Friday, October 05, 2007

Is the credit crisis over? Not so fast

NEW YORK (Reuters) - The audacious rise in the Dow industrials to a record will do little to prevent the millions of new “For Sale” signs likely to dot U.S. lawns soon.

Fears of mounting foreclosures and predictions of a lackluster holiday season remain even in the face of Dow 14,000, which has removed some, but not all, uncertainty about the faltering U.S. housing market.

At the root of investors’ anxiety are so-called subprime loans made to borrowers with shaky credit. Delinquencies are rising on subprime mortgages and defaults are piling up at record rates as home prices sink, pressuring consumers’ desire to spend.

The ripple effect from the slump in housing doesn’t stop there. Strains still exist in the U.S. credit markets even though there are signs of easing in the global liquidity squeeze, which was triggered by a lack of confidence in financial markets as subprime mortgage defaults soared.

Already, the housing slowdown has subtracted about 1 percentage point from growth in inflation-adjusted gross domestic product so far this year.

“I don’t think the worst is over,” said Robert Arnott, chairman of Research Affiliates LLC, a Pasadena, California-based investment management firm.

“We are coming off the greatest lending bubble — not housing bubble! — in U.S. history. We will feel its impact for a very long time.” For more investor comments see (ID:nN02411723: Quote, Profile, Research)

Falling home prices are leaving subprime borrowers who took out adjustable-rate mortgages with a major dilemma. Millions with subprime mortgages, which go to borrowers with checkered credit histories, are faced with negative equity in their homes that could make it increasingly unlikely they will qualify for new mortgages in an environment of tighter lending standards.

At current home prices, about $693 billion in ARMs are “already under water,” according to Stephanie Pomboy, financial economist at MacroMavens in New York.

TWIST OF THE ARMs

That’s frightening news for banks that already have absorbed losses on their balance sheets due to delinquent subprime borrowers. The losses so far amount to about 10 percent of the forecast of $100 billion in losses.

“The disturbing number here isn’t 10 percent … but the $100 billion,” Pomboy said.

With nearly $700 billion in ARMs in negative equity facing interest-rate resets, “depending on how much lenders can ultimately recover, this implies (bank) losses will be more like $210 billion to $346 billion,” she said.

“And that’s assuming the situation doesn’t get worse.”

In July, Federal Reserve Chairman Ben Bernanke had estimated the losses at $100 billion at the most.

But it appears Bernanke had underestimated those figures and their effects on the consumer.

In September, the Fed took the benchmark federal funds rate, which governs overnight loans between banks, down an aggressive half-percentage point to 4.75 percent, its lowest since May of last year. The Fed also cut the discount rate it charges for direct loans to banks by a half-percentage point to 5.25 percent.

“With the reset wave about to gather intensity and ‘For Sale’ signs dotting the lawns of 5.1 million homes across the country, the credit hit parade has only just begun,” Pomboy added.

Aside from the resetting of interest rates on home mortgages and falling home prices, both leading to a slowdown in consumer spending, Arnott of Research Affiliates is concerned about slumping home construction.

That, he said, was 5-plus percent of Gross Domestic Product at the latest housing peak. He puts the odds of recession around 60 percent.

TIGHT CREDIT HANGOVER

Indeed, September was a record month for investment-grade issuance of about $100 billion, but that came as conditions in the commercial paper market remained tight.

Since August, U.S. commercial paper outstanding shrank by $370 billion, with commercial and industrial loans also helping to pick up some of the slack. Now, those loans are growing at the fastest rate in more than 20 years, Goldman Sachs’ chief U.S. economist Jan Hatzius wrote in a research report published late on Monday.

All told, the stock market is underpinned by powerful factors. U.S. equities appear cheap relative to many asset classes, especially since Wall Street has been a laggard in the global equity rally over the last several years. And now that many oil-exporting countries are flush with cash, they’ve been putting that surplus money to work in higher-yield securities in the United States.

“Investors with new money to put into the marketplace probably will be less interested in certain other real asset classes, like houses, because the luster has come off the sector,” said Keith Wirtz, president and chief investment officer at Fifth Third Asset Management in Cincinnati.

Ironically, equity markets have created the least amount of “grief” for investors in this cycle, he added.

Climate change disaster is upon us, warns UN

Julian Borger
The Guardian
October 5 2007

A record number of floods, droughts and storms around the world this year amount to a climate change “mega disaster”, the United Nation’s emergency relief coordinator, Sir John Holmes, has warned.

Sir John, a British diplomat who is also known as the UN’s under-secretary-general for humanitarian affairs, said dire predictions about the impact of global warming on humanity were already coming true.

“We are seeing the effects of climate change. Any year can be a freak but the pattern looks pretty clear to be honest. That’s why we’re trying … to say, of course you’ve got to deal with mitigation of emissions, but this is here and now, this is with us already,” he said.

As a measure of the worsening situation, Ocha, the UN Office for the Coordination of Humanitarian Affairs - part of the UN secretariat that employs Sir John - has issued 13 emergency “flash” appeals so far this year. The number is three more than in 2005, which held the previous record.

Two years ago only half the international disasters dealt with by Ocha had anything to do with the climate; this year all but one of the 13 emergency appeals is climate-related. “And 2007 is not finished. We will certainly have more by the end of the year, I fear,” added Sir John, who is in charge of channelling international relief efforts to disaster areas.

More appeals were likely in the coming weeks, as floods hit west Africa. “All these events on their own didn’t have massive death tolls, but if you add all these little disasters together you get a mega disaster,” he said.

The only one of this year’s emergency appeals not connected to the climate was an earthquake in Peru, in August. The others arose after an unprecedented string of catastrophic floods across much of Africa, south Asia and North Korea, and followed severe drought in southern Africa, Nicaragua’s category-five hurricane, and extreme climate conditions in Bolivia, which brought both drought and floods.

The Ocha appeals represent the tip of an iceberg since they are launched only with the agreement of the affected country. India was badly affected by floods that hit the rest of the Asian region in July. But unlike its neighbour, Pakistan, India did not call on the UN for help.

Ocha believes that 66 million people were made homeless or were otherwise affected across south Asia. The lives of several million more people were turned upside down across Africa. Sudan, Mozambique, Madagascar, Zambia and Uganda experienced disastrous floods, and Swaziland and Lesotho declared emergencies because of severe drought that reduced harvests by half.

The latest appeal from Ocha was launched yesterday, to try to raise emergency relief funds for Ghana, where more than 400,000 people are reported to be homeless as a result of flooding. Appeals may also be started for Togo and Burkina Faso.

“The flooding in Africa just now is the worst anyone can remember,” Sir John said, expressing frustration at how little media attention in the west was being devoted to what he terms creeping climatic catastrophe.

Flooding is likely to be common for a warming planet, and climate change has a double effect - causing an increase in the frequency of storms, while higher atmospheric levels of carbon dioxide curb the ability of plants to draw groundwater.

A climate-change summit is to be held in Bali in December, with the aim of agreeing the principles of a new international treaty to replace Kyoto, the accord that expires in 2012. But the talks face determined US opposition to mandatory emissions targets, and most climate negotiators doubt a real breakthrough can be achieved before the Bush government leaves office in 2009.

Sir John argues that whatever is done on greenhouse gas emissions, money has to be spent now on mitigating the impact that climate change is already having. “You can’t actually stop disasters happening but you can do a lot to reduce their impact and reduce people’s vulnerability to them by making sure people don’t live on the coast or river plains, and that roads are raised and dams are in reasonable shape.”

According to the UN’s Intergovernmental Panel on Climate Change, which is leading research on the issue, global warming will disrupt and potentially devastate the lives of billions of people.

And, just as global warming starts to make itself felt, there are signs that “donor fatigue” has set in. Of about $338m (£166m) requested for Ocha’s 13 flash appeals this year, only $114m has so far come from donors.

'Amero coming within decade'

Strategist expects currency changes as Canadian dollar matches greenback


Posted: October 5, 2007
1:00 a.m. Eastern

By Jerome R. Corsi
© 2007 WorldNetDaily.com


A commemorative amero coin
BankIntroductions.com, a Canadian company that specializes in global banking strategies and currency consulting, is advising clients that the amero may be the currency of North America within the next 10 years.

"The amero would compete against other regional currency blocks," BankIntroductions.com says. "At present, with the Canadian dollar approaching par, more talk for an amero currency unit will become popular in Canada."

The company says that with the successful implementation of NAFTA, "the one dragging component for the amero will be Mexico, but in time this will change."

"Implementation of the amero currency may actually give Mexico an economic boost, thus helping to alleviate Mexican immigration pressures into the United States for those Mexicans seeking financial gain," BankIntroductions.com advises.

"The amero one day may well be circulating throughout North America."

Matt Bell, president of BankIntroductions.com, told WND in an e-mail to "feel free to quote our currency research on Canada. Our general opinion on the amero stands as stated."

As WND reported, coin designer Daniel Carr has issued for sale a series of private-issue fantasy pattern amero coins that have drawn attention on the Internet.

