Congress Asked to Lift Debt Limit

Martin Crutsinger
Associated Press
Wednesday September 19, 2007

WASHINGTON (AP) -- Treasury Secretary Henry Paulson told Congress on Wednesday the government will hit the current debt ceiling on Oct. 1.

He sought quick action to increase the limit, saying it was essential to protect the "full faith and credit" of the country, especially at a time of financial market turmoil.

The limit is $8.965 trillion. Unless Congress votes to raise it, the country would be unable to borrow more money to keep the government operating and to pay debt obligations coming due.

The United States has never defaulted on a debt payment but the decision on whether to raise the debt ceiling often means a prolonged battle in Congress.

Paulson wrote congressional leaders that according to data now available, the Treasury expects to reach the ceiling on Oct. 1 -- the first day of the new budget year.

That projection does not take into account moves the government often has to use, such as withdrawing investments from certain trust funds to create room for extra borrowing until Congress finally approves a debt increase.

This month, the Senate Finance Committee approved increasing the limit on the debt to $9.82 trillion. That boost of $850 billion would be the fifth since President Bush took office in 2001.

The House approved an increase in May. The full Senate has not acted yet.

"The full faith and credit of the United States, to which we all remain committed, is a national asset and a cornerstone of the global financial system," Paulson wrote. "In light of current developments in financial markets, which would be exacerbated by uncertainty in the Treasuries market, I urge the Senate to pass the legislation reported by the Finance Committee to increase the debt limit as soon as possible."

The national debt is the total accumulation of annual budget deficits, which must be financed with borrowed money.

Democrats blame Bush's tax cuts and the war in Iraq for pushing the record debt. Republicans defend the tax cuts and say the deficit is on a downward trajectory in part because of the economic stimulus from the cuts.

Senate Democrats are expected to use the upcoming debate on raising the limit to highlight the Bush administration's record on deficits.

The U.S. recorded four straight years of surpluses ending in 2001, Bush's first year. After that, deficits returned including a record imbalance in dollar terms of $413 billion set in 2004. The deficit has declined since. The administration sent Congress a budget in February that projects eliminating the deficit by 2012 while at the same time making Bush's first term tax cuts permanent.

Republicans campaigning to succeed Bush in the White House support his drive to make the tax cuts permanent. Democratic candidates have pledged to roll back the tax cuts received by upper-income families while offering tax relief to lower-income people.

Former Federal Reserve Chairman Alan Greenspan said in his memoirs published this week that Bush and Republicans had abandoned the GOP's conservative principles of favoring small government by failing to fight against rising government spending.

Bush said in an interview on Tuesday that he "would respectfully disagree" with Greenspan's comments. He said "cutting taxes made a significant difference" in the country's finances by spurring economic growth in the wake of a recession and the Sept. 11 attacks.

Vice President Dick Cheney, writing in Wednesday's Wall Street Journal, said Greenspan was "off the mark" by contending Bush had been fiscally irresponsible.

"The economic growth encouraged by the president's tax cuts is now producing sharply increased federal tax receipts," Cheney wrote.

Credit turmoil set to benefit big banks

Saskia Scholtes
Financial Times
Wednesday September 19, 2007

Large banks with big balance sheets and access to central bank liquidity could be poised to benefit from the recent turmoil in financial markets, says ratings agency Moody’s in a report on Wednesday.

As the crisis of confidence in credit has reduced access to cheap capital markets funding for non-bank participants such as hedge funds, the ratings agency argues that banks are set to play an increasingly important role as the much-needed distributors of central bank liquidity.

“Banks play a pivotal role, as they stand between the central bank and the rest of the financial system – the franchised distributors of the central bank’s vital product,” says Christopher Mahoney, vice-chairman at Moody’s.

The comment comes as international policymakers and regulators engage in increasingly heated debate over their response to the recent market turbulence, and whether banks should be granted a freer hand to allocate and distribute capital during times of stress.

Mr Mahoney says that the pace of financial innovation and liberalisation of capital markets in recent years has meant that banks have become distributors rather than holders of risk.

That process and change of function has increased the number of non-bank participants in the capital markets and is unlikely to reverse, he says.

However, the recent financial market turbulence has highlighted the fragility of such a system. This new type of fragility is in part because direct access to central bank liquidity is unavailable for non-banks.

In a such a system, the weakest link is confidence, says Mr Mahoney, stressing that confidence is a “state of mind” which is challenging for financial authorities to fix.

