Odds Are Growing for Economic Recession

By JEANNINE AVERSA – 9 hours ago

WASHINGTON (AP) — The unemployment rate leaps to a two-year high, record numbers of people are forced from their homes and Wall Street nose-dives again. Such is the fallout from a housing meltdown that threatens to slingshot the country into a recession.

The big economic question these days is whether the weakening economy will survive the strains or collapse under them.

The odds have grown that the economy will slip into a recession. At the beginning of last year, many economists put that chance at less than 1-in-3; now an increasing number says it has climbed to around 50-50. Goldman Sachs, the biggest investment bank on Wall Street even thinks a recession is inevitable this year.

Hopeful it can be avoided, President Bush and the Democrat-controlled Congress are exploring economic rescue measures, including possible tax rebates. Federal Reserve Chairman Ben Bernanke pledged to lower interest rates as needed.

The idea is to induce people to boost spending, especially on big-ticket items such as homes and cars, and revitalize economic activity.

"The recession gorilla is there. The question is can the Federal Reserve do enough to avert a recession?" asked Brian Bethune, economist at Global Insight. "We think the odds are close to 50 percent that there will be a recession. It is high — no question about it."

Much hope rides on the Fed. By dropping rates, it can act quickly — faster than Congress or the White House could agree on and deliver an economic boost.

"The Federal Reserve is not currently forecasting a recession," Bernanke said last week. "We are forecasting slow growth."

Bernanke signaled that a rate cut would come this month. Many economists believe a key rate, now at 4.25 percent, could fall by as much as one-half of a percentage point. Such a cut would lower the rates that are charged to millions of consumers and businesses for many different types of loans.

Analysts predict the Fed will keep doing that in the months ahead as part of a campaign that started in September, when the central bank cut rates for the first time in four years.

Trying to put the fragile economy back on firm footing is the biggest challenge for Bernanke since taking over the Fed nearly two years ago. His job requires a deft reading of the economy's vital signs and keen insights into what makes people and businesses tick. It is their behavior that shapes the economy. And it is in turbulent times that the Fed chief needs to bolster public and investor confidence.

Still, Wall Street is on edge. The Dow Jones industrials plunged nearly 250 points on Friday. Also, consumer confidence tumbled in early January.

Bill Cheney, chief economist at John Hancock Financial Services, puts the odds of a recession as high as 40 percent. "There are a lot of headwinds and the economy probably has enough momentum to get through, but when things get rough, there are a lot of ways things could go wrong," Cheney said.

The fear is that people will clamp down on the spending and businesses will put a lid on hiring and capital investment, sending the economy into a tailspin.

By one rough rule of thumb, a recession occurs when there are two consecutive quarters — six straight months — when the economy shrinks.

The National Bureau of Economic Research, the recognized arbiters for dating recessions, uses a more complicated formula. It takes into account such things as employment and income growth. By that measure, the last recession was in 2001, starting in March and ending in November.

Tax rebates aimed at stimulating the economy were part of Bush's $1.35 trillion in tax cuts in 2001. They were credited with helping to make the recession short and mild.

The current housing slump, made worse by a credit crunch, is weighing heavily on economic activity.

Upcoming reports are expected to show the economy grew at a feeble pace of just 1.5 percent or less in the final three months of last year and will be weak in the first part of 2008. Consumers, whose spending is indispensable to a healthy economy, are expected to have tightened their belts.

High energy prices, weaker home values that make people feel less wealthy, and a deteriorating jobs market all figure into more caution on the part of consumers.

The unemployment rate jumped to 5 percent in December from 4.7 percent, fanning recession fears. It was the biggest one-month gain since October 2001, during a time of massive layoffs in the travel industry after the Sept. 11 attacks.

Lawrence Summers, one of President Clinton's treasury secretaries, said the odds of a recession this year went up after the dismal employment report. He advocates temporary tax cuts and emergency spending. "It is now conventional opinion and many fear that there will be a serious recession," Summers wrote recently in the Financial Times.

Martin Feldstein, who was President Reagan's top economic adviser, and former Federal Reserve Chairman Alan Greenspan have urged greater government intervention. Greenspan recently said the economy is "getting close to stall speed," and Feldstein has said his best guess is that the economy "has not turned down and it is still expanding, but very weakly."