WND also reported the African Union is moving down the path of regional economic integration, with the African Central Bank planning to create the "Gold Mandela" as a single African continental currency by 2010.

The Council on Foreign Relations also has supported regional and global currencies designed to replace nationally issued currencies.

In an article in the May/June issue of Foreign Affairs, entitled "The End of National Currency," CFR economist Benn Steil asserted the dollar is a temporary currency.

Steil concluded "countries should abandon monetary nationalism," moving to adopt regional currencies, on the road to a global "one world currency."

WND previously reported Steve Previs, a vice president at Jeffries International Ltd. in London, said the amero "is the proposed new currency for the North American Community which is being developed right now between Canada, the U.S., and Mexico."

A video clip of the CNBC interview in November with Jeffries is now available at YouTube.com.

WND also has reported a continued slide in the value of the dollar on world currency markets could set up conditions in which the adoption of the amero as a North American currency gains momentum.

Police shot wrong suspect, court told

Herald Sun
Friday October 05, 2007

POLICE commanders twice changed their minds over the arrest of Jean Charles de Menezes in the moments before he was shot dead, a UK court heard yesterday.

As he approached Stockwell Tube station in London they decided surveillance officers should detain the man they thought was a suicide bomber before he entered it, as a specialist firearms team had yet to arrive.

But almost immediately after issuing the order, Scotland Yard commanders were told the elite armed SO19 squad was in a position to make the arrest, the Old Bailey was told.

Commander Cressida Dick then ordered the officers on the ground that SO19 would detain the suspect, senior anti-terrorist officer Detective Superintendent Jon Boutcher told the court.

The next information to come through to the control room was that the man they thought was attempted bomber Hussain Osman was descending the escalator to the station platform, Boutcher said. As police followed him underground, the control room lost radio contact with them, he told the court.

Boutcher, who was "silver" commander of the anti-terrorist operation that day, said the next thing they heard was that "the subject has been shot".

Jurors have been told that Menezes, an innocent 27-year-old Brazilian, was shot seven times in the head on July 22 2005.

The Metropolitan Police is on trial over claims a "catastrophic" series of errors in planning led to his death. The force denies the prosecution charge, which is being brought under health and safety law.

Menezes was followed from a block of flats in Scotia Road, Tulse Hill, south London, which police had under surveillance as it was linked to Osman.

As he made his way there, Boutcher said it was first believed he was not, and then that he was, the suspect Osman.

When he arrived at Stockwell, SO19 officers were still not there, but Menezes was being tailed by Special Branch (SO12) surveillance officers.

Boutcher said: "I informed Commander Dick that she should instruct the SO12 surveillance team to detain the subject.

"The SO12 officers are not trained for armed intervention. They carry firearms merely for self-protection.

"But in my judgment this was potentially Hussain Osman and a reasonable and balanced decision would be to stop the subject with the surveillance team before he was able to get into the Underground.

"She did indeed instruct the SO12 officers were to stop the subject."

But Boutcher said that "almost immediately" the operations room learned from Trojan 80, the senior firearms tactical adviser there "that the SO19 team were now in position to arrest the subject".

"Commander Dick then instructed that the SO19 officers would now conduct the arrest because they were in position to do so," he added.

He said he expected the arrest to take place in an "open plan" area before the suspect went through the barriers and down into the station, but soon learned he was making his way down the escalator.

"The effect of going underground then stopped radio transmissions," he added.

Later, he said: "Trojan 80, who was the senior tactical adviser in the room, informed us that the subject had been shot."

Qatar & Vietnam ditch the dollar

Announcements on Thursday from the Qatari and Vietnamese governments that they are rapidly divesting in dollar denominated securities will not come as good news to the US government. Overseas investors hold half of America’s $4,400bn of marketable government debt, up from a third in 2001 according to the US Treasury department.

Qatari Prime Minister, Sheikh Hamad bin Jassim bin Jabr al-Thani said on US TV that the government-backed $50bn Qatari Investment Authority (QIA) now had less than 40 per cent of its investments in dollars, down from a high two years ago of 99 per cent.

Given that the Emirate’s oil and gas revenue is in dollars, the latest troubles in the US economy have accelerated the need to diversify investments into non-dollar markets. Currencies such as the Euro, the British Pound and the Swiss Frank, are all looking far more stable as investments for the QIA, said Sheikh Hamad.

Such was the Qatari PM’s concern about the sliding dollar, that he even said an oil price of $125 per barrel would not be unreasonable.

On Thursday, the State Bank of Vietnam quietly let slip it would be ending its dollar purchase schemes, which it has been using to hold down the Vietnamese currency. Although it only has middling dollar reserves of $40bn, Vietnam is widely regarded as a barometer for economic sentiment among other, bigger, regional dollar sinks like China, Taiwan, Korea or Singapore. Hans Redeker, currency chief at BNP Paribas, told the Telegraph:

Vietnam is a relatively small country but it is symptomatic of Asia. The entire region is seeing inflation move up as a result of mercantilist policies of holding down their currencies with ‘dirty floats’, which are designed to help their export sectors. They need to change monetary policy.

Cue dollar sale.

Asian investors have already pulled out of US Treasuries - as FT Alphaville reported in September, foreign government holdings of T-Bills fell 3.8 per cent in August.

Japanese investors in particular, reports Bloomberg, are anticipating another rate cut from the Fed. The world’s second largest actively run bond fund, Japan’s Kokusai Global Sovereign is staying away from US Treasuries. According to Masataka Horii, who oversees $47.6bn:

The US dollar will go weaker because the market expects that interest rates will be cut and the economy will slow down… Another rate cut will make the economy stabilize. Maybe early next year, weakness in the US dollar will stop.

The problem for the US is that foreign appetite for debt has become an important prop for the economy. A 2006 study by Federal Reserve economists concluded that foreign investment in the US economy has been a liquidity support keeping long-term interest rates 90 basis points below where they should be.

The Constitution in Peril

Christopher Dickey
Newsweek

World War IVOct. 8, 2007 issue - A slew of recent books about the Bush administration’s wars (at home as well as abroad) might leave you wondering if President George W. Bush and Vice President Dick Cheney are their own Axis of Evil. In excruciating detail, these tomes tell of torture and warrantless wiretaps; they show a relentless arrogation of power and abrogation of what were thought to be solid constitutional principles. In these books, apocalyptic delusions got us into Iraq and misjudgments have helped keep us there. The picture that emerges is so bleak that even serious journalists and scholars sometimes veer toward conspiracy theories.

Consider, for instance, the lurid title of an otherwise scrupulously researched book by Pulitzer Prize-winning Boston Globe reporter Charlie Savage: “Takeover: The Return of the Imperial Presidency and the Subversion of American Democracy.”

The administration’s impassioned defenders, meanwhile, grow strident. Norman Podhoretz, the dean of neoconservatives, writes in “World War IV: The Long Struggle Against Islamofascism” that the Bush administration is up against “a domestic insurgency” led by “journalistic devotees of the Vietnam syndrome,” isolationists, “liberal internationalists” and (heaven forbid) “realists.”

In fact, the situation is far from a”civil war,” as Podhoretz (an adviser to Republican presidential candidate Rudy Giuliani) would have us believe. But this is a good moment to take stock of the more subtle narrative in these books: stories of score-settling at home, a new kind of enemy abroad, righteous intentions, grand visions and bad information. And if there is a recurrent theme, it’s that this administration set out to create its own reality, whether approaching the Bill of Rights like a classified document to be redacted or girding itself for war in Iraq with a steady diet of dubious intelligence.

The Bush and Cheney who emerge from these pages cherish secrecy, they deplore constraint and they sneer at dissent, so nothing and nobody can dissuade them from their chosen course. Reality checks are not allowed. “Democracies die behind closed doors,” federal appeals court Judge Damon Keith said in 2002. “The Framers of the First Amendment did not trust any government to separate the true from the false for us. They protected the people against secret government.”

Jack Goldsmith, who served briefly in 2003 and 2004 as head of the Office of Legal Counsel—a key position because it determines for the government what is legal and what’s not—suggests that the “strange and unattractive views on presidential power” held by Bush and Cheney will create a backlash compromising future presidents. That may be, but for now, in many respects, the Bush-Cheney vision has triumphed. Savage concludes that Cheney and Bush will leave presidential powers enhanced at the expense of Congress and the courts, to the detriment of the checks and balances essential to our constitutional system. (Savage suggests there’s already some nervousness among Republicans fearful that Hillary Clinton will reap the benefits. No president will want to see his or her imperial authority eroded.) “The expansive presidential powers claimed and exercised by the Bush-Cheney White House are now an immutable part of American history—not controversies, but facts,” says Savage. The worldwide war with terrorists that is so important to the arguments for that presidential power, including the occupation of Iraq, will go on as well. Last week all the leading Democratic presidential candidates admitted as much. What might have seemed farfetched political and military fantasies seven years ago are inescapable realities today.