“The difficulty is that while [central banks] are able to fend off liquidity stress for banks, buttressing confidence in non-bank counterparty risk is more difficult, and restoring “fluidity” throughout the non-bank financial system will be even more complicated.”

As a result, large banks remain central to a systemic risk resolution, he says.

However, Mr Mahoney warns that solidifying the banks’ position will not necessarily alleviate the credit pain flowing through the financial system.

This is because placing greater emphasis on the role of banks will inevitably imply some deleveraging, which is bad for asset prices.

“The greater the degree to which markets reject various structured technologies and force assets on to banks or the auction block, the lower the prices will be for the assets held in such structures,” says Mr Mahoney.

That could force investors to recognise large losses, he says, with implications for financial regulation.

China's latest export: soft power

While the U.S. has focused on the Mideast, Beijing has become a rival for global influence.

By Joshua Kurlantzick LAtimes
September 2, 2007

During the last two months, as Washington focused on Iraq, few people were paying attention to what was going in the remote Ural Mountains of Russia. There, under the auspices of the benign-sounding Shanghai Cooperation Organization, some 6,000 troops, combat vehicles and planes from six nations conducted a nine-day war game called "Peace Mission 2007."

The Bush administration's lack of interest in the Shanghai Cooperation Organization -- which is in fact a regional security group linking Russia, Central Asia and China -- is not terribly surprising. Since 9/11, President Bush, who won the White House in part by vowing to take a tough line against China, has concentrated on the Muslim world. To win global support for the war on terrorism, his administration has stopped calling Beijing a "strategic competitor," as he did before 9/11. On a recent visit to China, the U.S. chief of naval operations, Adm. Michael G. Mullen, announced that he was "reassured" about China's military power, adding, "I'm very encouraged about their commitment to continuing to improve this relationship" with America.

But even as the administration praises China, Beijing is subtly working to increase its global influence. In the long run, China could become the first major power since the former Soviet Union to threaten U.S. international influence.

China is modernizing its military, especially its obsolete air force and navy. It boosted defense spending by nearly 20% last year, and it has developed more-sophisticated medium-range missiles and fighters that could prevent U.S. aircraft carriers from defending Taiwan, as they did in 1995 and 1996.

Yet it is not China's military that threatens America right now; the U.S. military remains vastly technologically superior to the People's Liberation Army. Rather, it is China's growing long-term defense relationships with other nations that should worry Washington.

A decade ago, China's relationship with Russia suffered from a Cold War hangover, but today the two nations hold frequent joint military exercises. China also holds similar exercises with Kyrgyzstan, a Central Asian state on China's western border, with U.S. ally Thailand and with other nations.

It also has begun training foreign military officers. A course at China's National Defense University was specifically designed for the visiting officers. As these officer elites become more comfortable with China, they may reorient their militaries toward the People's Republic (just as programs for visiting officers in the U.S. have helped cement foreign military links to the Pentagon). In fact, a reorientation to China may already be happening.

In the Philippines, some military officers who once instinctively looked to the U.S. for training now go to China. Should the Philippines ever be drawn into a conflict between the U.S. and China -- the northern part of the Philippines lies relatively near Taiwan, and the country historically has had an informal defense relationship with the island -- its growing military links with Beijing might persuade it to not choose sides. In fact, China already has pressured Singapore, a nation with close ties to the U.S., to not take sides in any future conflict over Taiwan.

China's softer tools of economic and diplomatic influence also challenge U.S. power, particularly at a time when America's global reputation has plummeted. Over the last decade, Beijing has worked hard to cultivate foreign publics, not just foreign leaders, by developing sophisticated assistance programs that have made China the largest donor or lender to countries such as Cambodia and Angola.

Beijing also has turned on the diplomatic charm. Such top leaders as President Hu Jintao and Premier Wen Jiabao spend vastly more time abroad than did their predecessors -- or U.S. leaders -- and China has upgraded its diplomatic corps, producing a new generation of English-speaking, media-savvy envoys.

Beijing already is using its soft power to limit America's role in the region. In 2005, after wooing the Uzbek government through state visits and growing economic assistance, Beijing quietly helped push the Uzbeks to turn against Washington after the U.S. criticized Uzbekistan for a brutal crackdown on activists. That year, Uzbekistan revoked U.S. access to its military bases.

