Fed Projects a Four Year Long Recession

Michael Swanson
Safe Haven.com
Tuesday September 25, 2007

Aside from the dollar and long-term bonds all markets went up last week as the Fed demonstrated that it is more fearful of a slowing economy and banking woes than inflation. In fact, it is willing to sacrifice the dollar to save the banks. Just last month, the Fed was saying that the threat of inflation is just as great as the threat of a slowdown in the economy. Now it is cutting rates in a huge way as the DOW is near its all-time high, gold is making new highs, and the price of oil is exploding.

The Fed is obviously terrified. I have noted in the last podcast that Bernanke built his career on a doctoral thesis that claimed that the Fed didn't cut rates fast enough during the 1929 stock market crash. But if you look at a chart of the Depression bear market with an overlay chart of interest rates you'll see that the Fed cut interest rates as the market topped. A few years later when the market finally bottomed you'll see that they had been lowering rates all of the way down.

What Bernanke believes is that the Fed should have cut rates all at once during the start of the bear market instead of gradually over two years. He seems to be putting this belief to work right now. It means that he is gravely concerned about the state of real estate and banking in the United States.

As the NYT reports:

Those wanting to understand the Fed's reversal can profit from reading two papers by Fed officials which were released this summer as the credit squeeze was worsening.

Taken together they constitute an admission that the Fed was surprised by the housing and borrowing boom on the upside, and now it fears it will be surprised on the downside.

One paper, by Karen E. Dynan, a Fed economist, and Donald L. Kohn, the Fed's vice chairman, asked why a strong economy had left Americans deeper in debt than ever before.

"The most important factors behind the rise in debt and the associated decline in saving out of current income have probably been the combination of increasing house prices and financial innovation," they concluded. In other words, Wall Street and rising home prices made it easier to borrow more money, and consumers did so.

That led to more consumption than would have been expected. Now, the authors say, "an unexpected leveling out or decline" in home values could have the opposite effect.

And, Frederic S. Mishkin, a Fed governor, said in the other paper that this leveling or decline could, in turn, have a bigger effect on the economy than the Fed anticipated.

"Although I generally do not place the housing and mortgage markets close to the epicenter of previous cases of financial instability," he wrote, "I would note that the current situation in the U.S. could prove to be different."

Mr. Mishkin said he had modified one Fed economic model, concluding that a 20 percent fall in home prices could cause consumer spending to fall by 2 percent within two years, about twice what the old model forecast.

But that was not the point Mr. Mishkin wanted to emphasize. Instead, his model showed that much of that damage could be averted if the Fed acted rapidly to cut rates -- as it is now doing.

When Alan Greenspan was at the Fed he often had Fed governors write papers to rationalize and justify changes in Federal Reserve policy. One should read the Mishkin paper mentioned above to understand what the Fed is doing now. If the credit markets don't revitalize in the next few weeks you can expect to see the Fed lower rates again by another 50 points at their October FOMC meeting no matter where the Dollar, Gold, or the DOW are. They have signaled that they don't give a damn about the Dollar. All they care about is Wall Street.

One could look at this another way though. One could say that they don't care about inflation because they see a total bust in housing that will create deflationary pressures in the economy. Mishkin's paper projects negative GDP growth for the next five years, a Federal Funds rate falling two full points lower, consumer spending shrinking for five years, and the CPI going down and staying negative if housing prices decline by 20%. These negative trends are expected to begin now and accelerate for two and a half years.

He sees such a housing price decline as very likely as house prices fell by 16% from late 1979 through late 1982. Contrary to people who believe that real estate is the best investment you can buy because it never drops, it has dropped in the past. And with bubbles leading to busts it is happening right now. The question remains, when will it stop? When the Nasdaq topped in March of 2000 it didn't bottom for two full years. Real estate topped out a year ago.

Mishkin isn't just a normal Fed governor. He is one of Ben Bernanke's closest friends. The two served at Columbia university together and in 1997 they wrote a book together calling on central banks to make public targets for inflation. Mishkin's views dovetail with Bernanke's.

According to Mark Zandi, co-founder of Moody's Economy.com, housing prices will decline by at least 11% in the next 3 1/2 years. Zandi sees prices in New York city falling from between 1 percent and 7 percent for each of the next five quarters so there is a lot of leeway in his projections. Hey, if we only get an 11% decline and you cut the Fed model projections in half we're still facing a horrible recession.

Mishkin argues that "the task for a central bank confronting a bubble is not to stop it but rather to respond quickly after it has burst." Instead of lower ratings as economic conditions deteriorate as his models do, and show practically a depression coming as a result, he advocates cutting rates all at once just as Bernanke's doctoral thesis about the 1929 stock market crash argues.

What I have to wonder though is what happens if the Fed lowers rates by one percent or more in the next three months and real estate doesn't rebound? These theories have never been tried before by a Central bank. We don't know if cutting rates all at once will prevent the damage caused by a bursting bubble. It has never been tested. Even when the tech bubble burst in 2000, Alan Greenspan didn't lower rates until almost a year later and after the Nasdaq fell to almost half its value.

The problem is real estate is still overvalued just as tech stocks became overvalued in 2000. One would think that real estate will have to drop and return to a normal valuation before it can bottom out, so simply lowering interest rates may not have the wonderful effects that Mishkin and Bernanke hope they will.

What I do know for sure, which is all you need to know to make money, is that they are setting up an inflationary trend. As the Fed prints more money it has to go somewhere. Of course this is bullish for gold and commodities which are now leading the stock market. But it is possible that the DOW and broad market could also continue to go up too.

Neocons Insult Ahmadinejad at Columbia

Kurt Nimmo
Tuesday September 25, 2007

It doesn’t take much to read through the corporate media bombast on Mahmoud Ahmadinejad’s “showdown” at Columbia University, as the Associated Press characterized what in essence was an ambush and a heaping dose of disrespect by the Iranian leader’s surly hosts. In the very first sentence of the report, we learn that “Ahmadinejad defended Holocaust deniers and raised questions about who carried out the Sept. 11 attacks,” both entirely legitimate topics of discussion, that is outside the purview of Bushzarro world.

“Thousands of people jammed two blocks of 47th Street across from the United Nations to protest Ahmadinejad’s visit to New York for the opening of the U.N. General Assembly session. Organizers claimed a turnout of tens of thousands. Police did not immediately have a crowd estimate,” the Associated Press reports. “The speakers, most of them politicians and officials from Jewish organizations, proclaimed their support for Israel and criticized the Iranian leader for his remarks questioning the Holocaust.”

In other words, thousands of people are outraged by something Ahmadinejad never said, a lie fabricated by MEMRI, a Mossad front designated to provide propaganda to convince Americans they are obliged to squander their hard-earned money and precious lives for the sake of Israel’s territorial ambitions, although of course this is rarely mentioned. Instead we are warned ad nauseam the Arabs and Muslims “hate us for our freedom”—to shop until we drop and run up the credit cards—and are keen to slaughter our grade schoolers, thus we have to fight them over there before they swarm over us like “Islamofascist” vermin here with a sword in one hand and a Koran in the other.

