Last year America spent 57 percent more than it earned on world markets. That is, our imports were 57 percent larger than our exports.

How did we manage to live so far beyond our means? By running up debts to Japan, China and Middle Eastern oil producers. We're as addicted to imported money as we are to imported oil.

Sometimes large-scale foreign borrowing makes sense. In the 19th century the United States borrowed vast sums from Europe, using the funds to build railroads and other industrial infrastructure. That debt-financed wave of investment left America stronger, not weaker.

But this time our overseas borrowing isn't financing an investment boom: adjusted for the size of the economy, business investment is actually low by historical standards. Instead, we're using borrowed money to build houses, buy consumer goods and, of course, finance the federal budget deficit.

In 2005 spending on home construction as a percentage of G.D.P. reached its highest level in more than 50 years. People who already own houses are treating them like A.T.M.'s, converting home equity into spending money: last year the personal savings rate fell below zero for the first time since 1933. And it's a sign of our degraded fiscal state that the Bush administration actually boasted about a 2005 budget deficit of more than $300 billion, because it was a bit lower than the 2004 deficit.

It all sounds unsustainable. And it is.

Some people insist that the U.S. economy has hidden savings that official statistics fail to capture. I won't go into the technical debate about these claims, some of which resemble arguments used not long ago to justify dot-com stock prices, except to say that the more closely one looks at the facts, the less plausible the "don't worry, be happy" hypothesis looks.

Denial takes a more systematic form within the federal government, where Dick Cheney is doing to budget analysis what he did to intelligence on Iraq. Last week Mr. Cheney announced that a newly created division within the Treasury Department would show that tax cuts increase, not reduce, federal revenue. That's the Bush-Cheney way: decide on your conclusions first, then demand that analysts produce evidence supporting those conclusions.

But serious analysts know that America's borrowing binge is unsustainable. Sooner or later the trade deficit will have to come down, the housing boom will have to end, and both American consumers and the U.S. government will have to start living within their means.

So how bad will it be? It depends on how the binge ends. If it tapers off gradually, the U.S. economy will be able to shift workers out of sectors that have benefited from the housing boom and the consumption spree into sectors that produce exports or replace imports. Given time, we could bring the trade deficit down and bring housing back to earth without a net loss in jobs.

In practice, however, a "soft landing" looks unlikely, because too many economic players have unrealistic expectations. This is true of international investors, who are still snapping up U.S. bonds at low interest rates, seemingly oblivious both to the budget deficit and to the consensus view among trade experts that the dollar will eventually have to fall 30 percent or more to eliminate the trade deficit.

It's equally true of American home buyers. Most Americans live in regions where housing remains affordable. But a detailed new study by HSBC, a multinational bank, confirms what I and others have been saying: most of the rise in housing values has taken place in a "bubble zone" along the coasts, where housing prices have risen far more than the economic fundamentals warrant. According to HSBC's estimates, houses in the bubble zone are overvalued by between 35 and 40 percent, creating trillions of dollars of illusory wealth.

So it seems all too likely that America's borrowing binge will end with a bang, not a whimper, that spending will suddenly drop off as both the bond market and the housing market experience rude awakenings. If that happens, the economic consequences will be ugly.

All in all, Alan Greenspan, who helped create this situation, can consider himself lucky that he's safely out of office, giving briefings to hedge fund managers at $250,000 a pop. And his successor may be in for a rough ride. Best wishes and good luck, Ben; you may need it.

Copyright 2006 The New York Times Company

Now that the U.S. trade deficit for 2005 has come in at $726 billion, the fourth straight all-time record, a question arises.

What constitutes failure for a free-trade policy? Or is there no such thing? Is free trade simply right no matter the results?

Last year, the United States ran a $202 billion trade deficit with China, the largest ever between two nations. We ran all-time record trade deficits with OPEC, the European Union, Japan, Canada and Latin America. The $50 billion deficit with Mexico was the largest since NAFTA passed and also the largest in history.

