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Today's Stories August 6, 2007 Uri Avnery White Elephants: Bush's Middle East Arms Deals August 4 / 5, 2007 Alexander Cockburn Rupert Murdoch and the Luck of the Bancrofts Peter Linebaugh Speaking in Irish Tongues Saul Landau Faith-Based War Alan Farago The Candidates and the Collapsing Economy Dave Zirin When Domes Attack: Even in Minnesota Barucha Calamity Peller Oaxaca is Not Over Anthony DiMaggio Double Standards in U.S. Aid to the Middle East Dave Lindorff Spy Power: Bush Demands, Democrats Deliver--Again and Again and Again Fred Gardner Write Off Your Congressman Nicola Nasser The Iranian Option Benjamin Dangl Privatizing Repression in Paraguay Rannie Amiri Bribe, Divide and Conquer Daniel Gross CSR on Trial: Starbucks Behind the Brand Sherwood Ross Obama Renounces Use of Nuclear Weapons Manuel Garcia, Jr A Bridge Truth Movement?: From 9/11 to Minneapolis Missy Beattie The First Mannequin and the "Crime Scene" Ron Jacobs The Outlaw Trip to Mexico: Goin' Down the Road Feelin' Bad Website of the Weekend Photos: Texas Immigrant Prison   August 3, 2007 Gabriel Matthew Schivone An Interview with Noam Chomsky on Responsibility, War Guilt and Intellectuals Jonathan Cook Israel's Jewish Problem in Tehran Patrick Cockburn Sunnis Walk Out of Iraq Government Little Steven Van Zandt Die, Greedy Swine! Die! Die!: How the Record Companies are Killing Rock Music Christopher Brauchli Bush Makes Putin Look Like James Madison D. K. Wilson Two Sides and a Middle: Michael Vick Ain't the One to Ask Linda Ford and Ira Glunts Maxwell's Silver Hammer: Syracuse University Enlists in the Global War on Terror Kelly Overton The Casualties of Green Scare: the Feds' War on the Animal Rights Mvt. Monica Benderman In Freedom's Name Manuel Garcia, Jr. Minneapolis Bridge Collapse: Was Cheney at the Scene? Website of the Day A Cinematic Look at the Police State in Action   August 2, 2007 Paul Craig Roberts The Return of the Robber Barons Stanley Heller Report from the Land of Apartheid Eric Ruder Fighting PTSD; Fighting the Army Robert Fantina Still Getting It Wrong: the NYT and Iraq Alan Farago The Toxic Mortgage Waste Crisis Chris Floyd Chertoff, Chiquita and Death Squads Franklin Lamb Lebanon's Crucial Special Elections Sen. Russ Feingold Closing the Book on the Abramoff Era Anthony Papa Drug Treatment isn't a Silver Bullet Norman Solomon The Big Guns of August Website of the Day Louie, Louie Video Contest   August 1, 2007 Debbie Nathan More Secret Payments by Former NYT Reporter to Web Porn Star Surface in Nashville Courtroom Fred Gardner Ciao, Michelangelo Gary Leupp Why Iraq's Best-Loved Athlete Can't Go Home David Rosen America's Top 10 Political Sex Scandals Winston Warfield Is the Tillman Case Still a Coverup? Daniel McBride Lessons from Bomber Harris: If the US Strikes Pakistan Glen Ford The Corporate Plan to Crush Black Resistance Thomas P. Healy The Toxic Career of Indiana's Environmental Commissioner John V. Whitbeck The Five Percent Solution David Krieger Nuclear Weapons and the University of California Website of the Day The Tragic Story of Hisham Mohammed   July 31, 2007 Kathy Kelly Dancing in the Darkness: the Story of Abu Mahmoud Clancy Sigal The Ghosts of Passchendaele Paul Krassner Assholes of the Week: From Baby Doll to Cheney Joe DeRaymond Return to the Republic of Death? Diane Christian "Winning": What Bush Could Learn from the Shade of Achilles Chris Floyd Good News is No News: Why the Bush Adm. Buries Accounts of Extremist Recantations Ramzy Baroud Bush's Real Agenda in Palestine Alan Farago Battle for the Soul of Florida Fidel Castro In Spite of Everything: Reflections on the Pan American Games Dan Bacher The Fish Terminator: Schwarzenegger's Campaign to Build the Delta Canal and More Dams   July 30, 2007 Marjorie Cohn: Independent Counsel Time Patrick Cockburn Four Million Iraqis on the Run Peter Quinn Irish in America Uri Avnery A Warning to Tony Blair John Ross Zapatista Intergalatica Lands on Earth Ron Jacobs Free the San Francisco 8 David Vest Farewell, Old Friend: Another Legend of the Blues is Gone Jeffrey St. Clair T99 Nelson: Seduced by a Legend of the Blues Website of the Day Collateral Repair Project   July 28 / 29, 2007 Alexander Cockburn Now