To tell the story of how this happened, it’s useful to start, as Savage does, by following Cheney’s career. Cheney was chief of staff in the Gerald Ford White House, fighting a rear-guard action to protect presidential power from a vindictive and meddlesome Congress in the aftermath of Vietnam, Watergate and public scandals about the CIA’s secret operations. Later, serving in Congress himself, Cheney remained a passionate defender of the executive, arguing that the legislative branch had no right to rein in the secret presidential activities that led to the Iran-contra scandal. As secretary of Defense under President George H.W. Bush in 1991, Cheney insisted that approval from Congress wasn’t needed for a war against Saddam Hussein. The elder Bush overruled him. But when Cheney became vice president 10 years later, the veteran Washington infighter was paired with the younger Bush, George W., who was, as Savage puts it, “one of the least experienced presidents ever to take the oath.” Cheney and his staff, particularly his longtime aide David Addington, soon came to dominate almost every debate over constitutional issues that touched on national security and executive authority. Goldsmith remembers how they addressed all laws they didn’t like: “They blew through them in secret based on flimsy legal opinions that they guarded closely so no one could question the legal basis for the operations.”

From the beginning Bush’s staff, guided by Cheney’s, “hoped to enlarge the zone of secrecy around the executive branch, to reduce the power of Congress to restrict presidential action, to undermine limits imposed by international treaties, to nominate judges who favored a stronger president and to impose greater White House control over the permanent workings of the government,” writes Savage. Then 9/11 happened and suddenly “the war on terrorism’s climate of perpetual emergency provided a vehicle for turning [Cheney’s] vision of an unfettered commander in chief into a reality.”

Goldsmith, a conservative academic and generally a supporter of a strong executive, argues in his book “The Terror Presidency: Law and Judgment Inside the Bush Administration” that much of what was done in the early days after 9/11 is perfectly understandable. Threats seemed to be everywhere. A second wave of attacks appeared imminent and all but inevitable. “The President had to do what he had to do to protect the country,” writes Goldsmith. “And the lawyers had to find some way to make what he did legal.” But unlike previous war presidents—Lincoln, FDR—who bent the Constitution in order to save it, and took responsibility for doing so, the Bush administration stonewalled, as if public ignorance were the best way, in many cases, to give the president the powers he needed.

It was the administration’s ignorance of the enemy that it now confronted that led it, in part, to resort to extreme tactics. Al Qaeda had emerged as a major threat in the late 1990s. Ever since the end of the cold war, the Central Intelligence Agency, the Federal Bureau of Investigation, the National Security Agency and more than a dozen other intelligence organizations that answer to the president had been struggling to adapt their sources and methods to the new menace. As Amy B. Zegart argues in “Spying Blind: The CIA, the FBI, and the Origins of 9/11,” they just weren’t up to the job. “With FBI agents keeping case files in shoe boxes rather than putting them into computers, with CIA operatives clinging to old systems designed for recruiting Soviet officials at cocktail parties rather than Jihadists in caves … the U.S. Intelligence Community did not have a fighting chance against Al Qaeda,” Zegart writes. The intelligence community was well aware of the threat. It had given Bush a daily brief in August 2001 with the heading “Bin Ladin Determined To Strike in US.” But the paper was full of old news, and the various agencies failed to act on the new information that they actually had in hand about some of the 9/11 terrorists living in the United States. Zegart, blaming institutional inertia more than individuals, counts more than 20 specific instances where the CIA or the FBI missed chances to stop the 9/11 attacks.

Problems that ran so deep were not going to be changed in time to meet the clear and present danger that now faced the country. As the United States launched a war in Afghanistan (and planned for one in Iraq), the administration needed a lot more information about Al Qaeda than was available. “Really, they did not have anything very useful,” says Karen Greenberg, head of New York University’s Center on Law and Security. “It was worse than you can imagine.” One answer to the problem: the use of extreme and painful methods to make captured members of Al Qaeda and other suspects tell everything they knew—and sometimes more than they knew. “The most advanced nation in the world was relying on 14th-century torture techniques,” says Greenberg. (The same problem arose in 2003, when U.S. forces in Iraq discovered they knew next to nothing about the insurgents attacking them. The resulting abuses at Abu Ghraib were partly born of desperation.) Suspected Qaeda prisoners were taken to secret sites, or to Guantánamo, or grabbed by “rendition” teams who took them to countries where interrogators had long experience with torture, or simply held incommunicado in American military prisons. Still another measure: dispensing with warrants when tapping into phone conversations between the United States and suspected terrorists or their contacts in the rest of the world.

To a layman’s eyes, all these measures would seem to violate the Bill of Rights (and in some cases the Geneva Conventions). The pervasive secrecy threatened the First Amendment’s guarantee of free speech. The wiretaps flew in the face of Fourth Amendment guarantees that no warrants for searches (or, by extension, surveillance) would be issued without probable cause and specific details. The detentions, especially of American citizens designated “enemy combatants,” defied the Sixth Amendment rights to a speedy trial, to be confronted with witnesses and to have legal counsel. And the interrogation techniques certainly were cruel and unusual punishments of a kind you’d think is prohibited by the Eighth Amendment. Indeed, these issues continue to be fought ferociously in the courts and debated in Congress. But the president’s positions have been hard to roll back.

The reading of the Constitution, the Geneva Conventions, international treaties and congressional laws on torture by the administration’s smart and highly ideological lawyers was quite different from a layman’s. In a series of opinions from the Office of Legal Counsel that were written by conservative zealot John Yoo but signed by his superiors, conventional understandings about the meaning of the Constitution were turned on their heads. In an August 2002 opinion, Yoo defined torture as “only extreme acts” of the kind that might “cause death or organ failure.” This was to be part of the guidance used by American interrogators, who wanted to make sure they couldn’t be prosecuted later for what the administration approved today. It told them a whole world of pain and suffering could be inflicted so long as the subject didn’t expire. For example, such techniques as “waterboarding” might make a suspect fear he was on the brink of drowning.

“The message,” says Goldsmith, “was indeed clear: violent acts aren’t necessarily torture; if you do torture, you probably have a defense; and even if you don’t have a defense, the torture law doesn’t apply if you act under color of presidential authority.” Goldsmith revised some of the legal reasoning of the August 2002 opinion in late 2004. But by then most of the key leaders of Al Qaeda responsible for September 11 had been captured (apart from bin Laden and his colleague Ayman Al-Zawahiri), and they had already been squeezed for months or years to extract whatever tales they might tell to stop the pain. (There was some measure of vengeance, in fact. According to a CIA officer privy to high-level discussions at the agency who did not want to be named because he is not authorized to speak to the press, there was internal opposition to having the CIA hold these suspects at secret sites after they’d told what they could about imminent attacks. But others argued that “these people were just scum and they wanted to waterboard them every day forever,” the officer told NEWSWEEK. The waterboarders won until 14 of the prisoners held at secret sites were finally transferred to Guantánamo last year.)

Meanwhile, as we now know, the bush administration had begun preparing for an attack on Iraq to oust Saddam Hussein even before the war in Afghanistan was over. The potential dangers to the United States posed by Saddam’s erratic behavior and longstanding desire to have weapons of mass destruction were a major preoccupation for many in the administration, especially those around Cheney. Containment wouldn’t be enough. A new war was needed that would “shock and awe” America’s enemies, and possibly even open the way for new democratic regimes throughout the region. It would also continue the sense of emergency that helped shore up presidential power in Washington.

But, again, the intelligence community was disappointing the Bush administration. Leads in the supposedly slam-dunk case against Saddam kept losing their bounce. So the administration and the top CIA leadership put increasing faith in an Iraqi defector code-named Curveball, who supposedly had worked as a chemical engineer in Saddam’s biological-weapons program, and claimed to have seen what could be mobile bioweapons factories mounted on trucks. Los Angeles Times correspondent Bob Drogin lays out the whole sorry tale in his forthcoming book, “Curveball: Spies, Lies, and the Con Man Who Caused a War.” The defector was in German hands, and was never interviewed by the Americans before the invasion. The Germans had warned that Curveball might be making up all or most of his story—and he was. He had never worked in the biological program; he’d been a taxi driver before heading to Germany to seek asylum. There were no mobile labs. The Bush administration had believed what it wanted to believe.

“President Bush launched the wrong war,” writes Philip H. Gordon in a book titled, as it happens, “Winning the Right War: The Path to Security for America and the World,” an argument for combating terrorism with more than military might. Bush “hyped the terrorist threat as a means of winning political support,” says Gordon, a fellow at the Brookings Institution. “And while he talked of a war that challenged the nation’s very existence, he fought it on the cheap, as if he knew that Americans would not have been onboard had they been told what the war would entail.”

Today, of course, those costs are no secret. And the Bush administration’s very special vision of a powerful president waging endless war, which once would have seemed fantastical, has become the painful reality that Americans may be living for generations to come.

Who Loves Real ID? AOL, Microsoft and Yahoo Do.