If you sincerely believe you are free, attempt to question the Holocaust and see how far you get. For that matter, attempt to discuss the plight of the Palestinians, as Ahmadinejad did, and see how far you get. Simply insisting the Palestinians are human and are grossly and habitually victimized by the Israeli state is a dangerous pursuit, on occasion leading to not only ad hominem attacks but threats of violence, lost careers, as the American political scientist Norman Finkelstein recently discovered, and even prison time, as questioners in Europe and Canada have learned.

“Asked why he had asked to visit the World Trade Center site—a request denied by New York authorities—Ahmadinejad said he wanted to express sympathy for the victims of the Sept. 11 attacks,” the Associated Press continues. “Then he appeared to question whether al-Qaida was responsible, saying more research was needed.”

Indeed, more research is needed, but we will not get it, as the neocons will not be challenged on their preposterous claim that a gaggle of cave dwelling Arabs were responsible and a hand-picked whitewash commission, leaving out enough contrary evidence to fill a large hole at the Fresh Kills landfill site on Staten Island, have put aside all question, at least all questions the corporate media and our Congress critters refuse to ask, preferring instead the absurd claim Arabs defied physical science and magically, as if through a voodoo trance, made Norad stand down on September 11, 2001.

“If the root causes of 9/11 are examined properly—why it happened, what caused it, what were the conditions that led to it, who truly was involved, who was really involved—and put it all together to understand how to prevent the crisis in Iraq, fix the problem in Afghanistan and Iraq combined,” Ahmadinejad said.

Not exactly, although Ahmadinejad will be excoriated severely for the crime of offering a critique. As we know—or a small number of us know—the attacks served as a much anticipated and meticulously plotted “Pearl Harbor event,” not designed to prevent “crisis in Iraq,” and soon enough Ahmadinejad’s Iran, but precisely for the opposite reason—to inflict a series of violent crimes of the sort familiar to the Nazis on the people, culture, and society of the region. Simply reading a few neocon documents makes this perfectly and horrifically obvious, not that we should expect the average American to read anything more or less than the side of his morning cereal box.

Obviously, Mahmoud Ahmadinejad walked into a trap at Columbia University, as he should realize far too many Americans have surrendered to the brutal vision of the neocons and their Jabotinskyite mentors, preferring to insult and harangue foreign visitors and, provided with the appropriate contrived pretext, bomb their nations into Neolithic condition, as the neocons will do soon enough to Iran.

If Ahmadinejad had his wits about him, he would stay as far away from America as possible and prepare the inevitable—cruise missiles and bunker busters with his name attached, a prospect disgusting as children signing artillery shells last summer at Kiryat Shmona, Israel.

Syria refuses peace talks with Israel

UPI
Tuesday September 25, 2007

Senior Syrian officials said Monday the U.S. airstrike on a Syrian nuclear facility Sept. 6 has ruined all chances of peace with Israel.

The announcement came after Israeli Prime Minister Ehud Olmert said earlier Monday there would be no war with Syria, the Jerusalem Post reported.

Olmert said ongoing tension with Syria in the past few weeks would not turn into armed conflict, and while Syria's troops are "on alert," Syrian Information Minister Mohsen Bilal said Syria would not initiate an attack, Ynetnews reported.

Regarding talks with Palestinian President Mahmoud Abbas, Olmert said they "have gained momentum since the Palestinian unity government was dissolved and Hamas took over the Gaza Strip," the report said.

Opposition leader Binyamin Netanyahu challenged Olmert, saying the prime minister was "the only one in the State of Israel who believes (Abbas) is a partner," the report said.

Big Brother is keeping tabs on satnav motorists

Wilton D. Alston
JBS
Tuesday September 25, 2007

A secret 'Big Brother' operation is allowing officials to pinpoint the exact location of thousands of vehicles with satellite navigation systems.

The controversial scheme is built into the small print of a contract between the Department for Transport and the satnav company Trafficmaster.

Currently the 'spy in the sky' system is limited to some 50,000 drivers who have Trafficmaster's Smartnav system.

However, the system could provide the blueprint to monitor the location, speed and journey details of millions of drivers in years to come.

Such a system might be used to manage a system of road pricing, where motorists are charged according to which roads they use and the time of day. It might also be used to identify speeding drivers.

It could also be used by everyone from the police to the taxman to discover whether an individual is

where they claim to have been at any point in time.

The Daily Mail has seen details of the £3million contract. The partnership, which began in July, is described by the DfT and the company as necessary to monitor traffic flows and congestion blackspots.

However, the small print makes clear that the information being collected and handed over to the Government is far more detailed and, potentially, sinister.

The document states: "The unprocessed data to be supplied - by Trafficmaster - will consist of individual vehicle location reports and associated information."

It then gives an example of what this 'associated information' is together with how it should be collated and presented.

This includes a unique number identifying the vehicle, two six-figure Ordnance Survey readings for the location, and the date and time when the information was captured. It also includes what kind of vehicle it is, the speed it is travelling and the direction.

A snapshot of this information is collected at 15-minute intervals and then collated and provided in its raw form to the DfT. A Trafficmaster spokesman said: 'Our responsibility is to provide the data. It is not necessarily our responsibility or decision as to how it is used.'

The revelations will fuel concerns that Britain is turning into a surveillance society.

However, the DfT stressed that all the information is anonymised to ensure they do not have the personal details of drivers.

A spokesman said: "This contract provides anonymous data about sections of journeys made so we have a good understanding of where and when congestion is forming. Without fully understanding the effects of congestion we cannot develop ways of tackling it.

"We have no interest in knowing where people are travelling to and from."

Bush Homosexual Allegations Resurface In New Book

Leola McConnell releases tell-all memoirs

Paul Joseph Watson
Prison Planet
Monday, September 24, 2007

Allegations that George W. Bush performed a homosexual act on current U.S. Ambassador to Poland Victor Ashe in the mid-1980's have resurfaced in the tell-all memoirs of the woman who first made the claim.

Leola McConnell, former Liberal Democratic Candidate for Governor of Nevada and one time prostitute-for-hire, was met with deafening silence on behalf of the majority of the corporate media last year when she sensationally alleged that Bush and Ashe regularly hired bisexual men for secret sex sessions in the 80's when Bush was a private citizen.

"In 1984 I watched George W. Bush enthusiastically and expertly perform a homosexual act on another man, one Victor Ashe," said McConnell.

"Ashe is the current U.S. ambassador to Poland; and he too should come out, like former New Jersey Gov. James McGreevy, and admit to being a gay American."

"Other homo-erotic acts were also performed by then-private citizen George W. Bush. I know this because I performed one of them on him myself."

According to Radar Online, in the year since McConnell made the claim, she has been subjected to constant harassment and death threats. An attempt to get her story told in the pages of Larry Flynt's Hustler Magazine fell through, so she has chosen to self-publish a series of memoirs called Lustful Utterances.

In the books, McConnell (pictured below) also claims to expose a network of clientele that regularly enjoyed her "services", most of which come from the Evangelical wing of the Republican Party and the Neo-Con crowd.