the NYT is Selling "Bloodbath" as a Rationale to Stay in Iraq Ralph Nader Rotten Justice Robert Fantina American Lies and Iraqi Nationalism Fred Gardner Prohibitionists Attack, Reformers Fundraise   Yves Engler Handwashing and the Bottomline   July 27, 2007 John Ross Bombing Pemex--or Not? Arthur Neslen Gaza was a Gas for Blair Dave Lindorff Declaring the US a Battlefield: Martial Law is Now a Real Threat Julene Blair The Environmentalist Within Christopher Brauchli Bush Uses Children as Shock Troops in His War on Socialized Medicine Jesse Hagopian Fund the Wounded, Not the War Charles Modiano Manufacturing a Villain: Sports Illustrated's Vilification of Barry Bonds Bill Day The Hollow Environmentalism of Leonardo DiCaprio Walter Brasch Leaders Afraid to Lead M.D. Mitchell Farm Based Camps Website of the Day Fighting Sarcoma   July 26, 2007 Kathleen Christison The Siren Song of Elliot Abrams Andy Worthington Why the Pentagon's Gitmo Study is a Joke Clancy Chassay How the Bush White House Seeks to Destroy Lebanon Marjorie Cohn Showdown Over Executive Privilege Susie Day Apartheid Americana David Price Tour de Witch Hunt: Drugs, Diaries and Purges Marie Trigona Argentina's "Dirty War" Crimes Trial: The Torturer Priest Norman Solomon Media Spin on Iraq: We're Leaving (Sort Of) William S. Lind How to Win in Iraq Natsu Saito Ward Churchill and the Regents at the University of Colorado John Stauber Netroots and the Iraq War: Does Ending It Matter to Them Anymore? Website of the Day Sticking It to the Man   July 25, 2007 Andy Worthington Gains and Losses at Gitmo Gary Leupp Bush Speechwriter, Michael Gerson, Calls for Attack on Syria Ray McGovern The Sad Decline of John Conyers Dr. Susan Block Bonobo Bashing in the New Yorker Joshua Frank Hillary's Neocon: the Imperial Vision of Richard Holbrooke Tina Richards What Harry Reid Doesn't Know About His Own Bill Ben Terrall Indonesia's Bloody Brand of CounterTerrorism Farzana Versey God Acquitted!: Lessons from the Case of Darwood Ibrahim Mohammad Ali Salih A Bomb in My Briefcase? Laura Carlsen A Strange Homecoming: Reflections on the First US Social Forum Ron Jacobs Come to Kennebunkport! Sunsara Taylor Knocked Up is F**ked Up Website of the Day Wal-Mart's Flip Flops: Feet Killers July 24, 2007 Saul Landau How to Walk in Bushtime Kathy Kelly The Plight of Iraqi Refugees in Jordan Russell Mokhiber The Michael Vick / George Bush Thing M. Shahid Alam Islam Now, China Then Patrick Cockburn and Anne Penketh Meeting in Baghdad Dave Lindorff Overcoming John Conyers Binoy Kampmark You Tube You Can't: Failure of a Medium Richard Neville Murdoch's Transplant: a Warning to the Wall Street Journal Cindy Sheehan We Must Move Beyond Politics as Usual Evelyn Pringle Anti-Depressants and Birth Defects: Why is the CDC Downplaying the Risks? Norman Solomon Media Corrections We'd Like to See CP Newswire Reading Harry Potter Not Sinful Website of the Day Sea Islands Black Heritage Festival   July 23, 2007 Andy Worthington Narcolepsy on Gitmo Detainees Uri Avnery A Trap for Fools Patrick Cockburn Turkish Prime Minister Threatens to Invade Northern Iraq Sousan Hammad The Children Without a Title John Walsh Todd Gitlin's Nader Fixation Harvey Wasserman Spinning Kashiwazaki: PR Flacks Rush to Aid of Crippled Nuke Martha Rosenberg The Life and Times of a Hog-Hanging Farmer Collin Baber Here Come the MRAPs: Resurrecting Apartheid Armor for Iraq Reza Fiyouzat Iran's Forgotten Anti-Nuke Movement Stephen Lendman Saving a President: Scare-Mongering and Executive Orders Website of the Day The Port Huron Project   July 21 / 22, 2007 Alexander Cockburn Giuliani and the Dogs of War Werther How to Read a National Intelligence Estimate Ralph Nader Atomic Blowback David Keen Buy Hard: How to Sell an Endless War Fred Gardner Karl Rove, Pothead: When Good Drugs Happen to Bad People Gary Leupp Edelman's Edict: Is Hillary "Reinforcing Enemy Propaganda?" Robert Fantina Fear in Iraq Saker The Future of Palestine: an Interview with Jonathan Cook Rannie Amiri Nasrallah in the Crosshairs: How will the Third Lebanon War Start? Mike Whitney The Crisis in Hedgistan Dr. Susan Rosenthal, MD The Hidden Injuries of Powerlessness: Linking Alienation and Dissociation Monica Benderman Facing the Truth Dan Bacher Deltagate: