Le Shorter: Reverting to the Mean

estimated mean 1890-2000: $132K

[chart: after Schiller]

'Toontime Extra: "Excuse Me, My Blackberry is Ringing..."

Wackydoodle asks: "Is that an O for Oscar or the size of your retirement account?"*

Economist Marshall Auerback usefully observes: "[Roosevelt's] government hired about 60% of the unemployed in public works and conservation projects that planted a billion trees, saved the whooping crane, electrified rural America, and built such diverse projects as the Cathedral of Learning in Pittsburgh, the Montana state capitol, much of the Chicago lakefront, New York's Lincoln Tunnel and Triborough bridge complex, the Tennessee Valley Authority and the aircraft carriers Enterprise and Yorktown.  It also built or renovated 2,500 hospitals, 45,000 schools, 13,000 parks and playgrounds, 7,800 bridges, 700,000 miles of roads, and a thousand airfields".  You can bank on that, friend.

*Deposed General Motors Chairman, Richard "Hummer" Wagoner will receive a $20.2 million retirement benefit.  During his tenure GM lost billions and cut thousands of jobs.  Way to go Rick!

Indonesia's Geithner Experience

The G-20 meeting is coming up April 2nd where 44 will face a Chinese led reserve currency revolt, and some increasingly sceptical Euro leaders about his administration's plan for world financial salvation. Part of the reason for the scepticism may be the past track record of his Treasury Secretary, Tim Geithner.  Like a ghost from McGee's closet, Geithner's performance as a Treasury official who wrote the IMF's 1997-98 plan to rescue Indonesia from the Asian financial crises has come back to haunt him.  Australian Prime Minister Paul Keating trashed Geithner's handling of the problem at a public forum in Sydney this month.  According to Keating, Giethner fundamentally misdiagnosed the problem facing Indonesia.  The countries that went to the IMF for emergency loans--South Korea, Thailand, and Indonesia all had sound public financing.  Nevertheless Geithner applied the usual prescription for a current account crisis, emergency loans conditioned on drastically reduced government debt.  That prescription might have been appropriate for Mexico in 1994, but not Indonesia in 1997.  Indonesia was facing a credit squeeze caused by the wave of private capital moving out of the country as the Asian panic got underway.  Keating said the IMF's financial malpractice caused Soeharto's government to loose power:  "Soeharto's government delivered 21 years of 7% growth.  It takes a gigantic fool to mess that up.  But the IMF messed it up.  The end result was the biggest fall in [a nation's] GDP in the 20th century."  As a result of the mess up, no Asian government including China trusts the IMF.  Asian governments only have about a 16% voting share at the IMF, an artifact of the Bretton Woods international financial system.  In response China has decided to build the biggest war chest the world has ever seen to guarantee its solvency independent of the US or the West. 

Apparently not paying his taxes (despite being reminded) was only the opening act of the 'Geithner Experience'.  He is now essentially pushing a taxpayer subsidized (as much as 97%) inflation of toxic asset prices that was rejected by the previous Treasury Secretary Henry Paulson as unworkable.  The proposed auction mechanism is almost guaranteed to produce a price higher than what the secured sludge is worth, because that is what the zombie banks need-- a price close to what the book values are, otherwise they take an equity hit that will finish them at last.  Potential toxic asset bidders like PIMCO also have a vested interest in high auction values because they own the corporate bonds ($100B) of the zombie banks.  High auction prices are bad for taxpayers because it makes it even more unlikely that the securities will ever be sold by the proposed "investment partnerships" at a profit.   Bottom line: Uncle Sam is stuck buying an expensive bag of manure that gets more odoriferous the farther he digs hoping to find a widow's mite at the bottom.

Le Shorter: "Ah, Honorable Gleeback No Good!"

In February:

• Net foreign acquisition of long-term US securities estimated at -$60.9 billion;
• China's state owned Chinalco signed a $19.5 billion deal with Australia's giant Rio Tinto mining company;
• China National Petroleum signed agreements with Russia and Venezuela for $25 and $4 billion each for long term oil supply;
•  China Development Bank made a $10 billion loan to Brazil's Petrobras in exchange for oil.

Economist James Kenneth Galbraith tells why.

'Toontime: The Sour Grapes of Rath

[credit: Tom Toles, The Washington Post]

From the Questionable Documents Dept.

This excerpt is from a purported letter by an AIG financial products executive posted at www.businessinsider.com.  It may not be real, but it sums up the disgusting situation:

"Even worse than this is that the failure of AIG is part of a systemic

failure of the anglo-saxon financial world. If AIG alone had failed,

then the lessons to be learned would be at AIG alone. However, as

clearly as AIG itself is a case study in corporate governance failures

that I hope will be taught to the future class of sheep/managers at

Harvard Business School, the real failures in the US and UK banking

systems stem from an extremist belief in the free market. How else to

explain the simultaneous failures of virtually every large US and UK

bank? And the blame for this lies squarely in the corrupt circles of

US politico-business classes....Basically at the heart of the US

democratic system is the fundamental issue that those with money can

influence those with power and that usually their interests are

narrow, short term and take no account of the country at large."

My Missile is Bigger Than Yours

Japan, during the latter part of the war, was desperate to bring the hurt to United States soil.  It was suffering terribly from the effects of long range bombardment presaged by the largely symbolic Doolittle Raid after Pearl Harbor.  Japan did not have a V-2 program, and its atomic research program was crude. It did have strong paper balloons used in stratospheric research.  A military man, Major General Sueyoshi Kusaba came up with the idea of using the balloons as a bomb delivery device.  By floating a hydrogen filled balloon into the prevailing easterly jet streams at 30,000 feet an attached bomb could reach the western United States in three days.  The Japanese floated thousands of balloons, but only about 300 bombs dropped over the western United States.  The operation never amounted to more than a nuisance, but incendiaries did start a few forest fires, and a few civilian casualties were inflicted.  The US military, for fear of civilian panic, kept the public in the dark about the operation.