When NAFTA was up for a vote in 1993, the Clintonites and their GOP fellow-travelers said it would grow our trade surplus, raise Mexico's standard of living and reduce illegal immigration.

None of this happened. Indeed, the opposite occurred. Mexico's standard of living is lower than it was in 1993, the U.S. trade surplus has vanished, and America is being invaded. Mexico is now the primary source of narcotics entering the United States.

Again, when can we say a free-trade policy has failed?

The Bushites point proudly to 4.6 million jobs created since May 2003, a 4.7 percent unemployment rate and low inflation.

Unfortunately, conservative columnist Paul Craig Roberts and analysts Charles McMillion and Ed Rubenstein have taken a close look at the figures and discovered that the foundation of the Bush prosperity rests on rotten timber.

The entire job increase since 2001 has been in the service sector – credit intermediation, health care, social assistance, waiters, waitresses, bartenders, etc. – and state and local government.

But, from January 2001 to January 2006, the United States lost 2.9 million manufacturing jobs, 17 percent of all we had. Over the past five years, we have suffered a net loss in goods-producing jobs.

"The decline in some manufacturing sectors has more in common with a country undergoing saturation bombing than with a super-economy that is 'the envy of the world,'" writes Roberts.


Communications equipment lost 43 percent of its workforce. Semiconductors and electronic components lost 37 percent ... The workforce in computers and electronic products declined 30 percent. Electrical equipment and appliances lost 25 percent of its workforce.


How did this happen? Imports. The U.S. trade deficit in advanced technology jobs in 2005 hit an all-time high.

As for the "knowledge industry" jobs that were going to replace blue-collar jobs, it's not happening. The information sector lost 17 percent of all its jobs over the last five years.

In the same half-decade, the U.S. economy created only 70,000 net new jobs in architecture and engineering, while hundreds of thousands of American engineers remain unemployed.

If we go back to when Clinton left office, one finds that, in five years, the United States has created a net of only 1,054,000 private-sector jobs, while government added 1.1 million. But as many new private sector jobs are not full-time, McMillion reports, "the country ended 2005 with fewer private sector hours worked than it had in January 2001."

This is an economic triumph?

Had the United States not created the 1.4 million new jobs it did in health care since January 2001, we would have nearly half a million fewer private-sector jobs than when Bush first took the oath.

Ed Rubenstein of ESR Research Economic Consultants looks at the wage and employment figures and discovers why, though the Bushites were touting historic progress, 55 percent of the American people in a January poll rated the Bush economy only "fair" or "poor."

Not only was 2005's growth of 2 million jobs a gain of only 1.5 percent, anemic compared to the average 3.5 percent at this stage of other recoveries, the big jobs gains are going to immigrants.

Non-Hispanic whites, over 70 percent of the labor force, saw only a 1 percent employment increase in 2005. Hispanics, half of whom are foreign born, saw a 4.7 percent increase. As Hispanics will work for less in hospitals and hospices, and as waiters and waitresses, they are getting the new jobs.

But are not wages rising? Nope. When inflation is factored in, the Economic Policy Institute reports, "real wages fell by 0.5 percent over the last 12 months after falling 0.7 percent the previous 12 months."

If one looks at labor force participation – what share of the 227 million potential workers in America have jobs – it has fallen since 2002 for whites, blacks and Hispanics alike. Non-Hispanic whites are down to 63.4 percent, but black Americans have fallen to 57.7 percent.

What is going on? Hispanic immigrants are crowding out black Americans in the unskilled, semi-skilled and skilled job market. And millions of our better jobs are being lost to imports and outsourcing.

The affluent free-traders, whose wealth resides in stocks in global companies, are enriching themselves at the expense of their fellow citizens and sacrificing the American worker on the altar of the Global Economy.

None dare call it economic treason.

© 2006 Creators Syndicate Inc.