the Politics of Fish Kills Michael Baney Fujimori's Long Race From Justice Missy Beattie Here, There and Everywhere Ron Jacobs Tremble, Tyrants Adam Engel Radical Language: an Introduction Thomas Naylor California Split: an Open Letter to Schwarzenegger Poets' Basement Landau, Ford and Engel Website of the Weekend Surge in Action   July 20, 2007 Eliza Szabo Fatal Neglect: Civilian Casualties in Afghanistan Pam Martens Doctoring the News: CNN's Sanjay Gupta, Laura Bush and Merck Alan Farago Winners and Losers in the Housing Market Crash Harvey Wasserman Lies and Leaks: The Earthquake That Screamed "No Nukes!" Marjorie Cohn Iraqis will be the Deciders Dave Zirin White Noise and the Black Athlete Anthony DiMaggio American Public Opinion and Israel Scott Liebertz Oaxaca on Edge Linn Washington, Jr. British Cops Assault Rape Allegations Bill Piper / Anthony Papa Flying High?: The Political Junkets of Bush's Drug Czar Ramzy Baroud Bush's War Policy: When Time Heals Nothing Website of the Day The Prankster Art of Mark Jenkins   July 19, 2007 Patrick Cockburn The Next Invasion of Iraq Remi Kanazi Is This Ben Gurion or Hell?: a Palestinian Adventure Through Israel's Largest Airport Winslow T. Wheeler The Surging Costs of the Iraq War Sharon Smith Democrats and Health Care: Behind the Rhetoric Dave Lindorff Killing Cabbies in Iraq Conn Hallinan Have Gun, Will Travel: Mercenaries in Iraq and Afghanistan D. K. Wilson The Michael Vick Case Pulls Back the Veil on Who We Really Are Joshua Frank Democrats as Leviathan: Another Step Toward War with Iran Norman Solomon The Ghost of Wayne Morse Russell Hoffman Rattling the Reactor: Quakes, Fires and Leaks at the World's Largest Nuke Ray McGovern Bush's Wooden Headedness Kills Website of the Day Protesting Power July 18, 2007 Brenda Norrell Spy Towers on the US Border Col. Dan Smith How the US Could "Lose" Saudi Arabia Martha Rosenberg Lord of Crookharbour: the Trial of Conrad Black Conn Hallinan Bombing and Spraying Afghanistan Binoy Kampmark The SIM Card Terror Case Patrick Bond / Rehana Dada Who Killed Sajida Khan? Tom Johnson The Long Road ... to Nowhere Paul Craig Roberts A Free Press or a Ministry of Truth? Bob Quellos Pushing the Poor Out of House and Home Felice Pace Falling for Lieberman's Iran Resolution Robert Weissman National Health Insurance: More Humane and More Efficient CP Newswire Shocking Report Showing Involvement of US Psychologists in Torture Website of the Day Gilad Atzmon Live!   July 17, 2007 Patrick Cockburn Just Another Day in Iraq: 100 Fathers, Mothers and Children Killed Marjorie Cohn Out of Control: Executive Power Plays Evelyn Pringle Inside Bush's FDA David Rosen Moral Hypocrisy on the Hill: the Christian Right, Sexual Scandal and the Pleasures of the Courtesan Susan Miller Width Matters: Displacement and Israel's Wall Franklin Lamb Did the UN Cave to Israel on Lebanon's Shabaa Farms? Don Monkerud Considering Victory in Iraq Harvey Wasserman Nuclear Surge Russell Hoffman Japan Dodges a Radioactive Bullet Dave Lindorff Feingold Turns to Dross Dave Zirin Reclaiming Sports as True Fiction Website of the Day Che at the UN: 1964   July 16, 2007 Gary Leupp Cheney Urges Bush to Strike Iran Ellen Cantarow The Untold Story of Iraqi Women Paul Craig Roberts Impeach Now Allan J. Lichtman The D.C. Madam's Public Service Dan Bacher Cheney and the Klamath: Was the Veep Behind the Nation's Worst Salmon Kill? Patrick Cockburn The Killing of Khalid W. Hassan Manuel Garcia, Jr. Property is Racism James Brooks AIPAC and Mahmoud Abbas: the Undemocratic Road to Defeat Liaquat Ali Khan The Judicial Crisis in Pakistan Julie Flint Suleiman Jamous in Limbo Website of the Day Free Suleiman Jamous!   July 14 / 15. 2007 Alexander Cockburn Support Their Troops? Andy Worthington Gitmo's Tangled Web: Khalid Sheikh Mohammed, Majhid Khan, Dubious US Convictions and a Dying Man Ralph Nader Lawlessness, Waste and Incompetence Robert Fantina The Illegalities of the Iraq War Ron Jacobs Architecture as Military Strategy Joshua Frank Eat, Fight, Screw, Pray: An Interview with Joe Bageant Conn Hallinan Guns, Foundations and Free Trade: How the Right Targets Africa Dr. Susan Rosenthal, MD War and Dissociation John Ross No En Nuestro Nombre!: a Letter to the Mexican Antiwar Movement Fred Gardner Who's Afraid of Cannabidiol? Rannie Amiri A Primer on Israeli Doublespeak Charles Modiano ESPN's Rap Sheet: Pacman as Black Man Anthony DiMaggio America's Parochial Press China Hand Executive Orders and Coercive Diplomacy Missy Comley Beattie Reprobate Rhetoricians Dr. James J. Murtagh, Jr. Harry Potter Battles Big Brother Kenneth Rexroth On Thomas More's "Utopia" Poets' Basement Engel, Davies and Orloski Website of the Weekend GOP Sex Hypocrites: a Slideshow