Bush is a regular attendee at the the all-male Bohemian Grove club, an annual gathering of the elite which takes place at a forest encampment in Monte Rio, California. In 2004, the New York Post reported that homosexual porn stars were being hired by the Grove to "service" the members, supposedly without their knowledge.

However, the Grove is notorious for its homosexual activity and a reporter who worked at the camp during the summer of 2004 and 2005 told us that he was regularly propositioned by men seeking homosexual intercourse.

On June 29 1989, the Washington Times' Paul M. Rodriguez and George Archibald reported on a Washington D.C. prostitution ring that had intimate connections with the White House allegedly all the way up to President George H.W. Bush. According to the story, male prostitutes had been given access to the White House and the article also cited evidence of "abduction and use of minors for sexual perversion."

Photos of George W. Bush embracing Jeff Gannon, the gay escort turned fake news reporter, who was allowed unmitigated access to the White House press corps with no background investigation or credentials, were popular at the height of the Gannon/Guckert scandal.

Newsmax Presidential Poll Skewed Against Ron Paul

National Expositor

Tuesday September 25, 2007

Below is a copy of the poll from Newsmax's site. Notice how Ron Paul is left out of questions 4 and 5. If Ron Paul supporters leave 4 and 5 blank the final percentage will be skewed towards all neocon candidates. It's a no brainer. Newsmax wants to report that they received many Ron Paul votes, but in the end, Fred Thompson will get the higher percentage. Is Newsmax showing their true colors with this clear bias?

---- Poll Below

Many polls show Fred Thompson could emerge as a leading contender for the GOP nomination in 2008. We want to know what you really think. Key media and others want to know your opinion about Fred Thompson. Vote today!

1) What is your overall opinion of Fred Thompson?

Favorable

Unfavorable

No Opinion

2) Is Fred Thompson your candidate for president in 2008?

Yes

No

3) In the following field, who is your 2008 candidate?

	John McCain	Condi Rice	Mike Huckabee
	Mitt Romney	Rudy Giuliani	Fred Thompson
	Tom Tancredo	Ron Paul	Newt Gingrich
	Duncan Hunter	Sam Brownback	Other

4) In a Republican primary of the following, who would you vote for?

	Rudy Giuliani	John McCain
	Newt Gingrich	Fred Thompson

5) If the 2008 President race was between Fred Thompson & Hillary Clinton, who would you vote for?

Fred Thompson

Hillary Clinton

6) Who did you vote for in the 2004 election?

Bush

Kerry

Other

Results will be announced through NewsMax E-mail News Alerts. All poll takers automatically register for breaking news alerts. It's free and you can unsubscribe at any time.

Link to their poll - http://polls.newsmax.com/thompson/?p=1&PROMO_CODE=32EC-1&gclid=CK-70oa73I4CFQ2aOAodyW9_pg

Gordon Brown's vision: UK as a work camp

Andrew Gimson
London Telegraph
Tuesday September 25, 2007

Gordon Brown received his most enthusiastic applause before he had spoken: there was real warmth in the greeting extended to the new Prime Minister as he arrived on the podium.

But as Comrade Brown addressed the party, he achieved a most dispiriting effect.

It was admirable stuff, at least in parts, but there was so much of it and such unrelieved earnestness and such a continual and relentless emphasis on hard work.

Comrades, we are building a land fit for workaholics and if you cancel your holiday in order to get the new tractor factory finished on time, you are a hero of our time.

The Prime Minister has resolved that for the greater good of us all, he will turn Britain into a work camp.

If you work hard, things will go well for you, or as Comrade Brown put it: "If you try hard, we will help you make the most of your talents."

But he warned that "immorality" will not be tolerated.

Comrade Brown expects "discipline, respect, responsibility", and "anyone who is caught selling drugs or using guns will be thrown out".

What is more, he thundered, "No one who sells drugs to our children or uses guns has the right to stay in our country."

We are surprised that some commentators said they could find "nothing new" in Comrade Brown's speech, for it seems to us that his promise to deport drug dealers and gun-toting criminals is a striking innovation in penal policy.

But perhaps the Brownites will point out that it is simply a return to the wholesome 18th-century practice of deportation, from which the American colonies and Australia benefited so enormously, receiving as they did so many of the most energetic and freedom-loving inhabitants of these islands.

We cannot help wondering how easy Comrade Brown will find it to deport French or German criminals.

But where there is a will, there must be a way, and the vital thing, as the Prime Minister pointed out, is to defend our British way of life.

The British way of life used to include a place for the bumbler, the idler and the joker and used to value freedom and spontaneity over state control and regimentation.

We are told that people in the olden days used sometimes to laugh at authority and liked to sit down for a cup of tea and a chat, and even thought it a good idea, at the end of the day, to relax with a pint of beer and a cigarette.

But that almost unimaginably barbaric era is over and so is the ridiculous notion that the answer to some of our problems might be to give people more freedom, not less.

So Comrade Brown told the conference: "We will send out a clear message that drugs are never going to be decriminalised."

Some of us could not help raising an eyebrow as we heard the word "never".

It appears that Comrade Brown intends to guide our destinies until the end of time.

Surely he has not already succumbed to the monstrous vanity of thinking that his moral tyranny, firmly buttressed by extracts from his estimable father's sermons, will endure forever?

As if sensing that he had failed to delight everyone, and had even inspired vague, involuntary feelings of gloom in some of his supporters, Mr Brown told the conference at the end of his address: "Sometimes people say I am too serious and I fight too hard and maybe that's true."

One of the things people actually used to say about the Brownites, in the long years before their man got the top job, was that they could never see a belt without hitting below it.

But those days are also past and moral seriousness lies at the heart of the appeal the new Prime Minister is making to us.

His tone of voice is different, but Mr Brown turns out to be every bit as self-righteous as Tony Blair.

Giuliani Party Seeks $9.11 Per Person

AP
Tuesday September 25, 2007

A supporter of Rudy Giuliani's is throwing a party that aims to raise $9.11 per person for the Republican's presidential campaign.

Abraham Sofaer is having a fundraiser at his Palo Alto, Calif., home on Wednesday, when Giuliani backers across the country are participating in the campaign's national house party night.

But Sofaer said he had nothing to do with the "$9.11 for Rudy" theme.

"There are some young people who came up with it," Sofaer said when reached by telephone Monday evening. He referred other questions to Giuliani's campaign.

"I'm just providing support for him. He's an old friend of mine," Sofaer said of Giuliani.

Sofaer was a State Department adviser under President Reagan and is a fellow at Stanford University's Hoover Institution

Giuliani's campaign had no immediate comment.

According to the invitation, "$9.11 for Rudy" is an "independent, non-denominational grass-roots campaign to raise $10,000 in small increments to show how many individual, everyday Americans support `America's Mayor.'"

Giuliani was mayor of New York during the Sept. 11 terrorist attacks.

US plans to disintegrate Iraq

Press TV
Tuesday September 25, 2007

The US Senate is planning to vote on a proposal backed by Democratic Senator Joseph Biden to divide war-torn Iraq based on ethnic lines.