The Japanese bomb balloons were a primitive example of a non-ballistic or cruise missile system.  Ever since Ronnie 'Hellcat' Reagan came up with the idea of "Star Wars" twenty five years ago the US has spent about $100 billion trying to create an effective anti-missile missile. At least two things are wrong with the idea.  One, the systems designed were to be used against intercontinental ballistic missiles (ICBMs) following predictable parabolas or "minimum energy" paths.  To illustrate such a trajectory throw a stone up into the air.  The initial energy input by your arm muscles and gravity control the stone's parabolic path (unless you believe in the "magic bullet" theory).  The trajectory is mathematically predictable, making it theoretically possible but still actually difficult to intercept a ballistic missile traveling at hypersonic speeds. According to General James Cartwright, commander of the USAF Strategic Command who is paid to think about these things, the threat of attack by a enemy using ICBMs is no longer imminent--think Soviet Union and the Cold War.   The US, despite its best efforts, has not been able to develop an ABM that is reliably accurate.  Second and more importantly, no foreseeable enemy with the technical capability necessary to attack the United States at long range would use a ballistic system.  To do so would be the modern equivalent of sending balloons.  For example, North Korea which is just now developing long range delivery systems, could simply skip the step of a ballistic system, knowing in advance that the US has a shot at destroying a ballistic missile en route.  Nuclear blackmail only works if your enemy knows your missiles are accurate and will reach their targets. Now throw a baseball at home plate and put a curve or slide on the ball, if you know how.  As any hitter will tell you, the position of the ball at home plate is not very predictable especially if you mix up your throws with a knuckle or screwball pitch.  Even more difficult to hit would be a baseball that breaks up into separate smaller baseballs, anyone of which could cross the plate for a strike. That is what a MIRV(multiple independent re-entry vehicle) missile can do.  These are the types of evasive systems a resourceful enemy would use. The U.S., despite billions wasted on the tactically naive "Star Wars" idea, has no defense against weapons like these.     

[photo: Minuteman III launch from Vandenberg AFB, CA]

Exxon Valdez Twenty Years Later

The worst oil spill in history occurred twenty years ago yesterday when the supertanker Exxon Valdez went aground in Prince William Sound, Alaska.  The captain was sleeping off drink and an inexperienced third mate was at the helm when the ship struck Bligh Reef in the early morning of March 24th. The reef ripped the bottom of the single hull tanker causing the rupture of its oil tanks and the release of 11 million gallons of viscous crude oil into an unspoiled environment.   The human response to the spill was initially disorganized and lackadaisical, but after a severe winter storm spread the spill farther into the sound on the third day clean up operations began and thereafter expanded exponentially.  The clean up became the largest private project in Alaska since the Alaska pipeline, employing 11,000 people at one point.  The clean up cost about $2 billion and lasted four summers. The spill covered 10,000 square miles of coastline, fouling two national parks, a national forest, two wildlife refuges, five state parks, four critical habitat areas and a state game sanctuary.  The spill disrupted the local economy and culture that focused on fishing.  The effects of the toxic, high sulfur sludge--crude mixed with seawater--on wildlife was extremely devastating.  An estimated 250,000 seabirds were killed.  Fourteen of the thirty six resident killer whales disappeared.  One thousand sea otter carcasses were recovered.  One hundred fifty-one bald eagles were confirmed dead.  The Pacific herring population crashed in 1993 and is still too low to sustain a commercial fishery.  The depressing list of wildlife casualties goes on.

Exxon Corp., which raked in the largest corporate profit in history last year, paid a relatively small amount in compensation and fines for damages.  It paid a $25 million dollar criminal fine (the federal court fined Exxon $150 million but forgave $125 million in recognition of the company's cooperation in cleaning up the spill), $100 million in criminal restitution, and paid $900 million over ten years as a civil settlement. Under a provision for injuries not apparent at the time of the 1991 civil settlement, the federal and Alaskan governments have demanded an additional $92 million for restoration projects due to lingering presence of oil on beaches. Exxon-Mobil has not responded to the demand made in June 2006.   Nor has either government made any effort to collect the money for restoration projects that would employ Alaskans. Public Employees for Environmental Responsibility have asked US Attorney General Eric Holder and Alaska's Acting Attorney General Richard Svobodny to act immediately to collect the overdue claim against the company.

Today, the Sound is superficially back to normal. Visitors can again experience the spectacular scenery and abundant wildlife, but the toxic legacy of the Valdez remains hidden beneath the sand and in nooks and crannies of isolated beaches.  The trustees of the Exxon Valdez Oil Spill Council report  that the amount of Valdez oil remaining exceeds the total of all previous pollution on the beaches in the Sound.  Oil is decreasing at a rate of only 0-4% per year with only a 5% chance of decrease at the highest rate. It will take centuries for all the oil to disappear. [photos: courtesy ENS]

Lebensraum for Polar Bears

On Thursday of last week the five countries with polar bear populations met to implement the 1973 agreement on conservation of polar bears (Ursus maritimus) intended to give the apex predators a fighting chance for survival as global warming melts their sea ice hunting grounds. A plan for action will be drawn up by bear biologists.  Appropriately, the scheme is circumpolar in scope with protected areas for denning in winter and no hunting in summer.  Industrial activity would be limited in reserves established in those areas of sea ice likely to be the last to melt: the Canadian archipelago and northwest Greenland.   The great white bear prefers the edge of the ice sheet for hunting its favorite food, seals.  Norway  gets credit for hosting the meeting and setting high expectations to save the bear from extinction.  Eric Solheim, minister of the environment for Norway, said on TV that failure to save the bear "would be an amazing crime" against future generations.  The meeting of US, Russia, Canada, Norway and Denmark(Greenland) also called for strong and immediate action to reduce global warming that is severely impacting the bears' habitat.  Any effective plan must also deal with bear hunting by indigenous peoples and trophy hunters in Canada.  Canada is home to about 60% of the world's estimated 22,000-25,000 polar bears Hunters from the south spend up to $35,000 for the opportunity to kill a bear with telescopic high-powered rifle.  One successful trophy guide told the Independent he enjoys the strenuous hunt in subzero temperatures, but does not enjoy killing the quarry.  Nevertheless, he sees no paradox in his business.  Russia, US and Greenland only allow native people to kill the bear for food.    They use all parts of the bear except the liver which is toxic. About 700 bears a year are killed by hunters.  Norway prohibits all hunting.   Last year the US banned the importation of skins when it listed the species under the Endangered Species Act {Polar Bears Win Protection, 5/21/08}, but most countries place no restriction on importation.  Experts consider the current hunting quotas problematic given the extreme climatic challenges facing the great white bear.

