imported products rise in price, signaling the arrival of price inflation. Over two decades of monetary inflation has been exported to Asia, which has paid for our federal deficits and trade gaps. The end result is that they now own significant portions of our entire debt structure. More importantly though, with the end of the USTBond bubble and the end of the Asian Central Bank defense of the highly overvalued USDollar, we have entered phase #2. We next import inflation. The rise of Asian imported product prices marks the beginning of the reversal of that monetary inflation export.
B) RISKS DUE TO ASIAN DEPENDENCE UPON CAPITAL AND MFG
Since 1980, the US business executives have made conscious decisions to pursue lower cost labor. They have dispatched manufacturing operations to Asia. They have made massive commitments to Asia for new mfg plant and equipment. They have largely abandoned our homeland. Yet instead of being called un-American, they are praised by share holders, whose interest conflicts with the labor force. "Jobless recovery" is a betrayal to our nation and its workers. Plenty of jobs are being created by US firms. The majority of them require speaking Chinese, Japanese, or Korean, and maintaining residence in those countries. This trend shows no signs of changing. If anything, China and India are accelerating their job creation, as they become international workshops and service centers. The outflow of a wider array of white-collar jobs is now the newer trend, including accounting, software development, legal services, and more.
The end result of this disastrous practice has been two-fold. The United States depends heavily upon Asia for finished products, component supplies, and other mfr'ed items. The practice is so complete, that many car engines are made in Japan, shipped to Detroit, and installed during the assembly line process. However, neither General Motors nor Ford can turn a profit. Import product brand names cover the spectrum, from consumer electronics to computer equipment to photocopiers to cell phones to cameras to construction machinery to cars to tires. The list does not end there. A more complete list of imports must include contracted mfg under private label through outsourced vendors. For instance, your Verizon or Nokia cellphone is made in Japan or Korea or Taiwan, without clues on the label. When with a friend checking PC's for his new "college boy" son, I had an opportunity to verify that monitors were made in Korea or China. I checked the serial ID tag in back for the country of origin. Peter Lynch would be proud of me.
The other crucial dependence is for Asian capital. In the 1970 decade, the USA coerced recycling of OPEC petro surpluses into USTBonds. That practice was met with huge losses within just a few years. In the 1980 and 1990 decades, Asian trade surpluses have been recycled into USTBonds, GSE agency debt, US corporate debt, and elsewhere. We as a nation here in the United States now find ourselves requiring $3 billion per day in foreign capital in order to maintain federal govt operations, and to make payments on the trade accounts. In addition, the US requires substantial additional capital for the residential real estate mortgage finance bubble. The recycle of Asian trade surplus into our credit markets does not negate the trade gap; it instead creates two unsolvable problems.
C) ASIAN CENTRAL BANK RESERVE HEDGING RESPONSE
So far, the Asians have kept their currencies debased to sufficient levels so as to avoid serious losses to recycled portfolios. USTBonds held in reserve have actually risen in value during this Fed-inspired bond bubble. The US Economy has slowed, inviting a natural shift in investment funds from stocks into bonds. Speculative fever has been orchestrated by the Greenspasm, who has implicitly guaranteed an unimpeded path to speculative profiteering. However, the effective cost to Japan has been severe. Over the years of the entire Japanese banking system and real estate sector have failed to recover in health. Their economy has been hollowed out of its mfg capacity. China has not only enjoyed large-scale mfg expansion, but has benefited from Japanese migration to off-shore sites in China.
Asian Central Banks soak up almost all surplus USDollars from their commercial banks, thereby absorbing the currency risk on a systemic basis. Unfortunately, their individual economies must now share that risk incurred. Asian Central Bank reserve holdings represent the lion's share of USTBonds held outside our shores. In the last two years, Asians have moved from purchasing 45% of new US Treasury issuance, to roughly 60% now. Never mind that the source of a sizeable amount of these USTBond reserves originated from printing presses with Yen label and stamping molds. What is created so easily from thin air is not so easily disposed of into the same mist. Japan and China now uncomfortably find themselves as "bag holders."
The Bank of Japan and the People's Bank of China are not eager to watch their vast combined $550-600B central bank holdings decay. Some people I speak with privately mention that marginal purchases of new USTBond issuance is the key, and that core holdings in reserve will simply rise and fall with currency shifts in the exchange rate. This is a very serious false assumption to make. Given that at least Japan practices fractional banking, copied from the USA model, they will not sit by idly and watch their vast horde reduce in value. They will instead hedge against it, and diversify. That means they buy fewer US Treasurys, and quietly sell in reallocation as the opportunity is presented.
China, as far as I know, does not practice fractional banking, and has a much more responsible and responsive banking system than the more mature United States. They do not expand the monetary base via intermediary banks so loosely. Translation: their private banks do not underwrite loans in insane fashion in order to create and then sustain bizarre consumption levels. People's Bank of China tightens reserve requirements more readily (like recently from 6% to 7%), in response to emerging new bubbles, such as seen in their urban real estate. In the face of the USDollar decline which began last year, the PBOC announced a planned diversification away from near total USTBond reserves, and into EuroBonds and Gold bullion. China has already reacted to shifting exchange rates.
Asian Central Banks would be foolish not to diversify into rising reserve assets. Observers would be foolhardy to expect anything otherwise. The implications of sitting idly by extend into domestic economic expansion. Reserves lost represent capital not lent out for that expansion. Progress inhibited by irresponsible reserve asset management could mean industries inadequately fostered and nourished, jobs inadequately produced. Preservation of capital is not just a western concept. In no way will core holdings be left exposed to decay during a USDollar decline versus Asian currencies. Inaction would essentially expose them to "economic margin calls" originating from lost value of their reserves.
Asia's finance ministers met in the spring months of this year to discuss their own vested interests. They may be planning some credit markets of their own soon, to provide capital for growing economies in Thailand, VietNam, Malaysia, and China. Such a development would have large consequences to US credit demand emanating from Asia. Their ministers are pondering an Asian Currency Unit, to counter the USDollar (serving North America) and the Euro (serving the European Union). The ACU might emerge sooner than we expect. I propose the official name "Azho" for any new pan-Asian currency. I wish I could patent the name. The Japanese Yen has suffered too much damage for to serve as the currency across the entire Asian economy. Why not a fresh new one?
The "red herring" in the mix is trade wars, sanctions, and conflict that permeate the political specter. Recent Congressional legislation hopes to repeat the disastrous Smoot-Hawley trade restrictions from 1930. There is no end to political stupidity, since grandstanding and tapping into voter emotions clearly supercedes intelligent study of economics and its history. A 27.5% trade tariff on Chinese imports is in the planning stages. We actually believe we might win back jobs in a trade war. Such incredible shallow thought. If China does not revalue their currency, then we will. Instead, every conceivable ill effect would follow. They would lose much of their appetite for USTBonds and GSE agency debt. They might oblige us and enable a 10-15% price rise in our imports. WalMart, beware !!! They might accelerate their planned diversification out of our Treasury debt and into Gold. They might move forward any plans for a Gold-convertible Yuan currency. All of these potential reactions would qualify as retaliation. Can Congress think ahead? Do they recognize the power held by our Chinese creditor masters?
D) LAGGED FEDERAL RESERVE MONETARY EFFECT ON PRICE LEVELS
Seemingly lost in the shuffle, with all the nonsensical talk of "deflation" is the Federal Reserve expansion of money supply. In the last three years, we have witnessed monetary expansion rivaling the 1920's Weimar Republic itself. In certain shorter stretches of time, the MZM has been allowed to rise at annualized rates of growth exceeding 20%. Few younger investors or financial industry watchers can remember evidence that general price levels rise after a multi-month lag in time following huge money supply increase. How short their memories !!! Lack of understanding is matched by lack of historical study.
There has never been a planned and executed Federal Reserve monetary expansion without a resultant systemic price inflation episode. The current environment is no exception, although it bears a severely different smell and taste. The fact that debt default and liquidations are so great does not preclude or eliminate the eventual arrival of the monetary stimulus response. The Fed has grown money supply at rates never seen before in the history of the United States. In the late 1990 decade, the Fed departed from a stated objective to increase the monetary base at a rate not to exceed the GDP growth rate. They opted to implement a reckless new objective, which targeted the observed price inflation rate. Tragically, they chose the Consumer Price Inflation as their guiding meter. It does not include a host of costs from daily life, but more importantly, it failed to reflect the effects of a free Fed monetary spigot seen in the stock market. Thus we grew a stock bubble, and suffered a wealth loss from the bust. To gain perspective on the sheer magnitude, consider this. The Fed has increased the money supply since 1995 by an amount greater than the entire existing 1977 money supply. Our economy has not grown by the same proportions. Bubbles have grown instead !!! Yet few seem to comprehend the source of the problem. It is the Federal Reserve, which I call the Dept of Inflation.
Given the powerful forces offsetting the intended inflationary attempts, and the equally powerful forces continuing to pressure price levels, the verdict will come in with some systemic price inflation. The only question is when. The location of this nascent price inflation will most likely coincide with current locations where it is now evident, namely the commodities, certain services such as health, and other areas. Surely, any windfalls or other significant realizations of cash arrivals will be delivered to banks, to retire some debt. This is expected. But on a systemic basis, some truly awesome powerful forces are at work. Price levels within the entire system will react, but without a remedy realized within profit margins. Costs will rise even faster than prices. By next year, we are going to see some price inflation with lagged arrival, marked to time following the Fed expansion policies and practices. To expect otherwise is to ignore history, and to overlook the inflation process. So far, the financial sector is the principle beneficiary of credit extension and monetary expansion. But as the bond bubbles and housing bubbles dissipate and release capital, the general economy will see a flood of money spill over.
E) INCIPIENT TWO-SIDED PRICE INFLATION THREAT TO USTBONDS
In July of this year, we saw the USTBond suffer a 1.2% rise in yield. The market responded violently to Greenspasm's betrayal, reneging on a promise to speculators to support the 10-yr TNotes. Severe damage was done, which exposed the risk to the bond market outside the threat from incipient price inflation. We simply witnessed an abandonment of speculative bond positions, amplified by GSE agency convexity risk. Many regard this as a watershed event, only to mark the bond top and interest rate bottom. A second market force represents danger to USTBond demand. As discussed previously, when Asian Central Banks decide to hedge or diversify their holdings, we may see an effect from the demand side influencing prevailing long-term interest rates. Even a slowing of Asian demand would cause a slight rate rise. A third market force comes from growth in USTBond supply. With Iraq war costs rising more than expected, with payroll withholdings on the wane from job losses, with added security costs, and with the sneaky killer to the Medicare obligations in prescription drug coverage, we will next year see a worsening in USGovt federal deficits, not a reduction. Our federal supply needs are growing leaps and bounds. Interest rates will be forced higher and higher, even in the face of economic weakness.
A complementary threat to bonds exists. Completely absent in the last decade has been a climate of rising price levels on a systemic basis. Market forces from unwound speculation and curtailed foreign demand comprise a clear and present danger. The arrival of widespread, sustained, systemic price level increases is written in stone. Those stones rest down the road, to be sure. Commercial traffic must pass those stones sooner or later, but eventually the writings will be visible for all to read. The sources of this incipient price inflation are monetary expansion from
Fed printing press operations, in lagged effect
imported product price inflation due to currency shifts
The resulting two-sided price inflation effect is total. It comes from inside the monetary system, and from outside in the currency markets. Inside, we see it in the form of counterfeit Fed money fueling bond bubbles, as well as credit extensions throughout the entire system. Money coming out of these bubbles will be released into the economic system. I expect production costs to rise faster than general price levels on a systemic basis. All indications are for rising price levels without remedy to profit margins. Credit will be desperately extended in order to preserve jobs and cash flow, which is necessary for continued floating of debt. Outside, we see it in the form of rising import prices. Our economy depends on foreign importers to supply finished products and components for between 40% and 60% of our needs, depending upon the sector in question. The two-sided threat embodies the most dangerous risk to our credit markets and economy since the 1970 decade. Fanny Mae has a ringed target on its back now, with survival at stake.
A return of systemic price inflation within our economic and financial environment makes mandatory a risk premium for bond investors. This means higher interest rates, to offset erosion of capital placed in custody of the USGovt. This nation is behaving like a "Banana Republic" in its financial operations and management. Sooner or later, we will earn significantly higher prevailing long-term interest rates. We will surely deserve them. Many believe the bond rally will resume, since it was so easily orchestrated by federal intervention. Many believe that economic sluggishness is automatically tied to low interest rates. They are not. Harken back to the 1970 decade, when stagflation was the sign of the times. That is precisely where we are headed. In that decade our cost structure rose in price from crude oil events. Now our costs are rising on a wider basis from a declining USDollar. Expect bonds not to benefit in this dangerous phase #2 when Asian currencies join forces with the Euro in gaining ground versus our USDollar. Money will want to chase bonds, but rising price inflation levels will require higher yield premiums. Money will exit bonds at the same time that money will seek out bonds. Incipient price inflation will see sellers easily prevail, since price inflation is anathema, a dreaded curse.
F) LIKELY ERRORS WITHIN FED RESPONSE, DESPERATION SETS IN
In January of 2001, any alert observer could detect sudden desperation by Chairman Greenspasm. He suddenly embarked on a path which has seen 12 interest rate cuts of the Fed Funds target. While he has flooded the system with money, innocuously called "liquidity," he has lowered rates below the native price inflation level felt inside the economy. Some have called it the "Greenspan Gambit." Since November of 2002, short-term interest rates have plunged below that native level to allow multiple months of negative real rates. Such allowance is the essence of promoting a policy of inflation. In most world economies, the ultimate outcome is sheer destruction.
The Federal Reserve has chosen to keep interest rates low, despite some urgent signals clear for all to see. Gold and Silver have commenced a new long-term bull market. Or at least one can claim without dispute, that they have reversed a long-term bear market. The commodity indexes have also reversed their long-term bear market. The sudden bond revolt this summer was a warning. All continents participated. A trade gap in excess of 5% of US GDP now exists, with no sign of correction. Government Sponsored Enterprises have shown signs of distress, from under-capitalization to accounting fraud. The result has been executive resignations and oversight changes. Residential real estate has risen at a double digit rate for a few years now. Yet no stopping the monetary presses. In the 1970 decade $1.5 new dollars generated $1 new dollar in GDP. In 2001, the ratio was $5.0 new dollars to one. In Q2 of 2003, the ratio has grown to $6.5 new dollars to one. What I call the "Monetary Futility Index" is growing to dangerous Weimar-like levels.
Greenspam has been more than clear in his intention to keep monetary policy relaxed and loose, as he inflates beyond all expectations. He speaks incessantly and ridiculously about threats of deflation, even as he produces the greatest monetary inflation known in recorded history. Well, actually Nero in ancient Rome extracted 95% of the gold from their coinage, only to set off a 1500% price inflation episode in the third century. Inflation is an old concept. In my opinion the knighted chairman periodically tests the system with exhibited restraint in the money supply, seen for instance recently in a MZM slowdown. He must know of the risks in unrelenting expansion. He has shown extreme willingness to go overboard, in the face of all warning signals. He must be extremely fearful of a systemic implosion if he stops the presses.
If the Fed slows the monetary spigot and restrains the liquidity flow, he invites the monster to come through the front door. Namely, we would quickly see recession, job cuts, real estate decline, reduced consumption, and severe outcomes to the financial markets on which we have come to depend. Public outcry would be loud with criticism, since it would be quickly traceable to the Fed restraint. This is not an acceptable option. This is a man who has shown no restraint in good times, and no restraint in bad times. If he becomes confused, which I believe he has been for over a year, I believe he will err on the side of continued monetary open heavy flow. He has provided us all the necessary signals to plan for a predictable future path.
If the Fed senses trouble with an economic stall, even if the origin of the stall can be identified as originating from a declining USDollar, I seriously doubt Greenspasm will allow the money supply to slow down. He is all too clear about the threat of the monster at the front door, and can control it. But he cannot at the same time control the monster at the back door. Something must give, either the USTBond or the USDollar. I believe the Fed actions indicate beyond a doubt that the USDollar will be sacrificed. By continuing the monetary stimulus year after year in the current environment, and hearing reassurance by the Bank of Japan, he apparently feels immune to "back door price inflation." It is my long considered opinion that Greenspasm hopes for a sustained economic recovery free of price inflation BEFORE the monster arrives at the back door, in the form of imported product price inflation coupled with Asian selling of USTBonds.
The central threat to Greenspasm's ponzi scheme is the monster at the back door. It is now knocking, since the Japanese Yen upside breakout marks a watershed event. Other Asian currencies will invariably follow suit. Within a few months we are undoubtedly going to see a rise in prices for a host of imported finished products and component supply products. At the same time, the Asian appetite for our debt supply is surely to wane. We are now at the doorstep to a horrible combination of economic sluggishness and rising price inflation. The dragon monster at the back door is blowing hot breath. Few seem now to be noticing. In time the breath will scorch our economy and financial markets. This is precisely what Kurt Richebächer feared as devastating.