Advocates of the plan, which is to be voted as soon as Tuesday, claim that the plan would allow US troops to eventually go home without leaving chaos behind.

The Plan, which calls for an autonomous federation of Kurdish, Shia and Sunni regions has come under fire by critics, who say Iraq's ethnic groups who live side-by-side in cities and inter-marry are not divided by lines on a map.

The bipartisan Iraq Study Group, which delivered recommendations in December, warned division could trigger mass population flows, the collapse of the Iraqi security forces and ethnic cleansing by strengthened militias.

Bush Predicts Hillary For Left Hand Puppet

Says she has the right elite connections and financial backing to win

Steve Watson
Infowars.net
Monday, Sept 24, 2007

President Bush has declared that Hillary Clinton will win the Democratic nomination, with the White House also declaring Barak Obama to be "condescending" and "intellectually lazy".

The pseudo endorsement comes, according to the AP, in a new book by author Bill Sammon entitled Evangelical President set for release Monday.

“She's got a national presence and this is becoming a national primary,” Bush says “And therefore the person with the national presence, who has got the ability to raise enough money to sustain an effort in a multiplicity of sites, has got a good chance to be nominated.”

Bush stopped sort of saying Hillary would win the election however stating:

“I think our candidate can beat her, but it's going to be a tough race... I will work to see to it that a Republican wins, and therefore don't accept the premise that a Democrat will win. I truly think the Republicans will hold the White House.”

The President's pick of Hillary for nominee is not surprising given that she has supported every major Bush policy with as much if not more zeal.

Clinton voted for the Patriot Act and she voted for the war in Iraq, but so many Democrats are blinded by the cult of personality that they will overwhelmingly vote to put this crime family back in office. While we have made some progress in educating liberals as to the phony staged consensus of the left-right paradigm, the fact remains that a majority still see the White House as some kind of political super bowl, where the success of their 'team' is the be all and end all - to the expense of America as a whole.

"I felt that it was appropriate under the circumstances, which really went back to 1998 under the Clinton administration's conclusion that the regime had to change, that the President (Bush) had authority to pursue that goal," said Hillary after giving her personal approval for the mess in Iraq.

Clinton is the ultimate elitist and represents the Democrats supposed base, the poor and downtrodden, about as much as Lindsay Lohan represents grace and dignity. She was sure to inform the likes of David Rockefeller and Queen Beatrix of the Netherlands as to her presidential aspirations during her visit to last year's Bilderberg conference in Ottawa Canada. Bilderberg has a proven history of acting in a kingmaker capacity. Both Bill Clinton and Tony Blair attended before becoming President and Prime Minister and the media reported that Bilderberg selected John Edwards as Kerry's running mate in 2004.

Bush is right to point out that Hillary has the ability to raise the most money, given that Hillary's presidential financiers include Neo-Con kingpin and Fox News owner Rupert Murdoch, with whom she often meets and parties with along with Roger Ailes and other Republican big wigs. While Bill has been hanging around with the Bushes, Hillary has also been living it up with the likes of Newt Gingrich, Bill Frist, John McCain and Rick Santorum.

Such elite back slapping and shoulder rubbing again highlights that when it comes to getting ahead it pays to be on the same page.

The Anglo-American aristocracy, big businesses and banks have long been pulling the strings behind the curtain in the theatre of politics and underlings such as the Clintons and the Bushes know what they have to do to satisfy their desire for political control.

We have continually exposed how Clinton and the Bushes personally profited from massive drug smuggling operations through Mena, while Clinton was Governor of Arkansas. Alex Jones has interviewed multiple former CIA officers who were unloading the cocaine. Bush Snr, met eleven times with the Clintons in the year before Clinton announced his run for President. Teenagers Don Henry and Kevin Ives were murdered for accidentally witnessing a CIA cocaine smuggling operation in Mena. Bill Clinton aided in the cover up, as well as the money laundering. The Clinton-Bush relationship is a long and fruitful one.

The Clintons and the Bushes have been known to vacation together in more recent times. Last year on CBS, Clinton revealed that he looks upon the Bushes as a surrogate family, and how Barbara Bush refers to him as "her son". Is this really a picture of two distinct and opposed political ideologies pitted against one another?

In 2005, George W invited both Clintons as guests of honor and praised them to the hilt as he unveiled portraits of the two to be hung in the White House. Bush described him as having "...a great compassion for people in need... a man of enthusiasm and warmth". This after Bush's 2000 campaign was built around Clinton having no honor or dignity whilst in the White House.

Hillary returned the compliment a year later declaring that she has a good personal relationship with the Bushes and that she considers the president to have "a lot of charm and charisma".

Another Clinton in office would mean America being under the thiefdom of either a Bush or a Clinton for a total of at least 32 years, 36 if Hillary is re-elected (many now acknowledge that H.W. Bush pulled the strings as VP during the Reagan era), and they still say anyone can become President! What a pathetic joke!

Forecasters are already predicting a success for the Senator, meaning Americans will probably be living under the same hierarchical oligarchy that brought them rampant illegal immigration, the devaluation of the dollar, the gigantic deficit, 9/11, and hatred of the U.S. around the world. The electorate got bored of drinking Coke so now the establishment is going to provide Pepsi.

Bush and his cadre have set multiple police state precedents that the Democratic opposition has proven it offers no hope of rescinding. Bush spies on Americans with no regard for the Bill of Rights or even the meager statutory restraints imposed on him, and all the Democrats do is whine that they were not in on the snooping, and that next time they want to be informed. Of course, they have an interest in keeping the police state healthy and strong. The idea that Hillary Clinton would be more sensitive to civil liberties if she were at the empire’s helm is too absurd for words.

We need to continue to push for the American public to vote for a real anti-war candidate, Congressman Ron Paul, a man who voted against the illegal invasion of Iraq unlike Hillary Clinton and who also unlike Hillary is firmly opposed to embroiling America in any further foreign entanglements such as Iran and opposes the further strangulation of freedom at home.

Ron Paul is the only candidate who can beat Hillary Clinton and wrestle America free from the ownership of the same gaggle of crooks that have ruthlessly sat on their autocratic power monopoly for the past 30 years.

Misery may be just beginning, warns IMF

By Edmund Conway, Economics Editor : Telegraph UK

Last Updated: 12:16am BST 25/09/2007

	The US housing market faces further falls if credit market problems persist

Even when the financial waters are calm, the International Monetary Fund's Financial Stability Report can make for worrying reading. When markets are in the midst of a major crisis, it can be extremely disturbing.

The message from the latest of these risk assessments is that this crisis is no flash in the pan. The likelihood of further market crunches has increased significantly, it said. Even if these do not occur, there will still be major knock-on effects on the economy.

Jaime Caruana, chief author of the report, said: "After a long period of benign conditions, the financial system is enduring a significant test. This has important implications for the economy. We expect that the process of adjustment will be protracted and there will be implications in terms of the lessons that need to be drawn. There may be some regulatory changes which need to be examined."

He predicted a slowing of the global economy's growth, and said it could help to push up inflation, as markets realise that money is likely to be considerably more expensive in the future.