August 6, 2007 The Junk Credit Crisis Judgment Week on Wall Street By MIKE WHITNEY It's a Bloodbath. That’s the only way to describe it. On Friday the Dow Jones took a 280 point nosedive on fears that that losses in the subprime market will spill over into the broader economy and cut into GDP. Ever since the two Bears Sterns hedge funds folded a couple weeks ago the stock market has been writhing like a drug-addict in a detox-cell. Yesterday’s sell-off added to last week’s plunge that wiped out $2.1 trillion in value from global equity markets. New York investment guru, Jim Rogers said that the real market is "one of the biggest bubbles we’ve ever had in credit" and that the subprime rout "has a long way to go." We are now beginning to feel the first tremors from the massive credit expansion which began 6 years ago at the Federal Reserve. The trillions of dollars which were pumped into the global economy via low interest rates and increased money supply have raised the nominal value of equities, but at great cost. Now, stocks will fall sharply and businesses will fail as volatility increases and liquidity dries up. Stagnant wages and a declining dollar have thrust the country into a deflationary cycle which has---up to this point---been concealed by Greenspan’s "cheap money" policy. Those days are over. Economic fundamentals are taking hold. The market swings will get deeper and more violent as the Fed’s massive credit bubble continues to unwind. Trillions of dollars of market value will vanish overnight. The stock market will go into a long-term swoon. Ludwig von Mises summed it up like this: "There is no means of avoiding the final collapse of a boom brought about by credit expansion. The question is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved." (Thanks to the Daily Reckoning) It doesn’t matter if the "underlying economy is strong". (as Henry Paulson likes to say) That’s nonsense. Trillions of dollars of over-leveraged bets are quickly unraveling which has the same effect as taking a wrecking ball down Wall Street. This week a third Bear Stearns fund shuttered its doors and stopped investors from withdrawing their money. Bear’s CFO, Sam Molinaro, described the chaos in the credit market as the worst he'd seen in 22 years. At the same time, American Home Mortgage Investment Corp---the 10th-largest mortgage lender in the U.S. ---said that "it can't pay its creditors, potentially becoming the first big lender outside the subprime mortgage business to go bust". (MarketWatch) This is big news, mainly because AHM is the first major lender OUTSIDE THE SUBPRIME MORTGAGE BUSINESS to go belly-up. The contagion has now spread through the entire mortgage industryóAlt-A, piggyback, Interest Only, ARMs, Prime, 2-28, Jumbo,óthe whole range of loans is now vulnerable. That means we should expect far more than the estimated 2 million foreclosures by year-end. This is bound to wreak havoc in the secondary market where $1.7 trillion in toxic CDOs have already become the scourge of Wall Street. Some of the country’s biggest banks are going to take a beating when AHM goes under. Bank of America is on the hook for $1.3 billion, Bear Stearns $2 billion and Barclay’s $1 billion. All told, AHM’s mortgage underwriting amounted to a whopping $9.7 billion. (Apparently, AHM could not even come up with a measly $300 million to cover existing deals on mortgages! Where’d all the money go?) This shows the downstream effects of these massive mortgage-lending meltdowns. Everybody gets hurt. AHM’s stock plunged 90% IN ONE DAY. Jittery investors are now bailing out at the first sign of a downturn. Wall Street has become a bundle of nerves and the problems in housing have only just begun. Inventory is still building, prices are falling and defaults are steadily rising; all the necessary components for a full-blown catastrophe. AHM warned investors on Tuesday that it had stopped buying loans from a variety of originators. 