Who Loves Real ID? AOL, Microsoft and Yahoo Do.: “The federal Real ID Act doesn’t have many friends these days. Eighteen states have passed legislation rejecting the law, Congress has refused to put any money into implementing it, and just this week New York Gov. Elliot Spitzer announced he, not the Feds, would determine New York’s drivers license policy, with officials in his administration indicating the state might opt out of the Real ID program altogether.

The few remaining cheerleaders for this national ID system, which promises to be a nightmare for privacy and identity security, have resorted to classic doublespeak to try to salvage Real ID’s reputation. On the Department of Homeland Security blog Wednesday, Secretary Michael Chertoff claims Real ID would actually protect privacy. (‘War is Peace’ and ‘Freedom is Slavery’ will be the subjects of future blogs.)

Chertoff isn’t completely alone though. The Information Technology Association of America (ITAA) sent a letter to Congress this week begging for more federal funding for Real ID. Why would an organization, whose membership includes AOL, Microsoft, Verizon and Yahoo, support a national ID card? For the answer, let’s employ that fundamental adage of Washington politics: Follow the money.

Also included in the ITAA membership list are Digimarc and Northrop Grumman, companies that specialize in creating high-tech ID cards, as well as Choicepoint and LexisNexis, data brokers that make their money selling personal information about you to advertisers and the government. These companies stand to make millions in contracts from states who are struggling with a federal mandate to overhaul their licensing systems and share more data by the May 2008 deadline (now widely viewed as impossible to meet).

But there’s one small problem: The American people don’t want a national ID card, and polling has shown they don’t trust the private sector not to harvest their data once it’s collected in a national database. So what are the Department of Homeland Security and the ITAA to do?

Well, Digimarc invited a group of state DMV bureaucrats to Washington this week (as Jim Harper pointed out, that’s a good way to get around those pesky elected officials who oppose Real ID) in order to answer that very question. Their answer? It’s all about PR, baby. In a panel on ‘Bringing Your Public On Board,’ participants discussed how to give Real ID a facelift. According to CNET’s News.com, one panelist even suggested that states use their homeland security grants — the ones that are supposed to go to counterterrorism, disaster response and infrastructure (read: bridge) safety — to take out paid advertising.

Real ID is so unpopular because in addition to being a $23 billion unfunded mandate, it will build a vast national database of personal information, expose us to a greater risk of identity theft, and move us ever closer to a total surveillance society. Spending our homeland security money on spin definitely isn’t the way to fix it.

Instead Congress should scrap Real ID altogether and replace it with a real plan for identity security that protects privacy. And if you don’t like companies you do business with pushing a national ID and increased identity theft, pick up the phone and let them know.”

Ed and Elaine Brown Reported Arrested

The Guardian reports:

Convicted tax evaders Ed and Elaine Brown have been arrested at their Plainfield home without incident, the U.S. Marshal’s office in New Hampshire said Thursday.

The couple had been convicted on federal tax charges in January. They refused to turn themselves in to authorities when they were sentenced in April and had been holed up in their rural, fortress-like home since. It was not immediately clear how they were taken into custody.

“The Browns may now begin serving their 63-month federal prison terms,” U.S. Marshal Stephen Monier said. “High profile situations like this are always difficult, but they don’t have to be tragic. I’m glad no one was injured, and that the community remained safe throughout the operation.”

The Browns have claimed the federal income tax is not legitimate.

Earlier this year, officials cut power and telephone service in an effort to ratchet up pressure on the couple convicted of scheming to avoid federal income taxes by hiding $1.9 million of income between 1996 and 2003.

After abandoning his federal trial and retreating to his home, Ed Brown repeatedly said that any attempts to arrest him would result in a violent confrontation.

Fox News reports:

It was not clear how the couple were arrested. A team of deputy marshals took them into custody at about 7:45 p.m.

Report from WMUR 9 in New Hampshire:

The New Hampshire Union Leader reports:

“We had no indication that the Browns intended to voluntarily surrender, so we had to move forward with an operation that promised the safest possible outcome. That day was today, U.S. Marshal Stephen Monier said in a written statement.

The Browns were taken into custody by a team of deputy marshals, Monier said.

He said marshals moved “forward with an operation that promised the safest possible outcome” but did not provide details. The two did not surrender, he said.

A news briefing is scheduled for 10 a.m. today at the U.S. District Courthouse in Concord.

TruthNews, Infowars, and Prison Planet will report details as they are made available.

Abu Ghraib prisoners accuse US companies of torture

Fanny Carrier
Agence France Press
October 2, 2007

WASHINGTON (AFP) - Two US Army subcontractors accused of torturing prisoners at Baghdad’s Abu Ghraib jail go to court Wednesday in a case that highlights the murky legal status of private US companies in Iraq.

Titan and CACI International were hired by the Army to provide interrogators and interpreters at the notorious prison, the scene of well-documented abuses of detainees following the US-led invasion of Iraq in 2003.

One former Iraqi prisoner now living in Sweden says that under the companies’ watch, he was sodomized, nearly strangled with a belt, tied by his genitals to other detainees, and given repeated electric shocks.

“This is probably the most important case still standing against Abu Ghraib because the cases against the government have essentially failed so far,” said Michael Ratner, president of the Center for Constitutional Rights.

“This case represents our last hope for getting some accountability for the torture in Iraq and getting any compensation for the victims,” said Ratner, whose group has fielded lawyers to assist in the lawsuit.

The case was filed in 2004 by a dozen former prisoners and the family of a man who died in detention, accusing Titan and CACI of conspiring with US officials “to humiliate, torture and abuse persons” at Abu Ghraib.

But US security companies in Iraq occupy a legal gray area, as highlighted by the case of Blackwater USA, which according to a new Congress report has been involved in nearly 200 shootings in Iraq since 2005.

The report was issued by a House of Representatives committee as congressmen convened hearings following a September 16 shooting in a crowded Baghdad square involving Blackwater guards that killed at least 10 Iraqis.

Under an order passed by the US occupation authority in 2004, security contractors hired by the Pentagon and State Department enjoy immunity from arrest under Iraqi law for acts related to their contracts.

After the Baghdad shootings, the Iraqi government said it was preparing a new law to control the operations of the private companies, but has backed off initial demands for Blackwater to be thrown out of Iraq.

At Wednesday’s hearing, Titan and CACI were to ask Washington federal judge James Robertson to dismiss the case.

The companies argue that they cannot be tried as they were under the control of the Army, which in turn says it can only prosecute its own personnel, not civilians.

Other US judges have refused to hear cases brought by former Iraqi prisoners, arguing that they have no jurisdiction over alleged crimes committed against foreigners in a third country.

But in one case brought by a federal prosecutor in North Carolina, former CIA agent David Passaro was jailed for more than eight years in February for beating an Afghan prisoner who died of his injuries in 2003.

Detroit-based lawyer Shereef Akeel, who is representing some of the Abu Ghraib plaintiffs, is confident that the case will proceed.

“This is for the sake of who we are (as Americans). And if we don’t understand the principals at stake here — if we let them lay low — we have done a disservice to our founding fathers,” he said.

“I have this vision of the Iraqis coming here… of putting them in a hotel in Washington, DC right across the street from the people who make the decisions… so they can have their day in court,” Akeel added.

The sole US officer charged over the Abu Ghraib abuses, Lieutenant Colonel Steven Jordan, escaped with just a reprimand at his court martial in late August.

Eleven junior soldiers are serving varying sentences but no senior Pentagon official was ever charged in the scandal, which President George W. Bush has described as the “biggest mistake” made by the United States in Iraq.

U.S. protests shrink while antiwar sentiment grows

Andy Sullivan
Reuters
October 3, 2007

Crowds at antiwar rallies in Washington have dwindled even as U.S. opinion has turned against the war in Iraq, as organizers feud and participants question the effectiveness of the street protests.

Rival antiwar groups, which in years past jointly sponsored massive rallies on the National Mall, have promoted separate protests recently or decided to steer clear of the capital altogether.

The thinning crowds stand in contrast to the antiwar protests of the Vietnam era, which grew as the war progressed.

Activists and experts say divisions among peace groups, along with other factors like the lack of a draft, fatigue about the war and the rise of the Internet, have all contributed to the declining turnout.

Sparse turnout — fewer than 1,000 at a rally on Saturday, according to local media reports — could undermine the goal of forcing an end to U.S. involvement in Iraq, participants say.

“When you have demonstrations in which the turnout is not terribly impressive, that gives politicians the sense that people may oppose the war but nobody’s really going to pay a price,” said Peter Kuznik, an American University history professor and antiwar protester.

Antiwar rallies drew hundreds of thousands of people at the war’s start in 2003, although only 23 percent of Americans then said the invasion was a mistake, according to a USA Today/Gallup Poll. That figure is now 58 percent.

Frustration about the war has driven down President George W. Bush’s approval ratings and helped Democrats win control of Congress last year. But since 2005, antiwar groups have opted to promote separate events rather than work together.