The report was even more foreboding, saying: "The consequences of this episode should not be underestimated and the adjustment process is likely to be protracted. Credit conditions may not normalise soon, and some of the practices that have developed in the structured credit markets will have to change."

The probability of major financial institutions defaulting has risen dramatically, as jittery investors withdraw money from the market.

With the crisis having originated in the US, all eyes are now on the American property market. The report warned that problems in the credit markets could push US property prices even lower, while the world economy will suffer if the high interest rates in credit markets persist.

"The chances of more severe tightening of credit conditions cannot be dismissed," it said. "Such a tightening could have significant global macro-economic consequences, with the incidence of such tightening falling most heavily on more marginally creditworthy borrowers." Meanwhile, the sub-prime crisis is likely to last "at least through 2008", with more families defaulting as the low introductory "teaser" rates rise, the report said. It added that even if house prices fall only 5pc and then stabilise, losses from the sub-prime defaults would still reach $170bn (£84bn), with a quarter of this lost by banks and the remainder by holders of mortgage-backed securities.

In its latest update of its economic forecasts next month, the IMF is expected to slash its forecast for US economic growth next year – perhaps to as low as 1pc-1.5pc.

Although the crisis has mainly affected US and European markets so far, developing economies are also at risk. In some countries, banks have borrowed abroad in foreign currencies to lend domestically, and with little capital to rely on they are vulnerable to the problems in Western credit markets.

The assessment – given extra weight as the IMF is notoriously conservative with its forecasts – will be a major disappointment to many in the markets who expected a quick recovery.

The report said the crisis stemmed in part from three key weaknesses:

• Uncertainty and poor information about the risks associated with complex financial instruments. Greater transparency is needed.

• Globalisation has meant crises spread faster around the world since, for example, US mortgage debt is owned by investors from Germany and the UK to China and Australia.

• Investors have become over-reliant on ratings agencies which grade various debt instruments. It concluded the agencies should introduce a special ratings scheme for complex structured credit instruments – the products at the centre of the turmoil. It added that institutional investors "must ensure their investment mandates do not lead to an over-reliance on agency letter ratings, and that they do not (implicitly) delegate the job of examining complex assets to ratings agencies."

A Fed panic and a massive bailout of American banks paid for by the entire world

Rodrigue Tremblay
Online Journal
Monday September 24, 2007

Manias, panics, and crashes are the consequence of an economic environment that cultivates cupidity, chicanery, and rapaciousness rather than a devout belief in the Golden Rule." --Peter L. Bernstein, Foreword to Manias, Panics, and Crashes (4th ed.) by C. P. Kindleberger

"In a crisis, discount and discount heavily." --Walter Bagehot (1826-1877), British economist

"The job of the Federal Reserve is to take away the punch bowl just when the party starts getting interesting." --William McChesney Martin (1906-1998), Fed Chairman (1951-1970)

"The dysfunctional state of American politics does not give me great confidence in the short run.'' --Alan Greenspan, Fed Chairman (1987-2006)

The mismanagement of money and credit has led to financial explosions over the centuries. The causes, cures and consequences of such financial catastrophes are most often repetitive. Indeed, such financial collapses are usually the result of the unbridled greed and cupidity of financial operators and of the lack of necessary supervision by public institutions designed to protect the public and the common good.

For example, after the October/November 1907 financial crisis in the United States, the idea initially advanced by banker Paul Warburg to establish a partially private and partially public Federal Reserve System of banking was finally adopted in 1913. The Fed thus became the lender of last resort for banks that find themselves in an illiquid position. It was only after the stock market crash of 1929, however, that the Securities and Exchange Commission (SEC) was established, in 1934.

But even with institutions and regulations in place, when they are inoperative, corrupt or ill-adapted, financial crises can still occur. And the current financial crisis is there to remind us of this fact.

On September 18, the Fed showed some panic and announced a larger than expected half percentage point cut in both the federal funds rate and in the discount rate, and this after having slashed its discount rate by a half point on August 17, in order to facilitate borrowing by America's largest banks and to facilitate the bailout of their affiliates and other operators, such as hedge-funds, caught in the sub-prime loans crisis. In so doing, the Bernanke Fed is following Bagehot's advice for aggressive discounting in a situation of financial crisis. The only problem is that Bagehot's rule calls for the central bank to lend copiously in times of critical credit stringency . . . but at a high rate of interest. By lending to troubled lenders at reduced preferential rates, the Fed is acting as their "government," i.e. subsidizing their risky loans operations and taxing anybody else who holds American dollars. It is not only attempting to make them more "liquid," but also more "solvable" and less likely to fail.

This raises three interesting questions. First, who pays for the bailout of U.S. financial institutions? Second, what are the longer-run consequences of the massive bailout undertaken by the Fed? And third, why did the Fed let the financial situation deteriorate to such an extent that an entire sector of the economy is being clobbered and its collapse is threatening the whole economy?

First, we must consider that the U.S. dollar is still a key reserve currency, although losing ground to the euro, and it is still being held in massive amounts by most central banks in their foreign reserves, and also by private banks, commercial and economic entities and individuals around the world. For example, in early 2007, foreign central banks alone held some two and a quarter trillion in U.S. dollars reserves, which represented about 66 percent of their total official foreign exchange reserves, with a bit more than 25 percent being held in euros.

Since the dollar is losing its purchasing power, both in absolute and relative terms, central banks and other foreign investors have been "taxed" by the American Fed's policy of benign neglect regarding the dollar. In real terms, the seigneurage tax on foreign holders of the dollar can be measured by taking the difference between the annual rate of depreciation of the dollar vis-à-vis major convertible currencies and the short-term rate of interest on these reserves. For example, if the annual rate of depreciation of the dollar is 5 percent and the short-term rate of return on U.S. T-bills is 4 percent, central banks are losing some $22.5 billion. Since private foreigners hold more than two trillion in short-term dollar denominated debt, the net annual loss of foreign holders of U.S. dollars can easily reach $50 billion a year. The conclusion is easy to see: Not only have foreigners been heavily financing the large U.S. government's deficits over the last six years, but they are now being called upon to help finance the generous bailout of American financial institutions.

Investors both abroad and in the U.S. know that official inflation figures are tilted on the low side for many people, essentially because they are designed to reduce the weight given in the indexes to goods and services whose prices increase the fastest, but also because housing costs and asset prices are only partly taken into consideration. This could explain why inflation expectations are on the rise, even though official inflation figures do not register an increase in inflation. Too much easy money as experienced over the last few years at first fuels asset inflation, but sooner or later it shows its ugly head in the prices of all commodities and in the prices of all goods and services. With the current drop of the dollar, Americans can be expected to pay more for a lot of items, such as fuel and food. This will translate to a lower standard of living.

Already, the price of gold, the price of oil and the prices of other commodities are on their way up and can serve as inflation bellwethers. The behavior of long-term interest rates that incorporate inflation expectations is also a good indicator of future inflation. With the Fed printing money and increasing the money supply on a high scale as if it were dropping money from a helicopter, thus the nickname of Fed Chairman Ben "Helicopter" Bernanke, short-term interest rates will drop for awhile, but long-term interest rates will be edging up, unless a deep recession steps in.