The financial zone is now subject to lost monetary control by the Federal Reserve, fully indicated, and very predictable, with encouraged speculation, and desperate unremitting money pumping. In time even his supporters will object to his policies. This Greenspasm knows only one response tactic, to print more money. He will respond to any USTBond threat by monetizing more purchases of the same, even as foreigners and Americans are selling. He will attempt to offset their large-scale selling. In time, I expect an all-out panic by Greenspasm and the entire Federal Reserve institution. Their power has been eroded. Their policies are fast becoming ineffective. In the future, I expect them to be widely regarded as toothless and powerless to stop the crisis. Everything they do now contributes to conditions which are due to develop into crisis, intensify the pressure gradients, and to fan the flames of fires which will engulf the USDollar.
G) MULTIPLICITY IN POSITIVE EFFECTS ON GOLD
A bifurcation process has been underway within the US Economy for over a year. Few have noticed. The main body of alert observers hails from Bear and Gold crowds. The production zone will continue to be vulnerable to deflationary pressures, from liquidations and debt defaults, and simple failure to compete against foreign rivals including China. Little if any progress is evident in a true recovery. So a severe low-pressure zone has been created and has been prolonged. Prices continue to fall in certain productive sectors, such as computer equipment, cars, furniture, and clothing. Numerous factors are at work. Cost cutting is not working. Cutting of capital investments and cutting of jobs remove critical catalysts for work and valuable agents for innovation, which serve as leverage within the business model. These reductions perpetuate the cash flow reductions which threaten debt service. The low pressure zone might be intensifying.
The commodity and supply cost side of the equation is showing clear signals now of shortage and rising price. This side is much less subject to debt foundations. Mining functions are at operating at 95% capacity now. So a severe high-pressure zone has been created and will soon develop further. The unfortunate effect of declining prices for 20 years has been shutdowns of mines across the globe. Environmental movements add to the pressure to conduct business "not in my back yard." Regulatory obstacles add to the many hurdles necessary to achieve robust production. Since aging operations are prolonged in an inefficient manner, sustaining profitless jobs, all supported by a vast debt structure, the commodity industries are ripe ground for legitimate price increases. Rising prices would encourage new production. Joining the process is the speculation crowd, whose imprint is most easily seen in the energy markets. US oil production has been in decline for many years. A falling USDollar means higher energy costs. China is a commodity customer, not a supplier. They are consuming more crude oil on an annual basis, with growth at roughly 5%. The high pressure zone might be intensifying.
I expect the Monetary Futility Index to reach $10 new dollars to generate $1 new GDP dollar, all in time. When in doubt, Greenspasm will print more money. A world monetary crisis is coming, and the USDollar will be at its epicenter. The powering force will be the uncontrolled growth in the supply of money. Incremental Fed monetization now equals new consumer credit extensions, which happens also to equal the rise in the bilateral Chinese trade surplus. So the Federal Reserve response to duress is building a juggernaut in China. This nation will be in the news on a regular basis throughout this decade.
This entire scenario is the centerpiece of Puplava's Perfect Storm hypothesis. The events in the last two years are unfolding according to script. The engine powering the low-high pressure differential gradient is the USDollar in continued oversupply. As trouble develops on multiple fronts, from the front door, through the back door, we will see both economic sluggishness and rising long-term interest rates. Futility of policy has so far been met with more of the same discredited methods and amplifying upward their force.
The last piece to the Gold bull market acceleration is the decline (however rapid) of the US Treasury market, the mortgage finance market, and residential real estate. All bonds are dependent upon the Treasury market. Threats to price inflation and long-dated bonds have been cited. They are pervasive, powerful, and will grow in strength. The rising long-term interest rates will expose real estate as an appendage to the bond bubble. Housing will be revealed as a "hard asset impostor" when it declines in value, while commodities like gold and oil/gas continue to gain in price.
The last bubble will be in Gold. The Fed has run out of options; it has no more beneficial bubbles to inflate. Gold has recently flirted with the $400 level. It did so following two critical events. The G7 Meeting concluded with discontinued plans to levitate the USDollar. The OPEC Meeting in Vienna concluded with stated plans to curb crude oil production by 900,000 barrels per day. The rise in Gold price will continue until it shatters the $400 level. The writing is on the wall:
THE DRAGON IS AT THE BACK DOOR
RISING ASIAN IMPORT PRICES ARE COMING
LONG-TERM INTEREST RATES ARE SOON TO RISE
GOLD IS READY TO EXPLODE TO THE UPSIDE
A move in Gold bullion past the $400 level will turn heads, change views, alter policy, and scare many people. It is written in stone. Prepare for it. Exploit it. Many dismiss the possibility of a damaging short squeeze inflicted upon the criminal Gold Cartel, who surreptitiously sold off our national gold treasure for their personal profit. If that is not treason, I do not know what is. In the summer of 2002, a "line in the sand" was drawn at $330 gold. By autumn, that line was surpassed and redrawn at $370. Now it appears to be redrawn once more at $400. The cartel is transparent in its reaction to the assault on the Gold price. They appear to rachet their highly leveraged options, futures contracts, and spreads at incrementally higher levels, as a desperate defense of a naked short gold position which exceeds two years worth of world gold production. In this manner, they deliver unto themselves a Chinese water torture. They suffer continued smaller painful blows, instead of a massive short squeeze and meltdown. At the same time, gold miners have steadily reduced their forward sales hedge books. Observers to this tragedy should not lose sight of the fact that the USGovt is probably bailing them out quietly. The Dept of Treasury is likely gradually purchasing the Gold Cartel's hedge book. Official actions and bullion banker actions are effectively ensuring the gold bull will run for a long time.
Purists can contact Swiss American Trading Corp in Phoenix Arizona (see Fred Goldstein) at 800-BUY-COIN. He sells current mintage gold and silver coins, as well as collector coins. Recent year coins rise and fall with the bullion price, whereas collector coins are rising almost every single month in recent years. Conservative investors can purchase shares of the Tocqueville Gold Fund (TGLDX). Its +200% performance over the last three years makes a mockery of the more publicized S&P, although few seem to be aware. Risk-adopting investors can purchase the larger miner shares such as Newmont (NEM), Kinross (KGC), AngloGold (AU), or Harmony (HMY). Those who favor greater risk can purchase shares of the medium-sized miners such as GoldCorp (GG) or Royal (RGLD) or Pan American Silver (PAAS). Investors with strong appetite for both risk and reward should consider a portfolio of Canadian Juniors, known as explorers. Their gains are often breath-taking, as can be their occasional declines. When properties are elevated to producing status, and then acquired by larger mining companies, a big payoff occurs for investors.
The HUI unhedged miner stock index confirms a magnificent new trend, a bull market in gold. Its gains are over 400% since January 2001, when the Fed embarked on its panicky monetary easing, following a few years of tightening late in the last decade. They built the stock bubble, broke it, then proceeded to build even bigger new multiple bond bubbles. What an incredible roller coaster the Fed has set in motion since 1971 when we abandoned the gold standard, an effective reliable tether to our USDollar. We opened Pandora's Box. Financial stability has become a thing of the past ever since. The best possible outcome the Fed can engineer in the current mess is near endless stagflation akin to the 1970 difficult decade, identified by a sluggish economy amidst rising price inflation, for as far as the eye can see. The worst possible outcome is unimaginable and dreadful. I think we will see an outcome in the middle, which will be somewhat more damaging and painful than what we experienced 30 years ago. It has to be worse. We have at least three times as many dollars now sloshing around the globe. Debt levels are triple what they were back then. The trade gap is five times what it was back then. The consequences must therefore be greater than what we experienced back then. The primary beneficiary will be GOLD. In several months, the next Fed move on short-term interest rates will be up !!!
Jim Willie CB
October 2, 2003
The ever-expanding Patriot Act
Critics warned the expanded police powers authorized by the so-called Patriot Act -- ratified just weeks after the terror attacks of Sept. 11 -- would soon be used by opportunistic cops and prosecutors in areas far afield from any threat of al-Qaida-style terrorism.
Nonsense, supporters replied. New government powers to read every e-mail passing through an Internet Service Provider; to conduct roving wiretaps without informing their victims; to snoop on our book buying and library borrowing habits; to secretly rake through our private financial data; to "enhance" criminal sentences till they stretch for decades ... would be used only when necessary to prevent for "another Sept. 11."
Guess what.
"Within six months of passing the Patriot Act, the Justice Department was conducting seminars on how to stretch the new wiretapping provisions to extend them beyond terror cases," reports Dan Dodson, a spokesman for the National Association of Criminal Defense Attorneys. "They say they want the Patriot Act to fight terrorism; then, within six months, they are teaching their people how to use it on ordinary citizens."
Well ... so what? If some moron in California finds himself charged with "terrorism using a weapon of mass destruction" when he wounds himself because his pipe bomb exploded in his lap, if a North Carolina prosecutor charges the proprietor of a methamphetamine lab with breaking a new state law against "manufacture of chemical weapons," hoping to send him up for 12 years to life instead of the standard six months ... they're all criminals, right? Who should shed a tear if the authorities now have new tools to use against them?
Except that:
• In the June 27 edition of "The Nation," Jonah Engle reports, "Speaking at a conference this winter on Internet crime, eBay.com's director of law enforcement and compliance, Joseph Sullivan, offered law-enforcement officials extensive access to personal customer information," all, Mr. Sullivan helpfully offered, "without having to produce a court order."
Why this sudden spirit of cooperation?
"September 11th changed things dramatically," Nimrod Kozlovski of Yale's Information Society Project told The Nation. "EBay has itself felt the sting of tough new laws: On March 28 its PayPal unit was charged by the Justice Department with violating the Patriot Act for providing money transfer services to gambling companies. ... In this political climate, being pliant to law enforcement may be sound business. ..."
• In a July 17 article in Atlanta's alternative newsweekly "Creative Loafing," Marc Schultz, a bearded young journalism student in Atlanta, describes being visited and interviewed by FBI agents who were tipped off by an anonymous snitch that he'd been seen reading a suspicious newspaper article while waiting in line at a local coffee house.
Schultz described the piece he was seen reading as "this scathing screed focusing on the way corporate interests have poisoned the country's media ... really infuriating, deadly accurate stuff about American journalism post-9-11."
The editors of the alternative weekly identified the crime for which Mr. Schultz was investigated by the FBI as "reading while bearded."
• David Socha, a 17-year-old on his way to Hawaii, was arrested in July at Logan Airport in Boston and charged with a felony for having a note in his gym bag which read: "(Expletive) you. Stay the (expletive) out of my bag you (expletive) sucker. Have you found a (expletive) bomb yet? No, just clothes. Am I right? Yea, so (expletive) you."
No, the young man's outrage over the suspension of his Fourth Amendment rights was not particularly prudent -- though I'm glad to see some of the spirit of John and Samuel Adams survives.
But should he really have been arrested and charged with "making a terrorist threat"? What threat? And what has happened to our First Amendment rights? Young Mr. Socha's protected political statement was zipped inside his own luggage.
• The President's Commission on the U.S. Postal Service is even urging the Postal Service to create "smart stamps," to track the identity of people sending mail.
"USPS already offers mail-tracking services to corporate customers," reports Alorie Gilbert of CNET News.com. "The (Commission) proposes a broad expansion of the concept to all mail for national security purposes."
"We have a long history in this country of anonymous political speech," comments Ari Schwartz, associate director of the Center for Democracy and Technology. Any change that removes anonymity from the public mail system is "making a major change to political discourse in this country," he said.
Only impacting criminals?
And they're not done. President Bush last week endorsed a proposal by Rep. Tom Feeney, R-Fla., which would allow the Justice Department to expand the use of "administrative subpoenas," gathering up books, papers, documents and electronic data, free of frustrating judicial supervision or the need to make a case before any grand jury -- whereupon the subjects of such subpoenas would be barred from telling anyone but their own lawyers about them ... guaranteeing we won't even know how much of this is going on.
The administration also wants to remove the right to be freed on bond of those accused -- not convicted, mind you, merely accused -- of anything the government calls "terrorism."
And when are these "temporary" suspensions of our rights likely to end? No one will say.
Vin Suprynowicz is assistant editorial page editor of the Review-Journal and author of the books "Send in the Waco Killers" and "The Ballad of Carl Drega." His Web site is http://www.privacyalert.us.
http://www.reviewjournal.com/lvrj_home/2003/Sep-21-Sun-2003/opinion/22167264.html
Police arrested Patrick Lawrence, a 22-year-old white male, resident of
Dacula, GA, in a pumpkin patch at 11:38 p.m. Friday. Lawrence will be
charged with lewd and lascivious behavior, public indecency, and public
intoxication at the Gwinnett County courthouse on Monday.
The suspect allegedly stated that as he was passing a pumpkin patch, he
decided to stop. "You know, a pumpkin is soft and squishy inside, and
there was no one around here for miles. At least I thought there
wasn't," he stated in a phone interview from the jail.
Lawrence went on to state that he pulled over to the side of the road,
picked out a pumpkin that he felt was appropriate to his purposes, cut a
hole in it, and proceeded to satisfy his alleged "need."
"I guess I was just really into it, you know?" he commented with evident
embarrassment. In the process, Lawrence apparently failed to notice the
Gwinnett County police car approaching and was unaware of his audience
until officer Brenda Taylor approached him.
"It was an unusual situation, that's for sure," said officer Taylor. "I
walked up to (Lawrence) and he's . . . just working away at this
pumpkin."
Taylor went on to describe what happened when she approached Lawrence.
"I just went up and said, 'Excuse me sir, but do you realize that you
are screwing a pumpkin?' He got real surprised, as you'd expect, and
then looked me straight in the face and said, 'A pumpkin? Damn...is it
midnight already?'
SILVER: The one important aspect of the silver market that distinguishes it from the gold market is that silver is consumed. Most of the gold that has been discovered in the world still exists as above-ground supply as either jewelry and or in bullion form. Most of silver that has been produced has been consumed. When the supply wreck in the metals markets hits, it is bound to hit the silver market first where supply is increasingly becoming an issue. Six years ago there was over 250 million ounces on the COMEX. Today there is little over 100 million ounces. Then again less than half of this is available for delivery. The silver and gold supply train wreck will be dealt with in more detail in an upcoming Storm Update. Time does not permit more coverage of the issue today. Suffice to say that a day of reckoning on demand and supply deficits will shortly be upon us. It is what scares the heck out of the silver shorts. They are short the metal in a major way and they don’t have the supply if delivery is demanded. It is their worst nightmare.
http://www.financialsense.com/Market/archive/2003/0929.html
Silver just won't go under 5 bucks...sigh.e
What up with TRBY? Anyone got a scoop or a prediction?
Been watching it...looks like it's close to buying time...or is it?
Actually yesterday was buying time...
http://finance.yahoo.com/q?s=TRBY.OB&d=t
Looks like that was a good call.
I'm going out on limb here but I think last week was a top for the markets...SP500, DIJA and NASDAQ...
“Those who are not shocked when they first come across quantum theory cannot possibly have understood it.” - Niels Bohr
America's founding fathers are Japanese
By David Derbyshire, Science Correspondent
(Filed: 31/07/2001)
THE Japanese discovered and colonised America thousands of years before the Vikings or Christopher Columbus, according to a new study.
Scientists investigating how humans spread across the world have found evidence that Japan was the launch pad into the New World 15,000 years ago.
Previously anthropologists assumed that America was colonised from mainland China or Mongolia. The findings come from a study comparing 21 facial characteristics of modern and prehistoric skulls collected from Europe, Asia and America.
By measuring the sizes of facial features, the team of American, Chinese and Mongolian scientists put together a family tree of ethnic groups and a map of how humans may have spread.
Most anthropologists believe that humans evolved in Africa, colonising the world in waves. By 17,000 years ago the last great Ice Age was ending and the glaciers were retreating. For the first time people living in Asia could move north.
By 15,000 years ago the first humans crossed into America, according to the team led by Dr Loring Brace, professor of anthropology at the University of Michigan in Ann Arbor.
His study, published in the Proceedings of the National Academy of Sciences, found these settlers were not linked with any known mainland Asian population.
Instead, they showed ties to the Ainu peoples living in Japan at the same time and their predecessors, known as the Jomon. Their descendants include the Iroquois, the Blackfoot and the Sioux.
http://news.telegraph.co.uk/news/main.jhtml?xml=/news/2001/07/31/wyank31.xml
The Subpoenas are Coming!
Citing a provision of the Patriot Act, the FBI is sending letters to journalists telling them to secretly prepare to turn over their notes, e-mails and sources to the bureau. Should we throw out the First Amendment to nail a hacker?
By Mark Rasch Sep 29 2003 05:00AM PT
Frequent readers of this space know that I am no apologist for hackers like Adrian Lamo, who, in the guise of protection, access others' computer systems without authorization, and then publicize these vulnerabilities.
When Lamo did this to the New York Times, he violated two of my cardinal rules: Don't make enemies with people appointed for life by the President of the United States; and don't make enemies of people who buy their ink by the gallon.
Now, in the scope of prosecuting Lamo, the FBI is doing the hacker one better by violating both of these precepts in one fell swoop.