Saturday’s protest, sponsored by the Troops Out Now Coalition, came two weeks after an antiwar event sponsored by the ANSWER Coalition, which drew roughly 10,000 people. ANSWER also sponsored a rally in March.

The groups’ agendas are similar, opposing what they call “imperialist” U.S. policy not only in Iraq but toward countries like Cuba and Iran — which has alienated some supporters.

“There’s all of these peripheral issues that you’re going to be associated with, whether you want to or not,” said Hamilton College history professor Maurice Isserman.

SPLINTER GROUP

Both groups’ leaders were associated with the Workers World Party, which advocates a shift toward a Soviet-style planned economy. But a 2004 dispute prompted some members to form the splinter Party for Socialism and Liberation.

Members of the splinter group stayed active in the ANSWER Coalition, and the remaining members of the Workers World Party formed the Troops Out Now Coalition, Troops Out Now spokesman Dustin Langley said.

Another antiwar group, United for Peace and Justice, has refused to work with ANSWER since a joint rally in 2005. The event drew well over 100,000 people, media reports said, but the two groups clashed over speaking time and other issues.

United for Peace and Justice, which has tried to focus on ending the Iraq war, drew 100,000 people to a January protest. The group plans 11 regional demonstrations later this month, but none in Washington.

“The base that we work with was saying to us, ‘We’ve been to Washington a lot in the last four years, we don’t want to go to Washington again,”‘ national coordinator Leslie Kagan said.

ANSWER has called for antiwar groups to join forces for a large rally in the spring, but Kagan and Langley said their groups have not decided whether to participate.

Antiwar leaders say recent smaller protests reflect new tactics, not disorganization. Smaller activist groups like Code Pink have been a colorful, disruptive presence at congressional hearings and appearances by Bush administration officials.

“There’s times when we’ve had half a million people out in the streets, and there’s times when it’s important just to be there,” Langley said.

But others said it is less likely they’ll head to Washington at all. “People are tired, they are frustrated because they didn’t expect this to go on so long,” said Laura Bonham, a spokeswoman for Progressive Democrats of America, which lobbies lawmakers to support a withdrawal. “It’s like, well, we can stay home.”

Largely absent from the actions are young people, who were the majority of Vietnam-era protesters — perhaps because they do not risk being drafted into the military or from a sense that they can express their opposition to the war on the Internet, rather than on the streets, Isserman said.

Weak dollar prompts record foreign buyouts of U.S. companies

Robert Weisman
The Boston Globe
Tuesday, October 2, 2007

BOSTON: European, Asian and Canadian companies are taking advantage of the weaker dollar to buy their U.S. counterparts at a record pace, increasing investment in the United States but also raising fears about a potential loss of jobs and autonomy.

“We could be looking at the world’s largest tag sale if we continue to see declines in the dollar,” said Donald Klepper-Smith, chief economist at DataCore Partners.

In the latest large deal aided by a weak dollar, Commerce Bancorp, which is based in Cherry Hill, New Jersey, agreed Tuesday to be acquired by Toronto-Dominion Bank of Canada in a cash-and-shares deal valued at $8.5 billion.

Nationally, the value of purchases of companies by non-U.S. buyers so far this year totaled $257.4 billion - more than in any full year since 2000, the height of the technology boom, according to Thomson Financial, a research firm in New York.

The buyouts are sparking anxiety in the United States, though their impact is complex. Foreign owners typically use acquisitions as an entry into the U.S. market and thus may be more willing than American buyers to invest in their new holdings, some economists say. But the risk is that they might also be quicker to cut back or consolidate U.S. operations when times get tough.

“Quite naturally, foreign companies want to play in this market,” said Alan Tonelson, a research fellow at the U.S. Business and Industry Council, a trade group for small and midsize manufacturers. “They want leading-edge technology, and the United States is still the technology leader. But when they buy these companies, they’re acquiring control over the most dynamic pieces of the American economy, and they’re acquiring control over America’s future.”

Corporate deals are just one way the dollar’s falling value is having an impact. The weaker dollar has also drawn European, Asian and Canadian tourists, made it more expensive for Americans to travel abroad, and bolstered the exports of U.S. companies that sell high-technology equipment or medical gear overseas. But foreign acquisitions could become the sagging dollar’s most lasting legacy.

In New England, one of the regions heavily affected, 69 companies have been sold to foreign buyers in the first nine months of 2007 for a total of $30.8 billion - also a seven-year high.

In June, Philips Electronics of the Netherlands snapped up Color Kinetics, a maker of lighting systems, for $714 million. Last month, Analog Devices agreed to sell a pair of cellular product lines to MediaTek of Taiwan for $350 million. And last week, United Group of Australia completed a $411 million purchase of Unicco Service, which sells cleaning services for office buildings.

Some see the takeovers as inevitable in a global economy where geographic borders are no match for increasingly multinational companies.

“It’s part of the overall global economic climate,” said Brian Bethune, an economist for Global Insight, who said the acquisitions should be judged case by case. “Foreign companies are trying to get access to the U.S. market, and generally that’s positive. European and Asian companies tend to take a longer view and could be more patient investors than U.S. hedge funds.”

For now, many of the overseas buyers are promising to invest in their acquired properties. The new management team at Sabic Innovative Plastics, the former GE Plastics, plans to add 75 to 100 employees to its 425-person work force in New England.

“We’re really lucky it wasn’t bought by a Dow or a DuPont, because they might have moved the work from here to another one of their U.S. facilities,” said Alfred Shogry, president of the Berkshire Central Labor Council in Pittsfield, Massachusetts.

A spokeswoman at Color Kinetics said, “Philips is looking at us to be their global research and development center for LED-based lighting fixtures,” referring to the company’s patented light-emitting diode technology. “We’re absolutely hiring and growing right now.”

But that is not always the case with foreign takeovers. The French telecommunications equipment maker Alcatel, which bought its U.S. rival, Lucent Technologies, last year, said last month that it would cut thousands of jobs. The outsourcing provider Caritor, which has corporate offices in California but almost all its employees and operations in India, recently said it planned to eliminate more than a quarter of the 350 jobs at the Boston headquarters of the technology services company Keane, which it purchased in June.

Klepper-Smith said he feared the effect of foreign deals on workers and communities if decisions on jobs and plant locations are made in Europe, Asia or the Middle East. “It raises some red flags and some real questions about our independence,” he said.

Secret U.S. Endorsement of Severe Interrogations

NY Times | October 04, 2007
SCOTT SHANE, DAVID JOHNSTON and JAMES RISEN

WASHINGTON, Oct. 3 — When the Justice Department publicly declared torture “abhorrent” in a legal opinion in December 2004, the Bush administration appeared to have abandoned its assertion of nearly unlimited presidential authority to order brutal interrogations.

But soon after Alberto R. Gonzales’s arrival as attorney general in February 2005, the Justice Department issued another opinion, this one in secret. It was a very different document, according to officials briefed on it, an expansive endorsement of the harshest interrogation techniques ever used by the Central Intelligence Agency.

The new opinion, the officials said, for the first time provided explicit authorization to barrage terror suspects with a combination of painful physical and psychological tactics, including head-slapping, simulated drowning and frigid temperatures.

Mr. Gonzales approved the legal memorandum on “combined effects” over the objections of James B. Comey, the deputy attorney general, who was leaving his job after bruising clashes with the White House. Disagreeing with what he viewed as the opinion’s overreaching legal reasoning, Mr. Comey told colleagues at the department that they would all be “ashamed” when the world eventually learned of it.

Later that year, as Congress moved toward outlawing “cruel, inhuman and degrading” treatment, the Justice Department issued another secret opinion, one most lawmakers did not know existed, current and former officials said. The Justice Department document declared that none of the C.I.A. interrogation methods violated that standard.

The classified opinions, never previously disclosed, are a hidden legacy of President Bush’s second term and Mr. Gonzales’s tenure at the Justice Department, where he moved quickly to align it with the White House after a 2004 rebellion by staff lawyers that had thrown policies on surveillance and detention into turmoil.

Congress and the Supreme Court have intervened repeatedly in the last two years to impose limits on interrogations, and the administration has responded as a policy matter by dropping the most extreme techniques. But the 2005 Justice Department opinions remain in effect, and their legal conclusions have been confirmed by several more recent memorandums, officials said. They show how the White House has succeeded in preserving the broadest possible legal latitude for harsh tactics.

A White House spokesman, Tony Fratto, said Wednesday that he would not comment on any legal opinion related to interrogations. Mr. Fratto added, “We have gone to great lengths, including statutory efforts and the recent executive order, to make it clear that the intelligence community and our practices fall within U.S. law” and international agreements.

More than two dozen current and former officials involved in counterterrorism were interviewed over the past three months about the opinions and the deliberations on interrogation policy. Most officials would speak only on the condition of anonymity because of the secrecy of the documents and the C.I.A. detention operations they govern.

When he stepped down as attorney general in September after widespread criticism of the firing of federal prosecutors and withering attacks on his credibility, Mr. Gonzales talked proudly in a farewell speech of how his department was “a place of inspiration” that had balanced the necessary flexibility to conduct the war on terrorism with the need to uphold the law.