[photo: US Fish & Wildlife Service]

A New World Money

US Person posted previously {Talk About Stress, 2-23-09} that the G-20 was preparing to unveil a plan to replace the US dollar as the world's reserve currency.  China's central bank governor Zhou Xiaochuan, in the run up to the meeting, proposed in an essay on the central bank's website that a new monetary unit should be introduced as part of a global system controlled by the International Monetary Fund.  Beijing has pubically expressed fears for the declining value of its huge investment in US dollars [see chart] as the Federal Reserve continues to digitally manufacture dollars as part of its rescue of the collapsing US economy and international financial market.  Mr. Zhou suggests expanding the role of special drawing rights (SDR) which the IMF introduced after the collapse of the Bretton Woods fixed exchange system.  SDRs are valued in a basket of four currencies: US dollar, Yen, Euro, Pound sterling.  They are used as a unit of account by IMF and some other international organizations.  China proposes to expand the basket of currencies to all major economies and set up a settlement system between SDRs and other currencies so SDRs can be used as an international medium of exchange.  The father of modern liberal economics, John Maynard Keynes, made a similar proposal in the 1940's. 

American Jews Support Peace in Middle East

A scientific poll financed by supporters of J Street, a new peace lobby group in Washington, DC, finds that American Jews support US involvement in the Israeli-Arab peace process (69%). They are also support the US working with a joint Hamas-Fatah Palestinian Authority even though our government refuses to recognize Hamas as a legitimate representative because of its terrorist organization status.  Interestingly, the same percentage of Israelis (69%) also think Israel should negotiate with a Hamas-Fatah government according to the Truman Institute at Hebrew University.  By 76% American Jews support a two state final solution to the Palestinian-Israel conflict, the outlines of which were negotiated during the Camp David and Taba summits. These results are not surprising, but do demonstrate the disconnect between the people and the Liebermans of the world when it comes to resolving this conflict.

Fat Cats Gone Wild!

[credit: Mike Luckovich, Atlanta Journal-Constitution]

McClatchy News Service reports, based on quarterly financial reports as of Dec. 31 :

• JP Morgan has current derivative losses of $241.2 billion and future exposure of $299 billion more, much more than its total reserves of $144 billion;
• Citigroup has current losses of $140.3 billion exceeding its reserves of $108 billion, and future losses of $161.2 billion;
• Bank of America has only $80.4 billion in current losses below its reserve of $122.4, but it has $218 billion in total exposure;
• HSBC Bank USA has current losses of $62 billion, 3 times its reserves, and exposure of $95 billion;
• Wells Fargo has current losses of of $64 billion below its reserves of $104 billion, but total exposure of $109 billion
  

These five banks account for 95% of U.S. trading in complex derivatives like credit default swaps and collateralized debt obligations.  Here is what former CEO of the Federal Reserve Bank of New York, Timothy Geithner said about the shadow banking system in 2008: "The structure of the financing system changed fundamentally during the boom, with dramatic growth in the share of assets outside the traditional banking system....The parallel system financed some of these very assets (i.e. collateralized debt obligations) in the bilateral or tri-party repo market[1]....the variety of assets financed in this manner expanded beyond the most highly liquid securities (i.e. traditional Treasury bills) to include less liquid securities." His former bank, the New York Fed, and JP Morgan served as the primary clearing houses for repo financing of the less liquid instruments that are now close to worthless (about 5-35 cents on the dollar). Bottom line: A fox is in charge of the henhouse.  The Fed executive who played a key role in expanding the shadow banking system is now tasked with deconstructing it at taxpayers' expense.  The plan now is for the US to directly buy or finance the purchase of these securities at prices no one else will bid.  Clearly a more expensive route for the taxpayer and another unwarranted subsidy for fat Street cats[2].  Bonus anyone?

[1]Repo market or repurchase market is the private credit market where all financial institutions, regulated and unregulated, go to obtain short term financing (mostly overnight) to meet reserve requirements, obtain bridge loans, lend or purchase securities, hedge investments or invest on a short term basis. Traditionally only US Treasury bills and notes were accepted as collateral because they are considered safe.  In a tri-party repo the pledged securities are delivered to a third party bank for custody.   It is the primary form of repurchase agreement for securities dealers in the US.  The New York Fed and JP Morgan are the two main custodial banks.  Geithner admits, "the scale [of leveraging]...made many of the vehicles and institutions in this parallel financial system vulnerable to a classic type run, but without the protection such as deposit insurance that the [regulated] banking system has in place to reduce such risks." Translation:  when the Street woke up to the fact that pledged securities in the repo market were junk, shock waves ripped through the interconnected system.  Bear Sterns was the first money bag to drop. The buyout of Bear Sterns by the Fed and JP Morgan was more about shoring up the repo market for which these two banks are the main pillars.  One of the primary function of a clearing bank is to value and match securities tendered for cash borrowings.  If Bear Sterns' collateral was worthless, the integrity of both the New York Fed and JP Morgan would have been seriously impaired.  

[2]A word to the wise.  According to financial advisor Martin Weiss there is another credit default swap to watch:  contracts on the default of United States Treasury bonds!  Formerly an unthinkable concept, nevertheless, a small group of players are bidding up premiums on the contract to 14 times their 2007 level.  Its a warning flag of serious potential damage to the credit of the US government.  No one wonder China is worried.  It is the "come to Jesus moment" in America.  No manufactured rallies on the Street can change it.  No arm waiving stock tout can disguise it.  Failed institutions must be allowed to fail regardless of their political patronage.  We are either enlightened capitalists or bad socialists.  

Iraq, Meet the New Boss

From the words of The Who's song, it's the same old boss: the multinational oil companies.  The Iraqi oil minister at an OPEC industry seminar in Vienna said his country would accept bids on new development projects on a 75/25 basis with the minority share going to Iraq.  That is the same deal Saddam Hussein gave to companies like Exxon/Mobil and Royal Dutch Shell before the invasion and occupation of his country by US forces. Previously, when oil prices were twice what they are now, Iraq was only permitting 51% shares to foreign companies.  Iraq is exempted from OPEC's production caps because of war damage to its oil industry infrastructure.  Thirty new wells are up for bid in the giant Halfaya field with five billion barrels of proven reserves. Iraq currently produces 2.4 million barrels per day.  Plans are to increase production to 6 million a day over the next five years.  If you are a cynic or even a rational nonconformist like U.S. Person, you would not argue with claims of "victory" by neo-cons because it seems the flow of Iraqi oil to the West has been secured for the foreseeable future through the use of military force.  Bhuya!

House of Mammon III

The sordid tale of greed at the House of Mammon (AIG) took another sickening turn of the screw as the NYT reported the insolvent insurance giant is suing its 80% owner, the federal government, for return of $306 million in tax payments.  Some of the taxes were imposed on offshore tax havens set up for executive compensation through C.V. Starr & Company controlled by Maurice R. Greenberg former AIG chairman and Starr International Company of Panama.  