The Bureau recently sent letters to a handful of reporters who have written stories about the Lamo case -- whether or not they have actually interviewed Lamo. The letters warn them to expect subpoenas for all documents relating to the hacker, including, apparently, their own notes, e-mails, impressions, interviews with third parties, independent investigations, privileged conversations and communications, off the record statements, and expense and travel reports related to stories about Lamo.
In short, everything.
The notices make no mention of the protections of the First Amendment, Department of Justice regulations that restrict the authority to subpoena information from journalists, or the New York law that creates a "newsman's shield" against disclosure of certain confidential information by reporters.
Instead, the FBI has threatened to put these reporters in jail unless they agree to preserve all of these records while they obtain a subpoena for them under provisions amended by the USA-PATRIOT Act.
The FBI doesn't want the reporters talking to anyone, because that would supposedly harm the ongoing criminal investigation.
The government also officiously informed the reporters that this is an "official criminal investigation" and asks that they not disclose the request to preserve documents, or the contents of the letter, to anyone -- presumably including their editors, directors, or lawyers -- under the implied threat of prosecution for obstruction of justice.
That's why you're reading about the letters for the first time here.
They do this despite the fact that, had they actually obtained and issued a subpoena for these documents, the federal criminal procedure rules would have prohibited the imposition of any obligation of secrecy unless the Justice Department obtained a "gag" order on the press -- a rare event indeed.
All of this began the day after the Attorney General advised all United States Attorney's Offices to prosecute each and every criminal offense with the harshest possible penalties, instead of the previous policy of prosecuting cases with the penalties that most accurately reflect the seriousness of the offense. Thus, journalists be forewarned -- your government may be seeking to throw the book at you!
Believe it or not, this isn't even the worst of it.
Patriot Games
The demand that journalists preserve their notes is being made under laws that require ISP's and other "providers of electronic communications services" to preserve, for example, e-mails stored on their service, pending a subpoena, under a statute modified by the USA-PATRIOT Act.
The purpose of that law was to prevent the inadvertent destruction of ephemeral electronic records pending a subpoena. For example, you could tell an ISP that you were investigating a hacking case, and that they should preserve the audit logs while you ran to the local magistrate for a subpoena.
It was never intended to apply to journalist's records.
Similarly, the letters go on to inform the reporters that the FBI intends to get an order for production of records under the Electronic Communication Transactional Records Act, a statute that applies only to ISPs. Citing that law, they insist that the journalist is mandated to preserve records for at least the next three months and possibly longer. This demand is all the more egregious in that it comes more than a year after the articles and interviews first appeared -- after any actual Internet logs would have been routinely deleted.
There are times -- few and far between -- when it may be essential in a criminal investigation or prosecution to subpoena a member of the press. Say, for example, a cameraman gets a picture of a crime in progress, and the photograph or videotape is published or broadcast, and the prosecution seeks to use it at trial. Or suppose that O.J. Simpson, after the murders in Brentwood, chose to unload his soul to Barbara Walters. That admission may require hauling Ms. Walters to the stand, if -- and this is a big "if" -- there is no other way to obtain crucial evidence.
But before a subpoena can be issued to a reporter under federal regulations and internal DOJ guidelines, not only must the Attorney General personally approve the subpoena, but prosecutors are instructed to use all reasonable efforts to get the information from other sources. The New York State newsman's shield law that applies to the Lamo prosecution requires essentially the same thing.
Even if such a subpoena is issued, government regulations mandate that, absent exigent circumstances, it must be limited to the verification of published information, and to such surrounding circumstances as relate to the accuracy of the published information.
Breaking the Rules
And yet, the FBI is demanding that reporters preserve every scrap of documentation about everything having to do with Adrian Lamo -- and has expressly told them that if they fail to do this for at least three months, and perhaps longer, they can expect to be prosecuted for contempt of court.
The DOJ guidelines also mandate that before a subpoena is issued, even for public information (e.g., a copy of a Dateline NBC videotape), there has to be a good faith effort to obtain the records by negotiation with the reporter. But no negotiation has occurred in this case.
I wish I could say this was a first. But in May of 2002, prosecutors investigating the very same Lamo case issued an unauthorized subpoena to MSNBC.com's Bob Sullivan for his notes and records. The subpoena was hastily withdrawn when it was noted that it had never been approved by the Attorney General, as mandated by regulation, and that the prosecutor -- who was reported as "inexperienced" -- didn't even realize that he had to obtain such approval.
And in March of 2001, the Department of Justice subpoenaed then-Wired.com reporter Declan McCullagh to testify in a criminal case, also in violation of the regulations.
While the FBI has reportedly told reporters that this time they will seek Attorney General approval before issuing subpoenas, there does not appear to have been any effort to obtain any that approval before threatening to prosecute these reporters with obstruction of justice under a statute that facially does not apply to them.
It's as though the FBI believes that Attorney General approval is a mere formality, ignoring the regulations that require negotiations with reporters first, and reportedly stating that all reporters can expect to be required to "turn it all over."
So why would the government need to put a reporter on the stand to testify that she interviewed Adrian Lamo, and that Lamo confessed?
Presumably to demonstrate that Lamo in fact hacked into the New York Times. I would certainly hope that the government would be able to prove this through other means -- like the IP logs. But if you peruse the affidavit submitted by the FBI to arrest Adrian Lamo, you begin to wonder. The affidavit is rife with references to articles written by Security Focus reporter Kevin Poulsen, and MSNBC.com's Sullivan, as their principal "evidence" of Lamo's guilt.
Might it be helpful to the government to enlist all journalists Lamo spoke to as criminal investigators -- doing the prosecutors' job for them? Sure. Would it make the FBI's job easier? No doubt. But the law requires that the information sought by subpoena be highly relevant and not available elsewhere. The government has not even tried to make this showing.
Nor have they limited their request to preserve evidence to verification of the published information. In fact, if all they wanted was verification of published information, no document preservation would be necessary. You simply call the reporter to the stand and ask, "Hey, when you said in your article that Lamo confessed, was that true?" End of subpoena.
So there must be a more sinister motive behind this preservation request. And there must be a more sinister motive behind using the ISP statute to do so.
Secret Orders
There are really only three reasons the government would invoke the ISP statute against journalists. All of these possibilities are frightening in their implications.
They may think that reporters who write stories for online publications or who use e-mail to communicate with sources (and whose news organizations maintain their own Internet connections) are, in fact, "providers of electronic communications" under the law. The statute is clearly geared at mandating the preservation of ephemeral electronic records by ISP's, but perhaps the Department of Justice is attempting to use the fact that reporters use electronic communications as a jurisdictional hook to order them to preserve their physical notes -- a dramatic, unprecedented and unwarranted expansion of the statute.
More sinister is the possibility that these letters were never intended to go to the reporters at all, but rather were actually intended to go to their ISPs. You see, the regulation that mandates Attorney General approval applies only to subpoenas to reporters, or to telephone companies to get a reporter's telephone records. Because the regulation is 20-years-old, it does not address the possibility that you could actually get the content of a reporters communications from a third party -- an ISP -- without subpoenaing the reporter herself. So the whole thing could be intended as an end-run around for the First Amendment.
Finally, it is possible that the FBI knew that the ISP statute didn't apply to the reporters, but simply wanted to threaten or intimidate them with the possibility of an obstruction of justice prosecution. But, as the Enron auditors at Arthur Anderson learned, all the government has to do is tell the reporters that their information may be relevant to the prosecution or defense of the case, and this would put them on notice that destroying their records in anticipation of litigation would constitute obstruction. There was no need for the heavy handed threat.
None of this explains the cloak of secrecy the FBI has thrown over the whole affair. Reporters are being told that this is an official criminal investigation, and asked not to tell anyone. Even the DOJ's proposals for secret administrative subpoenas announced this month as part of USA-PATRIOT II would allow recipients of such subpoenas to confer with their own lawyers and others necessary to enforce the subpoena. The FBI request here made it clear that they didn't want the reporters talking to anyone, because that would supposedly harm the ongoing criminal investigation.
And yet the FBI publicly announced to the world, through a Wired.com reporter, their intention to subpoena every journalist who ever talked to Adrian Lamo. Apparently, the FBI can talk about their intention to subpoena reporters, and mention specific reporters' names in the Lamo affidavit, but if journalists have the temerity to mention it to their own lawyers, this could devastate the prosecution.
I've never spoken to Adrian Lamo, but I am sure that by writing this article, I am making myself a target for subpoenas, search warrants (government, take note that the law prohibits search warrants for reporter's notes) and demands to preserve evidence. All I have to say is, quoting President George W. Bush, "Bring it on."
Clikck link story has hyper links you might like to check out:
http://www.securityfocus.com/columnists/187
Transcripts! Get your transcripts:
You know, like the paper boys of old in New York...back when we had a press in this country...
http://www.wheelingpark.net/kuglin/
Stocks: Remember when I was gonna get a whole bunch of VXGN under 4 and decided not to after the stock crashed because the vaccine didn't pass trials...
http://finance.yahoo.com/q?s=VXGN&d=t
Missed a 3 bagger...
Oh well, catch another wave dude anybody actually pull the trigger?
HLSH still hanging above 2.80...
MDCE no trades...
IBM still under 90 and I think it's heading back to 80 or so but you'll note I am not short.
Dollar in downtrend...
Gold above 380
Silver still above 5 but dropping; looking for a correction back near 4.50 when it do buy buy buy buy buy...
NFTR
The research and activism arm of BlackBox Voting.com
More info: http://www.blackboxvoting.com
Diebold issued a pull-down demand under DMCA for the BlackBoxVoting.org web site, citing a link posted on a forum in the site, claiming that the link allowed web visitors to visit an unrelated page, containing Diebold internal memos, which they say they own the copyright to.
These memos are more properly termed "Evidence," because they contain evidence of a pattern of lawbreaking that dates back at least to 1999. An injunction needs to be filed immediately in California based on evidence contained in these memos, before forcing citizens in 14 counties to vote on these machines in the recall election in a few days.
- In October 2001 in the "support" directory you will find a thread of memos about altering the audit log in Access. That contains the famous Ken Clark "end-runs around the voting system" quotes.
- In January 2001 in threads that say "(used to be Nov. 2000 election") the memos document that in Volusia County, Florida an unauthorized and mysterious "second upload" of votes was done, overwriting the correct totals with another set of totals, all of which were correct except the presidential race. In this, Al Gore suddenly has MINUS 16,022 votes. The memos say to be careful because "the boogie man" might be reading them and refer to "possible unauthorized upload" and clearly document that there were TWO uploads, from a "card #0" and a "card #3." The Card #3 upload took votes away from Gore, and that card is now missing.
- In April 2000 are memos about using cell phones to intercept and transfer votes.
- Also, since only versions 1.17.17 and earlier, version 1.11.14 of GEMS were ever certified or authorized, watch for all the memos which show they were using unauthorized, unexamined, uncertified versions 1.14.xx and 1.15.xx (various numbers on the end, all are uncertified). What this means is that NO ONE except for one or two programmers in Canada know what was in those programs used to count votes.
- If you download the memos, do a search for the word "fake" and you'll see that in Colorado Springs, they sold software they had never created, and when El Paso County Colorado demanded a demo before cutting a check, they discuss how to fake the demo and say they have done it before.
- Watch also for Ken Clark's discussion of sending uncertified software to California and saying something like "what good are rules if you can't bend them?"
All in all, you will find over 300 memos that document willful violation of the law.
Lexis-Nexis would be a worthwhile exercise now for every one of these search terms pertaining to the origins of Global Election Systems: This firm was a wholly owned subsidiary of North American Professional Technologies, Inc., which was in turn a wholly owned subsidiary of MacroTrends Ventures International, Ltd. Charles Hong Lee is one of the principals with these firms; He has been tied in the press to participation in a scheme to bilk immigrants out of some $47 million; he is also connected with a scandal in which a Mr. Graye was prosecuted, relating to Vinex Wines. Charles Hong Lee was also involved with something called "The Vancouver Maneuver," a stock pump & dump scheme that bilked investors out of millions in connection with an entertainment company and something called Beverly Development. Charles Hong Lee was a principal with Global Election Systems, along with the late Clinton Rickards. Talbot Iredale, currently the V.P. for Research and Development for Diebold Election Systems, began with the company in 1991, right around the time the Vancouver Maneuver was exposed in Barron's magazine. This is the pedigree from whence the Diebold Memos arose.
Sophia Lee may or may not be related to Charles Hong Lee (they are both from Vancouver, they are both originally from Hong Kong, but there are perhaps 10,000 people in Vancouver with the last name of "Lee" -- among the dozen people working for Diebold in Vancouver are Sophia Lee and Whitman Lee). Sophia Lee was in San Luis Obispo County, California on the day that a vote tally mysteriously popped up on the Internet five hours before the polls closed; she is the support tech for King County, Washington which Diebold principal engineer Ken Clark refers to as being "famous for" doing end runs around the voting system using a Microsoft Access hack, and her name is referenced in a strange series of memos for Volusia County, Florida in which programmers and techs discuss the unexplained appearance of an illicit set of votes that replaced the correct set.
Yes, that's right: 16,022 votes were removed from Al Gore's tally on election night when a mysterious, and now "lost" memory card uploaded and overwrote the correct totals. These disappearing votes were noticed by a clerk, who set alarm bells ringing and the tally was corrected, but Diebold programmers now say, in the memos, that the replacement vote upload can't be found. They concede that an extra vote upload was done, and Vice President of research Talbot Iredale says in the memos that it may have been illicit. The Volusia County memos then say something like "You never know when the "boogie man is reading these," suggesting caution.
====================================
Here is a contribution originally from Slashdot, made available for the Black Box Voting book by Donald Way. (Diebold: This is satire and meant for entertainment purposes only. If you would like to spend several more $500 per hour lawyer fees suing us over satire, go right ahead.)
CONSTITUTIONAL AMENDMENT
1. Pending: your vote is now the property of Diebold, Inc. Any attempt on your part to ascertain the disposition of your vote is hereby declared to be in violation of federal law, e.g., the Digital Millenium Copyright Act.
You have the right not to vote. Any vote you make can be used against you in a court of law. The judge presiding in such a court of law may be appointed by Diebold, Inc., and need not require a jury, but if a jury is summoned, it need not be a jury of your peers.
By acting to vote you consent to our determining whether your vote is valid, and in the event it is judged not to be valid, you consent to our voiding your vote and further voiding your right to vote in the future.
You furthermore acknowledge that owing to storage and bandwidth limitations that Diebold, Inc., may experience, your vote may be digitally compressed in a way such that your true intent in casting the vote may be lost. If such an eventuality should occur, your vote may be determined using statistical data derived from any source we deem appropriate or convenient.
You have the right to protest if your vote is cancelled, altered, or in any way modified as the result of such action on our part, however, you hereby acknowledge that in such an eventuality, Diebold, Inc. may determine that your right to vote is deleterious to democracy as implement by Diebold, Inc., and therefore may be considered to be an overt act against the national security of these United States.
You have 10 seconds to comply.
God Bless America
Thu Sept 25 2003
Titanic About to Hit the Iceberg (New York Times)
"For two years, Baltimore County has warned, `Iceberg ahead!' and now independent experts have warned that it's a gigantic iceberg," Mr. [James T.]Smith said. "Maryland should not say, `Damn the iceberg, full speed ahead.' "
New York Times article
Diebold Election Systems, reeling from a series of revelations about security flaws in its voting machines, took another hit when the SAIC report was released yesterday. Only 69 heavily redacted pages (out of 200) were released, raising more questions than they answered.
The SAIC report (Scientific Applications International Corporation), commissioned by the state of Maryland after it purchased some $55 million worth of high risk voting machines, can hardly be called an "independent" review. The SAIC's vice chairman, Bill Owens, also happens to be Chairman of VoteHere, the company that stands to benefit most if the SAIC report manages to identify certain security flaws while helping Diebold remain afloat. VoteHere makes a cryptography system to "verify" votes, which it claims will address Diebold's problems. Activist groups say "no dice" and are standing firm for a paper ballot that voters can verify, rather than more bits, bytes, and secret computer code.
But Diebold doesn't plan to correct security flaws on the rest of them??? According to a Diebold spokesman, "encryption and password upgrades will be made only for the machines destined for Maryland, [Mark] Radke said, and would not be available for the 33,000 touch-screen machines already in use elsewhere."
"Elsewhere" includes California, where 14 counties will be using Diebold machines in a few days for the recall race. The SAIC review found 328 security weaknesses, 26 of them critical, according to the Washington Post. How critical? If you live in Alameda County, Los Angeles, or any of a dozen other California counties, this is what you'll be voting on:
"The results of a successful attack could result in voting results being released too soon, altered, or destroyed. The impact of exploitation could lead to a failure of the elections process by failing to elect to office, or decide in a ballot measure, according to the will of the people. The impact could be a loss of voter confidence, embarrassment to the State, or release of incomplete or inaccurate election results to the media."
Diebold's dysfunctional response
While most of us would read "328 security weaknesses, 26 of them critical" as a bit of a problem, here is how Diebold describes it: ""We are pleased to be moving forward," said Thomas W. Swidarski, president of Diebold Election Systems. "The thorough system assessment conducted by SAIC verifies that the Diebold voting station provides an unprecedented level of election security."