Associates at the Justice Department said Mr. Gonzales seldom resisted pressure from Vice President Dick Cheney and David S. Addington, Mr. Cheney’s counsel, to endorse policies that they saw as effective in safeguarding Americans, even though the practices brought the condemnation of other governments, human rights groups and Democrats in Congress. Critics say Mr. Gonzales turned his agency into an arm of the Bush White House, undermining the department’s independence.

The interrogation opinions were signed by Steven G. Bradbury, who since 2005 has headed the elite Office of Legal Counsel at the Justice Department. He has become a frequent public defender of the National Security Agency’s domestic surveillance program and detention policies at Congressional hearings and press briefings, a role that some legal scholars say is at odds with the office’s tradition of avoiding political advocacy.

Mr. Bradbury defended the work of his office as the government’s most authoritative interpreter of the law. “In my experience, the White House has not told me how an opinion should come out,” he said in an interview. “The White House has accepted and respected our opinions, even when they didn’t like the advice being given.”

The debate over how terrorist suspects should be held and questioned began shortly after the Sept. 11, 2001, attacks, when the Bush administration adopted secret detention and coercive interrogation, both practices the United States had previously denounced when used by other countries. It adopted the new measures without public debate or Congressional vote, choosing to rely instead on the confidential legal advice of a handful of appointees.

The policies set off bruising internal battles, pitting administration moderates against hard-liners, military lawyers against Pentagon chiefs and, most surprising, a handful of conservative lawyers at the Justice Department against the White House in the stunning mutiny of 2004. But under Mr. Gonzales and Mr. Bradbury, the Justice Department was wrenched back into line with the White House.

After the Supreme Court ruled in 2006 that the Geneva Conventions applied to prisoners who belonged to Al Qaeda, President Bush for the first time acknowledged the C.I.A.’s secret jails and ordered their inmates moved to Guantánamo Bay, Cuba. The C.I.A. halted its use of waterboarding, or pouring water over a bound prisoner’s cloth-covered face to induce fear of suffocation.

But in July, after a monthlong debate inside the administration, President Bush signed a new executive order authorizing the use of what the administration calls “enhanced” interrogation techniques — the details remain secret — and officials say the C.I.A. again is holding prisoners in “black sites” overseas. The executive order was reviewed and approved by Mr. Bradbury and the Office of Legal Counsel.

Douglas W. Kmiec, who headed that office under President Ronald Reagan and the first President George Bush and wrote a book about it, said he believed the intense pressures of the campaign against terrorism have warped the office’s proper role.

“The office was designed to insulate against any need to be an advocate,” said Mr. Kmiec, now a conservative scholar at Pepperdine University law school. But at times in recent years, Mr. Kmiec said, the office, headed by William H. Rehnquist and Antonin Scalia before they served on the Supreme Court, “lost its ability to say no.”

“The approach changed dramatically with opinions on the war on terror,” Mr. Kmiec said. “The office became an advocate for the president’s policies.”

From the secret sites in Afghanistan, Thailand and Eastern Europe where C.I.A. teams held Qaeda terrorists, questions for the lawyers at C.I.A. headquarters arrived daily. Nervous interrogators wanted to know: Are we breaking the laws against torture?

The Bush administration had entered uncharted legal territory beginning in 2002, holding prisoners outside the scrutiny of the International Red Cross and subjecting them to harrowing pressure tactics. They included slaps to the head; hours held naked in a frigid cell; days and nights without sleep while battered by thundering rock music; long periods manacled in stress positions; or the ultimate, waterboarding.

Never in history had the United States authorized such tactics. While President Bush and C.I.A. officials would later insist that the harsh measures produced crucial intelligence, many veteran interrogators, psychologists and other experts say that less coercive methods are equally or more effective.

With virtually no experience in interrogations, the C.I.A. had constructed its program in a few harried months by consulting Egyptian and Saudi intelligence officials and copying Soviet interrogation methods long used in training American servicemen to withstand capture. The agency officers questioning prisoners constantly sought advice from lawyers thousands of miles away.

“We were getting asked about combinations — ‘Can we do this and this at the same time?’” recalled Paul C. Kelbaugh, a veteran intelligence lawyer who was deputy legal counsel at the C.I.A.’s Counterterrorist Center from 2001 to 2003.

Interrogators were worried that even approved techniques had such a painful, multiplying effect when combined that they might cross the legal line, Mr. Kelbaugh said. He recalled agency officers asking: “These approved techniques, say, withholding food, and 50-degree temperature — can they be combined?” Or “Do I have to do the less extreme before the more extreme?”

The questions came more frequently, Mr. Kelbaugh said, as word spread about a C.I.A. inspector general inquiry unrelated to the war on terrorism. Some veteran C.I.A. officers came under scrutiny because they were advisers to Peruvian officers who in early 2001 shot down a missionary flight they had mistaken for a drug-running aircraft. The Americans were not charged with crimes, but they endured three years of investigation, saw their careers derailed and ran up big legal bills.

That experience shook the Qaeda interrogation team, Mr. Kelbaugh said. “You think you’re making a difference and maybe saving 3,000 American lives from the next attack. And someone tells you, ‘Well, that guidance was a little vague, and the inspector general wants to talk to you,’” he recalled. “We couldn’t tell them, ‘Do the best you can,’ because the people who did the best they could in Peru were looking at a grand jury.”

Mr. Kelbaugh said the questions were sometimes close calls that required consultation with the Justice Department. But in August 2002, the department provided a sweeping legal justification for even the harshest tactics.

That opinion, which would become infamous as “the torture memo” after it was leaked, was written largely by John Yoo, a young Berkeley law professor serving in the Office of Legal Counsel. His broad views of presidential power were shared by Mr. Addington, the vice president’s adviser. Their close alliance provoked John Ashcroft, then the attorney general, to refer privately to Mr. Yoo as Dr. Yes for his seeming eagerness to give the White House whatever legal justifications it desired, a Justice Department official recalled.

Mr. Yoo’s memorandum said no interrogation practices were illegal unless they produced pain equivalent to organ failure or “even death.” A second memo produced at the same time spelled out the approved practices and how often or how long they could be used.

Despite that guidance, in March 2003, when the C.I.A. caught Khalid Sheikh Mohammed, the chief planner of the Sept. 11 attacks, interrogators were again haunted by uncertainty. Former intelligence officials, for the first time, disclosed that a variety of tough interrogation tactics were used about 100 times over two weeks on Mr. Mohammed. Agency officials then ordered a halt, fearing the combined assault might have amounted to illegal torture. A C.I.A. spokesman, George Little, declined to discuss the handling of Mr. Mohammed. Mr. Little said the program “has been conducted lawfully, with great care and close review” and “has helped our country disrupt terrorist plots and save innocent lives.”

“The agency has always sought a clear legal framework, conducting the program in strict accord with U.S. law, and protecting the officers who go face-to-face with ruthless terrorists,” Mr. Little added.

Some intelligence officers say that many of Mr. Mohammed’s statements proved exaggerated or false. One problem, a former senior agency official said, was that the C.I.A.’s initial interrogators were not experts on Mr. Mohammed’s background or Al Qaeda, and it took about a month to get such an expert to the secret prison. The former official said many C.I.A. professionals now believe patient, repeated questioning by well-informed experts is more effective than harsh physical pressure.

Other intelligence officers, including Mr. Kelbaugh, insist that the harsh treatment produced invaluable insights into Al Qaeda’s structure and plans.

“We leaned in pretty hard on K.S.M.,” Mr. Kelbaugh said, referring to Mr. Mohammed. “We were getting good information, and then they were told: ‘Slow it down. It may not be correct. Wait for some legal clarification.’”

The doubts at the C.I.A. proved prophetic. In late 2003, after Mr. Yoo left the Justice Department, the new head of the Office of Legal Counsel, Jack Goldsmith, began reviewing his work, which he found deeply flawed. Mr. Goldsmith infuriated White House officials, first by rejecting part of the National Security Agency’s surveillance program, prompting the threat of mass resignations by top Justice Department officials, including Mr. Ashcroft and Mr. Comey, and a showdown at the attorney general’s hospital bedside.

Then, in June 2004, Mr. Goldsmith formally withdrew the August 2002 Yoo memorandum on interrogation, which he found overreaching and poorly reasoned. Mr. Goldsmith, who left the Justice Department soon afterward, first spoke at length about his dissenting views to The New York Times last month, testified before the Senate Judiciary Committee on Tuesday.

Six months later, the Justice Department quietly posted on its Web site a new legal opinion that appeared to end any flirtation with torture, starting with its clarionlike opening: “Torture is abhorrent both to American law and values and to international norms.”

A single footnote — added to reassure the C.I.A. — suggested that the Justice Department was not declaring the agency’s previous actions illegal. But the opinion was unmistakably a retreat. Some White House officials had opposed publicizing the document, but acquiesced to Justice Department officials who argued that doing so would help clear the way for Mr. Gonzales’s confirmation as attorney general.