Russia Stops Slaughter of Harp Seals

The Russian government granted the request of activists and organizations to stop the killing of harp seal pups (P. groenlandica).  Canada remains the only major developed nation that still allows the slaughter of young harp seal for their white pelts.  Minister of Natural Resources and Ecology Yuriy Trutnev announced the ban yesterday in Moscow.  Public opposition to the harp seal hunt has increased with anti-hunting demonstrations taking place in Russian cities.  Trutnev credited public pressure as contributing to the ban's passage. The slaughter was subsidized by the government and according to animal welfare activists there was little demand for pelts dyed black to make hats. The number of pups killed by Russian sealers in 1999 was 34,850. Smaller culls occur in Namibia, Norway and Greenland.  Later this month the Canadian seal slaughter begins. Last year more than 217,000 harp seals were killed, almost all of which were pups under 3 months of age.  Until recently pups were clubbed to death, but Canada outlawed that savagery when it was proved by veterinarians that many pups were being skinned alive.  Seals are also harvested for their meat, and fat used in human beauty products.  International opposition to the harvest is growing according to ENS. The EU Parliament is to vote on a seal products ban on April 1, but a ban must also be approved by member nations before it can take effect.   The ban will come to late to protect pups born this year and not able to swim to safety.

[Canadian harp seal pup courtesy IFAW]

'Toontime: Da Man Fronts 'The Street'

[credit: Matt Davies, Journal News]

Earth Hour

Sometimes the bad news about the state of our home planet is simply too sad.  It may make you feel helpless and frustrated about doing anything alone to change the culture of neglect and abuse of Earth.  It is such a big problem.  But you can do something symbolic and important by joining your neighbors and people around the globe to declare, "Lights out!" for one hour on Saturday 8:30pm Zulu, March 28th.  Our Earth deserves a break, so show you "get it" on Saturday and join the global electric wave of support. 

zulu= local time 

House of Mammon II

Senator Chris Dodd (D-CT), told CNN that 44's people wanted language inserted in the stimulus bill that would guarantee bonuses in existing employment contracts were honored.  Dodd said that his provision limiting bonuses and severance packages had to be modified or lost altogether in response to the push from the administration.  According to Dodd he did not author the change, but agreed to it reluctantly.  American International Group Inc. has its financial products unit headquartered in Dodd's state.  He also claims he knew nothing about the bonuses at AIG until the scandal hit the media last week. Senator Dodd is chairman of the Senate Banking Committee*.  But Bloomberg reports the previous regime contemplated paying bonuses to AIG employees in November, 2008 under the TARP agreement.  Neil Barofsky, inspector general for the Troubled Asset Relief Program testified before the House Ways and Means Committee today. Million dollar bonuses were paid to 73 employees as "retention pay". Records show about 50 are no longer employed by AIG.  Some bonuses have been returned voluntarily by patriotic recipients.  Taxpayers now own 80% of AIG which means a shareholders suit could be initiated by the government seeking the recovery of the millions in equity or forcing the company into reorganization.  Either way, the bleeding of taxpayer money will continue until the insolvent company is liquidated.

*opensecrets.org  says Dodd received $103,000 in donations during the 2008 election cycle from AIG, making him the company's largest single recipient. 44 was next in line with $101,232.

Whaling Goes On

The International Whaling Commission met in Rome last week and according to the Environmental News Service a disturbing trend towards resuming commercial whaling has developed.  Rather than continue work on a detailed whale management plan based on tested scientific procedures, the Commission decided to go ahead with an ad hoc quota plan being developed by countries that want to resume commercial whaling. Conservationists see this decision as a capitulation to the demands of whaling nations such as Japan which has killed 5,000 whales in the past five years for so-called "scientific purposes"  The IWC science committee concluded in 2007 that many questions about whale survival such as mortality rates remain unanswered despite this "research".  The reality is that whale meat is a prized food commodity in Japanese markets.  Whale meat is equivalent to our best beefsteaks. The proposed deal would grant Japan unlimited  minke whaling rights in coastal waters in exchange for reducing its harvest in the Southern Ocean near Antarctica.  The IWC chair, a holdover from the previous US regime is leading the new effort to resume whaling.  The plan is being condemned by anti-whaling organizations.  Director of the whale program for the International Fund for Animal Welfare said, "science is being thrown to the whalers like Christians to the lions in ancient Rome."   The head of the Sea Shepherd organization, which mounts direct actions to disrupt whaling operations in the Southern Ocean called for the removal of the American chairman of the IWC.  House Natural Resources Committee Chairman Nick Rahall (WV-D) has sent a letter to the acting Commerce Secretary asking for a replacement.  The House of Representatives is on record to end commercial whaling around the globe. The Obama administration favors continuing the IWC's moratorium.

[Bryde's whale on deck of Japanese vessel.  Current population numbers are unknown, Institute for Cetacean Research]

Truth, Justice and the American Way?

Who is one to believe?  The "Decider" or the International Red Cross?  My bet is on the Red Cross.  The neutral organization has been caring for wounded soldiers and prisoners of war since 1864.  When asked about the secret ICRC report on the treatment of detainees in CIA custody during a press conference in August 2007 he replied, "Haven't seen it; we don't torture." repeating the lie he first made in a speech on September 6, 2006[*].  This is not a matter of semantics fellow citizens, this is a violation of basic human dignity.  It is equally immaterial whether the tortured captives are terrorists or innocent bystanders.  Torture is illegal under US domestic law and international treaties and morally wrong. Full Stop.  And when torture is committed by the government of the "world's greatest democracy" without consequence something is terribly wrong with civilization.  Americans stood unflinching against the criminal Nazi regime and the Japanese military dictatorship at the cost of half a million lives lost in combat during WWII.  One of the defining principles of that "good war" was that no national leader or government is above accountability for war crimes.  If our government does not take the morally correct action and seek to hold those accountable for crimes that extend into the very sacristy of Washington--the Oval Office--it will be a betrayal of all those thousands who died fighting tyranny.

[*] Journalist Mark Danner writes in his article about the report,"In the wake of the ICRC report one can make several definitive statements: 1. Beginning in the spring of 2002 the United States began to torture prisoners.  This torture, approved by the President...and monitored in its daily unfolding by senior officials...clearly violated major treaty obligations of the United States including the Geneva Conventions and the Convention Against Torture, as well as US law".   See also the exclusive report by Jane Mayer in the New Yorker 

The House of Mammon

Update:  The WaPo has published the names of some of AIG's counterparties paid with taxpayer money.  Jon Stewart at Comedy Central is getting a lot of credit in the media for taking on "Mad Money" Cramer  and exposing the blatant stock boosting that passes as financial reporting in the US.  But anyone who has read this blog, Zola's Money or even the history of our stock market crash in '29 knows the market is manipulated by insiders {The Invisible Hand Revealed, 6/01/07}.  Now, even Joe "Not So Much" the Plumber knows it.