Remember, according to Diebold someone left a file on a web site (it was 40,000 files for six years.) According to Diebold they did not do any patches in Georgia (they installed patches on 22,000 voting machines, not once but over and over, without allowing anyone to examine them).
If you can't show me how my votes get totalled, you lose the right to total my taxes, says one veteran computer programmer who finds the SAIC report unsatisfactory.
"The 200-page report has been shown to Diebold officials and is now being reviewed by the state's Department of Budget and Management and the State Board of Elections" wrote WiredNews. Yet only 69 pages were released, and they are redacted to remove basic information. The section on the GEMS central count program, for example, simply stated that it was deficient and needed to be changed, and then redacted the rest. GEMS is the program under fire in the recent Salon.com article and it affects both optical scan and touch screen systems.
"The voting terminal is an embedded device running Microsoft Windows {Redacted} as its operating system." -- The voting terminal runs on Windows CE, and the reason this appears to be redacted is that, according to an internal memo by Tab Iredale, V.P. Research and Development, they've been trying to avoid letting certifiers have a go at the operating system. The only way they can do this, according to FEC regulations, is to claim it is "COTS" (Commercial Off the Shelf) -- in other words, you buy it in a box and put it on the machine as is. However, Windows CE is not that kind of program. There is no such thing as "off the shelf" Windows CE. It is always fully customized, and, kind of like a set of legos, is programmed to fit. Therefore, it must be certified. Since Diebold has been trying to avoid certifying Windows CE, its existence was redacted.
"The currently used version of the AccuVote-TS software is {Redacted}" -- It is inexcusable to decline to say what version is being examined. Only the official NASED certified version is allowed to be used in elections. Either SAIC examined something that is not certified and has never been used, or they examined something certified that has been used. Either way, we have a right to know!
The methodology used to count your votes is redacted?
"Purpose and function of the AccuVote-TS voting system:
- Generate electronic ballots;
- Permit voters to view and cast their votes electronically;
- Record, store, and report vote totals; and
- Provide accurate electronic audit trails to ensure integrity of the AccuVote-TS voting system.
{Redacted}
The "What the hell happened" questions
- What the hell happened here? Ciber Inc. certified this stuff!
- What the hell happened here? Wyle Laboratories certified it too!
- What the hell happened here? NASED certified it too!
- What the hell happened here? Official Georgia voting machine examiner Brit Williams certified it too!
- What the hell happened here? The Diebold memos show they use versions that weren't even certified.
Could there be any better evidence that our "testing and certification" system is BROKEN?!?
==============================================================
Next: Multimedia voting machine presentation by Take Back The Media (yeah; turn up the sound, guys).
==============================================================
Oh, and yes: Diebold has been playing whackamole. Or there is another way to look at it: Hiding the evidence of lawbreaking. After 15,000 internal memos were leaked, Diebold tried to force www.blackboxvoting.org to shut down, claiming copyright because of a LINK on the site, but also sent a cease & desist letter to Global Free Press demanding removal of a search engine which quickly and easily finds information in the memos. By running search terms like "fake" "hack" "fix" "broken" and "boogie man" it quickly becomes apparent that evidence critical to the public interest is being hidden.
Why is this company still selling voting machines?
The Global Impact of the Gold Dinar
Philip Judge
This coming week, Malaysia plays host to a strategically important international conference entitled "GOLD INTERNATIONAL TRADE - Strategic Positioning in the Global Monetary System".
The stated objectives of the conference are clear and include discussions on the role of gold in international trade, gold-based financing mechanisms and the use of gold in international trade settlements.
Speakers include representatives from Islamic Development Bank, International Islamic University Malaysia, Central Bank of Iran, Bahrain Monetary Agency and Islamic Chambers of Commerce USA.
The keynote address will be delivered by Malaysia's Prime Minter, Datuk Seri Dr Mahathir Mohamad, who has been a long-time advocate of the re-introduction of gold, and specifically the gold dinar as a major international currency; "Besides being a means of payment for one of the biggest and most homogenous communities in the world, the Islamic dinar is also seen by many people as the only real challenge to the US dollar." February 2002 (i)
The official conference website states; "1997 East Asian and numerous other financial crises worldwide made apparent the vulnerability of the current monetary system and the need for a more stable and just global monetary system. In fact, since the collapse of Bretton Woods in 1971, the world monetary system has been inflationary and volatile with the absence of a stable unit of account. . . gold in international trade is seen as a strategic move to protect the interest of nations as far as monetary stability, independence and justice are concerned." (emphasis ours) (ii)
Clearly, when considering monetary systems, stability is an important issue, but equally important, and one that is often overlooked, is the issue of justice. In many peoples mind, an international payment system based on gold addresses both these issues.
The last one hundred years has seen the major western economies steadily dismantle the classic gold standard internationally, and replace it with a "flexible" debt-based paper monetary system. We only have to look around to see that this system has had far-reaching and destructive implications globally, on many levels.
In the western world today, we have had 2-3 generations of people that don't know or understand gold or silver, have no experience with the precious metals from a monetary perspective, and have absolutely no comprehension of their value.
In the east however, the complete opposite is the case. The vast majority of the population understand that gold and silver are the only real money, while paper is just a promise to pay. Many are aware that the west has been able to simply print paper money and send it around the world to pay for its unquenchable consumer appetite for goods and services. Islamic Nations have experienced and witnessed 1st hand currency crisis as result of the international US dollar policy. They have recognised that the US dollar system has exported massive inflation, instability and unsustainable debt around the world. Islamic oil producing nations are well aware that they are exchanging a strategically important and diminishing asset for paper.
This viewpoint is reflected in a public statement made in late 2001 by the Islamic Mint, when gold dinar coins were released in the seven Emirates of United Arab Emirates from branches of Thomas Cook Exchange Company and the Dubai Islamic Bank, "because of the fundamental political consequences of the introduction of paper money instruments, the reintroduction of gold money can be expected to be an equally significant milestone in the changing tides of the world economic & social situation. . . there is no doubt that this work puts behind it a century of suffering and defeat for Muslims and opens the coming age to a powerful and revived Islam."
While it has gathered attention and support in recent years, the concept of using the Islamic dinar as day-to-day currency and an international settlement instrument is by no means a new concept, having its modern origins back in 1963. Some observers may claim that the driving force behind the re-introduction of the gold dinar is religiously motivated, while others will argue that it is stimulated more by an absence of any viable alternative. (iii)
The gold dinar, and the Islamic banking model in general, has several distinguishing features. It is governed by strict religious laws and principles, it has a clear implementation strategy, and importantly, is non-debt based (according to the Qur'an and the Hardith, the only lawful money is non-usurious gold and silver).
At a time when the west is greatly increasing the regulatory requirements of moving money, under Islamic law, there is total freedom to buy, sell and possess any quantity of Dinar. It has been said that money is like electricity and moves through the path of least resistance.
Whatever the outcome of this week's conference in Malaysia, there are some certainties. Geo-politically and monetarily we are moving into a time of rapid change. As a result of the un-sustainability, and the debt associated with this present fiat US dollar system, Islam has every reason to embrace a stable gold backed alternative, and are likely to do so at an ever more rapid rate.
For decades, the west has been artificially lowering the gold price through selling and leasing, in an effort to protect and manage a flawed and untenable paper monetary system. Meanwhile there is growing evidence that indicates eastern and Islamic nations have been quietly accumulating. The gold from the west has been transferring east, which is going to have huge geo-political ramifications in tomorrow's world.
Islam is a vast trading block of over 1.5 billion people that transcends political and geographical boundaries. In a world of limited tangible supply of gold, consider the effects on the gold and broader financial markets as these nations start to unload their US dollar reserves to implement such a monetary system.
Historically, it can be seen that military might does not save an empire that has debased its currency.
(i) Prime Minter, Datuk Seri Dr Mahathir Mohamad, February 2002
(ii) Source : http://enm.iiu.edu.my/gold2003/
(ii) In l963 the 1st savings bank based on the Islamic ideal of profit-sharing was established in the a small Egyptian town. A more in-depth history is available from our 1998 article www.anglofareast.com/0106.html
29 September 2003
Philip Judge
© 2003
pjudge@anglofareast.com
Philip Judge is a director of The Anglo Far-East Bullion Company, a private bullion custodial and banking company. www.anglofareast.com
http://www.gold-eagle.com/editorials_03/judge092903.html
U.S. Uses Terror Law to Pursue Crimes From Drugs to Swindling
September 28, 2003
By ERIC LICHTBLAU
WASHINGTON, Sept. 27 - The Bush administration, which calls
the USA Patriot Act perhaps its most essential tool in
fighting terrorists, has begun using the law with
increasing frequency in many criminal investigations that
have little or no connection to terrorism.
The government is using its expanded authority under the
far-reaching law to investigate suspected drug traffickers,
white-collar criminals, blackmailers, child pornographers,
money launderers, spies and even corrupt foreign leaders,
federal officials said.
Justice Department officials say they are simply using all
the tools now available to them to pursue criminals -
terrorists or otherwise. But critics of the
administration's antiterrorism tactics assert that such use
of the law is evidence the administration is using
terrorism as a guise to pursue a broader law enforcement
agenda.
Justice Department officials point out that they have
employed their newfound powers in many instances against
suspected terrorists. With the new law breaking down the
wall between intelligence and criminal investigations, the
Justice Department in February was able to bring
terrorism-related charges against a Florida professor, for
example, and it has used its expanded surveillance powers
to move against several suspected terrorist cells.
But a new Justice Department report, given to members of
Congress this month, also cites more than a dozen cases
that are not directly related to terrorism in which federal
authorities have used their expanded power to investigate
individuals, initiate wiretaps and other surveillance, or
seize millions in tainted assets.
For instance, the ability to secure nationwide warrants to
obtain e-mail and electronic evidence "has proved
invaluable in several sensitive nonterrorism
investigations," including the tracking of an unidentified
fugitive and an investigation into a computer hacker who
stole a company's trade secrets, the report said.
Justice Department officials said the cases cited in the
report represent only a small sampling of the many hundreds
of nonterrorism cases pursued under the law.
The authorities have also used toughened penalties under
the law to press charges against a lovesick 20-year-old
woman from Orange County, Calif., who planted threatening
notes aboard a Hawaii-bound cruise ship she was traveling
on with her family in May. The woman, who said she made the
threats to try to return home to her boyfriend, was
sentenced this week to two years in federal prison because
of a provision in the Patriot Act on the threat of
terrorism against mass transportation systems.
And officials said they had used their expanded authority
to track private Internet communications in order to
investigate a major drug distributor, a four-time killer,
an identity thief and a fugitive who fled on the eve of
trial by using a fake passport.
In one case, an e-mail provider disclosed information that
allowed federal authorities to apprehend two suspects who
had threatened to kill executives at a foreign corporation
unless they were paid a hefty ransom, officials said.
Previously, they said, gray areas in the law made it
difficult to get such global Internet and computer data.
The law passed by Congress just five weeks after the terror
attacks of Sept. 11, 2001, has proved a particularly
powerful tool in pursuing financial crimes.
Officials with the Bureau of Immigration and Customs
Enforcement have seen a sharp spike in investigations as a
result of their expanded powers, officials said in
interviews.
A senior official said investigators in the last two years
had seized about $35 million at American borders in
undeclared cash, checks and currency being smuggled out of
the country. That was a significant increase over the past
few years, the official said. While the authorities say
they suspect that large amounts of the smuggled cash may
have been intended to finance Middle Eastern terrorists,
much of it involved drug smuggling, corporate fraud and
other crimes not directly related to terrorism.
The terrorism law allows the authorities to investigate
cash smuggling cases more aggressively and to seek stiffer
penalties by elevating them from what had been mere
reporting failures.
Customs officials say they have used their expanded
authority to open at least nine investigations into Latin
American officials suspected of laundering money in the
United States, and to seize millions of dollars from
overseas bank accounts in many cases unrelated to
terrorism.
In one instance, agents citing the new law seized $1.7
million from United States bank accounts that were linked
to a former Illinois investor who fled to Belize after he
was accused of bilking clients out of millions, federal
officials said.
Publicly, Attorney General John Ashcroft and senior Justice
Department officials have portrayed their expanded power
almost exclusively as a means of fighting terrorists, with
little or no mention of other criminal uses.
"We have used these tools to prevent terrorists from
unleashing more death and destruction on our soil," Mr.
Ashcroft said last month in a speech in Washington, one of
more than two dozen he has given in defense of the law,
which has come under growing attack. "We have used these
tools to save innocent American lives."
Internally, however, Justice Department officials have
emphasized a much broader mandate.
A guide to a Justice Department employee seminar last year
on financial crimes, for instance, said: "We all know that
the USA Patriot Act provided weapons for the war on
terrorism. But do you know how it affects the war on crime
as well?"
Elliot Mincberg, legal director for People for the American
Way, a liberal group that has been critical of Mr.
Ashcroft, said the Justice Department's public assertions
had struck him as misleading and perhaps dishonest.
"What the Justice Department has really done," he said, "is
to get things put into the law that have been on
prosecutors' wish lists for years. They've used terrorism
as a guise to expand law enforcement powers in areas that
are totally unrelated to terrorism."
A study in January by the General Accounting Office, the
investigative arm of Congress, concluded that while the
number of terrorism investigations at the Justice
Department soared after the Sept. 11 attacks, 75 percent of
the convictions that the department classified as
"international terrorism" were wrongly labeled. Many dealt
with more common crimes like document forgery.
The terrorism law has already drawn sharp opposition from
those who believe it gives the government too much power to
intrude on people's privacy in pursuit of terrorists.
Anthony Romero, executive director of the American Civil
Liberties Union, said, "Once the American public
understands that many of the powers granted to the federal
government apply to much more than just terrorism, I think
the opposition will gain momentum."
Senator Patrick J. Leahy of Vermont, the ranking Democrat
on the Judiciary Committee, said members of Congress
expected some of the new powers granted to law enforcement
to be used for nonterrorism investigations. But he said the
Justice Department's secrecy and lack of cooperation in
putting the legislation into effect made him question
whether "the government is taking shortcuts around the
criminal laws" by invoking intelligence powers - with
differing standards of evidence - to conduct surveillance
operations and demand access to records.
"We did not intend for the government to shed the
traditional tools of criminal investigation, such as grand
jury subpoenas governed by well-established precedent and
wiretaps strictly monitored" by federal judges, he said.
Justice Department officials say such criticism has not
deterred them. "There are many provisions in the Patriot
Act that can be used in the general criminal law," Mark
Corallo, a department spokesman, said. "And I think any
reasonable person would agree that we have an obligation to
do everything we can to protect the lives and liberties of
Americans from attack, whether it's from terrorists or
garden-variety criminals."
http://www.nytimes.com/2003/09/28/politics/28LEGA.html?ex=1065867976&ei=1&en=db88cf04efa1dc2...
''Corporations are the main victors in Iraq''
Printed on Monday, September 29, 2003 @ 00:00:31 CST ( )
By Devin Nordberg
YellowTimes.org Guest Columnist (United States)
(YellowTimes.org) – "It's not about oil. It's not about oil."
But we're taking their oil. And not just to finance reconstruction.
Paul Bremer, the U.S. administrator of the Iraqi occupation, made that clear back in July when he declared that Iraq needs to accept foreign investment and privatization of its oil before a permanent government is put in charge of the country. In other words, democracy is welcome only after the most important economic decisions regarding the future of Iraqis have been decided for them.
You'd think that such a blatant rejection of democracy and obvious grab at Iraq's oil would attract more notice. Bremer made it clear that corporations have priority over people in Iraq, and that the U.S. occupation plans to ensure that.
Our occupation of Iraq has an eerie similarity to another intervention in the Middle East that occurred 50 years ago -- the CIA-British coup that ousted Iran's democratically elected leader, Mohammed Mossadegh, and installed the infamous Shah of Iran.
So when Arab nations greet our rhetoric of creating democracy with suspicion or outright derision, we've earned it. Iranians struggled successfully for democracy and we promptly crushed their dream.
Then, as now, the U.S. and Great Britain used violence to prevent Iraq and Iran from controlling their own oil.
This set of priorities contrasts sharply with the U.S. occupation of Japan after WWII, when Americans sat down with Japanese scholars and collaboratively designed and implemented one of the most progressive democratic constitutions in the world. We can take pride for having helped Japan evolve into a peaceful, stable, and prosperous country that is one of our closest allies. Today, Iranian and Iraqi people resent our support of their previous corrupt regimes and, understandably, don't trust our intentions now.
The differences between the American occupations of 1945 Japan and 2003 Iraq reflect the rise of corporate power here and abroad, and within the Bush administration in particular. Dick Cheney's former company, Halliburton, is already cashing in on Iraqi "rebuilding" contracts that it obtained from the U.S. government. The oil companies that donated so heavily to the Bush campaign will reap huge profits if they are allowed to take over oil production in Iraq. The weapons makers profit from Bush's policies as well, and even telecommunications companies stand to benefit, since Bremer intends to give foreign corporations license to operate mobile phone networks in Iraq.
It's no surprise that Dick Cheney, Paul Wolfowitz, and Donald Rumsfeld have been advocating an invasion of Iraq since at least 1998 through the Project for a New American Century. It could be argued that Saddam Hussein has been a marked man since he nationalized Iraqi oil back in 1973, but that's another story.