Most of the relevant facts are not in dispute. Bush was advised by experts before the hurricane touched ground that even a Force-4 storm would breach the levees. He knew, as the New York Times says, “If the levies breached and flooded a large portion of the city, then the flooded city would have to be completely evacuated….Any delay in confirming the breaches would result in a delay in the post-landfall evacuation of the city”. Clearly, the evacuation should have been ordered, unless there was some hidden motive for leaving the city’s people in imminent danger.

We know now that Bush was told on Aug 29, the day the storm hit, that “a major section of the 17th Street Canal levee had collapsed” and was flooding the city, although, at the same time, he was still misleading reporters that the levees had held. (“We dodged a bullet”)

The media has papered-over Bush’s refusal to respond to the disaster by implying the administration was merely “slow to react” or “in a fog” or “not fully involved”. But how likely are these assertions?

Bush and his FEMA director, Michael Chertoff, completely grasped the urgency of the catastrophe, and yet, stubbornly refused to disperse funds, deploy troops, or call for an immediate evacuation.

Why?

That may be an impossible question to answer without engaging in unproductive conspiracy theories. But, we know that the administration was still pleading ignorance about the broken levees while an 8 ft river was coursing through New Orleans.

The senate investigation attempts to spread the blame equally to state and local officials and excuse the conduct of the Bush administration as a “litany of mistakes, misjudgments, lapses, and absurdities.” This theory, of course, conflicts with everything that people remember about the withholding of aid, the willful obstruction of the relief effort, and the racist imprisoning of poor black residents in the squalid-confines of the Superdome.

Once again, we see that the media narrative closely matches the political agenda of the Bush White House obfuscating the widely-acknowledged facts. Katrina was not “a failure of imagination” as the media would have us believe. Rather, it was a blatant act of criminal negligence.

How could it be otherwise?

“FEMA was warned that a hurricane striking New Orleans was one of the three most likely disasters in the US (in a 2001 report But the Bush administration cut New Orleans flood control by 44%”. (Sidney Blumenthal: “No one Can Say they didn’t see it coming”)

Bush consistently chopped funding to the Army Corps of Engineers as well as Federal Flood Control even though he was warned repeatedly that the levees were sinking. As Paul Krugman notes, “In 2002 the Army Corps of Engineers chief resigned, reportedly under threat of being fired, after he criticized the administration’s proposed cuts in the corps’ budget, including flood-control spending”.

FEMA Blocks Relief Effort

The media’s “failure of imagination” theory is an interesting bit of revisionism which conflicts with eyewitness testimony. Consider the comments of Mitchel Cohen in “People of the Dome”:

“The government, which could have and should have provided water and food to residents of New Orleans, has not done so intentionally to force people to evacuate by staring them out. This is a crime of the gravest sort.

We need to understand that the capability has been there from the start to drive water and food right up to the convention center, as those roads have been clear. It’s how the National Guard drove into the city.

On Wednesday a number of Greens tried to bring a large amount of water to the Superdome. They were prevented from doing so, as have many others. Why have food and water been blocked from reaching tens of thousands of poor people?

They even refused to allow voluntary workers who had rescued over 1,000 people in boats over the previous days to continue on Thursday….and had to be “convinced” at gunpoint to “cease and desist”. There is something sinister going down….its not just incompetence or negligence.”

Cohen’s reflections are undoubtedly closer to what most people remember of those first few days following the hurricane than those of the senate. The fantastic claim that the Bush administration was simply “slow to respond” was effectively challenged by Aaron Broussard, President of Jefferson Parish LA in his Sept 4, testimony on Meet the Press:

“We have been abandoned by our own country. Hurricane Katrina will go down in history as one of the worst storms to ever hit an American coast, but the aftermath of Katrina will go down as one of the worst abandonments of Americans on American soil ever in US history.

We had Wal-Mart deliver 3 trucks of water, trailer trucks of water. FEMA turned them back. They said we didn’t need them. FEMA had 1,000 gallons of diesel fuel on a Coast Guard vessel docked in my parish. The Coast Guard said, “Come and get the fuel right away.” When we got there with our trucks, they got a word. “FEMA says don’t give you the fuel”. Yesterday…yesterday…FEMA comes in and cuts all of our emergency communication lines. They cut them without notice. Our sheriff, Harry Lee, goes back in, he reconnects the line. He posts armed guards on our line and says, “No one is getting near those lines.”