American International Group is perpetuating the system of money rewards for its employees who wrote billions of dollars in credit default swaps, a speculative form of derivative security, that are contributing to the current world-wide financial crisis.  Despite receiving $170 billion from the federal government in direct aid to keep the company going in the midst of the largest corporate loss ever recorded ($61.7 billion for the fourth quarter) AIG is preparing to pay out $165 million in so-called "retention pay".  These bonuses are directly tied to employee performance.  Thus, the bonus system fed the hazardous drive to write more and more speculative instruments that many experts believe lies at the foundation of the collapsing shadow banking pyramid.  AIG sold over $500 billion of toxic credit default swaps. There is a growing realization that some of its bailout money has been paid to AIG's counterparts which are also receiving federal aid.  Goldman Sachs was identified by the Wall Street Journal as one company getting two helping of federal funds. Both AIG and the Fed have refused to identify counterparties' names claiming it to be proprietary.  If the information were released it would undoubtably reveal the extent of the incestuous, speculative web of deals that is the shadow banking system.  Economist Nouriel Roubini says, "given that common shareholders are already effectively wiped out, the bailout of AIG is a bailout of the creditors of AIG that would now be insolvent without such a bailout."  AIG's financial products unit is under investigation by the Department of Justice, SEC, and the UK's Serious Fraud Office (apparently the British are immune to just petty fraud).  Secretary Geithner, a Street insider from the New York Federal Reserve Bank[1], politely asked in a phone call according to AP that AIG refrain from paying huge bonuses, calling the payments "unacceptable" given the company's receipt of federal financial aid.   CEO Edward Liddy replied in a letter that AIG was "contractually obligated" to make the payments, and if it did not the company would face lawsuits, presumably from disgruntled AIG executives. Liddy also said he thought it would harm the company for the Feds to continue to insist that executive compensation be reduced. The government now owns 80% of AIG.  This absurd situation demonstrates the desparate need for sweeping reform of US credit markets.  The concern is that 44's calls for more financial regulation will not go far enough in making "the change Americans can believe in".  Legislators are beginning to question whether saving AIG is in the interest of the public at large or merely the co-dependent financial institutions on the Street of Broken Dreams. The shadow banking system must be completely replaced by a well regulated commercial banking system under the control of Congress[2] because the greed of private bankers knows no shame.  

[1]It was the New York  branch of the Federal Reserve that engineered the bail out after the 1998 crash of the giant hedge fund Long Term Capital Management threatened Wall Street banks. The banks feared a chain reaction as LTCM unwound its speculative positions (including $1.6 billion in swaps) thereby depressing prices and forcing other companies to liquidate their own debt in a vicious circle of price deflation.  Sounds familiar.  On the back of an envelope make a conservative estimate that $8 trillion of derivatives will fail (about 2% of the US total). US banking capital is estimated to be only $1.6 trillion.  Taxpayers have contributed so far through the rescue program $2 trillion.  That still leaves a shortfall of $4.4 trillion a sum that can only come from the printing press of last resort, Uncle Sam's.  Dr. Roubini, aka Dr. Doom, estimates US credit loses will peak at $3.6 trillion.  The US $ has lost 95% of its value since 1913 when the Federal Reserve began operations.  In 1913 a box of Kellogg's Corn Flakes cost 9 cents and butter was 30cents/lb.

[2]  The Constitution gives the power to print money only to Congress.  Article 1, Section 8. Rep. Ron Paul (R-TX) has taken the first step towards reclaiming that power by introducing legislation subjecting the Federal Reserve to audits by the General Accountability Office, an arm of Congress. 

'Toontime Extra: The Post Bubble Economy

[credit: Kevin Siers]

'Toontime: Treasury's Superfund Site

[credit: Dwane Powell]

Brazil Cracks Down on Animal Trade

Some good news from the wildlife conservation front for a change.  Reuters reports that Brazilian federal police arrested 72 people accused of running an international smuggling ring that trading in wild animals.  Police had 102 warrants, but could not execute them all in Operation Oxossi.  The ring smuggled captured animals from parks and ecological reserves, including endangered species such as jaguars, snakes, monkeys and tropical birds, that bring high prices on the international market. One endangered Blue Macaw egg could bring as much as $3800 in Europe making the wildlife trade more lucrative in some cases than drug trafficking.  The global trade in animals and their parts is worth $10 to $20 billion a year ranking third behind arms sales and drugs according to Brazil's National Network Against Wild Animal Trade (Renctas). The organization estimated in 2001 that 38 million wild animals were poached every year. Captured animals usually suffer in inhuman conditions after being taken.  Only about a third survive to be sold. Police associated with the arrests say the traffickers are being charged under criminal anti-gang statutes making convictions with prison sentences more likely. Typically those charged with animal trafficking only face fines.  Many small time traders are poor indigenous people with few options for making a living.

[photo: www.msu.edu, Pantera onca]

Wilderness is a Good Thing

The House of Representatives failed to pass the wilderness bill which has widespread support in Congress, but failed to muster 2 votes to reach the two-thirds majority required under the rules. The bill has already passed the Senate.  Its defeat in the House should be laid at the feet of the Democratic leadership which subjected it to the two-thirds requirement by not allowing the measure to be amended on the floor.  Repugnants were ready to load it with poison pill provisions on which Democrats in marginal districts did not want to record a vote.  One dubious provision is a law allowing the carrying of concealed weapons in national parks.  Once again good legislation is lost in the endless game of "chicken" played by self-interested politicians.  As it turned out this particular amendment made it into the bill to appease whingeing Repugnants (their fetish for carrying weapons is apparently limitless), but the bill went down to defeat anyway.  House Democrats should gird their loins and try again without subjecting the bill to such an unfair legislative hurdle. 

[photo: USGS, Mt. Hood, OR]  

Le Shorter: One Meter by 2100

That is the amount the seas will rise due to ice cap melting.  Scientists attending a UN conference on climate change in Copenhagen said on Tuesday that the previously predicted 59cm rise was a drastic underestimation.  Improved data from satellites shows that Greenland will once again be green as it looses 200 to 300 cu.km. of ice (7.63 million cu.ft.) into the sea each year.  600 million people live on low lying land formations.  George Will, are you reading this?