Meanwhile, the American occupation of Iraq increasingly resembles the cycle of violence between Palestinians and Israelis: American soldiers are ambushed and killed, and the U.S. military retaliates by rounding up and imprisoning Iraqi "suspects," including civilians, women, and children as young as 11. More Iraqi violence results, and the cycle continues. Iraqis have little hope that American troops will withdraw anytime soon and have not been treated with dignity or afforded human rights by their occupiers.
How did the American ideals of liberty and justice become hollow slogans for presidents to use to justify military attacks abroad? Ever since Eisenhower warned us of the dangers of the military-industrial complex, it has become steadily more powerful. Corporations should not be allowed to influence foreign policy.
Yet the Bush Administration's foreign policy, like domestic policy, often seems to come directly from corporate boardrooms. For example, Executive Order 13303 grants complete legal immunity to transnational oil companies operating in Iraq. While U.S. soldiers attempt to establish law and order in Iraq, Bush has put oil companies above the law.
The time to end the occupation of Iraq is overdue. We should pull our troops out before more of them die, hand the temporary administration of Iraq over to the U.N., let the U.N. weapons inspectors back in Iraq, fund the rebuilding of Iraq through the U.N., and allow Iraqis to choose their own government.
The best way for us to fight terrorism is to advance justice; and justice will not be possible as long as corporations are prioritized over people.
Devin Nordberg writes for ReclaimDemocracy.org, an organization devoted to restoring citizen authority over corporations and advancing democracy.
[Devin Nordberg writes for ReclaimDemocracy.org, an organization devoted to restoring citizen authority over corporations and advancing democracy.]
Devin Nordberg encourages your comments: nordberg@hawaii.edu
YellowTimes.org is an international news and opinion publication. YellowTimes.org encourages its material to be reproduced, reprinted, or broadcast provided that any such reproduction identifies the original source, http://www.YellowTimes.org. Internet web links to http://www.YellowTimes.org are appreciated.
White House Denies Leaking CIA Identity
http://story.news.yahoo.com/news?tmpl=story&cid=514&e=2&u=/ap/20030929/ap_on_go_ca_st_pe...
Rice "knew nothing" about CIA agent leak
http://in.news.yahoo.com/030928/137/282ov.html
White House Says Top Aide Was Not Behind C.I.A. Leak
September 29, 2003
By DAVID STOUT
WASHINGTON, Sept. 29 - The White House said today that it
was ``ridiculous' for anyone to suggest that President
Bush's top political adviser had leaked secret information
in an effort to discredit an outspoken critic of Mr. Bush's
policy on Iraq.
But the White House denial that Mr. Bush's political aide,
Karl Rove, was behind the leak failed to satisfy Democrats,
several of whom demanded investigations of one kind or
another.
The controversy, which has been simmering for two months
and boiled over during the weekend, concerns the wife of
Joseph Wilson, a former United States diplomat, and his
wife, Valerie Plame. The syndicated columnist Robert Novak,
citing ``two senior administration officials,' wrote in
July that Ms. Plame was an undercover operative for the
Central Intelligence Agency specializing in weapons of mass
destruction.
["The controversy, which has been simmering for two months
and boiled over during the weekend," in other words we in the "major" media din't say a fucking thing about it for two months until it started spreading like wildfire on the net and we had to say something. We'll now do our best to be shills for the government and water down the story as far as possible never even mentioning the alligations that 70 CIA "assets" had been "liquidated"...]
On Sunday, The Washington Post reported that Bush
administration officials had contacted a half-dozen
Washington reporters in an effort to publicly disclose Ms.
Plame's identity, apparently in retaliation for Mr.
Wilson's public assertions that President Bush had
exaggerated the threat of any Iraqi weapons of mass
destruction to help justify the war to topple Saddam
Hussein.
The Post also reported that the C.I.A.'s office of general
counsel had written to the Department of Justice in late
July to complain of the disclosure and to ask for an
investigation into whether administration officials had
indeed been involved in what could be a violation of
federal law.
Asked at a midday news briefing if Mr. Rove was behind the
leak, the chief White House spokesman, Scott McClellan,
said today that he had spoken to Mr. Rove and had been
assured that it was ``simply not true' that Mr. Rove had
had anything to do with the leak.
``The president knows that Karl Rove wasn't involved,' Mr.
McClellan said. Pressed on just how the president knew
that, Mr. McClellan said: ``Well, I've made it very clear
that it was a ridiculous suggestion in the first place. I
saw some comments this morning from the person who made
that suggestion backing away from that. And I said it is
simply not true.'
Mr. McClellan also pledged that the White House would
cooperate with the Justice Department in any investigation
of the leak.
Although the Justice Department was said to be considering
at least a preliminary inquiry, several Democrats urged
that the matter be entrusted to an independent inquiry
outside the Justice Department, which has drawn criticism
of partisanship from Democratic circles.
Senator Charles E. Schumer, Democrat of New York, who
called for the F.B.I. to investigate the disclosure after
it first surfaced in July, said today that an independent
counsel should be appointed. And some of the 10 Democrats
seeking to challenge President Bush in 2004 said the
disclosure of an ambassador's wife as a C.I.A. officer
demonstrated that the Bush administration was intertwining
politics and national security and could not be trusted to
investigate itself.
``This administration has played politics with national
security for a long time, but this is going too far,' one
of those Democratic hopefuls, retired Gen. Wesley Clark,
told Reuters, suggesting an independent commission look
into the accusations. ``I don't think, in this
administration, the Department of Justice will have the
credibility it needs to reassure American allies abroad,
and people around the world, about this matter.'
The general suggested former Senator Sam Nunn, a Georgia
Democrat, or John Shalikashvili, a former chairman of the
Joint Chiefs of Staff, to lead an independent inquiry.
Another candidate, former Gov. Howard Dean of Vermont, said
that keeping Mr. Ashcroft out of an investigation would
help ensure a thorough inquiry free of political pressure,
and he suggested that the review be carried out by the
Justice Department's inspector general, an independent
post.
``We need to determine the facts in the highly sensitive
matter free from any political taint,' Mr. Dean told
Reuters.
http://www.nytimes.com/2003/09/29/politics/29CND-LEAK.html?ex=1065860680&ei=1&en=fbdc7f678f0....
SBSC Releases Its 8th Annual State by State Rankings of Small Business Climates
Washington, D.C.—Today, the Small Business Survival Committee (SBSC) released its eight annual rankings of the states according to their respective policy climates for small business and entrepreneurship in the “Small Business Survival Index 2003.”
In terms of their policy environments, the most entrepreneur-friendly states under the “Small Business Survival Index 2003” are: 1) South Dakota, 2) Nevada, 3) Wyoming, 4) New Hampshire, 5) Florida, 6) Texas, 7) Tennessee, 8) Washington, 9) Michigan, 10) Mississippi, 11) Alabama, 12) Colorado, 13) Illinois, 14) Virginia, and 15) Indiana.
In contrast, the most anti-entrepreneur policy environments are offered by the following: 37) North Carolina, 38) Montana, 39) Ohio, 40) West Virginia, 41) Iowa, 42) Oregon, 43) New Mexico, 44) Vermont, 45) New York, 46) California, 47) Rhode Island, 48) Maine, 49) Minnesota, 50) Hawaii, and 51) District of Columbia.
According to SBSC chief economist Raymond J. Keating, author of the study, “The ‘Small Business Survival Index 2003’ compares how governments in the states treat small businesses and entrepreneurs. Since small business serves as the backbone of the U.S. economy—for example, by providing the bulk of new jobs and being a font of innovation—every state and local lawmaker should be concerned with how their policies impact small business.”
SBSC president Darrell McKigney added, “With small businesses creating some three-quarters of all net new jobs, everyone has an interest in knowing if their state’s government stands behind its small businesses – or is standing in the way.”
The “Small Business Survival Index 2003” analyzes 21 major government-imposed or government-related costs affecting small businesses and entrepreneurs such as personal and business tax rates, property taxes, as well electricity and health care costs, and computes an overall rating. The entire report is available at www.sbsc.org.
Keating notes: “The Small Business Survival Index manages to capture much of the governmental burdens impacting critical economic decisions—particularly affecting investment and entrepreneurship—state by state. Starting up, owning and operating a business is a risky venture. But those individuals willing to take such risks, by making investments of resources, time and energy, spur the economy forward. Indeed, entrepreneurship and investment serve as the economy’s lifeblood. Of course, most politicians claim to support small business, but their actions speak far louder than any political speeches ever could.”
Keating concludes: “The best policy environment for entrepreneurship consists of low taxes, limited government, restrained regulation, and government protecting life, limb and property. States following such a governing philosophy will reap great rewards from America’s entrepreneurs, including faster economic growth and increased job creation.”
For a copy of the “Small Business Survival Index 2003,” visit SBSC’s website at www.sbsc.org. SBSC is a national nonpartisan, nonprofit small business advocacy group headquartered in Washington, D.C.
http://www.sbsc.org/LatestNews_Action.asp?FormMode=1&ID=317
$36-bn private Chinese gold investment?
By: Tim Wood
Posted: 2003/09/26 Fri 17:00 EDT / © Mineweb 1997-2003
NEW YORK -- The Hong Kong edition of Friday’s China Daily will be celebrated in gold bug circles after the Bank of China’s bullion guru said local consumers could pour $36 billion into the metal, equivalent to around 2,950 tonnes, or more than one year of supply, at current prices.
Xi Jianhua, the Bank of China's gold business expert, is also quoted saying that it would be "safe and feasible" for China swap some foreign exchange reserves for gold. The country has a little over 600 tonnes of gold in reserve now, and $360 billion in foreign exchange.
Xi also wants rapid deregulation of the retail gold market, the cornerstone of which is the Shanghai Gold Exchange. China currently consumes about 200 tonnes of gold a year, much of it met from local production.
Apparently, a recent national survey show that one fifth of respondents claimed to be willing to divert 10 to 30 per cent of their savings to gold. Consequently, Xi believes that private funds amounting to 300 billion yuan could be buying gold, in addition to what the Chinese Central Bank would buy.
The Central Bank purchase suggestion is especially bullish as uncertainty grows about the intentions of Washington Agreement banks regarding the renewal of their controlled gold sales.
Initial private demand in China is expected to be more modest at between 300-500 tonnes, but that would be a large fillip on top of expected demand for the World Gold Council’s globally traded gold funds. Gold producers that have recently conducted investor road shows in North America report that hedge funds are especially interested in the imminent ETFs.
Xi said the purpose of purchasing gold would be equivalent to the Fed’s market window, allowing China’s central bank to take yuan out of circulation, reduce the surplus on the current account and diversify foreign exchange holdings, all with an eye on reducing calls for the yuan to appreciate.
At a Denver Gold Forum luncheon devoted to gold investment issues, Pierre Lassonde, president of Newmont, said Chinese gold demand could only grow with deregulation. “Current consumption is 0.2 grams per person per year. In India it is over 0.7 grams and grew from a level similar to the Chinese 11 years ago. Indian gold market deregulation grew demand from 200 to 900 tonnes, although it has slipped to 600 tonnes now,” he said. “Imagine if China grows from 0.2 to 0.7 grams of gold per person? It will be the largest gold market in the world. It will happen, I can see it.”
Andy Smith, Mitsui’s precious metals analyst, worries that Chinese gold demand will not live up to high expectations, and that investors are likely to make money selling more mundane items to a burgeoning middle class that aspires to the accoutrements of progress.
That said a Central Bank official talking openly about manipulating the yuan via gold is a significant milestone that bears watching. If China does swap a meaningful amount of dollars into gold in the next few months, investors can take Xi rather more seriously than they might right now given the Bank’s cultivated inscrutability.
http://m1.mny.co.za/MGGold.nsf/Current/4225685F0043D1B285256DAD0073688C
Hubble Spots Two Tiny Uranian Moons
By SPACE.com Staff
posted: 11:10 am ET
25 September 2003
Astronomers have found two of the smallest moons ever spotted around Uranus, brining the distant planet's satellite tally to 24, the third most in the solar system.
The moons are 8 to 10 miles across (12 to 16 km) -- about the size of San Francisco -- and were discovered with the Hubble Space Telescope.
With greater technology, astronomers are finding smaller moons around the giant planets with remarkable frequency, especially over the past two years. Jupiter leads the way with more than 50 known moons, Saturn has more than 30.
More moons are sure to be found as the search continues. Jupiter could have about 100 down to 0.62 miles (1 kilometer) in diameter, one expert has said.
The newly detected moons orbit closer to the planet than the five major Uranian satellites, which are each several hundred miles wide. The International Astronomical Union (IAU) will announce the finding today.
Uranus picture compiled from images returned on January 17, 1986 by Voyager 2. The spacecraft was 9.1 million kilometers (5.7 million miles) from the planet.
"It's a testament to how much our Earth-based instruments have improved in 20 plus years that we can now see such faint objects 1.7 billion miles (2.8 billion km) away," said Mark Showalter of Stanford University and NASA's Ames Research Center.
The newly discovered moons are temporarily designated as S/2003 U1 and S/2003 U2 until the IAU formally approves their discovery. S/2003 U1 is the larger of the two moons, measuring 10 miles (16 km) across. The Hubble telescope spotted this moon orbiting between the moons Puck, the largest satellite found by the Voyager spacecraft, and Miranda, the innermost of the five largest Uranian satellites.
Astronomers previously thought this region was empty space, according to a statement issued today by Hubble officials. S/2003 U1 is 60,600 miles (97,700 kilometers) away from Uranus, whirling around the giant planet in 22 hours and 9 minutes.
The smallest Uranian moon yet found, S/2003 U2, is 8 miles (12 kilometers) wide. Its orbital path is just 200 to 450 miles (300 to 700 km) from the moon Belinda. S/2003 U2 is 46,400 miles (74,800 km) away from Uranus and circles the planet in 14 hours and 50 minutes. The tiny moon is part of a densely crowded field of 11 other moons, all discovered from pictures taken by the Voyager spacecraft.
"The inner swarm of 13 satellites is unlike any other system of planetary moons," says co-investigator Jack Lissauer of Ames. "The larger moons must be gravitationally perturbing the smaller moons. The region is so crowded that these moons could be gravitationally unstable. So, we are trying to understand how the moons can coexist with each other."
One idea is that some of the moons are young and formed through collisions with wayward comets.
"Not all of Uranus's satellites formed over 4 billion years ago when the planet formed," Lissauer said. "The two small moons orbiting close to [the moon] Belinda, for example, probably were once part of Belinda. They broke off when a comet smashed into Belinda."
The astronomers hope to refine the orbits of the newly discovered moons with further observations.
"The orbits will show how the moons interact with one another, perhaps showing how such a crowded system of satellites can be stabilized," Showalter explained. "This could provide further insight into how the moon system formed. Refining their orbits also could reveal whether these moons have any special role in confining or 'shepherding' Uranus's 10 narrow rings."
http://www.space.com/scienceastronomy/uranus_moons_030925.html
Thinking the unthinkable: China's future colonization of the USA
By Lev Navrozov
SPECIAL TO WORLD TRIBUNE.COM
Lev Navrozov emigrated from the Soviet Union in 1972 He settled in New York City where he quickly learned that there was no market for his eloquent and powerful English language attacks on the Soviet Union. To this day, he writes without fear or favor or the conventions of polite society. He chaired the "Alternative to the New York Times Committee" in 1980, challenged the editors of the New York Times to a debate (which they declined) and became a columnist for the New York City Tribune. His columns are today read in both English and Russian. .
September 26, 2003
Before launching the website www.worldthreats.com, Ryan Mauro had been a geopolitical analyst for a maritime security company called Tactical Defense Concepts. I have decided to publish his interview with me in my column because it “starts from scratch,” a useful approach, since in the last eight years or so, the media created an honest-to-goodness vacuum on the subject.
A Glimpse into China's Post-Nuclear Weapons:
Lev Navrozov Interviewed by Ryan Mauro (PhilNDeBlank9@aol.com) for www.worldthreats.com
I am thankful to Lev Navrozov, an expert in post-nuclear superweapons, as he calls them, for granting this interview.
RM: Mr. Navrozov, your “nano weapons columns” on Newsmax.com and WorldTribune.com are intriguing. What is nanotechnology and how can it neutralize the U.S. means of nuclear retaliation?
LN: The word “nano” means “one billionth.” Nanotechnology is a field of many fields, some of them civilian, dealing with such small systems. What is of interest to us is tiny systems (they are called “assemblers”) of molecular nanotechnology. Such assemblers can penetrate molecules and transform or destroy them.
The world peace has been based on Mutual Assured Destruction. That is, every nuclear power such as the United States, Russia, or China has had means of nuclear retaliation, which an enemy nuclear attack cannot destroy. Thus, nuclear weapons can destroy New York, Moscow, or Beijing, but they cannot destroy submarines deep underwater, carrying nuclear missiles, underground nuclear installations, or bombers on duty high in the air carrying nuclear bombs. Nano assemblers are expected to be able to find these means of retaliation and destroy them by penetrating in between their atoms. Thus an attacked country can be destroyed safely by nuclear weapons because it has no means of nuclear retaliation to retaliate after the enemy nuclear attack and destroy the attacker by way of Mutual Assured Destruction.