2 other mortgage lenders announced they were going out of business just hours later. The lending climate has gotten worse by the day. Up to now, the banks have had no trouble bundling mortgages off to Wall Street through collateralized debt obligations (CDOs). Now everything has changed. The banks are buried under MORE THAN $300 BILLION worth of loans that no one wants. The mortgage CDO is going the way of the Dodo. Unfortunately, it has attached itself to many of the investment banks on its way to extinction. And it’s not just the banks that are in for a drubbing. The insurance companies and pension funds are loaded with trillions of dollars in "toxic waste" CDOs. That shoe hasn’t even dropped yet. By the end of 2008, the economy will be on life-support and Wall Street will look like the Baghdad morgue. American biggest financials will be splayed out on a marble slab peering blankly into the ether. Think I’m kidding? Already the big investment banks are taking on water. Merrill Lynch has fallen 22% since the start of the year. Citigroup is down 16% and Lehman Bros Holdings has dropped 22%. According to Bloomberg News: "The highest level of defaults in 10 years on subprime mortgages and a $33 billion pileup of unsold bonds and loans for funding acquisitions are driving investors away from debt of the New York-based securities firms. Concerns about credit quality may get worse because banks promised to provide $300 billion in debt for leveraged buyouts announced this yearÖÖBear Stearns Cos., Lehman Brothers Holdings Inc., Merrill Lynch & Co. and Goldman Sachs Group Inc., are as good as junk." That’s right---"junk". We’ve never seen an economic tsunami like this before. The dollar is falling, employment and manufacturing are weakening, new car sales are off for the seventh straight month, consumer spending is down to a paltry 1.3%, and oil is hitting new highs every day as it marches inexorably towards a $100 per barrel. So, where’s the silver lining? Apart from the 2 million-plus foreclosures, and the 80 or so mortgage lenders who have filed for bankruptcy; a growing number of investment firms are feeling the pinch from the turmoil in real estate. Bear Stearns; Basis Capital Funds Management, Absolute Capital, IKB Deutsche Industrial Bank AG, Commerzbank AG, Sowood Capital Management, C-Bass, UBS-AG, Caliber Global Investment and Nomura Holdings Inc.óare all either going under or have taken a major hit from the troubles in subprime. The list will only grow as the weeks go by. (Check out these graphs to understand what’s really going on in the housing market.) The problems in real estate are not limited to residential housing either. The credit crunch is now affecting deals in commercial real estate, too. Low-cost, low-documentation, "covenant lite" loans are a thing of the past. Banks are finally stiffening their lending requirements even though the horse has already left the barn. Commercial mortgage-backed securities are now nearly as tainted as their evil-twin, residential mortgage-backed securities (RMBS). There’s no market for these turkeys. The banks are returning to traditional lending standards and simply don’t want to take the risk anymore. Bataan Death March? Leveraged Buy Outs (LBOs) have been a dependable source of market liquidity. But, not any more. In the last quarter, there was $57 billion in LBOs. In the first month of this quarter that amount dropped to less than $2 billion. That’s quite a tumble. The Wall Street Journal’s Dennis Berman summed it up like this: "the Street is scrambling to finance some $220 billion of leveraged buy out deals" (but) the "mood has gone from Nantucket holiday to Bataan Death March". Berman nailed it. The investment banks took great pleasure in their profligate lending; raking in the lavish fees for joining mega-corporations together in conjugal bliss. Then someone took the punch bowl. Now the banking giants are scratching their heads-- wondering how they can unload $220B of toxic-debt onto wary investors. It won’t be easy. "The banks and brokers are in the bull’s eye," said Kevin Murphy. "There’s