Secondly, a massive bailout as the Bernanke Fed has undertaken raises the question of moral hazard present in any massive central bank rescue intervention, after it has failed to properly regulate the risky activities of the banks it supervises. Indeed, by accepting mortgage-backed securities as collateral for huge more or less longer-term loans to American banks and brokers, at reduced interest rates, the Fed is in effect rewarding the very institutions which acted the most irresponsibly over the last four or five years, while saving its own face for having failed in its regulatory mission. The message is loud and clear: American financial institutions can indulge in creating "innovative" risky artificial credit instruments, shifting the risks to unsuspecting borrowers and investors while reaping juicy fees and rewards, and when things turn sour, as can be expected, the Fed will come to their rescue and bail them out with cheap and extended loans. That is a good way to carelessly encourage greedy and out-of-control financial institutions to create successive disorderly and disruptive financial crises.

Indeed, the Bernanke Fed is presently taking the pain of the consequences away from financial institutions that acted irresponsibly, and for some, as former Fed Chairman Alan Greenspan has said, which have acted criminally. This is a clear case of moral hazard.

If old regulations are not implemented or if no new regulations are put into place, such a massive bailout will insure that American financial institutions will continue in the future to pursue the fast buck in creating risky artificial capital, without due regard to the risks involved for small borrowers and small savers, while the Fed will take responsibility for shifting losses partly on itself but mainly to holders of American dollars. In effect, the Fed is suspending market discipline for the big financial players it puts under its protection, while letting market discipline crush small homeowners and small investors who bought now foreclosed houses on shaky mortgages or who invested their savings in fraudulent and risky collateralized debt obligations (CDOs). That is the net result of applying Bagehot's rule only in part.

The third question is why both the Greenspan and the Bernanke Fed did not remove the punch bowl of easy money and easy credit sooner when things began getting ugly in the sub-prime mortgage market during the 2003-2007 period. Why did they appear paralyzed and do nothing? Former Fed Chairman Alan Greenspan has an easy and self-serving explanation. Before 2003, he was afraid of an onset of deflation and that is why the Fed brought its key lending rate to 1 percent (from June 2003 to June 2004) for only the second time in history. He also says that there was too much "global savings" around the world and that is what pushed interest rates down. This is a sleight of hands explanation, because if globalization and global savings kept inflation low and long-term interest down, short-term interest rates and money supply increases were under the Fed control at all times. The Fed had no obligation, after 2003, to keep real short-term interest rates so negative for so long. Indeed, as the Bush administration was cutting tax rates to enhance its 2004 reelection prospects and was spending money like a drunken sailor in wars waged in remote lands, the Fed should have taken the contrary route to counterbalance the fiscal impetus this created for the macro economy. In other words, it should have taken the punch bowl away. It did not.

As a consequence, mortgage debt as a percentage of disposable income in the U.S. is at the highest level it has been in 75 years, reaching 100 percent, while consumer debt has risen to its highest level in history. All this makes the economy more vulnerable than it has been since the 1929-39 depression. Another consequence of this binge of easy money has been the frenzy of leveraged buy-outs and industrial concentration that we have observed over the last few years.

Finally, let's put the cherry on the cake. Indeed, there is a most disturbing piece in former Fed Chairman Alan Greenspan's recent memoirs (The Age of Turbulence) and in the explanations he gave in interviews granted to promote his book, and it is his confession that while he was chairman of the Fed he actively lobbied Vice President Dick Cheney for a U.S. attack on Iraq. If this was the case, it was most inappropriate for a central banker to act this way, especially when he had other things to do than lobbying in favor of an illegal war. Does it mean that Mr. Greenspan was an active member of the pro-Israel Lobby within the U.S. government and joined the Wolfowitz-Feith-Abrams-Perle-Kissinger cabal? It would seem to me that such behavior would call for an investigation.

Indeed, to what extent was the pro-Israel Lobby responsible for the Iraq war and the deficits it generated? Already, polls indicate that 40 percent of American voters believe the pro-Israel Lobby has been a key factor in going to war in Iraq and that it is now very active in promoting a new war against Iran. This figure is bound to rise as more and more people confront the facts behind this most disastrous and ill-conceived war. Indeed, how many wars can this lobby be allowed to engineer before being stopped? And, to what extent can the current financial turmoil in U.S. and world markets be traced back to the influence of this most corrosive lobby?

Cheney mulled luring Iran into war with Israel: report

AFP
Monday September 24, 2007

US Vice President Richard Cheney has considered provoking an exchange of military strikes between Iran and Israel in order to give the United States a pretext to attack Iran, Newsweek magazine reported in its Monday issue.

But the weekly said the steady departure of neoconservatives from the administration over the past two years had helped tilt the balance away from war.

One official who pushed a particularly hawkish line on Iran was David Wurmser, who had served since 2003 as Cheney's Middle East adviser, the report said.

A spokeswoman at Cheney's office confirmed to Newsweek that Wurmser left his position last month to "spend more time with his family."

A few months before he quit, Wurmser told a small group of people that Cheney had been mulling the idea of pushing for limited Israeli missile strikes against the Iranian nuclear site at Natanz -- and perhaps other sites -- in order to provoke Tehran into lashing out, the magazine reported, citing two unnamed "knowledgeable sources."

The Iranian reaction would then give Washington a pretext to launch strikes against military and nuclear targets in Iran, Newsweek reported.

When Newsweek attempted to reach Wurmser for comment, his wife, Meyrav, declined to put him on the phone and said the allegations were untrue, the report said.

A spokeswoman at Cheney's office told the weekly the vice president "supports the president's policy on Iran."

UK Police Claim Filming Them Is an Offence

You Tube
Monday September 24, 2007

Film-maker Darren Pollard was clearing up flood rubbish from his fron garden when he noticed the police harassing a youth opposite his house. Darren retrieved his camera and this is what he filmed!

More of Darren Pollards films & documentaries can be seen here: http://video.google.co.uk/videosearch...

Darren Pollards website: http://www.dazp5.pwp.blueyonder.co.uk/

Alan Greenspan's Role in US Dollar Collapse

You Tube

Monday September 24, 2007

Blackwater faces terrorism charges

Press TV
Monday September 24, 2007

The Iraqi Government may refer the case of a shooting incident by US private security company Blackwater to the Iraqi courts within days.

State Minister for National Security Affairs, Shirwan al-Waili, said the Government had received little information so far from the US side of a joint investigation. But he said the Iraqi probe into the shooting was largely completed and that he believed the findings were definitive.

"The shots fired on the Iraqis were unjustifiable," he said. "It was harsh and horrible. "

Waili did not spell out what the investigative committee would recommend to the court, but a preliminary report said "the murder of citizens in cold blood in the Nisour area by Blackwater is considered a terrorist action against civilians just like any other terrorist operations".

An Iraqi official, however, said Baghdad would not rush to expel the US firm because it would leave a "security vacuum" in the capital.

Iraqi investigators have said that they have a videotape showing that Blackwater guards opened fire against civilians without provocation.