Still think that Katrina was “a failure of imagination”?

Farhad Manjoo of Salon.com reported, “Citing security concerns, the Department of Homeland Security barred the American Red Cross from entering New Orleans with food. 500 Floridian air-boaters were ready to rescue people stranded in inundated homes, but FEMA turned them down”.

Still not convinced?

“The Homeland security Department has requested and continues to request that the Red Cross not come back to New Orleans,” said Renita Hosler, spokeswoman for the Red Cross. “Right now access is controlled by the National Guard and local authorities. We have been at the table every single day. We cannot get into New Orleans against their orders.” (Homeland Security won’t let Red Cross deliver Food, Ann Rogers, Pittsburg Post-Gazette)

Bush was not “misinformed” nor was the “White House in a fog” as the media insists. The evidence clearly demonstrates that the warnings were deliberately delayed, aid was deliberately obstructed, rescue-efforts were deliberately sabotaged, and the entire action was part of a broader government operation to achieve an “unknown” objective.

Some have suggested that FEMA has been transformed under Homeland Security and operates as a secret government “spending 12 times more for ‘black operations’ than for disaster relief. It spent $1.3 billion building secret bunkers throughout the United States in anticipation of government disruption by foreign or domestic upheaval.” (FEMA-The Secret Government, by Harry V. Martin)

Under executive orders, in the event of a national emergency, FEMA now has the ability to suspend the constitution, detain American citizens, and declare martial law. It is therefore entirely possible that FEMA no longer functions as a disaster-relief agency at all, but, has been recalibrated to address the problems that may arise from massive civil unrest following a terrorist attack or (more likely) an economic meltdown. (Note: A contract was just issued by Homeland Security to Halliburton subsidiary, KBR, for $385 million to build detention Centers within the United States. Someone in the Bush administration is definitely expecting trouble.)

Whatever the reasons may have been for obstructing the relief-effort, the results are painfully obvious. The unprepared were left to die in the flood, the poor and black were shunted into filthy detention centers, and the city was transformed into a war-zone replete with armored vehicles and 70,000 military personnel roaming the streets.

The men and women who lost their lives in New Orleans were not the victims of a “dysfunctional reaction to the storm” (NY Times) or of a “sluggish response” (Wa Post) from the administration. Rather, they are the blameless victims of a government strategy that is as abstruse as it is lethal.

Many of the facts for this article were found at “BushCo. Nukes New Orleans” a great resource for details on Katrina

Fifty years ago, American scientists were in a frantic race to counter what they saw as the Soviet threat from germ warfare. Biological pathogens they developed were tested on volunteers from a pacifist church and were also released in public places.

The remarkable story is told in a BBC Radio 4 documentary, Hotel Anthrax.

In the 1950s, the Seventh-day Adventist Church struck an extraordinary deal with the US Army. It would provide test subjects for experiments on biological weapons at the Fort Detrick research centre near Washington DC.

The volunteers were conscientious objectors who agreed to be infected with debilitating pathogens. In return, they were exempted from frontline warfare.

Fort Detrick was working on weapons it could use in an offensive capacity as well as ways of defending its troops and citizens.

Hotel Anthrax uses declassified documents, evidence from Senate investigations and personal testimony to trace the American bio-weapon programme during this period.

The research involved anthrax, other lethal bacteria and biological poisons. The scientists also conducted tests on an unsuspecting American public.

Rabbit fever

More than 2,000 volunteers, nicknamed the "white coats", passed through Fort Detrick between 1954 and 1973, where they worked as lab technicians, as well as offering up their bodies for science.

One white coat, George Shores, tells of how he was infected with tularaemia or rabbit fever.

A giant metal sphere, known as the Eight Ball because of its resemblance to a snooker ball, was used in the experiment. Technicians exploded prototype bio-weapons inside the structure.