Fears About Economy Increase

Anthony Faiola and Tomoeh Murakami Tse
Washington Post
Saturday January 12, 2008

Major banks and mortgage companies yesterday sharply accelerated an industry consolidation that is set to change the landscape of American lending, while a convergence of events exposed fresh worries about the U.S. economy.

New indications emerged yesterday that the spiraling subprime mortgage crisis is spreading from home loans to credit cards, potentially engulfing a far broader segment of Americans. At the same time, the U.S. trade deficit soared to a 14-month high, fueled by soaring oil prices.

And rising concern that U.S. investment houses, particularly Merrill Lynch, may yet suffer far greater losses, helped set up a wide market sell-off.

Echoing the heightened concern, Treasury Secretary Henry M. Paulson Jr. said yesterday that the U.S. economy had slowed "rather materially" at the end of 2007 and that "time is of the essence" in launching an economic stimulus package to stave off a recession.

Meanwhile, a broad shake-up of the U.S. lending industry is speeding up. Bank of America agreed yesterday to buy the troubled Countrywide Financial for $4 billion, a bargain-basement price for the nation's largest mortgage lender, which, analysts said, could have even more substantial mortgage-related losses ahead.

"There are signs" that the economy "is slowing down fairly rapidly," Paulson told Bloomberg Television. Congressional Democrats have promised to work with the Bush administration to pass a series of economic measures meant to boost consumer confidence and fend off a sharp downturn, perhaps including tax rebates for low- and middle-income Americans and tax cuts and other fiscal measures to boost investment. "If something were to be done here, I think the focus would be on something that's temporary and that could get done and make a difference soon," Paulson said.

Some saw the rescuing of Countrywide from possible bankruptcy, as well as news that J.P. Morgan Chase is in "very early talks" with about a half-dozen regional banks, including Washington Mutual of Seattle, as evidence of a much-needed consolidation that in the long run could fortify the lending industry and eventually ease the nation's credit crunch.

Full article here.

CIA, Iran & the Gulf of Tonkin

Ray McGovern
Consortium News
Sunday January 13, 2008

When the Tonkin Gulf incident took place in early August 1964, I was a journeyman CIA analyst in what Condoleezza Rice refers to as “the bowels of the agency.”

As a current intelligence analyst responsible for Russian policy toward Southeast Asia and China, I worked very closely with those responsible for analysis of Vietnam and China.

Out of that experience I must say that, as much as one might be tempted to laugh at the bizarre theatrical accounts of Sunday’s incident involving small Iranian boats and U.S. naval ships in the Strait of Hormuz, this is—as my old Russian professor used to insist—nothing to laugh.

The situation is so reminiscent of what happened—and didn’t happen—from Aug. 2-4, 1964, in the Gulf of Tonkin and in Washington, it is in no way funny.

At the time, the U.S. had about 16,000 troops in South Vietnam. The war that was “justified” by the Tonkin Gulf resolution of Aug. 7, 1964, led to a buildup of 535,000 U.S. troops in the late Sixties, 58,000 of whom were killed—not to mention the estimated two million Vietnamese who lost their lives by then and in the ensuing 10 years.

Ten years. How can our president speak so glibly about 10 more years of a U.S. armed presence in Iraq? He must not remember Vietnam.

Lessons From Vietnam and Iraq

What follows is written primarily for honest intelligence analysts and managers still on “active duty.”

The issuance of the recent National Intelligence Estimate (NIE) on Iran was particularly welcome to those of us who had been hoping there were enough of you left who had not been thoroughly corrupted by former CIA Director George Tenet and his malleable managers.

We are not so much surprised at the integrity of Tom Fingar, who is in charge of national intelligence analysis. He showed his mettle in manfully resisting forgeries and fairy tales about Saddam Hussein’s “weapons of mass destruction.”

What is, frankly, a happy surprise is the fact that he and other non-ideologues and non-careerist professionals have been able to prevail and speak truth to power on such dicey issues as the Iranian nuclear program, the upsurge in terrorism caused by the U.S. invasion of Iraq, and the year-old NIE saying Iraq is headed for hell in a hand basket (with no hint that a “surge” could make a difference).