The shooting happened while the contractors were escorting a US embassy convoy through Baghdad and eleven people were killed in the incident.

Meanwhile, a newspaper in North Carolina has reported US federal officials are investigating claims made by two former employees of the firm who pleaded guilty to weapons charges. The men are said to be cooperating with investigators as part of a plea bargain. According to the report, the firm was involved in the smuggling of automatic weapons into Iraq but the under-fire security contractor has denied the media reports.

Massive Surveillance Net Keeps Track of Americans' Travel -- Even the Size of Hotel Beds

ROCCO PARASCANDOLA
Newsday
Monday September 24, 2007

The Bush Administration has been collecting detailed records on the travel habits of Americans headed overseas, whether you fly, drive or take cruises abroad -- not simply your method of transit but the personal items you carry with you and the people you stay with, according to documents and statements obtained by the Washington Post.

They even keep sometimes keep track of what books you read. For as long as 15 years.

In a terrifying front-page article Saturday, the Post outlines the latest in US government surveillance.

According to officials, the records are intended "to assess the security threat posed by all travelers entering the country. Officials say the records, which are analyzed by the department's Automated Targeting System, help border officials distinguish potential terrorists from innocent people entering the country."

The new details suggest a much broader net than that. The details of the program were revealed when a group of activists requested copies of records on their travel and found someone had written a note about their flashlight carrying the symbol of a marijuana leaf.

"The Automated Targeting System has been used to screen passengers since the mid-1990s, but the collection of data for it has been greatly expanded and automated since 2002, according to former DHS officials," the Post said.

"The federal government is trying to build a surveillance society," said John Gilmore, a civil liberties activist in San Francisco whose records were requested and then first revealed in Wired News. The government, he said, "may be doing it with the best or worst of intentions. ... But the job of building a surveillance database and populating it with information about us is happening largely without our awareness and without our consent."

According to Wired, passengers pulled aside for extra screening are those most likely to enter the record books. Gilmore had been pulled aside and border patrol officials took notes of his belongings. Read about the document collection at the Identity Project here.

Homeland Security officials defended the program.

"I flatly reject the premise that the department is interested in what travelers are reading," DHS spokesman Russ Knocke told the paper. "We are completely uninterested in the latest Tom Clancy novel that the traveler may be reading."

According to the Post, "The DHS database generally includes 'passenger name record' (PNR) information, as well as notes taken during secondary screenings of travelers. PNR data -- often provided to airlines and other companies when reservations are made -- routinely include names, addresses and credit-card information, as well as telephone and e-mail contact details, itineraries, hotel and rental car reservations, and even the type of bed requested in a hotel."

The millions of travelers whose records are kept by the government are generally unaware of what their records say, and the government has not created an effective mechanism for reviewing the data and correcting any errors, activists said, the paper said.

The activists alleged that the data collection effort, as carried out now, violates the Privacy Act, which bars the gathering of data related to Americans' exercise of their First Amendment rights, such as their choice of reading material or persons with whom to associate, according to the report.

IMF warns financial market turmoil will continue

Angela Balakrishnan
Monday September 24, 2007
Guardian Unlimited

The impact from the turmoil in financial markets will continue to be felt next year with the US bearing the brunt of the slowdown in economic growth, the International Monetary Fund predicted today.

IMF managing director Rodrigo de Rato said that world growth should remain firm, but will be below levels seen this year and last as downside risks intensify due to the global credit crunch.

The longer the crisis continues, the worse the impact will be, Mr De Rato warned in the IMF's twice-yearly Global Financial Stability report, published today.

"The consequences of the turmoil should not be underestimated. The implications will be significant and far reaching. Credit markets are correcting, but slowly. We aren't at a stage of normality," Mr De Rato said.

Mr De Rato added that most countries should be able to cope with the financial conditions, which he said will have a particular impact on America next year.

"It has an effect on the real economy which will be felt more in 2008, with greater intensity in the United States, less in other areas."

The IMF believes that the period ahead could be difficult as bouts of turbulence are likely to recur, which will prolong the adjustment process.

"Uncertainty regarding overall losses and exposure has raised market and liquidity risks, with potentially broader implications for financial institutions," the report said, adding that a few more months were needed to access the full impact on banks, companies and governments.

The IMF also said there was no quick fix for the credit squeeze sparked by a surge in defaults on US sub-prime home loans to borrowers with poor credit histories.

Financial institutions have become more cautious about lending money to each other in an attempt to limit exposure to the US sub-prime loans that were sold around the world to investors willing to buy packages of asset-backed securities.

Mr De Rato said it was not yet clear whether the credit crisis represented a change in economic cycle or a temporary slowdown in growth.

Central banks have tried to alleviate the credit woes by injecting more liquidity in money markets. The Federal Reserve cut interest rates last week for the first time in over four years, by 50 basis points to 4.75%.

However, the IMF warned that the chances of a more severe tightening of credit conditions could not be dismissed.

Dollar hits fresh lows

By Simon Falush

LONDON (Reuters) - The dollar fell to a record low against the euro for a third straight session on Monday, weighed down by expectations of further U.S. interest rate cuts which are limiting the currency's appeal to global investors.

Investors ignored more complaints from French officials about the euro's strength versus the dollar, which again dropped to a 15-year low against a basket of major currencies.

The Federal Reserve's 50-basis point cut in overnight rates last week to 4.75 percent stoked expectations of even more monetary easing that would erode the dollar's rate appeal compared with the euro and higher-yielding currencies.

"The recent bout of dollar weakness continues, dollar bears are still holding the upper hand," said Kamal Sharma, currency strategist at Bank of America.

Futures prices implied on Monday that the chances of an easing by the U.S. Federal Reserve in October were at 66 percent from 72 percent on Friday's close but still well above the 26 percent priced in a week ago, according to Reuters data.

At least one more quarter percentage point cut has been factored in by the year-end on top of any move in October.

The euro rose to a record high at $1.4130, according to Reuters data, and by 1146 GMT, it traded at $1.4100, up 0.1 percent on the day. The dollar index slipped to a 15-year low of 78.398 and was down 0.1 percent from late U.S. trade on Friday at 78.461.

Market players are keeping a close eye on whether the dollar breaks the all-time low of 78.19 struck on its trade-weighted index in 1992, a level that analysts said would provide a key test of whether the U.S. currency's sell-off deepens or pauses.

Activity was subdued with financial markets in Tokyo, Asia's top currency trading centre, closed for a national holiday. Markets in South Korea and Taiwan were also shut for holidays.

Analysts said the market will remain very sensitive to any news suggesting further escalation of the credit and liquidity crisis.

BANK LOSSES

On Monday, European shares dipped after it emerged that Deutsche Bank was likely to face significant losses as a result of the credit crunch. But they recovered losses to trade slightly up on the day.

Sources familiar with the situation told Reuters the bank's profit could be hit by up to 1.7 billion euros ($2.4 billion) when it revalues loans that dwindled in value in the wake of a credit crunch.

Meanwhile, the euro's climb to an all-time high above $1.41 has stirred worries about its potential hit to European exports and prompted more criticism of the European Central Bank by the government of French President Nicolas Sarkozy.