China has other new means of leverage over the U.S. Having amassed more than $1 trillion in reserves partly through its persistent trade surpluses with America, Beijing theoretically could undermine the U.S. economy by selling massive amounts of U.S. treasuries, which would deflate the dollar. But because a weakened U.S. economy would slow China's growth as well, it's highly unlikely that China would take this step. Instead, Beijing is amassing a $200-billion state-controlled investment fund to buy assets around the globe, including in the U.S. Already, China has bought a stake in Blackstone, a major U.S. private equity group.

Washington remains unprepared to determine which types of Chinese investment here are appropriate because Congress, after years of moving too slowly, only just passed laws on monitoring foreign investment in the U.S. The absence of clear guidelines has left Washington ambivalent about investments that do not involve technology critical to our national security -- such as the one in Blackstone -- but which might prove damaging. As Chinese companies become bigger global players, Washington will be forced to confront this issue more frequently.

China's domestic economic strategies potentially threaten the U.S. as well. For instance, Beijing is currently nurturing about 50 "national champion" companies, providing them with soft loans and other assistance from China's state-linked banks. Because these subsidies allow them to operate on smaller profit margins, some of these companies, like petroleum giant CNOOC Ltd., may increasingly challenge the dominance of U.S. oil and gas firms in Africa, Venezuela and the Middle East.

Despite these threats, the U.S.-China relationship is not headed for a Cold War-like standoff. China is heavily dependent on U.S. investment, just as the U.S. is reliant on China's consumption of greenbacks, a symbiosis that has made China, in the words of Comedy Central's Stephen Colbert, a "frenemy" -- a friend and an enemy all at once.

Confronting a "frenemy" will be tougher than fighting an enemy, because Washington must simultaneously cooperate and compete with Beijing. To do that successfully, the U.S. must treat China with the same respect it had for the Soviet Union, assigning at least one person in each U.S. embassy to closely follow Chinese economic and military activities in that nation, and investing far more resources in training the next generation of American China specialists. Preparation leads to confidence, helping U.S. diplomats and politicians understand how China does -- and doesn't -- threaten America. And with more knowledge on hand, surely Washington won't ignore Peace Mission 2008.

Joshua Kurlantzick is a visiting scholar at the Carnegie Endowment for International Peace and the author of "Charm Offensive: How China's Soft Power Is Transforming the World."

Extended video: Police beats up town counsilman

Last month, a town councilman (of Roseland, IN) tried to vote to eliminate the town's police force because of budget problems. This month, the councilman is ejected from a meeting after having a disagreement over meeting procedures. Even though he is being pretty peaceful about it, two town police officers escort him from the meeting. On the way out, one of the cops just flips out and shoves the guy to the ground and starts beating the shit out of him. The officer then arrests the guy and charges him with disorderly conduct.


*************************************

You wanna get pushed around like this is China, well your gonna get your chance. Wake up your idiots! This type of thing is happening everyday in the New American Police State.

China's Ultimatum: Let Us Invade Taiwan Or We'll Dump The Dollar

Financial analyst says China could use huge dollar reserves as blackmail for beefing superpower status

Paul Joseph Watson Prison Planet Wednesday, September 19, 2007

The Fed's decision to cut interest rates again is likely to send the dollar tumbling to historic new lows, leading one financial analyst to predict that China's fury at the devaluation of its huge dollar reserves will provoke them into giving the U.S. government a terse ultimatum - let us invade Taiwan unopposed or we'll dump the dollar and bring about economic chaos.

China holds $1.3 trillion of dollar denominated assets and leading Communist Party officials have repeatedly threatened to use what the London Telegraph referred to as "the nuclear option," the liquidation of US treasuries if Washington imposes trade sanctions to force a yuan revaluation, the result of which would be an almost certain and immediate collapse of the dollar.

But according to Greg Zanetti of the Financial Network, an advisor for the McDonalds franchise, China may also be using economic threats as a means of greasing the skids for the unopposed invasion of Taiwan.

"So what is the end game?" writes Zanetti. "Well, there is now conjecture that China may willingly take the huge financial hit from the falling dollar… provided we don’t interfere with their claims to Taiwan."

"Their argument would be they acquired Hong Kong peacefully and that the envelopment of Taiwan would just be the finale of a 70 year civil war."

"Their gamble would be that Americans would not fall on their swords for Taiwan. Of course, if we agree to such a deal we have (for all intents and purposes) ceded regional hegemony to China. They would be considered the Asian power and we would begin our retreat as a global power."