But those are the NIEs. They share the status of “supreme genre” of analytic product with the President’s Daily Brief and other vehicles for current intelligence, the field in which I labored, first in the analytic trenches and then as a briefer at the White House, for most of my 27-year career.

True, the NIE “Iraq’s Continuing Program for Weapons of Mass Destruction” of Oct. 1, 2002, (wrong on every major count) greased the skids for the attack on Iraq on March 19, 2003. But it is more often current intelligence that is fixed upon to get the country into war.

The Tonkin Gulf events are perhaps the best case in point. We retired professionals who worked through the Tonkin Gulf incident are hopeful that Fingar can ensure integrity in the current intelligence process as well.

Salivating for a Wider War

Given the confusion last Sunday in the Persian Gulf, you need to remember that a “known known” in the form of a non-event has already been used to sell a major war—Vietnam. It is not only in retrospect that we know that no attack occurred that night.

Those of us in intelligence, not to mention President Lyndon Johnson, Defense Secretary Robert McNamara and National Security Adviser McGeorge Bundy all knew full well that the evidence of any armed attack on the evening of Aug. 4, 1964, the so-called “second” Tonkin Gulf incident, was highly dubious.

But it fit the president’s purposes, so they lent a hand to facilitate escalation of the war.

During the summer of 1964, President Johnson and the Joint Chiefs of Staff were eager to widen the war in Vietnam. They stepped up sabotage and hit-and-run attacks on the coast of North Vietnam.

Defense Secretary Robert McNamara later admitted that he and other senior leaders had concluded that the seaborne attacks “amounted to little more than pinpricks” and “were essentially worthless,” but they continued.

Concurrently, the National Security Agency was ordered to collect signals intelligence from the North Vietnamese coast on the Gulf of Tonkin, and the surprise coastal attacks were seen as a helpful way to get the North Vietnamese to turn on their coastal radars.

The destroyer USS Maddox, carrying electronic spying gear, was authorized to approach as close as eight miles from the coast and four miles from offshore islands, some of which already had been subjected to intense shelling by clandestine attack boats.

As James Bamford describes it in “Body of Secrets:”

“The twin missions of the Maddox were in a sense symbiotic. The vessel’s primary purpose was to act as a seagoing provocateur—to poke its sharp gray bow and the American flag as close to the belly of North Vietnam as possible, in effect shoving its 5-inch cannons up the nose of the Communist navy. In turn, this provocation would give the shore batteries an excuse to turn on as many coastal defense radars, fire control systems, and communications channels as possible, which could then be captured by the men...at the radar screens. The more provocation, the more signals...

“The Maddox’ mission was made even more provocative by being timed to coincide with commando raids, creating the impression that the Maddox was directing those missions and possibly even lobbing firepower in their support....

“North Vietnam also claimed at least a twelve-mile limit and viewed the Maddox as a trespassing ship deep within its territorial waters.”
(pp 295-296)

On Aug. 2, 1964, an intercepted message ordered North Vietnamese torpedo boats to attack the Maddox. The destroyer was alerted and raced out to sea beyond reach of the torpedoes, three of which were fired in vain at the destroyer’s stern.

The Maddox’s captain suggested that the rest of his mission be called off, but the Pentagon refused. And still more commando raids were launched on Aug. 3, shelling for the first time targets on the mainland, not just the offshore islands.

Early on Aug. 4, the Maddox captain cabled his superiors that the North Vietnamese believed his patrol to be directly involved with the commando raids and shelling. That evening at 7:15 (Vietnam time) the Pentagon alerted the Maddox to intercepted messages indicating that another attack by patrol boats was imminent.

What followed was panic and confusion. There was a score of reports of torpedo and other hostile attacks, but no damage and growing uncertainty as to whether any attack actually took place. McNamara was told that “freak radar echoes” were misinterpreted by “young fellows” manning the sonar, who were “apt to say any noise is a torpedo.”

This did not prevent McNamara from testifying to Congress two days later that there was “unequivocal proof” of a new attack. And based largely on that, Congress passed the Tonkin Gulf resolution bringing 10 more years of war.