article after article not only on subprime, but also banks sitting on leveraged buy out loans." (WSJ) Credit protection on bank debt is soaring just as investor confidence is on the wane. In fact, the VIX index (The "fear gauge") which measures market volatility--- has surged 60% in the last week alone. The increased volatility means that more and more investors will probably ditch the stock market altogether and head for the safety of US Treasuries. But, that just presents a different set of problems. After all, what good are US Treasuries if the dollar continues to plummet? No one will put up with 5% or 6% return on their investment if the dollar keeps sliding 10% to 15% per year. It would be wiser to one’s move money into foreign investments where the currency is stable. And, that is (presumably) why Treasury Secretary Paulson is in China today---to sweet talk our Communist bankers into buying more USTs to prop up the flaccid greenback. (Note: The Chinese are currently holding $103 billion in toxic US-CDOs---and are not at all happy about their decline in value.) If the Chinese don’t purchase more US debt, then panicky US investors will start moving their dollars into gold, foreign currencies and German state bonds as a hedge against inflation. This will further accelerate the flight of foreign capital from American markets and trigger a massive blow-off in the stock and bond markets. In fact, this process is already underway. (although it has been largely concealed in the business media) In truth, the big money has been fleeing the US for the last 3 years. What passes as "trading" on Wall Street today is just the endless expansion of credit via newer and more opaque debt-instruments. It’s all a sham. America ‘s hard assets are being sold off to at an unprecedented pace. Credit Crunch: Whose ox gets gored? When money gets tight; anyone who is "over-extended" is apt to get hurt. That means that the maxed-out hedge fund industry will continue to get clobbered. At current debt-to-investment ratios, the stock market only has to fall about 10% for the average hedge fund to take a 50% scalping. That’s more than enough to put most funds underwater for good. The carnage in Hedgistan will likely persist into the foreseeable future. That might not bother the robber-baron fund-managers who’ve already extracted their 2% "pound of flesh" on the front end. But it’s a rotten deal for the working stiff who could lose his entire retirement in a matter of hours. He didn’t realize that his investment portfolio was a crap-shoot. He probably thought there were laws to protect him from Wall Street scam-artists and flim-flam men. It’ll be even worse for the banks than the hedge funds. In fact, the banks are more exposed than anytime in history. Consider this: the banks are presently holding a half trillion dollars in debt (LBOs and CDOs) FOR WHICH THERE IS NO MARKET. Most of this debt will be dramatically downgraded since the CDOs have no true "mark to market" value. It’s clear now that the rating agencies were in bed with the investment banks. In fact, Joshua Rosner admitted as much in a recent New York Times editorial: "The original models used to rate collateralized debt obligations were created in close cooperation with the investment banks that designed the securities"Ö.(The agencies) "actively advise issuers of these securities on how to achieve their desired ratings" (Joshua Rosner "Stopping the Subprime Crisis" NY Times) Pretty cozy deal, eh? Just tell the agency the rating you want and they tell you how to get it. Now we know why $1.7 trillion in CDOs are headed for the landfill. The downgrading of CDOs has just begun and Wall Street is already in a frenzy over what the effects will be. Once the ratings fall, the banks will be required to increase their reserves to cover the additional risk. For example, "As a recent issue of Grant’s explains, global commercial banks are only required to set aside 56 cents ($0.56) for every $100 worth of triple-A rated securities they hold. That’s roughly 178 to 1 ratio. Drop that down to double-B minus, and the requirement skyrockets to $52 per $100 worth of securities held---a margin increase of more than 9,000%". "56 cents ($0.56) for every $100 worth of triple-A rated securities"?!? Are