[image: 2030, Inc., blue-green shows extent of New Orleans inundation by 1 meter (3.28ft) sea rise]

Boosterism Breaks Bad

US Person avoids commenting on Stumptown developments except when they impact wildlife such as the sea lion pogrom taking place at Bonneville Dam.  He is aware that readers of this humble blog may not find local news sufficiently provocative*.   But occasionally local government exhibits such irrational behavior that derision is deserved.  Like many local jurisdictions in the United States, Stumptown is suffering from declining revenues.  The city is desperate to find money for its public transportation, low-income housing and health services. But when it comes to professional sporting entertainment, the city acts like an alcoholic coming off a dry spell.  The son of Henry Paulson, the former Secretary of the Treasury, is offering a deal to bring a third major sports team to town in the form of an MLS soccer franchise.   Merritt Paulson says he will guarantee $60 million in city backed loans to renovate an existing baseball stadium and build another, smaller stadium for the displaced AAA baseball Beavers.   Mr. Paulson wants the city to contribute $15 million of urban renewal funds for the project.  No doubt the Paulson family is rich.  Merritt's father is a Wall Street mogul, a former CEO of Goldman Sachs.  But launching a soccer team in the middle of what may be the Second Great Depression goes beyond the "audacity of hope".  Assuming Mr. Paulson junior makes good on his promises and does not declare bankruptcy when the deal goes south, the city is still on the hook for 20% of the projected $88 million expansion costs and $2.5 million of the inevitable cost overruns.  The urban renewal zone is yet to be created.   Some state legislators question the appropriate use of urban renewal funds for what is essentially a private entertainment enterprise.   The Mayor, who is operating under the cloud of a state investigation for a morals violation, has run for political cover by the city's powerful business and development community.  He is one of two city council members out of five promoting the project.  He recently voted for a new mega bridge across the Columbia River despite sprawl and pollution impacts in a city that touts its green reputation.  His Honor also backed an aerial tram line that went wildly over budget, leaving the city to pay millions in cost overruns.  The heavily subsidized line serves only a limited area. Why a government should be involved in sports entertainment when it is considering cutting services is a paradox about which residents of Stumptown should be concerned.  Perhaps Timber soccer fans will walk to the stadium to watch lavishly paid male athletes perform in shorts.

*US Person wishes to clarify the record by stating he never advocated nationalizing all the banks, just some of them.  That the government is willing to resort to bookeeping games to allow Citigroup to report a profit and stop the Street of Broken Dreams from a financial China syndrome is more evidence in favor of allowing the FDIC to liquidate a few zombie banks {2/23/09}.

Yucca Mountain Looses Funding

The nation's only high level radioactive waste depository is loosing funding in the Obama administration budget.  That is good news for the people of southern Nevada were the Yucca Mountain site is located ninety miles from Las Vegas. Senate majority leader Henry Reid has vigorously opposed burying radioactive waste in the underground salt dome.  He called the budget cut the "most significant victory to date to protect Nevada from becoming the country's toxic wasteland".  Recent geological studies show that underground water flows through the ridge in greater amounts that first estimated raising the possibility of corrosion damage to waste vessels intended to last for a millennium.  Proponents of nuclear power as a clean alternative fuel both within the administration and in the industry have been dealt a serious setback. The problem with nuclear power has always been the permanent disposal of radioactive waste from the nuclear fuel cycle. {Nuclear is Not an Option, 12/31/2007}.  Without a depository, depleted fuel rods and other high level waste must be stored in temporary facilities near the reactors. Approximately 57,700 tons of nuclear waste are stored at more than 100 temporary sites.  Each year 2,000 more tons are generated.  France reprocesses its spent fuel, but many experts believe this solution creates as many problems as it solves.  There are no plans to withdraw the repository license application to avoid industry lawsuits.  So far the government has spend $13.5 billion on the project.  If completed, total costs are expected to exceed $96.2 billion.  The Regime planned to have the Yucca Mountain facility on line by 2020.

Lynx Score!

The US Fish & Wildlife Service reversed a critical habitat designation for the Canadian Lynx (Lynx canadensis) made during the Regime by former deputy assistant secretary Julie MacDonald.  MacDonald was forced to resign in disgrace after the Department of Interior's inspector general determined she improperly pressured federal biologists to reach conclusions favoring industry over species preservation. The lynx decision favored timber interests by restricting the critical habitat designation to just 1,841 sq. miles (476,817 hectares) within existing national parks. A specialist hunter, the lynx requires a large territory to survive. The revised designation covers 39,000 sq. miles in Maine, Minnesota, Montana and Washington where dense conifer forests provide snowshoe hares for food, large woody debris piles for dens, and deep powder snow cover for long periods. Because critical habitat for a protected species under the Endangered Species Act requires special management considerations, commercial interests which require federal permits are often opposed to new or expanded designations.   All of the newly designated critical habitat is considered occupied by biologists based on verified records of lynx sightings and reproduction.  In 2009 Colorado began a reintroduction program to the lynx's historic range. A Colorado born lynx gave birth to two kittens in 2006 indicating the possibility of a successful reintroduction.  But in 2007 several lynx were killed possibly by fur poachers since only the radio collars were left behind.   The lynx has been protected since 2000 as a threatened species, and it is illegal to hunt or trap the fur bearing animals except in Alaska.

Le Shorter: Public Health Insurance 20% Cheaper

AP reports a study by an independent nonprofit group found that a public health care plan like Medicare could reduce projected health care costs by about $2 trillion over an 11 year period. Premiums in the public health insurance plan would be at least 20% lower partly due to reduced administrative costs.  Within a decade the number of people in the public plan would nearly equal those with private insurance.  Repugnants are screaming "socialism".

Let's Make a Deal

Secretary of  State Hillary Clinton's strong statement against destroying Palestinian homes in East Jerusalem is the beginning of what hopefully is a more balanced foreign policy towards Israel.  But it is only a beginning. Among many difficult problems to be solved  are the unauthorized Jewish settlements in the West Bank. Senate Foreign Relations Committee chair John Kerry (D-MA) made this key point in his address at the Brookings Institute on Wednesday when he said, "we are serious about Israel freezing settlement activity in the West Bank." Despite the recent resort to violence by both sides, the outlines of a final solution are becoming clearer Senator Kerry said.  Inevitably conflict resolution will require sacrifice on the part of some Israelis in the the interest of a permanent peace, but it need not be without some compensation for the improvements left behind.  Certainly the settlements should not be destroyed as Israel did in Sinai when captured territory was returned to Egypt.  Also, settlers should be given a formal choice of where to live if their communities are affected by a peace agreement.  They will undoubtedly prefer not to live in a Muslim state as a minority.  The two regions of the new Palestine will need a secure land and air corridor if it is to achieve any economic independence as a state, but that can be accomplished through a long term joint security arrangement which does not require Israel to relinquish sovereignty over land within its recognized international boarders. Expecting Israel to allow the return of Palestinians displaced 60 years ago to its territory is unreasonable.  International aid to Palestine for absorption of the diaspora, or individual family compensation for those having a demonstrable claim may be a way forward to the final solution.  Untying the Gordian knot of this conflict will take time and will need to be done in careful stages.  But both sides seem genuinely tired of conflict and have accepted the fact that they want a permanent divorce. The United States will be only be too happy to divide the household goods for them.