Meanwhile, in the Trenches

By the afternoon of Aug. 4, the CIA’s expert analyst on North Vietnam (let’s call him “Tom”) had concluded that probably no one had fired on the U.S. ships. He included a paragraph to that effect in the item he wrote for the Current Intelligence Bulletin, which would be wired to the White House and other key agencies and appear in print the next morning.

And then something unique happened. The Director of the Office of Current Intelligence, a very senior officer whom Tom had never before seen, descended into the bowels of the agency to order the paragraph deleted. He explained:

“We’re not going to tell LBJ that now. He has already decided to bomb North Vietnam. We have to keep our lines open to the White House.”

“Tom” later bemoaned—quite rightly: “What do we need open lines for, if we’re not going to use them, and use them to tell the truth?”

Two years ago, I would have been tempted to comment sarcastically, “How quaint; how obsolete.” But the good news is that the analysts writing the NIEs have now reverted to the ethos in which “Tom” and I were proud to work.

Now the analysts/reporters of current intelligence need to follow suit, and we hope Tom Fingar can hold their feet to the fire. For if they don’t measure up, the consequences are sure to be disastrous.

This should be obvious in the wake of the Tonkin Gulf reporting experience, not to mention more recent performance of senior officials before the attack on Iraq in 2003.

The late Ray S. Cline, who was the current intelligence director’s boss at the time of the Tonkin Gulf incident, said he was “very sure” that no attack took place on Aug. 4. He suggested that McNamara had shown the president unevaluated signals intelligence which referred to the (real) earlier attack on Aug. 2 rather than the non-event on the 4th.

There was no sign of remorse on Cline’s part that he didn’t step in and make sure the president was told the truth.

We in the bowels knew there was no attack; and so did the Director of Current Intelligence as well as Cline, the Deputy Director for Intelligence. But all knew, as did McNamara, that President Johnson was lusting for a pretext to strike the North and escalate the war. And, like B’rer Rabbit, they didn’t say nothin’.

Commenting on the interface of intelligence and policy on Vietnam, a senior CIA officer has written about:

“... the dilemma CIA directors and senior intelligence professionals face in cases when they know that unvarnished intelligence judgments will not be welcomed by the President, his policy managers, and his political advisers...[They] must decide whether to tell it like it is (and so risk losing their place at the President’s advisory table), or to go with the flow of existing policy by accentuating the positive (thus preserving their access and potential influence). In these episodes from the Vietnam era, we have seen that senior CIA officers more often than not tended toward the latter approach.”
“CIA and the Vietnam Policymakers: Three Episodes, 1962-1968,” Harold P. Ford

Back to Iran. This time, we all know what the president and vice president are lusting after—an excuse to attack Iran. But there is a big difference from the situation in the summer of 1964, when President Johnson had intimidated all his senior subordinates into using deceit to escalate the war.

Bamford comments on the disingenuousness of Robert McNamara when he testified in 1968 that it was “inconceivable” that senior officials, including the president, deliberately used the Tonkin Gulf events to generate congressional support for a wider Vietnam War.

In Bamford’s words, the Joint Chiefs of Staff had become “a sewer of deceit,” with Operation Northwoods and other unconscionable escapades to their credit. Then-Under Secretary of State George Ball commented, “There was a feeling that if the destroyer got into some trouble, that this would provide the provocation we needed.”

Good News: It’s Different Now

It is my view that the only thing that has prevented Bush and Cheney from attacking Iran so far has been the strong opposition of the uniformed military, including the Joint Chiefs.

As the misadventure last Sunday in the Strait of Hormuz shows, our senior military officers need all the help they can get from intelligence officers more concerned with the truth than with “keeping lines open to the White House” and doing its bidding.

In addition, the intelligence oversight committees in Congress seem to be waking from their Rip Van Winkle-like slumber. It was Congress, after all, that ordered the controversial NIE on Iran/nuclear (and insisted it be publicized).

And the flow of substantive intelligence to Congress is much larger than it was in 1964 when, remember, there were no intelligence committees as such.

So, you inheritors of the honorable profession of current intelligence – I’m thinking of you, Rochelle, and you, Rick – don’t let them grind you down.