you kidding me? As Mugambo Guru says, "That is 1/18th of the 10% stock margin equity required in 1929"!! (Mugambo Guru; kitco.com) The high-risk game the banks have been playing---of "securitizing" the loans of applicants with shaky credit---is falling apart fast. There’s no market for chopped up loans from over-extended homeowners with bad credit. The banks don’t have the reserves to cover the loans they have on the books and the CDOs have no fixed market value. End of story. The music has stopped and the banks can’t find a chair. The public doesn’t know anything about this looming disaster yet. How will people react when they drive up to their local bank and see plywood sheeting covering the windows? This will happen. There will be bank failures. The derivatives market is another area of concern. The notional value of these relatively untested instruments has risen to $286 trillion in 2006---up from a meager $63 trillion in 2000. No one has any idea of how these new "swaps and options" will hold up in a slumping market or under the stress of increased volatility. Could they bring down the whole market? That depends on whether they’re backed-up by sufficient collateral to meet their obligations. But that seems unlikely. We’ve seen over and over again that nothing in this new deregulated market is "as it seems". It’s all stardust mixed with snake oil. What the Wall Street hucksters call the "new financial architecture of investment" is really nothing more than one overleveraged debt-bomb stacked atop another. Ironically, many of these same swindles were used in the run-up to the Great Depression. Now they’ve resurfaced to do even more damage. When the crooks and con-men write the laws (deregulation) and run the system; the results are usually the same. The little guy always gets screwed. That much is certain. At present, the stock market is running on fumes. Another 4 to 6 months of wild gyrations and it’ll be over. The NASDAQ plunged 75% after the dot.com bust. How low will it go this time? Keep an eye on the yen. The ongoing troubles in subprime and hedge funds are pushing the yen upwards which will unwind trillions of dollars of low interest, short term loans which are fueling the rise in stock prices. If the yen strengthens, traders will be forced to sell their positions and the market will tank. It’s just that simple. The Dow Jones will be a Dead Duck. So far, Japan ‘s monetary manipulations have been a real boon for Wall Street--enriching the investment bankers, the big-time traders and the hedge fund managers. They’re the one’s who can take advantage of the interest rate spread and then maximize their leverage in the stock market. It works like a charm in an up-market, but things can unravel quickly when the market retreats or starts to zigzag erratically. The recent rumblings suggest that the volatility will continue which will push the yen upwards and cut off the flow of cheap credit to the stock market. When that happens, the end is nigh. The American People: "We’re not a dumb as you think" It’s always refreshing to find out that the majority of Americans seem to have a grasp of what is really going on behind the fake headlines. For example, The Wall Street Journal/NBC conducted a poll this week which shows that two-thirds of Americans believe that "the economy is either in a recession now or will be in the next year." That matches up pretty well with the 71% of Americans who now feel the Iraq War "was a mistake". Americans are clearly downbeat in their outlook on the economy and haven’t been taken in by the daily infusions of happy talk about "low inflation" and "sustained growth" from toothy TV pundits. In fact, the mood of the country regarding the economy is downright gloomy. "Only 19% of Americans say things in the nation are headed in the right direction, while 67% say the country is off on the wrong track". Iraq , of course, is the number one reason for the pessimism, but the dissatisfaction runs much deeper than just that. "Only 16% expressed substantial confidence in the financial industry"ó"18% in the energy or pharmaceutical industries"ó"17% in large corporations and 11% in health-insurance companies". Only 18% of the people have confidence in the corporate media and only 16% in