"They had like telephone booths all the way around the outside of the Eight Ball and you went into the telephone booth and shut the door and put on a mask like a gas mask.

"It was hooked up to the material that was inside the Eight Ball and you breathed it in," explained Mr Shores.

He began to feel ill before too long.

"Even my gums hurt. I don't think I have ever been so sick in all my life. First it started as a headache and achy feelings and it just kept progressing.

"I just wanted to breathe enough to keep alive. I would just take little gasps of breath and I would hold it for as long as I could because it hurt so bad.

"I can imagine if someone was using that agent in the battlefield the soldier would just have to lie down - he would not be able to function."

The white coat volunteers were not infected with the most lethal microbes. Their role was to test the effectiveness of new vaccines and antibiotics and as soon as they became ill, they were given medical treatment. Within a few days, George Shores began to recover.

But America's Institute of Medicine is conducting a study of more than 6,000 veterans who say their health has been compromised by secret tests in the Cold War years.

Some of these were veteran sailors who were involved in tests known as SHAD - Shipborne Hazard and Defense - which involved spraying lethal chemicals such as sarin and nerve gases in the open sea.

The BBC programme makers also obtained declassified documents prepared by the US Department of Veterans Affairs which refer to a study of nearly 100 SHAD veterans who have since died.

It found the veterans were three times more likely to have developed one of a group of killer diseases as a sample group in the general population.

It concludes: "This study does suggest that veterans who participated in Project SHAD may be at increased risk for cerebrovascular and respiratory diseases."

Subway experiment

But it wasn't just the white coat volunteers and sailors who were subject to experiments. Scientists used what they thought was a harmless simulant in major bio-weapon tests across US cities and on public transport.

It was a bacteria which they believed was harmless but which would mimic the dispersal of deadly biological agents such as anthrax.

But later research showed that the strain of Bacillus globigii, or BG, did pose a risk to people who were ill or whose immune system was failing.

The programme hears from a retired scientist whose job in 1966 was to drop light bulbs carrying BG on the New York subway. He would then measure how the simulant might spread in the event of a real attack, using a motorised vacuum devise concealed inside a suitcase.

Wally Pannier, 82, recalls: "We'd just drop light bulbs with the powdered stimulant inside.

"I think it spread pretty good because you had a natural aerosol developed every few minutes from every train that went past."

In 1994, the Senate Committee on Veterans' Affairs conducted what it described as a comprehensive analysis stretching back 50 years of the extent to which veterans were exposed to potentially dangerous substances without knowledge or consent.

It was chaired by John D Rockefeller.

In a damning report, it concluded that the Department of Defense (DoD) repeatedly failed to comply with required ethical standards when using human subjects in military research - and that the DoD demonstrated a pattern of misrepresenting the danger of various exposures and continued to do so.

Dr Michael Kilpatrick, a medical adviser to the DoD, claims the concerns which SHAD veterans have been raising may, finally, be changing that behaviour.

"It's very hard to try and put today's ethics on standards 20, 30, 40 years ago. That's not to excuse it. I think they were trying to protect people using the medical science that was available at that time.

"We're taking a look at any current tests that require consent of our military personnel.

"We're making sure that there is an archive, a registry, a way to get back to all of the information."

If anyone had told the Cole's commander that there was any indication of a problem in Aden, "he would not have gone there," Weldon told reporters. "He had no clue."

Weldon would not say who provided evidence of such intelligence to him.

Since August, Weldon, vice chairman of the House Armed Services Committee, has pushed Congress and the Pentagon to investigate the workings of Able Danger, which used data mining to identify links that might indicate the workings of terrorists. If he is correct, it would change the timeline for when government officials first became aware of Atta's links to al-Qaida.

Former members of the Sept. 11 commission have dismissed Weldon's findings.

Cmdr. Greg Hicks, a Pentagon spokesman, released a statement saying that Pentagon officials welcome the opportunity to address these issues during a hearing scheduled Wednesday before a subcommittee of the House Armed Services Committee.