If you’re working in the bowels of the CIA and you find that your leaders are cooking the intelligence once again into a recipe for casus belli, think long and hard about your oath to protect the Constitution. Should that oath not transcend any secrecy promise you had to accept as a condition of employment?

By sticking your neck out, you might be able to prevent 10 years of unnecessary war.

Fliers' Data Left Exposed, Report Says

Del Quentin Wilber
Washington Post
Sunday January 13, 2008

A government Web site designed to help travelers remove their names from aviation watch lists was so riddled with security holes that hackers could easily have stolen personal information from scores of passengers, a congressional report concluded yesterday.

Thousands of people used the Web site, and as many as 247 submitted detailed personal information between October 2006 and last February, the report says. A spokesman for the Transportation Security Administration, which established the site, said the agency was not aware of any travelers who used the site and became victims of identity theft.

Congressional investigators raised concerns about a conflict of interest in how the no-bid contract to create the Web site was awarded. The TSA employee who framed many of the contract's requirements and was in charge of overseeing the site was once employed by the firm that was awarded the contract -- Desyne Web Services, a small firm in Boston, Va. -- and socialized with members of the company, according to the report by the Democratic staff of the House Oversight and Government Reform Committee.

The TSA continues to use Desyne on various projects, the report said, and has awarded the company no-bid contracts worth about $500,000.

The report also found that the TSA conducted little oversight of the Web site.

"It is mindboggling that TSA would launch a Web site with so many security vulnerabilities," Rep. Henry A. Waxman (D-Calif.), chairman of the committee, said in a statement. "The handling of this Web site goes against all good government contracting standards, reveals serious flaws in oversight, and potentially exposed travelers to identity theft."

Telephone messages left at Desyne were not returned yesterday. A TSA official said that the issues raised by the report were "old news" and that the problems had been addressed. "Things could and should have been done differently," said Christopher White, a TSA spokesman. "We have learned from those issues."

The government provides airlines with security watch lists that give the names of suspected terrorists, fugitives and others considered a "threat to aviation."

The lists have been frequently criticized, particularly since the terrorist attacks of Sept. 11, 2001, heightened security concerns. Prominent Americans, including members of Congress, have been singled out for questioning and searches at airports because their names were similar to names on the lists.

TSA officials said they had taken steps to reduce the number of people whose names are on the no-fly list, who are not allowed to board planes. They took the same steps, they said, to reduce their "selectee" list. Passengers with names similar to those on the selectee list are subjected to extra screening and questioning at checkpoints.

Full article here.

Secret Government plan will see offenders given shorter sentences for wearing tags

TOM HARPER
UK Daily Mail
Sunday January 13, 2008

Dangerous offenders who are electronically tagged while awaiting trial will receive shorter prison terms following a secret move by the Government.

Labour has been accused of cynicism after Justice Secretary Jack Straw slipped the change through Parliament last week by adding a clause to the new Criminal Justice and Immigration Bill.

It means the number of hours offenders, including thieves and drug dealers, are forced to spend at home under curfew will be deducted from their eventual sentence.

Last night the Conservatives dubbed the scheme a "get out of jail free" card and said it was a desperate bid to slash the prison population.

Shadow Justice Minister Edward Garnier said: "The Government has made a mockery of parliamentary democracy by ramming ill-considered new criminal justice laws through the House of Commons without a vote.

"I fail to see how time spent at home drinking and taking drugs can be classed as incarceration."

Shadow Justice Secretary Nick Herbert said: "Far from being tough on crime and on the causes of crime, Jack Straw is giving criminals a break."

Over the past ten years, the Government has been forced into emergency measures, including releasing thousands of inmates early, to cope with overflowing jails.

Last night, however, the prison population stood close to capacity at 79,976.

Now, in a further bid to keep numbers down, the Government has introduced the amendment forcing judges to deduct from future sentences the time an offender spends tagged on bail.

Full article here.

Member of Japanese Diet Doubts Official 9/11 Fairy Tale

Kurt Nimmo
Truth News
Sunday January 13, 2008

Don’t expect the New York Times or CNN to report on Fujita Yukihisa’s grilling of Japanese PM Fukuda over the official 9/11 fairy tale.