RM: If nanotechnology is to be used as weapon, how does it work?
LN: Let me recall the description a nanotechnologist has e-mailed. A molecular assembler I spoke about is a device capable of breaking and creating the chemical bonds between atoms and molecules. Since a molecular assembler is by definition able to self-replace, the first could build a duplicate copy of itself. Those two then become four, become eight, and so on. This compounding capital base could lead to a massive and decisive force within days. As Eric Drexler described it in his book—which he published in 1986!—“a state that makes the assembler breakthrough could rapidly create a decisive military force--if not literally overnight, then at least with unprecedented speed.”
Such a device is capable of rapidly manufacturing and deploying billions of microscopic/macroscopic machines at relatively little cost. These machines could comb the oceans for enemy submarines and quickly disable the nuclear arsenals they carry. Similar acts of sabotage could be carried out simultaneously against land-based nuclear facilities and conventional military forces in a matter of hours, if not minutes.
The race to build a molecular assembler, if won by China, will result in its worldwide nanotechnic dictatorship. We are certainly at a crucial juncture in history, not unlike 1938 and its nuclear scientists who foretold the atom bomb. This time, we cannot afford to be caught sleeping.
RM: What countries are developing the post-nuclear superweapons involving nanotechnology?
LN: It is worthwhile to speak only of China, Russia if dictatorship comes back to that country, and the United States if it awakens from its sleep, which may well be its last. To make the nanoweapons useful, a country must have the ability and the will to either world domination or to the defense against another country's world domination.
RM: What do you believe are the motives and goals of the countries that are developing the post-nuclear superweapons?
LN: The national student movement of 1989, associated with Tiananmen Square, endangered the Chinese dictatorship more than any group in Soviet Russia endangered the Soviet dictatorship two years later. Yet the Soviet dictatorship fell. What a lesson for the Chinese dictators! We know authentic information about the Tiananmen Square movement from Zhang Liang's publication “The Tiananmen Papers,” a 514-page collection of Chinese government documents. It is clear that the dictators of China saw how absolutism was endangered in China and understood that the only way to prevent future Tiananmens was to annihilate or subjugate the source of subversion, viz,.the West.
RM: What do you believe are going to be China's next steps in terms of acquiring territory?
LN: In contrast to Hitler, who stupidly grabbed the rump of Czechoslovakia in 1939, China has been very cautious in its territorial claims, since the position of China now is the best for the development of “Superweapon No. 3,” such as the nano superweapon.
RM: Who does China see as allies and enemies?
LN: The worst enemy is the democratic West, whose very existence produces Tiananmens able to destroy the Chinese dictatorship. The best ally is the democratic West, supplying China with everything necessary for the annihilation or subjugation of the democratic West.
RM: Are the other post-nuclear weapons being researched to this day? If so, are they known? If not, can you enlighten us?
LN: Since the nano “Superweapon No. 3” is a hypothesis, and not an absolute certainty, the Chinese Project 863 has been engaged in genetic engineering and at least six or seven other fields.
RM: If China has or is close to, molecular nanotechnology to be used in war, what is the purpose of having a large, advanced conventional army and “traditional” nuclear weapons?
LN: Eric Drexler, the Newton of nanotechnology, alive and enriching us with his wisdom, discusses the problem in his historic book of 1986 “Engines of Creation.” My assistant Isak Baldwin says that, according to Drexler, “A nation armed with molecular nanotechnology-based weapons would not require nuclear weapons to annihilate a civilization. In fact, it seems that a rather surgical system of seeking and destroying enemy human beings as cancerous polyps could be developed--leaving the nation's infrastructure intact to be repopulated.”
Nevertheless conventional weapons might be useful even on the “D-day,” after nanotechnology has been successfully weaponized. Conventional non-nuclear weapons have been useful even after 1945. Please recall that two “atom bombs” were delivered in 1945 by conventional U.S. bombers with conventional machine guns and all.
RM: What beliefs or desires are motivating the rulers of China? The belief that Communism must triumph over Capitalism?
LN: A New York taxi robber risks his life, life imprisonment, or death sentence to acquire the taxi driver's $200. Hence the bullet-proof partitions in taxis. The dictators of China defend not $200, but their power, which is worth trillions of dollars, apart from what cannot be expressed in terms of money (royal grandeur, cult, and glorification). Remember the French king who said, “The state—it is me”? Many dictators have been saying and can always say: “Communism/ capitalism/democracy/freedom/socialism/national socialism/our great country/the meaning of life/the goal of history/--it is me.”
RM: If the U.S. is the most technologically advanced country, does this mean we have been surpassed?
LN: The “most technologically advanced country” is an ambiguous generality. In the 1950s, Russia was still a technologically backward country, with most of its population deprived of running water, to say nothing of passenger cars. Yet it did not prevent Russia from outstripping the United States in space rocketry, when the Soviet space satellite was launched before its American counterpart. In its annual “Soviet Military Power,” to which I subscribed, the Pentagon could not help praising certain Soviet weapons as second to none in the world.
RM: What today is holding China back from becoming overtly aggressive and reshaping the geopolitical world?
LN: The dictators of China are not insane! China's government-controlled “capitalist corporations” have been penetrating the entrails of the Western economies, absorbing the latest science and technology -- or sometimes entire Western corporations, induced to operate in China on cheap local labor. To become “overtly aggressive”? What for? To invade Taiwan? To perish, along with the West, in Mutually Assured Destruction? No, the dictators of China are not insane! They are developing superweapons able to annihilate the Western means of nuclear retaliation.
RM: What are your suggestions for defending the U.S.? What steps must be taken?
LN: It is necessary for the U.S. political establishment to understand what is going on. Then the right steps will be taken. This is not a recipe that one person or one group can offer. This must be a national effort.
In 1978, to enlighten the West, I convinced nineteen outstanding Westerners to join the Advisory Board of the Center for the Survival of Western Democracies under my presidency. The irony is that when we concentrated on Soviet Russia, before 1991, we had all the grants we needed. But in the last eight years or so, China was the American holy cow, and we have had no funds to carry on our research of China and the enlightenment of the West.
RM: How much progress have you made in alerting the government and intelligence apparatus about the Chinese threat?
LN: Since our Center for the Survival of Western Democracies began to regard China, and not Russia, as the key geostrategic player, the donations to our organization stopped. My assistants work without pay or with a token pay. We need a top-level publicist at $10,000 for four months, Chinese translators at $100 a week, etc. Quite unlike a conjectural $200 billion on the war in Iraq, where WMDs are still being hidden (presumably under Hussein's bed, which is also being hidden) and a conjectural $600 billion for the reconstruction of Iraq (well, once it has been destroyed by the Coalition bombs, missiles, and shells, it is to be reconstructed).
RM: What do you predict will occur in the future?
LN: For the time being, the prediction is not difficult: unless the situation changes, the West will be annihilated or will become a Chinese colony with all the consequences arising therefrom.
Lev Navrozov's (navlev@cloud9.net] new book is available on-line at www.levnavrozov.com. To request an outline of the book, send an e-mail to webmaster@levnavrozov.com.
September 12, 2003
http://www.worldtribune.com/worldtribune/back_neil.html
Focus: China's gold rush
( 2003-09-25 11:10) (China Daily HK Edition)
Prominent gold experts and officials are urrging the government to lift the ban on individual trading in the precious metal as soon as possible, as quoted prices at the Shanghai Gold Exchange (SGE) continually hit record highs this month amid a surge in buying enthusiasm.
A woman shows a bar of gold in Wuxi, Jiangsu Province. Enthusiasm for individual investment in gold has always been high in China. [newsphoto.com.cn]
The introduction of individual traders, they say, would kill four birds with one stone, by invigorating flagging consumption, slashing the foreign trade surplus, trimming conspicuous foreign exchange reserves and easing international pressures on China to appreciate its currency.
It is "safe and feasible" for China to spend part of its foreign exchange reserves on gold imports, as well as place such purchases on the domestic market and open the market to individual players at the earliest possible opportunity, said Xi Jianhua, Bank of China's gold business expert.
About 20 per cent of respondents to a recent national survey said they were willing to spend 10 to 30 per cent of their savings in gold investment, indicating a huge potential demand for gold.
Outstanding individual bank savings in China hit 10.61 trillion yuan (US$1.28 trillion) at the end of July. After trying in vain for years to encourage a high growth rate in private spending, China has had to rely on proactive fiscal policies, marked by heavy government investment since the Asian financial crisis in 1997, to maintain fast gross domestic product growth.
Based on the survey results, Xi estimated that a possible injection of as much as 300 billion yuan (US$36.15 billion) in private money could flow into the gold market.
The money would create demand for about 3,000 tons of gold, he said. It would then only be natural for the country to expand imports as China currently has just 600 tons of gold reserves at its disposal, far from enough to cope with the potential gold rush.
In the initial stages, individual investors would create a market demand for 300 to 500 tons, according to analysts, and further growth would be gradual.
Spending on such a scale for gold imports would not have a significant impact on China's foreign exchange reserves, they said. Even if the anticipated 300 billion yuan worth of private investment was made right away, the country's US$356.5 billion worth of foreign exchange reserves at the end of July could cater for the demand with ease.
Using the reserves to purchase foreign gold would not only help withdraw billions of yuan now in circulation, but also boost the overall national import volume, Xi said, and thus "ease pressures on the appreciation of the yuan".
Xi's suggestions were echoed by Xu Shouxin, vice-director general of the China Gold Association.
Xu said the association has long proposed promoting individual ownership of gold, adding that the best way would be to allow commercial banks to start individual gold investment services at the earliest possible date.
He also stressed the need to spend part of the country's foreign exchange reserves on gold imports once the domestic market is opened to individual investors.
The time is now perfect for the government to make the move, say analysts, citing potential room for further hikes in gold prices, both in the domestic and international markets.
Rising prices
Gold prices in China have risen more than 15 per cent since the Shanghai Gold Exchange started operating last October, initiating free trade in gold for the first time in the history of the People's Republic of China. But its members are limited to 108 institutions, including producers, processors and traders of gold and gold products, plus commercial banks.
Staff at the Shanghai Gold Exchange follow closely the international gold prices. [newsphoto.com.cn]
The price of Au99.95, the type of gold used in the manufacturing of ornamental items, which was 83.5 yuan (US$10.10) a gram last October, climbed to a record high on September 22, closing at 102.21 yuan (US$12.31). Meanwhile, the price of Au99.99, gold reserved for investment-oriented speculation, which was 84 yuan (US$10.16) a gram last October, closed at 102.45 yuan (US$12.34) on September 22.
Analysts note that trade at the Shanghai Gold Exchange, dominated by Au99.95 in the beginning, is now marked by heavy transactions in Au99.99.
Meanwhile, prices of gold jewellery in Shanghai and other major Chinese cities also increased by 2 to 3 yuan (24-36 US cents) per gram this month.
Some SGE members have been increasing their stocks in anticipation of heightened demand once the market is open to individual investors, said an industry insider who declined to be identified. "These investors have been very active, taking every possible chance to buy in."
A gold analyst with the Industrial and Commercial Bank of China said the domestic gold market is following the appreciation trend of gold against the US dollar, predicting that prices will further rise following an influx of new capital at the Shanghai Gold Exchange.
International gold prices recently hit a six-year high of US$390 per ounce, exceeding the previous record of US$388 set in February when the US invasion of Iraq was imminent. Prices dipped to US$318.75 an ounce on April 7 in anticipation of a quick end to the war but started to bounce back as it dragged on, and the rising trend has gained strength since the beginning of this month.
Local analysts say the complicated situation in the Middle East, the world's oil barrel, and a sluggish international economy are the two main forces driving the increase in gold prices.
The slow restoration of peace and order in Iraq, escalating tensions between Israel and Palestine and the weaker-than-expected economic recovery in the United States, Europe and Japan have blunted consumer confidence and diverted a large amount of capital into the gold market, said Li Xisheng, an analyst with Qilu Securities.
Sluggish stock markets worldwide have also driven investors to the gold trade, Li said.
Xi noted that Japanese investors have been buying in substantial amounts of gold since the beginning of this month, while the appreciation of the euro against the US dollar has produced more opportunities for European investors in the gold market.
Other analysts even predict that international gold prices may surpass US$400 an ounce before the end of the year.
Short supply
As the world's third largest gold consumer and fourth largest gold producer, China is suffering from a long-term shortage of gold, said Li Xisheng.
The country's annual consumption is about 200 tons, while its production equals roughly 180 tons a year.
The Shanghai Gold Exchange, initiating free trade in gold last year for the first time since 1949, so far serves only institutional traders, rather than individuals. [newsphoto.com.cn]
According to the China Gold Association, national gold output hit 88.12 tons in the first half of the year, an annualized increase of 13.21 per cent. The industry created a profit of 974 million yuan (US$117.35 million), up almost 60 per cent from the same period last year due to rising gold prices and soaring demand.
However, analysts say, it is difficult for China to maintain major long-term growth in gold production because of limited natural resources and production capability.
In China, some 800 producers, each equipped to handle a daily capacity of more than 50 tons of ore, employ a workforce of 400,000. Their combined annual gold production capacity is 150 tons.
However, Li said, 80 per cent of these producers have a daily ore processing capacity of less than 200 tons each.
Small-scale production, a lack of the latest technology and management techniques, and low production efficiency keep most Chinese gold producers from being competitive enough, as do high production costs, he said.
Meanwhile, strong growth is expected in domestic gold demand over the long term, Li said, as individual incomes continue to increase.
-- First, per capita annual gold consumption in China is only 0.2 grams, far below that in Western and other Asian countries. The figure for India is one gram, while the United Arab Emirates averages the highest at 30 grams.
China is the largest potential jewellery market in the world, said Chu Xiangyin, an official with the China Council for the Promotion of International Trade. Consumption of ornamental objects topped 80 billion yuan (US$9.65 billion) in 2002 and has been growing by 15 per cent annually.
The market value should grow 10 times in 10 years, Chu said.
China is also on course to become a major manufacturer of gold jewellery in 2010 as a result of increased private spending power and lowered import tariffs, said Kang Xingzhou, vice-chairman of the China Gold Association.
Kang predicted that China's annual gold jewellery sales volume would reach 189 billion yuan (US$22.78 billion) by 2010, accounting for more than 10 per cent of the world's total.
-- Second, the demand for gold for industrial use will also increase rapidly as China becomes the world's manufacturing centre.
Currently, 90 per cent of the gold consumed in China is used to make jewellery.
-- Third, the potential for individual investment in gold as an option to currencies to maintain private wealth is almost unlimited.
Uncertainties about worldwide political stability and economic growth have strengthened this function of gold, Li said.
For instance, global investment in gold rose by 8 per cent in the fourth quarter of 2001 following the September 11 terrorist attacks, while growth for the previous three quarters was only 4 per cent.
Closer to home, gold prices in China surged amid plunging stock markets during the SARS outbreak earlier this year.
Such uncertainties may also bring about adjustments to China's foreign exchange reserves.
When China's foreign exchange reserves grow to US$400 billion and the ratio of gold in the reserves is brought to 5 per cent, according to Merrill Lynch, a new demand for 122 tons of gold will result. Gold comprised just 2.6 per cent of the US$286 billion worth of reserves at the end of last year.
For thousands of years, the Chinese have traditionally saved gold and worn gold ornaments, analysts reason. If the government does decide to allow individual investors into the sector, the landscape of the entire gold industry worldwide could change completely.
China's gold rush
The introduction of individual traders in the gold market will, according to gold experts and officials:
-- invigorate flagging consumption;
-- slash the foreign trade surplus;
-- trim conspicuous foreign exchange reserves;
-- ease international pressures on China to appreciate its currency.
As much as 300 billion yuan (US$36.15 billion) in private money is estimated to flow into the gold market, creating demand for about 3,000 tons of gold.
A market demand for 300 to 500 tons of gold will be created by individual traders in the initial stages.
Gold prices in China have risen more than 15 per cent since the Shanghai Gold Exchange started operating last October.
Prices of gold jewellery in Shanghai and other major Chinese cities increased by 2 to 3 yuan (24-36 US cents) per gram this month.
http://www1.chinadaily.com.cn/en/doc/2003-09/25/content_267390.htm
Chicago City Council Takes on Patriot Act
by Fran Spielman
Chicago would become the largest of 200 U.S. cities to oppose civil liberties "abuses" invoked by the USA Patriot Act under a resolution advanced by a City Council committee Thursday over the objections of U.S. Attorney Patrick Fitzgerald.
The danger is that we are slowly eroding our most cherished constitutional freedoms. The act is being employed most often against immigrants and noncitizens. But it's a slippery slope.
Chicago Alderman Joseph Moore Fitzgerald appeared before the Human Relations Committee to defend the "widely misunderstood" act, which includes immigration provisions that have yet to result in a single person being detained nationwide.
Before the Patriot Act, people conducting criminal and intelligence investigations of terrorists were not allowed to share information with each other, the U.S. attorney said.