Under the 1979 Taiwan Relations Act, the United States is mandated to provide support to Taiwan in the event of any hostile trade embargoes or military invasion on behalf of China.

The fact that the U.S. government, with the help of Alan Greenspan, have done their utmost to bring about a slow-paced economic meltdown by continually bad-mouthing the dollar suggests they would want to avoid the rapid decline that would be triggered if the Chinese were to dump their assets.

Though public sentiment in China and the majority of analysts think a Chinese invasion of Taiwan is unlikely, any warming of relations between Taiwan and the U.S. is usually subject to vocal rebuke.

Earlier this year, Chinese government leaders threatened to plan new war games and heighten military readiness in anticipation of any attempt by the U.S. to defend Taiwan should a Chinese invasion occur, or simply if Taiwan declares its independence, after President Bush shook hands with Taiwan's representative to the United States, Joseph Wu.

Iraqis Reject Blackwater Mercenary Thugs

Steve Watson Infowars.net Wednesday, Sept 19, 2007

After years of running riot in Iraq with impunity, the license of private contractor company Blackwater USA has been revoked by the Iraqi government, and the company has been banned from operating in the country all together according to reports, a move that will see the withdrawal of tens of thousands of armed mercenaries from Iraq.

CNN reports:

Iraq's Interior Ministry has revoked the license of Blackwater USA, an American security firm whose contractors are blamed for a Sunday gunbattle in Baghdad that left eight civilians dead. The U.S. State Department said it plans to investigate what it calls a "terrible incident."

In addition to the hundreds of thousands of US troops in Iraq, The Bush administration has deployed a shadow army of private contractors.

Earlier this summer it was reported that the number of U.S.-paid private contractors in Iraq now exceeds that of American combat troops, with more than 180,000 civilians -- including Americans, foreigners and Iraqis -- working in Iraq under U.S. contracts, according to State and Defense Department figures obtained by the Los Angeles Times.

Blackwater USA, which has a 6,000 acre training facility as part of its headquarters in North Carolina, is one such company that currently has tens of thousands of heavily armed mercenaries stationed in Iraq who are accountable to no one and have hit the headlines on multiple occasions.

In March 2004, four Blackwater personnel died in a grisly attack in Iraq in Falluja, west of Baghdad. The Four, all of whom were military veterans, were ambushed, killed, mutilated and had their charred remains strung from a bridge overlooking the Euphrates River in an incident that sparked shock and outrage.

However, after Blackwater refused to share information about why and how they were killed, and callously told the families of the men that they would need to sue to get any information, a lawsuit was filed, marking the first time a company has been sued for deaths in the line of work. Blackwater has since attempted to reverse the situation and sue the families for $10 million to silence them and keep them out of court.

By the end of 2004 Blackwater's president, Gary Jackson, was bragging to the press of "staggering" 600 percent growth. "This is a billion-dollar industry," Jackson said in October 2004. "And Blackwater has only scratched the surface of it.". This prompted outrage that security in Iraq is partly (and we now know mostly) in the hands of private companies who profit from the continuation of conflict and chaos.

In 2005 the LA Times reported that Private security contractors, including Blackwater, have been involved in scores of shootings in Iraq, but none have been prosecuted despite findings in at least one fatal case that the men had not followed proper procedures. Instead of facing any kind of accountability, contractors suspected of reckless behavior are simply sent home with the full knowledge of U.S. officials.

Last February one Blackwater employee got into an argument with an Iraqi security contractor working for the Vice President as a security guard. It is not cleared what transpired but the Blackwater employee emptied the entire magazine of his pistol into the Iraqi. Rather than being arrested and sent to prison for murder the contractor was simply returned to the US and dropped from the payroll.

Most recently, a Congressional Research Service report stated that a news article discussing an incident in which a Blackwater guard shot dead an Iraqi driver in May 2007 quoted an Iraqi official's statement that the Iraqi Interior Ministry had received four previous complaints of shootings involving Blackwater employees.

Everyday Iraqis have dubbed the mercenaries "Mossad" and many have gone on record to state that they have witnessed Blackwater contractors killing innocent people in the street without a care.