[graphic: BBC]

Pelosi Creeps Out

Update:  The Democratic majority in the House of Representatives passed a so-called "cram-down" law allowing bankruptcy judges to modify mortgages loans  by reducing the principal, increasing the loan term or cutting the interest rate.  Repugnants were outraged by the bill's passage claiming it would allow Joe Blow to "game the system".  As if the system were not already gamed by the scammers on the Street of Broken Dreams!  In their ranting they failed to mention that wealthy or corporate debtors already have these options available to them for investment real estate or vacation homes.  The Mortgage Bankers Association said 48% of homeowners with sub prime adjustable mortgages are one month or more behind on their payments.  Foreclosures are being fueled by the loss of jobs and incomes as unemployment reaches historic proportions.  The bill goes to the Senate.  Stayed tuned to this cyberspace.

{posted 3/2/09}Firedoglake.com informs us that Speaker Nancy Pelosi (D-CA) backed down under Wall Street lobbyist pressure and tabled a provision allowing bankruptcy judges to restructure mortgages to prevent foreclosures.  Every foreclosure in a neighborhood drops home values by 1% according to Credit Suisse, but if bankruptcy judges are given the authority to write down mortgages, the avalanche of foreclosures could be reduced by 20%.  That is a good thing for struggling homeowners, but bad business for banks.  Best of all the law would not cost taxpayers a dime. Spend a dime and call Speaker Pelosi's office and tell them you want representation. The bankers have more than enough as it is.   202-225-0100

'Toontime: Chez Bush

[credit: Pat Oliphant]

A Lesson in State Capitalism

Since the government is going to be in business with America's largest corporations it should be done with companies that promise to make socially and environmentally acceptable products.  A look at General Motors and Honda shows the native company mired in debt slowly dying despite billions in government financial aid while Honda, suffering lower sales (except for sales of its hybrid cars) because of the worldwide depression,  is announcing the debut of its new Class 8 hybrid truck assembled by Peterbuilt Motors Company in Georgia. Auditors examining GM's books for its annual SEC report are uncovering a bleak house of plummeting sales, reoccurring operating losses and inability to raise new capital.  These conditions are choking the company's cash flow and threatening the "going concern" rating. Failure to achieve such a rating from auditors could trigger more loan default clauses.  During the past 3 years GM has piled up $82 billion in losses.  It has received $13.4 in federal loans. GM's stock price fell to $1.80 after the market close on Wednesday.  The company now faces the March 31 deadline for signed agreements from debt holders and the UAW which it needs to demonstrate to the government it can become a viable company again.  GM will have to close five more factories and layoff 47,000 workers world wide to survive. The alternative is a Chapter 11 bankruptcy. 

The Honda Model 386 hybrid diesel-electric truck is certified green by the EPA.  It uses a parallel system developed by Eaton Corporation and is expected to reduce emissions by almost 45 tons a year compared to diesel trucks.  Like a hybrid car, the system generates electricity from brake energy. Fuel efficiency is improved by powering electrical systems without auxiliary motors when the engine is off.   The truck will be tested by UPS hauling auto parts for the company and its performance telemetry compared to diesels on the same two dissimilar routes.  

[photos: courtesy American Honda Motor Co.]

The Naked Yoo

The Justice Department has released previously withheld legal memos from the Office of Legal Counsel concerning presidential authority to combat terror.  The release came after the documents were sought in a civil suit brought by Joseph Padilla, a US citizen detained for years as an enemy combatant before being convicted of crime in federal court.  The nine memos, some written or co-written by the eminent Confucian legal scholar John Yoo, now on leave from Berkeley {4/8/08, Yoo the Merciless}, demonstrate the shocking extent the Regime was willing to eliminate civil liberties while fighting terror.  Under the foregone conclusions passed by Yoo and his colleagues as legal analysis, the new and improved "Commander-in-Chief power" (nowhere enumerated in the Constitution) would trump the First, Fourth and Sixth Amendments in the Bill of Rights should the President deem it necessary to combat terror within the US.  Yoo's view--tantamount to the imposition of martial law--was considered extreme even by the office director, but he waited almost to the end of the Regime's reign of excess before rescinding the memo supporting suspension of free speech and freedom of the press. With only five days left in power, the director of OLC rescinded three other memos claiming broad powers to unilaterally rescind treaties and engage in domestic surveillance without the approval of Congress.  The Department's Office of Professional Responsibility is investigating whether political appointees knowingly signed off on unreasonable interpretation of laws to provide cover for the Regime's anti-terror programs.

Righting Wrongs

President B. H. Obama went to the Department of Interior on Tuesday and told the gathered civil servants that the previous occupant was wrong to issue a rule change abrogating the consultation requirement for government projects impacting protected species.  {1/21/09, 43 Slips One Pass} On the 160th anniversary of the Interior Department he told the cheering audience that restoring the consultation rule "would restore the scientific process to its rightful place at the heart of the Endangered Species Act".  While not technically not overruling the change, Mr. Obama's memorandum instructs agencies to use the consultation process in every case, until formal rule making can begin.  The same discredited thinking was espoused by the US Chamber of Commerce in response to the reversal which called the rule intended to force agencies to consider environmental impacts of their development projects, "added red tape".

[photo: LA Times]

Le Shorter: Obama Writes, Dear Demitry...

President Barack Obama has written to President Demitry Medvedev suggesting that the United States would abandon plans for a missile shield in Eastern Europe if Russia would help the U.S. convince Iran to stop development of nuclear weapons.{11/08/08, The Old Game}  The approach is no doubt welcomed by the Russian leadership who grew restive after eight years of jingoist bombast from the Charlatan. President Obama's letter should open the way for increased cooperation with our former allies. President Medvedev will meet with Obama in early April.  Obama will need to steel himself against the cries of outrage from the political neanderthals of the right-wing if he is to "reset" a new era of cooperation in Europe.