During his days as a federal prosecutor in New York, Fitzgerald started a 1996 criminal investigation of Osama bin Laden. He was allowed to talk to foreign police officers, foreign intelligence agencies and even al-Qaida members. He was prohibited from talking to the FBI team across the street conducting the intelligence investigation.
"Repealing the Patriot Act would put that wall back up, which is a danger both to all of our safety and all of our civil liberties," Fitzgerald said
Mayor Daley appeared to sympathize with Fitzgerald.
"We live in a very challenging time. No one wants to jump on anyone's . . . civil rights and human rights. But 9/11 gave us a different perspective with regards to terrorism," the mayor said.
Aldermen who went on record against the Iraq war were not convinced.
"The danger is that we are slowly eroding our most cherished constitutional freedoms. The act is being employed most often against immigrants and noncitizens. But it's a slippery slope," said Ald. Joseph Moore (49th).
Asked how many Chicagoans have been victimized by the Patriot Act, Ald. Freddrenna Lyle (6th) said, "The numbers could be astronomical or very small. We have no way of knowing, and that's what we're objecting to. These people are not entitled to a lawyer. They can be swept up off the streets. Their family does not have to be notified. You cannot even determine who they're holding, what department has them. They have no right to get a lawyer once they're in custody, and they can be held for indeterminate periods of time while charges are being made against them."
Signed into law on Oct. 21, 2001, the Patriot Act vastly increased the federal government's power to access private records, conduct secret searches, detain and deport citizens and eavesdrop on confidential communications between attorneys and their clients in federal custody. A proposed expansion of the act is now before Congress.
Copyright 2003, Digital Chicago Inc.
http://www.commondreams.org/headlines03/0926-04.htm
Criticism of Patriot measure endorsed
City's resolution also opposes passage of USA Patriot Act II
By Jonathan Osborne
AMERICAN-STATESMAN STAFF
Friday, September 26, 2003
The Austin City Council officially put in writing its criticism of the USA Patriot Act on Thursday, joining the more than 170 cities and counties nationwide that have passed similar resolutions.
Council Members Jackie Goodman, Daryl Slusher, Danny Thomas and Raul Alvarez voted for the resolution, which also opposed the passing of the USA Patriot Act II. Mayor Will Wynn and Council Members Brewster McCracken and Betty Dunkerley abstained.
Austin's resolution expresses concern that the Patriot Act, lauded by federal lawmakers as an essential tool in fighting terrorism, might have the potential of violating fundamental liberties.
The resolution -- sponsored by Goodman, Thomas and Alvarez -- stopped short of directing police not to cooperate with federal authorities. And as Slusher requested, it does not declare any parts of the act unconstitutional.
The act was approved by Congress shortly after the Sept. 11 terrorist attacks. It gives the government surveillance powers that critics say could lead to the infringement of citizens' civil rights.
It changes federal officials' methods for obtaining records, search warrants and wiretaps if the investigation involves international espionage or terrorism. Agents still must convince a judge that any action is necessary.
Federal officials have repeatedly said that critics are misinterpreting the law and reminded the public that the law has so far been upheld by the courts as constitutional. Officials also say many of the powers the law provides already are granted for investigations of other types of crime, including drug investigations.
"The Patriot Act actually puts more restrictions on our obtaining records than currently exists with grand jury subpoenas," said Ron Sievert, an assistant U.S. attorney in Austin.
Last month, U.S. Department of Justice spokesman Mark Corallo told the Austin American-Statesman, "I think that people hear these broad statements such as the FBI can get your library records, and they're scared -- rightfully so. But when you explain to them that a grand jury can always get your library records under the normal system and that this has to be done under the auspices of a federal judge and Congress, they say, 'Oh.' Our targets are not the average American; our targets are people who want to kill average Americans."
Amid the growing concern, U.S. Attorney General John Ashcroft has been touring American cities in recent weeks, promoting the act and defending it as a crucial tool in the battle against terrorists.
His message did not ring true with the more than 100 people who showed up for Thursday's vote, placards in tow.
"As a democracy, we have the right to stand up and say no," Will Martin, a 15-year-old high school student speaking on behalf of the Austin Campus Anti-War Network, told the council.
"The USA Patriot Act . . . is an insult to Americans. Our rights are being threatened by our own government."
josborne@statesman.com; 445-3621
At Thursday's meeting, the Austin City Council:
* Approved two contracts worth $140,000 for counsel on the city's Minority-Owned and Women-Owned Business Enterprise Program and ordinance.
* Authorized a $1.5 million construction contract with Austin-based Hutchison Construction Inc. for the expansion of the Terrazas Branch Library.
* Created a task force to study the city's historic landmark designation program and to make recommendations to the City Council next spring.
* Settled a civil case against former Parks Department trail manager Freddie Urias for $115,000. Urias was accused last year of soliciting sexual contact, drugs and money from teenage girls assigned by courts to perform community service. Two girls who said they were victimized by Urias brought the lawsuit.
http://www.statesman.com/metrostate/content/auto/epaper/editions/friday/metro_state_f3376e04930a20c3...
Hostility to Bush has started to move across the Atlantic
By James Harding
Published: September 27 2003 5:00 / Last Updated: September 27 2003 5:00
In his nearly three years in office, George W. Bushhas prompted millions of people around the world to take to the streets in protest at US administration policy.
They have, until now, made little difference. Whether people have been demonstrating against the US's unilateral withdrawal from the Kyoto treaty on the environment, voicing their concerns over the treatment of Guantanamo detainees or marching against war in Iraq, a Bush administration buoyed by popular support at home has pursued its agenda apparently impervious to international criticism.
In the last week, however, overseas hostility to Mr Bush has begun to make a dent on domestic US politics and even the president's re- election prospects.
International reluctance to provide troops and financial resources in Iraq is forcing the Pentagon to consider disrupting the lives of more American families and businesses by calling up additional reserves - the part-time soldiers who are required to leave their careers at short notice to serve.
[Works out great will create jobs while they are gone...bummer will be when they get back and their job is gone, not because they were replaced (which is illeagal) but because the position was eliminated...]
"Since it doesn't look like we'll have a coalition brigade, we have no choice but to plan for American forces," General John Abizaid, the commander of US forces in the Gulf, said this week.
The call-up of more reserves threatens to weigh on what Gen Abizaid acknowledged was already battered morale following the extension of many reservist tours of duty in Iraq by several months.
"Everybody that's there needs to know when they're coming home. I will ensure that the new guys coming in know when they're coming home. It is not right now and it needs to be fixed," he said.
The strain on the reserves has the potential to play out politically beyond military communities. "It is a huge problem for Bush," says Norm Ornstein, a political analyst at the American Enterprise Institute. The White House faces both "disgruntlement" and the possibility of falling re-enlistment rates in 2004, he says.
Anthony Cordesman, a former Pentagon official now at the Center for Strategic and International Studies, points out that the deployment of more reserves may only hit the families of 30,000-40,000 people, but the call-up nevertheless "has a political cost . . . The complaints and the whole attitude create a climate where people perceive the war as a negative."
[War = negative?!!! How can that be?]
The public opinion polls this week have already started showing a marked turn against Mr Bush. The president's approval ratings have generally fallen to around 50 per cent - the NBC/Wall Street Journal Poll this week had Mr Bush's approval rating at just 49 per cent, the lowest level in his presidency.
[The above paragraph seems manufactured they can make those poles read whatever they want...they only ask a 1000 people or so...powers that be preparing shrub for an out...?]
A plurality of Americans are now telling pollsters they disapprove of Mr Bush's handling of Iraq and, for the first time since the terrorist attacks of September 11 2001, a White House request for national security spending is opposed by the majority of Americans surveyed.
The paltry international financial commitments to Iraq reconstruction is adding to the sense of burden on the American taxpayer and making for a more critical Congress as it considers Mr Bush's demand for $87bn (€79bn, £53bn) for Iraq and Afghanistan.
Democrats, sensing that they could yet confound the Washington pundits and dash Mr Bush's re-election hopes in 2004, have seized on the president's failure to secure overseas assistance.
Joseph Biden, the top Democrat on the Senate foreign relations committee, said this week that Mr Bush's foreign policy had "so poisoned the well" before the war that next month's international donors' conference was not expected to deliver more than $2bn-$3bn in support. The White House is asking for $20bn to rebuild Iraq.
In a debate between the Democratic candidates for the presidency, Joe Lieberman, the Connecticut senator, said: "If George Bush had a better, more multilateral foreign policy, we wouldn't have to finance this alone. Again he went to the United Nations this time like a beggar and was turned down by the nations of the world."
Just three weeks after Mr Bush made a national television address in which he said his commanders in Iraq had requested another multinational division to "share the burden more broadly", the president's credibility is being tested as that support proves slow in coming.
At the UN this week, the change in the stature of a man the White House has liked to present as a "foreign policy" president was, perhaps, most evident. When Mr Bush spoke to world leaders at the General Assembly a year ago, he dominated the agenda. This year the General Assembly belonged not to Mr Bush but to Kofi Annan, the UN secretary-general.
Emboldened by a difficult year of diplomacy and the death in Iraq of UN special representative Sérgio Vieira de Mello, Mr Annan denounced unilateralism, warned against the principle of pre-emption and the use of ad hoc coalitions to fight wars and admonished world leaders for shirking the difficult task of reforming the UN to cope with new threats and a new distribution of power.
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=105...
Interesting times indeed.
Police estimated there were about 20,000 marching, although organisers estimated up to 100,000 had attended the event.
http://news.bbc.co.uk/2/hi/uk_news/3143062.stm
Weapons still getting past airport screeners
Fri Sep 26, 6:36 AM ET Add Top Stories - USATODAY.com to My Yahoo!
By Mimi Hall, USA TODAY
Guns and knives, along with box cutters like those used by the Sept. 11 hijackers, slipped past screeners in recent airport security tests by undercover agents.
Two years after the terrorist attacks prompted tighter security at airports nationwide and the deployment of 50,000 government-paid screeners, congressional investigators found that the Transportation Security Administration has not stopped the flow of lethal weapons through checkpoints.
The frequency and types of weapons remain classified. "You wouldn't want to know. ... It's gruesome," said Rep. John Mica (news, bio, voting record), R-Fla., chairman of a House aviation panel. "We have a huge army (of screeners) that's not working well."
Sources who have seen the classified information confirmed that guns, knives and box cutters were among the weapons that eluded screeners in tests by the General Accounting Office (news - web sites), the investigative arm of Congress. The GAO report, released Thursday, said the transportation security agency doesn't adequately train screeners or keep track of how well they are performing.
Those screeners are part of a vast bureaucracy created after the terrorist attacks, when Congress ordered private airport screeners to be replaced with a government force. The goal was to increase federal oversight of screening procedures and improve training and supervision.
A spokesman for the TSA, Nico Melendez, said screeners have found more than 1,000 prohibited guns, more than 2 million knives and 50,000 box cutters.
He noted that checkpoint screening is only part of a multilayered security system that includes reinforced cockpit doors, thousands of armed federal air marshals, hundreds of armed pilots and screening of checked bags for explosives. Taken together, he said, they provide "the best security of our transportation system in our nation's history."
Rep. Peter DeFazio (news, bio, voting record), D-Ore., said much more needs to be done. "What I worry about is that these people (terrorists) seem to repeat patterns," he said. "I'm worried they'll try to take planes down again."
http://story.news.yahoo.com/news?tmpl=story&cid=676&ncid=716&e=22&u=/usatoday/200309...
Can't keep drugs out of prisons; can't keep weapons out of airports...sheep never learn...write all the laws you want: the law breakers break the law, the good sheep citizen obeys the law, hoping the gov will keep them safe.
The Story of Joe Wilson and Valerie Plame.
Posted by Dietz Smith on July 23,
2003 08:46 PM
The Story of former US Ambassador to Gabon, Joseph Wilson and his wife Valerie Plame, has received limited and spotty attention from the mainstream media. The blogosphere has attempted to shine a little light on the matter, but even that has focused more on Wilson's accusation that the White House has "outted" his wife at the expense of the larger context, making any comprehensive understanding of the situation difficult. And so I will attempt to present the facts as they appear at this time.
In 1990 Joseph Wilson was the chargé d'affaires in Baghdad, as such he was the last American diplomat to meet with Saddam Hussein before the first Gulf War. After Iraq he served as George H. W. Bush's ambassador to Gabon and São Tomé and Príncipe. He then went on to serve the Clinton administration as a policy advisor on Africa for the National Security Council. With his wealth of experience and expertise in both Baghdad and central Africa Wilson was uniquely qualified to address intelligence matters concerning both regions.
In February of 2002 the CIA contacted Wilson and he was told Vice President Dick Cheney had concerns about an intelligence report purporting to document the sale of Yellowcake uranium by Niger to Iraq. The CIA asked Wilson to go to Niger, investigate and return with his report to the CIA, which would be passed on to the vice presidents office.
Wilson went to Niger where he conducted an eight-day investigation concluding there could have been no sale of Uranium to Iraq primarily due to logistical difficulties. He conferred with the US ambassador to Niger, Owens-Kirkpatrick, who agreed with his findings. He then returned to Washington where he provided a detailed verbal report to both the CIA and the State Department explaining his conclusions.
With that Wilson thought the whole matter was behind him.
During the State of the Union address Wilson heard the now famous "16 words", "The British government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa" and the alarm bells went off. He contacted a friend at the State Department who told him Bush was not referring to Niger, but likely meant another African country. Since there are in fact three other African producers of uranium, Gabon, South Africa and Namibia, Wilson allowed as it was one of those and let the matter lie. Then, several months later, he heard State Department spokesman Richard Boucher say the US had been fooled by bad intelligence concerning Niger and Iraq. At that point he decided enough was enough and went public.
On July 6, Wilson went for the double whammy, writing an Op-Ed in the New York Times and appearing on NBC's Meet the Press. In both he detailed his story much as I have provided here and then drew some conclusion concerning administration behavior.
The following is from Meet the Press:
MS. MITCHELL: But, in fact, many officials, including the president, the vice president, Donald Rumsfeld, were referring to the Niger issue as though it were fact, as though it were true and they were told by the CIA, this information was passed on in the national intelligence estimate, I've been told, with a caveat from the State Department that it was highly dubious based on your trip but that that caveat was buried in a footnote, in the appendix. So was the White House misled? Were they not properly briefed on the fact that you had the previous February been there and that it wasn't true?
AMB. WILSON: No. No. In actual fact, in my judgment, I have not seen the estimate either, but there were reports based upon my trip that were submitted to the appropriate officials. The question was asked of the CIA by the office of the vice president. The office of the vice president, I am absolutely convinced, received a very specific response to the question it asked and that response was based upon my trip out there.
MS. MITCHELL: So they knew months and months before they passed on these allegations that, in fact, that particular charge was not true. Do you think, based on all of this, that the intelligence was hyped?
AMB. WILSON: My judgment on this is that if they were referring to Niger when they were referring to uranium sales from Africa to Iraq, that information was erroneous and that they knew about it well ahead of both the publication of the British White Paper and the president's State of the Union address.
MS. MITCHELL: What do you think was going on here? Was this the politicization of intelligence in order to justify a war?
AMB. WILSON: Well, I think there's two things. One, either the administration has some information that it has not shared with the public or, yes, they were using the selective use of facts and intelligence to bolster a decision in the case that had already been made, a decision that had been made to go war.
These statements blatantly counter the administrations assertion that they made a mistake in using the "Niger Document" in the State of the Union address, but in his New York Times Op-Ed Wilson went even further concluding with the following;
The question now is how that answer was or was not used by our political leadership. If my information was deemed inaccurate, I understand (though I would be very interested to know why). If, however, the information was ignored because it did not fit certain preconceptions about Iraq, then a legitimate argument can be made that we went to war under false pretenses. (It's worth remembering that in his March "Meet the Press" appearance, Mr. Cheney said that Saddam Hussein was "trying once again to produce nuclear weapons.") At a minimum, Congress, which authorized the use of military force at the president's behest, should want to know if the assertions about Iraq were warranted.
I was convinced before the war that the threat of weapons of mass destruction in the hands of Saddam Hussein required a vigorous and sustained international response to disarm him. Iraq possessed and had used chemical weapons; it had an active biological weapons program and quite possibly a nuclear research program - all of which were in violation of United Nations resolutions. Having encountered Mr. Hussein and his thugs in the run-up to the Persian Gulf war of 1991, I was only too aware of the dangers he posed.
But were these dangers the same ones the administration told us about? We have to find out. America's foreign policy depends on the sanctity of its information. For this reason, questioning the selective use of intelligence to justify the war in Iraq is neither idle sniping nor "revisionist history," as Mr. Bush has suggested. The act of war is the last option of a democracy, taken when there is a grave threat to our national security. More than 200 American soldiers have lost their lives in Iraq already. We have a duty to ensure that their sacrifice came for the right reasons.
Finally, an insider who had first hand knowledge of the Niger affair had come out in public and given his side of the story. What had started as a White House admission of a screw up, intended to quiet concerns of deliberate deception, now became a major media story. It was in the climate of accusations against the administration and attempts by the White House to divert blame and shift attention away from Niger and the State of the Union that Robert Novak enters the story.