If President Bush wanted to make sure the Justice Department did not rebel again, Mr. Gonzales was the ideal choice. As White House counsel, he had been a fierce protector of the president’s prerogatives. Deeply loyal to Mr. Bush for championing his career from their days in Texas, Mr. Gonzales would sometimes tell colleagues that he had just one regret about becoming attorney general: He did not see nearly as much of the president as he had in his previous post.

Among his first tasks at the Justice Department was to find a trusted chief for the Office of Legal Counsel. First he informed Daniel Levin, the acting head who had backed Mr. Goldsmith’s dissents and signed the new opinion renouncing torture, that he would not get the job. He encouraged Mr. Levin to take a position at the National Security Council, in effect sidelining him.

Mr. Bradbury soon emerged as the presumed favorite. But White House officials, still smarting from Mr. Goldsmith’s rebuffs, chose to delay his nomination. Harriet E. Miers, the new White House counsel, “decided to watch Bradbury for a month or two. He was sort of on trial,” one Justice Department official recalled.

Mr. Bradbury’s biography had a Horatio Alger element that appealed to a succession of bosses, including Justice Clarence Thomas of the Supreme Court and Mr. Gonzales, the son of poor immigrants. Mr. Bradbury’s father had died when he was an infant, and his mother took in laundry to support her children. The first in his family to go to college, he attended Stanford and the University of Michigan Law School. He joined the law firm of Kirkland & Ellis, where he came under the tutelage of Kenneth W. Starr, the Whitewater independent prosecutor.

Mr. Bradbury belonged to the same circle as his predecessors: young, conservative lawyers with sterling credentials, often with clerkships for prominent conservative judges and ties to the Federalist Society, a powerhouse of the legal right. Mr. Yoo, in fact, had proposed his old friend Mr. Goldsmith for the Office of Legal Counsel job; Mr. Goldsmith had hired Mr. Bradbury as his top deputy.

“We all grew up together,” said Viet D. Dinh, an assistant attorney general from 2001 to 2003 and very much a member of the club. “You start with a small universe of Supreme Court clerks, and you narrow it down from there.”

But what might have been subtle differences in quieter times now cleaved them into warring camps.

Justice Department colleagues say Mr. Gonzales was soon meeting frequently with Mr. Bradbury on national security issues, a White House priority. Admirers describe Mr. Bradbury as low-key but highly skilled, a conciliator who brought from 10 years of corporate practice a more pragmatic approach to the job than Mr. Yoo and Mr. Goldsmith, both from the academic world.

“As a practicing lawyer, you know how to address real problems,” said Noel J. Francisco, who worked at the Justice Department from 2003 to 2005. “At O.L.C., you’re not writing law review articles and you’re not theorizing. You’re giving a client practical advice on a real problem.”

As he had at the White House, Mr. Gonzales usually said little in meetings with other officials, often deferring to the hard-driving Mr. Addington. Mr. Bradbury also often appeared in accord with the vice president’s lawyer.

Mr. Bradbury appeared to be “fundamentally sympathetic to what the White House and the C.I.A. wanted to do,” recalled Philip Zelikow, a former top State Department official. At interagency meetings on detention and interrogation, Mr. Addington was at times “vituperative,” said Mr. Zelikow, but Mr. Bradbury, while taking similar positions, was “professional and collegial.”

While waiting to learn whether he would be nominated to head the Office of Legal Counsel, Mr. Bradbury was in an awkward position, knowing that a decision contrary to White House wishes could kill his chances.

Charles J. Cooper, who headed the Office of Legal Counsel under President Reagan, said he was “very troubled” at the notion of a probationary period.

“If the purpose of the delay was a tryout, I think they should have avoided it,” Mr. Cooper said. “You’re implying that the acting official is molding his or her legal analysis to win the job.”

Mr. Bradbury said he made no such concessions. “No one ever suggested to me that my nomination depended on how I ruled on any opinion,” he said. “Every opinion I’ve signed at the Office of Legal Counsel represents my best judgment of what the law requires.”

Scott Horton, an attorney affiliated with Human Rights First who has closely followed the interrogation debate, said any official offering legal advice on the campaign against terror was on treacherous ground.

“For government lawyers, the national security issues they were deciding were like working with nuclear waste — extremely hazardous to their health,” Mr. Horton said.

“If you give the administration what it wants, you’ll lose credibility in the academic community,” he said. “But if you hold back, you’ll be vilified by conservatives and the administration.”

In any case, the White House grew comfortable with Mr. Bradbury’s approach. He helped block the appointment of a liberal Ivy League law professor to a career post in the Office of Legal Counsel. And he signed the opinion approving combined interrogation techniques.

Mr. Comey strongly objected and told associates that he advised Mr. Gonzales not to endorse the opinion. But the attorney general made clear that the White House was adamant about it, and that he would do nothing to resist.

Under Mr. Ashcroft, Mr. Comey’s opposition might have killed the opinion. An imposing former prosecutor and self-described conservative who stands 6-foot-8, he was the rare administration official who was willing to confront Mr. Addington. At one testy 2004 White House meeting, when Mr. Comey stated that “no lawyer” would endorse Mr. Yoo’s justification for the N.S.A. program, Mr. Addington demurred, saying he was a lawyer and found it convincing. Mr. Comey shot back: “No good lawyer,” according to someone present.

But under Mr. Gonzales, and after the departure of Mr. Goldsmith and other allies, the deputy attorney general found himself isolated. His troublemaking on N.S.A. and on interrogation, and in appointing his friend Patrick J. Fitzgerald as special prosecutor in the C.I.A. leak case, which would lead to the perjury conviction of I. Lewis Libby, Mr. Cheney’s chief of staff, had irreparably offended the White House.

“On national security matters generally, there was a sense that Comey was a wimp and that Comey was disloyal,” said one Justice Department official who heard the White House talk, expressed with particular force by Mr. Addington.

Mr. Comey provided some hints of his thinking about interrogation and related issues in a speech that spring. Speaking at the N.S.A.’s Fort Meade campus on Law Day — a noteworthy setting for the man who had helped lead the dissent a year earlier that forced some changes in the N.S.A. program — Mr. Comey spoke of the “agonizing collisions” of the law and the desire to protect Americans.

“We are likely to hear the words: ‘If we don’t do this, people will die,’” Mr. Comey said. But he argued that government lawyers must uphold the principles of their great institutions.

“It takes far more than a sharp legal mind to say ‘no’ when it matters most,” he said. “It takes moral character. It takes an understanding that in the long run, intelligence under law is the only sustainable intelligence in this country.”

Mr. Gonzales’s aides were happy to see Mr. Comey depart in the summer of 2005. That June, President Bush nominated Mr. Bradbury to head the Office of Legal Counsel, which some colleagues viewed as a sign that he had passed a loyalty test.

Soon Mr. Bradbury applied his practical approach to a new challenge to the C.I.A.’s methods.

The administration had always asserted that the C.I.A.’s pressure tactics did not amount to torture, which is banned by federal law and international treaty. But officials had privately decided the agency did not have to comply with another provision in the Convention Against Torture — the prohibition on “cruel, inhuman, or degrading” treatment.

Now that loophole was about to be closed. First Senator Richard J. Durbin, Democrat of Illinois, and then Senator John McCain, the Arizona Republican who had been tortured as a prisoner in North Vietnam, proposed legislation to ban such treatment.

At the administration’s request, Mr. Bradbury assessed whether the proposed legislation would outlaw any C.I.A. methods, a legal question that had never before been answered by the Justice Department.

At least a few administration officials argued that no reasonable interpretation of “cruel, inhuman or degrading” would permit the most extreme C.I.A. methods, like waterboarding. Mr. Bradbury was placed in a tough spot, said Mr. Zelikow, the State Department counselor, who was working at the time to rein in interrogation policy.

“If Justice says some practices are in violation of the C.I.D. standard,” Mr. Zelikow said, referring to cruel, inhuman or degrading, “then they are now saying that officials broke current law.”

In the end, Mr. Bradbury’s opinion delivered what the White House wanted: a statement that the standard imposed by Mr. McCain’s Detainee Treatment Act would not force any change in the C.I.A.’s practices, according to officials familiar with the memo.

Relying on a Supreme Court finding that only conduct that “shocks the conscience” was unconstitutional, the opinion found that in some circumstances not even waterboarding was necessarily cruel, inhuman or degrading, if, for example, a suspect was believed to possess crucial intelligence about a planned terrorist attack, the officials familiar with the legal finding said.

In a frequent practice, Mr. Bush attached a statement to the new law when he signed it, declaring his authority to set aside the restrictions if they interfered with his constitutional powers. At the same time, though, the administration responded to pressure from Mr. McCain and other lawmakers by reviewing interrogation policy and giving up several C.I.A. techniques.