[image: The Ohio Art C0mpany] 

Expediency Kills

Update:  The traps are set and the unwanted stellar sea lions come and go. No California sea lions, those greedy salmon gobbling enemies of fishermen, have appeared at the base of the Bonneville dam.  It is almost as if they know if they are captured their life is over.  Officials publicly admitted captured sea lions will be euthanized. The Stumptown newspaper in its irritating know it all editorial voice, supports the killings in this way:  "We know that sea lions are not to blame for the demise of Columbia salmon.  The fish runs collapsed because of dams, overfishing and habitat destruction."  Their idea of logic is to kill the seal lions to fix the problem because making dams easier to get over or removing the unneeded ones is too expensive.  The editorial board is even unwilling to reduce the sport fisherman's catch limits because "Sport fishing provides hundreds of millions of dollars in annual economic benefit." Buffalo hunting was lucrative in its day too.

After a temporary setback in court the states of Oregon and Washington are gearing up to capture or kill (mostly kill) up to 85 California sea lions (zalophus californianus) congregating at the Bonneville Dam on the Columbia River.  The sea lions have figured out that spawning salmon congregating below the dam are easy catches. On Thursday, the Ninth Circuit Court of Appeals refused to grant an injunction against the NOAA Fisheries Service permit allowing the "taking" of protect mammals that do not respond to hazing and cannot be relocated.  There are few available spaces for adult male sea lions in parks and zoos.  So thirty intelligent creatures simply trying to survive face the death sentence.  Man is just too lazy, or too greedy, to keep most of the pinnipeds out of the area without using lethal means.  Neither does it require skill to kill a sea lion with a shotgun at close range. The fact is that the sea lions eat less than 4% of the salmon run while "sportsmen" take 13% according to the Army Corps of Engineers.  Officials attempt to explain the unfairness involved by claiming sea lions do not discriminate between hatchery or wild fish. I doubt a fisherman feeling inadequate compared to a sea lion in the water does either, nor does the man-made monolith of concrete and steel standing in the path of the salmon's return home.   Homo sapiens is having difficulties in the post-modern age, and will have more to come, because his entire approach to living on a living planet inhabited by other sentient beings is egotistical. The verdict of natural selection is rather severe.

Political Theatre or Justice at Last?

Senator Patrick Leahy's (D-VT) proposal to hold a public congressional inquiry into the war crimes of the Bush Regime is gaining traction in Washington.  As well it might since the public is expressing its displeasure over an increasing awareness torture was used as official policy of the United States, and their civil liberties were trampled in the name of an amorphous "war on terror"[1].  Discussions have centered around the ultimate purpose of such an inquiry.  National reconciliation after a divisive invasion is often mentioned, but an equally debilitating consensus may be forming that no criminal prosecutions will take place as a result of information divulged during the proceedings.  Also, any witness appearing before the commission will probably be offered immunity in return for testimony.  Which may explain why Alberto "Gonzo" Gonzales the former attorney general whose Justice Department provided the alleged legal justifications for the use of torture--euphemistically termed "enhanced interrogation"--is so willing to appear before the proposed committee of inquiry. Alexander Cockburn reported two years ago that Air Force Lt. General Randall Schmidt made a 55 page sworn statement that former Defense Secretary Rumsfeld gave verbal and written approval to torture detainees at Guantanamo and Abu Ghraib.  Since then potential evidence has repeatedly surfaced directly connecting top Regime officials to the torture policy[2].  Despite the damning evidence an independent committee could be misused as political theatre to distract an angry public and derail any moves to prosecute officials deemed responsible for illegal actions. Speaker Pelosi has voiced concern about the possible misuse of immunity grants and lack of criminal prosecutions resulting from a "truth commission".  Complicating matters, the Senate Intelligence Committee announced it would hold its own hearings in private concerning the CIA's role in operating the rendition and interrogation programs. Congressional aides have already said that the investigation will not be used to determine wrongdoing, but merely to gather information that was withheld from Congress during the Regime.  Some of this information, such as the location of black detention sites in foreign countries, is considered by Washington insiders to be among the agency's "crown jewels".   Already Senator Christopher Bond (R-MO) the ranking minority member of the Senate's Intelligence Committee has labeled the Leahy proposal for a public truth commission a "witch hunt".   The Senate Judiciary Committee chaired by Sentator Leahy will hold hearings on the composition of an independent inquiry. The public wants the truth, but not at the expense of justice.

[photo: Camp X-Ray courtesy www.globalsecurity.org.  This temporary camp held as many as 300 detainees and was closed after Camp Delta was opened in April 2002.]

[1]An example of the abrogation of civil rights in the name of fighting terror is the case of Ali Saleh Kahlah al-Marri, a legal US resident from Qatar, who has been held incommunicado since 2003 at the Navy's Consolidated Brig in Charleston, South Carolina. New Yorker Magazine, 2/23/09.   His lengthy detention without trial may be the litmus test for President Obama's commitment to the rule of law when dealing with potentially dangerous detainees.  His case is scheduled to be heard by the Supreme Court in April.  Al-Marri was being prosecuted for various crimes that seemed suspiciously related to aiding terrorists in the United States when he was seized by the Regime and disappeared into total isolation.   A defense lawyer familiar with the case says the government desperately wanted to interrogate the "hard case" under the new rules because he had been named by Khalid Sheik Mohammed under torture as a fellow terrorist.  Al-Marri was subjected to extreme sensory deprivation in solitary and was bound and gaged with a sock during an interrogation session videotaped by the Pentagon.  The only evidence offered by the Regime to justify al-Marri's secret detention is an affidavit by a DIA intelligence analyst.  A former federal prosecutor during the Regime says al-Marri's indefinite detention without trial is justified because the criminal justice system cannot handle dangerous international terrorists.  A criminal court may release a defendant on bail, rule out substandard evidence, or run the risk of accidental disclosure of classified information.  Americans face the risk of release of child rapists, arsonists, murderers and potential serial killers everyday in the name of due process of law.  In comparison a possible sleeper agent who can be deported is small potatoes. Qatar wants al-Marri to come home. 

[2] Former chief jailer at Abu Ghraib, Janis Kapinski testified to Army CID about the memo from Secretary Rumsfeld stuck to a pole outside the office of interrogators authorizing starvation, dogs and stress positions at the infamous prison.  "Make sure this happens!!" said the Secretary in handwritten marginalia.   There was court testimony that Secretary Rumsfeld and his deputy Paul Wolfowitz received nightly briefings from intelligence personnel concerning the interrogations.