On July 14, Novak wrote "Mission to Niger" a piece outlining the Wilson story from an administration friendly position. The article is enlightening, but heavy on the spin, claiming that the Wilson trip was initiated at "low level" within the CIA, which considered his report "less than definitive". But what is of interest and the thing that takes the Wilson story to a whole new level is this paragraph,
Wilson never worked for the CIA, but his wife, Valerie Plame, is an Agency operative on weapons of mass destruction. Two senior administration officials told me Wilson's wife suggested sending him to Niger to investigate the Italian report. The CIA says its counter-proliferation officials selected Wilson and asked his wife to contact him. "I will not answer any question about my wife," Wilson told me.
Robert Novak had exposed Wilson's wife as a CIA operative specializing in Weapons of Mass Destruction. A claim Wilson refutes to this day. If Novak's assertion is true a CIA agent has been publicly exposed, if false a woman's identity has been publicly altered and called in to question. So who told Novak and Why?
Two days later on July 16 David Corn, Of the Nation, took up the challenge in "Capitol Games" an article exploring the possibility of an administration leak to Novak as a means of destroying Valerie Plame's career for the purpose of retribution and intimidation. In the article he writes,
The sources for Novak's assertion about Wilson's wife appear to be "two senior administration officials." If so, a pair of top Bush officials told a reporter the name of a CIA operative who apparently has worked under what's known as "nonofficial cover" and who has had the dicey and difficult mission of tracking parties trying to buy or sell weapons of mass destruction or WMD material. If Wilson's wife is such a person--and the CIA is unlikely to have many employees like her--her career has been destroyed by the Bush administration. (Assuming she did not tell friends and family about her real job, these Bush officials have also damaged her personal life.) Without acknowledging whether she is a deep-cover CIA employee, Wilson says, "Naming her this way would have compromised every operation, every relationship, every network with which she had been associated in her entire career. This is the stuff of Kim Philby and Aldrich Ames." If she is not a CIA employee and Novak is reporting accurately, then the White House has wrongly branded a woman known to friends as an energy analyst for a private firm as a CIA officer. That would not likely do her much good.
This is not only a possible breach of national security; it is a potential violation of law. Under the Intelligence Identities Protection Act of 1982, it is a crime for anyone who has access to classified information to disclose intentionally information identifying a covert agent. The punishment for such an offense is a fine of up to $50,000 and/or up to ten years in prison. Journalists are protected from prosecution, unless they engage in a "pattern of activities" to name agents in order to impair US intelligence activities. So Novak need not worry.
The very next day, July 17, TIME released a story entitled "A War On Wilson?" in which the government paints a very different version of events. So different that they actually claim Wilson's trip and subsequent report to the CIA supports the administrations position,
Government officials are not only privately disputing the genesis of Wilson's trip, but publicly contesting what he found. Last week Bush Administration officials said that Wilson's report reinforced the president's claim that Iraq had sought uranium from Africa. They say that when Wilson returned from Africa in Feb. 2002, he included in his report to the CIA an encounter with a former Nigerien government official who told him that Iraq had approached him in June 1999, expressing interest in expanding commercial relations between Iraq and Niger. The Administration claims Wilson reported that the former Nigerien official interpreted the overture as an attempt to discuss uranium sales.
"This is in Wilson's report back to the CIA," White House Press Secretary Ari Fleischer told reporters last week, a few days before he left his post to join the private sector. "Wilson's own report, the very man who was on television saying Niger denies it...reports himself that officials in Niger said that Iraq was seeking to contact officials in Niger about sales."
Wilson counters that the Official in question was an Algerian-Nigerian intermediary inquiring about commercial sales and dismisses any Nigerian attempts to sell uranium.
The article also touches on the administrations chiding of Wilson for not addressing the forged documents in his report to the CIA to which Wilson responded by saying he did not address the documents because he did not see them.
What is interesting to remember in all of the administrations claims about the Wilson report and its meaning is that it does not exist. By Wilson's own admission the report was verbal and any documentation that may exist was in response to his statements.
What had started out as Wilson's attempt to tell the truth and expose, what he perceived to be, the administrations attempt to deceive had evolved in to an extremely nasty war of words and accusations. The ball was back in Wilson's court and on July 21, he went to NBC news and, in an interview, accused the administration of exposing his wife and destroying her career in retribution and went on to say, "It's a shot across the bow to those who might step forward, those unnamed analysts who said they were pressured by the White House for example would think twice about having their own families names being dragged through this particular mud."
It's taken several weeks, but Democrats are finally picking up on the war between Wilson and the administration and as of July 22, they've decided they want answers. Sify News reports Senator Jay Rockefeller has spoke out saying, "Retribution is their method... They go after the people they don't like. Wilson's a good example of it," and he went on to say, "At the very least, it was a highly dishonorable thing to do...We're still trying to find out if the kind of position she holds at the CIA is the kind of thing which, if revealed, would reveal sources and methods ... or put lives in danger,"
Senator Diane Feinstein was even more blunt in her reaction, "For her to be essentially 'outed' by the administration, can put every CIA agent in jeopardy,"
And long time Bush advocate Senator Richard Durbin got right to the point, "This is an extremely serious situation... In their effort to seek political revenge against Ambassador Wilson for his column, they are now attacking him and his wife and doing it in a fashion that is not only unacceptable, but may be criminal... That, frankly, is as serious as it gets in this town," he said.
Today the president's new Press Secretary, Scott McClellan, was asked about the involvement of the White House in an attempt to discredit Wilson and Plame,
Q Scott, has there ever been an attempt or effort on the part of anyone here at the White House to discredit the reputations or reporting of former Ambassador Joe Wilson, his wife, or ABC correspondent Jeffrey Kofman?
MR. McCLELLAN: John, I think I answered that yesterday. That is not the way that this White House operates. That's not the way the President operates. And certainly, I first became aware of those news reports when we were contacted by reporters and the questions were raised. It's the first I had heard of those. No one would be authorized to do that within this White House. That is simply not the way we operate, and that's simply not the way the President operates.
Q In all of those cases?
MR. McCLELLAN: Well, go down -- which two?
Q Joe Wilson and his wife?
MR. McCLELLAN: No.
Q And Jeffrey Kofman from ABC.
MR. McCLELLAN: First of all, if there's any truth to it, it's totally inappropriate. Second of all, I just made very clear, that's simply not the way we operate.
Q So that's a little bit of a change. You said if there's any truth to it, it's inappropriate, whereas just a moment ago --
MR. McCLELLAN: Well, no, you were talking about the first one on I guess, the ABC reporter. And I had previously said that if that were true, it would be totally inappropriate. I'm not suggesting it is. I have no knowledge of anything to suggest that it is. Obviously, sometimes there are anonymous reports out there. I always wish I knew -- I could find out who anonymous was.
Q Are you trying to do an internal investigation to find out?
MR. McCLELLAN: I have no reason to believe that there is any truth that that has happened. So if I thought that there was any reason to believe that something like that had happened, I would --
Q So you're saying that reporters just made it up?
MR. McCLELLAN: -- try to get to the bottom. Campbell, I just said that anonymous is someone I would like to know who that is, but it's usually a fruitless search.
This pretty well brings us up to speed except for one last observation on my part. The Minute Man from Just One Minute is questioning the accusation that the administration was the source of the leak for Novak's exposure of Wilson's wife as a CIA operative.
The distinction between "administration" and "government" officials haunts this story. TIME clearly makes a distinction, and so does Mr. Corn here. My impression is that "Administration" means what it says; "government" is non-White House executive branch. In this story, the CIA would be "government", and White House officials would be "Administration".
So, when asked directly by Mr. Corn, Mr. Novak says his sources for the key personal information are "government". This agrees with the TIME formulation. The phrase "and its accurate" may suggest, to deep de-constructionists, that Novak got independent verification from a second source.
Minute Man is splitting hairs in defense of both Bush and Novak. Each of us writing in the Blogosphere knows the power of words, if we didn't beleive words have meaning and power we wouldn't be doing this. Accordingly we are also aware that presentation is everything. When Robert Novak phrased the outing of Valerie Plame in a manner that appeared to imply an administration source that was no accident. Let's revisit the questionable reference,
Wilson never worked for the CIA, but his wife, Valerie Plame, is an Agency operative on weapons of mass destruction. Two senior administration officials told me Wilson's wife suggested sending him to Niger to investigate the Italian report.
Looking closely at these two sentences it is clear Novak does not claim an administration source for his knowledge. In fact he makes no attribution what so ever and that is the problem. No where in this article does he attempt to substantiate his claim concerning Valerie Plame's status with the CIA, instead he leaves it to the reader to draw the obvious conclusion by starting the sentence after the assertion with, "Two senior administration officials told me".
Either the administration told Novak Valerie Plame is a CIA operative or they didn't. Novak certainly wants us to believe they did. Either the administration is lying or Novak is.
This post came about as the result of a post found at the Daily Rant.
http://www.therant.info/archive/001187.html
The Valerie Plame Affair
[I would expect and hope you would email this as far and wide as possible...any who read this.]
A retired career ambassador has just publicly accused the President's chief official political advisor of revealing the identity of a covert intelligence operative: an aggravated felony that carries a ten-year term in federal prison. Yet no newspaper, newsmagazine, wire service article, or television or radio network news broadcast has yet reported that charge.
Why not?
Joseph C. Wilson, IV is the former Ambassador to Gabon (and associate director of the National Security Council for Africa) sent to Niger last year by the Central Intelligence Agency to investigate the claim that the Iraqi regime had tried to buy yellowcake
'My country right or wrong'" is like saying, 'My mother drunk or sober.'" G.K. Chesterton
Congress Puts Brakes on CAPPS II By Ryan Singel
02:00 AM Sep. 26, 2003 PT
Congress moved Wednesday to delay the planned takeoff of a controversial new airline passenger-profiling system until an independent study of its privacy implications and effectiveness at stopping terrorism can be completed.
A congressional conference committee, which was reconciling the Senate and House versions of the Department of Homeland Security's budget for next year, opted to keep the Senate's stronger language.
That language prohibits deployment of the Transportation Security Administration's CAPPS II program until the General Accounting Office certifies to Congress that the system will not finger too many innocent passengers.
The study will also check whether the system will effectively pinpoint terrorists, and whether an appeals system is in place for those delayed or prohibited from flying.
CAPPS II is intended as a high-tech replacement for the current system, which simply checks passenger names against a list of suspected terrorists.
The new system will require passengers to provide airlines with additional information, which the agency will check against commercial databases and a watch list of suspected terrorists and people wanted for violent crimes. The system will then color-code each passenger, according to decisions made by the system's pattern-matching algorithms.
An ideologically diverse coalition of civil-liberty advocates oppose the project, saying the system would be Big Brotheresque and ineffective.
The TSA has vociferously defended its program, saying it is necessary for airline safety and insisting the new system will be less invasive than the current one.
Wednesday's compromise bill, which provides $29.4 billion for Homeland Security, would prohibit the deployment of the system until the GAO study is completed on Feb. 15, 2004.
Sen. Robert C. Byrd (D-West Virginia), who is the ranking member on the appropriations committee, said he was pleased with the recommendation for further study.
"CAPPS II has raised many questions about individuals' privacy rights," Byrd said. "This is an important endeavor for homeland security. But there are many troubling questions raised by such a system, not least of which is what information will the government use to determine threat level."
Privacy advocates praised Congress's actions, saying a detailed study is long overdue.
"This is very significant first step," said Barry Steinhardt, director of the technology and liberty program at the American Civil Liberties Union in New York.
"Congress is doing the responsible thing putting CAPPS II on hold, especially in light of the JetBlue fiasco, which makes clear that once you establish a huge data-mining program, the results can't be predicted," Steinhardt said.
The TSA wants to replace the current watch list with a high-tech system, because, as critics and the agency both point out, innocent passengers get delayed or prohibited from flying for simply having the same, or a similar, name as a wanted terrorist under the current system. It has been working on the system since the agency was founded, after the terrorist attacks of Sept. 11.
The TSA must also conduct its own internal study on privacy concerns. It had promised to deliver the study to another privacy rights group, the Electronic Privacy Information Center Thursday, according to the group's president, Marc Rotenberg.
Instead, the group received official notice (PDF) that the privacy study was not yet complete and probably would not be until early next year.
David Sobel, general counsel for EPIC, questioned why the internal report was taking so long.
"The delay underscores the necessity of Congress stepping in -- as it did -- to do an assessment that TSA hasn't," said Sobel, who added that he wouldn't be surprised if Congress was as little persuaded by the CAPPS II study as it was the Pentagon's Terrorism Information Awareness study.
Congress decided Thursday to terminate that Pentagon project.
Nuala O'Connor Kelly, the chief privacy officer for the Department of Homeland Security, is currently helping with the TSA's internal study. But O'Connor Kelly, who was named privacy czar earlier this year, may have her hands full in the coming weeks -- she is also investigating the TSA's role in the JetBlue scandal.
Last week, JetBlue admitted that, upon request from the TSA, the airline gave 5 million passenger records to a defense contractor that used the data for a profiling study unrelated to CAPPS II.
O'Connor Kelly is looking into the extent of the TSA's involvement in that affair and whether the TSA violated the Privacy Act.
CAPPS II is also facing scrutiny from the Office of Management and Budget. An official at the OMB, which helps the president evaluate government agencies' effectiveness, said the watchdog group would be reviewing the "budget information for CAPPS II in the coming weeks."
The TSA has no problem with either the GAO study or the OMB study, according to agency spokesman Brian Turmail.
"We welcome any and all opportunities to explain and demonstrate the program and the very rigorous firewalls in place to safeguard the rights and safety of the traveling public," Turmail said.
The TSA plans to use real data to test CAPPS II in the coming months after issuing the appropriate public notices. It may be difficult for the agency to find a company willing to participate in testing, however. Both Delta and JetBlue had volunteered their help but have since rescinded their offers after public scrutiny.
Galileo, a travel database company that handles reservations for nearly 700 airlines, said in August that it would help out, but a representative for the company has not returned calls for comment since JetBlue revoked its commitment on Monday.
Story location: http://www.wired.com/news/politics/0,1283,60600,00.html
CIA seeks probe of White House
[Holy CRAP!!!! MAINSTREAM MEDIA!!!!]
Agency asks Justice to investigate leak of employee’s identity
WASHINGTON, Sept. 26 — The CIA has asked the Justice Department to investigate allegations that the White House broke federal laws by revealing the identity of one of its undercover employees in retaliation against the woman’s husband, a former ambassador who publicly criticized President Bush’s since-discredited claim that Iraq had sought weapons-grade uranium from Africa, NBC News has learned.
THE FORMER ENVOY, Joseph Wilson, who was acting ambassador to Iraq before the first Gulf War, was dispatched to Niger in 2002 to investigate a British intelligence report that Iraq sought to buy uranium there. Although Wilson discredited the report, Bush cited it in his State of the Union address in January among the evidence he said justified military action in Iraq.
The administration has since had to repudiate the claim. CIA Director George Tenet said the 16-word sentence should not have been included in Bush’s Jan. 28 speech and publicly accepted responsibility for allowing it to remain in the president’s text.
Wilson published an article in July alleging, however, that the White House recklessly made the charge knowing it was false.
“We spend billions of dollars on intelligence,” Wilson wrote. “But we end up putting something in the State of the Union address, something we got from another intelligence agency, something we cannot independently verify, in an area of Africa where the British have no on-the-ground presence.”
WHITE HOUSE DENIALS
The next week, columnist Robert Novak published an article in which he revealed that Wilson’s wife, Valerie Plame, was a covert CIA operative specializing in weapons of mass destruction. “Two senior administration officials told me Wilson’s wife suggested sending him to Niger to investigate,” Novak wrote.
The White House has denied being Novak’s source, whom he has refused to identify. But Wilson has said other reporters have told him White House officials leaked Plame’s identity.
NBC News’ Andrea Mitchell reported Friday night that the CIA has asked the Justice Department to investigate whether White House officials blew Plame’s cover in retaliation against Wilson. Revealing the identities of covert officials is a violation of two laws, the National Agents’ Identity Act and the Unauthorized Release of Classified Information Act.
ATTEMPTS TO REMOVE CLAIM
When the Niger claim first arose, in February 2002, the CIA sent Wilson to Africa to investigate. He reported finding no credible evidence that Iraq was seeking uranium from Niger.
The CIA’s doubts about the uranium claim were reported through routine intelligence traffic throughout the government, U.S. intelligence officials said. Those doubts were also reported to the British.
The Niger report included a notation that it was unconfirmed when it was published in the October 2002 National Intelligence Estimate, the classified summary of intelligence on Iraq’s weapons programs.
The CIA had the Niger claim removed from at least two speeches before they were given: Bush’s October address on the Iraqi threat, and a speech by U.N. Ambassador John Negroponte.
As the State of the Union address was being written, CIA officials protested over how the alleged uranium connection was being portrayed, so the administration changed it to attribute it to the British, who had made the assertion in a Sept. 24 dossier.
By MSNBC.com’s Alex Johnson with NBC’s Andrea Mitchell.
http://www.msnbc.com/news/937524.asp?0cv=CB10&cp1=1