Blackwater USA does not hide the fact that it has hired fascist thugs—for instance, Chilean commandos, “many of who had trained under the military government of Augusto Pinochet,” according to Blackwater head honcho Gary Jackson. Other investigative journalists have alleged that Blackwater is engaged in recruiting U.S. trained former soldiers and police officers from Colombia as well as Filipino mercenaries.

According to Ken Silverstein of Harper's Magazine, Blackwater also has a "revolving door" with the CIA and the Pentagon and is engaged in "aggressively recruiting" top CIA officials. In 2006 Silverstein wrote:

"A number of senior CIA and Pentagon officials have taken top jobs at Blackwater, including firm vice chairman Cofer Black, who was the Bush Administration's top counterterrorism official at the time of the 9/11 attacks (and who famously said in 2002, 'There was before 9/11 and after 9/11. After 9/11, the gloves came off'),"

The Nation's Jeremy Scahill has also pointed out the many ties that Blackwater has to the GOP:

Blackwater's success in procuring federal contracts could well be explained by major-league contributions and family connections to the GOP. According to election records, Blackwater's CEO and co-founder, billionaire Erik Prince, has given tens of thousands to Republicans, including more than $80,000 to the Republican National Committee the month before Bush's victory in 2000. This past June, he gave $2,100 to Senator Rick Santorum's re-election campaign. He has also given to House majority leader Tom DeLay and a slew of other Republican candidates, including Bush/Cheney in 2004. As a young man, Prince interned with President George H.W. Bush, though he complained at the time that he "saw a lot of things I didn't agree with--homosexual groups being invited in, the budget agreement, the Clean Air Act, those kind of bills. I think the Administration has been indifferent to a lot of conservative concerns."

Blackwater contractors were also used by the Department of Homeland Security in New Orleans in the aftermath of Hurricane Katrina. They were authorized to carry loaded automatic assault weapons, make arrests and use lethal force if it was deemed necessary, a fact that had Constitutionalists up in arms:

"This vigilantism demonstrates the utter breakdown of the government," says Michael Ratner, president of the Center for Constitutional Rights. "These private security forces have behaved brutally, with impunity, in Iraq. To have them now on the streets of New Orleans is frightening and possibly illegal."

For more information on Blackwater watch the short piece below from Jeremy Scahill, who has also authored a book titled Blackwater: The Rise of the World's Most Powerful Mercenary Army.

Wheelchair-Bound Woman Dies After Being Shocked With Taser 10 Times

State rules Taser death homicide

Local 6 | September 19, 2007

A Clay County woman's family said it's seeking justice after their loved one died shortly after being shocked 10 times with Taser guns during a confrontation with police.

The family of 56-year-old Emily Delafield said it would take the Green Cove Springs Police Department to court, according to a WJXT-TV report.

In April 2006, officers with the police department said they were called to a disturbance at a home in the 400 block of Harrison Street just before 5 p.m.

In a 911 call made to the Green Cove Springs, Delafield can be heard telling a dispatcher that she believed she was in danger:

Dispatcher: And what's the problem?

Delafield: My sister is waiting on my property.

Dispatcher: Your what?

Delafield: My sister (inaudible) is on my property trying to harm me.

Officers said they arrived to find Delafield in a wheelchair, armed with two knives and a hammer. Police said the woman was swinging the weapons at family members and police.

Within an hour of her call to 911, Delafield, a wheelchair-bound woman documented to have mental illness, was dead.

Family attorney Rick Alexander said Delafield's death could have been prevented and that there are four things that jump out at him about the case.

"One, she's in a wheelchair. Two, she's schizophrenic. Three, they're using a Taser on a person that's in a wheelchair, and then four is that they tasered her 10 times for a period of like two minutes," Alexander said.

According to a police report, one of the officers used her Taser gun nine times for a total of 160 seconds and the other officer discharged his Taser gun once for a total of no more than five seconds.

A medical examiner found Delafield died from hypertensive heart disease and cited the Taser gun shock as a contributing factor, the report said. On her death certificate, the medical examiner ruled Delafield's death a homicide.

The family said it plans to sue the Green Coves Springs Police Department now that it has all the reports regarding their loved one's death.

"We're going to try to compensate the estate and the family and try to get justice," Alexander said.

He said he believes the evidence weighs heavily in favor of Delafield's family and that justice will be served.

"I think that this evidence is going to show, along with some of the evidence we've collected outside of here, that there is no reason Emily Delafield should have died that day," Alexander said.

He said he plans to file a notice to sue sometime before the end of the year.