Since late 2005, Mr. Bradbury has become a linchpin of the administration’s defense of counterterrorism programs, helping to negotiate the Military Commissions Act last year and frequently testifying about the N.S.A. surveillance program. Once he answered questions about administration detention policies for an “Ask the White House” feature on a Web site.

Mr. Kmiec, the former Office of Legal Counsel head now at Pepperdine, called Mr. Bradbury’s public activities a departure for an office that traditionally has shunned any advocacy role.

A senior administration official called Mr. Bradbury’s active role in shaping legislation and speaking to Congress and the press “entirely appropriate” and consistent with past practice. The official, who spoke on the condition of anonymity, said Mr. Bradbury “has played a critical role in achieving greater transparency” on the legal basis for detention and surveillance programs.

Though President Bush repeatedly nominated Mr. Bradbury as the Office of Legal Counsel’s assistant attorney general, Democratic senators have blocked the nomination. Senator Durbin said the Justice Department would not turn over copies of his opinions or other evidence of Mr. Bradbury’s role in interrogation policy.

“There are fundamental questions about whether Mr. Bradbury approved interrogation methods that are clearly unacceptable,” Mr. Durbin said.

John D. Hutson, who served as the Navy’s top lawyer from 1997 to 2000, said he believed that the existence of legal opinions justifying abusive treatment is pernicious, potentially blurring the rules for Americans handling prisoners.

“I know from the military that if you tell someone they can do a little of this for the country’s good, some people will do a lot of it for the country’s better,” Mr. Hutson said. Like other military lawyers, he also fears that official American acceptance of such treatment could endanger Americans in the future.

“The problem is, once you’ve got a legal opinion that says such a technique is O.K., what happens when one of our people is captured and they do it to him? How do we protest then?” he asked.


Out Of Control School Security Guard Assaults Camerawoman

Paul Joseph Watson
Prison Planet
Thursday, October 4, 2007

More out of control school security guards have been accused of assaulting children and also the media, as a camerawoman who wasn't even on school property had her equipment shoved in her face by an aggressive guard during filming.

Action 10 News were investigating reports of guards and police beating children at a school in Robstown, Corpus Christi.

The film crew were not even on school property as they recorded shots of the building before a security guard walked up and forcefully shoved the camera in video journalist Brandy Dunfee's face.

Watch the video.

Action 10 News have now filed a police report regarding the assault.

"If he's willing to do that to me for the world to see on camera, then what is he willing to do when no one is looking," said Dunfee.


Uncut video of the assault.

Allegations of police and security guards beating up students in the school have been met with a wall of silence from school authorities who have refused to talk to Action 10 News.


Students report being beaten by police and security guards at the school.

Last week, a video showing a school security guard arresting and breaking a girl's arm for dropping cake made national headlines.

The last couple of months have produced an epidemic of police and security guard brutality which seems to be spiraling out of control as cops are trained that the public is their enemy.

Approval of Bush, Congress Hits New Low

ALAN FRAM
Associated Press
Thursday, October 4, 2007

WASHINGTON (AP) - Public approval for President Bush and Congress has sunk to the lowest levels ever recorded in The Associated Press-Ipsos poll.
Only 31 percent said they approve of the job Bush is doing, according to the survey released on Thursday. His lowest previous approval in the survey was 32 percent—a virtual tie with the new reading—recorded several times, most recently in June.

Only 69 percent of Republicans voiced approval of Bush, about where he has been in recent months but still an anemic showing for a president within his own party. That included only 29 percent from the GOP who said they strongly approve of the job he is doing.

Underlining the widespread political polarization sparked by the Iraq war and other issues, just 7 percent of Democrats and 19 percent of independents gave positive marks to Bush's work.

With the war dragging on and fears of recession at home, the poll showed public discontent with Bush on issues across the board.

A record low 34 percent said they approved of his handling of the economy, which has been battered by a major credit crunch and a feeble housing market. His prior low in the poll in that area was 37 percent.

Bush also hit a new low with 31 percent approving of his work on domestic issues like health care, just below June's 32 percent. The poll was taken as the president was about to veto a measure adding $35 billion to children's health coverage.

Twenty-nine percent approved of how Bush is handling Iraq, a slight dip from last month's 33 percent and virtually even with the record- low of 27 percent last December. Bush last month approved a plan to gradually reduce the number of troops in Iraq from more than 160,000 to just above the 130,000 who were there when this year's force build up began.

On foreign affairs and terrorism, 36 percent approved, just below September's 40 percent measure and about tied with the 35 percent low point he hit in December.

Congress' job performance was approved by just 22 percent, continuing a steady decline in the public's assessment since Democrats took over in January. Unable to force Bush to wind down the Iraq war, just a quarter of Democrats gave a thumbs-up to Congress' work, compared to a fifth of Republicans and independents.

Congress' lowest approval reading in the poll had been 24 percent, recorded most recently in July.

AP-Ipsos polling began in December 2003.

President Truman's approval ratings of 23 percent in both 1951 and 1952 were the lowest ever recorded by the Gallup Poll. Congress' Gallup Poll low was 18 percent in 1992.

The AP-Ipsos poll was conducted from Oct. 1-3 and involved telephone interviews with 1,005 adults. It had a margin of sampling error of plus or minus three percentage points.

Merger opens U.S. defense to China

Washington Times | October 04, 2007
Bill Gertz


A Chinese company with ties to Beijing's military and past links to Saddam Hussein's army in Iraq and the Taliban will gain access to U.S. defense-network technology under a proposed merger, Pentagon officials say.

Huawei Technologies will merge with the Massachusetts-based 3Com network-equipment manufacturer in a deal announced last week. Huawei has been linked to the U.N. oil-for-food scandal, which involved millions of dollars in payoffs to Saddam's regime during a time of U.N. sanctions.

The announced merger follows a July computer attack on the Pentagon that U.S. intelligence officials say involved Chinese military hackers. The hackers were detected breaking into Pentagon computers, including an e-mail system close to Defense Secretary Robert M. Gates.

"Huawei is up to its eyeballs with the Chinese military," said a defense official concerned about the deal. Huawei was founded in 1988 by a Chinese military officer and got its start building military communications networks.

A second official said the deal comes as the Pentagon has mounted an aggressive effort to thwart large numbers of computer intrusions from Chinese hackers and spies.

"And now we are proposing to sell the PLA a key to our front door. This is a very dangerous trend," the official said, referring to the People's Liberation Army, as the Chinese military is called.

3Com announced Friday the $2.2 billion merger with Bain Capital Partners LLC and noted in a statement that Huawei Technologies will acquire a minority interest and "become a commercial and strategic partner of 3Com."

Rep. Duncan Hunter, California Republican and ranking member of the House Armed Services Committee, said he is worried the deal will lead to the loss of sensitive technology to China.

"Specifically, I have some concerns surrounding the minority position of Huawei Technologies and what control the Chinese company might have over America's sensitive information," Mr. Hunter said. "In addition to encouraging the Pentagon to review how this deal may affect any of its classified contracts, I would encourage the Committee on Foreign Investment in the United States to conduct a thorough review."

A Pentagon spokesman said he is not aware that anyone in the Defense Department has asked Treasury's Committee on Foreign Investment in the United States to investigate the merger. A Treasury spokesman had no comment.

3Com, through a subsidiary, provides the Pentagon and the Army with intrusion-detection equipment, and the merger potentially will provide Huawei access to strategic computer-network vulnerabilities, said defense officials speaking on the condition of anonymity.

Spokesmen for 3Com did not return phone calls or e-mails seeking comment. A spokesman for Bain had no immediate comment. A Huawei spokesman could not be reached for comment.

Defense officials said Huawei's past is the main cause for concern. Huawei technicians were involved in violating U.N. sanctions against Iraq in the early 2000s by illegally providing a fiber-optic network in Iraq that linked the Iraqi military's air-defense network.

The CIA-led Iraq Survey Group stated in its final report that Huawei and two other Chinese firms "illicitly provided transmission switches" for fiber-optic communications in Iraq from 1999 to 2002.

U.S. and British warplanes bombed the Chinese-made fiber-optic network in August 2001 after it was found to be part of Iraqi air-defense missile sites that were firing at U.S. and allied aircraft enforcing a no-fly zone.

Huawei also was involved in building a telephone-switching system in Kabul, Afghanistan, for the ruling Taliban militia prior to its ouster in 2001, according to U.S. intelligence officials.

The defense officials said it is unlikely that the Committee on Foreign Investment in the United States would block the deal because 3Com is being advised on the merger by Goldman Sachs Group Inc., whose former chairman is Treasury Secretary Henry M. Paulson Jr. White House Chief of Staff Joshua B. Bolten also is a former Goldman Sachs executive.

Gary Milhollin, an arms-proliferation specialist with the Wisconsin Project on Nuclear Arms Control, said Huawei was founded by a Chinese military officer and got its start with U.S. technology exports.

"In the past, Huawei has shown it's willing to help America's enemies after importing U.S. technology," he said. "And it has done so in defiance of U.N. regulations. So before we make more U.S. high technology available to Huawei, we should make sure it has changed its ways."