Yukihisa is a member of the House of Councillors in the Diet, that is to say the national legislature of Japan, and his questions about the transparent sham that is the official version of events is indeed a big deal — but not as important in America as the travails of Britney. Yukihisa’s presentation was all the more important due to the fact he was the Chief Cabinet Secretary under former PM Junichiro Koizumi in 2001.

Although we don’t yet have an English translation of the video — taped from Japanese television — now appearing on YouTube, the 911.video.de site posted the following, apparently a translation from Japanese:

On January 11th 2008 member of Parliament Yukihisa Fujita of the Japan Democratic party, made a 20 minute long statement at the House of Councillors, the upper house of the Diet (parliament) of Japan. He questioned the official version of 9/11 presented to the Japanese government and the public by the US administration in a session of the defense commission.

He asked the current Prime Minister Fukuda who was the Chief Cabinet Secretary under Koizumi cabinet in 2001.

“How could terrorists attacked the Pentagon?”

He asked whether Terrorism is crime or war. Some Japanese people were killed, so he believes this was a crime, so Japanese police should investigate the real suspect even though Japanese government assumed that the suspect was Al-Queda since Bush told Koizumi so and sent the self-defense force to Iraq. Can Japanese police arrest president Bush if he was one of the suspects?

The statement was made in connection with the discussion about the renewal of the Japanese logistic assistance program for the US navy in the “fight against terrorism”.

US President George W Bush has recently pressed Japanese Prime Minister Yasuo Fukuda to ensure Tokyo resumes crucial naval operations to support the war in Afghanistan. The Japan Democratic party which is in the opposition is blocking the resumption of the mission,which supplies fuel and water to US-led forces operating in the Indian Ocean.

The government wants to continue and to be part of the fight against terrorism. The opposition argues that the operation has not been approved formally by the United Nations. It claims that oil supplied by Japanese ships has been diverted for use in operations in Iraq, an accusation the Americans deny.

The government has made changes to the legislation which authorizes the mission. It has to be renewed every year after approval by parliament. The new law says Japanese ships can only refuel and supply water to vessels on anti-terrorism patrols. Ships involved in military operations — whether they be attacks, rescue operations or humanitarian relief — will not receive Japanese supplies.

Yukihisa Fujita did question Defense Minister Shigeru Ishiba and Minister of Finance Fukushiro Nukaga about the way in which the US government did inform the Japanese government about the people responsible for the 9/11 attacks.

Mr.Yukihisa Fujita stressed that of the 24 people that died on 9/11 only 13 were identified and 11 bodies remain unaccounted for. He pointed out that there was never an official police investigation into the deaths of these japanese nationals.

He then explained that in the USA many people doubt the official version of 9/11 and numerous websites and scientists have collected evidence that contradicts the governments version..

He presented several largescale photographs of:
a) the Pentagon entry and exit hole
b) the flight path towards the Pentagon
c) the exploding WTC towers
d) the WTC 7 collapse.

He concluded that the japanese governments support of the “war against terror” is solely based on information provided by the US-administration. He demanded further investigation in the face of the governments drive to support the war more actively.

Yukihisa Fujita was elected to the House of Councillors for the first time in 2007

The Democratic Party of Japan (Minshinto) is a social liberal political party founded in 1998 by the merger of several smaller parties.

It is the second-largest party in the House of Representatives and the largest party in the House of Councillors, and it constitutes the primary opposition to the long-dominant Liberal Democratic Party.

Here we have a respected Japanese politician asking on public television if Bush can be arrested in connection with events of September 11, 2001, and the corporate media finds this unworthy of publication or even mention in passing.

But then, of course, the neocon corporate media, snugly in bed with the “defense” industry and long ago sold down the river by the CIA’s Operation Mockingbird, has ignored the coming out of former Italian president Francesco Cossiga, who declared the attack was a CIA and Mossad operation. As well, they have ignored former German Intelligence Minister Andreas von Bülow, who stated his informed belief that 9/11 was orchestrated at the highest level of the U.S. government.

Once again, another important news story is relegated to the memory hole.