the federal government. These are encouraging numbers. They show that the vast majority of people have lost confidence in the system and its institutions. They also illustrate the limits of propaganda. People are not as easily indoctrinated as many believe. Eventually the "bewildered herd" catches on and sees through the lies and deception. The American people know intuitively that something is fundamentally wrong with the economy. They just don’t know the details or the extent of the damage. Decades of neoliberal policies have inflated the currency, broadened the wealth gap, and destroyed manufacturing. Workers can no longer buy the things they produce because wages have stagnated through a stealth campaign of inflation which originated at the Federal Reserve. When wages shrink, prices eventually fall from overcapacity and the economy slips into a deflationary cycle. This downward spiral ultimately ends in depression. So far, that's been avoided because of the Fed’s massive expansion of cheap credit. But that won’t last. Economic policy is not "accidental". The Fed’s policies were designed to create a crisis, and that crisis was intended to coincide with the activation of a nation-wide police-state. It is foolish to think that Greenspan or his fellows did not grasp the implications of the system they put in place. These are very smart men and very shrewd economists. They knew exactly what they were doing. They all understand the effects of low interest rates and expanded money supply. And, they’re also all familiar with Ludwig von Mises, who said: "There is no means of avoiding the final collapse of a boom brought about by credit expansion." A crash is unavoidable because the policies were designed to create a crash. It’s that simple. The Federal Reserve is a central player in a carefully considered plan to shift the nation’s wealth from one class to another. And they have succeeded. Nearly 4 million American jobs have been sent overseas, the country has increased the national debt by $3 trillion dollars, and foreign investors own $4.5 trillion in US dollar-backed assets. While the Fed has been carrying out its economic strategy; the Bush administration has deployed the military around the world to conduct a global resource war. These are two wheels on the same axel. The goal is to maintain control of the global economic system by seizing the remaining energy resources in Eurasia and the Middle East and by integrating potential rivals into the American-led economic model under the direction of the Central Bank. All of the leading candidatesóDemocrat and Republican---belong to secretive organizations which ascribe to the same basic principles of global rule (new world order) and permanent US hegemony. There’s no quantifiable difference between any of them. The impending economic crisis is part of a much broader scheme to remake the political system from the ground-up so it better meets the needs of ruling elite. After the crash, public assets will be sold at firesale prices to the highest bidder. Public lands will be auctioned off. Basic services will be privatized. Democracy will be shelved. The unsupervised expansion of credit through interest rate manipulation is the fast-track to tyranny. Thomas Jefferson fully understood this. He said: "If the American people ever allow private banks to control the issue of our currency, first by inflation, then by deflation, the banks and the corporations that will grow up will deprive the people of all property until their children wake up homeless on the continent their fathers conquered." We are now in the first phase of Greenspan’s Depression. The stock market is headed for the doldrums and the economy will quickly follow. Many more mortgage lenders, hedge funds and investment banks will be carried out feet first. As the disaster unfolds, we should try to focus on where the troubles began and keep in mind Jefferson ‘s injunction: "The issuing of power should be taken from the banks and restored to the people to whom it properly belongs." Rep. Ron Paul is the only presidential candidate who supports abolishing the Federal Reserve. Mike Whitney lives in Washington. He can be reached at fergiewhitney@msn.com

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