A close aide to Sarkozy, Henri Guaino, said the euro's strength against the dollar and yuan was eroding the competitiveness and productivity of firms and the French government could not "stay silent in the face of this absurdity".

But ECB President Jean-Claude Trichet brushed aside the criticism by calling it an outdated debate, saying the central bank's first mandate was to ensure price stability.

The yen gained against the dollar and euro, indicating that continued turmoil in the banking sector is leading to greater risk aversion, analysts said. The euro dipped 0.3 percent to 162.21 yen while the dollar was down 0.4 percent at 114.99.

In a relatively quiet day for data, investors will take cues from speeches from European and U.S. policymakers.

Speakers include Federal Reserve Bank of Dallas President Fisher at 1300 GMT and Treasury Assistant Secretary Ryan Speaks at 1310. Swiss National Bank Vice Chairman Philipp Hildebrand will speak at 1600.

In the U.S., investors this week will get further insight into the housing decline that has sparked a global credit crisis, with the release of existing and new home sales for August.

"The US existing home sales (on Tuesday) and new home sales (on Thursday), ... are likely to re-fuel fears of a hard landing in the U.S., leaving the market intensifying speculation about more aggressive U.S. monetary easing," said Dresdner Kleinwort in a note to clients.

(Additional reporting by Gertrude Chavez-Dreyfuss)

Iran Closes Border With Northern Iraq

Monday September 24, 2007 2:46 PM

By YAHYA BARZANJI

Associated Press Writer

SULAIMANIYAH, Iraq (AP) - Iran closed major border crossings with northeastern Iraq on Monday to protest the U.S. detention of an Iranian official the military accused of weapons smuggling, a Kurdish official said.

At least four border gates were closed starting Sunday night and one remained open Monday, Sulaimaniyah Gov. Dana Ahmed Majeed told The Associated Press.

The move threatens the economy of Iraq's northern region - one of the country's few success stories - and also appears aimed at driving a wedge between Iraq and the Americans at a time of friction over a deadly shooting in Baghdad involving the security firm Blackwater USA.

In Tehran, the public relations department at the Interior Ministry said no decision had been made to shut the border.

However, the semiofficial Mehr news agency reported that five border points had been closed to protest the detention of the Iranian, who has been identified as Mahmudi Farhadi. He was arrested four days ago during a raid on a hotel in Sulaimaniyah, 160 miles northeast of Baghdad.

The closure will continue until Farhadi's unconditional release, the Mehr agency quoted Ismail Najjar, general governor of Iranian Kurdistan province, as saying.

U.S. officials said Farhadi was a member of the elite Quds force of the Iranian Revolutionary Guards that smuggles weapons into Iraq. But Iraqi and Iranian leaders said he was in the country on official business and with the full knowledge of the government.

Kurdish authorities said the move affects crossing points near the border towns of Panjwin, Haj Omran, Halabja and Khanaqin. A crossing at the town of Shena remained open, Majeed said.

Darseem Ahmed, an official at the gate near Haj Omran, 225 miles northeast of Baghdad, said up to 400 trucks use that crossing point daily.

A Kurdish merchant from Sulaimaniyah said he had three trucks loaded with construction materials stuck on the Iranian side of the border near Panjwin.

``They didn't allow them to cross, they closed the gate,'' Khalid Aman Sulaiman said, expressing concern the move would cause prices of imported products to spike. He said he would consider bringing the goods across illegal routes if the border points don't open within a week.

Jamal Abdullah, a spokesman for the autonomous Kurdish government, said the Iranian move ``will have a bad effect on the economic situation of the Kurdish government and will hurt the civilians as well.''

``We are paying the price of what the Americans have done by arresting the Iranian,'' he said.

Abdullah said the regional government had asked the central government to contact Iranian officials in Baghdad to stress that Kurdish authorities had no role in the detention.

``If this closure continues it will have an effect on the historical relations between the Kurdish government and the Iranian state,'' Abdullah added.

A U.S. military spokesman, Rear Adm. Mark Fox, also said Sunday that Iran has smuggled advanced weapons into Iraq for use against American troops, including the Misagh 1, a portable surface-to-air missile that uses an infrared guidance system and could threaten U.S. aviation.

Iran has denied U.S. allegations that it is smuggling weapons to Shiite militias in Iraq, a denial that Iranian President Mahmoud Ahmadinejad reiterated in an interview with CBS' ``60 Minutes'' aired Sunday.

``We don't need to do that. We are very much opposed to war and insecurity,'' said Ahmadinejad, who arrived in New York Sunday to attend the U.N. General Assembly. ``The insecurity in Iraq is detrimental to our interests.''

But the U.S. insists it has evidence to the contrary. On Monday, U.S. troops killed one suspected militant and detained four others said to be involved in kidnapping operations run by Iranian-backed Shiite militias in Baghdad's Shiite district of Sadr City, the military said.

The latest detention of an Iranian official also has taxed relations between Iraq and the United States, already strained after the shooting deaths of 11 civilians at Nisoor Square in Baghdad on Sept. 16 - allegedly at the hands of Blackwater, one of three companies hired by the State Department to protect U.S. diplomats and other Western civilians.

Prime Minister Nouri al-Maliki has said the Blackwater incident was among several ``serious challenges to the sovereignty of Iraq'' by the company, adding he would take the case up in discussions with President Bush on the sidelines of the U.N. General Assembly.

Blackwater, of Moyock, N.C., denies its guards fired illegally and says they were defending themselves from armed insurgents.

Al-Maliki also condemned Farhadi's arrest, saying he understood the man had been invited to Iraq.

``The government of Iraq is an elected one and sovereign. When it gives a visa, it is responsible for the visa,'' al-Maliki told the AP in an interview Sunday in New York. ``We consider the arrest ... of this individual who holds an Iraqi visa and a (valid) passport to be unacceptable.''

Last week, President Jalal Talabani, a Kurd, demanded the Iranian's release and warned in a letter to America's top commander in Iraq, Gen. David Petraeus, and U.S. Ambassador Ryan Crocker that Iran had threatened to close its border with Iraq's Kurdish region over the case - a move that would cause considerable damage to trade in the prosperous Kurdish region.

Iranian Foreign Ministry spokesman Mohammad Ali Hosseini said Sunday that Farhadi was in charge of border transactions in western Iran and went to Iraq on an official invitation.

The U.S. military said the suspect was being questioned about ``his knowledge of, and involvement in,'' the transportation of EFPs and other roadside bombs from Iran into Iraq and his possible role in the training of Iraqi insurgents in Iran. No charges against the Iranian have been filed yet.

In violence Monday, at least 16 people were reported killed or found dead nationwide. The deadliest attack was a suicide truck bombing that struck an Iraqi checkpoint near the northern city of Tal Afar, killing three security forces and three civilians and wounding 16 other people, said Mayor Najim Abdullah.

The World Health Organization, meanwhile, said a woman who was the only confirmed case of cholera in Baghdad had died Sunday. That brought the number of deaths from the disease in the country to 11.